Citation: R v Agius; R v Castagna (No 9) [2018] NSWSC 2041
Court: Supreme Court of New South Wales
Date: 8 March 2018
Judge(s): Adamson J
Background
The Crown sought to tender selected passages from a file note created on 10 May 2009 by an accountant, William Nussbaum, who was a director at HLB Mann Judd, an accounting firm. The note was prepared in the context of his firm's work on the tax affairs of one of the accused, Dr Castagna. The firm had managed Dr Castagna's tax returns for a number of years.
The file note recorded Nussbaum's thoughts at the time of a telephone conversation with Dr Castagna's solicitor. The specific passages the Crown sought to tender included the client's name, the date, the document description, and a passage reflecting Nussbaum's state of mind about the tax matters in question.
Defence counsel for Dr Castagna objected to the document's admission on several grounds, giving rise to a voir dire (a preliminary hearing to determine admissibility of evidence).
Legal Issues
- Whether the file note constituted a "business record" within the meaning of s 69 of the Evidence Act 1995 (NSW), and therefore fell within the exception to the hearsay rule
- Whether the file note was prepared "in contemplation of" legal proceedings, which would exclude it from the s 69 exception under s 69(3)
- Whether there was a sufficient foundation for the statements in the file note, given Nussbaum's knowledge of the relevant facts
- Whether the file note should be excluded under s 135 of the Evidence Act 1995 (NSW) on the basis that its probative value was substantially outweighed by the danger of unfair prejudice to Dr Castagna
Decision
Issue 1: Business record under s 69
Adamson J was satisfied that the file note was a business record within the meaning of s 69 of the Act (at [5]). As a file note made by a director of an accounting firm in the course of managing a client's tax affairs, it formed part of the records kept by the firm for the purposes of its business (at [1]).
Issue 2: Contemplation of proceedings under s 69(3)
The defence pointed to a line in the file note (not tendered by the Crown) indicating that Nussbaum had turned his mind to the possibility that his firm might be sued. Adamson J held that this did not meet the threshold required by s 69(3) to displace the business records exception. The mere possibility of suit, as reflected in that notation, was insufficient to characterise the whole document as one prepared in contemplation of legal proceedings (at [7]).
Issue 3: Foundation for the statements
The defence argued there was no evidentiary foundation for the statements in the note. Adamson J accepted the Crown's submission that trial evidence already before the court amply established Nussbaum's long-standing involvement with Dr Castagna's tax affairs, dating back to at least January 1999 (at [8]). His increasing responsibility for the accused's tax returns over time provided the requisite foundation.
Issue 4: Exclusion under s 135
The defence submitted that the jury might place undue weight on the file note, particularly because Nussbaum used the word "we" rather than "I," potentially suggesting broader corporate knowledge. Adamson J rejected this argument, finding it underestimated the jury's capacity to contextualise the note in light of who made it, what they knew, and the limits of their involvement (at [10]). While the file note was prejudicial, it was not unfairly so. Its probative value was not substantially, or even minimally, outweighed by any risk of unfair use (at [11]).
Orders Made
- File note admitted (discrete passages from Exhibit A on the voir dire)
Key Takeaways
- A file note created by an accountant in the course of managing a client's tax affairs can constitute a business record under s 69 of the Evidence Act 1995 (NSW), even where it records the author's private thoughts not communicated to anyone else at the time (at [4]-[5]).
- Under s 69(3), a document is only excluded from the business records exception where it was prepared in contemplation of legal proceedings; a passing reference in a file note to the possibility of a lawsuit does not, without more, meet that threshold (at [7]).
- Evidence already led at trial about a witness's involvement in relevant events can supply the necessary foundation for statements contained in a business record tendered under s 69 (at [8]).
- The s 135 discretion to exclude evidence requires that the danger of unfair prejudice substantially outweighs probative value; the Supreme Court here declined to exercise that discretion where the risk that the jury would misuse the document was considered minimal, particularly given jurors' capacity to appreciate the limits of the author's knowledge (at [10]-[11]).
- Prejudicial effect alone does not trigger exclusion under s 135. The prejudice must be characterised as unfair in the sense that the jury might misuse or overvalue the evidence beyond what its proper probative force warrants (at [11]).
Legislation and Cases Referenced
Legislation
- Evidence Act 1995 (NSW) ss 69, 135
Cases
- Not stated