Leung v Fordyce

[2019] NSWSC 18

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Claudia Leung in her capacity as Executrix of the Estate of the late Robert Ho v Paul Mervyn Fordyce t/as Pmf Legal Trading [2019] NSWSC 18
Hearing dates:	11, 12, 13, 14 December 2017;Written submissions: 6, 7, 14, 19 December 2017, 22 January 2018 and 6 February 2018
Decision date:	29 January 2019
Jurisdiction:	Equity
Before:	Kunc J
Decision:	Plaintiffs entitled to declarations that costs agreements not sent and to consequential relief
Catchwords:	EVIDENCE — onus of proof when a declaration is sought in relation to a negative fact  — plaintiffs seek declaration that defendant solicitor did not send costs agreements DECLARATIONS — onus of proof when a declaration is sought in relation to a negative fact — plaintiffs seek declaration that defendant solicitor did not send costs agreements
Legislation Cited:	Evidence Act 1995 (NSW) Legal Profession Act 2004 (NSW) Uniform Civil Procedure Rules 2005
Cases Cited:	Albrighton v Royal Prince Alfred Hospital (1980) 2 NSWLR 542 Amirbeaggi v Business in Focus (Australia) Pty Ltd [2008] NSWSC 421 Application of Ferdinando Scali [2010] NSWSC 1254 Armagas Ltd v Mundogas S.A. (The Ocean Frost) [1985] 1 Lloyd’s Rep 1 Aytul Ak-Tankiz v Ferat Ak & Ramazan Ak [2014] NSWSC 1044 Bater v Bater [1951] P 35 BCI Finances Pty Ltd (in liq) v Binetter (No 4) (2016) 348 ALR 227; [2016] FCA 1351 Blacket v Barnett [2017] NSWSC 1032 Blatch v Archer (1774) 1 Cowp 63; (1774) 98 ER 969 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Connor v Blacktown District Hospital (1971) 1 NSWLR 713 Darkinjung Local Aboriginal Land Council v Darkinjung Pty Ltd [2010] NSWSC 132 Department of Health v Arumugam [1988] VR 319 Elayoubi v Zipser [2008] NSWCA 335 Ex parte Ferguson; Re Alexander (1944) 45 SR (NSW) 64; (1944) 62 WN (NSW) 15 Fordyce v Ho [2015] NSWCA 240 Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39 Fulton v Fulton [2014] NSWSC 619 Gray v Guardian Trust Australia [2003] NSWSC 704 Ho v Fordyce (ex parte) [2014] NSWSC 1404 Ho v Powell (2001) 51 NSWLR 572; [2001] NSWCA 168 Hutchison Construction Services Pty Ltd v Fogg; Fogg v Les Quatre Musketeers Pty Ltd (t/as Plastamasta South Coast) [2016] NSWCA 135 In the matter of Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 Jones v Dunkel (1959) 101 CLR 298 Juul v Northey [2010] NSWCA 211 Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; [1995] HCA 68 Krstic v Brindley [2006] NSWSC 1414 Kuligowski v Metrobus (2004) 220 CLR 363; [2004] HCA 34 Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23 Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 at 450; [1992] HCA 66 Palmer v Dolman [2005] NSWCA 361 Rail Corporation New South Wales v Donald; Staff Innovations Pty Ltd t/as Bamford Family Trust [2018] NSWCA 82 Re Atkinson [1971] VR 612 Re Day (2017) 91 ALJR 262; [2017] HCA 2 Robert Ho v Paul Mervyn Fordyce t/as Pmf Legal Trading [2015] NSWSC 544 Robert Ho v Paul Mervyn Fordyce t/as Pmf Legal Trading (No 2) [2015] NSWSC 1748 SAMM Property Holdings Pty Ltd v Shaye Properties Pty Ltd [2017] NSWCA 132; (2017) 345 ALR 633 Sangha v Baxter [2009] NSWCA 78; (2009) 52 MVR 492 Saravinovska v Saravinovski (No 6) [2016] NSWSC 964 Sgro v Australian Associated Motor Insurer’s Limited (2015) 91 NSWLR 325; [2015] NSWCA 262 Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640; [1975] HCA 63 Strong v Woolworths Limited (2012) 246 CLR 182; [2012] HCA 5 The Nominal Defendant v Cordin [2017] NSWCA 6 Tinnock v Murrumbidgee Local Health District (No 2) [2016] NSWSC 87 Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (In Liquidation) (No 2) (2011) 297 ALR 56; [2011] FCA 1123 Watson v Foxman (1995) 49 NSWLR 315 Wentworth v Rogers [2005] NSWSC 143 Ex parte Ferguson; Re Alexander (1944) 45 SR (NSW) 64; (1944) 62 WN (NSW) 15
Category:	Principal judgment
Parties:	Claudia Leung (first plaintiff) Rhodium NSW Pty Ltd (second plaintiff) The Trading House Pty Ltd (third plaintiff)   Paul Mervyn Fordyce (first defendant) PMFPL Pty Ltd (formerly known as Pmf Legal Pty Ltd) (second defendant)
Representation:	Counsel: N Cotman SC; L Corbett (plaintiffs) T Alexis SC; L Coleman (defendants)   Solicitors: HWL Ebsworth Lawyers (plaintiffs) FD Legal Pty Ltd t/a Pmf Legal (defendants)
File Number(s):	2014/288128
Publication restriction:	No

Judgment

Summary

1. The length and complexity of these reasons belies the fact that there is really only one issue in these proceedings: whether several costs agreements were not created and sent on or about the dates the defendants allege. This has bearing upon the costs assessment process the plaintiffs commenced under the Legal Profession Act 2004 (NSW) (the “Act”) in relation to legal costs owed to the defendants. The costs assessment has been suspended pending the determination of these proceedings.

2. The late Mr Ho worked in the hospitality industry for many years providing consultancy services to restaurants in Australia and in Asia. He died in 2017. During his working life, he employed the accountancy services of Mr Wilson Wong of Bennelong Partners with whom he maintained a close professional association. Mr Wong acted as the principal point of contact for communications between Mr Ho and the first defendant, Mr Paul Fordyce, a solicitor. From time to time, Mr Ho also had contact with Ms Leung, an employee of Bennelong Partners. Ms Leung is the executrix of Mr Ho’s estate and continues these proceedings in that capacity as first plaintiff. The second and third plaintiffs, Rhodium NSW Pty Ltd (“Rhodium”) and The Trading House Pty Ltd (“Trading House”) respectively, are companies formerly controlled by Mr Ho and now by his estate.

3. Mr Fordyce is a now retired solicitor who, with the second defendant, PMFPL Pty Ltd (formerly Pmf Legal and to which I will refer by that name) an incorporated legal practice, acted for Mr Ho in various proceedings between January 2012 and May 2014 (collectively referred to in this judgment as “Ho Matters”). In these reasons unless otherwise specified, references to “Pmf Legal” include Mr Fordyce and references to “Mr Ho” or his estate include the plaintiffs collectively.

4. On 17 June 2014, Mr Ho filed two applications for assessment of solicitor/client costs under s 350 of the Act in relation to two sets of separate proceedings where Pmf Legal had acted for Mr Ho and in which Mr Ho says he never received costs agreements (the “Costs Assessment Applications” and the “Costs Assessment”). Costs Assessment Application 2014/180275 disputed outstanding legal costs of about $593,952 in the “BBQ King Proceedings” which commenced in late January 2012. Costs Assessment Application 2014/180287 disputed outstanding legal costs of about $160,139 in relation to the “Guardianship Proceedings” and related “Complaints Proceedings” which commenced in September 2013 and January 2014 respectively. The total legal costs in dispute are about $760,000.

5. On 16 July 2014, Pmf Legal filed a costs assessment response (the “Response”) to the Costs Assessment Applications which enclosed copies of six costs agreements or engagement letters Pmf Legal said it sent to Mr Ho by prepaid post in respect of those proceedings (the “Engagement Letters”). These were:

1. BBQ King Engagement Letter dated 3 April 2012 (the “BBQ King Letter”);

2. Rhodium Engagement Letter dated 27 April 2012 (the “Rhodium Letter”);

3. Trading House Engagement Letter dated 7 June 2012 (the “Trading House Letter”);

4. Amended BBQ King Engagement Letter dated 4 July 2012 (the “Amended BBQ King Letter”);

5. Guardianship Engagement Letter dated 4 September 2013 (the “Guardianship Letter”); and

6. Complaints Engagement Letter dated 28 January 2014 (the “Complaints Letter”).

6. The plaintiffs subsequently commenced proceedings in this Court on 1 October 2014. The procedural history of this matter is lengthy and there have already been several other judgments: Ho v Fordyce (ex parte) [2014] NSWSC 1404; Robert Ho v Paul Mervyn Fordyce t/as Pmf Legal Trading [2015] NSWSC 544; Robert Ho v Paul Mervyn Fordyce t/as Pmf Legal Trading (No 2) [2015] NSWSC 1748; and Fordyce v Ho [2015] NSWCA 240.

7. On 13 October 2017, the plaintiffs filed a statement of claim seeking, by way of final relief, declarations that the defendants did not make disclosure of costs to the plaintiffs within the meaning of the Act and that the Costs Assessment should proceed on the basis there were no costs agreements between the parties. They also seek an order that the defendants account for any overpayment consequent to the declarations and an order for costs on the indemnity basis against the defendants. Interim orders restraining the defendants from taking steps to recover fees or enforce any obligations arising from the Engagement Letters were also sought. A defence was filed on 23 October 2017 which contended for the existence of an engagement letter dated 31 January 2012 in the BBQ King Proceedings (the “31 January BBQ King Letter”). An amended statement of claim was subsequently filed on 9 November 2017 also seeking relief in relation to the 31 January BBQ King Letter.

8. During the course of the hearing, the plaintiffs conceded that both the Trading House Letter and the Complaints Letter were sent to Mr Ho on or about the dates which the letters are dated (the “Agreed Engagement Letters”). Accordingly, the plaintiffs agreed that in respect of those two letters costs disclosure had been made to Mr Ho and that they were not entitled to seek declarations of the kind referred to in the preceding paragraph.

9. The provenance of the other five engagement letters remains in contention. However, what is not disputed is that in June 2014 Mr Fordyce created electronic copies of three engagement letters bearing the dates of 27 April 2012 (the Rhodium Letter), 4 July 2012 (the Amended BBQ King Letter) and 4 September 2013 (the Guardianship Letter) which were then provided to the Costs Assessor in July 2014 (the “Disputed Engagement Letters”). The plaintiffs allege that this was done fraudulently in the knowledge that the documents never existed in the first place and that they had not been sent on or around the dates they bear on the face. The defendants deny the allegations of fraud and argue that the Disputed Engagement Letters are replicas of the original documents reproduced from existing copies of the letters that were kept on the hard copy matter files and which were sent to Mr Ho on or about the dates they display. Without overlooking the 31 January BBQ King Letter and the BBQ King Letter, the submissions largely focused on the Disputed Engagement Letters.

10. The plaintiffs’ case is that the Disputed Engagement Letters were not created and not posted to Mr Ho on or about the dates they bear. The defendants’ case is that the Disputed Engagement Letters were created and were posted to Mr Ho on or about those dates, but at some point were lost in electronic form and were replicated electronically in June 2014. While the parties needed to address both elements (creation and posting of the Disputed Engagement Letters), the resolution of this dispute ultimately depends upon the inferences that the Court is able to draw from a relatively limited, but not always straightforward, body of evidence.

