(c) Error in fact-finding
67 The trial judge found that Mr Betyounan was not Mrs Betyounan's agent to give instructions for drawing the $90,000 cheque in favour of Karl Suleman & Co. He found that if the appellant had sought instructions from Mrs Betyounan, Mrs Betyounan's instructions would have been such that it would not have happened. The findings were critical to the decision holding the appellant liable to the respondents for the $90,000. I do not accept the respondents' submission that the finding as to causation was not a necessary step, because the legal wrong was not misappropriation but breach of duty by failure to obtain instructions; and so there had to be determined what would have occurred if the appellant had sought instructions.
68 Although the appellant's complaint as to fact-finding applied more widely, the submissions focussed upon these critical findings.
69 If Mrs Betyounan had intended, together with Mr Betyounan, that part of the loan would be invested, and had known and intended that it would be put into a Suleman scheme in order to receive the high return, and together with Mr Betyounan had blamed the appellant for their imprudent investment and sought to recover it from her, that would be very material to authority and causation. From what Mr Betyounan told the appellant leading to the file note of 3 October 2001, it was clear that Mr Betyounan intended that part of the loan would be put into a Suleman scheme. On the appellant's case, his later account of a home loan from which $90,000 was withheld was a false account, and it could be inferred (in particular from Mrs Betyounan's involvement in the letter of 24 March 2002 and her writing of the letters in April and May 2002) that Mrs Betyounan was jointly involved with him in the intended investment and the subsequent falsity. If that were so, a finding that Mr Betyounan was acting with her authority was at the least enhanced, and it could hardly be found that she would have told the appellant, if instructions had been sought, that money should not be put into a Suleman scheme.
70 The appellant submitted that the trial judge failed to address or make findings on this important matter, and in particular declined to have regard to or resolve whether the Ex 5 approval letter and the Ex 2 settlement letter were fabrications prepared by the respondents. That they were fabrications by the respondents not only would assist in showing the falsity of the account jointly put forward by the respondents, but also would support that Mrs Betyounan was equally with her husband intent on putting money into a Suleman scheme. The appellant submitted that the critical findings were accordingly flawed.
71 There were substantial grounds for finding fabrication of the Ex 5 approval letter. However, it was not put to either Mr Betyounan or Mrs Betyounan that the Ex 5 approval letter was a fabrication, or that he or she had been involved in its fabrication. I do not think that the appellant can use fabrication of the copy letter against them.
72 The appellant referred in this connection to the statement by the respondents' trial counsel, after a short adjournment expressed to be in order that he might take instructions, that "consistent with the duty that I owe to the court" he did not "wish to press, or for your Honour to have regard, to the entry that appears on [the Ex 5 letter] as Loan Purpose: Home loan". The appellant submitted that this supported that the Ex 5 letter was a fabrication in which the respondents were involved. I do not think that the submission rises above speculation, and fabrication was still not put to the respondents even though Mrs Betyounan was later recalled to give further evidence.
73 The appellant is, however, on sound ground with the Ex 2 settlement letter. An expert report of Ms Michelle Novotny tendered in the appellant's case concluded that it was "the product of document manipulation by means of a physical and/or digital cut-and-paste superimposition method". Ms Novotny was not cross-examined. Plainly the respondents would not have wished to provide the Legal Services Commissioner with a copy of the settlement letter stating that a cheque for $90,000 had been drawn in favour of Karl Suleman & Co, when they said they knew nothing of Karl Suleman, and that a cheque had been drawn in favour of DMS or Zia George was in accord with their account. It was open to find that the respondents had brought about the fabrication. It was sufficiently put to both Mr Betyounan and Mrs Betyounan that they had falsified the copy letter.
74 The trial judge can not have accepted the account of a home loan from which $90,000 was withheld, but he made no findings upon the respondents' putting forward an incorrect account of their loan and mortgage transaction and what happened to the money. Nor so far as appears from his reasons did the trial judge give consideration in this connection to Mrs Betyounan's joint intention that money be put into a Suleman scheme, with the significance which that could have to authority and causation. The trial judge did not refer to fabrication of the Ex 5 approval letter. As to the fabrication of the Ex 2 settlement letter, the trial judge said -
"As to the versions of the letter of the 22nd October 2001, or the conversation between MV and DB in November 2001, on 6th December 2001, or the conversation between DB and Adam Zomaga on 7th December 2001 - all these matters post date the settlement of the loan on Friday 19th October 2001, and therefore, while mysterious and puzzling, in the light of my findings as to the telephone call on 3rd or 4th October 2001, the conference with DB on 3rd October 2001 and the evidence of Kay Horton as to instructions on or about 18th October 2001, there is no need to come to a concluded view of these matters.
It is certainly puzzling to compare the two letters dated 22nd October 2001. There is no doubt that exhibit 2 is not a copy of the original. It is clear on the face of this document, as well as on the basis of the expert report (Ex 11), that the original document is exhibit 1. Who produced exhibit 2, modifying the original letter, when and for what purpose, and in what circumstances are questions I do not need to determine. There is insufficient evidence to resolve these questions. The variation would not seem to advantage the position of MV in any way. I did not hear from Zia George or QLS or Karl Suleman. The modified letter could have advantaged the claim of the plaintiffs. It may have been produced by a third party - QLS, for example, after it received the yellow envelope delivered by DB. I simply do not know, and do not need to determine."
75 Findings as to, at the least, fabrication of the Ex 2 settlement letter were important to proper fact-finding, and I am unable to accept that there was insufficient evidence to enable findings. More widely, in restricting his findings in the manner he did the trial judge left incomplete the consideration which should have been given to authority and causation. The trial judge's findings on those matters were materially flawed.
76 The appellant submitted that the findings as to causation were flawed in another respect. For the reasons which follow, the submission should be accepted.
77 The respondents were represented at the commencement of the trial and while they gave evidence in chief and were cross-examined. Shortly after the conclusion of the cross-examination of Mrs Betyounan, the respondents terminated their counsel's retainer. A little later, without material progress of the trial, they terminated the services of their solicitor. The transcript showed Mrs Betyounan participating in discussion with the trial judge of the respondents' representation, and she gave further brief oral evidence before the proceedings were adjourned for some time.
78 When the proceedings re-commenced the respondents were again represented. Mrs Betyounan was recalled and, over objection, gave the evidence -
"Q. Had she told you that her husband was planning to invest with Karl Suleman, and had she told you that that involved 100 per cent risk and no guarantee, what would you have done?
A. If, if --
Q. No. If she told you that, what would you have done?
A. I would not go on with the loan. I would just cancel it."
79 Counsel for the appellant cross-examined. He received answers to the effect that Mrs Betyounan would not have agreed with any form of investment, even with bank or a building society, because "we not the type to invest"; that the money was to build their house; and that if the appellant had told her about Mr Betyounan's intended investment with Karl Suleman she would have vetoed it without speaking to him -
"I would have said to her, you are absolutely wrong, there is no such thing, and I would tell her to cancel the loan."
80 It appears that at the time no one realised that s 5D(3)(b) of the Civil Liability Act 2002 made inadmissible a statement by Mrs Betyounan about what she would have done. That point was made in submissions, and the trial judge said in his reasons -
"In her evidence in reply, RB had asserted that had she been informed by her solicitor that her husband was giving instructions to pay monies to Karl Suleman, she would certainly not have agreed to this; that she would have instructed her solicitor not to comply with such instructions. This evidence was led on the question of causation. It was not objected to at the time by the defendant's counsel. In fact, he cross-examined RB in some detail on her evidence. (Tr 205-7) However, despite failure to object, the Act makes clear that this evidence is not admissible, and I reject it."
81 The evidence in chief had been objected to, although not on the ground that s 5D(3)(b) made it inadmissible, and counsel for the appellant may have had little choice but to cross-examine. What evidence the trial judge intended retrospectively to reject is unclear. In the course of submissions he referred to rejecting the cross-examination, but the summation given by the trial judge appears to have some elements of the cross-examination. As appears from the passage next set out, he also appears to have acted on some of the evidence given in cross-examination. In particular, the passage includes "As she said, she was not a gambler"; Mrs Betyounan did not in fact say that she was not a gambler, and this must be a reference to her evidence that they were not the type to invest. As well, in saying that Mrs Betyounan appeared to have only a rudimentary understanding of the banking and finance systems the trial judge must have been referring to the lack of understanding she showed when asked in the cross-examination about putting the money in an account with a bank.
82 It is not satisfactory that the cross-examination was consequent on a ruling later reversed and it was left unclear what of the evidence was rejected upon the new ruling. However, the appellant's complaint went beyond this.
83 In his reasons on the question of causation to which I have earlier referred the trial judge said, and I repeat part of the passage earlier set out -
"To determine what RB would have done if the defendant had not been negligent, I must approach the question from the point of view of the second plaintiff (subjectively), and in the light of all the relevant circumstances. Section 5D(3)(a). [of the Civil Liability Act 2002].