Australian Securities and Investments Commission v Hellicar & Ors; Shafron v Australian Securities and Investments Commission [2011] HCATrans 294 (26 October 2011)

Last Updated: 27 October 2011

[2011] HCATrans 294

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S176 of 2011

B e t w e e n -

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Appellant

and

MEREDITH HELLICAR

Respondent

Office of the Registry
Sydney No S177 of 2011

B e t w e e n -

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Appellant

and

MICHAEL ROBERT BROWN

Respondent

Office of the Registry
Sydney No S178 of 2011

B e t w e e n -

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Appellant

and

MICHAEL JOHN GILLFILLAN

Respondent

Office of the Registry
Sydney No S179 of 2011

B e t w e e n -

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Appellant

and

MARTIN KOFFEL

Respondent

Office of the Registry
Sydney No S175 of 2011

B e t w e e n -

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Appellant

and

GREGORY JAMES TERRY

Respondent

Office of the Registry
Sydney No S180 of 2011

B e t w e e n -

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Appellant

and

GEOFFREY FREDERICK O’BRIEN

Respondent

Office of the Registry
Sydney No S181 of 2011

B e t w e e n -

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Appellant

and

PETER JOHN WILLCOX

Respondent

Office of the Registry
Sydney No S174 of 2011

B e t w e e n -

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Appellant

and

PETER JAMES SHAFRON

Respondent

Office of the Registry
Sydney No S173 of 2011

B e t w e e n -

PETER JAMES SHAFRON

Appellant

and

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Respondent

FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
CRENNAN J
KIEFEL J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 26 OCTOBER 2011, AT 10.17 AM

(Continued from 25/10/11)

Copyright in the High Court of Australia

FRENCH CJ: Yes, Mr Gleeson.

MR GLEESON: Good morning, your Honours. On the first page of our three page outline, there are four matters that I need to complete before moving on with the argument. The first is that in relation to our proposition 1 that the case was narrow and specific, I would ask your Honours to go to the actual pleading which is in the red book at volume 1 at page 193, with the critical allegations being that Mr McGregor tabled a draft announcement which was in the form of annexure A to the pleading. Annexure A is at page 347. That is the 7.24 am announcement.

The case against the directors was tied to that document, and paragraph 57 over the page alleged that they voted in favour of a resolution to approve that announcement and to authorise the sending of that announcement to the ASX. By contrast with Mr Macdonald, the final announcement is pleaded in paragraph 61 as a different document, and Mr Macdonald’s contravention is in respect to the final announcement. One other part is at page 231 in paragraph 112 against the directors.

The reason for the alleged contravention was approving that specific 7.24 am announcement with actual or constructive knowledge that it conveyed a false message that there was a reasonable basis for asserting certainty of sufficiency of funding.

Your Honours, the second supplementary matter is in relation to our proposition 2(d) which is the fifth draft of the minutes prepared at 8.00 am on 15 February did not get to the meeting and therefore could not have been used as a template. The Court of Appeal found that at paragraph [478].

The third matter which I would like to dwell on for a moment is paragraph 2(f) which is the position of Allens immediately prior to the meeting. The relevant findings are in the Court of Appeal at paragraph [340] and following. The additional information Mr Robb and Mr Cameron obtained from Macdonald and Shafron about a concern about Trowbridge not having the latest data is set out and it led the court to correctly, we submit, make the finding in [343] that they must have gone to the meeting uncertain about whether a surplus was the most likely outcome.

HAYNE J: That is, does the Court of Appeal accept that what Mr Cameron had said in his statement to the Jackson inquiry was to be accepted and found to be a fact?

MR GLEESON: Yes. There being no evidence to contradict it and ASIC not calling the available witness, Mr Robb, if he was to give any different version of that conversation. Over the page at [351] there is the finding which we submit is correct that when Mr Robb made his changes on the draft release he contemplated reduction in the assurance of funding. There is the finding which is correct at [352] that Mr Robb had an input into the ultimate changes. There was some process between him and Mr Baxter and the matter that is important, where the trial judge erred, is reached at paragraph [354].

The judge correctly asked the question, why did Mr Robb and Mr Cameron remain silent if at the meeting they were observing the directors being asked to approve the unequivocal statements in the draft announcement? He gave an answer which the Court of Appeal said just did not work which was, well, they had not had time to absorb it, that much is true, and then what the trial judge had said at paragraph [329] was presumably they held back on voicing a view because they had had an opportunity later in the day to give a view of the document.

That is where the Court of Appeal correctly found a central error in the trial judge’s reasoning. If you are the solicitor, if you know you have to advise on the document, if you know there is a problem in the area of sufficiency of funding and if you know you will be doing that later in the day, you do not sit there and let your board approve that document to go as a final to the market without, as a very minimum, making sure they know this document does not have your approval.

GUMMOW J: You say “if you are a solicitor”, what do you mean?

MR GLEESON: If you are the solicitor for the company engaged to advise the company on matters including the appropriate release to the market, you do not remain silent in these circumstances.

GUMMOW J: How could you make a finding on some sort of assumed attributes of how solicitors conduct themselves?

MR GLEESON: What the Court of Appeal is doing here, your Honour, with respect, is correctly saying we are not in Blatch v Archer territory yet. These are actual inferences - - -

GUMMOW J: The pressure on solicitors in this sort of situation could be enormous.

MR GLEESON: Exactly, your Honour.

GUMMOW J: Before you make a finding about it, you would need a lot more.

MR GLEESON: Well, that is where I am disagreeing with your Honour. What the court is saying is, on the record we have got, we know certain matters about Allens’ knowledge and their conduct. We know they are concerned, very properly, about sufficiency of funding, that is number one. Number two, we know they are retained to advise on this release to the market and number three, they apparently remained silent in a meeting where, according to ASIC, the directors are being asked to and do consider and approve a document as a final to go to the market. It belies common sense and practice of a competent and careful solicitor to sit there silent.

The inference is at least available, a fairly strong inference we would suggest, the reason that Mr Robb sat there and said nothing on this topic was the obvious one, that the 7.24 am announcement was not before the meeting for final release to the market. That is where your Honour asked yesterday, when we come to the inferences question, why would anyone be contemplating calling Mr Robb and what would you ask him? That is an inference which we submit - - -

GUMMOW J: You could have called Mr Robb, could you not?

MR GLEESON: I am going to come to the detail of those circumstances.

GUMMOW J: All right.

MR GLEESON: My submission at the moment is an available inference which counted fairly strongly against ASIC’s case arose from these facts we are looking at.

HAYNE J: Which assume that the solicitor attending the board meeting of the public company is there to interject when he or she thinks fit?

MR GLEESON: With respect, your Honour, that may not quite be a fair summary of what I am putting. Your Honour knows from the agenda of the meeting, and we will go back to it perhaps, that it specifically identified three sets of advisers who were to speak to the meeting. One of those sets of advisers was Mr Robb to deal with legal issues. The fourth matter that I wish to go to on page 1 is our proposition 4, and here there is a factual dispute between the parties - - -

HEYDON J: Proposition 4?

MR GLEESON: Proposition 3 on page 1, paragraph 4. If your Honours could compare that with Mr Gageler’s outline, he submits in paragraph 2.2 that the Court of Appeal did not overturn the trial judge’s finding on tabling but did overturn the approval finding. We disagree with that as a characterisation of the judgment. In 3.1.1, he refers to Mr Baxter’s evidence that he took a document to the meeting and his usual practice was to distribute it. What that leaves out is the cross-examination of Mr Baxter and the Court of Appeal’s findings that his practice was not followed and a similar point arises in relation to paragraph 3.2.2. The short difference between us is we submit the Court of Appeal on the rehearing correctly disagreed with what the trial judge found based on Mr Baxter’s evidence and said that looking at the weight of the evidence as a whole, ASIC had not proved to the appropriate standard that Mr Baxter distributed the document to all of the directors. Could I show why that is.

BELL J: Where in the Court of Appeal do we find that?

MR GLEESON: Yes. It is under the second theme, the practice theme, which commences at [302]. Paragraph [302] sets out the evidence of Mr Baxter in-chief about practice, as does [303]. Paragraph [304] notes his cross-examination that this was a series of steps of betting in advance that have to occur. Then it reviews the evidence which of course showed that that practice had not occurred and the Court reaches the conclusion at [310] that what was not done was what was said to be the practice and that undermined conclusions from the evidence of practice that it was before the board for approval as an ASX announcement.

BELL J: Can I take up one aspect of this with you arising from the submissions you were making yesterday afternoon concerning the significance of the Brierley directors having the 7.24 am draft? As I understand it, the Court of Appeal said well, there are other explanations. They might have come into possession of that at the Jackson inquiry or they might have come into possession of it because they had other channels of communications with Mr Macdonald.

But the document itself really had a very limited life. It came into existence shortly before the meeting and was rendered otiose not long after and does not appear to have formed part of the file maintained by JHIL. What was the reasoning that led to the Court of Appeal concluding it might have turned up at the Jackson inquiry?

MR GLEESON: The submission was recorded in paragraph [375] and it had the two elements to it. It had the possibility of the Jackson inquiry or it had separate lines of communication. Then I can point to no more than the last sentence of paragraph [382]. But what we put as more likely if one is looking at the inferences is we know there are separate lines of communication, we know it is for whatever reason really has direct input into Macdonald on the very transaction occurring.

We accept the Court of Appeal’s finding Baxter brought to the meeting the 7.24 am announcement. At the meeting there is dispute but it seems to have started 9, 9.30, 10.00 o’clock. Mr Robb turned up at 10.30. The meeting went till some time around lunchtime, perhaps 12 o’clock, 1 o’clock, there is some evidence like that. We know that from some time after 1.00 o’clock there is circulation of the 9.35 am version of the announcement. There is plenty of opportunity in a meeting going for several hours or at the end of a meeting for a conversation between persons who have that degree of familiarity and who have that precise interest in what is to be said for the document to be handed from Baxter to one of the Brierley directors.

BELL J: It is just that the Court of Appeal seemed to have relied on reasoning, including this speculation about the Jackson inquiry as a possible explanation. On the face of it, the trial judge’s view that an inference was open, supporting the idea that the release had been tabled at the meeting, seems to gain support from the production by the Brierley directors.

MR GLEESON: There is two steps to that inference. One is that they got it on that morning and the second is that they got it not as a distribution of a document to a person, but by reason of everyone receiving it at a meeting. Now, inferences can possibly be drawn that that may be a possible line of reasoning to pursue. What we are seeking to point out is that when one carrying out what we submit is the overall assessment of the evidence, there are a couple of strands, some points slightly stronger than a strand, pointing in favour of the party with the legal burden of proof to a section 140 evidence standard. At the end of my submissions this morning I will try to, if possible, encapsulate what we say are the nine or ten pieces of evidence and how they fit together and in that context the explanation we submit would be available that they simply did not prove that however a Brierley director got it, it was because everyone got it.

Your Honours, just to complete what we are putting about Mr Baxter’s practice and the tabling finding, I went to [310] where the court came to its first conclusion. The court went further in [311] to [315] that this was a matter pointing strongly against ASIC’s case. They returned to this question a little later at the third theme, which is paragraphs [359] and following, which was if Mr Baxter took it to the meeting, did he take it and table it? At [360] they say:

no actual recollection . . . his usual practice that, if proposed announcements had not been sent to the board members in their board packs prior to the meeting, he distributed hard copies of any announcement –

to the board at the meeting. If your Honours could go to the liability judgment at paragraph [132] to see the full context of Mr Baxter’s evidence. The so-called practice involved the propositions that not only would you distribute it to everyone at the meeting, which makes sense, but in the case of overseas directors you would email or fax a copy to them and if they did not have it, Mr McGregor would read out the terms of the announcement to them.

We know, and the court found, that practice was departed from in at least the second and third respect. It was never sent to the US directors. It was never read aloud at the meeting. So, the critical element of practice upon which Baxter says “Because I brought it I would have handed it out” is one which is falsified in those two respects. The Court of Appeal, correctly, returning to paragraph [361], noting that his evidence is founded on reconstruction in the absence of recollection and is based on his earlier email and the usual practice then sets out the cross-examination I have read and came to a conclusion in [363] if:

a draft news release was taken to the meeting is not because of JHIL’s practice earlier considered, but because Mr Baxter’s 6.57 am and 7.24 am emails referred to his taking the communication documents . . . to the meeting.

So it only gets you as far as he took the document to the meeting. For that reason, and it is repeated throughout the judgment, we differ from ASIC that the tabled finding has been overturned by the Court of Appeal. Your Honours, of course, can review whether that was correct or not, but it is wrong to assert that finding is currently extant.

Your Honours, to conclude Mr Baxter, if I could ask your Honours to go to black volume 1, there were two references. The first is on page 372. I have taken the Court down to line G – or asked the Court to read down to line G which was his concession that what occurred was “entirely irregular”. That was destructive of the practice argument. I would ask the Court to consider the further concessions he made between lines H and Q, the end result of which he was unable to depose to the matter. The other aspect of Mr Baxter is this. If your Honours could go forward to page 409, he was here being asked about, at the top of the page:

There was nothing said, discussed or decided at the directors meeting –

that he saw as an impediment to making the post-meeting changes. He said at about line M and following he felt he could do that, not on his own but with the approval of Macdonald. Macdonald, he said:

And discussion with others.

Q. But the terms of the resolution that you were working on and changing earlier in the evening of the 15th –

So this is at the end of the day -

were not set in stone . . . the media releases were not set in stone in any way by anything discussed or decided in the February board meeting, were they?

A. I’m not sure.

Q. But you had just made 15 or so changes –

to the release –

A. Yes.

Q. You couldn’t have run that going behind the back of the directors, if they had set in stone the terms of the resolution; would you agree?

A. Correct.

The answer is also given in relation to a question about the release. So if that is read together with page 411, N to T, we would submit the end result of Mr Baxter’s evidence was an acceptance that he could not have been engaging in the process he did later that day if he had witnessed a definitive resolution to send a particular announcement.

The one other witness called by ASIC on the topic was Mr Harman and, your Honours, you only need to go to one page, page 92, letter J to letter Q. He also was asked he did not see any impediments to making the changes in the release during the day. He agreed. His answer at line P to Q was important:

It was not my understanding that the press release was set in stone at the board meeting.

That is why, with respect, the Court of Appeal said ASIC is to be held to the case, which is you approved the sending of that particular 7.20 am announcement to the ASX. The only two direct witnesses you called conceded that that was not the way they observed the meeting to occur. That, we would submit, was fairly powerful in the Court of Appeal’s approach.

For better or worse, your Honours, I have finished page 1 and on page 2 I have covered and do not need to go back to the slideshow, that is proposition 4, or to the immediate post-meeting conduct, that is proposition 6. That leaves me two substantive factual topics to do on the main part of the case. The first is the evidence of Mr Brown and, to a lesser extent, Mr Koffel about the correlation, that is proposition 5, and the second is to bring together what we wish to submit about the minutes, proposition 7.

What the Court of Appeal did with Mr Brown’s evidence was to review the entirety of that evidence and find that it did not amount to the critical plank in ASIC’s case which the trial judge thought it did. It was proper for the court to do that as part of its rehearing power and we submit the court did it correctly. I will ask the Court to go to two places. Firstly, volume 13 of the blue book, the part of the evidence in-chief and then volume 3 of the black book. In volume 13 of the blue book at 5747, Mr Brown deposed to an exchange with Mr Macdonald during the meeting.

I might preface it. Your Honours know from the January meeting that Mr Brown was the person who had the moral issue. He was unhappy with net assets and he was always a man, to his credit, concerned about whether the sufficiency question was being addressed in a proper director’s duties fashion. So it is unsurprising that at the February meeting he is active in raising that matter and he initiates an exchange with Mr Macdonald where he wants an assurance that the funds allocated are sufficient and “Is the Trowbridge report sound and fit for the purpose” in question? Mr Macdonald gives an answer which indicates he is approaching this question from a different end, namely, he is more a communications man rather than a substantive decision man. He says:

“If we can’t tell all of the interested stakeholders that there will be enough funds then we will have great difficulty getting acceptance of the plan –

Mr Gageler yesterday read through the prism of paragraph [393] of the Court of Appeal’s judgment, that part of the conversation, he then stopped. What he did not do was to read the balance of the conversation or to the findings the Court of Appeal made about it, because what Brown went on to say was:

“I appreciate that difficulty, but that is not an answer. My question is: are you sure there are going to be sufficient funds in the trust?”

Macdonald said:

“Yes there are. We have got the best actuarial modelling. We have shown that we can meet the cash requirements each year. We are providing enough funds for future claims.”

We would submit it is tolerably clear from that conversation that the matter that Brown is seeking assurance on and getting it on is the substantive question, can we properly as directors’ duties separate under this model using Trowbridge, can we rely upon Trowbridge? Now, there is no doubt he has been told by Macdonald that there is a communication aspect of the decision and the stakeholders. We know that is everyone in the government through to the claimants through to other persons. But what does not appear from that conversion, we would submit, is what ASIC now seeks to place on it which is, you can infer from that conversation that Mr Brown and the other directors knew that they were hereby being asked to approve the 7.24 am release.

What ASIC seeks to elevate from this conversation – it just does not arise from it – is, well, this conversation could only be occurring if the 7.24 am release is before the board as a subject matter for decision and, clearly, it is quite explicable without that occurring. For that reason, if I could ask your Honours to go back to the Court of Appeal at paragraph [394]. The finding the court perfectly correctly made is that:

In his oral evidence Mr Brown said that he was concerned about sufficiency of funding on the basis of Trowbridge’s actuarial best estimate, and that his “I appreciate that difficulty” did not refer to making a public statement or anything in a draft news release.

Then the court sets out the evidence expressly to that effect. I just invite your Honour to read that extract from Mr Brown. The reference to that evidence is volume 3 of the black book at 1327. I dwell on that because when I come to my two US clients, ASIC propound two main reasons why this meeting, to their appreciation down the telephone, was meant to have expanded to the approval of a document they did not have and was not read out to them. One of them is that conversation.

Completing Mr Brown’s evidence-in-chief at page 5752 at paragraph 211 he said he had no recollection of reading or discussing the relevant document, and over the page at 212, he explained how he understood such documents would have to be approved by management and Allens before they would come to the board, and that was the way the practice of the company worked. That is all from his evidence-in-chief.

Then, could I go to the cross-examination in black 3. There are two sections which the Court of Appeal read in detail. I will just give the references first. The first section is pages 1328 to 1331, and the second is 1336 to 1356. Immediately before the reference I have given the Court, 1327, is the material I have read through the Court of Appeal’s judgment, and he was cross-examined to some length on the conversation with Macdonald that I have been to, and on 1338, lines J to M, he accepted correctly that when Macdonald is referring to statements, that would encompass what he described as:

press release statements and the statements that would go to other interested stakeholders. So, yes –

that is the context of Macdonald’s question. His response:

My question was not in that context.

The cross-examiner tries to tie him down to – he is referring, that is, Macdonald is referring to what the cross-examiner calls a press release. Brown correctly refuses to accept that narrowing and says:

And to statements that you might make to other interested parties - the whole lot.