11. In response to the plaintiffs’ allegation that the Disputed Engagement Letters were not created and posted to Mr Ho on or about the dates they bear, the defendants have been unable to satisfy the Court that those agreements were sent. Not without real hesitation, I am satisfied on the basis of the defendants’ evidence about the usual practice of the second defendant that the relevant costs agreements came into existence on the dates alleged by Pmf Legal. This is because hard copies of those letters are found on the relevant files. For their part, the plaintiffs have not established to the requisite standard that those copies were fraudulently produced and inserted into the files by Mr Fordyce. However, that same evidence of usual practice, in particular concerning the use of a mail-book, forms the foundation of the Court’s conclusion that the defendants have failed to prove that those letters were sent. This is primarily, but not exclusively, because those letters are not recorded in the mail-book as having been sent.

12. It is common ground that Pmf Legal has rendered bills of costs to Mr Ho in respect of the costs in dispute. Accordingly, in relation to the matters the subject of the Disputed Engagement Letters, the Court’s finding will result in the Costs Assessment proceeding on the basis of what the assessor considers to be the “fair and reasonable value of the legal services provided”: ss 319(1)(c) and 331(1) of the Act.

13. The parties raised several ancillary issues, both factual and legal, that were relevant to the case. In summary, these were:

1. The usefulness and reliability of Pmf Legal’s mail-book system (as to which see paragraphs [146] to [154] below);

2. Whether the lack of metadata about the Disputed Engagement Letters could be explained by technical fault and systemic data loss (as to which see paragraphs [165] to [171] below);

3. Pmf Legal’s billback system and print records (as to which see paragraphs [172] to [183] below);

4. The hard copy matter files and the authenticity of the documents therein (as to which see paragraphs [184] to [191] below);

5. The use and usefulness of evidence of usual practice (as to which see paragraphs [192] to [222] below); and

6. Who bore the onus of proof and to what standard in circumstances where fraud was pleaded but where relevant facts were peculiarly within the knowledge of the defendants (as to which see paragraphs [224] to [239] below)?

Procedural matters

14. Directions hearings took place on 3 and 24 October 2017 and on 22 December 2017. On 3 October 2017, I granted leave to the parties to file and serve a statement of claim and defence. These were filed on 13 and 23 October 2017 respectively. An amended statement of claim and reply was subsequently filed on 9 November 2017.

15. On 24 October 2017, I made the following orders:

“2. Pursuant to UCPR 31.24, the parties’ computer forensic experts meet in conclave (without the attendance of the parties affected and their legal representatives) and:

(a)    endeavour to reach agreement on any matters in issue; and

(b)    prepare a joint report, specifying matters agreed and matters not agreed and the reasons for any disagreement,

on or by 14 November 2017.

3.    The proceedings be referred to mediation before a mediator to be agreed by the parties, to take place on or by 28 November 2017.”

16. The expert witnesses — Dr Allan Watt for the plaintiffs and Mr Nigel Carson for the defendants — produced the joint report referred to in order 2(b) on 15 November 2017 (the “Joint Report”).

17. Mediation was unsuccessful and the matter proceeded before me on 11 December 2017 for four days. Mr N Cotman of Senior Counsel with Mr L Corbett of Counsel appeared for the plaintiffs. Mr T Alexis of Senior Counsel with Ms L Coleman of Counsel appeared for the defendants. Given the complicated nature of the matters put in issue by the parties, in total three sets of written submissions were provided by each of the parties. The Court is indebted to counsel for their comprehensive and helpful written and oral submissions.

The Act

18. Though not directly relevant to the issues for determination, by way of background it is convenient to record that the applicable legislation relevant to the broader costs dispute between the parties is the now repealed Act, which applied from 1 October 2005 to 30 June 2015. The purpose of the Act was to regulate legal practice “in the interests of the administration of justice and for the protection of clients of law practices and the public generally”: s 3(a). The definition of a “law practice” included an Australian legal practitioner who is a sole practitioner, a law firm or an incorporated legal practice: s 4. Chapter 3 of the Act governed the conduct of a legal practice and, among other things, the disclosure and assessment of legal costs between clients and law practices at Part 3.2 (see “Purposes” at s 301).

Costs disclosure — Chapter 3 Part 3.2 Division 3 — mandatory

19. Cost disclosure is mandatory under the Act. Pursuant to ss 309 to 311, a law practice must disclose to a client “in writing before, or as soon as practicable after, the law practice is retained” the various matters set out in s 309. Disclosure is to be “expressed in clear plain language”: s 315.

20. Section 309 provides:

“309   Disclosure of costs to clients

(1)  A law practice must disclose to a client in accordance with this Division:

(a)  the basis on which legal costs will be calculated, including whether a fixed costs provision applies to any of the legal costs, and

(b)  the client’s right to:

(i)  negotiate a costs agreement with the law practice, and

(ii)  receive a bill from the law practice, and

(iii)  request an itemised bill after receipt of a lump sum bill, and

(iv)  be notified under section 316 of any substantial change to the matters disclosed under this section, and

(c)  an estimate of the total legal costs if reasonably practicable or, if that is not reasonably practicable, a range of estimates of the total legal costs and an explanation of the major variables that will affect the calculation of those costs, and

(d)  details of the intervals (if any) at which the client will be billed, and

(e)  the rate of interest (if any), whether a specific rate or a benchmark rate, that the law practice charges on overdue legal costs, whether that rate is a specific rate of interest or is a benchmark rate of interest (as referred to in subsection (1A)), and

(f)  if the matter is a litigious matter, an estimate of:

(i)  the range of costs that may be recovered if the client is successful in the litigation, and

(ii)  the range of costs the client may be ordered to pay if the client is unsuccessful, and

(g)  the client’s right to progress reports in accordance with section 318, and

(h)  details of the person whom the client may contact to discuss the legal costs, and

(i)  the following avenues that are open to the client in the event of a dispute in relation to legal costs:

(i)  costs assessment under Division 11,

(ii)  the setting aside of a costs agreement or a provision of a costs agreement under section 328 (Setting aside costs agreements or provisions of costs agreements),

(iii)  mediation under Division 8, and

(j)  any time limits that apply to the taking of any action referred to in paragraph (i), and

(k)  that the law of this jurisdiction applies to legal costs in relation to the matter, and

(l)  information about the client’s right:

(i)  to accept under a corresponding law a written offer to enter into an agreement with the law practice that the corresponding provisions of the corresponding law apply to the matter, or

(ii)  to notify under a corresponding law (and within the time allowed by the corresponding law) the law practice in writing that the client requires the corresponding provisions of the corresponding law to apply to the matter.

Note. The client’s right to sign an agreement or give a notification as mentioned in paragraph (l) will be under provisions of the law of the other jurisdiction that correspond to section 304 (Part also applies by agreement or at client’s election).

(1A)  For the purposes of subsection (1) (e), a benchmark rate of interest is a rate of interest for the time being equal to or calculated by reference to a rate of interest that is specified or determined from time to time by an ADI or another body or organisation, or by or under other legislation, and that is publicly available.

(1B)  The regulations may make provision for or with respect to the use of benchmark rates of interest, and in particular for or with respect to permitting, regulating or preventing the use of particular benchmark rates or particular kinds of benchmark rates.

(2)  For the purposes of subsection (1) (f), the disclosure must include:

(a)  a statement that an order by a court for the payment of costs in favour of the client will not necessarily cover the whole of the client’s legal costs, and

(b)  if applicable, a statement that disbursements may be payable by the client even if the client enters a conditional costs agreement.

(3)  A law practice may disclose any or all of the details referred to in subsection (1) (b) (i)–(iii), (g), (i), (j) and (l) in or to the effect of a form prescribed by the regulations for the purposes of this subsection, and if it does so at the time the other details are disclosed as required by this section the practice is taken to have complied with this section in relation to the details so disclosed.”

21. There are various consequences if a law practice fails to make disclosure: a client need not pay its legal costs unless they have been assessed; a law practice cannot recover legal fees until the costs have been assessed; a client may apply to have the costs set aside; the costs assessor can reduce the costs in reflection of and proportionate to the seriousness of the non-disclosure; and the failure to disclose may constitute unsatisfactory professional conduct or professional misconduct: s 317.

22. In circumstances of non-disclosure, the costs of an assessment are generally borne by the law practice: s 369.

Costs agreement — Chapter 3 Part 3.2 Division 5 — discretionary

23. A costs agreement is distinct from costs disclosure. Though costs disclosure is frequently made with or at the same time as a costs agreement, disclosure may be made separately, and the existence of a costs agreement is discretionary under the Act per s 322: see, e.g., Wentworth v Rogers [2005] NSWSC 143 at [44] (Patten AJ) and Darkinjung Local Aboriginal Land Council v Darkinjung Pty Ltd [2010] NSWSC 132 at [152] (Austin J) (“Darkinjung”). However, the “practical significance of a costs agreement is that … costs that are subject to a costs agreement must be assessed by reference to the provisions of the agreement”: Amirbeaggi v Business in Focus (Australia) Pty Ltd [2008] NSWSC 421 at [25] (Brereton J), unless the costs assessor is satisfied that “the agreement does not comply in a material respect with any applicable disclosure requirements of Division 3 (Costs disclosure)” per s 361.

24. If a costs agreement is made, it must be written or evidenced in writing: s 322(2). It is enforceable like any other contract: s 326. A costs agreement may consist of a written offer that is accepted in writing or by other conduct and it must state that it is an offer to enter into a costs agreement, that the client may accept it in writing or by other conduct, and must specify the type of conduct constituting acceptance: s 322.

25. However, the Act does not stipulate a costs agreement is invalid or void because of insufficient costs disclosure. Only s 327 in Division 5 provides that a “costs agreement that contravenes, or is entered into in contravention of, any provision of this Division is void.”

26. Relevantly, a law practice remains entitled to recover legal costs from a client even where no valid or operative costs agreement exists according to the “fair and reasonable value of the legal services provided” so long as a bill of costs has been rendered to the client: ss 319(1)(c) and 331(1). As Austin J noted in Darkinjung at [152], where no costs agreement exists “The only change is that the assessment is directed towards ascertaining the fair and reasonable value of the legal services provided rather than the amount properly due under a costs agreement.”

Uncontentious background facts and some contentions

27. Mr Fordyce was admitted as a solicitor in New South Wales in about July 1974 and commenced practice shortly thereafter. He worked at four firms before establishing Pmf Legal in December 2003, which he operated as a sole practitioner.

28. On about 11 August 2011, Mr Ho retained Mr Fordyce in relation to litigation involving the Golden Century restaurant. Mr Ho (through Mr Wong) instructed Mr Fordyce to send all correspondence to a PO Box in Castlecrag (“Mr Ho’s PO Box”). Pursuant to these instructions, Mr Fordyce sent an engagement letter to Mr Ho’s PO Box on or about 11 August 2011 (the “Golden Century Letter”). A copy of the Golden Century Letter signed by Mr Fordyce was in evidence.

