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

18. 266 CLR 56; [2018] HCA 40 RHG Mortgage Ltd v Rosario Ianni [2015] NSWCA 56 Twynam Pastoral Co Pty Limited v AWB (Australia) Limited [2008] FCA 1922 Watson v Foxman (1995) 49 NSWLR 315 Category: Principal judgment Parties: Matter 2021/83984: The Owners - Strata Plan 87265 (Appellant) Mr Tony Saaib (Respondent)

Matter 2021/140048: Ms Irena Alexandrova (Appellant) The Owners - Strata Plan 87265 (Respondent) Representation: Matter 2021/83984: Counsel: N Kidd SC / S Ahmed (Appellant) S Lawrance SC / M Fernandes (Respondent)

Solicitors: Mills Oakley (Appellant) Centurion Lawyers (Respondent)

Matter 2021/140048: Counsel: M Condon SC (Appellant) N Kidd SC / S Ahmed (Respondent)

Solicitors: Abbas Jacobs Lawyers (Appellant) Mills Oakley (Respondent) File Number(s): 2021/83984; 2021/140048 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity - Technology and Construction List Citation: [2021] NSWSC 150 Date of Decision: 1 March 2021 Before: Henry J File Number(s): 2016/382268; 2019/235463

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

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.

Judgment

1. 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.
2. 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).
3. 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.
4. 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]
5. 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.

Mr Saaib

1. 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.
2. 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.
3. 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.
4. 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]

Ms Alexandrova

1. Similar difficulties arose with respect to Ms Alexandrova. As with Mr Saaib, English was not her first language. [9] She also suffered from difficulty recalling the contents of conversations, to the extent that they were not recorded, some 10 years after the events. As a defendant, she too had an interest in a particular outcome of the proceedings.
2. The judge's findings with respect to Ms Alexandrova are sufficiently summarised in the following passage: "[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."
3. Again, the judge supported her conclusions with explanations and examples. It will be appropriate to deal with relevant aspects of these findings in respect of the particular topics addressed.
4. There was no challenge to the general findings as to Ms Alexandrova's credit and reliability, which were undoubtedly soundly based.

Admissibility of evidence

1. 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.
2. 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."
3. Exhibit H was a volume of material relating to the construction of the home at Mount Hay Road.
4. 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."
5. 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."

Brief chronology

1. 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.
2. 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.

Authority to sign contract

1. 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.
2. 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."
3. 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.
4. 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.
5. 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.
6. 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.

Ground 1 - communications with Ms Alexandrova

1. Ground 1 of the appeal challenged the rejection of Mr Saaib's evidence that he spoke to Ms Alexandrova "regularly" in 2010. The challenge was based on the proposition that Mr Saaib's evidence in that respect was unchallenged. It was, however, open to interpretation. So long as it is borne in mind that, as the judge had correctly noted, there was no record of outgoing calls from Ms Alexandrova's phone, nothing turned on that evidence. That there were communications at the key time was accepted.

Ground 2 - communication regarding the Marrickville project

1. More specifically, ground 2 took issue with the finding that Ms Alexandrova did not speak to Mr Saaib about the Marrickville project prior to 12 October 2010. However, I do not read the judge's reasoning at [319]-[325] as making that finding. Rather, the judge was not affirmatively satisfied that Ms Alexandrova discussed the Marrickville project with Mr Saaib, as opposed to discussing it with Mr Zaatini, at that time. The absence of the affirmative finding sought by the appellant does not demonstrate error. However, and more importantly, the absence of a finding as to the communications is of little relevance given, (i) that Mr Saaib introduced Mr Zaatini to Ms Alexandrova in 2010, (ii) the apparent purpose of the introduction, and (iii) the close communications between Mr Saaib and Mr Zaatini. The findings as to the later conversations, at [332] and [333], set out above, were firmly based in the evidence and support the appellant's case.

Ground 3 - how Mr Saaib understood the application he signed

1. Ground 3 took issue with the statement by the trial judge at [336] that she was "unpersuaded" that a reference to the Marrickville project in the communications on 13, 14 and 15 October and to the eligibility application which 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'." An affirmative finding, as noted above, may not have arisen from that material alone, but should have been made on the basis of the whole of the evidence. To that extent, ground 3 should be upheld.

Ground 4 - the ultimate issue

1. Ground 4 was a composite ground addressing the critical ultimate conclusion on the basis of 10 independent factors. It is appropriate to return to that when the other grounds have been addressed.

Ground 5 - absence of Jones v Dunkel inference

1. 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.
2. 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.
3. 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.
4. 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]

Ground 7 - supervising the building work

1. The final ground of appeal challenged the judge's finding that, although there was clear evidence, accepted by the trial judge, that Mr Saaib and Mr Zaatini spoke regularly and constantly through 2011 and 2012, there was insufficient material from which to infer that Mr Zaatini did building work under Mr Saaib's supervision.
2. That conclusion is said to have followed from the judge's rejection of the contention that Mr Saaib had authorised Mr Zaatini to enter into the 4 October 2010 contract. However, if that finding were set aside, it is not clear that the finding with respect to events of 2011 and 2012 would take the matter further. Whilst there may be grounds for an inference that Mr Saaib discussed the Marrickville project with Mr Zaatini during the course of its construction, that does not give rise to an inference that he attended at the site or took steps to supervise the work.

Ground 4 revisited

1. 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.
2. 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.
3. 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.

Notice of contention

1. Mr Saaib filed a notice of contention identifying a further ground upon which the decision of the trial judge should be upheld, namely: "It followed from the finding that the respondent did not undertake the Work leading to the construction of the Building (J [375]) that the respondent was not liable to the appellant for breach of the Statutory Warranties as alleged."
2. Mr Saaib submitted that it was an essential element of the case against him that he had "built the townhouses". Even if he had signed the 4 October contract, it was submitted, if he did not perform it, he could not be liable for breach of a warranty against defective performance contained in it. The judge said she could see "no basis on which it could be said that Mr Saaib undertook the work leading to the construction of the Marrickville property." [45]
3. However, it is not entirely clear what is meant by these propositions. The appellant's case was that Mr Zaatini undertook the work, but that he was in touch on a regular, almost daily, basis with Mr Saaib throughout 2011-2012 when the work was being undertaken, as the trial judge found. The available inference, which should be drawn on the probabilities, was that Mr Saaib and Mr Zaatini discussed the project, possibly among other things. The contention assumes that Mr Saaib did not have to physically construct the buildings, so long as he supervised the work of others. However, if his supervision was deficient, it did not follow that he was not responsible for the results. If the contract was concluded in his name with his authority, it may be inferred that he maintained responsibility. There is no evidence that there was any separate contract between the developer, the bank and some other builder, such as Award Build Pty Ltd.
4. The ground raised by the notice of contention should be dismissed.

Owners corporation's appeal

1. It follows that the appellant is entitled to a judgment against Mr Saaib. The amount of its damages was assessed by the trial judge and there has been no challenge to that assessment. Accordingly, with respect to Mr Saaib, the Court should make the following orders: 1. Allow the appeal. 2. Set aside the orders made in the Equity Division on 1 March 2021 as varied on 21 April 2021. 3. In place thereof, 1. give judgment for the Owners Corporation against Mr Saaib in the sum of $3,425,583.54, such judgment to take effect from 1 March 2021; 2. order that Mr Saaib pay the Owners Corporation's costs of the trial. 1. Order that Mr Saaib pay the appellant's costs in this Court.

Ms Alexandrova's appeal

1. 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.)
2. 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.
3. 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.
4. No order as to the costs of the appeal.
5. 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.
6. 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.
7. 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.

THE REGULATORY BACKGROUND

1. The primary judge summarised the regulatory background to the proceedings as follows: "[49] …pursuant to ss 92 and 99 of the Home Building Act 1989 (NSW), a builder is required to obtain home warranty insurance in relation to work to be done under a residential building contract before the building work is undertaken. In order to obtain home warranty insurance, a builder must first be licensed to undertake building work that requires home warranty insurance and be eligible to obtain home warranty insurance from an insurer to cover the value of the contract works or in respect of the type of building works to be undertaken. A builder's eligibility for home warranty insurance on building projects may be limited by dollar value and by type of works and a builder may apply to an insurer to obtain an increase in eligibility limits."

THE FACTUAL CIRCUMSTANCES

1. 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).
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.

THE PRIMARY JUDGMENT - THE SAAIB PROCEEDINGS

1. Success for the Owners Corporation in its proceedings against Mr Saaib was in practical terms dependent upon the Court's 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 and indicated that he gave his authority to her to obtain home warranty insurance in relation to the project. This was so because her Honour accepted evidence that the purported signatures of Mr Saaib on critical documents, including the 4 October Contract, were forgeries and found that there was no basis on which it could be said that Mr Saaib undertook building work in relation to the Marrickville project.

Ms Alexandrova's evidence

1. 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."
2. 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's evidence

1. 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.
2. 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."

THE PRIMARY JUDGMENT - THE ALEXANDROVA PROCEEDINGS

1. 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.
2. 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."
3. 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.
4. 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.

DETERMINATION OF THE APPEAL IN THE SAAIB PROCEEDINGS

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

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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."

Ground 1 - whether Mr Saaib and Ms Alexandrova spoke regularly

1. By this ground the Corporation challenged the primary judge's finding that the telephone call records in evidence supported her view that Mr Saaib and Ms Alexandrova were not in regular contact. Her Honour had said that by "regular" she was referring to something that was done "routinely or at uniform times". Mr Saaib gave evidence that he spoke to Ms Alexandrova "regularly" in 2010 but what precisely he meant by that was not clearly elucidated.
2. In any event, the challenged finding was of limited significance in that it did not address the question of what Mr Saaib and Ms Alexandrova spoke about, a subject her Honour dealt with elsewhere in her judgment.
3. Further, the limited telephone records in evidence in any event suggested that Ms Alexandrova spoke far more frequently to Mr Zaatini than to Mr Saaib and did not indicate that Ms Alexandrova was "in regular contact" with Mr Saaib in the sense identified by her Honour .
4. For these reasons, Ground 1 should be rejected.

Ground 2 - whether Mr Saaib and Ms Alexandrova spoke about Marrickville

1. By this ground the Corporation challenged her Honour's failure to be satisfied that Ms Alexandrova "spoke to Mr Saaib about the Marrickville project, his 'role' as builder or Mr Zaatini's authority in relation to documents naming Mr Saaib as builder in the terms in which he deposes or more generally in relation to those matters prior to 12 October 2010". One corollary of that failure to be so satisfied was a rejection of Ms Alexandrova's evidence of the First, Second and Third Saaib Conversations to which I have referred above in [120], [123] and [126].
2. That rejection was supported by her Honour's general reasoning which I have quoted in [146] above and by the following more specific observations: "[323] Ms Alexandrova's evidence of [the First, Second and Third Saaib Conversations] might not be inconsistent with the events at the time. However, there are no documents or call records referring to or evidencing the discussions and her evidence is, in my view, more likely to be a product of reconstruction (conscious or otherwise) rather than actual recollection. [324] The fact is that, as at 12 October 2010, there are no emails, calls records or other documents that refer to any communication between Ms Alexandrova and Mr Saaib in relation to the Marrickville project and/or Mr Zaatini. In addition, none of the Marrickville project-related documents that existed at that time had been signed by Mr Saaib. Indeed, the 4 October Contract was not signed at all but was simply an altered form of the Second Contract and likely the First Contract."
3. As no error in this reasoning was demonstrated, Ground 2 should be rejected.

Ground 3 - whether Mr Saaib understood any references to the Marrickville project in his conversations with Ms Alexandrova in October 2010 as references to the Eligibility Application and the prospect of future work

1. Mr Saaib's evidence that he had this understanding is not contrary to any evidence (other than that of Ms Alexandrova's), nor is it improbable. As her Honour held, he gave a plausible explanation for that understanding, namely, that he had been told that the Eligibility Application was needed in relation to possible future projects or jobs, not that it was needed because he was the builder in respect of the Marrickville project.
2. Ground 3 should accordingly be rejected.

Ground 5 - whether a Jones v Dunkel inference arose from Mr Saaib's failure to call Mr Zaatini as a witness

1. The primary judge declined to draw such an inference, being unpersuaded that Mr Zaatini was, at least at the time of trial, to be regarded as in Mr Saaib's "camp" or that it was natural for Mr Saaib to call him (see Payne v Parker [1976] 1 NSWLR 191 at 201; ASIC v Hellicar (2012) 247 CLR 345; [2012] HCA 17 at [169]). As her Honour held, it was clear that there was no ongoing relationship between Mr Saaib and Mr Zaatini. Indeed, 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. In evidence, Mr Saaib vehemently criticised Mr Zaatini as a "liar" and a "bullshit person".
2. This ground of appeal should in these circumstances be rejected.

