The Owners - Strata Plan 87265 v Saaib; Alexandrova v The Owners - Strata Plan 87265 - [2022] NSWCA 63 - NSWCA 2021 case summary — Zoe

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The Owners - Strata Plan 87265 v Saaib; Alexandrova v The Owners - Strata Plan 87265

[2022] NSWCA 63

Court of Appeal (NSW)|2021-12-02|Before: Basten JA, Macfarlan JA, Gleeson JA

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At a glance

Source facts

Court

Court of Appeal (NSW)

Decision date

2021-12-02

Before

Basten JA, Macfarlan JA, Gleeson JA

Catchwords

[2006] NSWCA 282 Anthony v Morton [2018] NSWSC 1884 ASIC v Hellicar (2012) 247 CLR 345
[2012] HCA 17 Badenach v Calvert (2016) 257 CLR 440
[2016] HCA 18 Fox v Percy (2003) 214 CLR 118
[2003] HCA 22 Hughes v The Queen (2017) 263 CLR 338

Source

Original judgment source is linked above.

Catchwords

[2006] NSWCA 282 Anthony v Morton [2018] NSWSC 1884 ASIC v Hellicar (2012) 247 CLR 345[2012] HCA 17 Badenach v Calvert (2016) 257 CLR 440[2016] HCA 18 Fox v Percy (2003) 214 CLR 118[2003] HCA 22 Hughes v The Queen (2017) 263 CLR 338[2017] HCA 20 I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109[2002] HCA 4 Jacara Pty Ltd v Perpetual Trustees WA Ltd (2000) 106 FCR 51[2000] FCA 1886 Jones v Dunkel (1959) 101 CLR 298[1959] HCA 8 Lee v Lee (2019) 266 CLR 129[2019] HCA 28 Mal Owen Consulting Pty Ltd v Ashcroft (2018) 97 NSWLR 1163[2018] NSWCA 135 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494[1998] HCA 69 Payne v Parker [1976] 1 NSWLR 191 R v Bauer (2018) 266 CLR 56

Judgment (42 paragraphs)

[1]

[7]

HEADNOTE [This headnote is not to be read as part of the judgment] The Owners - Strata Plan 87265 is the Owners Corporation of the strata scheme in respect of a block of 11 townhouses located in Marrickville NSW. It is the successor in title to the previous owner and the developer of the property, Transformer Group Pty Ltd. This appeal arises out of separate proceedings that the Owners Corporation brought in the Equity Division against Mr Tony Saaib and Ms Irena Alexandrova. The Corporation claimed damages from Mr Saaib in respect of the costs of rectifying defects in the common property of the building on the basis that Mr Saaib had entered into, as "builder", a contract with Transformer Group for construction of the building. The Corporation's case was that, even if (as Mr Saaib asserted) he did not sign the contract, he authorised his nephew, Mr William Zaatini, to enter into it on his behalf and to deal with Ms Alexandrova, an insurance and finance broker, to arrange home warranty insurance in relation to the construction of the building. Mr Saaib's case in response was that the building contract and a number of other forged documents were brought into existence without his knowledge by Mr Zaatini and/or Mr Joe Antoun and Mr Nemer Antoun in order to obtain for Transformer Group home warranty insurance and bank finance for the development. He also contended that he did not undertake or supervise any building works for the construction of the building. The Corporation's claim failed because the primary judge held, by a finding that was not disputed on appeal, that Mr Saaib's purported signature on the contract was forged and held, notwithstanding evidence given by Ms Alexandrova of implied admissions by Mr Saaib to the contrary, that Mr Saaib did not authorise his name to be used as "builder" and held that he did not play any role in the construction of the building. In separate proceedings the Corporation claimed damages from Ms Alexandrova against the possibility, which in fact eventuated, that it failed in its claim against Mr Saaib. The primary judge accepted the Corporation's case that, by submitting documents to the prospective insurer, purportedly on behalf of Mr Saaib, but in fact without his authority, Ms Alexandrova engaged in misleading or deceptive conduct which led to the Corporation's predecessor, Transformer Group, not having the benefit of enforceable home warranty insurance, with consequent loss to the Corporation. The primary issues in the Owners Corporation's appeal were: (1) Whether Mr Saaib authorised Mr Zaatini to enter into the Marrickville building contract on Mr Saaib's behalf; (2) Whether a Jones v Dunkel inference arose from Mr Saaib's failure to call Mr Zaatini as a witness; (3) Whether evidence relating to the Leura project (see [148] below) had significant probative value and was admissible as tendency evidence. The primary issue in Ms Alexandrova's appeal was whether the Corporation suffered loss that was caused by Ms Alexandrova's alleged misleading or deceptive conduct. The Court (Basten JA and Gleeson JA; Macfarlan JA dissenting) allowed the Owners Corporation's appeal: In relation to Issue 1 (authorisation to enter into the building contract) (Per Basten JA, Gleeson JA agreeing): Clearly the trial judge had to assess the credibility and reliability of the evidence of the two defendants, Mr Saaib and Ms Alexandrova. However, the findings were largely not based on demeanour in the witness box, but rather the inherent likelihood of particular circumstances and events: [5]. The error of the trial judge was, in effect, to consider carefully each separate item of evidence, but give insufficient weight to possibilities which should, in combination, have led to the inference that Mr Saaib had authorised Mr Zaatini to enter into the Marrickville building contract on his behalf: [93]. (Per Macfarlan JA, contra): The Owners Corporation's case was dependent upon acceptance of Ms Alexandrova's evidence that she and Mr Saaib spoke on a number of occasions in a way that indicated his involvement as builder in the Marrickville project: [137], [160]. As her Honour's rejection of Ms Alexandrova's evidence was based on conclusions concerning her reliability, the Fox v Percy standard of review applied: [162], [165]-[166]. The primary judge's finding that Mr Saaib did not authorise Mr Zaatini to enter into the Marrickville building contract on his behalf was consistent with significant unchallenged evidence and was not "glaringly improbable" or "contrary to compelling inferences": [167]-[171], [173] Of particular importance were the unchallenged findings that Mr Saaib received no financial or other benefit from the construction, was not a party to any subcontract, invoice or other document relating to the building and that his name was forged on at least 24 documents relating to the project: [167]-[171]. Fox v Percy (2003) 214 CLR 118; [2003] HCA 22, applied. In relation to Issue 2 (Jones v Dunkel inference) (Per Basten JA, Gleeson JA agreeing): Based on their close relationship in 2009-2012, Mr Zaatini was clearly a person who might be expected to give evidence for Mr Saaib: [79]. A suggestion that Mr Zaatini might be reluctant to give evidence because it might constitute an admission of wrongful conduct on his part would invite an application for a certificate under s 128 of the Evidence Act. It does not follow from the fact that Mr Saaib's lawyer had reported Mr Zaatini to the police for fraud that Mr Zaatini would lie on oath: [88]. It can properly be inferred that Mr Zaatini's evidence would not have assisted Mr Saaib's case: [89]. Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8; RHG Mortgage Ltd v Rosario Ianni [2015] NSWCA 56, applied. (Per Macfarlan JA, contra): Mr Saaib regarded Mr Zaatini as a fraudster, describing him as such in a fraud report lodged on Mr Saaib's behalf with the NSW Police; it was clear that there was no ongoing relationship between Mr Saaib and Mr Zaatini. It cannot be said that Mr Zaatini was, at least at the time of the trial, to be regarded as in Mr Saaib's "camp" or that it was natural for Mr Saaib to call him: [185]. Payne v Parker [1976] 1 NSWLR 191; ASIC v Hellicar (2012) 247 CLR 345; [2012] HCA 17, applied. In relation to Issue 3 (evidence relating to the Leura project) (Per Basten JA, Gleeson JA agreeing): The phrase "striking similarities" is apt to invoke reliance upon pre-Evidence Act common law principles governing similar fact evidence and is not a requirement of s 97(1). The tabulation of differences between conduct in one circumstance and conduct in another is not a mechanical exercise, it must be undertaken contextually: [36]. The fact that Mr Saaib, a holder of a builder's licence, who was not at the time running a building business requiring use of the licence, had permitted a third party to use the licence, in effect "fronting" for that person, is a remarkable and unusual circumstance and is the substance of the accusation in the present case. The evidence relating to the Leura project had significant probative value and should have been admitted: [36]-[37]. (Per Macfarlan JA, contra): The circumstances of the Leura project were quite distinct from those of the Marrickville project, with the result that the former was not significantly probative of the issue concerning Mr Saaib's role in relation to the Marrickville project: [189]. The primary judge did not err in finding that the evidence relating to the Leura project was not admissible as tendency evidence. R v Bauer (2018) 266 CLR 56; [2018] HCA 40; Hughes v The Queen (2017) 263 CLR 338; [2017] HCA 20, applied. Macfarlan JA allowed the Alexandrova appeal (Basten JA and Gleeson JA found it unnecessary to decide): There is no basis in the evidence for inferring that, absent the misleading and deceptive conduct that the primary judge found, Transformer Group would have contracted with a suitably qualified builder and would have obtained the benefit of a valid contract of insurance by honest means: [203]-[204], [206]. Any loss that the Owners Corporation suffered was thus not demonstrated to have been caused by that conduct: [208]. Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8, applied.

[8]

Judgment

BASTEN JA: The appellant in the first matter is The Owners - Strata Plan 87265, being the owners corporation of a strata scheme involving 11 residential townhouses on Livingstone Road, Marrickville. The townhouses were constructed in 2011 and 2012. Subsequently, major faults were identified which led to a claim by the owners corporation against the builder, Tony Saaib. In December 2016, the owners corporation commenced proceedings in the Equity Division.
Although Mr Saaib's name appeared on various documents, including a building contract with the developer, The Transformer Group Pty Ltd (which has since been deregistered), Mr Saaib denied that he was the builder. On his case, the builder was his nephew, William Zaatini, or Award Build Pty Ltd. He said Mr Zaatini had forged his name on the contract (and other documents).
A critical step in entering into the contract for the construction of residential property was the obtaining of a home warranty insurance policy, as required under the Home Building Act 1989 (NSW). A policy was obtained in Mr Saaib's name by a finance and insurance agent, Irena Alexandrova. In July 2019 the owners corporation commenced proceedings against Ms Alexandrova, on the basis that if Mr Saaib's denials were true, then Ms Alexandrova had engaged in misleading or deceptive conduct in obtaining home warranty insurance on his behalf. On the basis that Mr Saaib was not the builder, her conduct was said to have led to the issue of a home warranty insurance policy under which the owners corporation could not recover its losses. It relied upon her conduct in identifying Mr Saaib as the builder as, if his denials were accepted, a misleading and deceptive representation causing damage to the owners corporation. Thus, the claim against Ms Alexandrova only arose if the Court accepted Mr Saaib's defence that he did not authorise the inclusion of his name on the contract as the builder, and was not in fact the builder.
In a judgment delivered on 1 March 2021, in the Equity - Technology and Construction List, Henry J dismissed the proceeding brought against Mr Saaib, but upheld the claim against Ms Alexandrova and awarded damages against her in an amount of some $3.4 million. [1]
The trial judge dealt with the complex factual claims carefully and comprehensively. The case was largely circumstantial and undoubtedly a difficult one as to which reasonable minds might well differ. However, the judge's assessment, entirely appropriately, turned to a significant extent upon the assessment of objective circumstances. Clearly the judge had to assess the credibility and reliability of the evidence of the two defendants, Mr Saaib and Ms Alexandrova. However, the findings were largely not based on demeanour in the witness box, but rather the inherent likelihood of particular circumstances and events.
For the reasons set out below, which benefit greatly from the reasoning of the trial judge, I have come to a different view as to where the probabilities lie on the critical issue, namely whether Mr Saaib in fact authorised his nephew and Ms Alexandrova to put him forward as the builder. Either he or Mr Zaatini (or both) acted quite improperly. He said Mr Zaatini was a scoundrel who was not to be trusted. No party sought to call Mr Zaatini. While the trial judge had the benefit of hearing Mr Saaib's denials as to any involvement in the Marrickville development and hearing his cross-examination challenging those denials, there are a number of uncontested circumstances which rendered aspects of his evidence highly implausible. Further, accepting Mr Saaib cast Ms Alexandrova in a bad light. She had had a business relationship with Mr Saaib over some years. He trusted her and said she was a "good person". She acted on the basis that he was the builder. She was in contact with Mr Zaatini, but also Mr Saaib at critical points in time. There was, understandably, no finding that she was part of a scheme of knowing deception. Rather, she too must have been a victim of fraudulent conduct on the part of Mr Zaatini. However, given her association throughout the relevant period with Mr Saaib, that seems implausible.
It will be necessary to explain the reasons why the trial judge did not accept key parts of Ms Alexandrova's evidence. However, for reasons which will be explained below, contemporary circumstances and documents support the view that Ms Alexandrova acted appropriately and with knowledge of the true circumstances. What she may not have known was the role which Mr Saaib was to play in the development. In any event the appellant's case on appeal relies on findings of primary fact made by the trial judge; the result turns on the inferences drawn from those facts.
The case turned on two possibilities. Either Mr Zaatini acted without the knowledge of his uncle with whom he was in close contact, or his uncle agreed to "front" for him to allow him to undertake a building project for which he was not qualified to obtain the necessary home warranty insurance.
If the finding is made on the probabilities that Mr Saaib was the builder, the case against Ms Alexandrova must fall away. The primary case run by the owners corporation was against Mr Saaib; its belated claim against Ms Alexandrova was contingent upon a finding that Mr Saaib was not the builder.
The most legally complex part of the case concerned the finding of causation in respect of Ms Alexandrova's misleading or deceptive conduct. On the basis that Mr Saaib is liable, that issue need not be addressed.