29. Pmf Legal was incorporated in 2012 and registered as Pmf Legal Limited.

30. On about 31 January 2012, Mr Ho retained Mr Fordyce in respect of litigation involving the BBQ King Restaurant (the “BBQ King Proceedings”). It was assigned the internal matter number 120009. A Microsoft Word file labelled “120131 Engagement Letter.doc” was created on 31 January 2012 and saved onto the X drive under the Ho subdirectory and in the BBQ King matter file. Mr Fordyce’s personal assistant, Ms Alison Sweet, sent him an email with the subject line: “HO90/120009 Engagement Letter DRAFT”, which contained a hyperlink or softlink (“X:\H\HO90\120009 – Proceedings for damages against company and shareholders-BBQ King\Correspondence\120131 Engagement Letter.doc”) through to the file Ms Sweet had prepared. According to Mr Fordyce, the 31 January BBQ King Letter was not sent to Mr Ho’s PO Box on that date but was held back with the intention that it would be posted with an accompanying invoice a few days later.

31. On or about 3 February 2012, invoice 20755 dated 31 January 2012 was sent to Mr Ho’s PO Box for work done in relation to the BBQ King Proceedings. The invoice recorded various tasks carried out on 31 January 2012 in the BBQ King Proceedings and was for $3,069. However, it makes no reference to the preparation of an engagement letter. It is alleged the 31 January BBQ King Letter was sent to Mr Ho’s PO Box on or about that day — see paragraph [257] below, the 31 January BBQ King Letter.

32. However, an invoice dated 31 August 2012 but bearing the same number (20755) as the 31 January 2012 invoice was in evidence. Though the “total costs” at the bottom of the page read $3,069 (which is the same as the 31 January 2012 invoice 20755), the “total due” in the invoice heading is zero. In the Response, Mr Fordyce stated that no invoice was sent to Mr Ho on 31 January 2012 but that one was sent on 31 August 2012. During the proceedings, Mr Fordyce stated that this was an error which he had discovered only when preparing for mediation [T 207:47]:

“At the time the letter was written to the costs assessor I had been referred to a letter with an invoice 20755 of 31 August 2012. There was a question about an invoice of 31 January 2012 and with that number and I believed that the 31 August invoice was the invoice so that I said there was no invoice of 31 January. But when I checked the files and put together material for the purpose of the mediation, I can [sic] thorough check and found the one, the invoice of 31 January 2012 which deals with matters that were all done in 31 January 2012.”

33. Ms Vanessa Klobucar began working as the office junior at Pmf Legal sometime in February 2012.

34. During March 2012, an IT consultant, Mr Billy Morgan, was called to service both Mr Fordyce and his assistant’s computers. The item description on Mr Morgan’s invoice reads:

“Computer support regarding Paul’s computer (memory). Setup new PA computer as the original computer would not start correctly and also would not print via billback. Replaced faulty hard disk with new hard disk and installed all software from scratch”.

35. On 31 March 2012, an invoice of $41,718 was sent to Mr Ho’s PO Box for work done by Pmf Legal in the BBQ King Proceedings.

36. On 3 April 2012, an email exchange occurred between Mr Fordyce and Mr Wong about the estimated costs and what billing method would be used in relation to the BBQ King Proceedings. Mr Fordyce alleged that the BBQ King Letter was reissued and sent to Mr Ho’s PO Box on or about that day — see paragraph [272] below, the BBQ King Letter.

37. On 27 April 2012, Mr Ho instructed Mr Fordyce to cease the winding up of Rhodium and to join it as a plaintiff to the BBQ King Proceedings (the “Rhodium Proceedings”). It was given the internal matter number 120027. It is alleged the Rhodium Letter was sent to Mr Ho’s PO Box on or about that day — see paragraph [316] below, the Rhodium Letter.

38. On or about 7 June 2012, Mr Ho instructed Mr Fordyce to cease the winding up of Trading House and join it as a plaintiff to the BBQ King Proceedings (the “Trading House Proceedings”). It was given the internal matter number 120035. An engagement letter was prepared and sent to Mr Ho’s PO Box. This was documented in Pmf Legal’s mail-book for 2012 which the office junior maintained as a record of Pmf Legal’s outgoing mail. See paragraph [241] below, the Trading House Letter.

39. On or about 4 July 2012, Mr Fordyce alleges that the Amended BBQ King Letter was created which identified Rhodium and Trading House as Mr Fordyce’s clients. A hard copy of the Amended BBQ King Letter was allegedly found in the hard copy matter file which was kept in addition to the electronic matter file. It is alleged the Amended BBQ King Letter was sent to Mr Ho’s PO Box on or about that day — see paragraph [295] below, the Amended BBQ King Letter.

40. On about 5 June 2013, Mr Fordyce’s desktop computer had a hard drive failure. The item description on the invoice from the IT consultant, Mr Morgan, reads: “Hardware – Hard disk Replaced faulty hard disk (Paul’s desktop). Cloned data from the old disk to the new disk. date: 5 June 2013”.

41. On or about 4 September 2013, Mr Ho retained Pmf Legal in relation to Supreme Court proceedings to set aside ex parte orders made by the Guardianship Tribunal which had appointed members of Mr Ho’s family to act as his guardian (the “Guardianship Proceedings”). It is alleged the Guardianship Letter was sent to Mr Ho’s PO Box on or about that day — see paragraph [329] below, the Guardianship Letter.

42. On 10 September 2013, in relation to the Guardianship Proceedings, the NSW Trustee and Guardian wrote to Pmf Legal requesting copies of “the Costs Agreement for all matters” in which Pmf Legal was acting for Mr Ho. On the same day, Pmf Legal replied to the NSW Trustee and Guardian’s request enclosing an unsigned copy of the BBQ King Letter dated 3 April 2012. Mr Fordyce also instructed Ms Georgina Wu (a solicitor at Pmf Legal at that time) to save a PDF copy of the BBQ King Letter dated 3 April 2012 into the Guardianship Proceedings’ electronic file.

43. On 12 September 2013, Mr Fordyce emailed Mr Wong and Ms Leung attaching the NSW Trustee and Guardian’s letter of 10 September 2013 and a copy of Pmf Legal’s letter in reply without enclosures. Neither Mr Wong nor Ms Leung replied to this email.

44. On 18 September 2013, the NSW Trustee and Guardian telephoned Mr Fordyce requesting a signed copy of the BBQ King Letter dated 3 April 2012.

45. On the same day, Mr Fordyce emailed Ms Wu, copying in Mr Wong and Ms Leung, regarding the telephone conversation with the NSW Trustee and Guardian. In the email, Mr Fordyce stated: “Need copy of executed cost agreement with Mr Ho”. Neither Mr Wong nor Ms Leung replied to Mr Fordyce’s email.

46. On about 28 January 2014, Mr Ho retained Pmf Legal in relation to proceedings involving the Health Care Complaints Commission (the “Complaints Proceedings”). The Complaints Letter was sent to Mr Ho on or around this time and a corresponding entry appears in Pmf Legal’s mail-book for 2014 — see paragraph [249] below, the Complaints Letter.

47. On about 10 March 2014, the IT consultant Mr Morgan attended Pmf Legal. The item description on his invoice reads: “Support regarding server hard drive (required replacing faulty hard disk under warranty). Date: 10 March 2014”.

48. On about 19 May 2014, Mr Fordyce notified Mr Ho he intended to cease acting as Mr Ho’s solicitor. In late May 2014, Mr Ho terminated all retainers with Pmf Legal. Mr Ho retained the legal services of Mr Mark Webeck of HWL Ebsworth Lawyers.

49. On about 2 June 2014, Pmf Legal received a notice of change of solicitor from Mr Webeck.

50. On about 16 June 2014, Pmf Legal notified Mr Webeck that it intended to commence proceedings against Mr Ho in respect of unpaid accounts (the “Costs Recovery Proceedings”).

51. On 16 and 17 June 2014, in preparation for the Costs Recovery Proceedings, Mr Fordyce created digital versions of the Disputed Engagement Letters (the “June 2014 versions”).

52. On 17 June 2014, Mr Ho filed the Costs Assessment Applications both of which asserted: “There is no costs agreement between myself and the law practice”.

53. Pmf Legal received the notice of Costs Assessment Applications on about 25 June 2014.

54. On or about 16 July 2014, Pmf Legal filed its Response to the Costs Assessment Applications enclosing copies of the Engagement Letters — that is the BBQ King Letter, the Rhodium Letter, the Trading House Letter, the Amended BBQ King Letter, the Guardianship Letter and the Complaints Letter.

55. On or around 8 August 2014, Mr Webeck provided Mr Ho copies of the Engagement Letters. Mr Ho’s affidavit states: “I can say that I have never seen or received any of the Costs Agreements prior to being provided them by Mr Webeck”.

56. On 12 September 2014, Mr Fordyce wrote to the Costs Assessor confirming that copies of all of the Engagement Letters had been provided in the Response.

57. On 1 October 2014, Mr Ho commenced proceedings against Pmf Legal in the Supreme Court and applied to the Equity Division Duty Judge ex parte for search orders. Rein J made the ex parte search orders which permitted a computer forensics company, Klein & Co., to access Pmf Legal’s computers to copy specifically identified materials in relation to the Ho Matters and to report its findings to an independent solicitor appointed by the Court, Mr Seamus Burke (the “Search Orders”): Ho v Fordyce (ex parte) [2014] NSWSC 1404.

58. Klein & Co. carried out the searches and produced its report to Mr Burke on 24 October 2014 (the “Klein & Co. Report”). The Klein & Co. Report analysed a snapshot of data in relation to Ho Matters from 2012 to 2014 which had been identified as relevant (the “imaged materials”). Klein & Co. was also provided with an affidavit from Mr Fordyce dated 20 October 2014 in which he detailed Pmf Legal’s systems and practices, and was assisted by Pmf Legal’s IT consultant, Mr Morgan, to access the relevant data. Klein & Co. noted that its report was based on a limited and preliminary forensic analysis of the data and that it had not examined all of the records available in preparing the report.

59. The Costs Assessor suspended the Costs Assessment Application at around the time the Search Orders were made.

60. On 24 October 2014, Mr Burke sent a letter to Mr Fordyce by way of email requesting further information in respect of some of Klein & Co.’s findings (the “Burke Letter”). He enclosed a copy of the Klein & Co. Report. Mr Burke’s letter stated:

“…if you were able to provide an explanation in relation to inconsistency identified in the Letter (1st paragraph on page 2) between the apparent dates and the internal document timestamps of the files relating to the costs agreements of 3 April 2012, 27 April 2012, 4 July 2012 and 4 September 2012 [sic], this may facilitate the further analysis of the data by Klein & Co.”

61. Mr Fordyce replied to the Burke Letter on 3 November 2014 (the “Replying Letter”). In his Replying Letter, Mr Fordyce noted but did not directly address Mr Burke’s request for further information. Rather, he drew attention to other inconsistences in the metadata provided to Mr Burke. By reference to these inconsistences, he stated:

“…the information extracted by the experts simply cannot be correct. Whilst I appreciate the opportunity to present an alternative explanation, I am in no way qualified to provide an explanation for blatantly incorrect metadata.”

62. On 24 November 2014, Mr Fordyce applied to set aside the Search Orders on the basis that the plaintiffs had failed to apprise the Court of critical matters relevant to the granting of the search orders.

