Maaz v Fullerton Property Pty Ltd

[2021] NSWCA 79

Court of Appeal

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

Maaz v Fullerton Property Pty Ltd [2021] NSWCA 79

Hearing dates:

22 March 2021

Decision date:

07 May 2021

Before:

Basten JA at [1];
Gleeson JA at [36];
Brereton JA at [37]

Decision:

(1)   Dismiss the appeal from the judgment and orders in the District Court.

(2)   Order that the appellant pay Fullerton’s costs in this Court.

Catchwords:

BUILDING AND CONSTRUCTION – payment claim by builder – false statutory declaration in support of payment claim – statement by builder that all subcontractors paid – claim paid by principal – principal liable to unpaid subcontractors – Contracts Debts Act 1997 (NSW), s 5 – proceedings against builder for moneys paid by principal directly to subcontractors

EVIDENCE – admissibility – hearsay – exceptions – business records – where business records of subcontractor tendered to prove unpaid debt – whether authenticity of document may be determined on the basis of inferences drawn from its form, contents or source – whether production on subpoena necessary – provenance and accuracy of the documents not challenged

EVIDENCE – admissibility – business records –records of a party – whether records of third party warrant discretionary exclusion – whether weight sufficient to establish deceit

TORTS – deceit – misleading and deceptive conduct – false statutory declaration in support of payment claim – statement by builder that all subcontractors paid – statement known to be false – claim paid by principal – principal liable to unpaid subcontractors – loss suffered – payments to subcontractors recovered

Legislation Cited:

Competition and Consumer Act 2010, Sch 2 – Australian Consumer Law, s 18

Building and Construction Industry Security of Payment Act 1999 (NSW)

Contracts Debts Act 1997 (NSW), s 5

Evidence Act 1995 (NSW), ss 48, 69, 135, 166, 167, 183

Cases Cited:

Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542

Asden Developments Pty Ltd (in liq) v Dinoris (No 2) (2015) 235 FCR 382; [2015] FCA 1025

Australian Competition and Consumer Commission v Air New Zealand Ltd (No 1) (2012) 207 FCR 448; [2012] FCA 1355

Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

Capital Securities XV Pty Ltd (Formerly known as Prime Capital Securities Pty Ltd) v Calleja (2018) NSWCA 26

Compafina Bank v Australia and New Zealand Banking Group Ltd [1982] 1 NSWLR 409

Duke Group Ltd (in liq) v Arthur Young (No 3) (1990) 55 SASR 11; 3 ACSR 420

Duncan v R [2015] NSWCCA 84

Gregg v R [2020] NSWCCA 245

Hampton Court Ltd v Crooks (1957) 97 CLR 367; [1957] HCA 28

Jadwan Pty Ltd v Rae & Partners (A Firm) (No 3) [2017] FCA 1045

Karmot Auto Spares Pty Ltd v Dominelli Ford (Hurstville) Pty Ltd (1992) 35 FCR 560; ATPR ¶41-175

Lancaster v R (2014) 44 VR 820; [2014] VSCA 333

Lin v State of Tasmania (2015) 252 A Crim R 64; [2015] TASCCA 13

Marra Developments Ltd and the Companies Act, Re [1979] 2 NSWLR 193

National Australia Bank Ltd v Rusu (1999) 47 NSWLR 309; [1999] NSWSC 539

Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170; [1992] HCA 66

Nicholson v R (1984) 12 A Crim R 231; 113 LSJS 125

Penrith City Council v Penrith Waste Services Pty Ltd [1995] NSWLEC 227

Ross McConnel Kitchen & Co Pty Ltd (in liq) v Ross (No 1) (1985) 1 NSWLR 233

State of Tasmania v Lin (2011) 225 A Crim R 1; [2011] TASSC 54

Trade Practices Commission v TNT Management Pty Ltd (1984) 56 ALR 647; ATPR ¶40-483

Tubby Trout Pty Ltd v Sailbay Pty Ltd (1992) 42 FCR 595; 113 ALR 748

Vinidex Tubemakers Pty Ltd v Marshall (1981) 5 Petty Sessions Review 2414

Vitali v Stachnik [2001] NSWSC 303

Wormleaton v Thomas & Coffey Ltd (No 3) [2013] NSWSC 1817

Texts Cited:

Australian Law Reform Commission, Evidence (Interim) (Report 26, 1985)

Australian Law Reform Commission, Evidence (Report 38, 1987)

Category:

Principal judgment

Parties:

Tony Maaz (Appellant)
Fullerton Property Pty Ltd (Respondent)

Representation:

Counsel:
T Hall (Solicitor) (Appellant)
C Harris SC (Respondent)

Solicitors:
Hall Partners (Appellant)
CKSD Lawyers (Respondent)

File Number(s):

2020/243297

 Decision under appeal 

Court or tribunal:

District Court

Jurisdiction:

Civil

Date of Decision:

24 July 2020

Before:

SJ Gibb DCJ

File Number(s):

2019/103130

HEADNOTE

[This headnote is not to be read as part of the judgment]

The appellant was the sole director of Project.Built Pty Ltd (“the builder”), a company contracted by the respondent in 2015 to construct an apartment building at Kitchener Parade, Bankstown. In the course of the work, the builder made claims for progress payments, for amounts which included payments made to subcontractors. The appellant swore statutory declarations in support of the claims averring that all subcontractors had been paid. Payments were made by the respondent to the builder in reliance upon the statutory declarations. The subcontractors later claimed payment from the respondent for unpaid invoices rendered to the builder. The respondent met those claims.

In 2019 the respondent commenced proceedings for deceit and misleading or deceptive conduct, claiming that statements in certain statutory declarations by the appellant were untrue and that the builder had not paid the subcontractors. The loss suffered by the respondent was calculated by reference to the later payments it had made directly to the subcontractors.

On 24 July 2020 the trial judge entered judgment in favour of the respondent in the sum of $388,318.31, which included $50,000 for exemplary damages. On the appeal, the appellant challenged the findings made with respect to the admissibility of the business records of the subcontractors and submitted that no loss arose unless the cost of the development exceeded the price under the fixed price contract with the builder, which had been terminated.

The principal issues before the Court were:

1. whether the records of the subcontractors were admissible to establish that the subcontractors had not been paid by the builder; and

2. whether the respondent had suffered financial loss where the contract was for a fixed price and there was no evidence that the fixed price had been exceeded.

Consideration was also given to whether:

1. the records should have been excluded in the judge’s discretion as prejudicial; and

2. the records had insufficient weight to demonstrate the elements of deceit.

Held, dismissing the appeal:

Issue (1) – admissibility of subcontractors’ records

per Basten JA (Gleeson JA agreeing):

1. Although representations contained in the subcontractors’ records were hearsay because made out of court by persons not called as witnesses, they were admissible as business records: [20]-[23]; [31].

Evidence Act 1995 (NSW), s 69 applied.

1. Where the authenticity of a document was in issue this may be determined on the basis of inferences drawn from its form, contents or source. Although the documents relied upon were not obtained in response to a subpoena, their authenticity was not in doubt. The acquisition of documents by means of subpoena in other cases did not distinguish these facts from others: [25]-[26].

Evidence Act 1995 (NSW), s 183 applied.

Capital Securities XV Pty Ltd (formerly known as Prime Capital Securities Pty Ltd) v Calleja [2018] NSWCA 26; Gregg v R [2020] NSWCCA 245 followed.

per Brereton JA:

1. Whether a previous representation is admissible under s 69 depends on whether (i) it is contained in a document which forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business, or at any time was or formed part of such a record; (ii) it was made or recorded in that document in the course of, or for the purposes of, that business; and (iii) it was made by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact, or on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact: [58].

2. For the purposes of determining whether the conditions under s 69 of the Evidence Act are satisfied, the Court may examine the documents and draw reasonable inferences from them: [59].

3. Here (i) invoices issued by subcontractors to the builder were not admissible as business records of the respondent, but were admissible as business records of the subcontractor; (ii) emails from the subcontractors to the respondent or its agent were admissible as business records of the subcontractor and as business records of the respondent; (iii) bank statements and internet payment summaries were admissible as business records of the respondent: [60]; [62]-[64]; [70]-[74]; [76]-[77].

Evidence Act 1995 (NSW) ss 69, 183.

Australian Competition and Consumer Commission v Air New Zealand Ltd (No 1) (2012) 207 FCR 448; [2012] FCA 1355; Asden Developments Pty Ltd v Dinoris (No 2) (2015) 235 FCR 382; [2015] FCA 1025; Jadwan Pty Ltd v Rae & Partners (No 3) [2017] FCA 1045; Tasmania v Lin (2011) 225 A Crim R 1; Tubby Trout Pty Ltd v Sailbay Pty Ltd (1992) 42 FCR 595, applied.

Issue (2) – assessment of loss

per Basten JA (Gleeson JA agreeing), Brereton JA:

1. The relevant contract was between the respondent and the builder; the proceedings were between the respondent and the appellant. The claim against the appellant was in tort and under the Australian Consumer Law, it was not in contract. The contract did not control the loss suffered by the respondent for the false statements of the appellant: [32]-[34], [89]-[90].

