Meiko Australia Pacific Pty Limited v Adam Samuel Hinchliffe & Anor

Meiko Australia Pacific Pty Limited v Adam Samuel Hinchliffe & Anor - [2009] NSWSC 354 - NSWSC 2009 case summary — Zoe

[18]

"that as the first defendant was between April 2007 and October 2008 the managing director of the plaintiff, as such he owed duties to the plaintiff to exercise his powers and discharge his duties in good faith in the best interests of the plaintiff and for a proper purpose [section 181 Corporations Act ] and also not to improperly use his position to gain an advantage for himself or someone else or to cause detriment to the plaintiff [section 182 of Corporations Act ]." 12 The amendment was opposed. The principled exercise of the relevant discretion is to disallow the amendment which came following the cross examination of the first defendant and in circumstances in which fairness would have dictated that any such claim be properly pleaded before or at least at the commencement of the hearing. The gravity of the claims against the first defendant entitled its legal advisers to ready themselves fully on every aspect of the claims made against him and it would not be just to promote these further allegations to be pursued without full particulars having been given. Parties and sources of evidence 13 The plaintiff's evidence in chief consisted of the following affidavits: Juergen Sachs (sworn 7 November 2008), Burkhard Joachim Randel (sworn 5 February 2009) and Danny Chan (5 February 2009). Mr Chan was cross-examined. 14 The first defendant's evidence in chief consisted of parts of earlier affidavits and a further affidavit sworn prior to the hearing: 26 November 2008 (transcript 37: paragraphs 46-49, 54-55 were read; transcript 54: paragraphs 41-45, 51-53, 66); 3 February 2009 (paragraphs 1-35) and 21 April 2009. The first defendant was cross-examined. Liquidation of the second defendant 15 The second defendant was placed into liquidation by the first defendant in January 2009. On 21 April 2009 the liquidator of the second defendant consented to leave being granted to the plaintiff to proceed against the second defendant in these proceedings. 16 On the same day the plaintiff consented to a relaxation of the Freezing Order made on 7 November 2008 and extended on 13 November 2008 as against the second defendant. 17 The second defendant has not participated in these proceedings. The first defendant's complaints qua missing causes of action 18 Bearing in mind the complaints by the first defendant to the effect that the plaintiff had failed to plead various causes of action it is germane to note the following matters:

[31]

25 August 2008 31 The first defendant sought an urgent injection of cash, blaming John Large for "many errors in the journal entries" for which his employment with the plaintiff was terminated. 27 August 2008 32 The German parent sought financial information. 1 September 2008 33 The first defendant acknowledged receipt of Euro 400,000.00 from the German parent and blamed financial incompetence. 5 September 2008 34 Financial information was sent to German parent. 26 September 2008 35 The German parent advised that, having examined the financial information provided, further information was required and a list of suspicious payments was provided, with a request for information about them. 29 September 2008 36 The first defendant blamed others for various discrepancies; as one example, compare first defendant's characterization of the sum of $430,000.00 as having been authorized by John Large; later says it was possible that John Large had taken the money, but later, through his solicitors, stated that was a "final loan by MAP to Swiss Systems … on 1 August 2008". 2 October 2008 37 The first defendant continued to blame others and suggested that his trip to Germany may not be worthwhile, offering instead to assist the plaintiff to find a replacement for himself so the plaintiff can "continue on as smoothly as possible from this point". The first defendant made the following request of the plaintiff: "Please advise ASAP so that suitable arrangements for my departure can be planned." 6 October 2008 38 The plaintiff required the first defendant to come to Germany. 9 October 2008 39 A meeting was held between the plaintiff and the first defendant. When asked whether there was anything the first defendant wished to tell the plaintiff, the first defendant said that money was needed so stock could be held. 40 The first defendant claimed that John Large may have taken the sum of $430,000.00. 10 October 2008 41 The first defendant admitted having taken money and resigned as Managing Director of the plaintiff when told he could do so or be terminated. 23 October 2008 42 The first defendant denied having misappropriated funds. 24 October 2008 43 Legal representatives of the parties met although no resolution was reached; amount still estimated to be $730,000.00. After 26 October 2008 44 The plaintiff discovered that the amount missing was $1,727,351.62. November 2008 45 Mr Chan was asked by the plaintiff's solicitor to examine the plaintiff's records and identify transfers of funds from bank accounts from the plaintiff to the second defendant from 13 April 2007; Mr Chan identified numerous transfers and discovered that the net amount owing to the plaintiff by the second defendant was $1,644,432.26. The evidence given by Mr Sachs 46 Mr Sachs is the financial controller of the Meiko group of companies (hereafter, Meiko) of which the plaintiff is a member. His evidence was broadly as follows. 47 Meiko manufactures and sells dishwashing and other systems for commercial applications. Its head office and manufacturing plant is in Offenburg. It has a number of subsidiaries throughout the world including Meiko Australia Pacific Pty Limited (hereafter "MAP") in Australia. 48 Prior to establishing a direct presence in Australia Meiko sold its products into Australia through a dealer. The Dealer was the first defendant who conducted his business through Swiss Systems Pty Limited (the second defendant). 49 In or about early 2007 Meiko entered into discussions with the first defendant for Mieko to purchase part of the business of the second defendant. During those negotiations the first defendant said to Mr Sachs' boss Mr Randel, in his presence, words to the following effect "We will need to settle the sale of the business quickly. There are a number of liabilities of the company and Swiss Systems does not have the funds to continue operating". Mr Sachs then instructed Meiko's lawyers in Australia to prepare an agreement and on or about 5 April 2007 a Deed of Agreement for Sale of Business was executed by MAP, Meiko and the first and second defendants. 50 At the time that negotiations were undertaken for the purchase of the Swiss Systems business, several conversations were conducted in relation to the employment by MAP of the first defendant. 51 In or about late March 2007 Mr Sachs had a conversation with the first defendant in words to the following effect:

[37]

Action taken in relation to discovered obscurities in financial information provided 58 On 9 September 2008 Mr Sachs attended a meeting with Mr Randel and Meiko's director of finance, Mr Kipca. As a result of that meeting a request was forwarded to the first defendant to clear up any obscurities in the accounts and send copies of the statements. [the ruling as to objections to the second sentence is 'allow' the evidence] 59 On 19 September 2008 the further documents were forwarded to Meiko from the first defendant. Mr Sachs noticed that the receivables were elevated and that under the classification "other receivables" were amounts of approximately A$1.2 million. He did not know what these amounts were for. He further investigated the bank statements and found that cheques were made payable from MAP to the second defendant. 60 On 26 September 2008 Mr Sachs forwarded a letter to the first defendant requesting that he provide an explanation for the extraordinary entries within two days. A list of the 'suspicious payments' was included in the letter together with a request that the first defendant insert details of the purpose of the payment and the person that authorised the payment. 61 On 29 September 2008 Mr Sachs received an email from the first defendant completing the details of the unsubstantiated payments. A copy of the email is at the end of page 57 and the completed schedule is at page 59 of the schedule. The columns headed "Reasons" and "Authorised by" were completed by the first defendant. The explanation offered for the significant amounts taken from the MAP account is "part reconciliation". Apart from the staff salaries the first defendant has nominated either John Large or the previous financial controller, Gerald Walz, as the authorising parties for the transactions. Gerald Walz was authorised by MAP to sign cheques or authorise payments from the account but not John Large. Mr Sachs contends that the first defendant was hiding the transactions. [this evidence is allowed as subj/136]. 62 On or about 29 September 2008 arrangements were made for the first defendant to travel to Offenburg to explain the payments. The visit was scheduled for 9 October 2008. 63 On 2 October 2008 Mr Sachs sent an email to the first defendant advising him to provide all information to Meiko. A copy of this email is at page 62 (middle) of Exhibit JS1.Mr Hinchliffe's reply is at page 61. 64 Pending the visit from the first defendant Mr Sachs contacted Meiko's Australian lawyer. 65 On or about 3 October 2008 Mr Sachs received a copy of the Balance Sheet and Profit and Loss statement of Swiss Systems for the period July 2007 to June 2008. The records report showed substantial payments for wages and dividends made by the second defendant to the first defendant.

