Wednesday, August 21, 2019

Why Mark Weinberg's dissenting opinion in Pell is required reading for commercial lawyers and litigants

by Ganesh Sahathevan

Justice Mark Weinberg.

   While the decision in the matter of Cardinal George Pell concerns criminal issues  it does raise questions  about the application of the rules of evidence by Australia's courts in all including commercial matters. While commercial disputes are generally civil matters between the parties  in commercial matters litigants face the burden of presenting financial information to judges who often seem dismissive of financial detail (see article below for the reasons why Australian courts seem to find dealing with financial data a burden).

In handing down the decision in Cardinal George Pell's appeal against his conviction for crimes relating to child sex abuse   Chief Justice Ann Ferguson said  that “it is not enough that the jury might have had a doubt, but they must have had a doubt” .

Her Honour said so in explaining why she and the other judge in the three judge panel disagreed with  dissenting judge Mark Weinberg's decision where he  concluded that the "jury might have had a doubt".

In reading out the court’s conclusions for rejecting the appeal, Chief Justice Anne Ferguson outlined Justice Weinberg’s reasoning.

“In his dissenting judgment, the judge found that at times, the complainant was inclined to embellish aspects of his account,” she told the court this morning.
“He concluded that his evidence contained discrepancies, displayed inadequacies so as to cause him to have a doubt as to the applicant’s guilt.
“He could not exclude as a reasonable possibility that some of what the complainant said was concocted, particularly in relation to the second incident.”

“Nevertheless, Justice Weinberg stated that in relation to the first incident, if the complainant’s evidence was the only evidence, he might well have found it difficult to say that the jury, acting reasonably, were bound to have a reasonable doubt about the Cardinal’s guilt,” she said.
“He went on to note, however, that there was more than just the complainant’s evidence.
“In Justice Weinberg’s view, there was significant and in some places impressive evidence
suggesting that the complainant’s account was, in a realistic sense, impossible to accept.”
“Justice Weinberg stated that in his view, the convictions could not stand,” she said.
“Nevertheless, the appeal on the unreasonableness ground has been dismissed because two of us took a different view of the facts.”. 
In short, its seems as if the CJ is herself aware that one cannot prove with absolute certainty that the jurors must have had a doubt. It will always have to be an objective test, which is what Weinberg set-out. However, because it can only be an only be an objective test, Weinberg could only make a conclusion based on probabilities (hence "may" and not "must").

Nevertheless, the Chief Justice seemed determined, as has become the norm, to formulate if not state legal principle without reference to a factual matrix.
Commercial lawyers (one hopes) but certainly litigants in commercial matters can immediately see the problems that can and will arise in taking such an approach.Conversely, Weinberg's reasoning provides a timely if not long overdue reminder of how the facts in any case ought to be assessed.



Tuesday, August 13, 2019

Westpac's Fed Crt win can also mean a Westpac downgrade: Asian investors would not consider Westpac a safe investment given Perram J's peculiarly Australian judgement

by Ganesh Sahathevan

Westpac was downgraded by UBS in April this year due to the concerns raised in the royal commission about the quality of the lender’s mortgage book. Perram J's decision is likely to add to the concerns, especially in Asia 

In Australian Securities and Investments Commission v Westpac Banking Corporation (Liability Trial) [2019] FCA 1244 (13 August 2019), Perram J said:

Whilst I accept that the ( National Consumer Credit Protection Act 2009 (Cth)) requires a credit provider to ask the consumer about their financial situation (s 130(1)(b))and, in turn, to ask itself—and to answer—the s 131(2)(a)Questions, I do not accept that this has the further consequence that the credit provider must use the consumer’s declared living expenses in doing so.

While lawyers and judges may be able to perceive the wisdom and clarity of these words, to investors , especially from Asia, the words make little sense for they imply that a lender need not concern itself with what the borrower says about his or her living expenses ie his or her net cashflows.

Additionally, while ASIC's pleadings may well have been deficient (in Perram J's words “this case fails on the facts") the judgement does raise a question about what it is Australian courts consider to be relevant in matters that concern lending, if not net cashflows.

Consequently while Westpac can celebrate its victory over ASIC,investors, especially in Asia, are likely to re-assess Westpac's risk profile and the quality of its loan book,and in particular its consumer loan book. Of primary concern will be the quality of current loans.However there will also be concerns about future loan quality given the likely perception that Perram J's decision provides Westpac justification to grow its loan book unconstrained by considerations of borrowers' capacity to repay. His reference to spending on wagyu and shiraz, presumably in an attempt to quantify cash outflows, is not likely give investors any comfort.
Bankers who do not consider what their borrowers say they earn and spend to be relevant, while not uncommon in Asia, are also not considered a safe investment, either in shares or in deposits.

Australian courts have, even when considering insolvency, shown a tendency to disregard cashflows instead choosing to rely on their analysis of "all the circumstances of the case". 

Perram's wagyu and shiraz explanation adds to the evidence that Australian lawyers and judges are not comfortable dealing with commercial matters, and worse, not capable of dealing with the increasingly technical nature of commercial transactions.


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