Chong & Neale v CC Containers Pty Ltd & Ors [2015] VSCA 137

EVIDENCE - Whether open to infer from circumstantial evidence that each appellant was a participant in the conspiracy - Payments made to appellants during period of the conspiracy - Whether innocent hypotheses excluded as unlikely possibilities - Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1; Lithgow City Council v Jackson [2011] HCA 36; (2011) 244 CLR 352; Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125, applied.

EVIDENCE - Whether trial judge erred in rejecting account given by party - Inferences to be drawn from party giving false account - Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361, applied.

EVIDENCE - Rule in Browne v Dunn (1893) 6 R 67 - Inference to be drawn from nature of cross-examination - R v MAP [2006] QCA 220, applied - Inferences to be drawn from appellant failing to give evidence but aligning himself with false account.

EVIDENCE - Whether privilege against self-incrimination was properly claimed - Section 128 of the Evidence Act 2008 - Whether rule in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 could apply where privilege against self-incrimination has been claimed.

PRIVILEGE - Privilege against self-incrimination - Implied waiver of privilege against self-incrimination by nature of cross-examination - Course of conduct at trial.

FRAUDULENT MISREPRESENTATIONS - Sale of business agreement contained false warranties - Reliance on representations - Whether open to trial judge to conclude that appellants were knowing participants in fraudulent misrepresentations and misleading and deceptive conduct in relation to sale.

EQUITY - Fiduciary duties - Payments made to appellant subsequent to sale of business and referable to purchase price - Appellant director of purchaser - Whether open to trial judge to conclude that appellant had received secret commissions - Whether secret commissions were paid in furtherance of the repair fraud.

INTEREST - Whether trial judge erred in calculation of interest on damages awarded for repair fraud - Sections 58 and 60 of the Supreme Court Act 1986, considered - Whether amounts awarded were sums certain - Appeal allowed as to award of interest but otherwise dismissed.

1 Between 2002 and 2008, CC Containers Pty Ltd ('CCC Old'),[1] a company owned and controlled by the appellant Kain Chong ('Kain') and his son Kevin Chong ('Kevin') stored and repaired shipping containers owned by Mediterranean Shipping Company (Aust) Pty Ltd ('MSCA'), a wholly owned subsidiary of Mediterranean Shipping Company SA ('MSC'). The appellant Christopher Neale ('Neale') was at all material times a director of MSCA.

2 Following a trial in the Supreme Court, the appellants, Kain and Neale, were found to have conspired, together with Kevin and others, to injure the respondents MSC and MSCA by means of a fraud perpetrated in respect of the repair by CCC Old of the shipping containers of MSCA (the repair fraud). Between 1998 and 2008, the appellant Neale received undisclosed payments from Kain via corporate entities owned by them. The appellants were also found to have engaged in a fraudulent misrepresentation and misleading and deceptive conduct in relation to the February 2008 sale of the business of CCC Old to a newly formed company of the same name, CC Containers Pty Ltd ('CCC'), in which MSCA was the primary shareholder. The purchase price of CCC Old's business having been grossly inflated as a consequence of the revenue derived by it from the repair fraud, the appellants were found to have known that the warranties contained in the sale of business agreement were false. The appellant Neale was found to have breached his fiduciary and statutory duties as a director of MSCA and CCC and to have received secret commissions as a result of his participation in the repair fraud and involvement in the sale of CCC Old's business.

3 The appellants appeal against those findings and seek to have the following orders set aside. The appellant Kain was ordered to pay MSCA and MSC the sum of $703,178.93, interest of $550,344.16 and exemplary damages of $10,000 for his involvement in the repair fraud. The appellant Neale was ordered to pay MSCA and MSC the sum of $489,488.49, interest of $385,096.55 and exemplary damages of $10,000 for his involvement in the repair fraud. The appellant Kain was ordered to pay CCC the sum of $4,099,114.45 together with interest of $1,479,668.00 for fraudulent misrepresentation and deceptive and misleading conduct arising from the sale of CCC Old's business, the sum ordered being the difference between the price paid for the business and its true value at the date of purchase. For breaches of his fiduciary and statutory duties together with the fraudulent misrepresentation and deceptive and misleading conduct in respect of the sale of the business, the appellant Neale was ordered to pay CCC and MSCA the sum of $4,099,114.45 and interest of $1,359,390.00. Neale was further ordered to pay MSC and MSCA the sum of $288,721.20 with interest of $192,439.33 for the receipt of secret commissions.

4 Before identifying the issues that must be considered in these appeals, something must be said of the course followed by the appellants before and during the trial. Kain and Neale were each added as defendants after the respondents had filed their first statement of claim. Both initially filed non-responsive defences. In response to the respondents' second further amended statement of claim, Kain and Neale both filed further non-responsive defences asserting their privilege against self-incrimination, and continued to assert it at the trial.

5 At the close of the respondents' case at trial, Kain changed his position and announced that he intended to advance a positive defence. He was given leave to file a responsive defence and was ordered to provide particulars. Following the receipt of Kain's particulars of defence and an outline of his proposed evidence, the respondents were ordered to make discovery of any documents in their possession upon which they wished to rely in rebuttal of Kain's responsive defence. Upon resumption of the trial after an adjournment of some days, Kain gave evidence, proffered an explanation for some of the facts relied upon by the respondents and denied other facts. The trial judge ultimately rejected Kain's evidence on all material issues. Neale continued to assert his claim of privilege against self-incrimination throughout the remainder of the trial, filed no responsive defence and did not give evidence. During the course of the trial however, Neale aligned himself with the explanation proffered in evidence by Kain.[2] The respondents submitted at trial that Neale had failed to properly claim privilege against self-incrimination. They invited the trial judge to draw an adverse inference from Neale's failure to give evidence. The trial judge made no findings in these regards.

6 The appeals require consideration of the following issues:

• Was it open to the trial judge to infer from the circumstantial evidence that each appellant had conspired with other named conspirators to injure MSC and MSCA by means of the repair fraud?
• Did the evidence permit the inference that the appellant Neale breached his fiduciary duty to MSCA in receiving regular payments by way of secret commissions from a company under the control of Kain?
• Did the trial judge apply the correct standard of proof?
• Did the evidence permit the inference that the appellants Neale and Kain were knowing participants in the fraudulent misrepresentations and misleading and deceptive conduct in relation to the sale of CCC Old?
• Did Neale receive secret commissions upon the sale of CCC Old and were these secret commissions paid in furtherance of the repair fraud?
• Did the appellant Kain give, and did the respondents rely upon, the warranties contained in the sale of business agreement of CCC Old?
• Did the trial judge err in rejecting Kain's account?
• What inferences arose if Kain gave false evidence in order to conceal his true role?
• Did Neale make a proper claim of privilege and, if so, was that claim waived?
• What inference arose if Neale, in reliance on the privilege against self-incrimination, failed to give evidence but advanced a positive defence in which he aligned himself with the false account of Kain?
• Did the trial judge err in her calculation of the interest on the damages awarded for the repair fraud in treating the sums received by Kain as sums certain?

Background - summary of facts and findings below

7 MSC operates a shipping business transporting containerised cargo around the world. Its Australian operations are conducted through MSCA. MSC began operating in Australia in about 1989 and used the services of a company controlled by the first appellant, Kain, to repair, maintain and store shipping containers in Melbourne. From 1998, the repair, maintenance and storage of MSCA's containers in Melbourne was undertaken by CCC Old. Kain and Kevin were CCC Old's directors from its incorporation.

8 In February 2008, CCC, a newly incorporated company, acquired the business conducted by CCC Old. MSCA owned 75 per cent of CCC, while Kain and Kevin owned the remaining 25 per cent. The directors of CCC included Neale, Kain and Kevin. Neale was a director of MSCA responsible for MSCA's operations throughout Australia and New Zealand, and his particular responsibilities included shipping container inventory management, maintenance and repairs. MSCA subsequently acquired the 25 per cent of CCC held by Kain and Kevin in November 2009. Kevin continued to work in the business until mid-2010.

9 In early November 2010, a shipping company that was utilising the container services of CCC issued a complaint alleging that false charges had been levied for the movement of shipping containers. The complaint caused MSCA and CCC to conduct an investigation which established that the respondents had been the subject of a large scale fraud.

10 At trial, the respondents sought to recover loss arising from the fraud from Kain, Kevin, Neale, Desmond Lee, and Lee's company, Lee Holdings (Aust) Pty Ltd. Lee had been an employee of the business of CCC Old and later CCC, reporting to Kevin. Lee Holdings (Aust) Pty Ltd was a company owned and operated by Lee. Lee, his company and Kevin filed defences but did not appear at trial. Kain and Neale attended the trial, were represented and contested the respondents' claims.

11 Five separate frauds were alleged by the respondents, and were summarised by the trial judge in her reasons as follows:

(a) repair fraud - this relates to fraudulent charges made for repair work on shipping containers that was never undertaken;

(b) container movement fraud - this relates to false charges made for the movement of shipping containers in and out of the CCC container yard;

(c) transport fraud - this concerns the operation of a transport business, CC Cartage, by Mr Lee, without the consent of CCC;

(d) diesel fraud - this concerns the unauthorised taking of fuel belonging to CCC; and

(e) container sale fraud - this relates to the unauthorised disposal of shipping containers stored at CCC's container yard.[3]

12 Only the repair fraud, which was pleaded to have been in existence since at least 2002, was said to have involved the appellants. Each of the other frauds that were perpetrated through the business originally owned by CCC Old were not alleged to have commenced prior to 2008 or 2009. It is not necessary to examine the remaining four separate frauds found by the trial judge.

13 The respondents pleaded that: 'During the period from at least late October 2002 to about late February 2008 each of [CCC Old], Mr Lee, Mr Kevin Chong, Kain Chong and Mr Neale, unlawfully conspired to injure MSC and MSCA by unlawful means'. Alternatively, the respondents pleaded that each of those conspirators 'unlawfully conspired with each other to cause MSC and/or MSCA to pay amounts to [CCC Old] to which it was not entitled, with the sole or predominate purpose of injuring MSC and/or MSCA.' These pleadings reflected the alternate forms of the tort of conspiracy. The respondents' pleadings particularised the unlawful means by which the conspirators injured MSC and MSCA and the overt acts of the co-conspirators. The respondents further pleaded that by reason of that conduct Neale had breached his fiduciary and statutory duties, had perpetrated a fraud against MSC and MSCA and had received secret commissions.

14 The trial judge set out the relevant elements of the tort of conspiracy and they were not in issue on the appeal. It was also not in issue that the repair fraud was in existence throughout the pleaded period of the conspiracy and that the unlawful means that had been employed were the obtaining of financial advantage by deception, false accounting and the falsification of documents.[4]

15 We turn to examine the nature of the repair fraud. It was committed in the course of CCC Old's shipping container business. It is convenient to extract the trial judge's summary of the operations of the business as to the context in which the frauds were perpetrated:

In the case of CCC customers, when a ship arrives in Melbourne, the containers are usually collected by the shipper or their agent and taken to their premises to unpack them. Once a container is emptied it is then sent to the CCC container depot. When it comes to the container depot, a container controller records the number of the shipping container and the registration number of the truck that has brought the container to the yard. Each container is surveyed to see if it requires maintenance or repair. If it does, then a quote for the cost of that work is completed and the quote is entered into CCC's computer system. Containers that require maintenance or repairs are then sent to the repair area of the yard and the repairs are approved by the shipping line which owns the container. There is an automatic approval amount set for most shipping lines so that repairs under that limit are carried out without any other authorisation by the shipping line and without inspection of the container. If the repair cost is above the automatic approval limit, then the shipping line must give specific instructions for the repair work to be undertaken. In addition to maintenance and repairs, work is carried out on some containers to upgrade them from general to food standard so that food may be transported in them.

Once the containers have been repaired or upgraded, the repair quote is marked in the CCC computer system as complete. Invoices are generated periodically in accordance with the arrangements for the particular shipping line. In addition to any repair or maintenance fees, most of the shipping lines are charged an entry fee (when the container comes into the yard), storage fees (for the time that the container is in the yard) and an exit fee (when the container leaves the yard). There are two shipping lines that are not charged in this way. Instead they are billed on a package rate. MSCA is charged a fee when one of their shipping containers leaves the depot. APL[5] is charged a fee when one of their shipping containers enters the depot. In addition, both MSCA and APL are charged for repairs. Once the containers have been repaired or upgraded, they are stored at the depot until they are needed. They may be released to an exporter, or, if there is a shortage of containers in another port, containers may be moved to those other ports.[6]

16 The trial judge described the methods by which the conspirators were said to have committed the fraud as follows:

Three methods were employed for overcharging for repairs. The first method was to falsely duplicate maintenance and repair charges for shipping containers that had already been the subject of maintenance or repair. In other words, MSCA was charged twice for the same work. The second method was to record charges for repair or maintenance works where no repair or maintenance had been undertaken. For example, charges were sometimes levied for work to convert a container from the general category to one that was capable of transporting food but the standard of the container was not altered. Sometimes charges would be made for repair work when there was no damage to the container. The third method of falsifying the invoices was to increase the amount charged for legitimate repairs to more than was an appropriate charge. No matter which method was deployed, the CCC Old Co staff who were involved in the fraud referred to the false repair charges as 'Repair X′s', 'X′s' or 'Ghost Repairs'.[7]

17 On the few occasions that customers raised questions about the repair charges, the overcharging was blamed on the computer system and a refund was arranged. MSCA had an on-site surveyor checking repair quotes and inspecting containers to ensure that work had been done. However, MSCA had an automatic approval limit, and if an amount quoted for a repair was below that limit no check was done. It was this approval limit which enabled the fraud to be committed.

18 At trial, the respondents led evidence from several witnesses in relation to the repair fraud. Jay Ho was married to Kain's niece, and began working at CCC Old in 2002, managing the operations in the yard. He reported to and acted at the direction of Kevin. It was apparent to him that the repair fraud was already on foot at the time he commenced his employment at the business. Early in his employment, Ho was taught by another employee how to create false repair charges, and was told that it was part of CCC Old's practice. Ho was told by Kevin that this was standard industry practice. Ho created false repair charges as part of his daily routine for approximately a year before his promotion to another position in which he was no longer required to do so.

19 Thai Nguyen began working for CCC Old in 2003 in the repair and maintenance department, acting at the direction of Kevin, Ho and Lee. Nguyen's responsibilities included entering quotes for repair works into the computer system. He would inflate the quotes entered into the system. He was told by his managers to enter the false information so that CCC Old could make more profit and stay afloat.

20 There was documentary evidence in the form of numerous emails which implicated Kevin and Lee in the repair fraud. For instance, Lee sent Kevin emails setting out the amounts that were to be falsely charged. Other employees who worked at CCC Old also gave evidence that they were encouraged by Kevin and Lee to continue the frauds.

21 The duplication of invoices as one means of implementing the repair fraud ceased in early 2008, shortly before the sale of the business to CCC. The other methods of repair fraud continued after the sale.

22 On a weekly basis, CCC Old would invoice MSCA for its services on MSCA's containers. Amongst the charges on the invoices were the false charges for repairs. On a weekly basis MSCA would make remittances to CCC Old on the invoices submitted. Nguyen testified that it was not now possible to identify which of those charges for repairs that were entered into the system were false save for those repairs that had been duplicated.

23 The repair fraud was not in issue. The form of the fraud was not disputed. It had not been put in issue that, throughout the period of the conspiracy, staff were instructed that particular volumes of the fraud had to be maintained so that the revenue earned by CCC Old from the fraud did not decline. The staff were also instructed that it was necessary for them to participate if they wished to retain their employment. The key role of Kevin in the fraud was not disputed by any witness although Kain expressed concern in cross-examination at the imputations made against his son. Kevin elected not to appear at the trial and has been declared bankrupt. The respondents were given leave to proceed against him.

24 Kain advanced the curious submission at trial, and repeated on appeal, that the evidence of the witnesses testifying as to the fraud 'was not properly tested' and that they were by their admission 'dishonest' and gave evidence under the protection of a s 128 certificate under the Evidence Act 2008. The relevance of this submission was never made clear as Kain did not dispute the existence of the fraud or its duration.

Participation of Kain and Neale in the repair fraud

25 It was the respondents' case, and was so found by the trial judge, that a portion of the proceeds of the repair fraud remitted by MSCA to CCC Old was regularly distributed by CCC Old to Ackland Forge Pty Ltd ('Ackland Forge'), a company owned and controlled by Kain. In turn, Ackland Forge would distribute a portion of the payments it received from CCC Old to Dawn Trading Pty Ltd ('Dawn Trading'), a company owned and controlled by Neale. The respondents tendered documentary evidence of those payments being made between October 2002 and February 2008. The payments from CCC Old to Ackland Forge would always occur on or within a few days of MSCA's weekly remittances to CCC Old for container repairs. A document entitled 'Repair Fraud - Further Particulars Part II' was tendered by the respondents and set out in table form the dates and details of MSCA remittances to CCC Old, the payments from CCC Old to Ackland Forge, and the payments from Ackland Forge to Dawn Trading for the period 2002 to 2008. The table was drawn from bank statements of the relevant entities. In total, the table records that between October 2002 and February 2008, CCC Old made payments to Ackland Forge in the amount of $2,410,385.50, and Ackland Forge made payments to Dawn Trading in the amount of $1,081,726.19.[8]

26 In respect of the payments from CCC Old to Ackland Forge, Ackland Forge issued invoices to CCC Old that were endorsed, 'Discount on invoices of Mediterranean Shipping Co., (A) Pty Ltd remittance' or similar. These invoices were prepared by Kain. It was not in dispute that this endorsement was false. With few exceptions, between 25 October 2002 and 21 November 2003 the invoices were for exactly 3.3 per cent of the total amount paid by MSCA to CCC Old, and between 28 November 2003 and 29 February 2008 the invoices were for 4.4 per cent of the total amount.

27 In respect of the payments from Ackland Forge to Dawn Trading, Dawn Trading invoices addressed to Ackland Forge were endorsed as 'to work performed'. Kain testified that he had been provided with blank invoices for Dawn Trading and completed the invoices to Ackland Forge. The invoices were issued at about the same time as the Ackland Forge invoices were issued to CCC Old. It was conceded at trial by Neale's counsel that the endorsements to the invoices were false, as Dawn Trading had done no work for Ackland Forge. The amounts paid by Ackland Forge to Dawn Trading were usually between two per cent and three per cent of the amount remitted by MSCA to CCC Old.

28 Although Kain sought to distance himself from any involvement in the business of CCC Old after 2001, the trial judge found that he continued to be involved in its management up to and including the time of its sale to CCC in 2008. Her Honour set out certain 'established facts' as providing the foundation for the finding that Kain and Neale were involved in the repair fraud:

1. First, there is the fact that MSCA was defrauded through false charges being made for repairs and other work that was never undertaken. It is clear from the documentary and oral evidence that both Kevin and Mr Lee were centrally involved in that fraud. It is not possible to tell exactly how much MSCA overpaid, but suffice to say for present purposes, the amount was in excess of $1 million.
2. While it is not clear exactly when the fraud began, it is clear from Mr Ho's evidence (which was not contradicted and which I accept) that the repair fraud was underway when he took up his role in CCC Old Co's maintenance and repair section in 2002. It is also clear from the evidence of Mr Ho that by October 2002 (some six months after Mr Lee began to work for CCC Old Co) the repair fraud was in full swing. Whilst there is no documentary evidence by way of emails from this early period, that is explicable. The electronic records of CCC Old Co (including some historical records) were transferred to MSCA when the business was purchased in February 2008. However, before MSCA took over, CCC Old Co did not have a proper email server on which all emails were stored. Consequently, not all emails from the early period are available.
3. There is the familial relationship between Kain and his son, Kevin. Both were directors of CCC Old Co, at least for part of the time that the fraud was perpetrated.
4. There is the close friendship of many years between Kain and Mr Neale.
5. Mr Neale was a director of MSCA with responsibility for shipping container inventory and management.
6. There is the fact that Kain was told when MSCA remittances were received by CCC Old Co and he raised invoices to CCC Old Co from Ackland Forge for a discount on invoices of MSC.

7. CCC Old Co made payments to Ackland Forge from at least 1998.

8. Ackland Forge made payments to Dawn Trading before 2002.

1. The Dawn Trading invoices addressed to Ackland Forge stated that the charge was for 'work performed' when there was no work done.

1. Whilst the amount paid to Ackland Forge was not always exactly the same percentage of the MSCA remittance amount, it was almost always 3.3 per cent until November 2003 and thereafter almost always 4.4 per cent. In this regard, Kain admitted that the payments were made, and that they represented a percentage of the amounts remitted by MSCA.
2. Although the percentage amount paid by Ackland Forge to Dawn Trading was less consistent and there were some limited exceptions, it was usually within a reasonably narrow band of between 2 per cent and 3 per cent of the MSCA remittance. Even on Kain's version of events, the amount to be paid to Dawn Trading was linked to the MSCA remittances. There is no evidence that the payments were not so linked.
3. Ackland Forge and Dawn Trading were paid within days of the MSCA remittance.
4. Some manifestations of the repair fraud continued after the business was purchased in February 2008 by MSCA.

