McMahon v John Fairfax Publications Pty Limited

Commonwealth Bank overdraft documents 17Also on the seventh day of the hearing, I rejected the defendants' tender of documents from the Commonwealth Bank relating to Mr McMahon's business overdraft account (first raised at T616; argument from T625; ruling at T629). 18Relevantly for present purposes (imputation (c) no longer being relied upon), the tender went to the truth defence in support of imputation (e) alleged to arise from the second article (set out above). The defendants alleged that the plaintiff did not inform the Commonwealth Bank of the change in his business structure which occurred on 1 July 2007 but nonetheless continued to use the overdraft facility of the old partnership to fund the liabilities of the limited partnership. 19Pre-empting the defence on that issue, Mr McMahon gave evidence-in-chief (at T08) that he had told the Commonwealth Bank of the change in structure in a conversation in May or June 2007 with his relationship manager at the Bank, Mr Migheli. Mr Dawson sought to test the likelihood that a conversation took place in the terms stated by Mr McMahon. In that context, he foreshadowed tendering the terms and conditions of the overdraft, from which it could be seen that the change in structure was arguably a breach of the overdraft contract. Mr Dawson stated that he would allege that, having regard to the terms of that contract, it was fanciful to suggest that Mr Migheli was given sufficient information to understand the restructure. Mr Dawson submitted that, if Mr Migheli had been told in full and frank terms what had happened, there was "no way" that the Bank would have continued to let the overdraft be available to Mr McMahon. 20There was no suggestion that the defendants proposed to call anyone from the Commonwealth Bank as a witness to support those contentions. I concluded that what was proposed to be put was merely speculative and went beyond the case particularised. Accordingly, I rejected the tender.

Mr McMahon's memorandum as to the sale of the BMW 21On the eighth day of the hearing I ruled that a memorandum written by Mr McMahon to his trustee in bankruptcy was admissible (T711-12). In that document, Mr McMahon provided an explanation as to the circumstances in which he had transferred his BMW to his wife approximately a year before going into bankruptcy. The memorandum was in the following terms: In early November 2003, I commenced co-habitation with Ms Anerys Brotherton-Ford (ABF) at her house at 13 Princess Ave Rosebery. Whilst it was agreed that I would live there rent-free, it was also agreed that I would make a contribution to her for food, household items, electricity, phone and gas of $70 per week. Additionally it was agreed that I would have the use of the garage for $40 per week. During 2006, my son Tom with his pet dog "Maxi" stayed with us for 9 months. It was agreed prior to his arrival that I would pay to ABF an amount of $240 per week for Tom's full board and $25 per week for Maxi's board. By early October 2006 I had not paid to ABF any of the above amounts. Prior to the 15 th October 2006, we prepared a reconciliation of monies owed by me to her at that time in respect of these amounts. I have been unable to locate the original of that reconciliation however annexed hereto is a re-construction of same which indicates that the amount then owing was $27,055.00. At the time, I owned a 1998 BMW 325i motor vehicle registered no ADO25X. I made enquiries as to the value of that vehicle and ascertained that it was worth approximately $27,000. I then offered, and ABF agreed to accept the transfer to her of the said motor vehicle in full satisfaction of the amount due to her. She subsequently sold the vehicle for $26,500. 22The defendants wished to invite the jury to conclude that the arrangement recorded in the memorandum was contrived. Put on that basis, the document was relevant only to credit and so was "credibility evidence" within the meaning of s101A of the Evidence Act 1995. That meant that, by virtue of the credibility rule in s102 of the Act, the document was not admissible unless it fell within the exception to that rule in s103 of the Act. 23Section 103 provides: (1) The credibility rule does not apply to evidence adduced in cross-examination of a witness if the evidence could substantially affect the assessment of the credibility of the witness. (2) Without limiting the matters to which the court may have regard for the purposes of subsection (1), it is to have regard to: (a) whether the evidence tends to prove that the witness knowingly or recklessly made a false representation when the witness was under an obligation to tell the truth, and (b) the period that has elapsed since the acts or events to which the evidence relates were done or occurred. 24Mr McClintock did not accept that the document satisfied the test in s103 but put no affirmative submissions on that issue. I was satisfied that the jury could reasonably conclude that the arrangement recorded in the memorandum was contrived in hindsight and did not reflect the true circumstances of the transfer of the car. On that basis, I was satisfied that the fact that Mr McMahon had presented that memorandum to his Trustee in Bankruptcy could substantially affect the jury's assessment of Mr McMahon's credibility. 25My reasons for reaching that conclusion were the inherent unlikelihood that the events recorded occurred in the manner described (particularly having regard to a wealth of other evidence as to the extent to which Mr McMahon was financially supporting both himself and Ms Brotherton-Ford at that time) and the fact that the memorandum was written in circumstances in which Mr McMahon knew he was under a legal obligation to tell the truth. 26Mr McClintock submitted, however, that the document still did not fall within the exception to the credibility rule in s103 of the Act because a document is not "evidence adduced in cross-examination" within the meaning of the section. He contended that the purpose of that section, and its only purpose, is to permit cross-examination. 27The proposition that s103 does not permit the tender of documents was implicitly rejected by the Court of Criminal Appeal in the decision of Aslett v R [2006] NSWCCA 49. In that case, a number of men were charged with sexual assault of a young girl during the commission of a robbery at her home. One of the accused, Mr Bonham, had told police during electronically recorded interviews of his own involvement in the commission of the offences. In doing so, he had also implicated another of the accused, Mr Aslett. 28Bonham decided to plead guilty and agreed to give evidence against Aslett. Police then asked Bonham to confirm the accuracy of transcripts of the interviews he had earlier given, which he did by signing them. Later, however, whilst he maintained his plea of guilty, he resiled from his agreement to give evidence against Aslett. 29Bonham was called by the Crown in the trial of Aslett, whereupon he denied that Aslett had participated in the robbery. The Crown was then granted leave under s38 of the Evidence Act to cross-examine him. The trial judge admitted the audiotapes of Bonham's interviews and the transcripts of those interviews later signed by him. It appears from the judgments in the Court of Appeal that the documents were then relied upon as to the truth of the representations made in them regarding Aslett's involvement in the offences. 30The evidence had been objected to at the trial on the basis that it did not fall within the exception to the hearsay rule in s66 of the Act (see [69] of the judgment of the Court of Criminal Appeal). The Crown argued, however, that the documents were admissible by a combination of ss38, 103 and 60 of the Act. The trial judge admitted the evidence on that basis. The Court of Criminal Appeal upheld that decision: at [72] per Barr J; Spigelman CJ agreeing at [1]; Howie J agreeing at [147]. 31Mr McClintock noted that no express attention was paid in Aslett to the question whether a document tendered during cross-examination can properly be characterised as "evidence adduced in cross-examination of a witness", within the meaning of s103. The decision nonetheless stands as a decision of an appellate court in which the ratio necessarily assumed the correctness of the proposition that a document can be admitted as to credit under s103 even if it does not satisfy one of the other paths to admissibility of documents, such as under s43 of the Act. In my view, that is made clear in Aslett at [74]-[76]. 32There is one aspect of the decision in Aslett that warrants careful attention. In upholding the trial judge's ruling, the Court said: The circumstances were similar to those that arose in Adam v The Queen (2001) 207 CLR 96. A witness, having knowledge of the events giving rise to the charges and probably concerned in them, made a statement that assisted the prosecution. At trial it was apparent that he was unwilling to assist the Crown by giving evidence in accordance with the statement. The Crown obtained leave under s38 to cross-examine him. His statement was tendered on the question of his credit and was admitted by virtue of s103 . The effect of s60 was to make the contents of the prior statement available to prove the truth of the assertions in it. See generally the judgment of the majority of the Justices of the High Court of Australia at 105 -109 (emphasis added). 33With great respect to the Court in Aslett , it should be noted that the majority in Adam did not endorse the proposition that the statement was admissible "by virtue of s103". On the contrary, the High Court held that the credibility rule was not engaged, since the evidence was not relevant only to credibility: 207 CLR 96 at [39]. It appears that in Adam , the document in question had, rather, been admitted during cross-examination as a prior inconsistent statement (see Adam at [18]; cf Aslett at [74]). It follows that, to the extent that the Court in Aslett drew comfort from the decision in Adam as to whether a document may be admitted under s103, it may have been misplaced. The ratio of the decision in Adam was that, having been admitted and being relevant for a non-hearsay purpose (credit), the document fell within the exception to the hearsay rule in s60 and could be used to prove facts in issue. It was in response to that decision that the application of the credibility rule was later extended to evidence relevant both to credit and a fact in issue but not admissible to prove the fact in issue. 34I was not taken to Adam when I ruled on the admissibility of Mr McMahon's memorandum. I should acknowledge that I identified the issue flagged in the preceding paragraph only during the course of preparing these reasons. However, that consideration does not derogate in any way from the conclusion I reached. 35Mr McClintock submitted that, if Aslett is authority for the proposition that a document can be admitted under s103 of the Evidence Act , it is wrong. I rejected that submission. 36The starting point is that evidence that is relevant is admissible (s56 of the Act). Evidence that is relevant can include evidence that relates only to credit (s 55) but in that event, its admissibility is also governed by the credibility rule (s 102). Further, evidence that is relevant can include a document, but in that event consideration must be given as to whether the document is relied upon for a purpose that attracts the hearsay rule (s 59). 37When considering the admissibility of evidence under the credibility rule, if the matter which the court is satisfied could substantially affect the assessment of the credibility of the witness is the fact that he brought a particular document into existence, I see no reason why the document itself cannot not be adduced in cross examination (at least where the witness accepts that it is his document, as occurred here). For example, if a witness had previously made a fraudulent insurance claim, I see no reason why the claim form (if it was the witness's document) could not be admitted into evidence during cross-examination even if it was relevant only to credit. 38The credit issue sought to be raised against Mr McMahon was that he put forward to his trustee in bankruptcy an implausible explanation as to the consideration given by his wife for the transfer of the BMW to her. The memorandum was not relied upon for a hearsay purpose but only to prove what Mr McMahon said to the trustee. The terms of the memorandum were intrinsically capable of generating scepticism, more so when viewed in the context of other evidence in the case. I saw no reason in those circumstances why the document itself could not properly be adduced in evidence in cross-examination, since (in my view) it satisfied the test in s103. 39For those reasons, I admitted the document (Exhibit 33).

Plaintiff's application to amend particulars of damage 40On the tenth day of the hearing I allowed an application by the plaintiff for leave to amend his particulars of damages in respect of the claim in injurious falsehood (at T838). 41The claim in injurious falsehood was not pleaded in the original statement of claim. It was inserted by amendment on 22 December 2009 (see third further amended statement of claim filed pursuant to leave granted by Nicholas J on 17 December 2009). The new claim was pleaded in paragraphs 8, 9 and 10 of that version of the pleading. Those were not the only amendments made at that time. 42The amendment as pleaded introduced a claim of injurious falsehood in respect of both articles. It was alleged that each of the imputations arising from each article was false (paragraph 8) and that each of the articles was published with malice towards the plaintiff (paragraph 9). Particulars of malice were given in respect of both Mr Priest and Ms Nickless. 43It was further alleged that the publication of each article and the imputations had caused and will continue to cause the plaintiff to suffer actual financial loss and damage. Confusingly, however, the particulars of that allegation referred the reader back to paragraph 2 of the pleading, which supplied particulars only in respect of direct loss of business as a result of the first article. Those particulars alleged that Lumley General Insurance Limited, one of Mr McMahon's major clients at the time, had withdrawn all instructions from his firm on 5 October 2007 as a result of the publication that date of the first article. 