IBRAHIM & ORS v PHAM & ORS

BADAL INVESTMENTS PTY LTD (Third plaintiff)

PHILIP PHAM (First defendant) PARTIES : PHAM ATIC PTY LTD (Second defendant)

FRED DAVID (Third defendant)

SUZIE DAVID (Fourth defendant)

PAUL MANUELPILLA DOMINIC (Sixth defendant)

LINDA JOAN GLORIA ROMANO (Seventh defendant) FILE NUMBER(S) : SC 20483 OF 2002 B H K Donovan QC / D Baran (Plaintiffs)

COUNSEL : D Pritchard (First and second defendants)

R Darke SC / M Dicker (Third to sixth defendants) Barclay Benson Lawyers (Plaintiffs)

SOLICITORS : Ebsworth & Ebsworth (First and second defendants)

Acuiti Legal (Third to sixth defendants)

DLJ:1 [2004] NSWSC 650 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

BADAL INVESTMENTS PTY LTD (Third plaintiff)

PAUL MANUELPILLA DOMINIC (Sixth defendant)

LINDA JOAN GLORIA ROMANO (Seventh defendant)

JUDGMENT (Tendency evidence - admissibility - civil action)

1 On 20 July I ruled that proffered tendency evidence was inadmissible. I said: "Yesterday I heard an application by the plaintiffs to lead what I will describe as tendency evidence (see s 97 of the Evidence Act 1995).

Evidence made up of four affidavits of persons involved in other litigation against the same defendants was tendered on the voir dire for the plaintiffs. For the defendants in response specifically to the tendency assertions, as I shall describe them, were tendered affidavits as well as affidavits from the substantive actions. I heard oral submissions and have written submissions from the defendants.

Yesterday I indicated that in all likelihood I would deliver my ruling this morning and publish my reasons therefor as soon as I can.

My ruling is that I decline to admit the evidence in exhibit A on the voir dire; the Kondrajian and Nakad material.