[60]

Investigation of accounts 76 On 21 October 2008 Mr Sachs travelled to Australia with an assistant accountant and undertook an investigation of the accounts of the company. 77 Mr Sachs' initial investigation indicated that the accounts had not been kept or had been removed from the office premises. [The ruling as to evidence allows the evidence in the previous sentence]. It was necessary to largely reconstruct the accounts from bank documents and other records that Meiko obtained from sources outside of MAP. Appointment of lawyers 78 On or about 23 October 2008 Mr Sachs appointed Barringtons Lawyers to enter into negotiations with the lawyers for the first and second defendants. This was because the first and second defendants lawyers alleged that Meiko's previous lawyer, Mr Rod Commins, had a conflict of interest. Mr Barry met with Mr Martin, the lawyer for the first and second defendants on Friday 24 October 2008. At that meeting no satisfactory offer was put by the first or second defendants to repay the debt to the plaintiff. The debt at the time was estimated to be $730,000.00. The lawyers for the first and second defendants acknowledged that the money had been taken and asserted that it was for the purposes of a loan. [the final sentence is allowed]. 79 At no time had Meiko or the plaintiff or any employee or director of Meiko or the plaintiff, given permission for either the first or second defendants to borrow money from the plaintiff. No meeting of the directors of the plaintiff has taken place to approve any loan or other advance to either the first or second defendant. Discovery of other missing funds 80 Mr Sachs returned to Germany on 26 October 2008. Since his return he had been working with the Australian accountants to reconcile the amounts that have been taken from the plaintiff. [A true copy of the reconciliation of the money that has been withdrawn from the account of the plaintiff and transferred to the benefit of the first or second defendants can be found at page72 of Exhibit JS1]. [This evidence is allowed as subj/136] All of these transactions require approval of this Board of Directors. This approval was never sought or obtained. 81 Mr Sachs' evidence was that the payments were not referable to any contract or invoice; there was no reason for such large sums to be transferred from MAP; the total amount owing to the plaintiff by the first and second defendants was $1,727,351.62. [this evidence is allowed]. The evidence of Mr Randel 82 Mr Randel is the joint managing director of the plaintiff. 83 As he deposed, the employment contract for the first defendant signed on or about 31 March 2007 stipulated in paragraph 2 of the schedule:

[65]

The evidence of Mr Chan 86 Mr Chan, a Chartered Accountant with around 27 years of experience undertook an investigation of the plaintiff's financial records in late November 2008 (paragraph 7). 87 The investigation involved the identification of funds transfers from the plaintiff to the second defendant since 13 April 2007, the date of completion of the sale of the majority of the business of the second defendant to the plaintiff (paragraph 7). 88 Mr Chan identified a category of transfers from the plaintiff to the second defendant unsupported by documentation referable to the plaintiff's business such as invoices and the like (paragraph 8). 89 These "unsupported" transfers out of the plaintiff's account, summarised in Annexure C of the affidavit, totalled $1,707,322.19. However, there was also $62,889.93 of unsupported transfers into the plaintiff's account - resulting in a net figure of $1,644,432.26 (paragraph 9). 90 With regards to the payment of creditors, Mr Chan observed that, from the time of his employment with the plaintiff, the first defendant personally approved each payment and signed each cheque for the creditor companies (paragraph 13). 91 The $1,707,322.19 of unsupported transfers included the entirety of the $730,000.00 judgment debt obtained against the defendants on 5 December 2008 (paragraph 17). 92 Mr Chan's affidavit also suggests that many of these unsupported transactions in the plaintiff's financial records are only accompanied by obscure journal entries in the general ledger. These include: "transfer between companies", "short term loan", and "other debtors" amongst others. Cross-examination of Mr Chan 93 Under cross-examination Mr Chan emphasised that he was "100% sure" that all invoices that he used to conduct his investigation were located in the plaintiff's St Leonards office (transcript 77.15-26). 94 Mr Chan, however, did make some concessions about his evidence under cross-examination. 95 Mr Chan repeatedly stated that it was possible that supporting documentation relating to an unsupported transfer may have come into existence on a bona fide basis but was simply undetected during his investigation. Nevertheless, the question that led to this concession was repeated numerous times during the cross-examination (transcript 77.49-78.3, 78.16-20, 79.30-34, 81.16-20, 81.36-40). 96 Mr Chan was unaware of the backup tapes of a server owned and/or operated by the second defendant that had existed in the plaintiff's North Melbourne office, the server now being in the possession of law enforcement officers (transcript 92.39-93.14). 97 His evidence was that the quality of the plaintiff's financial records was compromised by the incompetence of its former accountants Mr Large and Mr Walz (transcript 92.29-37).