Issue (3) – failure to exclude on basis of prejudice

per Brereton JA:

1. Statements of fact in a business record are admissible against anyone, not only against the party in whose records they appear: [79]-[80]. Ample notice having been given of intention to tender the business records, where the appellant did not make any request under Evidence Act, s 167, to enable the provenance or accuracy of the documents to be tested, there was no reason to exclude them in the judge’s discretion under Evidence Act, s 135: [84].

Issue (4) – weight to establish deceit

per Brereton JA:

1. Weight is essentially a matter for the trial judge. There was no reason to doubt the authenticity or accuracy of the documents, and the appellant adduced no evidence to contradict them. The trial judge was justified in treating the documents as reliable: [86]-[87].

Judgment

1. BASTEN JA: In 2015 the respondent, Fullerton Property Pty Ltd (“Fullerton”), entered into a contract with Project.Built Pty Ltd (“the builder”) for construction of an apartment building at Kitchener Parade, Bankstown. The appellant, Tony Maaz, was the sole director of the builder. The contract was terminated by Fullerton and the builder is now in liquidation.

2. In the course of the construction work, the builder made claims for progress payments pursuant to the terms of the contract and the Building and Construction Industry Security of Payment Act 1999 (NSW) (“Security of Payment Act”). Such claims included recovery of payments made by the builder to subcontractors. In accordance with the contract, the appellant supplied statutory declarations asserting that such payments had been made. On the basis that such statements were correct, the builder was reimbursed the amounts of those payments by Fullerton.

3. In 2019 Fullerton commenced proceedings in the District Court against the appellant, claiming that certain of the statutory declarations were untrue in that the payments to subcontractors verified by the appellant as having been made had not in fact been made. The proceedings against the appellant were brought in (i) deceit and (ii) for breach of the prohibition on misleading or deceptive conduct in trade and commerce under s 18 of the Australian Consumer Law. The loss suffered by Fullerton was calculated by reference to the payments later made by it to subcontractors in respect of amounts earlier paid by it to the builder on the basis that the subcontractors had already been paid.

4. On 24 July 2020 the trial judge (S J Gibb DCJ) entered judgment in favour of Fullerton against the appellant in the sum of $388,318.31, which included an amount of $50,000 for exemplary damages.

5. On 21 October 2020 the appellant filed a notice of appeal containing four grounds. Grounds 1-3 asserted that Fullerton’s evidence, relying on the business records of the subcontractors, was not admissible to establish that the subcontractors had not been paid by the builder. Ground 4 alleged that Fullerton was not entitled to claim damages unless it could be shown that the cost of the development, including the further payments to subcontractors, exceeded the price under its fixed price contract with the builder.

6. The appellant’s written submissions appeared to add a further ground, namely that, if the material relied on to demonstrate non-payment of the subcontractors were admissible, it nevertheless failed to satisfy the heightened standard of proof required where the allegation against the appellant was of conduct involving grave moral delinquency; the appellant relied on the reasoning of the High Court in Briginshaw v Briginshaw [1] affirmed in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd. [2]

   1. (1938) 60 CLR 336; [1938] HCA 34.

   2. (1992) 67 ALJR 170; [1992] HCA 66.

7. In his written submissions in reply, the appellant’s solicitor acknowledged that an authority relied on by him in asserting the inadmissibility of the records was no longer good law. Nevertheless, he sought to maintain the claim of inadmissibility based on the fact that the material from the subcontractors had not been obtained under subpoena. He identified the issues as (i) application of the Briginshaw standard of proof, (ii) the admissibility of the third party business records (and the effect of them), and (iii) the calculation of damages in the light of the fixed price contract.

8. In the course of oral submissions, the appellant’s case was refined to two issues, namely (i) failure to prove the falsity of the statutory declarations, [3] and (ii) the failure to establish that the respondent suffered expenditure greater than the price under the fixed price contract. If loss were established, no issue was raised with the finding as to exemplary damages. [4]

Proof of falsity of statutory declarations

3. CA tcpt, 22/03/21, p 9(20).

4. Tcpt, p 15(25).

(a)   background

9. The entitlement to progress payments depended upon the operation of the contract and the Security of Payment Act. Pursuant to cl 38.1 of the contract, the builder was required to give “in respect of a progress claim, documentary evidence of the payment of moneys due and payable to … the subcontractors”. That documentary evidence was to be in the form of a statutory declaration. Fullerton was entitled to “withhold moneys certified due and payable in respect to the progress claim until [the builder] complies with sub-clause 38.1”: cl 38.2. The standard form of statutory declaration provided with each progress claim was, so far as relevant, in the following terms:

“I, Tony Maaz, do solemnly and sincerely declare that:

I am a director of Project.Built Pty Ltd and am authorised to make this Statutory Declaration.

To the best of my knowledge and belief having made all reasonable enquiries that at the date of …

…

All subcontractors and/or suppliers of material who are or at any time have been engaged on the Project have, subject to any dispute noted below …, …been paid in full all moneys which have become payable under the terms of each Subcontractor Agreement for supply.”

10. The evidence before the trial judge was almost entirely documentary, the bulk of the documents being annexed to an affidavit of (Michael) Yu Wang sworn on 15 March 2020. Mr Wang was the sole director and secretary of Fullerton. Mr Wang exhibited to his affidavit:

1. the contract documentation;

2. a copy of an email from the builder requesting that the respondent pay the invoices of subcontractors directly (which occurred from about September 2017);

3. copies of the “progress drawdown reports” accompanied by the statutory declarations signed by the appellant;

4. a list of the progress claims made by the builder;

5. a record of all payments made by Fullerton to the builder;

6. a table of the invoices issued by the subcontractors to the builder relevant to Fullerton’s claim and the payments made by Fullerton to the subcontractors in satisfaction of the invoices; and

7. copies of relevant subcontracts.

11. A schedule of double-payments included in Mr Wang’s affidavit was reproduced, but not identical terms, as a schedule to the statement of claim. There were variations made to that schedule in the course of the proceedings, resulting in a final document being prepared by Fullerton which became MFI 8 and was the subject of a response by the appellant’s solicitor, which became MFI 9. This was the final form of the schedule relied upon by the judge in calculating Fullerton’s loss. However, as nothing turns on the calculations, as opposed to the underlying principle, there is no need to refer to that material further.

(b)   case pleaded

12. To understand the scope of the issue as to the falsity of the declarations, it is convenient to identify the matters in dispute as a result of the pleadings.

13. First, the amended statement of claim identified 16 subcontracts entered into by the builder and asserted that under each the builder was liable for payment for the work performed. Those allegations were not admitted in the defence, but they were proved by Fullerton and nothing arises in relation to them on the appeal. The statement of claim then made allegations in relation to each payment claim for the months from March – August 2017. The statement of claim alleged that each payment claim included (i) amounts referable to work performed by subcontractors; (ii) a statutory declaration by the appellant; (iii) a tax invoice issued by the builder for the amount of the claim, and stated that Fullerton had paid the claim in reliance on the appellant’s assertion that the builder had paid the subcontractors. [5] None of those allegations was admitted, but none was denied. [6]

    5. Amended statement of claim, pars 16, 17, 19-21 (March payment claim).

    6. Amended defence, 9, 10, 12-14.

14. The pleading further alleged that each statutory declaration contained representations by the appellant that, “to the best of his knowledge and belief and having made all reasonable inquiries” the builder had paid the relevant subcontractors in full and alleged that reasonable inquiries would have revealed that the subcontractors had not been paid. [7] The appellant admitted executing the supporting statements on behalf of the builder but asserted that he had relied on representations of his bookkeeper who had been stealing money from the builder and denied that reasonable inquiries would have revealed the true situation. [8]

    7. Amended statement of claim, pars 18, 22.

    8. Amended defence pars 10, 15.

15. The affirmative claim of being the victim of fraud was not supported by evidence. At the trial the appellant gave no evidence and called no evidence; his forensic strategy was to put Fullerton to proof. The only issue remaining in this Court, as to which proof was said to be lacking, was the fact that the subcontractors had not been paid.

(c)   reasoning as to falsity

16. Because of the limited nature of the appeal, it is convenient to identify one example of the reasoning as to the non-payment of invoices by the builder. The judge undertook this task by examining the documents relevant to the particular subcontractors. The payments were organised by Fullerton’s contract superintendent, Foresight Management Pty Ltd, which was also identified by the judge as Fullerton’s project manager. [9] There was evidence that, in September 2017, Foresight Management organised the request by the builder that Fullerton pay subcontractors directly.

    9. Judgment, p 2.5.

17. In relation to Complete Plumbing Solutions Pty Ltd, which issued invoices totalling some $50,000 in January and June 2017, the judge noted: [10]

    10. Judgment, p 19.9.

“On 16 April 2018 Complete Plumbing Solutions Pty Ltd informed the contract superintendent that these accounts still had not been paid and asked for payment (exhibit 3/270-272).”

