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Claudia Leung in her capacity as Executrix of the Estate of the late Robert Ho v Paul Mervyn Fordyce t/as Pmf Legal Trading - [2019] NSWSC 18 - NSWSC 2017 case summary — Zoe
[2011] FCA 1123
Watson v Foxman (1995) 49 NSWLR 315
Wentworth v Rogers [2005] NSWSC 143
Ex parte Ferguson
Re Alexander (1944) 45 SR (NSW) 64
Judgment (60 paragraphs)
[1]
Re Day (2017) 91 ALJR 262; [2017] HCA 2
Robert Ho v Paul Mervyn Fordyce t/as Pmf Legal Trading [2015] NSWSC 544
Robert Ho v Paul Mervyn Fordyce t/as Pmf Legal Trading (No 2) [2015] NSWSC 1748
SAMM Property Holdings Pty Ltd v Shaye Properties Pty Ltd [2017] NSWCA 132; (2017) 345 ALR 633
Sangha v Baxter [2009] NSWCA 78; (2009) 52 MVR 492
Saravinovska v Saravinovski (No 6) [2016] NSWSC 964
Sgro v Australian Associated Motor Insurer's Limited (2015) 91 NSWLR 325; [2015] NSWCA 262
Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640; [1975] HCA 63
Strong v Woolworths Limited (2012) 246 CLR 182; [2012] HCA 5
The Nominal Defendant v Cordin [2017] NSWCA 6
Tinnock v Murrumbidgee Local Health District (No 2) [2016] NSWSC 87
Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (In Liquidation) (No 2) (2011) 297 ALR 56; [2011] FCA 1123
Watson v Foxman (1995) 49 NSWLR 315
Wentworth v Rogers [2005] NSWSC 143
Ex parte Ferguson; Re Alexander (1944) 45 SR (NSW) 64; (1944) 62 WN (NSW) 15
Category: Principal judgment
Parties: Claudia Leung (first plaintiff)
Rhodium NSW Pty Ltd (second plaintiff)
The Trading House Pty Ltd (third plaintiff)
[2]
Paul Mervyn Fordyce (first defendant)
PMFPL Pty Ltd (formerly known as Pmf Legal Pty Ltd) (second defendant)
Representation: Counsel:
N Cotman SC; L Corbett (plaintiffs)
T Alexis SC; L Coleman (defendants)
The length and complexity of these reasons belies the fact that there is really only one issue in these proceedings: whether several costs agreements were not created and sent on or about the dates the defendants allege. This has bearing upon the costs assessment process the plaintiffs commenced under the Legal Profession Act 2004 (NSW) (the "Act") in relation to legal costs owed to the defendants. The costs assessment has been suspended pending the determination of these proceedings.
The late Mr Ho worked in the hospitality industry for many years providing consultancy services to restaurants in Australia and in Asia. He died in 2017. During his working life, he employed the accountancy services of Mr Wilson Wong of Bennelong Partners with whom he maintained a close professional association. Mr Wong acted as the principal point of contact for communications between Mr Ho and the first defendant, Mr Paul Fordyce, a solicitor. From time to time, Mr Ho also had contact with Ms Leung, an employee of Bennelong Partners. Ms Leung is the executrix of Mr Ho's estate and continues these proceedings in that capacity as first plaintiff. The second and third plaintiffs, Rhodium NSW Pty Ltd ("Rhodium") and The Trading House Pty Ltd ("Trading House") respectively, are companies formerly controlled by Mr Ho and now by his estate.
Mr Fordyce is a now retired solicitor who, with the second defendant, PMFPL Pty Ltd (formerly Pmf Legal and to which I will refer by that name) an incorporated legal practice, acted for Mr Ho in various proceedings between January 2012 and May 2014 (collectively referred to in this judgment as "Ho Matters"). In these reasons unless otherwise specified, references to "Pmf Legal" include Mr Fordyce and references to "Mr Ho" or his estate include the plaintiffs collectively.
On 17 June 2014, Mr Ho filed two applications for assessment of solicitor/client costs under s 350 of the Act in relation to two sets of separate proceedings where Pmf Legal had acted for Mr Ho and in which Mr Ho says he never received costs agreements (the "Costs Assessment Applications" and the "Costs Assessment"). Costs Assessment Application 2014/180275 disputed outstanding legal costs of about $593,952 in the "BBQ King Proceedings" which commenced in late January 2012. Costs Assessment Application 2014/180287 disputed outstanding legal costs of about $160,139 in relation to the "Guardianship Proceedings" and related "Complaints Proceedings" which commenced in September 2013 and January 2014 respectively. The total legal costs in dispute are about $760,000.
[5]
Procedural matters
Directions hearings took place on 3 and 24 October 2017 and on 22 December 2017. On 3 October 2017, I granted leave to the parties to file and serve a statement of claim and defence. These were filed on 13 and 23 October 2017 respectively. An amended statement of claim and reply was subsequently filed on 9 November 2017.
On 24 October 2017, I made the following orders:
"2. Pursuant to UCPR 31.24, the parties' computer forensic experts meet in conclave (without the attendance of the parties affected and their legal representatives) and:
(a) endeavour to reach agreement on any matters in issue; and
(b) prepare a joint report, specifying matters agreed and matters not agreed and the reasons for any disagreement,
on or by 14 November 2017.
3. The proceedings be referred to mediation before a mediator to be agreed by the parties, to take place on or by 28 November 2017."
The expert witnesses - Dr Allan Watt for the plaintiffs and Mr Nigel Carson for the defendants - produced the joint report referred to in order 2(b) on 15 November 2017 (the "Joint Report").
Mediation was unsuccessful and the matter proceeded before me on 11 December 2017 for four days. Mr N Cotman of Senior Counsel with Mr L Corbett of Counsel appeared for the plaintiffs. Mr T Alexis of Senior Counsel with Ms L Coleman of Counsel appeared for the defendants. Given the complicated nature of the matters put in issue by the parties, in total three sets of written submissions were provided by each of the parties. The Court is indebted to counsel for their comprehensive and helpful written and oral submissions.
[6]
The Act
Though not directly relevant to the issues for determination, by way of background it is convenient to record that the applicable legislation relevant to the broader costs dispute between the parties is the now repealed Act, which applied from 1 October 2005 to 30 June 2015. The purpose of the Act was to regulate legal practice "in the interests of the administration of justice and for the protection of clients of law practices and the public generally": s 3(a). The definition of a "law practice" included an Australian legal practitioner who is a sole practitioner, a law firm or an incorporated legal practice: s 4. Chapter 3 of the Act governed the conduct of a legal practice and, among other things, the disclosure and assessment of legal costs between clients and law practices at Part 3.2 (see "Purposes" at s 301).
Cost disclosure is mandatory under the Act. Pursuant to ss 309 to 311, a law practice must disclose to a client "in writing before, or as soon as practicable after, the law practice is retained" the various matters set out in s 309. Disclosure is to be "expressed in clear plain language": s 315.
Section 309 provides:
"309 Disclosure of costs to clients
(1) A law practice must disclose to a client in accordance with this Division:
(a) the basis on which legal costs will be calculated, including whether a fixed costs provision applies to any of the legal costs, and
(b) the client's right to:
(i) negotiate a costs agreement with the law practice, and
(ii) receive a bill from the law practice, and
(iii) request an itemised bill after receipt of a lump sum bill, and
(iv) be notified under section 316 of any substantial change to the matters disclosed under this section, and
(c) an estimate of the total legal costs if reasonably practicable or, if that is not reasonably practicable, a range of estimates of the total legal costs and an explanation of the major variables that will affect the calculation of those costs, and
(d) details of the intervals (if any) at which the client will be billed, and
(e) the rate of interest (if any), whether a specific rate or a benchmark rate, that the law practice charges on overdue legal costs, whether that rate is a specific rate of interest or is a benchmark rate of interest (as referred to in subsection (1A)), and
(f) if the matter is a litigious matter, an estimate of:
(i) the range of costs that may be recovered if the client is successful in the litigation, and
(ii) the range of costs the client may be ordered to pay if the client is unsuccessful, and
(g) the client's right to progress reports in accordance with section 318, and
(h) details of the person whom the client may contact to discuss the legal costs, and
(i) the following avenues that are open to the client in the event of a dispute in relation to legal costs:
(i) costs assessment under Division 11,
(ii) the setting aside of a costs agreement or a provision of a costs agreement under section 328 (Setting aside costs agreements or provisions of costs agreements),
(iii) mediation under Division 8, and
(j) any time limits that apply to the taking of any action referred to in paragraph (i), and
(k) that the law of this jurisdiction applies to legal costs in relation to the matter, and
(l) information about the client's right:
(i) to accept under a corresponding law a written offer to enter into an agreement with the law practice that the corresponding provisions of the corresponding law apply to the matter, or
(ii) to notify under a corresponding law (and within the time allowed by the corresponding law) the law practice in writing that the client requires the corresponding provisions of the corresponding law to apply to the matter.
Note. The client's right to sign an agreement or give a notification as mentioned in paragraph (l) will be under provisions of the law of the other jurisdiction that correspond to section 304 (Part also applies by agreement or at client's election).
(1A) For the purposes of subsection (1) (e), a benchmark rate of interest is a rate of interest for the time being equal to or calculated by reference to a rate of interest that is specified or determined from time to time by an ADI or another body or organisation, or by or under other legislation, and that is publicly available.
(1B) The regulations may make provision for or with respect to the use of benchmark rates of interest, and in particular for or with respect to permitting, regulating or preventing the use of particular benchmark rates or particular kinds of benchmark rates.
(2) For the purposes of subsection (1) (f), the disclosure must include:
(a) a statement that an order by a court for the payment of costs in favour of the client will not necessarily cover the whole of the client's legal costs, and
(b) if applicable, a statement that disbursements may be payable by the client even if the client enters a conditional costs agreement.
(3) A law practice may disclose any or all of the details referred to in subsection (1) (b) (i)-(iii), (g), (i), (j) and (l) in or to the effect of a form prescribed by the regulations for the purposes of this subsection, and if it does so at the time the other details are disclosed as required by this section the practice is taken to have complied with this section in relation to the details so disclosed."
A costs agreement is distinct from costs disclosure. Though costs disclosure is frequently made with or at the same time as a costs agreement, disclosure may be made separately, and the existence of a costs agreement is discretionary under the Act per s 322: see, e.g., Wentworth v Rogers [2005] NSWSC 143 at [44] (Patten AJ) and Darkinjung Local Aboriginal Land Council v Darkinjung Pty Ltd [2010] NSWSC 132 at [152] (Austin J) ("Darkinjung"). However, the "practical significance of a costs agreement is that … costs that are subject to a costs agreement must be assessed by reference to the provisions of the agreement": Amirbeaggi v Business in Focus (Australia) Pty Ltd [2008] NSWSC 421 at [25] (Brereton J), unless the costs assessor is satisfied that "the agreement does not comply in a material respect with any applicable disclosure requirements of Division 3 (Costs disclosure)" per s 361.
If a costs agreement is made, it must be written or evidenced in writing: s 322(2). It is enforceable like any other contract: s 326. A costs agreement may consist of a written offer that is accepted in writing or by other conduct and it must state that it is an offer to enter into a costs agreement, that the client may accept it in writing or by other conduct, and must specify the type of conduct constituting acceptance: s 322.
However, the Act does not stipulate a costs agreement is invalid or void because of insufficient costs disclosure. Only s 327 in Division 5 provides that a "costs agreement that contravenes, or is entered into in contravention of, any provision of this Division is void."
Relevantly, a law practice remains entitled to recover legal costs from a client even where no valid or operative costs agreement exists according to the "fair and reasonable value of the legal services provided" so long as a bill of costs has been rendered to the client: ss 319(1)(c) and 331(1). As Austin J noted in Darkinjung at [152], where no costs agreement exists "The only change is that the assessment is directed towards ascertaining the fair and reasonable value of the legal services provided rather than the amount properly due under a costs agreement."
[9]
Uncontentious background facts and some contentions
Mr Fordyce was admitted as a solicitor in New South Wales in about July 1974 and commenced practice shortly thereafter. He worked at four firms before establishing Pmf Legal in December 2003, which he operated as a sole practitioner.
On about 11 August 2011, Mr Ho retained Mr Fordyce in relation to litigation involving the Golden Century restaurant. Mr Ho (through Mr Wong) instructed Mr Fordyce to send all correspondence to a PO Box in Castlecrag ("Mr Ho's PO Box"). Pursuant to these instructions, Mr Fordyce sent an engagement letter to Mr Ho's PO Box on or about 11 August 2011 (the "Golden Century Letter"). A copy of the Golden Century Letter signed by Mr Fordyce was in evidence.
Pmf Legal was incorporated in 2012 and registered as Pmf Legal Limited.
On about 31 January 2012, Mr Ho retained Mr Fordyce in respect of litigation involving the BBQ King Restaurant (the "BBQ King Proceedings"). It was assigned the internal matter number 120009. A Microsoft Word file labelled "120131 Engagement Letter.doc" was created on 31 January 2012 and saved onto the X drive under the Ho subdirectory and in the BBQ King matter file. Mr Fordyce's personal assistant, Ms Alison Sweet, sent him an email with the subject line: "HO90/120009 Engagement Letter DRAFT", which contained a hyperlink or softlink ("X:\H\HO90\120009 - Proceedings for damages against company and shareholders-BBQ King\Correspondence\120131 Engagement Letter.doc") through to the file Ms Sweet had prepared. According to Mr Fordyce, the 31 January BBQ King Letter was not sent to Mr Ho's PO Box on that date but was held back with the intention that it would be posted with an accompanying invoice a few days later.
On or about 3 February 2012, invoice 20755 dated 31 January 2012 was sent to Mr Ho's PO Box for work done in relation to the BBQ King Proceedings. The invoice recorded various tasks carried out on 31 January 2012 in the BBQ King Proceedings and was for $3,069. However, it makes no reference to the preparation of an engagement letter. It is alleged the 31 January BBQ King Letter was sent to Mr Ho's PO Box on or about that day - see paragraph [257] below, the 31 January BBQ King Letter.
However, an invoice dated 31 August 2012 but bearing the same number (20755) as the 31 January 2012 invoice was in evidence. Though the "total costs" at the bottom of the page read $3,069 (which is the same as the 31 January 2012 invoice 20755), the "total due" in the invoice heading is zero. In the Response, Mr Fordyce stated that no invoice was sent to Mr Ho on 31 January 2012 but that one was sent on 31 August 2012. During the proceedings, Mr Fordyce stated that this was an error which he had discovered only when preparing for mediation [T 207:47]:
"At the time the letter was written to the costs assessor I had been referred to a letter with an invoice 20755 of 31 August 2012. There was a question about an invoice of 31 January 2012 and with that number and I believed that the 31 August invoice was the invoice so that I said there was no invoice of 31 January. But when I checked the files and put together material for the purpose of the mediation, I can [sic] thorough check and found the one, the invoice of 31 January 2012 which deals with matters that were all done in 31 January 2012."
[10]
General observations about the witnesses
The following sections address some relevant legal principles, the evidence of the principal witnesses including submissions on credit and reliability, and the views to which I have come which inform my findings of fact. While the Court has the benefit of some objective evidence (expert reports on the computer systems and metadata, the mail-books and hard copy matter files), this is a case where much of the witness testimony is uncorroborated, untested or of questionable reliability, and much turns on the Court's assessment of character and credit - particularly that of Mr Fordyce.
[11]
Relevant legal principles
Facts must be proved on the balance of probabilities to the actual persuasion of the Court: Evidence Act 1995 (NSW), s 140 ("Evidence Act"); Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-2; [1938] HCA 34; Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56 at [48] per Emmett J.
Affidavit evidence which is not tested in cross-examination is to be discounted in weight as appropriate "according to all the circumstances of the case": Fulton v Fulton [2014] NSWSC 619 at [111] per Hallen J.
Findings on credit should not be made "globally" - a witness may reliably recount some matters and not others: Sangha v Baxter [2009] NSWCA 78; (2009) 52 MVR 492 at [155]-[156] per Basten JA (Handley AJA agreeing); as applied in Hutchison Construction Services Pty Ltd v Fogg; Fogg v Les Quatre Musketeers Pty Ltd (t/as Plastamasta South Coast) [2016] NSWCA 135 at [11] per Leeming JA (Beazley P and Meagher JA agreeing)
Memory is fallible and a reconstructive process - "All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed": Watson v Foxman (1995) 49 NSWLR 315 at 318-19 per McClelland CJ in Eq.
A witness' credibility and truthfulness can be tested by reference to objective fact particularly "the documents in the case, by paying particular regard to his, or her, motives, and to the overall probabilities": Blacket v Barnett [2017] NSWSC 1032 at [225] per Hallen J citing Armagas Ltd v Mundogas S.A. (The Ocean Frost) [1985] 1 Lloyd's Rep 1 at 57 per Robert Goff LJ and In the matter of Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 at [7] per Black J.
I note also what was said in The Nominal Defendant v Cordin [2017] NSWCA 6 at [171] per Davies J (Emmett AJA agreeing):
"One reason that contemporaneous statements and documents are likely to be more accurate than a recollection of events is that a statement made at the time of an event, particularly when relatively spontaneous, is likely to be more accurate than a later statement made at a time when false memories can intrude. In a minority of cases the false memories are deliberately so because of the contrivance of the maker of the statement. In the majority of cases the false memories are honestly believed either for the reasons such as those outlined by Leggatt J in Gestmin SGPS S.A. v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm) or because the person recalling the events has tried to assemble recollections logically so that what happened can have some rational explanation in the person's mind. As Leggatt J noted at [17] memories are fluid and malleable, being constantly rewritten whenever they are retrieved".
[12]
Mr Ho's evidence
The plaintiffs sought to rely on two affidavits sworn by the late Mr Ho on 1 October 2014 and 24 August 2015 under s 63(2) of the Evidence Act, in which he claims there was no costs disclosure and denies having received any costs agreements from Pmf Legal. This evidence must now be considered in the light of the plaintiffs' concession that the Trading House Letter and Complaints Letter were sent. Mr Ho states that he kept "records of all the correspondence received from Mr Fordyce and PMF Legal" but that when he searched he could not locate documentation relating to costs agreements or costs disclosure for work to be done by Mr Fordyce. He said that he recalled receiving emails containing fee estimates and disclosure documents and fee agreements in relation to counsel but that he had not seen or received any in relation to Mr Fordyce. He also states that by about November 2013 he started paying counsel's fees directly because he was "concerned" about paying through Mr Fordyce. Shortly thereafter he changed solicitor.
Ms Leung, the executrix of Mr Ho's estate who maintains the claim, was not called to give evidence. She has not filed an affidavit in these proceedings and there is no evidence indicating that Ms Leung has undertaken any search of Mr Ho's personal records.
The plaintiffs submitted that Mr Ho's evidence is reliable and is supported by the business records created (or not, as the case may be) as part of Pmf Legal's usual practice. Further, the plaintiffs argued that a reasonable person would not commence proceedings in circumstances where they did not believe there was a legitimate basis for so doing. Given the defendants' mail-books were only made available in July 2015 through an informal discovery process and that Mr Ho did not have access to the mail-books when preparing the Costs Assessment Application in June 2014, the plaintiffs asserted Mr Ho did not have any basis upon which to falsify or alter his evidence to accord with the mail-books.
The plaintiffs also submitted that Ms Leung was not required to give evidence in order to discharge her duties as executrix of the estate and that even if she had conducted a search of Mr Ho's possessions it would not have turned up the Engagement Letters (because they did not exist, according to the plaintiffs' case) and would therefore have added nothing to the evidence in the case. The plaintiffs did not address the possible ramifications of their concessions in relation to the Agreed Engagement Letters on the reliability of Mr Ho's evidence.
[13]
Mr Fordyce's evidence
Mr Fordyce's evidence in respect of each of the Disputed Engagement Letters is that in the course of preparing for the Costs Recovery Proceedings in June 2014 and before receiving the Costs Assessment Applications, he and his paralegal Ms Inglis searched the electronic and hard copy matter files to locate the relevant costs agreements in relation to the outstanding fees. Mr Fordyce says that to his surprise they were unable to locate electronic copies of the Disputed Engagement Letters but that unsigned hard copies of the Disputed Engagement Letters were found in the hard copy matter files. Mr Fordyce stated that the office was basically "paperless" and relied on an electronic file system but that it was part of the usual practice to print out and file a paper copy of client engagement letters. However, he said he "had no signed agreements by Mr Ho in any of the matters including the Golden Century matter."
Because he liked to keep client files electronically and to facilitate ease of use for the intended Costs Recovery Proceedings, between 16 and 17 June 2014 Mr Fordyce recreated electronic copies of the Disputed Engagement Letters from the unsigned hard copies he had found in the hard copy matter files. Mr Fordyce explanation for recreating the documents in Microsoft Word rather than scanning the documents was as follows [T 103:11]:
"HIS HONOUR
Q. In a pre-electronic age if you had been asked to produce those copies to evidence the fact that you had some records of the agreements you say you'd sent off to Mr Ho, one might have photocopied those and sent them off to the Guardianship Tribunal or whoever, do you accept that?
A. I do.
Q. What I don't understand and I think this is what Mr Cotman has been exploring with you at this point, is why didn't you just photocopy, PDF, image those documents which you're telling me now were actual copies, which I infer you say were created at or about the date they bear and send those off as opposed to replicate by typing, electronically, those documents into new files? Do you understand my question?
Q. I do, your Honour.
Q. And it's very primitive but why didn't you do that?
A. PDF documents are not user-friendly for the purposes of litigation or any such purpose because they have - at the end of - there are a number of problems with using a PDF document like that. So if I copy a selection of material in the PDF document and paste it into, say, a word document, there is a paragraph mark at the end of each paragraph of the PDF which may not be useful for me because I may be doing it as a narrower document or a wider document. So I had to physically remove every paragraph mark to make the document into a suitable document for use in Word.
The second problem is that PDFs don't always properly read the material. So when I cut a PDF from a PDF and place it into a Word document, there are likely to be errors and the document has to be then closely checked to make sure that it's accurate. And I, I physically, for the purposes of producing a document quickly to the costs assessors would just, would just - I would just go to a document on the electronic file and open it and print it, rather than having somebody take a document - find a document in a hard file, a paper copy file, take that document out of the paper copy file, take it to a machine, scan it - print the document, put it back and put it away. It was just inefficient to do it that way.
Q. Yes but do you understand the distinction between producing something as evidence and creating a document which, for the purposes of preparing submissions and the like, you could easily manipulate?
A. I'm sorry, your Honour.
Q. I'll ask the question a different way. I think I understand what you are saying in terms of the convenience of having everything electronic and the problems that attach to PDF documents if you try and copy them and they come up in little boxes and don't copy well, I understand all of that. So in terms of being able to manipulate documents to insert them in things like letters and submissions, I follow entirely why you might create an electronic version of the document. The distinction I am trying to explore with you is between that and actually having a document which is a piece of evidence that says, "Here is the copy, my office copy of the document that I say was sent to Mr Ho."
What I am trying to understand is why did you not simply take that piece of evidence and copy it in one form or another and send it off to the costs assessor saying, "Here is my office copy of the document that was sent to Mr Ho."
A. All of the engagement letters that were sent to the costs assessor were printed off the, off the computer. We, we didn't do, do that manual step, yes."
[14]
Mr Fordyce's credit
Submissions on Mr Fordyce's credit were directed to his presentation as a witness generally, his responses to the independent solicitor, his behaviour in and around the application to set aside the Search Orders, his evidence on the 31 January BBQ King Letter and on the authenticity of the hard copy letters.
[15]
Plaintiffs' submissions
The plaintiffs submitted that Mr Fordyce's initial deceptive act in creating the Disputed Engagement Letters and, at least at first, holding them out to be original documents taints all his evidence (which was colourfully referred to as "debased currency"); that on numerous occasions Mr Fordyce deliberately misled or did not disclose to the Court all relevant information until questioned directly or confronted on an issue; and, that his conduct was, and continued to be, deceptive and improper, and demonstrated an inability to tell the truth which called into question the reliability of his evidence.
The plaintiffs drew attention to Mr Fordyce's Replying Letter to the Burke Letter (see paragraph [61]) and the following points:
1. Mr Fordyce did not raise the existence (or absence) of the 31 January BBQ King Letter with the independent solicitor as another anomaly or inconsistency in the Klein & Co. Report - this was strange given his evidence that he specifically recalled the 31 January BBQ King Letter because it was held back to send with the invoice;
2. Mr Fordyce's assertions that the findings documented in the Klein & Co. Report, for instance, that the Rhodium Letter and the Amended BBQ King Letter were created on 17 June 2014, "simply cannot be correct" and that the metadata was "blatantly incorrect" conflicted with his later testimony that he recreated the Disputed Engagement Letters in June 2014; and,
3. That if Mr Fordyce's evidence about the Disputed Engagement Letters were true (that they existed and were sent to Mr Ho on the dates displayed), he would have offered some explanation when the independent solicitor confronted him about the inconsistent data on 24 October 2014 instead of ignoring the request.