63. On 11 December 2014, Mr Fordyce’s motion was listed for directions before Bergin CJ in Eq (the “December 2014 Proceedings”). Mr Fordyce appeared for himself on that occasion. Counsel appeared for Mr Ho. When asked by her Honour whether he knew if “the computer expert analysed your copies of any costs agreement in this matter”, Mr Fordyce stated that he did not know. At that time (and unbeknownst to her Honour), only Mr Fordyce and not Mr Ho had been provided with a copy of the Klein & Co. Report by Mr Burke (see paragraph [60] above). Her Honour ultimately set the motion down for further hearing before Rein J.

64. On 17 December 2014, Rein J ordered that the plaintiffs’ legal representatives be given access to the Klein & Co. Report. At a directions hearing on 20 December 2014, his Honour subsequently ordered that the plaintiffs’ legal representatives were permitted to summarise the Klein & Co. Report for Mr Ho, Mr Wong and Ms Leung and allow those three to view the Klein & Co. Report but they were not to be provided with copies.

65. On 5 May 2015, Rein J dismissed the motion: Robert Ho v Paul Mervyn Fordyce t/as Pmf Legal Trading [2015] NSWSC 544.

66. In June 2015, Pmf Legal’s computer system was attacked by a “ransomware” virus resulting in data loss in respect of its client billback system which used recording software called Reckon Billback Cost Recovery and Expense Management Software (“Reckon”).

67. On 19 August 2015, the Court of Appeal dismissed Mr Fordyce’s application for leave to appeal from Rein J’s decision: Fordyce v Ho [2015] NSWCA 240.

68. On 9 September 2015, the Costs Assessor continued the suspension of the Costs Assessment Applications pending the determination of these proceedings.

69. Mr Fordyce retired in late 2016 and Mr Davor Dadic, who began working at Pmf Legal in May 2016, took over as principal of Pmf Legal.

70. On 13 October 2017, the plaintiffs filed a statement of claim, amended on 9 November 2017, alleging non-receipt of the engagement letters and fraudulent conduct by Mr Fordyce.

71. On about 18 October 2017, Mr Dadic and his paralegal searched the off-site storage facility where Pmf Legal’s hard copy client files were stored looking for materials relating to Mr Ho. They found hard copy matter files in relation to the BBQ King Proceedings, the Guardianship Proceedings and the Rhodium Proceedings. See further paragraphs [184] to [191] below.

72. Mr Ho died in 2017. His estate maintains the proceedings.

General observations about the witnesses

73. The following sections address some relevant legal principles, the evidence of the principal witnesses including submissions on credit and reliability, and the views to which I have come which inform my findings of fact. While the Court has the benefit of some objective evidence (expert reports on the computer systems and metadata, the mail-books and hard copy matter files), this is a case where much of the witness testimony is uncorroborated, untested or of questionable reliability, and much turns on the Court’s assessment of character and credit — particularly that of Mr Fordyce.

Relevant legal principles

74. Facts must be proved on the balance of probabilities to the actual persuasion of the Court: Evidence Act 1995 (NSW), s 140 (“Evidence Act”); Briginshaw v Briginshaw (1938) 60 CLR 336 at 361–2; [1938] HCA 34; Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56 at [48] per Emmett J.

75. Affidavit evidence which is not tested in cross-examination is to be discounted in weight as appropriate “according to all the circumstances of the case”: Fulton v Fulton [2014] NSWSC 619 at [111] per Hallen J.

76. Findings on credit should not be made “globally” — a witness may reliably recount some matters and not others: Sangha v Baxter [2009] NSWCA 78; (2009) 52 MVR 492 at [155]–[156] per Basten JA (Handley AJA agreeing); as applied in Hutchison Construction Services Pty Ltd v Fogg; Fogg v Les Quatre Musketeers Pty Ltd (t/as Plastamasta South Coast) [2016] NSWCA 135 at [11] per Leeming JA (Beazley P and Meagher JA agreeing)

74. Memory is fallible and a reconstructive process — “All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed”: Watson v Foxman (1995) 49 NSWLR 315 at 318–19 per McClelland CJ in Eq.

75. A witness’ credibility and truthfulness can be tested by reference to objective fact particularly “the documents in the case, by paying particular regard to his, or her, motives, and to the overall probabilities”: Blacket v Barnett [2017] NSWSC 1032 at [225] per Hallen J citing Armagas Ltd v Mundogas S.A. (The Ocean Frost) [1985] 1 Lloyd’s Rep 1 at 57 per Robert Goff LJ and In the matter of Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 at [7] per Black J.

76. I note also what was said in The Nominal Defendant v Cordin [2017] NSWCA 6 at [171] per Davies J (Emmett AJA agreeing):

“One reason that contemporaneous statements and documents are likely to be more accurate than a recollection of events is that a statement made at the time of an event, particularly when relatively spontaneous, is likely to be more accurate than a later statement made at a time when false memories can intrude. In a minority of cases the false memories are deliberately so because of the contrivance of the maker of the statement. In the majority of cases the false memories are honestly believed either for the reasons such as those outlined by Leggatt J in Gestmin SGPS S.A. v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm) or because the person recalling the events has tried to assemble recollections logically so that what happened can have some rational explanation in the person’s mind. As Leggatt J noted at [17] memories are fluid and malleable, being constantly rewritten whenever they are retrieved”.

80. Evidence given against interest or which is inherently probable is more convincing: Saravinovska v Saravinovski (No 6) [2016] NSWSC 964 at [467].

81. Negative facts must be proved — disbelieving a witness about one matter does not make the inverse true though inferences may arise supporting the alternative state of affairs: Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 at 694 per Gibbs J; [1975] HCA 63.

82. It may be the case that some issues cannot be resolved on the evidence at the Court’s disposal particularly in situations where “evidence distilled into the word of one witness against the word of one or more other witnesses”: Aytul Ak-Tankiz v Ferat Ak & Ramazan Ak [2014] NSWSC 1044 at [187] per Robb J.

Mr Ho’s evidence

83. The plaintiffs sought to rely on two affidavits sworn by the late Mr Ho on 1 October 2014 and 24 August 2015 under s 63(2) of the Evidence Act, in which he claims there was no costs disclosure and denies having received any costs agreements from Pmf Legal. This evidence must now be considered in the light of the plaintiffs’ concession that the Trading House Letter and Complaints Letter were sent. Mr Ho states that he kept “records of all the correspondence received from Mr Fordyce and PMF Legal” but that when he searched he could not locate documentation relating to costs agreements or costs disclosure for work to be done by Mr Fordyce. He said that he recalled receiving emails containing fee estimates and disclosure documents and fee agreements in relation to counsel but that he had not seen or received any in relation to Mr Fordyce. He also states that by about November 2013 he started paying counsel’s fees directly because he was “concerned” about paying through Mr Fordyce. Shortly thereafter he changed solicitor.

84. Ms Leung, the executrix of Mr Ho’s estate who maintains the claim, was not called to give evidence. She has not filed an affidavit in these proceedings and there is no evidence indicating that Ms Leung has undertaken any search of Mr Ho’s personal records.

85. The plaintiffs submitted that Mr Ho’s evidence is reliable and is supported by the business records created (or not, as the case may be) as part of Pmf Legal’s usual practice. Further, the plaintiffs argued that a reasonable person would not commence proceedings in circumstances where they did not believe there was a legitimate basis for so doing. Given the defendants’ mail-books were only made available in July 2015 through an informal discovery process and that Mr Ho did not have access to the mail-books when preparing the Costs Assessment Application in June 2014, the plaintiffs asserted Mr Ho did not have any basis upon which to falsify or alter his evidence to accord with the mail-books.

86. The plaintiffs also submitted that Ms Leung was not required to give evidence in order to discharge her duties as executrix of the estate and that even if she had conducted a search of Mr Ho’s possessions it would not have turned up the Engagement Letters (because they did not exist, according to the plaintiffs’ case) and would therefore have added nothing to the evidence in the case. The plaintiffs did not address the possible ramifications of their concessions in relation to the Agreed Engagement Letters on the reliability of Mr Ho’s evidence.

87. The defendants submitted that Mr Ho’s credit cannot be presumed merely by virtue of the instigation of legal proceedings. They suggested that the proceedings may have been a strategic move to place pressure on Mr Fordyce and to somehow bring about the resolution of the disputed legal costs to Mr Ho’s advantage. They submitted that the reliability of Mr Ho’s uncorroborated and untested evidence in respect of the Disputed Engagement Letters was “fatally” compromised because the plaintiffs’ did not address their own concessions in respect of the creation and posting of the Agreed Engagement Letters which directly contradicted Mr Ho’s denial of having not received those two letters.

88. The defendants pointed to the lack of evidence from Ms Leung and, particularly, that she had not independently searched Mr Ho’s records for the engagement letters in order to form her own view about the truth of Mr Ho’s evidence and the validity of maintaining the proceedings. This they said removed an “obvious source” of information which might have corroborated Mr Ho’s evidence and was in dereliction of her duty as executrix of Mr Ho’s estate. The defendants submitted the Court could not be satisfied of the fraudulent activity alleged when the proceedings were maintained by someone without personal knowledge (or a legitimately formed belief) of the asserted facts. No authority was cited to support the contentions in relation to Ms Leung’s executorial duties and the maintenance of the proceedings.

89. It is well settled that the principal duties of an executor or executrix include identifying and getting in any assets of the deceased, paying any debts, and distributing the assets of the estate in accordance with the testator’s wishes: see, e.g., Juul v Northey [2010] NSWCA 211 at [196] per McColl JA. The estate may have claims against third parties which, as a general rule, the executor is obliged to pursue; and, where a testator dies while litigation is on foot, the executrix may maintain (or where appropriate, compromise) those proceedings on behalf of the estate: Re Atkinson [1971] VR 612 at 616 per Gillard J. The costs of litigation will usually be borne by the estate. However, an executor must not unthinkingly defend a claim but exercise judgment as to its legitimacy and take steps to avoid costly litigation where possible, which accords with the duty to preserve the estate’s assets: see, e.g., Application of Ferdinando Scali [2010] NSWSC 1254 at [10] per Brereton J. Personal liability for the costs of litigation may accrue to an executor considered to have acted unreasonably: see, e.g., Gray v Guardian Trust Australia [2003] NSWSC 704 at [9] per Austin J.

90. Self-evidently, a deceased person is unavailable to give further evidence or be subject to cross-examination and the Court must treat untested evidence with a suitable degree of caution. I agree with the defendants’ submission that Mr Ho’s decision to commence legal proceedings does not automatically confirm the credibility of his claim or his evidence. However, I do not accept that the plaintiffs’ concessions about the Agreed Engagement Letters completely undermine the reliability of Mr Ho’s evidence. This is because, contrary to what the defendants assert, there is other objective evidence agreeing with Mr Ho’s version of events — or rather there is an absence of records which is inconsistent with Pmf Legal’s stated “usual practice” and which contrasts with the presence of evidence (including metadata) for the Agreed Engagement Letters.

91. Furthermore, in a case where the defendants contend that a number of engagement letters were sent in relation to several matters, failure to recall or to find two letters invites caution about, but not the dismissal of, Mr Ho’s evidence. Similarly, while the plaintiffs may not have addressed the effect of the concessions on the balance of Mr Ho’s evidence, I am not persuaded that omission is fatal to their case or to the reliability of Mr Ho’s evidence.

