FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v
Advanced Medical Institute Pty Ltd (No 2) [2005] FCA 1357

EVIDENCE – hearsay – business records exception – Evidence Act 1995 (Cth) s 69 – meaning of ‘prepared or obtained’ in s 69(3) – meaning of ‘in contemplation of’ in s 69(3).

WORDS AND PHRASES – “prepared or obtained” – “in contemplation of”

Evidence Act 1995 (Cth) s 69

R v Dudko (2002) 132 A Crim R 371 cited

Vitali v Stachnik [2001] NSWSC 303 cited

Robinson v Stern [1939] 2 KB 260 discussed

Jarman v Lambert and Cooke Contractors Ltd [1951] 2 KB 937 discussed

W & M Wood (Haulage) Ltd v Redpath [1967] 2 QB 520 cited

Hollington v Hewthorn & Co [1943] KB 27 cited

Feltafield Pty Ltd v Heidelberg Graphic Equipment (1995) 56 FCR 481 followed

Waterwell Shipping Inc v HIH Casualty and General Insurance Ltd

(unreported, Sup Ct of NSW, 8 September 1997) followed

AUSTRALIAN COMPETITION & CONSUMER COMMISSION v

ADVANCED MEDICAL INSTITUTE PTY LTD (ACN 095 238 645)

AND OTHERS

NSD 1106 OF 2004

LINDGREN J

6 SEPTEMBER 2005

SYDNEY

THE COURT RULES THAT:

1. MFI 1, with the exception of the documents at pp 40 to 96 under tab 3, is admissible and is admitted as Exhibit 1R4.

2. The use to be made of the documents under tab 4 in Exhibit IR4 is limited as going to the question whether an order for corrective advertising should be made.

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

REASONS FOR JUDGMENT (No 2)

(Admissibility of business records)

INTRODUCTION

1                     The applicant (‘ACCC’) seeks orders in respect of a newspaper advertisement of a ‘nasal spray delivery system’ (‘the product’) said to cure the condition of impotence or erectile dysfunction in men (‘the advertisement’). Publication of the advertisement is said to contravene s 52 of the Trade Practices Act 1974 (Cth).

2                     The first respondent (‘AMI’) supplied the product. The third respondent, Ian Bruce Turpie (‘Mr Turpie’) is a television and club entertainer, and the advertisement featured his image and attributed to him certain statements as to the effectiveness of the product.

3                     The second respondent, Philip Somerset (‘Mr Somerset’), was an adviser to AMI in relation to the use of ‘celebrities’ in its advertising, and procured Mr Turpie’s agreement to being featured in the advertisement.

4                     By consent, orders were previously made against Mr Turpie, whom ACCC has called as a witness in its case against AMI and Mr Somerset.

5                     On Friday 2 September 2005, the last day of the hearing of evidence, AMI tendered a bundle of documents. Most, if not all, of the documents come from ACCC’s file. ACCC objected to the tender of many of them. I now rule on the objection.

THE DOCUMENTS TENDERED

6                     The bundle of documents is marked ‘MFI 1’. The documents are organised under four tabs. There is no objection to the tender of those under tabs 1 and 2.

7                     The documents under tab 4 relate to publicity given to this proceeding by ACCC. Senior counsel for AMI made it clear that those documents are tendered to show that an order for corrective advertising would be superfluous.

8                     The use to be made of the documents under tab 4 will therefore be limited as going to the question whether an order for corrective advertising should be made.

9                     The documents under tab 3 comprise pages 14–108 of the bundle. Objection was not pressed in relation to those at pages 97-108, being correspondence between Mr FG Lever SC, senior counsel for Mr Turpie, and the Australian Government Solicitor, representing ACCC. Accordingly, those documents are admitted.

10                  The numerous remaining documents under tab 3 are tendered by AMI as business records of ACCC under s 69 of the Evidence Act 1995 (Cth) (‘the Act’). Section 69 provides:

‘(1) This section applies to a document that:

(a) either:

(i) is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business; or

(ii) at any time was or formed part of such a record; and

(b) contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business.

(2) The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made:

(a) by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact; or

(b) on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact.

(3) Subsection (2) does not apply if the representation:

(a) was prepared or obtained for the purpose of conducting, or for or in contemplation of or in connection with, an Australian or overseas proceeding; or

(b) was made in connection with an investigation relating or leading to a criminal proceeding.

(4) ...

(5) For the purposes of this section, a person is taken to have had personal knowledge of a fact if the person’s knowledge of the fact was or might reasonably be supposed to have been based on what the person saw, heard or otherwise perceived (other than a previous representation made by a person about the fact).’

