Trade Practices Commission v TNT Management Pty Ltd & ors

Gardner v Moult (1839) 10 Ad & E 464 Fleet v Perrins (1868-9) LR 3 QB 536 Richards v Morgan (1863) 4 B & s641 Metroplaza Pty Ltd v Girvan (NSW) Pty Ltd (In liquidation) and Ors (Foster J, 9 August 1993, judgment no.1050/93, unreported) Shears v Chisholm (1992) 9 ACSR 691 Nicholson v O'Flaherty; Ex parte Nicholson (1985) 2 Qd R 499 Pearce v Button (1986) 8 FCR 408 Karmot Auto Spares Pty Ltd v Dominelli Ford (Hurstville) Pty Ltd (1992) 35 FCR 560 Supetina Pty Ltd v Lombok Pty Ltd (1984) 5 FCR 439 Albrighton v Royal Prince Alfred Hospital (1980) 2 NSWLR 542 Potts v Miller (1940) 64 CLR 282 Re Montecatini's Patent (1973) 47 ALJR 161 Re Action Waste Collections Pty Ltd (in liquidation) (1981) VR 691 R v Seifert (1955) 73 WN(NSW) 358 R v Hally [1962] Qd R 214 Arnotts Ltd v Trade Practices Commission (1990) 24 FCR 313 Paric v John Holland (Constructions) Pty Ltd (1985) 62 ALR 85 TPC v Sterling (1979) ATPR 40-121 Equiticorp Industries Group Ltd v Hawkins [1990] 2 NZLR 175 Buttes Gas & Oil Co v Hammer (No 3) [1981] QB 223 Derby & Co Ltd v Weldon (No 10) [1991] 2 All ER 908 Nea Karteria Maritime case [1981] Com LR 138 Dingwall v The Commonwealth of Australia (1992) 39 FCR 521 Eric Hughes & Whitby Enterprises Pty Ltd v Canon Australia Pty Ltd & Westpac Banking Corporation (Jenkinson J, 1 October 1990, unreported) INSTANT COLOUR PTY LTD (ACN 009 300 501) AND BRIAN IVEY AND MATTHEW FERGUSON AND NEVILLE CHARLES QUARTERMAINE AND EDWIN BENNETT IVEY AND RICHARD THOMAS MINCHERTON AND CANON AUSTRALIA PTY LTD (ACN 005 002 951) AND CANON FINANCE AUSTRALIA LTD (ACN 003 637 116) R D NICHOLSON J PERTH 30 OCTOBER 1995

IN THE FEDERAL COURT OF AUSTRALIA) WESTERN AUSTRALIA DISTRICT REGISTRY) GENERAL DIVISION ) NO WAG 93 OF 1991 B E T W E E N: INSTANT COLOUR PTY LTD (ACN 009 300 501) First Applicant and BRIAN IVEY Second Applicant and MATTHEW FERGUSON Third Applicant and NEVILLE CHARLES QUARTERMAINE Fourth Applicant and EDWIN BENNETT IVEY Fifth Applicant and RICHARD THOMAS MINCHERTON Sixth Applicant and CANON AUSTRALIA PTY LTD (ACN 005 002 951) First Respondent and CANON FINANCE AUSTRALIA LTD (ACN 003 637 116) Second Respondent

RULINGS R D Nicholson J: This is a collection of rulings on questions of evidence and procedure made in this proceeding between 7 March and 24 April 1995. The following is an index of the rulings: Page Ruling on application to inspect second applicant's proof of evidence 2 Production of proof of evidence 6 Application for leave to amend statement of claim to include a claim for exemplary damages 7 Similar fact evidence objection 15 Admissibility of transcript from Hughes proceeding 25 Ruling on reports of financial experts 45 Ruling on legal professional privilege of letter of instruction 50 Admissibility of oral evidence by Mr Cummins 57 13 MARCH 1995 RULING ON APPLICATION TO INSPECT SECOND APPLICANT'S PROOF OF EVIDENCE EVIDENCE - inspection - witnesses - refreshing memory from proof of evidence - whether waiver of privilege. A ruling is sought on an objection taken on behalf of the applicants, in respect of an application made on behalf of the respondents, to inspect without penalty a privileged document used by the second applicant to refresh his memory outside the court. The document in question is the proof of evidence prepared for the purpose of enabling the second applicant to give his evidence in this action. These are the reasons for my ruling that the document should be produced for inspection. On the occasion of the application first being made the second applicant had given evidence which, with the benefit of subsequent reflection, counsel for the respondents accepted as ambivalent on the question of whether he had refreshed his memory from the document. Further evidence was then called from the second applicant who testified that he had read the document a week ago and had done so for the purpose of refreshing his memory about the matters upon which he was proposing to give evidence. It is not in dispute that the document is, in the absence of waiver, subject to legal professional privilege. Nor is it in dispute that, so far as the document contains matters not part of the proof of evidence but rather forming part of a brief to counsel, it does not fall within the application for inspection. Nor is the Court called upon by the application to consider the appropriateness of the Court itself inspecting the document to determine which portions of it properly form part of the proof of evidence, because counsel for the respondents is willing to rely upon counsel for the applicants to make that determination. In Trade Practices Commission v TNT Management Pty Ltd & ors (1984) 56 ALR 647 Franki J ruled that when a witness uses documents to refresh his/her memory, privilege is waived, at least in the circumstances then pertaining. Those circumstances were indistinguishable in principle from the circumstances recounted in the evidence of the second applicant. On behalf of the applicants it is submitted that this ruling should not be followed because the decision of the High Court in Attorney-General (NT) v Maurice (1986) 161 CLR 475 requires a different result. The submission is that the law now is that where there is no intentional waiver of privilege the question whether waiver should be imputed depends on whether it would be unfair or misleading to allow a party to refer to or use material and yet assert that the material is privileged from production. In the case of a proof of evidence, it is submitted, it must be unfair for waiver to be imputed where the witness does not know the legal effect of resorting to the proof. Only in the case of the clearest evidence of intentional waiver should waiver be found. It is apparent from the dicta of the High Court in Maurice (supra) that the application of legal professional privilege is subject to waiver - not only intentional waiver but also imputed waiver: see at 481 (per Gibbs CJ); at 487-8 (per Mason and Brennan JJ); and at 490-3 (per Deane J). The dicta of Malcolm CJ in Southern Equities Corporation Ltd v West Australian Government Holdings Ltd (1993) 10 WAR 1, to the effect that it is not open to the Court to remove the privilege attaching to statements taken from potential witnesses, must therefore be read as referring to the removal of privilege that arises as a consequence of certain statutory provisions to which he then referred. I therefore reject the submission that the law requires that only in the case of the clearest evidence of intentional waiver can the privilege be found to be set aside. I also reject the submission that where a witness is unaware of the legal consequences of refreshing his or her memory from a proof of evidence there must necessarily be a reason for finding the privilege not waived. The considerations of fairness relevant to the determination of whether waiver should be imputed are not confined to the absence of such knowledge on the part of the witness or to the fact that a proof prepared for the use of the witness can be given over for cross-examination to opposing counsel. The dictates of fairness extend to a much wider range of considerations. These are examined in detail by Debelle J in Mancorp Pty Ltd v Baulderstone Pty Ltd (1991) 57 SASR 87 at 90-1.

In Mancorp (supra), Debelle J held that the dictates of fairness required the production for inspection without penalty of the proof of evidence used by the witness to refresh his memory in the circumstances of that particular case. His Honour gave extensive reasons for his ruling and it is apparent that the issue was carefully argued before him. I am unable to find in the submissions made to me on the point any reason for disagreeing with his understanding of the law and specifically the effect of the decision of the High Court in Maurice (supra). Examination of his reasons makes apparent that the view which he reached does not have as its foundation an over-reliance upon authorities pertaining to the criminal jurisdiction and I reject the further submission made that it is inappropriate to apply the rule applied by Franki J in TPC (supra) and by Debelle J in Mancorp (supra) is inappropriate to application in the civil jurisdiction. Given that the application does not extend to any portions of the document which counsel for the applicants considers does not form part of the proof of evidence strictly so called, I do not consider there are any circumstances of the present case disclosing unfairness in the document being made available for inspection. The only circumstances present to set against the requirements of fairness dictating that the document should be inspected are the absence of knowledge on the part of the second applicant of the legal effect of his resorting to the document for the purpose of refreshing his memory. Of central importance in this action is the nature of the representations which the applicants claim were made to them by the respondents. The second applicant's evidence involved a detailed recollection of such alleged representations. These are said to have occurred in the 1988/89 year. Some years have now elapsed so that the document may have assumed a greater importance to refreshing memory. It was read by the second applicant within a week of his giving evidence. In my opinion the weight of factors in favour of inspection substantially outweighs any factors to the contrary.

I have also conducted my own researches on the matter on which the ruling is required and I am unable to find any support for the contentions put on behalf of the applicants. On the contrary, the common understanding in texts, commentaries and articles is that the law is as I have referred to above. For these reasons I have ruled that notwithstanding that the statement used by the second applicant to refresh his memory was privileged, the document comprising the true proof of his evidence should be made available to counsel for the respondent for inspection without penalty. 13 MARCH 1995 PRODUCTION OF PROOF OF EVIDENCE PROCEDURE - production and inspection of documents - manner of inspection - whether produced to Court or to Counsel calling for inspection The ruling which is required is whether the document, namely, the proof of evidence which was the subject of the call on 9 March 1995 and the subject of a ruling earlier today in relation to legal professional privilege, should be produced to the Court or produced to counsel for the respondents. In my view, the latter is the correct course. There are two reasons why that should be so. The first is that the call was for the document to be produced to counsel. The matter was dealt with on that basis. The second reason is that in the authorities which I have referred to and relied upon in reaching my ruling on the issue of legal professional privilege, namely, Trade Practices Commission v TNT Management (1984) 56 ALR 647 at 687/689 and Mancorp Pty Ltd v Baulderstone Pty Ltd (1991) 57 SASR 87, the decision of the court was that the statement of proof should be produced for inspection.

