(iii) Depending on the answer to these questions, is the Mortgage and, if and to the extent it be found that the loan underlies the mortgage, the loan liable to be set aside under s37A of the Conveyancing Act and, if so, with what consequences? (see paras 49 and 50 of the second Amended Statement of Claim)
136 Question 3 - Estoppel?
With respect to the Plaintiff's claim of estoppel:
(a) Can the Court be satisfied that Christopher Kwan was aware that on 1 June 1999 before Sidis DCJ Counsel for the Woowins made a statement to the effect that the Castlecrag property would be available to meet an order for the costs thrown away by the vacation of the hearing date of the District Court proceedings?
(b) If so:-
(i) was Christopher Kwan aware that the Plaintiff's solicitor had made a mistake as to the title over which she had placed the Plaintiff's caveat?
(ii) was Christopher Kwan aware that the Plaintiff's solicitor was labouring under a misapprehension as to the title over which she had placed the Plaintiff's caveat?
(iii) was Christopher Kwan aware that the Plaintiff was claiming to be entitled to a lien over the Property by reason of having undertaken the work which interest might compete with Christopher Kwan's entitlement to a mortgage over the Property?
(c) Did the Plaintiff act to his detriment in reliance upon the representation made to Sidis DCJ by Mr Davidson?
(d) Did Christopher Kwan come under any (and if so what) duty to advise the Plaintiff of the Plaintiff's solicitor's mistake having regard to the fact that Mr Davidson's statements to Sidis DCJ were made by him as counsel for the Woowins not Christopher Kwan?
(e) If the answers to (a)-(d) are in the affirmative, was Christopher Kwan thereby precluded (by application of principles governing abuse of process and estoppel) from:
(i) asserting an entitlement to repayment of the loan alleged to have been made on 13 February 1998;
(ii) relying on the Mortgage ?
137 Question 4 - Equitable lien or charge in equity?
In respect of the Plaintiff's claim to an equitable lien or charge in equity:
(a) Did the contract relied upon by the Plaintiff for the recovery of payment for work done by him for the Woowins contain a provision (express or implied) entitling him to any (and if so what) interest in the Castlecrag Property so as on that basis to entitle the Plaintiff to an equitable lien or charge in equity over that property, or would otherwise such entitlement arise on the basis pleaded?
(b) If the undertaking of the work pursuant to that contract gave rise to an interest in the Property, was in any event such interest extinguished when the Plaintiff left the Property in 1995?
138 Question 5 - Priority of mortgage over equitable claim?
If the Plaintiff became entitled to an equitable lien:
(a) Did Christopher Kwan have notice of the lien?
(b) If Christopher Kwan had notice of the equitable lien, did he act unconscionably in registering the Mortgage obtaining thereby priority for the repayment of his loan?
(c) Did the Plaintiff's interest prevail over Christopher Kwan's interest as mortgagee of the Property?
(d) Was the conduct of Christopher Kwan such as to prevent him from retaining the net proceeds of sale of the Property in partial satisfaction of the debt owed to him by Kate Woowin?
139 Question 6 - Conspiracy to injure?
Did the creation of the loan, the entry into the Mortgage and/or the repayment of the loan by Kate Woowin involve:
(a) an intention on the part of Kate Woowin and Christopher to injure the Plaintiff; and
(b) the undertaking of any (and if so what) unlawful acts
or otherwise so as to constitute a conspiracy against the Plaintiff?
140 Question 7 - Damage to Plaintiff?
If the answer to question 6 is in the affirmative, has the Plaintiff suffered any (and if so what) damage by reason of that conspiracy and its being carried into execution?
Question 1 - Sham transactions?
141 The Plaintiff contends that there was no bona fide loan transaction between Christopher and Kate on or by the 13 February 1998. There was thus no loan capable of being secured by the mortgage over the Castlecrag property. On the other hand, the First Defendant claims that there can be no doubt that the original loan was a genuine transaction, that it was established by the Affidavit evidence of both of the participants and corroborated by the bank records identifying the transfer of the funds from Mr Kwan's account to Ms Woowin's in February 1998. I turn now to consider that evidence in greater detail.
