Leader Computers P/L v Hakim and Wilson
[2009] SADC 94
•2 September 2009
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
LEADER COMPUTERS P/L v HAKIM AND WILSON
[2009] SADC 94
Judgment of His Honour Judge David Smith
2 September 2009
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES
GUARANTEE AND INDEMNITY
EVIDENCE - WITNESSES
EVIDENCE - BURDEN OF PROOF, PRESUMPTIONS, AND WEIGHT AND SUFFICIENCY OF EVIDENCE
Sydney corporation applied to plaintiff, a corporation based in Adelaide, to purchase goods on credit – plaintiff required a guarantee and forwarded a form of guarantee by electronic mail (email) to the Sydney Corporation – guarantee was returned by facsimile transmission (fax) apparently executed by the first defendant who was sole director and shareholder of the Sydney corporation – application was granted – plaintiff thereafter supplied goods to the value of $51,382.20 to the order of the Sydney corporation – Sydney corporation failed to pay for any of the goods and after four months was placed in liquidation – action to enforce guarantee and in the alternative for misrepresentational conduct.
First defendant claimed signature on guarantee was a forgery and denied any misrepresentational conduct – discussion of offer and acceptance and where and when contract of guarantee was made – discussion of whether rule in Jones v Dunkel applied because person who witnessed signing of the guarantee was not called as a witness – discussion of burden of proof and the distinction between legal and the evidentiary burdens of proof.
Held – Court had jurisdiction – rule in Jones v Dunkel had no application – there was a provisional or evidentiary onus which by reason of the state of the evidence shifted to the first defendant who failed to discharge it with acceptable evidence and on all evidence plaintiff proved on balance of probabilities that first defendant signed guarantee – order enforcing Guarantee and Indemnity against first defendant.
Fair Trading Act 1987 (SA) s 56, s 57; Trade Practices Act 1974 (Cth) s 52; Evidence Act 1929 (SA) s 30, referred to.
Entores Ltd v Miles Far East Corp [1955] 2 QB 327; Brinkibon Ltd v Stahag Stahl und Stahlwarenhandelsgesellschaft m.b.H [1983] 2 AC 34; Tallerman & Co Pty Ltd v Nathan’s Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93; Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR 366; Aviet v Smith and Searls Pty Ltd (1956) 73 WN (NSW) 274; W A Dewhurst & Co Pty Ltd v Cawrse [1960] VR 278; Hampstead Meats Pty Ltd v Emerson & Yates Pty Ltd [1967] SASR 109; Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR 366; Express Airways v Port Augusta Air Services [1980] Qd R 543; Reese Bros Plastics Ltd v Hammon-Sobelco Australia Pty Ltd (1988) 5 BPR 11,106; Pomery v Rural Hotels (1973) 5 SASR 191; Adami v R (1959) 108 CLR 605; R v Mazzone (1985) 43 SASR 330; Jones v Dunkel (1959) 101 CLR 337; Payne v Parker [1976] 1 NSWLR 191; Spence v Demasi (1988) 48 SASR 536; Cornwall v Rowan (2004) 90 SASR 269; Brown v Rolls Royce Ltd [1960] 1 All ER 577, considered.
LEADER COMPUTERS P/L v HAKIM AND WILSON
[2009] SADC 94Introduction
Between the 23rd March 2006 and the 12th May 2006 Leader Computers Pty Ltd (“Leader Computers”), supplied television sets, electrical goods and accessories at a cost of $51,383.20 to the order of BTN Group Pty Ltd (“BTN”). BTN failed to pay for any of the goods. On the 21st July 2006 BTN was placed in liquidation. Leader Computers claims the sum owing from Julie Bernadette Hakim, whom, it alleges, guaranteed BTN’s indebtedness to Leader Computers. Ms Hakim was then the sole Director and shareholder of BTN.
Ms Hakim denies that the signature on the Guarantee and Indemnity is hers. She claims it is a forgery. This is the primary issue.
Claims, Defences and Course of Proceedings
Leader Computers not only seeks to enforce the Guarantee against Julie Hakim but also pleads, in the alternative, a number of misrepresentational actions[1], against both her and the second defendant, Linda Wilson, who was a former employee of BTN. The alternative claims would arise for consideration upon a finding that that Guarantee is unenforceable against Julie Hakim, by reason, for instance, of forgery.
[1] Misrepresentation pursuant to the Misrepresentation Act 1972 (SA); Deceit; Estoppel; Misleading or Deceptive Conduct contrary to s 56 of the Fair Trading Act 1987 (SA) and s 52 of the Trade Practices Act 1974 (Cth) and Unconscionable conduct contrary to s 57 of the Fair Trading Act 1987 (SA).
On the 17th March 2008 Linda Wilson was declared bankrupt. The trustee of her estate in bankruptcy declined to take over the prosecution of her defence. Leader Computers has not obtained the necessary leave to further prosecute the action against her. However, it is accepted by the parties that it is Linda Wilson’s signature witnessing the alleged signature of Ms Hakim to the Guarantee. Despite attempts by the plaintiff to arrange for her to attend court and give evidence, she refused to do so. Accordingly, Linda Wilson took no part in the trial as either a party or a witness.
The pleaded defence of Julie Hakim is unhelpful. It does not specifically deny that Julie Hakim signed the Guarantee and Indemnity. Nor does it allege that the signature on the said document, which purports to be hers, is a forgery. It follows therefore that there are no particulars of that serious allegation of fraud. Nonetheless, at trial, Julie Hakim prosecuted the defence that she did not sign the Guarantee and that it was a forgery. In respect of the alternative claims, some technical pleading point is made that the various claimed causes of action were invalid. This was not pursued at trial. Rather, Ms Hakim at trial denied the alleged misrepresentational conduct.
Jurisdiction
The defence pleads clearly that this Court has no jurisdiction to entertain the action, because “... all the representations and conduct alleged in the plaintiff’s Statement of Claim are alleged to have been made or to have taken place in the State of New South Wales”[2]. This contention was specifically not argued at trial (310). It has no merit. I will deal with it immediately.
[2] See [2] of Defence.
This Court will have jurisdiction to entertain this action if the contract of Guarantee and Indemnity was formed here in South Australia. That can only be decided by applying the principles relating to offer and acceptance. Further, any action for a species of misrepresentation can be maintained in the jurisdiction where the conduct complained of, acted to misrepresent or mislead. I turn briefly to the principles relating to offer and acceptance.
The principles relating to offer and acceptance and the time and place of the formation of a contract, are clear and have been settled for many years. The general rule is that the time of formation of a contract is when the acceptance of the offer is actually communicated to the offeror. The place of formation of the contract is the place at which the acceptance is communicated to or received by the offeror[3]. A facsimile transmission, like its predecessor the telex, and for that matter a telephone call, is an instantaneous communication and so takes effect, like the verbal communication, at the time it is made and the place of formation of the contract is the place where the acceptance is received. The postal acceptance rule, which is to the contrary, does not apply to such instantaneous communications. In the 1955 English Court of Appeal decision of Entores Ltd v Miles Far East Corp[4] the general rule was applied to a telex. In that case, an offer was made by telex from the plaintiff in London to the defendant in Holland and accepted by the defendant by telex from Holland back to London. The Court of Appeal held that the resultant contract was made in and was actionable in, London. The Entores decision was not seriously doubted. Almost thirty years later in 1983 it was followed by the House of Lords in Brinkibon Ltd v Stahag Stahl und Stahlwarenhandelsgesellschaft m.b.H[5]. Such is the time-honoured approach in Australia[6].
[3] See Tallerman & Co Pty Ltd v Nathan’s Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93 per Dixon CJ and Fullagar J at 111 and 112.
[4] [1955] 2 QB 327
[5] [1983] 2 AC 34.
[6] See Aviet v Smith and Searls Pty Ltd (1956) 73 WN (NSW) 274; W A Dewhurst & Co Pty Ltd v Cawrse [1960] VR 278; Hampstead Meats Pty Ltd v Emerson & Yates Pty Ltd [1967] SASR 109; Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR 366; Express Airways v Port Augusta Air Services [1980] Qd R 543; see also Reese Bros Plastics Ltd v Hammon-Sobelco Australia Pty Ltd (1988) 5 BPR 11,106 per Gleeson CJ, with whom McHugh JA agreed, CA(NSW); and for a general discussion of this topic see Carter on Contract Vol 1 at 8445-8473.
The Electronic Transactions Act 2000 (SA), which would appear to apply to electronic mail (email) and to facsimile transmissions (faxes), has implemented the above common law principles. There is similar legislation in New South Wales.
With those principles in mind, it is clear that the contract of Guarantee and Indemnity became actionable in South Australia when the facsimile of the executed document was transmitted to and received at Leader Computers’ office in 165‑187 Franklin Street, Adelaide. Likewise, the alleged misrepresentational conduct constituted by telephone calls, facsimile transmissions and emails from BTN’s offices in Ultimo, became actionable in South Australia, when received by Leader Computers in Adelaide. The conduct became operative and acted to mislead or deceive, if that be proved, when it was received and at the place it was received.
This Court plainly has jurisdiction to entertain these actions.
Credibility and Reliability
Leader Computers called oral evidence from:
·Stephen Luke Randell – Account Manager;
·Pamela Gauci – Credit Controller; and
·Tony Monteleone – Solicitor.
In addition there were a number of documents tendered.
Julie Hakim gave oral evidence in her defence and in addition called David Sutherland Tully who was a salesman employed by BTN at the time material to this action. There were also documents tendered in the defendant’s case relating to Ms Hakim’s handwriting.
I accept the credibility and reliability of the witnesses called in Leader Computers’ case. Much of what they said, and the documents tendered through them, was unchallenged.
As far as the defendant Julie Hakim’s case is concerned, I accept as credible and reliable only what was said by David Tully. It was uncontroversial.
I do not accept as credible and reliable anything said by the defendant Julie Hakim, on material matters, unless it is supported by other acceptable evidence. She was evasive, vague, self-contradictory and obfuscating. Further, notwithstanding her legal obligations as Director, in an implausible way, she sought to distance herself from BTN’s dealings with Leader Computers. Under her direction, BTN came into the corporate market place traded for a short time then departed, under suspicion of insolvent trading and breaches of the Corporations Law, leaving no less than half a million dollars owing to a range of creditors, including the plaintiff[7]. More particularly, in relation to this action, within three months of arranging a credit account with Leader Computers, BTN “ran up” an account of in excess of $50,000 and paid not a cent of it. I will further particularise why I take such an adverse view of the credibility and reliability of Ms Hakim’s evidence as I traverse the evidence as a whole and make findings thereon.
[7] See Exhibits P18, P19 and P20.
Evidence – Findings of Fact
The following narrative constitutes my findings of fact. I will identify and resolve the conflicts as I proceed.
Parties – Nature of Businesses - Findings
Leader Computers is, and was, at the time material to this action, primarily a manufacturer of computers. In addition, it sold other electrical goods, including television sets and home entertainment systems. It sold these goods by wholesale and accordingly did not trade with the public but with businesses which did so. Its head office was, and is, at 165-187 Franklin Street, Adelaide. It also had offices in Queensland, New South Wales and Victoria (23).
Despite Ms Hakim’s evidence that BTN was started by her and incorporated by her in 1996 (112), the Certificate of Registration shows that BTN started its corporate life, under another name, on the 27th October 1995, then on the 24th September 1996 it changed its name to BTN Group Pty Ltd[8]. Julie Hakim, throughout the time material to this action, was the sole Director, secretary and shareholder of BTN[9]. The company’s principal place of business was, at first, North Sydney, then it moved to Mascot and by July of 2005 was headquartered in Suite 106, Level 6, 336 Wattle Street, Ultimo, New South Wales[10].
[8] See Exhibit P1.
[9] See ASIC Extract Exhibit P15.
[10] 114; see also Exhibit P15.
There were conflicts in the evidence about the nature of BTN’s business in March 2006 when it commenced trading with Leader Computers.
Ms Hakim’s evidence was that BTN commenced trading with a staff of three, selling, installing and maintaining NEC telephone systems to small to medium sized businesses (110). In 2004 she set about “growing the company” (110). By 2005 BTN had a staff of 25, which included a team of telemarketers, and it was not only selling, installing and maintaining NEC telephone systems but was selling plasma TVs as well as computers (110-113). Like the telephone systems, these other electrical goods, or at least the TVs, were also supplied by NEC (149). She said that in mid to late 2005, she decided to target the Adelaide market because the Sydney market was “flooded” (113). The telemarketing employees sought customers “in the Adelaide area” (114), and sales personnel were sent to Adelaide (113). This operation was managed from the company’s principal place of business in Ultimo. In March 2006 BTN opened a trading account with Leader Computers and commenced buying goods from them.
Leader Computers’ evidence as to this topic was materially different.
In March 2006 the Accounts Manager of BTN, Linda Wilson, telephoned Leader Computers and spoke to their Accounts Manager, Stephen Randell. Mr Randell said in his evidence, which I accept, that Linda Wilson told him, in reply to his request for information about the nature of BTN’s business, as follows:
·that BTN sold telecommunication plans (25);
·that BTN offered plasma TVs, home entertainment systems, computers and laptops as “sweeteners” to help seal the telecommunications deal (24, 25); and
·that there were “issues” with the supplies from NEC (24).
Ms Hakim, in her evidence, accepted that Ms Wilson, as Accounts Manager, had authority “to create credit accounts, trading accounts ...”[11]. What Ms Wilson said to Stephen Randell was said in the course of her employment and within the scope of her authority, as Accounts Manager and was admissible through Mr Randell on the topic of the nature of BTN’s business[12]. In any event, no objection was taken to its admission.
[11] 195; see also 118, 121, 158, 159.
[12] See Pomery v Rural Hotels (1973) 5 SASR 191.
Finally, Leader Computers contended that the inference reasonably arising from the evidence was that the “issue” mentioned by Ms Wilson was that NEC were no longer supplying because BTN had been unable to pay NEC for supplies. The evidence which gave rise to this inference included Julie Hakim’s own testimony to the effect that in 2006 NEC was threatening to enforce a guarantee against her and in the result she borrowed from her brother and paid NEC a sum of approximately $90,000[13].
[13] See Hakim 210, 211.
The above propositions were put to Ms Hakim.
Ms Hakim denied that BTN sold telecommunication or telephone plans (131). She, hesitantly, denied that she had an interest in a company which in 2006 sold such plans, but she accepted that at some other time, which she could not specify, that company may have sold such plans. She nominated the company as Tell Star Pty Ltd (“Tell Star”) (132). She could not recall that she was the sole Director, secretary and shareholder of that company in 2006 and was confronted with the ASIC Personal Name Extract to that effect, to refresh her memory[14]. She said that, at the relevant time in 2006, she was running BTN and was not active in Tell Star (133). But she then agreed that BTN’s sales personnel did offer customers Tell Star plans (133), but explained that “... they weren’t really working for Tell Star it just helped them with their sales ...”[15]. Further, on the 21st July 2006, at a meeting of creditors of BTN, Ms Hakim informed the meeting that BTN and Tell Star “... would sell package deals. BTN Group would sell and finance telecommunications equipment and Tell Star would sell airtime ...”[16]. Further, it is notable that in the report to creditors of the 12th July 2006 Tell Star was listed as a creditor of BTN to the tune of $81,194.90 and in the list of creditors its address was given as Suite 106, Level 6, 330 Wattle Street, Ultimo, New South Wales 2007, which of course is the principal place of business of BTN[17].
[14] See Exhibit P16; see also 132.
[15] 133, 144, 145.
[16] Exhibit P19 at 2.
[17] See Exhibit P18.
Ms Hakim denied that BTN offered “sweeteners”[18]. She explained why BTN added plasma TVs and such goods to its products in the following terms:
Q. The purpose of opening an account with Leader was to purchase principally plasmas –
A. Yes.
Q.- and associated equipment. How did the BTN Group company deal with plasmas. Why did they need plasmas.
A.Because we needed to compete in the marketplace. If your competitors are offering, we wanted to be unique in the marketplace. We wanted to be a little bit different to what our competitors are because Sydney is quite a cut-throat city. So we came up with the idea of adding more products to what we were originally selling.
(143)
[18] 118, 144, 145.
When asked if BTN charged the customer for say a plasma TV, she explained that it would be an “... all encompassing charge ...” (145). The following exchange took place in her evidence as to this topic:
A.The invoice included all equipment and if we supplied a plasma to the customer then the plasma was charged and put on the finance forms.
Q.Are you saying that you charged the customer for the provision of the plasma
A.Yes.
Q. Did you charge for that separately.
A. No.
Q. And the charge was an all encompassing charge.
A. That’s correct, RRPs.
Q. Would it be detailed in the invoice.
A. Yes.
Q. Have you got any such invoice.
A.No, but – we can from the finance companies that BTN dealt with. They have got all the BTN invoices and their details.
Q.Yes, but when you send your final bill to your customer –
A.Yes.
Q.- the plasma screen, for instance, if it was a plasma screen, would feature as one of the items supplied.
A.Yes.
HIS HONOUR
Q.So you have got invoices showing that.
A.BTN has invoices.
Q.No, your company. When you send a bill to your customer.
A.Sorry, yes, yes, but the bill wasn’t sent to customers because we never invoices customers, we invoiced the finance company. The equipment was financed and that was in the finance.
Q.In every instance it was financed.
A.Yes.
Q.So it would show on the bill to whatever finance company.
A.Yes.
Q.Do you have any of those.
A.No.
(145, 146)
As to why BTN changed from purchasing goods such as plasma TVs from NEC, Ms Hakim’s guarded response was as follows:
From my recollection we were dealing with NEC. NEC had plasmas as well but the plasmas provided from NEC weren’t as good quality, I suppose. I don’t know. I can’t recall but that’s from what I know now, that’s why they went to Leader. Also the freight, we saved on the freight but I cant answer you why Bob went to Leader or why Bob filled out a registration.
(149)
I characterise this response by Ms Hakim as “guarded” because she said that she was unaware until the end of April 2006 that BTN was buying such goods from Leader Computers (117) and so, while she did offer an explanation for the decision to change, she was “at pains” to make it clear that she played no part in the decision at the time it was made but learned of it later.
As to the issue of “selling plans” it can be seen from the above summary that, upon persistent questioning, Ms Hakim effectively changed her original position of outright denial and, by gradual steps, accepted that BTN was involved in selling plans for Tell Star. The relationship between Tell Star and BTN was never made clear, save that the statutory records of ASIC showed that Ms Hakim was the sole Director and shareholder of both corporations at the times material to this action.
Accordingly, I find that what Stephen Randell was told was correct and BTN was selling telephone or telecommunications plans. In particular, I conclude that BTN was involved in the business of selling such plans in the sense that it was either doing so on its own account or doing so on behalf of Tell Star.
Ms Hakim maintained her denial of offering “sweeteners”. That denial was not believable. Her explanation of the basis upon which goods, such as plasma TVs, were offered, and ultimately supplied, lacked commercial reality. She said that the plasma TVs, for instance, were sold as part of BTN’s product and that there was an all‑encompassing cost. She did not produce any invoices or documents supporting what she said. Further, she said that they were not separately invoiced to either the customer or the customer’s financier. They were delivered directly to BTN’s customer by Leader Computers apparently “sight unseen”. It is improbable that businesses would buy, or borrow to buy, such equipment, some consignments of which wholesaled at many thousands of dollars[19], without either first seeing the goods or knowing their cost. Ms Hakim’s evidence is wholly implausible, even putting aside the unconvincing way it emerged.
[19] See Exhibit P7.
Therefore, I find that BTN did offer goods such as plasma TVs as “sweeteners” to prospective customers. I again rely on the evidence of Stephen Randell as to what was told to him by Linda Wilson, but there is also the circumstantial evidence to which I have alluded which points to those goods being an inducement or a gift.
It is probable that Leader Computers became the supplier of such goods to BTN in March 2006 because there were difficulties with NEC. According to Ms Hakim, in about mid-2006 NEC was threatening to enforce a personal guarantee against her in respect of approximately $90,000 owed by BTN to NEC. The timing of the change to Leader Computers was approximately coincident with that threat. The irresistible conclusion is that the “issues with NEC”, mentioned by Ms Wilson to Mr Randell, were that NEC had stopped supply or was in some way resisting or restricting supply, because BTN was not paying. Indeed, subsequent history is consistent with that proposition. BTN did not pay its new supplier Leader Computers, even for the first plasma TV supplied, and it owed NEC approximately $90,000.00. Ms Hakim herself paid NEC with the help of a loan from her brother. I reject the explanation of Ms Hakim as to why BTN changed from NEC as quoted from the evidence above. It was obviously disingenuous. In it Ms Hakim unwittingly embarked on the false explanation as if she was directly involved in the decision – as she was on my findings, then having remembered her lines, namely that she played no part in any such decision, she added the qualification of having heard about it later.
I find that BTN sought supplies of, for instance, plasma TVs from Leader Computers in March 2006, not because of concerns about quality or savings on freight charges, but, rather, because NEC probably refused to supply.
In arriving at this trio of findings, I have, as indicated, dismissed as implausible the evidence to the contrary of Ms Julie Hakim, but I add, that what she said also lacked credibility, because it was variously evasive, ambiguous and less than the whole truth.
I now set out my findings as to the short-lived commercial relationship between BTN and Leader Computers.
Course of Trading Relationship
As I have previously indicated, on about the 21st March 2006 Stephen Randell, of Leader Computers, spoke with Linda Wilson, of BTN, on the telephone. Ms Wilson, on behalf of BTN, was seeking to purchase “... computers and home entertainment gear ... plasmas ... and things like that ...” (24). In response to his enquiry about the nature of BTN’s business, Ms Wilson told him that BTN:
·sold telecommunication plans (25);
·offered “home entertainment gear, computers, laptops things like that ... as sweeteners ... to help basically to seal the deal when they were selling telecommunications ...” (25); and
·was having “issues” with supplies from NEC (24).
In accordance with practice, Mr Randell forwarded by electronic mail (email) a Dealer Registration Form to BTN for completion (27). On the 21st March the completed form was returned by facsimile transmission (“fax”) and attached to it was a Certificate of Registration in respect of BTN as requested in the form itself[20]. The Dealer Registration Form appears to be signed by Bob Arandelovic. The contact persons at BTN were specified as Bob Arandelovic and Linda Wilson. Notably, the form indicated, inter alia, that the main focus of BTN’s business was “telecommunications”.
[20] 27; see also Exhibit P1.
On the 22nd March 2006, BTN’s application was approved[21]. Such registration entitled BTN to purchase goods, but only on a “cash on delivery” basis (30). After this registration process Linda Wilson enquired of Stephen Randell about terms of credit and in response to that enquiry he forwarded to her, by email, three documents; an Application for Credit, Leader Computers’ Terms and Conditions of Sale, and a Guarantee and Indemnity for execution[22]. Mr Randell explained that the three documents were “... actually the one electronic document ...” (32).
[21] 30; see also endorsement on Exhibit P1.
[22] 31; Exhibits P2, P3 and P4.
The Application for Credit (Exhibit P2) was returned, apparently completed by Linda Wilson, by fax, on the 23rd March 2006[23]. However, the Guarantee and Indemnity was not returned at that time (33, 34). Mr Randell explained that “... quite a few customers do try to avoid to send through the Indemnity ...” (34). Mr Randell then contacted “Lin” concerning the missing Guarantee and Indemnity and in response she apologised and said words to the effect that she would arrange for “her boss to do it” (34). Accordingly, on the 27th March 2006 the executed Guarantee and Indemnity was faxed from BTN to Leader Computers[24]. Mr Randell said that he noted that the printed name under the signature on the Guarantee was “J Hakim” which was also the name of the proprietor of BTN as recorded in the Application for Credit [25]. The Guarantee was dated the 20th March 2006[26].
[23] 32, 33; see also header endorsement Exhibit P2.
[24] 35; see also Exhibit P3.
[25] 35; see also Exhibit P2.
[26] Exhibit P2.
The Application for Credit, when received, was referred to Ms Pamela Gauci who was the Credit Controller at Leader Computers (76). It came to her attention on or about the 23rd March 2006 (78) before the executed Guarantee had been returned (78). As was the usual practice when no Guarantee was provided, Ms Gauci cursorily checked the trade referees[27] and approved a “fourteen day and $5,000 credit limit”[28]. On about the 27th March 2006 the executed Guarantee and Indemnity came to her attention and with the approval of the Managing Director Paul Kristoris the credit terms were expanded to $40,000 and thirty days[29].
[27] 79; see also Exhibit P9.
[28] 79; see also endorsement on Exhibit P2.
[29] 79; see also endorsement Exhibit P2.
Trading commenced immediately on the 23rd March 2006[30].
[30] 39; see also Purchase Orders P6.
For approximately seven weeks between the 23rd March 2006 and the 12th May 2006 BTN purchased goods on credit, such as plasma televisions and home theatre systems from Leader Computers. These goods were delivered to customers of BTN or perhaps Tell Star as “sweeteners” for unspecified agreements struck between the customer and one or other or both of BTN and Tell Star.
In particular, BTN faxed or emailed Purchase Orders for specified goods to Leader Computers who, in accordance with the instruction in the Order, shipped those goods direct to the customer[31]. Leader Computers forwarded the Tax Invoice for the individual purchase to BTN at its principal place of business in Ultimo in New South Wales[32].
[31] 39, 40; see also Purchase Orders Exhibits P6, P7 and P8.
[32] 40, 41; see also Tax Invoices Exhibit P5.
In April and May 2006 Ms Hakim became directly involved in the day-to-day business between BTN and Leader Computers. She contacted Leader Computers by telephone and by email concerning the late delivery of goods to a customer named Murray in Western Australia. Stephen Randell who was in charge of the BTN account (40, 41) said “Julie from BTN” telephoned and “... was a bit irate, irate with me ...” (44) over the matter. Mr Randell knew “Julie” was the “... big boss ...” (44). He said Linda Wilson, in particular, and also William Broughton, also an employee of BTN, had told him that “Julie” was the boss. He added that when he spoke with “Julie at BTN” on the telephone “... she made it fairly clear that she was the boss of the company ...” (52). Stephen Randell gave evidence, which I accept, about a number of telephone calls with “Julie” and, further, he identified the orders and the emails reflecting this contact and dealing with the resolution of the problem[33]. Ms Hakim did not contest this evidence[34]. I accept in particular that Ms Hakim first contacted Stephen Randell by telephone “before” the email of the 27th April 2006[35].
[33] 43-46, 51-56; Exhibits P7 and P8.
[34] 117, 174-9.
[35] 53, 54 and see also Exhibit P8.
On the 18th May 2006, BTN placed its last order with Leader Computers[36]. It seems from all the business records before me that this order was never filled. Because the account was overdue, it was referred to the Credit Controller at Leader Computers Pamela Gauci (83). On the 23rd May 2006, after some fruitless contact with BTN, Ms Gauci closed the account and trading then ceased[37]. BTN has not paid for any of the goods (87). Ms Hakim agreed that no payments were ever made (207).
[36] See Exhibit P8.
[37] 84-86; see also Exhibit P10.
The evidence of BTN’s indebtedness was in the end unchallenged. As at the 12th May 2006 it was indebted to Leader Computers in the sum of $51,383.20 which sum included some freight charges[38]. BTN is also indebted to Leader Computers for interest on that debt calculated in accordance with the agreed Terms and Conditions of Sale[39].
[38] 43, 87, 88; see also Exhibit P7.
[39] See [4.2] of Terms and Conditions of Sale, Exhibit P4; and see also Bank letter in respect of interest calculation, Exhibit P21.
BTN ceased trading generally in June 2006[40].
[40] See Report to Creditors Exhibit P18.
Julie Hakim called a meeting of the creditors of BTN on 21st July 2006 to resolve whether the company should be wound up. BTN’s debts were said to be $959,214.44 of which $500,469.15 pertained to trade creditors including Leader Computers[41]. In the meeting Julie Hakim was asked what was BTN’s relationship with Tell Star. The minutes[42] record, inter alia, as follows:
Deborah asked Ms Hakim what the company’s relationship with Tell Star Pty Ltd Limited (“Tell Star”) was.
Mrs Hakim advised the meeting that there was no direct relationship between the companies. However, from time to time the two companies would sell package deals. B.T.N. Group would sell and finance telecommunications equipment and Tell Star would sell “air time”.
[41] See Exhibit P18.
[42] Exhibit P19.
The meeting resolved to appoint liquidators. There is no prospect of any dividend being paid to creditors[43].
[43] See Exhibit P20.
There was little controversy over the above narrative which emerged largely from the plaintiff’s evidence but as can be seen included some acceptable input from Ms Hakim. The said narrative constitutes findings by me.
I turn to the first defendant’s evidence. I do not accept all of what she has said and so I will recount what she said and then make my findings as to it at the end.
Ms Hakim started her evidence by telling the Court that she was occupied as a Director of Xcelleron Pty Ltd (109). She then detailed her involvement with BTN. She acknowledged that she was the sole Director and shareholder (109). She described the early history of the company and the nature of its business (109-115). I refer to my previous findings as to that topic.
She said that her role in the company was “... just oversee all departments ...” (109). The evidence of David Tulley, who was the Customer Service Manager at BTN from about March 2005 until liquidation, was that there were weekly meetings of all departments including the accounts department which Ms Hakim attended (240-247). He also said that Ms Hakim was approachable and that there was interaction between her and the staff of BTN (248).
Ms Hakim agreed that she employed Linda Wilson as Accounts Manager from “... approximately March 2006 until approximately May 2006 ...” (137, 172). It is clear however and I find that Linda Wilson was still working at BTN on the 18th May 2006 because she processed an order on that day to Leader Computers[44]. Ms Hakim said, as I have previously indicated, that she delegated and authorised Linda Wilson to negotiate credit accounts with suppliers and order goods[45]. She agreed that Linda Wilson worked in an office which adjoined hers in the Ultimo premises of BTN (140).
[44] 178, 179; see also Exhibit P6 at 4.
[45] 115, 118, 121, 158, 195.
Ms Hakim asserted that she was not aware, at the time it happened, that BTN established a credit account with Leader Computers. I will come to the detail of what she said in due course. However, her evidence was that Linda Wilson, together with Bob Arandelovic, with no prior notice or reference to her, forsook NEC and negotiated the terms of trade with Leader Computers and further, with no instructions from her completed:
·the Dealer Registration Form (Exhibit P1);
·the Application for Credit (Exhibit P2); and
·the Credit Reference Form (Exhibit P9)
and then forwarded not only those documents to Leader Computers but also the contentious executed Guarantee and Indemnity (Exhibit P3).
Ms Hakim, as indicated, said that she did not sign the Guarantee and Indemnity[46] and that it was a forgery (124, 163).
[46] 124; Exhibit P3.
When shown the document, she said she recognised Linda Wilson’s witnessing signature but that the signature above “J Hakim” was not her signature (124). A copy of her six year old New South Wales driver’s licence bearing her signature[47], and a copy of her five year old passport which also bore her signature[48] was tendered through her with the object of demonstrating dissimilarity between those signatures and that on the Guarantee.
[47] 125; Exhibit D2.
[48] 125, 128; Exhibit D1.
There was no expert evidence called by either side as to the handwriting. In cross-examination Mr Randell, of Leader Computers, who could not have been familiar with Ms Hakim’s signature, was unexpectedly asked by counsel for Ms Hakim for his opinion about the similarities between the signatures on the passport (Exhibit D1) and the driver’s licence (Exhibit D2) on the one hand, and the signature on the Guarantee (Exhibit P3) on the other. Mr Randell hesitantly considered they were dissimilar but protested his ignorance of such matters (57‑66). He said in the end:
Q. It’s put to you that they’re very dissimilar. What do you say about that.
A.They are dissimilar. I probably wouldn’t say they’re very dissimilar, but that’s just my opinion. I don’t now enough about signatures to say these are completely different people or anything. I don’t know enough about that.
XXN
Q.Nobody expects that you give expert handwriting evidence. It’s just a simple question of comparing the handwriting and the signatures in the same way that you were asked some questions this morning and you answered those questions. So if you could have a look at Exhibit P2, second page of P2 where the signature ‘L Wilson’ appears, the signature on Exhibit P2 and P3 and you’re quite clear in stating that you believe you were asked to be the same.
A.Well they look the same. The ones with ‘Julie’ have kind of got the same strokes in them, but as I say I don’t know much about signatures. I couldn’t say with 100% certainty it’s signed by two different people because I don’t know enough. Some of the strokes kind of look like a J and a H to me, but that’s just me, that’s what I see, but as I say, I don’t know enough about it. I can’t comment.
(66)
It was permissible for Ms Hakim to put before the Court examples of her handwriting - in this case her signature, provided it be proved to be genuine. I accepted that it was[49]. However, on reflection, the said section should not be read as permitting a witness, who was neither an expert nor a person who had a previous knowledge of Ms Hakim’s signature, to venture an opinion about the authenticity of the signature on the Guarantee. The determination of that issue is for me as the tribunal of fact[50].
[49] See s30 of Evidence Act 1929 (SA).
[50] See Adami v R (1959) 108 CLR 605; see also R v Mazzone (1985) 43 SASR 330 at 337.
Accordingly, I disregard the evidence of Mr Randell. If I am in error as to this view, then I consider that Mr Randell’s evidence as to the comparison of the disputed writing lacks any probative value one way or the other.
Ms Hakim reinforced her evidence that she did not sign the Guarantee by adding:
·First, although purchasing commenced on the 23rd March 2006, it was not until late April 2006 that she became aware that Leader Computers was supplying goods to BTN; and
·secondly, although the executed Guarantee was forwarded from BTN to Leader Computers on the 27th March 2006, it was not until early May 2006 that she became aware of its existence.
Ms Hakim’s evidence to the above effect was anything but clear.
She said that she discovered that Leader Computers was a supplier in April 2006 (117), when a customer complaint was brought to her attention and in the result she, inter alia, spoke with Stephen Randell (117, 155). She explained that she would not have known before that because she was “not involved in the purchasing side ...” but delegated the creating of trading accounts and the ordering of goods to the Accounts Manager, Ms Linda Wilson (115, 118, 158). Then the emphasis in her evidence changed a little and she seemed to suggest that the catalyst to discovering that Leader Computers was a supplier to BTN was when Linda Wilson provided her with reports on the extent of BTN’s indebtedness to Leader Computers “... towards the end of April ...” (117, 118, 119, 161). Then on further questioning the date of discovery changed again slightly to “... around about the beginning of May after I got presented the invoices for Leader from Lin ...” (154, 155).
As to when she first sighted a copy of the executed Guarantee she said that occurred:
·“... around May 2006 ...” (122, 123);
·“... around the beginning of May ...” (155); and
·“... at some time near the start of May ...” (162).
The discovery by Ms Hakim of a forged document in which she personally guaranteed what she then knew was the considerable indebtedness of BTN to Leader Computers, ought to have filled her with alarm. After all, BTN was indebted to the previous supplier, NEC. She said she was “... traumatised ...” by her discovery (172). She said that the following occurred or in some instances did not occur:
·she did not report the matter to the police (125, 163);
·BTN continued to trade with Leader Computers or sought to do so. Orders by BTN dated the 12th May 2006 were filled by Leader Computers (see Exhibit P7), there was email correspondence of the 16th and 18th May 2006 (178), and as late as the 18th May 2006, BTN was still ordering goods from Leader Computers[51]. When questioned about this the following exchange occurred between cross-examining counsel, Mr Stathopoulos, and Ms Hakim:
[51] 178, 179; Exhibits P6 and P8.
Q. Not only that, but you allowed the company to continue to trade with Leader Computers, did you not.
A. The intention of the company was to pay its bills in May.
Q. I didn’t ask about the intention of the company, I asked whether you allowed the company to continue to trade with Leader Computers after you found out that there was an apparent guarantee and indemnity signed by you and witness by Lin Wilson.
A. I can’t recall the purchase order dates on that. I can’t recall the dates on the purchase order when the last transaction with Leader Computers – it was all around about May.
Q. The question was that you allowed the company to continue to trade after you had found out that there was a guarantee and indemnity signed by you and witnessed by Lin Wilson.
A. But I can’t answer that.
Q. You don’t know that.
A. No, you’re telling me that I allowed them to keep trading with Leader after I found out. Now I can’t answer that because I don’t recall – I did not send any purchase orders to Leader to keep ordering from Leader.
(163, 164)
Later in her evidence Ms Hakim said that upon discovery of the forgery she “personally” did not send any orders to Leader Computers and that she did call a halt to further dealings (173, 174). However, even later in her evidence the following inconsistent and ambiguous exchange occurred with cross-examining counsel:
Q. Your evidence yesterday was that when you found out that the existence of the guarantee and indemnity, you stopped trading with Leader. Now there’s no communication from you to Leader about that to that effect, is there.
A. That’s correct.
Q. I suggest to you that the reverse was the case, that Leader actually stopped trading with you.
A. That’s correct.
Q. You agree.
A. I don’t know, I didn’t really deal with Leader at all.
Q. Leader stopped trading because your account had become delinquent.
A. I can’t answer that because I was not involved with Leader.
(214)
·She did not take any meaningful action against Linda Wilson whom she agreed was the prime suspect (125).
When it was suggested that BTN continued to employ Linda Wilson for some time after the discovery, Ms Hakim rather benignly said that she did not “... recall the dates she ceased with us ...” (162). In an unconvincing way she claimed that “... I did try to get hold of Lin. I tried to contact her several times and couldn’t get hold of her. She never returned to work and I never saw her since me sighting these documents ...” (126). However, Ms Hakim contended that she discovered the alleged forgery was in “about the beginning of May 2006 and, as indicated above, the records of Leader Computers show that Linda Wilson sent an email and placed and order for BTN with Leader Computers as late as the 18th May 2006[52].
[52] Exhibits P6 and P8; see also 178, 179.
Nor did she institute any proceedings against Linda Wilson or prosecute any form of cross-claim against her in this action (189).
·She agreed that she did not notify Leader Computers of the forged Guarantee. She said in explanation:
Q. When you saw those documents, you would have known that that was Leader’s requirements for extending credit.
A. Yes.
Q. And yet you say you’re discovered this guarantee and indemnity and you don’t do anything about notifying Leader.
A. After discovering those documents I had to seek my legal to find out what’s happened, how could she have done that, why did she sign it, what can we do. My intentions with all the creditors was still trading and still paying all the bills
(180)
·She agreed that the first legal letter raising the question of forgery was a letter from her solicitors Klonis & Co Lawyers, dated the 23rd August 2006, in which they on her behalf challenged the lodgement of a caveat by Leader Computers over a property owned by her in Sydney[53]. Ms Hakim sought to counter that by asserting that she had raised the issue of the forged Guarantee at the creditor’s meeting of the 21st July 2006. When shown the minutes of that meeting in which no such topic was mentioned (Exhibit P19) she then said that it could have been at the later meeting on the 7th March 2007[54].
[53] 180; see also Exhibit D1.
[54] Exhibit P20; see also 180-189.
The further history of the relationship of BTN and Leader Computers, culminating in BTN being placed in liquidation is clear and is the subject of my previous findings.
The sum claimed is still outstanding.
What remains now is to make findings about the defence evidence which I have merely summarised above.
I reject Ms Hakim’s evidence that she was not aware of BTN opening a trading account with Leader Computers or the reasons for doing so. Her evidence that Linda Wilson and to a lesser extent Bob Arandelovic undertook that without her knowledge is manifestly improbable. In her early evidence Ms Hakim said her role in BTN was “... overseeing all departments ...” and her witness David Tulley supported that. It is inconceivable that Linda Wilson, who could only have been working for BTN for a matter of weeks at that time, even with some input from Mr Arandelovic, could have made such an array of decisions necessary to effect the change of supplier from NEC to Leader Computers. There was considerable detail required by Leader Computers as a pre‑condition to establishing the account. For instance, without consulting Ms Hakim, how would Ms Wilson have completed the Credit Reference document, which required disclosure of trade referees (Exhibit P9)? The evidence of Ms Hakim about how Ms Wilson could have known of detail concerning the referees is unconvincing in the extreme (190, 191). Accordingly, I reject the contention that a new employee such as Ms Wilson could and would make such important decisions about the affairs of BTN without consulting with the owner of the company, Ms Hakim, who shared an adjoining office and was, on Mr Tully’s evidence, approachable.
I reject also the evidence of Ms Hakim that some person, probably Linda Wilson, forged her signature on the guarantee. The arguably dissimilar handwriting on the passport and driver’s licence does not establish that the signature on the Guarantee and Indemnity is not that of Ms Hakim. Indeed, though it is completely a matter for me, I agree with that part of Mr Randell’s evidence to the effect that there are some similarities in the handwriting. However, I do not and cannot decide the question of the enforceability of the Guarantee on the basis of the handwriting.