The communication of 16 April 2018 was an email from Jason Borg of Complete Plumbing to the manager of Foresight Management, Ben Clifton. Mr Borg’s email attached the two tax invoices with the statement:

“Attached are invoices due by project built. These will need to get paid by tony or client before certificates are handed out. Total $50,045.50”.

Mr Clifton forwarded the email to Justin Wang, Mr Michael Wang’s brother who also worked for Fullerton. The invoices were described as “outstanding, payable by Project Built.”

On 7 June 2018 Mr Clifton wrote to the appellant stating that various sums were outstanding including:

“2.   Payments by the Principal to subcontractors for work that the Principal had already paid Project Built. These payments, referred to as debt payments on behalf of Project Built, were necessary to ensure that subcontractors continued to attend site and provide their certification. The total quantum of this debt exclusive of GST is $686,694.” [Blue175]

There was no response from the appellant to that letter.

18. It is not in dispute that the subcontract work was done, nor that the amounts charged were appropriate. There was no evidence that the invoices had been paid by the builder. There was evidence that Fullerton later paid those invoices directly. The only question was whether there was any evidence from which it could be inferred that the invoices had not been paid by the builder.

19. The failure of the appellant to respond to the letter of 7 June 2018 might form the basis for an implied admission, but the figure referred to in the letter is well in excess of the amount accepted by the trial judge and there was no breakdown of the claim annexed to the letter. The question is, therefore, whether the records involving Complete Plumbing constituted admissible evidence.

(d)   legal principles

20. In principle the statements by Mr Borg, who was not called, were hearsay. The admissibility of his email and the attached invoices turned on the application of s 69 of the Evidence Act 1995 (NSW) with respect to the admissibility of business records by way of an exception to the rule excluding hearsay evidence. Section 69 provides as follows:

69   Exception: business records

(1)   This section applies to a document that—

(a)   either—

(i)   is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business, or

(ii)   at any time was or formed part of such a record, and

(b)   contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business.

(2)   The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made—

(a)   by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact, or

(b)   on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact.

(3)   Subsection (2) does not apply if the representation—

(a)   was prepared or obtained for the purpose of conducting, or for or in contemplation of or in connection with, an Australian or overseas proceeding, or

(b)   was made in connection with an investigation relating or leading to a criminal proceeding.

(4)   If—

(a)   the occurrence of an event of a particular kind is in question, and

(b)   in the course of a business, a system has been followed of making and keeping a record of the occurrence of all events of that kind,

the hearsay rule does not apply to evidence that tends to prove that there is no record kept, in accordance with that system, of the occurrence of the event.

(5)   For the purposes of this section, a person is taken to have had personal knowledge of a fact if the person’s knowledge of the fact was or might reasonably be supposed to have been based on what the person saw, heard or otherwise perceived (other than a previous representation made by a person about the fact).

21. There was no attempt to examine the operation of s 69 in the course of the appeal. Indeed, there was no attempt to identify any particular document which may have been admitted under s 69 which was said to be inadmissible. Rather, the appellant’s case at trial was that the documents could not prove their own authenticity and therefore admissibility. Reliance was placed on the following reasoning of Bryson J in National Australia Bank Ltd v Rusu:[11]

“[17] Before a business record or any other document is admitted in evidence it is obviously necessary that there should be an evidentiary basis for finding that it is what it purports to be. Documents are not ordinarily taken to prove themselves or accepted as what they purport to be; there are exceptions under the common law and under statutes for public registers and for many kinds of documents when certified in various ways: and see the method of proof provided in some cases by ss 170 and 171 of the Evidence Act 1995. At the simplest, the authenticity of a document may be proved by the evidence of the person who made it or one of the persons who made it, or a person who was present when it was made, or in the case of a business’s record, a person who participates in the conduct of the business and compiled the document, or found it among the business' records, or can recognise it as one of the records of the business.

…

[28]   So far as I am aware there is no judgment which has decided that under the Evidence Act 1995 the authenticity of a document tendered in evidence may be determined simply on the basis of the form and contents of the document or on that basis taken with information about the source from which it was produced showing that it was produced on subpoena and by whom. References in case law to authentication of documents tendered are usually brief and incidental. …”

11. (1999) 47 NSWLR 309; [1999] NSWSC 539.

22. The trial judge did not accept that approach; rather, she correctly preferred the reasoning of Leeming JA in the Capital Securities XV Pty Ltd (formerly known as Prime Capital Securities Pty Ltd) v Calleja. [12] As Leeming JA explained at [100]-[101], Bryson J had not been referred to s 183 of the Evidence Act (to which reference will be made below) nor had he obtained any useful assistance from the parties objecting to the tender of the documents. In any event, the appellant accepted that Rusu had been expressly overruled in Gregg v R. [13]

    12. [2018] NSWCA 26.

    13. [2020] NSWCCA 245 at [362]-[372] (Bathurst CJ); Hoeben CJ at CL agreeing at [712] and Leeming JA at [713]-[716].

23. Adopting the approach to s 69 accepted by Leeming JA in Calleja, the following conclusions may be drawn with respect to the present documents.

1. Section 69(1) states that the section applies if a document satisfies two criteria. The first is that it forms part of the records kept by a person, body or organisation for the purposes of a business. There may be little doubt that the email produced by Mr Wang constitutes such a record. However, the important consideration, to which no reference was made in Rusu, was the way in which the court may approach such a document. For that purpose, s 183 of the Evidence Act provides:

183   Inferences

If a question arises about the application of a provision of this Act in relation to a document or thing, the court may—

(a)   examine the document or thing, and

(b)   draw any reasonable inferences from it as well as from other matters from which inferences may properly be drawn.

2. On its face, the document may be seen to be a business record. The subject matter identified by Mr Borg from Complete Plumbing was “FW: Invoices” and the email from Mr Clifton to Mr Wang was headed “Complete Plumbing – Project Built debt”. There could be no error in the identification of the document as a business record in the hands, probably, of Complete Plumbing, Foresight Management and Fullerton.

3. The second criterion requires that the document contain or record a representation made or recorded in the course, or for the purposes, of the business. The document contains a number of representations: the relevant one for present purposes is that made by Mr Borg, namely that Project.Built had not paid the attached invoices. That representation was made by Mr Borg in the course, and for the purposes, of the business of Complete Plumbing. It may be inferred that the email and the attached invoices were documents constituting part of the business records of Complete Plumbing.

4. Section 69(2) then provides that the hearsay rule will not apply to the document (or so much of the document as contains the representation) if the representation was made by a person who had, or might reasonably be supposed to have had, personal knowledge of the asserted fact. It may readily be inferred that Mr Borg had such knowledge. It might also be inferred that Fullerton’s agent, Mr Clifton, had such knowledge from his dealings with the appellant and with the subcontractors. However, it is sufficient for present purposes that the representation qualifies as a representation contained in a business record of Complete Plumbing.

5. Accordingly, the representation was admissible (and properly admitted) by way of an exception to the hearsay rule.

24. It was not entirely clear that the appellant, by the time the matter reached the hearing of the appeal, resisted that conclusion. Further, as the appellant did not challenge particular findings, it is not necessary to identify each of the relevant findings of non-payment made by the trial judge to test the assertion of inadmissibility.

25. Finally, it was submitted that the reasoning in Calleja could be distinguished because the documents in that case were obtained by response to a subpoena and therefore their source was not in issue. [14] Mr Hall further submitted: [15]

“We say that … if you want to prove [non-payment], you go to Complete Plumbing and you get an affidavit from someone at Complete Plumbing or alternatively, you issue Complete Plumbing a subpoena in which you request the issue of documents to the Court, being copies of any unpaid invoices at a particular day. And, you can’t just get the invoice and say, here it is addressed to us and it’s also addressed to Project Built, the builder. And, that means, you never paid it. It could mean anything of a number of things. And, we don’t understand why the [respondent] didn’t go about proving their case in the conventional way but, they didn’t.”

14. Tcpt, p 11(3)-(20).

15. Tcpt, p 14(29)-(38).

26. Procedures by which documents may be obtained (including discovery, subpoenas and notices to produce) are often the only way to obtain a document that a party does not possess. It is also true that production under compulsion may confirm the authenticity of a particular record. However, in this case, Fullerton had the documents it needed; furthermore, their authenticity was not in doubt. The fact that the documents the subject of consideration in Calleja were obtained under subpoena was of no consequence for the soundness of the reasoning in that case, nor the appropriateness of its application in the present case.

(e)   comfortable satisfaction

27. As the appellant submitted, admissibility of the document was one thing, the weight to be attached to it was another. The appellant’s submission was that a finding of deceit involved deliberate dishonesty on the part of the appellant and that sufficient weight could not be derived as an indirect inference from an email attaching two invoices and stating they had not been paid.