In brief I can add for present purposes that I am not persuaded that the material is tendency evidence. If I was, I would not be persuaded that it has significant probative value. If I was so persuaded I would exclude it nonetheless under s 135(c) at the least. I will publish my reasons as soon as I can". 2 I now provide my reasons. 3 By their third further amended statement of claim filed in court on 15 July this year the plaintiffs sue the defendants claiming damages in negligence against the first and second defendants, claiming relief under the Fair Trading Act 1987 against the first defendant and under the Trade Practices Act 1974 against the second defendant and damages for breach of fiduciary duty as against the first and second defendants. Cognate causes of action are pleaded respectively against the third, fourth, fifth and sixth defendants. 4 The application in respect of which I delivered the above ruling was made at the conclusion of the oral evidence of both plaintiffs. The plaintiffs' evidence in chief was given by way of affidavit. 5 For present purposes as between the plaintiffs and the first and second defendants the allegation is that over a series of meetings in 2000 arrangements were made by the first and second defendants for the obtaining of finance secured by the first plaintiff's home unit with a view to investment by the second plaintiff in what I shall describe as businesses connected with Karl Suleman. As between the plaintiffs and the third to sixth defendants (like the first and second defendants, a firm of solicitors) the dealings relate to refinancing and the involvement in particular of Ms Jajoo, a solicitor with the latter group. I add that in connection with the first and second defendants a Mr Varda was involved in the meetings between the plaintiffs and those defendants. At the time of the application with which I was concerned Mr Varda had not been called. 6 The application made by the plaintiffs was to tender in the current proceedings evidence of Mrs Anahid Kondrajian and her husband Elie. The evidence was made up of parts of an affidavit each had sworn on 19 August 2003 and filed in those persons' separate proceedings against the same defendants in action number 20484 of 2002. 7 Additionally, the plaintiffs sought to tender part of the evidence set out in the respective affidavits of Joseph Nakad and Tamara Nakad sworn on 25 August 2003. Those affidavits were sworn in the proceedings instituted by those deponents as plaintiffs against the same defendants in action number 20486 of 2002. 8 Those four affidavits became exhibit A on what was described as the voir dire to determine the admissibility of the asserted tendency evidence. 9 Again, in brief, the material from these four affidavits relates to a meeting at which it is to be understood the four deponents were present with Mr Pham in circumstances where each knew that Mr Pham was a solicitor for Mr Suleman and each of the four deponents at the time of that one meeting in 2001 had as their solicitors the third to the sixth defendants. 10 In the present action the third to the sixth defendants became involved in refinancing for the plaintiffs as a result of a recommendation by another entity, namely Quick Loan Services. 11 Exhibit 1 on the voir dire was constituted by two affidavits of Meredith Louise Cridland, solicitor for the first and second defendants. In these affidavits Ms Cridland deposes to Mr Pham having acted as a mortgage broker for KSE investors on approximately twenty-two to twenty-five occasions over the period mid-2000 until early November 2001. Thirteen different statements of claim have been filed by investors against Mr Pham, one or two have been discontinued, but eleven are still outstanding. Apparently there is a suggestion that in the wings, as it were, there are four hundred additional sets of instructions. 12 The notice under s97 of the Evidence Act 1995 annexed to the first of Ms Cridland's affidavits purports to give notice in respect of parties other than the Kondrajians and the Nakads. Evidence from the two other proposed parties who have commenced proceedings, as I understand it, against Mr Pham have not been pressed in this current application. The causes of action in the proceedings instituted by the Kondrajians and the Nakads are essentially the same as those pleaded in the current substantive action. 13 Exhibit 2 on the voir dire is an affidavit of Mr Pham sworn 1 July 2004, an affidavit of 17 June 2004 by Deborah Ann Locke who was the secretary to Mr Pham, and an affidavit of Alexander Atic sworn 29 June 2004. There is also an affidavit of Hoangu Thai (Carina) sworn 8 July 2004. 14 The principal affidavit of Mr Pham places in issue the assertions made against him by the Kondrajians and the Nakads. Clearly in relation to transactions involving those four persons there would be substantial conflicts of evidence. The balance of the affidavits set out matters of practice within the office conducted by Mr Atic, on their face quite inconsistent with the essential matters asserted to be "similar fact", or, more strictly, tendency evidence, as in the claims by the Kondrajians and the Nakads. 