There is further pressing him on that topic and he adheres to his answer at 1329C, and he is pressed to agree that this conversation with Macdonald is really a conversation about what is going to go into what is described as “the press release”, and he correctly refuses to accept that, and he says:

I would call it a conversation about the substance of the matter –

what I have termed the “essential directors’ duty” issue - - -

CRENNAN J: If you go to 1327 and look at his answer at R, he clearly appreciated the intertwining of being satisfied about the sufficiency of the funding as a public disclosure.

MR GLEESON: I accept, your Honour, that there is a link and he appreciated a link. He is coming at the question from – the first order question is, should we do this? Related to that, there will be public disclosure. One of the aspects the Court of Appeal correctly came to at paragraph [395] was even if that link was present, a link between the essential decision about sufficiency and then what in due course people might be told, how do you get from that to this being evidence of directors being asked to approve at this meeting the 7.24 am announcement? That is the step where they said ASIC fell short on the case which they were making. Your Honours, at 1329 at letter K he says:

Sir, to the best of my recollection, it wasn’t presented at the meeting.

That is, the ASX announcement was not presented at the meeting –

The meeting did discuss the key messages –

That is the point I have just accepted –

the way it was to be handled with the various publics for this . . . had an extremely competent public affairs and public relations department, and a very competent, as I thought at that time, chief executive, and I would have been content for him to be able to put all that together as part of his responsibilities.

That is another theme the Court of Appeal picked up from his evidence and accepted, that he maintained that the actual decision on the content of the various announcements was something left to Mr Macdonald and his team.

GUMMOW J: Provided the press release would deal with the fundamental question of full funding. That seems to be what was in Mr Brown’s mind at 1328, letter D. As Justice Crennan put to you, the two were intertwined.

MR GLEESON: I am not suggesting they were not intertwined, your Honour. What I am suggesting is that it is a conversation where the critical matter he is seeking assurance on is the substantive decision and the fact that that is intertwined with messages, which may in turn be communicated, leaves ASIC a significant step short of saying you can infer from this evidence, and this is really the high point of their case in terms of solving this dilemma. We know from the slides and the board paper that messages were not to be communicated of the type that were in the 7.24 am draft and that went out. Something happened. Someone was responsible for that.

CRENNAN J: It raises again, I think, and I think you are probably coming to it, what is the precise meaning of paragraph (b) of the resolution as minuted?

MR GLEESON: Thank you, your Honour. The meaning which ASIC has attributed to it throughout the entire case is that the directors authorised and directed the 7.24 am announcement to be sent to the market, not that they said, we have been looking at a document which in principle appears to reflect appropriate messages which balance a decision we are making and we now leave to management and Allens to turn out the final document. The case has always been fought on the basis that the meaning they attribute to it is directors approved and required that document to go. Your Honours might say to me that seems a little artificial, it seems a little narrow, but that is exactly what was the case. It was not a case about directors approving messages.

I mentioned yesterday that when there was an attempt possibly to broaden the case, there was objection by the counsel for my clients. Your Honours will see that in Mr Brown’s cross-examination itself. It occurred at pages 1348 through to 1349. The question which provoked Mr Bathurst to rise was at the foot of page 1347 where at this point the 7.24 am announcement is being put in front of Mr Brown, him having said it is not my recollection that I saw it or approved it at the meeting. What he is asked to agree to is that the terms:

That is, I want to suggest to you, the terms of what I indicated to you and you agreed was one of the key messages spoken to at the meeting?

So there is an attempt to say, well, because messages are being conveyed, we can draw a bridge from that to a particular document being before the meeting and approved. The objection was raised at 1348, S that Mr Bannon was:

not entitled to make an alternative case that rather than the document being tabled and voted on, there was discussion similar or equivalent to what was said on the press release.

The objection was taken in clear terms at 1349, H that silence was not any form of acquiescence to a broader case. Your Honours will know that no application to amend to raise a broader case was made. There are a couple of other aspects of Mr Brown I need to go to. One which is of importance, and it picks up your Honour Justice Gummow’s question about was there a message being discussed about full funding. What I will show is that what Mr Brown agreed was being discussed was this, sufficiency of funding in accordance with the actuarial estimate.

FRENCH CJ: You say that on ASIC’s pleaded case it had to prove tabling of the draft ASX announcement, a vote on a resolution and the passing of that resolution in terms of what appeared subsequently in the minutes?

MR GLEESON: Yes, being to send that document to the ASX, which we know the very thing did not occur.

FRENCH CJ: That did not occur, but that would not be critical to their case as - - -

MR GLEESON: No, would not be critical to their case, but it would be and it is a relevant factor to consider. If that is what has happened, if everyone has observed that, why do they then set about the process of turning what they all knew was a document that was not fit for final decision into a proper form.

BELL J: Can I just clarify one matter arising out of the Chief Justice’s question. I understood you yesterday to accept that the resolution might have been passed by the informal mechanism that was always adopted by this board, that is, without a formal vote. That is so, is it not?

MR GLEESON: There is evidence of informality, but it still had to get to the point of the chair saying in a manner that everyone knows what they are considering are we all happy with that, and the “that” has to be pretty clear and the “that” in the ASIC’s case is the 7.24 am announcement is to go as the company’s statement to the market. That is the point where I am - - -

BELL J: I understand that. I just wanted to clarify - - -

MR GLEESON: It does not have to be by a formal tabling of votes, but it has to be assent to a critical matter and that - - -

BELL J: As the minute states.

MR GLEESON: Exactly as the minute states. Your Honour Justice Crennan raised with me, is the minute capable of a softer or perhaps a broader more expansive ambulatory meaning? We would submit, it is not in terms of how they ran the case, but it is not as a minute and of course we know why that problem emerged. It is one of the whole problems with the minutes, that whoever drew up that minute before the meeting did it in anticipation of something which might happen without it being a minute drawn up to record what had happened. Your Honours, can I just complete this other aspect.

HAYNE J: But was adopted as a record of what had happened. It was signed as a correct record of what had happened.

MR GLEESON: Your Honour is asking me about 3 April and if may I will come to that in a moment.

GUMMOW J: Well, I think you have to start with it actually. But you pursue your course.

MR GLEESON: Could I beg to differ with your Honour as firmly as I can? We submit it would be an error to say one starts with a set of minutes which do not satisfy the statutory presumption under section 251A and which have no status other than a piece of evidence which passes admissibility tests of various sorts that I will deal with, to be considered along with the weight of the other evidence. To say, “You start facing that”, and then an onus in effect has shifted to you and you will have to work exceptionally hard to disprove the minute, we submit, would be an erroneous way to consider the whole body of evidence that was called in the case and of course the evidence which was available but not called.

GUMMOW J: I think you may have persuaded the Court of Appeal of this. One view is that that is the source of the difficulties with their reasoning.

MR GLEESON: Your Honour, can I complete Brown?

GUMMOW J: This concentration and themes and so on.

MR GLEESON: Your Honour, I did attempt yesterday to explain and defend themes as not the only way to do it, perhaps not the most common way of doing it, but when a court is dealing with a volume of material of this character, number one, and number two, an extensive notice of contention from ASIC running a whole lot of arguments the trial judge did not accept the court found it convenient and, we would submit, fair to the parties to treat that as a useful tool to assess all the evidence. So the matter with Mr Brown that I wish to further deal with is this. If your Honours could go to page 1322.

HAYNE J: Which volume?

BELL J: It is volume 3.

MR GLEESON: It is black 3. At the top of page he is being cross-examined by reference to the slides, and the slides accept there would be an ASX announcement, and his answer was:

ASX announcement and whatever further communications activities were going to go on –

At the foot of the page he is asked:

Q. And you don’t dispute that there was significant discussion, do you, at this meeting, about the ASX announcement?

A. Yes, I believe there was significant discussion about the communication of the Foundation to all outside parties.

The “Yes”, we would submit, is to be read in the sense of, yes, in the sense that there was to be significant discussion of the communications to all outside parties. Then he is asked a few further questions, and the linkage point comes out fairly clearly, which I have accepted, at letter G, that:

market reaction would depend upon our understanding of . . . the substance of [the proposal], and I could rely on the people within the company to reflect that in any news announcement.

So that is his “management will do the job”. He is then asked:

Q. You can’t think of any reason why . . . you wouldn’t have asked management for a copy of the announcement, can you?

He gives a fair answer:

A. To the best of my recollection, sir, the announcement was not provided at the meeting. What there was was a discussion, if you will, of the key messages that were to be provided to the market.

So this is the discussion of key messages but short of the meeting being provided with and asked to approve a particular announcement. Now, at 1324 he is asked about the February board paper and whether he thought:

the communications message was unsatisfactory because it did not convey that there would be a certainty of funding – that’s correct?

A. I note – yes.

Q. You had expected from the previous meeting that if the management was going to put up a proposal again –

there would have to be full funding.

A. Yes, sir.

Q. And, two, that’s the message they would be conveying to the market?

A. Yes, sir.

Then it is important to read on for the context:

Q. And yet the board paper you got, which dealt in detail with a communications strategy, didn’t say “fully funded”?

A. That is correct, and that’s where there was a whole lot of discussion in the board meeting, and that was the focus of the meeting, for the board to be satisfied that the Foundation had sufficient funds to meet its obligations.

Then, in effect, the Browne v Dunn question is put to him.

you made sure you satisfied yourself precisely what it was that the announcement was going to contain –

He denies that:

A. I believe the board discussed the key messages and had some discussion about the approach to individual key stakeholders, but was content to leave the drafting of the press release to management.

Now, this is where the Court of Appeal said that the entirety of his evidence was not addressed in this detail by the trial judge and the trial judge did not take into account the witness said repeatedly that the drafting was to be left to management. There is some more cross-examination on the Macdonald conversation that page and the next page. Then there is 1327 that I have been to. So that completes the first section of his evidence I wish to go to. The second is this. Commencing at 1336 at the foot of the page he is asked whether the:

communication would include an ASX announcement:

And his answer was:

A. As part of a communication, yes, sir.

Q. You were satisfied that what was said as to the proposed terms of the communication –

He did not agree with the question in that form. He said:

A. I recall a discussion of the general thrust of communications . . .

Q. You were satisfied that what was said as to the proposed terms of communication to the market –

That is the market generally. It is not about a specific press release –

accorded with what you expected should be said?

A. I believe so, sir, yes.

Q. And your expectation was that the message to the market would be that the Foundation was fully funded?

A. My expectation was that the market – that the message to the market was, in the terms that had been provided to us, sufficiently funded.

And he has pressed on full funding as opposed to sufficient funding and the answer I wanted to draw particular attention to is at the foot of the page:

And may I explain the term “fully funded”?

The concept probably at January but certainly at February, at the top of page 1338, was that the:

actuarial estimate provided sufficient funds. That’s a longwinded way of expressing something. I believe that the shorthand way that was developed in that meeting was to say it was fully funded, but fully funded in the context of sufficiently funded to the actuarial estimate –

So another matter the Court of Appeal picked up and paid attention to was that the message which Brown was accepting consistent with what he thought he was approving was sufficient funding to the actuarial estimate relying upon the Trowbridge numbers. He is then pressed again at letter J:

management indicated what it was proposing to say and the board indicated that it approved of that?

GUMMOW J: But he had said in his affidavit, had he not, that he had certain assumptions as to the sufficiency of the actuarial estimates and the methodology?

MR GLEESON: He was wanting confirmation, yes. That was the critical matter and he was wanting confirmation that the Trowbridge report in its assumption methodology was an appropriate basis upon which the decision could be made and, in turn, the matter could be communicated to the market. At 1338, K:

I don’t recall the specific terms that management used in describing communications –

but, in principle, accepted the statement. When I have said there are two high points that ASIC relies upon in the whole of Brown, the first is the Macdonald conversation, and 1338 is the second high point of the ASIC case. So it is the whole of the section between letter I and letter S. Having said at letter K he did not recall the specific terms that management used in describing the communications, he is then asked:

Q. And they indicated that this was what was going to be communicated by various means to the market, including an ASX announcement?

A. That would have been part of it, I would assume.

So this is why the Court of Appeal says this is not recollection –

Q. After they had indicated that –

Now, the “that” seems to be that they are going to communicate to the market various messages, including the message at the top of the page, sufficient funding to the actuarial estimate –

it is likely that the board’s approval of that message –

I emphasise the word “message”. The cross-examiner is clearly content to frame a question as message –

was summarised, may we take it, by Mr McGregor, in the usual fashion, saying, “Is the board happy with that?” and everybody nodded?

A. I do not recall, sir, exactly what the - - -

Q. But you wouldn’t dispute that that might have happened in that form?

A. It could well have happened in that form, yes.

So, treating that as the high point of the case against us, if the Macdonald conversation is to be read as I submit it is, it has these problems in it which the Court of Appeal identified. The first problem is this is not a man agreeing this occurred. It is a man agreeing that something was possible. The second problem, which is more fundamental, is what has been put to him is management propounding messages and McGregor bringing the meeting to a consensus as to whether messages, key messages, will go to the market, not a 7.24 am announcement being put to the meeting.

Coming back to your Honour Justice Bell’s question earlier this is why I say that the McGregor – “Are we all happy with that?” – is in a sense, at the heart of the case. What ASIC needed to prove was at this part of the meeting it was tolerably clear to everyone that the “that” is not a message in general, but it is the 7.24 am announcement. That is the second problem with it. The third is that the message he is agreeing to is a message of sufficiency according to actuarial estimate, not certainty of sufficiency of funding. Your Honours, that is critical because the case is that the 7.24 am was misleading because it conveyed certainty of sufficiency of funding.

What the cross-examiner never put to Mr Brown was “You were party to an approval of (a) a specific announcement in the 7.24 am terms and (b) an announcement which was to convey to the market certainty of sufficiency of funding”. Brown would never have agreed to that because he was not acting on that basis. He was acting on the basis that the actuarial estimate was reliable.

HAYNE J: What do you make then of the answer at 1329, letters F to H?

MR GLEESON: Your Honours would read that in the context of letters B to D. He is being asked about things that are likely and the problem with asking a question in terms of “is something likely to have happened” to a person who said “There are aspects I do not recall, I do not believe occurred” is what exactly are you encompassing in “likely”. He says at letter C:

I believe Mr Macdonald would have been talking to it as well, but that’s more from a belief of what would be the usual practice rather than an explicit recollection.

He is drawing that distinction. Then there is the question –

Q. Would you accept that it is likely that one of the members of management indicated that one of the key messages to be communicated would be that the Foundation will have sufficient funds to meet all legitimate compensation claims . . .

A. Yes, sir.

So my answers to your Honour’s questions are these. Firstly, the problem with “likely” is he is not agreeing it occurred. Secondly, it is an agreement to a message, a message, not to the 7.24 am announcement. Thirdly, it is not - - -

HAYNE J: Well, the cross-examiner is taking the script of the question from the text of the 7.24 am announcement, is he not?

MR GLEESON: Yes. What the cross-examiner is doing at this point, from a witness who said a couple of things (a) “I do not recall”, (b) “I can give some assent to messages being discussed as part of an overall communication strategy”, (c) “In my mind, sufficiency of funding was always tied to the actuarial estimate”, the cross-examiner is then, with that sort of witness, picking out lines from the press release and saying, “Well, do you recall a message like that being discussed?” That is no doubt what he is doing and that is the sort of answers that he gets over the next few pages of the document. But what that leaves ASIC is considerably short of proof of what is recorded in the minute for the reason I mentioned earlier.

Could I just indicate some aspects, but not all, of that strategy that then follows? At 1340 he is asked some questions about certainty and your Honours will note, between letters O to Q:

If, on the other hand, “certainty” means it is absolutely certain that there is no possibility whatsoever that the funds are not enough, are not sufficient . . . I don’t believe that I would ever concur that the company should be implying that.

A number of his answers are simply “I don’t recall” and I will not go through all of them. At 1342 ASIC would point to the answers between letters O to Q to find an agreement from Mr Brown that:

the levels of assurance that [he] received in the meeting about the sufficiency of funding are stronger than what is implied in –

the slides and that is a matter ASIC can point to and say, well, perhaps it was ramped up a little in the meeting and that might start to provide the bridge between the more cautious statements in the slides and the board paper and what actually happened. But it still falls short of proof that the board is being asked to approve the 7.24 am announcement.

HAYNE J: That is the fundamental premise for this branch of your argument is that it was for ASIC to prove that the minute was accurate.

MR GLEESON: No, your Honour. The fundamental premise is it was for ASIC to prove the allegation it made, and the allegation was that the directors approved the release of the 7.24 am announcement, of which there were various ways for ASIC to try and prove it. Could I take your Honours to 1344, where a different tack was tried at letter G:

Q. What I want to suggest to you is that you were told, by the board paper, that more work was being done . . . on a draft announcement?

A. We were told that there was more work being done . . .

Q. May we take it that you would have expected that management had had enough time between the publication of the board paper and the time of the board meeting to prepare a draft ASX announcement?

A. I can’t answer that question, sir, because I don’t know exactly what other tasks management had to do in that period.

It was a bold question because we know one thing is perfectly clear, management had not had enough time to do that and the witness was perfectly entitled to give the answer he did, which was completely accurate. Now, while it is all important, the last part I will go to is page 1354. The question at the foot of the previous page was:

Q. I suggest to you if someone indicated in words to the effect of the balance of the document -

that is the 7.24 –

you would have had no difficulty –

and he denied that –

A. Sir, if given the opportunity to read it –

and he appropriately qualified his answer. It is obviously very difficult –

trying to put my mind as to how I would have viewed it, I may well have raised the question in relation to the third-last paragraph of the statement on this page, where it talks about “the Foundation will have sufficient funds” –

He made the same comment in relation to another answer. The ultimate Browne v Dunn question is put at letter I and he denied it at letter L. At letter T he is asked can he point to any other document which would support those statements? He says, “No.” So, your Honours, could I just pull together what we say on the correlation issue by reference to the Court of Appeal’s findings. At paragraph [387] the trial judge’s findings at [153] to [161] are set out. At [388] the court correctly notes that the trial judge has not looked at the full context of the evidence. At the end of [391] they note Mr Brown’s evidence that he was content to leave the drafting of it to management. The court picks that up at [395] and that is the conclusion on the Macdonald conversation. At [396] they note correctly that the trial judge had not entirely accurately summarised the cross-examination. They deal with the answers in terms of likelihood. At [401] we submit correctly they identified that the trial judge’s reasoning had four steps to it.