28. The trial judge made it clear that she understood that Fullerton’s claim in deceit involved a “grave allegation” and said the appellant “rightly urged caution”, referring to Briginshaw and the requirement that the tribunal achieve a state of actual satisfaction having regard to the seriousness of the allegation and the gravity of the consequences flowing from a particular finding.

29. The ensuing discussion involved detailed reference to the evidence, which was not restricted to the matters which have been adverted to above. The judge stated: [16]

“By 23 June 2017 the defendant knew (or reasonably ought to have known) the building company was in some financial trouble. He was negotiating for a cash ‘injection’ by the builder’s banker (Commonwealth Bank) as well as negotiating with subcontractors about time to pay …. He was actively involved in discussing payment arrangements at least with the electrician on 22 June 2017 … – just weeks before he made the 7 July 2017 statutory declaration, which was followed by 2 others (to the same effect), respectively on 3 August 2017 and 5 September 2017.

By the end of June 2017, the defendant was on notice that payments had not been made, at least to the electrician with whom he was negotiating about payment (as he was with the bank). Minimal enquiry would have revealed the lack of that payment (which he had discussed directly with the electrician) as at 7 July 2017 (where he knew about the absence of payment in full days before making the declaration). …

…

As and from 7 July 2017 … the false representations made (as to both payment and ‘reasonable enquiry’) that can only have been made knowingly. All were made after he knew that at least the payments to the electrician had not been made. The subject matter of the representations was well within the [appellant’s] knowledge and not readily verifiable by the [respondent].”

16. Judgment, p 28.7.

30. None of this material was addressed in the course of submissions, either in writing or orally. That may well have been because the challenge was as to the falsity of the statutory declaration, there being no reference in the notice of appeal to error in drawing an inference that, for the purpose of the claim in deceit, the appellant knew that the statutory declarations were false. Even in oral argument, it was far from clear that such a submission was made, the appellant’s solicitor, Mr Hall, concluding that “on the exemplary damages point, we say that we are not in a position to cavil with the trial judge’s finding on exemplary damages, if and where a positive finding of damages is made.” [17] The point with respect to damages is the matter which will be dealt with below: relevantly for present purposes, that concession, combined with the absence of evidence from the appellant, who must have known whether the subcontractors had in fact been paid, provided an ample basis for the judge to reach a comfortable satisfaction as to the allegations made by Fullerton. There was no error either in her statement of the relevant principle, or in the application of the principle.

    17. Tcpt, p 15(22)-(25).

31. In these circumstances, the challenge to the admissibility of the business records must fail and the judge’s findings based on those records must be upheld.

Calculation of loss

32. The second and independent point raised on the appeal was the claim that no loss had been proved and thus no right to compensation by way of damages had been established. The appellant asserted that no loss was established unless the respondent proved that the additional payments to the subcontractors had resulted in expenditure in excess of the fixed price provided in the contract.

33. The argument was based upon a misapprehension. The relevant contract was between Fullerton and the builder; the proceedings are between Fullerton and the appellant. The claim against the appellant was in tort, including the statutory cause of action under the Australian Consumer Law in that category: it was not in contract. The representations which induced the payments involved expenditure on account of the subcontractors, being amounts which, if not paid by the builder, Fullerton was required to pay pursuant to s 5 of the Contractors Debts Act 1997 (NSW). The wrong involved the builder obtaining payment of those moneys in circumstances in which it was not entitled to them, not itself having paid the subcontractors. It is true that the improperly made payments did not go to the appellant, but to the builder, but they were paid out as a result of misrepresentations made by the appellant for the sole purpose of obtaining payments to the builder. Fullerton made payments which it was neither obliged to make, nor would have made, but for the misrepresentations by the appellant. Whether or not those payments resulted in it expending more on the project than the fixed price contract with the builder (which was never completed), is irrelevant.

34. The only basis upon which an issue could arise under the contract would be if Fullerton were to claim in the insolvency of the builder for moneys had and received by the builder which were not due under the contract. No such claim is before this Court: the possibility of such a claim does not relieve the appellant of its liability.

Conclusion

35. The various grounds of appeal having failed, the appeal must be dismissed. The appellant must pay the respondent’s costs in this Court. Accordingly, the Court should make the following orders:

1. Dismiss the appeal from the judgment and orders in the District Court;

2. Order that the appellant pay Fullerton’s costs in this Court.

36. GLEESON JA: I agree with Basten JA.

37. BRERETON JA: The respondent Fullerton Property Pty Ltd was the owner of a property in Kitchener Parade, Bankstown, which it proposed to develop into an eight-storey apartment block. Fullerton contracted Project.Built Pty Ltd (now in liquidation), of which the appellant Tony Maaz was the sole director and shareholder, as its builder, and appointed Foresight Management Pty Ltd as its project manager, to act as the superintendent under the contract, to “monitor project costs” and to “check and process all progress claims” by the builder.

38. Work on the project commenced at the end of 2016. Project.Built sub-contracted various parts of the building work to consultants and sub-contractors. Clause 38.1 of the contract between Fullerton and Project.Built provided that the builder would, when making progress claims, provide a Statutory Declaration (a) confirming that all subcontractors had been paid in full all moneys which had become payable under the terms of the relevant subcontract, and if it was unable to do so (b) evidencing the moneys that were due and payable. Clause 38.2 provided that Fullerton was entitled to withhold moneys certified due and payable in respect of a progress claim until Project.Built complied with sub-clause 38.1, up to the amount that was unpaid. Clause 38.3 provided that before final payment Fullerton could pay any unpaid sub-contractors directly, and that any amounts so paid were deemed to be in part satisfaction of Fullerton’s obligation to pay Project.Built.

39. During 2017, Project.Built made progress claims, including in respect of work completed by subcontractors. Mr Maaz made a number of Statutory Declarations that stated that Project.Built had paid all moneys owed by it to subcontractors. Relying on those declarations, Fullerton paid progress claims made by Project.Built, without withholding any amount under clause 38.2. A number of subcontractors, in respect of whose work Fullerton had already made payments to Project.Built pursuant to progress claims, without withholding amounts which had the statutory declarations been accurate it would have been entitled to withhold, subsequently claimed not to have been paid, and Fullerton paid them directly. In the District Court, Fullerton sued Mr Maaz for damages, including exemplary damages, for contravention of s 18 of the Australian Consumer Law [18] (on the basis that his statutory declarations were misleading and deceptive) and for deceit (on the basis that they were intentionally false).

    18. (CTH) Competition and Consumer Act 2010, Sch 2 – Australian Consumer Law, s 18.

36. At the hearing, Fullerton read two affidavits of its sole director Yu Wang, to which were exhibited various relevant documents, in particular invoices issued by subcontractors to Project.Built, and emails emanating from subcontractors to Foresight containing statements to the effect that they had not been paid. The affidavit did not explain the provenance of the documents exhibited; in particular, it did not state the source from which they had been obtained. The subcontractors who had prepared and issued the invoices or sent the emails were not called. Mr Maaz adduced no evidence in his defence.

37. The trial judge gave judgment for Fullerton for compensatory damages of $322,208; interest of $16,110; and exemplary damages of $50,000. From that judgment Mr Maaz appeals to this Court. Ultimately, there were two issues on the appeal:

1. whether there was admissible evidence sufficient to prove to the requisite standard that the subcontractors had not been paid, and thus that the statutory declarations were false; and

2. whether the respondent had proved that it had suffered any loss.

The evidence of non-payment

42. The appellant contended that, in the context of allegations of deceit to which the “Briginshaw standard”[19] of proof applied, the trial judge erred in making findings based on the drawing of inferences in respect of business records that were not created by Fullerton. At trial, and initially in the appeal (in written submissions), the appellant submitted, on the authority of National Australia Bank Ltd v Rusu (‘Rusu’),[20] that in the absence of evidence as to the authenticity and provenance of the documents tendered, they were inadmissible. This submission, which was made in ignorance of the judgment of the Court of Criminal Appeal in Gregg v R,[21] which overturned Rusu, was subsequently refined to one that some evidence was still required to demonstrate the authenticity and provenance of a business record before it is admitted; and that in any event the fact that they were “third party” records, which were not created by Fullerton but came into its possession as contract principal or through its project manager Foresight, “militated against their reception or weight”, in the absence of direct evidence from the subcontractors who generated them.

    19. See Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34.

    20. (1999) 47 NSWLR 309; [1999] NSWSC 539.

    21. [2020] NSWCCA 245.

The evidence and reasoning

43. This submission invites attention to the manner in which the trial judge used the documents in question to conclude, as her Honour did, that specific invoices issued by each relevant subcontractor had not been paid when Mr Maaz made a relevant statutory declaration, and remained unpaid until they were subsequently paid by Fullerton, and thus that the statutory declarations were false. That process, which her Honour set out precisely and transparently with reference to the relevant documents for each subcontractor and invoice, may be summarised as follows.