Next, the plaintiffs drew attention to Mr Fordyce's conduct in the December 2014 Proceedings when he attempted to have the Search Orders set aside. In those interlocutory proceedings, Mr Fordyce had told Bergin CJ in Eq that he did not know if Klein & Co. had analysed the Engagement Letters and that there were no mail-books that would have recorded the sending of the Engagement Letters. It became clear in these proceedings that this was not true. In cross-examination in these proceedings, Mr Fordyce himself agreed that he had been provided with a copy of the Klein & Co. Report in October 2014 and that he had "forgotten" about the existence of the electronic mail-books for 2012 to 2014 - copies of which were now in evidence and about which he had given affidavit evidence of the mail-books' use. The plaintiffs again asserted that Mr Fordyce's character and evidence was discredited by his persistent failure to acknowledge his conduct was improper (irrespective of any personal pressures he may have been experiencing at the time the Search Orders were served and executed), or that he had convinced himself of the correctness of his position such that he was incapable of giving honest evidence. The following passages of Mr Fordyce's cross-examination were highlighted:
"[T 191:9]
MR COTMAN
Q. It was manifest on that report that the computer experts had undertaken an analysis of the copies of costs agreements in this matter hadn't they?
A. I wouldn't have considered it to be analysis.
…
[T 191:35]
MR COTMAN
Q. You seriously say that when asked a question by a judge of this Court "Do you know whether the computer expert analysed your copies of any costs agreement in the matter" you could sensibly say "No I don't"?
A. That's correct.
Q. That's a correct answer?
A. Yes.
Q. It's a truthful answer, is that what you say?
A. Yes.
Q. Can you explain to his Honour how, having regard to what you knew the experts had done from the material that had been provided to you and the questions that had been asked of you by the solicitor, you could say that was an honest answer?
A. The experts had not undertaken an analysis of the kinds that had been undertaken by Dr Watt and by our expert. What they have done is to go to a document, I imagine from what I would do, right click on the document, the reference to the document electronically, then gone to "properties", selected "properties" and then copied what appeared in "properties" and that was not - I don't regard that as being an analysis.
…
[T 192:20]
MR COTMAN
Q. Do you seriously say to his Honour that an analysis by a computer expert that involves looking at the contents of computer files on your computer being your costs agreements, and comparing that to the metadata associated with those files, what you might call the properties, and detecting incongruity between them, is not analysis, is that what you say?
A. No, all they're reporting on is what shows up on the properties result search. Whether that's metadata or not, I don't know, but I can - if I can do it myself, which I could, I don't regard that as being analysis by computer experts. It's something any reasonably experienced person with a computer could do. So all they did was provide a preliminary overview of what the documents had. That's - that was my opinion when I answered Bergin J."
…
[T 196:15]
HIS HONOUR
Q. No, but what Mr Cotman is asking you--
A. Yes, yes.
Q. --is that, my recollection and the transcript will establish this in due course is that you earlier, when Mr Cotman drew the question at the bottom of page 7 and your answer, to your attention earlier, it said, "How is it that you came to say, 'No, your Honour'?" Your answer, my recollection is, was to the effect that the, "No," was because you knew that the franking machine didn't provide that sort of data, and that you had at the time, that is to say at the time that you were answering her Honour, had it in mind that you had the view that your Mailbook was not reliable.
Now, what Mr Cotman is asking you, I think is, how does that answer sit with now saying to me, in answer to and explaining your earlier exchange with her Honour that you just didn't remember there was a Mailbook? I guess, which is it?
A. I was, I was obviously wrong when I thought that I was answering her Honour in relation to the Mailbook. I have subsequently looked at the Mailbook and I know what the situation with it was, I have to say that I obviously hadn't looked at it by the time I was, at the time I was before Bergin J.
Q. Is your evidence now that the, "No," answer in both places is informed by the fact that at that time, you now tell me, you had forgotten that you had a Mailbook?
A. Yes, your Honour."
[16]
Defendants' submissions
The defendants submitted that during the course of his day and a half cross-examination, Mr Fordyce answered "each question candidly and responsibly and he didn't seek to avoid anything". He did not present as dishonest or evasive and he made concessions against his own interest which, the defendants submitted, increased the reliability of Mr Fordyce's evidence. For example, Mr Fordyce acknowledged that usual practice (upon which he sought to rely) was not followed all the time.
Further, the defendants argue that the plaintiffs' submissions misrepresent the content and context of the Burke Letter and provide an "an utterly spurious characterisation" of the Replying Letter. Mr Fordyce's list of "further inconsistencies" was disclosing information against Mr Fordyce's own interest and could not be construed as active concealment of the electronic creation of the Disputed Engagement Letters in June 2014.
In respect of the hearing before Bergin J, the defendants posited that a reading of the transcript indicated Mr Fordyce, who appeared for himself, was unable to articulate his position clearly and correctly and that consideration should be given to the pressure and challenges which confront any self-represented litigant. They contended the plaintiffs' proposition that Mr Fordyce misled her Honour was not plain on the face of the transcript and should not be inferred. The defendants submitted that what was clear from the transcript was that Mr Fordyce was confused and overwhelmed by the situation and had misunderstood the questions put to him by her Honour. In cross-examination, Mr Fordyce admitted that his response to her Honour's question about the existence of the mail-book was "wrong" and that he "wasn't thinking".
The defendants submitted that it was artificial to separate Mr Fordyce's conduct at the December 2014 Proceedings from the surrounding circumstances of the Search Orders. Mr Fordyce had explained in cross-examination that at the time the Search Orders were made he was in a state of financial and emotional strain - he was "worked up about this matter" and "very emotionally distressed". He further explained that he was overseas at his daughter's wedding, that the solicitor left in charge of the practice during Mr Fordyce's absence had departed unexpectedly, the practice bookkeeper had stopped working at the office, the practice effectively ceased all other operations to manage the ramifications of the Search Orders, and Pmf Legal was in "in financial difficulties because of the non‑payment of the accounts and then because of the disruption caused to my practice by this matter." He stated he was concerned about his reputation following the online publication of Rein J's decision to issue the Search Orders.
[17]
Mr Fordyce's credit - conclusion
There is much force in the plaintiffs' submissions on Mr Fordyce's credit and I generally prefer them. However, while I do not propose to accept Mr Fordyce as a reliable witness in the sense that I am not satisfied his uncorroborated testimony is likely to be entirely accurate, the evidence does not lead me to conclude that his evidence was deliberately and knowingly false. I was left with the overwhelming impression that Mr Fordyce had embraced technology, especially the "paperless office", with determination and enthusiasm. He exhibited great pride in that fact. In my view, he could not accept, and was clearly surprised to the point of indignation, that his office systems were unable to support what he had clearly persuaded himself to be the case in relation to the Disputed Engagement Letters. His faith in his office systems and the technology he had adopted seems to have blinded him to the possibility that, for whatever reasons, the Disputed Engagement Letters may not have been prepared or sent. He clearly believed, or had persuaded himself, that they had been prepared and sent and could not contemplate any alternative, even if that compelled him to adopt objectively strained or fanciful explanations.
Mr Fordyce presented as an intelligent man. However, his answers were often equivocal and circuitous, and information had to be teased out of him by both counsel and the Court. The several aspects of Mr Fordyce's evidence and conduct, historically and in these proceedings, identified by the plaintiffs demonstrate his unreliability. I have therefore approached his evidence on the basis that I cannot accept it unless it is inherently credible, against his interest or corroborated by contemporaneous records or other reliable evidence.
It is necessary to make some additional observations.
I do not find Mr Fordyce's reasons for recreating the Disputed Engagement Letters (at paragraphs [93] to [95] above) particularly convincing. Moreover, his conduct in presenting the Engagement Letters to the Costs Assessor as copies of letters sent to Mr Ho on or about the date they bear rather than post-dated recreations clearly demonstrates how deeply he had persuaded himself of his view of the world.
He also chose not to volunteer this information when questioned by the Mr Burke following the issue of the Klein & Co. Report. In my view, the defendants have misconstrued the Replying Letter in their submission that Mr Fordyce was opting to identify further inconsistences to those noted in the Klein & Co. Report (see paragraph [102] above). The Replying Letter states (emphasis added):
"We have perused the document provided by you on behalf of Klein and Co. and note the following further inconsistences:
- The engagement letter dated 3 April 2012 is identified as by Klein and Co. as having been created 31 January 2012 and last printed 16 September 2010.
- Engagement letter of 27 April 2012 is identified by Klein and Co. as having been created 17 June 2014, accessed 15 June 2014 and printed 15 June 2014.
- Engagement letter dated 4 July 2012 is identified by Klein and Co. as having been created 17 June 2014 and printed 16 September 2010.
This list is not exhaustive, but rather seeks to demonstrate by way of example that the information extracted by the experts simply cannot be correct. While I appreciate the opportunity to present an alternative explanation, I am in no way qualified to provide an explanation for blatantly incorrect metadata, if indeed that is what has resulted in such bizarre findings and if indeed this is metadata that I am referring to - I would not know.
Additionally I consider it somewhat alarming that rather than seeking to find a logical timeline to explain the documents, the computer experts have ceased all work pending my unqualified advice or comment, as per your email of 31 October 2014.
I trust we can agree that the information provided in the Klein & Co. letter can only be incorrect or flawed.
…
The material that has been presented to us now to comment on appears, based on my limited understanding, to be contradictory and impossibly inconsistent."
[18]
Fraud
It is convenient to consider next the allegations of fraud against Mr Fordyce. It was the plaintiffs' submission that Mr Fordyce had created and fraudulently backdated the Disputed Engagement Letters. The plaintiffs submitted that Mr Fordyce was motivated to do so because he was prohibited from starting recovery proceedings for unpaid legal costs unless he could prove the existence of costs disclosure to Mr Ho, or unless and until a costs assessment has occurred pursuant to s 317(2) of the Act. Neither was Mr Ho required to pay the legal costs until a costs assessment had occurred. Mr Fordyce admitted he had already suffered financial detriment because of the Costs Assessment Application and that he stood to lose further pending the outcome of the Costs Assessment.
The defendants' fundamental submission was that the plaintiffs had not proved to the requisite standard the allegations of fraud made against Mr Fordyce, the available evidence was not conclusive and there was no evidence of motive, and the Court should not lightly make such a finding.
An allegation of fraud must be approached with precision. The case which defendants had to meet was pleaded against them in the amended statement of claim:
"32. On 16 July 2014, the First and Second Defendants in each of the costs assessment applications forwarded to the Costs Assessment Registry, the following unsigned engagement letters (together the Purported Costs Agreements):
a. The BBQ King Engagement Letter;
b. Costs agreement purportedly dated 27 April 2012 between the late Mr. Ho and the First or Second Defendant (Rhodium Engagement Letter);
c. Costs agreement purportedly dated 7 June 2012 between the late Mr. Ho and the First or Second Defendant (Trading House Engagement Letter);
d. Costs agreement purportedly dated 4 July 2012 between the Second Plaintiff and the Third Plaintiff and the First or Second Defendant (the Amended BBQ King Engagement Letter);
e. Costs agreement purportedly dated 4 September 2013 between the late Mr. Ho and the First or Second Defendant (Guardianship Engagement Letter);
f. Costs agreement purportedly dated 28 January 2014 between the late Mr. Ho and the First or Second Defendant (January 2014 Engagement Letter).
…
43. The First and Second Defendants knew that the Purported Costs Agreements had not been provided to the Plaintiffs at any time before they were sent to the allocated Costs Assessor on or about 16 July 2014, and knew that the Plaintiffs had not agreed with the First or Second Defendant that they could charge legal costs on the basis set out in the Purported Costs Agreements.
Particulars
i. The First and Second Defendants knew that they had no signed costs agreements in relation to any of the proceedings;
ii. The First and/or Second Defendants created the BBQ King Engagement Letter on or about 7 June 2012 and dated the document 3 April 2012;
iii. The First and/or Second Defendant created, on or about 17 June 2014, the Rhodium Engagement Letter and the Amended BBQ King Engagement Letter and dated them 27 April 2012 and 4 July 2012 respectively;
iv. The First and/or Second Defendant created the Guardianship Engagement Letter on or about 16 June 2014 and dated the document 4 September 2013.
44. The First and Second Defendants' conduct in providing to the allocated Costs Assessor, the Purported Costs Agreements for the purposes of the Costs Assessment was fraudulent."
[19]
The defendants' other witnesses
The defendants relied on evidence from two former Pmf Legal employees, Ms Klobucar and Ms Wu, and the current principal of the practice, Mr Dadic. Each presented as a witness who had no interest in doing anything other than telling the truth and their evidence was inherently credible or supported by contemporaneous evidence. I accept their evidence.
[20]
Expert evidence
Given Mr Fordyce's reliance on technology and determination to run a "paperless office", a technological novice confronted with the present dispute could be forgiven for the innocent hope that the defendants' computer records might provide a definitive answer as objective, contemporaneous evidence. A superficially more computer literate observer might inquire about the "metadata", a term of uncertain meaning in recent public discourse. Unfortunately, the evidence of the parties' computer experts did not bring the hoped for clarity and left the Court unable to draw many definitive conclusions.
There were three expert reports:
1. Dr Watt's report of 1 November 2016 (the "Watt Report") for the plaintiffs;
2. Mr Carson's report of 20 October 2017 (the "Carson Report") for the defendants; and
3. The Court ordered Joint Expert Report of 15 November 2017 produced by the experts in conclave (referred to at paragraphs [15] and [16] above).
Dr Watt and Mr Carson were each cross-examined.
From the outset, there was disagreement between the experts about computer terminology and about the interpretation and reliability of data.
Dr Watt differentiated between "file" and "document": a "file" is a receptacle to hold information; a "document" is a file that has readable information. A Microsoft Word file may be created on a certain date but the information it contained on that date may not be the same as the information now contained in the document. Accordingly, Dr Watt said that file creation date cannot be used as proof that there was actually any readable information or content in that file on what the metadata calls the "content created" date. The file may just be a blank document and the metadata does not distinguish between when the file itself was created and when information was added to that file transforming it into a "document".
Dr Carson did not agree with this distinction between file and document but agreed "with the generalisation that each file… needs to be individually assessed as to what its contents are likely to have been at a point in time". Further, he agreed that "the existence of a file with the given creation date is not irrefutable proof that the contents of the file are the same now as they were on the given creation date." To save confusion, I have referred to the "content" of a file or document where relevant. I note also that a computer "subdirectory" is also commonly known as a "folder".
[21]
Other factual issues
The parties raised a number of other factual issues which it is convenient to deal with at this point. They were:
1. The mail-book;
2. Backup system files;
3. Data loss;
4. The Reckon billing system;
5. The hard copy matter files;
6. Usual practice;
7. Presumption of receipt.
[22]
The mail-book
The entire mail-books for the years 2012, 2013 and 2014 were tendered in evidence and I have inspected them. Although referred to as mail-books, consistently with the defendants' "paperless office" philosophy, they in fact were Excel spread sheets. Additionally, the parties' both provided an analysis of the mail-books which compared the invoices recorded as sent to Mr Ho in the mail-books and those received by Mr Ho as detailed in the Costs Assessment Application.
The plaintiffs seek to rely on Ms Klobucar's evidence in respect of using and maintaining the mail-book, the congruence between what Mr Ho says he received and the mail-book entries, and what they say is the unreliability of Mr Fordyce's evidence in that regard as proof that the mail-book is a reliable source of evidence of the mail sent out during the relevant period.
The defendants' assert that the mail-book was kept haphazardly and could be relied on only to show the positive act of sending, not the negative fact or proposition as contended by the plaintiffs. Accordingly, they submitted that absences in the mail-book do not prove that an item of mail was not sent.
While it is clear from inspecting them that the mail-book was not a system which recorded all outgoing mail with perfect accuracy, it is nevertheless the most obviously reliable contemporary source of information. In reaching that conclusion I have not overlooked that the mail-book system relied on the manual input of data by an employee and with that comes the greater potential for human error or simple mistake. Likewise, the recording of an item of mail may have simply been missed (see for example, paragraphs [247 (8)] and [345] below). For instance, Ms Klobucar states that she was absent from work on 4 July 2012. Nonetheless, for the following reasons I regard the mail-book as reliable to the extent that if an item of mail is recorded in the mail-book as sent, it was in fact sent. I will return below to the question of what can be inferred from the absence of an entry in the mail-book.
First, although there is no mention of the mail-book in either of her affidavits, Ms Klobucar's evidence in cross-examination was that maintaining the mail-book was an aspect of her job and that she would complete the mail-book entry before putting the mail in an envelope to be sent out. I accept her evidence, which was logical, clear and inherently probable. Making an entry in the mail-book was a routine step in the outgoing mail process. Ms Klobucar agreed that sometimes mail items were provided to her but held back to send at a later stage. She would separate any such mail and place it in a secure location such as her office drawer. She could not recall if she would record in the mail-book the date the letter displayed or the date of its actual posting.
[23]
Backup system files
As I have already observed, Pmf Legal endeavoured to maintain its files electronically. Mr Fordyce's affidavit evidence (which accords with the expert evidence and I therefore accept on this point) is that:
1. There was a shared drive on the server (the "X drive") where "most records were created and should have been saved";
2. Engagement letters were created on various computers depending on which employee started the document;
3. The engagement letter may then have been saved onto the employee's computer, the X drive, or "may not be saved at all".
Mr Fordyce's evidence was [T 211:20]:
"We were using a program called SyncToy to do backups and SyncToy completely overrides any - any documents that are there so that SyncToy would have been the most - would have been the copy of the file as at the day before the synchronisation was done and if there was no - if there had been a document on the file at the time the engagement letters were created and subsequently for some reason those documents had gone, then SyncToy would have not shown those documents as being on the file, so all I would have is a current picture of the file which would be exactly the same as what is on the X drive."
Mr Fordyce explained that he would backup his computer onto both his own computer hard drive and an external hard drive. He stated "when I left the office every night I would take that copy home with me in case something happened to the computer system so that I wouldn't lose our records". He stated that there was a hard drive for each day of the week that would be overridden the next week. He would change the hard drive from time to time however he did not have a backup copy of the server "at, say, a particular date in 2012".
The expert evidence confirmed that Pmf Legal used a file synchronisation program called SyncToy to back-up its computers. As a matter of theory a file synchronisation system operates by repeatedly updating/backing up a single copy of a document or file as it is modified. It does not result in the creation of multiple historic versions of a document but overwrites the existing copy and requires only as much storage space as is constituted by the files at any given time.
Mr Carson said in cross-examination (emphasis added) [T 241:17]:
"MR COTMAN
Q. … assume it's suggested that the backup process used in relation to this system was one where the backups only changed the backup file to reflect what had changed in the system that was being backed up, so as a new file came in, that would then be added, and if a file was deleted, that would be removed, for example?
A. Well, I--
Q. Do you understand that?
A. I do understand it, it's, it's, like synchronising?
Q. Yes.
A. And, I don't know how it was set up, to be quite honest with you, but that's, that's, certainly one approach.
Q. Certainly, what we do know from the multiplicity of identical files, is that it doesn't look like a sync backup, does it?
A. In that the files are being removed from the backup?
Q. Just in terms of the fact that what are the backups are producing over, and over again, the same file?
A. Yeah, correct, I, I think so.
Q. Whereas, if it was a true, sync backup, you would have one copy of a file, which would never get changed by the backup system, unless it itself then changed in some way?
A. Well, well, one copy per location, I would think, yes, yep."
[24]
Data loss
The parties accepted that there is an absence of electronic data in relation to the Disputed Engagement Letters.
The plaintiffs' submission was that there was no evidence consistent with data loss on the X drive as opined by Dr Watt in the Joint Report (noting that Mr Carson was not instructed to examine for data loss) and that there was no evidence suggesting that files were located elsewhere on Pmf Legal's computer system other than the X drive, which is where Mr Fordyce stated the files would be. They also noted that Mr Fordyce had not indicated there was any significant or noticeable data loss. Accordingly, they asserted that all the data relevant to Mr Ho was present on the individual Pmf Legal computers and the server which had been examined by the experts. The plaintiffs submitted that, if the defendants wanted to rely on data loss as a conceivable explanation for the absence of electronic records, it was incumbent on the defendants to prove that data had been lost. The plaintiffs posited that it was not plausible that only the Disputed Engagement Letters data including the backup data in relation to Mr Ho was missing.
The defendants submissions were:
1. The plaintiffs had the onus of proving there was no data loss and that the plaintiffs had not precluded the possibility of some form of general data loss having occurred on Mr Fordyce's desktop computer;
2. The Watt Report relied on unproven and unstated assumptions regarding the restoration of data following the replacement of faulty hard drives on Mr Fordyce and Ms Sweet's computers or the Pmf Legal server on 5 June 2013 and 10 March 2014 respectively; that Dr Watt had not searched the entire computer system for data loss, only the X drive; and cumulatively this impugned the reliability of the Watt Report;
3. Dr Watt had failed to confer with Mr Morgan when preparing the Watt Report and the plaintiffs had failed to call Mr Morgan to prove the assumptions upon which Dr Watt's opinion was based. Dr Watt's cross-examination included [T 56:32]:
"Q. When you examined the images that were available to you from Klein & Co, you looked to see if there were other unrelated documents created by Mr Fordyce or his staff around the particular documents that you were concerned with?
A. Yes.
Q. Unrelated documents created by Mr Fordyce or his staff around 24 April or 4 July 2012 and 3 September 2013 in that year, is that right?
A. Yes.
Q. As a result of that, I think you concluded that there were unrelated documents created by Mr Fordyce and his staff around those dates and therefore I think you expressed the opinion that there was no evidence of hard disk or hard drive failure and consequential loss of data. Is that how we should understand your opinion on that?
A. Yes.
Q. Before expressing that opinion, did you take any steps to speak with Mr Fordyce or any of his staff members about that subject matter of the hard disks being replaced and/or loss of data?
A. Well, I normally would come and speak to people in the - opposing person.
Q. So the answer is no?
A. No."
1. Dr Watt did not give evidence of the existence of files on the dates in question, only dates on or around the Disputed Engagement Letters, and that this did not substantiate the plaintiffs' assertion that there were too many other contemporaneous files for there to have been a generalised data loss;
2. There was an absence of evidence on the integrity of Pmf Legal's computer systems as a whole and accordingly the available evidence was too limited in scope to rule out generalised data loss conclusively; and,
3. There were various "feasible" explanations or scenarios for the missing data as put in the Carson Report and which Dr Watt agreed were possible in cross-examination.
[25]
The Reckon billing system
Another issue raised by the parties was Pmf Legal's billback system and printing records. The defendants' evidence was that in 2012 to 2014, Pmf Legal used fully automated billback software, "Reckon", which marked the printing of documents to a client's file/account for billing purposes ("the Reckon billing system"). The Reckon billing system produced records which, in the ordinary course, would be backed up onto Reckon's server. Such records, if they did exist, were not produced in evidence. Mr Fordyce stated that no examination had occurred of the Reckon billing system to verify the printing of the Disputed Engagement Letters on the date they bear when Mr Fordyce says they would have been printed to place on the hard copy matter file. When asked why the Reckon billing system had not been checked, Mr Fordyce stated "I didn't do it, that's - I can't explain any further, I just didn't think about it" (see further paragraphs [177] to [178] below).
For the purpose of his report, Mr Carson had been instructed that a ransomware virus had attacked Pmf Legal's computer network in about June 2015 resulting in the destruction of all data on the Reckon server. The instructions state: "The Reckon server which operated the Reckon software was not backed up."
In written submissions, the plaintiffs posited that a Jones v Dunkel (1959) 101 CLR 298 ("Jones v Dunkel") inference arose against the defendants from the non-production of the Reckon billing system records particularly in relation to the 31 January BBQ King Letter. They argued that Mr Carson had agreed that reviewing the billing system records would be the starting point for producing evidence of printing at a certain time which they submitted was evidence the defendants should have called in aid of its case.
