Rothmore Farms Pty Ltd (in liq) v Belgravia Pty Ltd

Federal Court of Australia|1999-07-01|Before: Re Hugh J, Mansfield J

REASONS FOR DECISION 1 On 20 April 1999, in the course of the hearing, the applicant sought to tender the transcripts of evidence given at examinations conducted pursuant to s 81 of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act") of certain of the respondents in this proceeding, in particular of Noelene Michelle Cooper ("NMC"), Robert John Mills, Tennyson Turner ("TT"), and Andrew Charles Cooper ("ACC"). That application was opposed. I ruled that those transcripts of evidence were not admissible, either against each of those respondents only or generally. 2 Subsequently, on 22 April 1999, the applicant sought to tender against those respondents severally evidence of admissions made by each of them against their interests in the course of their respective examinations under s 81 of the Bankruptcy Act. The means of proof of those admissions was by affidavit from the counsel conducting each of the examinations. In each case counsel refreshed memory from the transcript of evidence of the respective examinations before deposing to the substance of the admissions made by the particular respondent. The evidence could equally have been given, if otherwise properly admissible, without reference to that transcript and could have been given orally. I ruled that that evidence also should not be admitted. 3 These reasons explain why I made those rulings. The s 81 Transcripts of Evidence

4 Counsel for the applicant properly acknowledged the effect of the decision of the Full Court (Wilcox, O'Connor and Sackville JJ) in Colonial Mutual Life Assurance Society Ltd v Donnelly as Trustee of the Bankrupt Estate of Morris (1998) 82 FCR 418 ("CML") on this question. That decision was given following the amendments to relevant provisions of the Bankruptcy Act effected by the Bankruptcy Legislation Amendment Act 1996 (Cth) which came into force on 16 December 1996. The effect of those amendments was discussed for example by Finn J in Re Schofield; ex parte Rangott v P & B Barron Pty Ltd (1997) 72 FCR 280 at 283-285.

5 Of particular significance to the present application are s 81(17) and s 255(2) of the Bankruptcy Act. Section 81(17) now provides:

"Notes taken down and signed by a person in pursuance of subsection (15), and the transcript of the evidence given at the examination of a person under this section: (a) may be used in evidence in any proceedings under this Act in which the person is a party; …" and section 255(2) now provides:

"The transcript or recording is admissible as evidence of the matters described by a person whose words are recorded in the transcript or recording, unless the Court, or a court in which the transcript is sought to be introduced, makes an order to the contrary."

6 In CML (above), the Full Court determined that s 255(2) of the Bankruptcy Act, and not s 81(17) of that Act, empowers the Court to admit the transcript of evidence of an examination conducted under s 81 against a party to proceedings under the Bankruptcy Act. It also decided that, by reason of s 255(2), such evidence may also be admissible in such proceedings against a party who was not the person being examined. The Full Court observed at 433:

"In our opinion, the primary judge was correct in holding that s 81(17) was not intended to provide for the admissibility of a transcript of an examination in subsequent proceedings as evidence of the matters stated therein. The subsection was merely intended to remove a barrier that otherwise might have prevented a transcript of a s 81 examination being received in evidence, if otherwise admissible, for example, as an admission. As the primary judge pointed out, a s 81 examination is inquisitorial in nature and is conducted under powers of compulsion. But for a provision such as s 81(17), these circumstances might have led to restrictions on the use that could have been made of the transcript in other proceedings under the Bankruptcy Act. Like s 597(14) of the Corporations Law, considered in Douglas-Brown v Furzer, s 81(17) does not explicitly address the question of admissibility of a s 81 transcript in subsequent proceedings. The admissibility of such a transcript must be determined by reference to the law of evidence, including any statutory provisions bearing on the question.

