All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
27 His Honour pointed to the need for the court to feel some sense of actual persuasion of the existence of each element of the cause of action. That did not mean that proof is to be achieved other than on the balance of probabilities. It directs attention to the concept of proof, and the concept of satisfaction. (See, too, my judgment, with which McColl and Bell JJA agreed, in Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [44] to [55].)
28 The consequences of those considerations was, McLelland CJ in Eq said, that a party relying on spoken words as the foundation of a cause of action for misleading or deceptive conduct might face serious difficulties, "in the absence of some reliable contemporaneous record or other satisfactory corroboration".
29 For reasons that I will turn to in a moment, his Honour's observations are of particular importance in this case.
30 I should note that Mr Sneddon of counsel, who appeared with Mr Alexander of counsel for the defendants, accepted that the court was to approach the task of assessing the evidence in accordance with the principles that I have just stated.
Credibility of the witnesses
31 Citigroup called Ms Dunk, Mr Vicente and Mr Rao. It is I think fair (and not unkind) to say that none of them appeared to have a particularly strong recollection of relevant events. I have no doubt that this can be explained, to some extent, because each of them has been busy since the events in question in September 2007.
32 There were some aspects of the evidence of Mr Vicente and Mr Rao that gave me cause for concern. For example, each of them, in cross-examination, contradicted things that he had said in his affidavit. It was not until confronted with the statement in the affidavit that the contradiction was resolved.
33 Accordingly, I think, their evidence needs to be assessed with care, particularly where it is not supported by contemporaneous documents. However, I do not think that any of them sought deliberately to mislead the court. On the contrary, I thought that each sought, to the best of his or her ability, to give truthful evidence. What I perceive as deficiencies seemed to me to reflect more the passage of time than conscious dishonesty.
34 The defendants called Ms Bubke, Mr Barlow, Mr Scott Pollock and Mr Peter Doherty.
35 Mr Peter Doherty's evidence was intended to rebut a suggestion of recent fabrication put to Ms Bubke in cross-examination. I admitted it on the voir dire. Mr Sneddon tendered it on the hearing. In the result, Mr Hutley did not oppose the tender. I admit that evidence as evidence on the hearing.
36 No attack was made on the credibility of Mr Peter Doherty or Mr Pollock. I accept their evidence, so far as it goes.
37 Before I turn to the attacks that were made on the credibility of Ms Bubke and Mr Barlow, I should note that Mr Sneddon sought to read an affidavit of Ms Bubke sworn on 2 September 2010 (the Thursday before the hearing commenced on 6 September 2010). That affidavit referred to documents that the defendants had produced pursuant to a notice apparently given on 27 July 2010.
38 The documents were provided on 1 September 2010. In brief, they related to efforts made by CrediProtect to collect, or otherwise to turn to account, the book of debt. Ms Bubke referred to those documents and sought to give evidence of what she said were some 608,899 individual steps taken as part of collection attempts made by CrediProtect in relation to the book of debt. She identified those attempts from four separate categories of record. The purpose of the evidence was to rebut a suggestion that the shortfall between the recovery rate of 15 to 18 per cent allegedly represented on 21 September 2007 and the rate actually collected reflected deficiencies in CrediProtect's collection efforts. That was a legitimate purpose. But it was unfair in the extreme to Citigroup to expect it to assess and challenge that evidence at the last moment. Citigroup was entitled to proper notice of the evidence, and a proper opportunity to assess it and the documents on which it was based. Citigroup was given neither.
39 I turn to the attacks on the credibility of Ms Bubke and Mr Barlow. I should make it make plain at the outset that, in general, I thought that each was an unimpressive witness.
40 As to Ms Bubke, it is apparent that she was prepared, on several occasions, to misrepresent the truth to her business associates. For example, she told Mr Brendan Doherty that she had a tentative $400,000 approval to fund a call centre in Manila. That was untrue. She did that, she said, to advance her commercial interests by pushing Mr Doherty along, even though he was her intended joint venture partner at the time.
41 I will not take up time by detailing other instances of misleading, indeed dishonest conduct, of the kind that I have just referred, save to note in fairness to Ms Bubke, that as to one of them (relating to her having told Citigroup that she had had a third person cost the book of debt independent of Mr Brendan Doherty), she acknowledged the untruth in her affidavit of 18 August 2010.
42 Ms Bubke gave evidence that was at best misleading, and in fact I think untrue, as to her relationship with Mr Barlow. When caught out, she gave as an explanation that their private relationship "wasn't out in public".
43 One matter that is of significance is that, when Ms Bubke was being pressed to sign the deed of guarantee, she told Citigroup that she was having her lawyers looking at it. Her evidence in cross-examination was that was not true but that, on the contrary, she "forgot" to instruct her lawyers. It is unclear whether she was telling the truth to Citigroup, or telling the truth to the Court. If the former, then she was not telling the truth to the Court; if the latter, she was not telling the truth to Citigroup. Neither version of the possibilities goes to her credit.