The defendants submitted that the plaintiffs were not entitled to rely upon a Jones v Dunkel inference because they had not raised the billback system or printing records or the need to examine these records in any of their pleadings, documentary or oral evidence, and accordingly there was no support for the premise that the records actually exist to be produced. They also submitted that the plaintiffs had failed to put any questions in cross-examination about a failure to produce these records. They drew attention to Gleeson J's statement of law in BCI Finances Pty Ltd (in liq) v Binetter (No 4) (2016) 348 ALR 227; [2016] FCA 1351 ("Binetter"):
"129. This aspect of the principle is summarised in Cross on Evidence, where it is stated (at [1215]) that:
[T]he rule [in Jones v Dunkel] only applies where a party is "'required to explain or contradict" something. What a party is required to explain or contradict depends on the issues in the case as thrown up in the pleadings and by the course of evidence in the case. No inference can be drawn unless evidence is given of facts "requiring an answer".
(Citations omitted).
130. Thus, there must be some existing basis in the evidence before the Court to support the inference which the party relying on the principle seeks to have drawn before the absence of evidence from the opponent takes on any significance."
[26]
The hard copy matter files
The plaintiffs tendered the hard copy matter files each of which contained an unsigned hard copy of the Disputed Engagement Letters purportedly sent to Mr Ho on or about the dates they bear. The files are labelled: "HO90/130027 Guardianship Tribunal application by Miss Sarah Ho"'; "120009…HO90 Proceedings for damages against company and shareholders-BBQ King"; 120024…HO90 Reinstatement of Rhodium Pty Ltd and terminating the winding up".
The folders were retrieved from Pmf Legal's storage facility by Mr Dadic in October 2017. Mr Dadic is a solicitor who began working at Pmf Legal in May 2016 before taking over the practice from Mr Fordyce in late 2016. He is the solicitor with carriage of the matter for the defendants. He has sworn an affidavit in these proceeding on 20 October 2017 and was called as a witness for the defendants. His affidavit evidence is that on about 18 October 2017, he and a paralegal searched the secure storage unit where Pmf Legal's physical files have been housed since January 2017 for files relating to Mr Ho.
Mr Dadic had also visited the storage facility in September 2017. In cross-examination, Mr Dadic stated that he had not added anything to the files in the facility since it was created. The storage unit is secured by an electronic key which is known only to Mr Dadic and his paralegal. However, prior to January 2017, the hard copy matter files were stored and accessible at Pmf Legal's offices. He could not confirm who else would have had access to the files in the ordinary course of business before the files were moved to the storage facility in January 2017 other than that he himself did not have access to the files.
He gave evidence that the hard copy matter files were stored in various locations around Pmf Legal's office and that he assumed access was unfettered [T 222:23]:
"Q. --were they kept in Mr Fordyce's office or in a general filing area? How does it work?
A. It was a - the files were stored in all kinds of places. There were - there was a filing cabinet, there was a storage area in the filing room, there were files in his office, there were files in my office, there were files in the paralegal working area, which was an open sort of working area, so they were all over the shop.
Q. So far as the addition of material to those files, from time to time, or indeed a subtraction of material from the files that was first of all not a matter that you were concerned with or about?
A. Absolutely not, yeah.
Q. So far as they were of interest to Mr Fordyce, he and those working with him had unfettered access to them?
A. I would assume so."
[27]
Usual practice
Both the plaintiffs and the defendants rely on the evidence given of the usual practice undertaken at Pmf Legal upon opening a new matter or file as proof of the occurrence of the creation and posting of the Engagement Letters and from which inferences can be drawn in respect of the Disputed Engagement Letters. The plaintiffs argued that, in this instance, the "usual practice" evidence (particularly the absence of records in accordance with the usual practice) proved that the fact in issue - the creation of the Disputed Engagement Letters - did not occur because the usual practice would otherwise have recorded its occurrence. The defendants argued that there was insufficient evidence to suggest that Pmf Legal's usual practice was not followed in respect of the Disputed Engagement Letters. They asserted that there was a regular and uniform practice followed by Pmf Legal in respect of the creation and posting of engagement letters as demonstrated by the Agreed Engagement Letters and from this the Court could reasonably infer that the Disputed Engagement Letters were sent to Mr Ho.
There was agreement regarding what the components or steps of the usual practice were and what business records might arise from that usual practice, which was supported by direct or objective evidence in respect of the Agreed Engagement Letters. What was not agreed was the degree of adherence to that usual practice and consequently whether the usual practice could be relied upon to infer the posting of the Disputed Engagement Letters.
The evidence relied on to demonstrate usual practice consisted of:
1. The testimony of Ms Klobucar and Ms Wu (which the Court accepts as reliable) and of Mr Fordyce (which the Court will accept only as set out in paragraphs [106] to [107] above);
2. The mail-books for the years 2012 to 2014; and
3. Computer data and metadata as was sought to be explained by the expert witnesses, particularly the file backup system.
[28]
The law
The law in this area was recently explained in SAMM Property Holdings Pty Ltd v Shaye Properties Pty Ltd [2017] NSWCA 132; (2017) 345 ALR 633 per McColl JA (Gleeson JA and Sackville AJA agreeing) citing Connor v Blacktown District Hospital (1971) 1 NSWLR 713 at 721 ("Connor v Blacktown District Hospital") per Asprey JA (Mason JA agreeing) at paragraph [150]:
"To prove that an act has been done, it is admissible to prove any general course of business or office, whether public or private, according to which it would ordinarily have been done, there being a probability that the general course will be followed in the particular case."
Asprey JA explained in Connor v Blacktown District Hospital (at 721):
"…evidence of relevant practice may be given by a person who, on a sufficient number of occasions, and over a sufficient period, has regularly and uniformly performed acts, or has observed the regular and uniform performance of acts by others, under the same circumstances and upon the same occasions, so as to make it appear probable in the minds of reasonable men that, given the same circumstances and occasion, the like acts will be performed."
In respect of the reliability of business records, the observations of Hope JA are pertinent (though I note this was in the context of a large hospital) in Albrighton v Royal Prince Alfred Hospital (1980) 2 NSWLR 542 at 548G ("Albrighton"):
"...No doubt mistakes may occur in the making of records, but I would think they occur no more, and probably less often, than in the recollection of persons trying to describe what happened at some time in the past. When what is recorded is the activity of a business in relation to a particular person amongst thousands of persons, the records are likely to be a far more reliable source of truth than memory. They are often the only source of truth."
Jacobs JA's observations in Connor v Blacktown District Hospital (1971) (at 716) should also be recalled (this position is still good law, see, for example Tinnock v Murrumbidgee Local Health District (No 2) [2016] NSWSC 87):
"In my opinion, to say that evidence of practice is admissible to prove that a certain state of affairs existed on a particular day is to put the matter too broadly. I cannot give evidence of what other people did on a particular day because I have observed them doing it on other days. The particular rule is that I can give evidence of what I did on a particular day, even though I have no distinct recollection of the particular day, if it was part of my practice to do the act regularly."
[29]
Witness evidence
Mr Fordyce's evidence was that "the invariable practice was to create the engagement letter when the file was opened. That was an integral part of the process from the time of giving instructions to create the file until the engagement letter was completed and signed." [T 90:25]
The engagement letter was created electronically and Mr Fordyce gave evidence that, though hard copy matter files were kept, he preferred to use an electronic file system rather than paper/hard copy matter files and "to maintain electronic copies of such hard copy documents as exist."
In examination-in-chief, Mr Fordyce's evidence in relation to the preparation of cost agreements was [T 89:37]:
"When a new matter became one that was going to go forward I would give instructions to my personal assistant or paralegal to give her the details needed by her to complete the standard form costs agreement, engagement letter and those details were the name of the client, the description of what the matter was and the anticipated amount of costs for her to complete into that standard form. That would involve using the time costing system in the office, the opening of a new file on that time costing system, the time costing system would automatically generate a number for that file. She was then able to - what would happen then is that a file would be open on the X drive under the - in the relevant place.
That file would be populated with various folders for documents, correspondence, et cetera. The engagement letter would then be created or - or having given the instructions to my personal assistant or paralegal, I would then receive from her an engagement letter. She would usually either bring it into my office or I would go and look over her shoulder or she would send me a link to it. I would look at the engagement letter to make sure that it reflected the instructions that I had given her and then if that document was in order, I would tell her that the document was in order and then she would then physically bring it into my office for me to sign."
He would review the engagement letter before signing. He said [T 91:6]:
"If that material was correct, I would then instruct the engagement letter to be printed and brought to me to sign. The engagement letter was then brought into my office. I had a fountain pen, the - our letterheads and our invoices were on a very shiny high‑quality paper. I signed with the fountain pen and I had to use a - a blotter to blot them because the ink wouldn't dry on the document or it would smudge."
[30]
Submissions
Taking all of the evidence together, I am satisfied that the usual practice when opening a new client matter or file was a multistage process that generated various business records most of which were at least initially created electronically. Files were also kept in hard copy but, to the extent possible, Mr Fordyce aimed to run a "paperless office". I accept and adopt the plaintiffs' summary of the steps in the usual practice as supported by the evidence:
"a. An engagement letter is generated in a computer file, which file is kept on the "X: drive", in client and then matter sub-directories (e.g. X:\H\Ho\ etc);
b. Usually, the file is created by the opening of an existing "standard" file, editing, and a "save as" from that existing file, to create the new file in the client directory. The source file may itself be from the client directory, if a prior file exists of that type of document populated by the client address, etc.;
c. For the relevant files, the "save as" name of the file is the date of the letter contained in the file, expressed in YY/MM/DD format, as the prefix, with the suffix "engagement letter.doc" for the files or any later variation;
d. The document is printed from the file for editing and, if approved, another, for signature, being a special print job to a distinctive letterhead (the "swirl" document) on special paper;
e. The special copy is printed, signed and a signed copy of the letter is kept on the client's "hard copy" file. There may also be a scanned PDF copy of the signed letter, kept in the client's X: drive matter directory;
f. The printing is done on a central printer, which is monitored by a computer driven billing system, and print jobs are recorded by the billing system against the client matter;
g. The letter, signed, is delivered to the office junior who, by reference to the letter and any accompanying material, enters the details of what is posted (including multiple items) in a computer spread sheet, and to whom and to where, as part of the particulars found on the mail-book spread sheets;
h. After entry in the mail-book is made, the item(s) is enveloped, franked and stored on the junior's desk until, at the end of the work-day, it is mailed by her; and,
i. The firm's computer files are backed up to a variety of devices over time, creating multiple copies of files on the "X: drive" and various backups of that drive (the oldest file in issue ('120131') has 33 identifiable identical copies)."
[31]
Usual practice - conclusion
I accept the plaintiffs' contention that where the usual practice was followed, a number of records of the creation of an engagement letter would usually be generated. It seems to me that the fewer "usual records" discoverable in relation to a particular engagement letter on the date it was purportedly created speaks against the probability that the engagement letter was created on that date. I have come to this view by comparing the records created in relation to the Agreed Engagement Letters, where I accept the usual practice was duly observed, and the records (or absence thereof) available in relation to the Disputed Engagement Letters. At paragraphs [240] to [254] below, I have set out the evidence and my observations on the Agreed Engagement Letters as a point of reference for consideration of the Disputed Engagement Letters.
Having regard to the authorities I have set out in paragraphs [195] to [199] above, I have concluded that the evidence of usual practice must be approached in one of three ways - it being recalled that such evidence is circumstantial evidence which enables the Court to infer the existence of a fact about which there is no direct evidence. This is most easily demonstrated by reference to the evidence about the mail-book.
First, if the Court accepts the evidence of usual practice (e.g. all outgoing mail was recorded in the mail-book), then a proven departure from the usual practice will be a strong foundation on which the Court can (but not must) conclude that the particular thing sought to be proven relying on the usual practice (e.g. the mailing of an item) did not occur.
Second, even when the Court is satisfied that there was a usual practice, the Court can take into account the likelihood of departure from that practice when it is asked to infer a particular fact in reliance upon that usual practice (e.g. how regularly the mail-book was used perhaps by reference to the number of entries in the mail-book generally).
Third, a party cannot rely on evidence of usual practice where it is apparent - by the party's own admission, or from other evidence - that the practice was regularly departed from unless it is able to be established that the departures themselves could be described as part of the usual practice. In other words, there is either a usual practice or there is not. There are usually not persistent "exceptions" to the usual practice.
[32]
Presumption of receipt
There was no dispute that, in accordance with s 160 of the Evidence Act as it was at the relevant time, if the Court was satisfied that a letter had been posted to Mr Ho it is presumed to have been received four days after posting (noting that the legislation was recently amended to seven days after posting).
[33]
Onus
Before turning to the Court's findings in relation to each of the Engagement Letters, the final area of general dispute between the parties which requires consideration is the debate between them about legal burden and evidential burden and the standard of proof in circumstances where the plaintiffs plead fraud but where relevant facts were peculiarly within the knowledge of the defendants. As is apparent from conclusions which I have already expressed in these reasons, different aspects of the dispute about onus of proof have informed different issues in the proceedings.
[34]
Submissions
The plaintiffs' submitted that only "comparatively slight evidence" was required for them to discharge the onus of proving that the Disputed Engagement Letters were not sent because the relevant facts were peculiarly within the defendants' knowledge and that the onus shifted to the defendants to explain what occurred in circumstances where they had that knowledge.
Citing Blatch v Archer (1774) 1 Cowp 63 at 65; (1774) 98 ER 969, the plaintiffs submitted that it was incumbent upon the defendants' to persuade the Court that the Disputed Engagement Letters were sent, particularly given the statutory and fiduciary obligations of a solicitor. The plaintiffs also submitted the defendants were required to prove Mr Ho had informed consent before entering into transactions with Pmf Legal in circumstances where the defendants, in a fiduciary capacity and charging costs on a special basis, wanted to retain the benefit of the transaction (referring to Maguire v Makaronis (1997) 188 CLR 449 at 466; [1997] HCA 23). I do not consider arguments on matters of fiduciary obligation or the survival of any obligations beyond the retainer, or the burden of proving fully informed consent, to be relevant to the existence or non-existence of the Disputed Engagement Letters.
The plaintiffs also submitted that in respect of any data loss, it was sufficient that they prove there was no evidence consistent with data loss as stated in the Watt Report. They asserted that the defendants bore the onus of proving that any data loss had occurred and that it affected data relevant to Mr Ho (citing Ex parte Ferguson; Re Alexander (1944) 45 SR (NSW) 64; (1944) 62 WN (NSW) 15 - which stands for the proposition that the onus is with the defendants where facts are peculiarly within their knowledge).
The defendants' argued that the onus remained with the plaintiffs as the moving party seeking a negative declaration to prove the serious allegations of fraud by Mr Fordyce and that burden was to be discharged in accordance with the principles articulated by Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 and reflected in s 140 of the Evidence Act.
In respect of allegations of fraud by Mr Fordyce, the defendants referred to Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 at 450-451; [1992] HCA 66 at [2] per Mason CJ, Brennan, Deane and Gaudron JJ where it was said that there is "a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct.". See also, Re Day (2017) 91 ALJR 262; [2017] HCA 2 at [14]-[19] (Gordon J).
[35]
The law
As a starting point, in civil proceedings, the standard of proof is on the balance of probabilities: Evidence Act, s 140. In making a finding, the Court must feel an "actual persuasion of the occurrence or existence" of facts in issue and may take into consideration "the nature of the cause of action or defence, and the nature of the subject-matter of the proceeding, and the gravity of the matters alleged": Evidence Act, s 140(2); see, e.g., Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (In Liquidation) (No 2) (2011) 297 ALR 56; [2011] FCA 1123.
The Uniform Civil Procedure Rules 2005 ("UCPR"), rr 14.14, 15.3 and 15.4 relevantly provide that allegations in the nature of fraud must be pleaded specifically and with particularity by the claimant, and where any condition of mind is alleged, which includes fraudulent intent, the claimant must give "particulars of the facts on which the party pleading relies": see Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, 573; [1995] HCA 68; Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39, [26]; Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114, [46].
It is helpful to repeat the entire passage from Neat Holdings at 450-451 referred to above (citations omitted):
"The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, 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". Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct."
The relevant legal principles were conveniently summarised by Gleeson J in Binetter:
"122 Where a plaintiff has the onus of proving a matter, and "relevant facts are peculiarly in the knowledge of the defendant or where the defendant has the greater means to produce evidence relating to those facts", then if the plaintiff provides sufficient evidence from which the matter may be inferred, "the defendant then comes under an evidential burden, or an onus of adducing evidence": Krstic v Brindley [2006] NSWSC 1414 at [26].
123 Where a fact is peculiarly within the knowledge of a party to litigation, slight evidence of that fact may suffice to prove the fact unless that evidence is explained away by the party with the knowledge of the fact: Hampton Court Ltd v Crooks [1957] HCA 28; (1957) 97 CLR 367 at 375; TyCo Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333 at [121]; Parker v Paton (1941) 41 SR (NSW) 237 at 243; Ex parte Ferguson; Re Alexander (1944) 45 SR (NSW) 64 at 67, 70.
124 A failure by respondents to deny or explain facts when it was in the respondents' exclusive power to do so allows increased strength or weight to be given to primary facts favourable to the applicants and allows inferences favourable to the applicants to be more confidently drawn: United Group Resources Pty Ltd v Calabro (No 5) [2011] FCA 1408; (2011) 198 FCR 514 at [75]-[76]. The silence of a party may serve to resolve a doubt or an ambiguity regarding the existence of a fact, especially where the facts are peculiarly within the knowledge of the silent party: Transport Industries Insurance Co. Ltd v Longmuir [1997] 1 VR 125; (1996) 9 ANZ Insurance Cases 61-385 at 142.
125 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": Coshott v Prentice [2014] FCAFC 88; (2014) 221 FCR 450 at [80], quoting Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970. This maxim also bears upon the appropriateness of deciding whether a fact has been proved when only limited evidence is available. In Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572 at [14]-[15], Hodgson JA (with whom Beazley JA agreed) said:
[I]n deciding facts according to the civil standard of proof, the court is dealing with two questions: not just what are the probabilities on the limited material which the court has, but also whether that limited material is an appropriate basis on which to reach a reasonable decision …
In considering the second question, it is important to have regard to the ability of parties, particularly parties bearing the onus of proof, to lead evidence on a particular matter, and the extent to which they have in fact done so …"
[36]
Onus - conclusion
I summarise the foregoing, and the approach I have adopted, as follows. The plaintiffs bear the legal onus of proving their case on the balance of probabilities, i.e. that the Disputed Engagement Letters were not produced and sent on or about the dates they bear. A finding of fraud is "a finding of seriously wrong conduct" and will not be made lightly: Sgro v Australian Associated Motor Insurer's Limited (2015) 91 NSWLR 325; [2015] NSWCA 262 at [57] (Beazley P), and the Court requires "a degree of probability which is commensurate with the occasion": Bater v Bater [1951] P 35 at 36-37 (Denning LJ). To quote Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; [1938] HCA 34: "'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences". However, as the defendants conceded, once the plaintiffs have raised sufficient evidence to entitle them to, but not compel, a finding in their favour, the defendants bear the evidential onus of proving the creation and sending of the Disputed Engagement Letters in circumstances where "the relevant facts are peculiarly in the knowledge of the defendant or where the defendant has the greater means to produce evidence relating to those facts": Krstic v Brindley [2006] NSWSC 1414 at [26]. I have also borne in mind the High Court's observation in Kuligowski v Metrobus (2004) 220 CLR 363 at 385-386; [2004] HCA 34 at [60] that "[a] failure to find a matter alleged does not establish the truth of the contrary of that which is alleged."
[37]
The Agreed Engagement Letters
I will now set out my reasoning in relation to each of the Engagement Letters. That reasoning proceeds against the background of the totality of the evidence available in relation to the Agreed Engagement Letters, so I will consider those letters first.
[38]
The Trading House Letter
On or about 6 June 2012, Mr Fordyce says he received instructions from Mr Wong on behalf of Mr Ho to cease the winding up of Trading House Pty Ltd and to join it as a plaintiff to the BBQ King Proceedings. That evidence is corroborated by the evidence of Ms Wu.
Ms Wu stated that Pmf Legal received instructions about reinstating Trading House while Mr Fordyce was overseas on about 7 June 2012. As instructed, Mr Fordyce's personal assistant, Ms Sweet, prepared the Trading House Letter with accompanying schedule of fees and expenses. Ms Wu then signed the letter and provided it to either Ms Sweet or Ms Klobucar to send out. The letter was scanned onto the computer. Annexed to Ms Wu's affidavit of 1 September 2015 is a copy of the signed Trading House Letter. The copy bears the Pmf Legal logo in the top left-hand corner of the first page and on the footer of each page a wave watermark and liability disclaimer. The wave watermark was pre-printed on special paper which was used when sending official firm correspondence to clients rather than a copy being printed just for the office or matter file. The presence of the wave indicates that the copy is a photocopy or scan of the formal letterhead sent to the client.
Ms Wu clarified in a later affidavit that she did not independently recall the date on which she signed the letter but that it was her practice to check the currency of the date on the face of the letter before signing. She agreed in cross-examination that she was not involved in the process of sending out letters once she had signed them and could not speak to that process. When asked about her involvement in various Ho Matters she said "I have no detailed recollection about any of the matters. I have a global recollection." She could not specify the extent of her involvement in any of the Ho Matters.
Ms Wu's evidence corresponds with the metadata and expert evidence, which is set out below.
The relevant Microsoft Word metadata is:
1. File created: 7/06/2012 9:58:48 AM
2. File accessed: 7/06/2012 10:07:50 AM
3. File modified: 7/06/2012 10:07:50 AM
4. Application created: 7/06/2012 9:58:48 AM
5. Last printed: 7/06/2012 10:07:00 AM
6. Last saved: 7/06/2012 10:07:00 AM
7. Document author: Paul
8. Document last modified by: PA1
9. Full file path as found on Pmf Legal Server: X:\H\HO90\120035-Reinstatment of Trading House and terminating the winding up\Correspondence\120607 Engagement Letter.doc
[39]
The Complaints Letter
Mr Fordyce's evidence is that on or about 28 January 2014, Mr Ho retained Pmf Legal in relation to the Complaints Proceedings. Mr Fordyce instructed his paralegal to open a new file and to prepare the Complaints Letter. The Complaints Letter was printed and signed by Mr Fordyce and a copy was scanned onto the X drive. It was posted to Mr Ho's PO Box on or about that date.
Mr Fordyce's evidence is corroborated by the metadata and expert evidence, which is set out below, as well as the evidence of usual practice.
The relevant Microsoft Word metadata is:
1. Created: 28/01/2014 1:34 PM
2. Date last saved: 28/01/2014 2:00 PM
3. Last printed: 28/01/2014 1:45 PM
4. Document author: Paul
5. Document last modified by: PL1
6. Total editing time: 00:16:00
7. Full file path as found on Pmf Legal Server: X:\H\H090\140009 - Health Care Complaints\Correspondence\140128 Engagement Letter Hourly Precedent Pmf Legal Limited.doc
The relevant Adobe PDF metadata is:
1. Created: 28/01/2014 12:58 PM
2. Modified: 28/01/2014 12:58 PM
3. PDF Producer: DocuCentre-IV C4470, Fuji Xerox Office Printer/Scanner
In summary, the objective contemporaneous evidence indicating that the Complaints Letter was prepared and sent to Mr Ho's PO Box is as follows:
1. An electronic copy of the Complaints Letter is saved on the X drive in the Ho matter file. The full file pathway is: "X:\H\H090\140009 - Health Care Complaints\Correspondence\140128 Engagement Letter Hourly Precedent Pmf Legal Limited.doc";
2. It was created on 28 January 2014 at 1:34 pm as indicated by the metadata and the file name ("140128 Engagement Letter Hourly Precedent Pmf Legal Limited.doc") following the file naming convention e.g. "YY/MM/DD engagement letter.doc";
3. It was last printed at 28 January 2014 at 1:45 pm and last saved at 2 pm;
4. The Complaints Letter was scanned using the DocuCentre-IV C4470 printer and a PDF version was electronically created and saved on the X drive in the Ho matter file ("140128 Engagement Letter.pdf");
5. The PDF was created on 28 January 2014 at 12:58 pm - the experts agree that this is incorrect and the inconsistency between the time stamps on the Microsoft Word metadata and the Adobe PDF metadata "may be a result of the scanning device not having made adjustment for ESDT which is UTC+11 in January and UTC +10 in June" - to that end, it was created about 15 minutes after printing; and,
6. The 2014 mail-book records an "engagement letter" addressed to Mr Ho's PO Box on 28 January 2014. The entry is one of two in the mail-book for that day (the other is for a different client) and is one of numerous entries for January and February 2014.