In addition to removing a barrier to the admissibility of a s 81 transcript in subsequent proceedings, s 81(17) imposes an important restriction on the use of such a transcript. Section 81(17) provides that a transcript may be used in proceedings under the Bankruptcy Act in which the examinee is a party. Although not framed negatively, the evidence intention of s 81(17) is to restrict the use of transcripts, if otherwise admissible, to the proceedings identified in the subsection. As Finn J remarked in Re Schofield at 189, s 81(17) reflects a longstanding Parliamentary intention that the use of a transcript of an examination in later proceedings should be "quite circumscribed". Section 81(17), in its current form, is less restrictive than its predecessor, since the transcript is not now limited to use against the examinee. Nonetheless, it continues to reflect the longstanding parliamentary intention to which Finn J referred." Douglas-Brown (Official Liquidator of Woomera Holdings Pty Ltd) v Furzer (1994) 13 ACSR 184 is a decision of the Full Court of the Supreme Court of Western Australia. 7 The Full Court, after addressing the nature and significance of the changes to ss 81 and 255 by the amendments, and the discretionary power contained within s 255(2), emphasised that s 255(2) must be read together with s 81(17) so as to impose a restriction upon the use to which a s 81 transcript of evidence can be put in subsequent proceedings. In particular, the Court observed (at 434):

"Thus the apparently broad terms of s 255(2) must be qualified so as to make a s 81 transcript admissible (subject to the power of the Court to make an order to the contrary) only in proceedings under the Bankruptcy Act to which the examinee is a party." 8 Although strictly speaking those observations of the Full Court may have been obiter dicta, because the proceedings in issue were clearly proceedings under the Bankruptcy Act, counsel for the applicant acknowledged that I should treat myself as bound by them. He reserved to his client the opportunity to contend elsewhere that the Full Court was in error in so circumscribing the scope of operation of s 255(2). 9 In those circumstances, the critical question on whether to admit the transcripts themselves is, therefore, whether these proceedings are "proceedings under" the Bankruptcy Act within the meaning of that expression in s 81(17) of that Act. If they are, the transcripts of evidence are admissible in these proceedings, and subject to any order to the contrary made under s 255(2), would be evidence against all parties. 10 The applicant put two arguments that these proceedings are "proceedings under" the Bankruptcy Act. The first was that the claim depended for its existence upon s 121 of the Bankruptcy Act and that, therefore, it was a claim involving proceedings under that Act. Reliance was placed upon the fact that the claim, in part at least, is based upon s 565(1) of the Corporations Law ("the Law"). It provides: "A settlement, a conveyance or transfer of property, a charge on property, a payment made, or an obligation incurred before the commencement of Part 5.7B, by a company that, if it had been made or incurred by a natural person, would, in the event of his or her becoming a bankrupt, be void as against the trustee in the bankruptcy, is, in the event of the company being wound up, void as against the liquidator."

Part 5.7B commenced on 23 June 1993, after the first of the three transactions which are sought to be impugned in this proceeding. The reference in s 565(1) to the circumstances in which, if the company making the settlement conveyance or transfer of property were a natural person, that transaction would be void against a trustee in bankruptcy, in a practical sense invites the application of s 121 of the Bankruptcy Act to that first transaction. The contention is based upon that incorporation of the Bankruptcy Act by reference. 11 The second contention was that the applicant, by its provisional liquidator, is in reality suing as trustee for the bankrupt estates of Jillian Helen Marshall, Richard John Cooper and Simon Vincent Cooper, whose estates hold 90 per cent of the shares in the applicant and whose estates procured his appointment as provisional liquidator of the applicant for the benefit of the estates. 12 The amended application and the amended statement of claim identify three transactions which are impugned. The applicant was the trustee for the Jill Cooper Family Trust ("the Trust") until 10 February 1993 when it either retired or was removed as trustee, and the respondent Belgravia Pty Ltd ("Belgravia") was appointed trustee of the Trust. That transaction, as a consequence of which Belgravia became the registered owner of the assets of the Trust, is said to be invalid under s 565 of the Law. On about 19 May 1998, Belgravia vested the assets of the Trust in ACC. On 7 August 1998, ACC purchased certain property from TT, the consideration for which included the transfer to TT of certain assets said to include the assets of the Trust which vested in ACC on about 19 May 1998. The three transactions are together attacked by the applicant under s 86 of the Law of Property Act 1936 (SA) and at common law; it is not submitted that those lines of attack enliven s 81(17) of the Bankruptcy Act in the sense that they could make these proceedings proceedings under the Bankruptcy Act. The only foundation for the argument is the attack upon the transaction of 10 February 1993 under s 565 of the Law. 13 The applicant referred to Poulos v Waltons Stores (Interstate) Ltd (1986) 68 ALR 537 and Bostik (Australia) Pty Ltd v Gorgevski (No 2) (1992) 36 FCR 439 in support of the first contention. In Poulos the relevant issue was whether the parties were parties to "a proceeding … in a matter arising under …" the Conciliation and Arbitration Act 1904 (Cth) so as to preclude the Court by reason of s 197A of that Act from awarding costs in favour of the successful party. Gray J (with whom Keely J agreed) at 542 pointed out that the word "proceeding" was used in conjunction with, but in a different sense from, the word "matter", and that the word "matter" had the broad meaning given to it in Fencott v Muller (1983) 152 CLR 570 at 603, namely:

"a justiciable controversy, identifiable independently of the proceedings which are brought for its determination and encompassing all claims made within the scope of the controversy …"

His Honour, in addressing whether the matter arose under the Conciliation and Arbitration Act 1904, considered and applied cases under s 76(ii) of the Constitution to pose the question as follows (at 543): whether the matter involves the assertion of some right or defence provided by that Act. As the enforcement of the right asserted by the successful party depended upon that Act, s 197A applied to preclude an order for costs being made. Bostik considered much the same issue under s 347(1) of the Industrial Relations Act 1988 (Cth), which replaced the Conciliation and Arbitration Act 1904. The reasons of Sheppard J (at 442-443), with whom Heerey J agreed, and of Gray J (at 445-448) make it plain that the decision turned upon the meaning of the word "matter" and the words "arising under" in s 347(1). The significance of the word "matter" compared to "proceeding" also appears from the decision of the Full Court (Lockhart, Beaumont and Hill JJ) in Grace Bros Pty Ltd v Magistrates of the Local Courts of New South Wales (1989) 23 FCR 68. 14 I do not think that those cases assist the applicant because of the different provisions then under consideration. The concept encompassed within the word "matter" is quite different from the word "proceeding" as defined in the Bankruptcy Act. Section 5 of that Act defines "proceeding" as meaning a proceeding under that Act. In my judgment, the expression "proceedings under" the Bankruptcy Act in s 81(17) encompasses any action seeking to take a step, or assert or establish an entitlement, provided for by or under the Bankruptcy Act. It includes any legal action to assert a cause of action provided for by that Act. 15 That meaning is consistent with the approach of the Court in considering whether a claim is made under provisions of the Trade Practices Act 1974 (Cth): see eg Sammy Russo Supplies Pty Ltd v Australian Safeway Stores Pty Ltd (1998) ATPR 41-641; Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (1998) ATPR 41-633; Gregg v Tasmanian Trustees Ltd (1997) 73 FCR 91; Pritchard v Racecage Pty Ltd (1997) 72 FCR 203. 16 The expression "proceeding under this Law" in s 1322 of the Law was considered in Talbot v NRMA Holdings Ltd (1996) 68 FCR 590 by Burchett J and in Sipad Holding ddpo v Popovic (1995) 61 FCR 205 by Lehane J. In Talbot, Burchett J concluded that the passing of a special resolution was a proceeding under the Law so that s 1322 could be used to exclude a procedural irregularity. The word "proceeding" was not confined to a legal proceeding. In Sipad, Lehane J similarly concluded that a general meeting of a company and the appointment of a representative to that meeting, both matters dealt with in the Law, were proceedings under the Law so as to enable the dispensing power under s 1322 to be invoked. His Honour said (at 219):

"Section 1322(2) operates in relation to a "proceeding under this Law" in circumstances where there has been a "procedural irregularity". Subsection (1) gives content to those terms. It is clear that a general meeting of a company is to be regarded as a proceeding under the Law, and I think the appointment of a representative under s 249 must be regarded as a proceeding under the Law also. However, if it is to be assumed that, but for s 1322, a general appointment of someone to represent a corporation at general meetings of the company is ineffective, I am not convinced that it is ineffective or invalid because of a procedural irregularity. Shortly, perhaps with excessive crudity and without reference to authority (I know of none that particularly assists) the problem is not that parties have attempted to do something which the Law permits but failed to do it effectively because of a procedural failure or omission; it is that they have tried to do something which the Law does not authorise."