15 Exhibit 3 on the voir dire is made up of the affidavits of the first defendant in the proceedings sworn 12 November 2003 and an affidavit of Thuan Nguyen sworn 30 June 2004 in, as it were, "corroboration" to some substantial extent (on their face) of the first defendant's position vis-à-vis the plaintiffs in this action, and thus any "conduct" in relation to them which is to be viewed in relation to the asserted conduct of the plaintiffs in relation to the Kondrajians and the Nakads. 16 Exhibit 4 on the voir dire is a compilation of twelve relevant affidavits filed on behalf of the third to the sixth defendants, which I will merely describe as being to the same purport and effect on this application as the other evidence. 17 Counsel for the first and second defendants, in relation to the two affidavits filed by Mr and Mrs Kondrajian, usefully provided an analysis comparing accounts in each disclosing, not surprisingly, almost an identicality in versions as to events and conversations said to have taken place. 18 An essential summary of the difference between all that involves the plaintiffs in the substantive action and the Kondrajians and the Nakads is that the relevant paragraphs of the affidavits of the other plaintiffs are primarily concerned with one alleged conference between Mr Pham and the four other plaintiffs in about April 2001 in which it is said Mr Pham assisted them to raise finance at a time when they were represented by Dominic David Stamford. The context for the consideration of tendency evidence is starkly different, a view that can be formed on the reading of the Kondrajian and the Nakad material alone. 19 The relevant current law in relation to tendency evidence (it is to be taken that this application was argued only on the basis of tendency and not coincidence) commences with the definition in the dictionary to the Evidence Act of "tendency evidence" which is rather circular, stating that such evidence is "evidence of a kind referred to sub-s 97(1) that a party seeks to have adduced for the purposes referred to in that section". 20 S97 of the Evidence Act is as follows: 97(1) Evidence of the character, reputation or conduct of a person, or a tendency that a person has or had, is not admissible to prove that a person has or had a tendency (whether because of the person's character or otherwise) to act in a particular way, or to have a particular state of mind, if: (a) the party adducing the evidence has not given reasonable notice in writing to each other party of the party's intention to adduce the evidence, or (b) the court thinks that the evidence would not, either by itself or having regard to other evidence adduced or to be adduced by the party seeking to adduce the evidence, have significant probative value. (2) Subsection (1) (a) does not apply if: (a) the evidence is adduced in accordance with any directions made by the court under section 100, or (b) the evidence is adduced to explain or contradict tendency evidence adduced by another party. 21 The author of Odgers, Uniform Evidence Law (5th edition), comments as follows at pages 266-267: "This provision, which applies in both civil and criminal proceedings, prohibits use of evidence of "character, reputation or conduct" (or "tendency") to prove that a person had a tendency to act or think in a particular way, unless the requirements of the provision are satisfied …If such evidence is not adduced to prove the existence of some tendency to act or think in a particular way, it is not caught by s97… Another way of expressing this proposition is to say that evidence of "character, reputation or conduct" (or "tendency") is not caught by this provision (the "tendency rule": see Dictionary) if it is not adduced to prove the existence of some tendency to act or think in a particular way, but adduced for some other purpose". 22 S97(1) of the Evidence Act has been considered by the Full Federal Court in Jacara Pty Ltd v Perpetual Trustees WA Ltd (2000) 106 FCR 51. Sackville J (with whom Whitlam and Mansfield JJ agreed) at 66 (para [61]) stated: "[61] The critical question in a case in which the tendency rule stated in s 97(1) is said to apply to evidence of conduct is whether the evidence is relevant to a fact in issue because it shows that a person has or had a tendency to act in a particular way. To adopt the language of Cowen and Carter, the question is whether the evidence of conduct is relevant to a fact in issue via propensity: in so far as the evidence establishes the propensity of the relevant person to act in a particular way, is it a link in the process of proving that the person did in fact behave in the particular way on the occasion in question?" 23 Later, his Honour stated at 68-68 (paras [72]-[74]): "[72] The tendency rule stated in s97(1) of the Evidence Act departs from the common law position enunciated in Sheldon . The fact that tendency evidence is relevant to a fact in issue is not enough to make it admissible. Even if relevant, it will not be admissible if the court thinks that the evidence would not have "significant probative value". As Lehane J pointed out in Zaknic Pty Ltd v Svelte Corp Pty Ltd (1995) 61 FCR 171; 140 ALR 701 at FCR 175-6: "What is clearly required, if [tendency] evidence is to be admissible, is that it could rationally affect the assessment of the probability of the relevant fact in issue to a significant extent; that is, more is required than mere statutory relevance".