This is made particularly clear in the TPC case (supra) at 689 where Franki J held that the statement was to be made available to counsel without penalty. The words used by Debelle J in Mancorp (supra) were, "Produced for inspection" and I do not take that as implying in an unexpressed way production only to the court. In my view, privilege having been held to have been waived, the document becomes a discoverable document and is available in answer to the call. The call, being of the nature to which I have referred, needs to be responded to directly by counsel. 21 MARCH 1995 APPLICATION FOR LEAVE TO AMEND STATEMENT OF CLAIM TO INCLUDE A CLAIM FOR EXEMPLARY DAMAGES. HIGH COURT AND FEDERAL COURT - the Federal Court of Australia - practice and procedure in original jurisdiction - pleadings - amendment of statement of claim - Rules of the Federal Court of Australia, O13 rr2(1), (2) and (3). DAMAGES - exemplary damages - post-tortious conduct - whether referrable to cause of action A ruling is required in respect of a motion on behalf of the applicants seeking leave to amend their substituted statement of claim by the addition of two further allegations. Those allegations are in accordance with annexure A to the notice of motion and are numbered 54.10 and 54.11 and I direct they be inserted in the transcript at this point: "54.10 In furtherance of the said fraudulent conduct and in aggravation thereof by an agreement made 5 March 1993 between the first respondent and the sixth applicant in writing, the first Respondent agreed with the sixth Applicant, to pay him the sum of $225,000 for information and documentation to be provided by him to the first respondent, it if would be the direct and predominant cause of: (i) this proceeding being dismissed; or (ii)of a settlement agreement, which includes the filing of a notice of discontinuance by the applicants, and the discharge and release of the Respondents from all liability to the applicants. 54.11 In furtherance of the said fraudulent conduct and in aggravation thereof in or about mid to late May 1993, Mr T Redmond, the secretary of the first respondent spoke to the sixth applicant by telephone and said that he considered the said agreement was cancelled, but that if the sixth applicant gave a statement to the first respondent, and totally co‑operated with it, the first respondent would pay the sixth applicant the sum of $25,000.00.