142 Clearly, on Christopher's own account, the agreement, if made, was oral. Not only was there no written agreement, there was no letter or contemporaneous diary note or other record produced, recording terms or referring to the loan. All there was, was the bank documents recording a transfer between an account in his name in a Hong Kong bank to an account in Kate's at the same bank but bearing his PO box number. The only witnesses were Christopher and Kate between whom according to Christopher, there was then and thereafter a continuing, close friendship; T, 579, 581. That is not necessarily fatal but such extreme informality for so large a sum, even between friends, is a factor tending against there being any genuine loan though consistent with the money being provided by Christopher to Kate for investment on his behalf as further evinced by the common post office box number in the two addresses being Christopher's box number. This is particularly when considered in context with other factors. There were, it is true, the bank documents though with the same box number, namely Christopher's. Those documents of themselves provide no evidence as to the reason for the money transfer. It might have been equally a loan, or money made available to invest. Moreover, it should not be overlooked that the money belonged not to Christopher but his mother; it was not as likely that he would be lending his mother's money to his friend, as against investing it for his mother. There is no evidence of a gift from mother to Christopher her son.
143 The First Defendant contends that in late January or early February 1998 he and Kate had a conversation in Guangzhou China in which she requested a loan of capital to do some trading in the foreign exchange and share markets; Affidavit of Christopher Kwan sworn 12 October 1999 para [4]. According to the First Defendant, Kate said that she was prepared to give him a mortgage over the property at Castlecrag at an exchange rate of 0.58 and 9% interest for the $US430,000 promised; Affidavit of Christopher Kwan sworn 12 October 1999 para [4].
144 To elaborate, the money in question, as I have said, was money of Christopher's mother, not Christopher's, being compensation for resumption of his mother's house in China. She did no more than authorise him to remit the money out of China (Ex DX15 authority dated 1 October 1996, three certificates dated 6 February 1998, Foreign currency Sales Form debt 9 February 1998 and Remittance Acknowledgment dated 10 February 1998). That Kate, a foreign exchange dealer at the time (T, 635) might be given the money to trade for his mother would be perfectly explicable. That he would lend it to Kate for her to trade as principal is rather less credible. What actually happened was that on 13 February 1998 Christopher transferred the sum of US$430,580 from his account No. 275-321230 in the Hang Seng Bank in Hong Kong to Kate's account in the same bank No. 275-308799: see statements of Bank Accounts Annexures "A" and "B" to Affidavit of Christopher Kwan sworn 12 October 1999. But significantly, the address for Kate on Kate's account was Christopher's own post office box in Chatswood, not Kate's own address; see annexure B and T, 640. Clearly, a sum of US$430,580 changed hands. The Plaintiff contends that the transfer was facilitated solely for the benefit of Christopher rather than Kate; T, 640.8-20. In support the Plaintiff also emphasises the absence of written records of the alleged conversations and the fact that Kate and Christopher were the only persons privy to the alleged conversations; T, 640.50-59.
145 There are moreover a number of aspects of the claimed loan which cast doubt, cumulatively if not individually, on its genuineness, apart from what appears to be an unauthorised use of his mother's money. First, he is, on his account, lending totally unsecured and undocumented. Documentation and security only comes into being on Christopher's urgent instructions 18 months later, when clearly advice was then being sought by Christopher on behalf of Kate and her mother in the circumstances of the Plaintiff's litigation and a proposal for disposal of the Castlecrag land to Christopher; see [152(b)] below. According to the note of 25 June 1999 to Mr Christie of Verekers from Christopher (PX4 at 114) "In January 1998 both Kate Woowin and I agreed to make a transaction of US four hundred and thirty thousand to be given to Kate", and "a nominal interest rate was set …" adding "the funds would have been borrowed at an exchange rate of 0.59". Yet despite that apparently clear statement there were the following discrepancies:
(a) the bank documentation shows that the money went between the two accounts, each bearing the same PO box of Christopher's, not in January 1998, as also stated (wrongly) in the mortgage, but on 13 February 1998;
(b) the "nominal" interest rate (which Christopher, incredibly, equated to "normal" interest, despite his property and business sophistication, fluent English and use of the word normal in other context which showed he understood it as I explain further, below) became in the mortgage, for no apparent reason, 9%.