In each case, the event or action was one in respect of which the action in question was taken by reference to a step prescribed by the Law. 17 As I have said, in my judgment, the claim in the present proceeding upon which the applicant relies is not a proceeding under the Bankruptcy Act. So far as is relevant, it is a proceeding under the Law. The impugned conduct is not rendered improper by reason of any provision in the Bankruptcy Act, but by s 565 of the Law. The legislative foundation for the claim is s 565 of the Law. It is true that s 565 incorporates by reference concepts for which s 121 of the Bankruptcy Act provides, but that is a matter of drafting style only. The word "under" means "in accordance with" or "authorised, warranted, or attested by": The Macquarie Concise Dictionary, 2ed 1098. Section 81(17) of the Bankruptcy Act limits the use of s 81 examination transcripts of evidence to proceedings under that Act. The fact that s 565 of the Law incorporates by reference concepts which apply under s 121 of the Bankruptcy Act does not convert the claim into one made under the Bankruptcy Act, or the proceedings to proceedings under the Bankruptcy Act. By way of comparison, s 597(14) of the Law permits the use in evidence of the written record of an examination under Pt 5.9 of the Law "in any legal proceedings against" the examinee; it does not confine the use of such examination transcripts to proceedings under the Law. 18 The alternative contention of the applicant relies upon the facts that the provisional liquidator of the applicant · was appointed trustee of the bankrupt estates of Jillian Helen Marshall, Richard John Cooper and Simon Victor Cooper on 20 April 1998, · at 20 April 1998 and thereafter those bankrupt estates held respectively seven, one and one of the ten issued shares in the applicant (the other share was held by ACC), and · was appointed provisional liquidator on 14 September 1998 at least in part so as to institute and maintain these proceedings, which if successful will enure for the benefit of those bankrupt estates, because the sole known creditors of the applicant are the Commonwealth Bank of Australia and The Commonwealth Development Bank ("the banks") and the banks are effectively also the sole creditors in the bankrupt estates in respect of the same indebtedness (the bankrupts guaranteed the indebtedness of the applicant). In effect, it is contended, the provisional liquidator is discharging his functions and responsibilities as trustee under the Bankruptcy Act in bringing these proceedings. 19 The acceptance of those facts does not, in my judgment, result in these proceedings being "proceedings under" the Bankruptcy Act. The purpose of the provisional liquidator in bringing these proceedings in the name of the applicant is distinct from the nature of the proceedings themselves. Section 81(17) provides that the characteristic which attracts its operation, and its restriction, is the nature of the proceedings themselves, i.e. that they be "under" the Bankruptcy Act. For the reasons expressed above, I do not consider that these proceedings so qualify. 20 The respondents contended that, even if these proceedings are proceedings under the Bankruptcy Act, I should for discretionary reasons exercise the power available under s 255(2) of that Act to exclude the proposed evidence. 21 Those submissions asserted that the provisional liquidator of the applicant has a conflict of interest because, at the same time as he is maintaining these proceedings and accepting as established the debt of the banks he should, on behalf of the bankrupt estates, be applying to dispute that indebtedness in the interests of the three bankrupt estates. I do not accept that contention. There is no evidence before me at present which indicates that the provisional liquidator is acting improperly or unwisely in accepting that the applicant and the bankrupt estates are indebted to the banks. Furthermore, in proceedings in the Supreme Court of South Australia involving Jillian Helen Marshall, Simon Victor Cooper and Richard John Cooper, the issue as to their indebtedness to the banks has been determined adversely to them. The judgment was given on 22 August 1998. Their appeal from that decision to the Full Court of that court was dismissed on 20 March 1998. 22 It was also contended for the respondents that the transcripts of evidence taken at the examination reveal unfairness in the conduct of those examinations, by the pursuing of what was described as leading questions. I was given some examples of the more "blatant" leading questions (the transcript of the examination of NMC at 196-197). I have not reviewed in their entirety the transcripts which were sought to be tendered but those passages referred to do not, in my judgment, demonstrate unfairness in the form or persistence of the questioning. I conducted some random sampling of other parts of the examinations. That, too, did not demonstrate unfairness in the form or persistence of the questioning. My attention was also drawn to s 37 of the Evidence Act 1995 (Cth) ("the Evidence Act"). The power under s 255(2) of the Bankruptcy Act is independent of that section, and is a power which should be exercised in the interests of justice in all the circumstances. Section 37 does not purport to put any fetter on that discretion. In any event, the proposed tender of the transcripts of evidence taken at the examinations is not "examination in chief" in these proceedings: see the definition of 'Examination in chief' in cl 2 of Pt 2 of the Dictionary to the Evidence Act. I note further that each of the examinees, with the exception of TT, was represented by a lawyer: cp s 37(1)(c) of the Evidence Act. Even if the examination were permeated by leading questions, I do not think that the circumstances are such as to lead to the non-reception of the evidence (if it were otherwise admissible). No additional element of unfairness in the questioning has been demonstrated. If I were otherwise minded to receive the evidence, I would not make any order under s 255(2) precluding its reception or limiting its use. Of course, the weight to be given to such evidence if admitted would need to be the subject of separate consideration. I would, in that event, have given TT the further opportunity to refer to any parts of his examination transcript to demonstrate any particular unfairness, simply because he was not represented at the examination and his submissions did not dilate on that topic. In the event it is unnecessary to do so. 23 Finally, it was put that the provisional liquidator conducting the examinations abused the examination process by seeking evidence in that manner in anticipation of these proceedings, and in respect of certain of the examinations after these proceedings had been instituted. There was however no application to set aside the examination orders, nor to adjourn the examinations: cp Karounos v Official Trustee (1988) 19 FCR 330 at 335-336. The purpose of procuring evidence concerning proceedings in contemplation or even proceedings in existence is not of itself improper: Re Hugh J Roberts Pty Ltd (In Liquidator) [1970] 2 NSWR 582 at 584. 24 It is the trustee's responsibility, in the interests of the creditors of a bankrupt estate, to establish what assets were or are in the possession and ownership of the bankrupt, to identify what has happened to assets formerly held by the bankrupt, and to determine whether action should be undertaken or continued to pursue those assets: eg Karounos at 335. There is nothing before me on this application which tends to indicate that the trustee's purpose in conducting the examination under s 81 was other than for those proper purposes. Nor is there any suggestion that the answers given at the examinations were other than accurate and truthful. There is no reason to think that they were not accurate and truthful. In the circumstances, I would not decline to receive the evidence in my discretion under s 255(2) of the Bankruptcy Act on that ground. The tender of admissions

