Motorola Solutions, Inc. v Hytera Communications Corporation Ltd [2020] FCA 1195 | Case summary

Parts to which no objection is taken 2 The first of these is at p 51 of the Prospectus where this statement appears: All directors, supervisors and senior executives of the Company shall undertake that the Preliminary Prospectus and its summary contain no false statements, misleading statements, or material omissions, and assume individual and joint and several legal liabilities for the authenticity, accuracy and entirety thereof. 3 Beneath this statement and over the page there appear 19 signatures including the signature of Mr Wu Mei and Mr G S Kok (Guo Xixiang). Motorola accepts that these pages of the Prospectus are admissible evidence of the state of mind of Mr Wu Mei and each of the signatories. In real terms, it is evidence which may tend to prove that each of the signatories believed that the Prospectus contained no false statements, misleading statements, or material omissions. Motorola also submits, and Hytera does not appear to contest, that the same pages prove that Mr G S Kok was a senior executive of the First Respondent and had been identified as a person appropriate to certify the accuracy of the Prospectus and to assume legal liabilities in relation to it. Motorola was content that if admitted to prove this, that there should be an order under s 136 of the Evidence Act 1995 (Cth) ('the Act') confining its use accordingly. 4 The second is at p 13 of the Prospectus and is the following statement: The Company has nearly 100 types of products, including analog conventional terminals, analog trunking terminals, DMR digital terminals, TETRA digital trunking terminals, PDT digital trunking terminals, MPT analog trunking systems, analog simulcast systems, PDT digital trunking systems, and mobile video systems. 5 As I understand it, Motorola accepts that this is admissible to prove the truth of the statement. 6 The third is on p 37 and is a statement that '[t]he Company launched PDT, DMR, and TETRA terminal products and plans to launch PDT trunking systems with single base stations and PDF [sic; PDT] trunking systems with multiple base stations in 2011'. Again, as I understand it, Motorola accepts that this statement is admissible to prove its truth. 7 The fourth appears at p 19 of the Prospectus and concerns the First Respondent's business income and its proportion of operating income attributable to analog and digital products for the years 2008, 2009 and 2010. This table is as follows: 8 The reference in the table to '2018' is a typographical error and should be '2008'. Motorola accepts that this table is admissible evidence as to those matters. 9 There was an ambiguity in Motorola's submission at s5 as to whether it sought a s 136 direction in relation to the second, third and fourth matters I have laid out above. Hytera proceeded on the basis that Motorola was seeking such a direction and opposed it. I am not sure that it did since s5 is a little unclear towards its end. 10 Assuming it was sought, I decline to make such a direction. These three matters all appear to satisfy the requirements of s 69(2) of the Act; certainly, Motorola did not develop a submission that they did not (For practical reasons I below do in fact make a s 136 direction limiting their use to the proof of their truth - this ordinarily would be unnecessary but, as will be seen, makes some sense in the context of the remaining directions).