[40]
The Disputed Engagement Letters
It will be apparent that the objective contemporaneous evidence including metadata in respect of the Agreed Engagement Letters aligns substantially with the evidence given by Mr Fordyce, Ms Klobucar and Ms Wu about the usual practice at Pmf Legal upon opening a new file and the multiple steps involved in that usual practice, all of which produced relatively consistent data and records which I have set out above.
Bearing this in mind, I will approach the Disputed Engagement Letters in the same way. In the course of these reasons to this point, I have also expressed a number of conclusions which inform my consideration of each of those letters. To avoid repetition in relation to each letter, I summarise those conclusions here:
1. While Mr Ho's untested evidence is, without more, insufficient to allow the Court to make the findings the plaintiffs seek, it is sufficient to impose an evidential burden on the defendants to demonstrate the contrary, as was ultimately accepted by the defendants - see paragraph [239] above.
2. Mr Fordyce's evidence cannot be accepted unless it is inherently credible, against his interest or corroborated by contemporaneous records or other reliable evidence - see paragraph [107] above.
3. The Court accepts the evidence of Ms Klobucar, Ms Wu and Mr Dadic - see paragraph [127] above.
4. The metadata do not provide evidence upon which the Court may safely rely. Save in areas where the experts clearly agreed, the Court is not sufficiently persuaded by either expert to make any finding based on the evidence of the computer experts - see paragraph [144] above.
5. An entry in the mail-book is reliable, contemporaneous evidence of the item described as having been sent. However, absence of a reference to something in the mail-book, while a strong indicator, is not "conclusive evidence" sufficient, in and of itself, to prove the unrecorded item was not sent. Nevertheless, absence of a reference is evidence which, with other circumstances (including evidence of usual practice and other items recorded in the mail-book), can be relied on for the conclusion that something was not sent - see paragraph [154] above.
6. The Court disregards the issue of backup data.
7. The defendants have failed to establish that the absence of computer records of the Disputed Engagement Letters on or about the dates they bear can be explained by data loss - see paragraph [171] above.
8. The failure of the defendants to call evidence about the billback system's data (and failure to provide an explanation for the absence of that evidence) gives rise to a Jones v Dunkel inference which makes it easier to draw the ultimate conclusion contended for by the plaintiffs in relation to the Disputed Engagement Letters as to whether they were created on or about the date they bear.
9. The Court is satisfied that Pmf Legal had a usual practice in relation to the creation and posting of engagement letters as set out in paragraph [211] above.
10. If the Court is satisfied that a letter had been posted to Mr Ho it is presumed to have been received four days after posting.
[41]
31 January BBQ King Letter
This letter was not the subject of any evidence from Mr Ho. Its existence was drawn to attention by the defendants and added to their amended statement of claim by the plaintiffs. The plaintiffs submitted that the defendants did not rely on the 31 January BBQ King Letter in the Response and denied that Mr Ho ever received the letter.
The computer evidence shows the 31 January BBQ King Letter file was created on 31 January 2012. However, the precise content of the file on that date is unknown and there is insufficient evidence to make the finding that the 31 January BBQ King Letter was posted to Mr Ho on or around 31 January 2012.
The expert evidence is that the Microsoft Word metadata indicates a file named "120131 Engagement Letter.doc" was created and saved onto the X drive on or about 31 January 2012. On its face, it could be expected that the contents of this file was an engagement letter dated 31 January 2012. The defendants submit that this accords with Mr Fordyce and Mr Ho's evidence that the retainer in the BBQ King Proceedings commenced on 31 January 2012. However, when "120131 Engagement Letter.doc" is opened it contains an engagement letter dated 3 April 2012.
The 31 January BBQ King Letter was not included in the Costs Response. In his affidavit, Mr Fordyce says that "At that time, I seem to have forgotten or overlooked the fact that the BBQ King Engagement Letter was originally dated 31 January 2012." Mr Fordyce's explanation in cross-examination was as follows [T 118:16]:
"MR COTMAN
Q. You of course didn't mention the 31 January engagement letter in your costs assessment response, did you?
A. No.
Q. You had of course rendered bills under that fee agreement, had you not?
A. Yes I had.
Q. It was therefore a material document to produce in respect of those bills, was it not?
A. I had forgotten about the 31 January document, when we answered the costs assessor it was some years after the event. I looked at it, when I opened the document it had 3 April and then I, then I printed that off.
Q. But just looking at the name of the file would have reminded you that something had happened on 31 January on your version of events, wouldn't it?
A. I opened the document, it had 3 April and I didn't think further about it.
Q. You opened a document that was ostensibly dated 31 January 2012, found a document dated April and thought no more about it, is that the idea?
A. I don't know whether - I don't think I was the one creating these documents for the costs assessor. The, the - our staff were putting those documents together. They were just asked to produce the costs agreements that were on the files.
Q. But you had a series of bills that predated April 2012, didn't you?
A. Yes I did.
Q. In respect of that, you understood that it would be significant to find out whether or not you had a costs agreement that predated April 2012, wouldn't it?
A. I didn't turn my mind to that at all."
[42]
Metadata
The relevant Microsoft Word metadata is:
1. Created: 31/01/2012 1:12:18 PM or 2:12:18 PM (Source File)
2. File accessed: 07/06/2012 9:48:42 AM
3. Application created: 31/01/2012 2:12:00 PM
4. Date last saved: 07/06/2012 9:48:00 AM
5. Last printed: 16/09/2010 10:27:00 AM
6. Revision number: 4
7. Document author: Paul
8. Last saved by: PA1
9. Total editing time: 00:11:00
10. Full file path as found on Pmf Legal Server: X:\ H\HO90\120009-Proceedings for damages against company and shareholders-BBQ King\Correspondence\120131 Engagement Letter.doc
In summary, the objective evidence about the 31 January BBQ King Letter is:
1. A file was created on the X drive on 31 January 2012 at 2:12 pm.
2. It was labelled "120131 Engagement Letter.doc" in conformity with the file naming convention.
3. The full file pathway is: "X:\H\HO90\120009-Proceedings for damages against company and shareholders-BBQ King\Correspondence\120131 Engagement Letter.doc".
4. There is no electronic file with the content being an engagement letter dated "31 January 2012".
5. There is no hard copy version of this letter on the 120009 BBQ King hard copy matter file.
6. No signed copy of the letter exists in either hard or soft copy.
7. There is no mail-book entry on that date. There are numerous entries in the mail-book for January and February 2012. An engagement letter to another client is recorded as being sent on 31 January 2012.
8. The 2012 mail-book contains other entries of Engagement Letters being sent to Mr Ho, for example, the Trading House Letter. Although the defendants contend that the 31 January BBQ King Letter was held back to be sent with the invoice on 3 February 2012, the mail-book entry for 3 February 2012 only records the sending of the invoice, not of the engagement letter. This does not accord with the usual practice evidence or with Ms Klobucar's evidence that she recorded all mail items that she enveloped and sent out. I pause to note that Ms Klobucar's affidavit states that she commenced at Pmf Legal in "February 2012" but does not specify an exact start date.
9. There are no metadata or other records indicating printing of the 31 January BBQ King Letter on 31 January 2012 or during 2012.
10. The application metadata records a print date of 16 September 2010 at 10:27 am. This is at odds with the date of creation but, as Mr Carson explained in both cross-examination and the Carson Report, is a "fairly common anomaly" where last print metadata was likely inherited from another Microsoft Word file which had been used as a template to create the 31 January BBQ King Letter: "When you "Save As" a document, it inherits the previous last print date".
11. 33 backup copies of the 31 January BBQ King Letter file on the Pmf Legal server exist in the computer records but there is no whole file or fragment of a file containing a 31 January 2012 letter.
12. The last modification or save date was 7 June 2012 at 9:48 am - about ten minutes before the Trading House Letter was created which may indicate the 31 January BBQ King Letter was used as a template file for the Trading House Letter.
[43]
Witness evidence
Mr Fordyce's evidence is that on 3 April 2012 he or his personal assistant altered the date of the 31 January BBQ King Letter from 31 January 2012 to 3 April 2012. No other content was changed. The change of date followed email discussions between Mr Fordyce and Mr Wong from 30 March 2012 to 3 April 2012 regarding estimated costs in the matter and what billing method would be used. Mr Fordyce says the letter was re-issued in order to confirm that Pmf Legal was continuing to act pursuant to time-based costing and "to make it clear Pmf Legal's hourly rates continued to apply". He asserted that it was implicit in his email that a signed copy was required and by copying Mr Wong and Ms Leung in on the email he was alerting them to the need for a signed copy. The emails are in evidence but are silent in relation to the issuing of a further engagement letter and say nothing in terms about hourly rates continuing to apply. Nor can I accept from any of the emails that it was "implicit that signed copy was required". This seems to be a wishful, after-the-fact interpretation on the part of Mr Fordyce.
The hard copy BBQ King matter file in evidence contains an engagement letter date 4 July 2012 which is followed directly by an engagement letter dated 3 April 2012. Mr Fordyce says that when he searched the hard copy matter file in June 2014, he found the 4 July 2012 document and removed it from the file in order to make a copy. He says he did not see or notice that the following document was the 3 April 2012 letter ("I just took out the document I wanted") and that he did not search the files to see if a hard copy of the 3 April 2012 Engagement Letter existed.
[44]
Objective evidence
A printed copy of BBQ King Letter sits, unsigned, on the hard copy BBQ King Proceedings file (see paragraph [190] above). The BBQ King Letter is the final document of the divider section labelled "corro" in the folder and it is preceded by the Amended BBQ King Letter.
There is no entry in the mail-book recording that the BBQ King Letter was sent to Mr Ho on about 3 April 2012. Ms Klobucar's evidence is that she was not absent on that day. There are numerous entries in the mail-book for March and May 2012, but only seven pieces of correspondence in April. Of those seven, there are two entries for 3 April (neither being letters to Mr Ho), three on 5 April 2012 (including a tax invoice to Mr Ho) and two on 20 April 2012 (including another tax invoice to Mr Ho).
An electronic Microsoft Word version of the BBQ King Letter does not exist as a separate file created on 3 April 2012 (which, following the file naming convention, it could be assumed might be labelled "120403 Engagement Letter.doc"). However, when opened, the "120131 Engagement Letter.doc" bears the date of 3 April 2012. The Microsoft Word metadata is the same as that of the 31 January BBQ King Letter reproduced above. The only other electronic iteration of the BBQ King Letter is a PDF version created (and most likely printed) on 10 September 2013 ("120403 Engagement Letter to Robert Ho - 120009.pdf"). In relation to the PDF version of the BBQ King Letter, the relevant metadata is:
1. File created: 10/09/2013 12:10:15 PM
2. File accessed: 10/09/2013 12:10:15 PM
3. File modified: 10/09/2013 12:10:15 PM
4. Full path: H\HO90\130027 - Guardianship Tribunal application by Miss Sarah Ho\Correspondence\120403 Engagement letter to Robert HO - 120009.pdf
I note that the PDF version is saved into the "130027" matter sub-directory, rather than in the "120009" sub-directory.
In the Joint Report, the experts agree that there was no evidence to indicate the file or document named 31 January BBQ King Letter was created, modified or printed on 3 April 2012. As an agreed matter between them, I accept that evidence. Dr Watt asserted that the evidence suggested the 31 January BBQ King Letter was created on 7 June 2012. Mr Carson said the only evidence to suggest that was the "last modified date" which was not a strong basis for this also been the creation date. Dr Watt agreed in cross-examination that if the date in "120131 Engagement Letter.doc" was amended to "3 April 2012" this was on or before 7 June 2012, the "last modified" date for the file.
[45]
Submissions
The defendants contend that the BBQ King Letter was a modified version of the 31 January BBQ King Letter re-issued on 3 April 2012 to Mr Ho in order to clarify the time-based costing mechanism Pmf Legal was applying. They rely on the usual practice, as stated by Mr Fordyce and Ms Klobucar, to conclude that it could reasonably be inferred that the BBQ King Letter was printed, signed and sent to Mr Ho on or about 3 April 2012. The defendants argued that, given its "decidedly haphazard content", the absence of an entry in the electronic mail-book recording the letter as sent to Mr Ho was not conclusive evidence that the letter was not sent when Mr Fordyce says it was. They submitted that the Microsoft Word metadata were unhelpful in identifying when the "3 April 2012" date was inserted into the letter because the "track changes" function had not been enabled and Dr Watt could only positively state that the date change occurred before 7 June 2012, which was the "last modified" date for the file. In relation to paragraph [273] above, the defendants submitted that in admitting he did not recall seeing the letter on the file, Mr Fordyce was actually making a concession against his own interest which supported his credibility because, they said, he could have stated the letters were both there when he checked in June 2014.
Further, they submitted that the fact the BBQ King Letter was provided to the NSW Trustee and Guardian on 10 September 2013 and in the Costs Response indicated that the file existed at least in September 2013 and demonstrated a consistent pattern of the BBQ King Letter being provided to third parties as proof of an existing retainer between Pmf Legal and Mr Ho in the BBQ King Proceedings. The defendants argued that it was reasonable to expect that an express reference in Mr Fordyce's reply to the NSW Trustee and Guardian to an engagement letter in the BBQ King Proceedings may have prompted a response from Mr Wong or Ms Leung (who were sent a copy of Mr Fordyce's reply) if they did not believe the document existed as at September 2013. The defendants submitted that their lack of response should be taken as tacit consent or acquiescence.
The defendants argued the same in respect of Mr Fordyce's email of 18 September 2013 to Ms Wu, which was copied to Mr Wong and Ms Leung, containing notes of a telephone conversation with the NSW Trustee and Guardian on that date in which he stated: "Need copy of executed cost agreement with Mr Ho". Neither Mr Wong nor Ms Leung responded to that email. The defendants again submitted that Ms Leung's failure to respond was particularly significant given her role as executor and that the allegations being maintained against Mr Fordyce do not sit comfortably with the references in September 2013 to existing retainers with Mr Ho, even in circumstances where Ms Leung was not the direct recipient of the letters and emails referred to. They asserted that the Court was entitled to take into consideration that Ms Leung had not conducted independent searches for the Disputed Engagement Letters, yet maintained the proceedings.
[46]
Conclusion
But for the existence of the hard copy letter on the hard copy matter file, I would not be satisfied that the BBQ King Letter was created on or about 3 April 2012. For example (as the defendants submitted, see paragraph [279] above), the Microsoft Word metadata only reveals a "last modified" date, it does not specify when the date displayed in the 31 January BBQ King Letter file was changed. As the Carson Report states "The date exists as a text entry without any associated information about when it was entered." The experts could only narrow this to a range of between 31 January 2012, the file's "creation date", and 7 June 2012, the "last modified" date.
Similarly, there is no evidence that the 31 January BBQ King Letter file was modified, saved or printed on or around 3 April 2012 and there is no entry in the mail-book recording that the letter was sent. And there is no separately existing Microsoft Word version of the BBQ King Letter on the server or in the backup files verifying the creation of the letter on 3 April 2012. The only indisputable computer evidence is that a PDF version of the BBQ King Letter was created and probably printed on 10 September 2013 to send to the NSW Trustee and Guardian.
However, consistent with my acceptance of the defendants' evidence of usual practice, based on the presence of the unsigned copy of the BBQ King Letter on the matter file, in circumstances where the Court has not accepted the plaintiffs' submission of fraudulent recreation and placing of the letter on the file by Mr Fordyce, I find that the letter was brought into existence on 3 April 2012.
Nevertheless, based on that same evidence of usual practice, by reason of the absence of an entry in the mail-book on 3 April 2012, when taken with the existence of the other entries for April recorded in paragraph [275] above (including other letters being sent to Mr Ho), the defendant has failed to satisfy me on the balance of probabilities that the BBQ King Letter was sent to Mr Ho's PO Box on 3 April 2012 or at all. I do not accept that the relatively few entries for April 2012 means the regular use of the mail-book fell away, especially when the number of entries increases again in May. I consider that the possibility of the usual practice being abandoned for one month is far less plausible than, for example, an explanation (admittedly not explored in the evidence) of the effect of the April school holidays on the business of Pmf Legal.
[47]
Witness evidence
Mr Fordyce's affidavit evidence is that the letter was first created on or about 4 July 2012 when he says he amended the content of the existing BBQ King Engagement Letter (the 31 January BBQ King Letter) to create the Amended BBQ King Letter. In cross-examination, when asked to confirm he meant the "120131 Engagement Letter.doc", he stated "I think that would have been the way it would have been done yes". He says he altered the content of the 31 January BBQ King Letter to add and identify Rhodium Pty Ltd and Trading House Pty Ltd as clients and recipients of the letter in addition to Mr Ho following their reinstatement, he added "AMENDED" to the subject line, and changed the date to 4 July 2012 to reflect those amendments.
In cross-examination, Mr Fordyce agreed that if the 31 January BBQ King Letter was opened to use as a template, the content altered, and the document or application exited, a system prompt would have appeared asking whether the user wanted to save changes before closing. He also accepted that if usual practice had been followed a file called "120704 Engagement Letter.doc" (the name reflecting the creation date) would have been created and saved onto the X drive in respect of these changes. He could not recall the manner in which the file was closed or whether it was saved or printed before he closed the application. He agreed the letter was "an important document … for the conduct of [his] practice" which he "felt significant to create". He stated there was a "possibility" the file was not saved at all upon closing even though he said "I hoped I would have said yes" to a system prompt to save the file. He said "I've lost many documents where I haven't done that."
His cross-examination proceeded as follows [T 164:4]:
"MR COTMAN
Q. You understand that we are talking about your alteration of the file, 120131 to create the file 120704, don't you?
A. Yes.
Q. The process is that you've opened the January file, if we can use that expression?
A. Yes.
Q. You've then altered the text on the screen, over a while, as you are inserting the new party names, and the new date, and so forth?
A. Yes.
Q. You are then doing the "Save As," or something of that nature, to create a new file?
A. Yes, if I, if I'd done it that way, yes.
Q. How else would you have done it?
A. The, I could have printed the document, as you suggested. I don't recall whether I did, or I didn't. I sometimes do, but not always.
Q. Then done what?
A. Had the staff send it.
Q. Did you then close the January file?
A. Well I've closed, I certainly closed it, yes.
Q. You would have been closing a document that now had changes all over the front page, is that right?
A. Yes.
Q. You would have been asked, "Do you want to save it?"
A. Well, that's what usually happens, yes.
Q. Presumably, because this was an important document, that you felt significant to create, you would have said, "Yes"?
A. I hoped I would have said yes, yes.
HIS HONOUR: Don't you need to be careful at this point, though? Because, where the machine, I think I'm allowed to take notice of my own understanding of the system, provided that I expose it. The machine asks you, "Do you want to save the changes?" In which case, you save the changes and the document name remains the same, or do you do a "Save As," and create a new document?
MR COTMAN:
Q. If you had opened 120131, the January document, changed it, printed it, and then sought to close it, you would have been asked, "Do you want to save the document?"
A. That's what automatically happens, yes.
Q. This being an important document, you've told us, for the conduct of your practice, you would have said, "Yes"?
A. As I said, I've lost many documents where I haven't done that.
Q. You would have said "Yes," wouldn't you?
A. I should have said yes.
…
Q. In the last answer that you gave, you were suggesting that you might not have saved it, is that the idea?
A. That's a possibility, yes.
Q. Did you just say, "No thanks," and let the document close?
A. That's a possibility, yes.
…
HIS HONOUR
Q. Just so I'm clear, that is to say close it without saving the changes?
A. That could have happened in the context of working on other documents, shutting down at the end of the day, and not paying attention to what messages were coming up on the screen, for example. There are a lot of ways.
Q. Don't you generally have to actually say, "Yes," or, "No"?
A. No, you can close the computer, you can shut the computer down. "
[48]
Objective Evidence
An unsigned printed copy of the Amended BBQ King Letter exists on the hard copy BBQ King Proceedings file (see paragraph [190] above). It is the penultimate document of the divider section labelled "corro" in the BBQ King Proceedings folder. The only identifiable electronic copy of this file is the version created in June 2014 (which is not disputed).
There are no signed copies of the Amended BBQ King Letter either in hard copy or electronically, and there is no mail-book entry recording its posting on or about 4 July 2012. Ms Klobucar's evidence is that she was absent on that day. However, the mail-book does record 19 letters being sent out on 4 July 2012, including one to Mr Ho enclosing a tax invoice in another matter. It also records a tax invoice to Mr Ho in another matter being sent out on 20 July 2012.
No electronic version of the Amended BBQ King Letter ("120704 Engagement Letter.doc") exists on the server or in the backup files in either a Microsoft Word or PDF format. Mr Carson's evidence was that this indicated usual practice was not followed - the missing files were "dealt with, or opened, or created differently, potentially, or in different places. There would have to be an explanation why they are different to the other files." He agreed that it could be expected that if a file was created it should ordinarily be propagated across the backup copies as they occurred from time to time and be traceable through those backup copies upon examination of the system (forensic or otherwise).
The metadata does not indicate that the 31 January BBQ King Letter was opened on 4 July 2012 when Mr Fordyce asserts he modified the file to create the Amended BBQ King Letter. There is no system print data of the Amended BBQ King Letter on or about 4 July 2012 (there is only a record of the June 2014 version being printed). It does not appear that any other Ho matter file was opened and used as a template document for the creation of a new document through the "save as" function on 4 July 2012.
The only metadata in evidence in relation to the Amended BBQ King Letter is that of the June 2014 Microsoft Word version which is as follows:
1. File created: 17/06/2014 8:47:06 AM
2. File accessed: 17/06/2014 8:47:06 AM
3. File modified: 17/06/2014 8:46:11 AM
4. Application created: 17/06/2014 8:42:00 AM
5. Application printed: 16/09/2010 10:27:00 AM
6. Application last saved: 17/06/2014 8:46:00 AM
7. File path: H\H090\120009 Proceedings for damages against company and shareholders BBQ King\Correspondence\120704 Amended Engagement Letter.doc
[49]
Submissions
It was not disputed that the electronic copy of the Amended BBQ King Letter was created in June 2014. The issue that arises is whether the hard copy document was placed on the file on or about July 2012 and was used by Mr Fordyce in June 2014 as a template document to create the 2014 electronic version.
The defendants submitted that the hard copy of the Amended BBQ King Letter is a true copy of the engagement letter sent to Mr Ho on or about 4 July 2012 in accordance with Pmf Legal's usual practice. They again argued that the absence of an entry in the mail-book was not probative; that there were feasible explanations for the absence of electronic evidence of the Amended BBQ King Letter; and, that Mr Fordyce had no motive to commit fraud - particularly where the Amended BBQ King Letter did not change the contractual relations between Pmf Legal and Mr Ho in relation to the BBQ King Proceedings retainer. Accordingly, they submitted that the Amended BBQ King Letter was of marginal relevance where the contractual relations between Pmf Legal and Mr Ho were established in the first retainer in the BBQ King Proceedings e.g. the 31 January BBQ King Letter.
The plaintiffs submitted that had usual practice been followed a file called "120704 Engagement Letter.doc" would have existed on the X drive, which it did not. The explanation for this (that the file was opened and altered without saving) was not supported by records and was, again, contrary to usual practice. And there would have been other records such as the mail-book showing that the Amended BBQ King Letter was printed and sent to Mr Ho. Moreover, the metadata did not show that 31 January BBQ King Letter was opened at any time after 7 June 2012 until September 2013 which contradicted Mr Fordyce's evidence that he thought he would have used the 31 January BBQ King Letter as the template for the Amended BBQ King Letter.
In relation to the hard copy letter, the plaintiffs submitted that Mr Fordyce's claim that he did not recall seeing the BBQ King Letter when he took the Amended BBQ King Letter out of the file to create the electronic replica in June 2014 was highly improbable given the position of the BBQ King Letter and the Amended BBQ King Letter in the hard copy matter file (one on top of the other) and undermined the idea that the documents were accessed in June 2014. They submitted that it was more probable that the hard copy letters were not in the file at that time but were placed on the BBQ King file in late June or July 2014 when Pmf Legal was preparing for the Recovery Proceedings.
[50]
Conclusion
But for the existence of the hard copy letter on the hard copy matter file, I would not be satisfied that the Amended BBQ King Letter was created on or about 3 April 2012. For example, there is no determinative electronic evidence proving the creation of the Amended BBQ King Letter on 4 July 2012. Mr Fordyce's explanation for this (that the 31 January BBQ King Letter file was used as a source file and the new document was not saved before closing) is no more than plausible. However, the metadata suggests that the 31 January BBQ King Letter file was not opened after June 2012. Mr Fordyce's recollections in cross-examination were, at best, vague ("I could have printed the document, as you suggested. I don't recall whether I did, or I didn't. I sometimes do, but not always" [T 164:20]).