(c) On top of that supposed substantial interest rate, the funds were inexplicably to be borrowed at an exchange rate of 0.59 (there is confusion also between 0.59 and 0.58 as the rate but nothing hangs on that), according to the note; thus despite this exchange rate being already greatly to the advantage of the lender and the disadvantage of the borrower, when the prevailing market exchange rate was 0.67; that would have cost Kate immediately the sum of A$102,588 if called up; the loan, being on-demand, could have been called up immediately to her substantial disadvantage.
(d) The mortgage as documented refers to "the sum of $741,380 advanced on or about January 1998" when the loan advanced was in reality A$639,791.97; had the arrangement been as claimed, the mortgage would more appositely have been expressed as securing an advance of US$430,580, to be repaid in Australian dollars, to be converted at the (deemed) exchange rate of 0.59.
146 Thus, if one takes into account both the 0.59 exchange rate and the supposed 9% interest rate on top, the effective interest rate over the 18 months is exorbitant. The $102,588 increment corresponds over one year to an interest rate already over 16%. So onerous an arrangement does not accord with the kind of deal that a sophisticated exchange dealer like Kate would make against her interest. Although no evidence was given on the point, there is nothing to indicate that she was not in a position to borrow against the Castlecrag property on reasonable terms and the terms claimed by Christopher to have applied were hardly reasonable, in particular a deemed unfavourable exchange rate of that order. Nor does it appear compatible in its onerousness with Kate and Christopher being such good friends. It looks more likely a device to eliminate any asset in Kate's hands available to meet the Plaintiff's judgment while restoring the money lost to the Woowins in China where it could not be traced.
147 So far as my impressions of Christopher as a witness, I found him intelligent and astute and certainly not someone who would confuse, with his sophistication and command of English, the word "nominal" for the word "normal", as he claimed. I found him at times to prevaricate as, for example, on whether in September 2000 his assistance had been sought to find Eileen and Kate. He claimed to have no knowledge of where they were yet there was no suggestion that he was not a close friend of Kate's on a continuing basis even if there had been tension (see [180] below) at some point in the arrangements with regard to Castlecrag. Summing up, I formed the impression that Christopher would not hesitate to do all he could to assist Kate and her mother in frustrating any future judgment that the Plaintiff might obtain and would not be excessively scrupled in how this was done.
148 It was thus hardly surprising that, faced with a claimed loan arrangement seemingly so one-sided against Kate, Mr Christie of Verekers made a diary note expressing his concern for "evidence of the loan occurring and of the agreement that it be secured" adding "made it clear I was only acting for him"; PX4, p115. If he were acting for Kate, he might indeed have had a conflict. Mr Christie follows this up with a letter of 19 July 1999 noting to Christopher that "you are to provide me with evidence of the relevant transaction and the agreement that it be secured" and asking again "Will you please let me have this information for my file as soon as possible"; PX4, p124. All he ever got, it appears, was Christopher's bank statement with the Hang Seng Bank in Hong Kong, showing a deposit on 12 February 1998 of US$430,580 and a withdrawal next day of the same amount. Mr Christie, clearly in the First Defendant's camp, was not called to give evidence, nor Christopher's mother likewise, whose money was being used.
149 There is a further matter telling against the genuineness of the loan. When on 22 July 1999 Christopher received the whole of the net proceeds of sale of the Castlecrag property totalling $804,467.99 (T, 634) he immediately transmitted most of the money out of Australia to his same bank account in Hong Kong (PX4, p132 and following, affidavit paras 18, 19 and 21). But he then "lent" to and applied for the benefit of, the Woowins a substantial amount of money (roughly $67,000); affidavit paras 23-25, He did so without security and without subsequently receiving payment or making any demand for repayment; T, 634.