Further, I necessarily reject the assertion by Ms Hakim that for over a month she was unaware that BTN purchased goods from Leader Computers. She was forced to acknowledge that she learned of the existence of Leader Computers, as a supplier, by about the 27th April 2006 because there existed incontrovertible evidence, in the form of business records of both BTN and Leader Computers establishing that she was personally contacting Leader Computers and in particular Stephen Randell.
What Ms Hakim did or rather did not do after the beginning or start of May 2006 is inconsistent with her being “traumatised” by discovering that there was a forged guarantee in her name securing the debts of the impoverished BTN. I find that she:
·did not report the forgery to the police;
·permitted BTN to continue to trade with Leader Computers until Leader Computers itself put a stop to the trade;
·continued to employ Linda Wilson and did not remonstrate with or make any claims or institute any proceedings against her even by way of cross-claim in this action; and
·did not seek to challenge the guarantee until her own property in Sydney was put in jeopardy.
This evidence of what happened after early May 2006 belies Ms Hakim’s claim that she was the aggrieved victim of a forgery. In strict evidentiary terms the united force of this aftermath evidence is manifestly inconsistent with her claim of forgery.
Finally, I would reject Ms Hakim’s evidence on material matters for the reasons I have set out under the heading Credibility and Reliability. Her evidence was internally inconsistent unreliable, incredible and untruthful.
Accordingly, I do not accept Ms Hakim’s denial of having signed the Guarantee and Indemnity and her denial of having knowingly traded with Leader Computers from late March until the 12th May 2006.
There remains the question of whether the plaintiff’s evidence, which I accept and find is true, supplemented in places by some concessions made by Ms Hakim, proves on the balance of probabilities that Julie Hakim signed the Guarantee and Indemnity or, if not, whether any of the alternative misrepresentational claims have been proved.
Some applicable legal principles
Before answering the above questions, it is necessary to direct myself about the application of the rule in Jones v Dunkel[55] and the principles relating to the burden of proof and the discharge of it.
[55] (1959) 101 CLR 337.
I have considered the legal arguments of counsel for Ms Hakim, Mr Royle. One requires some attention. He argued, inter alia, that as a result of the plaintiff not calling or at least not subpoenaing Linda Wilson – to give evidence as to the signature she witnessed – the rule in Jones v Dunkel (supra) applied such that I should draw an inference adverse to the plaintiff’s case (266).
The rule in Jones v Dunkel is that “... the unexplained failure by a party to give evidence, to call witnesses, or to tender documents or other evidence may, not must, in appropriate circumstance lead to an inference that the uncalled evidence would not have assisted that party’s case ...”[56].
[56] See Cross on Evidence 3rd Aust Ed 1986 at 35, 36.
It is not sufficient for the appellant to merely draw attention to witnesses who could have been called but were not and leave it at that. The circumstances which lead to the inference are:
·that evidence was not tendered which was within the power of one of the parties, as opposed to the other, to tender and that further it was expected and natural for that party to produce it[57]; and
·that the uncalled evidence would have had the capacity to elucidate or put a true complexion on a matter of controversy between the parties[58]
[57] See Payne v Parker [1976] 1 NSWLR 191 per Glass JA 201-2; Spence v Demasi (1988) 48 SASR 536 per Cox J at 547, 548.
[58] See Payne v Parker (supra) per Glass JA at 201-2.
As indicated, counsel for the first defendant’s initial submission was that an adverse inference should be drawn. So too, some authorities and often in submissions, it is said that an adverse inference arises. That is not so if the natural meaning of adverse, namely damaging, is intended. The original articulation of the rule set out above makes that clear. This point is excellently exemplified by the case of Cornwall v Rowan[59] and, in particular, the following comments of the court at 414 and 415:
The trial judge was correct to observe that failure to call Ms Heath may lead to an inference that her evidence would not have assisted the case of the State appellants: Jones v Dunkel per Kitto J (at 308), Menzies J (at 312) and Windeyer J (at 320-321). However, the principle does not permit an inference that the uncalled evidence would in fact have been damaging to the State appellants. It cannot convert suspicion or conjecture into an inference, and cannot be used to prove facts for which there is no other evidence; Jones v Dunkel. At 304-305 Dixon CJ said:
"In an action of negligence for death or personal injuries the plaintiff must fail unless he offers evidence supporting some positive inference implying negligence and it must be an inference which arises as an affirmative conclusion from the circumstances proved in evidence and one which they establish to the reasonable satisfaction of a judicial mind ... But the law ... does not authorise a court to choose between guesses, where the possibilities are not unlimited, on the ground that one guess seems more likely than another or the others. The facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied."
Therefore without the necessary factual foundation, an inference as to Ms Wighton’s attitude to Ms Rowan cannot be drawn from the failure of the State appellants to call Ms Heath. See also Payne v Parker [1976] 1 NSWLR 191 at 194; West v Government Insurance Office of NSW (1981) 148 CLR 62. There was no such admissible evidence in this case, and the failure to call Ms Heath did not, therefore, assist Ms Rowan.
[59] (2004) 90 SASR 269.
Returning to the articulation of the rule itself, it can be seen that it has no application in this case. First, Linda Wilson’s evidence was not within the power of the plaintiff as opposed to the first defendant to adduce. Put another way, she was not necessarily “in the plaintiff’s camp” but could be regarded as available equally to both sides[60]. Indeed, Linda Wilson had been sued by the plaintiff and only her bankruptcy saved her from participation in this action. It might be reasonable therefore to infer that she would not be enamoured with the plaintiff. On the other hand, as I have indicated, there were no contribution proceedings or a cross-action against her by the first defendant. And so, it was not necessarily expected or natural for the plaintiff to tender her evidence to the Court.
[60] See Spence v Demasi (supra).
Further, the failure to call Ms Wilson was explained in evidence by the solicitor Toni Monteleone. He said that he, on behalf of the plaintiff, requested that she be available for evidence and on behalf of the plaintiff offered to pay the cost of her fare to Adelaide and accommodation here but she refused (97).
Finally, I note that s31 of the Evidence Act 1929 (SA) applies to this document. It permits a party to prove an instrument by means other than calling a person who witnessed the signature. Section 31 provides:
31It shall not be necessary to prove, by the attesting witness, any instrument to the validity of which attestation is not requisite; and such instrument may be proved by admission or otherwise, as if there had been no attesting witness thereto.
The plaintiff here contends that there is other evidence besides the evidence of the person who has witnessed the signature, which proves the Guarantee and Indemnity. I shall return to this.
I now turn to the principles relating to burden of proof.
It is trite to say that the plaintiff, Leader Computers, bears the onus to prove on the balance of probabilities that the Guarantee and Indemnity is enforceable against the first defendant, Julie Hakim. That is, the legal burden of proof and it remains upon the plaintiff throughout. There is however an evidential or provisional burden which may apply and may shift from the plaintiff to the defendant. A plaintiff will at the outset of a trial bear both the legal burden of proof and the evidential burden. As evidence is adduced by the plaintiff an evidential burden may arise and shift to the defendant who may fail if he or she does not address it with acceptable answering evidence. However, in the end, the Court must be satisfied that the plaintiff has proved its case on the balance of probabilities[61].