44. Golden Touch Rendering and Painting Pty Ltd: Golden Touch issued invoice 1, dated 20 June 2017, to Project.Built for $19,800. Her Honour inferred that this invoice remained unpaid when Mr Maaz made the statutory declaration of 3 August 2017 from a Westpac bank statement for an account in the name of Fullerton dated 31 October 2017, which contained an entry evidencing a “Withdrawal Online” on 24 October 2017, being “Pymt Golden Tou Rendering” of $25,000. The conclusion that until then the invoice remained unpaid was an inference, drawn from the proved fact of payment by Fullerton on that date, in the absence of any evidence that it had earlier been paid.

45. Complete Plumbing Solutions Pty Ltd: Complete Plumbing rendered invoice 0051 to Project.Built on 30 December 2016 for $15,945.50 and invoice 0085 on 27 June 2017 for $34,100. On 16 April 2018, Mr Borg of Complete Plumbing sent an email to Mr Ben Clifton of the project manager Foresight, attaching those two invoices:

“Attached are invoices due by project built. These will need to get paid by tony or client before certificates are handed out. Total $50,045.50.”

The conclusion that these invoices remained unpaid when Mr Maaz made the statutory declarations of 29 March 2017 and 3 August 2017 respectively was based on the statement in the email, which was to the effect that the invoices remained unpaid as at 16 April 2018.

46. M Sola Electrics Pty Ltd: Sola Electrics issued invoice 6 to Project.Built on 23 April 2017 for $18,549.30, and invoice 7 on 24 May 2017 for $19,198.30. It issued invoice 8 on 24 June 2017 for $49,481.30, and invoice 9 on 24 July 2017 for $28,563.70, addressed to Fullerton directly, but marked for the attention of Project.Built.

47. Her Honour inferred that these invoices remained unpaid when Mr Maaz made the statutory declaration of 3 August 2017 from internet payment summaries dated 8 February 2018, 11 April 2018, 1 March 2018 and 27 November 2017, of payments by Fullerton identifying Sola Electrics as the payee, in amounts which correspond precisely with the invoices. That for 11 April 2018 states that it was authorised by Yu Wang, Fullerton’s sole director. That for 1 March 2018 specifically refers to “Claim No 8”. The conclusion that until then the invoices remained unpaid was an inference, drawn from the proved fact of payment by Fullerton on that date, in the absence of any evidence that it had earlier been paid.

48. National Aluminium: National Aluminium issued invoice 1919 to Project.Built on 20 April 2017 for $35,000; invoice 1945 on 29 May 2017 for $12,000; and invoice 1966 on 22 July 2017 for $12,000. By email of 6 October 2017, Mr Hraibi of National Aluminium sent copies of the invoices to Mr Clifton at Foresight, and in response to a request from Mr Clifton stated:

“All work have been completed and no payment has been received on any of the relevant invoices.”

The conclusion that these invoices remained unpaid when Mr Maaz made the statutory declarations of 8 June, 7 July and 5 September 2017 respectively was based on the statement in the email, to the effect that the invoices remained unpaid.

49. Kone Elevators Pty Ltd: Kone issued claim no 2 to Project.Built on 11 July 2017 for $96,954. By email dated 9 October 2017, Ms San Gil of Kone responded to a query from Foresight as to whether the lift in question had not been installed because Kone was awaiting payment of the invoice:

“That is correct.”

The conclusion that this invoice remained unpaid when Mr Maaz made the statutory declaration of 5 September 2017 was based on the statement in the email to the effect that the invoice remained unpaid.

50. JJ Marino & Associates Pty Ltd: Marino & Associates issued invoice 15-123-6 to Project.Built on 18 July 2017 for $9,240. Her Honour inferred that this invoice remained unpaid when Mr Maaz made the statutory declaration of 3 August 2017 from an internet payment summary dated 8 February 2018 of a payment by Fullerton which identifies JJ Marino & Associates as the payee, in an amount which corresponds precisely with the invoice. The conclusion that until then the invoice remained unpaid was an inference drawn from the proved fact of payment by Fullerton on that date, in the absence of any evidence that it had earlier been paid.

51. Rose Atkins Rimmer: Rimmer issued invoice 2005472 to Project.Built on 1 August 2017 for $2,277. Her Honour inferred that this invoice remained unpaid when Mr Maaz made the statutory declaration of 5 September 2017 from an internet payment summary of a payment by Fullerton dated 7 February 2018 which identifies Rose Atkins Rimmer as the payee, references RAR2005472 (the invoice number), is in an amount which corresponds precisely with the invoice, and states that it was authorised by Yu Wang. The conclusion that until then the invoice remained unpaid was an inference drawn from the proved fact of payment by Fullerton on that date, in the absence of any evidence that it had earlier been paid.

52. Two MS Pty Ltd: Two MS issued invoice 02023 to Project.Built on 17 August 2017 for $1,320. Her Honour inferred that this invoice remained unpaid when Mr Maaz made the statutory declaration of 5 September 2017 was drawn from a Westpac bank statement for an account in the name of Fullerton dated 31 May 2018, which contained an entry evidencing a “Withdrawal Online” on 16 May 2018 being “Pymt Two Ms Pty Two Ms Fire” of $1,320. The conclusion that until then the invoice remained unpaid was an inference drawn from the proved fact of payment by Fullerton on that date, in the absence of any evidence that it had earlier been paid.

53. Her Honour then accepted the evidence of Mr Wang that the payments recorded in the relevant bank statements were “payments made by Fullerton to the subcontractors in satisfaction of said invoices", and that all the invoices the subject of the claim had not been paid when the last relevant statutory declaration was made on 5 September 2017.

54. It will be seen that there were essentially two categories. In one (constituted by Golden Touch, Sola Electrics, Marino & Associates, Rimmer, and Two MS), the conclusion that the invoice remained unpaid at the time of a relevant statutory declaration was an inference drawn only from the proved fact of subsequent payment by Fullerton, in the absence of any evidence that it had earlier been paid. In the other (constituted by Complete Plumbing, National Aluminium, and Kone), the conclusion was founded on a statement in a communication from the relevant subcontractor to Fullerton’s agent Foresight, to the effect that the relevant invoice remained unpaid.

55. For the purposes of the first category, neither the notice of appeal, nor the appellant’s submissions, contended that if there were admissible evidence of subsequent payment by Fullerton, it was not open to her Honour to infer that the invoices remained unpaid by Project.Built until that payment was made. The appellant’s complaints were directed to admissibility. Mr Hall’s submissions for the appellant in substance raise the questions:

1. were the documents in question admissible under (NSW) Evidence Act 1995 (‘Evidence Act’), s 69 (“the admissibility question”);

2. if strictly admissible, ought they nonetheless have been excluded under Evidence Act, s 135 (“the discretionary exclusion question”); [22] and

3. if admitted, did the absence of evidence of their provenance and by their makers so deprive them of weight that the trial judge ought not have regarded them as proving the matters for which her Honour relied upon them (“the weight question”).

   22. Although the appeal did not specifically raise s 135, the submission that if admissible, the fact that they were “third party” records “militated against their reception or weight” appears to raise the question of discretionary exclusion.

The admissibility question

56. The first question, then, is whether the conditions for admissibility under Evidence Act, s 69 were satisfied. The appellant’s submissions direct attention to the extent, if any, to which those conditions are affected by the circumstances that a document is one that is not created by the party that tenders it, or that the maker of the document is not called to authenticate it. The question of admissibility is distinct from those of discretionary exclusion and weight, and the gravity of the allegation and potential application of the Briginshaw standard does not affect whether the documents were admissible.

57. Section 69 is as follows:

69   Exception: business records

(1)   This section applies to a document that—

(a)   either—

(i)   is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business, or

(ii)   at any time was or formed part of such a record, and

(b)   contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business.

(2)   The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made—

(a)   by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact, or

(b)   on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact.

(3)   Subsection (2) does not apply if the representation—

(a)   was prepared or obtained for the purpose of conducting, or for or in contemplation of or in connection with, an Australian or overseas proceeding, or

(b)   was made in connection with an investigation relating or leading to a criminal proceeding.

(4)   If—

(a)   the occurrence of an event of a particular kind is in question, and

(b)   in the course of a business, a system has been followed of making and keeping a record of the occurrence of all events of that kind,

the hearsay rule does not apply to evidence that tends to prove that there is no record kept, in accordance with that system, of the occurrence of the event.

(5)   For the purposes of this section, a person is taken to have had personal knowledge of a fact if the person’s knowledge of the fact was or might reasonably be supposed to have been based on what the person saw, heard or otherwise perceived (other than a previous representation made by a person about the fact).

58. Ultimately, the question whether a previous representation is admissible under s 69 depends on whether:

1. it is contained in a document which forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business, or at any time was or formed part of such a record (s 69(1)(a));

2. it was made or recorded in that document in the course of, or for the purposes of, that business (s 69(1)(b)); and

3. it was made by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact, or on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact (s 69(2)).

59. For the purpose of determining whether those conditions are satisfied, the Court may examine the document, and draw any reasonable inferences from it, as well as from other matters from which inferences may properly be drawn. [23] Thus, if the court can infer from the document itself that the conditions are satisfied, further evidence of the provenance of the document is not required to establish its admissibility. [24]

    23. Evidence Act, s 183.

    24. Gregg v R [2020] NSWCCA 245 at [368] (Bathurst CJ; Hoeben CJ at CL agreeing), [714] (Leeming JA), overruling National Australia Bank v Rusu (1997) 47 NSWLR 309; [1999] NSWSC 539.

60. As to the first condition, the document in which the previous representation is contained must be, or at some time have been, part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business. Nothing in s 69(1)(a)(i) requires that a document can qualify as a document that “forms part of a record of (that) business” only if it was created, as distinct from kept, within the business in question. [25] Documents which have not been generated by a business but are received by it from an external source and are retained by the recipient business for its purposes become part of the records of that business. [26] Earlier authorities, which suggested that documents received from a third party were admissible business records of the recipient business only if adopted, for example, by being marked “paid” or “checked and found correct” by a qualified person in the recipient business,[27] took too narrow an approach,[28] and in any event were influenced by the (then) requirement of the applicable legislation that the statement tendered have been made by a “qualified person”.

    25. Tubby Trout Pty Ltd v Sailbay Pty Ltd (1992) 42 FCR 595 at 598 (Drummond J); 113 ALR 748.

    26. Nicholson v R (1984) 12 A Crim R 231 at 238 (King CJ; Walters J and Mohr J agreeing); Duke Group Ltd (in liq) v Arthur Young (No 3) (1990) 55 SASR 11 at 16-17 (Perry J); 3 ACSR 420.

    27. See Trade Practices Commission v TNT Management Pty Ltd (1984) 56 ALR 647 at 659 (Franki J); ATPR ¶40-483; Ross McConnel Kitchen & Co Pty Ltd (in liq) v Ross (No 1) (1985) 1 NSWLR 233 at 235 (Young J).

    28. Tubby Trout Pty Ltd v Sailbay Pty Ltd (1992) 42 FCR 595 at 598 (Drummond J); 113 ALR 748.

61. Although, at least in the context of “hard copy” communications, the original of a document, such as a business letter or invoice, sent by a business to another person (whether or not the other person is a business) is not part of the records of the sending business, because it neither belongs to nor is kept by that business, which by sending it parts with possession of it,[29] a carbon copy of the letter or invoice, retained by the sending business for its purposes, is part of the records of the sending business. ^[30] In the context of electronic communications, however, it is more accurate to describe as the original that which is not only created but retained on the computer system of the sending business, and what the recipient receives as an electronic copy of that original.

    29. Karmot Auto Spares Pty Ltd v Dominelli Ford (Hurstville) Pty Ltd (1992) 35 FCR 560 at 564-565 (Heerey J); ATPR ¶41-175.

    30. Compafina Bank v Australia and New Zealand Banking Group Ltd [1982] 1 NSWLR 409 at 411-412 (Hunt J); Trade Practices Commission v TNT Management Pty Ltd (1984) 56 ALR 647 at 649 (Franki J); ATPR ¶40-483.

62. Accordingly, for the purpose of the first condition:

1. documents, such as emails and invoices, sent by a subcontractor to Fullerton or its agent Foresight, and retained by Fullerton, are business records of Fullerton;

2. the electronic originals of such documents, retained by the relevant subcontractor, are business records of the relevant subcontractor; and

3. bank statements and internet payment summaries issued by Westpac but received and retained by Fullerton are business records of Fullerton.

63. Turning next to the second condition (s 69(1)(b)), it is essential to identify the relevant business, because the business to which it refers must be the same business as that referred to in the first condition (s 69(1)(a)), as Perram J accepted in Australian Competition and Consumer Commission v Air New Zealand Ltd (No 1) (‘Air New Zealand’):[31]

“I do not accept the first argument. I do accept Mr Owens’ submission that the business referred to in s 69(1)(b) must be the same as the business referred to in s 69(1)(a). The exception to the hearsay rule in s 69(2) only applies to the representation referred to in s 69(1)(b) so that it follows that s 69 will be of no utility even where a business record under s 69(1)(a) is accepted to exist unless the representation contained in the document which is sought to be tendered is of the kind described in s 69(1)(b), that is, it must be “made or recorded in the document in the course of the business, or for the purposes of the business”. That requirement is not new, having first appeared (albeit worded slightly differently) in Pt IIC of the Evidence Act 1898 (NSW) after 1976 and Part IIIA of the Evidence Act 1905 (Cth) after 1978: see Evidence (Amendment) Act 1976 (NSW), sch 4; Evidence Amendment Act 1978 (Cth), s 3.”

31. Australian Competition and Consumer Commission v Air New Zealand Ltd (No 1) (2012) 207 FCR 448 at 459 [44]; [2012] FCA 1355; followed by Jadwan Pty Ltd v Rae & Partners (A Firm) (No 3) [2017] FCA 1045 at [25] (Kerr J).

64. The fact that a document forms part of the records of a business does not necessarily mean that a representation contained or recorded in it was made for the purposes of that business. This is the proper explanation of those cases which hold that a statement in a letter from A to B retained in the records of B is not admissible merely because it is retained by B in its business records. [32] Thus a letter of complaint from a customer, retained by the supplier, is not an admissible business record of the supplier, because the statements in it were not made in the course of or for the purposes of the supplier’s business.

    32. Trade Practices Commission v TNT Management Pty Ltd (1984) 56 ALR 647 at 659 (Franki J); ATPR ¶40-483; Karmot Auto Spares Pty Ltd v Dominelli Ford (Hurstville) Pty Ltd (1992) 35 FCR 560 at 564-565 (Heerey J); ATPR ¶41-175.

64. However, it does not follow from the fact that a documentary statement is made by a person outside the business that it is not made for the purposes of the business. [33] In Tubby Trout Pty Ltd v Sailbay Pty Ltd,[34] the issue was whether a statement made in a letter received by a business conducted by Sailbay Pty Ltd was admissible as evidence of the truth of a matter asserted in that letter, by reason of being contained in a record of that business. The crucial question was whether the statement was made for the purposes of the recipient business. Drummond J said:[35]

    33. Ross McConnel Kitchen & Co Pty Ltd (in liq) v Ross (No 1) (1985) 1 NSWLR 233 at 235-236 (Young J).

    34. (1992) 42 FCR 595; 113 ALR 748.

    35. Tubby Trout Pty Ltd v Sailbay Pty Ltd (1992) 42 FCR 595 at 598-599 (Drummond J); 113 ALR 748.

“The letter, not being made by a Sailbay officer, cannot be said to be made in the course of either of Sailbay’s businesses. More difficult is the question whether it was made for the purposes of either or both of those businesses. In Trade Practices Commission v TNT Management Pty Ltd (1984) 56 ALR 647 Franki J, in giving various rulings on the legislation here in issue, said (at 659):

In general, a statement of fact in a letter from A to B found in the files of B is not admissible as a business record of B merely because it was filed and kept by B. This is because statements in the letter are not made in the course of, or for the purposes of, B’s business.

No-one, I think, would dispute what Franki J had to say there, particularly in view of his emphasis on what “merely” appears. However, at the same page, his Honour went on to say:

An invoice may be a communication and, if relevant, admitted on the basis that it is not evidence of the truth of its contents. In the case of an invoice filed in the records of B with the word “Paid” or other note written on it, the whole does not become a business record of B merely because the word “Paid” is written on it. The document should be treated as a communication, and any statement of fact in the note, if made by a qualified person, will be admissible as evidence of that fact under Pt IIIA of the Act.

If his Honour is there to be taken as holding that a document made by a person outside the business and received by the business can never meet the requirements of s 7B(1) unless the truth of what is recorded in the outsider’s document is acknowledged by some appropriate person acting on behalf of the recipient’s business, with respect, I cannot agree with that.

There is nothing in the wording of s 7B(1)(a) that requires a document to be a document created within the business in question before it can qualify as a document that “forms part of a record of (that) business”. Moreover, par (a)(iii) and (iv) of the definition of “qualified person” in s 7A(1) of the Evidence Act show that documents generated by outsiders to a business, including outsiders in relationships more remote than contractual ones, can nevertheless meet all the requirements of s 7B(1), including s 7B(1)(a).

I have said that any need for acknowledgment of the reliability of the document is met by evidence that satisfies s 7B(1)(a). It is the evidence of the location of the document in a record system, formal or informal but a system nevertheless, kept by the business, that meets any such requirement of acknowledgment. There is, in my view, no justification for implying into the section some additional requirement for acceptance by the business of the accuracy of the facts recorded in a document made by an outsider, before it will be admissible.

However, the question of admissibility of a document under s 7B will depend in large part upon the nature of the document in question. There is a difference, it seems to me, between an invoice and a letter received by a business from an outsider. If the evidence shows that in the case of an invoice, for example, it was kept in a file of invoices sent by outsiders who have supplied goods and services to the business and that the invoice purports to record the supply of goods or services of a kind commonly used by the business in the course of its activities, that would, I think, be sufficient to satisfy s 7B(1)(b). Such a document could fairly be said to be made for the purposes of the recipient business although it was also made in the course of and for the purposes of the other business that supplied the goods or services listed in the invoice.”

