HOBART, 28 May 1997 (hearing), 10 June 1997 (decision)

Plaintiff/Respondent: G G McArthur with A C R Spence

1. For determination is an interlocutory application dated 8 April 1987. It was taken out by the defendant. It seeks an order that the plaintiff's reply and defence to counterclaim be struck out on the grounds that the defendant has failed or refused to comply with an order for discovery. Interlocutory skirmishes have loomed large in this litigation. The purpose of many of them has been far from clear to me, but there is no doubt that their effect has been the postponement of a resolution of the ultimate disputes between the parties. Many of these interlocutory applications, including this one, have been supported by voluminous affidavit material much of which has been generated by the use of a photocopying machine. The judge's papers on this application run to 438 pages. Upon this application (which was but one of three brought before me for hearing on the same day) the applicant read one affidavit and the plaintiff/respondent sought to read four affidavits. One of the affidavits which the plaintiff/respondent sought to read was sworn on 27 May 1997 by Anthony Charles Roblin Spence, solicitor of Hobart. Mr Sealy, who appeared as senior counsel for the applicant objected to the admission into evidence of the whole of Mr Spence's affidavit. The basis of the objection was that:

* the deponent does not give the grounds of the belief which he deposed he held concerning matters of fact in respect of which he had no first hand knowledge;

* in all the circumstances, the content of the affidavit was such that it should be excluded in the exercise of a judicial discretion which, it was submitted, was conferred by the Rules of Court, O41, r3.

2. The submissions, both in support of and against the objection, were unfettered by authority and consequently it was necessary to reserve my decision on a threshold point. Resolution of this litigation seems to be further postponed.

Is there a general discretion to exclude evidence in civil proceedings?

3. The objection was based on the Rules of Court, O41, r3 which provides:

"3 -- (l) Affidavits shall be confined to facts to which the deponent is able to dispose of his own knowledge, except in the cases specially provided for by these rules, and except in the case of affidavits used on interlocutory motions or applications, in which case statements as to the belief of the deponent, giving the sources of his information and the grounds of his belief, may be admitted.

(2) The costs of any affidavit which unnecessarily sets forth matters of hearsay, or argumentative matter, or copies of or extracts from documents shall be paid by the party filing the same."

4. It was submitted that the word "may" in r3(1) confers a general discretion on a court or judge to exclude affidavit hearsay evidence admissible by virtue of the rule, on the grounds that its admission would be "unfair" to the party against whom the evidence was sought to be adduced or its admission would be "contrary to the interests of justice".

5. The common law of evidence is that there is no discretion in civil proceedings to exclude relevant evidence of an excessively prejudicial kind or evidence improperly obtained. See Ibrahim v R [1914] AC 599 at 610; Hurst v Evans [1917] 1 KB 352 at 358; Manenti v Melbourne and Metropolitan Tramways Board [1954] VicLawRp 19; [1954] VLR 115. An exception in the case of similar fact evidence appears to have been acknowledged in a number of cases. See D F Lyons Pty Ltd v Commonwealth Bank of Australia [1991] FCA 74; (1991) 100 ALR 468 at 475 - 476; Taylor v Harvey [1986] 2 Qd R 137; Mood Music Publishing Co Ltd v De Wolfe Ltd [1976] Ch 119. See also Extent of the Judicial Discretion to Reject Prejudicial Evidence in Civil Cases (1988) 62 ALR 211.

6. In Pearson & Anor v Button & Ors (1985) 60 ALR 537, Pincus J cast some doubt on the proposition that in civil cases, there was no discretion to exclude evidence that had been unlawfully obtained. He argued that the public policy rationale for the exclusion of such evidence in criminal cases (Bunning v Cross (1978 - [1978] HCA 22; 1979) 141 CLR 54; Cleland v R [1982] HCA 67; (1982) 43 ALR 619) applied with equal force to evidence tendered in civil proceedings.

7. It has been said that an exception to the general rule that in civil cases there is no discretion to exclude admissible evidence is evidence, the admission of which in public proceedings would be contrary to public policy. See D v National Society for the Prevention of Cruelty to Children [1977] UKHL 1; [1978] AC 171. However, it may be that this case concerns inadmissibility as a matter of law, rather than as the result of an exercise of the discretion.

Does O41, r3 confer a general discretion to exclude evidence in civil proceedings?

8. The origin of O41, r3 appears to lie in Chancery practice. I refer to the history of the rule set out in In re John O'Brien ex parte Allchurch [1923] SASR 411. In the United Kingdom this practice finds expression in O41, r5(2) in the following terms:

"An affidavit sworn for the purpose of being used in interlocutory proceedings may contain statements of information or belief with the sources and grounds thereof."

