I am unable to reconcile the difference between my figure of $153,582 and Szady's $181,071 above."
41 The defendant swore a further affidavit dealing with matters in the second report of Mr Potter. Of that material, Mr Potter said he was unable to identify golf winnings alleged to be of the order of $60,000 by the defendant as dates within the relative period had not been specified. Likewise, moneys received from friends on account of overseas purchases by the defendant's former wife of $5,120.24 could not be reconciled with receipts during the relevant period. Finally, the defendant said that upon further researching the matter he now accepted that he had received all pool payments. Mr Potter said that this would cause him to revise his second report to increase the figure of $153,582, but he could not give a specific revised figure.
42 Mr Potter's reports were not seriously challenged in cross-examination. Mr Potter did not accept the proposition that if he had all relevant documentation he should be able to identify the amount of excess income in the defendant's financial records. Mr Potter said that it was fairly clear there were a lot of cash payments so it would be unusual to find all the suspect income going through a bank account. It was an instance of a cash economy. This opinion is made out by the fact that each of the cheques referred to in the statement of claim in the Papua New Guinea proceedings which was said to be made out to Bluebole Pty Ltd and, in one case, J F Seeto were, in fact, all made out to cash.
43 Mr Potter did accept that the greater the discrepancy between the excess of income over expenditure and the 60% of Tradeserve second invoices, the less the likelihood of the theory that 60% of the second invoices was the source of the discrepancy. However, Mr Potter said that while it was a harder proposition to make it was not unusual for there to be such a wide discrepancy.
44 Mr Potter's evidence was not met by expert evidence tendered on behalf of the defendant. I accept his conclusions and, in particular, that the most conservative estimate of the unexplained income of the defendant in the relevant period was an amount in excess of $153,582. Consideration must be given, however, to the alleged golf winnings and the alleged reimbursements by friends.
45 The defendant said he won between K12,000 and K14,000 in a Ho Chi competition. That evidence was supported by his former wife, Kathryn Mary Mitchell. Michael John Illidge, a member of the Lae Golf Club of which the defendant was captain, said the defendant won approximately K10,000 to K12,000 at this competition in May 1998. In his oral evidence he increased this figure to K20,000 on the basis of a discussion he had with another member of the Club. As already indicated, the Defendant sought a restriction in the period of the investigation of Mr Potter. The Ho Chi competition falls outside that period and is to be excluded from consideration.
46 The defendant said he won $20,000 in a Calcutta in May 1994. He said that this figure was included in his estimate of winnings from gambling of K60,000. It, also, should be disregarded as it falls outside the relevant period.
47 The defendant said he won $11,000 in an annual ANZAC holiday competition in Melbourne in 1997 which he banked in Australia. Yet he could point to no record of such banking and accepted that the records had been examined by Mr Potter and he could find no evidence of such a deposit.
48 The defendant also claimed that he won money at golf playing a Daytona betting competition. He accepted that the rule was that the winnings were put on the bar, the winner only taking whatever was left over. The defendant did not bring to account any costs associated with his gambling winnings. I find that gambling winnings did not account for any significant portion of the $506,226 unexplained income. Furthermore, I am of the view that gambling should not be added to the possible overestimates which Mr Potter took into account to arrive at his most conservative figure of $153,582.
49 In his second affidavit, the defendant said that he and his then wife were able to identify $24,441.40 as reimbursements by friends for goods purchased overseas and payments for restaurant expenses for groups of friends. This figure is substantially less than the figure of $53,600 identified by Mr Potter in his second report as a difference between his analysis and the claims of the defendant. Furthermore, in cross-examination the defendant conceded that several of the items were not maintainable where he used his credit card to pay a restaurant. The entire amount was claimed rather than the amounts reimbursed by his friends. Many items he could not explain.
50 Again, I reject the suggestion that the $506,226 of unexplained income is accounted for to any significant extent by reimbursements from friends. In my view Mr Potter's most conservative figure of $153,582 should not be reduced for such reimbursements.