Each of those proposed additional paragraphs begins with the words, "In furtherance of the said fraudulent conduct and in aggravation thereof". That is a reference to conduct which is pleaded in pars51 and 52 of the substituted statement of claim, in which it is alleged that certain representations and warranties were fraudulently made by the first respondent, either knowing them to be false or recklessly not caring whether they were true or false. That is, those paragraphs plead an action in the tort of deceit. The representations to which those paragraphs relate are, without particularising in any detail, alleged to have occurred in the years 1988 to 1990. In addition, the substituted statement of claim in par1 of the claim seeks damages and exemplary damages under s82 of the Trade Practices Act 1974 (Cth). In support of the notice of motion an affidavit is filed which is made by Mr B Taylor, the solicitor for the applicants ("the solicitor"). Without endeavouring to read every detail in that affidavit, the following are salient features of it. Firstly, the solicitor deposes that on the morning of 20 March 1995, he was informed by the sixth applicant that he had entered into an agreement with the secretary of the first respondent, on behalf of the first respondent, whereby for a payment of $225,000 by the first respondent to the sixth applicant, he was to "sabotage" the first to fifth applicants' claims in this action so that their application would be dismissed. Next, the affidavit attaches a copy of the alleged agreement. That document is headed "Instructions to Trustee" and is dated 5 March 1993. It purports to be signed between the person named as secretary of the first respondent and the sixth applicant and it makes provisions to the effect of the solicitor's deposition. It also states that if "information and documentation" is provided by the sixth applicant, having the effect of the present action being dismissed or settled, certain payments would follow. The solicitor's affidavit also deposes that he was informed by the sixth applicant that that agreement was never carried out and that subsequently in or about mid to late May 1993 he had a telephone conversation with the secretary of the first respondent in which that person informed him that he considered the agreement was cancelled but continued by saying that if the sixth applicant gave a statement to the first respondent and totally cooperated with it, the first respondent would pay him the sum of $25,000. To the extent it may be necessary, I shall return to any other factual matters deposed to in that affidavit. The application falls for consideration in accordance with O13 rr2(1), (2) and (3) of the Rules of the Federal Court of Australia ("FCR"). Sub-rule (1) of r2 provides no impediment to the court making an amendment at the present stage of this proceeding, that is 2 weeks into what is projected as an 8 week trial. Sub-rule (2) provides that all necessary amendments shall be made for the purpose of determining "the real questions" raised by or otherwise depending on the proceeding, or of avoiding multiplicity of proceedings. It is not contended before me that there is a case to be made in terms of the avoidance of multiplicity of proceedings. Under subr2(3) the Court may grant leave if it thinks it is just to do so in all the circumstances. In Instant Colour Pty Ltd v Canon Australia Pty Ltd (Heerey J, 9 December 1993, judgment no. 994/93, unreported) Heerey J dealt with matters arising on an application which led as a result of his judgment and order to a substituted statement of claim. In his judgment he dealt generally with the position of the law pertaining to the making of amendments to pleadings at what he described as the macro level and then in relation to the particular pleadings at the micro level. It is sufficient to say that the present application has not been argued before me in the same terms and that it does not really give rise to issues in accordance with the law which might be applicable to the application for leave to amend pleadings. In particular, no prejudice is asserted on the part of the respondents if an amendment is made. For the respondent it is alleged that a submission made yesterday on behalf of the applicants (that the sixth applicant had made his own inquiries about the specific allegations of dishonesty, which in the solicitor's affidavit were said to have been levelled against the second and sixth applicants, was satisfied they were ill-founded and did not proceed with the agreement) should be taken by me as leading to an inference that all the applicants must have known of the existence of the agreement referred to in the solicitor's affidavit prior toyesterday. That is, the significance of that submission is that an issue of timing arises under the law normally applicable to an application to amend pleadings. In my view, that inference is not open because there is no basis for an assumption that the sixth applicant had directed his inquiries to any of the other applicants. I therefore do not make that inference and I do not consider any issue of timing can be considered as arising from those contentions. The next issue which arises is this. The case for the applicants is that post-tortious conduct, including conduct relating to this litigation, ought to be a matter which is relevant to the assessment of exemplary damages. The case in support of that proposition is made on authorities relating to defamation or false imprisonment. In particular, reliance is placed upon the decision of the High Court in Lamb v Cotogno (1987) 164 CLR 1. In that case, in the reasons for judgment of the court, reference was made to the decision in Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118, describing it as a libel action in which the Court had affirmed that in actions for tort, exemplary damages may be awarded for conduct of a sufficiently reprehensible kind. The High Court then continued at page 8 by saying that, notwithstanding the remarks of the House of Lords in Rookes v Barnard [1964] AC 1129, it was plain that what was said by the Court in Uren (supra) was not restricted to the law of libel and that the well settled judicial approach in Australia extends exemplary damages to "a wider range of torts". Their Honours placed reliance upon what was said in Mayne and McGregor on damages 12th ed (1961) at 196 in relation to such damages and in what was also said by Brennan, in XL Petroleum (NSW) Pty Ltd v Caltex Oil (Aust) Pty Ltd (1985) 155 CLR 448 at 471. In the light of what is there said, I am not prepared to conclude that exemplary damages in respect of post-tortious conduct is confined to the tort of defamation or false imprisonment and that those torts ought to be regarded as being in a special category. The critical question is whether evidence of post‑tortious conduct, which is in this case the subject of the application for further amendment to the substituted statement of claim, is conduct which is itself rightly referable to exemplary damages. If it is, in my opinion, exemplary damages can extend to such post-tort conduct. On the next question of the relationship between the post-tort conduct and the tort in issue, my attention has been directed to Davis v Russell McVeagh McKenzie Bartleet & Co [1994] 2 NZLR 175. That was a decision of Henry J in the commercial list of the High Court of New Zealand on 13 December 1993. I have not had drawn to my attention, nor has my own research shown, that that decision has been taken on appeal or has been referred to elsewhere. In that case, a firm of legal practitioners, being one of several defendants, in an action based on the tort of deceit had made against them allegations said to be referable to exemplary damages which concerned the manner in which the litigation itself was being conducted. That conduct included: failure by them to prevent destruction of documents; concealment of written contracts; concealment of documents notwithstanding agreements reached; and compounding of the deceit by failure to discover documents. It was there held on the application to strike out the pleadings, that to support a claim for exemplary damages there must be a close factual link between the conduct complained of as justifying an award and the conduct constituting the cause of action to which it is attached. It was further held that it would be an unwarranted extension of this principle to recognise in a general way that the defendants' conduct of the litigation process, if not directly referable to the actionable wrong can found a claim for exemplary damages. Accordingly, the relevant specific paragraphs of the statement of claim were struck out. In the course of his reasons for judgment, Henry J referred to the primary purposes of exemplary damages being to punish for outrageous conduct and to deter, in order to mark in an appropriate way the contumelious disregard of the plaintiff's rights. He emphasised that the unusual features of the case before him were that all the conduct occurred long after the commission of the tort and related solely to a failure to comply with discovery obligations laid down by the rules of procedure. He also said that in the many reported cases on exemplary damages there could be found repeated references to the effect that it was the conduct exhibited in the course of committing the tortious activity itself which is at issue - that is, to mark the heinous conduct in the course of the tortious activity. He referred to authorities to which I have also been taken in the defamation area - namely, Warwick v Foulkes (1844) 12 M&W 507; Walter v Alltools Ltd (1944) 61 TLR 39 and Lamb (supra). He concluded that in all three cases the close link between the later conduct and the commission of the actionable tort was clear. He regarded the false representation cases as comparable to the defamation cases and all of them as distinguishable from the pleading which he had under consideration. His Honour made reference (at 180) to the unreported decision of Harding v Kummer (High Court, Auckland, A 1107/80, 21 March 1983) in which a broader view of the matter was taken but concluded that in principle there may be some difficulty in justifying an award holding a defendant liable in damages for conduct not directly related in the sense that it is not part of the wrong which is the subject of the suit. To do this, he said, would be to go beyond expressing society's condemnation of that wrong and the way in which it was perpetrated and, in effect, to provide a measure of compensation for another wrong which does not form the cause of action. It is a conduct which is beyond that directly referrable to the substance of the primary complaint which, with its attendant consequences, is compensable. He concluded by finding it an unwarranted extension of principle to recognise in a general way that a defendant's conduct of the litigation process, if directed at interfering with the remedy sought by a plaintiff but not directly referrable to the actionable wrong, can found a claim for exemplary damages. The question here, therefore, becomes whether the matters alleged in the affidavit of the solicitor, forming the subject of the application for amendment of the substituted statement of claim, are properly to be characterised as directly referrable to the substance of the primary complaint or as to another act or wrong not part of that cause of action - namely, the tort of deceit in the present action. The agreement referred to by way of annexure to the affidavit of the solicitor provides that if the sixth applicant made available the information or documentation leading to the result of dismissal or settlement of the action, a payment would be made. It did not in its terms require that the sixth applicant give evidence of untruths or conceal evidence from the court. Indeed, if the sixth applicant had taken action to provide information or documentation having the required effect the other applicants would have had to agree to the dismissal of the action, it having been listed for trial on 3 May 1993, or have entered into the settlement agreement which the annexed agreement proposed. So far as the alleged offer of $25,000 is concerned, that was for a statement by the sixth applicant to the first respondent and total co-operation by him with it. Again, in its terms, this offer does not require the sixth applicant to give evidence of untruths. However, in his affidavit the sixth applicant says that the purpose of the agreement was to "sabotage" the claims of the other applicants so that their application would be dismissed. That is clear evidence that the alleged actions of the respondents were directions to preventing the honest truth emerging. That is, that the respondents object was to conceal the tort. It is this which the applicants submit provides the link between the action of deceit and the subsequent conduct of which complaint is now sought to be made. I am unable to accept that submission. All the conduct which is referred to in the proposed pleadings occurred approximately 3 years after the date on which the commission of the tort of deceit is alleged. Taken at its worst, that alleged conduct relates to alleged interferences with the course of justice, which may or may not attract another cause of action or criminal consideration. I have not been addressed on those possibilities other than by way of general reference. In my opinion, so far as the application to amend this pleading is concerned, that subsequent conduct is properly to be seen as conduct which is beyond that directly referable to the substance of the primary complaint in the tort of deceit. For those reasons I would not accede to the application for the amendment of the substituted statement of claim. My orders are that the notice of motion for amendment of the substituted statement of claim be dismissed and, secondly, that the costs of the application be in the cause. 31 MARCH 1995 SIMILAR FACT EVIDENCE OBJECTION EVIDENCE - admissibility and relevancy - similar facts - whether logically probative of facts in issue - whether proof of system or practice. The applicants seek to have admitted the evidence of William Frederick Holman which has been heard on a voir dire. The evidence was led on the basis that all of it was admissible similar fact evidence. Objection is taken to its admissibility. Two recent decisions in this Court have addressed the law relevant to the determination of the basis upon which similar fact evidence is admissible. They are Jaldiver Pty Ltd v Nelumbo Pty Ltd (1993) ATPR (Digest) 46-097 and D F Lyons Pty v Commonwealth Bank of Australia (1991) 100 ALR 468. My attention was directed to an article by Frank Bates in "Similar Facts in Civil Cases" 108 Law Quarterly Review 200, in which it is concluded that the decision in Lyons (supra) represents a new development in the law relating to similar fact evidence. As pointed out in that article at 204, Gummow J in Lyons (supra) at 477, relied upon what was said by Rowland J in Peet & Co Ltd v Rocci [1985] WAR 164 at 172-6, to the effect that he was not convinced that the rule which allowed the reception of similar fact evidence applied to similar statements. That aspect was not put in argument before me. However, at the same page Gummow J in Lyons (supra) also relied upon what was said by Beaumont J in Fisher v Commonwealth Bank of Australia (11 April 1990, judgment no.286/1990, unreported), where he drew a distinction between discussions between A' and other witnesses which could be of some probative value as tending to establish the general tenor or thrust of discussions between A' and B', and the failure of such material to be probative of the particular terms of the conversation that took place between A' and `B' (the fact in issue), the particular terms being of critical importance because it was they which were relied upon to constitute the alleged misrepresentations founding the case. That aspect was relied upon, among others, in submissions for the respondents. Apart from saying that, however, it is not necessary for me to develop a statement of the law relevant to the matter requiring ruling beyond those which appear in Jaldiver (supra) and Lyons (supra) and subsequent references made in these reasons. I accept that it is of critical importance to the determination of the probative value of the similar fact evidence to be clear in relation to the nature of the inquiry; that is to identify the matter which is in issue. Central to dealing with the ruling is the question whether in the particular circumstances of the case before me the similar fact evidence is logically relevant to the fact in issue: Jaldiver (supra) at 53401. (1) Evidence of representations by first respondent to Mr Holman: In order to determine that, it is necessary to deal with the evidence of Mr Holman on the voir dire in accordance with the issues which it purports to address. The first main aspect of his evidence is that which addresses six representations made to him which are said to be logically probative of representations in issue in this proceeding. The first piece of his evidence relates to the issue of prices. It is pleaded in par19.23 of the Statement of Claim that during the period from July 1988 the first respondent represented and warranted to the second and third applicants (or alternatively there was a collateral agreement upon purchase of two photocopier machines) that "laminated copies produced from the CLC machines would sell to members of the public for $12 for each A3 copy and $8 for each A4 copy". I reject the submission for the respondents that, because the evidence of Mr Holman on this matter is not precisely in terms of the pleaded representation, it cannot be logically probative. His evidence speaks of "the vicinity" in which the prices were set and, more importantly, is evidence that the first respondent made a representation to him about price and consequently that such representations were part of the system or pattern of operation of the first respondent in the marketing of CLC 100 machines. The second aspect of the evidence of Mr Holman is that he was told by Mr Channing on behalf of the first respondent that he could expect somewhere between 5,000 and 10,000 copies without touching the machine and at 20,000 copies there was a major service which would be included in the copy price. It is conceded on behalf of the respondents that the case for the admission of this evidence is a stronger one than any other portion of the evidence. I agree with that submission. I also consider that the evidence is logically probative of a system or practice and that such probative effect is not so slight that the omission of this evidence could be justified. Next Mr Holman's evidence addressed the question of representations concerning how long it would take for a service person to arrive and perform a service. He testified that it would be in the vicinity of two hours. The pleading in the Statement of Claim at par19.4 is that a representation was made "that the first respondent would arrange for a service technician to arrive at wherever the CLC machines were located, within two hours of a service call having been requested". In my view it is not to the point that this evidence does not go to the making of the specific pleaded representation to the second and third applicants on behalf of the first respondent because it goes to establishing a system or practice on behalf of the first respondent in relation to the CLC 100 machine. It is evidence of a system or practice of representations on response time in relation to that machine in the same city as some of the applicant's machines. It is therefore logically probative of the pleaded fact. The next aspect of Mr Holman's evidence of representations is in relation to the subject of the long-term possibility of the CLC 100 being superseded by other technology. His evidence was that he was advised by Mr Channing on behalf of the first respondent that this would not occur for "several years". The pleading in the Statement of Claim in par31.5 is that a representative for and on behalf of the respondents "represented and warranted that there would not be a new version of the copier for the life of the Lease". It was not in contention before me that the reference to "the Lease" referred to a lease of a CLC 100 machine, normally being of three years duration. In my opinion the evidence of Mr Holman on this aspect is logically probative of the system or practice of the first respondent in relation to the CLC 100 machine in that representations were made about its replacement. The difference between the terms of his evidence and the pleaded representation is of no material substantive difference. Then Mr Holman testified that there was a discussion that "After two years we would get a trade-in of around $30,000, given that the price of the machine was about $50,000". In par19.7 of the Statement of Claim, it is pleaded that the representation was made that "The CLC machines would have a re-sale value of 60% of $51,950 at the end of two years after purchase". For the respondents it is contended that evidence of "trade-in" cannot be evidence of "re-sale" value so that the evidence cannot be logically probative of the fact in issue. A "sale" is "the transfer by common consent of the ownership of a thing... from one person to another in exchange for a price in money" (The Oxford Companion to Law at 1099). A "trade-in" involves the same element except that the price for money is reflected in the value of the goods received. The distinction is one without substance when the purport of the pleaded issue is that after a certain period of time the CLC machines would have a certain value. In my view the matter raised on behalf of the first respondents may go to the weight of the evidence but does not occasion this aspect of evidence to be lacking in the quality of being logically probative of the system or practice of the first respondent in making representations concerning the CLC 100 machines. In further evidence Mr Holman testified that the copy quality which he needed was one which was good and consistent and it was his understanding from his conversations with the representative of the first respondent that he could expect consistency. In par19.21 of the Statement of Claim it is pleaded that one of the representations and warranties made between 12 - 19 July 1988 was that "Good quality colour photocopies produced by Adolphe on a demonstration CLC machine at the first respondent's premises between 12 - 19 July 1988 would be the quality that "you" would obtain from every copy produced by the CLC machines". It is apparent that Mr Holman's evidence on this aspect is not logically probative of that specific pleading. For the applicants, reliance was also placed upon a pleading in par25 of the Statement of Claim in which it was said that between August 1988 to September 1988 the first respondent represented and warranted to the second and third applicants that in respect of copies produced by the copiers "The colour quality will be flawlessly crisp and clear every time". However, that pleading is particularised with reference to the contents of the Internal Sales Manual of Canon and the evidence of Mr Holman on this aspect is not logically probative of that. I was also taken to a question asked of the second applicant in cross‑examination whether he had been told "in the first discussions" that a copy would be of flawless character. However, the discussions referred to are those which arose in evidence-in-chief as to what he had heard in the video. I accept the submission for the first respondents that the nature of the pleadings on this aspect does not establish any logically probative basis for the admission of the evidence on this subject of copy quality. It is therefore the position that, in relation to the evidence of representations, with the exception of the evidence relating to copy quality, I consider that there is a "similarity" of the proposed evidence in the narrower sense referred to by Gummow J in Lyons (supra) at 476 because the common characteristic which is the significant one is the system or practice of the first respondent in relation to making representations concerning the CLC 100 machine. What is sought to be proved is the business practice of the respondents - that is, their system or practice in marketing the CLC 100 - cf Turner v Jenolan Investments Pty Ltd (1985) ATPR 40-571 at 46635 citing Martin v Osborne (1936) 55 CLR 367 at 375-6. (2) Evidence of performance of Mr Holman's machine: I turn now to the second main division of the evidence of Mr Holman and that is evidence which relates to the performance of the CLC 100 machine which he obtained from the first respondent and operated. In par44.33 of the Statement of Claim it is pleaded that "the machine was inherently faulty" and in par44.34 that "the machine was not free of technological or other problems". This is a pleading which, by virtue of the opening words of par44 sets out the ambit of the claim on behalf of the applicants that the representations and warranties elsewhere pleaded were "false, untrue, misleading and deceptive". I do not accept the submission for the respondents that the pleading in these paragraphs can be limited to matters raised in pars33.3 (c) and (d) relating to the drum. Ultimately, however, what is in issue is whether the representations made to the applicants, if established, were false and misleading because their particular machines were inherently faulty. The evidence of Mr Holman on the machine performance issue includes evidence of the particular requirements of his business requiring high quality and faithful reproduction to service a specific section of the market. He referred to a folder of photographs of a scientific nature and in some cases involving computer screen enhancements. The breadth of the pleading in pars44.33 and 44.34 cannot mean that the nature of the applications dealt with by Mr Holman cannot be logically probative of inherent fault or technological and other problems, but it does limit the weight which may be given to that evidence. On this aspect of Mr Holman's evidence it is also submitted for the first respondents that his evidence is really to be seen as evidence that the machines were in need of service, not that they were inherently faulty or free of technological or other problems. That contention also goes to the weight of the evidence. On behalf of the applicants it is said that I should take into account that there are certain "Knowledge of Respondent" files admitted into evidence relating to worldwide performance of the CLC machines and, in addition, a "Warranty Claim File" which relates to all warranty claims on the machine. These, however, relate to the issue of the respondents' knowledge. The applicants contend, nevertheless, the evidence extends to the nature of the problems which, it is submitted, show a "striking similarity" to evidence in this case of problems with the CLC 100 machine. That similarity is a common characteristic which is not ultimately the fact in issue here. Inherent fault in the CLC 100 machine may be able to be found if the evidence concerning the large number of machines utilised by the applicants establishes that fact. It is significant that the number of machines utilised by the applicants is numerous so that there is already a large body of evidence on the operability of the CLC 100 machine. In my opinion this is a case where it is necessary to consider, even if the evidence passes the test of being logically probative of the claim, if it is so widely cast that it should nevertheless be excluded because it is too remotely relevant or would give rise to a multiplicity of issues so that it would be profitless to pursue it: Lyons (supra) at 475. It is true that there is a quantative element to take into consideration - Jaldiver (supra) at 53401 citing Aroutsidis v Illawarra Nominees Pty Ltd (1990) 21 FCR 500 at 509 and Shepherd v R (1990) 170 CLR 573 at 580. However, weighed as against the potential weight of the "Knowledge of Respondent" and "Warranty Claim" exhibits, the additional probative force to be derived from exploring the particular specialist applications of Mr Holman is slight. It could not be strongly probative. Furthermore it would open up a cobweb of subsidiary factual disputes: Lyons (supra) at 478. In my opinion this evidence should not be admitted. (3) Evidence of the machine's performance on Mr Holman's business:

The third main division in the evidence of Mr Holman is that which relates to the effect of the problems of the machine on the conduct of his business. For the applicants it is submitted that this evidence enables the Court to consider the probability or improbability of the fact or event in issue concerning the applicants' business - cf Martin (supra) cited in Hoch v R (1988) 165 CLR 292 and to weigh the circumstances in the light of human experience. In my opinion this evidence is not similar in the narrower sense referred to by Gummow J in Lyons (supra) at 52596, in that the common characteristic is not the significant one for the purpose of the inquiry at hand. The common characteristic between this similar fact evidence and the relevant evidence before me is that both Mr Holman and the applicants had a loss occasioned to their business. The significant issue is how the applicants loss was occasioned. The reasons why Mr Holman had a loss occasioned may not necessarily be the same for the applicants. If I am wrong that the logical probative character of the evidence is not apparent, I would nevertheless exclude the evidence on the ground that it would open up a cobweb of subsidiary factual disputes of less than strong probative value for the purposes of resolving this case: Lyons (supra) at 52597. (4) Evidence of response times to service calls and complaints by Mr Holman:

The fourth aspect of the evidence of Mr Holman is evidence of actual response time to service calls and complaints in relation to that topic. The representation pleaded in par19.29 of the Statement of Claim is in the terms that "If a machine required service for any reason, then a technician would be there within two hours of our phone call and the service would take approximately thirty minutes to one hour". There is a further pleading in par44.6 that the representations were false and misleading because "services took longer than thirty to sixty minutes". For the applicants it is said that this is not advanced as similar fact evidence but as probative of the state of mind of Mr Holman in that it is evidence that he took the problems seriously. From that it is said the Court could infer that the problems were indeed serious. Another witness, Mr Pinkerton, has given evidence that he regarded problems as serious when they were such as to require a service for the machine. It is not made apparent in the submissions before me to what extent the pleadings make the questions of seriousness a fact in issue. In my opinion the absence of reference to such a pleading and the nature of the inference sought to be drawn result in this evidence being either entirely non‑probative or of such slight probative value that it should not be admitted.

(5) Evidence of communications with technicians: Next, the evidence of Mr Holman refers to advice to him by technicians that damp paper was causative of problems with the machine. In par28.4 of the pleading it is alleged that "In or about October 1988 the Second Applicant complained to Greg Stokes, the first respondent's technical support manager, concerning poor colour quality and varying quality of reproductions and he represented and warranted that these problems were due to damp paper". Then follows a particularisation referring to conversations from October 1988 to November 1988 between certain parties including Stokes. I accept the submissions for the applicants that this is evidence of a system or practice on the part of the first respondent and therefore that it may be logically probative. There are no reasons to exclude it. The next consideration is regarding Mr Holman's evidence of an arrangement which he made with technicians to leave a new drum at his premises so that he would not have to wait for one to come when a service was required. In my view the common characteristic of this evidence and the evidence relating to drums at issue in this case is not significant for the purpose of the inquiry at hand (Lyons (supra) at 52596) and the evidence does not qualify as logically probative. Then Mr Holman's evidence testifies that no person from the first respondent suggested to him that the problems of which he was complaining concerning the machine were due to operator error. The applicants seek to lead this evidence in response to the pleas in pars53.4 and 53.10 to the effect respectively that the applicants' employed staff were not properly qualified or trained or that they failed properly to operate or locate the copiers. It is said that the evidence is logically probative of the fact thus put in issue that in the eyes of the technicians the machine had inherent technical problems. If it be the case that such evidence can be logically probative in that respect I nevertheless consider that it should not be admitted because it would open up a range of subsidiary factual disputes inappropriate for examination. The reasons why "a technician or any other person" did not make such a suggestion could be wide indeed. There is an aspect of Mr Holman's evidence in which he testifies that a technician had changed the read only memory and the difficulties which he encountered as a consequence. In my view this is not logically probative either of any inherent defect or of any relevant representation or otherwise and should not be admitted. (6) Log Book: Mr Holman then gave evidence leading to the tender of a copy of the log book relating to the machine operated by him. So far as the log book is evidence of problems experienced by the machine, the matter falls to be dealt with in accordance with the evidence of Mr Holman relating to machine problems. So far as it relates to servicing by the first respondent, the log book is logically probative of the system or practice of the first respondent in servicing machines. It may be admitted as evidence of such system or practice only. 13 APRIL 1995 ADMISSIBILITY OF TRANSCRIPT FROM HUGHES PROCEEDING EVIDENCE - admissibility - witnesses - evidence of witnesses in previous proceedings - whether common parties to litigation - whether admissions by agents/servants - nature of employment - whether authority to give evidence on behalf of principal/master - documentary evidence - whether transcript a record of business -Evidence Act 1905 (Cth), ss7A(1), 7B(1), 7B(2) - Rules of Federal Court of Australia, O33 r5, O18 r2. PROCEDURE - power of Court to dispense with compliance with rules of evidence - whether matters not bonafide in dispute - Rules of Federal Court of Australia, O33 r3. The applicants seek orders: 1) That pursuant to O33 r5(1) of the Federal Court Rules the applicants have leave to read the evidence set out in certain pages of transcript taken in the matter of Eric Hughes and Whitby Enterprises Pty Ltd v Canon Australia Pty Ltd and Westpac Banking Corporation (Jenkinson J, 1 October 1990, unreported) ("the Hughes proceeding"). 2) Alternatively, leave should be granted to the applicants to call evidence with respect to admissions made on behalf of the first respondent in the Hughes proceeding, being admissions described in a Notice to Admit pursuant to O18 r2. 3) Additionally, that leave should be given to include all the evidence referred to in certain letters from the applicants' solicitors to the respondents' solicitors dated 28 March and 30 March 1995 as amended in writing on 10 April 1995 and orally on 11 April 1995 ("the letters") on either of the following bases, namely: (a) pursuant to O33 r3 of the Federal Court Rules; or (b) pursuant to s7B of the Evidence Act 1905 (Cth); A further alternative basis, namely, pursuant to s48(1)(c) of the Evidence Act 1995 operative from 18 April 1995, is in my opinion correctly abandoned as such because of the effect on that provision of the Evidence (Transitional Provisions and Consequential Amendments) Act 1995. The nature of the evidence sought to be adduced and the particular facts relied upon are identified in the letters in which the following appears:

"The relevant pages of transcript consist of the following: 1. E Hughes 127; 130-139 2. A Fisher 283-286 3. J Kent-Hughes 346-347 4. Ginnane 436, 438, 475, 489 5. B Cummins 288-291; 388-390 6. D A Browne 540-541; 556-558 7. Dobson 571-574 The proof of particular facts relevant to the present proceeding, to which the abovementioned passages of transcript are relevant are as follows: 1. That in April 1988, E Hughes was informed by Ginnane that servicing of the CLC copier would be required after the production of every 5000 copies. E Hughes T131, 137 2. That in July 1988, Ginnane varied this representation to 3000 to 4000 copies between services. E Hughes 139 3. That Canon salesmen were informed by technicians in early 1988 that the CLC100 needed a service call approximately every 1250 copies and were authorised to convey that information to potential customers. Ginnane 438 Browne 556 4. Alternatively, that Canon salesmen were instructed early in 1988 to inform potential customers that the CLC100 required servicing every 4000 to 5000 copies. Fisher 283-284 285-286 5. That prior to April 1988, Canon salesmen were generally representing to customers that the CLC100 required servicing every 5000 copies. J Kent-Hughes346-347

6. That the first respondent knew it had a world-wide problem with the CLC1 from the time that it had been brought on to the market in Australia. Cummins 290 7. That Canon sales representatives failed to modify claims as to the performance capacity of the CLC100, when late in 1988 failures of the photosensitive drum in that machine became known to its senior management. Ginnane 479-480 8. ... 9. That Browne denied that when the CLC100 was released in Australia, the first respondent was aware of technological problems concerning the machine. Browne 557" The applicants contend that the abovementioned facts are relevant to the issues established by the pleadings but the issue of relevance is not to be dealt with as part of this ruling. The following may be said concerning the witnesses referred to above: (a) E Hughes was the plaintiff in the Hughes proceeding; (b) A K Fisher was a sales consultant in the employ of the first respondent to this proceeding for 10 years; (c) J Kent-Hughes was a director of a company which leased a CLC100 machine in April 1988; (d) W L Ginnane was the district sales manager for the first respondent in Victoria; (e) B A J Cummins was a partner in the firm of solicitors acting for the applicants in the Hughes proceeding;

(f) D A Browne was employed by the first respondent as a systems coordinator. (g) B L Dobson was a technical support person employed by the first respondent for 9 years. The witnesses Ginnane, Browne and Dobson were called by the respondent in the Hughes proceeding and the other witnesses were called by the applicants in that proceeding. In the Hughes proceeding, the applicants claimed certain representations and warranties were made between March and August 1988 by the first respondent, in respect of a Canon CLC100 machine leased to the second applicant, namely that: (a) the machine was capable of producing colour copies reproduced on paper which, on average, would cost 30 cents per copy and which could be purchased from the respondent; (b) the average cost of toner for each copy produced by the machine was 18 to 20 cents per copy, depending on the density of the toner; (c) the machine was capable of producing 3000 to 4000 copies before service of the machine would be required; (d) once a service call was placed with the respondent the period of time that would elapse between the making of the service call and making the machine operational would be no longer than four hours; (e) the machine was suitable for the commercial purpose of use in a business of colour copying to be commenced by the second named applicant. Acting on the faith of the representations and warranties the second applicant claimed to have entered into the hiring agreement for the machine, terminated his employment and formed a company for the purpose of selling colour photocopier reproductions. The applicants alleged that they had since discovered that each of the said representations and warranties were untrue in that: (a) the machine was not capable of producing colour copies reproduced on paper which, on average, cost 30 cents per copy and in fact due to malfunction of the machine and wastage of copies, the average cost of each copy greatly exceeded 30 cents; (b) the average cost of toner for each copy exceeded 18 to 20 cents per copy; (c) the number of copies produced before the machine was required to be serviced was considerably less than 3000 to 4000 copies; (d) during service calls the machine had been inoperative for periods in excess of four hours; (e) the machine was not capable of fulfilling the purpose of use in the business of colour copying because the degree of its malfunction had rendered its use uneconomical. On 1 October 1990 Jenkinson J awarded damages to the applicant Hughes in the sum of $160,000. Admission pursuant to 0rder 33 rule 5: Order 33 r5 of the Federal Court Rules reads: "5(1) A party may, with the leave of the Court, but saving all just exceptions, read evidence taken, or an affidavit filed, in other proceedings. (2) Sub-rule (1) does not enable evidence taken, or an affidavit filed, in other proceedings to be read as evidence on any issue at a trial, except in relation to the proof of particular facts."