Its forerunner, O38, r3 made provision to the same effect but was expressed in slightly different words, namely:

"Affidavits shall be confined to such facts as the witness is able of his own knowledge to prove. Provided that in interlocutory proceedings and, if any order or direction made or given under Order 37, rule 1B, so provides, an affidavit may contain statements of information or belief, with the sources and grounds thereof."

9. The Tasmanian rule is to the same effect as the English rule but, as can be seen, it is expressed slightly differently. That difference appeared when the Rules came into force with the enactment of the Supreme Court Civil Procedure Act 1932. The equivalent rules in Western Australia (O37, r6(2)), South Australia (O83.04(1)) and Victoria (O43.03(2)) all provide for the admission of affidavit hearsay evidence on the hearing of interlocutory applications in terms identical to the United Kingdom rule. The Rules of Court, Queensland, O41.3(1) is expressed in precisely the same terms as the Tasmanian O41, r3.

10. If Mr Sealy's submission is correct, it means that in Tasmania and Queensland, a rule of court, introduced to regulate the practice in the Chancery Division of admitting hearsay evidence in interlocutory proceedings, has effect to modify the very long and well established general rule of evidence that in civil proceedings (apart from the exceptions to which I have referred) there is no judicial discretion to exclude evidence. Apparently without the matter having been argued, Shorland J said en passant in Patrick v Attorney General [1957] NZLR 228 (a case to which Mr Sealy made reference in written submissions tendered after I had reserved my decision) at 230:

"... but I cannot state too strongly that the Rule is not to be construed as giving a party a right to file affidavits which include hearsay evidence, but it is to be construed as giving the Court the power in proper cases to grant a party the concession of placing hearsay evidence before the Court when the cost, delay or inconvenience, which would be involved in obtaining an affidavit from the deponent in whose knowledge such matters are, would be out of proportion to the reasonable necessities of the case."

11. His Honour appears to have approached the rule on the basis that those seeking to adduce affidavit hearsay evidence on interlocutory applications have to persuade the court to admit it, but I see no basis in the words of the Tasmanian rule for adopting that construction. Unfortunately, the report of the case does not set out the terms of the rule, and from the resources available to me, I have been unable to find it. In Community Development Pty Ltd v Engwirda Construction Company [1968] Qd R 541, Lucas J said, also en passant, at 544, "[t]he Court is given a discretion to admit such statements provided the conditions mentioned [by the rule] are complied with."

12. With respect, I am unable to adopt as authority those observations in Patrick v Attorney General (supra) and Community Development Pty Ltd v Engwirda Construction Company (supra). Hearsay evidence in an affidavit that complies with O41, r3 and read on an interlocutory proceeding may nonetheless be inadmissible. Such evidence might not be relevant to an issue. In my view, the expression "may be admitted" in O41, r3 does not confer some hitherto unknown general discretion to exclude affidavit hearsay evidence. It confers a power to exclude affidavit hearsay evidence given in compliance with the rule if it is inadmissible for some reason other than it is hearsay. This construction puts the Tasmanian rule on the same footing as its equivalent in the UK, South Australia, Victoria and Western Australia. I rule that I have no general discretion to exclude any part of Mr Spence's affidavit sworn 27 May 1997, provided it is relevant and complies with O41, r3.

13. The whole of the substantive part of Mr Spence's affidavit is prefixed by the expression, "I am informed by Simon Wallace and believe ...". The affidavit discloses that Mr Wallace is a representative of the plaintiff and the person who instructed Mr Spence. In some instances the affidavit deposes to the deponent's belief in information supplied to him by Simon Wallace about acts done by Simon Wallace. In other respects the affidavit deposes to a belief by the deponent in information given to him by Simon Wallace which, in turn, was given to Simon Wallace by another, and in some instances, given, again in turn, by yet another person. On behalf of the applicant, Mr Sealy submitted that the affidavit does not disclose "the sources of [the deponent's] information and the grounds of his belief." He also submitted that unless the belief was based on information that Simon Wallace gave the deponent about something that he, Simon Wallace, had done, then this was a further ground for refusing to accept the evidence because it does not comply with the requirements of O41, r3.

14. In National Westminster Finance of Australia Ltd v Powe (1992 - [1992] TASSC 43; 1993) 1 Tas R 161, Green CJ considered the proposition that the source of a deponent's information must itself be admissible according to the ordinary rules of evidence, and if evidence of that source material could not be adduced because of some positive rule of exclusion, it was inadmissible as a source of information. In that case reliance was placed on Deputy Commissioner of Taxation v Aherne (No 2) (1988) 2 Qd R 158. Thomas J (with whose judgment the other members of the Court concurred) referred to Savings and Investment Bank Ltd v Gasco Investments (Netherlands) B V [1984] 1 All ER 296 and said (obiter) at 163:

"Such evidence could be received only if properly receivable under O41 r3. This involves two requirements -- first that the source material itself be admissible, and second that the source be identified. [Emphasis added]

15. With respect to that passage, Green CJ in National Westminster Finance of Australia Ltd v Powe (supra) said at 165:

"With respect those statements of the limitations upon the materials which may be used by a deponent to ground his belief are expressed in somewhat wider terms than I would be prepared to accept. I accept that a deponent may not rely upon source material which may not lawfully be adduced in evidence because of some positive rule of exclusion derived from say public policy, the law relating to privilege or a provision in a statute on the ground that any other conclusion would defeat the rule."