11                  It is not disputed that subs (1) of s 69 is satisfied.

12                  While subs (2) of s 69 begins by stating that the hearsay rule does not apply to a document, it adds a qualification: ‘so far as it contains the representation’. The reference is to the ‘previous representation’ referred to in para (1)(b).

13                  Identification of the representation or representations concerned lies at the heart of a proper understanding and application of s 69 (cf R v Dudko (2002) 132 A Crim R 371 at [55]–[57] per Spigelman CJ, with whom Simpson J and Blanch AJ agreed). It is only once the representation in question is identified that the ‘personal knowledge’ test of subs (2) can be applied, and the ‘preparer’ or ‘obtainer’ of the representation referred to in subs (3) can be identified. The process of identifying the representations in the numerous documents contained in MFI 1 that are to be relied on would be painstaking and time consuming and was not followed.

14                  At various times Mr Turpie, his son Josh Turpie, and Mr Somerset spoke to officers of ACCC who made diary notes of what they said. In each case there was a representation by the individual as to facts, and a representation by the officer that the individual had said certain things to him. The individual may have had personal knowledge of the facts of which he spoke, and the ACCC officer did have personal knowledge of the fact that the individual told him those things. Section 69 has the capacity to apply to the notes in so far as they contain both classes of representation. An initial question for AMI is what fact or facts it seeks to prove. It may wish to prove the facts spoken of, or the fact that information was known to the speaker or conveyed to the officer. These questions have not been explored in submissions.

15                  There are many diverse ‘representations’ contained in the numerous pages under tab 3 of MFI 1. The problem can be illustrated. At page 92 under tab 3 is an email dated 9 July 2004 from Simon Pristel, Deputy Editor of the Sunday Herald Sun, to Michael Terceiro of ACCC. It contains the sentence ‘His reaction is accurately recorded in the article’. The sentence refers to Mr Turpie’s ‘reaction’ in the course of a telephone conversation between Mr Turpie and Fiona Byrne, a Sunday Herald Sun reporter, who wrote an article about the advertisement. Mr Terceiro had written to Ms Byrne seeking information relating to certain matters associated with the ‘story’ which she had written. When Mr Pristel’s affidavit was read, late on Thursday 1 September 2005, objection was taken to that sentence in the email, which was annexed to the affidavit, and there was considerable debate about that particular representation.

16                  I indicated that I would rule on the objection the following morning and entered Court ready to do so. However, AMI then tendered the bundle, MFI 1. The debate over the particular sentence was subsumed in a general debate over the numerous documents under tab 3.

17                  The argument on Friday 2 September 2005 did not address each document separately, let alone each of the many diverse representations contained in them. I will not attempt to identify those representations, notwithstanding the importance which s69 accords to the process of doing so. Rather, I will indicate the applicable general principles and the decision which I have reached on the issues which were argued before me. If the parties remain in dispute in relation to any particular representation, they may relist the matter.

18                  The issue debated was the applicability of the exception provided in subs (3) of s 69. All of the documents in dispute pre-date the commencement of this proceeding. The argument concentrated on the expression ‘was prepared or obtained ... in contemplation of ... [a] proceeding’ within that subsection.

19                  Two questions were raised:

1. whether it is only the contemplation of the ACCC Commissioners that matters; and

2. when there was a passing from mere investigation to a contemplation of a legal proceeding.

1. Whose contemplation?

20                  The proceeding was commenced on 19 July 2004. The decision to commence it was taken by the ACCC Commissioners on 14 July 2004.

21                  The diary notes were made, and the letters of which copies are contained in MFI 1 were written, by ACCC officers, Michael Terceiro and Cyril Loa.

22                  Apparently, AMI will rely on the file notes and copy letters as containing representations made either by Mr Turpie, Josh Turpie or Mr Somerset, or by ACCC officers on the basis of information supplied by Mr Turpie, Josh Turpie or Mr Somerset, in either case in circumstances in which Mr Turpie, Josh Turpie or Mr Somerset, as the case may be, had or might reasonably be supposed to have had, personal knowledge of the asserted fact.

23                  It is the contemplation of the person who ‘prepared’ or ‘obtained’ the representation, that matters for the purposes of s 69(3), not that of the ACCC Commissioners.

24                  The progenitor of the s 69(3) exception was s 14CF(1) of the Evidence Act 1898 (NSW). That section and others formed Part IIC of that Act, which was introduced by the Evidence (Amendment) Act 1976 (NSW) (Act No 13, 1976) following a report of the New South Wales Law Reform Commission, Evidence (Business Records) (‘LRC 17’) in 1973. Section 14CF(1) provided:

‘(1) Notwithstanding section 14CE, a statement made or obtained for the purpose of, or in contemplation of, a legal proceeding or any other legal proceeding arising out of the same or substantially the same facts is not admissible.’