[71]

"… there is no dispute that $730,000.00 flowed from the plaintiff to the second defendant which then flowed from the second defendant to the first defendant, and the first defendant used that to assist he and his wife acquire a property at 252 Raglan Street, Mosman…" (transcript 21.37 - 41). 108 Similarly, the first defendant appears to consider that he is absolved of liability because the plaintiff employed allegedly incompetent accounting staff. That supposed absolution was despite the first defendant's admitted personal involvement in the Euro transfers to the second defendant (transcript 48.15-17). 109 The first defendant showed himself to be knowledgeable about the affairs of the plaintiff and second defendant. He accepted that the second defendant's practice was that it would not make a payment without an invoice (transcript 40.36-38). 110 However, the first defendant could not point to a single invoice as justifying the transfers to him the subject of these proceedings. His position was that the transfers were reimbursements for future expenses which he could not identify (transcript 48.9-11). Onus of proof 111 There is a plethora of authority in support of the proposition that the Court is bound to see that a case of fraud is clearly proved. An allegation of fraudulent intent is one of the most serious allegations capable of being made. Actual dishonesty is said to be "the hallmark of fraud". 112 The gravity of the allegation has been said to be such that whereas section 140(1) of the Evidence Act 1995 (NSW) stipulates a single standard of proof for all civil cases, namely the balance of probabilities, Section 140(2) preserves the doctrine in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362; Pedler v Richardson (unreported, Supreme Court of NSW, 16 October 1997, Young J) at 10-11. See also McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315, 319. 113 More recently in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 the High Court has put the matter in the following terms:

[106]

129 Importantly, the amount claimed is the amount the subject of the current proceedings and not the $730,000.00 judgment debt obtained against the defendants on 5 December 2008. 130 Each transfer in question is summarised in Annexure C to Mr Chan's affidavit sworn 5 February 2009. The plaintiff's bank statements and the second defendant's bank statements recording each of the transfers are in evidence (Exhibit DC-2 to Mr Chan's affidavit). 131 The first defendant admitted that the transfers occurred and does not claim that the transfers occurred without his knowledge (transcript 43.40-50). 132 The evidence relating to this bank account is in paragraph 17 of Mr Chan's affidavit, line 2 and in the documents referred to by him. Mr Chan demonstrates that the money originated from the plaintiff. 133 There would appear to be little dispute that this is the plaintiff's money. The first defendant admitted that in re-examination (transcript 58.5-20, especially 19-20). 134 The second defendant's liquidator is aware that the plaintiff will ask for an order in relation to that sum (Annexure C to the affidavit of Hugh Richard Barry sworn 20 April 2009 being a letter dated 20 April 2009 to the liquidator's solicitors) and see the consent orders made on 21 April 2009, paragraph 2(b). 135 The following questions will focus on the transfers made from the plaintiff to the second defendant not supported by documentation referable to the plaintiff's business. Who authorised the transfers? 136 Although the first defendant tried to sheet home the blame for the suggested unruly state of the financial records of the plaintiff to a former employee, Mr Gerald Walz, it is apparent that after Mr Walz's employment ceased in March 2008 the first defendant can be the only person to have caused the transfers to be made because: i. From no later than early April 2008 the first defendant was the only signatory to the plaintiff's bank accounts (transcript 45.39-40, transcript 95.9-17). Crucially, the first defendant has never denied that fact at any time .

[120]