16. The learned Chief Justice's reservations have been subsequently justified. In Deputy Commissioner of Taxation v Aherne (No 2), Thomas J relied upon Savings and Investment Bank Ltd v Gasco Investments (Netherlands) B V (supra) as authority for the passage I have set out, but Phillips J revisited this case in Deutsche Ruskversicherung AG v Walbrook Insurance Co Ltd & Others [1994] 4 All ER 181 and declined to follow Peter Gibson J in Savings and Investment Bank Ltd v Gasco Investments (Netherlands) B V saying at 191:

"Having regard to that purpose I cannot, with great respect, follow the judge in concluding that, at the interlocutory stage, a deponent must identify as the source of his information or belief an original source of evidence which will be admissible at the trial. The object of the rule militates against placing this restriction upon the natural meaning of its words. In a situation of urgency a plaintiff may well not have time to identify or trace evidence which will be admissible at the trial. If he has learned of facts via an intermediate source which there is good reason to believe will, itself, have had access to primary sources of information, I can see no good reason for precluding the plaintiff from relying upon that intermediate source as a ground for seeking interlocutory relief."

17. In Hardy Rubber Co Pty Limited v The General Tyre and Rubber Company (1972 - [1973] HCA 66; 1973) 129 CLR 521 at 536, Gibbs J held admissible under the equivalent rule to O41, r3, the belief of the deponent based on hearsay upon hearsay. His Honour said:

"It is true that his evidence is hearsay -- indeed it is hearsay upon hearsay -- but affidavit evidence on information and belief is admissible on interlocutory proceedings provided that the sources and grounds of that information and belief are stated."

18. In these circumstances it seems, with respect, inappropriate to apply Thomas J's obiter dicta in Deputy Commissioner of Taxation v Aherne (No 2). I shall direct myself in accordance with the remarks of Gibbs J in Hardy Rubber Co Pty Limited v The General Tyre and Rubber Company (supra) and Phillips J in Deutsche Ruskversicherung AG v Walbrook Insurance Co Ltd & Others (supra). Accordingly, I rule that compliance with O41, r3 does not require that the evidence of the grounds of the deponent's belief be admissible.

19. The source of Mr Spence's information and belief is clearly identified as Mr Simon Wallace. There is no more that Mr Spence could set out as the source of his belief. With respect to adequate disclosure of the grounds of belief, Thomas J said in the Deputy Commissioner of Taxation v Aherne (No 2) (supra) at 162 that:

"... it is impossible to lay down any rule which will determine what is a sufficient disclosure of sources and grounds to overcome the hurdle of admissibility and enter the area where weight is assessed."

20. In this case I am satisfied that there has been compliance with the rule. In the case of each paragraph Mr Spence sets out in great detail each of the relevant acts and enquiries that Mr Simon Wallace told him that he had done or caused others to do for him. The relevance of the affidavit appears to be that an inference could be drawn from its contents that there are no further relevant documents to discover and accordingly, the plaintiff is not in breach of the discovery order. Had Mr Spence merely deposed that he was informed by Mr Simon Wallace and believed that there were no further documents to discover, there would have been insufficient disclosure of the grounds of Mr Spence's belief. However, there are no grounds for Mr Spence's belief other than the fact that Mr Wallace told him that certain things had been done by him, or that others had told Mr Wallace that certain things had been done and that Mr Wallace believed his informants. This affidavit is quite different from the vague assertions made in an affidavit sought to be read in Concorde Enterprises Ltd v Anthony Motors (Hutt) Ltd [1976] 1 NZLR 741. In that case, the deponent deposed that he "was informed by [his] employers and believe[d] that the only negotiations between officers of ... and officers of ... relating to the subject matter of this action took place in Wellington -- all other communications being either by telephone or made between the respective solicitors for the parties."

21. Accordingly, I rule against the objection to the admission into evidence of the contents of Mr Spence's affidavit insofar as the objection is based upon non compliance with the Rules of Court, O41, r3. I make no ruling with respect to admissibility on any other ground, nor make any observation about the weight that might be accorded its contents especially those parts that are based upon hearsay upon hearsay. I do not know why Mr Wallace did not make his own affidavit. Had he done so, I doubt if this preliminary evidence point would have arisen.