44 Ms Bubke's evidence in relation to efforts made on 24 and 25 September 2007 to obtain finance was less than impressive. In my view, she prevaricated because she understood to tell the truth would show either that she had mislead the people from whom she was seeking finance or that her knowledge, of the value of what she was seeking to buy, was greater than she pretended.
45 Ms Bubke was asked about another version of the model, from which the pricing of the book of debt was built up, that was shown to Mr Rao at the meeting of 21 September 2007. She professed a lack of understanding of the model. However, her cross-examination showed that she understood it clearly and thoroughly. She ultimately conceded that point.
46 Ms Bubke asserted that she did not think that she was exposed to any risk when Capital 9 was bidding. That evidence was hard to accept, because the bid form submitted on her instructions suggested that NRG was the "guarantor" for Capital 9. She sought to escape from that by saying that she was no more than a small shareholder in Capital 9 (or CrediProtect). However, e-mail correspondence revealed that she and Mr Brendan Doherty had intended to go 50/50 in the venture; and indeed Ms Bubke protested when Mr Brendan Doherty sought to increase his percentage to 60 per cent.
47 I turn to Mr Barlow. I have the strong impression that he sought to conceal the extent of his understanding of the pricing model that he displayed to Mr Rao at the meeting on 21 September 2007. (One of the difficulties in assessing the representations said to have been made at that meeting is that the defendants have been unable to produce the actual model that was shown. Hence, an understanding of what was shown to Mr Rao has to be derived from looking at preceding or succeeding versions of the model, and interpolating such observations as people are able to recall of the model actually shown.)
48 When asked about the model, Mr Barlow volunteered, in a totally irrelevant way, that he didn't understand it and that "you had a Court appointed forensic accountant who couldn't make head or tail of this in three weeks looking at it." (This was a reference to the referee, to whom was referred the question of assessment of the value of the book of debt. I shall return to his report.) It is clear, in my view, that Mr Barlow referred to the referee in an attempt to highlight the problems of evaluating the book of debt, and the spreadsheet about which he was being asked questions. The difficulty with this aspect of his evidence (apart from the fact that it was manifestly unresponsive) is that the spreadsheet about which he was being asked was not given to the referee.
49 The evidence of what was said at the meeting on 21 September 2007 was given, at my direction, orally. There were very marked discrepancies between Mr Barlow's oral evidence-in-chief about what was there said and the evidence in his affidavit (which, once he had been cross-examined on it, was admitted into evidence on this point). For example, in his oral evidence, Mr Barlow attributed to Mr Vicente a comment that the book should return "between 15 to 18 percent". By contrast, the affidavit referred to "better that 18 percent". The discrepancy is significant in the circumstances of this case.
50 Again, one of the representations alleged in Mr Barlow's affidavit was that Mr Vicente had said that some off shore company was offering 6.5 cents in the dollar. That allegation did not feature in Mr Barlow's oral evidence. Other aspects of Mr Barlow's oral evidence suggested very strongly that (although he denied it) he had consulted Ms Bubke's affidavit to "refresh" his recollection before he gave evidence in Court.
51 I deal below with the evidence of what happened after 21 September 2007. Mr Barlow's participation in those events makes it very hard to accept his evidence. He did not refer to the representations said to have been made, as to a recovery rate of 15 to 18 per cent, in e-mails to funders. When challenged on this he volunteered (for the first time) the suggestion that he might have done so "in a conversation". I do not regard that opportunistic evidence as credible.
52 Mr Barlow was dissembling in the evidence given by him about the "black magic" spreadsheet and about his e-mails to funders. I do not propose to set out the relevant passage, but I will note that he sought for the best part of a page or more of transcript to evade answering the question of from where he had got a recovery rate of 15 per cent. Finally, when Mr Hutley asked me to direct him to answer the question and I put the question to him, Mr Barlow conceded, reluctantly, that "I do appear to be saying it".
53 There are other aspects of the evidence that I regard as reflecting adversely on the credibility of Ms Bubke and Mr Barlow. However, I have said enough to indicate why, to the extent that there is a conflict, I prefer the evidence given for Citigroup to that given for the defendants.
The first issue: the alleged representations
54 Some of the alleged representations, said to have been made at the meeting on 21 September 2007 are not seriously (if at all) in issue. However, they do not appear to me to go anywhere of present relevance. In this category, I place the representations alleged in paragraphs (a), (b), (d) and (l) of paragraph 19 of the cross-claim list statement.
55 The second group of representations comprises those that, one way or another, relate to the expected recoveries to be made on the book of debt. They are the representations alleged in paragraphs (e) to (k) of paragraph 19 of the list statement.
56 There are then smaller groups of representations, relating to:
* there being another bidder at 6 cents (para (c));