FEDERAL COURT OF AUSTRALIA

Investa Properties Pty Ltd v Nankervis (No 4) [2014] FCA 589

THE COURT ORDERS THAT:

The general objection of the fourth respondent to evidence of the applicants as being “not admissible against the fourth respondent” is disallowed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    Yesterday Ms Painter and Mr Collins both made submissions to me in relation to a general objection of the fourth respondent to evidence adduced by the applicants. Specifically, the fourth respondent claims:

The claim against the fourth respondent is on narrow grounds. The fourth respondent does not object to evidence which is necessary to be led against other respondents, provided it is not purported to be relied upon as against the fourth respondent. However unless and until the applicants make any such distinction clear, the objection must be maintained. Similarly, any documents which are not admissible against the fourth respondent are objected.

2    Ms Painter for the applicants submitted that the objection had no base in law under the Evidence Act 1995 (Cth) (“the Act”). In particular, Ms Painter referred me to s 56(1) of the Act which provides that if evidence is relevant in a proceeding it is admissible in that proceeding.

3    There are numerous authorities supporting the position advanced by the applicants, including ASIC v Vines (2003) 48 ACSR 282; [2003] NSWSC 995 at [22]; Eire Contractors Pty Ltd v O’Brien [2012] NSWCA 400, and ASIC v MacDonald [2008] NSWSC 995.

4    Mr Collins for the fourth respondent accepted the weight of authority was in favour of the position taken by the applicants, however he also referred me to comments of Sackville J in Seven Network Ltd v News Ltd (No 8) (2005) 224 ALR 317; [2005] FCA 1348 at [21] (to which Gzell J referred in MacDonald) where Sackville J said:

In my opinion, considerable care should be exercised before s 136 of the Evidence Act is invoked to limit the use of evidence on the ground that its use might be unfairly prejudicial to a party in a procedural sense. I agree with Mr Sheehan that the policy apparently underlining provisions such as ss 60 and 77 of the Evidence Act should not be undercut by the making of orders under s 136 as a matter of course. This is particularly so where a judge, rather than a jury, is a trier of fact, since the danger of unfairness to a party might be expected to be mitigated by the judge attributing less weight to material that cannot adequately be tested in cross examination. Even so, the circumstance may be such that the power conferred by s 136 will not only be enlivened but it will be appropriate for the court to make a direction limiting the use of otherwise admissible evidence.

5    As I observed yesterday to Mr Collins, unfortunately Sackville J did not give any example of a circumstance where it would be appropriate for the court to make a direction limiting the use of otherwise admissible evidence. Nonetheless Mr Collins for the fourth respondent requested that I exercise my general discretion under s 136 of the Evidence Act to limit admissibility of evidence against the fourth respondent, which evidence is otherwise admissible against the first and second respondents, on the basis of a potential danger that such evidence could be unfairly prejudicial to the fourth respondent or misleading or confusing. In particular, Mr Collins submitted that if the proceeding was solely between the applicants and the fourth respondent, the evidence to which the fourth respondent objected would not be admissible.

6    At the conclusion of yesterday’s sitting I expressed the view that, at this stage, there seemed little basis upon which I should exercise my discretion to so limit the admissibility of evidence against the fourth respondent. I have considered the matter overnight and remain of the same view.

7    First, it is not sufficient in my view for the respondent in these circumstances to submit that the evidence would not be admissible against it if it were the only respondent. I am satisfied that the exercise of the court’s discretion in s 136 is selectively appropriate to specific cases of unfair prejudice or misleading or confusing evidence, and that it is not appropriate to uphold a general objection to evidence on the basis that it is not admissible against a particular respondent in circumstances where it is clearly admissible against other respondents in the same proceeding.

8    Further, in civil trials by judge alone, as is the current proceeding, the burden on both counsel and the court resulting from a ruling to grant limited admissibility warrants a cautious approach by the court to such rulings. In this respect I note in particular comments of Bergin J in Silbermann v CGU Insurance Ltd (2003) 48 ASCR 231; [2003] NSWSC 1127 at [18]-[19].

9    Second, at this stage I do not accept the blanket objection of the fourth respondent to admissibility of the applicants’ evidence on the basis that the case against the fourth respondent is “narrower” than that against the first and second respondents. At its simplest, the case for the applicants against all three respondents in respect of both lot 191 and lot 170 is that each of the respondents must account as a defaulting fiduciary to the applicants in respect of sales of those lots, and further that each of them must give equitable compensation. The case against the fourth respondent as found in the statement of claim appears to rest on the attribution of Mr Barclay’s actions and knowledge to the fourth respondent. To that extent, there are many similarities and overlaps in the applicants’ case against the three respondents.

10    Third, and in any event, as explained by Sackville J in Seven Network:

… the danger of unfairness to a party might be expected to be mitigated by the judge attributing less weight to material that cannot adequately be tested in cross examination.

11    As I further observed to Mr Collins yesterday, the fourth respondent is entitled to make submissions as to the weight I should ascribe to certain evidence in respect of the fourth respondent. Merely claiming inadmissibility of evidence against a particular respondent where the evidence is admissible against other parties is not reason for the court to exercise its discretion.

12    It follows that I disallow the fourth respondent’s objections to the applicants’ evidence, where the reason for the objection is merely “Not admissible against the fourth respondent”.

Associate:

Dated:    10 June 2014