viii. The first defendant had access to electronic records since at least early November 2008 (transcript 46.24-25). It appears that the first defendant has made no efforts to access the electronic records in his possession by obtaining the "specific type of recorder" required to do so (transcript 46.28-34). Although the first defendant claims that Mr Martin, his solicitor, had made "numerous attempts to gain access to the server" (transcript 46.44-46), no subpoena had been served for its production. 144 Hence, the whole of the underpinning of the notion that material valuable to the cases of either party must repose in electronic form amounts to no more than speculation. 145 Mr Martin, in cross-examination of Mr Chan, attempted to elicit evidence to the effect that Mr Chan might have missed invoices that were located in North Melbourne. Mr Chan explained in re-examination that North Melbourne was a service centre only and that not many accounts were received there (transcript 95.34-41). 146 In closing address, counsel for the first defendant, when asked about access to supporting documentation, stated in a somewhat figurative sense that "presumably Mr Hinchliffe had it under his key if he was the Managing Director of both organisations and had a key to the door and could open it up… (transcript 137)". 147 Whether the non-existence of the documents be attributed to the incompetence of the former accountants Mr Walz and Mr Large does not address whether there was in fact supporting documentation or not. 148 The most likely conclusion having regard to the evidence adduced is that there is unlikely to have been supporting documentation for the unexplained transfers subject to the proceedings either in hard copy or electronic form. Could the transfers have been made for proper purposes? 149 The first defendant's contention that outside of the $730,000.00, the balance of the transfers was for ordinary business purposes is rejected. There is simply no explanation in relation to the balance of the funds. One may examine the inadequate journal entries appearing on Annexure C of Mr Chan's affidavit to see what little there was said about them. 150 The claim that the transfers were reimbursements is also rejected. The first defendant, when pressed on the issue of the transfers eventually stated that the transfers were for "expected costs by one company on behalf of another…" thus exposing the reality that the transfers were not for reimbursements (transcript 48.8-13). 151 In paragraph 30 of his affidavit sworn 21 April 2009, the first defendant broadly asserted that the second defendant bore various expenses on behalf of the plaintiff. Those expenses were said to be in the nature of reimbursements and not "expected costs" as described under cross-examination (transcript 48.8-13). The following categories of asserted expense have been dealt with in the evidence:

[126]

vi. The renovation expenses, day to day accounts - nothing was placed in evidence supporting an entitlement to reimbursement, nor any explanation given as to timing of expenses (although it appears to be suggested that it was earlier rather than later as it related to work done on premises to be used by both the plaintiff and the second defendant). 152 If the first defendant's assertion that the second defendant was entitled to the funds as reimbursement for expenses paid by the second defendant is correct, then the questions put to Mr Chan on behalf of the first defendant suggesting that the payments to the plaintiff somehow related to some of the preceding and following payments in the opposite direction make no sense and were not supported at all by the first defendants own evidence 153 There are also significant differences in the process that had been utilised by the second defendant to obtain (genuine) reimbursements up to October 2007, rendering it highly improbable that the transfers in truth were reimbursements. The first defendant admitted that the reconciled amounts that had been transferred from the plaintiff to the second defendant prior to December 2007 (and which are listed in Annexure A to Mr Chan's affidavit) had invoices attached to them (transcript 45.35-37). However, none of the transfers were made referable to any invoices. Possibly to make up for the absence of invoices, the first defendant also said that the transfers were for "expected costs" (transcript 48.9-11). 154 Mr Martin's questions put to Mr Chan in cross-examination were to the effect that some of the transfers represented loans between the parties. Mr Martin did not elicit that notion from the first defendant. 155 In fact, when asked about the $730,000.00 admitted by the defendants to have been taken from the plaintiff, the first defendant admitted that he had not "discussed the loans with anybody in Germany" (transcript 42.5-7). The first defendant did not mention any other loan from the plaintiff. 156 The Court rejects the suggestion that the transfers were the subject of any loan, although even were the transfers individual loans or part of a larger loan, that would not alter the net position as between the companies. 157 Indeed, if the transfers were a part of some loan (evidence of which was not ever given by the first defendant, despite his having sworn a number of affidavits in the proceeding before giving oral evidence at the trial), would significantly detract from the first defendant's assertion that somehow the first defendant was only taking in advance, what he expected would be borne by the second defendant (transcript 47.29-32). 158 In paragraph 30 of his affidavit sworn 21 April 2009 the first defendant claims that it was necessary for the second defendant to "continue to expend funds to effect the plaintiff's business and to recoup those funds from the plaintiff". The first defendant, however, admitted that the plaintiff never ran out of funds. 159 The first defendant had submitted that the "expected costs" were analogous to already incurred "estimated costs" determined by the joint accounting staff of the plaintiff and the second defendant. However, no evidence for the basis of calculation of those estimated costs has been adduced let alone any invoices to assist this contention let alone any invoices. 160 If the transfers were for expected costs, than that was a matter which the first defendant required to make good in discharging the evidentiary onus earlier referred to. 161 In conclusion, the transfers are unlikely to have been for proper purposes. In particular, they are unlikely to be for reimbursements for ordinary business expenses. Whatever the true purpose of the transfers were, expected costs or not, to deprive the plaintiff of funds without an explanation was itself improper. 162 In addition, the numerous prevarications, qualifications and inconsistencies characterising the evidence given by the first defendant and importantly, his concession that there were no invoices referable to any of the transfers mandates the finding which is made [applying terms of the proper approach to the onus of proof earlier referred to] that the purposes of the transfers were improper. The claim for moneys had and received 163 Whilst it may not strictly be necessary to do so, the plaintiff also put its cases as claims for moneys had and received and/or in the alternative as money paid claims. 164 Gummow J summarized the law relating to a claim for money had and received in Roxborough v Rothmans of Pall Mall Australia Limited (2001) 208 CLR 516. 165 The principle encapsulated by Viscount Haldane LC in Royal Bank of Canada v The King [49] received mentioned from Gummow J. As His Honour observed [in passage later adopted by Lord Wright [50], his Lordship said [51]]:

[128]

In this Court, emphasis was placed by Dixon CJ, McTiernan, Williams, Webb and Taylor JJ upon unconscientious retention by the defendant of the sum claimed by the plaintiff as "the reason of the rule under which an action of money had received lies in cases of payment by mistake [126]". Their Honours continued [127]: "Under that rule the action is available when the payee cannot justly retain the money paid to him because it would not have come to his hands if it had not been for a false supposition of fact on the part of the payer causing the latter to believe that he was compellable to make the payment or at all events that he ought to make it. It is to be noticed that Parke B in Kelly v Solari [128] defines the requisite mistake as 'the supposition that a specific fact is true, which would entitle the other to the money, but which fact is untrue' [129]." (emphasis added) 167 His Honour summarised the law relating to a claim for money had and received commencing at p 539 and analysed the reasons of Lord Mansfield in Moses v Macferlan [1760] En R 713; (1760) 2 Burr 1005 [97 ER 676] starting at 545. 168 His Honour also observed that the rejection of an earlier implied contract theory should be taken as reflecting the settled position in Australia: foot of [63]. 169 As his Honour noted at [90], an action for money had and received is no longer based on implied contract, which was a source of much consideration in Moses v Macferlan, which focused what of the history of the dealings between the parties was necessarily pleaded: [81]. 170 At [95] His Honour indicated that recourse should be had to the general considerations referred to in Moses v Macferlan. Those general considerations were whether "upon the merits the plaintiff was entitled to the money" with a safe conscience: [81], [83]. In New South Wales, Austin J in Vickery v Jjp Custodians [2002] NSWSC 782 at [120] generally followed the approach of Gummow J. 171 The cause of action against the first defendant for money had and received is made out. This is because it is apparent that his affairs so far as concerned the transfers were intertwined. He appears to have regarded his minority shareholding in the plaintiff and the fact that he was a director as sufficient to permit him to enter all manner of transactions. Indeed the evidence permits the conclusion that the second defendant was no more than the corporate vehicle of the first defendant. The first defendant used the second defendant as a vehicle for the purpose of receiving funds directed to it by the first defendant. 172 Accordingly, in the words of Lord Mansfield in Moses v Macferlan, the gist of this action, in the circumstance that the first defendant used the second defendant as his personal vehicle and for the receipt of funds for "convenience", the first defendant is obliged by the ties of natural justice and equity to refund the money: p 681. 173 Likewise the claim against the second defendant for money had and received is also made out. Of course the second defendant was not represented during the hearing of the proceedings and did not defend the proceedings. 174 Generally in terms of the claims to moneys had and received the first defendant in its final address submissions disputed that such a claim had been made out. Money paid 175 As described by Austin J in Vickery v Jjp Custodians supra at [128] to [130], especially at [130], a claim for money paid may arise where money is paid to a third party at the request of a defendant.