14. Mr Neale did not share the proceeds of other frauds.

1. Mr Neale was a longstanding director and employee of MSCA. He had not previously been known to have abused his position.
2. Finally, between October 2002 and February 2008, Ackland Forge received over $1 million from CCC Old Co and paid Dawn Trading over $1 million.[9]

29 Having put aside Kain's explanation, the trial judge concluded on the basis of all of the established facts that the proper inference was that Kain and Neale were participants in a conspiracy to defraud MSCA:

[T]there being no other plausible explanation provided, and bearing in mind the seriousness of the allegations made, it seems to me probable and proper to infer that Kevin, Kain, Mr Lee and Mr Neale conspired to defraud MSCA. In particular, I would infer that they had an agreement to overcharge MSCA by issuing inflated invoices for repairs (including by the duplication of invoices for work previously performed) and then to share at least part of the proceeds between CCC Old Co, Kain and Mr Neale. In this regard, Kevin and Mr Lee issued (or caused to be issued) false invoices and Kain and Mr Neale received at least part of the proceeds thereby obtaining a financial advantage by deception. The conspirators falsified documents in the course of the fraud (the invoices issued to MSCA (by CCC Old), to CCC Old (by Ackland Forge) and to Ackland Forge (by Dawn Trading)). I also infer that Kevin, Kain, Mr Lee and Mr Neale conspired with the intention of injuring MSCA. The fraud in respect of the false invoices addressed to MSC and MSCA was aimed at them alone. They were the only entities that would be the subject of harm as a result of the fraud directed to them. In my view, these are the only probable inferences to be drawn. Whilst there are other possibilities, such as that contended for by Kain, they are not probable. In particular, the timing of the payments to Ackland Forge and Dawn Trading after MSCA remittances, the link between Kain and Mr Neale and the fact that Mr Neale was an employee and director of the main target of the fraud, makes it inherently unlikely to my mind that there is no connection between them and the fraud and their coconspirators in perpetrating that fraud, or that they did not know about and participate in that fraud. It is not a case where there are unconnected steps taken by individuals in isolation from one another. In the circumstances of this case, that would be an unlikely coincidence of events. Rather, it is probable that the participants acted in concert with a specific plan to effect the fraud and share the proceeds of it. In this regard, it seems likely that Kain acted as the conduit between his son and Mr Lee on the one hand and Mr Neale on the other in arriving at the agreed plan.[10]

30 As we described above, the business of CCC Old was acquired by CCC in February 2008. The purchase price was set by reference to CCC Old's EBITDA.[11] The stated income of the business, which formed part of the calculation of the EBITDA figure, was inflated as a result of the repair fraud. The trial judge found that the purchase price had been inflated by $4,392,197.16 as a result of the fraud. The net amount received for the sale after payment of a debt owed to CCC Old's financier was $9,239,490.65.[12]

31 The sale of business agreement included warranties given by Kain and Kevin as an inducement to MSCA to purchase the business that the information provided as to CCC Old's business was accurate. The trial judge summarised the warranties as follows:

[Kain and Kevin] warranted and represented that:

as an inducement to the Purchaser to enter into this agreement and to purchase the Business ... it is a condition of this Agreement that ... to the knowledge of the Warrantors each of the [warranties] is true, complete and accurate. ...

The warranties included that:

(a) all information given with respect to the business of CCC Old was true and correct;

(b) all information known and material to the purchase of the business had been disclosed;

(c) the books and records of the business were complete, accurate and properly maintained;

(d) the financial performance of the business was not affected by any unusual or non recurring items;

(e) all information concerning the financial position of the business had been compiled in accordance with applicable laws and regulations;

(f) there were no actual or contingent liabilities which could adversely affect the value of the business;

(g) all accounting records:

(i) were fully and properly maintained;

(ii) did not contain or reflect any material inaccuracies or discrepancies;

(iii) gave a true and fair view of the trading transactions, financial and contractual positions of the business;

(iv) were prepared in accordance with accepted accounting principles and practices;

(h) the accounts set out in the sale of business agreement were complete and accurate.[13]

32 The trial judge found that the respondents CCC and MSCA relied upon those warranties.

33 Kain put in issue his level of involvement in the sale of the business. Relevantly, there was a significant amount of documentary evidence indicating that Kain was involved in the sale. We shall refer to that evidence when dealing with Kain's evidence.

34 Neale signed the sale of business agreement on behalf of CCC.

Neale's receipt of secret commissions on the sale of the CCC Old business

35 In addition to the regular payments throughout the conspiracy, the trial judge found that Neale received two further payments in March and May 2008 amounting to approximately three per cent of the purchase price paid by CCC for the CCC Old business.

36 Relevantly, the following payments were made around the time of the sale of the CCC Old business. On 11 March 2008, $1.5 million was paid to CC Technologies Pty Ltd ('CC Technologies'), another company owned by Kain.[14] On 14 March 2008, CC Technologies paid $250,000 to Dawn Trading.[15] On 19 May 2008, Dawn Trading invoiced Ackland Forge for $262,473.82 plus GST of $26,247.38, making a total of $288,721.20.[16] On 21 May 2008, CC Technologies paid $38,721.20 to Dawn Trading.[17]

37 The trial judge referred to a significant amount of evidence that established that the two payments constituted secret commissions to Neale. In particular, on 4 March 2008 (four days after the CCC Old business was sold) Kain sent an email to Kevin asking: 'Also advise me when we wish to pay Chris and what amount?'.[18] On 5 May 2008, Kain sent an email to Kevin asking how much Ackland Forge should send an invoice for.[19] On 10 June 2008, Kain sent an email to Kevin saying that he had used the sale proceeds to pay a 'business sale commission' of $250,000.[20] On 16 June 2008, Kain sent an email to Kevin asking for assistance to contact their accountant to handle the 'commission payment and invoice etc'.[21] The trial judge rejected Kain's evidence that the references to 'Chris' and to a 'commission' in the emails did not relate to Neale and were a commission to another person.

38 Ackland Forge's accountant prepared a reconciliation of the company's taxable income for the year ended 30 June 2008. The reconciliation included the invoiced amount of $262,474 as 'Commission on Sale re CC Containers'. The amount of $288,721.20 paid by Ackland Forge to Dawn Trading constituted 3.12 per cent of the net amount received by CCC Old for the sale of the business.[22] Kain denied that he had given any instruction that the payments should be so characterised in the company accounts. These payments gave rise to the allegations relating to Neale's receipt of secret commissions on the sale of the business.

39 The trial judge found that the respondents had made out their claim that Neale received secret commissions from the purchase price paid by CCC for the CCC Old business. Neale's counsel had submitted at trial that while there was no email suggesting that Neale had been rewarded for anything until very late in the piece, he accepted that the evidence left open the view that in 2008 Neale obtained a commission on the sale of CCC Old. Upon a review of the evidence, the trial judge concluded that Neale had received a secret commission:

In the absence of other cogent evidence, and based on the documentary evidence that I have set out above, it seems to me probable that the payments to Dawn Trading after the sale of the CCC Old Co business were a secret commission received by Mr Neale. It does not matter that the payments were not made directly to him by CCC Old. Indeed, Mr Neale accepts this. It is clear that the payments were derived from that source. There is a sufficient connection between that payment and the payments ultimately received by his company, Dawn Trading.[23]

40 Neale did not make any disclosures to MSCA as to his long-standing relationship with Kain or as to these or any other payments made to Dawn Trading. The trial judge found that the secret commissions further evidenced that Kain and Neale were party to a conspiracy to overcharge MSCA by means of the repair fraud and to share the proceeds.[24]

41 The grounds of appeal of Kain raise the question whether it was open, on the evidence and findings made, to draw the requisite inferences to sustain the claims in the repair fraud conspiracy to the standard of proof required in Briginshaw v Briginshaw[25] and Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd.[26] We shall later address that question. Both Neale and Kain advanced a particular submission as to the standard of proof to which we now turn. It was said that to establish that they had the necessary intent for the conspiracy pleaded, 'every rational inference inconsistent with the requisite state of mind' had to be excluded. For the reasons that follow, that submission is unsustainable.

42 As the respondent's case involved allegations of conspiracy to defraud, fraudulent misrepresentations, and misleading and deceptive conduct, the Court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct.[27] Whilst civil claims involving fraud or deceit remain to be determined on the balance of probabilities,[28] the character of such allegations calls for clear and cogent proof that enables the tribunal of fact to feel an 'actual persuasion'.[29] The need for such proof is, at least in part, informed by the view expressed by the High Court in Neat Holdings, and to which the trial judge made reference, that 'members of our society do not ordinarily engage in fraudulent or criminal conduct'.[30]

43 In reviewing the elements of the tort of conspiracy, the trial judge approached the question of proof on the basis that the respondents needed to establish, on the balance of probabilities, that all the alleged conspirators had intended to injure the appellants.[31] Her Honour recognised that the gravity of the matters alleged should be taken into account in determining whether that standard of proof had been met.[32] She referred to a passage from the joint judgment in Neat Holdings to the effect that although the standard of proof did not alter when dealing with a serious matter such as fraud, 'authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary "where so serious a matter as fraud is to be found"'.[33]

44 The standard of proof required in a civil case where serious allegations are made was discussed in Rejfek v McElroy,[34] where Barwick CJ, Kitto, Taylor, Menzies and Windeyer JJ observed:

The 'clarity' of the proof required, where so serious a matter as fraud is to be found, is an acknowledgment that the degree of satisfaction for which the civil standard of proof calls may vary according to the gravity of the fact to be proved: see Briginshaw v Briginshaw, per Dixon J; Helton v Allen per Starke J; Smith Bros v Madden, per Dixon J.

But the standard of proof to be applied in a case and the relationship between the degree of persuasion of the mind according to the balance of probabilities and the gravity or otherwise of the fact of whose existence the mind is to be persuaded are not to be confused. The difference between the criminal standard of proof and the civil standard of proof is no mere matter of words: it is a matter of critical substance. No matter how grave the fact which is to be found in a civil case, the mind has only to be reasonably satisfied and has not with respect to any matter in issue in such a proceeding to attain that degree of certainty which is indispensable to the support of a conviction upon a criminal charge: see Helton v Allen per Dixon, Evatt and McTiernan JJ.[35]

45 The appellants emphasised at trial that there was no direct evidence that they were involved in the issuing of false or duplicate invoices as part of the repair fraud. The trial judge observed that in cases where fraud is alleged, direct evidence will often be lacking so that plaintiffs must satisfy the court that the inference they seek to draw is one which, on the balance of probabilities, arises from the established facts.[36] Her Honour quoted the oft-cited passage from Bradshaw v McEwans Pty Ltd,[37] which is in these terms:

Of course as far as logical consistency goes many hypotheses may be put which the evidence does not exclude positively. But this is a civil and not a criminal case. We are concerned with probabilities, not with possibilities. The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence, while [in] the latter you need only circumstances raising a more probable inference in favour of what is alleged. In questions of this sort, where direct proof is not available it is enough ... [if] the circumstances appearing in the evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture (see per Lord Robson, Richard Evans & Co Ltd v Astley). But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then though the conclusion may fall short of certainty it is not to be regarded as a mere conjecture or surmise.

46 In Transport Industries Insurance Co Ltd v Longmuir,[38] Tadgell JA invoked the locus classicus of proof on the balance of probabilities in a circumstantial case:

In a civil case like this, where there is no direct evidence of a fact that a party bearing the onus of proof seeks to prove, 'it is not possible to attain entire satisfaction as to the true state of affairs': Girlock (Sales) Pty Ltd v Hurrell. In such a case, however, the law does not require proof to the 'entire satisfaction' of the tribunal of fact. A definition of the sufficiency of circumstantial evidence in a civil case to support proof by inference from the directly proved facts was given by the High Court in the unreported case of Bradshaw v McEwans Pty Ltd (27 April 1951) in a passage since repeatedly adopted: eg Luxton v Vines; Holloway v McFeeters; Jones v Dunkell; Girlock's case.[39]

Tadgell JA then referred to the abovequoted passage from Bradshaw v McEwans Pty Ltd.[40]

47 Save in one respect, no complaint is made as to the approach to the standard of proof adopted by the trial judge. The appellants submitted, however, that as the test for an action in conspiracy is 'what was the object in the mind of those combining when they acted as they did',[41] and adopting the Briginshaw approach to the serious allegations pleaded, proof as to the appellants' intent was more onerous than the civil standard. We do not accept that is so.

48 The common law has never recognised the existence of a third standard of proof.[42] It is not in issue that s 140 of the Evidence Act 2008 now prescribes the standard of proof in civil proceedings. As this Court stated in NOM v Director of Public Prosecutions,[43] it is settled that the conceptual effect of s 140(2) of the Evidence Act equates with the principle developed in Briginshaw.[44] The Court said in NOM:

Mere mechanical comparison of probabilities independent of a reasonable satisfaction will not justify a finding of fact. The fact finder must feel an actual persuasion of the occurrence or existence of the fact in issue before it can be found. Where, as in the present case, the standard of proof is to be applied to circumstantial evidence, satisfaction as to a reasonable and definite inference is required.[45]

49 Neale submitted at trial and on appeal that the respondents will not have established a prima facie case unless every rational inference inconsistent with the requisite state of mind has been excluded. Although proof that a conspirator had the necessary actual knowledge and intention could be inferred from the surrounding circumstances, the appellants said at trial and on appeal that the inference that the alleged conspirator had the requisite state of mind had to be the only rational inference available on the found facts. They submitted that Pereira v Director of Public Prosecutions,[46] Young Investments Group Pty Ltd v Stripe Capital Pty Ltd[47] and Young Investments Group Pty Ltd v Mann[48] were authority for that proposition.

50 In rejecting that submission the trial judge said:

It seems to me that the proper test to be applied and the question which the Court must answer is whether the more probable inference is that alleged, not whether it is the only rational inference. The cases relied upon by Mr Neale are not relevant. Pereira v DPP concerned proof of knowledge on a criminal charge of importing illicit drugs. In that context, the High Court held that where knowledge is inferred from the circumstances it must be the only rational inference. However, Bradshaw v McEwans Pty Ltd makes clear the distinction between criminal and civil cases so far as the drawing of inferences is concerned. Mr Neale also relied upon Young Investments Group Pty Ltd v Stripe Capital Pty Ltd at first instance and the appeal decision in Young Investments Group Pty Ltd v Mann. The relevant part of that case concerned the pleading of a claim against directors for involvement in a contravention of the misleading or deceptive conduct provision in the Corporations Act. At issue was the pleading as to the directors' knowledge of the essential facts of the contravention. That is a quite different issue to whether the defendants in the current case are liable for the tort of conspiracy because they combined to perform acts which injured the plaintiffs.[49]

51 In Young Investments Group Pty Ltd v Stripe Capital Pty Ltd,[50] the directors of the respondent applied to strike out pleadings alleging that they had been involved in misleading and deceptive conduct by the company in breach of s 1041H of the Corporations Act 2001 (Cth) and, under the second limb in Barnes v Addy,[51] had been knowingly concerned in its alleged breach of fiduciary duty. The Stripe directors complained that the pleadings did not disclose a reasonable cause of action. They contended that the applicants were obliged to plead the basis upon which they were aware of the essential facts or matters which must be proved to establish their liability, citing Yorke v Lucas.[52] Gilmour J stated that Yorke v Lucas informs the question of how the necessary knowledge may be established. His Honour observed that that case concerned alleged involvement in misleading and deceptive conduct by virtue of s 75B of the then Trade Practices Act 1974 (Cth) and an analogous provision substantially in the same terms as s 79 of the Corporations Act upon which the applicants relied. After referring to a number of passages from Yorke v Lucas, his Honour referred to a passage from Compaq Computer Australia Pty Ltd v Merry[53] where Finkelstein J observed that, in cases where a person is sought to be made liable as an accessory to a contravention of s 52 of the Trade Practices Act, it was necessary to establish that the person had intentionally participated in that contravention and that necessitated proof of knowledge of the essential matters that made up a contravention. Finkelstein J referred to Yorke v Lucas and further to Pereira v Director of Public Prosecutions[54] as authority that knowledge of relevant essential matters may in particular circumstances be inferred. Gilmour J went on to refer to the case pleaded against the Stripe directors including their knowledge that Stripe had made certain representations and the directors' duties to take reasonable care in a number of pleaded respects.[55] His Honour then said:

In my view, even assuming the existence of such duties, although I very much doubt that they exist at law, as well as the correctness of the factual allegations pleaded, for present purposes, they are not capable of supporting the allegation of inferred actual knowledge in paragraph 29.6(a). There is no plea that the Stripe Directors knew the extent of the trading or that it was exceptional and extraordinary. The allegation that the trading was unauthorised, inappropriate and not in the applicants [sic] best interests depends upon such prior knowledge. The alleged inference cannot be made out against a plea of a mere duty to know or even a breach of that duty. Neither of these constitutes actual knowledge of a contravention or proposed contravention and that the Stripe Directors associated themselves in some positive way therewith: Sent v Jet Corporation of Australia Pty Ltd. Moreover the pleaded inferred knowledge of the essential facts of the contraventions is not the only rational inference available: Pereira v DPP at 220. Indeed the assertions of negligent breach of a tortious or contractual duty by Stripe Directors to know the level of trading does not rise higher necessarily than what is pleaded, namely breach of such a duty.[56]

52 The phrase 'the only rational inference available' drawn from Pereira v Director of Public Prosecutions[57] concerned a criminal prosecution for contravention of the Customs Act 1901 (Cth) and whether the necessary mens rea of the charge could be inferred from all the circumstances. The appellants assume that the reference to 'the only rational inference available' meant that Gilmour J was applying the criminal standard of proof to establish the necessary knowledge. But Gilmour J said no more than that other rational inferences existed. His Honour said nothing as to the standard of proof to be applied in determining whether other rational inferences had been excluded. Moreover, he was concerned with a pleading alleging accessorial liability for a breach of the Corporations Act. His observation does not constitute any authority for the proposition advanced by both appellants on appeal that proof of the requisite intent in a civil claim of fraud or deceit requires the exclusion of all other rational inferences.

53 Gilmour J's decision was upheld on appeal to the Full Court,[58] but the passage from the judgment of Gilmour J upon which the appellants rely was not the subject of any consideration by the Full Court. The Full Court found the pleadings to be deficient in a number of material respects, including the absence of an allegation of knowledge on the part of the Stripe directors of material facts giving rise to a contravention of the provisions of the Corporations Act.

54 The appellants' contention must be rejected. The ordinary standard of proof required of a party who bears the onus in civil litigation is proof on the balance of probabilities and that remains so even where the matter to be proved involves criminal conduct or fraud.[59]

55 The trial judge's findings as to Kain's evidence covered each of the four central matters in issue in the trial. Each was relevant to the respondents' case that Kain was a party to the conspiracy to injure MSCA by means of the repair fraud. Those issues were:

(1) Whether he was involved in the business of CCC Old after 2001.

(2) His explanation that the payments from CCC Old to him and his dealings with Neale via Ackland Forge and Dawn Trading had no connection to the repair fraud but were an innocent commercial arrangement.

(3) His involvement in the sale of CCC Old to MSCA and whether he was aware of the falsity of the warranties which stated that the information regarding CCC Old was accurate.

(4) Whether he had paid secret commissions to Neale on the sale of the CCC Old business.

56 The trial judge rejected Kain's account on each of these issues. Having regard to the grounds of appeal and in particular the contention that it was not open to the trial judge to reject his account on these issues, it is necessary to examine Kain's evidence and the trial judge's findings in some detail before we turn to the contention raised by both appellants that it was not open to the trial judge to infer from all of the circumstantial evidence that the appellants were parties to the conspiracy pleaded. For the reasons that follow, we reject the submission that the trial judge erred in rejecting Kain's account.

(1) Kain's continued involvement in the business of CCC Old after 2001

57 Kain submitted on appeal that there was no evidence linking him to the conduct of the business of CCC Old after 2001 so that the evidence of the repair fraud and Kevin's involvement in it did not advance the case against Kain. The findings of the trial judge demonstrate that Kain sought to distance himself from the business of CCC Old after 2001. However, apart from the numerous emails that showed that Kain was notified when MSCA made payments to CCC Old, and received the remittance advices of MSCA, there was significant documentary evidence of his continuing role in CCC Old throughout the period from 2002 to 2008.

58 Kain was involved in the setting of fees paid to CCC Old by MSCA. In two emails dated 8 December 2004, Ho emailed documents to Kain described as 'MSC's current rates for your review' and 'the copy of amended rates for your review'. The trial judge said that 'Kain gave evidence that he could not understand nor remember why the rates were sent to him' and that he 'was surprised by this email, never replied to it and that it was the only one that he received about the container business after he left'. He otherwise 'denied having received details of MSCA's rates for review'. The trial judge found that 'Kain's evidence appeared to be tailored to address the documentary evidence that could be found ... I do not accept Kain's evidence'.

59 In an email to Kevin dated 21 November 2006 and with the subject line 'Re: Increase of Charges', Kain wrote, referring to Neale as 'Big Brother':

This morning talk to Big Brother, he is in Sydney with Big Boss from Geneva and will be in Melbourne 25-11-06 and dinner with me and will give him X'mas gift card I bought from JB Hi Fi, I will send invoice to you.

Regarding increase depot rates please call David on 23/11/06 Thursday to ask him to help and speed up the process in the nice way as big brother had advise me.

I am sorry I have to remind you that I am still waiting for year 2005 balance sheet, profit and loss statement etc your kind assistant will be much appreciated.

60 In an email to Kevin dated 28 February 2007 and with the subject line 'Re: Increase of Charges', Kain wrote, referring to Neale as 'Christ':

Good morning and wish you and your family all well, business prosperous. Talk to Christ yesterday David is going for 2 week holiday, upon his return Christ will guide us what to do next. I will explain more when we talk next.

61 In an email to Kevin dated 19 March 2007 and with the subject line 'MSC Increase of charges', Kain wrote, referring to Neale as 'our brother':

Talk to our brother this morning, that David Robertson has been back from leave last week, when you have time you can contact him for the above mentioned subject, he may just suggests increase 5% fuel levy on transport only, if so you can counter offer and ask for 7% for lift in/out charges and transport as well, point out to him that all our forklift use diesel that ask him to help, because we are struggling for long period of time due to high cost of fuel and his help will be much appreciated etc.

62 Kain was asked about this last email and agreed that he was referring to Neale as 'brother' in that email. Kain also acknowledged that Neale had said to him that he should seek an increase in the levy on lift-ins and lift-out charges but testified that Neale had suggested five per cent. Following Neale's suggestion, Kain told his son to request from MSC an increase of five per cent on the fuel levy and a seven per cent increase in the lift-in, lift-out fee. He agreed that shortly after that suggestion, MSC agreed to a seven per cent rebate on lift-in and lift-out charges.