66. This approach was followed, by Evans J, in State of Tasmania v Lin,[36] holding that a document such as an invoice retained by the business to which it was sent as a record of that business, was prepared partly for the purposes of the recipient business as well as for the purposes of the sender business, and thus that statements in it were admissible notwithstanding that the person with the requisite personal knowledge was engaged in the sender and not the recipient business. After setting out the passage from the judgment of Drummond J which is extracted above, his Honour said:[37]

“I agree with the approach taken by Drummond J, and consistent with it I conclude that the Weight Document, including the handwritten annotations made on it, was prepared for the purposes of both Southern United and the partnership. It is of the nature of an invoice. It contains information of quantities received from the partnership and of payments made to the partnership by cheques for one quantity, and a further amount due or paid to the partnership for another quantity. It is accordingly admissible as a business record of the partnership.”

36. (2011) 225 A Crim R 1; [2011] TASSC 54.

37. (2011) 225 A Crim R 1 at 12-13 (Evans J); [2011] TASSC 54; reversed, but not on this point, in Lin v State of Tasmania (2015) 252 A Crim R 64; [2015] TASCCA 13.

67. These authorities were followed, by Perram J, in Air New Zealand. After referring to statements which appeared contrary to the view that a third-party document would engage s 69(1), by Needham J in Re Marra Developments Ltd and the Companies Act:[38]

    38. [1979] 2 NSWLR 193 at 205-206 (Needham J).

“I do not think that statements by outsiders, such as an officer of the Bank of New South Wales, relating to matters which are of interest to Partnership Pacific Ltd can be said to have been made in the course of, and for the purposes of, that business. Therefore, I do not think that this document is admissible.”

and by Franki J in Trade Practices Commission v TNT Management Pty Ltd:[39]

39. (1984) 56 ALR 647 at 659 (Franki J); ATPR ¶40-483.

“In general, a statement of fact in a letter from A to B found in the files of B is not admissible as a business record of B merely because it was filed and kept by B. This is because statements in the letter are not made in the course of, or for the purposes of, B’s business.”

his Honour said:[40]

“[47]   Despite those two statements, I agree with the observations of the learned author of Cross that an outsider may make a representation “for the purposes” of a business even though separate from the business in question. And, indeed, Drummond J accepted as much in Tubby Trout Pty Ltd v Sailbay Pty Ltd (1992) 42 FCR 595 at 598-599. He doubted whether Franki J had truly meant what he said in the quotation above (noting that, a few lines later, Franki J may have accepted that a third party invoice might fall within s 7B(1)(b) of the Evidence Act 1905 (Cth)). In any event, if Franki J had said that, Drummond J thought it was wrong. He explained (at 599):

However, the question of admissibility of a document under s 7B [ie the predecessor to s 69] will depend in large part upon the nature of the document in question. There is a difference, it seems to me, between an invoice and a letter received by a business from an outsider. If the evidence shows that in the case of an invoice, for example, it was kept in a file of invoices sent by outsiders who have supplied goods and services to the business and that the invoice purports to record the supply of goods or services of a kind commonly used by the business in the course of its activities, that would, I think, be sufficient to satisfy s 7B(1)(b) [ie s 69(1)(b)]. Such a document could fairly be said to be made for the purposes of the recipient business although it was also made in the course of and for the purposes of the other business that supplied the goods or services listed in the invoice.

[48]   This approach seems, with respect, to have much to commend it. It is not unnatural to think of the statements contained in an invoice as being created by the entity issuing it not only for the purposes of its own business but also for the purposes of its intended recipient.

[49]   This is consistent with the approach taken in Cross and also with the decision of Evans J in Tasmania v Lin [2011] TASSC 54 at [27]-[29].”

40. (2012) 207 FCR 448 at 460 [47]-[49] (Perram J); [2012] FCA 1355; followed by Kerr J in Jadwan Pty Ltd v Rae & Partners (A Firm) (No 3) 2017 FCA 1045 at [25].

68. State of Tasmania v Lin and Air New Zealand were followed by Reeves J in Asden Developments Pty Ltd (in liq) v Dinoris (No 2),[41] holding that a document, of which an invoice is an example, complies with s 69(1)(b) if it is prepared in the course of one business, partly for the purposes of that business and partly for the purposes of the recipient business of which it becomes a record:[42]

“[10] However, I do not accept the remainder of Mr Martin’s submissions on this second ground. In my view, they fail to address the different purposes of s 69(1)(a) and s 69(1)(b) and, more importantly, the two alternatives that are open under the latter, which raise a different distinction between the businesses that are potentially engaged. As to the different purposes, s 69(1)(a) is directed to the way in which the document is recorded in the business concerned, whereas s 69(1)(b) is directed to the contents of the document in question, specifically the previous representation contained in it and how, or why, that representation was made in the document. It is the how, or why, the representation was made in the document that gives rise to the alternative expressed in s 69(1)(b), which I alluded to earlier.

[11] Under s 69(1)(b), the representation can be made or recorded in the document in the course of the business — that is, how it comes into existence — or it can be recorded in the document for the purposes of the business — that is, why it comes into existence. In many circumstances, if not most, the means by which, and the purposes for which, the representation comes into existence will exclusively serve the same business, that is, the representation will be prepared in the course of a business and be solely for the purposes of that business. However, in some circumstances, the representation will be prepared in the course of one business and be partly prepared for the purposes of that business and partly for the purposes of another business.

[12]   Invoices are a classic example of this: see Air New Zealand at [48] and Tasmania v Tu Ai Lin (2011) 225 A Crim R 1; [2011] TASSC 54 at [27]-[29] per Evans J.”

41. (2015) 235 FCR 382; [2015] FCA 1025.

42. Asden Developments Pty Ltd (in liq) v Dinoris (No 2) (2015) 235 FCR 382 at 384-385 [10]-[12] (Reeves J); [2015] FCA 1025.

69. Similarly, they were followed by Kerr J in Jadwan Pty Ltd v Rae & Partners (A Firm) (No 3):[43]

“[24]   For completeness however, I should indicate that I have given attention to whether a statement in a letter from Business A found in the files or records of Business B can be considered, for the purposes of the Act, to form part of Business B’s business records. I am satisfied it can. The breadth of the business records exception to the hearsay rule has been the subject of much judicial commentary, including that of Vickery J in Hodgson v Amcor Ltd; Amcor Ltd v Barnes & Ors (No 5) [2011] VSC 295. There is no reason to give the provision a narrow reading.

[25]   The more specific issue was considered by Perram J in Australian Competition and Consumer Commission v Air New Zealand and Another (No. 1) [2012] FCA 1355; (2012) 207 FCR 448 (Air New Zealand). His Honour held, at paragraphs [47] to [50] that it was consistent with the scheme of the Act that a statement from Business A found in the records of Business B can be accepted to form part of Business B’s records. I should follow that decision unless I regard it as clearly wrong. I do not regard his Honour to have been in error and I respectfully adopt both his Honour’s reasoning and his conclusion.”

43. [2017] FCA 1045 at [24]-[25] (Kerr J).

70. On the basis of these authorities, it may be stated that:

1. statements made in an invoice sent by a subcontractor to Project.Built were made, partly for the purposes of the business of the subcontractor and partly for the purposes of the business of Project.Built. However, I do not think that it can be said that they were made partly for the purpose of the business of Fullerton, to whom they were not addressed;

2. statements made in an email sent by a subcontractor to Fullerton or its agent Foresight, to the effect that certain invoices remained unpaid, were made partly for the purposes of the business of the subcontractor and partly for the purposes of the business of Fullerton; and

3. statements made in bank statements or internet payment summaries issued by Westpac were made partly for the purposes of Westpac but also partly for the purposes of its customer Fullerton.

71. Dealing finally with the third condition, while s 69(2) requires the previous representation to have been made by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact, or on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact, it does not require that the person said to have the relevant personal knowledge have any particular relationship with the relevant business. [44] Under the current provision, there is no longer any requirement that the statement be made by a “qualified person”, as there was under the former provisions. [45] The former requirement prevented the receipt of records as evidence of facts recorded in them where the person with the requisite personal knowledge of them was not associated with the business in question. The Australian Law Reform Commission considered that the “qualified person” requirement had marginal value as a safeguard but significant disadvantages, and proposed its removal; this was given effect with the introduction of the (CTH) Evidence Act 1995.[46] There is thus no longer any requirement that the maker of the relevant representation have any particular association with the relevant business. Representations made by strangers to the business which are recorded in a business record are admissible so long as the stranger had personal knowledge of the asserted fact. [47] Moreover, it suffices that it can be concluded that the maker of the previous representation was a person who had personal knowledge of the fact, even though that person cannot be identified; so long as the nature and content of the recorded representation permits that inference, the supplier of the information need not be identified. [48]

    44. Penrith City Council v Penrith Waste Services Pty Ltd [1995] NSWLEC 227; Vitali v Stachnik [2001] NSWSC 303 at [8] (Barrett J).