The second step as to whether he had recall, the court disposed of down to paragraph [408] and pointed out the difficulties in recollection in questions based in likelihood [409]. The third step which is, could the only source for the statements that he agreed to as a matter of possibility have been the draft release, the court examined in detail. The trial judge never did this. This was a critical step in the reasoning which was never done. The court notes that at [413] and the court actually does an analysis of where the various findings of the trial judge, this is [418], can be sourced to the slides and the only two that cannot be sourced to the slides you see in [419] are two matters that are irrelevant to the misleading nature of the press release and accordingly, the court said the correlation was very weak [420]. At [421] it was rather artificial. The conclusion at [421] is important. Even if there was:

acceptance by the board that a strong assurance of sufficiency of funding should be given does not satisfy the pleaded case –

That is where, coming back to the question of your Honour Justice Kiefel yesterday, this analysis of what ASIC alleged and what they failed to prove is critical to the Court of Appeal’s reasons. In relation to Mr Koffel, my other client, the trial judge said he got a little bit from his evidence. The Court of Appeal analysed correctly in [423] and [424] that Koffel did not make any concessions which supported this analysis.

FRENCH CJ: Can I just take you back for a moment to the trial judge’s finding in relation to the January meeting, which is recorded at paragraph [91] in the Court of Appeal:

management was sent away to do more work on the separation proposal to ensure sufficient funds were available to meet all present and future asbestos claims”.

That is not actually reflected in the minutes of the January meeting, but does that stand as a finding of fact and therefore a frame of reference for the February meeting?

MR GLEESON: No, your Honour. We would submit that is inaccurate in its summary nature. What we have is the minute which said management were sent away to do more work on funding. What that work was to be - - -

FRENCH CJ: It is a kind of weasel word.

MR GLEESON: Yes, your Honour, as to what it would be, that was what they were to come up with. The various positions of the directors your Honours see paragraph [97]. This is probably a better guide to what management thought they had to accommodate in some way. Brown had the moral issue and wanted sufficient funds. Terry, Gillfillan and Koffel at that stage were not committed to a view there had to be more than the net assets. My other client, Ms Hellicar, was always contemplating funding beyond the net assets up to an actuarial estimate.

So, in a sense, it is a combination of Ms Hellicar’s conceptual idea - increase the funding to the actuarial estimate - together with Mr Brown’s moral concern that you should not be taking a point based on Putt; you should treat it as a group liability, which conceptually perhaps management says, “That is how we come up with the extra $70 million MPV that the company will contribute beyond its, on one view, strict legal liability”.

Your Honours see in that last sentence of [97] that the Trowbridge estimates were in the order of $200 to $300 million variously throughout the period. I think I may be forgiven for not pushing judicial notice too far to submit that the central problem which emerged after the proposal was that when estimates were redone that figure was found to be many hundreds of millions of dollars short. When KPMG came in and looked at it they came up with a conservative figure much, much larger and that is why the subsequent events played out over the last 10 years.

Now, can I move then to the minutes. Could I start with the statutory provisions which are set out by the trial judge in two places. Firstly, at paragraph 64, your Honours will see the old provision which practitioners would have been familiar with up until about 1990. The Companies Code, section 253 worked this way. The obligation was imposed on the company to cause the minutes of shareholder or director meetings “to be entered, within one month” in the books and the company was to cause them “to be signed” by the chair of that meeting or the next meeting.

Then there were two evidentiary provisions which hung off section 253. The first was that a minute which was so entered and signed was “prima facie evidence of the proceedings”. The second which seemed to go further was that “unless the contrary” was proved there were several deeming results:

(a) the meeting shall be deemed to have been duly held and convened –

Importantly –

(b) all proceedings that are recorded in the minutes as having taken place at the meeting shall be deemed to have duly taken place; and

(c) all appointments . . . shall be deemed to have been validly made.

What we now have from 1990 onwards and relevantly is found at paragraph 54 - the structure starts the same way. The obligation is upon the company to:

keep minute books in which it records within 1 month:

(a) proceedings and resolutions of –

relevantly, directors’ meetings. We observe the obligations on the company. The obligation is not imposed on the directors by the law itself. It is a question for each company as to how it goes about meeting that obligation. In the case of a large company such as James Hardie with a large company secretariat, as a matter of fact the obligation was allocated to management. It was Mr Macdonald and the secretariat who were responsible to ensure the company met its obligation.

One thing is clear; the company did not comply with its obligation under subsection (1) in this case. The February minutes were not entered, recorded in the books by 15 March. Under subsection (2) there is an obligation on the company, again, to ensure that the chair within a reasonable time signs the minutes. That seems to contemplate that the minutes could be prepared and kept, one might think, conventionally by the company secretary at the meeting observing what has occurred and could be placed in the minute book under subsection (1) within the one-month period to comply with that obligation and then in terms of when the company must ensure the chair signs them, that is a reasonable time which in the circumstances might be longer than one month, or shorter.

It follows from that that no obligation by the law is imposed on the individual directors other than this indirect obligation on the chair in respect to the creation and entry and signing of the minutes. It is an offence under subsection (5A) not to comply with subsection (1) or (2) and in subsection (6) a minute that is so recorded and signed, that is in compliance with subsections (1) and (2), may be received as evidence of a resolution to which it relates unless the contrary is proved. That provision appears to take a slightly different approach to the earlier section 253 that I have mentioned.

In the present case, it is now accepted that the conditions for subsection (6) were not engaged. The trial judge at paragraph [72] drew the conclusion that it followed that the minutes had no special evidentiary value and we submit that was a correct conclusion. The role of the minutes in the case would be under the ordinary principles of evidence via the Evidence Act where they could have a role either directly as a business record or as part of a chain of evidence in relation to their subsequent adoption. That is our first submission on the topic of the minutes.

GUMMOW J: It is an odd construction of the provision, though, because it enables a company by its ineptitude to escape in the operation of 251A.

MR GLEESON: I would submit it - - -

GUMMOW J: The scheme of the section is people dealing with the company should be able to rely on the minutes, and I imagine there is something in the listing requirements, too, about this which we have not been taken to.

MR GLEESON: I would agree with part of what your Honour is putting. Importance is given to minutes being created and entered within a period. Why? Presumably, the closer they are brought into existence to the meeting the more reliable they are. One month is treated as a rough and ready cut-off point. If a company has not complied with that - - -

GUMMOW J: The company is too late, why should it have the advantage that flows from it being too late? Why should it not suffer any consequences that flow from any inaccuracies by reason of its late preparation of minutes so that the outsider still relies on them?

MR GLEESON: Your Honour, my short answer would be that does not follow. That would be reading too much into the section. If one were to go down that path, the obligation is imposed, as I said, on the company. No obligation imposed on the director.

GUMMOW J: It is imposed on the company but it is subject to the Criminal Code provisions, is it not?

MR GLEESON: Were we subject to that, but that is not the issue we are dealing with in terms of alleged contravention here.

FRENCH CJ: The question, I suppose, of construction would be whether the so-recorded in 251A(6) picks up the within one month in 251A(1). That was not in contention.

MR GLEESON: We submit it does and, yes, your Honour, that is not a point that has been raised because ASIC does not seek to reactivate the life of the section, but in order that my answer is complete, the consequence if a company does not comply with a section is it faces the offence provision under subsection (5A), but equally it is viewed in terms of what is really a different subject matter, namely, what prima facie reliability will be given to the minutes? The approach taken under subsection (6) is if it happens within a month, it is deemed to be sufficiently reliable to be evidence which will shift an evidentiary onus to the party disputing. If it is outside a month, it does not have that character.

KIEFEL J: Well, it is conclusive evidence if it is within that period, but would it not be evidence otherwise depending upon its weight and the time at which it was entered in the records? If it was entered in the records one month and one day, you would still say that it had some evidentiary weight, would it not?

MR GLEESON: Yes, your Honour, and the source of that would be under the Evidence Act as a business record or as part of a larger piece of evidence of chain of conduct.

HEYDON J: Or as an admission.

KIEFEL J: Yes.

MR GLEESON: As an admission being an example of requiring the minute plus something else to prove the fact. So we accept that. Our point is simply that if it is not done within the month, you do not look here and you are thrown back to what Justice Gzell correctly said at paragraph [72], no special evidentiary value, it is a piece of evidence to be considered along with the other evidence and its reliability and its weight have to be assessed.

GUMMOW J: Well, I have to tell you I am not persuaded that is correct at the moment.

KIEFEL J: But if is evidence in the nature of an admission in a business record, it throws up questions of evidentiary onuses, does it not? That is what it does. You have to look at the weight it is given. This is not a case with purely circumstantial evidence where you assume everything has the same low value and see how it is all added together. This is a document that has a business record which calls for an explanation, I would have thought.

MR GLEESON: Can I deal with two things? Your Honours said that if subsection (6) applies it would be conclusive evidence unless the contrary is to be proved. I would not want to accede to that, but it not necessary to decide that in this case because (6) does not apply.

KIEFEL J: Yes, I understand that.

MR GLEESON: I can put that to one side. On your Honour’s other question, we accept that what the trial judge was bound to do, and the Court of Appeal also bound to do on the rehearing, was to look at all the evidence and assess the role that each piece of evidence could properly receive and not simply say, as it were, everything starts automatically the same. I am not putting that extreme view, but - - -

KIEFEL J: All I am really saying is that, as a piece of evidence, it requires a little further analysis, does it not, than just to say it is a business record?

MR GLEESON: Yes, it does, and that is the exercise I am now coming to, that as a piece of evidence - - -

KIEFEL J: It is a statement or representation to the world about what has occurred which may amount to an admission, at least, by the company.

MR GLEESON: Yes, and in assessing its role within the larger framework there are perhaps three or four different strands that I wish to deal with. One is the one your Honour has said which is what is the character of the statement in the business record? Another strand is the provenance of the document. Another strand is its incompleteness because it never had attached to it the necessary piece of paper to make it a comprehensible statement. Another is the question of inaccuracy, and another is the balance of the evidence given by the persons who are said to have adopted it, and another is the inferences available from other evidence in the case.

We would submit that all of those have to be brought together and it would be wrong to give some immediate elevation to the minutes without having conducted that inquiry. Your Honours, can I try and flesh out those aspects that I have just mentioned. The first is the provenance question of the minutes. We know that they were drawn up in draft prior to the meeting as a work of anticipation, that they never got to the meeting as a template and, accordingly, they have not started in the sense your Honours might think minutes ought to start, namely, with the person allocated with the function at a meeting of recording the substance of the business.

One of the stark features of this case is, save for one page, there are no notes of the meeting. No notes were taken. No one carried out the task of attempting to record at the time what the business of the meeting was. The only page your Honours have is Mr Robb’s note, which started and finished quickly at volume 5, page 2191. All we get from that, apart from him attending at 10.30, is that the meeting started in accordance with the slideshow. It has got “P.Macd. 3 elements for recommendation – all separately of value”. That is the reference to the three different strands that the board was - - -

BELL J: Which page is this, sorry?

MR GLEESON: Page 2191. I will give a cross-reference. That is a reference to what is at page 2203 of the slideshow. Then McGregor said something and we know no more.

GUMMOW J: Would it not be part of your client’s tasks to make sure this inadequacy, if you say there was an inadequacy in procedures, was remedied? In other words, to say, well, who is taking the minutes? They all sit mute, gazing at slides.

MR GLEESON: My submission is that in a public listed company dealing with a very important complex major item of business, what is appropriate and required of directors is what they apparently did, which was to consume a complex board paper beforehand and to participate in a presentation of the board paper – which happened to use slides, it could be done in other ways – and that the responsibility for ensuring an accurate note was kept fell on the company in law and in fact was allocated to Mr Macdonald and to the company’s secretariat. Your Honours might be referring to what in a counsel of perfection where none of us make mistakes is something that should have happened, but in terms of a common sense practical approach to how a public company board meeting runs, is it unrealistic to say each and every director has a duty to ensure that the company’s secretariat is doing their job?

FRENCH CJ: Can I just ask about the minutes of the April meeting, which records that:

The Minutes of the meetings of Directors held on 15 February 2001 were confirmed as a correct record -

what consideration there was of them and whether they fell within the statutory time limit? That is at 2839 in blue 7.

MR GLEESON: I asked that question this morning, your Honour, and I was told, albeit corrected, there was no exploration at trial of when the April minutes were entered and whether they had the benefit of - - -

GUMMOW J: Well, we assume they were, do we not? We assume regularity. You would not want to assume a result that involved the commission of an offence.

MR GLEESON: Your Honours have raised two separate matters. First, I was asked was it explored, and my answer to that is, as far as I know it was not explored, that is - - -

FRENCH CJ: There is no finding in relation to these.

MR GLEESON: There is no finding on that matter.

FRENCH CJ: Although they were in evidence, obviously.

MR GLEESON: Yes. Can I deal with provenance. The work starts on drawing the minutes six week after the meeting and here we wish to differ from Mr Gageler’s submissions. If your Honours go to his outline, he asserts, and he said yesterday, in paragraph 3.3.5 that:

Mr Robb sent an account for, inter alia, settling the minutes.

He took that submission further to say your Honours should act on the basis that Mr Robb settled the minutes. Therefore, they have the extra weight of the lawyer. He has no finding to that effect from either court below and the evidence does not support it. Can I show your Honours the provenance of the minutes? In volume 6, at page 2671, the draft has come from Mr Shafron to Mr Macdonald and to Mr Morley. That is the work of management six weeks after the meeting.

They make some changes to what had been the draft before the meeting, for instance, page 2674, at letters L to P. The only change they make to the ASX announcement on 2679 is that “chair” is changed to “chairman”, although we know that that is wrong, black 1, page 370, on no view did Mr McGregor table any announcement. No one apparently has given attention to what the “ASX announcement” is, because no one has attached a document to the minutes.

HAYNE J: Why would you attach the document to the minutes that are to be approved after the event when the announcement has gone? Would it not be grossly misleading to put into the minute book of the company, approval of an ASX announcement when that which was announced differed from what was considered?

MR GLEESON: Not at all, your Honour. That would be the very thing ASIC would need to win this case. That is the hole in the case and your Honour’s question has pointed it out. If their case was right – what happened was these gentlemen and lady approved that draft document and they said send that draft to the exchange. We all know that did not happen. Something completely different happened. If this was to be an accurate record of the business which ASIC said occurred, they would have to grapple with your Honour’s question. They never have in this case. So the persons who prepared this, Macdonald, Shafron and Morley, it is perfectly clear, never paid attention to this, which they picked up as a template from the previous draft; because if they had, they would have had to turn their minds to your Honour’s question.

BELL J: Mr Gleeson, can I just take up with you what we are embarked on at the moment. You keep referring to the provenance of the minute. I would have thought the provenance is that it is in the minute book of a publicly listed company, which really brings us back to Justice Kiefel’s question to you earlier, which I do not understand you to have answered. You are now inviting us to speculate about whether or not Mr Macdonald and Mr Shafron were careless.

MR GLEESON: I am doing something rather different, I hope. What I have sought to do is to say that in the body of evidence we have reviewed to date virtually everything, save for a couple of threads, points towards whatever happened at that meeting, it was not what ASIC contends happened at the meeting. I am coming to the one plank which ASIC says this is the best or the second best part of our case. I have got something in the minute book saying the directors resolved to do something. I am trying to grapple with what is the best or the second best point in their case. I am saying when you just first look at it, it is an incomplete work. On any view it does not tell you what the ASX announcement is. So before your Honours say here we have got an almost sacrosanct starting point, it is at least incomplete, incomplete on any view, and if one thought of it - - -

CRENNAN J: But it is a minute. Minutes, generally speaking, of their nature are not comprehensive about the discussions which took place.

MR GLEESON: I fully accept, your Honour, the minutes are to record the substance of the resolution and they may record discussion. My point is not about discussion. My point is, if you read this in the records of the company and say what is the substance of what the directors did that day, you would ask yourself a question and say I do not know, because I am told they approved something (ASX announcement). I do not have that document identified with it. I need to do at least some further inquiry to know what it is this purports to record. That is my only point.

Now, once you embark on that inquiry, you might go down the path Justice Hayne has put to me and said, well, the obvious place to go would be to say they approved the final announcement that was released to the market and the reason you do not have to put the final announcement attached to it is, if they say an ASX announcement, they mean the one that went to the market. That is what your Honour put to me. That, in a sense, if you were reading a minute without having the attachment, perhaps your first inclination might be Justice Hayne’s and say this records the chairman tabling an announcement. The company resolved it be sent. Where do I find it? Presumably go and look at the records of the ASX.

That is the very case that ASIC does not make. That is why it would be wrong, we submit, to say this minute starts with special evidential value. The minute starts with confusion, not clarification. If one thought of it in terms of a criminal prosecution or in terms of a jury trial, if you tendered this page and you tendered nothing else and you said my case is the directors approved the 7.24 am announcement, your case would fail. You would need at least to tender the 7.24 am announcement and then you need some evidence saying contrary to what might appear to be the position, namely, the final announcement, they in fact approved a preliminary draft announcement. That is the gap that ASIC recognised at the start of this case by saying we need oral evidence.

The reason they called Baxter and Harman was to try and plug the gap and say we can draw a bridge between the minute and what may be an unobvious document which satisfies the description of ASX announcement and at the end of that process, Baxter’s evidence was of no use to ASIC. Harman’s evidence was no use to ASIC. At that point they said we are not calling any more witnesses who knew what went on at the meeting and they did it for a reason which can obviously be inferred; they feared that the rest of the witnesses would suffer the same fate. So to summarise what I am putting, that document at 2679, when it was prepared by Macdonald, never grappled with the fundamental problem of what was it that it was purporting to record was approved at the meeting. Having said that, I take your Honour Justice Bell’s point that I am still in management and I have got to move to what happened.

I want to then deal with Mr Gageler’s point that Mr Robb settled these minutes and I want to show that is wrong. At 2515 the court has the Allens bill for the period 19 January to 23 February, the items over the page including drafting of minutes for various meetings. The hours of Mr Robb are shown on page 2519 and one can see from the attached detailed worksheet, work that he did prior to the meeting on drafting of minutes, for instance, on 7 February. So that is prior to the critical time at which Mr Robb would be doing any alleged settling.

If I could then ask your Honours to go to volume 7 – sorry, your Honours, there is one step I missed out chronologically. In volume 6, the board papers for the April meeting commence at 2686 and they were sent out on 27 March. The minute is at 2736 and what follows from that is that at the date they were sent to the board, 27 March, the only evidence that we have of persons involved in the drafting of the minutes is what I showed your Honours at page 2671, Shafron and management. So they have gone to the board by 27 March. In volume 7, there are two documents relating to Mr Robb. The first is at 2830 - Shafron to Robb:

JHIL minutes are done in draft (attached) – they have not been confirmed by the Board yet.

So that is indicating that they have come out of Mr Shafron’s work. They are not being given to Mr Robb to settle them because they have already gone to the board for consideration. They have been given to him for a different reason which your Honour will see from the next paragraph. The foundation wanted to see the minutes and Mr Shafron was expressing a doubt, at least, as to whether the foundation was entitled to see the minutes and that is the matter that, presumably, Mr Robb was asked to consider.

That is the only evidence of involvement of Mr Robb advising whether the minutes should be released to what was a third party. There is no evidence of him settling them. In terms of his bill, all we have is at page 2826. It is Project Green. For reasons I cannot explain, the period of the bill covers some of the period covered by the earlier bill. There is a reference to settling completion documents and board minutes as required by Alan Kneeshaw. He is another person within the company secretariat for four or five separate entities. Mr Kneeshaw is identified in the Court of Appeal at paragraph [481].