63 In emails from 2006 and 2007 relating to the sale of the CCC Old business, Kain sent emails to Kevin referring to Neale as 'big brother' and 'brother', and he corresponded with Neale with the signature block 'Chairman' of 'CC Groups'. He confirmed in cross-examination that at the time of the sale to CCC he still considered CCC Old to be his and his son's family company and that he considered himself its chairman. He said he had informed Neale to that effect.

64 The respondents' case at trial was that Kain had given an untruthful account of his involvement in CCC Old after 2001 in order to distance himself from the repair fraud. The trial judge made an explicit finding that she did not accept Kain's evidence that he was not involved in the business of CCC Old after 2001,[60] concluding that he continued to play a role until the sale of the business in 2008. Her Honour's findings as to his continuing role were well supported by the documentary evidence. It demonstrated that Kain untruthfully sought to distance himself from the business of CCC Old. The evidence plainly justified the rejection of Kain's false assertion that he was not involved, and played no part, in the business after that time.[61]

(2) Kain's explanation that the payments from CCO Old and his dealings with Neale via Ackland Forge and Dawn Trading had no connection to the repair fraud but were an innocent commercial arrangement

65 We turn to Kain's account of the payments from CCC Old to Ackland Forge and his dealings with Neale.

66 Kain said that, since approximately 1981, he had worked in a company that was in the business of storing, maintaining and repairing shipping containers. He testified that he had performed the tasks of bookkeeper, operator, welder and painter. He indirectly held a majority of the shares in the company. In 1990, his son Kevin joined the company, commencing at a low level as a messenger boy. In 1998 Kain created a new corporate structure. CCC Old was incorporated.

67 Although Kain denied any knowledge of the repair fraud, he admitted during cross-examination that during the 1990s he had been forced to repay shipping lines for false repair invoices issued by CCC Old.

68 In the particulars to his amended defence, Kain had alleged that the payments from CCC Old to Ackland Forge had commenced in 2001 upon Kain's departure from CCC Old, in accordance with an agreement he made with Kevin. In that defence, as a rebuttal to the allegation that he participated in the repair fraud, Kain further said:

The Ackland Forge Invoices were issued by Ackland Forge to [CCC Old] by way of a retirement benefit for the Fourth Defendant [Kain] in consideration of him ceasing all involvement in and ceding the business of [CCC Old] in or about July 2001 to Kevin Chong.

69 The payments were pleaded as a retirement benefit from 2001 and in consideration of his ceding the business to Kevin. If this were true, the payments to Ackland Forge and to Dawn Trading were unlikely to be linked to the repair fraud.

70 By the time Kain came to give his evidence-in-chief, it was apparent that this explanation in his particulars of defence was contradicted by accounting records of CCC Old which revealed that the payments from CCC Old to Ackland Forge had been made since at least 1998, and so were not for his retirement. It was also apparent at this stage of the trial that the payments from Ackland Forge to Dawn Trading had also commenced much earlier. As the trial judge found, Kain then tailored his account to this further evidence.

71 In chief, Kain testified that in 1998, as the business of CCC Old was growing, he entered into a form of partnership with a Mr Sam Tarascio for about two years. Kain testified that as his wages were low, he asked his co-director, Tarascio, for five per cent of MSCA's remittances as a supplement to his wages, as MSCA was the largest customer of CCC Old's business. Kain stated that he had arranged for the five per cent to be paid to Ackland Forge so that he could use the funds in his other businesses. He then said that after 2001 he agreed with Kevin that he would charge the largest customer five per cent as a 'retirement benefit' when he handed CCC Old over to Kevin. Kain acknowledged that there was no written agreement between him and Kevin. The cross-examination showed that Kain departed from his pleading after having viewed the accounting records of CCC Old the day prior to his evidence.

72 In cross-examination, Kain further departed from his pleaded case and his evidence in chief. He now said that the arrangement in 1998 had been made with Kevin and that its terms were to be passed on to Tarascio. He said he had talked to Kevin to 'pass the message to Sam because I never meet him, because Sam is in the different office, me in the container side, just a portable office'.

73 The trial judge found that Kain's evidence concerning the payments from CCC Old to Ackland Forge differed significantly from his very recently pleaded case. Her Honour said:

In my view, the bulk of the evidence given by Kain is not reliable. Indeed, much of his evidence seemed tailored to counteract the documentary evidence. For example, his final pleaded defence was filed during the course of the trial and shortly before he was to give evidence. As I have noted above, the defence pleaded an arrangement entered into in 2001 for payments to be made to Ackland Forge. Yet when Kain did give evidence, he departed from what was alleged to take account of documents that showed that Ackland Forge had received payments from CCC Old well before 2001. In cross-examination, he conceded that prior to being shown documents shortly before he gave evidence, he thought that there was only documentary evidence of the payments to him from July 2001 onwards.[62]

74 Kain submitted that the trial judge was wrong to draw an adverse inference from the departure from his pleaded case that the payments from CCC Old to Ackland Forge constituted a retirement benefit that he and his son Kevin had agreed he should receive upon retiring from the business in 2001. That and other inconsistencies in his evidence, as we have said, led the trial judge to conclude that he had tailored his evidence to counteract the documentary evidence. There were compelling reasons for the conclusion reached by the trial judge.

75 Kain gave evidence about his relationship with Neale. Kain said he got to know Neale in 1980. They became good friends, and for some time met on a daily basis. Neale lived in the neighbourhood. Kain started doing business with him before he did business with MSC. Kain continued to do business with Neale when Neale was working for MSC.

76 Kain testified that the payments from Ackland Forge to Dawn Trading constituted instalments in the repayment of a loan that Neale had made to him. This explanation for their financial relationship was a critical part of his defence. It was rejected by the trial judge. As Kain contends that the trial judge erred in rejecting it, we must refer to it in some detail.

77 Kain said that he had a business in China in the late 1990s which ran into difficulties. He testified that Neale offered to lend him some money so that Kain could investigate his affairs in China. Kain said that Neale told him that he had money 'from India and Singapore', but that Kain would have to pay him back in Australia. Neale did not tell him how much money he could use. During cross-examination Kain said that he spoke to Neale in 1999 and said he might need to borrow some money to investigate things in China. He then said Neale loaned him $120,000 in 1999. Later in his cross-examination he said he borrowed a total of $1.1 million from Neale between 2000 and 2008.

78 Kain testified that he had an agreement with Neale that he would pay Dawn Trading when he received payments from CCC Old, with no set amount determined for each repayment. He said it was left to him to decide how much he would pay at any given time. There was no interest to be paid on the loan. The evidence established that there was no record kept by him of the amount borrowed or the repayments he made. Kain said he had been in contact with a Mr Yip, who was trustee for Neale, holding the funds in Singapore. He said Neale had allowed him to talk to Yip. Mr Yip, he said, had died in 2010. Kain said that he, Kain, always prepared the Dawn Trading invoices to Ackland Forge because it was he who determined the amount that he would repay to Neale. Kain said that he paid the balance of the loan owing to Neale from the gift of $2.5 million he got from Kevin on the sale of his units in the business of CCC Old.[63]

79 Kain was challenged as to this account of the arrangement:

I just want you to go straight to the point. How did you get the money from Mr Neale?---Whatever the expenditure of co in China they will let me know so I will instruct Mr Yip to pay the bill.

What bill?---What occur in China.

Where are the bills?---The bills is owing Mr Yip.

Where are the bills now?---Mr Yip already [has] them.

How did you get the bills to Mr Yip?---Now, from China tell me the total figure, he sent across to Mr Yip.

Did you get a copy of these bills?---No.

...

Who were they paying?---To pay someone, will pick up the money. Because they spend the Chinese money in China so ---

You understand me, Mr Chong. Who are the bills from?---From various place.

...

Who? Names?---You spend the money with the police, you spend money for investigation. What you want me to do?

Who are the names of the people in China that were to be paid?---I don't ---

Where are their invoices?---In China a lot of things are owed by cash, no invoices.

Are you saying it was all by cash?---Yes.

...

Let's just go back to my questions then shall we? Who was to be paid?---I pay all the investigator and I have appointed three representative.

Over what years were you making these payments?---From 2002 - no, from 2000 to 2007.

For seven years you're making payments to people in cash in China using Mr Neale's money?---Yes.

You're lying?---No.

80 We shall later refer to the cross-examination of Kain by Neale's counsel. For the present it suffices to say that Neale's counsel did not challenge Kain's explanation of their financial relationship and sought to elaborate upon some parts of it.

81 Kain acknowledged that he used the words 'to work performed' on all the Dawn Trading invoices. He said he used those words because he had been utilising Neale's money in Singapore. He said it was 'sort of work' performed. He did not know why GST on the invoices would be payable if it was repayment of a loan but he thought all invoices are 'to put in GST'. He denied that the description on the invoices was intended to conceal the true nature of the transactions.

82 Neither in closing submissions at trial nor before this Court was any attempt made to justify the use of that terminology on the invoices. Neale through his counsel conceded at trial and on appeal that the endorsements were false.

83 The evidence showed that at the time that Kain claimed he borrowed money from Neale because he was in need, he was earning half a million dollars from CCC Old annually, had many other business interests and had apparently received multi-million dollar compensation in an acquisition settlement. In answer to the further suggestion that he was not short of money and had no need to raise any from Neale, Kain simply asserted that he borrowed money from Neale.

84 Kain produced no documentation to support either his indebtedness in China, the loan or repayment agreement with Neale or his claim that he used the funds from Neale in China.

85 The trial judge found that 'the bulk of the evidence given by Kain' was not reliable and that his explanation of the payments to Ackland Forge from CCC Old and to Dawn Trading was 'not plausible'. Her Honour further said:

However, it is unlikely that a businessman, such as Kain, would not make (if not retain) any record or note of any type of how much he borrowed from a friend nor how much he repaid, yet at the same time prepare false invoices for what were asserted to be the repayments. I do not accept Kain's submissions that a distinction can be drawn because corporate entities must keep records (such as invoices) for taxation purposes. He could not identify by name who he had engaged to conduct the investigations in China, nor could he provide cogent evidence of what the payments were for. He did not provide any documentary evidence to support his testimony about Mr Yip and his death in 2010. All in all, his explanation for the payments was improbable.[64]

86 It was, in our opinion, not in the least surprising that her Honour rejected Kain's account in this regard. Although Kain refused to admit that the invoices recorded a false explanation for the payments, Neale conceded that was so at trial and again on appeal. Kain's explanation for the payments was advanced at only the last moment, following the close of the plaintiffs' case. It was an account devoid of any supporting detail. The content of his account was not only seriously deficient but the suggested commercial arrangement was highly improbable. Despite the duration of the arrangement, Kain was unable to produce the slightest documentary or oral evidence to support any aspect of his account. In addition, Kain's credibility was not to be assessed without regard to the credibility of other aspects of his evidence. In particular, her Honour rejected his explanation for the payments to Neale following the sale of CCC Old, recorded in the company accounts as a commission, as the repayment of the balance of the loan from Neale. The submission that the trial judge was not entitled to reject his account on this issue is without merit.

(3) & (4) Sale of the CCC Old business, awareness of the false warranties and payment of secret commissions to Neale

87 As described above, in his evidence Kain falsely denied that he played any role in the sale of the business. There were a number of emails evidencing Kain's central involvement in the sale, including in relation to the terms.[65] From mid-January 2006, Kain sent emails to Kevin asking for information to be provided to prospective purchasers of the business. Kain sent emails to Kevin in which he passed on advice apparently given to him by Neale in relation to the sale.

88 In cross-examination, Kain accepted that he had corresponded with Neale about the sale. He said Neale had rung him and they agreed that Neale would talk to his boss. He testified that he said to Neale that he would talk to Kevin to make an offer of a joint venture with MSCA. Kain said that after that he had no more involvement in the sale. However in June 2007 Kain sent an email to Neale proposing a joint venture with MSCA.

89 In an email from Kain to Kevin dated 22 August 2007 with the subject line 'MSC TRANSACTION AND QUOTATION FOR WATCHES.', Kain wrote, referring to Neale as 'brother':

Talk to brother to day that container JV with MSC, they will write to you to ask 5 year financial report, value of the business and how the business valued and by what matter etc please wait for official letter from them.

90 In an email from Kain to Kevin dated 30 August 2007 with the subject line 'MSC - Project', Kain wrote, referring to Neale as 'brother':

Reference to the above mentioned subject, meeting will take place on 6/9/07 at CC DEPOT, MSC - representative will include Finance Director, Operation Director and one Consultant with expert of business analysis as well, this meeting I have to present, you and may be included Kevin Ng as well.

As I told you yesterday that they need 5 years financial report, property lease agreement etc. MSC will official write to CC.

At this moment if you can give me brief summary of cash flow and last year profit amount will be much appreciated as brother needed.

Also to let you know that you must remember Brother had quoted them to purchase 50% of the business is 6 million not 5.5 million.

91 Kevin had previously told Kain that there was a valuation of the business at $10.9 million. In cross-examination, Kain was shown this email and asked to explain the last sentence:

Would you tell the court what you meant by that sentence?---Mr Chris say maybe your business 50 per cent, maybe six million and not 5.5 million, that's it.

You meant to convey to Kevin Chong?---Yes.

That Chris Neale had told you?---Yes.

The expectation?---Yes.

That MSC had of the purchase price?---Yes roughly.

Chris Neale had given you that information?---Yes.

That was information that was confidential to MSC?---I think so.

What they expected to buy the business for?---Yeah, but of course ---

... And you were warning Kevin not to under quote the business, weren't you?---Yes.

92 In an email dated 25 October 2007 from Kevin to Alexander Ellis, the finance director of MSCA at the time of the sale of the business, with Kain copied, Kevin wrote:

Dear Alex

I received your email today. Thank you for your response. I have spoken to Mr Chong Snr [Kain] regarding your proposal. In summary, everything is acceptable save for the multiple. We still feel that 4.75 is a reasonable request. We feel this multiple is reasonable for the following reasons:

We have agreed to MSC's revised shareholding of 75% from 50%, and additionally the Chong family has the strong ability to bring new business (not only in Melbourne, but nationally as well).

We hope you understand where we are coming from and look forward to a favourable reply.

Best regards,

KC

93 Kevin sent another email to Ellis, copying Kain, on 26 October 2007:

Dear Alex,

Mr Chong Snr and I have discussed the valuation further and believe that 4.75 is a fair multiple for the business. We have built up the business from day one and truly believe in the performance of the container park operations. Furthermore, in addition to the quality of the container park operations in Altona, through the contacts of the Chong family national opportunities can be pursued.

Regards

KC

94 According to Ellis, all negotiations were with Kevin. Ellis provided Kevin with a copy of the sale of business agreement. Kain admitted in his evidence that he had signed the sale of business agreement, but said that he had not read the agreement nor sought advice. Following the signing of the documents Kain became an inaugural director of CCC.[66]

95 Kain stated in cross-examination that he was paid $2.6 million when the business was sold to MSCA. He denied that it was a payment for his interest as a shareholder in the company. He said it was a gift. However Kain agreed in cross-examination that he retained an interest of 25 per cent in the business, including 25 per cent of the real property. He claimed he had no idea what that interest was worth because he had handed over the business to his son and never checked its worth. When it was put to him that the money he received on the sale was a payment for his interest in the company, he agreed. He said the interest was in a 'unit trust for the company'. The trust documents were with his son, Kevin. He also said, however:

So it wasn't a gift at all, it was because the business of the company had been sold to MSCA?---I don't think so because all the money is under Kevin Chong's control. What he want to do to settle all the debts or whatever he never discussed with me. He just called me, he said, this is (indistinct) I give you a gift, 2. something million, that's it.

96 Kain denied in cross-examination that he had to pay a commission on the sale to Neale or that he had an arrangement with his son to pay a commission on the sale to Dawn Trading. Her Honour rejected Kain's account in this regard.

97 Her Honour found that Kain was still involved in the business at the time of sale and was involved in the sale of the business:

I do not accept his evidence in this regard. His emails show that he was vitally interested in the disposal of the business to MSCA and was one of the decision makers. Indeed, the correspondence between Kain and his son is consistent with Kain instigating the discussions with MSCA and having a guiding role in relation to the sale. Further, Kain was one of the inaugural directors of CCC after it purchased the business. It would seem odd that he would take up that position if he was not involved in the sale of the business. In a sense, Kain's role as a director of CCC was the continuation of his role in the business.[67]

98 The evidence provided ample justification for these findings.

99 Kain submitted that he had no intention of entering into the contract, that the warranties were the product of unconscionable dealing, that he could rely on a defence of non est factum, or in the alternative that the doctrine of unilateral mistake applied. He contended that the trial judge had erred in concluding that he was aware that the warranties formed a part of the contract of sale.

100 Kain testified that when he signed the contract of sale he did not know that what he was signing contained warranties. He said that he thought he was signing a share or unit transfer. Further, he testified that he had no involvement in the affairs of CCC Old and knew nothing about the accounts or affairs of CCC Old.

101 The trial judge did not accept any of his evidence in this regard. She found that Kain, having participated in the repair fraud, knew that the warranties were false.[68] Her Honour found that Kain was 'vitally interested in the disposal of the business to MSCA and was one of the decision makers.'[69] It was Kain who instigated the discussions with MSCA and played a guiding role in the sale. He became one of the inaugural directors of CCC after it purchased the business. She found Kain to be an experienced businessman and that he understood what was happening with the sale of the business. Having signed the sale of business agreement which included the warranties, the trial judge found him to be bound by them.[70]

102 As we have earlier described, the emails tendered at trial evidenced Kain's intricate involvement in the management of CCC Old after 2001 and in the sale of business negotiations. He provided advice to Kevin in relation to the ongoing negotiations and attended meetings with MSCA in relation to the sale of business. The emails evidenced that Kain was advised by a qualified business adviser and friend, Nick Tsardakis, in relation to the sale. Kain signed various other agreements consequential upon or in relation to the sale of business agreement including an exclusivity agreement, two shareholders' agreements and an indemnity agreement. Then there were also emails by Kain by which he facilitated the paying of a business sale commission to Neale.

103 The thrust of the cross-examination of Kain was to the effect that his account of his lack of involvement in the sale of CCC Old to MSCA was deliberately untruthful and designed to conceal his real involvement. The evidence, documentary and viva voce, provided cogent reasons for the trial judge to reject the matters pleaded by Kain - that he did not assent to the contents of the contract, that he had no knowledge of the affairs of the CCC Old business and that he did not know the warranties were false.[71]

Conclusion as to finding that Kain's account was false

104 We have referred extensively to Kain's evidence and the trial judge's findings on the central issues at trial. In summary, there is no merit in Kain's contention that the trial judge erred in rejecting his evidence on each of these issues.

105 Her Honour approached the issue of Kain's credibility in considerable detail. Her objective analysis was replete with factual matters which dictated the conclusion that Kain gave an utterly implausible account. Her reasons are stated at length and with care, with extended reference to the evidence upon which her conclusions are based. The judge's criticism of the appellant Kain arising from the differences between his pleaded case and his testimony and the inconsistencies within his testimony which were disclosed during his cross-examination is not surprising. We do not agree that it was not open to the judge to conclude that Kain had attempted to amend his hand when it became apparent that his initial account did not accord with the documentary evidence. The inference that he provided false and inconsistent explanations in order to conceal the true reason why CCC Old made payments to Ackland Forge from 1998 and throughout the period of the conspiracy was a strong one. It is unsurprising that his attempt to distance himself from involvement in the CCC Old business after 2001, his claims that he had no involvement in the sale of CCC Old and his claim that he was not aware of the content of the sale agreement were all rejected. As we will later describe, the evidence led inescapably to the conclusion that Kain had paid secret commissions to Neale on the sale of CCC Old. The documentary evidence strongly supported the trial judge's conclusions on each of these issues. It was, for the reasons we have earlier given, well open to her Honour to reject Kain's explanation for the false invoices and payments from CCC Old to Ackland Forge and from Ackland Forge to Dawn Trading.

106 While reliance on demeanor is not expressed in the trial judge's reasons, we find it difficult to suppose that it did not have some influence. While we have not had the benefit of seeing and hearing Kain give his evidence, to the extent that reliance may have been placed on the manner in which Kain gave evidence, a careful reading of his evidence demonstrates that an unfavourable view of his credibility was inevitable.

107 Kain further submitted in oral argument on the appeal that there was nothing in his testimony that had warranted the conclusion that he was lying. We do not agree. There were convincing and substantial reasons to conclude that Kain gave a deliberately untruthful account, as the cross-examination sought to demonstrate. The trial judge found Kain had 'tailored' his account to the documentary evidence produced by the respondents. Even then, his account was in important respects irreconcilable with the documentary evidence. The very substance of much of his evidence, which was rejected, could not be explained as mistake or a misconceived reconstruction. It contained internal inconsistencies and was highly implausible. His account was bereft of the slightest documentary confirmation of any of the matters he put in issue. As the trial judge concluded, it is inconceivable that some records would not have existed or other evidence would not have been available providing some substantiation of the commercial arrangement which he asserted existed between him and Neale over a period of at least eight years, were his account truthful. There were cogent reasons to conclude that he had given an elaborate false account in order to conceal his true role in CCC Old, his involvement in the repair fraud and the real explanation for his financial dealings with Neale. We shall later in these reasons discuss the important inference that may be drawn from such conclusions.

108 We should deal briefly with a written submission of Kain that was not developed in oral submissions. It was there submitted that even if the following findings - that he was involved in the repair fraud and conspired with others with the intention to injure MSCA; that there was an agreement to overcharge MSCA and then share the proceeds; and that the participants acted in concert and Kain acted as the conduit - were all rightly made, they were insufficient to sustain the elements of the tort of conspiracy. These findings, it was said, did not enable the conclusion that there was an agreement to use dishonest means to bring about a situation prejudicing or imperilling existing legal rights or interests or an actual common intention in all parties to participate in the proposed act by concerted action to achieve the same unlawful object.[72] This argument is without substance. If the evidence supported the findings, each of these elements of the conspiracy would be made out.