[9]

Mr Saaib

The appellant did not seek to challenge the judge's findings as to the reliability of the evidence given by Mr Saaib and Ms Alexandrova. In addition to what were uncontested or accepted facts, it sought to rely upon the available objective evidence, the relationship between various individuals including Mr Saaib and Mr Alexandrova, and the natural inferences which could be drawn from that material. Nevertheless, it is appropriate to record the judge's findings and the reasons for them.
The critical issue, namely whether Mr Saaib authorised Mr Zaatini to enter into the building contract for the Marrickville project, did not directly involve Ms Alexandrova. Her role was, relevantly, to obtain home warranty insurance for the builder. She believed the builder was Mr Saaib or a company controlled by him. If she formed that belief on the basis of conversations with Mr Saaib, that would have been a matter of importance. If she formed the belief on the basis of information supplied by Mr Zaatini, the significance of the belief would turn upon separate findings as to the relationship between Mr Saaib and Mr Zaatini and their dealings with respect to the Marrickville project. It is convenient, therefore, to deal with the findings in relation to the credibility and reliability of Mr Saaib first.
The judge dealt with this issue at [252]-[269]. The judge was satisfied that English was not his first language. The judge's assessment of his evidence was carefully considered and explained by reference to particular aspects of the evidence. Importantly, it was directed to a somewhat broad-brush approach on the part of the owners corporation "that Mr Saaib's evidence cannot be accepted unless it is corroborated by reliable evidence or against his interest as he is an unreliable and dishonest witness". [2] The judge concluded that "aspects of Mr Saaib's evidence [were] unsatisfactory and unreliable" but did not find that he "deliberately gave false evidence" and made no finding of dishonesty. [3] Rather, the judge adopted a nuanced approach with respect to different aspects of Mr Saaib's evidence. It will be necessary to return to specific aspects of Mr Saaib's evidence and the judge's findings in relation to them, in dealing with the relevant topics. However, there were three underlying reasons for doubting his reliability.
First, limitations on his language skills had an impact on his evidence; there were questions he did not understand and on occasion his answers were "far from clear and difficult to follow". [4] (This is readily apparent from the transcript.) Secondly, he did not have written communications with the principal parties to the dispute, but relied on verbal exchanges, either by telephone or in person. He did not use a computer. It followed that there were no records of the content of communications which had occurred some 10 years before he gave evidence. The judge correctly adopted a guarded approach to his purported recollection of the subject matter and detail of such conversations. Thirdly, it was clear that Mr Saaib had an interest in denying any knowledge of the Marrickville project and did so "in an assertive manner". [5] The judge accepted that demonstrating a fixed or strong view was not a reliable indicator of truthfulness. [6] Aspects of Mr Saaib's evidence were described as "evasive", [7] and internally inconsistent. [8]
No complaint is made in relation to these findings, which were soundly based.

[11]

Admissibility of evidence

The appellant's case was that Mr Saaib allowed his nephew to use his name on a building contract so as to obtain the benefit of his (Saaib's) asserted entitlement to home warranty insurance with respect to the project. The appellant relied on evidence that Mr Saaib had, virtually contemporaneously, undertaken a similar role "fronting" as the builder on a construction project in Leura. The appellant contended that this otherwise extraneous evidence was admissible to show that Mr Saaib was not averse to allowing his name to be used for such an improper purpose to assist a friend, or in the present case, a nephew.
The excluded evidence included a letter (identified as Ex E) dated 31 July 2010 addressed to the owner of land at Mount Hay Road, Leura, wishing to construct a three-bedroom home. Mr Saaib wrote the letter on his own letterhead as builder, giving his ABN and licence number. He identified the total cost of the project as $305,000. The project was identified by reference to a lot and deposited plan number on Mount Hay Road. The letter commenced: "Many thanks for accepting us as your builder for the proposed residential development at the above address."
Exhibit H was a volume of material relating to the construction of the home at Mount Hay Road.
In an affidavit dated 28 February 2019, Mr Saaib stated: [10] "Shortly after I migrated to Australia in 1986, I began working as a formworker and have been ever since. That has always been my primary source of income. In 2001, I applied for and obtained my builder's licence, although I did not use that licence until 2007 (when I built a residential unit and retail shop at a property I own at … Canterbury Road, Punchbowl) and then again for a project in Leura in 2012, which I describe in more detail later in this affidavit. … In 2010, my company (Australian Metropolic Developments Pty Ltd or AMD) applied for and obtained a builder's licence, although AMD did not use that licence until 2016."
The affidavit described his relationship with Ms Alexandrova. He stated: [11] "I first met Ms Irena Alexandrova in about 2005. From around that time, I spoke with Ms Alexandrova fairly regularly about obtaining finance from time to time for properties I was interested in purchasing and properties I did purchase. For example in about 2009 I asked Ms Alexandrova to assist me in obtaining finance for the purchase of my home at … Mulgoa Road, Mulgoa. She obtained a pre-approval from Bankwest …. In 2012, I asked Ms Alexandrova to assist me in the obtaining of Home Warranty Insurance for the construction of a house at … Mount Hay, Leura …. This property belonged to one of my close friends … and I was happy to assist him in the construction of his home as a special favour to him. This is why I obtained the Home Warranty Insurance for that project in my personal capacity. I never got paid for this job and it is still not completed. … In about 2016 or 2017, I asked Ms Alexandrova to assist me in the obtaining of Home Warranty Insurance for the construction by [AMD] of a two storey house at … Pendle Hill."
Mr Saaib was cross-examined about the Leura project. It was put to him that he agreed to be the builder of the Leura house in March 2010. He eventually agreed. [12] The evidence continued: [13] "Q. I was asking you about the document … and you agree with me that as at March 2010, pre-March 2010 council was saying to the [owners] that in order for the operational consent approval to be released, it was necessary for them to submit to [council] the builder[']s details, name, address and licence number and a copy of the home owners warranty insurance certificate? A. Yes. Q. As at March 2010 you were a licensed home builder, correct? A. My licence home builder, yeah. Q. The conditions of your building licence at that time permitted you to build homes which required home warranty insurance, correct? A. Yes. … Q. During your conversation with [the owners], one of the things that [you were told] was that council was withholding development approval for the construction of the house at the Leura property until details of the licensed builder and a home owners warranty certificate was submitted to council, correct? A. Yes. … Q. And you told [the owner] that she could use your name as the licensed builder for the Leura project, correct? A. Yes. … Q. It was agreed that what you would do is allow your name to be used as the licensed builder of the project and for obtaining home owners warranty insurance for the project, correct? A. Yes. Q. It was agreed that you weren't going to be paid anything, correct? A. I make - I make it volunteer for them. I can't take more for workers. They not pay me nothing, no. Just volunteer because he done lot of favours for me. … Q. You knew that the Home Building Act required building contracts for home building to be in writing and signed. Correct? A. Yes, they write it. Yes, I know that. Q. When you say 'They wrote it,' what happened was that [the owner] said to you that she needed a contract in writing. Correct? A. Yes. Q. She said to you that she needed it to show to her bank. Correct? A. For the bank and for home warranty insurer. Q. So it served two purposes? A. Yep. Q. One was to show to her bank, and one was because it was required under the Home Building Act, is that right? A. Yeah, that's true."
However, the evidence of Mr Saaib's involvement in the Leura project did not merely commence at a similar time as did the Marrickville project, it continued throughout the construction of the Marrickville townhouses, namely through 2011 and 2012.
In 2010 little progress was made with respect to the Leura development. In August 2011 the previous owners transferred the property to their daughter and their son-in-law, George O'Beid. Mr O'Beid was the director of a company that held a builder's licence between 11 May 2010 and 10 May 2015. [14] The judge noted: "[224] In evidence is a project application for home warranty insurance for the Leura project that is completed in handwriting and dated 13 February 2012. It identifies Mr Saaib as the builder and Mr O'Beid as the owner and appears to have been signed by Mr Saaib and Mr O'Beid. It is not clear on the evidence what became of that application; the only home warranty insurance certificate in evidence is that issued by Calliden on 14 May 2010. [225] On 1 March 2012, the lapsing date of development consent for the Leura project was extended to 3 March 2015. The Notice of Commencement of Building Works is signed by Mr O'Beid, identifies Mr Saaib as the builder and notes that the works were scheduled to commence on 22 February 2012. [226] Works at the Leura property do not appear to have commenced until sometime in late 2012; an inspection of work relating to the piers took place on 6 November 2012. Further works appear to have been undertaken in 2016 and 2017, contrary to Mr Saaib's evidence that no works had been done for five years."
The judge appears not to have made an express determination that Mr Saaib did sign the application for home warranty insurance dated 13 February 2012. However, his name appears on the section under "Builder Licence Details" with a licence expiry date which appears to read "01/11/2013". The judge stated: "[228] Mr Saaib was asked to explain how he could have undertaken any works when, from 31 March 2012, he was no longer licensed to do building works requiring home warranty insurance. Mr Saaib initially gave a non-responsive answer, stating that he had done the work as a favour and 'that's all he could answer' (T262:44-50). He later gave evidence, which was subject to a certificate under s 128 of the Evidence Act, that he did not know when his licence expired and accepted that he should not have done any work when he was not licensed, stating that if he knew it had expired, he wouldn't have done the job as he would 'not take responsibility on [his] licence if [he] knew that' (T266:8-31). Mr Saaib also accepted that he allowed his name to be used as the licensed builder by the [owners] but said that he did not know his licence had expired (T266:35-36)." The original certificate of eligibility given on 15 December 2010 was for a period of one year, expiring on 15 December 2011.
This later material was not addressed by the judge in dealing with the question of admissibility, although many of the excluded documents related to the period 2011-2012. Arguably a propensity to allow third parties without necessary qualifications to obtain insurance for residential work by putting his name on a contract as builder when he did not intend to undertake the work appears strongly from the evidence relating to this latter period.
Counsel for Mr Saaib took a timely objection to this evidence, conceding in effect that it might be relevant because it involved contact with Ms Alexandrova, but noting that it was going to be said that "Mr Saaib has a tendency to give out his builder's licence for use by others or something like that. I take a tendency and coincidence objection to evidence of that nature." [15] The objection was not ruled on until the final judgment. The judge rejected both the documentary evidence and the cross-examination in relation to the Leura project, [16] which was not specifically identified but must have included the cross-examination set out above.
The admissibility of tendency evidence turns on compliance with s 97 of the Evidence Act 1995 (NSW). Section 97(1) provides that "[e]vidence 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 unless … the court thinks that the evidence will, 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."
It is clear that this requires a contextual analysis having regard to the circumstances of the case. The circumstances include the burden of proof on the party adducing the evidence. If, as in a criminal case, it is necessary to establish something beyond reasonable doubt, a higher level of probative value is required for it to be significant, as compared with a civil case where it is sufficient to establish a fact on the balance of probabilities. Further, in a civil case there is no requirement (as there is in a criminal proceeding) for the probative value to outweigh substantially any prejudicial effect: Evidence Act, s 101(2). The danger that evidence will be unfairly prejudicial, misleading or confusing, so as to engage grounds for excluding it under s 135, will rarely arise in a civil matter heard by a judge alone.
In this case, the trial judge obtained some assistance from the reasoning of Sackville J (with whom Whitlam and Mansfield JJ agreed) in Jacara Pty Ltd v Perpetual Trustees WA Ltd: [17] "[61] The critical question … 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, [18] the question is whether the evidence of conduct is relevant to a fact in issue via propensity: insofar 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?
Sackville J distinguished such reasoning from evidence which appeared to establish a "system" and thus provided a basis for a circumstantial inference as to a fact in issue. [19] Whether the distinction was relevant in the present case is unclear. In any event, the judge excluded the evidence on the basis that it did not have "significant probative value", thus applying s 97. The heart of the judge's reasoning appeared in the following passage: "[283] Evidence relating to one transaction for personal friends at a cost of around $200,000 where Mr Saaib signed the relevant 'letter contract' is not, to my mind, significantly probative of what he would be likely to do in connection with a building contract that required the construction of a multi-unit development at a value of $2.4 million for on-sale to third parties involving a corporate developer, Transformer Group, where there is no evidence of an ongoing or close association between Mr Saaib and the directors. As Ward CJ in Eq observed, a high level of similarity would seem to be called for in order to establish that a tendency on the part of a person to enter into particular types of contracts has significant probative value: Anthony v Morton. [20] There is also a lack of striking similarity in the cross-examination evidence relating to the Leura project and Exhibits E and H and the essential claim made in this case, which relates to the authority of Mr Zaatini to sign a contract on behalf of Mr Saaib: cf Twynam Pastoral Co Pty Limited v AWB (Australia) Limited. [21] "
The final reference was to a decision of Jagot J in a case in which, despite differences in the conversations and representations relied upon, the judge held there were "striking similarities in respect of the essential allegation". [22] Jagot J did not say that this reflected the statutory test, as opposed to being an apt description of the evidence before her.
However, the phrase "striking similarities" is apt to invoke reliance upon the pre-Evidence Act common law principles governing similar fact evidence. It is not a requirement of s 97(1); it is not an appropriate substitute for "significant probative value". Further, the tabulation of differences between conduct in one circumstance and conduct in another is not a mechanical exercise. It must be undertaken contextually. The fact that a holder of a builder's licence, who was not at the time running a building business requiring use of the licence, on his own evidence, has permitted a third party to use the licence, in effect "fronting" for that person, is a remarkable and unusual circumstance. As noted above, that is the substance of the accusation in the present case. That someone has done precisely that, virtually contemporaneously, in another matter, might strike the objective observer as highly significant, in circumstances where the material conduct is denied. Especially is that so where the holder of the licence asserts that another person, with no knowledge that the licence holder had permitted such conduct himself, has used his licence without his permission in the same way.
In my view the evidence of the Leura arrangements had significant probative value and should have been admitted.
Once the evidence is admitted, the error in its exclusion must be overcome by reassessing the critical finding of fact as to whether Mr Saaib authorised his nephew to use his name on the building contract for the Marrickville project.
Before considering this central issue and the challenges by the appellant to particular factual findings, it is convenient to set out a brief chronology of the Marrickville project from its inception until the signing of the contract. No issue was raised as to the judge's findings with respect to this material.

[12]

Brief chronology

On 6 August 2008 the developer obtained development consent for the Marrickville project. The sole director of the developer was Nemer Antoun, who was the brother of Joe Antoun (deceased) who, from September 2008 until February 2012, was the sole director of a building company, Award Build Pty Ltd. Both the developer and Award Build have since been deregistered. [23] Mr Zaatini appears to have been employed by, or worked with, Award Build.
The relationship between Mr Zaatini, Mr Saaib and Ms Alexandrova was a matter of critical importance. Mr Zaatini was known as William (Wajih) Zaatini and as William Mowad. [24] With respect to their relationship, the judge set out a narrative of facts as to which she was satisfied, [25] including the following matters: "[31] During the period from 2009 to at least 2012, Mr Saaib had a very close relationship with Mr Zaatini. They spoke regularly, almost daily during some periods, and Mr Saaib often spent time at Mr Zaatini's office in Kingswood from which a business called 'Joe'n'Sons' operated. On many occasions, Mr Zaatini helped Mr Saaib with paperwork as a favour to Mr Saaib. Mr Saaib's evidence is that Mr Zaatini's sister, Barbara, worked as a bookkeeper from Mr Zaatini's Kingswood office, did Mr Saaib's books and liaised with his accountant, Kamel Jabour. He also gives evidence that copies of his tax returns and other paperwork were held at Mr Zaatini's Kingswood office. [32] Ms Alexandrova is a self-employed insurance and finance broker. She assists clients with applications for construction, residential and commercial finance, as well as obtaining home warranty insurance for building projects. … [34] Ms Alexandrova met Mr Saaib in around 2005. She has assisted him with obtaining finance for properties and insurance services relating to his work as a builder. In 2009, Ms Alexandrova assisted him to obtain a loan to purchase his home at Mulgoa and, in March or April 2010, she assisted him to obtain home warranty insurance for the Leura project. Mr Saaib deposed that, in 2010, he spoke to Ms Alexandrova regularly. [35] Ms Alexandrova has also assisted Award Build with insurance for building projects since at least February 2010. She spoke to Joe Antoun once or twice and otherwise liaised with Mr Zaatini in relation to Award Build matters. [36] Mr Saaib introduced Ms Alexandrova to Mr Zaatini. There was a dispute as to when this occurred and when she became aware that Mr Zaatini was Mr Saaib's nephew. I accept Ms Alexandrova's evidence that she knew Mr Zaatini was Mr Saaib's nephew by February 2010. Her evidence is corroborated by Mr Saaib's evidence in cross-examination that Mr Zaatini got to know Ms Alexandrova 'through him' and he introduced Mr Zaatini to Ms Alexandrova as his nephew. [37] During the second half of 2010 and in early 2011, Ms Alexandrova dealt with Mr Zaatini in relation to home warranty and other insurances for the Marrickville project. It is common ground that Mr Zaatini sent Ms Alexandrova the 4 October Contract, the application(s) for home warranty insurance naming Mr Saaib as the builder of the Marrickville property and other documents relating to Mr Saaib, including a Builder Eligibility Profile Change Application which Mr Saaib says he signed when it was blank on 12 October 2010.
Several versions of the building contract were prepared and executed.
The first contract, dated 24 November 2009, was between Mr Nemer Antoun as owner and Mr Saaib as builder. The contract price was $2.4m and a commencement date of 11 January 2010 was included. The contract bore a signature purporting to be that of Mr Saaib but, as the judge accepted, it was not in fact his signature. Each signature was said to have been done in the presence of "William Mowad" (Zaatini) but the witness did not sign.
The status of the first contract was not resolved in the proceedings. It appears to have been superseded by a second contract which came into existence at some time between 17 June and 6 September 2010. [26] That contract was provided to the ANZ Bank in support of an application for finance on 6 September 2010. (The judge referred to the second contract, but it was not in evidence and nothing turns on it.)
On 13 September 2010 a letter was signed in the name of Mr Saaib recounting that he had entered into the agreement with the developer for construction of 11 townhouses at Livingstone Road, Marrickville. The letterhead bore the name "Tony Saaib Pty Ltd". A letter of offer issued by ANZ Bank to the developer on 28 September 2010 required a tripartite agreement between the bank, the developer and the builder, identified as "Tony Saaib Pty Ltd". All risk insurance was to be taken out by contractors and "evidence of a home owner's warranty insurance policy" provided. The developer accepted the offer on 1 October 2010. A "builder's side deed" was prepared which was also purportedly executed by Mr Saaib. Mr Zaatini and Ms Alexandrova then took steps to obtain the home owner's warranty insurance. On 30 September 2010 Ms Alexandrova advised Mr Zaatini that Mr Saaib was eligible, but had to complete an application form.
The trial judge accepted that Mr Saaib signed an "eligibility application" to permit him to obtain home warranty insurance in relation to a contract in an amount of $2.4 million. [27] The circumstances surrounding that event are of importance in determining whether he was aware of the building contract and the use of his name as the builder. That matter will be addressed below.
The contract which was treated as the third and final agreement, bore the date 4 October 2010. In other respects it was identical with the contract which bore the date 24 November 2009. Although an additional page was included in the earlier contract (being instructions with respect to signatures), it appeared that the new contract was a photocopy of the first contract with only the date changed.
On 12 October 2010 Mr Saaib signed an eligibility profile change application for the purpose of obtaining home owner's warranty insurance for a project of the size of the Marrickville contract. (His actual experience did not permit the upgrade in eligibility.) He said the form was "blank" when he signed it. His purpose in signing the document will be addressed below.
The following day, Ms Alexandrova raised with Mr Zaatini aspects of the documentation which would need to be addressed before the proposed insurer (QBE) would accept the application. Mr Saaib spoke to both Ms Alexandrova (twice) and Mr Zaatini on 13 and 14 October 2010.
On 15 October 2010 Ms Alexandrova emailed Mr Zaatini stating: "I have asked Tony [Saaib] about his 2009 and 2010 financial statements. He has only 09 which does not have trading income." Some 20 seconds later Mr Saaib texted Ms Alexandrova. Three hours later, at 2.36pm on 15 October, Mr Zaatini emailed Ms Alexandrova saying "I'm here with the man himself Tony". With respect to that email, the judge noted: "[134] … Mr Saaib's evidence is that he was pouring concrete that day. He also gave evidence in cross-examination that he did not think he visited Mr Zaatini at his Kingswood office during the day, but that it was possible he did so (T345:8-10)."
No finding was made at that point in the judgment, but there was no later finding that the content of the email was false; it was inherently plausible.
Certificates of insurance were issued by QBE for each townhouse in the proposed development on 18 January 2011. On 15 February 2011 the certifying authority for the project issued a construction certificate.

[13]

Authority to sign contract

The critical issues in the appellant's case against Mr Saaib were that, (i) he knew of the Marrickville project, (ii) he knew that Mr Zaatini was intending to undertake the building work and (iii) in fact did so, using Mr Saaib's name as the builder. There is no dispute that the signature on the contract purporting to be Mr Saaib's was not his signature. The appellant's case was, however, that Mr Saaib authorised Mr Zaatini to sign that, and other documents, on his behalf.
In his first affidavit of 28 February 2019 Mr Saaib described himself as a formworker. He was categorical in his denials of building the 11 residential units, visiting the property, having any knowledge of or contact with the developer, having seen the "alleged contract" dated 4 October 2010 until after the works had been completed and a dispute arose. He further said: "I did not sign the alleged contract. I did not authorise anyone to sign the alleged contract on my behalf. The signature on the alleged contract that is supposed to be mine is not mine."
The appellant's case was that these denials were extreme and inherently implausible. There were a number of factual elements which supported that case. Many of the steps in the argument relied upon findings made by the trial judge.
First, the judge made findings at [31], set out at [41] above. The finding that Mr Saaib and Mr Zaatini spoke quite regularly, "almost daily during some periods" was generic. However, the telephone records (Ex G) revealed that Mr Saaib called Mr Zaatini on no fewer than 66 occasions between 2 August 2010 and 26 October 2010. (It was probable that Mr Zaatini also called Mr Saaib.) Mr Saaib provided no account in his evidence as to what they spoke about, but the proposition that they did not discuss the Marrickville project at all was implausible.
The regular communications referred to by the trial judge continued through the two years during which Mr Zaatini was engaged in the construction of the townhouses.
The cross-examination of Mr Saaib in relation to the Leura property obtained the unsurprising concession that Mr Saaib was aware of the requirements for home warranty insurance in undertaking residential building work. Again, taken in isolation, the likely inference was that he knew that Mr Zaatini did not have the experience to make him eligible for the necessary insurance; nor did Mr Saaib. However, it is not necessary to draw that inference merely from the close relationship and almost daily contact, as opposed to the whole of the evidence.
As has been noted, the insurance broker, Ms Alexandrova, had known Mr Saaib from around 2005. She had assisted him to obtain a loan for his Mulgoa home in 2009. In March or April 2010 she assisted him to obtain home warranty insurance for the Leura project. Mr Saaib agreed that in 2010 he spoke to Ms Alexandrova regularly. [28] Further, Mr Saaib introduced Mr Alexandrova to Mr Zaatini, probably in early 2010. [29] The judge found that Mr Zaatini used a mobile telephone in his own name and a telephone held by Award Build in the second half of 2010 and early 2011. [30] The judge made critical findings in relation to the steps taken by Ms Alexandrova with respect to the home warranty insurance which was arranged with QBE. The chronology commenced, relevantly for present purposes, the day after the contract was executed on 4 October 2010. The judge stated: "[85] The QBE Application attached to Mr Zaatini's 5 October email is an application described as 'QBE Application for Job Specific Policy Multi-Unit Developments'. It refers to Mr Saaib as the Builder Entity, gives Award Build's 703 number, lists the Silverwater PO Box referred to in the 'to whom it may concern' letter as the office address and identifies Transformer Group (with Nemer Antoun as the contact) as the Owner/Developer. It refers to a signed contract date of '1/10/10' with a fixed price contract of $3,165,450 and describes the development as '11 Townhouses'. Section 9 on page 4, 'Builder Declaration and Acknowledgement', identifies William Zaatini, Construction Manager, as having signed the application 'for and on behalf of' Mr Saaib."
There was a dispute as to what happened after the email from Mr Zaatini. The dispute was identified by the judge in the following terms: "[88] Ms Alexandrova's deposes … that, shortly after receiving the 5 October email from Mr Zaatini (she does not say which one; presumably it was the email at 5:29pm), she telephoned Mr Saaib and they had a conversation as follows: Ms Alexandrova: I have received the QBE application form and the building contract for the Marrickville project. Do you want me to now proceed with submitting these documents to QBE? Mr Saaib: Yes. And please obtain anything else you need from William. … [90] Mr Saaib denies the conversation with Ms Alexandrova referred to at [88]. When asked in cross-examination whether he recalled Ms Alexandrova calling him on or about 5 October 2010, he said, 'Maybe she do, maybe she not. I'm not remember she call me'. He rejected telling Ms Alexandrova that she should proceed with submitting the home warranty insurance application form and building contract for the Marrickville project to the insurer or that she should obtain anything else she needed from Mr Zaatini."
There were further communications between Mr Zaatini and Ms Alexandrova over the next two days. The judge made further findings: "[96] There are records of four calls made on 7 October 2010 from Award Build's 703 number to Ms Alexandrova's number, the last of which was at 3:40pm for 582 seconds (9.7 minutes). Based on Ms Alexandrova's 8 October email, I infer that these calls were from Mr Zaatini to Ms Alexandrova and they discussed what was required for her to complete a proposal for an application to be made to increase Mr Saaib's eligibility for home warranty insurance from $500,000 to cover the $2.4 million Marrickville project, which involved, amongst other things, completing a Builder Eligibility Profile Change Application (Eligibility Application).
On 13 October 2010 Mr Zaatini sent an email to Ms Alexandrova attaching "builder's eligibility forms". The judge observed: "[102] There was some debate at the hearing about what 'builders eligibility forms' were attached to Mr Zaatini's email as the email records produced by Ms Alexandrova are incomplete and do not make it clear. Based on the description of 'builders eligibility forms' and the emails that followed, I infer that what was attached to Mr Zaatini's email was a partially completed Eligibility Application dated 12 October 2010 that Mr Saaib accepts he signed and dated when it was a blank form."
The evidence with respect to the completion of the increased eligibility application was summarised by the judge in the following passages: "[121] At 8:40pm on 13 October 2010, a call was made from Mr Saaib's number to Mr Zaatini's 545 number lasting [160] seconds (2.67 minutes). At 8.44pm that night, a call was made from Mr Saaib's number to Ms Alexandrova's number lasting 21 seconds. [122] Ms Alexandrova deposes … that, on 13 October 2010, she and Mr Saaib had a discussion, which may have been after he left her a message, in the following terms: Mr Saaib: How are we going with the Marrickville project insurance application? Ms Alexandrova: William has been sending me documents for the application for home warranty insurance for the Marrickville project. You need to sign the documents because you are the builder. William sent me a document signed in your name, but it's not your signature. I asked William to get you to sign it. Mr Saaib: Don't worry, William has been helping me complete the documents. It's no problem. I will sign whatever needs to be signed. Ms Alexandrova: Also, do you have your 2009 and 2010 financial statements? I don't know whether your letter will be sufficient. The insurer might want to see the financial statements for your business. Mr Saaib: I'll talk to my accountant about it and see what he can do. [123] Mr Saaib denies that conversation although, based on the call record, he accepted in cross-examination that he spoke to Ms Alexandrova after he spoke to Mr Zaatini. His evidence was that he did not remember what they talked about, that maybe she asked, 'do you sign the document,' and he told her yes, but that he never knew anything about the Marrickville project and rejected that it was discussed."
The judge made the following critical findings in relation to this material: "[332] As to the calls and text message on 13, 14 and 15 October 2010, I prefer Ms Alexandrova's evidence that she and Mr Saaib discussed her request for Mr Saaib to 'sign the application' in addition to discussing the need for the 2009 and 2010 financial statements. A discussion in those terms is inherently likely given the emails sent by Ms Alexandrova on 13 and 15 October 2010 and the concessions made by Mr Saaib in cross-examination. [333] I also find it likely that, during one or more of those calls, the Marrickville project was mentioned. There is no compelling reason why Ms Alexandrova would not mention the project to Mr Saaib and it is inherently unlikely for her not to have done so in circumstances where the 'application' that needed to be signed was the Home Warranty Application for the Marrickville project, Ms Alexandrova was working towards lodging the Eligibility Application and the Home Warranty Application at the same time, and Mr Saaib's increased eligibility was a necessary precondition to home warranty insurance being issued for the Marrickville project. Thus, I reject Mr Saaib's evidence that the Marrickville project was not mentioned on those calls. … [336] The language skills of the participants, particularly Mr Saaib, the evidence suggesting that the calls on 13 and 14 October may have been very short (of 21 and 41 seconds only), and the 15 October email that refers to a discussion with Mr Saaib about the 2009 and 2010 financial statements, being documents relevant to the Eligibility Application (rather than the Home Warranty Application), also leave me unpersuaded that a reference in those calls to the Marrickville project or to an application that needed to be signed was understood by Mr Saaib to be to anything other than a reference to the Eligibility Application and a possible project or future 'big job'."
The judge noted in this context that "[a] discussion referring to or knowledge of the Marrickville project on the part of Mr Saaib at that time is not, in my view, sufficient evidence from which to infer implied actual authority on the part of Mr Zaatini to enter into the 4 October Contract or to find that Mr Saaib knowingly authorised Ms Alexandrova to lodge the Home Warranty Application with the insurer naming him as the builder of the project." [31]
That conclusion was available to the judge on the basis of discussions of the Marrickville project at that time. However, there were other factors to be taken into account before reaching a negative conclusion in relation to the authority of Mr Zaatini to enter into the 4 October contract on behalf of Mr Saaib.
Further, the judge observed: [32] "Nor do I consider the calls to be sufficient to conclude that Mr Saaib had consented to and authorised Mr Zaatini to act as his agent on anything other than in respect of the Eligibility Application." The fact that Mr Zaatini was authorised to complete and lodge the eligibility application is a significant fact in itself. Again, there are more matters to be considered.
Although the judge considered that the application might have been lodged with an eye to future "big projects", none was ever identified. Conceding the possibility that Mr Saaib may have believed that other projects were possibilities, that does not affect the casualness with which he permitted the application to be filled in by Mr Zaatini, having regard to the period for which his eligibility would be granted, his lack of experience which would warrant an increase in his eligibility if it were to be correctly recorded in the application, and the fact that he was in constant contact with Mr Zaatini at the time the Marrickville project was being planned.
Finally, the judge's conclusion was inconsistent with the express rejection of Mr Saaib's evidence that the Marrickville project was not mentioned.
It was not in doubt that Ms Alexandrova had the 4 October contract and lodged it with the insurance broker, OAMPS, on 6 October 2010, with the QBE application. [33] Further, the judge accepted "the logic" of the owners corporation submission in the following terms: "[342] There is logic to the Owners Corporation's submission that, in the absence of evidence that Ms Alexandrova was asked to keep what she was doing with Mr Zaatini secret from Mr Saaib, the Court might infer that Mr Zaatini was not concerned about Ms Alexandrova speaking to Mr Saaib about his role as the builder on the Marrickville project and that Ms Alexandrova was likely to have done so. But that logic also involves some conjecture and guesswork as to what motivated Mr Zaatini and what might have happened."
If the last sentence in that passage constitutes a rejection of the inference sought by the owners corporation, it is unpersuasive. It gives insufficient weight to (i) the daily communications between Mr Zaatini and Mr Saaib; (ii) the absence of any evidence that Ms Alexandrova was asked by Mr Zaatini to keep Mr Saaib's role a secret; (iii) the nature of the relationship between Mr Saaib and Ms Alexandrova, which was an established business relationship, and (iv) her very recent engagement by Mr Zaatini, on Mr Saaib's introduction. The implicit assumption of some form of conspiracy against Mr Saaib is implausible. There was no finding to that effect, but in its absence, there is much weight in the owners corporation's submission.
There is more material to support that conclusion. The judge made the following further findings: "[266] Mr Saaib's evidence that the Marrickville project was not mentioned by Ms Alexandrova during any of those calls and it was not possible that she did so because he knew nothing about it (T336:50-T337:2) is also unconvincing in circumstances where he accepted he could not remember what he was told 10 years ago or what was discussed during the calls and the very purpose of the Eligibility Application was to enable home warranty insurance to be obtained for the Marrickville project. [267] Like other parts of his evidence, Mr Saaib's evidence in cross-examination regarding the outcome of the Eligibility Application was confusing and, at times, inconsistent. He said that, on 15 December 2010, he could not recall Ms Alexandrova telling him whether his 'eligibility [had] been approved or not' as he 'don't know 10 years ago what we talk about', then said he 'spoke to her about the form we sign, everything all right'. He then gave evidence that he called her on 15 December but stated '[I] don't know if she told me [the application] had been approved or she never told me that application was wrong…information on it' (T353:27-28) and maintained that he didn't know the Eligibility Application had been approved (T354:15-17). Having accepted that he spoke to Ms Alexandrova about the Eligibility Application at that time, it is seemingly implausible that he did not seek to find out what happened to it. [268] The Owners Corporation also referred to Mr Saaib's evidence regarding the calls from Award Build's 703 number which, I accept, changed during cross-examination from saying he did not know who used the number, to Mr Zaatini using it, to then asserting that he just remembered Mr Zaatini used it and stating, 'it's on my file. Because I call this number too' (T286:8). This evidence, and his evidence that he 'remembered' he was pouring concrete on 15 October 2010, seems to reveal a willingness on the part of Mr Saaib to say things 'off the top of his head' that might be thought to assist his case."
The judge downplayed these circumstances in two further passages. First, she found that Ms Alexandrova "acted on instructions from Mr Zaatini (not Mr Saaib) when she lodged the QBE application and the 4 October Contract with OAMPS on 6 October 2010." [34] In the sense that Mr Zaatini completed the application and provided the documentation, that finding may be accepted. It is not inconsistent with Mr Zaatini having authority from Mr Saaib to take these steps.
Further, the judge observed: "[325] The Owners Corporation's submission that it is highly improbable that Ms Alexandrova did not mention the Marrickville project to Mr Saaib and what she was doing in relation to that project (as evidenced by the contemporaneous emails) is, in part, premised on Mr Saaib's evidence in chief that, in 2010, he spoke to Ms Alexandrova 'regularly' …. The call records in evidence do not support such a finding, in the sense that 'regularly' might be ordinarily understood to mean routinely or at uniform times. Only two calls and one text message were made from Mr Saaib to Ms Alexandrova during the period 1 August 2010 to 30 November 2010, namely those on 13, 14 and 15 October 2010. This is to be contrasted with the volume of communications from Mr Zaatini (on Award Build's 703 number) to Ms Alexandrova; 29 calls and three text messages during the period 1 July 2010 to 14 January 2011. While the calls records are not conclusive, in that they do not include outgoing calls from Ms Alexandrova's number, they support a finding that Mr Zaatini and Ms Alexandrova, rather than Mr Saaib and Ms Alexandrova, were in regular contact."