44The plaintiff's position on the face of the pleadings may accordingly be summarised as follows: (a) before 22 December 2009, the only cause of action was for defamation arising from the publication of the two articles three weeks apart. There was a claim for special damages alleged to have been caused by the first publication on 5 October 2007 which (according to evidence now adduced in the trial) was the day on which Lumley informed the plaintiff of its decision to withdraw all files from him. There was no claim for special damages arising from the second matter complained of on 26 October 2007; (b) the amendment made on 22 December 2009 introduced a claim of injurious falsehood expressly pleaded in respect of both matters complained of. Specifically, the amended pleading alleged actual financial loss and damage caused by the publication of the second matter complained of. Inconsistently, however, the only particulars supplied in the pleading related to loss allegedly suffered as a result of the publication of the first article; (c) the present application does not seek to amend the pleading but seeks to supply particulars of the allegation in paragraph 10 of the third further amended statement of claim (first made on 22 December 2009) that actual financial loss and damage was caused by the second matter complained of as well as the first matter complained of. 45Mr McClintock submitted in those circumstances that the giving of the further particulars does not amount to an amendment. He noted that there had been no request by the defendants for such particulars in circumstances where the claim for financial loss arising from the publication of the second matter complained of (insofar as it gives rise to the injurious falsehood claim) has been on the pleading since 22 December 2009. 46Mr McClintock referred me in that context to the decision in Singleton v John Fairfax [1983] 2 NSWLR 728 at 730. In that case, Hunt J expressed the view that the existence in the rules of a specific power to order a party to give particulars of a claim for general damages "tends to suggest that the obligation [under the rules] upon the plaintiff to give 'the necessary particulars of any claim' does not require him to give particulars of a claim for general damages (or for aggravated compensatory damages) in his statement of claim unless ordered to do so". 47Mr Dawson submitted, correctly in my view, that those remarks do not apply to the present situation. The allegation that the plaintiff suffered actual financial loss is one of the elements of the cause of action of injurious falsehood. Particulars of that allegation ought to have been given in the pleading, in my view. However, I do not think that consideration is determinative. 48When the application for leave to file the amended pleading was brought before Nicholas J in December 2009, it was opposed by the defendants only on grounds relating to the form of the meanings identified by the plaintiff as arising from the two articles. The defendants did not otherwise raise any discrete objection to the proposed inclusion of the new cause of action. In particular, taking a fair and practical approach, Mr Dawson informed the Court that the defendants did not oppose the inclusion of the new cause of action on what are now commonly termed Aon grounds (the grounds considered by the High Court in the decision of Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 (5 August 2009)). 49In those circumstances, I do not accept that the application introduced an entirely new cause of action, as initially submitted on behalf of the defendants. A claim in injurious falsehood in respect of the second article has been on the pleadings since December 2009. Particulars of the malice of the third defendant, who is only sued on that article, have been given. 50It may also be noted that, apparently through oversight, the defendants did not plead to the injurious falsehood claim until after the commencement of the present trial. Had their defence addressed those allegations, as plainly it ought to have, they could not have failed to appreciate that injurious falsehood was pleaded (albeit with inadequate particulars) in relation to the second article. 51In all the circumstances I concluded that it would be wrong to disallow the provision even at this late stage of the particulars that ought to have been provided at the outset. The dangers of refusing to determine a claim on the basis of too strict a reading of the particulars are amply demonstrated in the decision of the Court of Appeal in Harris v Bellemore [2011] NSWCA 196 at [83]-[94]. A claim in injurious falsehood having been pleaded in respect of the second article, I determined that I should not preclude the plaintiff from putting that case before the jury. Accordingly, I allowed the application. Rulings given on 28 February 2012 52On the fifteenth day of the hearing I gave a series of rulings in respect of documents tendered by the defendants at the close of their case (T1325). 53The first related to credit card and bank statements recording amounts Mr McMahon had spent on three overseas trips. On the fourteenth day of the hearing, I had ruled that evidence as to the expenditure revealed in those statements was admissible (at T1241). My reasons for that ruling were published in McMahon v John Fairfax Publications Pty Ltd (No 4) at [3]-[17]. The premise of that ruling was that the evidence was relevant only to credit, having regard to the way in which the defence was particularised. 