Neale's breach of fiduciary duties and receipt of secret commissions

109 As part of the broader circumstantial case that the appellants participated in the repair fraud, we turn first to consider the findings made against Neale as to his role in the sale of the CCC Old business and the receipt of secret commissions. The evidence relating to Neale's conduct at the time of the sale of the CCC Old business not only supported the inference that he was a participant in the repair fraud, but provided ample basis for the trial judge to conclude that the respondents' claims specifically relating to the sale were made out.

110 Neale signed the sale of business agreement on behalf of MSCA. Ellis gave evidence that Neale, as the operations director of MSCA and a director of CCC, was intimately involved in meetings, discussions and email correspondence in relation to the purchase of the CCC Old business by CCC:

I'd like to deal now with any involvement Christopher Neale might have had in the negotiation of the purchase of the business. Would you just explain to us his involvement in that?---Yep. The purchase of the, the depot as part of a global strategy and it was very much an operational issue. We were buying the depot from an operational perspective to make sure that we could control our costs plus ensure that we had enough land space to manage the containers that we would be bringing through. So Chris as the operations director was intimately involved in that whole process. I was obviously involved from the financial perspective and Kevin Clark was also involved from the overall company perspective.

111 In respect of Neale, the trial judge found that the respondents had made out their claim that Neale had breached his fiduciary duties to MSCA and CCC as a result of his involvement in the sale of the business. Neale was a director of both companies at the time of the sale of the CCC Old business. Ellis testified that Neale's job with MSC did not change between 1988 and 2006/7. He also testified that since MSC had started in Australia in about 1989, they had dealt with CCC Old which was regarded as the business of Kevin and Kain.

112 At the hearing of the appeal, Neale accepted that there was evidence which showed that Neale had given Kain advice about the prospective sale of CCC Old to MSCA. It was submitted, however, that there was no evidence that MSCA was not aware that Neale was providing such information to Kain. Although Neale's counsel had extensively cross-examined Ellis, there was no suggestion that Neale's communications with Kain in this regard were known or authorised by MSCA. Had Neale's counsel been instructed that Neale was authorised to make such communications, he would have been obliged to put that to Ellis. It was the evidence of Ellis that prior to the commencement of the investigation into the allegation of frauds committed by CCC Old, he had no knowledge that Neale was being paid funds by Kain or that there was a relationship of the type disclosed by the evidence between Neale and Kain. Ellis said he had been told by Lee that two directors of MSCA were aware of the fraud but that at that time MSCA had little information as to the nature of the relationship between Kain and Neale.

113 The trial judge found Neale to be in breach of his fiduciary duties to CCC and MSCA in that, knowing the vendor's warranties as to the accounts of the business to be false, he did not disclose that matter to CCC or MSCA. The trial judge made the following findings as to his involvement:

Whilst Mr Neale may not have been the driving force behind the sale, the email correspondence shows that he was sometimes in touch with Kain about the sale of business and he was frequently copied into email correspondence about it. In addition, he attended meetings (both internal and external) during the course of which the sale was discussed. He signed the Sale of Business Agreement on behalf of CCC.

In the absence of any evidence to the contrary, I accept that he was aware that the sale of business agreement contained warranties and that the financial performance of CCC was relevant to the sale. He did not disclose to CCC nor MSCA the existence of the repair fraud and the receipt of payments by Dawn Trading from that fraud. He must have known that the warranties in the Sale of Business Agreement were false and that the price to be paid was inflated by the inclusion of the amounts referable to the repair fraud in the 2007 financial year. In my view, it is clear that he breached his fiduciary duties in this regard.[73]

114 It was not in issue that if the trial judge's findings as to Neale's knowledge of the repair fraud remained undisturbed, the finding of breach of fiduciary duty could not be challenged. But it was Neale's submission that there was no proper basis from which her Honour could safely infer that the payments constituted secret commissions on the sale, whether connected to Neale's knowledge of the repair fraud or not. It was submitted that it was not enough that the documents to which her Honour referred, including those sent by Kain, spoke of and were consistent with the payment of a commission. Further, it was submitted that her Honour had failed to give any weight to the fact that Neale was privy to only one of the documents referred to and that her Honour failed to advert to the caution which should properly be adopted in seeking to deploy the utterances of an alleged conspirator against a co-conspirator.[74] As no reference was made to that caution, it was submitted that it may be inferred that her Honour gave it no regard.

115 Finally, it was submitted that her Honour's willingness to infer the receipt of the secret commissions must have been influenced by the fact that she had already found Neale to be a conspirator in the repair fraud and otherwise in breach of his fiduciary duties in relation to the same sale of business as was the subject of the secret commission claim.

117 Kain's emails not only provided evidence in relation to the payment of the commissions but were also evidence of the common design, and in combination with other evidence were relevant to the existence of the conspiracy. The contention fundamentally misconceives the relevance of Neale's conduct with respect to the purchase of CCC Old. Its relevance was not dependent upon an antecedent finding that he was a conspirator in the repair fraud. His conduct could inform the question whether he was a conspirator in the repair fraud.

118 Evidence is admissible of what each party to the conspiracy may have done in furtherance of the conspiracy.[75] It is of course necessary to distinguish between the narrative by a co-conspirator of a past event, which would amount only to an admission against interest by that conspirator, and an act which is done to advance the object of the conspiracy or is otherwise in furtherance of the agreement. The evidence of the payment of commissions by Kain and Kevin to Neale and their receipt by Neale via his trust company was properly admissible, not only in order to prove Neale's breach of fiduciary duty and payment of the commissions but to establish the motive of these conspirators and the means by which they expected to and did achieve the end that Neale receive a further portion of the proceeds of the conspiracy.[76] It was also discrete evidence of a corrupt relationship between Neale and Kain which rendered more likely their involvement in the repair fraud.

119 Four days after the CCC Old business was sold, Kain had asked Kevin to 'advise me when we wish to pay Chris and what amount? He will issues [sic] invoice to Ackland Forge Pty Ltd.' Neale did in fact issue an invoice to Kain. That invoice was for approximately three per cent of the sale price paid for the CCC Old business. Kain's implausible explanation for why his accountant recorded the payments as a commission further supported the trial judge's conclusion.

120 The trial judge rejected Kain's explanation for the payment of what her Honour found to be a commission based on the sale price of CCC Old. Neale had adopted Kain's defence. Her Honour having rejected their explanation for the payment, the documentary evidence entirely justified the conclusion that Neale had received a secret commission upon the sale of CCC Old that was described in the documentation as a 'business sale commission' of $250,000.

121 As the respondents submitted, the facts referred to by her Honour at [108]-[124] of her reasons and the adverse findings concerning the receipt of secret commissions by Neale calculated by reference to the purchase price of CCC Old are discrete and significant findings. The finding of the payment of secret commissions did not depend upon any findings as to the existence of the repair fraud. The payment of secret commissions, viewed in isolation, evidenced the existence of a corrupt relationship between Neale and Kain and Kevin. The repair fraud - which affected the sale price of CCC Old - was the likely explanation for the payment of the secret commissions, there being no finding of any other improper conduct that could explain that corrupt relationship.

122 Hence the payment of the commissions, though a discrete circumstantial fact, could be added to those other facts which supported the conclusion that Kain and Neale were co-conspirators in the repair fraud.

123 The frauds perpetrated by CCC Old on MSCA and MSC during the period 2002 to 2008 had enabled CCC Old to misrepresent the revenue that it derived from its business. Neale acknowledged on appeal that it was implicit in the trial judge's findings that the secret commissions constituted a payment to Neale of his further share of the proceeds of the fraud committed against MSCA. The findings of fact of the trial judge strongly supported that conclusion. The payment of the secret commissions to Neale by CCC Old via Kain's company and the acts of Kain and Kevin in facilitating those payments were acts of the co-conspirators in furtherance of the combination.

124 The judge found that, as the respondents had succeeded on their claims of breach of fiduciary duties and secret commission, the claims against Neale for breach of statutory duties and misleading and deceptive conduct were also made out.

Did the respondents plead a claim against Neale for breach of fiduciary duty and receipt of secret commissions discrete from the repair fraud?

125 We pause to address the dispute between Neale and the respondents as to whether the respondents' pleading that Neale had breached his fiduciary duties and received secret commissions were causes of action discrete from the plea that Neale was a conspirator in the repair fraud. Neale submitted in closing at trial and maintained on appeal that paragraph 13B of the third further amended statement of claim was no more than an allegation of consequences which arise from the facts alleged as constituting the repair fraud. The respondents submitted that they had pleaded Neale's breach of fiduciary duty and receipt of secret commissions associated with the sale of the business of CCC Old as discrete causes of action.

126 Paragraphs 12 and 13 of the third further amended statement of claim set out the conduct said to constitute the repair fraud. In paragraph 13B, the respondents pleaded:

Further, by reason of the conduct alleged, or alternatively the amounts received, or alternatively the raising of the Dawn Trading Invoices, referred to in paragraphs 12 to 13 (inclusive) Mr Neale:

(a) breached his fiduciary and statutory duties ... by:

(i) joining in and acting in collaboration with the unlawful acts of each of [CCC Old], Mr Lee, Kevin Chong and Kain Chong; and

(ii) failing to inform MSCA of the creation of the false repair charges; and

(iii) failing to inform MSCA of the distribution of the proceeds of the false repair charges amongst [CCC Old], Kain Chong and himself;

(b) perpetrated a fraud against MSC and MSCA; and

(c) received a secret commission.[77]

127 In paragraphs 32A to 32DC, under the heading 'Sale of Business and Breach of Fiduciary Duty', the respondents pleaded that Neale had breached his fiduciary and statutory duties to the respondents and had received a secret commission. In particular, in paragraph 32B, the respondents pleaded:

Further, by reason of the matters pleaded in paragraphs 12 to 13 (inclusive) above, Mr Neale knew:

(a) that the warranties contained in the sale of business agreement were false and untrue; and

(b) the financial performance of [CCC Old] was not that which was disclosed to CCC and MSCA.

128 At the close of the respondents' case, Neale submitted that the causes of action of breach of fiduciary duty and receipt of secret commissions were dependent upon establishing Neale's participation in and knowledge of the repair fraud. The respondents contended that their pleadings alleging the breach of fiduciary duty and secret commissions were not dependent upon establishing Neale's involvement in the repair fraud. The respondents foreshadowed that if, contrary to their submission, the trial judge did not consider that those causes of action were discrete from the repair fraud, they would seek to amend their pleadings. At that time, the trial judge expressed the tentative view that the pleading, in particular paragraph 13B, supported the respondents' contention and that Neale should take that tentative view into account in determining what course he would follow. It appears that the trial judge did not consider it necessary to provide the respondents with an opportunity to amend their pleadings.

129 In final address, counsel for Neale submitted that the respondents' pleadings as to secret commissions did not allege any material facts with respect to the payment of the asserted secret commissions, other than Neale's alleged participation in the repair fraud. He submitted that contrary to the pleadings, the respondents wished to make a discrete claim of secret commissions based upon Neale's alleged assistance with respect to cartage rates and in connection with the sale transaction. Neither of those matters had been pleaded. He acknowledged that the pleadings do refer to communications between Neale and Kain concerning an increase in the rates, but that particular was put forward as evidencing a connection between Neale and Kain in support of the overall conspiracy. He conceded that if the repair fraud was made out, it would necessarily follow that Neale had also breached his fiduciary duties and received the secret commissions alleged.

130 The trial judge referred in passing to Neale's submission that the respondents had only pleaded the receipt of a sale commission by reason of his knowledge of the repair fraud but made no explicit finding regarding the pleadings. On appeal, Neale submitted that her Honour's finding that Neale had received secret commissions was not expressed to be on any basis other than Neale's knowledge of the repair fraud. The respondents submitted that in paragraphs [108] to [125] of her Honour's reasons, her Honour had proceeded upon the view that those were claims that could be considered independent of the repair fraud. We see nothing in her Honour's reasons to indicate that she treated the allegations of breach of fiduciary duty and receipt of secret commissions consequent upon the sale of CCC Old as claims independent of the existence of the repair fraud.

131 We do not accept that these causes of action were pleaded as being independent of the repair fraud. The breach of fiduciary duty and secret commissions associated with the sale of CCC Old's business pleaded in paragraphs 13B, 32A and 32DC were not pleaded as discrete causes of action but were expressed to be dependent upon proof that Neale participated in the repair fraud. Paragraph 32B of the respondents' third further amended statement of claim was dependent upon proof of Neale's participation in the repair fraud. If that claim failed, paragraphs 32C and 32DC, as pleaded, would fall away. Paragraph 32C commences by alleging that the matters contained therein arise '[b]y reason of his knowledge of the matters pleaded in paragraphs 32A and 32B' and each of paragraphs 32D to 32DC allege consequences or relief said to arise 'by reason of the breaches referred to in paragraph 32C'.

Proof of the conspiracy - circumstantial evidence

132 We turn then to the submissions of the appellants that in the absence of direct evidence of the appellants' agreement to participate in the conspiracy, the evidence adduced by the respondents was insufficient to establish that they were conspirators in the repair fraud. For the reasons that follow, the evidence was sufficient to establish that the appellants were conspirators in the repair fraud. It was open to the trial judge to conclude that the respondents made out all of their claims against the appellants.

133 As conspirators will ordinarily conceal their unlawful agreement, it will often be the case that there is no direct evidence of the combination. The conspiracy may be proved without direct evidence of an express agreement or understanding as to the common design.[78] It is generally a matter of inference deduced from certain acts of the parties done in pursuance of the apparent purpose in common between them. The overt acts done in furtherance of the combination may support the inference that there was such an agreement or understanding to further the common unlawful object of the combination.[79] Separate acts of co-conspirators may be relied upon which have such a concurrence of time, character, direction and result as naturally leads to the inference that these separate acts were the outcome of pre-concert or some mutual contemporaneous engagement evidencing the common object of the combination.[80] A mere co-incidence of separate acts however, which by their conjoined effect cause damage, will not suffice. The evidence must be such as to permit it to be inferred that the acts were undertaken in pursuit of the common object so that it may be said that the actors acted in concert towards the common end.[81]

134 Where circumstantial evidence is relied upon, it is 'the weight which is to be given to the united force of all of the circumstances' in combination which must be considered.[82] As was said by Winneke P in Transport Industries Insurance Co Ltd v Longmuir:[83]

In cases of circumstantial evidence each proven fact may gain support from the others and, although each, considered in isolation, might not provide a sound basis for inferring the ultimate fact to be proved, a combination of all facts might provide a compelling basis from which to draw that inference.[84]

135 The onus of proof is to be applied only at the final stage of the reasoning process. It is error to apply some particular standard of proof to each stage in the process. To do so would destroy the integrity of a circumstantial case.[85] The inference to be drawn from the facts proved 'must be weighed against realistic possibilities as distinct from possibilities that might be regarded as fanciful'.[86]

136 In response to the appellants' submission that the circumstantial evidence did not establish that they were co-conspirators or that they committed any of the other improprieties alleged, the trial judge noted that the difficulty with many of the arguments was that they invited consideration of particular factual matters in isolation.[87] On appeal primary attention continued to be directed to individual circumstantial facts in relation to the payments from Kain to Neale via their companies, that it was said could not support the inference that they were acting in pursuit of a common intention to achieve the same unlawful object. Little attempt was however made on appeal or, it appears, at trial to consider how the discrete matters in relation to the conduct of the business of CCC Old between 2001 and 2008 and its sale could further support the respondents' claim that the appellants were conspirators.

137 We turn then to these particular arguments of the appellants concerning parts of the circumstantial evidence that were said to stand in the way of the conspiracy alleged.

138 It was submitted that evidence that the repair fraud was in existence before October 2002, and that it continued after 2008, told against the appellants being members of the conspiracy pleaded. That meant that the conspiracy had a life independent of the appellants. The trial judge found that the CCC Old payments to Ackland Forge had been made since at least June 1998 and that Ackland Forge had also been making payments to Dawn Trading before 2002. In cross-examination Kain had accepted that to be so. Her Honour rejected the contention that that spoke against the conspiracy alleged. We agree.

139 The respondents did not plead that the conspiracy commenced in October 2002. The respondents had pleaded that the fraud had been perpetrated between 'at least late October 2002 to about late February 2008'. It was pleaded in that way because of the limitations in the documentary evidence that was then available to the respondents in proof of the conspiracy. Ellis, the finance director of MSCA, testified that the respondents' investigations revealed that the payments from Ackland Forge to Dawn Trading could be traced back to January 2000, and payments could have been made earlier. They were only able to obtain bank records for both Ackland Forge and Dawn Trading back to the year 2000.

140 We have earlier referred to the evidence of employees of CCC Old who learned about the existence of the fraud upon commencing work with CCC Old in 2002 and 2003 and that it was said to be a standard practice within the industry. The conspiracy pleaded was one in which conspirators came and went from the conspiracy during its continuance. It was already in existence when Ho and Lee became party to the conspiracy shortly after they commenced their employment with CCC Old. Ellis testified that when MSCA learned of the repair fraud, he, together with Kevin Clark, the managing director, and other personnel, spoke with Lee. Lee told them that when he joined the company in 2002, he had noticed and been made aware that repairs for the same container were being multiple invoiced. Lee said that when he arrived at the yard, he learned that the repair fraud was already in progress. Lee told Ellis that there were two directors of MSCA who were involved and were aware of what was going on.

141 That the payments from Ackland Forge to Dawn Trading prior to October 2002 could have represented a sharing of the proceeds of the repair fraud was not inconsistent with the respondents' case that since at least October 2002 the conspiracy was in operation.

142 The appellants also contended that the repair fraud continued after the sale of CCC Old to MSCA, which was said to tell against an inference that the appellants were participants in the fraud.

143 In late 2007 or early 2008, MSCA introduced new software which had the effect of significantly curtailing the method of repair fraud in which invoices were duplicated. Ellis testified that Neale was in favour of the implementation of that software. Lee told Ellis that in 2008, after MSCA had introduced the new monitoring system, the perpetrators of the fraud recognised that revenue from the fraud was going to drop and that there was therefore a need to increase the revenue by other fraudulent means to generate more cash. Lee told Ellis that Kevin had a history of establishing weaknesses in the customers' accounting methods. Lee said that he had then developed a cartage fraud with one of his senior managers, as well as the gate-in, gate-out frauds, all of which were designed to improve the revenue. Significantly, by early February 2008, at a time when the repair fraud ceased to be an adequate source of revenue, payments from CCC Old to Ackland Forge, and the weekly payments from Ackland Forge to Dawn Trading linked to the remittances from MSCA to CCC Old, ceased. Yet on Kain's account a substantial part of the monies owing to Neale had yet to be repaid. He claimed that was achieved by the payment in mid-2008 of what was described in the documentation as the commission on sale.

144 There was no evidence as to how the fraud was perpetrated after the sale of the final 25 per cent of Kain and Kevin's interest in CCC to MSCA or who might have benefited from the fraud after that time. The trial judge made no findings as to any events after the sale of the business. The continuance of aspects of the fraud after February 2008 was not evidence inconsistent with the conspiracy pleaded.

145 It was further submitted at trial that the evidence could not support the inference that the appellants had met with or spoken to some of the other co-conspirators. Counsel for Neale submitted that it had not been established that he had ever met with Lee or ever reached agreement about anything notwithstanding that he was a central figure in the conduct of the repair fraud. He submitted that it could not be inferred that Neale had met with Kevin Chong. He submitted that even if Neale 'had a deal with his mate Kain who he had known for years, did he really also have an agreement with Mr Lee and with Kevin Chong?'. He further submitted that if Neale's agreement was with Kain it would be necessary for the trial judge to find that Kain acted with the authority of Lee and Kevin and purported to bind them to an agreement. He submitted that the evidence failed to establish that Neale had conspired with Lee or Kevin. Allied to this submission was the contention that as Lee was the primary employee of CCC Old who facilitated the repair fraud during the pleaded period, the conspiracy could only commence when he commenced to participate in it.

146 These submissions which were repeated on appeal were wrongly premised on the notions that all co-conspirators must be involved from the commencement of the conspiracy, that they must remain conspirators throughout the continuance of the conspiracy and that they must have communicated directly with each other.

147 Conspirators may come and go from a conspiracy. They may join a conspiracy after its inception and leave the conspiracy before its conclusion.[88] There is no requirement that each member of a combination communicate directly with all of the other parties. The means by which a common agreement or design is reached and given effect will greatly vary. It has long been recognised that there need be no direct communication between all those who are said to be conspirators so long as it is shown that they entered into the agreement with a common purpose.[89] So an agreement may be made where there are one or more central figures around whom other conspirators revolve.[90] There may be an agreement where one conspirator communicates with another who in turn communicates with another in the form of a chain and where various members of the conspiracy will not meet or be aware of the identity of other members of the conspiracy. As Herron CJ and Holmes JA observed in Ex parte Coffey; Re Evans:

[A]lleged conspirators may never have seen each other and have never corresponded. One may have never heard the names of the others and yet by law they may be parties to the same common criminal agreement provided there is proof of acts on both sides which may lead a jury to infer that they were engaged in accomplishing the same common object.[91]

148 Next, the appellants submitted there was no linkage between the payment of remittances by MSCA to CCC Old and the payments by Ackland Forge to Dawn Trading. This submission again invited analysis of an isolated portion of the circumstantial evidence. That said, the evidence of the sequence of payments over a ten year period provided ample basis for the conclusion that the payments were linked to the remittances by MSCA and to the knowledge of the appellants.

149 Kain testified as to his arrangement with Kevin to be paid a percentage of the receipts from MSCA which was in a form of a payment by CCC Old to Ackland Forge. He said that he had agreed with Neale that he would remit moneys to Neale's trust company when he received the payments from CCC Old. His evidence was as follows:

Did you agree terms of payment?---Yes.

How often were you to pay him back?---Once I receive the payment I repay him.

What do you mean once I receive the payment?---No, once I receive the payment from CC Container so I have (indistinct) I will pay him. I will pay Dawn Trading.

150 Neale did not challenge that evidence. As Kain did not explicitly state that it was agreed with Neale that the source of the funds was remittances by MSCA it was submitted that it could not be inferred that the payments to Dawn Trading were linked to the payments from MSCA and hence to the repair fraud.

