52 The decision is remote from the present case. However, in the course of his judgment, Goldberg J referred with apparent approval to the following passage from Odgers, Uniform Evidence Law, 3rd edition, at p 443:
Plainly, it is likely that this ‘danger’ will usually only have significance in a jury trial. Where the trial is by a judge without a jury, it will be an unusual judge or magistrate who is prepared to concede that a danger exists that he or she might be ‘unfairly prejudiced’ by evidence. On the other hand, the provision is not limited to misuse of the evidence by the Tribunal of fact. Unfair prejudice may arise from procedural considerations. Thus an opposing party may be significantly prejudiced by hearsay evidence if unable to cross-examine on a crucial issue in the litigation. Alternatively, the opposing party may be unfairly prejudiced by evidence if prevented from properly challenging its reliability.
He also quoted from the judgment of McHugh J in Papakosmas, to which I have referred, but the citation from Odgers carries the implication that inability to test the truth of a representation otherwise admissible may constitute unfair prejudice and warrant rejection of the evidence.
53 In Dann  NSWCCA 185, it was held by the Court of Criminal Appeal that evidence of other episodes led as “relationship” evidence should have been rejected under s137. Heydon JA (Spigelman CJ and James J agreeing) said:
 In my judgment the evidence ought to have been rejected under s 137 also. Its low probative value was exceeded by the unfairness caused by a multiplication of questionably established discreditable instances. Though the jury were warned not to use the evidence as tendency evidence, only as relationship evidence, the distinction is difficult to grasp at the best of times. The vagueness of the evidence, particularly as to date, made it prejudicial in the sense that it was difficult for the accused to respond to it except by a denial.
54 The case illustrates the breadth of considerations which may provide a legitimate basis for a finding of unfair prejudice. The considerations taken into account inDann were quite different from the kind of unfair prejudice referred to in the ALRC report as quoted by McHugh J in Papakosmas.55 In Ordukaya v Hicks  NSWCA 180, the trial judge had admitted into evidence a statutory declaration made by the defendant pursuant to s64 of the Act, the defendant being 92 years of age at the time of the trial and it having been found that it was not reasonably practicable to call the defendant to give evidence. He declined to reject the evidence pursuant to s135.56 It was argued at the trial and on appeal that the evidence should have been rejected on the ground of unfair prejudice because the plaintiff was denied the opportunity to cross-examine the defendant. Sheller JA rejected that argument. He emphasised that, conformably with s64, the hearsay rule did not apply to the statement. He recorded the plaintiff’s reliance on the dicta in McLean that it would be unfairly prejudicial within s135 for evidence to be tendered against a party who could not contest it. He quoted what was said by McHugh J in Papakosmas at , and he quoted the passage in the ALRC report cited by McHugh J. Sheller JA said, at :
The purpose of s64 is to remove the obstacle of the hearsay rule in cases like the present where a party, due to age and ill health, is unable to give evidence and may suffer great injustice as a consequence. Inevitably the removal of the hearsay rule as an obstacle to admitting the statement carries with it prejudice to the other party.
57 I have to say that the appellant’s argument in Ordukaya was, it seems to me, a hopeless cause. The only point the appellant appears to have had was that the truth of the representation could not be tested because it was not reasonably practicable to call the maker of the representation. But that was the very basis on which hearsay evidence was made admissible in that case, by operation of s64. The submission that the evidence should then be disallowed on the ground of unfair prejudice was inconsistent with the policy underlying s64. The case demonstrates the need to distinguish between considerations which may legitimately arise in relation to unfair prejudice depending on how the hearsay evidence becomes admissible.58 Sheller JA went on to speak of the concept of irresponsibility behind the common law attitude to hearsay evidence, that is, the making of a statement without the sense of responsibility associated with giving evidence on oath. He said, at :
The irresponsibility referred to endures when, in the particular circumstance that it is impracticable for the witness to be called, the legislature provides that the hearsay rule is not to apply. But I do not think that it can be said that such irresponsibility makes the prejudice unfair to the point of outweighing material of high probative value such as this statutory declaration.