92. The Court concludes that, even allowing for the concessions in relation to the Agreed Engagement Letters, while Mr Ho’s untested evidence is, without more, insufficient to allow the Court to make the findings the plaintiffs seek, it is sufficient to impose an evidential burden on the defendants to demonstrate the contrary (as to the concept of evidential burden, see paragraph [237] below). So much was ultimately conceded by the defendants (see paragraph [230] below)

Mr Fordyce’s evidence

93. Mr Fordyce’s evidence in respect of each of the Disputed Engagement Letters is that in the course of preparing for the Costs Recovery Proceedings in June 2014 and before receiving the Costs Assessment Applications, he and his paralegal Ms Inglis searched the electronic and hard copy matter files to locate the relevant costs agreements in relation to the outstanding fees. Mr Fordyce says that to his surprise they were unable to locate electronic copies of the Disputed Engagement Letters but that unsigned hard copies of the Disputed Engagement Letters were found in the hard copy matter files. Mr Fordyce stated that the office was basically “paperless” and relied on an electronic file system but that it was part of the usual practice to print out and file a paper copy of client engagement letters. However, he said he “had no signed agreements by Mr Ho in any of the matters including the Golden Century matter.”

94. Because he liked to keep client files electronically and to facilitate ease of use for the intended Costs Recovery Proceedings, between 16 and 17 June 2014 Mr Fordyce recreated electronic copies of the Disputed Engagement Letters from the unsigned hard copies he had found in the hard copy matter files. Mr Fordyce explanation for recreating the documents in Microsoft Word rather than scanning the documents was as follows [T 103:11]:

“HIS HONOUR

Q. In a pre-electronic age if you had been asked to produce those copies to evidence the fact that you had some records of the agreements you say you’d sent off to Mr Ho, one might have photocopied those and sent them off to the Guardianship Tribunal or whoever, do you accept that?

A. I do.

Q. What I don’t understand and I think this is what Mr Cotman has been exploring with you at this point, is why didn’t you just photocopy, PDF, image those documents which you’re telling me now were actual copies, which I infer you say were created at or about the date they bear and send those off as opposed to replicate by typing, electronically, those documents into new files? Do you understand my question?

Q. I do, your Honour.

Q. And it’s very primitive but why didn’t you do that?

A. PDF documents are not user-friendly for the purposes of litigation or any such purpose because they have - at the end of - there are a number of problems with using a PDF document like that. So if I copy a selection of material in the PDF document and paste it into, say, a word document, there is a paragraph mark at the end of each paragraph of the PDF which may not be useful for me because I may be doing it as a narrower document or a wider document. So I had to physically remove every paragraph mark to make the document into a suitable document for use in Word.

The second problem is that PDFs don’t always properly read the material. So when I cut a PDF from a PDF and place it into a Word document, there are likely to be errors and the document has to be then closely checked to make sure that it’s accurate. And I, I physically, for the purposes of producing a document quickly to the costs assessors would just, would just - I would just go to a document on the electronic file and open it and print it, rather than having somebody take a document - find a document in a hard file, a paper copy file, take that document out of the paper copy file, take it to a machine, scan it - print the document, put it back and put it away. It was just inefficient to do it that way.

Q. Yes but do you understand the distinction between producing something as evidence and creating a document which, for the purposes of preparing submissions and the like, you could easily manipulate?

A. I’m sorry, your Honour.

Q. I’ll ask the question a different way. I think I understand what you are saying in terms of the convenience of having everything electronic and the problems that attach to PDF documents if you try and copy them and they come up in little boxes and don’t copy well, I understand all of that. So in terms of being able to manipulate documents to insert them in things like letters and submissions, I follow entirely why you might create an electronic version of the document. The distinction I am trying to explore with you is between that and actually having a document which is a piece of evidence that says, “Here is the copy, my office copy of the document that I say was sent to Mr Ho.”

What I am trying to understand is why did you not simply take that piece of evidence and copy it in one form or another and send it off to the costs assessor saying, “Here is my office copy of the document that was sent to Mr Ho.”

A. All of the engagement letters that were sent to the costs assessor were printed off the, off the computer. We, we didn’t do, do that manual step, yes.”

95. When he could not find the electronic copies on the X drive, he did not request the IT consultant Mr Morgan’s assistance in locating the files. Mr Fordyce admitted that Mr Morgan had previously been asked to find documents on the system. When asked about whether he was concerned that documents had gone missing from the electronic file, Mr Fordyce stated “I’ve had many documents disappear off the electronic system, you just can’t find them. I don’t know why it happens but it happens”. However, he said that he had not referred this issue to his IT consultant and was not concerned about the integrity of the electronic system. He had not examined the backup copies of the X drive which were stored on separate hard drives.

Mr Fordyce’s credit

96. Submissions on Mr Fordyce’s credit were directed to his presentation as a witness generally, his responses to the independent solicitor, his behaviour in and around the application to set aside the Search Orders, his evidence on the 31 January BBQ King Letter and on the authenticity of the hard copy letters.

Plaintiffs’ submissions

97. The plaintiffs submitted that Mr Fordyce’s initial deceptive act in creating the Disputed Engagement Letters and, at least at first, holding them out to be original documents taints all his evidence (which was colourfully referred to as “debased currency”); that on numerous occasions Mr Fordyce deliberately misled or did not disclose to the Court all relevant information until questioned directly or confronted on an issue; and, that his conduct was, and continued to be, deceptive and improper, and demonstrated an inability to tell the truth which called into question the reliability of his evidence.

98. The plaintiffs drew attention to Mr Fordyce’s Replying Letter to the Burke Letter (see paragraph [61]) and the following points:

1. Mr Fordyce did not raise the existence (or absence) of the 31 January BBQ King Letter with the independent solicitor as another anomaly or inconsistency in the Klein & Co. Report — this was strange given his evidence that he specifically recalled the 31 January BBQ King Letter because it was held back to send with the invoice;

2. Mr Fordyce’s assertions that the findings documented in the Klein & Co. Report, for instance, that the Rhodium Letter and the Amended BBQ King Letter were created on 17 June 2014, “simply cannot be correct” and that the metadata was “blatantly incorrect” conflicted with his later testimony that he recreated the Disputed Engagement Letters in June 2014; and,

3. That if Mr Fordyce’s evidence about the Disputed Engagement Letters were true (that they existed and were sent to Mr Ho on the dates displayed), he would have offered some explanation when the independent solicitor confronted him about the inconsistent data on 24 October 2014 instead of ignoring the request.

99. Next, the plaintiffs drew attention to Mr Fordyce’s conduct in the December 2014 Proceedings when he attempted to have the Search Orders set aside. In those interlocutory proceedings, Mr Fordyce had told Bergin CJ in Eq that he did not know if Klein & Co. had analysed the Engagement Letters and that there were no mail-books that would have recorded the sending of the Engagement Letters. It became clear in these proceedings that this was not true. In cross-examination in these proceedings, Mr Fordyce himself agreed that he had been provided with a copy of the Klein & Co. Report in October 2014 and that he had “forgotten” about the existence of the electronic mail-books for 2012 to 2014 — copies of which were now in evidence and about which he had given affidavit evidence of the mail-books’ use. The plaintiffs again asserted that Mr Fordyce’s character and evidence was discredited by his persistent failure to acknowledge his conduct was improper (irrespective of any personal pressures he may have been experiencing at the time the Search Orders were served and executed), or that he had convinced himself of the correctness of his position such that he was incapable of giving honest evidence. The following passages of Mr Fordyce’s cross-examination were highlighted:

“[T 191:9]

MR COTMAN

Q. It was manifest on that report that the computer experts had undertaken an analysis of the copies of costs agreements in this matter hadn’t they?

A. I wouldn’t have considered it to be analysis.

…

[T 191:35]

MR COTMAN

Q. You seriously say that when asked a question by a judge of this Court “Do you know whether the computer expert analysed your copies of any costs agreement in the matter” you could sensibly say “No I don’t”?

A. That’s correct.

Q. That’s a correct answer?

A. Yes.

Q. It’s a truthful answer, is that what you say?

A. Yes.

Q. Can you explain to his Honour how, having regard to what you knew the experts had done from the material that had been provided to you and the questions that had been asked of you by the solicitor, you could say that was an honest answer?

A. The experts had not undertaken an analysis of the kinds that had been undertaken by Dr Watt and by our expert. What they have done is to go to a document, I imagine from what I would do, right click on the document, the reference to the document electronically, then gone to “properties”, selected “properties” and then copied what appeared in “properties” and that was not - I don’t regard that as being an analysis.

…

[T 192:20]

MR COTMAN

Q. Do you seriously say to his Honour that an analysis by a computer expert that involves looking at the contents of computer files on your computer being your costs agreements, and comparing that to the metadata associated with those files, what you might call the properties, and detecting incongruity between them, is not analysis, is that what you say?

A. No, all they’re reporting on is what shows up on the properties result search. Whether that’s metadata or not, I don’t know, but I can - if I can do it myself, which I could, I don’t regard that as being analysis by computer experts. It’s something any reasonably experienced person with a computer could do. So all they did was provide a preliminary overview of what the documents had. That’s - that was my opinion when I answered Bergin J.”

…

[T 196:15]

HIS HONOUR

Q. No, but what Mr Cotman is asking you--

A. Yes, yes.

Q. --is that, my recollection and the transcript will establish this in due course is that you earlier, when Mr Cotman drew the question at the bottom of page 7 and your answer, to your attention earlier, it said, “How is it that you came to say, ‘No, your Honour’?” Your answer, my recollection is, was to the effect that the, “No,” was because you knew that the franking machine didn’t provide that sort of data, and that you had at the time, that is to say at the time that you were answering her Honour, had it in mind that you had the view that your Mailbook was not reliable.

Now, what Mr Cotman is asking you, I think is, how does that answer sit with now saying to me, in answer to and explaining your earlier exchange with her Honour that you just didn’t remember there was a Mailbook? I guess, which is it?

A. I was, I was obviously wrong when I thought that I was answering her Honour in relation to the Mailbook. I have subsequently looked at the Mailbook and I know what the situation with it was, I have to say that I obviously hadn’t looked at it by the time I was, at the time I was before Bergin J.

Q. Is your evidence now that the, “No,” answer in both places is informed by the fact that at that time, you now tell me, you had forgotten that you had a Mailbook?

A. Yes, your Honour.”

100. The plaintiffs contended that Mr Fordyce was withholding information from both the Court and the Ho parties and that his conduct during the December 2014 Proceedings was “fundamentally dishonest” and reflected his willingness to deceive for his own benefit. They noted that Mr Fordyce did not bring to attention either during the course of proceedings or in his affidavit evidence that he had electronically created the Disputed Engagement Letters in June 2014 and it was not until Rein J refused to set aside the Search Orders in May 2015 that this information was made known. Mr Fordyce’s cross-examination on this topic was said to be another illustration of his evasiveness and cunning:

“[T 186:2]

MR COTMAN

Q. Did you disclose to the independent expert or to the independent solicitors in response to this letter the information that you had created the last three mentioned files, in June 2014?