[61] See Halsbury’s Laws of England Vol 17 (1) 4th ed [417]-[422].
The House of Lords decision in Brown v Rolls Royce Ltd[62] explains the difference between the legal burden, which is imposed by the law, and the provisional burden, which is raised by the state of the evidence. The appellant was employed by the respondent where his hands were constantly in contact with oil. He contracted dermatitis. He sued the respondent in negligence contending that if the respondent had supplied him with barrier cream, as protection, as was commonly supplied by other employers to men doing similar work, then he would not have contracted the dermatitis. The appellant, at trial, bore the onus of proving, on the balance of probabilities, that the respondent was negligent in not supplying the cream and that the failure to do so caused the dermatitis. The appellant failed to establish negligence and an appeal to the House of Lords was dismissed unanimously. At 581 and 582 Lord Denning said:
My Lords, the difference between the judges of the Court of Session turned on the onus of proof. The majority of them ... thought that the burden was on the appellant to prove that the respondents were negligent and that, looking at the case at the end of the day, the appellant had not discharged that burden. The minority ... thought that, once the appellant proved that the respondents and not followed the common practice of the trade in supplying barrier cream, the burden shifted to the respondents so that they would not escape liability unless they proved ... that, even if they had adopted the common practice and supplied barrier cream, it would have done no good. This difference of opinion shows how important it is to distinguish between a legal burden, properly so called, which is imposed by the law itself, and a provisional burden which is raised by the state of the evidence. The legal burden in this case was imposed by law on the appellant. In order to succeed, he had to prove that the respondents were negligent and that their negligence caused the disease. ... In order to discharge the burden of proving negligence, the appellant proved that
“barrier cream is commonly supplied by employers to men doing such work as the [appellant] was doing.”
This was a cogent piece of evidence and raised no doubt a “presumption” or a “prima facie” case, in this sense, that, if nothing more appeared, the court might well infer that the respondents were negligent, and in that sense it put a burden on the respondents to answer it. But this was only a provisional burden which was raised by the state of the evidence as it then stood. The respondents might answer it by argument, as, indeed, they did, by pointing out that “there is no evidence as to what, if any, other precautions these employers take”; or the respondents might answer it by calling evidence themselves, as, indeed, they did, by proving that they “relied on their medical officer, Dr. Collier, who exercised proper care and skill” and they carried out the precautions advised by him. In this way a provisional burden may shift from one party to the other as the case proceeds or may remain suspended between them. But it has no compelling force. At the end of the day, the court has to ask itself – not whether the provisional burden is discharged – but whether the legal burden has been discharged, that is to say: Has the pursuer proved that the defenders were negligent?
...
That is not a proposition of law at all, but only a proposition of good sense. ... If defenders do not follow the usual precautions, it raises a prima facie case against them in this sense, that it is evidence from which negligence may be inferred, but not in the sense that it must be inferred unless the contrary is proved. At the end of the day, the court has to ask itself whether the defenders were negligent or not. It is sufficient if there is a greater probability on one side or the other’ but if, at the end of the case, the evidence is so evenly balanced that the court cannot come to a determinate conclusion, the legal burden comes into play and requires the court to reject the case of negligence against them.
[62] [1960] 1 All ER 577.
The Rolls Royce case is a clear example of an evidential burden arising from the appellant’s evidence which was then taken up and discharged by acceptable answering evidence from the respondent such that the court, upon assessing the evidence as a whole, came to the conclusion that the appellant had not discharged the legal burden.
Decision
I now apply the above principles to the found facts in this case.
The facts, as found by me, are clear. For the sake of convenience, I set out a summary of them.
On about the 21st March 2006 in the ordinary course of business BTN sought to open a Credit Trading Account with Leader Computers. By the 27th March 2006, BTN’s duly authorised officers, in particular, Linda Wilson, had provided to Leader Computers the requisite documentation including a Guarantee and Indemnity which document was ostensibly executed by a “J Hakim”. The signature of J Hakim was witnessed by Linda Wilson, who was the Accounts Manager at BTN. The sole Director and shareholder of BTN was, at the time, one Julie Hakim, who indeed acted as the Chief Executive Officer of BTN at all material times and in particular interacted with Leader Computers. Credit facilities were granted by Leader Computers to BTN. A normal trading relationship subsisted between the two corporations, save of course that BTN did not ever pay Leader Computers for the goods which were supplied. Julie Hakim was personally involved in the ongoing business between the two corporations. Business continued until the 23rd May 2006 by which time BTN was indebted to Leader Computers in the sum of $51,383.20. Indeed, to date no payments have been made and there is no prospect of any.
By the said Guarantee and Indemnity Julie Hakim personally guaranteed the indebtedness of BTN to Leader Computers.
The facts, found by me, establish a strong “presumption or a prima facie case”[63] that it was the first defendant, Julie Hakim, who signed the Guarantee and Indemnity (Exhibit P3). Such being the state of the accepted evidence an evidential or provisional burden then shifted to the defendant to establish, for instance, that the signature on the Guarantee was forged. No acceptable evidence material to that issue was adduced by the first defendant. I confirm, what is obvious from my findings, that save for some peripheral matters, I have rejected much of Ms Hakim’s evidence. It is as if the first defendant has adduced no evidence at all in respect of that material issue.
[63] See Rolls Royce (supra) at 581 per Lord Denning.
I find on consideration of all the acceptable evidence that the plaintiff, Leader Computers, has satisfied the legal burden and has proved on the balance of probabilities that the first defendant signed the Guarantee and Indemnity (Exhibit P3).
In the circumstances, in view of my categorical findings as to the primary cause of action, there is no need to consider the alternative claims.
Final Orders
On the 23rd July 2009 I announced this decision without publishing reasons for it (but reserving the right to do so) because I was made aware of a hearing in New South Wales relating to caveat proceedings which I understood was dependant on my decision in this action. I now confirm the findings and declarations I then made and set them out hereunder. I confirm that on the 23rd July 2009 I found and declared as follows:
·that the first defendant executed the Guarantee and Indemnity (Exhibit P3) and is bound by its terms and in particular the charge in term Clause 6;
·that the first defendant BTM Group Pty Ltd, the debtor company is indebted to the plaintiff in the sum of $51,383.20, together with interest to be calculated, and that debt which is unpaid falls within the terms of the Guarantee and Indemnity (Exhibit P3);
·that the plaintiff is entitled to an order enforcing the said Guarantee and Indemnity and is therefore entitled to judgment in the sum of $51,383.20 together with interest.
Accordingly, on the claim I propose to enter judgment for the plaintiff against the first defendant in the said sum of $51,383.20 plus interest.
I will hear counsel as to the calculation of interest and costs.
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