54After I gave my ruling on that issue, further submissions were put on behalf of the plaintiff seeking to confine the use that could be made of that evidence as going only to credit and not to any issue raised by the truth defence (T1257-1261). During those further submissions I was persuaded, contrary to my earlier view, that the detail of the expenditure on overseas travel was fairly comprehended within the scope of the existing particulars (at paragraph (i)(A)(5) of the particulars of truth in response to imputation (b) alleged to arise from the first article). 55The defendants had alleged that Mr McMahon's expenditure on credit cards was part of an extravagant and expensive lifestyle, funded by the firm's revenue, which led to further financial difficulties for him and his firm and contributed to his personal bankruptcy and the collapse of the firm in early October 2007. I concluded that the jury could reasonably accept Mr Dawson's contention that those trips contributed to the aggregate level of indebtedness and Mr McMahon's inability to weather the storm of the changes to his practice brought about by the amendments to the Civil Liability Act 2002. 56Further, although the alleged expenditure on overseas trips had not been individually particularised, the evidence given in re-examination revealed that Mr McMahon had been able to consider the amounts identified and to address them in re-examination. Accordingly, I ruled that the overseas expenses could be relied upon as being relevant to the truth defence.

Deloitte report dated 28 November 2007 57The next ruling related to a report by Deloitte dated 28 November 2007. The report was a formal report to this Court following the appointment of Deloitte as liquidators of the limited partnership. The parties were in dispute as to whether the report was admissible either as a business record within the meaning of s69 of the Evidence Act or under s1305 of the Corporations Act 2001 (Cth). Mr Dawson submitted that the report was a "book" within the meaning of s1305 since the liquidators acted as the agents of the limited partnership. In that respect, Mr Dawson relied upon the decision of Austen J in ASIC v Rich [2005] NSWSC 417 at [271]. I rejected that submission, accepting (as submitted by Mr McClintock) that the limited partnership was not a body corporate within the meaning of s1305. Accordingly, I concluded that the report did not fall within s1305. 58As to whether the report was a business record within the meaning of s69 of the Evidence Act , the competing submissions of the parties are summarised my earlier judgment in respect of a similar tender in McMahon v John Fairfax Publications Pty Ltd (No 4) at [23-25] (and see [42]). For the reasons there considered, I had some doubt as to whether the report was a business record. 59In any event I determined that, even if it was, I should exclude the report in the exercise of my discretion under s135 of the Act. I was persuaded to that conclusion by the submissions of Mr McClintock (at T1271). In particular, I was concerned that Mr McMahon had not had a fair opportunity in his case to address the detail of the financial information summarised in the report which was sought to be relied upon by the defendants. I was concerned in that context that the jury might accord considerable weight to the evidence, having regard to its appearance in a report to the Court. Accordingly, to ensure fairness to Mr McMahon, I excluded that document.

Groceries, restaurants, electricity and gas 60The next category of material ruled upon was a series of summaries of expenditure by Mr McMahon on restaurants, groceries, electricity and gas. Those summaries were tendered as falling within s106 of the Evidence Act on the basis that, during cross examination, Mr McMahon had either denied or not agreed to propositions put to him as to the amounts spent on various items. 61I accepted that the answers given by Mr McMahon were such as to invoke the application of s106. However, I determined to exercise my discretion under s135 of the Evidence Act to exclude the material relating to the expenses in question. I thought there was a danger of unfair prejudice to Mr McMahon in having the jury poring over every detail of a large number of entries on his credit card statements. The time that would have been required to explain each entry would have been vastly disproportionate to the probative value of the material. The credit card entries themselves provided too little information reliably to judge the nature of the expenditure in each case. I considered that material to be in a different category from the overseas expenditure, which could be identified with certainty as having been spent on the trips in question by reference to the dates of the relevant entries. 62Accordingly, I excluded that material.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 March 2012