However, Sheller JA then went on to say in relation to s135, in the same paragraph:
It is not necessary in this case to decide whether it ever could or whether it is confined to situations, like those in the cases to which I have referred, where the statement has been obtained by unfair means or has a tendency wrongly to excite the fact finder’s emotions and is of little probative value.
So the proper ambit of “unfair prejudice” was left open.
59 Meagher JA agreed with Sheller JA. So did Mason P, but in a short supplementary judgment, Mason P made some observations of his own. At , he referred to a real risk that the evidence will be misused in some unfair way in a jury trial as being the “core notion” of unfair prejudice within the meaning of the Act. However, he then went on to quote the passage from Odgers referred to earlier. His Honour said he agreed with that passage, thus endorsing the proposition that the opposite party may be significantly prejudiced by hearsay evidence if unable to cross-examine on a crucial issue or if prevented from properly challenging its reliability.60 Mason P also cited with apparent approval the decision in Safeway, referred to above.61 In Vitali v Stachnik  NSWSC 303, Barrett J, sitting at first instance, refused to reject evidence otherwise admissible pursuant to the business records provisions of s69 of the Act, tendered to establish that certain payments had been made. His Honour said [at 22]:
The trend of recent authority is, I think, against my exercising my discretion under s.135(a) to reject MFI 3 in this case. That authority lays particular emphasis on the adverb “unfairly” in the phrase “unfairly prejudicial”. I refer in particular to the judgment of McHugh J in Papakosmas v The Queen (1999) 196 CLR 297 and the judgment of Sheller JA (in which Meagher JA concurred) in Ordukaya v Hicks  NSWCA 180. In the latter case, as in ACCC v Australian Safeway Stores Pty Ltd  FCA 1269, there was approval of the notion that inability to cross-examine on material sought to be introduced is not of itself unfairly prejudicial, at least in civil proceedings where there is no jury, even though that inability may well be a very relevant consideration in the Court’s decision as to the weight it should ultimately afford to the evidence (see also R v Toki  NSWSC 999).
62 I have to say, with respect, that I disagree with his Honour’s perception of a trend of authority, particularly when appropriate distinctions are recognised between the ways in which hearsay evidence may become admissible. I have also to say, with respect, that I do not read Ordukaya or Safeway as standing for the proposition mentioned by his Honour. As for Toki  NSWSC 999, that was an interlocutory decision by Howie J, declining not to exclude relationship evidence pursuant to s137 in a criminal trial. Inability to test hearsay evidence by cross-examination did not arise for consideration in that case.
63 In Clark (2001) 123 ACrimR 506, the appellant had been found guilty of murdering the deceased. At the trial, evidence was led from a number of witnesses of conversations between them and the deceased, concerning the relationship between the appellant and the deceased. The evidence was admissible pursuant to s65. The trial judge refused to exclude the evidence under s135 and was, according to Heydon JA, to be taken to have refused to exclude the evidence pursuant to s137 or to limit its use pursuant to s136.
64 Heydon JA held there had been no error in that regard and said, at :
The appellant submitted that the trial judge should have exercised his discretion under s135 to exclude the evidence. The evidence was not misleading, confusing or wasteful of time. It was adverse to the appellant’s interest, but not unfairly so. The appellant said that the evidence was “so significantly prejudicial and so impossible to challenge its veracity that it is wrong to permit it”. The witnesses to the deceased’s statements were all there for cross-examination. There was in fact very little cross-examination on the evidence complained of. The appellant was there to deny having said or done any of the things attributed to him and, credibly or not, he did deny most of them. The deceased was not there for cross-examination, but if the impossibility of challenging the veracity of hearsay statements by non-witnesses were generally to justify, or were often to be a significant factor in justifying, a decision to exclude evidence in the court’s discretion under s135 or by reason of a finding of “unfair” prejudice under s137, the result would be to write the hearsay exceptions out of the Act to a large extent.
His Honour went on to quote the passage from McHugh J’s judgment in Papakosmas to which I have referred.
65 Bell J agreed with Heydon JA. Dowd J took issue with some aspects of Heydon JA’s judgment, but, in broad terms, agreed generally with Heydon JA’s approach in substance.
66 I would make the following observations concerning Heydon JA’s judgment. First, like Ordukaya, this was a case falling within an exception to the hearsay rule designed to allow evidence to be tendered of representations made by a person who, because of death or other reasons, cannot be called to give evidence as a witness. Section 64 and 65 accordingly necessarily contemplate that a representation may stand untested by cross-examination.
67 Secondly, even in that kind of case, Heydon JA did not lay down any hard and fast rule. The words “generally” and “often” are to be noted.
68 Thirdly, as noted by Heydon JA, at , the evidence complained of was not significantly more prejudicial than other evidence to the same effect of which the appellant did not complain (and, I would add, could not have complained), so that to exclude the evidence complained of, but not the other evidence, would have been to leave the jury (as Heydon JA put it) with vague and generalised evidence about the appellant’s state of mind, but not specific evidence about it.
69 In Sing  NSWCCA 20, two expert witnesses gave evidence at a criminal trial concerning DNA tests carried out under their supervision. On appeal, it was argued that the evidence should have been rejected under s135 or its use limited under s137.
70 On appeal to the Court of Criminal Appeal, Hodgson JA assumed for the purpose of the argument that the evidence involved hearsay or was based on hearsay. He said,
 Whatever is the correct answer to the hearsay question, I think there is substance in the appellant’s complaint that to admit evidence like that of Mr Weigner and/or Mr Goetz over objection, without the evidence from the persons who actually carried out the procedures that resulted in the print-outs, and indeed without any evidence that there was any difficulty in calling these persons, involved unfair prejudice to the appellant. It may be that these persons would have no recollection of exactly what they did and would have to rely on records; but that is not generally sufficient justification for not calling, in a criminal prosecution, a witness involved directly in a significant part of the prosecution case. Counsel for the appellant at the trial said he had an expert present in court for the purpose of assisting him with questions to be put to the persons who actually carried out the procedures, and I think this Court should proceed on the basis that there were relevant questions which the appellant’s counsel wished to put to these persons if they had been called. There is an obligation on the prosecution to call available witnesses of events alleged to constitute the offence and of essential parts of the prosecution case, at least unless there is some justification for not doing so: see for example R v Kneebone  NSWCCA 279. I think this does extend to witnesses such as those in this case dealing with important links in the prosecution case. Particularly since DNA evidence can be so compelling, I do not think the matter of the correct carrying out of testing procedures should normally be proved, over objection, merely by evidence of the existence of the procedures and the giving of instructions, and otherwise left to inference. If for any reason the persons who actually did the work are unavailable, there may be justification for such a course. But there is no suggestion of that here. For those reasons, even if the evidence of Mr Weigner and Mr Goetz were admissible, notwithstanding the possibility of hearsay, in my opinion it should have been excluded under s135 or s137 of the Evidence Act.
Levine and Howie JJ agreed with Hodgson JA.
71 Considerations particular to a criminal trial were involved. But this is, nonetheless, an instance of hearsay evidence being held to warrant rejection under s135 or limitation under s137 on the ground that the opposite party does not have the opportunity to test the evidence by cross-examination, at least where the persons with direct knowledge could be called.
72 In Ringrow Pty Ltd v BP Australia Ltd  FCA 933, Hely J refused to admit two valuation reports into evidence in reliance upon s135. The valuations had been prepared on instruction by a bank which was a stranger to the proceedings. It was an issue between the parties as to whether there was any valuable goodwill in relation to the service station business which was the subject of the proceedings. Arguably, the reports were evidence tending to establish that there was such goodwill. It was not proposed that the authors of the valuations would be called as witnesses.73 Hely J held that, subject to s135, the reports should be admitted as satisfying the business records provisions of s69. However, the evidence was rejected pursuant to s135. In so holding, his Honour said,
 Whilst inability to cross-examine ordinarily goes to weight, rather than to admissibility, in my view each of pars [a], [b] and [c] of s135 would be enlivened if the valuation reports were admitted into evidence.