[18]

Ground 5 - absence of Jones v Dunkel inference

Ground 5 asserted that the judge was wrong in failing to draw a Jones v Dunkel [35] inference from the failure of Mr Saaib to call Mr Zaatini as a witness. Based on their close relationship in 2009-2012, Mr Zaatini was clearly a person who might be expected to give evidence for Mr Saaib. He might have given evidence that Mr Saaib authorised him to sign documents in relation to the project, including the contract. In the alternative, he might have given evidence that he had no authority and had forged Mr Saaib's signature. The latter evidence might, as the appellant submitted, have required a certificate under s 128 of the Evidence Act to protect him from future prosecution. However, it was submitted that the failure to call Mr Zaatini at all should have supported an inference that his evidence would not have assisted Mr Saaib.
Whether such an inference should be drawn may require taking into account current circumstances, not merely a relationship as at the time of the events in question. Mr Saaib's evidence was to the effect that he had fallen out with his nephew. That may have been true, or it may have been untrue. It may have been the case that Mr Saaib was angry with his nephew because he was being sued for Mr Zaatini's poor construction work. Alternatively, they may have fallen out because Mr Zaatini had acted without authority, but would not take responsibility for that.
The trial judge declined to draw the relevant inference from the failure to call Mr Zaatini on two grounds. First, being unpersuaded by the other evidence that "reasonable and definite inferences [arose] that Mr Zaatini and Mr Saaib had discussed and agreed that Mr Saaib would be named in the 4 October contract as the builder of the Marrickville property", it followed that a Jones v Dunkel inference would not assist the appellant's case. [36] Such an inference cannot constitute affirmative evidence to fill a gap. However, for the reasons set out above and discussed further below, the circumstantial case relied on by the appellant has sufficient support to permit an inference to be drawn on the balance of probabilities. In that circumstance, it is open to this Court to have regard to the fact that Mr Zaatini was not called.
The judge further held that Mr Zaatini was not in Mr Saaib's camp and it would not be natural to expect him to call Mr Zaatini. [37] She noted that Mr Saaib had described Mr Zaatini in adverse terms and that Mr Saaib's lawyer had reported him to the police for fraud. [38]
Mr Saaib did speak of him adversely, but incidentally and did not address the issue as to why he would not call him. At the beginning of his cross-examination, he was asked about his state of knowledge of the Marrickville project prior to receiving a letter of 22 February 2017 which he claimed was the first time he had heard about the Marrickville project. He conceded that he did know a fair bit about Marrickville as at 22 February 2017. [39] It was then put to him that he had spoken "several times or many times" to Mr Zaatini prior to 22 February 2017; he replied: [40] "After I received the letter only because I no business with him. He's a bullshit person."
Later in the cross-examination he confirmed that he had a close relationship with Mr Zaatini "throughout 2011" and that they spoke daily. [41] It was then put to him: [42] "Q. And the same in 2012, correct? A. Same before we have all that bullshit scene."
Mr Saaib was cross-examined about the acceptance of his application for an increase in his home warranty insurance eligibility. The following exchange took place: [43] "Q. You didn't ever go to Mr Zaatini and say to him, 'Get me some of those construction jobs you were talking about because my eligibility has now been approved,' did you? A. The eligibility not been approved. I have no knowledge about it and I've never heard from Mr Zaatini anything, any job. Only liar and bullshit."
If the inference from the last passage is that in 2010 he did not like Mr Zaatini and did not trust him, that would be inconsistent with much of the other evidence, including the daily contacts, and the findings of the trial judge. If the inference is that in hindsight Mr Saaib is bitter about Mr Zaatini's conduct, that provides no justification for not calling him if his evidence would support Mr Saaib. With respect to his communications in 2012, he gave evidence of his close contact then, but suggested that at some undefined time after that, there had been a "bullshit scene". He had earlier accepted that he spoke to Mr Zaatini prior to 22 February 2017 about the Marrickville project, despite adding his abusive statement that he was "a bullshit person."
The appropriate inference to draw from this material was that Mr Saaib did not think that Mr Zaatini would give evidence which would support Mr Saaib's case, but that that was because he was a liar; yet he was not prepared to allow the Court to determine if that were correct.
There was no evidence as to why Mr Saaib's lawyer had reported Mr Zaatini to the police for fraud, nor as to whether the police had taken steps to investigate or prosecute him. As this Court said in RHG Mortgage Ltd v Rosario Ianni, [44] a suggestion that the witness might be reluctant to give evidence because it may constitute an admission of wrongful conduct on his part, would invite an application for a certificate under s 128 of the Evidence Act. The fact of the report to the police was consistent with Mr Saaib taking a particular view of Mr Zaatini's conduct, at least after he had obtained legal advice; it does not follow that the person would lie on oath. As in RHG v Ianni, because one member of a family has caused loss and damage to other members of the family does not mean that there is necessarily a rift in the family which would prevent the wrongdoer giving evidence in support of the case for the other family members who suffered by his or her conduct.
In my view, it may properly be inferred that Mr Zaatini's evidence would not have assisted Mr Saaib's case.

[20]

Ground 4 revisited

It is convenient then to return to ground 4. As noted above, the combination of 10 factors identified in ground 4 were said to be sufficient to ground an inference that Mr Saaib had authorised Mr Zaatini to enter into the Marrickville building contract on his behalf. The appellant submitted that the judge's conclusion that she was not persuaded as to that fact should be set aside as contrary to compelling inferences and as glaringly improbable.
Each of the findings relied upon from which a relevant inference could be drawn has been addressed above. Some of the 10 factors, including the undisputed emails during 2010 between Ms Alexandrova and Mr Zaatini and the uncontested testimony that Mr Saaib did not use a computer or email but typically communicated by telephone, were, as the respondent submitted, neutral, at least when viewed in isolation. However, the appellant was correct to submit that they should not be viewed in isolation and that the error of the trial judge was, in effect, to consider carefully each separate item of evidence, but give insufficient weight to possibilities which should, in combination, have led to the inference of authority contended for by the appellant.
In addition to the matters discussed above, it is necessary to have regard to the tendency evidence which should have been admitted and can now be taken into account. That evidence demonstrated that, throughout the period during which Mr Zaatini was dealing with the Marrickville project, Mr Saaib was allowing his name to be used as the builder on the Leura development, including for the purpose of obtaining home warranty insurance and at a time when his entitlement to such insurance was not in force. This material demonstrated a propensity to allow others to use his builder's licence and obtain home warranty insurance in his name when they had no entitlement (and indeed when he had no entitlement). That is quite similar to conduct that occurred in relation to the Marrickville development. There being no reason to believe that Mr Zaatini knew of Mr Saaib's conduct in relation to the Leura project, there is an inference available from the existence of the propensity in favour of the view that Mr Saaib was knowingly involved in the presentation of himself as a builder with an entitlement to home warranty insurance with respect to the Marrickville development, when he did not intend to carry out the building work.
Although it may add little to the inferences which can be drawn from the material set out above, the Court can be satisfied that Mr Zaatini would not have given evidence favourable to Mr Saaib. The evidence may have been of limited weight because of doubts as to Mr Zaatini's honesty, but it should not be assumed that he would have lied in critical respects.

[23]

Ms Alexandrova's appeal

In these circumstances, it is not necessary to address the substance of the grounds raised by Ms Alexandrova in her appeal. The judgment against her should be set aside. As the contingent claim against her by the owners corporation failed, she should have her costs of the trial (as an unrepresented party.)
As Ms Alexandrova did not actively support the owners corporation's case against Mr Saaib, there should be no order as to the costs of her appeal.
The Court should make the following orders: 1. Allow the appeal and set aside the orders made in the Equity Division on 1 March 2021. 2. In place thereof, 1. Dismiss the amended summons filed on 11 March 2020; 2. Order that the Owners Corporation pay Ms Alexandrova's costs of the trial as an unrepresented party.
No order as to the costs of the appeal.
MACFARLAN JA: The Owners - Strata Plan 87265 is the Owners Corporation of the strata scheme in respect of a block of 11 townhouses located in Marrickville NSW. It is the successor in title to the previous owner and the developer of the property, Transformer Group Pty Ltd ("Transformer Group"). This appeal arises out of separate proceedings that the Owners Corporation brought in the Equity Division against Mr Tony Saaib and Ms Irena Alexandrova.
The Corporation claimed damages from Mr Saaib in respect of the costs of rectifying defects in the common property of the building on the basis that Mr Saaib had entered into, as "builder", a contract with Transformer Group dated 4 October 2010 for construction of the building. The Corporation's case was that, even if (as Mr Saaib asserted) he did not sign the contract, he authorised his nephew, Mr William Zaatini, to enter into it on his behalf and to deal with Ms Alexandrova, an insurance and finance broker, to arrange home warranty insurance in relation to the construction of the building. Mr Saaib's case in response was that the building contract and a number of other forged documents were brought into existence without his knowledge by Mr Zaatini and/or Mr Joe Antoun and Mr Nemer Antoun in order to obtain for Transformer Group home warranty insurance and bank finance for the development. He also contended that he did not undertake or supervise any building works for the construction of the building.
The Corporation's claim failed because the primary judge held, by a finding that was not disputed on appeal, that Mr Saaib's purported signature on the contract was forged and held, notwithstanding evidence given by Ms Alexandrova of implied admissions by Mr Saaib to the contrary, that Mr Saaib did not authorise his name to be used as "builder" and held that he did not play any role in the construction of the building.
In separate proceedings the Corporation claimed damages from Ms Alexandrova against the possibility, which in fact eventuated, that it failed in its claim against Mr Saaib. The primary judge accepted the Corporation's case that, by submitting documents to the prospective insurer (the NSW Self Insurance Corporation for whom QBE acted as agent), purportedly on behalf of Mr Saaib, but in fact without his authority, Ms Alexandrova engaged in misleading or deceptive conduct which led to the Corporation's predecessor, Transformer Group, not having the benefit of enforceable home warranty insurance, with consequent loss to the Corporation.
On appeal, the Corporation contended that the primary judge erred in finding that: 1. Mr Saaib did not speak regularly to Ms Alexandrova during 2010; 2. Ms Alexandrova did not speak to Mr Saaib about the Marrickville project prior to 12 October 2010; 3. references to the Marrickville project during calls between Ms Alexandrova and Mr Saaib in October 2010 were understood by Mr Saaib as references to an Eligibility Application (see [127] below) and to "a possible project or future job"; 4. Mr Saaib did not authorise Mr Zaatini to enter into the Marrickville building contract on Mr Saaib's behalf; 5. a Jones v Dunkel inference did not arise from Mr Saaib's failure to call Mr Zaatini as a witness; 6. evidence relating to the Leura project (see [148] below) did not have significant probative value and was not admissible as tendency evidence; 7. Mr Saaib's evidence that he spoke to Mr Zaatini regularly in 2011 and 2012 was not a sufficient basis for inferring that Mr Zaatini did the building work under Mr Saaib's supervision.
On appeal, Ms Alexandrova contended that: 1. the primary judge erred in finding that Ms Alexandrova engaged in misleading or deceptive conduct; 2. the Corporation did not prove that it suffered loss that was caused by Ms Alexandrova's alleged misleading or deceptive conduct; 3. she was denied procedural fairness at the hearing at first instance; 4. the Corporation's claim against her is statute-barred.
For the reasons that appear below, I have concluded that the Corporation's appeal in the proceedings against Mr Saaib fails and that Ms Alexandrova's appeal in the separate proceedings brought against her by the Corporation succeeds, in relation to the latter on the basis that the Corporation did not establish that it suffered loss that was caused by Ms Alexandrova's alleged misleading or deceptive conduct. The overall result therefore is that the Corporation fails in both of its proceedings.