150 In considering the Plaintiff's claim that the loan was spurious, it is also necessary to refer by way of background to the period prior to Christopher's instructions to Verekers on 25 June 1999 to prepare the mortgage over the Castlecrag property. I turn first to Christopher's email of 4 April 1999 to Kate which records that "The house - I understand your concerns. But if I don't put a caveat on the house you will not be protected"; PX6 at 135. In cross-examination Christopher claimed that he wanted first and foremost, to protect his own interests in the property but considered that in putting the caveat on the property he was also protecting Kate's interests because she would not need to pay his loan to her out of a source other than the house; T, 621.439-T, 622.3. That claim lacks plausibility, as the caveat could have no effect on her liability if genuine, to repay the loan; it would merely freeze the capacity to sell the house while the caveat remained thus protecting Christopher but not protecting her. Christopher would as a financially sophisticated and astute property manager of a family company in Sydney have appreciated that, it can confidently be said. Christopher also said that he understood Kate to be concerned that the anticipated litigation against the Plaintiff might be very expensive and that she was worried that Christopher was pressing his claim; T, 621.25-37.
151 In the conversation said to have taken place between Christopher and Kate in late January or early February 1998 in Guangzhou China, according to Christopher's affidavit account (para 4 of affidavit of 12 October 1999) Kate offered Christopher 9% interest on the sum of US$430,000 advanced. Yet in the earlier letter of 25 June 1999, written just under four months earlier by Christopher to Richard Christie, at Verekers, instructing him to prepare the mortgage on Kate's property and at a time when it was yet to be known what would be the property sale price, Christopher instructed Richard that a "nominal interest rate was to be set". Christopher deposed in his affidavit of 12 October 1999 that at the time that he wrote the letter of the 25 June 1999 he understood the word "nominal" to mean "normal" and that the agreed rate of interest of 9% was consistent with this understanding. Two points in particular point to this being recent invention, and strongly militate against such an understanding, seriously undermining the credibility of Christopher's evidence on this crucial point. The first is Christopher's education and commercial experience. He obtained a Bachelor of Electrical Engineering in 1984 from the University of New South Wales, held a position as sales administrator with Mitsubishi Electric, was Product Manager with GEC, property manager of a family company in Sydney, and Managing Director of KHYCO (an overseas company), the latter which required him to attend to financial management of the company (T, 570-572). Second, is Christopher's own evident familiarity in other circumstances with the correct meaning of the word "normal". This was reflected in his letter of 7 October 1997 to the Department of Immigration in which he stated that the Plaintiff "would not normally be permitted to get into Australia under the points system" and that the Plaintiff should be deported immediately "so that the Woowin family can return safely and get on with their normal lives" (PX17).
152 Against this commercial experience and other usage I do not at all accept Christopher's contention that he misunderstood the nature of the interest rate governing the mortgage between he and Kate. But his transparent lie about misunderstanding the meaning of "nominal" is highly significant as to his credit generally. It bespeaks a willingness to twist language to suit his case; here to maximise the sum owed to Kate to equate or exceed the proceeds of sale of the property paid across to Christopher. This was, I infer, in order to protect the house and its proceeds to the greatest extent possible. Christopher claims that he is owed even more than the value of the house as sold to the third party. As the earlier calculations make clear, even with the artificially set and inflated US exchange rate of the supposedly agreed 58 or 59 cents to the A$, the later known sale proceeds paid by direction in their entirety by Kate to Christopher ($804,987.98) well exceeds the A$ equivalent of the loan at that rate (A$741,380). Faced with the apparently illogical conduct of Kate paying over more than Kate owed to Christopher even on Christopher's version of what occurred, the 9% interest rate was, I infer, simply a "deus ex machina" concocted to make up the shortfall. There could be nothing "nominal" about an interest rate of 9%. That in turn casts such doubt on Christopher's account of there having been a loan at all, as distinct from trading by Christopher on his own or mother's account through Kate's foreign exchange dealership, as to lead me to conclude there never was a genuine loan by Christopher to Kate. By then, 25 June 1999, without recourse to any documents in PX12 whose admissibility is challenged:
(a) the Plaintiff's claim against the Woowins was known and clearly a cause of concern to the Woowins and Christopher, with a hearing date looming on 28 July 1999 with no further delay likely to be countenanced;
(b) As at 5 May 1999 Mr Barry, QC (briefed on the advice of Mr Davidson pursuant to instructions given by Christopher to Mr Stenberg at their conference with Mr Davidson on 30 April 1999; T, 600-1, PX6 at 43-4) is asked whether the Castlecrag property could be sold to Christopher for a price ($750,000) exceeding what is then said to be owed to Christopher ($600,000), and the $150,000 surplus then returned to China, without the Court setting aside the sale; also asked whether, if judgment were entered against the Defendants "can such judgment be enforced against assets [which would on that analysis include the $150,000] held by the Defendant in Hong Kong and/or mainland China". This further undermines the case for there being a genuine loan at all, for here it is treated as only $600,000. Less than two months later, by the time the mortgage is signed, the so-called loan has climbed to over $800,000. It is escalated by the convenient discovery of the 9% interest, now added to the onerous deemed exchange rate of 0.59. Moreover, sale of the Property to Christopher is not compatible with it being mortgaged to Christopher already. There is no suggestion in the advice sought, that the property is already agreed to be mortgaged to Christopher. Nor that he was asking about whether he could foreclose by having it transferred to himself.