However, consistent with my acceptance of the defendants' evidence of usual practice, based on the presence of the unsigned copy of the Amended BBQ King Letter on the matter file, in circumstances where the Court has not accepted the plaintiffs' submission of fraudulent recreation and placing of the letter on the file by Mr Fordyce, I find that the letter was brought into existence on 4 July 2012.
Nevertheless, based on that same evidence of usual practice, by reason of the absence of an entry in the mail-book on 4 July 2012, when taken with the existence of the other entries for 4 and 20 July recorded in paragraph [299] above (including other letters being sent to Mr Ho), the defendant has failed to satisfy me on the balance of probabilities that the BBQ King Letter was sent to Mr Ho's PO Box on 4 July 2012 or at all.
Ms Klobucar's absence on 4 July 2012 does not advance the defendants' case. There is no evidence to suggest that in her absence the mail-book stopped being kept. The number of entries for June, July and August (including other correspondence to Mr Ho) demonstrates that the mail-book was in regular use. Notwithstanding her absence, there are a large number of entries (including one to Mr Ho) for 4 July 2012.
A further matter which I have relied on is that the Amended BBQ King Letter is the third engagement letter in relation to the proceedings apparently brought into existence but not recorded in the mail-book as having been sent out. For the same period of time the mail-book records other correspondence such as tax invoices being sent to Mr Ho. Confronted with the choice between accepting that:
1. by some extraordinary coincidence not one, but three engagement letters in relation to the same matter were sent but not recorded in the mail-book, while other correspondence was recorded; or
2. the three letters were not recorded in the mail-book because they were not sent,
the latter is to my mind the far more probable explanation and I find accordingly.
[51]
Witness evidence
Mr Fordyce's evidence is that the retainer with Mr Ho in respect of the Rhodium reinstatement commenced on 27 April 2012. On that day he instructed his personal assistant to create a new file in that matter and to prepare an engagement letter. The matter was given the file number "120027".
[52]
Objective Evidence
Two copies of the Rhodium Letter were exhibited to Mr Fordyce's affidavit: the first is the copy purportedly sent to Mr Ho on about 27 April 2012 which was discovered on the hard copy matter file in October 2017; the second is a copy of what was sent to the Costs Assessor on or about 16 July 2014 which had been recreated in June 2014. Both copies appear identical upon inspection.
There is no electronic version of the Rhodium Letter other than the version created by Mr Fordyce in June 2014. The relevant Microsoft Word metadata for that file is as follows:
1. File created: 17/06/2014 8:33:14 AM
2. File accessed: 15/07/2014 15:29:00 AM
3. File modified: 15/07/2014 15:29:00 AM
4. Application created: 17/06/2014 8:29:00 AM
5. Last printed: 15/07/2014 15:28:00 AM
6. Last saved: 15/07/2014 15:28:00 AM
7. H\HO90\120027 Reinstatement of Rhodium Pty Ltd and terminating the winding up\Correspondence\120427 Engagement Letter.doc
There is also no entry in the mail-book recording that the Rhodium Letter was sent to Mr Ho on about 27 April 2012. While there is a paucity of entries for April 2012 (which I have addressed in paragraph [288] above), a tax invoice in another matter is recorded as having been sent to Mr Ho on 20 April 2012. The number of entries in May is what might be described as a more usual level (when the 2012 mail-book is viewed as a whole). A tax invoice in another matter is recorded as being sent to Mr Ho on 2 May 2012 and a tax invoice in the Rhodium reinstatement matter is recorded as being sent to Mr Ho on 21 May 2012 (presumably after the Court had dealt with the reinstatement application on that day). The mail-book also records in connection with this matter that a letter with attachments was sent to ASIC on 4 May 2012.
The expert evidence is that the electronic Rhodium Letter was first created on 17 June 2014. Dr Watt found 22 backup copies of the 17 June 2014 document and he believed it was probably last printed on 15 July 2014. Mr Carson was not instructed to examine the Rhodium Letter created on 17 June 2014 or the number of backup copies. However, his report states that he "did not identify earlier versions of these files" than those created in June 2014. The experts agreed there were no backup records of the Rhodium Letter from 27 April 2012 but that other files exist in the backup files from 2012 and in deleted sections of the server.
[53]
Submissions
The defendants submitted that given Dr Watt accepted that there were other feasible explanations for the experts' inability to locate an electronic copy of the Rhodium Letter (the hypothetical data loss scenarios, which I have rejected as unproven conjecture), the plaintiffs could not demonstrate unequivocally that the Rhodium Letter was not created and not dispatched on or about 27 April 2012, and that the plaintiffs had not discharged its burden of proof in matters of fraud.
The plaintiffs submitted that the defendants could not seek to rely on usual practice to establish Mr Fordyce's case only to then submit that the mail-book (a crucial part of usual practice) was deficient and was not an accurate depiction of all of the correspondence actually sent to Mr Ho, and should be excluded from consideration of the body of evidence principally, the plaintiffs submitted, because it did not support the defendants' case. They submitted that the first explanation of Pmf Legal's usual practice as fell from Ms Klobucar was that the mail-book existed and was used - only later did Mr Fordyce contend it was not entirely reliable. The plaintiffs submitted that the defendants could not rebut objective evidence about an existing state of affairs with hypothetical explanations, particularly where it was in the defendants' power to adduce evidence to prove (on the balance of probabilities) that those things occurred. The plaintiffs argued that the defendants had produced no evidence of virus activity; no evidence of examination of other drive or directory locations on the Pmf Legal server; and, no evidence of a file being created on 27 April 2012 that may be the original file with the Rhodium letter saved over.
[54]
Conclusion
But for the existence of the hard copy letter on the hard copy matter file, I would not be satisfied that the Rhodium Letter was created on or about 27 April 2012. However, consistent with my acceptance of the defendants' evidence of usual practice, based on the presence of the unsigned copy of the Amended BBQ King Letter on the matter file, in circumstances where the Court has not accepted the plaintiffs' submission of fraudulent recreation and placing of the letter on the file by Mr Fordyce, I find that the letter was brought into existence on 27 April 2012.
However, I accept the plaintiffs' submissions recorded in paragraph [322] above. Based on that same evidence of usual practice, by reason of the absence of an entry in the mail-book on 27 April 2012, when taken with the existence of the other entries recorded in paragraph [319] above (including other letters being sent to Mr Ho), the defendant has failed to satisfy me on the balance of probabilities that the BBQ King Letter was sent to Mr Ho's PO Box on 27 April 2012 or at all.
In relation to this letter a particularly influential consideration in my conclusion is the letter to ASIC recorded in the mail-book as having been sent on 4 May 2012. The sending of that letter is independently verified by a reply from ASIC to Mr Fordyce dated 18 May 2012 which is to be found on the matter file which was in evidence before me. There is no hard copy of Mr Fordyce's letter on the file, but that seems to me to accord with the "paperless office" which I accept he was committed to operating. ASIC's reply refers to a letter of "14 May 2012", but I am comfortably satisfied that is an error for 4 May 2012. It records the receipt of 4 attachments (all dated 4 May 2012 or earlier) relating to the reinstatement application.
Confronted with the choice between accepting that:
1. for some strange reason the Rhodium Letter was not recorded in the mail-book - in contradistinction to the recording of other correspondence to Mr Ho and the all-important letter to ASIC of 4 May 2012 serving ASIC with the reinstatement application; or
2. the Rhodium Letter was not recorded in the mail-book because it was not sent,
the latter is to my mind the far more probable explanation and I find accordingly.
In reaching this conclusion I have not overlooked that it could be argued that the existence of the unsigned copy of the letter on the matter file makes it likely that the original was sent. In other words, why bring a copy of the letter into existence if the original was not sent? I do not accept this argument for two reasons. First, an equally plausible explanation is that the copy could be an unsent draft. Second, the argument is speculative, whereas the evidence of usual practice, and the assessment of the consequences where something that should have been recorded was not, is not speculative.
[55]
Witness evidence
Mr Fordyce's evidence is that the retainer with Mr Ho in respect of the Guardianship Proceedings commenced on or about 4 September 2013. He instructed his personal assistant to open a new file and to prepare a costs agreement. The matter was given the file number "130027". When he was unable to find an electronic copy in June 2014, he says he replicated the letter from the hard copy version in the hard copy Guardianship matter file.
[56]
Objective Evidence
The only electronic version of the Guardianship Letter is the version Mr Fordyce created in June 2014. The relevant Microsoft Word metadata is as follows:
1. Created: 16/06/2014 8:16:22 AM
2. File accessed: 16/06/2014 8:22:49 AM
3. Last modified: 16/06/2014 8:22:49 AM
4. Last printed: 16/06/2014 8:22:00 AM
5. Last saved: 16/06/2014 8:22:00 AM
6. Full path: H\HO90\130027 - Guardianship Tribunal application by Miss Sarah Ho\Correspondence\130904 Engagement letter Hourly Precedent-Pmf Legal Limited.docx
The relevant Adobe PDF metadata is:
1. Created: 16/06/2014 8:22:16 AM
2. File accessed: 16/06/2014 8:22:18 AM
3. File modified: 16/06/2014 8:22:19 AM
4. PDF Producer: DocuCentre-IV C4470, Fuji Xerox Office Printer/Scanner
There is no entry in the mail-book recording that the Guardianship Letter was sent to Mr Ho on about 4 September 2013. The mail-book records a tax invoice in another matter being sent to Mr Ho on 27 August 2013, a tax invoice in the Guardianship matter being sent on 5 September 2013 and other tax invoices on 19 and 26 September 2013. The mail-book also records a letter to the NSW Trustee and Guardian being sent on 10 September 2013 described as "Cover letter with attachments - 12009 Engagement Letter, Judgment/Order". A hard copy of that letter of 10 September 2013 (without the attachments) is on the file.
Two copies of the Guardianship Letter were exhibited to Mr Fordyce's affidavit: the first is the copy purportedly sent to Mr Ho on about 4 September 2013 which was discovered on the hard copy matter file in October 2017; the second is a copy of what was sent to the Costs Assessor on or about 16 July 2014 which had been recreated in June 2014. The copy on the hard copy matter file appears on top of correspondence received and printed emails sent on 2 and 3 September 2013 by Ms Wu and behind handwritten file notes of several telephone attendances on 6 September 2013.
An examination of the hard copy matter file version and the June 2014 version annexed to Mr Fordyce's affidavit reveals a slightly different file path in the document footer as follows (emphasis added):
1. The hard copy matter file version reads "H:\130904 Engagement letter Hourly Precedent-Pmf Legal Limited.docx"; and,
2. The June 2014 version reads "X:\H\HO90\130027 - Guardianship Tribunal application by Miss Sarah Ho\Correspondence\130904 Engagement letter Hourly Precedent-Pmf Legal Limited.docx".
[57]
Submissions
The defendants again sought to rely on the usual practice evidence to support the inference that the Guardianship Letter was sent to Mr Ho on or about 4 September 2013 and that the unsigned hard copy document existing in the hard copy Guardianship matter file was an original document. However, they contended that the different drive paths - "H:\130904" and "X:\H\HO90" - indicate that the version of the Guardianship Letter in the hard copy matter file was printed from an electronic file originally saved to an "H drive" rather than the usual "X drive". The defendants say the file path on the hard copy version indicates that it was a printed copy of the original electronic file which had been saved onto a different drive on 4 September 2013 that could now not be located. In contrast, the file path displayed on the June 2014 version indicated that letter was created on the "X" drive ("X:\H\HO90"). This they said supported Mr Fordyce's account that the original Guardianship Letter was located within the hard copy matter files and that the June 2014 version was an electronic replica of that document which was then saved onto the X drive in accordance with the usual practice. Again, the defendants posited the data loss scenarios and submitted that there was insufficient proof for the Court to make a finding of fraud.
The plaintiffs submitted that the defendants had not required Mr Carson to examine the rest of the Pmf Legal server beyond the X drive, including for an "H drive", and that they had failed to adduce any other evidence supporting the existence of an "H drive". Mr Carson agreed in cross-examination that he had been instructed that the Disputed Engagement Letters were created in the ordinary way within the client directory on the X drive and that it had not been suggested that the Disputed Engagement Letters could be located on a different part of Pmf Legal's server. Moreover, Mr Carson stated in cross-examination that access to the whole of Pmf Legal's server had been discussed with the defendants but ultimately did not occur. Consequently, he had not examined the whole system and "the server images that [he] was given access to weren't a complete copy of the server." The plaintiffs submitted that the idea of discrete/separate "H drive" was a recent invention of the defendants otherwise Mr Carson would have been asked to examine such a drive and that a more likely explanation for the different footer was that it was a typographical error when the document was recreated. The plaintiffs again put that the hypothetical data loss scenarios were implausible and became less probable with each repetition in respect of Ho Matters.
[58]
Conclusion
But for the existence of the hard copy letter on the hard copy matter file, I would not be satisfied that the Guardianship Letter was created on or about 4 September 2013. However, consistent with my acceptance of the defendants' evidence of usual practice, based on the presence of the unsigned copy of the Guardianship Letter on the matter file, in circumstances where the Court has not accepted the plaintiffs' submission of fraudulent recreation and placing of the letter on the file by Mr Fordyce, I find that the letter was brought into existence on 4 September 2013.
I have not overlooked the plaintiffs' submission that the different footers in the two extant versions of the Guardianship Letter call into question the authenticity of both of them, and especially the one on the hard copy matter file. However, I am unable to attach any particular significance to the different footers because the expert evidence was unpersuasive and inconclusive.
Mr Carson was not asked to examine for an "H drive" and was not provided with a full copy of the server to examine. However, in the images he inspected he stated that he could not recall seeing reference to an "H drive" as distinct from an "H directory". He speculated that "there could be some history that perhaps the IT person who maintained the system might know why he's called that H in that tree. Maybe it was mapped as H drive at one point."
Dr Watt was of the opinion that there was no "H drive" and more likely the different footer information was a soft link shortcutting or mapping to another location on the server or on the creator's computer [T 55:18]:
"Q. The fact that the footer on the version of the document at page 285 contains no reference to the HO90 file or to the matter file number tells us, does it not, that that version of the letter was saved to the H drive and not the X drive, correct?
A. No, that's wrong, sorry. These are soft links as in the soft link created to the server. It has no bearing on it whatsoever. If this had been the actual server itself, it would have been different, but this is not. This is a soft link on the computer pointing to a location on the server that has been programmed by the person who's set up the soft link, which is mapping. On Windows, it's often called mapped drives and - "
Nevertheless, based on that same evidence of usual practice, by reason of the absence of an entry in the mail-book on 4 September 2013, when taken with the existence of the other entries recorded in paragraph [332] above (including other letters being sent to Mr Ho), the defendant has failed to satisfy me on the balance of probabilities that the Guardianship Letter was sent to Mr Ho's PO Box on 4 September 2013 or at all.
[59]
The Disputed Engagement Letters - conclusion
In respect of the Disputed Engagement Letters, the Court finds that because those letters were never sent, the defendants did not make disclosure in accordance with Division 3 of the Act. The costs for work done under the scope of those Engagement Letters should be assessed on the basis there was no costs disclosure (s 363(2)(b)) and no costs agreement (s 361(1)(c)).
The Court will give the parties time to make submissions as to the appropriate form of orders and as to costs.
[60]
Amendments
22 February 2019 - Amendment to paragraphs [294], [315], [328] and [347] "the defendants are entitled" is changed to "the plaintiffs are entitled"
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 22 February 2019
Parties
Applicant/Plaintiff:
Claudia Leung in her capacity as Executrix of the Estate of the late Robert Ho
On 16 July 2014, Pmf Legal filed a costs assessment response (the "Response") to the Costs Assessment Applications which enclosed copies of six costs agreements or engagement letters Pmf Legal said it sent to Mr Ho by prepaid post in respect of those proceedings (the "Engagement Letters"). These were:
1. BBQ King Engagement Letter dated 3 April 2012 (the "BBQ King Letter");
2. Rhodium Engagement Letter dated 27 April 2012 (the "Rhodium Letter");
3. Trading House Engagement Letter dated 7 June 2012 (the "Trading House Letter");
4. Amended BBQ King Engagement Letter dated 4 July 2012 (the "Amended BBQ King Letter");
5. Guardianship Engagement Letter dated 4 September 2013 (the "Guardianship Letter"); and
6. Complaints Engagement Letter dated 28 January 2014 (the "Complaints Letter").
The plaintiffs subsequently commenced proceedings in this Court on 1 October 2014. The procedural history of this matter is lengthy and there have already been several other judgments: Ho v Fordyce (ex parte) [2014] NSWSC 1404; Robert Ho v Paul Mervyn Fordyce t/as Pmf Legal Trading [2015] NSWSC 544; Robert Ho v Paul Mervyn Fordyce t/as Pmf Legal Trading (No 2) [2015] NSWSC 1748; and Fordyce v Ho [2015] NSWCA 240.
On 13 October 2017, the plaintiffs filed a statement of claim seeking, by way of final relief, declarations that the defendants did not make disclosure of costs to the plaintiffs within the meaning of the Act and that the Costs Assessment should proceed on the basis there were no costs agreements between the parties. They also seek an order that the defendants account for any overpayment consequent to the declarations and an order for costs on the indemnity basis against the defendants. Interim orders restraining the defendants from taking steps to recover fees or enforce any obligations arising from the Engagement Letters were also sought. A defence was filed on 23 October 2017 which contended for the existence of an engagement letter dated 31 January 2012 in the BBQ King Proceedings (the "31 January BBQ King Letter"). An amended statement of claim was subsequently filed on 9 November 2017 also seeking relief in relation to the 31 January BBQ King Letter.
During the course of the hearing, the plaintiffs conceded that both the Trading House Letter and the Complaints Letter were sent to Mr Ho on or about the dates which the letters are dated (the "Agreed Engagement Letters"). Accordingly, the plaintiffs agreed that in respect of those two letters costs disclosure had been made to Mr Ho and that they were not entitled to seek declarations of the kind referred to in the preceding paragraph.
The provenance of the other five engagement letters remains in contention. However, what is not disputed is that in June 2014 Mr Fordyce created electronic copies of three engagement letters bearing the dates of 27 April 2012 (the Rhodium Letter), 4 July 2012 (the Amended BBQ King Letter) and 4 September 2013 (the Guardianship Letter) which were then provided to the Costs Assessor in July 2014 (the "Disputed Engagement Letters"). The plaintiffs allege that this was done fraudulently in the knowledge that the documents never existed in the first place and that they had not been sent on or around the dates they bear on the face. The defendants deny the allegations of fraud and argue that the Disputed Engagement Letters are replicas of the original documents reproduced from existing copies of the letters that were kept on the hard copy matter files and which were sent to Mr Ho on or about the dates they display. Without overlooking the 31 January BBQ King Letter and the BBQ King Letter, the submissions largely focused on the Disputed Engagement Letters.
The plaintiffs' case is that the Disputed Engagement Letters were not created and not posted to Mr Ho on or about the dates they bear. The defendants' case is that the Disputed Engagement Letters were created and were posted to Mr Ho on or about those dates, but at some point were lost in electronic form and were replicated electronically in June 2014. While the parties needed to address both elements (creation and posting of the Disputed Engagement Letters), the resolution of this dispute ultimately depends upon the inferences that the Court is able to draw from a relatively limited, but not always straightforward, body of evidence.
In response to the plaintiffs' allegation that the Disputed Engagement Letters were not created and posted to Mr Ho on or about the dates they bear, the defendants have been unable to satisfy the Court that those agreements were sent. Not without real hesitation, I am satisfied on the basis of the defendants' evidence about the usual practice of the second defendant that the relevant costs agreements came into existence on the dates alleged by Pmf Legal. This is because hard copies of those letters are found on the relevant files. For their part, the plaintiffs have not established to the requisite standard that those copies were fraudulently produced and inserted into the files by Mr Fordyce. However, that same evidence of usual practice, in particular concerning the use of a mail-book, forms the foundation of the Court's conclusion that the defendants have failed to prove that those letters were sent. This is primarily, but not exclusively, because those letters are not recorded in the mail-book as having been sent.
It is common ground that Pmf Legal has rendered bills of costs to Mr Ho in respect of the costs in dispute. Accordingly, in relation to the matters the subject of the Disputed Engagement Letters, the Court's finding will result in the Costs Assessment proceeding on the basis of what the assessor considers to be the "fair and reasonable value of the legal services provided": ss 319(1)(c) and 331(1) of the Act.
The parties raised several ancillary issues, both factual and legal, that were relevant to the case. In summary, these were:
1. The usefulness and reliability of Pmf Legal's mail-book system (as to which see paragraphs [146] to [154] below);
2. Whether the lack of metadata about the Disputed Engagement Letters could be explained by technical fault and systemic data loss (as to which see paragraphs [165] to [171] below);
3. Pmf Legal's billback system and print records (as to which see paragraphs [172] to [183] below);
4. The hard copy matter files and the authenticity of the documents therein (as to which see paragraphs [184] to [191] below);
5. The use and usefulness of evidence of usual practice (as to which see paragraphs [192] to [222] below); and
6. Who bore the onus of proof and to what standard in circumstances where fraud was pleaded but where relevant facts were peculiarly within the knowledge of the defendants (as to which see paragraphs [224] to [239] below)?
There are various consequences if a law practice fails to make disclosure: a client need not pay its legal costs unless they have been assessed; a law practice cannot recover legal fees until the costs have been assessed; a client may apply to have the costs set aside; the costs assessor can reduce the costs in reflection of and proportionate to the seriousness of the non-disclosure; and the failure to disclose may constitute unsatisfactory professional conduct or professional misconduct: s 317.
In circumstances of non-disclosure, the costs of an assessment are generally borne by the law practice: s 369.
Ms Vanessa Klobucar began working as the office junior at Pmf Legal sometime in February 2012.
During March 2012, an IT consultant, Mr Billy Morgan, was called to service both Mr Fordyce and his assistant's computers. The item description on Mr Morgan's invoice reads:
"Computer support regarding Paul's computer (memory). Setup new PA computer as the original computer would not start correctly and also would not print via billback. Replaced faulty hard disk with new hard disk and installed all software from scratch".
On 31 March 2012, an invoice of $41,718 was sent to Mr Ho's PO Box for work done by Pmf Legal in the BBQ King Proceedings.
On 3 April 2012, an email exchange occurred between Mr Fordyce and Mr Wong about the estimated costs and what billing method would be used in relation to the BBQ King Proceedings. Mr Fordyce alleged that the BBQ King Letter was reissued and sent to Mr Ho's PO Box on or about that day - see paragraph [272] below, the BBQ King Letter.
On 27 April 2012, Mr Ho instructed Mr Fordyce to cease the winding up of Rhodium and to join it as a plaintiff to the BBQ King Proceedings (the "Rhodium Proceedings"). It was given the internal matter number 120027. It is alleged the Rhodium Letter was sent to Mr Ho's PO Box on or about that day - see paragraph [316] below, the Rhodium Letter.
On or about 7 June 2012, Mr Ho instructed Mr Fordyce to cease the winding up of Trading House and join it as a plaintiff to the BBQ King Proceedings (the "Trading House Proceedings"). It was given the internal matter number 120035. An engagement letter was prepared and sent to Mr Ho's PO Box. This was documented in Pmf Legal's mail-book for 2012 which the office junior maintained as a record of Pmf Legal's outgoing mail. See paragraph [241] below, the Trading House Letter.
On or about 4 July 2012, Mr Fordyce alleges that the Amended BBQ King Letter was created which identified Rhodium and Trading House as Mr Fordyce's clients. A hard copy of the Amended BBQ King Letter was allegedly found in the hard copy matter file which was kept in addition to the electronic matter file. It is alleged the Amended BBQ King Letter was sent to Mr Ho's PO Box on or about that day - see paragraph [295] below, the Amended BBQ King Letter.
On about 5 June 2013, Mr Fordyce's desktop computer had a hard drive failure. The item description on the invoice from the IT consultant, Mr Morgan, reads: "Hardware - Hard disk Replaced faulty hard disk (Paul's desktop). Cloned data from the old disk to the new disk. date: 5 June 2013".
On or about 4 September 2013, Mr Ho retained Pmf Legal in relation to Supreme Court proceedings to set aside ex parte orders made by the Guardianship Tribunal which had appointed members of Mr Ho's family to act as his guardian (the "Guardianship Proceedings"). It is alleged the Guardianship Letter was sent to Mr Ho's PO Box on or about that day - see paragraph [329] below, the Guardianship Letter.