151 We do not accept that it was not open to the trial judge to conclude that the payments from CCC Old to Ackland Forge and from Ackland Forge to Dawn Trading were closely linked in time to the remittances of funds from MSCA to CCC Old. They included, as a substantial component, the payments on fraudulent repair invoices. As the evidence of Kain disclosed, he was able to prepare the invoices from Ackland Forge to CCC Old from information that he regularly received from an employee of CCC Old and which enabled him to raise invoices from Ackland Forge to CCC Old. Kain would then also draw up an invoice of Dawn Trading to Ackland Forge. The payments from CCC Old to Ackland Forge as well as the weekly payments from Ackland Forge to Dawn Trading, linked to the remittances from MSCA to CCC Old, ceased in February 2008.

152 The proximity in time of the payments from MSCA to CCC Old and the raising of the two sets of invoices, one by Ackland Forge to CCC Old and one by Dawn Trading to Ackland Forge, the sequence of payments that then followed from the remittances by MSCA being a practice that remained the same for almost 10 years, the nature of the close relationship between Kain and Neale and the fact that Neale was an employee and director of MSCA with ultimate responsibility for payment of repair invoices provided ample basis for her Honour's conclusion.

153 Neale also submitted before the trial judge and on appeal that the evidence failed to establish a connection in quantum between the remittances made by MSCA on the fraudulent invoices and the payments by Kain via Ackland Forge to Dawn Trading. That contention rested upon the fact that each lump sum remittance by MSCA to CCC Old included payments for legitimate, as well as false, invoices, and that the payments from Ackland Forge to Dawn Trading sometimes occurred before Ackland Forge had received its portion of those remittances from CCC Old. It was said that the intermingling of monies from the repair fraud with other remittances told against the payments being linked to the repair fraud.

154 The trial judge rejected submissions by the appellants that the timing of the payments precluded the drawing of an inference that Kain and Neale participated in a fraud between October 2002 and February 2008.[92] She also rejected the submission that the fact that the payments were referable to the entire remittance from MSCA to CCC Old (including both fraudulent and non-fraudulent payments) rendered the inferences drawn improbable.[93]

155 We also reject those submissions. It is to be remembered that the repair fraud covered not only invoices for repairs that had not been made but also for repairs, the cost of which was inflated. The successful concealment of the fraud from MSCA depended in part upon there not being discrete invoicing and payment for repairs that had not been undertaken, duplicated repairs and costs which had been inflated. As the payments by MSCA on false repair invoices were necessarily intermingled with legitimate payments to CCC Old, the appellants' benefits from the repair fraud could only be obtained by a sharing of a portion of the total remittance regularly made by MSCA to CCC Old.

156 Then it was said that the fact that the repair fraud was committed against other shipping lines but that the remittance to Kain and hence to Neale was calculated only by reference to the MSCA payments also told against them being involved in the conspiracy alleged. We also reject that contention. Kain had agreed with Kevin that he should receive his regular payments out of the remittances from MSCA. The fact that Kain was not paid separately for frauds perpetrated on other shipping lines does not stand in the way of the inference that he was to receive proceeds of the repair fraud from the remittances of MSCA, those remittances constituting the bulk of the revenue of CCC Old.

157 The fact that the quantum of the payments to Dawn Trading varied was said to stand against the existence of the appellant Neale's involvement in the conspiracy. The appellants did not dispute the findings of fact made by her Honour set out at [28] above, save for an argument in relation to paragraph 11 in which Neale said that the true range of the percentage amounts of the MSCA remittance constituted by the payments from Ackland Forge to Dawn Trading was 1.5 per cent to 3.5 per cent. This error was said to arise because in their particulars the plaintiffs had rounded payments to the nearest whole percentage point. Neale further emphasised on appeal that the relatively narrow range was not as significant as may appear. As Kain, through Ackland Forge, had received a consistent 3.3 per cent and then 4.4 per cent of the MSCA remittance, Neale argued that there was a significant difference between a payment to Neale constituting (say) two per cent rather than three per cent, relative to the money actually received by Kain. We do not accept this submission. Upon a review of the tabulated summary of payments, it is apparent that the trial judge's statement in paragraph 11 that, with 'some limited exceptions', the payments were 'usually' between two and three per cent of the MSCA remittance was accurate.

158 The receipt by Ackland Forge of a small percentage of the MSCA remittance and the passing on by Ackland Forge to Dawn Trading of the majority of that payment was not inconsistent with the inference for which the respondents contended. Neither was the fact that the invoices to Dawn Trading were usually within a reasonably narrow band of between two and three per cent of the MSCA remittance inconsistent with that hypothesis. As the trial judge observed, there could be many reasons why, over the lengthy period that this arrangement continued, the percentage payment from Ackland Forge to Dawn Trading might have been varied. The trial judge advanced but one reason why that may have been so.[94] We do not agree with the submission that these variations provided any impediment to the conclusion that the payments were so linked to the remittances from MSCA.

159 The trial judge found that Neale had encouraged the introduction of new software. As we described above, that resulted in the revenue from the repair fraud being significantly curtailed. The trial judge did not consider that to stand in the way of the conclusion that Neale was a participant in the fraud. Her Honour reasoned that for Neale to have done otherwise would have been suspicious.[95] The evidence showed that other means of furthering the fraud were then under consideration. The sale of the CCC Old business was to take place shortly thereafter.

160 Her Honour did not consider it relevant that Neale did not share in the proceeds of other frauds, including those using other methods and those concerning other shipping lines.[96] We agree. It was not explained why, if Neale was a conspirator in the repair fraud involving MSCA between 2002 and 2008, he should necessarily have been the beneficiary of frauds that were only commenced in 2008 after the CCC Old business was sold. No party sought to explore the question of the extent of the frauds perpetrated on other shipping lines or how those involved in those frauds may have benefitted.

161 The fact that Neale was a director of MSCA and responsible for matters of shipping container maintenance and repairs was said by him to be an insufficient reason to conclude that he would be involved in the asserted conspiracy. It was submitted that there were layers of management below him and that his capacity to influence the day to day affairs in Melbourne in the conduct of the fraud was not established. Whilst necessarily conceding that the repair fraud had occurred and that it involved at least the individuals on the ground, Ho, Lee, Kevin and perhaps others, and acknowledging the evidence that all of the ground staff were involved and that it was a practice employed throughout the industry, the question was asked rhetorically what Neale could have done to advance the conspiracy. It was conceded that over a 10 year period the status quo of the relationship of CCC Old and MSCA remained, that MSCA provided the bulk of CCC Old's earnings and that a massive fraud was perpetrated on MSCA involving Kevin and resulting in a significant increase in the value of CCC Old's business. It was conceded that it could properly be inferred that Neale well understood the extent of the business being conducted by CCC Old for MSCA, including the amounts of money being paid to CCC Old. The respondents point to the close and corrupt relationship between Kain and Neale and to emails which showed Neale's willingness to assist CCC Old at the apparent expense of MSCA. We have earlier referred to how those emails illustrate the extent to which Kain looked to Neale for guidance with respect to the advancement of CCC Old's business relationship with MSCA. Neale's role in MSCA provided further support to the respondents' circumstantial case.

162 Finally, we turn to Kain's arguments under ground 5 and 6 of his appeal concerning the respondents' allegations of misleading and deceptive conduct and fraudulent misrepresentation against Kain in relation to the warranties to the sale of business agreement. We have explained why the trial judge was well entitled to reject Kain's account of his knowledge and understanding of the warranties. Under these grounds Kain also contends that, as the respondents were aware that the financial records of CCC Old were deficient and had carried out their own extensive internal and external investigations of CCC Old's financial position, the trial judge erred in finding that the respondents relied upon the warranties. Alternatively, he contends that the respondents were estopped from relying on the warranties as they were aware that the warranties were false. For the reasons that follow, these submissions cannot be sustained.

163 Ellis gave evidence about the steps taken by the respondents prior to the acquisition of the business. They had obtained the advice of a business analyst, Vincent Pooch, and a due diligence report from KPMG, and they had carried out thorough investigations of the CCC Old business. Pooch and KPMG advised that the financial information provided for the CCC Old business was 'wrong and unreliable'. Ellis said that he had reasons to doubt the integrity of some of the information that was provided. In cross-examination he said that he considered the warranties to provide a means by which to sue the vendors if the information that had been provided was incorrect. He said that he would not have recommended that the purchase proceed if he had been aware of the repair fraud. He said that the 'warranties were there to protect us from what we didn't, what we didn't know'.

164 Ellis gave uncontradicted evidence that the existence of the risks created by the deficiencies in CCC Old's financial records was a primary reason for the respondents' insistence on the warranties contained in the sale of business agreement. He stated that the respondents wished to be able to fall back on the warranties.

165 Mr Angus Reynolds, the director of KPMG Transactional Services, was the business adviser of the respondents. He gave evidence supported by contemporaneous correspondence that the due diligence process was based upon information made available to KPMG. He said that there had been no attempt to establish the reliability of that information by reference to other evidence.

166 Kain submitted that the respondents acted upon the advice of the business analyst, Pooch, and relied upon the due diligence report from KPMG which expressed serious reservations about the correctness of CCC Old's accounts. Kain relied upon Ellis's evidence that, as a consequence of Pooch's investigations and the due diligence report of KPMG, there were reasons to doubt the integrity of the information provided to the respondents. They were aware that, given the state of the financial information available and the nature of CCC Old as a private company, there was nothing that Kain or Kevin could do to satisfy them that the company was properly run or that the risk of a financial black hole could be eliminated. Accordingly, Kain submitted that the conclusion that the respondents relied upon the representations contained in the sale of business agreement was erroneous or alternatively that the respondents were estopped from relying upon them.

167 The trial judge rejected these submissions. Her Honour found that the warranties contained in the sale of business agreement were false, as the stated income of the business resulted in the inflation of the sale price. She accepted the evidence of Ellis that though MSCA was aware of inaccuracies in CCC Old's financial records, the repair fraud had not been exposed. The trial judge accepted that the repair fraud had been hidden from Ellis, Pooch and KPMG and that a false explanation had been given as to the true nature of the payments by CCC Old to Ackland Forge. She accepted that the warranties were an important part of the decision made in entering into the agreement to purchase the business. That was evidenced by the email sent by Ellis to Kevin cautioning that the warranties should be reviewed carefully. Her Honour accepted Ellis's evidence that MSCA relied upon those warranties to protect CCC from what he and his co-directors did not know. She found that, contrary to Kain's submissions, the respondents had not relied upon the advice from Pooch and the due diligence report to the exclusion of the warranties.[97]

168 The warranties concealed the existence of the repair fraud in which Kevin, who was also a warrantor, was heavily involved. No error has been shown in her Honour's conclusions that the claims for fraudulent misrepresentation and misleading or deceptive conduct were made out.

169 To conclude, Kain's written submissions commenced with a detailed examination of the duties of an appellate court on an appeal by way of rehearing. He drew upon those well-settled obligations in order to emphasise that where the conclusion of the primary judge depends on facts that are unchallenged, unanswered or are ostensibly reliable, or upon inferences drawn from those facts that can be equally re-determined by the appellate court without relevant disadvantage, the appellate court must not then shrink from giving effect to its own conclusion.[98] We accept that save for the possible effect of the manner in which Kain gave his evidence, to which there was no specific mention in the trial judge's reasons, this Court is in as good a position as the trial judge to decide the proper inferences to be drawn from the facts which were undisputed or which, having been disputed, were established by the findings of the trial judge. Kain relied particularly on the recently restated proposition in Jew v Holloway,[99] that credibility findings will not insulate the judge's reasons from proper analysis. The findings of the trial judge were said to be so 'glaringly improbable' and 'contrary to compelling inferences' that appellate interference is justified.[100] We do not agree that the state of the evidence was such that it was not open to the trial judge to reject the palpably false account given by Kain and infer that the appellants were parties to the conspiracy alleged.

170 The appellants both argue that the established facts upon which the trial judge relied did not preclude alternate innocent explanations. The appellant Kain also contended that the trial judge had erred in rejecting his explanation of his conduct. He submitted that his account of his actions could not be excluded as a likely explanation. As we have said, that submission is unsustainable.

171 At trial and during the initial part of the appeal, Neale advanced a different argument. He submitted that as he had not given evidence and had maintained his claim of privilege, he had proffered no explanation for his or Kain's conduct. Accordingly, he submitted before the trial judge and on appeal that there were a number of possible explanations, each of which was no less likely than the inference for which the respondents contended. The factual foundation for that submission was flawed. For the reasons we explain below, Neale had adopted and aligned himself to Kain's innocent explanation. Other theoretical innocent explanations could thus be more readily put aside as farfetched.

172 However, as Neale placed such emphasis upon these other explanations at trial and in his written case on appeal, we shall address these hypotheses and for that purpose put aside the explanation of Kain which he adopted. To explain the financial arrangement between Kain and Neale, Neale's counsel suggested that Kain might have been rewarding him for participation in another fraud. That submission has no evidentiary support. The other frauds pleaded did not commence until 2008. The only fraud disclosed by the evidence that occurred during the period 2002 to 2007 was the repair fraud. Accordingly those other frauds could not provide any explanation for the ongoing financial relationship between Kain and Neale. Any suggestion as to the existence of some other fraud, not pleaded, that might explain the financial arrangements amounts to pure speculation. Then it was said to the trial judge that Neale may have been rewarded for some assistance he might have provided CCC Old on cartage rates or lift-in and lift-out rates or for overall general assistance of some unspecified kind in terms of the relationship between MSCA and CCC Old.[101] Significantly, these explanations rested upon there being a longstanding and continuous breach of fiduciary duty by Neale and a receipt of secret commissions. No evidence was adduced at trial to show that such assistance had been provided over the period of the payments or that such assistance might have explained Neale's financial reward.

173 We note that each of these possibilities depends upon Kain having continued to play a role in the business of CCC Old during the period from 2002 to 2008. Had one of these possibilities been the explanation for the relationship, Neale, having determined to cross-examine Kain and advance an explanation, would have been obliged to challenge Kain's evidence that he had no involvement with CCC Old during that period. He would have been obliged to put to Kain that the financial arrangements with Neale related to assistance which Neale was providing in CCC Old's conduct of its business and that it was not a private arrangement involving the repayment of a debt unrelated to the business of CCC Old. Absent some suggestion to Kain that he played a role in the business of CCC Old and that Neale was being rewarded by Kain for his assistance in the affairs of CCC Old, these possibilities had no foundation whatsoever. They were also inconsistent with the submission advanced by Neale at trial and on appeal that Neale's role was so far removed from the day to day affairs of MSCA that it would not have been possible for him to have assisted CCC Old in dealing with MSCA.

174 Then it was also said at trial that the payments might have been consideration for unspecified assistance in the sale of the business of CCC Old to MSCA. But the financial arrangements were in place for a very long period before a sale of CCC Old to MSCA was apparently contemplated. Leaving aside the inconsistency of these possibilities with Neale's adoption of Kain's explanation at trial, it was well open to the trial judge to reject each of these possibilities as speculative and quite unlikely.

175 On appeal, it was now suggested that the financial rewards received by Neale may have reflected a genuine desire on the part of Kain and CCC Old to maintain the favour of Neale and thereby the custom of MSCA. It had not been submitted at trial that the payments may have been made to Neale so that he would look favourably upon CCC Old continuing to have the custom of MSCA. This possibility lacked any evidentiary basis. There was no evidence that MSCA ever contemplated removing its very long standing custom from CCC Old or that payments to Neale were necessary so that he would continue to favour CCC Old. Furthermore, such a hypothesis provides no explanation for the commissions paid to Neale following the sale of CCC Old. Another possibility was advanced on appeal that the payments to Dawn Trading reflected a private dealing between Kain and Neale entirely unrelated to the business of CCC Old in which Kain utilised income from CCC Old to make payments to Neale. There was no evidentiary basis for this possibility, other than Kain's untruthful explanation of his private dealing with Neale.

176 It is no answer to the question of whether something has been demonstrated as being more probable than not to say that there is another possibility; the determination of the question turns on consideration of the probabilities.[102] These possibilities were not raised or explored with any witness by Neale during the course of the evidence. As we have said, they lacked any evidentiary foundation. Each possibility was inconsistent with the account advanced by Kain and adopted by Neale that their arrangement had an innocent explanation. These possibilities were not only unlikely but, as Crennan J said in Lithgow City Council v Jackson, 'in establishing an inference of a greater degree of likelihood, it is only necessary to demonstrate that a competing inference is less likely, not that it is inherently improbable'.[103] Having regard to the evidence, we do not think any of these explanations constituted a realistic alternative hypothesis or one that was no less likely than the inference for which the respondents contended.

177 Ironically, once the trial judge rejected Kain's explanation, to which Neale had aligned himself, the evidence gave rise to the highly prominent hypothesis that there was a corrupt relationship between Kain and Neale during the entire pleaded period in which MSCA was the victim of the repair fraud. No other illegal conduct was alleged or disclosed by the evidence for almost the entirety of that period. Absent some other realistic explanation, it was well open to the judge to conclude that the payment of the secret commissions upon the sale of CCC Old to MSCA was a reward for the purchase price for CCC Old being grossly inflated by the revenue generated by the fraudulent repair invoices. There was no other identified impropriety in the sale of the business to CCC Old that might have explained the secret commissions paid to Neale. Once the appellants' explanation of their dealings was rejected, there was no evidence of some other private dealing between Kain and Neale that could explain their corrupt relationship spanning ten years and culminating in the commissions on sale.

178 For these reasons the appellants have failed to make out any of their grounds of appeal.

179 We now turn to additional matters, not taken into account by the trial judge, that provide additional support for her Honour's conclusions.

The inference arising where a party gives false evidence or provides a false explanation

180 There is of course a difference between the mere rejection of a person's account of events and a conclusion that a person has falsely denied facts and provided a deliberately false account.[104] Where a deliberately untruthful account is given by a party who is in a position to contradict another party's evidence or to rebut an adverse inference arising from that evidence, the adverse inference may be drawn with greater confidence. The inference may also be drawn that the party recognises that the truth will not assist him or her but will advance the other party's case[.]105105 Moriarty v London Chatham & Dover Railway Co (1870) LR 5 QB 314; John Henry Wigmore, Evidence in Trial at Common Law (Little, Brown and Company, Chadbourn rev, 1979) vol 2, 132-42, especially 141; Oran Park Motor Sport Pty Ltd v Fleissig [2002] NSWCA 371 (Hodgson JA, with whom Beazley JA and Einstein J agreed); Salvation Army (South Australian Property Trust) v Rundle [2008] NSWCA 347, [102] (McColl JA); Tobin v Ezekiel [2012] NSWCA 285; (2012) 83 NSWLR 757, 775 [60] (Meagher JA, with whom Basten and Campbell JJA agreed). See also J D Heydon, Cases and Materials on Evidence (Butterworths, 1975) 62: '[I]nferences may be drawn from any lying, fraud, fabrication or suppression of evidence, flight or interference with the course of justice by a party. Such conduct is seen as an implied admission of the weakness of his case.' Such reasoning rests in part upon the view that a party that gives a deliberately false account should not be in a better position than one who refrains from giving evidence at all.106106 Oran Park Motor Sport Pty Ltd v Fleissig [2002] NSWCA 371; Tobin v Ezekiel [2012] NSWCA 285; (2012) 83 NSWLR 757.

181 The following are examples of judges at first instance drawing an inference from the fact that a party has given a deliberately false account, that the party recognised that truth would not assist his case and treating the false statements as enabling the other party's contention to be more confidently accepted.[107] In Mayall Australia Pty Ltd v Ciba-Geigy (Aust) Ltd,[108] Byrne J did not doubt that, where one of the parties withheld evidence and adduced misleading and false evidence, it might be open to draw an inference of a consciousness that its case was unfounded. For the legitimacy of the inference contended for, reliance had been placed on passages from Wigmore on Evidence.[109] His Honour accepted that the inference was essentially a logical one based on experience and that such reasoning, sometimes utilised in a criminal trial, could not only be applicable in a civil case but might be employed with less reluctance given the lower standard of proof and the absence of the court's traditional concern for the rights of an accused. Similarly, Gillard J in Li v The Herald and Weekly Times[110] found that where a party had deliberately given false evidence in relation to an important issue in a proceeding, it was cogent evidence of an admission by that litigant that the truth would not assist its cause and indeed would damage it.[111]

182 The legitimacy of such inferential reasoning was recognised by Gibbs J in Steinberg v Federal Commissioner of Taxation.[112] He considered the inferences that could have been drawn by the trial judge where a witness's evidence was rejected. His Honour said:

The reasons given by Mason J for rejecting this evidence were completely convincing.

The question that then arises, however, is whether it was right to conclude, as his Honour did, that the shares in the company were bought to enable the purchasers to acquire the land for the main or dominant purpose of profit-making by sale. The fact that a witness is disbelieved does not prove the opposite of what he asserted: Scott Fell v Lloyd; Hobbs v Tinling (CT) & Co Ltd. It has sometimes been said that where the story of a witness is disbelieved, the result is simply that there is no evidence on the subject (Jack v Smail; Malzy v Eichholz; Ex parte Bear; Re Jones) but although this is no doubt true in many cases it is not correct as a universal proposition. There may be circumstances in which an inference can be drawn from the fact that the witness has told a false story, for example, that the truth would be harmful to him; and it is no doubt for this reason that false statements by an accused person may sometimes be regarded as corroboration of other evidence given in a criminal case: Eade v The King; Tripodi v The Queen.[113]

183 The majority of the High Court in their joint reasons in Kuhl v Zurich Financial Services Australia Ltd[114] approved the drawing of a particular adverse inference against a party who gives or procures false evidence. They said:

The rule in Jones v Dunkel permits an inference, not that evidence not called by a party would have been adverse to the party, but that it would not have assisted the party. But the conclusion by the trial judge that the plaintiff - a party-witness - deliberately withheld evidence reflected a stronger reaction. It operated as a finding that there had been an admission. It could be inferred that the evidence was withheld, in breach of the witness's duty to tell the whole truth in answer to the question, because the plaintiff was conscious that success in the litigation would be rendered impossible or less likely if the material withheld were revealed. Depending on the circumstances, when a party lies, or destroys or conceals evidence, or attempts to destroy or conceal evidence, or suborns witnesses, or calls testimony known to be false, or fails to comply with court orders for the production of evidence (like subpoenas or orders to answer interrogatories), or misleads persons in authority about who the party is, or flees, the conduct can be variously described as an implied admission or circumstantial evidence permitting an adverse inference. The position must be the same where there is a failure of a party-witness to comply with the duty of a witness to tell the whole truth. There is a reason why failure to call a witness or failure to ask a particular question of a witness supports the possible inference that the witness's evidence would not have assisted the party, while failure of a party-witness to tell the whole truth may support an inference that the party suppressed evidence which would have been damaging to the party-witness. A litigant has no duty to call particular witnesses or to procure that any witnesses called by that litigant are asked particular questions. A litigant who enters the witness box, on the other hand, is under a positive duty to tell the whole truth in answer to the questions asked.[115]

184 It has also been recognised at an intermediate appellate level that the fact that a witness has concealed or misrepresented the truth about some matter may indicate a consciousness that the truth in respect of that matter would not have assisted his or her case. As Meagher JA stated in Tobin v Ezekiel, 'depending upon the subject matter of false or fabricated evidence and its significance in a case, such an inference may be available in relation to a specific fact'.[116] Similarly in Palavi v Queensland Newspapers Pty Ltd,[117] a case relating to the destruction of evidence, Beazley JA (with whom Tobias AJA agreed) said:

In Marsden v Amalgamated Television Services, an allegation was made that the plaintiff had attempted to suborn witnesses, including by attempting to induce them to give false evidence. Levine J referred to the following statement in Wigmore on Evidence, vol 2, 3rd ed (1940), Boston, Little, Brown and Company, par 278:

It has always been understood - the inference, indeed, is one of the simplest in human experience - that a party's falsehood or other fraud in the preparation and presentation of his cause, his fabrication or suppression of evidence by bribery or spoliation, and all similar conduct, is receivable against him as an indication of his consciousness that his case is a weak or unfounded one; and from that consciousness may be inferred the fact itself of the cause's lack of truth and merit. The inference thus does not apply itself necessarily to any specific fact in the cause, but operates, indefinitely though strongly, against the whole mass of alleged facts constituting his cause.[118]

Adverse inference against Kain - false evidence

185 One must always consider whether the explanation for a carefully crafted false explanation and a denial of proved facts lies in some hypothesis other than the case advanced by the opposite party. But as this case illustrates, the inference may become a prominent one that the explanation for the concealment of the truth lay in the recognition that the truth did not assist the party offering the false account but assisted the opposite party's case. In the case of circumstantial evidence, it enables the inference advanced by the opposite party to be more readily drawn. Thus Kain's counsel conceded during oral submissions on the appeal that Jones v Dunkel reasoning was available in the absence of an explanation or if any explanation offered was not accepted. He acknowledged that the trial judge could then more readily draw the inference emerging from the respondents' case.

186 Although the trial judge expressed herself in restrained terms, she was clearly satisfied that Kain falsely sought to distance himself from his intense involvement in CCC Old throughout the period from 2001 to 2008, that he falsely denied any involvement in the sale of CCC Old's business, and that he falsely denied that secret commissions were paid to Neale. On each of these issues Kain sought to contradict the facts which emerged from the documentary evidence. The trial judge rejected his factual explanation for the payments from Ackland Forge to Dawn Trading and his disclaimer of any knowledge of the existence of the repair fraud between 2000 and 2008. Based upon those findings, it would have been open to her Honour to draw an adverse inference against Kain from the fact that he gave materially false accounts in each of these areas.

187 In our opinion, Kain's dissimulation permitted the inferential conclusion that Kain was a participant in the repair fraud, drawn by the trial judge, to be drawn with even greater confidence. It also permitted the inference to be drawn that he had advanced a false account on these matters conscious that a truthful account would not have assisted him in rebutting the respondents' claims. For reasons that follow, the same reasoning may be applied to the appellant Neale.

Adverse inferences available to be drawn against Neale

188 As we have mentioned, and as we explain below, though Neale did not give evidence at trial, by the actions of his counsel, he aligned himself with Kain's account. Even if he had effectively claimed the privilege against self-incrimination (which, as we shall describe, he did not), by so advancing a positive case he waived that privilege. Neale's adoption of Kain's untruthful explanation of their private dealings enabled the inference to be drawn that Neale had also concealed the truth because he recognised that it would not assist his case. It permits the conclusion to be reached with greater confidence that he was a participant in the repair fraud.

Neale's alignment with the explanation provided by Kain

189 Neale's counsel put to Ellis at trial that he had been told by fellow directors that Neale had explained that Kain was helping him get family money out of India. Senior counsel for the respondents objected to that question, as the explanation had not been pleaded and was yet raising a positive defence. Counsel for Neale responded, 'I'm not raising a positive defence, and in any event it's a matter about which there is privilege'. The question was allowed and he proceeded further:

You operate in a worldwide environment in your business?---Correct.

And you know that many countries in the world have currency controls?---Correct.

One of them is India?---I don't know the specific currency controls for India and I don't know the history of currency controls for India. But yes, I know that there are controls.

And you also know from Mr Clark and from Captain Vordega that Mr Neale's explanation is that Mr Chong was assisting him in getting family money out from India?---I'm aware that there was some conversations about that. Correct.

190 It is not without significance that the explanation advanced by Neale to Mr Clark and Captain Vordega contained no suggestion that Kain was repaying Neale money which had been lent to Kain.

191 Then, in cross-examination of Kain, counsel for Neale asked him whether he had introduced Mr Yip to Neale. He said he had and was then asked to explain the purpose for which he had made that introduction. Kain said that Neale needed a trustee to keep his money in Singapore because he had brought money there from India. Neale's counsel did not challenge any of Kain's account concerning the borrowing of funds from Neale in Singapore or the arrangement to repay the money in Australia. Neale's counsel then asked Kain to elaborate on the process he had followed in preparing invoices of Dawn Trading to Ackland Forge. He again explained the alleged process, including the fact that it was left to him to decide the amount of each invoice. Neale's counsel challenged no part of Kain's evidence, nor did he provide Kain with an opportunity to respond to the criticisms set out below which he later made of Kain's conduct in his closing address.

192 Counsel for Neale submitted that Kain had claimed the Dawn Trading invoices to be tax invoices for which he was entitled to a deduction, notwithstanding that they were not for 'work performed' and were, according to Kain, repayments of a loan. He also submitted that the description on the Ackland Forge invoices of a 'discount' on MSC payments did not describe 'a genuine expense of CCC Old'. Counsel for Neale submitted that to treat the Dawn Trading invoices as tax invoices and claim deductions was wrong. In responding to the trial judge's inquiry as to why there were no contemporaneous records of the arrangement between Kain and Neale, counsel for Neale submitted that Kain was prepared to take any advantage, proper or improper, in relation to his taxation affairs that he thought he could and was the sort of person who would have destroyed any tax records as soon as he was able to in order to avoid leaving a trail of evidence which would enable his affairs to be challenged. We note that the allegations that the descriptions on the Ackland Forge and Dawn Trading invoices were false and that Kain had engaged in a long-standing tax fraud had not been put to Kain.

193 Neale's counsel in final submissions explained his cross-examination of Ellis in these terms:

[I]t introduced a subject matter to preserve the possibility that at some point evidence might be given about it and I didn't want it to be said it was a recent invention. But ultimately no evidence was given about it. I haven't chosen to go into evidence about any of this and there's been no waiver ...

194 He accepted that Kain's evidence was admissible against Neale, but submitted that it should be given little weight against Neale.

195 Initially on appeal counsel for Neale disputed that Neale bound himself to Kain's explanation as Neale had given no evidence and had taken the privilege against self-incrimination. Counsel submitted that he was not permitted, and nor was it necessary, to challenge Kain's account, as Neale was not intending to give evidence of an affirmative different explanation. Counsel acknowledged that he invited the trial judge to proceed upon the basis that there was no explanation from Neale. It appears that the trial judge accepted Neale's submissions and proceeded to consider the hypothetical explanations for the conduct of Kain and Neale advanced by Neale's counsel on the basis that Neale, in reliance on his claim of privilege, had provided no explanation.

196 However, in further oral argument on appeal counsel conceded that he had advanced Neale's explanation for these payments in his cross-examination of Ellis, and that the explanation in 'broad terms' was not inconsistent with Kain's evidence. Counsel for Neale also acknowledged that it was open to this Court to consider whether Neale had tied himself to Kain's account even though the trial judge had not been invited to consider that possibility.

197 On the second day of the hearing of the appeal, counsel for Neale submitted that the cross-examination of Ellis and Kain was consistent and was 'part of our case'. He briefly continued to submit that he could not challenge Kain as his client was claiming privilege and was not intending to give affirmative evidence. However, after further reflection, senior counsel abandoned that position. He conceded that there had been nothing to preclude him from suggesting a particular case in cross-examination even if his client claimed privilege. He made the significant submission that he accepted that Neale had aligned himself with Kain's account. He finally submitted before us that it had not been suggested at trial, nor was it now being suggested, that Kain's account was wrong. That does not accurately reflect his initial position on appeal or his case at trial which was to distance himself from Kain's account and list other possible explanations for their relationship. He had submitted to the trial judge in closing that although Kain's evidence was admissible against him, it should be given little weight.

198 As we have described above, both at trial and initially on appeal counsel for Neale submitted that as there was no defence advanced by Neale, there were multiple possible explanations for the payments from Ackland Forge to Dawn Trading other than that proffered by Kain that were left open. The submission made at trial failed to acknowledge that which was finally conceded on appeal, namely that Neale had aligned himself with Kain's account. It is significant that by the time of his closing address, Neale showed no inclination to acknowledge before the trial judge that he had embraced Kain's explanation during the trial. Rather, in oral submissions his counsel chose to rely upon explanations for the circumstantial evidence which were wholly inconsistent with the explanation which Kain had given. Beyond serious criticism of parts of Kain's conduct and imputations as to his credibility, none of which had been put to Kain in cross-examination by Neale, Kain's explanation for the dealings between Ackland Forge and Dawn Trading was not the subject of submissions. Neale did not invite the trial judge to act upon Kain's account. Rather in oral submissions the trial judge was asked to consider other possible hypotheses for their relationship.

199 There are a number of consequences of the manner in which it is now accepted that Neale's case was presented.

200 Firstly, the manner in which the defence of Neale was conducted constituted the advancement of a positive defence inconsistent with the maintenance of the privilege, assuming that it had been validly claimed. It may therefore be characterised as a waiver of his privilege. As observed in Reid v Howard,[119] privilege against self-incrimination may be waived. Fairness is central to the question whether a party's conduct should be construed as waiving their privilege.[120] If a party by his or her conduct expressly or impliedly discloses or makes an assertion about matters to which privilege would apply, fairness to the other party may dictate that the party's conduct should be taken as a waiver of any privilege attaching to that matter. In Mann v Carnell,[121] Gleeson CJ, Gaudron, Gummow and Callinan JJ stated, in the context of legal professional privilege, that it is 'inconsistency ... between the conduct of the client and maintenance of the confidentiality' which effects a waiver of the privilege.[122] The making of express or implied assertions about the content of the subject matter of the privilege while at the same time seeking to maintain the privilege gives rise to the inconsistency.[123] Had Neale wished to preserve the benefit of his claim of privilege, and in due course object to answering particular questions, his counsel would have been entitled to inform the judge that he would undertake no cross-examination of witnesses that involved advancing any affirmative case. That he did not do but rather, by the means we have referred to, sought to place his affirmative case before the trial judge. His reliance upon the privilege was impliedly waived.

Inference to be drawn from the application of the rule in Browne v Dunn

201 Second, contrary to the closing submissions of Neale at trial to the effect that no explanation was forthcoming from Neale, the conduct with which we are here concerned involved an adoption of Kain's account. That was ultimately acknowledged on the hearing of the appeal. Having regard to the rule in Browne v Dunn,[124] we would have reached that conclusion even if that concession had not been made. As Lord Herschell said in Browne v Dunn, it is essential to the proper conduct of a case that, where it is intended to suggest that a witness is not speaking the truth, some questions must be put in cross-examination to show that the imputation is intended to be made.[125] As Hunt J stated in Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation,[126] it is necessary to put the nature of the case upon which it is proposed to rely in contradiction of a witness's evidence, particularly where the cross-examiner's case 'relies upon inferences to be drawn from other evidence in the proceedings'.[127] In Rees v Bailey Aluminium Products Pty Ltd,[128] this Court said that the cross-examiner must confront the witness whose evidence is to be challenged. The rule rests upon notions of fairness and is designed to give the witness and the party calling that witness an opportunity to meet that challenge. The rule facilitates the tribunal's assessment of the reliability and accuracy of the witness. If the conduct of a witness is to be the subject of criticism, the rule dictates that the nature of the allegations be put to the witness.[129]

202 Counsel's submission at trial and initially on appeal misconceived the basis of the rule. Once counsel for Neale cross-examined Kain, he was obliged to challenge such parts of Kain's evidence that were material to the issues in the case and which were disputed. If there were matters touching upon Kain's explanation of the relationship with Neale that were disputed, counsel was obliged to identify them. A particular inference could be drawn from the absence of any challenge to Kain's explanation and the further cross-examination which invited Kain to elaborate on his explanation.

203 In the absence of such a challenge, the trial judge was entitled to treat Neale as taking no issue with the accuracy of Kain's account. Further, the terms in which Kain was cross-examined exposed a substantial part of Neale's version of events upon which he had instructed his counsel.[130] In R v MAP,[131] Keane JA said:

It is well established that the terms in which a party's counsel cross-examines a witness for the opposite side may be taken by the jury to reveal the version of events with which the party has instructed that party's counsel. In R v Robinson, Dunn J, with whom Wanstall ACJ and Douglas J agreed, said:

... cross-examining counsel is concerned with primary facts. His instructions are as to primary facts, and it is his obligation - a strict obligation - that, if he 'puts' occurrences to witnesses, he 'put' them in accordance with his instructions. This being so, the instructions may be inferred from the questions. If there is a discrepancy in a significant particular (I do not mean a minor or explicable discrepancy, for whilst perfection in communication between client and legal adviser is aimed at, it is not always achieved) between questions based on instructions as inferred and the evidence of the person from whom the instructions must be taken to have come, it seems to me to be quite permissable [sic] for a judge to ask the jury to have regard to the discrepancy in evaluating the evidence.

The truth is, I think, that whilst in a strict sense questions are not evidence, questions asked (and indeed questions unasked) form part of the conduct of his client's case by counsel. The conduct of the case is something from which the jury may be asked to draw inferences, so long as due regard is had to the requirement of fairness and the possibility of human error (especially in relation to peripheral matters).[132]

204 Even without such concessions as were made by his counsel on appeal, the inference to be drawn from the application of the rule in Browne v Dunne enables us to conclude that the thrust of Kain's false account was adopted by Neale. For the reasons we have stated with respect to Kain, an adverse inference could thus be drawn from Neale's advancement of a false explanation for his conduct. Even if the claim of privilege had been properly taken and had not been waived, having aligned himself with Kain's explanation, it may also be inferred that Neale could provide no explanation that would assist him in answering the respondents' case. It permitted the inference to be drawn with even greater confidence that Neale was a party to the conspiracy pleaded.

205 If, contrary to our conclusion, Neale did not align himself with Kain's defence, we should address the arguments advanced by Neale at trial, many of which were repeated in Neale's written case on appeal. Neale contended that, based upon his claim of privilege, he had advanced no positive defence. Thus no adverse inference could be drawn from his failure to give evidence. The respondents submitted at trial and again on appeal that the rule in Jones v Dunkel should be engaged in the case of Neale as he had failed to give evidence. For the reasons that follow, Neale's submission is unsustainable even if he had not aligned himself with Kain's account in the manner discussed above.

206 Alderson B recognised that a failure by a party in civil proceedings to deny a fact which it was in their power to deny 'gives a colour to the other evidence against him'.[133] In Bridge v The Queen,[134] Windeyer J quoted what Frankfurter J said in Adamson v California:[135]

Sensible and just-minded men, in important affairs of life, deem it significant that a man remains silent when confronted with serious and responsible evidence against himself which it is within his power to contradict.[136]

207 The inference, now usually described as the rule in Jones v Dunkel,[137] is a particular application of Lord Mansfield CJ's maxim 'that all evidence is to be weighed according to the proof which it was in the power of one side to have produced and in the power of the other to have contradicted'.[138] The failure of a party to give evidence in his or her own defence may give rise to an inference that his or her evidence would not assist him or her in the case.[139] As Windeyer J put it in Jones v Dunkel:[140]

But silence may amount to much more than an acquiescence in the primary facts. It may be eloquent in support of an inference to be drawn from those facts.[141]

208 The rule does not enable the absence of a witness to make up any deficiency of evidence. It will not support an adverse inference unless the evidence otherwise provides a basis on which that unfavourable inference can be drawn.[142] But where evidence has been left uncontradicted, any inference favourable to a party for which there was ground in the evidence might be more confidently drawn when a person, presumably able to put the true complexion on the facts relied on as the ground for the inference, has not been called as a witness and the evidence provides no sufficient explanation of his or her absence.[143] The reasoning involves the treatment of the failure to adduce evidence as a reason for increasing the weight of the proofs of the opposite party or reducing the weight of the proofs of the party in default.[144]

209 In RPS v The Queen,[145] Gaudron ACJ, Gummow, Kirby and Hayne JJ quoted the passage from the judgment of Menzies J in Jones v Dunkel in which he said:

[W]here an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference.[146]

In a civil trial there will very often be a reasonable expectation that a party would give or call relevant evidence. It will, therefore, be open in such a case to conclude that the failure of a party (or someone in that party's camp) to give evidence leads rationally to an inference that the evidence of that party or witness would not help the party's case.[147]

211 That passage was quoted with approval by the majority in Azzopardi v The Queen.[148] In Weissensteiner v The Queen,[149] Mason CJ, Deane and Dawson JJ said:

We have quoted rather more extensively from the cases than would otherwise be necessary in order to show that it has never really been doubted that when a party to litigation fails to accept an opportunity to place before the court evidence of facts within his or her knowledge which, if they exist at all, would explain or contradict the evidence against that party, the court may more readily accept that evidence. It is not just because uncontradicted evidence is easier or safer to accept than contradicted evidence. That is almost a truism. It is because doubts about the reliability of witnesses or about the inferences to be drawn from the evidence may be more readily discounted in the absence of contradictory evidence from a party who might be expected to give or call it. In particular, in a criminal trial, hypotheses consistent with innocence may cease to be rational or reasonable in the absence of evidence to support them when that evidence, if it exists at all, must be within the knowledge of the accused.[150]

212 In Dilosa v Latec Finance Pty Ltd [No 2],[151] Street J recognised that where the absent witness is a party then considerable importance may well attach to the inference that nothing which the party could say would assist his or her case. As Gleeson CJ said in Azzopardi,[152] the judgments in Weissensteiner recognise that the inference that may be drawn from the silence of a party to civil litigation may be significant.[153] Santow J drew such an inference in ASIC v Adler[154] because the parties who were available and not called had a personal involvement in the transactions in question.[155] Where a party elects not to give evidence 'the court is entitled to be bold'.[156] As Heydon, Crennan and Bell JJ stated in Kuhl v Zurich Financial Services Australia Ltd,[157] the rule has a particular application where it is the party which is the uncalled witness and may permit the court to draw, with greater confidence, any inference unfavourable to the party that failed to call the witness, if that uncalled witness appears to be in a position to cast light on whether the inference should be drawn.[158]

Neale's contention at trial that he had properly claimed privilege so that the rule in Jones v Dunkel could not apply

213 Neale submitted before the trial judge that she had accepted the claim of privilege as pleaded[159] in which he said that he 'claims and reserves his right to claim penalty privilege and self-incrimination privilege'. Accordingly he submitted that the rule in Jones v Dunkel could not apply. The trial judge, having reached the conclusion that the respondents had established that the appellants were parties to the conspiracy, did not address the respondents' submission that the privilege had not been properly claimed by Neale. She found it unnecessary to consider whether the conclusion she had reached might be supported by an inference to be drawn from the failure of Neale to give evidence.[160]

214 First, we should make reference to the respondents' submission at trial and on appeal that a Jones v Dunkel inference could have been drawn even if the privilege had been properly claimed.