That holding in principle is pertinent. Its application to the case involved detail which renders further study of the decision unproductive for present purposes.
Considerations relevant to “unfair prejudice”
74 Having regard to the terms and context of ss 135, 136 and 137 and the case law to which I have referred, I set out my view of considerations relevant to “unfair prejudice” as follows.
- (a) To say that any prejudice must be unfair prejudice is to state the obvious.
- (b) The phrase “unfair prejudice” is not defined. The legislature imposed no restriction on the criteria for unfairness.
- (c) The exceptions to the hearsay rule evince a legislative intention to allow evidence notwithstanding its hearsay character. But ss 135, 136 and 137 evince a legislative intention to allow any evidence, otherwise admissible, to be rejected or its use to be limited if the conditions specified in those sections are met.
- (d) Where hearsay evidence is made admissible by an exception to the hearsay rule it would be wrong to exclude it or to limit its use merely because it is hearsay and therefore of inherently less reliable quality. That would be to frustrate the intention of the legislature in making hearsay evidence admissible where it is covered by an exception to the hearsay rule. But that is not the same as saying that there is scope for the application of ss 135, 136 and 137 in relation to hearsay evidence which is covered by such a statutory exception but where there is some additional factor, for example, where the maker of the representation is not to be called.
- (e) Inability to test the truth of the representation is a legitimate ground for rejecting or limiting the use of evidence which is covered by an exception to the hearsay rule. Thus, whether the maker of the representation will be called as a witness is a relevant consideration.(f) However, where hearsay evidence is admissible under an exception to the hearsay rule because of the unavailability of the maker of the representation, there is a special reason for not disallowing the evidence or limiting its use on the ground that the evidence cannot be tested by cross-examination. That is because the legislature has made the evidence admissible notwithstanding that consideration.
- (g) Conversely, where the maker of the representation is available or is not shown to be unavailable and the party tendering the evidence does not call the person, that is a legitimate consideration in favour of a finding of unfair prejudice.
- (h) Sections 60 and 77 give rise to special considerations. Unlike other exceptions to the hearsay rule and the opinion rule, it is not the objective of those sections to facilitate proof. They are there to avoid a distinction having to be made about evidence being used for one purpose and not for another. Where a document goes into evidence because the existence of the document is a relevant fact, the operation of these sections without a limiting order under s136 may have a consequence which the legislature cannot have intended. Any representation in the document which is probative of some other element in the tendering party’s case becomes evidence of the content of the representation. Representations of fact become evidence of the truth of the representation, irrespective of whether they are first-hand or remote hearsay and irrespective of whether the source of the information is disclosed. Representations of expert opinion in the document are probative of whatever is the subject of the opinion expressed, irrespective of whether the author of the document is qualified to express the opinion and irrespective of whether the assumptions made for the purpose of expressing the opinion are specified. Such consequences cannot have been intended where the opposite party is disadvantaged by such consequences. Section 136 serves to avoid such unfairness.
- (i) Where ss 60 or 77 operate and the author of the document is not called, the truth of facts stated or the efficacy of the opinion expressed cannot be tested by cross-examination. The consequence of the operation of ss 60 or 77 is then potentially the more unfair on that account.
- (j) The operation of s60 on assumption evidence which is given as the basis for an expert opinion is also a special case. Where such evidence is in the form of a bare statement of facts or where facts are stated as having been provided by some other person or persons, s60 operates to make the account evidence of the truth of the facts so stated. That is not so if the expert says that certain facts are assumed for the purpose of providing the opinion. A disadvantage should not be incurred in legal proceedings by happenstance. If the facts stated are contentious, it will ordinarily be unfair that the opposite party is fixed with assumption evidence as evidence of the truth of the facts stated by reason of those facts having been stated in one form rather than the other.