On 10 September 2013, in relation to the Guardianship Proceedings, the NSW Trustee and Guardian wrote to Pmf Legal requesting copies of "the Costs Agreement for all matters" in which Pmf Legal was acting for Mr Ho. On the same day, Pmf Legal replied to the NSW Trustee and Guardian's request enclosing an unsigned copy of the BBQ King Letter dated 3 April 2012. Mr Fordyce also instructed Ms Georgina Wu (a solicitor at Pmf Legal at that time) to save a PDF copy of the BBQ King Letter dated 3 April 2012 into the Guardianship Proceedings' electronic file.
On 12 September 2013, Mr Fordyce emailed Mr Wong and Ms Leung attaching the NSW Trustee and Guardian's letter of 10 September 2013 and a copy of Pmf Legal's letter in reply without enclosures. Neither Mr Wong nor Ms Leung replied to this email.
On 18 September 2013, the NSW Trustee and Guardian telephoned Mr Fordyce requesting a signed copy of the BBQ King Letter dated 3 April 2012.
On the same day, Mr Fordyce emailed Ms Wu, copying in Mr Wong and Ms Leung, regarding the telephone conversation with the NSW Trustee and Guardian. In the email, Mr Fordyce stated: "Need copy of executed cost agreement with Mr Ho". Neither Mr Wong nor Ms Leung replied to Mr Fordyce's email.
On about 28 January 2014, Mr Ho retained Pmf Legal in relation to proceedings involving the Health Care Complaints Commission (the "Complaints Proceedings"). The Complaints Letter was sent to Mr Ho on or around this time and a corresponding entry appears in Pmf Legal's mail-book for 2014 - see paragraph [249] below, the Complaints Letter.
On about 10 March 2014, the IT consultant Mr Morgan attended Pmf Legal. The item description on his invoice reads: "Support regarding server hard drive (required replacing faulty hard disk under warranty). Date: 10 March 2014".
On about 19 May 2014, Mr Fordyce notified Mr Ho he intended to cease acting as Mr Ho's solicitor. In late May 2014, Mr Ho terminated all retainers with Pmf Legal. Mr Ho retained the legal services of Mr Mark Webeck of HWL Ebsworth Lawyers.
On about 2 June 2014, Pmf Legal received a notice of change of solicitor from Mr Webeck.
On about 16 June 2014, Pmf Legal notified Mr Webeck that it intended to commence proceedings against Mr Ho in respect of unpaid accounts (the "Costs Recovery Proceedings").
On 16 and 17 June 2014, in preparation for the Costs Recovery Proceedings, Mr Fordyce created digital versions of the Disputed Engagement Letters (the "June 2014 versions").
On 17 June 2014, Mr Ho filed the Costs Assessment Applications both of which asserted: "There is no costs agreement between myself and the law practice".
Pmf Legal received the notice of Costs Assessment Applications on about 25 June 2014.
On or about 16 July 2014, Pmf Legal filed its Response to the Costs Assessment Applications enclosing copies of the Engagement Letters - that is the BBQ King Letter, the Rhodium Letter, the Trading House Letter, the Amended BBQ King Letter, the Guardianship Letter and the Complaints Letter.
On or around 8 August 2014, Mr Webeck provided Mr Ho copies of the Engagement Letters. Mr Ho's affidavit states: "I can say that I have never seen or received any of the Costs Agreements prior to being provided them by Mr Webeck".
On 12 September 2014, Mr Fordyce wrote to the Costs Assessor confirming that copies of all of the Engagement Letters had been provided in the Response.
On 1 October 2014, Mr Ho commenced proceedings against Pmf Legal in the Supreme Court and applied to the Equity Division Duty Judge ex parte for search orders. Rein J made the ex parte search orders which permitted a computer forensics company, Klein & Co., to access Pmf Legal's computers to copy specifically identified materials in relation to the Ho Matters and to report its findings to an independent solicitor appointed by the Court, Mr Seamus Burke (the "Search Orders"): Ho v Fordyce (ex parte) [2014] NSWSC 1404.
Klein & Co. carried out the searches and produced its report to Mr Burke on 24 October 2014 (the "Klein & Co. Report"). The Klein & Co. Report analysed a snapshot of data in relation to Ho Matters from 2012 to 2014 which had been identified as relevant (the "imaged materials"). Klein & Co. was also provided with an affidavit from Mr Fordyce dated 20 October 2014 in which he detailed Pmf Legal's systems and practices, and was assisted by Pmf Legal's IT consultant, Mr Morgan, to access the relevant data. Klein & Co. noted that its report was based on a limited and preliminary forensic analysis of the data and that it had not examined all of the records available in preparing the report.
The Costs Assessor suspended the Costs Assessment Application at around the time the Search Orders were made.
On 24 October 2014, Mr Burke sent a letter to Mr Fordyce by way of email requesting further information in respect of some of Klein & Co.'s findings (the "Burke Letter"). He enclosed a copy of the Klein & Co. Report. Mr Burke's letter stated:
"…if you were able to provide an explanation in relation to inconsistency identified in the Letter (1st paragraph on page 2) between the apparent dates and the internal document timestamps of the files relating to the costs agreements of 3 April 2012, 27 April 2012, 4 July 2012 and 4 September 2012 [sic], this may facilitate the further analysis of the data by Klein & Co."
Mr Fordyce replied to the Burke Letter on 3 November 2014 (the "Replying Letter"). In his Replying Letter, Mr Fordyce noted but did not directly address Mr Burke's request for further information. Rather, he drew attention to other inconsistences in the metadata provided to Mr Burke. By reference to these inconsistences, he stated:
"…the information extracted by the experts simply cannot be correct. Whilst I appreciate the opportunity to present an alternative explanation, I am in no way qualified to provide an explanation for blatantly incorrect metadata."
On 24 November 2014, Mr Fordyce applied to set aside the Search Orders on the basis that the plaintiffs had failed to apprise the Court of critical matters relevant to the granting of the search orders.
On 11 December 2014, Mr Fordyce's motion was listed for directions before Bergin CJ in Eq (the "December 2014 Proceedings"). Mr Fordyce appeared for himself on that occasion. Counsel appeared for Mr Ho. When asked by her Honour whether he knew if "the computer expert analysed your copies of any costs agreement in this matter", Mr Fordyce stated that he did not know. At that time (and unbeknownst to her Honour), only Mr Fordyce and not Mr Ho had been provided with a copy of the Klein & Co. Report by Mr Burke (see paragraph [60] above). Her Honour ultimately set the motion down for further hearing before Rein J.
On 17 December 2014, Rein J ordered that the plaintiffs' legal representatives be given access to the Klein & Co. Report. At a directions hearing on 20 December 2014, his Honour subsequently ordered that the plaintiffs' legal representatives were permitted to summarise the Klein & Co. Report for Mr Ho, Mr Wong and Ms Leung and allow those three to view the Klein & Co. Report but they were not to be provided with copies.
On 5 May 2015, Rein J dismissed the motion: Robert Ho v Paul Mervyn Fordyce t/as Pmf Legal Trading [2015] NSWSC 544.
In June 2015, Pmf Legal's computer system was attacked by a "ransomware" virus resulting in data loss in respect of its client billback system which used recording software called Reckon Billback Cost Recovery and Expense Management Software ("Reckon").
On 19 August 2015, the Court of Appeal dismissed Mr Fordyce's application for leave to appeal from Rein J's decision: Fordyce v Ho [2015] NSWCA 240.
On 9 September 2015, the Costs Assessor continued the suspension of the Costs Assessment Applications pending the determination of these proceedings.
Mr Fordyce retired in late 2016 and Mr Davor Dadic, who began working at Pmf Legal in May 2016, took over as principal of Pmf Legal.
On 13 October 2017, the plaintiffs filed a statement of claim, amended on 9 November 2017, alleging non-receipt of the engagement letters and fraudulent conduct by Mr Fordyce.
On about 18 October 2017, Mr Dadic and his paralegal searched the off-site storage facility where Pmf Legal's hard copy client files were stored looking for materials relating to Mr Ho. They found hard copy matter files in relation to the BBQ King Proceedings, the Guardianship Proceedings and the Rhodium Proceedings. See further paragraphs [184] to [191] below.
Mr Ho died in 2017. His estate maintains the proceedings.
Evidence given against interest or which is inherently probable is more convincing: Saravinovska v Saravinovski (No 6) [2016] NSWSC 964 at [467].
Negative facts must be proved - disbelieving a witness about one matter does not make the inverse true though inferences may arise supporting the alternative state of affairs: Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 at 694 per Gibbs J; [1975] HCA 63.
It may be the case that some issues cannot be resolved on the evidence at the Court's disposal particularly in situations where "evidence distilled into the word of one witness against the word of one or more other witnesses": Aytul Ak-Tankiz v Ferat Ak & Ramazan Ak [2014] NSWSC 1044 at [187] per Robb J.
The defendants submitted that Mr Ho's credit cannot be presumed merely by virtue of the instigation of legal proceedings. They suggested that the proceedings may have been a strategic move to place pressure on Mr Fordyce and to somehow bring about the resolution of the disputed legal costs to Mr Ho's advantage. They submitted that the reliability of Mr Ho's uncorroborated and untested evidence in respect of the Disputed Engagement Letters was "fatally" compromised because the plaintiffs' did not address their own concessions in respect of the creation and posting of the Agreed Engagement Letters which directly contradicted Mr Ho's denial of having not received those two letters.
The defendants pointed to the lack of evidence from Ms Leung and, particularly, that she had not independently searched Mr Ho's records for the engagement letters in order to form her own view about the truth of Mr Ho's evidence and the validity of maintaining the proceedings. This they said removed an "obvious source" of information which might have corroborated Mr Ho's evidence and was in dereliction of her duty as executrix of Mr Ho's estate. The defendants submitted the Court could not be satisfied of the fraudulent activity alleged when the proceedings were maintained by someone without personal knowledge (or a legitimately formed belief) of the asserted facts. No authority was cited to support the contentions in relation to Ms Leung's executorial duties and the maintenance of the proceedings.
It is well settled that the principal duties of an executor or executrix include identifying and getting in any assets of the deceased, paying any debts, and distributing the assets of the estate in accordance with the testator's wishes: see, e.g., Juul v Northey [2010] NSWCA 211 at [196] per McColl JA. The estate may have claims against third parties which, as a general rule, the executor is obliged to pursue; and, where a testator dies while litigation is on foot, the executrix may maintain (or where appropriate, compromise) those proceedings on behalf of the estate: Re Atkinson [1971] VR 612 at 616 per Gillard J. The costs of litigation will usually be borne by the estate. However, an executor must not unthinkingly defend a claim but exercise judgment as to its legitimacy and take steps to avoid costly litigation where possible, which accords with the duty to preserve the estate's assets: see, e.g., Application of Ferdinando Scali [2010] NSWSC 1254 at [10] per Brereton J. Personal liability for the costs of litigation may accrue to an executor considered to have acted unreasonably: see, e.g., Gray v Guardian Trust Australia [2003] NSWSC 704 at [9] per Austin J.
Self-evidently, a deceased person is unavailable to give further evidence or be subject to cross-examination and the Court must treat untested evidence with a suitable degree of caution. I agree with the defendants' submission that Mr Ho's decision to commence legal proceedings does not automatically confirm the credibility of his claim or his evidence. However, I do not accept that the plaintiffs' concessions about the Agreed Engagement Letters completely undermine the reliability of Mr Ho's evidence. This is because, contrary to what the defendants assert, there is other objective evidence agreeing with Mr Ho's version of events - or rather there is an absence of records which is inconsistent with Pmf Legal's stated "usual practice" and which contrasts with the presence of evidence (including metadata) for the Agreed Engagement Letters.
Furthermore, in a case where the defendants contend that a number of engagement letters were sent in relation to several matters, failure to recall or to find two letters invites caution about, but not the dismissal of, Mr Ho's evidence. Similarly, while the plaintiffs may not have addressed the effect of the concessions on the balance of Mr Ho's evidence, I am not persuaded that omission is fatal to their case or to the reliability of Mr Ho's evidence.
The Court concludes that, even allowing for the concessions in relation to the Agreed Engagement Letters, while Mr Ho's untested evidence is, without more, insufficient to allow the Court to make the findings the plaintiffs seek, it is sufficient to impose an evidential burden on the defendants to demonstrate the contrary (as to the concept of evidential burden, see paragraph [237] below). So much was ultimately conceded by the defendants (see paragraph [230] below)
When he could not find the electronic copies on the X drive, he did not request the IT consultant Mr Morgan's assistance in locating the files. Mr Fordyce admitted that Mr Morgan had previously been asked to find documents on the system. When asked about whether he was concerned that documents had gone missing from the electronic file, Mr Fordyce stated "I've had many documents disappear off the electronic system, you just can't find them. I don't know why it happens but it happens". However, he said that he had not referred this issue to his IT consultant and was not concerned about the integrity of the electronic system. He had not examined the backup copies of the X drive which were stored on separate hard drives.
The plaintiffs contended that Mr Fordyce was withholding information from both the Court and the Ho parties and that his conduct during the December 2014 Proceedings was "fundamentally dishonest" and reflected his willingness to deceive for his own benefit. They noted that Mr Fordyce did not bring to attention either during the course of proceedings or in his affidavit evidence that he had electronically created the Disputed Engagement Letters in June 2014 and it was not until Rein J refused to set aside the Search Orders in May 2015 that this information was made known. Mr Fordyce's cross-examination on this topic was said to be another illustration of his evasiveness and cunning:
"[T 186:2]
MR COTMAN
Q. Did you disclose to the independent expert or to the independent solicitors in response to this letter the information that you had created the last three mentioned files, in June 2014?
A. No.
Q. Can you explain to his Honour why you did not do that?
A. I didn't do it because I was preparing an application to have the orders set aside and that, that notice of motion was filed soon after that letter.
Q. That's the explanation as to why you would not communicate to the expert or to the solicitor, the proposition that you had reproduced files copied from existing physical files to be found in your records, is that the idea?
A. Yes.
Q. Because you were seeking to prevent the disclosure of the contents of the examination to the Ho parties?
A. No.
Q. That was the ultimate effect of that which you were seeking to do, wasn't it?
A. It would've come out in discovery.
Q. As a solicitor of the Court--
HIS HONOUR
Q. I'm sorry, what would have come out in discovery?
A. They would've obtained access in the court proceedings, to the records of - our computer records and this information would've come out. It was on the - it was on the records. As far as I know, it wasn't capable of being deleted or taken off. So, it would've come out in the fullness of time."
The defendants asserted that the factual matrix and context of Mr Fordyce's application to set aside the Search Orders cannot be ignored - it was an interlocutory proceeding concerned with whether the duty of candour to the Court on an ex parte application had properly been discharged to allow for the making of the Search Orders. This was not a sufficient basis for the plaintiffs' contention that Mr Fordyce's silence in respect of the circumstances surrounding the creation or replication of the Disputed Engagement Letters reflected his disreputable nature or the submission that "[h]onest and creditable people give a complete account of explicable relevant events at the earliest opportunity".
The Replying Letter does not seem to me to be volunteering or spontaneously disclosing information that was not already plainly present in the Klein & Co. Report. Rather, the Replying Letter intentionally avoids the question put by Mr Burke (see paragraph [60] above) and seeks to deny the correctness of the Klein & Co. Report. In the context of Mr Fordyce knowing that he had created the letters in June 2014 (which would explain the timestamp discrepancies), his assertions that the metadata is "contradictory and impossibly inconsistent" and "incorrect or flawed" are disingenuous. The metadata is not "blatantly incorrect" when the electronic recreation of the hard copy letters in June 2014 is taken into account. It is only "blatantly incorrect" if, like Mr Fordyce, one has an absolutely fixed view that the Disputed Engagement Letters were created as he contends.
Mr Fordyce's explanation in cross-examination as to why he did not disclose from the outset that he had recreated the Disputed Engagement Letters in June 2014 again demonstrates a willingness to strain credulity to conform to his own worldview [T 187:23]:
"MR COTMAN
Q. In an affidavit sworn on 24 October 2014, you depose to matters to seek to deal with what you require to disclose according to this Court's order, do you recall that?
A. Yes.
Q. In your letter and your affidavit of 20 October 2014 when you were dealing with the disclosure information to conform to the order of the Court, did you disclose that you had lost three files off your system, found three hard copy files and recreated three files in your system?
A. No.
Q. Can you tell his Honour why you didn't disclose that?
A. Because the court orders asked me to identify the location of, of the relevant files and electronically and I did that, as far as I could.
Q. The location of the relevant files?
A. That was the court order.
Q. The relevant files, you say, were three files that you could not find?
A. So, I couldn't identify where they were.
Q. Quite, and you didn't say that in the affidavit?
A. They could've been on the X drive, that's where they should be. I didn't think outside that - those parameters."
He was not forthcoming with this information in the December Proceedings before Bergin CJ in Eq. In those proceedings, he stated he had filed an affidavit that dealt "with the creation of the documents, the very important material of production of these records almost a year before they were said to have been created when there was no reason to create the documents for reasons of improving my costs position" [Ex 10P T 11:24-28] yet he seemed studiously to avoid explicitly stating that the letters provided to the Cost Assessor were created in June 2014. It was clear to me that Mr Fordyce could not (or would not) accept that there was any difference between the letters he had "recreated" and what he was so certain were the original, now "lost", letters.
For example, and on the same topic, the following extract from his cross-examination is another illustration of his inability to confront what had occurred [T 98:29]:
"MR COTMAN
Q. Did you say to the Court, to Bergin J or to Rein J, "Look, three of these documents are ones that I put together for the purposes of the costs assessment."
A. No, I didn't raise that issue until after the Court had determined the application to set aside the costs - the orders of 1 October.
Q. Why not?
A. Because I didn't think they were relevant.
Q. You didn't think it was relevant to mention to either Bergin J or to Rein J that three of the documents that you had sent to the costs assessor were documents that you had produced as recently as July from files that you had produced as recently as June of 2014?
A. That's correct.
Q. In circumstances where it was being said by Mr Ho and on his behalf that those documents had, in fact, not been received at all, wasn't it?
A. That was the contention, yes.
Q. Certainly not received about the dates that they bore?
A. I think the contention was they hadn't ever been received."
A similar lack of candour was exhibited by Mr Fordyce's responses that he chose not to disclose to Klein & Co. or Mr Burke (and by extension the plaintiffs) that the Engagement Letters had been electronically recreated in June 2014 because "It would've come out in discovery" or that he did not disclose this information to Rein J or Bergin CJ in Eq because he did not think it was "relevant" to the application at hand (see paragraphs [100] and [114] above).
There were also other inconsistencies which cast doubt on the reliability of Mr Fordyce's recollection. For instance, in respect of the 31 January BBQ King Letter, Mr Fordyce initially asserted that he had forgotten its existence when preparing the Costs Reponses because "it was some years after the event". He later gave evidence that he specifically recalled that letter because its postage did not conform to the usual practice - that is, it was not posted on the date the letter bears on the face (see paragraphs [260] and [261] below). At another point he said that the 2014 mail-book contained "no entries". Examination of the 2014 mail-book reveals that this is not the case and, while some months contain few entries (October 2014 contains two entries for example), the mail-book was being used.
The pleading in paragraph 43 of the amended statement of claim makes it clear that it is common law, as opposed to equitable, fraud which was being alleged. The distinction between the two of them was explained by the Court of Appeal in Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114, [22] per Leeming JA (Beazley P and Sackville AJA agreeing):
"First, as Gleeson CJ said in Magill v Magill (2006) 226 CLR 551; [2006] HCA 51 at [17], "the concept of 'fraud' is wider in some legal contexts than in others". For present purposes, it will suffice to distinguish the two senses in which "fraud" is used in civil litigation which correspond to different meanings at law and in equity. The difference turns on the state of mind of the person said to have committed fraud. At common law, "fraud is proved when it is shown that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false": Derry v Peek (1889) 14 App Cas 337 at 374. The contrast with equity was explained by Viscount Haldane LC in Nocton v Lord Ashburton [1914] AC 932 at 953-954: "[i]n Chancery the term 'fraud' thus came to be used to describe what fell short of deceit, but imported breach of a duty to which equity had attached its sanction". His Lordship emphasised that a person who misconceived the extent of the obligation which a court of equity imposed upon him or her, "however innocently because of his ignorance", was taken to have violated an obligation which he was taken by the Court to have known, and with the result that the conduct was labelled fraudulent. He said of fraud in this sense at 954 that:
"What it really means in this connection is, not moral fraud in the ordinary sense, but breach of the sort of obligation which is enforced by a Court that from the beginning regarded itself as a Court of conscience".
The distinction must be taken to be settled law. For example, a unanimous High Court said (albeit in a statutory context) that establishing equitable fraud "does not require that an actual intention to cheat must always be proved": Polyaire Pty Ltd v K-Aire Pty Ltd (2005) 221 CLR 287; [2005] HCA 32 at [35]."
I discuss the authorities in relation to the standard of proof of an allegation of fraud in paragraphs [233] to [238] below. I also remind myself of what was said in Palmer v Dolman [2005] NSWCA 361, [47] per Ipp JA (Tobias and Basten JJA agreeing):
"[47] ...there are no hard and fast rules by which serious allegations might be proved from circumstantial evidence. The inquiry is simply, taking due account of what was said in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd, has the allegation been proved on a balance of probabilities".
Furthermore, in Ho v Powell (2001) 51 NSWLR 572; [2001] NSWCA 168, [14] (Hodgson JA):
"[I]n deciding facts according to the civil standard of proof, the court is dealing with two questions: not just what are the probabilities on the limited material which the court has, but also whether that limited material is an appropriate basis on which to reach a reasonable decision."
I therefore approach proof of this question on the basis that while the relevant allegations must be established on the balance of probabilities, the Court's level of satisfaction to that degree must be informed by an appreciation of the seriousness of the allegations. They are not allegations of which the Court should be satisfied by inexact proofs.
There are two reasons why I reject the plaintiffs' submission that the defendants engaged in fraudulent conduct as pleaded in the amended statement of claim.
First, the fact that the plaintiffs ultimately conceded that the Trading House Letter and Complaints Letter were in fact sent undermines the plaintiffs' case on fraud. It is to be noted that the allegation pleaded was a global one, i.e. that Mr Fordyce knew that he did not have fee disclosure agreements in any of the matters (including the Trading House Letter and Complaints Letter).
Second, even in relation to the remaining Disputed Engagement Letters, the Court is not satisfied that the evidence goes so far as to establish on the balance of probabilities, and recognising the seriousness of the allegation, that Mr Fordyce knew of the matter alleged in paragraph 43 of the amended statement of claim (as I have set out at paragraph [119] above). I have concluded that Mr Fordyce had what might be called, with no disrespect intended, a "blind faith" in his office practice and, in particular, in his office's computer systems. This was the case notwithstanding his acceptance that sometimes things went missing from "the system" (see paragraph [95] above). Considering the totality of the evidence, including having carefully observed Mr Fordyce in the witness box, I am not satisfied on the balance of probabilities, having regard to the seriousness of the allegation, that he knew that the Disputed Engagement Letters had not, in fact, been sent on or about the dates which they bore. On the contrary, I am satisfied by that evidence that as at June 2014 Mr Fordyce had persuaded himself that those letters had been prepared and sent. My strong impression was that both at the time he provided what might be described as the replica letters to the Costs Assessor and at the time he was giving his evidence before me, Mr Fordyce was "in denial" of the possibility that the Disputed Engagement Letters had, in fact, never been sent.
In preparing their reports, the experts had access to the imaged materials captured by Klein & Co. of the "Listed Things" as defined in the Search Orders (and which focused on the HO90 folder on the X drive where Mr Fordyce had instructed they were stored), copies of the engagement letters, the preliminary Klein & Co. Report of 14 October 2014 (which outlines the process Klein & Co. undertook to obtain the computer images in execution of the Search Orders), the Klein & Co. Report of 24 October 2014 (which was a "initial analysis limited to the files within this HO90 folder"), and various tax invoices from Mr Morgan to Pmf Legal. In addition, Mr Carson was also provided with the Watt Report, an affidavit from Mr Fordyce dated 27 February 2017 replying to the Watt Report, and Ms Wu's affidavit of 20 July 2017.
It became apparent during cross-examination that Dr Watt had managed to access "a backup of the entire server from around about September 2013" shortly before the hearing commenced but after the Watt Report and the conclave with Mr Carson. Dr Watt agreed that the opinions expressed in the Watt Report (that the Disputed Engagement Letters could not be found in electronic form) were based on his searches of the X drive only and assumed that the Disputed Engagement Letters were created on or filed on the X drive in the HO90 folder. However, he said that he had then searched the rest of the server data which he had recently accessed and had still been unable to find the Disputed Engagement Letters. Mr Carson was not instructed to search the entire server in making his report and stated that "the server images that I was given access to weren't a complete copy of the server".
There were concessions made by both experts regarding the reliability of the metadata or their own analysis. During the course of the hearing Dr Watt conceded that he had not stated all of the assumptions underlying the opinions expressed in the Watt Report and that he had not exposed potential flaws in the data or mechanism by which the data was assessed. By way of example, in respect of printing metadata and the 31 January BBQ King Letter, Dr Watt explained in cross-examination that his opinion proceeded on the assumption (that was not stated in the Watt Report) that a file or document was saved by the user after printing. In the circumstance that the user did not save the document after printing, he agreed the "last print" metadata would likely not reflect the most recent incident of printing. This is relevant where he opined in the Watt Report that there was "no evidence" that a Microsoft Word version of the BBQ King Letter was printed on or about 3 April 2012 or any other time in 2012.
It was Mr Carson's opinion that printing metadata, particularly of Microsoft Word documents, was not necessarily reliable and could not be used to prove definitively that a document was or was not printed. His report states:
"83. Microsoft Word does not reliably track print information. At best, it captures the last time a Word Document was printed and it will only do that, in my experience, if the user saves the document after printing it
84. I therefore do not expect print information to always be present and I expect sometimes it indicates a document was printed when it was not, for example when a template has been used that carries a previous print date across."
Dr Watt later agreed in cross-examination that it was possible that the 31 January BBQ King Letter could have been printed without it being tracked in the metadata because the file was not saved after printing.
A further example, the 31 January BBQ King Letter metadata indicates the file was created on 31 January 2012 at 2:12 pm, something which was agreed in the Joint Report. Dr Watt opined that the document (as distinct from the file) named "120131 Engagement Letter.doc" was created on 7 June 2012. It seems that this was based on the metadata which indicates a "last saved" date of 7 June 2012. However, in cross-examination, Dr Watt agreed that "last saved" metadata is not an entirely reliable basis upon which to assert a first creation date. Mr Carson was of the same view. The 31 January BBQ King Letter is discussed in detail at paragraphs [257] to [271] below.
I am not satisfied that the metadata always present an accurate or reliable picture of the facts. As noted above, the experts agreed that printing metadata were not always accurate. The same was said in respect of the content creation date as Dr Watt explained in cross-examination [T 44:36]:
"that date can be inadvertently altered by even moving files from one device to another. The - and often the last modified date is a more accurate date. I've, I've worked on matters where the creation date postdates the last modified or last saved date, and because of that very reason."
There was also some controversy about the authenticity of an email sent from Ms Sweet to Mr Fordyce on 31 January 2012. The Carson Report states that the "metadata strongly" indicates that Ms Sweet's email of 31 January 2012 was created and sent on 31 January 2012 from Ms Sweet to Mr Fordyce. Dr Watt asserted in the Joint Report that the copy of the email provided was "unreliable and likely to be fabricated" because it did not display header detail. He did not substantiate this opinion in the Joint Report. In cross-examination, Dr Watt agreed that email headers arise during transmission from sender to recipient, and that his opinion was expressed in circumstances where he had not looked at the email as received by Mr Fordyce, only as sent by Ms Sweet. He also agreed that he did have access to the email as received by Mr Fordyce yet he had not used this as the basis for his opinion.
Dr Watt eventually agreed that the email was "possibly genuine". However, he was "not prepared to say a hundred per cent of that email is completely genuine without a lot of other information. There are no Outlook files unfortunately, PST or OST files, on the end user's devices that would corroborate or provide corroborative evidence to confirm it. All we have is one copy and a backup from the exchange server." That Dr Watt seemed to require further data (a PST or OST file) to determine conclusively that an email was not fabricated seems to imply that there is not a single email that he could comfortably say was genuine and again points to the forensic limitations of the computer evidence.
Mr Carson's evidence was also of limited assistance in some respects because of the nature of the defendants' instructions. For example, Mr Carson was not instructed to examine whether the 2014 versions of the Rhodium Letter, the Amended BBQ King Letter or the Guardianship Letter existed on or about the dates they bear from 2012 and 2013, or to consider whether data "was lost on a failed hard disk, or any other found devices, or had gone missing". Accordingly, at various points he was unable to comment on the data where Dr Watt had expressed opinions. For example, in relation to the BBQ King Letter, Mr Carson stated that he did not "have enough information to provide opinion on this issue, it was not something I considered - part of my instructions. There may be evidence of this data loss I am not aware of".
Cumulatively, the issues to which I have referred resulted in gaps in the evidence that affected its utility. At times, the experts simply did not have enough information to make definitive findings or were not instructed to consider aspects of the parties' case: e.g. Dr Watt's assertion about email data and Mr Carson not being instructed to consider hypothetical data loss or the 2014 versions of the Disputed Engagement Letters. At other times, the data available were themselves ambiguous and could not provide definitive proof: e.g. printing metadata or when the content of a file was altered. The Court readily adopts the observation in the Watt Report that the metadata exhibit "potentially confusing features" which are open to different interpretation and opinion and which ultimately undermine the objectivity and utility of that evidence. It seems to me that the metadata are far from providing concrete evidence upon which the Court may rely. Save in areas where the experts clearly agreed, I have concluded that the Court cannot reach any other conclusion based on the evidence of the computer experts.
Ms Klobucar gave the following evidence in cross-examination [T 216:25]:
"Q. Was one aspect of your job to maintain the Mail-book?
A. Correct.
Q. Is this the way things worked? As I understand your affidavit, you're having brought to you from time to time, items for mailing?
A. Yes.
Q. Before you envelope them, you were looking at what it was, and making an entry into the Mail-book, as to who it was going to, the postcode, the date on which all of this was happening and then the matter number, which I take it that you could find from somewhere on the document?
A. Correct.
Q. Then, the description of what it was that you were handling?
A. Yes.
Q. Is it right that sometimes, you were being given, in effect, two items at once to go out?
A. Correct.
Q. If that was the case, you would put down the description of both items?
A. Yes.
Q. If you had a letter and an invoice, or in particular, an engagement letter and an invoice, you would put down both items in your listing?
A. Yes.
Q. Indeed, I won't take you to the Mail-book, but you can assume that if his Honour looks in the Mail-book, and in the column that you have as description, where you've got, say, "Letter and cheque," or whatever, that's your best summary of what it was you had been given to dispatch in the mail?
A. Correct.
Q. Would it be fair to say that you wouldn't get to the enveloping, franking, and so forth stage, until you'd finished your work on the Mail-book?
A. Correct.
Q. That was happening, in effect, during the day as material was being brought to you?
A. Yes.
Q. Having enveloped it, franked it, and then as you say in your affidavit, you then take it off to the mail box?
A. Yes."
Second, Ms Klobucar's testimony agrees with the mail-books in evidence. The mail-book was kept electronically on an Excel spread sheet. It recorded when, what and to whom mail was being sent. The columns of the spread sheet from left to right record the date of entry, the addressee, the addressee postcode, client identifier and matter number (e.g. HO90/120009), and an item description. Where multiple items of mail were being sent to one client, each of those items would be recorded (e.g. on 16 January 2014 "Statements and Tax Invoices #21125, #21128" or on 28 January 2014 "Engagement Letter and FILE COPY"). There are numerous entries recording postage of mail to various Pmf Legal clients for the years 2012 and 2013. For example in 2012, there are fifty-nine entries recording "engagement letter" being sent to clients of Pmf Legal. I do note that some months in the 2014 mail-book are decidedly sparse. For example, October 2014 contains only two entries. Nonetheless, it seems to me that the mail-book was used regularly.
Third, to the extent that I accept his evidence, this view is consistent with Mr Fordyce's evidence that the mail-book was kept and, where an entry appears in the mail-book, it could be relied on as evidence of the event of posting.
It follows that an entry in the mail-book is strong, contemporaneous evidence of the item described as having been sent. However, absence of a reference to something in the mail-book is not "conclusive evidence" sufficient, in and of itself, to prove the unrecorded item was not sent. Nevertheless, absence of a reference is a significant piece of evidence which, with other circumstances (including evidence of system or the presence of other entries at or about the relevant date), can be relied on for the conclusion that something was not sent. I develop this point further in paragraphs [217] to [222] below.
While they agreed that SyncToy was being used, the parties could not agree as to how the backup method functioned in practice and what records were or could have expected to have been generated. The plaintiffs construed the expert and Mr Fordyce's evidence as meaning that there were multiple copies of documents backed up to various devices. The plaintiffs submitted that the absence of backup data supported the conclusion that the Disputed Engagement Letters did not exist in electronic form on the dates recorded on the letters.
The defendants submitted the evidence meant that the back-up was always only a back-up of what existed on the server the day before. They submitted that the absence of backup data was not conclusive proof of the non-existence of the Disputed Engagement Letters specifically because a syncing backup system was used which would override existing documents. Nor, they submitted, was the presence of multiple copies of certain documents a relevant point of comparison where the expert evidence was that the system backed up the same files to multiple locations, or, in the circumstances put in the data loss scenarios, where the original file could not be located.
In relation to the relevance of the backup system files, I have concluded that the absence of backup data does not assist the plaintiffs for two reasons.
First, I do not propose to place any weight on the parties' expert evidence and will disregard the issue of backup data entirely. This is because I find it extraordinary that given a known program - SyncToy - the experts could not agree on something as apparently fundamental as whether the backup system captured multiple prior iterations of documents or only the latest version. Nor did I find the expert's explanations of their positions to be particularly clear or persuasive.
Second, if I am wrong to dismiss the issue of backup data for the reasons set out in the preceding paragraph, then I prefer the defendants' explanation because it seems to me more inherently likely given the purpose of the daily backup, being "not to lose our records". That would be achieved by backing up the latest iteration of the documents on the server. On that basis, the lack of data does not shed any light on the existence of versions of documents such as the Disputed Engagement Letters at an earlier time than the date of the backup.
The defendants had instructed Mr Carson to hypothesise about the missing Disputed Engagement Letters data (the "data loss scenarios"). The Carson Report states:
"…what are the circumstances where these documents, assuming that they were created on or about the date specified in their name (4 July 2012, 27 April 2012 and 4 September 2013) once existed but no longer exist?
87. Assuming they existed, there is a range of possible scenarios that may explain my inability to find them including:
a. The original documents were not saved in the normal locations - such as the PMF LEGAL server and not subject to the same backup and retention processes being deleted at some point or saved on systems not part of the Listed Things
b. The files may have been accidentally deleted
c. The files may have been quarantined and purged by anti-virus software if they contained suspected malware
d. The files may have been saved over, the originals being used as a template whereby the content was changed and the file data lost.
88. These are all circumstances that I am familiar with and the list above does not exhaust all possible explanations."
The plaintiffs tested the data loss scenarios against the evidence on the Rhodium Letter. Ultimately they submitted that it was "beyond credulity" to suggest that three engagement letters, which were not recorded as being sent in the mail-book, had gone missing in relation to one client by reason of an undefined hypothetical data loss scenario. The plaintiffs submitted:
1. The defendants did not put on evidence to indicate the file may have been saved to the wrong location on the server and did not ask Mr Carson to analyse the entire Pmf Legal server to prove as much - the defendants were not entitled to speculate when it was within its power to prove whether or not this was the case;
2. The probability of accidental deletion of only engagement letters in Ho Matters, immediately after the files were created and before backup copies could be created, was so low as to be implausible;
3. That relevant files were quarantined or purged by anti-virus software was mere speculation. Mr Carson had not been asked to examine if there were activity logs from anti-virus software on the Pmf Legal computers that might show files had been quarantined or purged. When questioned on the topic, Mr Carson confirmed that the template from which the Rhodium Letter specifically was created was not infected by a virus which would have passed through to any document populated from the template, and in cross-examination he specifically said that he was not "putting any weighting around these potentialities"; and,
4. The scenario that the files were all "saved over" would require too many coincidental circumstances of which Mr Carson agreed he could not find evidence (at least in relation to the Rhodium Letter). Specifically, the fourth data loss scenario assumes that an engagement letter was created on a particular date; that it was later re-opened and saved over without being renamed; and, then that it was accidentally deleted (along with any backup copies or file fragments indicating the letter once existed).
The Joint Report states:
"17. There is no evidence to support a conclusion that the BBQ King Engagement Letter was lost on a failed hard disk, or any other failed devices, or had gone missing.
Watt. Agree. There are too many copies of these and other documents all across the listed things and especially backup drives that contain files on the dates of all the documents in question and other documents on those dates. Yet none of the documents understood to have existed are present. It is unlikely there are missing documents.
Carson. Cannot Comment. I don't believe I have enough information to provide opinion on this issue, it was not something I considered - part of my instructions. There may be evidence of this data loss I am not aware of.
…
63. There is no evidence of data loss caused by hard disk or other storage device failure that led to data losses that were not recovered.
Watt. Agree. As per 17 and no fragments of deleted files with the correct metadata were located
Carson. Cannot Comment. I was not instructed in respect of examining for data loss scenarios."
In respect of the data loss scenarios put by the defendants and in accordance with the authorities below at paragraphs [233] to [238], I conclude that it is not incumbent on the plaintiffs to prove that there was no data loss. Rather, it is for the party asserting to prove positively the presence or absence of the state of affairs alleged. In this instance the defendants have not persuaded me to a state of actual satisfaction that there was data loss. This is because:
1. There is no evidence that shows there was data loss - Mr Carson was not instructed to investigate data loss and accordingly declined to comment;
2. Dr Watt's evidence is that there is no evidence consistent with data loss - a proposition the defendants failed to refute;
3. The defendants' submission that there were various "feasible" explanations for the apparent absence of electronic copies of the missing engagement letters was conjecture without some evidence of data loss; and,
4. I accept the plaintiffs' submissions recorded in paragraph [169] above.
Further, the defendants submitted that the plaintiffs had ample opportunity to seek records of the billing system or printing activity which they had not done, and that to raise this contention now was misplaced, particularly in circumstances where the plaintiffs had obtained various other materials and evidence from the defendants since October 2014. In effect, the defendants submitted that the plaintiffs are not entitled to complain about non-production of records when at no point did they ask for the production of the records.
By reference to the transcript, the plaintiffs rejected the submission that no questions were put about the failure to produce the billing records. For clarity, I will set out in full Mr Fordyce's evidence during cross-examination [T 159:8]:
"MR COTMAN
Q. You were charging for printing weren't you?
A. Yes.
Q. Indeed your printing system attached to your computers routed your printing orders through the billing system to capture the fact of printing having occurred?
A. We used the billback system which recorded printing against a file.
Q. But more particularly the billback system meant that if someone set out to print a document the record would turn up not only in relation to the metadata of the file, if it was saved, is that one possibility?
A. It - that can certainly happen.
Q. It could turn up in the metadata then of the operating system that was going in your computers?
A. I'm not a computer expert, I can't say.
Q. I know, I'm sorry Mr Fordyce, but the other place that you know it would turn up as a record is in the billing system because you were capturing information concerning printing of documents in your billing system relative to clients weren't you?
A. Yes.
Q. Right, and backing up that data?
A. I wasn't conscious of that being done. It may have been part of what Mr Morgan was doing on the server. There was a separate - there was a separate billbacks - billback box in the - with the server.
Q. Yes and that contained, in effect, the life blood of your practise being the capturing of time and events for which you would be entitled to bill clients and produce bills reflecting that, is that right?
A. Well it captured those records yes.
Q. Yes so that a further copy, or further record of printing could be in the billback system?
A. I don't know, I don't know how the billback system works. I would expect so, I don't know.
Q. Did you cause an examination to be made of the billback system files?
A. For what purpose?
Q. To determine whether there was a record of a printing of a document on 31 January 2012, 3 April 2012 or 4 July 2012 in relation to client file number 120009 for example?
A. No I wouldn't know how to do that anyway.
Q. I know you won't but you had people who did know that didn't you?
A. Well the - the billback system is fully automated so that the cost incurred n photocopying for example goes automatically onto the account that - the accounting system for that particular file.
Q. Yes and I assume date stamped and so on and so forth so that you can keep track of it all?
A. I am not aware that are - there are or are not date stamps. I just see the total figure on the invoice.
Q. Have you caused any examination to be made by anyone of the billback system as to whether any of these events that you say happened are recorded in the billback system?
A. No.
Q. Is there a reason for that?
A. I didn't do it, that's - I can't explain any further, I just didn't think about it."
The plaintiffs submitted that the defendants had not attempted to prove that all of the data recorded by Reckon was destroyed after the ransomware virus attack and that it was not mere speculation from the plaintiffs that there was a source of information about printing that could have been examined, or used to prove that the records have been destroyed. The defendants' instructions to their expert were printing, at least from the main printer, was recorded by Reckon, which Mr Fordyce confirmed in cross-examination.
Mr Carson was questioned on this point as follows [T 251:26]:
"Q. What you're being asked to assume by the affidavit that was sent to you by paragraph 123, that if something happened in June 2015 before that, the Reckon files were readily available?
A. Well, I don't know that I - I don't know that's what it's saying.
Q. Certainly it's not being suggested anywhere in the affidavit that the Reckon files were not available to be examined?
A. No."
In respect of any printing records, the plaintiffs submitted that the absence of system event logs recording printing in the captured images indicates the Disputed Engagement Letters were not printed. The defendants submitted that the plaintiffs had ignored Mr Carson's evidence that Windows system event logs and spool files were not a particularly reliable source to evidence the printing of documents. He said "[Windows is] pretty hit and miss with the system keeping track of printing… Windows does not log every print of a document… I wouldn't expect to find the system logging the printing of those files."
I accept the plaintiffs' submissions to the effect that a Jones v Dunkel inference should be drawn against the defendants. The plaintiff's case required the defendants to "explain or contradict" the proposition that the Disputed Engagement Letters had not been sent. The billback system was in the defendants' knowledge and control and I am satisfied could have shed some light on the question.
A Jones v Dunkel inference cannot be drawn where the relevant party provides an explanation for the failure to call the witness or evidence. Such an explanation would have been provided by establishing that the data had been lost because of the ransomware attack. However, as the plaintiffs submitted, while such a loss had been put as an assumption, it had not been proven.
Finally, it is to be recalled that a Jones v Dunkel inference does not permit conclusions to be drawn in the absence of evidence. In this case, as I will go on to explain, there is evidence in support of the conclusion that the Disputed Engagement Letters were not sent. However, the Jones v Dunkel inference which arises from the failure of the defendants to call evidence about the billback system's data (and failure to provide an explanation for the absence of that evidence) would go to the issue of when (if at all) the Disputed Engagement Letters were printed and, therefore, brought into existence. In this case it is unnecessary for me to rely on the Jones v Dunkel inference because, as I explain below, I am satisfied that the Disputed Engagement Letters were brought into existence on or about the date each of them bears.
In line with his efforts to maintain a "paperless office", Mr Fordyce's evidence was that he "hardly ever pick[ed] up a, a folder of papers". He said that he did not fabricate the letters and place them on the relevant hard copy matter files in such a way as to make it look as if each document was prepared contemporaneously with the date it displays.
The plaintiffs submitted that Mr Fordyce's evidence could not be trusted and that the hard copy versions of the Disputed Engagement Letters were replicas which did not exist in the Pmf Legal hard copy matter files as at June 2014. The defendants disputed this allegation, asserting that Mr Fordyce's evidence could be trusted and that, in circumstances where equally consistent inferences about whether the hard copy Disputed Engagement Letters were the product or the source of the June 2014 created documents, the plaintiffs had not discharged their legal burden of establishing the non-existence of the hard copy letters as at June 2014.
Pursuant to s 183 of the Evidence Act, I am able to draw inferences from documentary material. I have examined the engagement letters within the hard copy folders (the BBQ King Letter, the Amended BBQ King Letter, the Rhodium Letter and the Guardianship Letter) and noted their position relative to other dated documents in the folder. Each letter appears at the back of the correspondence section of the relevant file, being where one would expect one of the first pieces of correspondence to be found in a file maintained "solicitor fashion", i.e. proceeding in reverse chronological order from rear to front. On their face, and given their position in the file, the hard copy letters would strongly support the conclusion that they are copies of documents produced on the date they bear.
I accept Mr Fordyce's denial of the proposition that he fabricated those copies and placed them on the files in June 2014. I also accept his evidence that they were on the files when he looked at them at that time. Consistently with the view I have taken about Mr Fordyce's reliability, I have reached these conclusions because Mr Fordyce's evidence is corroborated by the defendants' evidence of usual practice, which is the next topic I will consider. It accords with that evidence that copies of those letters would have been placed on the file by a Pmf Legal employee (and not Mr Fordyce) at the time the letter was produced. I accept as inherently credible, given his determination to be "paperless", that Mr Fordyce would have had nothing to do with placing a physical copy of the letter on the file at the time the copy was produced.
Finally, in Elayoubi v Zipser [2008] NSWCA 335 at [86] Basten JA (Allsop P and Beazley JA agreeing) said (emphasis added):
"Evidence of usual practice may be of assistance in circumstances where mechanical steps or routine tasks are in issue and the witness who supposedly undertook the task on a particular occasion has no recollection of the occasion. The weight to be given to such evidence will depend upon the possibility or likelihood of departure from such practice."
Once signed, the letter would be given back to Mr Fordyce's personal assistant. He said he could not recall an occasion where he had not signed a cost agreement or engagement letter at or around the same time upon opening a new matter.
While Mr Fordyce admitted that he did not handle the preparation of the mail for postage, he observed [T 92:21]:
"The envelopes that were there [in the outgoing mail tray next to the franking machine] at the end of the day were not there when I came in on the following morning at about 5 o'clock in the morning. So, there was no build up of - of mail."
Mr Fordyce stated that to his knowledge none of the engagement letters that Pmf Legal sent to Mr Ho's PO Box were ever returned to him or to Pmf Legal by Australia Post or through any other means.
Mr Fordyce also gave evidence that he observed that his personal assistant would deliver the letter to the office junior, who was stationed opposite his office, and that the office junior would then move across to the franking machine to apply a stamp indicating prepaid post, along with the firm logo and address.
Ms Klobucar was the office junior at Pmf Legal from February 2012 until November 2016. She has sworn two affidavits in these proceedings on 8 September 2015 and 21 December 2015 in which she gave evidence of Pmf Legal's usual practice during her employment and she was called for cross-examination. I accept her evidence, including the evidence she gave in cross-examination concerning the use of the mail-book (see paragraphs [150] to [151] above).
Ms Klobucar's evidence was that one of her duties as Pmf Legal's office junior was to prepare signed mail to be sent out. Her evidence was that she would first make an entry in the mail-book recording details of the mail item or items to be posted; she would then place the mail into an envelope, weigh it to determine the cost of postage and use the office franking machine to stamp the envelope; following which she would deliver the mail to a post office box for posting at some point during the day (the "outgoing mail process"). Ms Klobucar was the "only person in the office" who performed this task unless she was absent from work. This outgoing mail process would occur throughout the day as material was brought to Ms Klobucar. She said that during her time at Pmf Legal all mail posted to clients including invoices was done according to this procedure and that nothing she had posted to Mr Ho's PO Box had been sent back to her as returned mail.
Ms Wu also gives evidence that during her time at Pmf Legal (from 7 October 2008 until 5 September 2014) "it was a standard practice for engagement letters to be prepared upon the opening of new files and sent to clients". Ms Wu was formerly employed as a solicitor at Pmf Legal. She has sworn two affidavits in these proceeding on 1 September 2015 and 20 February 2017 and was called as a witness for the defendants. Her evidence largely relates to the Trading House matter (HO90/120035).
Accordingly, the plaintiffs contended that a number of "usual records" could be expected to have been generated where usual practice was followed. They submitted that the creation of these records was an element of the usual practice itself and the absence of such records should rouse suspicion with the resulting inference being that the step was not taken at all. The usual records contended for were:
"a. A computer file, containing as the application (e.g. Word) data, the letter in question, and bearing a date;
b. A file name for that file which conforms to the standard format, reflecting the date on the letter;
c. Computer retained records (metadata) in application (e.g. Word) and/or system (e.g. Windows) files, registering the fact of and date of creation of the "new" file, by whom, and doing what to the file, and of any other file (i.e. a source file) employed in the process (that is, there should be evidence of one file being opened to create the new file, as there is with the '120131 etc.' file being opened to create the 7 June 2012 letter);
d. Computer generated records of the printing of the file, at least in the billing system records, if not also in the application or system metadata;
e. A hard copy of the letter (typically a signed copy on Pmf Legal letterhead) or at least an unsigned copy, on the relevant client "hard copy" file, demonstrably from the date of first printing of the letter;
f. Possibly, a scanned "soft" copy of the letter, as signed, in PDF format in the client "X: drive" directory;
g. Computer metadata files recording the creation of that PDF file;
h. An entry in the mail-book describing the engagement letter as the item, or one of the items, posted;
i. Multiple copies (literally dozens or more for 2012-3 files) of the entire, or fragments of the, application file AND systems metadata files, created by the file backup process, in various places on various devices."