In Telnet Pty Ltd T/A Osborne Computers Australia v Takapana Investments Pty Ltd T/A Ipex Information Technology Group & ors (Olney J, 8 July 1994, judgment no.449/94, unreported), Olney J said in relation to this rule: "The only Australian authority to which reference has been made which has a bearing upon the operation of O33 r5 is Wentworth v Rogers (No 12) (1987) 9 NSWLR 400, a decision of the NSW Court of Appeal. The corresponding provision of the NSW Supreme Court Rules is in virtually identical terms. At p 423 of the report the court said: "Sub-rule (1) in effect reproduces a rule of long standing both in England and Australia. However, subr(2) is new. It is difficult to understand what subr(2) means. It precludes the evidence from being read on any issue at a trial except in relation to the proof of particular facts. But it is difficult to imagine what the evidence could be related to other than proof of particular facts, except some matter of opinion. However, the evidence may not be given except by leave of the Court. ... More significantly, subr(1) has the qualification "saving all just exceptions". It has long been established that this sub‑rule did not go to questions of admissibility. In particular it allows the evidence to be tendered only in proceedings between the same parties or their privies as were parties to the original proceedings, and where the issues are the same. With respect, it may be that the Court of Appeal's difficulty with the prohibition against reading evidence given in other proceedings "except in relation to the proof of particular facts" could be resolved if the sub-rule were construed as being limited in operation to circumstances in which the particular facts sought to be proved are first identified by the party seeking leave. The sub‑rule distinguishes on the one hand between "any issue at a trial", which I would understand to be a reference to an issue raised by the pleadings, and on the other, "the proof of particular facts", which would seem to be a reference of the facts sought to be proved in order to establish a party's case in respect of an issue. In case it be later held that I have erred in my own understanding of the operation of subr(2), I indicate that for my own part I would be slow to exercise the discretion conferred by subr(1) without it being made known to the opposite party and to the Court what the particular facts are that the party seeking leave wishes to prove by the evidence given in an earlier proceeding and what are the issues as established by the pleadings to which those facts relate. Unless this is done the Court cannot reach a conclusion as to the relevance of the evidence sought to be admitted, nor can it judge whether that evidence is capable of providing proof of the facts sought to be proved." Both Wentworth (supra) and Telnet (supra) were referred to with apparent approval by Hill J in Complete Technology Pty Ltd v Toshiba (Australia) Pty Ltd (1994) 53 FCR 125 at 133. For the applicants reliance is also placed on Printing, Telegraph and Construction Company of agents A G E and C E Havas v Drucker (1894) 2 QB 801. In that case consideration was given to the application of O37 r3 of the rules of the High Court (Eng) which in all material respects are the same as O33 r5 of the Federal Court Rules. It was held that the rule had only the effect of doing away with the necessity for an order to read such evidence and did not affect the admissibility of the evidence, a matter long accepted and referred to by Olney J in Telnet (supra). In the course of his reasons Kay LJ said: "The Divisional Court have affirmed the order for a commission to examine witnesses in Paris on behalf of the defendant. The plaintiffs say that the commission ought not to have been ordered, because the witnesses have been already examined on commission, and the evidence so taken is available to the defendant in the present action. I am clearly of opinion that it is not possible to make that evidence available in this action. The rule as to reading evidence taken in another action was, that the two suits should be virtually between the same parties or their privies. This has been extended to cases where the interests of the parties in the second action were represented in the earlier one to which they were to parties, as, for instance, in the case of legatees or tenants in common. The Court, if satisfied that the issues were the same and that the parties came within the description I have given could make an order that the evidence taken in the former action might be read in the subsequent one, but would only do so if all these conditions existed." The present is not a case where the interests of the parties were represented in the earlier case to which they were not parties. The Hughes proceeding dealt with the interests of other applicants. It is not enough that both proceedings were undertaken by purchasers of the CLC100 machine from the first respondent. The dicta in Wentworth v Rogers (supra) at 423, that the rule "allows the evidence to be tendered only in proceedings between the same parties or their privies as were parties to the original proceedings, and where the issues are the same", is sufficient in itself to found the refusal of the motion for admission under the rule. Although the first respondent in the present proceeding is the same party as the respondent in the Hughes proceeding, the applicants are neither the same parties nor their privies. Admission of the transcript pursuant to O33 r5 is therefore precluded. Admission as evidence of authorised agent: There is also authority that oral testimony, called in judicial proceedings to prove a certain contention, is not such an admission of the truth by conduct so as to be admissible in other proceedings as evidence against the party who tendered the testimony: British Thomson‑Houston Co Ltd v British Insulated and Helsby Cables Ltd [1924] 2 Ch 160. In that decision it was accepted that affidavits or documents, which a party knowingly uses as true in a judicial proceeding for the purpose of providing a particular fact, are evidence against that party in subsequent proceedings to prove the same fact: British Thomson‑Houston Co Ltd (supra) at 164 per Pollock MR and at 171‑180 per Atkin LJ. Although Atkin LJ at 180 considered that the law as to the admissibility of affidavit evidence was in an uncertain and unsatisfactory condition, he expressed the opinion that the authorities were nevertheless confined to the admissibility of written evidence and rejected parole evidence as coming within the rule laid down by those authorities (see Brickell v Hulse (1837) 2 Ex.675 at 680‑1 concerning an affidavit; Gardner v Moult (1839) 10 Ad & E 464 concerning a deposition; and Fleet v Perrins (1868-9) LR 3 QB 536 concerning an affidavit in answer to interrogatories and also Richards v Morgan (1863) 4 B & s641 at 657. The position in relation to affidavits and documents is recognised in Cross on Evidence 4th ed (1991) at 927, par33510, and at 929 par33525. The foundation of this reasoning was that the admission of a witness's testimony in isolation at a subsequent trial would require an "elaborate review of all the circumstances of the former trial, the qualifications on that of subsequent evidence, the speeches of counsel, and a decision whether the evidence of a particular witness was or was not used": British Thomson-Houston Co Ltd (supra) at 170. Pollock MR and Atkin LJ, the majority in British Thomson‑Houston Co Ltd (supra), recognised the position to be different in respect of oral testimony. Pollack MR at 166-7 and Atkin LJ at 168-170 rejected the contention that the calling of a witness is an admission by conduct of the evidence of that witness. However, the applicants rely upon the second of two reservations to the view which Atkin LJ reached on the use of the evidence of third parties. In British Thomson-Houston Co Ltd (supra) his Lordship stated at 170: "On principle, therefore, I should come to the conclusion that evidence of third parties used in a trial by a party in proof of any fact is not admissible in proof of such fact against that party in any subsequent suit in which he is a litigant. I should however, qualify this proposition with two reservations. If the evidence is tendered at the subsequent trial, not in proof of the fact in support of which it was tendered at the first trial, but in proof of the state of mind of the party then using it, on such issues as obtaining the first judgment by fraud, or of malice, or of want of reasonable or probable cause, it may become admissible. Secondly, if the evidence given is that of a witness who at the former trial was in fact the agent of the party, authorized to give the evidence on his behalf, it may then be admissible." The second reservation was referred to in Metroplaza Pty Ltd v Girvan (NSW) Pty Ltd (In liquidation) and Ors (Foster J, 9 August 1993, judgment no.1050/93, unreported). The decision in British Thomson‑Houston Co Ltd (supra) was followed and applied in Shears v Chisholm (1992) 9 ACSR 691 at 703 per J D Phillips J. It is therefore necessary to examine each of the pieces of evidence in question to ascertain whether it has the character of that described in the second reservation by Atkin LJ. In order to do this it is necessary to examine what is meant in law by the second reservation of Atkin LJ. After reference to that reservation Atkin LJ continued by way of example that if on a claim for goods sold and delivered the plaintiff puts his servant or agent forward to seek to prove to whom credit was given or that a bill was dishonoured and the like, "it may well be that such evidence may be treated as an admission by the party or his agent": British Thomson-Houston Co Ltd (supra) at 170-1. Bowstead on Agency 15th ed (1985) at 409 states: "(1) An admission or representation made by an agent may be received in evidence as an admission binding the principal only in the following cases: (a) Where it was made as part of a communication expressly authorised by the principal.