Subsection 14CE(1) referred to a ‘statement’ (defined in s 14CD(1) to include any representation of fact) in a document, and s 69(3) of the Act refers to a ‘representation’ made or recorded in a document (subs (2) makes it clear that the representation must be of an ‘asserted fact’).

25                  Unlike its New South Wales predecessor, s 69(3)(a) does not use the formula ‘made or obtained’. In order for s 69(3)(a) to apply, a person must have ‘prepared’ or ‘obtained’ the representation (not the document) in contemplation of a proceeding. It is an unusual use of language to refer to the ‘preparing’ of a representation, but I think that the intention is clear enough: the reference is to the person who prepared, formulated, shaped or framed the terms in which the representation is made. This will typically, perhaps always, be or include the maker of the representation.

26                  The person who ‘obtains’ a representation is a person who seeks the representation or procures it to be made. This person is not the maker of the representation, but may be a person who ‘prepared’ it.

27                  By referring to persons who prepared or obtained the representation, the legislature was attempting to encompass all those who might cause a representation to be made in the form which it takes. That it was attempting to do so is consistent with the rationale of reliability which underlies the business records exception to the hearsay rule, and the rationale of unreliability which underlies the subs (3) exception to that exception: see LRC 17, paras 48, 51; Australian Law Reform Commission’s Report on Evidence (Interim) (ALRC 26)vol 1, para 343; Vitali v Stachnik [2001] NSWSC 303 at [12]; ALRC Discussion Paper, Review of the Uniform Evidence Acts (ALRC DP 69) at para 7.240.

28                  When Mr Turpie, Josh Turpie or Mr Somerset said things to Mr Terceiro or Mr Loa, of which the latter made diary notes, both the former and the latter contributed to the ‘preparation’ of the representations contained in the diary notes as to the asserted facts, and the latter may be seen to have ‘obtained’ those representations.

2. Investigation or contemplation?

29                  AMI submits that many of the file notes and copy letters formed part of ACCC’s investigative process and preceded a point of time at which it could be said that ACCC officers had a proceeding ‘in contemplation’.

30                  AMI submits that the use of the words ‘in connection with an investigation’ in para 69(3)(b) dealing with criminal proceedings shows that representations made in connection with an investigation relating or leading to a civil proceeding were not intended to be encompassed by para 69(3)(a). Paragraph (b) appears to have been drafted with the procedures of investigation by the police, and subsequent prosecution by a different authority in mind. I accept that para (a) is not to be read as if it were identical to para (b) but without the word ‘criminal’, and think that para (a) is to be applied according to its terms uninfluenced by para (b).

31                  In subs (3) of s 69 the expression ‘in contemplation’ means, in my view, ‘in view as a purpose’, ‘prospective’ or ‘expected’: Oxford English Dictionary; Macquarie Dictionary.

32                  Robinson v Stern [1939] 2 KB 260 concerned subs 1(1) and (3) of the Evidence Act 1938 (UK), which provided:

‘(1) In any civil proceedings where direct oral evidence of a fact would be admissible, any statement made by a person in a document and tending to establish that fact shall, on production of the original document, be admissible as evidence of that fact…

(3) Nothing in this section shall render admissible as evidence any statement made by a person interested at a time when proceedings were pending or anticipated involving a dispute as to any fact which the statement might tend to establish.’ (my emphasis)

The word ‘anticipated’ is akin to the word ‘contemplated’.

33                  The facts were that a child was injured in a collision with the defendant’s motor car. Immediately after the accident the defendant went to a police station, and after a caution that what she said might be used as evidence, made a statement tending to show that the accident was the child’s fault.

34                  In a subsequent action by the child for damages for personal injury, the statement was tendered by the defendant as evidence under s 1(1) of the Evidence Act 1938. The defendant was asked by the judge whether, at the time she went to the police station, she anticipated that there might be proceedings against her, and she said that she had not thought about it. The judge admitted the statement and gave judgment for the defendant.

35                  On appeal, the Court of Appeal held that after the caution was administered to her by the police constable, the defendant must have ‘contemplated’ the possibility of proceedings being taken against her and that therefore the statement was rendered inadmissible by s 1(3), and there must be a new trial.

36                  Some emphasis was placed on the fact that it was common in the case of motor accidents causing personal injury to expect that a proceeding would be brought. Scott LJ was inclined to think that ‘anticipated’ meant ‘likely’, but considered that even giving the word the meaning ‘anticipated by the person making the statement’, the defendant must have anticipated a proceeding having regard to the facts of the case, the exculpatory content of the statement, and the warning which had preceded it.

37                  In Jarman v Lambert and Cooke Contractors Ltd [1951] 2 KB 937 (‘Jarman’) , s 1 of the Evidence Act 1938 was again in issue. A workman suffered an injury to his foot in the course of his employment. With a view to claiming on his employer for compensation, he gave particulars of the accident on a form supplied to him, and signed the declaration at the foot of the form to the effect that the particulars given in it were true.

38                  Subsequently, he withdrew his claim for compensation under the Workmen’s Compensation Act 1925 (UK) and sued the employer for damages for negligence. However, while the action was pending, the workman died as a result of his injuries, whereupon his widow was substituted as plaintiff.

39                  It was held that no proceeding was ‘anticipated’, either by the workman or by anyone else at the time when the statement was made, and that the form filled in and signed by the employee was admissible under subs (1). Evershed MR said that ‘anticipated’ meant ‘regarded as likely’ or ‘reasonably probable’.

40                  In W & M Wood (Haulage) Ltd v Redpath [1967] 2 QB 520, Ashworth J, citing Jarman, said that ‘anticipated’ meant ‘likely or reasonably probable’, while in Hollington v Hewthorn & Co [1943] KB 27, Hilbery J gave the synonym ‘might reasonably be apprehended’.

41                  The meanings of ‘in contemplation’ in s 7C(1) of the Evidence Act 1905 (Cth) and ‘anticipated’ in s 14B(3) of that Act were considered by Beazley J in Feltafield Pty Ltd v Heidelberg Graphic Equipment (1995) 56 FCR 481 (‘Feltafield’). Her Honour treated the two expressions as synonymous, reviewed the authorities, including Robinson v Stern, and concluded that the correct test was to ask whether there was a reasonable probability or likelihood of proceedings in the mind of the maker of the statement.

42                  In Waterwell Shipping Inc v HIH Casualty and General Insurance Ltd (unreported, Sup Ct of NSW, 8 September 1997) (‘Waterwell’) Giles CJ Comm D, treated ‘in contemplation’ in s 69(3) as meaning ‘likely or reasonably probable’ (at 5-6). Importantly, his Honour also stated (at 4):

‘Depending upon the facts, the positions of the parties may be that, while they see it as possible that there could be legal proceedings once sufficient investigations have been made to enable them to form their respective views upon whether there is a valid claim, it is also possible that there will not be legal proceedings because when the facts are known the insured might not maintain its claim or the insurer might acknowledge the claim. The distant, unassessable, possibility of legal proceedings once the facts are known is not, in my view, contemplation of legal proceedings for the purposes of s 69(3).’

43                  I agree with Beazley J in Feltafield that the test is subjective, and do not understand Giles CJ Comm D to have suggested otherwise in Waterwell. The question to be asked is whether the person who ‘prepared’ or ‘obtained’ the representation contained in the document, prepared or obtained it having in mind that legal proceedings were likely or reasonably probable, not merely one possibility.

44                  I have read the correspondence under tab 3 which extends over a period from 20 April 2004 to 13 July 2004, the day before this proceeding was commenced. ACCC officers said on a number of occasions that they were seeking merely to ascertain the truth and that there was no commitment to issue proceedings. There are also, however, more positive references. Much depended upon whether Mr Turpie would cooperate. From the beginning, ACCC officers referred to an appearance of contravention of the Trade Practices Act 1974 (Cth). At what point of time can it be said that they regarded a proceeding as likely or reasonably probable? Senior counsel for AMI submits that that time was no earlier than 24 June 2004. That was the date of an email from Mr Terceiro to Mr Josh Turpie which contained the sentence:

‘On the basis of your father’s evidence, we believe that we will be able to recommend to the Commissioners that it institute proceeding against AMI as having authorised the publication of the advertisements and Mr Phil Somerset for having been knowingly concerned in AMI’s contraventions.’

The email continued by pointing out that this was ACCC staff's view and that no decision had yet been made.

45                  I have come to the conclusion that the appropriate date is a little earlier, namely 16 June 2004. That was the date of a letter from the ACCC over Mr Terceiro’s signature to Mr Somerset, which contained this sentence:

‘Whilst the ACCC has made no final decision whether to institute legal proceedings in relation to the Alleged Conduct, it is presently minded to commence legal proceedings.’ (my emphasis)

46                  In the result, subject to any point to be taken in relation to any particular representation, it seems to me that from and including 16 June 2004, a proceeding, and, if it matters, one of the present kind, was ‘in contemplation’ in the minds of Mr Terceiro and Mr Loa. This does not mean that some steps taken after that date may not also bear the character of further ‘investigation’. The two characterisations, investigation and the taking of steps in contemplation of a legal proceeding, are not mutually exclusive.

47                  Having addressed only the issues which were debated before me, I will publish these reasons and the parties may relist the proceeding for further consideration in relation to any particular representation. Otherwise I admit MFI 1 with the exception of the material under tab 3 from and including 16 June 2004.

Associate:

Dated: 22 September 2005