153 Moreover, although Christopher says that he asked Mr Stenberg on 21 May 1999 to lodge a caveat against the Property in his own interests (and that was a matter of considerable importance to him), he never in fact lodged such a caveat and he never pressed Mr Stenberg on performance of those instructions; T, 593-594, 604-611). In the same evidence, he denied having any discussion about Mr Kang's caveat with Mr Stenberg on 24 May 1999 even though the objective evidence (summarised below) is that by title searches on 21 May 1999 Mr Stenberg had notice of the caveat being on one only of the two title deeds relating to the property; and on 24 May 1999, at the very time Mr Stenberg was conferring with Christopher personally and with the Woowins by telephone, he received a copy of the caveat, supporting a likely inference that Mr Stenberg discussed the caveat with Christopher and the Woowins at that time.
154 Thus, as to notice of the Plaintiff's caveat being on one only of the two title deeds (the laneway of little value), the evidence is to the effect that, at the very time Mr Stenberg and Christopher were in conference on Monday 24 May 1999 (between 11 am and 12.42 pm or thereabouts), and in communication with Kate by telephone (between 11.55 am and 12.28 pm or thereabouts), Mr Stenberg's office received from his law stationer (at 12.06 pm-12.08 pm) a copy of Mr Kang's Caveat and the Deposited Plans referred to in the Folio Identifier searches of the Property ordered and received by Mr Stenberg on Friday 21 May 1999. See PX6 p124-129, 130, 130-132, 161; Exhibit 7; PX16 (entry for 24 May 1999); PX12 (entry for 11.55 am on 24 May 1999, recording a telephone call from Christopher's mobile phone to the Woowins in China for a duration of 1,986 seconds, just over 33 minutes); and T, 609-610, 628-629 and 700-703.
155 The Chronology based on PX6 (with which PX7 should be read in relation to events occurring on 20-21 May 1999) provides a convenient means of identifying events of particular significance. In general terms, reference should be made to entries relating to 17 and 28 December 1998; 7, 20 and 28 January, 8 February, 4, 10, 11, 12, 19, 21 and 30 April, 5, 11, 17, 20, 21, 24, 25, 26 and 31 May and 11 June 1999. The following points, in particular, should be noticed:
(a) In relation to references to a "caveat" in entries for 4 and 12 April 1999 and 20 May 1999: although Christopher says that he asked Mr Stenberg to lodge a caveat on the Castlecrag Property to protect his (i.e. Christopher's) "lien" over the property, and he instructed Mr Stenberg to obtain title searches for that purpose, he denies (T, 605) any suggestion that (on 21 or 24 May 1999 or otherwise) Mr Stenberg reported to him the fact of Mr Kang's caveat or the existence of two title deeds for the Property. Although he says he was acutely concerned about his own interest in the Property, he says that he never followed-up his request that Mr Stenberg lodge a caveat on the property to protect his "lien"; T, 605-612. Paragraph 4 of Christopher's email to Kate of 4 April 1999 (PX6 p135) betrays a concern on the part of Kate, about Christopher's proposal of a caveat, which is inconsistent with any suggestion that she agreed in February 1998 to provide security in his favour. He says "the house - I understand your concerns. But, if I don't put a caveat on the house, you will not be protected". That is totally at odds with his instructions to Mr Christie on 25 June 1999, that back in January 1988 "both Kate and I agreed that I would hold a mortgage over the property at 228 Edinburgh Road, Castlecrag" (PX4, p114). If she did indeed agree to a mortgage, she could hardly object to the lesser intrusion of a caveat. And if she did not, as appears more likely, it is equally likely she did not agree to a loan either.