(b) Where it has reference to some matter or transaction upon which the agent was employed on the principal's behalf at the time when the admission or representation was made, and the making thereof was within the ordinary course of that employment. (c) Where it has reference to some matter or transaction respecting which the person to whom the admission or representation was made had been expressly referred by the principal to the agent for information." It is not contended for the applicants that any of the witnesses were expressly authorised or that express referral had been made to the agent for information. The basis on which therefore the second reservation of Atkin LJ is said to apply must to be confined to the second alternative. In P Gillies' Law of Evidence in Australia 2nd ed (1987) at 511 reference is made to the rule that a servant's admissions will be regarded as those of the master where the servant's statement is made in the normal course of his or her duty. At 512 it is said that servants in non‑managerial positions have not readily been regarded as possessing the authority to speak for the employer in the course of their duty, but that if the servant is a senior one the position may well be different. For example a manager of an employer's business may be capable of having implied authority to make admissions in relation to the business. It is therefore the nature of the employment which is relevant to the test and not the fact that the servant is called as the witness by a party because, on the authority of British Thomson‑Houston Co Ltd (supra) such calling does not make the witness/servant an agent of the party calling him or her. The conduct of the party in calling the servant as a witness cannot therefore be conduct which constitutes an acknowledgment of a servant's statement made beyond the scope of employment. With these principles in mind I turn to each of the specific pieces of evidence. It is apparent that the evidence of E Hughes referred to in pars1 and 2 in the letters is not evidence given by a witness who was the agent of the relevant party, that is, the first respondent in the present proceeding. Hughes was not an agent of the first respondent and clearly did not have its authority to give the evidence in the Hughes proceeding. In submissions for the applicants it was suggested that the evidence should be admitted because it is the evidence by Hughes of what was said to him by the first respondent in respect of the particular facts referred to in each of the two paragraphs. However, the second reservation of Atkin LJ in British Thomson‑Houston Co Ltd (supra) clearly is referrable to the character of the witness and the authority of that person and not to the evidence. It does not apply to qualify the evidence referred to in these two paragraphs. In par3 it is sought to lead evidence from two witnesses called in the Hughes proceeding on behalf of the first respondent in the present proceedings. It is to be noted that the issue described in par3 is not an issue which is supported by reference to the transcript inasmuch as it requires an inference to arrive at the position that the salesmen "informed by technicians in early 1988". Mr Ginnane was a senior employee of the first respondent. However, his evidence at 438 does not have the quality of an admission, addressing only his knowledge as to machine's need to have a service call approximately every 1250 copies. Browne's evidence at 556 would not qualify for admission because it provides secondary evidence of a document already an exhibit in the present proceeding. Paragraph 4, which also includes in its description of the particular facts a matter available only by way of inference, refers to the evidence of Fisher. He was not a witness who at the former trial was the agent of the first respondent or who was authorised to give evidence on his behalf so that his evidence cannot qualify within the second reservation of Atkin LJ. With reference to par5, the witness J Kent-Hughes was not an agent of the first respondent and had no authority to give evidence on its behalf so that the second reservation cannot apply to qualify this evidence for admission. The reference in par6 to the evidence of Cummins is a reference to his evidence that a Mr Gill, Victorian sales manager for the first respondent, had told him in a conversation that the first respondent had a world-wide problem with the CLC100 machine. Mr Gill had acknowledged he was not a technical person but his opinion was that the main problem the applicant in the Hughes proceeding was experiencing related to the drum. The first thing to be said about that evidence is that it is not given by a witness who at that former trial was the agent of the first respondent or authorised to give evidence on its behalf. It is not the evidence of Mr Gill but rather the hearsay evidence of Mr Cummins concerning what he was told by Mr Gill, which has nothing apparent to establish Mr Gill's authority and still less so in relation to technical matters relating to drums. In the present proceeding Mr Gill was called and this matter was not put to him. All that emphasises the significance of the primary rule that evidence of third parties used in a previous proceeding is not admissible in a subsequent suit, the application of which rule is not displaced because there is no case for the application of the second reservation in respect of this paragraph. Paragraph 7 refers to further evidence of Mr Ginnane. In that evidence Mr Ginnane says that he did not towards the end of 1988 take steps to ensure that correct information would be made available to customers about the problems with the drum in the machine and that no specific instruction was given from his end on that matter. This evidence does not have the character of an admission or a representation. It is evidence of what he did not do. Although Ginnane was arguably of sufficient seniority to make an admission or representation for the first respondent, this evidence is not of that character. In par9 admission is sought of transcript relating to the evidence of Browne in which he testified that "at release we were aware of no problems." That is apparently neither an admission nor a representation but in any event Browne is not a witness of such seniority that he can be taken to have had the authority to speak as agent of the first respondent on this subject. On behalf of the applicants it was contended that a further ground for admission of the above evidence was that it showed the system or practice of the first respondent. That is a test which may be relevant if it were sought by the applicants to call similar fact evidence in the present proceeding. It is not the test, as I understand it, to be applied in respect of any application for the admission of evidence given in a prior proceeding. For the applicants reliance is also placed on Nicholson v O'Flaherty; Ex parte Nicholson (1985) 2 Qd R 499. In that case Williams J, with whom the other members of the Full Court agreed, held that answers given and recorded in a transcript of a prior proceeding could be held to amount to an admission that at the material time the respondent knew that a certain company was not a registered builder. Although the case involved consideration of s10 of the Recording of Evidence Act 1962 (Qld) that section merely facilitated the proof of the former evidence without the necessity of calling a short‑hand reporter or recorder. The case therefore concerned the application of the first of the reservations referred to by Atkin LJ in British Thomson‑Houston Co Ltd (supra) at 170, although no reference was made to that authority in Nicholson (supra). In my opinion this is not an authority which casts any doubt upon the statement of the rule of law applicable in British Thomson-Houston Co Ltd (supra). It is not contended that any of the items of evidence, the admission of which is sought by the applicants, falls within the first reservation of Atkin LJ. If it were the case that any of the evidence of the Hughes proceedings had the character of an admission or representation given with the requisite authority, a question would then arise whether that evidence could only be proved by oral testimony given the non‑applicability of O33 r5. As I consider none of the evidence so qualifies I do not consider this further aspect. Admission pursuant to Order 33 rule 3: The applicants then contend that not only should the admissions be admitted but, in addition, all the evidence identified in the letters should also be admitted. To the extent such evidence contains matters which do not amount to admissions, the applicants rely upon the provisions of O33 r3 of the Federal Court Rules which reads: "3.The court may at any stage of the proceedings- (a) dispense with compliance with the rules of evidence for proving any matter which is not bona fide in dispute; or (b) dispense with compliance with the rules of evidence where such compliance might occasion or involve unnecessary or unreasonable expense or delay, including, but without limiting the generality of this power, compliance with the rules relating to proof of handwriting or of documents and the proof of the identity of parties or of authority." For the applicants it is contended that the evidence sought to be admitted pursuant to this rule is not bona fide in dispute and is otherwise relevant and that as it has been tested by cross-examination in the Hughes proceeding there will be no denial of natural justice to the respondents if the evidence is admitted in this proceeding. In Pearce v Button (1986) 8 FCR 408, Lockhart J said at 422:

"Order 33 r3 is in wide terms. I see no reason why it should be read down. It should be construed according to its ordinary and natural meaning. But the power conferred upon the court by the rule is limited to dispensing with compliance with the rules of evidence to prove any matter not bona fide in dispute (r3(a)) or where such compliance might occasion or involve unnecessary or unreasonable expense or delay (r3(b)). In my opinion although it is for the judge to determine in each case whether the rule may be applied, its essential object is to facilitate the proof of matters which are not central to the principal issues in the case. The rule is not confined to dispensing with the rules of evidence to facilitate the proof of merely formal matters, but a judge should be slow to invoke it where there is a real dispute about matters which go to the heart of the case. Murine Eye Remedy Co v Eldred [1926] VLR 425; Meek v Guardian Assurance Co Ltd (1963) 80 WN (NSW) 940; H v Schering Chemicals Ltd [1983] 1 WLR 143 and Downs Irrigation Co-operative Association Ltd v The National Bank of Australasia Ltd (No 2) [1983] 1 Qd R 475 are cases where comparable rules or statutes were considered by courts of this country and the United Kingdom and where approaches were taken generally similar to mine." In Pearce (supra) it was held that the provisions of the rule should not have been invoked to permit hearsay evidence to be given in respect of documents forming a vital part of the case against the applicants and crucial to the question of whether certain vehicles had in fact been unlawfully imported. In my opinion the evidence sought to be lead relates to matters which go to the heart of the case - namely, the representations alleged to have been made by the first respondent to the applicants. The highly contentious nature of the issues to which the evidence relates make it entirely inappropriate to apply O33 r3 to the admission of the evidence being either the evidence described as admissions or the evidence in the Hughes proceedings additional to the "admissions". Admission pursuant to s7B of the Evidence Act 1905 (Cth)

The applicants contend that the statements referred to in the letters and marked in the accompanying transcript from the Hughes proceeding are admissible pursuant to the provisions of s7B of the Evidence Act 1905 (Cth), which reads as follows: "7B. (1)Subject to this Part, where, in any proceeding, evidence of a fact is admissible, a statement of the fact in a document is admissible as evidence of the fact if: (a)the document containing the statement forms part of a record of a business, whether or not the business is in existence at the time when the question of admissibility arises; (b)the statement was made in the course of, or for the purposes of, the business; and (c)the statement was made by a qualified person or reproduces, or was derived from, either or both of the following descriptions of information: (i) information in one or more statements, each made by a qualified person in the course of, or for the purposes of, the business; (ii) information from one or more devices designed for, and used for the purposes of the business in or for, recording, measuring, counting or identifying information, not being information based on information supplied by any person.

(2)This section makes a statement admissible notwithstanding: (a)the rules against hearsay; (b)the rules against secondary evidence of the contents of a document; (c)that any person concerned in the making of the statement is a witness in the proceeding, whether or not he gives testimony consistent or inconsistent with the statement; or (d)that the statement is in such a form that it would not be admissible if given as oral testimony; but does not make admissible a statement that is otherwise inadmissible. (3)In this section, "fact" includes opinion." It is the case that s7A(1) of the same Act defines "business" so as to include "any business, profession, occupation, calling, trade or undertaking engaged in or carried on by the Crown in right of the Commonwealth...". The same sub-section defines "document" in a way which would include transcript prepared for court proceedings. It is said therefore on behalf of the applicants that the transcript from the Hughes proceeding forms part of "a record of a business" referred to in s7B(1)(a) and is accordingly admissible. Section 7B(1) must be read subject to s7B(2), from which it is clear that the first sub-section "does not make admissible a statement that is otherwise inadmissible". From the law previously set out the extent to which evidence in prior proceedings may be admitted in later proceedings is dealt with and the first sub‑section does not override that law.