51 Included in the possible overestimates in Mr Potter's figure of $506,226 is an amount of $12,693 with respect to Colin Wakefield which is accepted by the plaintiff. In the calculation of possible overestimates there is an amount with respect to pool expense reimbursement of $51,232. The defendant said that upon further examination by him, there were no outstanding pool amounts.
52 On the evidence, therefore, the inference to be drawn in the absence of explanation by the defendant of his receipts in excess of those from identified sources, is that they came from secret commissions or secret profits from the plaintiff's payment of second invoices to Tradeserve. On the best basis for the defendant the amount of unexplained income is in excess of $140,889 (Mr Potter's most conservative figure of $153,582 less the acknowledged $12,693) increased for the acknowledged full payment from the pool in a figure which could not be stated by Mr Potter but with respect to which he had made an adjustment for possible overestimate of $51,232. On the worst basis for the defendant, the amount of unexplained income is $493,533 ($506,226 less $12,693).
53 Upon an application in the Queensland proceedings by the defendant and his then wife for removal of a caveat over the Normanby Terrace property, the court ordered the removal of the caveat and that $175,000 from the proceeds of sale of the property be deposited in an interest bearing with Ramensky Lawyers, the defendant's solicitors. The parties agreed that the plaintiff would discontinue the Papua New Guinea proceedings, the plaintiff would discontinue the Queensland proceedings and the plaintiff would commence the current proceedings in New South Wales. It was agreed that the unsuccessful party in these proceedings would pay the other party's costs of the Papua New Guinea proceedings, the Queensland proceedings and the application to remove the caveat.
54 In these proceedings, the plaintiff seeks a declaration that the defendant holds the $175,000 plus interest as a constructive trustee in favour of the plaintiff and an order that the moneys in the interest bearing account be paid to the plaintiff.
55 I infer from the evidence before me that the defendant received portion of the proceeds of the second invoices raised by Tradeserve against the plaintiff as secret commissions or secret profits in an amount at least as great as $175,000.
56 The hearing was adjourned to enable Mr Minicus to travel from Papua New Guinea to be available for cross-examination. An affidavit sworn by him had been filed on behalf of the defence. In the result, that affidavit was not read and Mr Minicus was not called as a witness. I was invited to draw the inference that his testimony would not have assisted the defendant (Jones v Dunkel (1959) 101 CLR 278 at 308, 312). Mr Bellamy submitted that the inference should not be drawn where some prejudice or jeopardy would be caused to a witness if called as, for example, where proceedings are pending concerning the witness which was said to be the case with respect to Mr Minicus (Cross on Evidence (1996) par 1215). It is unnecessary for me to resolve these rival contentions because I have reached the conclusions set out above without the necessity of drawing such as inference.
57 It was submitted on behalf of the defendant that evidence ought to have been called from Tradeserve. That would not, in my view, have served any useful purpose. Payments to Tradeserve by the plaintiff were proved by the summary in Mr Potter's report of the Tradeserve invoices rendered to the plaintiff, the plaintiff's order books and the plaintiff's cheque payment remittance forms. That cash payments were made by Tradeserve, wrongly attributed to Bluebole Pty Ltd and J Seeto, were sufficiently proved by the photocopies of the cheques referred to in the statement of claim in the Papua New Guinea proceedings which were in evidence before me. I was invited to draw an inference adverse to the plaintiff for its alleged failure to call Mr Minicus and documentary evidence from Tradeserve. I decline to draw any such inference.
58 The Evidence Act 1995, s 140 prescribes the standard of proof in civil proceedings as the balance of probabilities and provides that the court may take into account in deciding whether it is so satisfied the nature of the cause of action or defence, the nature of the subject matter of the proceedings and the gravity of the matters alleged. This provision reflects the common law position. In Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362 the High Court discussed the quality of persuasion required for this purpose, when the law requires the proof of any fact the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. In civil matters the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal:
"But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences. Everyone must feel that, when, for instance, the issue is on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency."