Commonwealth Bank of Australia v Hamilton; Commonwealth Bank of Australia v Hamilton

[2010] NSWSC 1142

CITATION:	Commonwealth Bank of Australia v Hamilton; Commonwealth Bank of Australia v Hamilton [2010] NSWSC 1142
HEARING DATE(S):	30 September 2010
JUDGMENT DATE :	30 September 2010
JUDGMENT OF:	Price J at 1
EX TEMPORE JUDGMENT DATE:	30 September 2010
DECISION:	1. Admit documents 11 to 39. 2. Admit documents 40 to 59.
CATCHWORDS:	EVIDENCE - admissibility - coincidence evidence - whether significant probative value
LEGISLATION CITED:	Evidence Act 1995 s 98(1)
CATEGORY:	Procedural and other rulings
CASES CITED:	Harriman v R (1989) 167 CLR 590 Phillips v R [2006] HCA 4
PARTIES:	Commonwealth Bank of Australia Jason Hamilton Karen Hamilton Peter Webb Lawcover Insurance Pty Limited
FILE NUMBER(S):	SC 2007/263396; 2007/263397
COUNSEL:	Mr DA Smallbone and Ms LJ Freiwald Mr K Ginges Mr D Lloyd Mr SR Donaldson SC and Mr G Ng
SOLICITORS:	Gadens Lawyers (Commonwealth Bank of Australia) A. Luong & Associates (Jason Hamilton, Karen Hamilton) TressCox Lawyers (Peter Webb) Yeldham Price O'Brien Lusk (Lawcover Insurance Pty Limited)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

PRICE J

30 September 2010

2007/263396 COMMONWEALTH BANK OF AUSTRALIA v JASON HAMILTON

JUDGMENT

1 HIS HONOUR: The plaintiff has given two notices to the third defendant that it intends to adduce coincidence evidence under the coincidence rule, section 98(1) Evidence Act 1995.

2 The notices have been marked MFI C in the Karen Hamilton proceedings and MFI D in the Jason Hamilton proceedings. For the ease of convenience, I propose to refer to the coincidence evidence notice, MFI D.

3 The plaintiff contends that the two or more events that occurred, which are the subject of the proposed evidence are so similar in the events themselves and the circumstances in which they occurred that it is improbable that the events occurred coincidently and the purpose of the proposed tender is to prove that the third defendant did those particular acts which are detailed in paragraph 3(a) to (i) inclusive of the notice, and further to prove that he had a particular state of mind, which is detailed in paragraph 4(a) to (g) of the notice.

4 In view of the submissions, which have been made, it is appropriate that I refer to paragraphs 3 and 4 in further detail. The purpose of the evidence which is sought to be adduced is that Mr Webb did a particular act, namely:

(A) He did not seek or obtain from Jason Hamilton authority to give to
the Commonwealth Bank of Australia the cheque directions Mr Webb gave on or about 26 September 2005 in relation to the purchase of the property from Napier 888 Pty Limited.
(B) He did not seek or obtain from Jason Hamilton authority to direct
payments of funds advanced by the Commonwealth Bank of Australia into Mr Webb's trust account.
(C) He did not seek or obtain from Jason Hamilton authority to
disperse from Mr Webb's trust account funds that he had been paid in from the Commonwealth Bank of Australia's advance.
(D) He did not seek or obtain from Jason Hamilton authority to pay

those funds or any part thereof to Graham Lee.

(E) He did not seek or obtain from Jason Hamilton authority to pay those funds or any part thereof to any other person.

(F) He did not inquire of Jason Hamilton whether Jason Hamilton

understood that he was borrowing more money than what he was paying for the property.
(G) He did not inquire of Jason Hamilton whether Jason Hamilton
understood that he was consenting to the surplus funds not being directed towards the cost of the property.
(H) He decided not to seek or obtain any of those instructions from Jason Hamilton in person.
(I) He decided not to make any of those inquiries of Jason Hamilton in person.

5 The evidence has also sought to prove that Mr Webb had a particular state of mind, namely:

(A) That he understood that Jason Hamilton was entering into a property transaction that was not in Jason Hamilton's commercial interest, but rather was in the interest of Graham Lee.
(B) That he well knew that the interests of Graham Lee in respect of the transaction conflicted with the interest of Jason Hamilton.
(C) That he well knew that instructions that he received from Graham Lee in respect of the said surplus funds conflicted with the interests of Jason Hamilton and were not likely to be authorised by Jason Hamilton.
(D) That he well knew that it was his duty to inquire of Jason Hamilton in person whether the cheque directions and instructions in respect of the receipt and disbursement of the said surplus funds were authorised by Jason Hamilton.
(E) That at the time of giving the cheque directions and at the time of receiving the funds into trust, and at the time of dispersing them from trust he feared that if he inquired of Jason Hamilton in respect of those matters he would be informed that the directions and dealings with those funds were not authorised by him.
(F) That he communicated the said cheque directions to the Commonwealth Bank of Australia, received the said surplus funds into his trust account and dispersed them otherwise than to Jason Hamilton in each case without any honest belief that he was authorised so to act.
(G) That he well knew that the Commonwealth Bank of Australia was being misled as to the true purchase price of the property.

6 The substance of the evidence of the occurrence of the events the plaintiff submits is contained within the documents, which are attached to the notice and are numbered 1 through to 59. The third defendant does not object to the tender of documents one to ten. Documents one to five are those, which relate to the purchase by Jason Hamilton of Unit 12, 8 to 10 Lydbrook Street Wentworthville. Documents five to ten relate to the purchase by Karen Hamilton of Unit 13, 8 to 10 Lydbrook Street Wentworthville. The third defendant, however, opposes the balance of the documents.

7 The contention by Mr Lloyd is in short, that the documents could not say and do not say anything about Mr Webb's instructions and whether he had authority from his clients to do any of the matters referred to. Furthermore, it is said that even if those documents could be said to say something about instructions, they would not be relevant for the purposes referred to in the coincidence notice, which I have detailed. Reference is made to Phillips v The Queen [2006] HCA 4 and in particular, what was said by the High Court at paragraph 47.

8 It was further put that the evidence in any event could not have any probative value. In particular, that if it was found to have some probative value, that that probative value would not be significant.

9 On the other hand, Mr Smallbone contends that Phillips v The Queen can be distinguished. The coincidence notice, it is said, does not refer to the state of mind of the clients, but focuses on what Mr Webb did or did not do and what his state of mind was.

10 The principal contention is that the dealings demonstrate that Mr Lee was getting large advances, which Mr Webb must have known about, and about which he ought to have made an inquiry. Reference is made to Harriman v The Queen (1989) 167 CLR 590 and in particular to the judgment of Dawson J at page 597.

11 Section 98 sub section 1 of the Evidence Act is as follows:

“(1) Evidence that 2 or more events occurred is not admissible to prove that a person did a particular act or had a particular state of mind on the basis that, having regard to any similarities in the events or the circumstances in which they occurred, or any similarities in both the events and the circumstances in which they occurred, it is improbable that the events occurred coincidentally unless:
(a) the party seeking to adduce the evidence gave reasonable notice in writing to each other party of the party’s intention to adduce the evidence, and

(b) 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.”

12 The term probative value is defined in the dictionary to the Evidence Act to mean the extent to which the evidence could rationally effect the assessment of the probability of the existence of a fact in issue. All of the documents, which are the subject of the proposed tender were extracted from the third defendant's affidavit exhibit H. Documents 1 to 39 relate to the purchase of units at 8 to 10 Lydbrook Street Wentworthville, whereas documents 40 to 58 relate to the purchase of units in Hassall Street Parramatta. I propose now to consider the similarities of the circumstances of each transaction to the purchase by Jason Hamilton of Unit 12.

13 Helen Czyewska purchased Unit 2 in Lydbrook Street. Documents 11 to 16 relate to that transaction. The similarities are:

1. The third defendant acted as a solicitor in each transaction, both for the vendor, Napier, and for the purchaser.

2. In each transaction there was a purchase consideration recorded in the contract for sale which was subsequently substantially reduced in an undated deed.

3. The money advanced by the mortgagee was more than the consideration in the deed.
4. After settlement funds were transferred from the purchaser's trust account to Graham Lee.

14 The Renee Beresford-Maning transaction. Ms Beresford-Maning purchased Unit 3 in Lydbrook Street. Documents 17 to 22 relate to this transaction.

1. The third defendant acted as the solicitor in each transaction,
both for the vendor Napier and for the purchaser.
2. In each transaction the purchase consideration recorded in the contract for sale was subsequently reduced in an undated deed.
3. The money advanced by the mortgagee was more than the consideration in the deed.
4. After settlement, funds were transferred from the purchaser's trust account to Graham Lee.

15 The John Paul Christie transaction. Mr Christie purchased Unit 4 in Lydbrook Street. Documents 23 to 28 relate to this transaction. The similarities are as follows:

1. The third defendant acted as a solicitor in each transaction,
both for the vendor, Napier, and the purchaser.
2. In each transaction the purchase consideration recorded in the contract for sale was subsequently reduced in a deed.
3. The money advanced by the mortgagee was more than the consideration in the deed.
4. Written authority was signed or purportedly signed by the purchaser authorising Webb Lawyers to transfer the balance or surplus of funds from the purchaser's trust account to Graham Lee.
5. After settlement, funds were transferred from the purchaser's trust account to Lee.

16 The Peter Nolan transaction. Mr Nolan purchased Unit 5. Documents 29 to 33 relate to this transaction. The similarities are as follows:

1. The third defendant acted as a solicitor in each transaction,

both for the vendor, Napier, and for the purchaser.

2. In each transaction the purchase consideration recorded in the contract for sale was subsequently reduced in a deed.
3. The money advanced by the mortgagee was more than the consideration in the deed.
4. Written authority was signed, or purportedly signed by the purchaser authorising Webb Lawyers to transfer the balance or surplus funds to Graham Lee.
5. After settlement, funds were transferred from the purchaser's trust account to Lee.

17 The Adam Thomas Miller transaction. Mr Miller purchased Unit 9 in Lydbrook Street. Documents 34 to 39 relate to this transaction. The similarities are as follows:

1. The third defendant acted for both the vendor, Napier, and the

purchaser.

2. The price recorded in the contract for sale was subsequently reduced in a deed.

3. The money advanced by the mortgagee was more than the consideration in the deed.

4. Written authority was signed, or purportedly signed by the purchaser authorising Webb Lawyers to transfer the balance or surplus funds to Graham Lee.

5. After settlement, funds were transferred from the purchaser's trust account to Lee.

18 The similarities, which I have detailed in each of these events are so striking that it is improbable that the events occurred coincidentally. Whilst it is true that none of the documents refer to the instructions provided to the third defendant, the inferences which are to be drawn from the material before me, in my view, could rationally substantially effect the assessment of the existence of a fact in issue, namely whether the third defendant did the particular acts detailed in paragraphs 3 (a) to (i) and had the particular state of mind detailed in paragraph 4 (a) to (g). I propose to admit documents 11 to 39.

19 I now turn to consider the transactions, which are the subject of documents 40 to 59. I do note that there are differences between the circumstances of these transactions and the purchase by Mr Hamilton. These transactions relate to the purchase of units at 13 Hassle Street Parramatta. The vendor was not Napier, but TJS.

20 The events that occurred do not involve the reduction in the purchase price recorded in the contract for sale by a deed. The circumstances of similarity in each of the transactions are as follows:

1. The third defendant acted for the vendor and the purchaser.
2. The monies advanced by the mortgagee were more than the consideration for the purchase.
3. Written authority was signed by the purchaser authorising Webb Lawyers to release the balance of the funds to Mr Lee.
4. After settlement, funds were transferred from the purchaser's trust account to Lee.

21 Notwithstanding the matters of dissimilarity, in my view the similarities in each of these events are so striking that it is improbable the events occurred coincidentally. The evidence, in my view, could significantly rationally effect the assessment of the existence of a fact in issue, namely whether the third defendant did the particular acts detailed in paragraphs 3 (a) to (i) and had the particular state of mind detailed in paragraphs 4 (a) to (g). I propose to admit documents 40 to 59.

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