Events post-termination of Mr Maley's retainer: the tampering with the file
49Mr Loiero instructed R J Thomas to act for the plaintiff in connection with the transaction.
50Mr Maley noticed, as he read through, for the purposes of these proceedings, the documents that were exhibited to Mr Loiero's affidavit and which Mr Loiero had deposed had been sent to Mr Maley, that several letters were not only inconsistent with his recollection of what had occurred, but each of them bore a "received" stamp which did not correspond with the "received" stamp which had been applied to other documents in the file. The suspicious stamp (the Blazai stamp) had 16 dashes at the bottom, whereas the stamp on undisputed documents (the Maclarens stamp) had 24.
51Mr Maley, alerted by the appearance of the Blazai stamp on the disputed documents and the Maclarens stamp on documents which were indisputably part of the file, caused his son to do a random search of files in the offices of Maclarens to see if the Blazai stamp appeared on any other document. His son selected, at random, 38 files that were open at the relevant period and inspected them. None of those files contained the Blazai stamp.
52Subsequently, Maclarens, through their solicitors retained Michelle Novotny, a document examiner, to conduct a random sample of 25% open files at Maclarens to investigate whether the Blazai stamp appeared on any documents other than the documents thought to have been added to the Maclarens file after it was delivered up by Mr Maley to Mr Loiero.
53Ms Novotny was provided with a list of open files by Maclarens. She selected files by name at random from the list. There was no indication on the list as to the nature of the matter. She requested a total of 782 files, of which 681 were provided, the balance being either not available, because the file had gone with a solicitor to another firm or had been destroyed, or not relevant because there were no documents within the file from the relevant period (mid to late 2001).
54Within these 681 files, 3,258 date stamp impressions were found and compared with the Blazai stamp and the Maclarens stamp. No stamps that corresponded with the Blazai stamp was found but 2,974 impressions that corresponded with the Maclarens stamp were found. Of the remaining 284 date stamp impressions, some were impressions on copy documents of files from other entities; others indicated that Maclarens used stamps other than the Maclarens stamp during that period.
55The evidence that every one of the suspected documents bore the Blazai stamp and that not a single document other than these documents was found in the random search described above is sufficient to establish that the documents bearing the Blazai stamp were not on the file when it left the custody of Maclarens and must have been added subsequently.
56There are other matters which indicate that the suspicious documents were not sent on the dates they bear. As the narrative set out above indicates, Mr Loiero tended to communicate with Mr Maley by endorsing correspondence from others with his own handwriting and faxing the endorsed letter back to Mr Maley. It is contrary to his usual practice that he would send a typewritten letter of any length to Mr Maley.
57Furthermore, each of the letters from the plaintiff to which the Blazai stamp had been applied supported, in an entirely self-serving way, the case that the plaintiff now brings in these proceedings.
58As far as the suspicious correspondence dated prior to 3 August 2001 is concerned, it is wholly at odds with the undisputed correspondence. For example, in one of the disputed letters, dated 17 July 2001, Mr Loiero seeks confirmation that the guarantees given by the Palastys were satisfactory. There was no discussion about guarantees and no reference to them in undisputed documents. Further, I do not accept that if Mr Maley had actually received such a letter, he would have done nothing.
59As appears from the narrative set out above, Mr Maley's utility as far as Mr Loiero was concerned, was to prepare a contract for sale of the Property in a form which could be exchanged and a copy despatched to Westpac, presumably with a view to obtaining further finance for the tavern purchase or to incline the bank to grant an extension on monies already due. This, together with Mr Maley's refusal to send the contract to Westpac, explain the almost total cessation of communication between Mr Loiero and Mr Maley after 6 August 2001 and up to and mid-December 2001 when Mr Maley convened the conference with Mr Loiero which resulted in the termination of his retainer.
60However, many of the suspicious documents bear dates in August, September, October and November 2001. Another noteworthy matter is that there are no responses by Mr Maley to these suspicious documents. I am satisfied that Mr Maley would not have disregarded correspondence from Mr Loiero had it been sent. His non-response is a further indication that the suspicious documents were not sent at all.
61It is also inconceivable that Mr Loiero would have been content to keep writing detailed correspondence into the ether, without any response from Mr Maley. Mr Loiero impressed me as the type of person who would not hesitate to complain or terminate a retainer if he thought that he was not getting timely service. There are references to the monthly payments of $18,000 and the purchase of the tavern in the suspicious correspondence, which, I am satisfied, had they been sent, would have elicited a timely response from Mr Maley.
62There is another odd feature of the file in that it contains a letter from R J Thomas, solicitor, dated 19 December 2001 which has apparently been signed by Mr Thomas. It bears the Blazai stamp and represents that the letter was received on 20 December 2001. However it contains a typographical error which appears to have been corrected on a subsequent version. It was put to Mr Thomas that he may have given Mr Loiero a signed version of what he proposed to send to Mr Maley but not in fact sent it. Subsequently he might have realised that there were errors in the letter which needed to be corrected and sent a corrected version to Mr Maley. That the uncorrected version is on the Maclarens file, with the Blazai stamp, leads to the inference that this document, too, was placed on the file after Mr Loiero had collected it from Mr Maley.
63It was put on behalf of the plaintiff that it was glaringly improbable that the suspicious documents could have been prepared in the four days between 17 December 2001, when Mr Loiero collected the file from Maclarens, and 21 December 2001, which was the latest date on which he could have delivered it to his new solicitors, R J Thomas, since that was the day their offices closed for Christmas.
64First, I do not consider it to be particularly unlikely that this correspondence, voluminous as it was, could be prepared in four days. Even if the file was delivered and reviewed by Mr Thomas on 19 December 2001, as he asserted in a letter of that date to Mr Harley, this would have been sufficient time to prepare the correspondence.
65Secondly, I do not accept that the file was necessarily delivered to R J Thomas on 21 December 2001, or that if it was, it was not uplifted by Mr Loiero subsequently. Mr Thomas had no documentary record of when the file had been received or what had been done with it on receipt. He was particularly vague in his oral evidence about when the file had come into his possession.
66Thirdly, I do not accept that preparation of these false documents did not commence prior to 17 December 2001. Mr Loiero impressed me as someone who would prefer to find a financial remedy for his own misadventures and is unconcerned, as these proceedings amply demonstrate, about the means he employs to further his ends. Once it appeared that the sale of the Property would not proceed as envisaged, he may well have begun preparing his case against Mr Maley and this may have occurred prior to the meeting of 17 December 2001. After all, he had been telling others, including Mr Nash, that Mr Maley was at fault prior to that day, although there was no justification for such an allegation.
67Whether the documents were added and the Blazai stamp applied by Mr Loiero or by someone else on his behalf does not emerge from the evidence. However, Mr Loiero is the only person with any apparent interest in the matter. I am satisfied either that he tampered with the file by adding the suspected documents or that he directed someone else to do it.
68He also removed salient documents, including Mr Maley's letter of 6 August 2001, and added pink documents, which were not on the file when it was in Mr Maley's possession.
69The plaintiff sought to fortify its case that certain documents had been sent by reference to facsimile records which showed, in some instances, that letters had been sent by facsimile on the dates which corresponded with the dates on suspicious documents. In the normal course, such records could reasonably be regarded as corroboration that certain documents were sent by facsimile at certain times. However, I have no confidence that the letters that correspond with the facsimile records were the letters identified by Mr Loiero.
70I find that after Mr Loiero obtained the file from Mr Maley he set about fabricating documents with a view to constructing a case against Mr Maley. He realised that the transaction had gone sour, and that he would not make the money he hoped to make from it. He therefore, in a dishonest and opportunistic way, sought to take advantage of Mr Maley's precipitate return of the file without making a photocopy.
71Not only did Mr Loiero fabricate correspondence from the plaintiff to Mr Maley but, in an attempt to give verisimilitude to his version, he also applied a "received" stamp to the correspondence before inserting it in apparent chronological sequence on the file. To this end he procured a stamp which resembled, at least to an eye not particularly attuned to deceit, the Maclarens stamp that appeared on actual correspondence within the file.
72But he did not stop there. He also added documents in pink paper to the file. He may have seen such copy documents on other solicitors' files and thought that they, too, would fortify his assertion that the file that he had tampered with was authentic. I accept Mr Maley's evidence that Maclarens did not use pink paper.
73However, in both these endeavours, he showed a lack of appreciation of the investigation that would be conducted on behalf of Maclarens to resist what Mr Maley knew to be a false claim.
74It was for the plaintiff to establish on the balance of probabilities that the suspicious documents were in fact sent to Maclarens on or about the dates they bear: s 140 of the Evidence Act 1995. The plaintiff has not discharged that onus. Had I considered the probabilities to be equal, or less than equal, the defendants would have been entitled to succeed, even if I had not been persuaded that Mr Loiero had tampered with the file: Hammoud Bros Pty Limited v Insurance Australia Limited [2004] NSWCA 366 at [31]-[33]. In establishing the findings of fact that I have made above, Maclarens has discharged an onus which is greater than the one it bears. Nonetheless, since Maclarens has discharged that onus it is appropriate that I record the findings I have set out above.