215 Since at least Wentworth v Lloyd[161] it has been recognised that a court cannot draw adverse inferences from the claim of privilege. In R v Roberts,[162] Batt JA (with whom Buchanan and Chernov JJA agreed) stated that:

[I]t is not permissible to draw any inference adverse to a witness from the reliance of the witness on a claim of privilege against self-incrimination. The credit of the witness is not impugned by the claiming of the privilege nor may any inference be drawn adverse to the case of the party calling the witness.[163]

216 Wentworth v Lloyd is also treated as early authority, in some respects, against applying Armory v Delamirie[164] and hence the similar principle in Jones v Dunkel in such a case. But care is required in identifying the inferential reasoning that is precluded. Thus in Standard Chartered Bank of Australia Ltd v Antico,[165] Hodgson J observed:

In Wentworth v Lloyd itself, a claim of privilege was made, and the Master of the Rolls, in deciding the case, stated that if the client chose to adopt this course he must be subject to the rule in Armory v Delamirie, where keeping back of evidence must be taken most strongly against the person who does so; and the Master of the Rolls said that legal professional privilege was different in this respect from privilege against self- incrimination. The House of Lords dismissed the appeal from the Master of the Rolls on the merits, but Lord Chelmsford, while concurring that the appeal should be dismissed on the merits, very forcefully disapproved of the Master of the Rolls' application of Armory v Delamirie. Since then the case has been taken as authority against the drawing of any adverse inference from the claim of legal professional privilege, and is also specifically authority against applying Armory v Delamirie or the similar principle in Jones v Dunkel to such a case. However, it seems to me clear that if there is other evidence from which the court may draw an inference as to the content of legal advice (or as to the commission of an offence in the case of the privilege against self-incrimination), the court may be able to draw that inference on the balance of probabilities in the absence of contrary evidence from the person claiming the privilege. What the court cannot do is to gain extra assistance in drawing that inference from the Armory v Delamirie or Jones v Dunkel principle. A fortiori, the court cannot draw an adverse conclusion if there is no other evidence supporting the conclusion. Most particularly, the court must not draw any adverse inference sub silentio without referring to it.[166]

217 Neale had submitted before the trial judge that the process of inferential reasoning in Jones v Dunkel is not available where the absence of evidence is the result of a claim of privilege against self-incrimination. That submission was implicitly maintained on appeal, at least until it was conceded that he had advanced a positive case by aligning himself with Kain. Referring to paragraphs from the eighth Australian edition of Cross on Evidence[167] and the authority of Pappas v New World Oil Developments[168] and Dolan v Australian & Overseas Telecommunications Corporation,[169] Neale contended that the process of inferential reasoning in Jones v Dunkel is not available where the absence of evidence is the result of a claim of privilege against self-incrimination. For the following reasons we have serious reservations as to the correctness of this contention but find it unnecessary to finally resolve that question.

218 Neither of the cases cited by Neale before the trial judge supports his contention. They support only the uncontroversial proposition that no adverse inference could be drawn from the fact that privilege is claimed. In Pappas v New World Oil Developments,[170] Lee J referred to counsel's submission that the failure of Pappas to answer the questions then put to him in cross-examination and the claim of privilege against self-incrimination provided grounds from which an inference may be drawn adverse to the credit of Pappas. In rejecting that submission, Lee J agreed with the conclusion of Spender J in Dolan v Australian and Overseas Telecommunications Corporation[171] (upon which Neale here also relies) that no adverse inference may be drawn from the refusal of a witness to answer a question on the ground that the answer may, or would, tend to incriminate the witness. But we are not presently concerned with the application of the principle that no adverse inference as to the credit of a witness may be drawn as a result of their exercise of the privilege to refuse to answer questions, but with the quite distinct issue of the inferences that may properly be drawn as result of the absence of evidence from that witness. Lee J recognised that distinction as he said:

Of course, the failure to adduce evidence on central issues on which the witness may be expected to give evidence will permit a court to be satisfied that inferences adverse to the case of that party may be properly drawn notwithstanding that the ground for refusal to provide the evidence may be rooted in the privilege against self incrimination.[172]

219 Warren J in ASIC v ABC Fund Managers Ltd,[173] citing Pappas v New World Oil Developments Pty Limited[174] and an extracurial article by Justice Young,[175] drew this precise distinction between the prohibition against drawing an adverse inference from the claim of privilege and adverse inferences that may arise from the absence of evidence which a party or witness could be expected to give.[176]

220 The passage from Cross on Evidence at [1215] to which Neale referred before the trial judge states that the rule 'has no application if the failure is explained, for example by ... refusal to waive privilege'.[177] Payne v Parker[178] is cited for this point, in which Glass JA (in dissent) said:

The third condition [for a Jones v Dunkel inference to be made] is satisfied if no explanation is offered for the absence of the witness, or the tribunal thinks that the explanation given is unsatisfactory. The explanation tendered may be that the witness is ill, overseas, dead or refuses to waive his privilege.[179]

221 It is assumed by the authors in Cross on Evidence that the reference by Glass JA to a refusal to 'waive his privilege' was intended to include the privilege against self-incrimination as well as legal professional privilege. Whether or not that be correct, there is now further authority against the view that a claim of privilege against self-incrimination provides a sufficient basis to exclude Jones v Dunkel reasoning where a party or witness fails to give evidence.

222 In Rowell v Larter,[180] Young J rejected the contention that a Jones v Dunkel inference should not be drawn:

The plaintiff did not give evidence. One can well understand why he did not as he would not be at all anxious to expose himself to cross-examination by counsel for the prosecutor because that might prejudice him in the ... [related criminal] proceedings. Senior counsel for the plaintiff has urged on me that I should not draw any adverse inference to the plaintiff because he did not give evidence because the reason for his non-appearance was obvious. I do not accept this submission.[181]

223 Croft J in Dale v Clayton Utz (a firm) [No 2][182] accepted that Rowell v Larter stands for the proposition that a plaintiff who elects not to give evidence in a proceeding cannot point to the privilege as the basis for escaping the drawing of an adverse inference from his or her failure to give evidence.

224 The rule in Jones v Dunkel has been applied to civil penalty proceedings in Australian Competition and Consumer Commission v Universal Music Australia Pty Ltd[183] and Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission,[184] notwithstanding the obvious risk of self-incrimination. In ASIC v Rich,[185] Austin J concluded that the principle in Jones v Dunkel is applicable against either party to civil penalty proceedings.[186]

225 In ASIC v Adler,[187] rulings by Santow J were made on the footing that the privilege against exposure to penalty was attracted through ASIC's seeking of pecuniary penalties and that the privileges did not prevent the application of the rule in Jones v Dunkel, the rule and privilege both falling within the rules of evidence and procedure for civil matters. On appeal,[188] Giles JA, with whom Mason P and Beazley JA agreed, concluded that it had been open to the trial judge to apply the inferential reasoning in Jones v Dunkel. Giles JA said:

In the end the argument must be that it would not be consistent with this stance against self-incrimination for an inference adverse to the person from whom a civil penalty is claimed to be drawn because of the failure of the person to give evidence. That reasoning did not find favour in RPS v The Queen, in which the 'right to silence' was not thought to be a useful basis for reasoning (at [22]). To say that a person can not be forced to give evidence against himself, by providing discovery or answering interrogatories or, in a criminal context, making a statement to the police, says little when it comes to the giving of evidence in the person's own case. In ordinary civil proceedings the defendant can not be forced to give evidence in his own case. Civil penalty proceedings are no different in that respect. In my opinion, it was open for Jones v Dunkel inferences to be drawn against Mr Adler, Adler Corporation and Mr Williams in these proceedings.[189]

226 In Council of the NSW Bar Association v Power,[190] Hodgson JA (with whom Beazley and McColl JJA agreed) stated:

If this had been a criminal trial, then in my opinion what the High Court said in Azzopardi would have meant that a jury could have been told that inferences from proved facts could more safely be drawn because the opponent elected not to give any explanation in terms of additional facts peculiarly within his knowledge or any evidence of such facts. In my opinion, if such Jones v Dunkel reasoning is available to a jury in a criminal trial, it must a fortiori be available to a court in civil proceedings such as the present. That would be so, even if these civil proceedings are regarded as proceedings for a civil penalty. I note that a similar view was expressed by Hill J in Australian Competition and Consumer Commission v Universal Music Australia Pty Ltd at [33].

It could be argued that this approach only deals with the right to silence in relation to proceedings actually under way, and that the opponent had another right against self-incrimination in respect of any additional offence with which he might be charged; and since his failure to give evidence was supported by that right, it could not be relied on to assist any inference against him.

However, that topic is dealt with by s 128 of the Evidence Act 1995 ...

In my opinion, the opponent cannot be in any better position, as regards a privilege against self-incrimination in other proceedings (or any inference that might be drawn from reliance on that privilege), than if he had given evidence before this Court and claimed the privilege as a basis for not answering particular questions; and in my opinion the content of s 128 (providing for the protection of a certificate with the effect stated in s 128(7)) is inconsistent with a view that a person not giving evidence because of a concern about self-incrimination in respect of another matter is in any better position, as regards inferences that may be drawn from failure to give evidence, than an accused not giving evidence at a trial, as discussed in Azzopardi.[191]

227 In ASIC v Fortescue Metals Group Ltd [No 5],[192] Gilmour J stated that nothing had been said by the High Court in RPS v The Queen,[193] Azzopardi[194] or Dyer v The Queen[195] that would extend the general proscription in criminal trials against engaging in inferential Jones v Dunkel reasoning to civil penalty proceedings.[196] Gilmour J concluded that despite a claim of privilege against self-incrimination, he would not have been precluded from drawing a Jones v Dunkel inference against the witness who had failed to give evidence.

228 Finally, in Hudak v Adams,[197] Rein J discussed the application of the rule in Jones v Dunkel where the explanation of the party for not giving evidence was that they were under investigation for the matter in dispute between the parties:

In my view it would be surprising for a defendant against whom a claim of fraud is brought to be able to rely on a concern that criminal charges will be laid as a reason why an adverse inference could not be drawn if he fails to give evidence. First, because if his evidence would, if accepted, support his case that what had been done had been effected with the complete concurrence of the plaintiff, he would have no concern that he would thereby incriminate himself on a charge of obtaining property from the plaintiff by fraud. Second, because it strikes me as inherently unfair that a party who wants to put the plaintiff to proof can decline to give evidence and do so without an adverse inference being drawn_._ If criminal proceedings are feared, a defendant may take the chance that the plaintiff will not be able to adduce sufficient evidence to establish his case, or may admit liability or not defend the proceedings. The third reason is that even in criminal cases there is, in exceptional and rare circumstances, room for a Jones v Dunkel inference: see Azzopardi v The Queen and Comptroller-General of Customs v Parker in which Simpson J explains that where the accused who does not give evidence and has a personal involvement in the transaction in question, a Jones v Dunkel inference can be drawn.

I do not need to resolve this interesting question.[198]

229 Our tentative view is that the privilege, if properly claimed pursuant to s 128, would not have precluded the application of the rule in Jones v Dunkel to a party or witness who fails to give evidence. But as it is clear that Neale did not effectively claim the privilege, we find it unnecessary to express a concluded opinion on this question.

230 On appeal, the respondents in written and oral submissions maintained their contention advanced at trial that the privilege had not been properly claimed by Neale so that the rule in Jones v Dunkel applied as he fell to be treated as a party who had failed to give any contradictory evidence.

231 The common law has long recognised the privilege of a witness to decline to give evidence if the giving of such evidence may incriminate him or her in an offence. The privilege is not merely a rule of evidence but is a fundamental and substantive common law right.[199] The rationale for the privilege is that an applicant must prove its own case and should not get any assistance from the respondent in proving its case. This statement also applies to the privilege against self-exposure to a penalty.[200]

232 Neale in his defence pleaded in respect of the respondents' statement of claim that he 'claims and reserves his right to claim penalty privilege and self incrimination privilege' and otherwise pleaded a non-responsive defence. In that context he sought to be excused from compliance with various requirements of the Supreme Court (General Civil Procedure) Rules 2005[201] to the extent that compliance with those Rules may have had a tendency to expose him directly or indirectly to a civil penalty or a criminal proceeding in respect of the subject matter of this proceeding.

233 During the interlocutory stages of the proceeding the trial judge ruled on an application to strike out the pleaded defence that the appellants were entitled to claim privilege against self-incrimination and penalty privilege and were not required to plead a responsive defence.[202] When the time came for Neale to advise the trial judge as to the course he would follow, Neale, through his counsel, asserted a claim of privilege from the bar table as the reason for declining to give evidence. The trial judge gave no indication that the privilege against self-incrimination in testifying at the trial could be made in that manner. Thus the respondents submitted in closing that no proper claim for privilege had been made and invited the judge to reason in accordance with Jones v Dunkel.

Having reached the conclusions that I have about the inferences to be drawn, it is not necessary to consider whether those inferences might more readily be drawn because of the failure of Mr Neale to give evidence in circumstances where he had claimed privilege against self-incrimination in his defence.[203]

235 The trial judge made no other reference in her reasons to Neale's claim of privilege and made no finding as to whether the privilege had been properly claimed.

236 The claim of privilege against self-incrimination must be claimed by the witness under oath or affirmation. The process by which such a claim is made is now prescribed by s 128 of the Evidence Act 2008. Its object is to strike a balance between upholding an objection by the witness to giving particular evidence on the ground that the evidence may tend to prove that he or she has committed an offence against Australian law, and in some cases requiring the witness to give the evidence but in circumstances where the court gives the witness a certificate in respect of the evidence.[204] The language and scheme of s 128 indicate that it only operates in a hearing context where there is a witness who objects to giving particular evidence and that the common law, and not s 128, governs the privilege against self-incrimination at the pre-trial stage and with respect to pre-trial processes.[205] The privilege under s 128 is only enlivened if by objection a witness demonstrates that they are unwilling to give the evidence where otherwise required to do so, on the ground that the evidence would tend to incriminate them.[206] As was said by Clarke JA in Accident Insurance Mutual Holdings Ltd v McFadden:[207]

Whether the answer may tend to incriminate the witness is a point which the court will determine, under all the circumstances of the case, as soon as the protection is claimed. It will do so without requiring the witness fully to explain how the effect would be produced, for if this were necessary, the protection which the rule is designed to afford to the witness would at once be annihilated: Taylor, (at 1247). However, the mere statement by a witness that he believes the answer will tend to incriminate him will not suffice to protect him from answering when the other circumstances of the case are such as to induce the judge to believe that the answer would not really have that tendency (at 1247-1248).[208]

237 Section 128 only applies if a witness objects to giving particular evidence on the ground of privilege (s 128(1)). If the court finds there are reasonable grounds for the objection, it is not to require that the evidence be given and is to inform the witness that he or she need not give the evidence but that if he or she does so a certificate will be given under the section (s 128(2)). If the witness gives the evidence, the court is to cause the giving of a certificate (s 128(3)), the effect of which is that the evidence and information obtained as a direct or indirect consequence of the witness giving the evidence cannot be used against him or her (s 128(7)). In addition, however, where the court is satisfied that the evidence may tend to prove the commission of an offence against Australian law but does not tend to prove the commission of an offence against a foreign law, and that the interests of justice require that the witness give the evidence, the court may require that the witness give the evidence (s 128(5)) and is to cause the giving of a certificate (s 128(6)).[209]

238 A failure by a witness to enter the witness box and testify at all is not the same as objecting to the giving of particular evidence. As Neale declined to enter the witness box there was no legal compulsion upon him to give any evidence, let alone 'particular evidence'. The respondents' submission in closing address at trial that Neale had not, in the manner required by s 128(1), objected to giving particular evidence and could not therefore call in aid the privilege[210] was on proper analysis correct. It is not sufficient for counsel to take the objection.[211] Neale had neither invoked the privilege nor received the benefit of any ruling or certification that relieved him from giving relevant evidence.

239 The privilege was not properly claimed. Looking at the argument before the trial judge that Neale had not advanced any positive defence, Neale was to be viewed as a party who had left uncontradicted the unfavourable inference which the trial judge drew from the undisputed facts and her findings. Even if the concession had not been made on appeal that Neale had adopted Kain's defence, the inference drawn by the trial judge that Neale was a party to the conspiracy could be drawn with even greater confidence in the absence of evidence from Neale.[212]

240 After delivering reasons for judgment on 10 April 2014, the trial judge requested that the parties provide minutes of orders to reflect the reasons and to address her on the question of costs.[213] Kain and the respondents were unable to agree on, amongst other things, the basis for the calculation of interest on the amounts that were to be awarded against him for the repair fraud.

241 In a ruling dated 4 July 2014, the judge concluded that interest should be paid by Kain pursuant to s 58 of the Supreme Court Act 1986 ('Supreme Court Act') rather than s 60 of that Act. She adopted the following two step approach: first, calculate the amount of the repair fraud perpetrated in each calendar year; and then calculate the interest payable on that amount from the date of the last transaction in each calendar year until the date of the order of the court.[214]

242 On the appeal, Kain challenges that conclusion. As Neale has not appealed against this aspect of the judge's orders,[215] we will not consider the question of interest as it relates to him.

243 Sections 58 and 60 of the Supreme Court Act set out two alternative bases for calculating interest. Those sections relevantly provide:

58 Interest to be allowed when debts or sums certain recovered

(1) If in a proceeding a debt or sum certain is recovered, the Court must on application, unless good cause is shown to the contrary, allow interest to the creditor on the debt or sum at a rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 ... from the time when the debt or sum was payable (if payable by virtue of some written instrument and at a date or time certain) or, if payable otherwise, then from the time when demand of payment was made.

...

(3) A debt or sum payable or a date or time is to be taken to be certain if it has become certain.

...

60 Interest in proceedings for debt or damages

(1) The Court, on application in any proceeding for the recovery of debt or damages, must, unless good cause is shown to the contrary, give damages in the nature of interest at such rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 as it thinks fit from the commencement of the proceeding to the date of the judgment over and above the debt or damages awarded.

(2) Nothing in this section -

...

(e) applies in relation to any sum on which interest might be awarded by virtue of section 58 ...; or

(f) limits the operation of any enactment or rule of law which, apart from this section, provides for the award of interest.

(3) If the damages awarded by the Court or jury include or if the Court in its absolute discretion determines that the damages awarded include any amount for -

...

(c) exemplary or punitive damages -

the Court must not allow interest in respect of any amount so included or in respect of so much of the award as in its opinion represents any such damages.

244 By way of their third further amended statement of claim, the respondents pleaded the tort of conspiracy against Kain and others. MSC and MSCA pleaded that, by reason of the conduct that gave rise to that tort, they have each 'suffered loss and damage'. They relied on particulars in which their loss was calculated on the basis of duplicate invoices issued from March 2005.[216] They also claimed the amounts paid pursuant to the false repair charges as 'monies had and received' by Kain and others. The particulars alleged that such monies were paid either under a mistake of fact or as illegal or excessive charges.

245 In its prayer for relief, in respect of the repair fraud, MSCA claimed against Kain: '[d]amages, including exemplary and equitable damages', whereas MSC claimed: '[d]amages, including exemplary damages'. Both MSCA and MSC also claimed: '[a]lternatively, the amounts received by [Kain] as a debt owing for the repair fraud'. They also claimed interest without specifying the nature of the interest or the source of the power to award it.

246 In her reasons, the trial judge stated that 'the [respondents'] pleaded case in respect of the repair fraud is primarily for the tort of conspiracy'.[217] After finding in favour of MSCA and MSC in respect of that tort,[218] the judge stated that orders should be made against Kain 'requiring him to pay $703,178.93 to MSC and MSCA, together with interest on that amount'.[219] The judge decided to award exemplary damages in the amount of $10,000 against Kain, consequent upon her upholding the claim of conspiracy.[220]

247 It is clear from the judge's reasons that, in respect of the repair fraud, the only claim for which she decided to grant a remedy was the tort of conspiracy. The judge did not address restitutionary principles associated with a claim for monies had and received as pleaded by the respondents.

248 At the hearing on 30 May 2014, the respondents submitted that they were entitled to an order for interest on the amounts awarded against Kain for the repair fraud, which was to be calculated from the date of each individual transaction that constituted the repair fraud. However, because the making of such an order would necessitate hundreds of calculations, the respondents submitted that the Court should order interest be paid by Kain in part on the basis of the two step approach set out at [241[221]] above.221 These submissions purported to rely on the method of calculation of interest set out under s 58 of the Supreme Court Act.

249 The respondents submitted that whilst ss 58 and 60 obliged the Court to take a particular approach to the calculation of interest in particular circumstances, the Court retained the power to make such orders as were appropriate. In support of this submission, the respondents cited s 60(2).[222]

250 Kain submitted that s 58 of the Supreme Court Act was inapplicable because the amount he was required to pay was neither a sum certain nor a debt, but rather was an award of damages. He contended that s 60 applied.[223]

251 The judge concluded[224] that interest should be calculated on the basis of the two step approach proposed by the respondents for the following reasons:

[I]n addition to the statutory bases for ordering interest, equitable principles permit the award of interest on an award of equitable compensation. Noticeably though, the method used by the Plaintiffs to calculate interest did not apply those principles. Rather ... the spreadsheets of calculations which they prepared and relied upon used the statutory method in s 58.

...

In my view, what Kain is required to do is to disgorge amounts that he wrongfully received through Ackland Forge. When each of those payments was received and the amount of each of them is, and has always been, known. It is akin to a defendant who is required to account as a constructive trustee. In my view, the amounts to be paid by Kain in respect of the repair fraud are in the nature of sums certain. The fact that the individual amounts must be added together to arrive at the total that Kain and Mr Neale must pay, does not change the analysis. That is an arithmetic exercise only with no need for any evaluative process to be engaged in. It can be contrasted to the situation which applied in Giller v Procopets [No 2] where equitable compensation was awarded for breach of confidence. In that case, the amount of the compensation had to be assessed and consequently was held not to be a sum certain.

The Plaintiffs have taken a practical approach to the calculation of interest recognising that to work out the exact interest to be paid on each individual amount from the date that it was received by Ackland Forge would be a lengthy and detailed exercise. The manner in which the Plaintiffs propose that interest be calculated benefits Kain - he will only pay interest from the date of the last transaction each year on the amounts that the Plaintiffs were wrongfully defrauded of during the course of that year.[225]

252 On 4 July 2014, the judge made an order reflecting her conclusion at [251] above. The order relevantly stated:

1. the sum of $703,178.93; 2. interest of $550,344.16; and

253 On the appeal, neither Kain nor the respondents made oral submissions on the interest issue and relied solely on their brief written submissions.

254 Kain contended that the judge erred in holding that interest was payable under s 58 of the Supreme Court Act rather than s 60. According to Kain, as the respondents succeeded in their claim for 'damages', they cannot be said to have recovered either 'a debt or sum certain' within the meaning of s 58.[226]

255 The respondents contended that there is no basis for impugning the award of interest. According to the respondents, the practical approach that the judge adopted had benefited Kain.