(b) In relation to entries for 21 and 24 May 1999: These need to be assessed against the background that Mr Kang's caveat was lodged at the Land Titles Office, and was the subject of a "Registration Notice", on 20 May 1999 (PX4 pp107-109).
Jones v Dunkel
156 Finally, there is a complete absence of any witness evidence in support of this alleged loan (and mortgage) transaction from other than Christopher save the wholly untested evidence of Kate Woowin (in her District Court affidavit of 9 August 1999, DX14). The Plaintiff contends that this supports the drawing of adverse inferences against Christopher. I agree; the cumulative effect of the evidence does suffice for this purpose. The Plaintiff invokes the principles of Jones v Dunkel (1959) 101 CLR 298 at 320-1, relying on the First Defendant not having called a number of witnesses, identified below.
157 I consider below the First Defendant's responses against the application of Jones v Dunkel. This is in determining whether the inference that I am already prepared to draw, that the loan and mortgage were shams, is strengthened because it can be assumed, conformably with the principles in Jones v Dunkel, that any evidence from these witnesses would not have assisted the First Defendant's case. In so doing I must take into account any constraints on the application of those principles such as whether a witness was available to the First Defendant, or truly "in his camp".
(a) The Woowins appear to be in China. It is put that there is no evidence that they were willing to give evidence, nor is there any way they could be required or compelled so to do. They are thus not available to be called, so taking them outside the rule in Jones v Dunkel . I agree with that proposition, as far as it goes. But the fact remains that they, as co-defendants have chosen not to give evidence in support of the position put by Kate in the District Court that there was this loan (see their DX14). Their failure to give that evidence in this Court in these proceedings, casts doubt, as against the Woowins, of the veracity of this alleged bipartite arrangement. Certainly Christopher is in those circumstances not in a position to rely on Kate's untested evidence in her affidavit of 9 August 1999 in DX15.
(b) Mr Stenberg it is said could hardly be said to be in the First Defendant's camp so as to satisfy the rule in Jones v Dunkel. By the time of the hearing, Mr Stenberg was not Christopher's solicitor, but had sued him for his fees. I agree; no Jones v Dunkel strengthening of inference is available as regards him.
(c) the First Defendant called Mr McKenzie (of Schrader & Associates) who had the conduct of the Woowins District Court defence, being the only matter in which Schrader & Associates relevantly had instructions. He was cross-examined. It has not been shown says the First Defendant that Mr Schrader, who supervised Mr McKenzie, would have given evidence that Mr McKenzie was not in a position to give, so that the rule in Jones v Dunkel seems not applicable. Again, I agree.
(d) Mr Christie received instructions from the First Defendant to prepare the mortgage. He is in the First Defendant's "camp" with no suggestion that he was not available to be called. It is said against, that Mr Christie had no knowledge of the transactions independently of the instructions he received from Christopher Kwan and Kate. That however is by no means self-evident. The First Defendant in opposition says that "No doubt had Mr Christie been asked to relate what he had been told by Mr Kwan or Ms Woowin there would have been vigorous and justifiable objection". That proposition though must depend on whether such an objection, based it can be taken upon legal privilege, would be sustained, or whether instead the exception from the privilege in s125 of the Evidence Act would apply. The exception applies, relevantly, where either the communication made or document prepared is
(i) "in furtherance of the commission of a fraud", or
(ii) for a communication or contents of a document which the client or lawyer "knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a [statutory[ power".