Ground 6 - whether the evidence relating to the Leura project was admissible as tendency evidence

1. The evidence relating to the Leura project and the use to which the Corporation sought to put it are referred to in [148] and [149] above, as are the primary judge's reasons for concluding that the evidence did not have "significant probative value".
2. As her Honour recognised, the evidence concerning the Leura project was not admissible as evidence relevant to Mr Saaib's role in relation to the Marrickville project unless it had "significant probative value" (see s 97(1)(b) of the Evidence Act 1995 (NSW)). Although "s 97(1) does not… condition the admission of tendency evidence on the court's assessment of operative features of similarity with the conduct in issue" (Hughes v The Queen (2017) 263 CLR 338; [2017] HCA 20 at [39]), "there must ordinarily be some feature of or about the offending [in a criminal case, or the fact in issue in a civil case] which links the two together" (R v Bauer (2018) 266 CLR 56; [2018] HCA 40 at [58]).
3. For good reason, the primary judge was satisfied in the present case that 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 the Marrickville project that her Honour was required to determine.
4. No error having been shown, this ground of appeal should be dismissed.

Ground 7 - whether Mr Zaatini undertook the building work under Mr Saaib's supervision

1. This ground partially overlaps with matter (e) quoted in [172] above. It should be rejected at least for the reason that the glaring improbability that the Corporation sought to be established was expressly based upon the proposition that "Mr Saaib had authorised Mr Zaatini to enter into the Marrickville project building on Mr Saaib's behalf". The primary judge however rejected this proposition and I have rejected the challenge to that rejection (see [173] above).
2. As none of the Corporation's appeal grounds have merit, its appeal in the Saaib proceedings should be dismissed. In these circumstances it is unnecessary to address Mr Saaib's Notice of Contention by which he sought to uphold the primary judge on a ground additional to those given by her Honour.

DETERMINATION OF THE APPEAL IN THE ALEXANDROVA PROCEEDINGS

1. 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.
2. 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.
3. 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).
4. 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).
5. 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.
6. 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.

ORDERS

1. For the reasons given above, I propose the following orders:

In the Saaib proceedings (NSWCA No 83984 of 2021) 1. Dismiss the appeal. 2. Order the appellant to pay the respondent's costs of the appeal.

In the Alexandrova proceedings (NSWCA No 140048 of 2021) 1. Appeal allowed. 2. Set aside the orders made in the Equity Division on 1 March 2021. 3. Dismiss the Owners Corporation's amended summons filed in the Equity Division on 11 March 2020. 4. Order the respondent to pay the appellant's costs of the proceedings at first instance and on appeal.

1. GLEESON JA: I agree with Basten JA.

Endnotes

1. The Owners - Strata Plan 87265 v Saaib [2021] NSWSC 150 ("Judgment").
2. Judgment at [252].
3. Judgment at [255].
4. Judgment at [256].
5. Judgment at [254].
6. Judgment at [255].
7. Judgment at [259].
8. Judgment at [260].
9. Judgment at [236].
10. Affidavit, par 3.
11. Affidavit, par 34-37.
12. Tcpt, 06/02/20, p 242(28).
13. Tcpt p 244(3).
14. Judgment at [223].
15. Tcpt, p 243(15).
16. Judgment at [286].
17. (2000) 106 FCR 51; [2000] FCA 1886.
18. Z Cowen and P Carter, "The Admissibility of Evidence of Similar Facts: A Re-Examination", in Essays on the Law of Evidence (1956), at 106: see Jacara at [58].
19. Jacara at [67].
20. [2018] NSWSC 1884 at [336].
21. [2008] FCA 1922 at [13].
22. Twynam at [13].
23. Judgment at [26].
24. Judgment at [30].
25. Judgment at [24].
26. Judgment at [52]; the basis for the judge's reference at [53] to the second contract being dated 24 November 2009 is unclear.
27. Judgment at [102].
28. Judgment at [34], set out above at [41**].
29. Judgment at [36].
30. Judgment at [40].
31. Judgment at [334].
32. Judgment at [334].
33. Judgment at [322].
34. Judgment at [322].
35. (1959) 101 CLR 298; [1959] HCA 8.
36. Judgment at [350]-[351].
37. Judgment at [352].
38. Judgment at [352]-[353].
39. Tcpt, 06/02/20, p 237(25).
40. Tcpt, p 237(35).
41. Tcpt, p 357(38)-(50).
42. Tcpt, p 358(1).
43. Tcpt, p 354(20)-(25).
44. [2015] NSWCA 56 at [122] (Emmett AJA).
45. Judgment at [375]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 April 2022