The plaintiffs submitted that Pmf Legal's office practice was largely computer based with some human intervention required to create files or to consolidate records on the computer system (for example, the electronic mail-book); that the evidence provided by the technology is objective and irrefutable; and suggested that if only three of six Engagement Letters could be traced electronically, then the "invariable" usual practice could be described, at best, as invariably "haphazard".
The plaintiffs argued that Pmf Legal's records indicate that there are only two instances of letters being sent in accordance with the usual practice which is documented in multistage records of production, handling and dispatch of these two letters. No such records exist for the other letters, the absence of which throws substantial doubt on their creation at all.
The defendants submitted that full weight should be given to the evidence of usual practice provided by Mr Fordyce and Pmf Legal's former employees' which was that when a new file was opened, an engagement letter would be prepared, ultimately signed and sent by prepaid post to the client's nominated address; that the usual practice was adhered to - as was demonstrated by the Trading House Letter and Complaints Letter; and that Mr Ho's evidence of when retainers commenced matches the dates Mr Fordyce indicated files were opened and engagement letters prepared corroborating Mr Fordyce's evidence. Moreover, the defendants submitted there was no suggestion that Mr Fordyce (as a solicitor of many years) did not know his obligations under the Act to make costs disclosure or that he was not aware of the serious career consequences of non-disclosure. Accordingly, it was highly improbable he would not comply with such obligations.
In respect of the Trading House Letter and Complaints Letter, the defendants conceded that these could be viewed merely as instances of the usual practice system working but did not necessitate its application to all. They invited the Court to infer that the usual practice was maintained but it was at times abandoned for various reasons which, with the passage of time, it was now difficult to prove and that full weight should be given to Mr Fordyce and his former employee's evidence in this regard. Moreover, it could not be assumed that the electronic or hard copy records were perfect or that those using it were infallible - particularly in relation to the mail-book. The defendants submitted that there were feasible explanations for the missing electronic records as indicated by Mr Carson, i.e. the data loss scenarios, and which Dr Watt accepted (discussed at paragraphs [165] to [172] above).
Applying this approach to the present case, on the basis of the totality of the evidence, I am satisfied that Pmf Legal had a usual practice in relation to the creation and posting of engagement letters as set out in paragraph [211] above. Insofar as I rely on Mr Fordyce's evidence in reaching this conclusion, I do so because it is inherently credible as to how an experienced solicitor might be expected to run his practice and is consistent with and corroborated by the evidence of the firm's former employees. However, having accepted the defendants' submission that there was a usual practice, I do not accept that it is open to the defendants to "have their cake and eat it" by submitting that there were departures for various reasons which, with the passage of time, it was now difficult to prove or that every inconsistency was explained away with the suggestion that it could not be assumed that the electronic or hard copy records were perfect or that those using it were infallible.
In closing submissions, the defendants agreed that they bore the evidential onus of satisfying the Court on the balance of probabilities that the Disputed Engagement Letters were prepared and sent. This is what Heydon J referred to in Strong v Woolworths Limited (2012) 246 CLR 182; [2012] HCA 5 at [53] as the "tactical burden" on the defendant "to call any or any weighty evidence" in circumstances where "a plaintiff calls evidence sufficiently weighty to entitle, but not compel, a reasonable trier of fact to find in the plaintiff's favour." Mr Alexis SC submitted that the defendants had discharged this burden, saying [T 310:10]:
"I could have elected not to go into evidence and I could have made a submission that said, the plaintiff must fail because the metadata analysis on any view is inconclusive… Our friend would have made a submission that we had an evidential onus for largely the reasons that he's already referred to, and our position would then have to cope with that. But we have made the decision to go into evidence and to bring forward consistent with and in discharge of that evidential onus, all the material that we have and so to the extent that we have an evidential onus, in our submission we have discharged that and in addition of course Mr Fordyce has entered the witness box … there could be no real suggestion in this case that we have not discharged an evidential onus."
The defendants also rely on the dicta of Fullagar J in Department of Health v Arumugam [1988] VR 319 at 330 specifically that "neither a total absence of explanation nor a non-acceptance of an explanation can by itself provide an element of proof required. It can enable already available inferences to be drawn against dishonest explainers with greater certainty, but that is all". Accordingly, the defendants submitted that even where facts were exclusively in the defendants' knowledge or power to explain, this would only allow for existing inferences, grounded in the evidence and favourable to the plaintiffs, to be drawn more confidently.
The defendants submitted that an allegation of fraud is not proved in circumstances such as in the present case where the choice between competing possibilities of equal likelihood can only be resolved by conjecture and that the Court could not be satisfied the plaintiffs had discharged their burden of proof to the requisite standard so as to support a finding that Mr Fordyce has engaged in fraud.
Evidential burden is not to be confused with the legal onus. Relevant here are the observations of Heydon J in Strong v Woolworths Limited (2012) 246 CLR 182; [2012] HCA 5 (citations omitted):
"[52] In the first sense, "evidential burden" refers to the duty of one party (usually the party bearing the legal (ie persuasive) burden, who in most instances will be the plaintiff) to call sufficient evidence to raise an issue as to the existence or non-existence of a fact in controversy. This must be done to prevent a no case submission succeeding (or if the relevant evidential burden rests on the defendant, to prevent the issue otherwise being withdrawn from the jury). The Privy Council (Lord Hodson, Lord Devlin, Viscount Dilhorne, Lord Donovan and Lord Pearson) criticised the expression "evidential burden of proof" as follows:
It is doubtless permissible to describe the requirement as a burden, and it may be convenient to call it an evidential burden. But it is confusing to call it a burden of proof. Further, it is misleading to call it a burden of proof, whether described as legal or evidential or by any other adjective, when it can be discharged by the production of evidence that falls short of proof.
However that may be, this is what Wigmore called the duty of producing evidence.
[53] In the second sense, "evidential burden" refers to circumstances in which a plaintiff calls evidence sufficiently weighty to entitle, but not compel, a reasonable trier of fact to find in the plaintiff's favour. There is then said to be an "evidential burden" in the sense of a "provisional" or "tactical" burden on the defendant: if the defendant fails to call any or any weighty evidence, it will run a risk of losing on the issue - that is, a risk that at the end of the trial the trier of fact will draw inferences sufficiently strong to enable the plaintiff to satisfy the legal (ie persuasive) standard of proof. The "provisional" or "tactical" burden raises the question whether a defendant should as a matter of tactics "call evidence or take the consequences, which may not necessarily be adverse".
[54] The third sense in which the expression "evidential burden" is employed arises where a plaintiff, in discharging the evidential burden in the first sense, calls evidence so strong that a reasonable trier of fact would be bound to decide the issue in the plaintiff's favour if the defendant calls no evidence. It is sometimes said that an "evidential burden" rests on the defendant which, if not discharged, will cause the defendant to lose and which, if discharged so as to cause the trier of fact either to reject the plaintiff's evidence or to be undecided, will result in the legal (ie persuasive) burden on the plaintiff not being satisfied."
In respect of drawing inferences, Beazley ACJ (as her Honour then was) recently stated in Rail Corporation New South Wales v Donald; Staff Innovations Pty Ltd t/as Bamford Family Trust [2018] NSWCA 82 at [76]-[78]:
"76 … An inference may only be drawn if there is evidence to support it. In Luxton v Vines (1952) 85 CLR 352; [1952] HCA 19 the plurality, Dixon, Fullagar and Kitto JJ at 358 approved the High Court's explanation of the principle in the then unreported decision of Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 as follows: "… where direct proof is not available, it is enough if the circumstances appearing in 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 ... 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." "
The relevant Adobe PDF metadata is:
1. File created: 08/06/2012 3:37:17 PM
2. File accessed: 08/06/2012 3:37:17 PM
3. File modified: 08/06/2012 3:37:17 PM
4. Application created: 07/06/2012 10:14:55 AM
5. Application modified: 07/06/2012 3:37:16 PM
6. Last printed: 7/06/2012 10:07:00 AM
7. Last saved: 7/06/2012 10:07:00 AM
8. PDF Producer: DocuCentre-IV C4470, Fuji Xerox Office Printer/Scanner
9. Full file path as found on Pmf Legal Server: X:\H\HO90\120035-Reinstatment of Trading House and terminating the winding up\Correspondence\120607 Engagement Letter-Signed by PMF LEGAL.pdf
In summary, the objective contemporaneous evidence indicating that the Trading House Letter was prepared and sent to Mr Ho's PO Box is as follows:
1. An electronic copy of the Trading House Letter is saved on the X drive in the Ho matter file. The full file pathway is: "X:\H\HO90\120035-Reinstatment of Trading House and terminating the winding up\Correspondence\120607 Engagement Letter.doc";
2. It was created on 7 June 2012 at 9:58 am as indicated by the metadata and the file name ("120607 Engagement Letter.doc") follows the file naming convention e.g. "YY/MM/DD engagement letter.doc",
3. The document was last modified on Ms Sweet's computer, PA1, at 10:07 am;
4. The source file "120131 Engagement Letter.doc" (31 January BBQ King Letter, discussed below) was opened at 9:48 am about ten minutes before the Trading House Letter was created using the "save as" function;
5. It was last printed and saved on 7 June 2012 at 10:07 am;
6. The printed Trading House Letter was scanned using the DocuCentre-IV C4470 printer and a PDF version was electronically created on 7 June 2012 at 10:14 am, about seven minutes after the Microsoft Word version was last printed;
7. It was saved on the X drive in the Ho matter file ("120607 Engagement Letter-Signed by PMF LEGAL.pdf"); and
8. The 2012 mail-book records an "engagement letter" addressed to Mr Ho's PO Box on 7 June 2012 (though it is mistakenly labelled with the Rhodium Proceedings file number "120027", rather than the Trading House Proceedings file number "120035"). The entry is one of a number in the mail-book for June 2012.
The parties agree, and on the basis of the foregoing the Court would in any event have found, that the defendants have proven on the balance of probabilities that the Trading House Letter was sent to Mr Ho on or about 7 June 2012 and is therefore presumed to have been received by him four business days later.
The parties agree, and on the basis of the foregoing the Court would in any event have found, that the defendants have proven on the balance of probabilities that the Complaints Letter was sent to Mr Ho on 28 January 2014 and is therefore presumed to have been received by him four business days later.
However, Mr Fordyce's evidence later was that he had a specific recollection about this letter because it was held back to be posted with the relevant invoice which was "different" to the usual practice [T 158:13]:
"MR COTMAN
Q. …I take it your expectation is it would have been posted on 31 January?
A. In the usual course, yes.
Q. You indeed don't say do you that there was something unusual about 31 January relative to that letter, do you?
A. No, I do say that there was something that caused that letter to be delayed.
Q. What is that Mr Fordyce?
A. An invoice was issued for the work that had been done up to - up to and including 31 January and that was to accompany the engagement letter.
Q. But the invoice didn't go until the, what is it, 2 or 3 February?
A. Correct.
Q. You say that this was a letter which was not dealt with in the ordinary course, this was a letter which was held back to join up with the invoice?
A. Because the invoice, the 31 January--
Q. Is that what you say?
A. Yes.
Q. This is a matter about which you have a specific recollection is it?
A. Yes.
Q. I see, so that this was not the subject of the usual practise, this was the subject of a different practise, is that right?
A. It was different to the usual practise yes.
Q. Because you say someone was holding back the letter of 31 January to join up with an invoice that was going to get printed some time in February so that it gets sent out together?
A. Yes.
Q. So that you say that the entry in the Mailbook for early February which refers to the mailing of an invoice in fact is a reference to the mailing both of an invoice and of an engagement letter?
A. Yes."
Later on, his precise recollection again seemed to change [T 178:30]:
"MR COTMAN
Q. Can I invite you to look at your letter, which is towards the end of the bundle of paper, which is your letter of 12 September 2014, on your letterhead?
A. Yes, sorry there, there are two. The letter to Mr Connery, or the letter to--
Q. Yes, your letter to Mr Connery, and therein item (c), you are confirming, are you not, that you have supplied to Mr Connery in response to his correspondence with you, all of the cost agreements under your cost response?
A. Yes.
Q. Can his Honour take it, that it still hadn't come back to your mind that there was a cost agreement at 31 January?
A. I wasn't addressing the date of the cost agreement, but no I certainly hadn't thought about it. I'd not addressed the issue of a cost agreement at all.
Q. But you had been thinking about cost agreements, both in terms of the conduct of your own proceedings and in the context of, eventually, the costs assessment, is that right?
A. That was the, the beginning point, yes.
Q. You had told your staff to look for all of the cost agreements?
A. Georgina, I think, had provided the cost agreements from the files, the electronic files.
HIS HONOUR
Q. That's not the question that you were asked.
A. Sorry, what was the question?
Q. The question was, "And you had told your staff"--
MR COTMAN
Q. To look for all the cost agreements?
A. On the electronic file.
Q. Since you had already established in June that the electronic files were not reliable, because you had three missing electronic files, you caused an examination to be made of all the physical files, didn't you?
A. I don't think so.
Q. It is the fact, is it not, that if one, then or today, went to the physical files of your firm, there would not be a single copy of the 31 January 2012 letter that you say existed as at and from that date, is there?
A. That's what I understand, yes.
Q. You have no explanation at all, as to why it is that there is no such document?
A. No.
Q. Indeed, you say that even the electronic evidence of its existence is gone because, "I altered the file"?
A. No, the electronic, the existence of the file dated, called 120131, is evidence of the engagement letter in its original form."
Mr Fordyce also gave evidence of a series of emails sent on 31 January 2012 between Mr Fordyce, Ms Wu and Ms Sweet - copies of these emails were annexed to Mr Fordyce's affidavit. An email was sent at 11:33 am on that day to Ms Sweet and Ms Wu bearing the subject line "BBQ King restaurant". The email reads:
"Can you find out the name of the company that carries on the business and any business name.
New file being opened for Ho.
Acting in relation to claims of former shareholder for misleading and deceptive conduct and oppression.
…Commencing proceedings for damages against company and shareholders.
Costs $150,000."
Further emails were exchanged one of which includes a business name extract search for BBQ King that states the search was performed on 31 January 2012 at 12:32 pm and specifically lists matter "HO90/120009".
At 12:14 pm on 31 January 2012, Ms Sweet sent an email to Mr Fordyce with the subject line "HO90/120009 Engagement Letter DRAFT". The email contained a hyperlink to a file labelled: "X:\H\HO90\120009 - Proceedings for damages against company and shareholders-BBQ King\Correspondence\120131 Engagement Letter.doc", but which now links through to an engagement letter dated 3 April 2012.
The experts agree that there was a file created on 31 January 2012 named "120131 Engagement Letter.doc". However, and allowing for their different use of terminology, they agreed that it could not be said what particular content, if any, that file contained and that the "current content of that file may or may not be the content as at 31 January 2012."
While Mr Carson could not say with certainty that the current version of the 31 January BBQ King Letter was created on 31 January 2012 at 2:12 pm, he did not agree with Dr Watt's finding that "the computer evidence indicates the BBQ King Engagement Letter was created on the day it was last saved, being the 7th June 2012." The Carson Report notes that "The application creation date is evidence of creation of a document that currently exists as the BBQ King Engagement Letter" but "whether the content now in that document is the same as it was on the day created is another question altogether." Consistently with the view I have taken of the expert evidence, I am unable to make any finding based on the evidence recorded in this paragraph.
The experts agree that the only version of the BBQ King Engagement Letter identifiable as having been printed is the PDF file named "120403 Engagement Letter to Robert Ho - 120009.pdf" which was created on 10 September 2013.
By reason of the matters set out in paragraph [268] above, the defendants have failed to satisfy the Court that the 31 January BBQ King Letter was either created or sent on the date it is said to have borne. Mr Fordyce's evidence of his recollections is not accepted because it is uncorroborated. In particular, I have no hesitation in finding on the basis of the absence of a 31 January 2012 entry in the mail-book (when all the other matters in paragraph [268] are taken into account) that the defendants have failed to satisfy the Court that the 31 January BBQ King Letter was ever sent to Mr Ho. Notwithstanding the absence of express evidence from Mr Ho of non-receipt of the letter, the strength of the evidence pointing against the existence or sending of the 31 January BBQ King Letter is sufficient to warrant the making of the declarations the plaintiffs seek.
The plaintiffs submitted that there is no objective evidence to support the contention that "120131 Engagement Letter.doc" was opened, modified or saved on 3 April 2012 to create the BBQ King Letter. They submitted that there are no backup copies of the 31 January BBQ King Letter file bearing a date of 3 April 2012; there are no fragments of a deleted or overwritten file that may have been the BBQ King Letter before the 7 June 2012 modification date when the file was opened to create the Trading House Letter or between 3 April 2012 and 7 June 2012; there is no evidence of the "120131 Engagement Letter.doc" being printed on 3 April 2012; no signed copy of the BBQ King Letter exists in hard copy or electronic format and only an unsigned copy exists on the hard copy matter file; and, that there is no entry in the 2012 mail-book recording postage of the BBQ King Letter to Mr Ho's PO Box in accordance with the usual practice.
The plaintiffs submitted there was no dispute that from 10 September 2013 at the latest, the 31 January BBQ King Letter file bore a date of 3 April 2012. This was the first date on which the metadata indicates the BBQ King Letter was printed (seemingly to create a PDF version to send to the NSW Trustee and Guardian) and, it submitted, the first date on which it was possible that a hard copy of the BBQ King Letter was placed on the hard copy matter file. The plaintiffs submitted that, given the position and proximity of the letters in the hard copy matter file (one on top of the other), it was unlikely that Mr Fordyce simply failed to see the second letter but that both letters were placed in the file after they were created in June 2014. I have already dismissed that line of argument in paragraphs [184] to [191] above.
The plaintiffs noted that the copy of the letter to the NSW Trustee and Guardian sent by email to Mr Wong and Ms Leung on 12 September 2013 did not enclose a copy of the BBQ King Letter which was being sent to the NSW Trustee and Guardian. Accordingly, the defendants were overstating the evidence in their submission that the BBQ King Letter was brought directly to Ms Leung and Mr Wong's attention by no later than 12 September 2013. The plaintiffs asserted that the defendants' reliance on the correspondence in relation to the Trustee's request was misconceived and that the communications were ambiguous at best. They submitted that Ms Leung was not required as part of this case to give evidence of the proper discharge of her duties as executrix and that even if she had conducted independent searches, it would not add to the body of evidence in the case on the plaintiffs' case.
In reaching this conclusion I have not overlooked that it could be argued that the existence of the unsigned copy of the letter on the matter file makes it likely that the original was sent. In other words, why bring a copy of the letter into existence if the original was not sent? I do not accept this argument for two reasons. First, an equally plausible explanation is that the copy could be an unsent draft. Second, the argument is speculative, whereas the evidence of usual practice, and the assessment of the consequences where something that should have been recorded was not, is not speculative.
The evidence of an unsigned copy of the BBQ King Letter being sent to the NSW Trustee and Guardian may be consistent with the letter having existed, but says nothing about whether it was ever sent.
I am also not persuaded by the defendants' submissions in relation to the 18 September 2013 email. The statement "Need copy of executed cost agreement with Mr Ho" is ambiguous. It could be interpreted as meaning an executed costs agreement existed and needed to be produced, or that a costs agreement needed to be executed and then produced. In my opinion, the email does not clearly confirm the existence or non-existence of a signed costs agreement and certainly casts no light on whether it was sent.
Furthermore, the email was directed to Ms Wu, not to Mr Wong and Ms Leung, and reads like an internal email requesting information of Ms Wu, not Mr Wong or Ms Leung. It does not ask Mr Wong or Ms Leung to acquire a signed copy from Mr Ho or attach a copy of the document to send to the NSW Trustee and Guardian. There is also no evidence to suggest Mr Fordyce or Ms Wu chased Mr Wong or Ms Leung to obtain a signed copy of the relevant Engagement Letters. Accordingly, it does not seem to me that the absence of response from Ms Leung at that time points to a dereliction of her duties as executrix (assuming, without deciding, that would otherwise have been the case).
Neither do I accept the defendants' arguments about the circumstantial evidence (e.g. the sending of unsigned copies of documents to third parties) to be sufficient to infer that the letter was sent.
When Mr Ho's evidence of non-receipt of the BBQ King Letter is combined with the failure of the defendants to demonstrate it was ever sent, the Court finds that it was not sent and that the plaintiffs are entitled to the declarations which they seek.
In respect of the "Application printed" date, the Watt Report explained that this is not uncommon where a file has been used as the template for a new document through the "save as" function and that this date "simply represents the last print date of the old file from which the BBQ King Amended Engagement Letter was created."
The plaintiffs submitted that Mr Fordyce had the relevant motive to insert documents fraudulently into the hard copy matter files because he was barred from commencing proceedings under the Act where costs disclosure had not been made until costs assessment had occurred. They contended that Mr Ho had no motivation to lie about costs disclosure particularly in circumstances where, they suggested, Mr Ho would have been labouring under the belief that what he claimed could easily be proved false by Pmf Legal's records. Their final submission was that Mr Fordyce's evidence about "re-creating" the June 2014 documents from pre-existing hard copy documents was a recent invention, and that the suspicious absence of usual business records coupled with Mr Fordyce's actions - such as omitting from his affidavits that the letters were recreated in June 2014 - spoke to his efforts to conceal his fraud.
In reaching this conclusion I have not overlooked that it could be argued that the existence of the unsigned copy of the letter on the matter file makes it likely that the original was sent. In other words, why bring a copy of the letter into existence if the original was not sent? I do not accept this argument for two reasons. First, an equally plausible explanation is that the copy could be an unsent draft. Second, the argument is speculative, whereas the evidence of usual practice, and the assessment of the consequences where something that should have been recorded was not, is not speculative.
When Mr Ho's evidence of non-receipt of the Amended BBQ King Letter is combined with the failure of the defendants to demonstrate it was ever sent, the Court finds that it was not sent and that the plaintiffs are entitled to the declarations which they seek.
When Mr Ho's evidence of non-receipt of the Rhodium Letter is combined with the failure of the defendants to demonstrate it was ever sent, the Court finds that it was not sent and that the plaintiffs are entitled to the declarations which they seek.
Mr Carson explained that in a DOS-related system "a drive is denoted by a letter followed by a colon and then backslashes". The file path is a slash-separated list of directory names which in relation to Ho Matters usually follows the pattern:
1. Drive - X:
2. Directory - H
3. Client folder/subdirectory - HO90
4. File name - e.g. "130904 Engagement Letter etc."
The defendants responded that it was not within their exclusive power to examine the H drive - the plaintiffs could have requested Dr Watt to do so particularly in circumstances where he claimed having access to the entire Pmf Legal server. Further they submitted that the expert evidence did not support such a conclusion and that the proposition that the existence of an H drive was a recent invention was not put to Mr Fordyce in cross-examination.
I should record two matters in relation to the mail-book entries which I have taken into account.
First, the tax invoice recorded as sent to Mr Ho on 5 September 2013 is noted as being in the Guardianship Proceeding. It is clear from the hard copy matter file that the matter had only begun a couple of days before, so I am satisfied this is a typographical error. I did consider whether the description of "tax invoice" may have been the error and that it should have read "engagement letter". However, I consider that far less likely than the matter number being the error because of the level of detail for the surrounding Ho correspondence entries in the mail-book, not least the detailed (and correct) recitation of the contents of the 10 September letter to the NSW Trustee and Guardian. Given the various Ho Matters, I am satisfied that a typographical error in the matter number is a far more likely conclusion than an engagement letter being incorrectly described as a tax invoice. Furthermore, tax invoices in the Guardianship Proceedings are recorded as having been sent to Mr Ho on 26 September 2013 and 4 October 2013, which accords with the course of the matter as appears from the file.
Second, confronted with the choice between accepting that:
1. for some strange reason the Guardianship Letter was not recorded in the mail-book, in contradistinction to the recording of other correspondence to Mr Ho and the important letter of 10 September 2013 to the NSW Trustee and Guardian; or
2. the Guardianship Letter was not recorded in the mail-book because it was not sent,
the latter is to my mind the far more probable explanation and I find accordingly.
When Mr Ho's evidence of non-receipt of the Guardianship Letter is combined with the failure of the defendants to demonstrate it was ever sent, the Court finds that it was not sent and that the plaintiffs are entitled to the declarations which they seek.