[73] Precisely what more is required has been expressed in different ways. In R v Lockyer (1996) 89 A Crim R 457 (SC(NSW)), Hunt CJ at CL said (at 459) that: ""significant" probative value must mean something more than mere relevance but something less than a "substantial" degree of relevance. His Honour thought that this meant evidence that is "important" or "of consequence" in establishing the fact in issue. The approach of Hunt CJ at CL was quoted with apparent approval in R v Martin [2000] NSWCCA 332 at [67]. See also R v AH at 709 per Ireland J. Lehane J in Zaknic , deriving guidance from the pre-Evidence Act cases, thought that the tendency evidence would have to be "clearly and strongly probative of the relevant fact in issue": at 176.

[74] I doubt that it is useful to attempt any more precise reformulation of the terms of s 97(1) of the Evidence Act. The statutory language provides the standard that is to be applied and judicial statements as to the construction of the legislation cannot supplant that language: Ogden Industries Pty Ltd v Lucas [1970] AC 113 at 127; (1968) 118 CLR 32 (PC), quoted in Brennan v Comcare (1994) 50 FCR 555; 122 ALR 615 at FCR 572 per Gummow J. Moreover, the statutory language incorporates a test which, although it will normally be applied before facts have been found, involves "a degree and value judgment" having regard both to the evidence to be adduced and other evidence adduced or to be adduced: s 97(1)(b); Fleming v Hutchinson (1991) 66 ALJR 211. Indeed the tendency rule is framed in terms of whether the court "thinks" that the evidence would not have significant probative value". 24 It appears Jacara has not been considered by the New South Wales Court of Appeal or in the New South Wales Court of Criminal Appeal. In ASIC v Vines [2003] NSWSC 1237 at para [33] Austin J expressly agreed with para [74] of the judgment of Sackville J in Jacara. 25 Jacara has been followed in later decisions of the Federal Court. In Australian Competition and Consumer Commission v 4WD Systems Pty Ltd [2003] FCA 850 (13 August 2003) Selway J followed Jacara (at paras [49]-[50]) and emphasised that tendency evidence could not be used to establish a business system. 26 In Trylow v Commissioner of Taxation [2004] FCA 446 (16 April 2004) Hill J stated at paras [114]-[115]: "[114] Tendency evidence must clearly be regarded with some scepticism. It may be in the criminal arena that evidence that an accused has committed a particular crime in a particular manner may be such that it would rationally affect the assessment of the probability of the fact in issue, being whether the accused did in fact commit a later crime in the same way: R v Boardman [1975] AC 421. It may even be the case where relationships are in issue that, as Sophie Tucker the American comedienne once sang: "A man who cheats will always repeat." But evidence, for example in the context of misleading and deceptive conduct that a respondent made representations in the past which were misleading will generally not affect the assessment of the probability that the representation made to an applicant and claimed to have been relied upon by the applicant was in the same and false terms. This will particularly be the case where there are, as in Jacara Pty Ltd v Perpetual Trustees WA Ltd (2000) 106 FCR 51 significant discrepancies in the account of the alleged conversations. [115] As Sackville J pointed out (at 65) in Jacara , that similar fact evidence will ordinarily be relevant to a fact in issue in the proceedings because it tends to establish a propensity in the relevant person, and that propensity is "a link in the process of tending to show that the person did in fact behave in the particular way alleged in the case." Evidence may be relevant both because it tends to establish a propensity and because it may tend independently to prove a fact in issue. That is the circumstance to which s95(1) is concerned. [116] Similar fact evidence is, as his Honour also observed by reference to the previous case law, not merely rejected on the grounds of relevance. Particularly in the area of criminal law it will be rejected because its prejudicial effect may transcend the probative force of that evidence. Whatever the situation in the criminal law may have been, it is clear from s97(1) of the Evidence Act that relevance will not of itself be the test of admissibility of tendency evidence. It will not be admissible where the Court is of the view that the evidence would not have "significant probative value", even if forensically it may be said to be relevant. Lehane J in Zaknic Pty Ltd v Svelte Corporation Pty Ltd (1995) 61 FCR 171, cited in Jacara, suggested that the tendency evidence would have to be "clearly and strongly probative of the relevant fact in issue" (at 176). However, I would, with respect, agree with Sackville J that it is the statutory language which must be applied and that there is a danger in a reformulation such as that undertaken by Lehane J, which may distract attention from the statutory language".