For reasons set out in my judgment of Kang v Kwan ([2001] NSWSC 698, 16 August 2001, unreported) I consider that the exception would have applied, so as to remove the relevant communications from the protection of legal privilege, insofar as they were made in furtherance of the commission of a fraud. Moreover, the Court's common law powers are preserved by s11 of the Evidence Act to deal with abuse of process. That was confirmed in Vander Lee & Ors v State of New South Wales & Ors ([2002] NSWCA 286, 30 August 2002, unreported) as also (by majority) that "power" in s125(1)(b) of the Evidence Act includes a power to bring proceedings. The preparation of a mortgage in the circumstances here prevailing was in furtherance of an abuse of the power (even if unwitting on the part of Mr Christie). It is, moreover, a power conferred by statute. Such a mortgage would, unless the mortgage were set aside, or fraud found, prevail upon registration by the solicitors concerned over any prior unregistered equitable interests, such as the Plaintiff's claimed lien. Such an application of s125, hypothesised as being in course of trial, presupposes, not a final finding that there were furtherance of a fraud, or abuse of power, but merely, as s125(2) mandates, "reasonable grounds" for so finding. Hence I would consider the principle in Jones v Dunkel applicable to Mr Christie, so that the absence of Mr Christie as a witness called by the First Defendant does strengthen an inference against the genuineness of the loan which is otherwise capable of being drawn. Likewise as to the sham character of the mortgage. Mr Christie is an important witness, given his receiving instructions from Christopher, and the way he then pressed for further information as to the loan from Christopher. I certainly would not consider Mr Christie's likely evidence as merely duplicative of others.
(e) Similar objection was taken to the application of Jones v Dunkel to the failure to call Mr Davidson, the Woowins' Counsel. I reach the same conclusion about his absence as I do for Mr Christie.
(f) No express point was made in answer to the principle in Jones v Dunkel applying to the failure to call Christopher's mother, whose money was being used, but to lend to Kate. She is covered by Jones v Dunkel.
(g) Finally, as to Ms Lau, it is said that she "was presumably as much available to the Plaintiff as to Mr Kwan". But that is not so; clearly she was in the Defendants' camp. As to the evidence she might have given, that would depend on what was elicited having regard to the following matters submitted by the Plaintiff in its written submissions in chief (pp11-12), quoted below:
"The fact that on Sunday 23 May 1999 the Woowins jointly appointed Linda Lau as their agent (PX6 p121) in lieu of Christopher, after having:
(i) received from Christopher a copy of Mr Stenberg's letter dated 17 May 1999 and the enclosures with that letter, including the Brief dated 5 May 1999 addressed to Mr Barry, QC (T, 603);
(ii) discussed those documents with Ms Lau on 18 May 1999 (PX21 para 15); and
(iii) received from Christopher a letter dated 21 May 1999 calling for the Castlecrag Property to be "transferred to [him] as soon as possible" and at their cost as to payment of stamp duty (PX12 p43 paras 4 and 6);
provides strong evidentiary support (corroborative of the protests recorded in PX12 at p47 para 1 and p51 para 9) for a finding not only that neither of the Woowins believed that they were indebted to Christopher or that he had an interest in the Castlecrag Property but also a finding that, in truth, there was no indebtedness and Christopher's evidence to the contrary is false."
158 I agree with that proposition.
159 The principles in Jones v Dunkel would in my opinion apply to the failure by the First Defendant to call Ms Lau.
PX12
160 Finally, I need to deal with PX12, whose admission at all, and then against Christopher, was strenuously opposed by the First Defendant. In so doing, I should emphasise that my conclusion that there was no genuine loan and that the mortgage was likewise a sham, does not need to rely upon that material. That conclusion sufficiently emerges from what has already preceded, though I consider PX12 supports that conclusion.
161 PX12 falls for considerations particularly as regards documents at pp43 to 52 inclusive. Those documents were admitted as against the Woowins pursuant to s63(2) of the Evidence Act conformably with s67 of that Act. Section 63(2) provides that the hearsay rule does not apply to:
"(a) evidence of the representation that is given by a person who saw, heard or otherwise perceived the representation being made, or