FEDERAL COURT OF AUSTRALIA

Cheers v El Davo Pty Ltd (In Liq) [2000] FCA 361

ALAN FRANCIS CHEERS & ORS v EL DAVO PTY LTD (IN LIQ) & ORS

VG 106 of 1997

FINN, LEHANE & HELY JJ

23 MARCH 2000

MELBOURNE

On appeal from a Single Judge of the Federal Court

THE COURT ORDERS THAT:

            1.         The notice of motion filed on 21 March 2000 be dismissed with costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

On appeal from a Single Judge of the Federal Court

REASONS FOR JUDGMENT

1                     We have before us a motion for leave to appeal from a decision of Weinberg J giving Capital Investment Corporation ("CIC") leave to amend its cross-claim against the eightieth to eighty-third cross respondents, to whom we will for convenience refer as the Davis respondents. This is the third occasion on which the cross-claim has been further amended.

2                     The issue the Davis respondents wish to have resolved by the Full Court can be stated shortly. Witness statements were exchanged in the proceedings in consequence of directions given by the docket Judge pursuant to O 10 r 2 of the Federal Court Rules. CIC sought leave to amend the cross-claim in light of information derived from the Davis respondents’ witness statements. The provenance of the amendments is not in dispute:  CIC notified the Davis respondents that the proposed amendments to the cross-claim arose from facts and matters raised in the witness statements filed and served by the Davis respondents.

3                     The primary Judge in granting leave said (at para 21):

“There is no reason in principle why a party who has pleaded a case against another party in a particular way should not seek to amend its case after discovering from the other side’s witness statements that the case can be put in a more advantageous manner.”

4                     Though not raising the issue before the primary Judge, the Davis respondents now wish to contend that this statement is incorrect because such a use involves both a breach of legal professional privilege and a breach of confidence. Their submission is that witness statements are exchanged under direction so that the other party will have advance notice of the evidence which may be adduced, so that it may prepare to meet that evidence. Use of witness statements for the purpose of amending a party's pleadings is beyond the purpose for which such statements can be used.

5                     There has been disagreement in the decided cases as to whether and to what extent exchange of witness statements results in the waiver of the legal professional  privilege which would otherwise attach to them. Many of the cases on this issue were referred to in the decision of Lindgren J in Australian Competition & Consumer Commission v Telstra Corporation Limited [2000] FCA 28.

6                     It is not necessary for us to express a view on that controversy in order to resolve the present application.

7                     Witness statements are ordered, as King CJ said in State Bank of South Australia v Smoothdale (No 2) Limited (1995) 64 SASR 224 at 228-229:

“to provide advance notice to the other parties of the evidence which the witnesses are expected to give and thereby to facilitate the hearing …”

8                     The hearing is facilitated if any amendments to the pleadings which those statements suggest should be made are made in advance of the hearing rather than, as would have been the case in earlier times, after the evidence in question had been given. This is not in any sense a use of the witness statement for a collateral purpose.

9                     Accordingly we do not think that his Honour’s decision is affected by sufficient doubt as would justify the grant of leave to appeal. Indeed, we would go further and say that the conclusion to which his Honour came was plainly correct.

10                  We find it hard to see how a party to litigation suffers an injustice if its projected version of the facts is adopted as the basis of the other side’s claim or defence. Whether or not CIC will be able to call the parties who signed witness statements and to tender those statements in evidence is not a matter which arises for decision at this stage. That will be a matter for determination by the primary Judge, if it arises, who may need to take into account a range of considerations including the significance, if any, of the fact that the relevant portions of the statements have already been read out in open Court without objection.

11                  Mr Hammond QC sensibly accepted that if he could not obtain leave to appeal on the point which he correctly identified as his principal point, then it would be unlikely that leave to appeal would be given simply to enable appellate review of the exercise of the discretion to grant leave to amend. It would be contrary to principle for leave to be granted in such circumstances.

12                  An argument not put to the primary Judge but which was foreshadowed but not developed before us was that the rules which provided for exchange of witness statements prior to the hearing were ultra vires to the extent that they encroached upon such legal professional privilege as attached to those statements. Given the manner in which this issue has been raised and put so far we are not prepared to grant leave to have it later developed in some as yet unspecified form.

13                  The notice of motion filed on 21 March 2000 is dismissed with costs.

Associate:

Dated:              27 March 2000