27 In Regina v Ellis [2003] NSWCCA 319 (5 November 2003) the Court of Criminal Appeal held that the statutory regime for the admissibility of tendency and coincidence evidence found in the Evidence Act (which includes s101) was intended to cover the relevant field to the exclusion of the common law principles previously applicable (see paras [70]-[74]). 28 Against this legal background, for the first and second defendants the submissions were that the evidence sought to be relied upon by the plaintiffs is not tendency evidence, having regard to the failure of the plaintiffs properly to articulate any relevant or material tendency sought to be relied upon. Any examination of the notice and the mere reference to the affidavit portions advanced for the plaintiffs sustains this submission in my view. 29 Additionally, the plaintiffs appear to be relying on only one additional event, namely the event involving the Kondrajians and the Nakads in April 2001, an event some eight or nine months after the events concerning the present plaintiffs. During that period Mr Suleman apparently had been raising funds. I agree with the submission for the first and second defendants that the events are fundamentally different, in that the Kondrajians and the Nakads had always retained Dominic David Stamford to which quality I have referred to above. Further, the Kondrajians and the Nakads paid no money to and received no tax invoice from the first and second defendants and the Kondrajians, at least, purport to involve Debbie Locke and PAL Holdings Ltd. 30 This, in my view, in relation to the first and second defendants is sufficient to dispose of the matter in their favour. 31 However, as I have stated above, if a view otherwise could be formed that this was "tendency" evidence, it does not have sufficient probative value having regard to the matters already referred to, and having regard to Mr Pham being involved in raising the finance for about twenty to twenty five investors between mid 2000 and October-November 2001. Further, and importantly, thirteen sets of plaintiffs using the same solicitor have commenced proceedings against Mr Pham in relation to his alleged involvement with Karl Suleman and only two have been proffered by the current plaintiffs. No other lay evidence is to be understood to be being called. The alleged similar fact or tendency evidence is oral in nature only and is not founded upon undisputed documentary evidence. It is essentially in dispute as far as Mr Pham and Ms Locke are concerned, the other transaction did not involve Mr Varda. The similar fact evidence is concerned with one alleged meeting only with Mr Pham, as opposed to three or four meetings and of course the Kondrajians and the Nakads are directly financially interested in the outcome of the current substantive proceedings. For these reasons I would have been of the view that the so-called tendency evidence did not have the requisite probative value. 32 Had I been otherwise persuaded, as I have said, I would have excluded the evidence under s135 of the Evidence Act at the very least on the basis of wasting undue time, taking into account that its use in these proceedings could not otherwise go to the resolution of the actions between the Kondrajians and the Nakads and Mr Pham or any other plaintiffs and Mr Pham on the same basis as if all the actions were being heard together and the evidence, subject to relevance, in one was evidence in another. The present action, involving approximately $170,000, would go on for at least another two weeks. 33 For the third to the sixth defendants submissions of a similar kind are made. As Mr Darke SC succinctly stated the position, there has not been demonstrated by way of the notice served in relation to his clients or by the contents of the relevant material that there is in fact a tendency to act in a particular way which could be established by that material. 34 The same principles of law are relied upon by third to the sixth defendants. 35 In relation to these defendants the pertinent issues of fact are whether Sabrina Jajoo made statements to Mrs Ibrahim and Mr Badal as set out in their affidavit in the substantive proceedings. As submitted, the question thus becomes whether the alleged tendency evidence is relevant to any of those facts in issue because it shows that Sabrina Jajoo, a solicitor with the third to the sixth defendants, has or had a tendency to act in a particular way. 36 The evidence of conversations with persons at Dominic David Stamford (the third to the sixth defendants) other than Ms Jajoo, including statements of Ms David or Mr David, could not be admissible under s97 because those statements do not go to any tendency possessed by Ms Jajoo. That proposition in my view is unarguably correct. The various conversations with Ms Jajoo sought to be relied upon all occurred in the general context of the deponents being clients of Dominic David Stamford. However, the requirement that the evidence must be relevant to a fact in issue because it shows that "a person has or had a tendency … to act in a particular way" calls for greater specificity than merely dealing with members of the public as clients, it is submitted, or otherwise for the purpose of arranging or assisting in loans for the investment of funds in projects involving Karl Suleman. I agree. 37 I would make the same observations as to the significant probative value of any such evidence in relation to the case sought to be made on the tendency basis against the third to the sixth defendants and the observations as to the operation of s135, especially sub-para (c), would be the same also. 38 For these reasons I made the orders referred to at the commencement hereof. The exhibits on the voir dire are to be returned. **********

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