FEDERAL COURT OF AUSTRALIA

Spalla v St George Motor Finance Ltd (ACN 007 656 555) [2004] FCA 471

ANTHONY PATRICK SPALLA, ANDREW DAVID BENTLEY STILL, IRLMOND PTY LTD (ACN 066 314 870) (RECEIVERS AND MANAGERS APPOINTED;  IN LIQUIDATION)  -v-  ST GEORGE MOTOR FINANCE LTD (ACN 007 656 555), ST GEORGE WHOLESALE FINANCE PTY LTD (ACN 001 834 886), ANDREW WILLIAM BECK, ANDREW STEWART HOME, DELOITTE TOUCHE TOHMATSU, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION AND SIMON ALEXANDER WALLACE SMITH

V 3203 of 2002

RYAN J

20 APRIL 2004

MELBOURNE

REASONS FOR RULING (No 2)

1                     As I indicated in the reasons for my first ruling on admissibility of evidence in this matter ( [2004] FCA 470), the present issues arise from a motion on notice dated 5 April 2004 by the first and second respondents (“St George”), for orders, amongst others;

‘(2)      That the proceedings be stayed as an abuse of process; and

(3)       further or alternatively, insofar as the amended statement of claim of the applicants filed and dated 9 December 2003 or the replies filed by the applicants refers to documents obtained by the first and second applicants or their legal advisers in the course of the criminal proceedings and through them the liquidator of the third applicant, it be stayed as an abuse of process.’

2                     Counsel for St George has sought to rely, in support of that motion, on various extracts from several affidavits by April Arslan, the solicitor for the applicants.  The use of Ms Arslan’s affidavits in that way has been opposed by Mr Hayes QC, who appears with Mr Wotherspoon of Counsel, for the applicants.  Counsel for the applicants point out that Ms Arslan's affidavits were prepared for use in relation to claims for legal professional privilege advanced by the respondents in respect of various documents of which they have given discovery.  As well, it has been submitted, the affidavits were prepared at a time when no question had arisen of a potential liability of the applicants or their solicitors for contempt of the County Court of Victoria.  That contempt is said to have been constituted by use of the contentious documents in a way extrinsic to the proceedings in that Court.

3                     Mr G Harris of Counsel for St George referred on the other hand to Muirfield Properties Pty Ltd v Erik Kolle and Associates [1988] VR 167 where Brooking J held that the rules of the Supreme Court of Victoria did not, by implication, prevent the use by one party of affidavits filed by another party in the same proceeding but for the purposes of a different application.  His Honour, with characteristic thoroughness, went on to review a number of authorities from a variety of jurisdictions and concluded that they supported his basic proposition that the affidavits of the other party could be used in the way described.  Mr Harris also referred to s 56 of the Evidence Act 1995 (Cth) which provides;

‘(1)      Except as otherwise provided by this act, evidence that is relevant in a proceeding is admissible in the proceeding.

(2)       Evidence that is not relevant in the proceeding is not admissible.’

4                     To resolve the controversy I have thought it appropriate to examine each of the disputed paragraphs in Ms Arslan's affidavits.  I shall consider each of those paragraphs separately and in the order in which it appears in her several affidavits sworn 11 March, 26 March, 31 March, 5 April and 15 April 2004.  As will appear, some of those paragraphs can be excluded because they do not contain the best evidence of the matters deposed to or because they are otherwise unnecessary for the purpose for which they have been adduced.

(a)        The affidavit of 11 March 2004. 

(i)        Paragraph 9

5                     In this paragraph Ms Arslan has deposed:

‘On 1 March 2004 Mr Ian Still provided me with a copy of a list of documents produced by St George in the course of Mr Spalla and Mr Still's criminal trial which were the subject of a claim for legal professional privilege by St George.  Now produced and shown to me and marked with the letters AA19 is a true copy of the list.’

6                     It is not clear from this paragraph whether Ms Arslan is referring to a claim for legal professional privilege which Spalla and Still told her had been advanced during the criminal trial or one which has been raised in the present proceeding.  However, I do not consider that ambiguity constitutes a ground for excluding paragraph 9 or the list of documents exhibited to it.

(ii)       Paragraph 11

7                     This refers to the sending by Ms Arslan to Middletons, the solicitors for St George, of a copy of the list referred to in relation to paragraph 9 and her request for an indication of the basis of each claim for legal professional privilege.  At first sight, that letter and Middletons’ reply seem irrelevant to the present notice of motion.  However, Mr Hayes pointed out that St George's response may be relevant to the question of waiver of the protection of the implied undertaking identified in Home Office v Harman [1983] 1 AC 280.  I shall therefore admit paragraph 11.

(iii)      Paragraphs 26 and 27

8                     These paragraphs recite the conduct, in December 2001 and January 2002, by the Australian Securities and Investment Commission (“ASIC”), of examinations under s 19 of the Australian Securities & Investment Commission Act 2001 (Cth).  Those examinations were directed to activities of Mr Beck and Mr Home as receivers of Irlmond and APS.  The paragraphs essentially narrate matters which are common ground and, although the best evidence of them may be that of Mr Honey or some other ASIC officer, I propose to admit paragraphs 26 and 27 for the purposes of the present interlocutory application.

(iv)       Paragraphs 28 and 29

9                     These paragraphs contain hearsay evidence of what happened at the criminal trial of Spalla and Still, including the provision to their Counsel of audiotapes of the s 19 examination and “copies of other documents obtained by ASIC in the course of its investigation”.  This is clearly not the best evidence of the matters deposed to by Ms Arslan but, consistently with the observations I made at [8] above in relation to paragraphs 26 and 27, I propose to admit paragraphs 28 and 29.