Then, as to the bill, we have an amount and we do not have a worksheet as we had with the previous bill recording what was occurring. In those circumstances, where there is no finding and the evidence is of that character, we would ask your Honours to reject the submission made by ASIC that Mr Robb settled the minutes.

HEYDON J: But he said he settled the minutes of the JHIL board meeting and there was only one board meeting that that could have been referring to, second diamond point on 2826. He said it. Why should one not assume it to be true or find it to be true?

MR GLEESON: Firstly, the statement is so general as to exactly what he has done. He has picked up the list of companies from the previous one. Secondly, I have shown your Honours that the document came from Macdonald and had gone to the board on 27 March and what we know about Mr Robb from page 2830 is that appears to be when he got the minute and that is after the bill. That is after the bill.

HEYDON J: Your argument assumes that this represents the totality of the communications on this question?

MR GLEESON: Two answers. First, yes. The second is that yet another area where the courts below in the first instance deal with the record as the parties have tendered it and to the extent an inference is sought by ASIC, I would like you to infer from the brief reference at 2826 that in some unidentified way, prior to 29 March and contrary to the 30 March document, Mr Robb did some settling, one would think perhaps you should call a witness.

GUMMOW J: It is not contrary to it at all. Mr Shafron is saying at 30 they are in draft because they have not been confirmed by the board.

MR GLEESON: And the proposition is in a bill that was sent on the previous day, your Honour, had Mr Robb, prior to getting that email, done settling of minutes and we would have thought if you wish to prove that as a fact, rather than leave it with one of the most highly uncertain inferences, the ordinary way would be to call a witness if you sought that fact to be proved.

BELL J: It brings you back again to Justice Kiefel’s question about evidentiary onuses in this context, does it not?

MR GLEESON: Let me attempt to answer it directly then. We are looking at a document which is in the minute book. If your Honours accept at least one step in my argument for the sake of moving to the next, it is a document which on its face is confusing, that is, the minute, because it does not identify what announcement it is that is said to be attached to the minute.

KIEFEL J: But once you identify what was announced and once you identify a document that was taken to the meeting which has an obvious connection with what was announced and you have some evidence that what was taken to the meeting was – I am sorry, you do not have to go that far. The minute says that something intended to be announced was tabled and approved at the meeting. Once you have the 7.20 minute and you have the connection with what was announced, why is there not an evidentiary onus cast upon the directors to show that it was not the 7.24 draft announcement that was tabled and approved as the minute says?

MR GLEESON: With respect, your Honour, it is circular. The critical step your Honour built into that was we get from somewhere else the bridge. The bridge is to a different document and to get to that different document, we have to have evidence - - -

KIEFEL J: That was taken to the meeting.

MR GLEESON: That it was taken to the meeting and that it was tabled in - - -

KIEFEL J: In circumstantial inferences, why is that not sufficient? It might not be ultimate proof, but why is it not sufficient for an evidentiary onus to be cast upon those who are in a position to explain what was or was not tabled to do so? That is the nature of evidentiary onus.

MR GLEESON: In the case of my four clients, and I am coming to their evidence in a moment, they each gave evidence and they explained exactly what their position was in relation to it, and they gave their evidence. So if an onus was cast up on them, they gave that evidence and their evidence explaining what occurred then had to be put back into the mix. But I would beg to differ with your Honour that one can move from saying Mr Baxter brought something to a meeting. There is a minute saying the meeting approved something to be sent. We can fairly quickly move over tabling - - -

KIEFEL J: No, the inference is, this is the document that was tabled and approved, as the minute says. That is the inference. It has to be rebutted, and just in the normal course of evidence. I suppose the point is, this discussion about Mr Robb, I think it, in a way, turns back to the directors. He was a witness who could say something about it, where was he? I mean, I know that the discussion about what ASIC was doing is very interesting and it obviously meant something to the parties about how it was being conducted, but it may be that it is, in terms of evidentiary onus as distinct from the decisions made by ASIC as to how far they were going to go to bring witnesses before the court, we are talking about two different things really.

MR GLEESON: Your Honours, there are five topics that Mr Robb could have elucidated. The Court of Appeal correctly identified the five topics at paragraph [758]. The first was whether the 7.24 am announcement was tabled. He was in a position to elucidate that because he not only observed the meeting, he was there as the company’s lawyer and he was a person who was to provide advice on that document and therefore would be naturally interested to follow closely what was happening in that part of the meeting. The second topic was how and in what circumstances he obtained copies of the 7.24 am draft news release.

I have already submitted that the natural inference that is available is that it was obtained at the end or shortly after the meeting when he went into the process of making the suggested changes with Mr Baxter and if that be the natural inference, that would tend against ASIC’s case. If he was to come and give some different evidence to say, “I got it when it was given to everyone at the meeting”, there would be an evidentiary onus on ASIC also as the party bearing the legal onus to call him to deal with that matter.

The third topic was if the document was handed out at the meeting, in what manner was it considered at the meeting? For the same reasons, he was in a good position, perhaps the best placed position of anyone to give evidence on that. The fourth topic is the same but even stronger, that as the lawyer observing the meeting with a keen interest in what resolutions were being passed, he would be keenly interested in observing whether the directors have passed resolutions in accordance with the draft that he brought to the meeting which only he had apparently. So he would have a very keen interest in observing and watching that. The fifth is the matter, perhaps directly, your Honour has put to me, which is whether the minutes accurately recorded the meeting.

Of those five matters we would submit that the first four, at least, fall squarely within the legal burden which ASIC bore in this case. As to the fifth matter your Honours raises with me, well, did ASIC do enough in the rest of the case to cast a burden on the directors such that they should answer by calling themselves as my client did and perhaps going further, calling the person who should have been the natural witness for ASIC to deal with matters one to four in order to deal with matter five.

Now, if there was a very strong and clear piece of evidence that Mr Robb was actually involved in the settling of the final minutes and that he was at the April meeting, for instance, when it occurred, that might be one thing. I have sought to show your Honours it is not a situation like that. So in an assessment of where he stood, we would submit that overall he clearly enough was a person that ASIC would be expected to call as part of their case.

HAYNE J: Can I just examine that further? Is the premise for that proposition that Mr Robb could or would likely have given evidence that the draft minutes which he had supervised in preparation did not accord with what occurred?

MR GLEESON: That is not a premise of what I am putting on the first four topics. It is relevant to the fifth topic – the fifth of the five topics. In relation to that topic - - -

HAYNE J: It would seem to me that at least issue 1, issue 3 and issue 4 are directly identified with the accuracy of the minutes and that issue 2 is subsidiary. Do you accept that?

MR GLEESON: No, I do not, your Honour. I beg to differ because - - -

HAYNE J: I suggest to you that the premise for this part of your argument is that Mr Robb could or might have said that the draft did not accord with the events as he observed them and that it would be necessary to understand that he would also have to say that he did not point that out to anyone, that is that the draft he had prepared did not accord with the events but he did not point that out.

MR GLEESON: No, I do not accept that, your Honour. He did not prepare the draft. If Mr Robb had come along, these are the matters he would have had to address in-chief or in cross-examination, apart from one to four, which is what happened on 15 February, and that is why I do not accept they are collapsed into the minutes. One to four are about what did you see, observe and do on 15 February. As to five, the question would have been this. You put pens down on your fifth draft at 8.05 am on 15 February.

According to the record, the next communication we have to you about the minutes is on 30 April where you were given a draft which Macdonald has prepared – March – and you were asked a question, should this be shown to the foundation. Apart from that we have a bill which is unilluminating as to what your role was.

BELL J: I have some difficulty with the latter proposition. The bill is explicit in that it is covering legal work done in connection with Project Green in the period 5 February to 27 March, the latter being the date on which the minutes were circulated to the board, and it contains an assertion as to settling board minutes. That would seem to be a document touching on the topic of the minutes.

MR GLEESON: Why then, I ask, does Mr Macdonald send him the draft on the 30th, page 2830?

BELL J: Is the conclusion that the assertion that – one is to assume that the assertion is incorrect, that contrary to the statement that the solicitor settled board minutes, respecting Project Green, for JHIL in the period when there was only one board meeting.

CRENNAN J: The other answer may be that minutes are always draft minutes until they are confirmed as a correct record.

MR GLEESON: That may be so, your Honour.

KIEFEL J: And this was not the first time that he was given a copy of the minutes. He had made some notations on the 7.24 am draft, had he not?

MR GLEESON: He has made notations on the 7.24 am draft announcement distinct from minutes.

KIEFEL J: Yes, I am sorry.

MR GLEESON: I would simply submit this. On 2826, is that a statement telling you what work Mr Robb did? When did he do it? Was it prior to the meeting or after? Did he do it at all? The next matter then, of course, is that the errors and inaccuracies in the minutes, as a whole, which the Court of Appeal correctly characterised as substantial, are indicative that whoever was engaging in review of those minutes could not have done so carefully. That inference just arises squarely from the extent and degree of the inaccuracies. It minimises them to call them rescheduling. It is fairly clear that anyone, whether it be Robb or otherwise, who was working on that document did not have a clear recall and/or did not apply their mind closely to the accuracy of the document. That is a matter which also would be relevant if Mr Robb gave evidence.

Your Honours, could I, before moving to Blatch v Archer, conclude what I have sought to put this way. In terms of onus, of course, it was for ASIC to prove, on the balance of probabilities, to a section 140 standard that their case was more likely than the alternative or alternative hypotheses, and that is the legal framework for it. However, if I simply put our case affirmatively as to what we say happened at the meeting, bearing in mind the onus point, it means I am putting this in a fashion we do not need to go as far. This is what we say happened.

The first thing was the directors came to the meeting knowing that the key business was the decision on separation. Secondly, they came to the meeting with information about a proposed communication strategy which would necessarily involve an ASX announcement as well as a range of other communications without being given the terms of the proposed announcement or being told they would be asked to approve it.

The third matter is that Mr Baxter had a good reason to, and did, refrain from generally circulating the 7.24 am draft because he would have to explain to his board that he had not followed procedure, that the document was not ready to go to the market and that the document made claims inconsistent with what the board had been told in the other material.

The fourth matter is that Mr Robb attended the meeting with concerns about sufficiency and remained silent with those concerns, as he was entitled to, because no press announcement was being finally approved at that meeting. The fifth matter is that during the rest of the day the work in progress continued until 10 pm with management and Allens making changes consistent only with the board not having approved the 7.24 am announcement.

The sixth matter is that the evidence of Brown goes no further than that messages were discussed and approved, but messages short of approval of an announcement as such, messages of sufficiency to the actuarial estimate, and messages that management would implement as they thought best.

The seventh matter is that the actual resolution that occurred at the meeting was to do the separation as per the four resolutions in the board paper. The last matter is that when the minutes came to be prepared late in March and in April, everyone involved in those minutes, Macdonald, management, Robb – if he had any role in them – and the directors in their review of them on 3 April did not attend to them with sufficient care to pick up the inaccuracies both in general and in particular.

Your Honours, if I can move to the other two topics. The first is Blatch v Archer. I could do this largely from the green book together with two authorities. At green page 412 at paragraphs 23 to 35, we make our submissions on what we contend are the conventional principles governing these questions, including the propositions that we accept the rules of civil matters apply under section 1317L, that section 140 of the Evidence Act applies, that that reflects Briginshaw, that the courts below were required to come to a state of actual satisfaction that the events occurred, taking into account the seriousness of the allegation and the gravity of the consequences if it were proved, that Blatch v Archer is the evidentiary framework through which to consider any question of adverse inferences.

Your Honours, in paragraph 28 we referred to the decision of the Court of Appeal in Ho v Powell [2001] NSWCA 168; 51 NSWLR 572. In Justice Hodgson’s analysis between paragraphs 13 to 16, his Honour expresses a view of the law that, in paragraph 14:

in deciding facts according to the civil standard of proof, the court is dealing with two questions: not just what are the probabilities on the limited material which the court has, but also whether that limited material is an appropriate basis on which to reach a reasonable decision.

He deduces that from Blatch v Archer. In paragraph 16 he treats the decision in Jones v Dunkel as one aspect of the larger Blatch v Archer principle. One aspect, in the sense, that is a case where there inference was drawn against the party who did not bear the legal onus and what his Honour says at the end of 16, which is our case:

In my opinion, a similar principle applies where a person bearing the onus of proof does not give or call evidence which that person is plainly in a position to give or call; and unless some explanation is given of this failure, the tribunal of fact is entitled to infer that this evidence would not have assisted –

The other case I wish to go to is Payne v Parker [1976] 1 NSWLR 191. Justice Glass, although in dissent in the result, elucidated the principles in a manner that has been accepted as good law at least in New South Wales if not beyond. The principles are nine and they start on page 200. They include that the reasoning allows an increase in:

the weight of the proofs of the opposite party or reducing the weight of proofs of the party in default –

In that proposition (2), Justice Glass deals with both sides of the coin. The first side is where there is:

a deficiency in the evidence either of a party bearing the legal onus –

that is our case -

or of a party bearing the evidentiary burden only.

That is the other case. At letter B he says –

If the failure is of the former kind, a consonant formulation would be that the direct evidence of the party carrying the onus may be more readily rejected, and the inferences for which he contends may be treated with greater reserve.

That is the proposition we submit was the relevant proposition and then it was a question whether it could be applied in this case. Justice Glass said then that there are three conditions for the application of the principle. That is proposition (6). The first is whether one party would be expected to call the witness. The second is whether his evidence would elucidate a matter, and the third is whether his absence was unexplained. As to expectation, which is the real issue in this case, his Honour elaborated on that in proposition (7) and, at the foot of page 202 when he turned to the facts – I only need to go this far - his Honour said:

I incline, however, to the conclusion that the accessibility of the witness’ evidence to the parties, his relationship to them and the nature of the cases respectively advanced by them are all material factors bearing upon the ultimate questions: Which party would be expected to call the witness?

Your Honours, in our submission in the green book at page 415 at paragraph 34, we therefore submit that under ordinary principles, if those three conditions are made out, there are four types of inferences that can be drawn. Our position about ASIC is stated briefly in paragraph 35 that the correct way to bring to account ASIC’s role and the public interest character of the proceedings is through the framework of whether the three conditions for Blatch v Archer have been satisfied, in a sense where we – and I do not speak for other parties – put a softer submission and the Court of Appeal found something which may be relevant to the satisfaction of the conditions, particularly expectation, has been given by the Court of Appeal a higher role as a duty and a breach of duty. I make no submission - - -

FRENCH CJ: What is the logic by which the public interest character of ASIC’s role plays into the assessment of the evidentiary impact?

MR GLEESON: It is this, your Honour. The character of these proceedings - - -

FRENCH CJ: It must be more than expectation, must it not? It must be an assumption that they are going to behave in a particular way and that if they behave in some other way inferences about the evidence can be drawn from that behaviour.

MR GLEESON: Can I put it slightly differently, maybe to the same effect. The character of the proceedings is civil penalty. The purpose of the proceedings is to establish an important matter in the public interest, namely, whether or not there has been a contravention of a significant provision affecting public listed companies and the market for listed securities.

The relief sought is designed to be declaration, penalty and disqualification which is designed to establish a correct standard of behaviour. It is designed to punish in the sense of specific deterrents. It is designed to have general deterrence characters to it and the effect on the individuals, if they lose, is it effectively destroys their professional livelihood.

In proceedings of such a character, the nature of such a proceeding, where the regulator brings forward that as the matter for the court to decide, carries with it as a natural expectation if the regulator has available to it good evidence, perhaps the best evidence on a topic, it will bring that evidence forward to the court rather than say I wish to rely upon uncertain and doubtful inferences.

So it goes to inform would you expect a person in that position, if they have evidence of that character, to bring it forward in proof of the case in satisfaction of the burden, or would you expect them to not do so? Now, where we differ from the Court of Appeal is if they make a choice, as they did on day 10 or 12 of this trial, “Enough is enough, we do not want to call all the witnesses we have announced we are going to call” we do not say, for our part, that ASIC “acted unfairly”. We do not say that the decision of any lawyer involved in advising ASIC to do that was in any way unfair. It was a calculated forensic decision made for an obvious reason, which is our first two witnesses have collapsed. Why should we call more?

Now, if they do that the consequence is not a penal one. It is not, as your Honour the Chief Justice put to Mr Gageler yesterday, is it a discounting of the entire case? The consequence is simply to say, to the extent we are left in the area of inferences in this matter, if we are left saying what inferences can ASIC have drawn in their favour, what should be drawn in our favour, if they really have held back the central witnesses who can most clearly elucidate the key facts that would allow you to satisfy the three conditions of Blatch v Archer and you would draw the inferences in paragraph 34.

HEYDON J: Why do you assume that ASIC had available to it “good” evidence? We know nothing about the evidence. Mr Robb did many things in the eight years between the 15 February meeting and the time of the trial for hundreds or thousands of other clients. The directors, on the other hand, were directors of the company.

MR GLEESON: Yes. Your Honour’s question raises, if I may say so, the second of the three conditions we have identified and the first and the second are interrelated in the authorities. The first is expectation, which has attached to it matters such as accessibility, relationship to the party and the nature of the case and it is the nature of the case I was seeking to answer in the Chief Justice’s question as to why that is relevant. The second condition is, is he a person – this is paragraph 30(b) – whose evidence would or might be expected, we would say, to elucidate a particular matter? It is that question of elucidation.

If one thinks in Payne and Parker, the question was whether the doctor who was sued for negligence could be expected to call the subsequent surgeon who had operated on the same patient with adverse consequences. The judgment of Justice Glass does not go on the basis of, I know what the surgeon would have said or that he had a memory of the precise events; he went on the more fundamental point of, was he in a position to have knowledge of key matters where he might be expected to elucidate it. If Mr Robb had turned up he may have had recall on some of the five matters, he may not. He may have been certainly able to be cross-examined on matters as well.

For instance, so your Honours see where we ultimately go, on page 436 at paragraph 126, we submit that those four inferences are available on the evidence in favour of the directors and the failure to call Mr Robb allows the court to more comfortably draw those inferences and, conversely, if your Honours go to paragraph 147, we submit that express or implicit in ASIC’s case are those four inferences and the failure to call Mr Robb, a person who was able to elucidate those matters, would lead a court to be less likely to draw them.

HEYDON J: Can I just ask two factual questions about how the trial was conducted? Did anyone ever suggest to the judge that in a case where neither side seemed to want to call Mr Robb, it might be appropriate for the judge to do so? That is one question. Another question is, was any point taken at the trial – I know you are distant from this argument for your clients’ parts but was any point taken at the trial that the conduct of ASIC in not calling Mr Robb was unfair and was going to lead to the conclusions that it eventually led to in the Court of Appeal?

MR GLEESON: The answer to the first is no. Can I defer the second to another counsel?

HEYDON J: Yes, certainly.