25 The applicant sought to tender evidence of admissions made at the examinations conducted under s 81 of the Bankruptcy Act in the manner referred to above. The tender in each case was against the particular respondent making the admission. The question of whether, if received, such evidence could be used against other respondents was deferred. In the light of my ruling, it was not necessary to pursue that question, but I note s 83 of the Evidence Act addresses it.

26 Section 81(1) of the Evidence Act provides that the hearsay rule does not apply to evidence of an admission. It was not contested that the proposed evidence did amount to admissions as defined in the Dictionary to that Act. Nor was any submission put by the respondents that any other provision of that Act obliged the rejection of that evidence. 27 It was however contended that the evidence should be rejected under s 135(a) of that Act because its probative value is substantially outweighed by the danger that it might be unfairly prejudicial to the individual respondents against whom it was tendered. The basis of that submission was that the admissions were procured only by the compulsory examination process available under s 81 of the Bankruptcy Act. 28 In my judgment, that fact does not lead to the rejection of the evidence. As noted earlier, apart from TT, the examinees were each represented at their examinations. There is no suggestion that what was said at the examinations was inaccurate or incomplete. There was nothing to suggest that the proposed evidence was selective; the respondents could each require the tender of the entirety of their respective admissions if that were the case: see Gardner v Duve (1978) 19 ALR 695; Jack v Smail (1905) 2 CLR 684 at 695. There is no material to suggest that, in any respect, there was any confusion on the part of an examinee, or that there was distortion or misrepresentation of the facts by reason of the form or nature of the questioning, or that the questioning led to an inaccurate picture emerging. 29 I note that s 85(2) of the Evidence Act imposes an additional qualification on the tender of admissions secured in the course of 'official questioning' in the case of criminal proceedings, namely that

"… the circumstances in which the admission was made were such as to make it unlikely that the truth of the admission was adversely affected".

Section 86 of that Act also imposes restrictions on the use in criminal proceedings of oral admissions made to an investigating official. Section 90 of that Act provides a discretion to refuse to admit in a criminal proceeding evidence of an admission if it would be unfair to do so: cp R v Swaffield (1998) 151 ALR 98. The provisions of s 137 also demonstrate that the admissibility of admissions in criminal proceedings is subject to different, and apparently more stringent, tests. Despite the contention to the contrary, I do not discern from these provisions a legislative intent to preclude evidence of admissions which were made under the compulsion of an examination conducted under s 81 of the Bankruptcy Act in proceedings such as the present. 30 I have referred above to matters which I have considered in the exercise of the discretion under s 135 of the Evidence Act. They do not give me any cause for concern that the proposed evidence is unreliable. It is clearly of significant probative value, although of course its weight is to be assessed in the light of all the evidence: Hoad v Swan (1920) 28 CLR 258 at 264-265. There is nothing to indicate that the parties against whom the evidence is tendered are unable to address that evidence, or to call other evidence as relates to it, or to the weight which should be attached to it: Stateliner Pty Ltd v Legal & General Assurance Society Ltd (1981) 29 SASR 16 at 46. The proposed evidence is not prejudicial, in the sense that it may unfairly divert attention from a consideration of the real issues in a fair and balanced way. The other discretionary considerations addressed on behalf of the respondents have been considered above in these reasons in relation to s 255(2) of the Bankruptcy Act, and I will not repeat them. 31 Accordingly, but for s 81(17) of the Bankruptcy Act, I would receive the proposed evidence of admissions against each of the respondents who made admissions, but of course using that evidence in each instance only against the particular respondent making the admission. 32 Section 8(1) of the Evidence Act provides that it does not affect the operation of the provisions of any other Act (other than specified provisions of the Judiciary Act 1903 (Cth) which are not relevant for present purposes). 33 In my judgment, s 81(17) of the Bankruptcy Act operates to cover the field of the circumstances in which the evidence given at an examination conducted under s 81 may be tendered in other proceedings. It is therefore a provision which s 8(1) of the Evidence Act preserves in its full operation so as to preclude the Evidence Act provisions relied upon by the applicant from permitting the receipt of the admissions made at the examinations. 34 Finn J in Schofield (above) at 190-191 addressed the applicability of the Evidence Act to enable the tender in proceedings under the Bankruptcy Act of transcripts of examination under s 81 of the Bankruptcy Act. The present issue expands that question in two ways, firstly because that which is sought to be tendered is the evidence of admission by means other than the transcript of the examination and secondly because these proceedings are not (as I have concluded) proceedings under the Bankruptcy Act. Finn J said at 285:

"There is no doubt that while coercive powers to examine of the type found in s 81 are an evolving feature in modern legislation, they are, nonetheless properly described as involving an "extraordinary jurisdiction": see [Re Csidei; Ex parte Andrew (1979) 39 FLR 387] at FLR 392. The continued retention in s 81(17) of a strict limitation on the admissibility of transcripts notwithstanding the periodic reviews of, and minor amendments to, s 81 since the Clyne Report in 1962, should properly be taken (a) as involving a legislative recognition of the distinctive and coercive character of the "jurisdiction"; and (b) as bespeaking a specific and deliberate intent of the legislature to provide in consequence a specific regime governing the admissibility of s 81 transcripts. A statute of general application should not, in my view, be construed as displacing, or providing a potentially more expansive alternative to, that specific regime: see generally D C Pearce and R S Geddes, Statutory Interpretation in Australia, (4th ed, 1996), par 7.18ff." 35 It is significant, in my view, that those policy considerations were reinforced by the Full Court in CML (above, at 433-434). In proceedings under the Bankruptcy Act, ss 81(17) and 255(2) do not apparently contemplate proof of what is said at an examination except by notes taken down and signed pursuant to s 81(15) or by the transcript of evidence. Evidence of a person who was present at the examination and who heard what was said is not otherwise contemplated as being admissible in such proceedings. If that were not the case, because the examination is conducted in public: s 81(2), then s 81(17) and s 255(2) could be subverted by the calling of such evidence. It is conceivable that an unofficial transcript could be maintained by an informal recording of the course of the examination for that very purpose. 36 CML (above) has also determined that notes of the examination under s 81(15) or the transcript may only be adduced in proceedings under the Bankruptcy Act. If that is so, in my judgment it is not possible to discern any reason why the legislature would have intended that the "official" record of an examination could not be used in proceedings such as the present, but an "unofficial" record of examination could be used in such proceedings. The only reason to suspect that the legislature adopted such a differential approach is that the examination is to be conducted in public. But that factor is not one which warrants any distinction being drawn between proceedings under the Bankruptcy Act and proceedings not under the Bankruptcy Act; it is a consideration relevant in either case. 37 I note that the effect of s 255(2) permits the use of such examinations as evidence not only against the examinee, but against other parties to the proceeding. Although that might be identified as a reason for the restrictive application of s 81(17) to proceedings under the Bankruptcy Act, but not to other proceedings, I consider that the tenor of the observations of the Full Court in CML referred to above do not support that view. In particular, the Full Court's comments recognise that s 81(17) facilitates proof of otherwise admissible evidence by removing a barrier to what might otherwise have constituted evidence of an admission, but it does so in the limited content of proceedings under the Bankruptcy Act. It recognises the "longstanding Parliamentary intention that the use of a transcript of an examination in later proceedings should be 'quite circumscribed'". 38 Counsel for the applicant referred to the observations of Finn J in Schofield (at 192) in the following terms:

"In the event none of the s 81 transcripts can be used in evidence in the principal proceedings. This is not to say that particular statements made at the examination may not otherwise be admissible on other grounds. But that is a separate matter altogether."

I do not think that his Honour in those remarks had in mind the receipt in proceedings such as these of evidence of the nature now presented. His Honour's reference to "other grounds" suggests that the "relevance" foundation of any such evidence would not be as admissions against interest. As his Honour observed, circumstances may well arise whereby statements during an examination may be sought to be used in evidence on other grounds, but that prospect does not alter the conclusion which I have reached on the particular application. 39 Accordingly, I have come to the view in the light of CML (above) that the legislative policy about the extent to which evidence of what has been said at an examination under s 81 may be given in subsequent proceedings, and the means by which that evidence may be given, as reflected in s 81(17) and s 255(2) precludes the reception of the proposed evidence in the manner sought in these proceedings of the admissions made at such examinations. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Decision herein of the Honourable Justice Mansfield.

Associate: Dated: 7 May 1999 Counsel for the Applicant: Mr R White QC with him Mr G Stephens

Solicitors for the Respondents: Alderman Consultant Solicitors

Dates of Hearing: 22 & 23 April 1999

Bankruptcy Act 1966(Cth)ss 81, 81(17), 121

Evidence Act 1995(Cth)ss 8(1), 37, 37(1)(c), 81(1), 83, 85(2), 86, 90, 135(a), 137, Dictionary

Bankruptcy Legislation Amendment Act 1996(Cth)

Conciliation and Arbitration Act 1904(Cth)s 197A

Industrial Relations Act 1988(Cth)s 347(1)

Trade Practices Act 1974(Cth)

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