[25]

THE FACTUAL CIRCUMSTANCES

The following summary of the factual circumstances relevant to the issues on appeal is drawn from her Honour's description of the evidence before her at [24]-[228] of her judgment of 1 March 2021 ([2021] NSWSC 150).
From 2008 to June 2013, Mr Nemer Antoun was Transformer Group's sole director. He was the brother of the late Mr Joe Antoun who had been the sole director of a building company named Award Build Pty Ltd between September 2008 and February 2012. That company was deregistered on 27 January 2013.
Mr Saaib obtained his builder's licence on 18 October 2001 and between August 2004 and 31 March 2012 was licenced to carry out building work that required home warranty insurance. He is a director and secretary of Australian Metropolic Developments Pty Ltd and is or has been associated with two other building companies. He does not know how to use a computer, has difficulties with written English and normally communicates by telephone.
Ms Alexandrova is a self-employed insurance and finance broker. She assists clients with applications for construction, residential and commercial finance, as well as for home warranty insurance for building projects. Relevant to the present case, she had between 2004 and 2013 a referral agreement with OAMPS Insurance Brokers Limited ("OAMPS") pursuant to which she earned commission for introducing licensed builders to OAMPS. QBE was the insurer agent to whom Ms Alexandrova submitted documents through OAMPS.
Ms Alexandrova met Mr Saaib in about 2005 and subsequently helped him obtain insurance in connection with his work as a builder. Mr Saaib gave evidence that in 2010 he spoke to Ms Alexandrova "regularly". From at least February 2010 Ms Alexandrova also assisted Award Build with insurance for building projects. She spoke to Mr Joe Antoun once or twice and otherwise liaised with Mr Zaatini in relation to Award Build matters.
Limited telephone records were in evidence. These included records of calls made to Ms Alexandrova's and Mr Zaatini's mobile telephone numbers in 2010-2011.
A residential building contract dated 24 November 2009 (the "First Contract") naming Mr Nemer Antoun as the owner and Mr Saaib as the builder for works at the Marrickville property was in evidence. It purported to be signed by Mr Saaib but it is uncontested that he did not sign it.
Ms Alexandrova deposed that in or about mid-2010 she had a telephone conversation with Mr Saaib in which he told her about "…a new project which I will be doing with my nephew [Mr Zaatini]", being the Marrickville project (the "First Saaib Conversation"). Thereafter she had a number of communications with Mr Zaatini about the project.
Between 17 June 2010 and 6 September 2010 a further building contract for the Marrickville project (the "Second Contract") came into existence, bearing the same date as the First Contract (that is, 24 November 2009). It named Transformer Group as the owner and, again, bore a purported signature of Mr Saaib as the builder. It was not in fact his signature.
Ms Alexandrova said that on about 29 or 30 September 2010 she came to believe that the Marrickville project had to be in Mr Saaib's name as builder and not in the name of Award Build because of the latter's limited eligibility to obtain insurance. She said that the initial intention of those involved had been for Award Build to be the builder and that she had been assisting Award Build to obtain an increase to its home warranty insurance eligibility limit to facilitate this but became aware that that would not be possible.
Ms Alexandrova gave evidence that, shortly after speaking to Mr Zaatini on 29 September 2010, she had a telephone conversation with Mr Saaib in which he stated "[b]oth the building contract and the home warranty insurance will be in my name" (the "Second Saaib Conversation").
On 30 September 2010, Ms Alexandrova sent Mr Zaatini an email stating: "Tony Saaib has eligibility with QBE. He has to complete the QBE application attached. The contract has to be under his name as well."
On 5 October 2010, Ms Alexandrova received an email from Mr Zaatini attaching a "QBE Builders' Warranty Insurance" application form and a copy of a further building contract for the Marrickville project, dated 4 October 2010 (the "4 October Contract"). The 4 October Contract listed Transformer Group as the owner and Mr Saaib as the builder. Again, it is uncontested that Mr Saaib did not sign this contract. The 4 October Contract was the contract on which the Corporation sued (see [106] above). At about this time a document entitled "Building Contract Side Deed" between Australia and New Zealand Banking Group (the project financier) ("ANZ Banking Group"), Transformer Group and Mr Saaib was also created. It again bore Mr Saaib's purported signature, which he denied signing or authorising anyone to sign on his behalf.
Ms Alexandrova deposed that, shortly after receiving the 5 October 2010 email, she had a telephone conversation with Mr Saaib (the "Third Saaib Conversation") in which the following was said: "[Ms Alexandrova:] I have received the QBE application form and the building contract for the Marrickville project. Do you want me to now proceed with submitting these documents to QBE? [Mr Saaib:] Yes. And please obtain anything else you need from [Mr Zaatini]".
On 6 October 2010, Ms Alexandrova sent the 4 October Contract and the QBE insurance application form to OAMPS for submission to QBE. Mr Saaib gave evidence that on or about 12 October 2010 he signed and dated a blank Builder Eligibility Profile Change Application (the "Eligibility Application") when he was in Mr Zaatini's office. This was an application to increase Mr Saaib's eligibility for home warranty insurance from $500,000. Mr Saaib deposed that Mr Zaatini told him that "there were lots of construction jobs around" and that the Eligibility Application was necessary if Mr Saaib was to do those jobs.
Ms Alexandrova gave further evidence that, following a number of communications with Mr Zaatini, on 13 October 2010 she had a conversation with Mr Saaib (the "Fourth Saaib Conversation") which included the following: "Mr Saaib: How are we going with the Marrickville project insurance application? Ms Alexandrova: [Mr Zaatini] has been sending me documents for the application for home warranty insurance for the Marrickville project. You need to sign the documents because you are the builder. [Mr Zaatini] sent me a document signed in your name, but it's not your signature. I asked [Mr Zaatini] to get you to sign it. Mr Saaib: Don't worry, [Mr Zaatini] has been helping me complete the documents. It's no problem. I will sign whatever needs to be signed. …".
Ms Alexandrova said that she had a further conversation with Mr Saaib on 14 October 2010 concerning "financials" that the intended insurer would or did require (the "Fifth Saaib Conversation").
On 15 October 2010 at 11:31am, Mr Saaib sent Ms Alexandrova a text message (which was not in evidence). Ms Alexandrova's evidence in cross-examination was that the text message said "Please call me".
Also on 15 October 2010 Ms Alexandrova sent an email to Mr Zaatini saying that she had asked Mr Saaib for his 2009 and 2010 Financial Statements and that he said he only had those for 2009. Ms Alexandrova referred then to Mr Saaib's accountant and said that if she received "all docs as per my previous email", she would submit "the proposal" that day. She concluded by saying "the ball is in your court".
Later that day, at 4:18pm, Ms Alexandrova sent a fax to OAMPS comprising seven documents: the Eligibility Application, a reference from an engineer, a reference from an architect, a statement purportedly signed by Mr Saaib as builder, financial statements for Saaib Construction Pty Ltd (a company of which Mr Saaib had previously been a shareholder and director), a home warranty insurance application dated 15 October 2010 which was purportedly signed by Mr Saaib and a payment sheet identifying expected progress payments for the Marrickville project works.
After further communications, on 18 January 2011 QBE, as agent for the NSW Self Insurance Corporation, issued home warranty certificates of insurance in respect of each of the Marrickville units identifying Mr Saaib as the builder of the works.
Construction of the Marrickville townhouses commenced soon after a construction certificate for the Marrickville project was issued on 15 February 2011. The construction continued until a final occupation certificate was issued on 20 December 2012. The primary judge found that, at about that date, "various subcontractors issued final trade certificates. Many of those trade certificates refer to 'Mr Joe Anto[u]n' or Transformer Group as the client. None refer to Mr Saaib".
Her Honour made the following further findings concerning the construction: "[184] Mr Saaib gives evidence that he did not build the Marrickville property. In cross-examination, Mr Saaib denied that he knew Mr Zaatini was working as a construction manager on the Marrickville project, that Mr Zaatini kept him updated as to the progress of work at the Marrickville site in 2011 and 2012, and that he knew that his builder's licence was being used in connection with the Marrickville job. [185] There is no evidence of any subcontracts between Mr Saaib and tradespersons who worked on the Marrickville project, purchase orders signed by Mr Saaib, invoices issued by subcontractors to Mr Saaib or receipts issued by Mr Saaib to subcontractors relating to the construction of the Marrickville property. [186] Mr Saaib also gives evidence that he has never been to the Marrickville property and that he received no benefit, monetary or otherwise, from the construction of the Marrickville property. Mr Saaib's evidence on these matters was not challenged by the Owners Corporation in cross-examination." (References omitted.)
The primary judge also referred to evidence of efforts to trace payments made by the project financier, ANZ Banking Group, to Transformer Group (the payments were made into Transformer Group's bank accounts with ANZ Banking Group and with the Commonwealth Bank of Australia). Her Honour concluded: "[191] The tracing exercise did not identify any payments from either the ANZ or CBA Transformer Group accounts to an account in the name of Mr Saaib. There are no other documents in evidence which identify, or suggest, that Mr Saaib received any money or other benefit from the construction of the Marrickville property."

[27]

Ms Alexandrova's evidence

The primary judge referred at the outset to Mr Saaib's reliance on the well-known statement of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319 as follows: "...human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions [of] self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience."
Her Honour made a number of general observations in the course of her careful consideration of Ms Alexandrova's reliability as a witness and expressed the following conclusions: "[237] I make no adverse credit finding of Ms Alexandrova. I accept she was trying to relay her honest recollections. However, for the reasons set out below, I have concluded that her evidence is not wholly reliable. This is primarily because of the recognised doubts regarding fading memory but also because aspects of her evidence were new and seemingly inconsistent with other parts of her evidence, and some of her evidence appears to have been influenced by hindsight. … [251] I accept that Ms Alexandrova's evidence of the conversations with Mr Saaib are not inconsistent with the contemporaneous records and are not implausible discussions to have had. The issue I have is how Ms Alexandrova arrived at the dates and details of each of the conversations about which she gives evidence. It seems most likely that, rather than a reliable recollection of any particular conversation, the details and dates have been based on the following: her review of a limited number of emails between herself and Mr Zaatini; her knowledge of the record of the calls and text messages on 13, 14 and 15 October 2010 and on 22 February 2017; her presumptions and understandings about the arrangements between Mr Saaib, Mr Zaatini and Award Build; and her belief that she would (and should) have contacted Mr Saaib on certain occasions in addition to the regular contact she had with and instructions she received from Mr Zaatini."
Mr Saaib gave evidence denying speaking to Ms Alexandrova in the terms to which she deposed. Although the primary judge found aspects of his evidence to be unsatisfactory and unreliable, her Honour did not conclude that he deliberatively gave false evidence and made no finding of dishonesty against him.
Her Honour then turned to examine the five relevant conversations Ms Alexandrova said that she had with Mr Saaib in the period mid-2010 to October 2010 in which he allegedly acknowledged his role as builder in respect of the Marrickville project (see [120], [123], [126] and [128]-[129] above).
As to the First Saaib Conversation (see [120] above), her Honour concluded that Ms Alexandrova's evidence was: "[320] …significantly undermined by her evidence in cross-examination about Award Build being the intended builder, the 'to whom it may concern' letter being used for Award Build's eligibility increase in relation to the Marrickville project, and Award Build's later approach to Mr Saaib. …. If there was such a conversation, presumably there would have been a discussion regarding Award Build's role and her prior dealings with Mr Zaatini."
As to the Second Saaib Conversation referred to in [123] above, her Honour said: "[321] …That conversation is at odds with [Ms Alexandrova's] 30 September email, which makes no reference to any discussion with Mr Saaib and asserts that the contract 'has be to in Mr Saaib's name', and her oral evidence that she understood that Award Build had approached him to be their partner."
In the absence of any documentary support, her Honour did not accept Ms Alexandrova's evidence of the Third Saaib Conversation (see [126] above). Instead, her Honour found that Ms Alexandrova acted on the instructions of Mr Zaatini, rather than Mr Saaib, when she lodged the QBE insurance application form and the 4 October Contract with OAMPS on 6 October 2010.
The primary judge accepted Ms Alexandrova's evidence that on 13, 14 and 15 October 2010 (in the Fourth and Fifth Saaib Conversations and the 15 October 2010 text message - see [128]-[130] above) she and Mr Saaib discussed her request for Mr Saaib to "sign the application" and that the Marrickville project may have been mentioned, there not being any reason for that not to occur. However her Honour was "unpersuaded that a reference in those calls to the Marrickville project or to an application that needed to be signed was understood by Mr Saaib to be anything other than a reference to the Eligibility Application and a possible future project or future 'big job'".
Speaking generally, her Honour noted the absence of any documentary evidence to support Ms Alexandrova's evidence that her conversations with Mr Saaib indicated that he knew and approved of his name being used in the 4 October Contract as "builder" and concluded: "[343] The objective facts are that at least 24 documents were created in relation to the Marrickville project that involved the falsification of Mr Saaib's signature, the use of contact details of others, fake company names, false statutory declarations and an illegitimate insurance certificate. There is no evidence that Mr Saaib received copies of those documents or was involved in their creation. … [350] In the end, I am simply unpersuaded that the objectively established facts and logic of events give rise to reasonable and definite inferences that Mr Zaatini and Mr Saaib had discussed and agreed that Mr Saaib would be named in the 4 October Contract as the builder of the Marrickville property, that Mr Zaatini had been authorised by Mr Saaib to provide to Ms Alexandrova the documents that he in fact provided to her, including the 4 October Contract, and, therefore, that Mr Saaib had authorised Mr Zaatini to enter into a building contract on his behalf in relation to the Marrickville project."
The primary judge added that she was not persuaded that a Jones v Dunkel inference should be drawn against Mr Saaib by reason of him not calling Mr Zaatini to give evidence (see Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8). Her Honour's reasoning included the following: "[352] I should record that I was not persuaded that Mr Zaatini was to be regarded as now in Mr Saaib's 'camp' or that it was natural for Mr Saaib to call him. Mr Saaib described Mr Zaatini as a 'liar' and a 'bullshit person' and someone who, as family, he was 'close to' and spoke to regularly 'before we have all that bullshit scene' but with whom he now has 'no business'." (References omitted.)