A. No.

Q. Can you explain to his Honour why you did not do that?

A. I didn’t do it because I was preparing an application to have the orders set aside and that, that notice of motion was filed soon after that letter.

Q. That’s the explanation as to why you would not communicate to the expert or to the solicitor, the proposition that you had reproduced files copied from existing physical files to be found in your records, is that the idea?

A. Yes.

Q. Because you were seeking to prevent the disclosure of the contents of the examination to the Ho parties?

A. No.

Q. That was the ultimate effect of that which you were seeking to do, wasn’t it?

A. It would’ve come out in discovery.

Q. As a solicitor of the Court--

HIS HONOUR

Q. I’m sorry, what would have come out in discovery?

A. They would’ve obtained access in the court proceedings, to the records of - our computer records and this information would’ve come out. It was on the - it was on the records. As far as I know, it wasn’t capable of being deleted or taken off. So, it would’ve come out in the fullness of time.”

Defendants’ submissions

101. The defendants submitted that during the course of his day and a half cross-examination, Mr Fordyce answered “each question candidly and responsibly and he didn’t seek to avoid anything”. He did not present as dishonest or evasive and he made concessions against his own interest which, the defendants submitted, increased the reliability of Mr Fordyce’s evidence. For example, Mr Fordyce acknowledged that usual practice (upon which he sought to rely) was not followed all the time.

102. Further, the defendants argue that the plaintiffs’ submissions misrepresent the content and context of the Burke Letter and provide an “an utterly spurious characterisation” of the Replying Letter. Mr Fordyce’s list of “further inconsistencies” was disclosing information against Mr Fordyce’s own interest and could not be construed as active concealment of the electronic creation of the Disputed Engagement Letters in June 2014.

103. In respect of the hearing before Bergin J, the defendants posited that a reading of the transcript indicated Mr Fordyce, who appeared for himself, was unable to articulate his position clearly and correctly and that consideration should be given to the pressure and challenges which confront any self-represented litigant. They contended the plaintiffs’ proposition that Mr Fordyce misled her Honour was not plain on the face of the transcript and should not be inferred. The defendants submitted that what was clear from the transcript was that Mr Fordyce was confused and overwhelmed by the situation and had misunderstood the questions put to him by her Honour. In cross-examination, Mr Fordyce admitted that his response to her Honour’s question about the existence of the mail-book was “wrong” and that he “wasn’t thinking”.

104. The defendants submitted that it was artificial to separate Mr Fordyce’s conduct at the December 2014 Proceedings from the surrounding circumstances of the Search Orders. Mr Fordyce had explained in cross-examination that at the time the Search Orders were made he was in a state of financial and emotional strain — he was “worked up about this matter” and “very emotionally distressed”. He further explained that he was overseas at his daughter’s wedding, that the solicitor left in charge of the practice during Mr Fordyce’s absence had departed unexpectedly, the practice bookkeeper had stopped working at the office, the practice effectively ceased all other operations to manage the ramifications of the Search Orders, and Pmf Legal was in “in financial difficulties because of the non‑payment of the accounts and then because of the disruption caused to my practice by this matter.” He stated he was concerned about his reputation following the online publication of Rein J’s decision to issue the Search Orders.

105. The defendants asserted that the factual matrix and context of Mr Fordyce’s application to set aside the Search Orders cannot be ignored — it was an interlocutory proceeding concerned with whether the duty of candour to the Court on an ex parte application had properly been discharged to allow for the making of the Search Orders. This was not a sufficient basis for the plaintiffs’ contention that Mr Fordyce’s silence in respect of the circumstances surrounding the creation or replication of the Disputed Engagement Letters reflected his disreputable nature or the submission that “[h]onest and creditable people give a complete account of explicable relevant events at the earliest opportunity”.

Mr Fordyce’s credit — conclusion

106. There is much force in the plaintiffs’ submissions on Mr Fordyce’s credit and I generally prefer them. However, while I do not propose to accept Mr Fordyce as a reliable witness in the sense that I am not satisfied his uncorroborated testimony is likely to be entirely accurate, the evidence does not lead me to conclude that his evidence was deliberately and knowingly false. I was left with the overwhelming impression that Mr Fordyce had embraced technology, especially the “paperless office”, with determination and enthusiasm. He exhibited great pride in that fact. In my view, he could not accept, and was clearly surprised to the point of indignation, that his office systems were unable to support what he had clearly persuaded himself to be the case in relation to the Disputed Engagement Letters. His faith in his office systems and the technology he had adopted seems to have blinded him to the possibility that, for whatever reasons, the Disputed Engagement Letters may not have been prepared or sent. He clearly believed, or had persuaded himself, that they had been prepared and sent and could not contemplate any alternative, even if that compelled him to adopt objectively strained or fanciful explanations.

107. Mr Fordyce presented as an intelligent man. However, his answers were often equivocal and circuitous, and information had to be teased out of him by both counsel and the Court. The several aspects of Mr Fordyce’s evidence and conduct, historically and in these proceedings, identified by the plaintiffs demonstrate his unreliability. I have therefore approached his evidence on the basis that I cannot accept it unless it is inherently credible, against his interest or corroborated by contemporaneous records or other reliable evidence.

108. It is necessary to make some additional observations.

109. I do not find Mr Fordyce’s reasons for recreating the Disputed Engagement Letters (at paragraphs [93] to [95] above) particularly convincing. Moreover, his conduct in presenting the Engagement Letters to the Costs Assessor as copies of letters sent to Mr Ho on or about the date they bear rather than post-dated recreations clearly demonstrates how deeply he had persuaded himself of his view of the world.

110. He also chose not to volunteer this information when questioned by the Mr Burke following the issue of the Klein & Co. Report. In my view, the defendants have misconstrued the Replying Letter in their submission that Mr Fordyce was opting to identify further inconsistences to those noted in the Klein & Co. Report (see paragraph [102] above). The Replying Letter states (emphasis added):

“We have perused the document provided by you on behalf of Klein and Co. and note the following further inconsistences:

- The engagement letter dated 3 April 2012 is identified as by Klein and Co. as having been created 31 January 2012 and last printed 16 September 2010.

- Engagement letter of 27 April 2012 is identified by Klein and Co. as having been created 17 June 2014, accessed 15 June 2014 and printed 15 June 2014.

- Engagement letter dated 4 July 2012 is identified by Klein and Co. as having been created 17 June 2014 and printed 16 September 2010.

This list is not exhaustive, but rather seeks to demonstrate by way of example that the information extracted by the experts simply cannot be correct. While I appreciate the opportunity to present an alternative explanation, I am in no way qualified to provide an explanation for blatantly incorrect metadata, if indeed that is what has resulted in such bizarre findings and if indeed this is metadata that I am referring to — I would not know.

Additionally I consider it somewhat alarming that rather than seeking to find a logical timeline to explain the documents, the computer experts have ceased all work pending my unqualified advice or comment, as per your email of 31 October 2014.

I trust we can agree that the information provided in the Klein & Co. letter can only be incorrect or flawed.

…

The material that has been presented to us now to comment on appears, based on my limited understanding, to be contradictory and impossibly inconsistent.”

111. The Replying Letter does not seem to me to be volunteering or spontaneously disclosing information that was not already plainly present in the Klein & Co. Report. Rather, the Replying Letter intentionally avoids the question put by Mr Burke (see paragraph [60] above) and seeks to deny the correctness of the Klein & Co. Report. In the context of Mr Fordyce knowing that he had created the letters in June 2014 (which would explain the timestamp discrepancies), his assertions that the metadata is “contradictory and impossibly inconsistent” and “incorrect or flawed” are disingenuous. The metadata is not “blatantly incorrect” when the electronic recreation of the hard copy letters in June 2014 is taken into account. It is only “blatantly incorrect” if, like Mr Fordyce, one has an absolutely fixed view that the Disputed Engagement Letters were created as he contends.

112. Mr Fordyce’s explanation in cross-examination as to why he did not disclose from the outset that he had recreated the Disputed Engagement Letters in June 2014 again demonstrates a willingness to strain credulity to conform to his own worldview [T 187:23]:

“MR COTMAN

Q. In an affidavit sworn on 24 October 2014, you depose to matters to seek to deal with what you require to disclose according to this Court’s order, do you recall that?

A. Yes.

Q. In your letter and your affidavit of 20 October 2014 when you were dealing with the disclosure information to conform to the order of the Court, did you disclose that you had lost three files off your system, found three hard copy files and recreated three files in your system?

A. No.   

Q. Can you tell his Honour why you didn’t disclose that?

A. Because the court orders asked me to identify the location of, of the relevant files and electronically and I did that, as far as I could.

Q. The location of the relevant files?

A. That was the court order.

Q. The relevant files, you say, were three files that you could not find?

A. So, I couldn’t identify where they were.

Q. Quite, and you didn’t say that in the affidavit?

A. They could’ve been on the X drive, that’s where they should be. I didn’t think outside that - those parameters.”

113. He was not forthcoming with this information in the December Proceedings before Bergin CJ in Eq. In those proceedings, he stated he had filed an affidavit that dealt “with the creation of the documents, the very important material of production of these records almost a year before they were said to have been created when there was no reason to create the documents for reasons of improving my costs position” [Ex 10P T 11:24–28] yet he seemed studiously to avoid explicitly stating that the letters provided to the Cost Assessor were created in June 2014. It was clear to me that Mr Fordyce could not (or would not) accept that there was any difference between the letters he had “recreated” and what he was so certain were the original, now “lost”, letters.

114. For example, and on the same topic, the following extract from his cross-examination is another illustration of his inability to confront what had occurred [T 98:29]:

“MR COTMAN

Q. Did you say to the Court, to Bergin J or to Rein J, “Look, three of these documents are ones that I put together for the purposes of the costs assessment.”

A. No, I didn’t raise that issue until after the Court had determined the application to set aside the costs - the orders of 1 October.

Q. Why not?

A. Because I didn’t think they were relevant.

Q. You didn’t think it was relevant to mention to either Bergin J or to Rein J that three of the documents that you had sent to the costs assessor were documents that you had produced as recently as July from files that you had produced as recently as June of 2014?

A. That’s correct.

Q. In circumstances where it was being said by Mr Ho and on his behalf that those documents had, in fact, not been received at all, wasn’t it?

A. That was the contention, yes.

Q. Certainly not received about the dates that they bore?

A. I think the contention was they hadn’t ever been received.”

115. A similar lack of candour was exhibited by Mr Fordyce’s responses that he chose not to disclose to Klein & Co. or Mr Burke (and by extension the plaintiffs) that the Engagement Letters had been electronically recreated in June 2014 because “It would’ve come out in discovery” or that he did not disclose this information to Rein J or Bergin CJ in Eq because he did not think it was “relevant” to the application at hand (see paragraphs [100] and [114] above).

116. There were also other inconsistencies which cast doubt on the reliability of Mr Fordyce’s recollection. For instance, in respect of the 31 January BBQ King Letter, Mr Fordyce initially asserted that he had forgotten its existence when preparing the Costs Reponses because “it was some years after the event”. He later gave evidence that he specifically recalled that letter because its postage did not conform to the usual practice — that is, it was not posted on the date the letter bears on the face (see paragraphs [260] and [261] below). At another point he said that the 2014 mail-book contained “no entries”. Examination of the 2014 mail-book reveals that this is not the case and, while some months contain few entries (October 2014 contains two entries for example), the mail-book was being used.