256 Both ss 58 and 60 have the beneficial purpose of providing for the award of interest to compensate parties who have been obliged to institute proceedings to recover a money sum and who in the meantime have been kept out of moneys which they could otherwise have used or upon which they could otherwise have earned interest.[227] However, as is evidenced by the language of s 60(2)(e), ss 58 and 60 are not intended to overlap.[228] The legislature clearly intended to distinguish between cases where a debt has become payable prior to the initiation of a proceeding for its recovery (in which case, s 58 will be enlivened if its requirements are met), and one in which the obligation to pay has not so crystallised at an earlier time (in which case, s 60 will be enlivened if its requirements are met).[229]

257 Where s 58(1) applies to a claim pursuant to a contract but the contract does not provide for payment of the amount claimed 'at a date or time certain', interest is payable 'from the time when demand of payment was made'.[230] The issue of a writ does not constitute a demand for payment for the purposes of s 58(1).[231]

258 Where there is no written instrument or a demand for payment, interest cannot be awarded under s 58 for a debt or a sum certain, but the plaintiff may be entitled to interest under s 60.[232]

259 In the present case, the only pleaded case upon which MSCA and MSC succeeded against Kain in respect of the repair fraud was the tort of conspiracy. The judge did not rely on any restitutionary or equitable principles in deciding the case in favour of MSCA and MSC or in assessing the amount to which they were entitled. Similarly, in seeking interest on the basis set out at [241] above, MSCA and MSC relied entirely on the provisions of s 58 and did not call in aid any restitutionary or equitable principles.

260 In these circumstances, the issue for the judge was whether the requirements of s 58(1) were satisfied. The first relevant requirement was that the amount of $703,178.93 that MSCA and MSC recovered from Kain be 'a debt or sum certain'. The judge did not find that that amount was either a debt or a sum certain. Rather, she found that the individual amounts that made up the total amount of $703,178.93 were 'in the nature of sums certain'. This finding was insufficient to engage s 58.

261 However, even if the judge is to be taken to have decided that the amounts were sums certain, she has not adequately explained why a sum recoverable for a tort, which is ordinarily characterised as damages, did not have that character in the present case.[233] The judge's use of the expression 'disgorge' and her reference to a defendant accounting as a constructive trustee cannot assist the analysis because the judge did not uphold the claim of MSCA and MSC on the basis of any restitutionary or equitable principles. It follows that Giller [No 2],[234] which dealt with the payment of interest on an award of equitable compensation for breach of confidence, had no application to the present case.[235]

262 Even if, contrary to the above analysis, it had been demonstrated that the first relevant requirement of s 58(1) had been met, that section did not authorise an award of interest against Kain from a date prior to the commencement of the proceeding on 9 November 2010[236] unless there was a 'written instrument' in existence that so provided or a demand for payment had been made before that time. In the present case, no written instrument was relied upon and our attention has not been drawn to any demand for payment. Even if it is assumed that a demand for payment had been made prior to Kain being added as a defendant, such a demand could not have been made prior to November 2010 when MSCA became aware of the repair fraud. It follows that s 58(1) did not authorise an order that interest be paid from as early as 2005.

263 For the reasons set out above, the judge was wrong to award interest against Kain under s 58 of the Supreme Court Act instead of s 60 of that Act. The Court will seek further submissions from the parties as to the order that should be made.

264 The appeal by Kain must be allowed in part in relation to the amount of interest. The appeal by Neale should be dismissed.

[1] ACN 082 962 598. To avoid confusion with the later company CC Containers Pty Ltd of the same name incorporated in 2008, this older company is referred to herein as 'CCC Old'. In her reasons, the trial judge referred to CCC Old as 'CCC Old Co'.

[2] See [188]-[198] below.

[3] CC Containers Pty Ltd v Lee [No 6] [2014] VSC 151, [6] ('Reasons').

[4] See Crimes Act 1958 ss 82, 83, 83A.

[8] Due to the methods by which the fraud was implemented and the records that were maintained, the respondents could only identify duplicated invoices issued after March 2005. Thereafter, Ackland Forge was paid $703,178.93 in respect of duplicated invoices, and Dawn Trading was paid $489,488.49: Reasons [74].

[11] Earnings before interest, taxes, depreciation and amortisation.

[25] [1938] HCA 34; (1938) 60 CLR 336 ('Briginshaw').

[26] [1992] HCA 66; (1992) 110 ALR 449 ('Neat Holdings').

[28] See, eg, Gould v Vaggelas (1985) 157 CLR 215, 239 (Wilson J).

[29] Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd [2003] HCA 49; (2003) 216 CLR 161, 208 [143], quoting Briginshaw [1938] HCA 34; (1938) 60 CLR 336, 361.

[30] Neat Holdings [1992] HCA 66; (1992) 110 ALR 449, 449-50, quoted in Reasons [38].

[31] That may state the obligation too broadly.

[32] Evidence Act 2008 s 140(2)(c).

[33] [1992] HCA 66; (1992) 110 ALR 449, 449-50.

[34] [1965] HCA 46; (1965) 112 CLR 517.

[36] Reasons [39], citing Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125, 141 (Tadgell JA), and cases there cited.

[37] (1951) 217 ALR 1, 5 (citations omitted).

[38] [1997] 1 VR 125.

[40] (1951) 217 ALR 1, 5.

[41] Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169; (2004) ATPR 42-013, 48,885 [12] (Keifel and Jacobson JJ), citing Crofter Hand Woven Harris Tweed Co Ltd v Veitch [1941] UKHL 2; [1942] AC 435, 445.

[42] Nigro v Secretary to the Department of Justice [2013] VSCA 213; (2013) 304 ALR 535, 569 [135], citing J D Heydon, Cross on Evidence (LexisNexis Butterworths, 9th ed, 2012) [9001], [9005], [9010].

[43] (2012) 38 VR 618 ('NOM').

[44] [1938] HCA 34; (1938) 60 CLR 336, 361-3 (Dixon J).

[45] NOM (2012) 38 VR 618, 655-6 [124]. See n 152 in NOM and cases referred to there.

[46] [1988] HCA 57; (1988) 63 ALJR 1, 3.

[47] [2011] FCA 1147, [24]-[31].

[48] [2012] FCAFC 107; (2012) 293 ALR 537, 541 [11].

[49] Reasons [56] (citations omitted).

[50] [2011] FCA 1147.

[51] (1874) LR 9 Ch App 244.

[52] (1983) 49 ALR 672.

[53] [1998] FCA 968; (1998) 157 ALR 1.

[54] [1988] HCA 57; (1988) 63 ALJR 1.

[55] [2011] FCA 1147, [28].

[56] Ibid [29]-[30] (citations omitted) (emphasis added).

[57] [1988] HCA 57; (1988) 63 ALJR 1, 3.

[58] [2012] FCAFC 107; (2012) 293 ALR 537.

[59] Neat Holdings [1992] HCA 66; (1992) 110 ALR 449, 449-50 (Mason CJ, Brennan, Deane and Gaudron JJ).

[63] See [95] below.

[70] Ibid [97]-[98], citing Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Equuscorp Pty Ltd v Glengallon Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471.

[72] The Koursk [1924] P 140, 159-60.

[74] The appellant cited R v Jackson (1987) 11 NSWLR 318, 320-3 (Roden J); Ahern v The Queen [1988] HCA 39; (1988) 165 CLR 87, 95, 99; Trade Practices Commission v Nicholas Enterprises Pty Ltd [1979] FCA 51; (1979) 26 ALR 609, 633; Mickelberg v The Queen [1984] WAR 191. For discussion, see Peter Gillies, The Law of Criminal Conspiracy (The Federation Press, 2nd ed, 1990) 182-92.

[75] Tripodi v The Queen [1961] HCA 22; (1961) 104 CLR 1, 6 (Dixon CJ, Fullagar and Windeyer JJ).

[76] De Pauw (1965) 4 CCC 335. See the discussion in Gillies, above n 74, 195.

[78] Australian Wool Innovation Pty Ltd v Newkirk [2005] FCA 290; (2005) ATPR 42-053, 42,674 [62] (Hely J).

[80] Latham v Singleton [1981] 2 NSWLR 843, 859 (Nagle CJ at CL), citing R v A-G (Cth) v Associated Northern Collieries [1911] HCA 73; (1911) 14 CLR 387, 400 (Isaacs J).

[81] Peters v The Queen [1998] HCA 7; (1998) 192 CLR 493, 516-20 (McHugh J); Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169; (2004) ATPR 42-013, 48,885 [12] (Kiefel and Jacobson JJ).

[82] Belhaven v Stenton Peerage [1875] 1 App Cas 278, 279, referred to with approval in Chamberlain v The Queen [No 2] [1984] HCA 7; (1984) 153 CLR 521, 535 (Gibbs CJ and Mason J).

[83] [1997] 1 VR 125.

[86] Palmer v Dolman [2005] NSWCA 361, [41] (Ipp JA, with whom Tobias and Basten JJA agreed).

[88] See Gillies, above n 74, 36-7.

[90] Ex parte Coffey; Re Evans [1971] 1 NSWLR 434, 446.

[98] Fox v Percy [2003] HCA 22; (2003) 214 CLR 118, 126-8.

[99] [2013] VSCA 260, [33].

1. [100] See ibid [33]; Forder v Hutchinson [2005] VSCA 281, [48] (Nettle JA, with whom Maxwell P and Habersberger AJA agreed).

[102] Kocis v S E Dickens Pty Ltd [1998] 3 VR 408, 430 (Hayne JA); Strong v Woolworths Ltd [2012] HCA 5; (2012) 246 CLR 182, 196-7 [34] (French CJ, Gummow, Crennan and Bell JJ).

[103] [2011] HCA 36; (2011) 244 CLR 352, 386 [94].

[104] See Smith v NSW Bar Association [1992] HCA 36; (1992) 176 CLR 256, 268; Jack v Smail [1905] HCA 25; (1905) 2 CLR 684, 698; Scott Fell v Lloyd [1911] HCA 34; (1911) 13 CLR 230, 241; R v Chapman [1973] QB 774, 780.[.][.]

[107] Bird v Bird [No 4] [2012] NSWSC 648, [46] (Rein J).

[108] (Unreported, Supreme Court of Victoria, Byrne J, 1 August 1994) 21-2.

[109] John Henry Wigmore, A Treatise on the Anglo-American System of Evidence in Trials at Common Law (Little, Brown and Company, 3rd ed, 1940) vol 2, [277]-[278] ('Wigmore on Evidence').

[110] [2007] VSC 109; (2007) Aust Torts Reports 81-887.

[112] [1975] HCA 63; (1975) 134 CLR 640.

[114] [2011] HCA 11; (2011) 243 CLR 361.

[115] Ibid 385 [64] (Heydon, Crennan and Bell JJ) (citations omitted) (emphasis added).

[116] [2012] NSWCA 285; (2012) 83 NSWLR 757, 775 [60] (Basten and Campbell JJA agreeing).

[117] [2012] NSWCA 182; (2012) 84 NSWLR 523.

[118] Ibid 530 [21] (emphasis in original).

[119] [1995] HCA 40; (1995) 184 CLR 1, 12.

[120] A-G (NT) v Maurice [1986] HCA 80; (1986) 161 CLR 475.

[121] [1999] HCA 66; (1999) 201 CLR 1.

[123] Council of the NSW Bar Association v Archer [2008] NSWCA 164; (2008) 72 NSWLR 236, 250-2 [46]-[48] (Hodgson JA, with whom Campbell JA agreed).

[126] [1983] 1 NSWLR 1.

[128] [2008] VSCA 244; (2008) 21 VR 478.

[129] R v Morrow [2009] VSCA 291; (2009) 26 VR 526.

[130] R v Robinson [1977] Qd R 387, 394.

[131] [2006] QCA 220.

[132] Ibid [57], quoting R v Robinson [1977] Qd R 387, 394.

[133] Boyle v Wiseman [1855] EngR 110; (1855) 10 Ex 647, 651; [1855] EngR 110; 156 ER 598, 600.

[134] [1964] HCA 73; (1964) 118 CLR 600, 614.

[135] [1947] USSC 106; 332 US 46 (1947).

[137] [1959] HCA 8; (1959) 101 CLR 298.

[138] Blatch v Archer [1774] EngR 2; (1774) 1 Cowp 63, 65; [1774] EngR 2; 98 ER 969, 970; Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572.

[139] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, 312 (Menzies J), 308 (Kitto J), 319-32 (Windeyer J), discussed in Manly Council v Byrne [2004] NSWCA 123; see also Cullen (Executor of Lascelles) v Welsbach Light Co of Australasia Ltd [1907] HCA 3; (1907) 4 CLR 990, 1002 (Griffith CJ); SS Pharmaceuticals Co Ltd v Qantas Airways Ltd [1991] 1 Lloyd's Rep 288; Adler v ASIC [2003] NSWCA 131; (2003) 179 FLR 1, 142-5 [651] (Giles JA, with whom Mason P and Beazley JA concurred).

[140] [1959] HCA 8; (1959) 101 CLR 298.

[142] Gaskell v Denkas Building Services Pty Ltd [2008] NSWCA 35, [48].

[143] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, 308 (Kitto J).

[144] O'Donnell v Reichard [1975] VicRp 89; [1975] VR 916, 921; Payne v Parker [1976] 1 NSWLR 191, 200.

[145] [2000] HCA 3; (2000) 199 CLR 620.

[146] Ibid 632 [26], quoting Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, 312.

[147] RPS v The Queen [2000] HCA 3; (2000) 199 CLR 620, 632 [26]. See also O'Donnell v Reichard [1975] VicRp 89; [1975] VR 916, 929; Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572, 576 [16], 586-7 [76]; State Bank of NSW v Brown (as liq of Parkston Ltd (in liq)) [2001] NSWCA 223; (2001) 38 ACSR 715, 731 [104]; R v Navarolli [2009] QCA 49; [2010] 1 Qd R 27, 28 [2].

[148] (2001) 205 CLR 50, 64-5 [34] ('Azzopardi').

[149] [1993] HCA 65; (1993) 178 CLR 217 ('Weissensteiner').

[151] [1966] 1 NSWR 259, 277.

[154] [2002] NSWSC 171; (2002) 168 FLR 253.

[156] SS Pharmaceutical Co Ltd v Qantas Airways Ltd [1991] 1 Lloyd's Rep 288, 293 (Gleeson CJ and Handley JA), citing Insurance Commissioner v Joyce [1948] HCA 17; (1948) 77 CLR 39, 49 (Rich J).

[157] [2011] HCA 11; (2011) 243 CLR 361.

[158] Ibid 384-5, citing Dilosa v Latec Finance Pty Ltd [No 1] [1966] 1 NSWR 255, 276-7; ASIC v Fortescue Metals Group Ltd [No 5] [2009] FCA 1586; (2009) 264 ALR 201, 225. See also Schellenberg v Tunnel Holdings Pty Ltd [2000] HCA 18; (2000) 200 CLR 121, 142-3 [51]; Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 (Handley JA); Oran Park Motor Sport Pty Ltd v Fleissig [2002] NSWCA 371 (Hodgson JA, with whom Beazley JA and Einstein J agreed); State Bank of NSW v Brown (as liq of Parkston Ltd (in liq)) [2001] NSWCA 223; (2001) 38 ACSR 715, 718 [17]-[18] (Spigelman CJ); Manly Council v Byrne [2004] NSWCA 123, [50]-[55] (Campbell J, with whom Beazley JA and Pearlman AJA agreed); Mamo v Surace [2014] NSWCA 58; (2014) 86 NSWLR 275 (McColl JA).

[159] On an interlocutory application to strike out a non-responsive defence which pleaded the privilege.

[161] [1864] EngR 492; (1864) 10 HL Cas 589; 11 ER 1154.

[162] [2004] VSCA 1; (2004) 9 VR 295.

[164] (1722) 1 Str 505; [1722] EWHC KB J94; 93 ER 664.

[165] (1993) 36 NSWLR 87.

[167] J D Heydon, Cross on Evidence (LexisNexis Butterworths, 8th Australian ed, 2010) [25040], [1215] ('Cross on Evidence').

[168] [1993] FCA 375; (1993) 117 ALR 304.

[169] [1993] FCA 202; (1993) 42 FCR 206.

[170] [1993] FCA 375; (1993) 117 ALR 304.

[171] [1993] FCA 202; (1993) 42 FCR 206.

[172] [1993] FCA 375; (1993) 117 ALR 304, 310, citing Justice P W Young, 'Taking the Fifth' (1991) 65 Australian Law Journal 412, 415.

[173] [2001] VSC 383; (2001) 39 ACSR 443.

[174] [1993] FCA 375; (1993) 117 ALR 304.

[175] Young, above n 172, 415.

[176] [2001] VSC 383; (2001) 39 ACSR 443, 467-8 [109].

[177] Heydon, Cross on Evidence, above n 167, [1215].

[178] [1976] 1 NSWLR 191.

[179] Ibid 202, citing Wigmore, Wigmore on Evidence, above n 109, [286].

[180] (1986) 6 NSWLR 21.

[182] [2014] VSC 517.

[183] (2001) 115 FCR 442, 456-7 [33] (Hill J).

[184] [2007] FCAFC 132; (2007) 162 FCR 466.

[185] [2009] NSWSC 1229; (2009) 236 FLR 1.

[187] [2002] NSWSC 171; (2002) 168 FLR 253.

[188] Adler v ASIC [2003] NSWCA 131; (2003) 179 FLR 1.

[190] [2008] NSWCA 135; (2008) 71 NSWLR 451.

[191] Ibid 465-7 [22]-[25] (citations omitted).

[192] [2009] FCA 1586; (2009) 264 ALR 201.

[193] [2000] HCA 3; (2000) 199 CLR 620.

[195] [2002] HCA 45; (2002) 210 CLR 285.

[196] [2009] FCA 1586; (2009) 264 ALR 201, 224 [97].

[198] Ibid 32,299 [41]-[42] (citations omitted).

[199] Reid v Howard [1995] HCA 40; (1995) 184 CLR 1, 11 (Toohey, Gaudron, McHugh and Gummow JJ); Griffin v Pantzer [2004] FCAFC 113; (2004) 137 FCR 209, 227-9 (Allsop J, Ryan and Heerey JJ agreeing). See also Lee v DPP (Cth) [2009] NSWCA 347; (2009) 75 NSWLR 581, 587 (Basten and Macfarlan JJA and Sackville AJA).

[200] Trade Practices Commission v Abbco Iceworks Pty Ltd [1994] FCA 1279; (1994) 52 FCR 96, 129 (Burchett J); Lifetime Investments Pty Ltd v Commercial (Worldwide) Financial Services Pty Ltd [2006] FCA 696, [26] (Spender J); Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543, 559.

[201] See, eg, rr 13.10 ('Particulars of pleading'), 13.12 ('Admission and denials'); O 29 ('Discovery and Inspection of Documents').

[202] CC Containers Pty Ltd v Lee [No 2] [2012] VSC 149.

[204] Cornwell v The Queen [2007] HCA 12; (2007) 231 CLR 260, 312 [148] (Kirby J).

[205] Jill Anderson, Neil Hunter and Louise Clegg, The New Evidence Law: Annotation and Commentary on the Uniform Evidence Acts (LexisNexis Butterworths, 2nd ed, 2009) 451 n 159.

[206] Ying v Song [2009] NSWSC 1344, [31], [51]; Song v Ying (2010) 79 NSWLR 442, 450 [28].

[207] (1993) 31 NSWLR 412.

[209] Ross v Internet Wines Pty Ltd [2004] NSWCA 195; (2004) 60 NSWLR 436, 444-5 [84].

[210] Health Services Union NSW v Mylan [2014] NSWSC 1026, [27]-[30].

[211] Young, above n 172, 414 (Justice Young suggests it may be even be improper for counsel to do so).

[212] See J D Heydon, Cases and Materials on Evidence (Butterworths, 1975) 62: 'Finally, a party's failure to give any satisfactory explanation of a prima facie case against him may suggest that the case is sound, either because silence is assent - an implied admission, or because it shows a consciousness of guilty or liability, or because inferences from the prima facie case, being unchallenged, are thereby strengthened. The presumption is the stronger where the facts are particularly within his knowledge.'

[214] CC Containers Pty Ltd v Lee [No 7] (Unreported, Supreme Court of Victoria, Ferguson J, 4 July 2014) [14], [21]-[23] ('Supplementary Reasons').

[215] At the supplementary hearing on 30 May 2014 referred to at [248] below, Neale accepted that, in respect of any amounts to be disgorged by him, interest was payable for the period before commencement of the proceeding in accordance with s 58 of the Supreme Court Act: Supplementary Reasons [19].

[216] See [25] and n 8 above.

[225] Ibid [18], [21]-[22] (citations omitted).

[226] Kain relied on Giller v Procopets [No 2] [2009] VSCA 72; (2009) 24 VR 1 ('Giller [No 2]'); Oddy v Fry (Unreported, Supreme Court of Victoria, McDonald J, 16 June 1997).

[227] Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520, 546 [69]; Clarke v Foodland Stores Pty Ltd [1993] VicRp 81; [1993] 2 VR 382, 396.

[228] David Leahey (Australia) Pty Ltd v McPherson's Ltd [1991] VicRp 77; [1991] 2 VR 367, 381 ('David Leahey'); Saunders v Nash [1991] VicRp 47; [1991] 2 VR 63, 67.

[229] Saunders v Nash [1991] VicRp 47; [1991] 2 VR 63, 68.

[230] David Leahey [1991] VicRp 77; [1991] 2 VR 367, 381-2.

[231] Saunders v Nash [1991] VicRp 47; [1991] 2 VR 63, 68.

[232] A J Lucas Drilling Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2009] VSCA 310, [184]-[188].

[233] The law relating to the availability of pecuniary remedies other than damages for a claim in tort is complex. See, eg, Hospitality Group Pty Ltd v Australian Rugby Union Ltd [2001] FCA 1040; (2001) 110 FCR 157, 196-7 [160]-[162], 198-9 [167]-[173].

[234] [2009] VSCA 72; (2009) 24 VR 1, 124 [22], 127-8 [36]-[37].

[235] Oddy v Fry (Unreported, Supreme Court of Victoria, McDonald J, 16 June 1997), which was cited by Kain, also had no application, as it dealt with interest payable to a retiring partner on an amount payable under s 46 of the Partnership Act 1958.

[236] For present purposes, we will leave to one side the fact that Kain was added as a defendant on 4 February 2011.