[28]

Mr Saaib's evidence

Mr Saaib deposed that in 2012 he was named as the builder in a home warranty insurance policy relating to the construction of a house in Leura that belonged to one of his close friends (the "Leura project"). He said that he was happy to assist in the construction as a "special favour", that he was the builder but never got paid for the job, that the works are incomplete and that no works have been undertaken for about five years.
The Owners Corporation relied on the evidence relating to the Leura project to support the conclusion that Mr Saaib was willing to make the "same type of arrangement" for Mr Zaatini. However, the primary judge held that this evidence did not have significant probative value in relation to the factual issues in the present case and was not therefore admissible as tendency evidence. Her Honour's reasoning included the following: "[283] Evidence relating to one transaction for personal friends at a cost of around $200,000 where Mr Saaib signed the relevant 'letter contract' is not, to my mind, significantly probative of what he would be likely to do in connection with a building contract that required the construction of a multi-unit development at a value of $2.4 million for on-sale to third parties involving a corporate developer, Transformer Group, where there is no evidence of an ongoing or close association between Mr Saaib and the directors. As Ward CJ in Eq observed, a high level of similarity would seem to be called for in order to establish that a tendency on the part of a person to enter into particular types of contracts has significant probative value: Anthony v Morton [2018] NSWSC 1884 at [336]. … … [285] …What work Mr Saaib did (or did not do) in relation to a contract that he signed for a $305,000 (or $200,000) build for close friends without getting paid is not, in my view, evidence that proves or makes it more probable that he gave authority to Mr Zaatini to enter into the 4 October Contract on his behalf or did (or did not) undertake work as the builder on the Marrickville project."

[29]

THE PRIMARY JUDGMENT - THE ALEXANDROVA PROCEEDINGS

The primary judge first noted that during closing submissions she granted the Owners Corporation leave to amend its Technology and Construction List Statement to rely, in the alternative to ss 18 and 236 of the Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law ("the ACL"), on ss 42 and 68 of the Fair Trading Act 1987 (NSW) as in force before the commencement of the ACL. Her Honour said that the amendments did not raise any new factual matters in the Owners Corporation's misleading or deceptive conduct claim against Ms Alexandrova, or change the nature of its case.
In addressing that claim, her Honour found that, by submitting the insurance application and related documents to OAMPS (for transmission to QBE), Ms Alexandrova impliedly represented that Mr Saaib authorised her to do that on his behalf as the builder in respect of the Marrickville project. Her Honour rejected Ms Alexandrova's submission that she was simply passing on information, finding: "[472] The Owners Corporation submits, and I accept, that there is nothing on the Application or Related Documents to indicate that Ms Alexandrova disclaimed any belief that she was not authorised to submit them on Mr Saaib's behalf. Her referral arrangement with OAMPS, pursuant to which she earned commission for referring licensed builders to OAMPS, involved her arranging applications for home warranty insurance to be completed by or on behalf of licensed builders and sent to OAMPS. Those matters lead me to conclude that M[s] Alexandrova was not acting as a 'post box' or mere conduit, but someone who was expected to be submitting documents on behalf of those… whom she represented."
Her Honour also found that this representation was misleading and deceptive because Mr Saaib did not enter into the 4 October Contract, did not authorise anyone else to do so on his behalf and did not authorise Ms Alexandrova to lodge the insurance application with OAMPS. Her Honour noted that Ms Alexandrova's intent and honesty were not relevant in this respect.
In respect to causation, her Honour noted that the Owners Corporation's case was one of reliance on misleading and deceptive conduct by a third party (namely OAMPS and QBE) causing the Owners Corporation loss. Her Honour then found that reliance by both OAMPS and QBE was established as it was not necessary for the Corporation to adduce direct evidence of reliance, it being open to the Court to infer reliance in an appropriate case.
Her Honour then turned to consider whether the Owners Corporation had established that it suffered loss by reason of Ms Alexandrova's conduct, noting its submission as follows: "[504] The Owners Corporation says that, had Ms Alexandrova not engaged in the contravening conduct, Transformer Group would have had to, and most likely would have, taken steps to contract a licensed builder to do the work and obtain a valid home warranty insurance policy for that work prior to the work being undertaken, because otherwise it would not have been able to construct the building at all. …"
Her Honour concluded that causation of loss had been established, observing: "[505] There is a degree of speculation to this counter-factual analysis. There is no evidence of what Transformer Group could and would have done absent the misleading conduct and issuance of the home warranty insurance. But it could not have proceeded with construction without that insurance and it seems reasonable to infer that it would have contracted with a licensed builder in order to do so."
Her Honour then noted that Ms Alexandrova had "raised, by way of defence, that others are responsible for causing the Owners Corporation loss and should be liable" and that there were provisions in the Competition and Consumer Act 2010 (Cth) and the Civil Liability Act 2002 (NSW) providing for proportionate liability of apportionable damages claims where there are concurrent wrongdoers.
Her Honour noted: "[515] I acknowledge that Ms Alexandrova is self-represented. That does not, in my view, absolve her of the obligation to plead or at least notify in submissions the basis on which it is alleged that the third parties to whom she has referred are concurrent wrongdoers. This is particularly [so] as Ms Alexandrova was actively encouraged prior to and during the hearing to obtain legal representation in this case."
As Ms Alexandrova had not pleaded a proportionate liability defence, her Honour found that Ms Alexandrova had no right to raise it. Her Honour therefore found Ms Alexandrova liable in respect of the full costs of rectifying the common property defects, totalling $3,425,583.54.

[31]

Ground 4 - whether Mr Saaib authorised Mr Zaatini to enter into the Marrickville building contract on his behalf