(v)        Paragraph 30

10                  This paragraph, in a manner similar to that of paragraphs 28 and 29, recites the provision “on behalf of the Deputy Director of Public Prosecutions” to Counsel for Still, of transcripts of the s 19 examinations and copies of exhibits referred to in those examinations.  For the reasons explained in relation to paragraphs 26 to 29, paragraph 30 will be admitted.

(vi)       Paragraph 31

11                  Objection is taken to the last sentence of this paragraph, which recites;

‘The applicants and their lawyers have proceeded on the basis that they are entitled to use the section 19 documents as of right, by reason of the exception contained in subsection 25(2) of the ASIC Act.’

I cannot discern the relevance of that conclusionary assertion to St George's motion, and accordingly that last sentence will be excluded. 

(vii)     Paragraph 33

12                  In this paragraph Ms Arslan has deposed;

‘The applicants make application, under s 125 of the Evidence Act, to obtain inspection of the documents set out in paragraph 32 above and to adduce evidence of them at trial insofar as those documents relate to the conduct of the receiverships, the identity of the secured creditor, the amount of the secured debt and the effect of Finkelstein J's findings and orders on the receiverships.  For the purposes of the applicants' application under section 125, they rely on the following section 19 documents in their possession.’

13                  Then follows a list of some six identified documents.  I regard that recital as essentially a statement of the relief by way of inspection of the s 19 documents which the applicants seek to obtain in reliance on s 125 of the Evidence Act.  As such, it is not relevant to St George’s motion and, like the last sentence in paragraph 31, will be excluded.

(b)        The affidavit of 26 March 2004. 

(i)        Paragraph 5

14                  This paragraph contains a number of hearsay recitals and conclusions drawn by Ms Arslan from letters and other documents.  I do not regard the recitals themselves as admissible, but I am prepared to receive into evidence for present purposes exhibits AA46 and AA47.

(ii)       Paragraph 28

15                  The other challenged paragraph in the affidavit of 31 March 2004 is paragraph 28, which contains a correction to paragraph 35 of Ms Arslan's earlier affidavit of 11 March 2004.  That paragraph was not sought to be relied on by St George, so paragraph 28 of the later affidavit can be disregarded.

(c)        The affidavit of 5 April 2004. 

(i)        Paragraphs 5 - 9

16                  These paragraphs recite various exchanges of correspondence and assertions made by Ms Arslan about St George’s claim of legal professional privilege and a similar claim which was made by Deloittes.  The body of each paragraph does not appear to be relevant to the St George motion and should be excluded.  However, should any party desire to adduce into evidence any of the exhibits AA59, AA60, AA61 or AA62, I would entertain, at an appropriate time, that party’s application to do so.

(ii)       Paragraph 11

17                  In this paragraph Ms Arslan merely “notes” that no claim to privilege in respect of exhibit AA29 or exhibit AA26 had been made by Mr Beck of Deloittes to Mr Carroll of Corrs but that such a claim was now being made in respect of those documents “together with the four Corrs letters” and “along with hundreds of other receivership documents”.  This paragraph cannot avail St George in support of its motion and accordingly will be excluded.

(iii)      Paragraph 12

18                  By this paragraph Ms Arslan has deposed;

‘In relation to Mr Beck's receivership notebook I am informed by Mr Spalla and believe that in or about March 2002 Mr Spalla and Mr Honey of ASIC had a discussion about ASIC's production of the notebook.  Mr Honey told Mr Spalla that ASIC would be removing certain pages from the copy of Mr Beck's notebook to be provided to Mr Spalla.  Mr Spalla informs me and I believe that subsequently a copy of the notebook with certain pages omitted was provided to Mr Spalla.’

Mr Hayes QC has pointed out that the best evidence of the matters deposed to in that paragraph can be given by Mr Honey, who has already sworn an affidavit and is to be cross-examined today.  However, those considerations have not persuaded me that this paragraph of Ms Arslan’s affidavit, for what it is worth, should be excluded.

(iv)       Paragraphs 13 - 17

19                  Paragraph 13 is partly framed as a preface to what follows and partly contains tendentious criticisms of Mr Sinn's affidavit, most, if not all, of which criticisms have been made by Counsel in cross-examination of that deponent.  The other following paragraphs, which are not relied on by St George, are hearsay accounts of conversations with Counsel for Spalla at the criminal trial to which Mr Hayes has pointed as providing a context for a full understanding of the parts of Ms Arslan's affidavit on which Counsel for St George has sought to rely.  I am disposed to admit paragraphs 13 and 17 on the understanding that it remains open to Mr Hayes to provide or supplement their context by adducing other paragraphs from this affidavit of Ms Arslan or others to which she has deposed.

(v)        Paragraphs 28 - 32

20                  These paragraphs contain hearsay assertions and speculation about the process which resulted in the formulation of the statement of claim in these proceedings and the extent to which documents now claimed to be the subject of legal professional privilege were, or may have been, used in that process.  These paragraphs, in my view, are irrelevant to the St George motion and should be excluded from the evidence in support of it.

(d)        The affidavit of 15 April.

(i)        Paragraph 2

21                  This paragraph deals with an application to Judge Hart in the County Court of Victoria on 7 April this year.  I understand that the transcript of that hearing is to be adduced in evidence before this Court.  If I am correct in that understanding, it is unnecessary for St George to rely on paragraph 2 of this affidavit of Ms Arslan.

(ii)       Paragraphs 17 and 18

22                  These paragraphs attest to the public use by the applicants of the s 19 documents and identify various passages in the present statement of claim which are said to reflect that use.  As with paragraphs 28 to 32 of the affidavit of 5 April discussed at [20] above they are not, I rule, available to be adduced in evidence in support of the St George motion.

Associate:

Dated:              22 April 2004