A recent decision of the Supreme Court of Western Australia has found that a company’s Quickbooks data file, reports generated from the data file and print outs of those reports are admissible in evidence as the books of a company without the need to call any witnesses to attest to the authenticity of the materials.
The liquidator of Westgem Investments Pty Ltd (Westgem) sought to tender the Quickbooks data file of Westgem in order to prove (amongst other things) Westgem’s insolvency. The plaintiffs sought to tender the Quickbooks data file as business records without calling any witness to explain their provenance. The defendants objected to the admissibility of the data file on this basis, submitting that neither the data file nor reports printed from it were “books” for the purposes of the Act, that much of the material in the data file was not relevant, and that the software used to access the data file had not been proved. The defendants further submitted that the Court should exercise its discretion to exclude the data file because the defendants would be unfairly prejudiced if the plaintiffs generated reports from it of which the defendants had no notice.
Legislative basis for admissibility of a company’s books
Pursuant to section 1305 of the Corporations Act 2001 (Cth) (Act), the books/records required to be kept pursuant to the Act as well as any document purporting to be a book kept by a body corporate, are admissible in evidence in any proceeding and are prima facie evidence of any matter stated or recorded in the book.
The books required to be kept under the Act are financial records which correctly record and explain a company’s transactions, financial position and performance, and which would enable true and fair financial statements to be prepared and audited (section 286).
This includes the following types of “books”:
- A register;
- Any other record of information; and
- Financial reports or financial records, however compiled, recorded or stored, which includes:
- invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers;
- documents of prime entry;
- working papers and other documents needed to explain the methods by which financial statements are made up; and adjustments to be made in preparing financial statements.; and
- a document, which includes any paper or other material on which there is writing and any article or material from which writings are capable of being reproduced with or without the aid of any other article or device.
The Court agreed with the plaintiffs that the Quickbooks data file could be introduced into evidence without any authenticating evidence by a witness. The data file was, as the Court described it, “accounting documents of prime entry” from which writings may be reproduced.
The Court further found that:
- The plaintiffs could use software (in this case “Reckon” software) to access the data contained in the data file without needing to prove or authenticate the software, although it was open for the defendants to bring evidence to show that the software was unreliable;
- The plaintiffs could print reports from the Quickbooks data file after tender of the data file, which would likewise be a ‘book’ kept by the company and admissible as prima facie evidence of their contents;
- While not all of the material in the data file was relevant, it was permissible to tender the entire data file in order to establish that it contained Westgem’s books maintained in a systematic way; and
- As the plaintiffs were prepared to provide notice to the defendants of the particular data in report form on which they intended to rely, the Court did not exercise its discretion to exclude the data file on the grounds that admitting it into evidence would be unfairly prejudicial to the defendants.
As a consequence of this decision, it is clear that liquidators can tender original accounting data in evidence, without needing to call any witnesses to attest to its authenticity, and can use software packages to print reports generated from the data in order to establish matters such as insolvency, payments made to creditors and/or related parties, and any other relevant transactions of the company. While this case dealt with a Quickbooks data file, it is likely that data files from other accounting packages, such as MYOB, Xero or Reckon would also be admissible in proceedings.
This article was written by Chloe Parker, Senior Associate, in our Adelaide office.
Publication Editor: Grant Whatley.