It is convenient to address Ground 4 first as it directly challenges the correctness of the primary judge's ultimate finding in the Saaib proceedings and enables the following general, and later more specific, observations to be made concerning that challenge.
As noted in [137] above, in light of the primary judge's forgery findings, success for the Owners Corporation in its claim against Mr Saaib was in practical terms dependent upon her Honour accepting Ms Alexandrova's evidence of Mr Saaib making statements to her implicitly acknowledging his involvement in the Marrickville project as builder.
Ms Alexandrova was cross-examined at length, with the cross-examination occupying some 133 pages of transcript. In seeing and hearing Ms Alexandrova give her evidence, the primary judge had a considerable advantage over this Court in assessing her evidence. This advantage was enhanced by her Honour's opportunity to hear the other evidence called in the proceedings, including that of Mr Saaib, and to consider the relevant documentary material over the seven days of the hearing.
Although her Honour's rejection of Ms Alexandrova's evidence was not based on any finding of dishonesty on her part, it was based on conclusions concerning her reliability which, as is apparent from the passages of the primary judgment quoted in [139] above, inevitably took into account her Honour's observations of Ms Alexandrova in the witness box and her Honour's assessment of Ms Alexandrova's evidence when placed in the context of the whole of the evidence in the case.
As Mr Saaib submitted on appeal, the considerations to which McLelland CJ in Eq adverted in Watson v Foxman (see [138] above) often enable the rejection of evidence which has been given honestly, as it needs to be assumed it was in the present case. Mr Saaib contended that Ms Alexandrova's evidence constituted evidence of the nature contemplated in Watson v Foxman, that is, evidence that is subconsciously reconstructed in a way that is self-serving.
Her Honour thoroughly considered all relevant contemporaneous documentary evidence when determining whether to accept or reject Ms Alexandrova's evidence. There would be no point in repeating here the detail of her Honour's reasoning to which I have referred in [139], [142]-[143] and [146] above. It is sufficient to draw attention to the following conclusory paragraphs: "[237] I make no adverse credit finding of Ms Alexandrova. I accept she was trying to relay her honest recollections. However, for the reasons set out below, I have concluded that her evidence is not wholly reliable. This is primarily because of the recognised doubts regarding fading memory but also because aspects of her evidence were new and seemingly inconsistent with other parts of her evidence, and some of her evidence appears to have been influenced by hindsight. … [251] I accept that Ms Alexandrova's evidence of the conversations with Mr Saaib are not inconsistent with the contemporaneous records and are not implausible discussions to have had. The issue I have is how Ms Alexandrova arrived at the dates and details of each of the conversations about which she gives evidence. It seems most likely that, rather than a reliable recollection of any particular conversation, the details and dates have been based on the following: her review of a limited number of emails between herself and Mr Zaatini; her knowledge of the record of the calls and text messages on 13, 14 and 15 October 2010 and on 22 February 2017; her presumptions and understandings about the arrangements between Mr Saaib, Mr Zaatini and Award Build; and her belief that she would (and should) have contacted Mr Saaib on certain occasions in addition to the regular contact she had with and instructions she received from Mr Zaatini."
Whilst this Court is obliged to conduct "a real review of the trial" and of the judge's reasons (Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [25]), it must refrain from interfering with a trial judge's factual findings where, as in the present case, they: "… are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence." (Citations omitted.) (Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55].)
As is apparent from its terms, that statement of principle applies not only in relation to factual findings likely to have been affected by the judge's impressions about a witness' "credibility" (if that term is taken in its narrow sense of honesty) but also to factual findings likely to have been affected by the judge's impressions of a witness' "reliability".
Before referring to the matters upon which the Owners Corporation relies in support of Ground 4, I observe that there are at least four significant, unchallenged on appeal, aspects of evidence or findings that strongly support the primary judge's conclusion.
First, Mr Saaib gave unchallenged evidence that he had never been to the Marrickville property and that he received no benefit, monetary or otherwise, from the construction on the property (J[186] quoted in [135] above).
Secondly, the primary judge made an unchallenged finding that there was "no evidence of any subcontracts between Mr Saaib and tradespersons who worked on the Marrickville project, purchase orders signed by Mr Saaib, invoices issued by subcontractors to Mr Saaib or receipts issued by Mr Saaib to subcontractors relating to the construction of the Marrickville property". (J[185] quoted in [135] above).
Thirdly, an extensive tracing exercise did not identify the payment to Mr Saaib of any part of the funds drawn down by the property developer and owner (Transformer Group) from its financier (ANZ Banking Group). The evidence was that, once drawn down from the financier to Transformer Group's bank accounts, the funds were paid out to a variety of recipients who included Award Build, Mr Nemer Antoun and Mr Zaatini.
Fourthly, the primary judge made a finding, unchallenged on appeal, "that at least 24 documents were created in relation to the Marrickville project that involved the falsification of Mr Saaib's signature, the use of contact details of others, fake company names, false statutory declarations and an illegitimate insurance certificate" and that there was "no evidence that Mr Saaib received copies of those documents or was involved in their creation".
To establish that her Honour's ultimate finding as to Mr Saaib's involvement in the project was "glaringly improbable" or "contrary to compelling inferences" (see [165] above), the Owners Corporation relied on the following matters: "(a) the undisputed 2010 emails between Ms Alexandrova and Mr Zaatini; (b) the uncontested testimony and finding (at J[29]) that Mr Saaib did not use a computer or email and typically communicated by telephone; (c) the uncontested testimony of Mr Saaib that he spoke regularly to Ms Alexandrova during 2010; (d) the evidence of Ms Alexandrova about her conversations with Mr Saaib during 2010; (e) the finding (at J[31]) and uncontested testimony that Mr Saaib and Mr Zaatini had a very close relationship and spoke virtually daily during 2010; (f) the finding (at J[36]) that Mr Saaib had introduced Ms Alexandrova to Mr Zaatini, such that Mr Zaatini knew that Ms Alexandrova had a working relationship with Mr Saaib; (g) the finding (at J[342]) and uncontested testimony that Mr Zaatini sent the Marrickville building contract naming Mr Saaib as the builder to Ms Alexandrova and did not make any request that Ms Alexandrova keep it secret from Mr Saaib, giving rise to the compelling inference that Mr Zaatini was not concerned about Ms Alexandrova speaking to Mr Saaib about him being the builder under that building contract; (h) the finding (at J[333]) and undisputed fact that there was no reason for Ms Alexandrova to keep the Marrickville building contract and insurance application secret from Mr Saaib, giving rise to the compelling inference that Ms Alexandrova spoke to Mr Saaib about him being the builder under the Marrickville building contract; (i) the findings (at J[328], and J[262]-[267]) and uncontested evidence that Mr Saaib signed the Eligibility Application form in blank, knowing that Mr Zaatini would complete the form with false information about Mr Saaib's home building experience and use it to apply for increased home building insurance eligibility on behalf of Mr Saaib, giving rise to the compelling inference that Mr Saaib gave authority to Mr Zaatini to complete on Mr Saaib's behalf whatever documents were necessary to obtain the Marrickville building contract and required home building insurance; (j) the finding at (at J[267]) that it was implausible that Mr Saaib did not seek to find out what happened to the Eligibility Application, giving rise to the compelling inference that he was told about the outcome of both the Eligibility Application and the home warranty insurance application given that they were both determined at the same time…". (References to appeal books omitted.)
These matters, whether taken individually or collectively, are in my view insufficient to render her Honour's finding glaringly improbable or contrary to compelling inferences. Rather, the finding was consistent with the significant unchallenged matters referred to at [167]-[171] above and with the other evidence.
I nevertheless add the following specific comments concerning the matters relied upon by the Owners Corporation, as listed in [172] above: 1. The Owners Corporation was unable to point to any email passing between Ms Alexandrova and Mr Zaatini in 2010 that contradicted her Honour's ultimate finding. Her Honour carefully analysed the emails that were in evidence in a way that was not shown to be in error. 2. That Mr Saaib typically communicated by telephone did not give rise to any compelling inference one way or the other as to the correctness of her Honour's ultimate conclusion. 3. This matter is the subject of Ground 1 which is addressed further below. It does not provide any significant assistance to the Owners Corporation's case. 4. Her Honour rejected the evidence of Ms Alexandrova, to the extent that it may have been relevant, for reasons that have not been shown to be erroneous. 5. The existence of a close relationship between Mr Saaib and Mr Zaatini was a relevant but not decisive matter, and was taken into account by her Honour. 6. (f),(g) These were relevant, but not decisive, matters which again her Honour took into account. 7. (h) Contrary to the Corporation's submission, this matter did not give rise to the compelling inference referred to. It was simply one matter that her Honour was obliged to, and did, take into account. 8. (i), (j) Her Honour took those matters into account but did not consider that they warranted rejection of Mr Saaib's evidence generally. In particular, her Honour did not regard his signature of the Eligibility Application form as necessarily indicating his involvement in the Marrickville project. It was open to her Honour to take that view in light of the explanation earlier given by Mr Saaib (see [127] above).
For these reasons, Ground 4 should be rejected.

[38]

DETERMINATION OF THE APPEAL IN THE ALEXANDROVA PROCEEDINGS

Ms Alexandrova's appeal against the primary judge's finding that she is liable in damages to the Owners Corporation was based on the four contentions that are described in [110] above.
As I consider that her causation ground (that the Corporation did not prove that it suffered loss that was caused by Ms Alexandrova's alleged misleading or deceptive conduct) should be upheld, it is unnecessary to deal with the other grounds.
As to the issue of causation, the primary judge noted that there was no evidence of what Transformer Group could and would have done absent the misleading and deceptive conduct and the issue of the home warranty insurance. Her Honour then concluded that Transformer Group "could not have proceeded with construction without that insurance and it seems reasonable to infer that it would have contracted with a licensed builder in order to do so" (J[505] quoted in [155] above).
As the Owners Corporation claimed damages from Ms Alexandrova under the Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law ("the ACL") and, alternatively, under the Fair Trading Act 1987 (NSW) (as in force before the commencement of the ACL, see [150] above), it was necessary for it to establish that it suffered loss "because of the conduct" of Ms Alexandrova (in the case of s 236(1) of the ACL) or "by" that conduct (in the case of s 68 of the Fair Trading Act).
The plurality in Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494; [1998] HCA 69 at [42] stated that in this context "that a comparison must be made between the position in which the party that allegedly has suffered loss or damage is and the position in which that party would have been but for the contravening conduct" but qualified that observation by indicating that the "but for" test embodied in it may not provide an answer to a causation issue in all cases.
The Owners Corporation relied on statements in I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109; [2002] HCA 41 at [33], [57] and [62] that it is sufficient that contravening conduct be a "material" cause of the plaintiff's loss, as distinct from the "sole" or "predominant" cause. In that case the Court was concerned with the reason or reasons the representee entered into the relevant transaction, not with the "but for" question relevant to that case of whether entry into the transaction was detrimental to it. The Court did not suggest that the latter question was not relevant. Rather, the answer was treated as obvious in light of the evidence in the case.
The parties in the present case did not otherwise suggest that a "but for" approach to the issue of causation was inappropriate. Rather, they differed as to what the outcome of adoption of that approach was in this case. The Court was referred by Ms Alexandrova to Abigroup Contractors Pty Ltd v Sydney Catchment Authority (No 3) (2006) 67 NSWLR 341; [2006] NSWCA 282 at [36] et seq for a consideration of the general concepts involved but that was a different case to the present in that it only involved what is a familiar inquiry as to what a representee, who sues the representor for damages, would have done if a misleading and deceptive representation had not been made to it. A similar inquiry had to be made in the present case but a further inquiry needed to be made as well.
As to the initial inquiry, it can readily be concluded in the present case that QBE, as the insurer's agent, would not have proceeded to have the insurance issued unless someone such as Ms Alexandrova had represented to it that Mr Saaib was the builder in respect of the Marrickville project and had authorised the application for insurance. Likewise, it is clear that if QBE had been told that those assertions were not accurate, it would not have proceeded to arrange the insurance.
Resolution of the causation issue in the present case however ultimately involves consideration of whether the Owners Corporation (through its predecessor, Transformer Group) would have obtained the benefit of valid insurance but for Ms Alexandrova's misleading and deceptive conduct. The Corporation needed to show what would probably have occurred in that circumstance. That involved postulating who would have sought the insurance as, or on behalf of, the builder. Those who did so in the events that actually occurred engaged in extensive dishonest and fraudulent conduct by forging Mr Saaib's signature on at least 24 documents (see [171] above). Can it be inferred that such conduct would not have been repeated?
I do not consider that there is any basis in the evidence for drawing in the Corporation's favour either of the inferences that might have resolved the causation issue in its favour.
First, there is no basis for inferring that if the same individuals, other than Ms Alexandrova, were involved in the hypothetical circumstance that they would have sought and obtained home warranty insurance by honest means. There was, for example, no evidence that the services of a suitably qualified builder were available and acceptable to them. The inference at least equally available is that a different name to that of Mr Saaib would have been dishonestly proffered to an insurer, or insurer's agent, or that different means would have been found to advance his purported application.
Secondly, there is no basis in the evidence for an alternative inference that if Ms Alexandrova had not been involved, or at least had not engaged in the conduct she did, that Transformer Group (whose actions are relevant because it is its rights to which the Corporation succeeded) would have engaged a completely different, and suitably qualified, builder. No evidence was called to suggest this and it seems an unlikely occurrence as the evidence did not enable any clear distinction between Transformer Group, Award Build and Mr Zaatini, some or all of whom seem to have been responsible for the forgeries and for the construction work that occurred, as well as being recipients of construction finance draw downs (see [170] above).
As consideration of how persons other than the representee would have acted is required, there is some analogy, albeit limited, to Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18 in which proof of causation in an action by an intended beneficiary against a solicitor involved proof of how the solicitor's client would have acted if the solicitor had not given the client allegedly negligent advice. The intended beneficiary's claim was for the loss of a chance (a claim that was eschewed in the present case). Even so, that intended beneficiary failed to discharge his onus of demonstrating that there was at least a substantial prospect that the client, who was not the representee, would have acted in a manner favourable to the intended beneficiary's interests (see [40] and also Mal Owen Consulting Pty Ltd v Ashcroft (2018) 97 NSWLR 1163; [2018] NSWCA 135 at [60]-[70]).
Returning to the primary judge's reasoning in the present case, it is certainly correct that Transformer Group could not have proceeded with the building work without home warranty insurance, as s 92 of the Home Building Act required the builder of a residential construction such as the Marrickville project to ensure that a contract of insurance that complied with the Act was in force. However I do not, with respect, agree with the primary judge that in the circumstances of this case it should be inferred that, absent the misleading and deceptive conduct that her Honour found, Transformer Group would have contracted with a licensed builder and would have obtained the benefit of a valid contract of insurance. For the Corporation to succeed on this point the Court would have to have had "a reasonable basis for a definite conclusion affirmatively drawn of the truth of which" it was reasonably satisfied (Jones v Dunkel (1959) 101 CLR 298 at 305; [1959] HCA 8). There is no such basis in the present case.
As I have indicated, a positive inference cannot be drawn that those associated with Transformer Group and/or Award Build would have acted any differently than they did in the circumstances that in fact occurred. When it became apparent that Award Build was not qualified to obtain home warranty insurance for the Marrickville project, persons associated with Transformer and/or Award Build caused the creation and utilisation of forged documents that created the charade that Mr Saaib, who was a licensed builder with the potential to obtain entitlement to the relevant home warranty insurance, was the builder in respect of the Marrickville project, or at least had authorised use of his name as such builder. As her Honour held in a finding that was not challenged on appeal, at least 24 documents involving the falsification of Mr Saaib's signature were created in relation to the Marrickville project. It is not necessary for present purposes to determine who precisely was responsible for this. It is sufficient to note that Mr Zaatini, Mr Joe Antoun and Mr Nemer Antoun were associated at the relevant time with Transformer Group and/or Award Build and that the evidence suggests that one or more of them was likely to have been responsible (see [106] and [114] above).
In these circumstances it cannot be concluded that, but for the assumed misleading and deceptive conduct, the Corporation would have obtained valid insurance. Any loss it suffered was thus not demonstrated to have been caused by that conduct.
As the primary judge found otherwise, the appeal should be allowed. It is unnecessary to address the Owners Corporation's Notice of Contention as it did not relate to the ground upon which I have found that the appeal should succeed.

The Owners - Strata Plan 87265 v Saaib; Alexandrova v The Owners - Strata Plan 87265

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