Dr Leo Shanahan v Jatese Pty Ltd: In Re Chynoweth and section 128 of the Evidence Act 1995 (NSW)

HIS HONOUR: This judgment concerns an evidentiary question which arose during the hearing of the principal proceedings: Dr Leo Shanahan v Jatese Pty Ltd [2018] NSWSC 1088. Resolution of the issue warrants publication, separately, of reasons. Definitions in the principal judgment are used in this judgment.

After lunch on day five of the hearing of the proceedings, Mr Phillip Chynoweth gave the following evidence, without objection, under cross-examination by senior counsel for the minority:

This evidence revealed that Mr Chynoweth had asked for, and received, money from the majority in respect of services which he provided as a director of CEH, without the minority knowing about it. Under the Shareholders’ Agreement, directors were not to be remunerated.

His evidence may tend to prove that he committed an offence against or arising under an Australian law, or is liable to a civil penalty.

Section 128 of the Evidence Act 1995 (NSW) (Evidence Act) (which is in Part 3.10) provides:

Section 132 of the Evidence Act (which is also in Part 3.10) provides:

The fact that he had asked for money and had been paid was not disclosed in the affidavit evidence, including that of Mr Chynoweth himself. Indeed, my perception was that his evidence about the payments came as somewhat of a surprise to both sets of counsel.

Mr Chynoweth’s testimony was completed at the end of day five. After the adjournment, it occurred to me that Mr Chynoweth may have had grounds for making an application or objection under a provision of Part 3.10 with respect to his evidence about the payments. The next morning, I drew to the attention of counsel that the evidence may tend to prove that he had committed an offence under an Australian law, or is liable to a civil penalty. I raised the question of whether, in the circumstances, the Court could or should give him a certificate under s 128(5) of the Evidence Act.

No doubt flowing from the disclosure of the payments, documentary evidence was later elicited by notices to produce and oral evidence elicited from the majority under cross-examination (after objection and the provision of certificates) which revealed that Mr Chynoweth or his company had received payments totalling not less than $84,000 (that is significantly more than the $20,000 to which he referred).

Objection on Mr Chynoweth’s behalf to the evidence already given by him was then sought to be made and a certificate applied for. The Court had the benefit of submissions from the parties on the subject. I gave Mr Chynoweth, represented by separate counsel, the opportunity to be heard.

The question is whether s 128(1) has the effect that s 128 applies if a witness objects to ‘giving’ particular evidence, or evidence on a particular matter after the evidence has been given.

For the reasons which follow, the answer is no. The plain meaning of the text and the structure of s 128 do not accommodate another answer.

The section operates as a whole and congruently in the following sequential way.

The first step is that the witness takes objection on the grounds that the evidence may tend to prove the commission of an offence or exposure to a civil penalty (s 128(1)).

Next, the court must determine whether there are reasonable grounds for the objection (s 128(2)).

If the court rules that there are reasonable grounds, the court is not to require the witness to give the evidence and the witness is to be informed that the witness need not give it unless required by the court under subsection (4), and that the court will give a certificate (the effect of which the court must explain) if the witness either gives the evidence willingly, without being required to do so, or after being required to give it under subsection (4).

At this point, the witness has the election to give the evidence willingly or to decline to do so. If the witness is prepared to give the evidence willingly, a certificate is given (128(5)).

If the witness is not prepared to give the evidence willingly, the court may require the witness to give it if it is satisfied that the evidence does not tend to prove that the witness has committed an offence or is liable to a civil penalty and the interests of justice require the witness to give the evidence. If the court requires the witness to give evidence, a certificate is given (s 128(5)).

If the court has overruled the objection, but after the evidence has been given the court finds that there were reasonable grounds for the objection, a certificate is to be given (s 128(6)).

It is plain that the objection must and can only be taken before the evidence is given.

First, s 128(1) is in the present tense. Section 128 applies only if a witness objects to giving evidence, not to objecting to evidence that has been given.

Second, the objection is taken in relation to particular evidence or evidence on a particular matter. If the objection is taken after the evidence is given, it can only relate to particular evidence. That evidence will then be known. The provision for the objection to be to evidence on a particular matter caters for the fact that the exact scope of the evidence will not yet be known. This is a further indication that the objection must be before the evidence is given.

Third, s 128(2) requires the court to rule on the objection. The remainder of s 128 operates depending on that ruling. If there are no reasonable grounds for the objection, the matter ends there and the witness can be required to give the evidence subject to a certificate later being given under s 128(6) if, after the evidence, the Court considers there were reasonable grounds for the objection.

Fourth, if there are reasonable grounds, the witness gets an option to give the evidence willingly under the protection of a certificate. No option can be exercised as to willingness once the evidence is given. If the witness is unwilling, the court may require the witness to give the evidence if the requirements of s 128(4) are met.

Fifth, s 128(6) operates where there has been an objection which has been overruled and where, after the evidence has been given, the court finds that there were reasonable grounds for the objection.

Finally, s 128(3) has no work to do once the evidence is given because the court will no longer be in a position to require the witness to give it.

In Meiko Australian Pacific Pty Ltd v Adam Samuel Hinchcliff [2009] NSWSC 354, Einstein J reached the same conclusion as I have. At [183]-[186], his Honour said:

However, a different conclusion was reached by the Full Court of the Family Court of Australia in LGM v CAM (2011) 46 Fam LR 118 (LGM). A brief exposition of the relevant factual circumstances in LGM is appropriate.

A judge of the Family Court (O’Ryan J) had made orders on 28 November 2007, in property proceedings, that the wife (W) be restrained from withdrawing or disbursing any monies from any bank account except for expenses in the ordinary course of business or for ordinary living expenses. At the conclusion of the hearing of the property proceedings, the husband (H) brought contempt proceedings against W based on alleged breaches of the orders which were said to have been admitted by her in her evidence in the property proceedings.

W was found by a different judge of that Court (Barry J) to have contravened the orders and she was sentenced to imprisonment. The contravention found was that W had written out cheques against her superannuation account. There was a dispute about whether she had dated the cheques, and whether the dates were written approximately at the time of their presentation. Her position was that she had not dated the cheques and had entered into the transactions prior to the date of the orders, and the cheques had been banked by someone else.

The evidence upon which the conviction was based included evidence of W given under cross-examination by counsel on behalf of H during the property proceedings on 20 March 2008 and 29 April 2008. The judgment records that on both of these occasions the cross-examination of W spanned a number of days over periods of months. It also records that she was in prison on both of these occasions.

After extensive cross-examination, it was ultimately put to her that the withdrawals had been directed by her in the full knowledge that the transactions were in breach of the Court’s orders. Counsel for another party raised with the trial judge whether W needed ‘a warning’.

O’Ryan J then said ‘I’ve decided simply to give you the warning, that you’re not bound to answer any questions that may incriminate you, that is to say that may, for example, lead to proceedings against you for breach of those orders.’

After further cross-examination, the same counsel suggested to the trial judge that W again be warned, and counsel for H agreed that W should be warned and he would not object to a certificate being granted. Counsel for H submitted that the certificate be limited to questions asked that day and that it should not apply retrospectively to questions asked of W prior to that day. His Honour apparently accepted this submission.

During the contempt proceedings, counsel for H said that to his recollection the granting of a s 128 certificate occurred in mid or late May, in response to which, Barry J observed that the evidence being relied on pre-dated the granting of the certificate. No further consideration to this issue was given in exchange between counsel and his Honour or in his Honour’s judgment.

The appeal papers before the Full Court apparently did not include the relevant certificate.

The unfairness to which W was exposed is manifest.

In overturning W’s conviction, the Full Court relevantly said of s 128 of the Evidence Act at [155]-[162]:

I am mindful that the Full Court is an intermediate Court of Appeal and that, unless I consider it to be plainly wrong, I should follow it. In my respectful opinion, the Full Court was plainly wrong that it was open to his Honour at any time to grant a certificate notwithstanding that the evidence had already been given.

Such circumstances may have the effect that the evidence elicited may not be permitted to be used, but not by dint of issue of a certificate.

I agree with the Full Court that the trial judge had failed to afford W the protection provided by not giving her the opportunity of raising her privilege when the questions were first asked in March 2008.

However, s 128(6) which the Court said made it clear that it was open to his Honour at any time to grant a certificate, in fact, makes the opposite clear.

The sequence contemplated in s 128(6) is that there has been an objection, the objection has been overruled, the evidence has then been given and the court then finds that there were reasonable grounds for the objection after all. In other words, if after the evidence is given, it becomes apparent from that evidence that the objection which was overruled should have been upheld, a certificate is given. The operation of the section is predicated on the fact that the evidence, once given, reveals that an earlier objection taken and overruled should have been upheld. It is protection against an incorrect ruling, not against no ruling. That is the mischief which s 128(6) seeks to avoid.

As the High Court said in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at [47]:

It may be accepted that s 128 is protective in its operation, but that operation is to be determined in accordance with the text of the section.

I observe that in Lewis Securities Ltd (in liq) (2017) 120 ACSR 327 Rein J took, after expressing reservations about it, the approach taken in LGM. His Honour’s judgment does not indicate that he was referred to Meiko.

Mr Chynoweth is not entitled to a certificate under s 128 of the Evidence Act. [1]