Fraud   

117. It is convenient to consider next the allegations of fraud against Mr Fordyce. It was the plaintiffs’ submission that Mr Fordyce had created and fraudulently backdated the Disputed Engagement Letters. The plaintiffs submitted that Mr Fordyce was motivated to do so because he was prohibited from starting recovery proceedings for unpaid legal costs unless he could prove the existence of costs disclosure to Mr Ho, or unless and until a costs assessment has occurred pursuant to s 317(2) of the Act. Neither was Mr Ho required to pay the legal costs until a costs assessment had occurred. Mr Fordyce admitted he had already suffered financial detriment because of the Costs Assessment Application and that he stood to lose further pending the outcome of the Costs Assessment.

118. The defendants’ fundamental submission was that the plaintiffs had not proved to the requisite standard the allegations of fraud made against Mr Fordyce, the available evidence was not conclusive and there was no evidence of motive, and the Court should not lightly make such a finding.

119. An allegation of fraud must be approached with precision. The case which defendants had to meet was pleaded against them in the amended statement of claim:

“32.    On 16 July 2014, the First and Second Defendants in each of the costs assessment applications forwarded to the Costs Assessment Registry, the following unsigned engagement letters (together the Purported Costs Agreements):

a.   The BBQ King Engagement Letter;

b.   Costs agreement purportedly dated 27 April 2012 between the late Mr. Ho and the First or Second Defendant (Rhodium Engagement Letter);

c.   Costs agreement purportedly dated 7 June 2012 between the late Mr. Ho and the First or Second Defendant (Trading House Engagement Letter);

d.   Costs agreement purportedly dated 4 July 2012 between the Second Plaintiff and the Third Plaintiff and the First or Second Defendant (the Amended BBQ King Engagement Letter);

e.   Costs agreement purportedly dated 4 September 2013 between the late Mr. Ho and the First or Second Defendant (Guardianship Engagement Letter);

f.   Costs agreement purportedly dated 28 January 2014 between the late Mr. Ho and the First or Second Defendant (January 2014 Engagement Letter).

…

43.    The First and Second Defendants knew that the Purported Costs Agreements had not been provided to the Plaintiffs at any time before they were sent to the allocated Costs Assessor on or about 16 July 2014, and knew that the Plaintiffs had not agreed with the First or Second Defendant that they could charge legal costs on the basis set out in the Purported Costs Agreements.

Particulars

i.   The First and Second Defendants knew that they had no signed costs agreements in relation to any of the proceedings;

ii.   The First and/or Second Defendants created the BBQ King Engagement Letter on or about 7 June 2012 and dated the document 3 April 2012;

iii.   The First and/or Second Defendant created, on or about 17 June 2014, the Rhodium Engagement Letter and the Amended BBQ King Engagement Letter and dated them 27 April 2012 and 4 July 2012 respectively;

iv.   The First and/or Second Defendant created the Guardianship Engagement Letter on or about 16 June 2014 and dated the document 4 September 2013.

Conclusion

309. But for the existence of the hard copy letter on the hard copy matter file, I would not be satisfied that the Amended BBQ King Letter was created on or about 3 April 2012. For example, there is no determinative electronic evidence proving the creation of the Amended BBQ King Letter on 4 July 2012. Mr Fordyce’s explanation for this (that the 31 January BBQ King Letter file was used as a source file and the new document was not saved before closing) is no more than plausible. However, the metadata suggests that the 31 January BBQ King Letter file was not opened after June 2012. Mr Fordyce’s recollections in cross-examination were, at best, vague (“I could have printed the document, as you suggested. I don’t recall whether I did, or I didn’t. I sometimes do, but not always” [T 164:20]).

310. However, consistent with my acceptance of the defendants’ evidence of usual practice, based on the presence of the unsigned copy of the Amended BBQ King Letter on the matter file, in circumstances where the Court has not accepted the plaintiffs’ submission of fraudulent recreation and placing of the letter on the file by Mr Fordyce, I find that the letter was brought into existence on 4 July 2012.

311. Nevertheless, based on that same evidence of usual practice, by reason of the absence of an entry in the mail-book on 4 July 2012, when taken with the existence of the other entries for 4 and 20 July recorded in paragraph [299] above (including other letters being sent to Mr Ho), the defendant has failed to satisfy me on the balance of probabilities that the BBQ King Letter was sent to Mr Ho’s PO Box on 4 July 2012 or at all.

312. Ms Klobucar’s absence on 4 July 2012 does not advance the defendants’ case. There is no evidence to suggest that in her absence the mail-book stopped being kept. The number of entries for June, July and August (including other correspondence to Mr Ho) demonstrates that the mail-book was in regular use. Notwithstanding her absence, there are a large number of entries (including one to Mr Ho) for 4 July 2012.

313. A further matter which I have relied on is that the Amended BBQ King Letter is the third engagement letter in relation to the proceedings apparently brought into existence but not recorded in the mail-book as having been sent out. For the same period of time the mail-book records other correspondence such as tax invoices being sent to Mr Ho. Confronted with the choice between accepting that:

1. by some extraordinary coincidence not one, but three engagement letters in relation to the same matter were sent but not recorded in the mail-book, while other correspondence was recorded; or

2. the three letters were not recorded in the mail-book because they were not sent,

the latter is to my mind the far more probable explanation and I find accordingly.

314. In reaching this conclusion I have not overlooked that it could be argued that the existence of the unsigned copy of the letter on the matter file makes it likely that the original was sent. In other words, why bring a copy of the letter into existence if the original was not sent? I do not accept this argument for two reasons. First, an equally plausible explanation is that the copy could be an unsent draft. Second, the argument is speculative, whereas the evidence of usual practice, and the assessment of the consequences where something that should have been recorded was not, is not speculative.

315. When Mr Ho’s evidence of non-receipt of the Amended BBQ King Letter is combined with the failure of the defendants to demonstrate it was ever sent, the Court finds that it was not sent and that the plaintiffs are entitled to the declarations which they seek.

The Rhodium Letter

Witness evidence

316. Mr Fordyce’s evidence is that the retainer with Mr Ho in respect of the Rhodium reinstatement commenced on 27 April 2012. On that day he instructed his personal assistant to create a new file in that matter and to prepare an engagement letter. The matter was given the file number “120027”.

Objective Evidence

317. Two copies of the Rhodium Letter were exhibited to Mr Fordyce’s affidavit: the first is the copy purportedly sent to Mr Ho on about 27 April 2012 which was discovered on the hard copy matter file in October 2017; the second is a copy of what was sent to the Costs Assessor on or about 16 July 2014 which had been recreated in June 2014. Both copies appear identical upon inspection.

318. There is no electronic version of the Rhodium Letter other than the version created by Mr Fordyce in June 2014. The relevant Microsoft Word metadata for that file is as follows:

1. File created: 17/06/2014 8:33:14 AM

2. File accessed: 15/07/2014 15:29:00 AM

3. File modified: 15/07/2014 15:29:00 AM

4. Application created: 17/06/2014 8:29:00 AM

5. Last printed: 15/07/2014 15:28:00 AM

6. Last saved: 15/07/2014 15:28:00 AM

7. H\HO90\120027 Reinstatement of Rhodium Pty Ltd and terminating the winding up\Correspondence\120427 Engagement Letter.doc

319. There is also no entry in the mail-book recording that the Rhodium Letter was sent to Mr Ho on about 27 April 2012. While there is a paucity of entries for April 2012 (which I have addressed in paragraph [288] above), a tax invoice in another matter is recorded as having been sent to Mr Ho on 20 April 2012. The number of entries in May is what might be described as a more usual level (when the 2012 mail-book is viewed as a whole). A tax invoice in another matter is recorded as being sent to Mr Ho on 2 May 2012 and a tax invoice in the Rhodium reinstatement matter is recorded as being sent to Mr Ho on 21 May 2012 (presumably after the Court had dealt with the reinstatement application on that day). The mail-book also records in connection with this matter that a letter with attachments was sent to ASIC on 4 May 2012.

320. The expert evidence is that the electronic Rhodium Letter was first created on 17 June 2014. Dr Watt found 22 backup copies of the 17 June 2014 document and he believed it was probably last printed on 15 July 2014. Mr Carson was not instructed to examine the Rhodium Letter created on 17 June 2014 or the number of backup copies. However, his report states that he “did not identify earlier versions of these files” than those created in June 2014. The experts agreed there were no backup records of the Rhodium Letter from 27 April 2012 but that other files exist in the backup files from 2012 and in deleted sections of the server.

Submissions

321. The defendants submitted that given Dr Watt accepted that there were other feasible explanations for the experts’ inability to locate an electronic copy of the Rhodium Letter (the hypothetical data loss scenarios, which I have rejected as unproven conjecture), the plaintiffs could not demonstrate unequivocally that the Rhodium Letter was not created and not dispatched on or about 27 April 2012, and that the plaintiffs had not discharged its burden of proof in matters of fraud.

322. The plaintiffs submitted that the defendants could not seek to rely on usual practice to establish Mr Fordyce’s case only to then submit that the mail-book (a crucial part of usual practice) was deficient and was not an accurate depiction of all of the correspondence actually sent to Mr Ho, and should be excluded from consideration of the body of evidence principally, the plaintiffs submitted, because it did not support the defendants’ case. They submitted that the first explanation of Pmf Legal’s usual practice as fell from Ms Klobucar was that the mail-book existed and was used — only later did Mr Fordyce contend it was not entirely reliable. The plaintiffs submitted that the defendants could not rebut objective evidence about an existing state of affairs with hypothetical explanations, particularly where it was in the defendants’ power to adduce evidence to prove (on the balance of probabilities) that those things occurred. The plaintiffs argued that the defendants had produced no evidence of virus activity; no evidence of examination of other drive or directory locations on the Pmf Legal server; and, no evidence of a file being created on 27 April 2012 that may be the original file with the Rhodium letter saved over.

Conclusion

323. But for the existence of the hard copy letter on the hard copy matter file, I would not be satisfied that the Rhodium Letter was created on or about 27 April 2012. However, consistent with my acceptance of the defendants’ evidence of usual practice, based on the presence of the unsigned copy of the Amended BBQ King Letter on the matter file, in circumstances where the Court has not accepted the plaintiffs’ submission of fraudulent recreation and placing of the letter on the file by Mr Fordyce, I find that the letter was brought into existence on 27 April 2012.

324. However, I accept the plaintiffs’ submissions recorded in paragraph [322] above. Based on that same evidence of usual practice, by reason of the absence of an entry in the mail-book on 27 April 2012, when taken with the existence of the other entries recorded in paragraph [319] above (including other letters being sent to Mr Ho), the defendant has failed to satisfy me on the balance of probabilities that the BBQ King Letter was sent to Mr Ho’s PO Box on 27 April 2012 or at all.

325. In relation to this letter a particularly influential consideration in my conclusion is the letter to ASIC recorded in the mail-book as having been sent on 4 May 2012. The sending of that letter is independently verified by a reply from ASIC to Mr Fordyce dated 18 May 2012 which is to be found on the matter file which was in evidence before me. There is no hard copy of Mr Fordyce’s letter on the file, but that seems to me to accord with the “paperless office” which I accept he was committed to operating. ASIC’s reply refers to a letter of “14 May 2012”, but I am comfortably satisfied that is an error for 4 May 2012. It records the receipt of 4 attachments (all dated 4 May 2012 or earlier) relating to the reinstatement application.

326. Confronted with the choice between accepting that:

1. for some strange reason the Rhodium Letter was not recorded in the mail-book — in contradistinction to the recording of other correspondence to Mr Ho and the all-important letter to ASIC of 4 May 2012 serving ASIC with the reinstatement application; or

2. the Rhodium Letter was not recorded in the mail-book because it was not sent,

the latter is to my mind the far more probable explanation and I find accordingly.

327. In reaching this conclusion I have not overlooked that it could be argued that the existence of the unsigned copy of the letter on the matter file makes it likely that the original was sent. In other words, why bring a copy of the letter into existence if the original was not sent? I do not accept this argument for two reasons. First, an equally plausible explanation is that the copy could be an unsent draft. Second, the argument is speculative, whereas the evidence of usual practice, and the assessment of the consequences where something that should have been recorded was not, is not speculative.

328. When Mr Ho’s evidence of non-receipt of the Rhodium Letter is combined with the failure of the defendants to demonstrate it was ever sent, the Court finds that it was not sent and that the plaintiffs are entitled to the declarations which they seek.

The Guardianship Letter

Witness evidence

329. Mr Fordyce’s evidence is that the retainer with Mr Ho in respect of the Guardianship Proceedings commenced on or about 4 September 2013. He instructed his personal assistant to open a new file and to prepare a costs agreement. The matter was given the file number “130027”. When he was unable to find an electronic copy in June 2014, he says he replicated the letter from the hard copy version in the hard copy Guardianship matter file.

Objective Evidence

330. The only electronic version of the Guardianship Letter is the version Mr Fordyce created in June 2014. The relevant Microsoft Word metadata is as follows:

1. Created: 16/06/2014 8:16:22 AM

2. File accessed: 16/06/2014 8:22:49 AM

3. Last modified: 16/06/2014 8:22:49 AM

4. Last printed: 16/06/2014 8:22:00 AM

5. Last saved: 16/06/2014 8:22:00 AM

6. Full path: H\HO90\130027 – Guardianship Tribunal application by Miss Sarah Ho\Correspondence\130904 Engagement letter Hourly Precedent-Pmf Legal Limited.docx

331. The relevant Adobe PDF metadata is:

1. Created: 16/06/2014 8:22:16 AM

2. File accessed: 16/06/2014 8:22:18 AM

3. File modified: 16/06/2014 8:22:19 AM

4. PDF Producer: DocuCentre-IV C4470, Fuji Xerox Office Printer/Scanner

332. There is no entry in the mail-book recording that the Guardianship Letter was sent to Mr Ho on about 4 September 2013. The mail-book records a tax invoice in another matter being sent to Mr Ho on 27 August 2013, a tax invoice in the Guardianship matter being sent on 5 September 2013 and other tax invoices on 19 and 26 September 2013. The mail-book also records a letter to the NSW Trustee and Guardian being sent on 10 September 2013 described as “Cover letter with attachments – 12009 Engagement Letter, Judgment/Order”. A hard copy of that letter of 10 September 2013 (without the attachments) is on the file.

333. Two copies of the Guardianship Letter were exhibited to Mr Fordyce’s affidavit: the first is the copy purportedly sent to Mr Ho on about 4 September 2013 which was discovered on the hard copy matter file in October 2017; the second is a copy of what was sent to the Costs Assessor on or about 16 July 2014 which had been recreated in June 2014. The copy on the hard copy matter file appears on top of correspondence received and printed emails sent on 2 and 3 September 2013 by Ms Wu and behind handwritten file notes of several telephone attendances on 6 September 2013.

334. An examination of the hard copy matter file version and the June 2014 version annexed to Mr Fordyce’s affidavit reveals a slightly different file path in the document footer as follows (emphasis added):

1. The hard copy matter file version reads “H:\130904 Engagement letter Hourly Precedent-Pmf Legal Limited.docx”; and,

2. The June 2014 version reads “X:\H\HO90\130027 – Guardianship Tribunal application by Miss Sarah Ho\Correspondence\130904 Engagement letter Hourly Precedent-Pmf Legal Limited.docx”.

335. Mr Carson explained that in a DOS-related system “a drive is denoted by a letter followed by a colon and then backslashes”. The file path is a slash-separated list of directory names which in relation to Ho Matters usually follows the pattern:

1. Drive — X:\

2. Directory — H\

3. Client folder/subdirectory — HO90

4. File name — e.g. “130904 Engagement Letter etc.”

Submissions

336. The defendants again sought to rely on the usual practice evidence to support the inference that the Guardianship Letter was sent to Mr Ho on or about 4 September 2013 and that the unsigned hard copy document existing in the hard copy Guardianship matter file was an original document. However, they contended that the different drive paths — “H:\130904” and “X:\H\HO90” — indicate that the version of the Guardianship Letter in the hard copy matter file was printed from an electronic file originally saved to an “H drive” rather than the usual “X drive”. The defendants say the file path on the hard copy version indicates that it was a printed copy of the original electronic file which had been saved onto a different drive on 4 September 2013 that could now not be located. In contrast, the file path displayed on the June 2014 version indicated that letter was created on the “X” drive (“X:\H\HO90”). This they said supported Mr Fordyce’s account that the original Guardianship Letter was located within the hard copy matter files and that the June 2014 version was an electronic replica of that document which was then saved onto the X drive in accordance with the usual practice. Again, the defendants posited the data loss scenarios and submitted that there was insufficient proof for the Court to make a finding of fraud.

337. The plaintiffs submitted that the defendants had not required Mr Carson to examine the rest of the Pmf Legal server beyond the X drive, including for an “H drive”, and that they had failed to adduce any other evidence supporting the existence of an “H drive”. Mr Carson agreed in cross-examination that he had been instructed that the Disputed Engagement Letters were created in the ordinary way within the client directory on the X drive and that it had not been suggested that the Disputed Engagement Letters could be located on a different part of Pmf Legal’s server. Moreover, Mr Carson stated in cross-examination that access to the whole of Pmf Legal’s server had been discussed with the defendants but ultimately did not occur. Consequently, he had not examined the whole system and “the server images that [he] was given access to weren’t a complete copy of the server.” The plaintiffs submitted that the idea of discrete/separate “H drive” was a recent invention of the defendants otherwise Mr Carson would have been asked to examine such a drive and that a more likely explanation for the different footer was that it was a typographical error when the document was recreated. The plaintiffs again put that the hypothetical data loss scenarios were implausible and became less probable with each repetition in respect of Ho Matters.

338. The defendants responded that it was not within their exclusive power to examine the H drive — the plaintiffs could have requested Dr Watt to do so particularly in circumstances where he claimed having access to the entire Pmf Legal server. Further they submitted that the expert evidence did not support such a conclusion and that the proposition that the existence of an H drive was a recent invention was not put to Mr Fordyce in cross-examination.

Conclusion

339. But for the existence of the hard copy letter on the hard copy matter file, I would not be satisfied that the Guardianship Letter was created on or about 4 September 2013. However, consistent with my acceptance of the defendants’ evidence of usual practice, based on the presence of the unsigned copy of the Guardianship Letter on the matter file, in circumstances where the Court has not accepted the plaintiffs’ submission of fraudulent recreation and placing of the letter on the file by Mr Fordyce, I find that the letter was brought into existence on 4 September 2013.

340. I have not overlooked the plaintiffs’ submission that the different footers in the two extant versions of the Guardianship Letter call into question the authenticity of both of them, and especially the one on the hard copy matter file. However, I am unable to attach any particular significance to the different footers because the expert evidence was unpersuasive and inconclusive.

341. Mr Carson was not asked to examine for an “H drive” and was not provided with a full copy of the server to examine. However, in the images he inspected he stated that he could not recall seeing reference to an “H drive” as distinct from an “H directory”. He speculated that “there could be some history that perhaps the IT person who maintained the system might know why he’s called that H in that tree. Maybe it was mapped as H drive at one point.”

342. Dr Watt was of the opinion that there was no “H drive” and more likely the different footer information was a soft link shortcutting or mapping to another location on the server or on the creator’s computer [T 55:18]:

“Q. The fact that the footer on the version of the document at page 285 contains no reference to the HO90 file or to the matter file number tells us, does it not, that that version of the letter was saved to the H drive and not the X drive, correct?

A. No, that’s wrong, sorry. These are soft links as in the soft link created to the server. It has no bearing on it whatsoever. If this had been the actual server itself, it would have been different, but this is not. This is a soft link on the computer pointing to a location on the server that has been programmed by the person who’s set up the soft link, which is mapping. On Windows, it’s often called mapped drives and—”

343. Nevertheless, based on that same evidence of usual practice, by reason of the absence of an entry in the mail-book on 4 September 2013, when taken with the existence of the other entries recorded in paragraph [332] above (including other letters being sent to Mr Ho), the defendant has failed to satisfy me on the balance of probabilities that the Guardianship Letter was sent to Mr Ho’s PO Box on 4 September 2013 or at all.

344. I should record two matters in relation to the mail-book entries which I have taken into account.

345. First, the tax invoice recorded as sent to Mr Ho on 5 September 2013 is noted as being in the Guardianship Proceeding. It is clear from the hard copy matter file that the matter had only begun a couple of days before, so I am satisfied this is a typographical error. I did consider whether the description of “tax invoice” may have been the error and that it should have read “engagement letter”. However, I consider that far less likely than the matter number being the error because of the level of detail for the surrounding Ho correspondence entries in the mail-book, not least the detailed (and correct) recitation of the contents of the 10 September letter to the NSW Trustee and Guardian. Given the various Ho Matters, I am satisfied that a typographical error in the matter number is a far more likely conclusion than an engagement letter being incorrectly described as a tax invoice. Furthermore, tax invoices in the Guardianship Proceedings are recorded as having been sent to Mr Ho on 26 September 2013 and 4 October 2013, which accords with the course of the matter as appears from the file.

346. Second, confronted with the choice between accepting that:

1. for some strange reason the Guardianship Letter was not recorded in the mail-book, in contradistinction to the recording of other correspondence to Mr Ho and the important letter of 10 September 2013 to the NSW Trustee and Guardian; or

2. the Guardianship Letter was not recorded in the mail-book because it was not sent,

the latter is to my mind the far more probable explanation and I find accordingly.

347. When Mr Ho’s evidence of non-receipt of the Guardianship Letter is combined with the failure of the defendants to demonstrate it was ever sent, the Court finds that it was not sent and that the plaintiffs are entitled to the declarations which they seek.

The Disputed Engagement Letters — conclusion

348. In respect of the Disputed Engagement Letters, the Court finds that because those letters were never sent, the defendants did not make disclosure in accordance with Division 3 of the Act. The costs for work done under the scope of those Engagement Letters should be assessed on the basis there was no costs disclosure (s 363(2)(b)) and no costs agreement (s 361(1)(c)).

349. The Court will give the parties time to make submissions as to the appropriate form of orders and as to costs.

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Amendments

22 February 2019 - Amendment to paragraphs [294], [315], [328] and [347] "the defendants are entitled" is changed to "the plaintiffs are entitled"