MR GLEESON: Your Honours, the one step of the Blatch v Archer Case I have not done is to review the factual circumstances in which the witness was withdrawn from the proceedings. May I leave that to Mr Bell? The one topic that leaves me is the separate position of my two US clients. This much is common ground. They did not receive any press announcement in their board papers.

At midnight on the night before the board meeting, they were emailed the slideshow and the cash flow model, so special attempts were made to get that material to them for their availability. The press release was not emailed to them during the meeting. They did not have knowledge of its terms. The press release was not read out to them at the meeting, and they could not know its terms.

The question is whether something happened at the meeting which was sufficiently explicit to put them on notice that the meeting was now proceeding to approving a particular document which they could not have knowledge of the detail of, and the contravention that has been found against them is that the meeting did happen in that fashion, and so at some point you breached your duty not by, as with the other directors, approving something which you should have known was misleading, but by your acquiescence, as it were, in allowing the meeting over the phone to believe you were assenting without taking the proper steps of getting the document.

There is a vast degree of artificiality about that type of case, your Honour. The burden it suggests a person is under in a telephone meeting, when you have not been given the material you are apparently being asked to rule upon is an extreme one, and one asks the question where do we see, apart from the minutes, evidence that McGregor at the meeting made clear to the US directors something like this, “Are you happy? We are now going to as a whole approve a document for release to the market, a very important document which we have not given you”.

Now, if that were conveyed in any form, you would expect immediately any reasonable director to say, “Why on earth am I being asked to take responsibility for something I do not know the terms of. Adjourn the meeting. Send me the document and then I will continue.” That never happened. What the ASIC case seems to come down to, apart from the minutes, the ASIC case comes down to, because of the cross-examination of Mr Brown, and I have taken you to, I think, all the key passages, that was good enough for someone on the end of the phone to know you are now being asked to take responsibility for the release of a very important document to the market. That is the central gap in the case against the US respondents. In terms of their position at the 3 April meeting, could I show your Honours their key evidence on these matters?

FRENCH CJ: I think your time runs out at 12.45.

MR GLEESON: Not only that, your Honour, I have stolen Mr Gageler’s time.

FRENCH CJ: Yes, you have done that already.

MR GLEESON: Yes, I know.

HAYNE J: In other words, you have doubled the time just about.

MR GLEESON: Yes.

FRENCH CJ: This is covered in your written material.

MR GLEESON: Your Honours, if I have gone too long, I apologise. I do wish to apply for 15 minutes to speak on behalf of my two US clients so your Honours just see their evidence.

FRENCH CJ: You can negotiate that with fellow counsel, Mr Gleeson. We will adjourn until 2.15 pm.

MR GLEESON: May it please the Court.

AT 12.44 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

FRENCH CJ: Yes.

MR GLEESON: Your Honours, Mr Walker acceded to 15 minutes but I will not need that long, so if it is convenient to the Court I ask for a few extra minutes on the US respondents.

FRENCH CJ: Yes, very well.

MR GLEESON: Thank you, your Honours. Your Honours, this is all I wanted to say which was extra. The first is that Justice Gzell’s summary of the evidence of Messrs Gillfillan and Koffel is adequate, save for one matter I will come to and the Court can act upon it. The evidence is set out in the liability judgment from paragraphs [162] to [178]. In the case of Mr Gillfillan, he indicated a recollection of not receiving the announcement, of no discussion of it. He said to the best of his recollection the event did not occur and he explained a reasonably compelling reason why he would have been troubled had that announcement been before the meeting, namely his US experience in making unqualified statements about future events such as this.

In relation to Mr Koffel at paragraph [169] and following, he similarly said he did not recall it being read out and relied upon his US experience in paragraph [170] which enabled him definitively to say he would not have been party to approving the contents of a release because he was a person who in fact used his US attorneys to review any such documents and he came from a critical environment in relation to corporate disclosure. His evidence continues in a fairly comprehensive and convincing fashion as to why he did not hear down the line he was somehow being asked to take part in such an approval.

The one matter of qualification I put was in relation to paragraph [177] which concerns the key messages. That is perhaps a little summary, and the Court of Appeal dealt with that at paragraph [423] in a more accurate manner. The second aspect in relation to these two gentlemen is that at the back of the liability judgment in paragraphs [1195] and [1197], they dealt specifically with 3 April, Mr Gillfillan’s evidence was that while he looked at the minutes, he studied the portion down to the section concerning the creation of the foundation and at that point formed a view, the balance was dealing with certain formalities, and did not read on further. Mr Koffel’s position was a simpler one. He took a practice of not reading draft minutes, regarding it as not the function of an individual director. That is the second matter.

HEYDON J: So he approves things he does not read? He was invited to vote in favour of the correctness of the minutes.

MR GLEESON: That follows, your Honour, from the practice he has deposed to. That leads to my two last matters. The second last is, the basis upon which the trial judge found these two gentlemen should have known the meeting was approving a document they did not have hinged almost entirely, it would seem, on the correlation finding. That is liability judgment [226] and [226] seems to be what his Honour then picked up in [231] and [234] to find adverse to these gentlemen. If your Honours accept the substance of my submissions on the correlation matter, the central plank in this reasoning has gone. ASIC add one further plank in their submissions in reply which is also based on Brown’s evidence. It is that conversation between Brown and Macdonald I took you to this morning from which it is

not possible, certainly on a Briginshaw standard, to draw the conclusion ASIC seeks.

Your Honours, the final matter is that then leaves the balance of the evidence against these gentlemen on this critical question of whether they reasonably heard that the meeting was expanded to a piece of business which on no view they could really deal with as resting upon the fact that they approved the minute on 3 April. That fact must be taken into account, but I do point out that the trial judge did not reject their evidence as untruthful when they explained what they did in relation to the 3 April meeting. The evidence was given. It has not been rejected. It is consistent with what they say about the 15 February meeting that it just never occurred in the manner ASIC need to succeed in their case.

Your Honours, our written submissions on this are in the green book at pages 443 to 446 and we do offer in paragraph 165 that the essence of ASIC’s case must be that something happened in the meeting of that character to make it clear that these gentlemen were now at peril if they did not dissociate themselves from a part of the meeting discussing the ASX announcement and on the balance of the evidence, having regard to the Briginshaw standard, we submit ASIC failed to prove that case. May it please the Court.

FRENCH CJ: Thank you, Mr Gleeson. Yes, Mr Bell.

MR BELL: If the Court pleases. I propose to address submissions in the following order. I intend to commence by answering Justice Heydon’s two questions before lunch which we apprehend to be important questions. Secondly, I wish to make a brief submission about Briginshaw, picking up some of the Justice Kiefel’s observations about evidentiary onus. Thirdly, a very important factual matter the Court has not yet been taken to is the chronology behind ASIC’s long communicated – by long communicated I mean six-month communicated – intention communicated to the defendants and to the court to call Mr Robb as a major witness in its case, because that informs a couple of things.

It informs the question of availability, to use the concept in Whitlam v ASIC, which is a Blatch v Archer Case, not a fairness case, and expectation in the sense that Mr Gleeson explained to your Honour the Chief Justice, how does that feed into expectation in a Payne v Parker or Blatch v Archer sense, but it also informs the Court of Appeal’s assessment of the fairness question. I then intend to come to what is the first strand in our short submission document, that is to say, that the fairness component of the Court of Appeal’s reasoning was by way of reinforcement, was not essential, was not critical, as the Solicitor-General suggests, to the Court of Appeal’s decision.

The proposition is this. The Court of Appeal reviewed the evidence in section 4.5. It came then to the question of the calling of witnesses. On no view, as the case was put below, could the calling of witnesses, that issue, have improved ASIC’s case. The question was, did it have some consequences if ASIC should have or could have called Mr Robb? The Court of Appeal analysed that in three strands; Jones v Dunkel, Payne v Parker or Blatch v Archer to the extent it is different, and then fairness, and then reached the conclusion under both Blatch v Archer and the separate fairness strand that the cogency presented on the facts put forward by ASIC, bearing in mind evidentiary onuses and ultimate persuasive onuses, the cogency was diminished in a Briginshaw case by reason of ASIC not calling Mr Robb, but for two reasons, both of which are freestanding and, we will see in the text of the judgment and the structure of the judgment, that the fairness point was simply by way of reinforcement.

We come to this conclusion and then the court says in two critical passages “the more so” because of the fairness point, so I will develop that. Then finally I will come to the fairness point because we do not – my client does not shy away from the Court of Appeal’s reasoning. Now, I should indicate this. Your Honours will have two short outlines of submissions on behalf of my client. The first one begins by saying this is not a case about whether ASIC owes an obligation of fairness when it litigates.

That statement was true until 10.15 yesterday morning when the Solicitor-General for the Commonwealth handed up his brief outline which in 5.1 raised for the first time in this case, after many years, section 64 of the Judiciary Act. Previously the obligation of fairness was accepted, was admitted in the submissions, including the submissions in this Court. The issue was what was its content and what consequences flowed if it had been breached. Yesterday morning we had without notice a new case.

Now, I do not say that so much to complain as to explain. A new issue has been presented which we will deal with, and it is said to be a knockout issue, the section 64 issue, Judiciary Act issue. We provided the Court, I think over the lunchtime or maybe this morning, with a separate short note in which we make the proposition that section 64 is not engaged for a variety of reasons. If that be good, in a sense one returns to the common law position which the solicitor accepted would be picked up by section 80, but for section 64.

I will take your Honour – Sir Samuel Griffith was not imagining a practice when he referred to the practice. The practice had grounding, including grounding in decided cases, one of which I will take your Honours to – that is the case of Deare in 1835 – where the proposition was that the Crown, the public officers must not – demurrer was set aside on the basis that the demurrer was standing in the way of the emergence of the true facts.

That theme, that case is what was taken up by Justice Mahoney in Cantarella and it is what informs all those cases in federal jurisdiction, Scott v Handley, the Full Court, Justice Finn in Hughes, Justice Allsop in Kamha and, of course, Sir Samuel Griffith in the celebrated 1913 decision. So that is the sequence with which I will proceed, if it please the Court.

Now, to turn to Justice Heydon’s two questions. They were, as I understood them, these. Was the trial judge asked to call the witness himself, Mr Robb, and, secondly, did my client, or was the submission made at first instance by reference to fairness considerations to justify or found a basis for what the Court of Appeal did? The answer to those questions is as follows. In relation to what the trial judge was asked in red 1, [370] your Honours will find the stay application. What the judge was asked to do was to direct the plaintiff to call the following witnesses. The judge was not asked to himself, bearing in mind what had been said in Apostilides. This was really by way of asking the judge to invite or direct the ASIC to call the witness. So that is the best answer I can give to your Honour Justice Heydon on that question. The second question, was it raised at first instance and run? The answer is a definitive - - -

GUMMOW J: Is there any record of his Honour’s ruling on that motion?

MR BELL: Yes, your Honour, I am coming to that. The argument before his Honour on that application your Honours will find in white 2, beginning at 843, line 41 where his Honour says “The notice of motion?”, calling it on. Mr McHugh, who appeared before my client below and in the Court of Appeal, made some submissions. Over the page, your Honours, on page 844, the application is put on three bases. If your Honours go to line 37 the first basis is:

The application is brought on the basis that ASIC as a prosecutor in a civil penalty case has an obligation that’s akin to that of a prosecutor in a criminal case.

The second reason at 46:

the function of ASIC as the representative of the State in an action of this kind –

So, precisely, the public interest style reasoning underpinning the Court of Appeal –

the analogy is –

so it is not akin to but the analogy is –

like a prosecutor’s, to act fairly in the discharge of its functions ultimately to assist in the attainment of justice between the parties –

Then:

It is also founded on ASIC’s model litigant obligations under the service direction –

His Honour took the view – no doubt correctly in Adler, because Adler foreclosed this and the matter was being taken protectively – his Honour dismissed the motion at lines 39 to 40. That was not the end of it though in the trial because in final submissions the parties returned to the fairness question, and I will come to that in a moment. Could I just pause by saying that in Adler, which is referred to – Mr McHugh properly referred the trial judge to that at line 18 at page 845 – in Adler [2003] NSWCA 131; (2003) 46 ACSR 504, at paragraph [676] it is recorded that:

ASIC accepted that it had to act fairly in the conduct of the proceedings, and said that it had done so.

Just jumping forward, this notion of fairness and an obligation “had to act fairly” was no novelty in the Court of Appeal. It is how ASIC had been conducting itself. It is consistent with the submissions - - -

GUMMOW J: The problem is the content of these aspirational statements, really.

MR BELL: Quite, your Honour, I will come to that. But the notion that this was a rabbit pulled out of a hat in the Court of Appeal is wrong. We say that when one comes to the fairness reasoning, you have a range of cases establishing propositions from which a general principle can be taken, an application of that principle or that genus of case to particular and peculiar facts, and that is why the chronology is so important here in relation to what was done with Mr Robb.

It is probably wrong to say a duty to call, but more correct to say that if you in a case with a Briginshaw onus have evidence which could go one way or could go another way, evidence where it is open to question by serious arguments as to objective probability, et cetera, sure, there might be some evidence pointing in one direction, but others in another direction, in a Briginshaw case, if you, ASIC, with the ultimate onus choose not to call someone fully available to you, and more than that, co-operating with you, you run the risk of having your arguments in favour of your case not accepted, and that is really all that happened in this case.

The conscious risk that my friend, Mr Bannon, took - a very experienced litigator - the conscious risk that he took with the volte-face in relation to Mr Robb came home to roost and the Court of Appeal said that was significant, both on orthodox Blatch v Archer reasoning and Whitlam v ASIC reasoning – which is not a fairness case, it is a Blatch v Archer/Payne v Parker case – or in addition, a breach of this fairness obligation. We will come to the content of it.

Could I just then, to finish the answer to Justice Heydon, illustrate that the matter was still alive at final submissions. If I could take the Court to black book volume 8 and, your Honours, firstly, in my client’s submissions beginning at 3409, first there was reference to the chronology and I will come to that, about paragraph 357 and following, and that chronology is taken up in the Court of Appeal, but then, 3412, the significance of the failure to call these witnesses, and over on 3413, a reference to the obligation akin to that of the Crown in 363, and then your Honours, the third last line of 363:

The obligation also arises out of ASIC’s functions . . . and as a model litigant –

So not blurring - distinct, distinct arguments put there. Then there is a reference to Whitehorn and the submissions continue as to the significance of these witnesses. A formal submission is made by reference to the prosecutorial matter in 366, picking up the ruling on the stay application. Then the submissions continue by reference to Jones v Dunkel and then Payne v Parker which, though Blatch v Archer was not referred to in terms, Payne v Parker of course picks up Blatch v Archer. It is the New South Wales statement of Blatch v Archer, and then in the Federal Court there is of course Whitlam. Your Honour, ASIC responded, in the same book. Their submissions relevantly are at 3472 and paragraph 32(a) draws a distinction and the first part of that:

there is a distinction between saying, on the one hand, that a regulator such as ASIC which is charged with the general responsibility of acting in the public interest must act fairly –

that is what was accepted in Adler, et cetera, but the distinction is drawn between the duty of prosecutorial fairness. Over the page, ASIC are aware, letter C, a number of cases which have treated ASIC as being:

under a duty analogous to that of prosecutorial fairness –

Then, your Honours, at paragraph 34 and following, a detailed submission by ASIC as to why it was not unfair in the circumstances. So it comes as something of a surprise to us to read in various parts of ASIC’s submissions in this Court that this matter was introduced in the Court of Appeal for the first time. Can I move then to the second point I was going to make in relation to Briginshaw and evidentiary onus and risk and that is this.

GUMMOW J: I see you have, at 3475, line P:

Notwithstanding . . . legal professional privilege in respect of the draft . . . all defendants having access to the draft.

MR BELL: I come to that in more detail. Access to an unsigned, incomplete statement, privilege which was only waived not on the day the decision was communicated not to call Mr Robb, but almost two weeks later by which stage some 19 witnesses had come and gone, but, in any event, I will be seeking to make good the significance of the fact that in terms of the language of Payne v Parker, of Blatch v Archer, of Whitlam, was Mr Robb available, the word used in ASIC and Whitlam, or was there an expectation that he would be called by ASIC and both of those boxes are ticked.

The Court of Appeal has in the passage – I think your Honours will be aware of, but we will come to – when the court goes from “could” to “should”. When they are dealing with “could” they are dealing with the Blatch v Archer strand and when they are dealing with “should” they are dealing with the fairness strand, but I will come back to that.

So, your Honours, moving on then to the Briginshaw and evidentiary onus. It was plain, your Honours, from the pleadings in this case that the only issue against my client and most of the defendants, most of the director defendants, apart from Mr Macdonald, I think, the only issue was the tabling and voting issue. That was the only issue. That was not admitted, plainly enough, by any of them and was denied by some of them. Secondly, early on Mr Harman, who attended the meeting, was cross-examined vigorously – and I will give your Honours the reference when I come to the chronology – in terms which made it absolutely clear that in play was the factual question, was the press release, the exchange release, tabled, in the sense of distributed, to the directors at the meeting and was it voted on and/or assented to in a meaningful coherent way? That issue is there.

Now, there has been debate, which I do not revisit, as to the evidentiary status of the minutes. If they had been within the month they would be presumptive evidence with a clear shift in the onus. The argument under the new provision is, and this makes sense, once the month has passed, the reliability which would otherwise inform the accuracy recedes and so the minutes go from presumptive evidence to another piece of evidence. But even accepting, as Justice Kiefel put to Mr Gleeson, that those minutes could be seen as capable of shifting an evidentiary onus, that evidentiary onus was capable of being shifted back by a range of other matters, including, for example, what derives from the slides, which Mr Baxter actually recalled speaking to, which spoke about we have an expectation that there will be enough funds, not that there is certainty, but we have an expectation that there are funds, from the Q and As which are referred to in our submissions, which say we cannot be certain. We cannot give any messages of certainty.

In that presentation, your Honour Justice Bell asked the question, well, had they faded in significance even over seven days? The answer is no, because in the presentation the statement was made to the directors we have road tested the Q and As and the fact that we cannot give certainty has not been a problem for the stakeholders, no doubt because we have got an actuarial basis which backs it up. So those matters, matters of that kind, matters of the kind raised by the very curious circumstance of Mr Robb apparently being present at a meeting when sign-off was given to a press release, then engaging in redrafting, all those matters go to the evidentiary issue and are capable, if the evidentiary onus did shift or was capable of shifting, of shifting it back.

So at that point and at the point the decision calling Mr Robb arose, there is a risk. ASIC has the ultimate onus. That onus is to be discharged at section 142 Briginshaw standard. That was accepted. That was common ground. What they knew they had to do was give actual persuasion, comfortable satisfaction to the court who is being asked to make serious findings with extraordinary serious consequences for the people and at that point ASIC took the risk. Now, as I said, this case is about that risk coming home to roost.

Now, can I then come to the chronology. Can I take the Court to the judgment at paragraph [645], page 122 of the white book. Your Honours, as I have said, this has significance both for the fairness point and the Blatch v Archer availability or expectation point. Our simple submission is, would you expect ASIC to call him? Well, that expectation is engendered and proved by what ASIC did. For more than six months they told all the defendants and the court that he is a major, probably the major witness in our case.

At paragraph [649] your Honours will see a reference to the letter of 7 March. That is at blue 10, it is 4662, and your Honours will see that by this letter solicitors for the Commission opposed the affidavits of, inter alia, Mr Baxter and in paragraph 4:

a list of topics in relation to which the plaintiff will seek to adduce evidence in chief for the following witnesses –

letter (g) is Mr Robb. Now, the list of topics for Mr Robb has been provided to your Honours. It is unfortunately not in the appeal books but it was before the Court of Appeal.

FRENCH CJ: Sorry, can you give me that page number again?

MR BELL: It is at 4663 and paragraph 4(g). So in March, more than six months prior to the commencement of the trial, service of a list of topics and, as I indicate, we would ask that these become part of the appeal papers. It was before the Court of Appeal. It was omitted for some reason in the appeal books and I apologise for that. Mr Robb, relevantly, with this list of topics, can I draw your Honours’ attention to paragraph [13], one of the topics in which ASIC indicated they were going to call him and examine him included the February 2001 board meeting and any communications he had with representatives of JHIL in relation to drafting the February 2001 board paper and his attendance at the board meeting including in relation to, and two of the documents your Honours will see over the page, that is R and S, file note of the conversation with Shafron and Macdonald.

That is the one in which Mr Peter Cameron is recorded as saying I cannot, in a sense – you cannot spring this news about Trowbridge on me and expect that to be dealt with on the minutes before a meeting, quite reasonably, but that document and what followed from that was something which called for some explanation because, with the greatest respect to something that Justice Hayne said, the notion that senior highly respected partner together with another partner would sit in a board meeting, having been told what he had been told and whose role was, the evidence demonstrates, to advise the company on the legality and the appropriateness of, inter alia, announcements to the market, the notion that he would not have spoken up if the board was going through either a formal or a quasi-formal process of signing off on something to go to the market is, we would submit, I do need to put it any higher than this, something which raised a real evidentiary, plausibility question as to whether what ASIC alleged was done was, in fact, done. Your Honour, the partners there - - -

HEYDON J: Is there evidence about that? I mean, I personally have never been to a board meeting of a publicly listed company and I have never been a solicitor. Is it judicial notice, or what?

MR BELL: Well, your Honour, there is some evidence which we will gather - and we might have to do it comprehensively - gather it overnight, that a number of the directors said they looked to – I think I am correct in saying this, I need to confirm it, that Mr Cameron was highly respected by the board, the board looked to him for advice. The job was, the retainer was to advise - including in relation to announcements. So we will seek to give that to your Honour, but also if that was the retainer, the notion that two presumably well-remunerated senior lawyers would be sitting in a meeting with all the knowledge of listing rule 3.1, all the knowledge of the role of ASIC in enforcing the law, would sit there and say, “Hold on, yes, tell the market this is certain”, when minutes before a question has been raised, called for some explanation.

Now, Mr Nixon has pointed out within blue 413 the agenda for the meeting involves Mr Cameron and Mr Robb reporting in relation to Project Green. But we will try and find those other references. One could well imagine, your Honours, that if these very experienced, no doubt, well-remunerated senior lawyers were there and sat mute, that directors in the company may well have some cause for grievance. I mean, it may well even be negligent to sit there if your job is to - - -

GUMMOW J: Their brief is to advise, Mr Bell, not to supervise.

MR BELL: But, your Honour, there is other evidence which we will give you that that retainer was to legal or review and advise in relation to announcements, and that was part of the whole protocol. This was a careful board. They were retained to give such advice and the evidence of that we will collect for your Honours. But I digress.

I was on the list of topics. One of the topics Mr Robb was going to be called to was his notes about pre-meeting meeting, another was that slightly exiguous note of the actual meeting. Then, your Honours, over on page 10 of the list of topics, he was to be asked about any involvement in drafting or advising on the final ASX announcement and any drafts of that announcement, including the 7.24 draft, that is letter A with his handwriting on it, which Mr Gleeson took you too.

That was a document which, I think, as Mr Gleeson sought to make good, raised further questions which cast doubt on what might otherwise be suggested by the minutes, for example, why, if Mr Robb got it during the meeting was he redrafting it when the board had approved it, or if he had redrafted it afterwards, what was he doing if it had been formally approved and signed off as a final?

They were questions which the evidence raised and which, in our submission, obviously undermined in the way we have sought to make good the plausibility of what was suggested by the minute of April. So one has different evidence in the scales and one might have shifting evidentiary onuses, never a shifting ultimate onus, that ASIC were conscious of the need to explain this as part of its case. Then, your Honours, paragraphs 16 and 17 and then 19, the April board papers. In terms of Blatch v Archer and Payne v Parker, is he a witness who has knowledge or something to say about central questions? Answer, yes. Answer given by whom? By ASIC seven months out from the trial.

HEYDON J: He said he would be asked questions on these topics. He did not say he would give this evidence.

MR BELL: No, but what is significant with ASIC, consistent with what we say is its obligation of fairness, saw it as its responsibility to call him. We will come to Mr Bannon saying to the trial judge a week before the trial we are calling Mr Robb because, inter alia, he has relevant information to provide.

HEYDON J: Do you have two points or one point? Do you say, one, because of the way ASIC behaved they, in effect, promised to call him and that leads to a certain result but if that is not so, two, he should have been called even if we had been told years before that he was not going to be called? Do you take the second position as well as the first?

MR BELL: We would take both, your Honour, but we know by this chronology one does not have to speculate about availability or co-operation because the record demonstrates better than any record one could imagine could that not only was he available, but he was co-operating and there was an intention to call him because he had relevant information. We say to that tick, tick and tick in terms of the criteria in the cases.

Your Honours, just to return to the chronology, so that was in March. Then paragraph [651] again, we will attempt to obtain affidavits, et cetera, and then could I just interpose. There is a step missing in the chronology which is supplied elsewhere. If your Honours go to green 2, 466 to 467, entries 8 and 9 were not picked up by the Court of Appeal, but one will see there a reference to ASIC’s major witnesses. Mr Robb had been identified as – the trial judge called on ASIC to identify who would be its major witnesses and who would be its minor witnesses for scheduling and organisational and time estimate purposes, and Mr Robb had been identified as a major witness. Then item 9, preparation of his affidavit was under way and will be provided at the earliest opportunity.

One then has, your Honour, back to the judgment at [652] - I do not need to take you to the letter of 16 September, but your Honour will see by that ASIC said it intended to call a number of witnesses who are, or were, partners or employees of Allens. For your Honours’ reference, without going to – that is blue 12, 5226 is the annotation at paragraph [652]. Then, your Honour, at [653] the directions hearing a week out, the transcript of that, your Honours, is at black 1, pages 1 to 3 and it is important. This is ASIC a week out from trial reporting to the trial judge on work in progress on the Robb affidavit, inter alia, and the Allens affidavits. Your Honour will see letter Q, both - - -

KIEFEL J: Sorry, which page are you on?

MR BELL: Page 1, Mr Bannon appearing for ASIC. Letter Q:

Both Mr Robb and Mr Williams were heavily involved in large aspects of the transaction and have requested the capacity to review large bundles of documents.

HIS HONOUR: They’ve got a week in which to review any draft of their affidavits . . .

We’re told in relation to Mr Robb we expect a statement in the week of 6 October 2008.

Then over the page explaining - - -

GUMMOW J: What is the statement at line 41? Mr Bannon says:

We are told that they’re not in our control, your Honour.

What is being said there?

MR BELL: That is an historic statement, your Honour. Up until some time in September confidentiality had been asserted by the companies and although ASIC had intended and notified the list of topics they were going to call them, Mr Robb had not been released to speak to ASIC. He had been released and was co-operating with ASIC, as Mr Bannon goes on to say.

GUMMOW J: Where do we see the date of the release?

MR BELL: Pardon?

GUMMOW J: Where do we see the date of the release of confidentiality?

MR BELL: Your Honour, that is - - -

HEYDON J: September 2008.

MR BELL: Yes, [651], your Honour, 9 September.

GUMMOW J: What date?

MR BELL: 9 September. Then return to the black book at page 2, Mr Bannon says, about letters F and G:

We’re left in the position consistently with the desire to ensure that there was no suggestion of case splitting firstly. Secondly, that to the extent that there was relevant information in relation to the Allen’s witnesses, that it be provided. Thirdly, not being in a position to provide that by way of affidavit –

That is a reference to not historically being able to provide that by way of affidavit –

hence, we gave the notifications and I accept that they were such as we could provide at the time.

Then letter O and P:

The second point so far as we’re concerned the, we’ve had had exemplary cooperation from the Allen’s witnesses and in endeavouring to provide these statements as soon as possible, but in fairness to both Mr Robb –

So Mr Robb was one of the Allens’ witnesses to whom senior counsel has said exemplary co-operation had been given –

is such that they told us that that’s the time they needed.

This is just a timetabling.

They’re entitled to make sure that they don’t, in relation to a matter which is of some history now, sign off to a statement which they’re not completely happy with, accepting the indication that the court’s obviously anxious to have the material.

His Honour directed, at line W, best endeavours to serve the affidavits of Robb and Williams, et cetera. Your Honour, the trial began on 29th, “Mr Harman”, as the Court of Appeal pointed out at [655], “was an early witness”. When he finished his evidence on 2 October, your Honours will see this at black 1, 117, N to Q, when he would otherwise have been excused, Mr Wood asked that he not be formally excused because Mr Robb’s affidavit was due and matters may arise relevant to the cross-examination of Mr Harman, hence the request, and no opposition to that. So still ASIC – that is on 2 October. Then paragraph [656], which is 7 October, day 12 of the trial, ASIC was provided with “progress to date on Part 1 . . . for your consideration”. Part 2 would be provided later that week:

The solicitors asked whether ASIC’s solicitors and counsel “would like to meet with Mr Robb tomorrow or on the weekend”.

So, here are more examples of this exemplary co-operation. We are going as fast as we can. Here is part 1. We can meet tomorrow or on the weekend. Essentially, you name the time and place. Now, just to come forward a counterpoint, after the decision had been taken, my instructing solicitors and those of another defendant asked for Mr Robb’s co-operation. Could we meet with him? Could he speak with us? No, was the answer from his lawyers. So, there was this big disparity. That is referred to later in the chronology. Then, we got to in paragraphs [657] and [658] and [659], the announcement of the decision not to call him which led Mr McHugh to foreshadow the stay application. The Court of Appeal - - -

GUMMOW J: What date was that?

MR BELL: That is 8 October – is ASIC informing the judge that he still did not have an affidavit from Mr Robb and they were giving some thought to whether they would call him.

GUMMOW J: It was day 27 of trial, was it?

MR BELL: No, 8 October. I do not think that is day 27.

CRENNAN J: Day 13.

HAYNE J: Day 13.

BELL J: Day 13 of the trial.

MR BELL: Day 15.

FRENCH CJ: Paragraph [661] says “a letter . . . dated 9 October”.

MR BELL: And the final decision, your Honour, was announced in paragraph [661] on 9 October. Your Honour, there was [658], could I just go back to it. It is important because Mr Harman and Mr Donald Cameron – not Mr Peter Cameron, obviously, but Mr Donald Cameron, the company’s secretary – had both been cross-examined as to what had occurred at the February meeting.

The references to that are black 1 – I do not need to take your Honours to it – but Mr Harman at black 1, 92, P, and Mr Cameron at black 1, 176 to 177. The point of that is that the matter, the contested matter, the events of February squarely in issue, notwithstanding the minutes, challenges to recollection, Mr Harman had no recollection, challenges to practice of minute – of keeping in drafts, et cetera. That was there.

So to the extent it was sought to be suggested that this is not part of our case in-chief, Mr Robb is not part of our case in-chief, that purported explanation was regarded by the Court of Appeal as not persuasive. In any event, what it represented was a forensic decision and, as I have said, a major risk in a Briginshaw case with a high onus of persuasion, that a witness who had been identified, who was available, and was co-operative, that the non-calling of him would have consequences. It was at that stage that, as [660] records, Mr McHugh took issue with Mr Bannon’s suggestion that it was not really part of the case in-chief and issue was joined.

What is important still, your Honour, in paragraph [662], the draft statement was not provided then, but not until 21 October – one sees that at [662] – by which time, I think by the 9th, something between 15 and 19 witnesses had been called and by 21 October, nine further witnesses, including experts, had been called. Then to finalise the chronology, your Honour, at [665] – I will take your Honours to this – at blue 12, 5411, a letter from Mr Robb’s solicitors to my instructor:

Mr Robb has been approached by a number of different interests . . .

We are instructed that Mr Robb is not prepared to meet with you or those other parties –

Another example of such a letter is at 5410, and can I indicate, your Honours, this matter of non-co-operation of - - -

GUMMOW J: You then took a risk, I suppose, by not calling him yourself. You then took a risk.

MR BELL: Your Honour, I will come to that, and whether any inference could be drawn there, but, your Honour, can I just make this point. Those letters, the two letters at 5410 and 5411, came to the knowledge of ASIC because they formed part of the affidavit in favour of the stay application. The stay application, as your Honours have seen, was foreshadowed and filed, and an affidavit was put on in support of it, including those letters.

KIEFEL J: What is the relevance of that?

MR BELL: Well, I think the affidavit was before the Court of Appeal. The Court of Appeal was dealing with the stay question, but if it be anywhere in any way an issue - - -

KIEFEL J: But what is the relevance of ASIC’s knowledge?

MR BELL: I thought your Honour said what is the evidence of that.

KIEFEL J: No, I am sorry. What is the relevance of ASIC’s knowledge?

MR BELL: Well, it may have some relevance on the fairness strand of the argument.

KIEFEL J: But they had already advised that they were - - -

MR BELL: They had, but it was not too late. They had not closed their case by then, I do not think.

HAYNE J: The stay application was founded on the proposition there could not be a fair trial absent Robb?

MR BELL: Yes.

HAYNE J: That application failed and is no longer an issue in this Court?

MR BELL: Yes, but, of course, what is in issue and what remained alive in the trial was this fairness question in the way I have demonstrated to your Honour in the submissions before and the response by ASIC.

HAYNE J: But we are to proceed, are we, on the basis that it is not disputed that there was unfairness of the kind that would warrant staying proceedings?

MR BELL: No, we do not submit that, your Honour. What we do not do is any longer contend that ASIC has a prosecutorial duty which would justify a stay which was all we sought by that stay application.

HAYNE J: So that unlike the position in a criminal matter where prosecutorial failure to call a witness, if it comes in under any ground of appeal, comes in under the ground on any other ground whatsoever is a miscarriage of justice, is not the strand of argument that is invoked here, rather, it is said that the failure to call a witness has a consequence for the assessment of the evidence that is called?

MR BELL: Yes, in precisely the same way that Justice Dawson in Whitehorn, if I can take your Honour to it, in [1983] HCA 42; (1983) 152 CLR 657 at 690 picked up Blatch v Archer for precisely that proposition. In the final paragraph on 690:

In these circumstances, the failure of the Crown to call the complainant as a witness was of major significance. No adequate explanation was given for that failure nor was any evidence called by the Crown by way of explanation. The jury could only reasonably have assumed that the evidence of the complainant would not have assisted the Crown case. See Blatch v Archer.

So there is no waiver, if your Honour is suggesting - - -

HAYNE J: I am not suggesting a waiver. I am trying to understand the footing on which we are proceeding.

MR BELL: Yes. The most extreme consequence would be a stay. The next consequence, which is the consequence that obtained, was that in a case which Briginshaw dictated had to be a cogent case, the conclusion as to cogency was less available to the party who had available to it in a Blatch v Archer sense a witness on identified major topics and who it chose not to call. That is the proposition. If what the Court of Appeal said about fairness be correct, then that is another way you get to the root. The Court of appeal did not suggest that this was something – the consequence of this would be a stay in a criminal sense, but they suggested it was not without consequences. To the extent it is called a duty, it may be a duty of imperfect obligation, but it is not without consequences.

FRENCH CJ: Do you say anything more than that the fairness obligation engenders an expectation upon which you can build an inference where the evidence is not called? Does it really go further than that? It is the same exchange I had with Mr Gleeson.

MR BELL: Quite possibly not, and can I give your Honour two answers to that. Your Honour asked yesterday, I think, at page 25 of the transcript, is there a logical link between fairness and cogency, because, in a sense, they are the two separate strands; cogency is Blatch and fairness is this public officer or Crown argument. We would submit that the answer is this. It is unfair to ask for a very serious finding with very serious consequences on the basis of evidence whose cogency is open to doubt in circumstances where you, the party with the burden, had in your power to lead direct evidence going to the central and disputed questions from an available and co-operative witness. That is how they are linked.

We make this point. There is a major public interest in – Briginshaw is, in a sense, concerned with private interest. That was an adultery case. In a public judgment one could get a finding of very serious public consequences for the individual involved. But there is, in this context, not just the obvious private consequences for the individual such as my client, there are public consequences. There is a limited pool of company directors. Company directors play an important role in our corporate governance procedure. It is a very serious cost, public cost, diminishing that pool by reference to what we would describe as an imperfect or insecure evidentiary foundation.

What must be sought to be achieved, or ASIC will be at risk, is that if they do have, on what was a disputed issue, on what was an area where they were having to rely on indirect evidence - the minutes are indirect evidence, and not to say that they are not of a certain potency, but they are hearsay, they are admissible, but they are hearsay, just as some of the evidence in Briginshaw v Briginshaw. This case is quite like Briginshaw v Briginshaw. Briginshaw was where there was a disputed admission.

FRENCH CJ: So what is the court doing on the approach that you are taking, or required to do? Is it to sort of put a finger on the balance of weight of evidence on each side as a kind of redress for unfairness because it is apples and oranges, is it not?

MR BELL: No, your Honour, we would respectfully see the Court of Appeal not as having stated some broad general theory, but as giving a decision on the particular facts of this case, including, apart from that history, the other facts are Mr Robb undoubtedly of central significance to critical issues, undoubtedly so, the lack of any other direct evidence on the topic - no other people who attended the meeting gave any evidence as to either the tabling or distribution or the assent. Certainly none of the ASIC witnesses did and the witnesses for the defendants who gave evidence denied it.

So the only piece of evidence in ASIC’s case was those minutes really, possibly the correlation, cross-examination, although we would say that is very limited weight. Mr Robb was uniquely placed to explain the significance of key documents including his own. ASIC had recognised that. If the minutes were accurate, who would you expect to call Mr Robb? You would expect ASIC to call Mr Robb to say of course the minutes are accurate, and the fact that they chose not to - - -

FRENCH CJ: That is just a ramped-up Blatch v Archer, is it not?

MR BELL: Your Honour, it may come to that and, as we submit, with respect, we can live with that because when one analyses the structure of the Court of Appeal’s judgment, which I am coming to now, the fairness material was put as the more so. It was superadded, and I should come to that proposition now.

GUMMOW J: Before you come to that, there was an appeal, was there not, by your client against the stay application dismissal?

MR BELL: Yes, which was dealt with – and is dealt with in the Court of Appeal’s judgment.

GUMMOW J: Looking at paragraph [663] of the Court of Appeal.

MR BELL: Yes, your Honour.

GUMMOW J: What do we then make of the Court of Appeal’s repetition in [664] of evidence that was tendered only on that aspect of the litigation?

MR BELL: This is a question which, I think, Justice Bell was about to take the Solicitor to yesterday and the Solicitor said it would not be appropriate to do that. There might be a question about that. But, your Honour, I can refer to it for illustrative purposes. You will see, for example, that one of the matters in [664] is that Mr Robb’s belief was that he obtained a copy of the draft news release on 16 February. Now, ASIC asked the court at first instance, knowing that was Mr Robb’s belief, asked the court to conclude that he got it at the meeting – the beginning of the meeting. This illustrates the sort of problem - - -

GUMMOW J: He also seems to have said that:

he had “few recollections” and did not recall –

et cetera, the February meeting. So why do we assume that there was this - - -

MR BELL: Well, your Honour, we do not know what the recollections were - - -

GUMMOW J: Just a minute, Mr Bell.

FRENCH CJ: Just let Justice Gummow finish his question.

GUMMOW J: No, I am not going to finish the question.

MR BELL: Sorry, I thought you had. We do not know what the recollections were but he was willing to discuss those with ASIC. He was not willing to discuss those with us. The fact that he did not have or may have had few recollections would be – may itself be significant if the court were to find that one would expect him to have recollections. This was a pretty major matter of public interest and public importance.

GUMMOW J: You managed to do something, Mr Bell, which no other counsel has done to me in 17 years on this Court, but I will not say any more and I do not think it is funny.

MR BELL: I do not know what your Honour is referring to, sir – I am just trying genuinely to answer your Honour’s questions. Now, the point is, there was a witness who ASIC should have, as a public interest body, no interest in securing findings of contravention and disqualifications on the basis of an imperfect record, no interest, whatsoever, and really - - -

BELL J: Can I ask where the Court of Appeal deals with this? A publicly listed company in its minute book has a minute recording the fact that at a meeting the ASX announcement was tabled and the resolution passed. There are concurrent findings of fact that an ASX draft announcement was at that meeting.

MR BELL: Yes, but there are not concurrent findings of fact that it was - - -

BELL J: On tabling.

MR BELL: Or distribution and that is important.

BELL J: I understand that, but it is at the meeting and then we find the record of the resolution in the minute book. One sees that amongst other things on the draft of topics that Mr Robb might be going to address was the preparation of the materials for the April meeting of the board, albeit Mr Robb did not attend, but what is it that it is thought that Mr Robb might usefully have said on what you acknowledge, Mr Bell, to be the critical issue?

MR BELL: Well, your Honour, he might have – and we have formulated or taken up, in a sense, paragraph [758] – on the fourth page of our three-page outline, or as an annexure to the three-page outline, there is some questions which one might have expected Mr Robb to explain.

BELL J: I am going to question of the minute.

MR BELL: The minute.

BELL J: Yes, the critical issue.

MR BELL: Well, one would have expected him to say, if he were able to say, “Yes, I have got no reason to doubt that.”

BELL J: It would be surprising if it were otherwise, would it not?

MR BELL: Well, yes and no. There was a number of surprising things in this case. This case really is binary; either the directors in April were lax, careless, wrong, slack in approving a minute which was not accurate or they did hear and assent to this press release on 15 February. They are the two possibilities.

BELL J: Well, the company’s solicitor who has rendered an account for settling the minutes of the meeting is not called by ASIC and in consequence it is put that the unsatisfactory evidentiary basis upon which the primary judge reached his conclusion was rightly resolved in favour of the appellants by the Court of Appeal.

MR BELL: I should say, Justice Gummow, if I cut off a question, I did it inadvertently and I unreservedly apologise, I was not conscious, if that is what your Honour is referring to, I should say I apologise sincerely. But to answer your Honour Justice Bell’s question, the issue of the minutes have – and Justice Gummow asked this of the solicitor yesterday, what was there which caused the Court of Appeal to have some doubts about the significance of the minutes, and the solicitor answered, it was just Mr Robb. But it was not. It was a number of things. It was about five things.

It was the mistakes which are detailed in the written submissions of the parties. It was the fact that the minutes were actually perversely prepared before the meeting and then were not revisited for another six weeks and, we would support what Mr Gleeson said, revisited by Mr Shafron and Mr Macdonald and sent to Mr Robb on the 30th. Why would Mr Robb be being sent minutes on the 30th saying here are the minutes which he had already settled? The point was, which may not have come out as clearly as – that email was after the bill. The bill was on the 29th for work done up to the 27th and there had been other meetings of other companies.

CRENNAN J: But you are reading a lot into the expression “draft minutes” which may mean nothing more than the minutes that have not been confirmed by the board as a correct record.

MR BELL: Your Honour, if I am, remember Briginshaw and remember who has the ultimate onus and who saw it for a long time as relevant to call Mr Robb to provide what was described after Mr Robb started co-operating with ASIC as relevant information? That directions hearing was on the 22nd. Mr Robb had been co-operating with ASIC for almost two weeks by then. So there may be ambiguities, obscurities in that question of timing, et cetera, but they were all questions which the regulator, a public interest regulator, has a legitimate interest only in finding out the true position in respect of, in our submission, and asking for a finding of contravention and disqualification with all the consequences on the basis of something which is uncertain but where the certainty was within the power to bring clarity, some clarity, it may not have been full clarity, but some clarity to the issue, then that is the nub of our point.

Now, could I then come to this point about the structure of the judgment and was the fairness reasoning – did it add anything to the Blatch v Archer reasoning. Your Honours, there are two important particular paragraphs. There are paragraphs [756] and [795]. In [756]:

The consequence that the case of the party in default suffers in its cogency is the more so where, as we have held, the failure to call a witness is contrary to an obligation of fairness.

So there is a cogency issue arising on orthodox, Blatch v Archer, and one sees that because Blatch v Archer is discussed continuously, or in one way or another, from paragraph [730] leading up to this important passage at [756]. Your Honours will see at [730]:

The failure of ASIC to call each of the three witnesses engages the principle in Blatch v Archer -

And then there is a reference conveniently at the top of the next page to Whitlam, which I do not think the Court has been taken to, but that is the key passage in Whitlam, the last two lines:

need to be diligent in calling available evidence, so that the court is not left to rely on uncertain inferences.

Now, I fully accept, your Honour Justice Bell, there may be a question, well, were the inferences uncertain? Part of the burden of my argument and Mr Gleeson’s argument is that whatever one draws from the business record, which is the April 3 minutes, what otherwise would be confidence or may be confidence in that document is undermined by the various matters I have referred to, including the direct evidence of all of Mr Gleeson’s clients that it did not happen.

BELL J: Putting that to one side for a moment, what I was really directing your attention to was the significance of the failure to call Mr Robb on that issue. Mr Robb was expected to - - -

MR BELL: The defendants had put in issue the accuracy of those minutes necessarily.

BELL J: I understand that, Mr Bell. It is whether one gets somewhere in the reasoning of the Court of Appeal any enlightenment on what was thought to be, on what you acknowledge is the critical issue, the lack of - - -

MR BELL: Well, the minutes, your Honour, if one goes to [758], the minutes are only one dimension of the critical issue. The critical issue is the fact of tabling and assent of which the minutes point in one direction. Everything else in the case, we submit, points in the other direction and everything else relevantly involved Mr Robb is pre-meeting with Mr Macdonald and Mr Shafron and Mr Peter Cameron; his notes, his annotations, the way these minutes evolved with five drafts prior to the meeting.

BELL J: Mr Bell, Mr Robb has been at the meeting. He has at least, on your best case, on 30 March seen the draft minutes containing the reference to the ASX resolution.

MR BELL: For a purpose, according to that email, of advising whether they needed to be provided to the foundation, but I accept your Honour, and maybe that is why he was not called. We do not know. He would not speak to us. We should not be expected to have called him blind. If it was all, according to Hoyle, if the minutes were accurate and he had no doubt about their accuracy, who would you expect would call him? The party asserting, adumbrating the accuracy of the minutes and the evidentiary conclusions one drew from that, and that party was a party to whom Mr Robb was fully co-operating and available. So, your Honour, [756] is preceded by a whole strand of Blatch v Archer reasoning and then the court says, well, the more so. They use that expression again in [795], if I can take your Honours to that.

KIEFEL J: But this concept of fairness and the way it is approached, it cannot logically detract from any particular aspect of the evidence. You cannot point to an aspect of the evidence and say it must be read down or no inference is available or there is - - -

MR BELL: No, and we do not say - - -

KIEFEL J: What we are talking about is the application of some policy and everything that you have said underscores that, that this is some new policy that is going to be applied to evidence, to make it less acceptable generally.

MR BELL: Your Honour, we do not say it detracts and, your Honour said, I think, yesterday in some exchanges said it might not – “detract” might be the wrong word – we do not say it detracts, but it has an impact on the cogency of the evidence otherwise available.

KIEFEL J: The evidence is a body of evidence? I mean, this is the difficulty.

MR BELL: Yes, your Honour.

KIEFEL J: With evidence and its cogency, one usually looks to particular aspects and then sees what effect it has on weight. Here, it is just thrown into the equation.

MR BELL: With respect, no, your Honour. The only evidence for ASIC really in favour of its case is the minutes and their case now rests solely really on the minutes and a bit of correlation - - -

KIEFEL J: But I did not understand you to say that it was to operate so that an available inference should not be relied upon. You are saying it undermines what particular inference about the minutes?

MR BELL: That the resolution was tabled and assented to on 15 February, the central issue. Mr Robb could have dealt with all of that.

KIEFEL J: You cannot say, though, that he could have given the evidence about that.

MR BELL: No, but we can say that there is an expectation. It is highly likely, as the Court of Appeal said, that he would have something relevant to say about that matter and if he did not there could be no problem or no fear for ASIC in calling him. So your Honours at [795]:

Failure of a party with the onus of proof –

This is about line 31 –

to call an available and important witness, the more so if the failure is in breach of the obligation of fairness, counts against satisfaction on the balance of probabilities –

and then reference to Briginshaw, and then [794], the last four lines –

As a matter of fairness and –

there is a conjunctive –

consistently with what was said in Whitlam and our more detailed discussion, Mr Robb should have been called –

So if your Honours accept that reading, which we would urge on you, the fairness point does not add anything. There is the Blatch v Archer point, and the engagement of that I sought to make good by reference to the chronology and that recount of - - -

FRENCH CJ: Do you accept that terms like “the more so” and “undermines” suggest a judicial finger on the scale?

MR BELL: Well, we would put it in terms of Briginshaw. We do not have actual persuasion, we do not have the necessary comfort, but we are even less comfortable given that the party who did not call him was a party who ought not to be seeking serious findings on the basis of evidence which calls for some speculation or some weighing of competing material. That is really the best way I think I can put it - not comfortable, but even less comfortable given who it is.

HEYDON J: Did the trial judge have power to direct that ASIC call Mr Robb? If a judge sees something unfair happening, is not the judge entitled to ask the party responsible for the unfair conduct to remedy it?

MR BELL: I think, your Honour, it is very difficult, short of the High Court giving an answer on that, to give an answer on it. Apostilides says no in a criminal context, cannot direct, can invite, and that would suggest, in a civil context, no. But of course Jones v Dunkel, Blatch v Archer are, in a sense, weapons that if you do not do something which may cause somebody to doubt the reliability of what you are asking the court, with consequences possibly of unfairness, then you take that risk.

So that is why I say it is maybe a duty of imperfect obligation. It cannot be fully enforced, but there are consequences which attach to it not being adhered to and so one could not get in this context an injunction or a direction to call which would be a direct enforcement of the obligation, but it is not an impotent obligation. It is not a chimera - if it exists, it is real. Can I turn then - - -

BELL J: Just before you do, while you are still in this part of the reasoning of the Court of Appeal, at [791] the court says:

We do not think the judge’s credit findings preclude us from viewing the accuracy of the minutes with considerable reserve.

Did the Court of Appeal make a finding respecting that part of the minutes recording the ASX announcement?

MR BELL: I think, your Honour, that what the Court of Appeal did was to find that the minutes as a whole, because of the range of errors which are detailed in the written submissions, and the provenance, that is, there was no one taking notes at the meeting, et cetera, regarded them as not having the reliability that they would otherwise generally have had, and therefore for each of the specific elements of the minutes.

But no doubt their Honours’ ultimate conclusion, including the conclusion in [791] was influenced not simply by those, what I would call internal considerations, or considerations internal to the minutes, but looking at the evidence as a whole and saying, “What about these other things? What about the Q and As? what about the slides? What about the conduct after the meeting inconsistent with a resolution?”

All of those things, no doubt, contributed to further undermining the confidence that the court might otherwise have had in the minutes. Then, this is the point about the structure of the judgment, all of that detailed analysis one finds in section 4.5 of the judgment, which is a long section beginning at page 59 of the white book, paragraph [272], review of submissions on the evidence and at [282], the paragraph Mr Gleeson took your Honours to, but I do not think he made this point, each of those bullet points, as it were, is taken up in paragraphs 4.5.3, 4.5.4, 4.5.6, et cetera. In other words, this is in a sense the table of contents for the balance of section 4.5. Your Honours will see those headings picked up and those topics discussed.

The whole of that discussion, which is correct appellate re-hearing, takes place up to section 4.6 which does not begin until page 117 when it comes to the topic of calling witnesses. If one were to stop the exercise at page 117, given that the Robb issue could never improve ASIC’s case, here is the Court of Appeal’s full detailed review of all of the evidence and all of the arguments put up by ASIC. You will not find in any of the intermediate conclusions any embrace of the ASIC contentions. It is then all considered together, taking the evidence as a whole, but if you were to ask, even before you get the Robb issue, on the basis of that review, if that review has merit and we submit it does because it points out the problems, would you have a Briginshaw satisfaction? The answer must be an overwhelming no.

That is why, when one came to the Robb issue, if we are right, on a Blatch v Archer or the fairness point, the conclusion or the level of comfort, to pick up the answer I gave to the Chief Justice, the lack of requisite comfort is even lower or higher. The comfort is less when one comes to the Robb issue. If you ask the question at the end of 4.5 following the full review of the evidence, is Briginshaw discharged, the answer is no. That is why we say, perhaps boldly, but that is why we say the court could take the view that all of this was unnecessary, added nothing and the analysis is careful and considered in light of Briginshaw.

Could I come then, your Honour, to the fairness proposition which I seek to defend. I have to first deal with the Judiciary Act point which I have indicated we learned of yesterday morning. Your Honours, it is presented as a point which is a knockout blow to the obligation because it is said that because section 64 has a certain consequence, the Crown in its various emanations is not subject to any superadded responsibilities or expectations. Our first submission, your Honour, is this. Section 64 actually has its Australian origins in the Claims Against the Commonwealth Act 1902. We have attached a copy of that Act to our – if your Honours have our one-page section 64 submission, it has two Acts attached to it.

One is the Claims Against the Commonwealth Act, Act No 21 of 1902 and one will see the immediate predecessor of section 64 and section 3(2). We, obviously enough, draw attention to the short title to the Act. It is concerned with the enforcement of claims against the Commonwealth. Section 64, we respectfully submit, is concerned with, and the case law bears this out, was concerned to impose obligations on the Commonwealth to make it equal in the sense of not in a special position as a defendant, vis-à-vis, someone with a claim against it as reflected simply, eloquently in the title “Claims Against the Commonwealth”.

That Act had a sunset clause, section 8. Your Honours will see in the other extract from the Judiciary Act, section 3 of the Judiciary Act repealed the claims against the Commonwealth Act and we find section 3(2), albeit it we accept not in identical words, in section 64 of the Act which remains to this day. Now, your Honours, our review of the debate, the Judiciary Act 1903, contains no suggestion whatsoever that there was an attempt or an endeavour or a desire to alter the meaning or effect of what had been section 3(2) of the Claims Against the Commonwealth Act, albeit that the wording is different. That is the first proposition.

One would not attribute therefore to Parliament in passing section 64 a desire to relieve the Crown of the expectations which courts had of the Crown as reflected 10 years later by Sir Samuel Griffith in the famous Melbourne Case. That is our first proposition. Your Honours, we would submit that if one goes, for example, to Sir Garfield Barwick in Maguire v Simpson [1977] HCA 63; 139 CLR 362 at 373, about point 5:

Because of that background, I have reached the conclusion that it is proper to regard s 64 as expressing the intention of the Parliament to subject the Crown in right of the Commonwealth as nearly as possible to the same liability as would obtain in the like circumstances –

That is the same notion of removing from the Crown some privilege or immunity or special defence to equalise it. It was concerned with, in a sense, making a level playing field where the Crown was a defendant. The Act was not concerned with relieving the Crown of obligations or common law expectations, as it were, to which it was subject and one would not attribute to Parliament in 1903 that intention on a purposive construction.

Your Honour, there is also the passage of Sir Kenneth Jacobs at page 405 at about point 4 on the page:

It therefore appears to me that when the Parliament enacted s. 64 of the Judiciary Act a main purpose was to prescribe by virtue of s. 78 of the Constitution the rights against the Commonwealth or a State which would be enforceable in a court –

So “against the Commonwealth or a State”. Now, if that argument be correct the section 64 argument does not avail ASIC in this case for that reason. Even where the Commonwealth is a defendant there are some cases where section 64 will cease to operate because of its special position and we give a reference to Evans Deakin and, also, a reference to your Honour Justice Gummow’s decision in Commonwealth v Western Australia.

Naismith, which the Solicitor took the Court to, is an illustration of the Act operating in the way it was intended to, saying to a Commonwealth entity you cannot rely on the traditional fact that you did not have to give discovery. You do. Now, alternatively, your Honours, we submit that section 64, given its aspiration to assimilate or as Sir Owen Dixon said in Commonwealth v Anderson to appropriate to the circumstances of a case as near as possible some parity, there are certain types of proceedings where that is not possible.

Your Honour, again Justice Gummow, speaking together with Justices McHugh and Hayne in the British American Tobacco Case which is not noted but can I read the reference - [2003] HCA 47; (2003) 217 CLR 30 at 65, paragraph 81 indicated, citing Sir Owen Dixon in South Australia v The Commonwealth that:

because the subject matters of private and public law were “necessarily different”, there would be some respects in which rights of parties could not be rendered “as nearly as possible” the same within the meaning of s 64.

In other words we would put this case in that category. It could never be a private suit against my clients to which ASIC could be assimilated or put in the position of, nor in an administrative law context could one have that situation.

We make, just because of the briefness of time, we make the point in paragraph 10 that if ASIC’s submission, section 64, is correct, every decision involving federal jurisdiction that has spoken of the obligation of fairness, and we cite only a few, must have been wrongly decided and that would need be made clear. Because when your Honours go to our written submissions on the fairness point in the green book, the proposition that there is an obligation of fairness with different dimensions is very well established in Australian jurisprudence, and English jurisprudence for that matter. In paragraph 85 of our submissions in green, 374, we extract the passage from the Full Court of the Federal Court in Scott v Handley:

The courts have, for example, spoken positively of a public body’s obligation . . . of assisting ‘the court to arrive at the proper and just result’ –

citing Cantarella –

And they have spoken negatively . . . of not unfairly impairing the other party’s capacity to defend itself.

With that passage in mind, can I just take your Honours to, in our short outline – not the section 64 outline, but the other outline – paragraph 13, the fifth proposition, on page 2. We have collected examples of the statement of principle or, one might say, expectation in action and we have sought to characterise facts of this case in the final three lines. We respectfully submit that what the Court of Appeal did was consistent with a concern that the Crown, at least in a case like this, should not, to put it negatively, hold back material capable of putting out of doubt or making more clear something which is or maybe thought to be unclear, depending on where the balance of evidence and the competing arguments lie, so one can put it negatively, must not do anything and if it does, suffer the consequences or one can express it positively, as the Full Court said, a duty to try and arrive at the proper and just result.

That notion which, as the submissions make clear and merge from Cantarella, can be tracked back – this is the earliest example I have found, I do not purport to say it is the only example – the case of Deare v The Attorney General [1835] EngR 55; 160 ER 80 at 85, which, your Honours, we refer to in that paragraph 13. This was an application where, at page 80 in the summary of the facts, a person had been charged effectively as owing an account. He then discovered a certain point in the proceedings, that the practice of the war office had changed and the bill charged that the defendants had diverse papers, et cetera, by which the truth of the several matters alleged would appear and prayed for discovery, the Crown demurred, and the demurrer was overruled, your Honours will see, on the ground that the Treasury officials were public officers and also for want of equity. The relevant passage in the Chief Baron judgment is at page 85, about 10 lines down:

At the same time it has been the practice, which I hope never will be discontinued, for the officers of the Crown to throw no difficulty in the way of any proceeding for the purpose of bringing matters before a Court of justice, where any real point of difficulty that requires judicial decision has occurred.

There is a real point of difficulty, we submit, on the evidence in this case, and there was. It was clear and it could have been clarified if the Crown in this case had acted in accordance with the expectations which have been given sanction in one way or another.

So to return to paragraph 13 of my short outline, in the decision to which your Honour Justice Bell was party in the Court of Appeal, Mahenthirarasa [2008] NSWCA 201; (2008) 72 NSWLR 273, the expectation, or if one puts it positively, the breach of duty was sanctioned by an award in that case of indemnity costs. In the Law Institute Case the sanction because of breach of the expectation was the non-dismissal of a claim for public interest immunity.

In Scott v Handley the opposition by the Commonwealth to the adjournment application was overruled and why - because the defendants in that case had to be given proper opportunity for the true facts to emerge for them to respond to the lately filed evidence. The Commonwealth says there - - -

FRENCH CJ: Mr Bell, I think your time is over now.

MR BELL: Your Honour, I am conscious of the time. Can I make this very brief application. Your Honour, when the allocations were done, we had had no notice whatsoever of the section 64 point. It is an important point apparently on the Commonwealth’s argument and I have had to deal with that. I am the counsel amongst the defendants on whom that burden has fallen and I did not anticipate when the original allocations were done - - -

FRENCH CJ: What is your application, Mr Bell, if I might?

MR BELL: Just for five minutes more, your Honour.

FRENCH CJ: Yes, very well.

MR BELL: Your Honour, the Commonwealth has said that there are not any cases where inferences have been drawn, for example, of an evidentiary kind and the kind which the Court of Appeal perhaps were drawing or in that territory. We point to the observation in the English Court of Appeal in Secretary of State for Foreign and Commonwealth Affairs v Quark, which is referred to in paragraph 12 of our short outline and I think your Honours have copies of that. The relevant paragraph of the decision is in paragraph 50 of the decision of Lord Justice Laws. This is dealing with public authority respondents, but we say that this is consistent with the expectation in other fields:

to assist the court with full and accurate explanations of all the facts relevant to the issue the court must decide. The real question here is whether in the evidence put forward . . . has given a true and comprehensive account of the way the relevant decisions in the case were arrived at. If the court has not been given a true and comprehensive account, but has had to tease the truth out of late discovery, it may be appropriate to draw inferences against the Secretary of State upon points which remain obscure.

Now, that, to anticipate the question, is not a decision whose reasoning is influenced by the Human Rights Act or any of the human rights discourse, at least not on the face of the decision. It has been followed in a couple of cases also in the Court of Appeal which we refer to in paragraph 12 of our submissions.

Your Honour, the final point and it is a discrete point which I can deal extremely briefly, also undermining the probability or the cogency of ASIC’s case, apart from the slides – this is a factual point – apart from the slides which Mr Gleeson took you to, the actual content of the Q and As - and your Honours have not been taken to those, but if your Honours have green 358 and 359, we have collected here and we have given the appeal book references, various of the questions and answers which were before the board and were picked up by Mr Baxter.

Your Honour Justice Hayne asked whether Mr Baxter was cross-examined on the topic. Mr Baxter gave evidence-in-chief that although he did not recollect anything about the stock exchange announcement, he did have an actual recollection of presenting the slides, including picking up the Q and A reference. Your Honours will see in the italicised – take, for example, the second one on page 359 – sorry, the third one:

It will not be known for very many years whether or not funding is sufficient. It is impossible to prove today . . .

cannot be measured reliably at this time . . . cannot make a determination as to the adequacy -

et cetera. This case on breach is extremely narrow. ASIC did not complain and does not complain about statements of sufficiency of funding based on actuarial projections. Its complaint is the certainty statement and the sharp point which emerges from this material before the Court is how could this board which rejected the.....model, very conscious of its obligations; getting advice from senior counsel about what it could do, having Mr Cameron and Mr Robb there to advise it, having all this material saying the thing about this because of the nature of the beast we are dealing with is we cannot be certain.

HAYNE J: These matters to which you refer at 358 and 359 are board papers, not board slides?

MR BELL: Yes, that is right, but the slides pick up, at 2220 I think it is – page 360, your Honour, we would make the cross-reference. That statement quoted there came from the slides presented by Mr Baxter, I think the slide of 2220. Again, the Court has, in a sense, this binary decision. We would simply conclude by saying one does not defend what must be implicit in the defendant’s case, carelessness, slackness, oversight in approving minutes, call it mistaken, accept fully the consequences of having inaccurate minutes, et cetera, and do not defend that conduct, but what we do submit earnestly to the Court is, should the consequences of contravention, which are disastrous of course for individuals in this context, should those consequences be visited for what on our case was slackness and carelessness in approving a set of inaccurate minutes, which was not he case put and not the case run, and is a matter for embarrassment and legitimate complaint, no doubt, by those affected by the inaccurate minutes, but do not take the view that if there was slackness there, there should be punishment or finding or upholding of contravention for something which, our submission is, on a Briginshaw standard was not made good by ASIC in this case for the host of reasons we have adumbrated. May it please the Court.

FRENCH CJ: Thank you, Mr Bell. Yes, Mr Wood. Mr Wood, we will sit until 4.30.

MR WOOD: If your Honours please. I will of course not trespass upon any area covered by my learned friends and I propose to address four topics briefly going to the reliability of the minutes as an accurate record of what occurred on 15 February and one topic separately which is what your Honours can and should make of the confirmation of the accuracy of the minutes at the 3 April meeting.

Your Honours have been taken to paragraph [240] in the Court of Appeal judgment dealing with the informal way in which meetings were conducted at James Hardie and the trial judge’s finding about that. What your Honours have not been taken to is two illustrative aspects of the evidence upon which that finding was built, and may I invite your Honours to go first to volume 9 in the blue books, to Mr McGregor’s statement, which he gave to the Jackson inquiry, remembering Mr McGregor had died by the time of our trial, he being the chairman of James Hardie, and he described in paragraph 20 at page 4202 the way in which he conducted the meetings.

Your Honours will see that at the bottom against letter V on page 4202 going over to 4203. So you have a presentation by a management of a paper or a proposal, a discussion and normally a consensus develops which is then expressed by the chairman. To see that in operation at the meeting of 15 February, may I take your Honours to Mr Willcox’s statement which is in volume 12 of the blue book, page 5543, and it is paragraphs 98 through to 100. What your Honours will see in 98 is agreement by Mr Willcox with the general statement of the way in which board meetings were conducted and then Mr Willcox descends into what occurred at the meeting of 15 February so far as the separation proposal was concerned.

This approach to the conduct of meetings is uncontentious because there are concurrent findings of fact that way, but also we have put in footnote 150 the evidence, references of Sir Lou Edwards, Mr Morley, Mr Brown, Mr Gillfillan and Ms Hellicar to the same effect. May I take your Honours to that depth of the material to make this observation. In the eight pages of the signed minutes of the 15 February meeting one has 22 resolutions. Those resolutions descend from matters of generality to matters of intricate legal complexity. If the approach that Mr McGregor expressed as to the conduct of a meeting was the way this meeting was conducted, and indeed that seems common ground, it is passing strange in the absence of some form of road map at the meeting for 22 resolutions, as recorded in those minutes, of that kind to have been passed.

The Court of Appeal noticed the argument about this at paragraph [488], and I will not take your Honours to it, but that was a part of the path to their conclusions about the hesitancy with which one should treat the minutes as an accurate record. The second general observation that permeates the reliability of the minutes as an accurate record can be found, most conveniently I think, if your Honours would be good enough to go to volume 2 of the green book, at page 244 – sorry, I have given the wrong reference – 244 is the annotated ASIC version.

What your Honours would notice throughout those pages is that there are references on 15 separate occasions to the tabling of documents at this meeting. Mr Willcox, Mr Koffel and Ms Hellicar said with the exception of two documents the entries in the minutes relating to the tabling of those documents are incorrect. The two exceptions were Mr Allsop’s advice and the cash flow model.

Now, I will not take your Honours to the evidentiary references, other than to identify that we have in paragraph 30(o) at green volume 2, 505 to 506, identified precisely that evidence. But there is something more important about this topic, and that is that evidence is supported by the joint company secretary, Mr Donald Cameron’s evidence. Your Honours know that Mr Shafron was one of the secretaries and Mr Cameron was another. Mr Cameron gave evidence, to which I should direct your Honours, as to the systems that were in place at James Hardie to capture documents presented to, tabled at meetings of directors over the relevant period of time.

Your Honours will find Mr Cameron’s outline of evidence in volume 12 of the blue book and, relevantly, the first reference is at page 5231. In paragraph 12, Mr Cameron tells us that after about some period well before the 2001 meeting, he ceased to go and attend board meetings. Mr Shafron performed that role. Against letter Q down to R, he tells us what occurred in terms of being provided by Mr Shafron with copies of documents and presentations that had been tabled at the board meetings. It was his role then to file them in chronological order in a filing system at James Hardie.

Then we know from paragraph 30, if I could take your Honours over to page 5238, that the particular document management system that addressed board papers, management accounts, board meetings and documents that were tabled at board meetings was set out in that paragraph 30 and it goes over to the top of the next page. Then minutes ultimately are kept as well. So one has a comprehensive system of record keeping so that one knows what was in board packs, at board meetings, tabled at board meetings and the minutes.

Then if I can take your Honours over to paragraph 149, which appears at page 5283 at letter O, he addresses the board meeting of 15 February and he states in paragraph 149 he did not attend, but then identifies the minutes and identifies Mr McGregor’s signature upon them. Then what is interesting and relevant to us occurs in paragraphs 150 and 151 and, indeed, 152. This can be seen and should be seen as the implementation of the system in place to capture documents tabled at the board meeting. So what he tells us in paragraph 151 is he received from Mr Shafron, consistent with the practice referred to earlier in paragraph 12, two documents initially.

The first one under bullet point No 2 is Mr Allsop’s opinion and bullet point No 3 is the cash flow model and bullet point No 4, the bottom one, is the Grant Samuel draft valuation, which your Honours will recall was a valuation of the subsidiaries, and he then says he either filed them or got his secretary to file them. Now, what is more revealing, perhaps if your Honours can keep that page open and be good enough to go to volume 5 of the blue book, you will see Mr Allsop’s advice that is referred to in paragraph 151. Your Honours will find that at page 2177.

In the top right-hand corner of 2177 you will see in handwriting that Mr Cameron has identified as that of Mr Shafron “Tabled and discussed Bd 15/02/01”. Similarly with the cash flow model, which your Honours will find over at 2311, again in Mr Shafron’s handwriting – this is the first page of four pages of the cash flow model, it is the assumption sheet. Your Honours will see at the top “Bd 15 Feb ’01 (Phillip Morley presented)”.

I can tell your Honours that the Grant Samuel report appears at page 2315, that is the first page of it. It does not carry any notation of that kind. That suggests that the evidence given by Mr Willcox and Ms Hellicar and Mr Koffel about what was tabled at the meeting could well be correct. But more importantly it tells us that - - -

HEYDON J: How could Mr Koffel’s opinions on that subject or evidence on that subject be helpful in view of the fact he was not in Sydney.

MR WOOD: True. I accept that immediately, but he would at least be able to hear what is said to be tabled, said to be distributed and said to be discussed, but it has that limitation which I readily accept. But I am not seeking to reinforce the evidence directly of Mr Willcox or Ms Hellicar, but rather to highlight the question, what happened to the other 12 or 13 documents said to be tabled at this meeting as recorded in the minutes?

BELL J: Was there some evidence from Mr Cameron respecting why a copy of the ASX release would not form part of the board papers?

MR WOOD: Yes, that is right. Your Honour is referring to the evidence referred to by the Court of Appeal in paragraphs [378] to [379]. Your Honour highlights what is now seen by the Court of Appeal to be an unsuccessful cross-examination by me to talk Mr Cameron into the dogmatic position that if a draft ASX announcement had been passed by the meeting, his system would have captured such a document. He resisted on the Court of Appeal’s interpretation of that evidence, which your Honours will see the discussion of that his system worked that way.

So that would have been a short way home. I have a rather longer way home by highlighting the question of whether the minutes could be seen in the light of objective evidence such as this and direct evidence of three of the directors as accurately recording the tabling of 13 of the 15 documents.

May I then go to the third topic dealing with reliability of the minutes to address a matter that your Honour Justice Hayne has mentioned more than once and ASIC have made something of in what they call proposition 3.3.3 of their outline propositions and that is that changes in the sixth draft of the minutes, which your Honours will remember was sent by Mr Shafron to Mr Macdonald on 21 March, being the first version after the 15 February meeting, actually reflected what happened at the board meeting on 15 February.

Your Honour Justice Hayne expressed particular interest in or reliance upon the changes so far as it related to the about turn. We say when one looks a little bit more closely at the changes effected between the fifth draft and the sixth draft, and there are six that relate to the creation of the foundation, the true result is a lack of support for the idea that those changes reflect what happened at the meeting. Rather, they suggest the opposite.

Can I seek to make that good in this way. One needs for this purpose, because some are additions and some are deletions, to have both the fifth draft which turned up on 15 February at 8.05, shortly before the board meeting, and your Honours will find that in volume 5 commencing at 2103, and one will need to compare that with the sixth draft which emerged on 21 March, some five weeks after the meeting, which your Honours will find volume 6 at 2674, or perhaps 2672 is where it starts, and the timing of it your Honours can see at 2671. If I can identify the first change that was made after the meeting by reference to volume 5, 2104, if your Honours would go to letter P, your Honours will see in that draft the payments to be made under the indemnity to the subsidiaries by the parent company was expressed to be “$[100] million” over a period of 42 years.

What the change was made in the sixth draft your Honours will see at page 2674 paid $65 million” expressed then as a net present value. That same $65 million your Honours will see, if your Honours go to 2107, being in the fifth draft, at letter F there is $100 million, again being net present value of $70 million there and what has been put in the sixth draft at page 2676 is $65 million. Now, we know without a shadow of a doubt that there was no mention of a present value of this deed of covenant and indemnity at the February meeting. The cash flow model showed it to be 70, the slides showed it to be 70 – sorry, 72 and the slides showed it to be the same number. None of them were 65. Mr Harman was cross-examined on it. Mr Morley was cross-examined on it and everybody agreed there was no mention of 65. So whoever has changed the fifth to the sixth draft, has changed it in a way that did not follow the actual activities at the meeting.

We have given your Honours the detailed references to the evidence to demonstrate that error in the final minutes, and your Honours will find them at pages 498 to 499 in our paragraphs 30(a) and 30(b), and that is probably the most simply demonstrated error in what occurred between the fifth and sixth drafts, and was perpetuated in the final. But the perhaps more subtle one and interesting one is the one concerning the power of attorney.

Your Honours will see in the fifth draft at page 2109 that the attorneys, in contemplation of that resolution, were Messrs Macdonald and Shafron and Ms Marchione, whereas in the sixth draft which your Honours will find at 2679, a Mr Guy Jarvi has appeared. There is a qualification then put at the end after Mr Jarvi’s appearance and there was subsequently a correction about this in the April meeting.

Your Honour Justice Hayne said this is a good indication that there was a focus upon the events at the meeting in terms of the redrafting and changing of the minutes thereafter. What is the true position, we would submit respectfully, at the evidentiary level – and I will not take your Honours through this in painful detail – but it is identified in painful detail in our paragraph 30(c) of our submissions that commence at 499 of the green book, and continue on to 501, now what that evidence demonstrates are these facts.

The draft of the fifth minutes identified three attorneys that did not include Mr Jarvi. The power of attorney that was extant as at the time of the meeting on 15 February did not include Mr Jarvi. Late in the night of the 15th or early in the morning of the 16th someone has come up with the idea that Mr Jarvi should be included. On 21 March someone decides – Mr Shafron one would think – to change the draft minutes from the fifth to the sixth version to include Mr Jarvi. So what has occurred, if this power of attorney had been tabled, is to change the fifth draft which was correct into the sixth draft which was incorrect.

Then someone has come up with the idea that there has been a problem in relation to the power of attorney because it purports on the face of the draft minutes to not have captured Mr Jarvi, but we know Mr Jarvi actually was one of the attorneys under the power of attorney itself, and we have referred your Honours to where you can find that power of attorney, we had better fix that by way of a notation and a ratification in the February board pack and then there is a notation about the material document at the February board meeting.

Mr Morley was cross-examined at black 3, 1006 to 1007 about this particular issue, but what upon analysis is revealed there is presumably Mr Shafron in changing the fifth draft to the sixth draft in this topic did not have his eye on the events of the meeting at all, but rather changed from what was possibly true if there was a tabling of the power of attorney to that which was demonstrably untrue.

FRENCH CJ: That might be a convenient moment, Mr Wood.

MR WOOD: It would be, thank you, your Honours.

FRENCH CJ: The Court will adjourn until 10 o’clock tomorrow morning.

AT 4.30 PM THE MATTER WAS ADJOURNED
UNTIL THURSDAY, 27 OCTOBER 2011