The evidence recorded in the transcripts was not made by a "qualified person". A "qualified person" is defined in s7A(1) as follows: "qualified person", in relation to a statement made in the course of, or for the purposes of, a business, means a person who: (a)at the time when the statement was made, was: (i) an owner of the business or a person carrying on the business; (ii) a servant or agent employed or engaged in the business; (iii) a person retained for the purposes of the business; or (iv) a person associated with the business in the course of another business; and (b)at that time: (i) in the case of a statement that is not admissible in evidence unless made by an expert on the subject matter of the statement - was such an expert; or (ii) in any other case - had, or may reasonably be supposed to have had, personal knowledge of the facts stated;". Paragraph (a) of that definition makes apparent that the section is addressing a record of a business made for the purposes of that business by a person engaged with its conduct (to express the matter generally). The witnesses were not within the description in par(a) so that the transcript cannot qualify in the manner contended no matter how wide the interpretation given to the section in other circumstances: see Karmot Auto Spares Pty Ltd v Dominelli Ford (Hurstville) Pty Ltd (1992) 35 FCR 560 at 565; Supetina Pty Ltd v Lombok Pty Ltd (1984) 5 FCR 439 at 455 and Albrighton v Royal Prince Alfred Hospital (1980) 2 NSWLR 542 at 548. For these reasons I consider that none of the contentions put for the applicants succeeds in entitling evidence from the Hughes proceeding to be admitted whether by transcript or otherwise. 13 APRIL 1995 RULING ON REPORTS OF FINANCIAL EXPERTS EVIDENCE - admissibility - expert opinion - foundations of expert reports - incomplete accounting system and records - whether divergence between foundations of opinion and evidence. Objection is made to the admission of MFI 54 and MFI 55. MFI 54 comprises three documents, the author of each of which is Mr T.C. Davey, a chartered accountant. The first report is dated 11 June 1993, the second is a supplementary report of 7 March 1995 and the third a letter of 11 April 1995. MFI 55 comprises an expert report of Laurence Arthur Cooke dated 15 March 1994, a revised report by the same expert dated 22 March 1995 and a further report from him also of 22 March 1995. Mr Cooke is also a chartered accountant. The grounds of objection broadly fall into two categories: the first is what I might call the Potts v Miller objection and the second is what counsel for the respondents described as three related points and as he described them, those points are: (1) that resort is had in these reports to material other than proven or provable books of accounts; (2) that to the extent resort is had to oral material or written material, it does not form part of the evidence in the vast majority of those instances; and (3) to the extent that it is the subject of some evidence in important respects, it does not accurately conform to the evidence. I will turn firstly to the Potts v Miller point. Potts v Miller (1940) 64 CLR 282 is a decision of the High Court of Australia. In that decision, the question arose of the admissibility, in an action for deceit, of a company's books and balance sheet for the purpose of proving the result of its financial operations and in particular the value of shares in the capital of the company. At 304, Dixon J, referring to a passage from the authorities he was reviewing, said: "That where a routine system is established for the very purpose of ascertaining the financial result of business operations consisting in multitudinous individual transactions, then, in spite of the use of living persons as part of the machinery for producing the result, the record is to be treated as a consequence of a system, and where, according to the common understanding and practice of business, the financial consequences would be ascertained from those records, then, when the issue submitted to a court of law is of that character, the court must receive that record as the appropriate evidence."

In Re Montecatini's Patent (1973) 47 ALJR 161 at 169, Potts v Miller (supra) was referred to by Gibbs J where he said that it established two rules: First, the books of account kept according to an established system in organised business are receivable in evidence as proof of the financial progress or of the result of business operations conducted on a large scale, and secondly, that when the books are produced, or their production is not insisted on, an accountant who has examined them may state their general effect. It is to be noted that those two rules were extracted by him from the decision in Potts v Miller (supra), although, it may be the case that the latter decision was an instance where the production of the books had not been insisted upon. In Re Action Waste Collections Pty Ltd (in liquidation) (1981) VR 691, Tadgell J in the Supreme Court of Victoria considered and applied these authorities. At 704 he noted that the dicta of Dixon J in Potts v Miller (supra) had been applied in other authorities - namely, R v Seifert (1955) 73 WN(NSW) 358 and R v Hally [1962] Qd R 214. The authorities and the legitimacy of them is not put into contest in this particular objection. What is said for the respondents is that the application of the principles which follow from the authorities to which I have referred must result in the reports in MFI 54 and MFI 55 not being admitted. In Action Waste (supra) at 703, Tadgell J referred to the fact that in the case before him the liquidator had made an examination by reference, inter alia, to a company's financial records and had then purported to make a reconstruction of the position as at a certain date. At 705 he reached the conclusion that the examination of the financial records in the context of that further reference satisfied the rule in Potts v Miller and allowed the second of the rules in Potts v Miller, as stated in Re Montecatini's Patent (supra), to which I have referred, to be applied to allow the expert to express an opinion. At 705, in giving his reasons, Tadgell J pointed to the fact that the records of the company in issue and exhibited by the liquidator, afforded some indication that there was an accounting system maintained by the company. He said that the extent and degree of completeness and accuracy of the system was unclear, but an examination of the system was a logical, practical and necessary starting point for the liquidator's investigation. He noted the liquidator had not confined his investigation to one based on the company's system and that hewas able to go to other material. He said that it was difficult to see what other course was practicably open to the liquidator in those circumstances. He then said that the result of the liquidator's examination in that case may well not provide an impeccable reflection of the company's financial position at any given time but it was the result of it. The other evidence offered by him was sufficient at least to provide some evidence of the fact that at the given date the company in that case was unable to pay its debts. It follows, in my opinion, that if there has been reference to a company's financial records then the second rule can be applied even if those company records are inadequate and even if the examination by the expert and the scope of his opinion relates to matters which go beyond those things in the company record. In the present case, the evidence in relation to MFI54 is supported by a trolley load of company records both financial and corporate and they are identified as exhibit 52. In the case of MFI55 there is an undertaking to provide to the court and to tender a similar trolley load of documents supporting the opinions of Mr Cook and I make my ruling on the foundation that that tender has taken place. Examination of those records and the basis of their tender, shows that they are divided into primary records and other resources. Included in the primary records are such financial records as are available including in particular, computer print outs. The foundations of the opinions of the expert, Mr Davey, is grounded on the documents in exhibit 52 as the foundation of the opinion of Mr Cooke will be grounded on the documents to be tendered. As these include the available financial records and as such records are the only practicable source of information, I consider that as in the case of Action Waste (supra), the rule in Potts v Miller does not sustain an objection to the admission of the evidence. Turning to the second main ground of objection, it is in the terms to which I have previously referred. So far as the first two grounds are concerned, that is, that there is reference to material other than proven books of account or to matters which do not form part of the evidence, I consider that in principle, provided the opinion is founded on the financial records that are available, that the reference to other material on the authority of Action Waste is not a ground for precluding the admission of either the opinion or the material. In further support of that, I refer to Arnotts Ltd v Trade Practices Commission (1990) 24 FCR 313, particularly at 350-1. As to the third limb of the inter-related objection, namely that the subject of the evidence in some important respects does not accurately conform to the evidence, I am of the opinion that that is a matter which goes to the weight of the evidence and not to its admissibility. If the foundations of the expert opinion cannot be sustained on the evidence in the case, the weight to be attached to the opinion will accordingly be affected. An expert can offer an opinion by reference to a hypothetical situation , provided the hypothetical situation corresponds fairly to the fact situation proven. The question is, whether divergence between the foundations of the opinion and the evidence in the case is of such a dimension as to preclude admissibility or to affect weight. In my opinion, where the foundations of the opinion are based on financial records, to the extent they are available, and corporate records in addition to other matters, it cannot be the case that the evidence should be inadmissible. I refer to the authority of Paric v John Holland (Constructions) Pty Ltd (1985) 62 ALR 85 at 87, where it is said in particular in relation to an expert opinion that it is a question of fact whether the case supposed is sufficiently like the one under consideration to render the opinion of the expert of any value. Whether the true position as disclosed by the evidence in the case with respect to creditors or loans or other matters is so substantially different as to substantially affect the value of the expert's report is, in my opinion, a matter for subsequent consideration and argument. I also consider that the question of the appearance in the experts' reports, in relation to both MFIs, of qualifications and disclaimers in a form customary to accountants reports provides no basis for not admitting the documents.

I turn to the particular documents: in the case of MFI 54A, it commences with a letter of 11 June 1993 and there are some aspects of that which attract ruling or attract a different tender than the balance of the documents. In my opinion, there is no basis to exclude pars5 and 7, that is, other than the first sentence in par7, from the tender on the principles upon which I have already reached the opinion previously expressed. The first sentence of par7 is not part of the tender. Pars10, 11 and 12 are not part of the tender. In my opinion, in par13 the second sub-paragraph, the last sentence in the third sub‑paragraph, the last sentence in par6 should be accepted on the limited basis on which they are tendered, namely as evidence on which the expert reached his opinion. Further, in my view, par14 should be received on the same basis and to the extent not so limited is within the expertise of the maker of it, Mr Davey. There are no qualifications, as I comprehend it, to the tender of the remainder of the documents and for those reasons, I would therefore admit, subject in the case of document 54A, the letter of 11 June 1993, in the manner referred to, those documents in MFI 54 and 55 as exhibits. 20 APRIL 1995 RULING ON LEGAL PROFESSIONAL PRIVILEGE OF LETTER OF INSTRUCTION EVIDENCE - admissibility - privilege - waiver - whether intentional or by implication of law - expert report - whether letter of instruction source of knowledge Application has been made for inspection of a letter of instruction from the solicitors for the applicants dated 21 February 1995 to Ernst & Young, chartered accountants. The applicants have declined to make that document available on the grounds that it is subject to legal professional privilege. In response, it is contended for the respondents that such privilege has been waived in the circumstances.

The fact that the letter in question is subject to legal professional privilege unless waiver has occurred is not put in dispute in the submissions for the respondents: cf TPC v Sterling (1979) ATPR 40-121 at 18304. The central question is whether the privilege that has attached to that letter has in the circumstances been waived. The bases of principle for resolving the issue is that which has been set out by the High Court of Australia in Attorney‑General (NT) v Maurice (1986) 69 ALR 31. It is apparent from the reasons of the members of the High Court in that case that waiver may occur either intentionally or by implication of law. So far as the reasoning of the members of the court relating to waiver by implication is concerned, it is sufficient if in these reasons I incorporate, as I now do the quotations from the judgments in Maurice (supra)referred to in Equiticorp Industries Group Ltd v Hawkins [1990] 2 NZLR 175 at 180 and I make that available for incorporation in the transcript at this point: "Waiver may be implied. The basis of such an implication is made very clear in Attorney-General for the Northern Territory v Maurice (1986) 69 ALR 31, Gibbs CJ at p34 said: "There was of course no express waiver in the present case and there is nothing to suggest that the claimants had any actual intention to waive privilege in the source documents. The principle applicable in those circumstances seems to me to be well stated in Wigmore, op cit, par2327: `In deciding it, regard must be had to the double elements that are predicated in every waiver, ie, not only the element of implied intention, but also the element of fairness and consistency. A privileged person would seldom be found to waive, if his intention not to abandon could alone control the situation. There is always also the objective consideration that when his conduct touches a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not. He cannot be allowed, after disclosing as much as he pleases, to withhold the remainder. He may elect to withhold or to disclose, but after a certain point his election must remain final.' The decisions in which this question has been considered seem to me to be particular applications of the rule that in a case where there is no intentional waiver the question whether a waiver should be implied depends on whether it would be unfair or misleading to allow a party to refer to or use material and yet assert that that material, or material associated with it, is privileged from production."

The joint judgment of Mason and Brennan JJ at p39 has the following: "An implied waiver occurs when, by reason of some conduct on the privilege holder's part, it becomes unfair to maintain the privilege. The holder of the privilege should not be able to abuse it by using it to create an inaccurate perception of the protected communication ..... In order to ensure that the opposing litigant is not misled by an inaccurate perception of the disclosed communication, fairness will usually require that waiver as to one part of a protected communication should result in waiver as to the rest of the communication on that subject matter: see Great Atlantic Insurance Co v Home Insurance [1981] 1 WLR 529; [1981] 2 All ER 485".

To the same effect Deane J at pp42-43 said: "Waiver of legal professional privilege by imputation or implication of law is based on notions of fairness. It occurs in circumstances where a person has used privileged material in such a way that it would be unfair for him to assert that legal professional privilege rendered him immune from procedures pursuant to which he would otherwise be compellable to produce or allow access to the material which he has elected to use to his own advantage. Thus, ordinary notions of fairness require that an assertion of the effect of privileged material or disclosure of part of its contents in the course of proceedings before a court or quasi‑judicial tribunal be treated as a waiver of any right to resist scrutiny of the propriety of the use he has made of the material by reliance upon legal professional privilege."" As appears from the dicta there referred to, waiver in circumstances of its imputation at law is inextricably bound up with notions of fairness. As Deane J there stated: "It occurs in circumstances where a person has used privileged material in such a way that it would be unfair for him to assert that legal professional privilege rendered him immune from procedures pursuant to which he would otherwise be compellable to produce or allow access to the material which he has elected to use to his own advantage."

The central question of whether waiver has occurred is therefore, in the absence of intentional waiver, to be resolved by reference to notions of fairness. In my opinion, this is not a case where it can be concluded that the applicants have intentionally or actually waived privilege by the production of the revised expert's report of Mr Cooke. I do not consider there has been an intentional disclosure of the protected material, namely, the letter of instruction from the solicitors dated 21 February 1995. In relation to the question of whether there has been waiver by implication, I have been referred on behalf of the applicants to three authorities. The first is Buttes Gas & Oil Co v Hammer (No 3) [1981] QB 223. That is an authority to the effect that a bare reference to a document in a pleading does not waive any privilege attaching to it but if a document is reproduced in full, its confidentiality is gone and no question of privilege could arise (see in particular the dicta of Donaldson LJ and Brightman LJ). The case has been referred to in the reasons for judgment in Maurice (supra). At 34 Gibbs CJ notes the position as I have stated it. At 43 Deane J refers to an authority to the same effect, linking it to considerations of fairness in the circumstance where a document is set forth. Also, at 46, Dawson J refers to it as an authority that, "mere reference to the occasion such as a conversation or a letter without reference to its content will not constitute a waiver of the privilege". It is clear that the reasons of the High Court in Maurice (supra) took full account of the reasoning of the court in Buttes (supra) and did not dissent from it. The real question in the present case is whether the reference to the letter of instruction in par2.3 of the revised expert's report of Mr Cooke is something more than a mere reference. The applicants would have it that it is a reference within the category referred to in Buttes although that authority is one relating to pleadings. The respondents contend that the nature of the reference goes beyond that which might be encompassed by an extension of the principle in Buttes beyond a reference in pleadings alone. The next authority referred to on behalf of the applicants is Derby & Co Ltd v Weldon (No 10) [1991] 2 All ER 908. That is an authority to the effect that a party who refers, in an interlocutory proceeding, to the fact that he has obtained legal advice and states the effect of that advice does not thereby waive privilege. So far as it deals with interlocutory proceedings the authority is distinguishable. It does, however, in the reasons of Vinelott J at 917 contain a citation of what was said by Mustill J in the Nea Karteria Maritime case [1981] Com LR 138 at 139. That is an authority which was considered and discussed by members of the High Court in Maurice (supra): see Gibbs CJ at 35 and Dawson J at 47. In that case, Mustill J referred to the deployment of evidence which would otherwise be privileged and the effect which that might have on the question of waiver of privilege. For the applicants it is contended that the words in that dicta can be applied in their favour. In my view the dicta must be taken in the manner in which it was regarded by the High Court and it provides no qualification to the application of principle as enunciated by the members of the High Court in Maurice. The further authority referred to on behalf of the applicants is Equiticorp Industries (supra) where it was held that when plaintiffs filed two affidavits in opposition to a proceeding, which referred extensively to a report prepared for them on the subject matter of the action, it formed the foundation of the plaintiffs' opposition to the applications for security for costs and should be disclosed forthwith to enable the defendants and the court properly to deal with the issues arising in those applications. It was held that although it was initially protected by legal professional privilege, the plaintiffs had waived the privilege attaching to the report, albeit unintentionally. Further, it was held that the description of the report in the affidavits went far beyond a bare reference to the existence of the document and that it had been included in the affidavits with the clear purpose of adding weight to the plaintiffs opposition and thus to influence the court. That, therefore, brings us back to the central question of the effect of the reference, in the revised expert's report, of Mr Cooke to the letter of instruction. The context in which the letter of instruction is referred to is that it appears in par2 under the heading "Sources of Information". It is followed by the statement "This report has been compiled from the following sources of information". Then follows par2.3 which identifies the letter of instruction. It appears in common with other paragraphs giving sources of information from which the report has been compiled. Much, if not all, of the cross-examination of Mr Cooke has been directed to ascertaining from him the foundations of his knowledge in relation to the report which he prepared and in which there are reconstructions of accounts in relation to the business of the first applicant that has been in part necessitated by the absence of available complete financial records. The foundations of the knowledge of the expert preparing this report are therefore critical to a proper judicial evaluation of the report itself. This is illustrated by the fact that in the course of cross-examination it was said by Mr Cooke that information in relation to cash not banked was also included in the letter of instruction that he received with regard to the preparation of this revised report and that seems to me to be beyond doubt the letter in par2.3. The question of fairness can be tested in this way. If the letter of instruction confined the expert to preparing the report in a certain way and that instruction was not apparent because the letter remained subject to legal professional privilege, it is clear that no true understanding could be arrived at in relation to the foundation of the expert's knowledge. In my view, once it is said that the letter of instruction was something from which the report has been compiled, it cannot be the case that the reference to the letter of instruction falls within the principle in Buttes case (supra). It must be a reference which calls into play the aspects of fairness and results in an unintentional and implied waiver of legal professional privilege. I note that in Dingwall v The Commonwealth of Australia (1992) 39 FCR 521 at 524, Foster J, while holding that the principles in Maurice's case were not wide enough to have the consequence that the provision of documents to a potential witness constituted a waiver of privilege where that witness was asked to prepare an expert report. However, he did say that Maurice's case certainly required that there be an indication that the documents, and I take that to be the documents which were provided, were used in the preparation of the evidentiary document in a way that could be said to influence the content of that document. In my view, once the expert states, as he does in par2, that the letter of instruction was a source of his knowledge that requirement is satisfied and an implied and unintentional waiver is properly found to have occurred. For these reasons, I would allow the application for access to the letter of instruction by the respondents. 24 APRIL 1995 RULING ON ADMISSIBILITY OF ORAL EVIDENCE BY MR CUMMINS. EVIDENCE - admissibility - oral evidence - hearsay - whether evidence subject of admission exception to hearsay rule - authority of employee to make admission. The respondents object to the calling by the applicants of evidence from Mr Cummins, a partner in the firm of solicitors who acted for the applicants in Eric Hughes & Whitby Enterprises Pty Ltd v Canon Australia Pty Ltd & Westpac Banking Corporation (Jenkinson J, 1 October 1990, unreported) ("the Hughes proceeding"). At transcript 1740 I have previously ruled on the admissibility of transcript from that proceeding which included at 290 the evidence which it was proposed to lead from Mr Cummins. The essential content of Mr Cummins' proposed evidence, as given without objection in the Hughes proceedings, at T289 - 290 was that on 23 December in the relevant year he had been contacted by Mr Gill, who was then the Victorian sales manager for the first applicant. He said: "Mr Gill told me that he had a lot of empathy with Eric Hughes situation, he had seen the record and that he sympathised totally with his situation, and it was for that reason that a back-up machine was on offer to him. He told me in this conversation that Canon had a problem, that it was a world-wide problem, and that the problem had existed since the machines had been brought on to the market later - during late of the previous year, which, by that I mean, your Honour, late 1987. I asked Mr Gill whether he could elaborate more on the problem with the machines as such and he said that he was not a technical person and he really continues say, but that it was a drum problem and that what Hughes was experiencing, or the main problem that Hughes was experiencing, related to the drum." By the proposal to call Mr Cummins to give evidence to the same effect orally before this court, the applicants seek to admit the evidence as an admission of the following fact: "That the first respondent knew it had a world-wide problem with the CLC-1 from the time that it had been brought on to the market in Australia". In these proceedings Mr Gill has been called to give evidence. It is said for the applicants that no questions were put to him in cross-examination directed to his authority to make the admission previously referred to. In my view nothing can be made of that because at the time Mr Gill had been called no obligation had arisen upon the respondents to raise that matter in the cross-examination of Mr Gill. That is so even though the applicants had opened by signifying they proposed to call evidence in relation to what had occurred in the Hughes proceeding. The essential thing to bear in mind is that the evidence is sought to be led as an admission of the fact to which I have referred. A close examination of the proposed evidence in the form in which it was given in the Hughes proceeding shows that there are several serious deficiencies in qualifying it as an admission in the terms sought. The first is that on no account could Mr Gill as Victorian sales manager have had authority to speak for other than the first respondent, so that any reference to the world-wide problem would be limited to the state of knowledge of the first respondent. The second thing is that in no way does the proposed evidence address the question of the knowledge of the world-wide problem existing from the time the machines had been brought onto the market in Australia. The third thing, in my view the quite fundamental thing, is that Mr Gill says that he was not a technical person and that permeates the understanding of all of the proposed evidence. The evidence cannot usefully be separated into knowledge of a world-wide problem on the one hand and an admission of the precise technical nature of the failure on the other. Because Mr Gill was not a technical person and said so in the proposed evidence to Mr Cummins, he made a statement which in my view strikes at the requisite authority that he would have had to have to made an admission of such sweeping and fundamental importance such as to bind the respondent. Once Mr Gill acknowledged that he was not a technical person he made a statement that destroyed the authority he would need to make an admission of such a fundamental character, and thus to qualify his evidence in the nature of an admission. I therefore, for the reasons I have given, adhere to the effect of the ruling which I previously gave when the question of the admission of the Hughes proceeding arose and when there were other reasons relevant to that which are now not applicable. Having reached that view on the face of the evidence, I note that in the evidence which Mr Gill gave in this proceeding there are references, to which I have been taken at T1121, 1129 and 1131, which support the view I have reached that there is not any demonstration that the requisite authority to make such an important admission was in any way vested in the Victorian sales manager of the first respondent. For these reasons I rule that the evidence of Mr Cummins as to what he was told by Mr Gill, in the terms to which I have referred, is not admissible. I certify that this and the preceding 58 pages are a true copy of the Reasons for Judgment of his Honour Justice R D Nicholson. Associate: Date: APPEARANCES Counsel for the Applicant: Mr N Moshinsky QC Solicitors for the Applicant: Mr E J Szabo Counsel for the Respondent: Mr R Macaw QC Solicitors for the Respondent: Mr D J Martino Date of Hearing: 7 March - 24 April 1995 Date of Judgment: 30 October 1995