[130]

The court pursuant to s 128 of the Evidence Act, 1995 , certifies that under s 128 of the Evidence Act, 1995, New South Wales, the evidence in these proceedings to be given by Adam Samuel Hinchliffe on 23 April 2009, a record of which cross-examination will be attached to the certificate following the cross-examination is evidence to which s 128(7) of that Act applies and in due course a transcript of the evidence will be attached to the certificate and duly authenticated by myself." 180 The terms of the ruling on 23 April 2009 refer to evidence "to be given" and to the certificate attaching to a transcript. The wording contained in the ruling defines the scope of the certificate to be given by the Court. The ruling did not extend to any affidavit material. Extent of protection now sought by first defendant 181 On 30 April 2009 the first defendant's solicitor presented a certificate which had attached to it transcript and which referred to affidavits which had been read at the trial, none of which were attached to the certificate. All of the affidavits had already been served on the plaintiff and read in the final hearing. All but one (sworn 21 April 2009) had been also read at various hearings prior to the commencement of the final hearing. One of the affidavits was an affidavit of disclosure sworn 26 November 2008, sworn pursuant to an order made on 13 November 2008, when freezing orders made on 7 November 2008 at an inter partes hearing were extended. The orders made on 13 November 2008 provided that if the first defendant wished to object to swearing an affidavit of disclosure, he should file a notice of motion supported by an affidavit. No such application was made. 182 The first defendant now seeks the certificate granted on 23 April 2009 to extend to all of the affidavit evidence of the first defendant filed, served and read in this proceeding. The Court should treat this as a further application for the grant of a certificate, as the affidavits are not referred to in the ruling made on 23 April 2009. Evidence to be given in future - timing of grant of certificate 183 The purpose of s 128 of the Evidence Act may be gleaned from the tenor of the words used within it. Throughout, references are to the giving of future evidence, to which a certificate shall attach: "to giving particular evidence" in s 128(1); "the court is not to require the witness to give that particular evidence" in s 128(2); "If the witness gives the evidence" in s 128(3); "The court is also to cause a witness to be given a certificate under this section if: (a) the objection has been overruled; and (b) after the evidence has been given, the court finds that there were reasonable grounds for the objection" in s 128(4); "… the court may require the witness to give the evidence" in s 128(5). Section 128 does not contemplate that a certificate might issue in respect of evidence already given save where the evidence is given over an objection by the witness to giving evidence. 184 The terms of s 128 clearly contemplate that a certificate, if granted, is granted prior to the giving of evidence not to evidence which has already been given, particularly where no objection was taken. 185 To the extent that a certificate can be issued after the giving of evidence, this may occur where the court has ruled but not granted a certificate: Cornwell v R [2006] NSWCCA 116 at [87] - [94]. The certificate in that proceeding concerned answers concerning specific matters, in cross-examination. 186 A retroactive application of s 128 is unwieldy and is not contemplated by that section. It also undermines the purpose of the section, which is to prevent witnesses from being coerced into giving evidence which tends to incriminate them. Once the evidence has been given, it cannot be said that the witness has been compelled. Evidence to which a certificate shall relate - questions to which objection is taken 187 Section 128 applies "if a witness objects to giving particular evidence on the ground that the evidence may tend to prove that the witness: (a) has committed an offence against or arising under an Australian law or a law of a foreign country; or (b) …": s 128(1). 188 Accordingly, it appears that a certificate should extend only to questions to which objection might be taken, that is, to questions put in cross-examination. Although no objection to any questions was in fact made on behalf of the first defendant, that an objection in reliance of the privilege against self-incrimination would be made to the entirety of the cross-examination is implied from the making of the application. 189 However, in relation to the first defendant's own affidavit material, there would not have been any such similar objection, not least of all but including because that material was freely sworn and filed and (save in respect of the affidavit read on 23 April 2009) read by the first defendant at earlier hearings. 190 All of the affidavits were read in the course of evidence in chief of the first defendant and so cannot be said to have in any way been the subject of an objection, implied or otherwise. 191 In Ross v Internet Wines Pty Ltd (2004) 60 NSWLR 436 at [104] the purpose of s 128 was identified as being to protect against self-incriminatory disclosures by compulsion. In the present proceedings, the first defendant was not compelled to read the affidavits. For this further reason, no certificate should be granted in respect of the first defendant's affidavit evidence. Contents of the affidavits 192 The first defendant's affidavits do not contain evidence which may tend to prove that the first defendant committed an offence and none have been identified by the first defendant as such. Decision 193 For those reasons no certificate will be issued with respect to the first defendant's affidavit evidence.

At a glance

Court

Decision date

Before

Source

Judgment (136 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (10)

Cited By (6)