Parts to which objection is taken 11 Hytera also seeks to rely on a part of the Prospectus at p 35. Only part of a single sentence is involved but the full passage in which it appears is useful for context: (2) Advantages of analog products decide that digital upgrading of industries is a long-term process Compared with digital products, analog products have advantages such as mature and stable technology, reasonable product prices, simple and convenient use, and simple system maintenance. Analog products can fully meet the demands of users who have simple requirements for functions and are highly sensitive to prices, especially the mid- and low-end users of industry, commerce, and public utilities in developing countries. Therefore, analog products are attractive and the market demands for analog products will still exist for a long term. (Emphasis added.) 12 Hytera seeks to adduce evidence of the italicised portion of the last sentence to which Motorola objects. Motorola submits that the sentence is an inadmissible opinion. Hytera submits that the sentence is admissible under s 69(2) of the Act as a business record. Section 69(1) and (2) provide: 69 Exception: business records (1) This section applies to a document that - (a) either - (i) is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business, or (ii) at any time was or formed part of such a record, and (b) contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business. (2) The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made - (a) by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact, or (b) on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact. 13 It is not in dispute that the Prospectus satisfies the requirements of s 69(1)(a)(i) so that it is a business record in the relevant sense. The sentence to which the objection is taken is the 'previous representation' referred to in s 69(1)(b). It is not in dispute that the sentence is a previous representation recorded in the document for the purposes of the business. Consequently, s 69(1)(b) is also satisfied. 14 The debate between the parties concerns s 69(2). Motorola submits that the sentence does not constitute an 'asserted fact' because it is an expression of opinion. Hytera submits (a) that s 69(2) applies to expressions of opinion as to the existence of an asserted fact and (b) that the sentence is an expression of opinion as to the existence of an asserted fact. 15 I accept proposition (a) for the reasons I gave in Australian Competition and Consumer Commissioner v Air New Zealand Limited (No 1) [2012] FCA 1355; 207 FCR 448 at 462-463 [62]-[64]. 16 To assess the correctness of proposition (b) it is necessary to identify the asserted fact which Hytera wishes to prove. There are two candidates: (1) the fact that as at 2011 market demand for analog products would continue to exist in the long term; or (2) the fact that as at 2011 the author of the document believed that the market demand for analog products would continue to exist in the long term. 17 I do not think that candidate (1) is the way in which Hytera seeks to use the material. In its written submissions, Hytera argued that the evidence was relevant to Motorola's additional damages claim to rebut any suggestion by Motorola that Hytera had 'desperately needed to introduce digital products rather than the analogue products which it had previously produced': Motorola Solutions, Inc. v Hytera Communications Corporation Ltd [2020] EWHC 980 at [29]. Hytera also noted that at p 5589 of the transcript in the related proceedings before the Federal District Court in Illinois, Motorola submitted that 'DMR [was] critical to the future of the company'. 18 On this view of affairs, the fact in issue is Hytera's desperation to introduce digital products and what Hytera seeks to prove is that it was not desperate. A number of ways of doing that might be imagined. One way, circumstantial perhaps, would be to show that Hytera itself thought that the demand for its analog products would continue in the long term. The fact that it thought that would be relevant in a s 55 sense to the question of whether it was 'desperate' to introduce digital products. 19 So viewed, the 'asserted fact' is that the persons who signed the Prospectus believed that demand for analog products would continue in the long term. 20 Once that is identified as the asserted fact it becomes clear that the material is admissible. What is sought to be done is to prove that an opinion was held, not the truth of the opinion. When it comes to s 69(2) it is clear that the same words on the page may be inadmissible to prove the correctness of the opinion but admissible to prove the existence of the opinion. Accordingly, the phrase is admissible for that purpose but for that purpose only. In Sydney Attractions Group Pty Ltd v Schulman [2013] NSWSC 858 at [89] Sackar J admitted the word 'capital' in relation to expenditure in a set of accounts so as to prove that this was how they had been treated but refused to admit the word under s 69(2) as evidence that the expenses were in fact capital expenditure. 21 Hytera also sought to adduce into evidence the statement at p 37 of the Prospectus that 'the sales of analog products of the Company will keep growing in the next three years'. This is admissible on the same basis. 22 Accordingly, I will admit the Prospectus into evidence but confine its use under s 136 of the Act to prove: (1) the state of mind of the persons signing it; (2) that Mr G S Kok was a senior executive of Hytera, appropriate to certify the contents of the Prospectus as correct and to assume legal liabilities in relation to it; (3) the truth of the three representations identified at ss6-8 of Hytera's submissions dated 1 August 2020; and, (4) that Hytera believed that the demand for analog products would keep increasing for the next three years or in the long term. 23 To be clear, the interaction of (1) and (3) above is that the three representations at ss6-8 of Hytera's submissions are in as to their truth and that, by reason of the signing of the Prospectus, the signatories believed them to be true. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Perram.

Motorola Solutions, Inc. v Hytera Communications Corporation Ltd

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