    45. See Re Marra Developments Ltd and The Companies Act [1979] 2 NSWLR 193.

    46. See Australian Law Reform Commission, Evidence (Interim) (Report 26, 1985) at vol 1, 184-185 [343(f)], 389-390 [707]; Australian Law Reform Commission, Evidence (Report 38, 1987) at 73 [129].

    47. Duncan v R [2015] NSWCCA 84; Wormleaton v Thomas & Coffey Ltd (No 3) [2013] NSWSC 1817 (statement recorded in police event book about medical history of a person admissible on the basis that the maker of the statement had personal knowledge).

    48. Lancaster v R (2014) 44 VR 820 at 831-832 [27] (Nettle and Redlich JJA and Almond AJA); [2014] VSCA 333.

72. It may readily be inferred that:

1. statements made in an invoice sent by a subcontractor to Project.Built were made by someone (in the business of the relevant subcontractor) who had the requisite degree of personal knowledge;

2. statements made in an email sent by a subcontractor to Fullerton or its agent Foresight, to the effect that certain invoices remained unpaid, were made by someone (in the business of the subcontractor) who had the requisite degree of personal knowledge; and

3. statements made in a bank statement or internet payment summary as to the particulars of a payment were, at the least, made on the basis of information directly or indirectly supplied by a person (in the business of Fullerton) who entered them when causing the payment to be made, who had or might reasonably be supposed to have had personal knowledge of the asserted fact.

The subcontractor invoices

73. The invoices issued by subcontractors to Project.Built were in my judgment not admissible as business records of Fullerton. That is because, although they at some stage came into the possession of Fullerton and were retained by it as part of its records, it cannot be said that the statements made in the invoices were made, even partly, for the purposes of Fullerton, to whom they were not addressed. They were made partly for the purposes of Project.Built as well as for the purposes of the subcontractor, but not for the purposes of Fullerton.

74. However, the subcontractor invoices were nonetheless admissible under s 69, at least on the basis that:

1. it was amply open to infer that the electronic originals were retained on the computer systems of the relevant subcontractor, and constituted business records of the subcontractor;

2. statements in them were made for the purpose of the business of the subcontractor;

3. those statements were made by a person (as it happens, in the business of the subcontractor, though that is not necessary) who had the requisite degree of personal knowledge; and

4. the contents of the originals retained on the computer systems of the relevant subcontractor can be proved by tendering the copy received by the recipient. [49]

   49. Evidence Act, s 48(1)(b).

75. The subcontractor invoices were probably also admissible business records of Project.Built, but it is unnecessary to decide that question; it suffices that they were admissible business records of the relevant subcontractor.

The emails

76. The emails from subcontractors to Fullerton or its agent Foresight were admissible business records, on the dual bases that:

1. the electronic originals retained by the subcontractors were business records of the subcontractor, and the relevant statements in them were made for the purpose of the business of the subcontractor, by a person (Mr Borg in the case of Complete Plumbing, Mr Hraibi in the case of National Aluminium, and Ms San Gil in the case of Kone) who had the requisite personal knowledge; and

2. they were business records of Fullerton, and the relevant statements in them were made partly for the purpose of the business of Fullerton (as well as for the business of the subcontractor), by a person (Mr Borg in the case of Complete Plumbing, Mr Hraibi in the case of National Aluminium, and Ms San Gil in the case of Kone) who had the requisite personal knowledge.

The bank statements and payment summaries

77. The Westpac bank statements and internet payment summaries were admissible under s 69, at least on the basis that they were business records of Fullerton; the statements made in them as to particulars of payments were made at least partly for the purposes of the business of Fullerton; and those statements were, at the least, made on the basis of information directly or indirectly supplied by a person (in many if not all cases, Yu Wang) who entered them when causing the payment to be made, who had or might reasonably be supposed to have had personal knowledge of the asserted fact.

Conclusion

78. It follows that all the documents relied on by the trial judge which were received under Evidence Act, s 69, were admissible.

The discretionary exclusion question

79. The appellant submitted that “even if the records were and are admissible, the question of the weight of someone else’s records being produced by a party to litigation must mitigate against the reception of the document or the inferences that are able to be drawn from it. These are third party records”. Reference was also made to the absence of evidence as to the provenance of the documents, and to the circumstance that the appellant was deprived of the opportunity of cross-examining the persons who made the relevant statements in them. This appears to be, at least in part, a submission that if admissible, the documents ought nonetheless have been rejected as a matter of discretion under Evidence Act, s 135.

80. Statements of fact in a business record are admissible against anyone, not only against the party whose records contain them. ^[50] It is a fundamental rationale of the business records provisions that statements in such records are admissible notwithstanding the hearsay rule, and notwithstanding that the maker of the representation is not called. [51] The view has consistently been taken that the fact that the maker of the statement is not called as a witness is not of itself a basis for rejection under the exclusionary discretion, since the legislation recognises this consequence. As the Court of Appeal said of the former provisions in Vinidex Tubemakers Pty Ltd v Marshall:[52]

“The provisions of Part IIC make it clear that it is not necessary for
the party seeking to tender a business record to identify and call the
person making the record. If it were not otherwise clear, s 14CG would

50. Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542 at 569 (Hutley JA); Trade Practices Commission v TNT Management Pty Ltd (1984) 56 ALR 647 at 654 (Franki J); ATPR ¶40-483.

51. Evidence Act, s 69(2).

52. (1981) 5 Petty Sessions Review 2414 at 2416 (Hope JA; Hutley JA and Glass JA agreeing); quoted in Ross McConnel Kitchen & Co Pty Ltd v Ross (No 1) (1985) 1 NSWLR 233 at 235 (Young J).

remove any doubt.”

81. Neither the ‘prejudice’ supposed to arise from not being able to cross-examine persons who would otherwise have had to give oral evidence, nor the ‘prejudice’ that a person might be forced to enter the witness box to answer a case which would not otherwise have required an answer, justifies exclusion of a business record on discretionary grounds. [53]

    53. Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542 at 570 (Hutley JA).

82. For reasons already explained, evidence as to the provenance of the documents was not required where inferences could readily be drawn. Moreover, this was not a case in which there was any serious issue as to the authenticity of the documents in question.

83. It was to address the perception that it might sometimes be unfair to an opposing party that business records were received without any opportunity to cross-examine the maker that the Australian Law Reform Commission recommended the inclusion in the uniform evidence law of provisions for a “request” to be made for the production of the maker of a previous representation for cross-examination. Thus, provision is made that a party may make a reasonable request to another party for the purpose of determining a question that relates to a previous representation, or the authenticity, identity or admissibility of a document, including to call as a witness the person who made the previous representation. [54]

    54. Evidence Act, ss 166(f), 167.

84. In this case, ample notice of intention to tender the business records had been given by their service as an exhibit to Yu Wang’s affidavit. No ‘request’ was made. In those circumstances, where the appellant did not avail himself of an opportunity to test the provenance or accuracy of the documents, there was even less reason to exercise the exclusionary discretion.

The weight question

85. The complaint about absence of evidence as to provenance, and the inability to cross-examine, was also relied on as detracting from the weight of the documentary evidence. As I understand it, the submission was essentially that, if admissible, the documents were unreliable.

86. Weight is essentially a matter for the trial judge. As her Honour rightly observed, with reference to the observations of Dixon CJ in Hampton Court Ltd v Crooks,[55] in circumstances where the facts were not within the knowledge of the plaintiff but peculiarly within the knowledge of the defendant, very little evidence might suffice. [56] Especially is that so where there is none to the contrary.

    55. (1957) 97 CLR 367 at 371-372 (Dixon CJ); [1957] HCA 28.

    56. Fullerton Property Pty Ltd v Maaz (District Court (NSW), Gibb DCJ, 24 July 2020, unrep) at 19 (‘Primary judgment’).

87. The context was one in which there was no obvious reason to doubt the authenticity of the documents, nor the accuracy of what was stated in them. The relevant statements in the documents as to dates, amounts and particulars of payment appeared routine and regular. The appellant did not take advantage of the opportunity afforded by the “request” mechanism. And the appellant adduced no evidence, let alone evidence to contradict them. The trial judge was entirely justified in treating the documents as reliable for the purposes for which her Honour relied on them.

The question of loss

88. The cause of action sued on was in deceit, and alternatively for contravention of the prohibition on misleading and deceptive conduct in trade or commerce. In cases for contravention of that provision, conventionally the same approach to the assessment of damages is adopted as in a case of deceit in tort.

89. By operation of (NSW) Contractors Debts Act 1997, s 5, Fullerton, as principal, had a direct legal liability to pay unpaid sub-contractors of its builder Project.Built. By clause 38.2 of the contract, it protected itself in respect of that liability by insisting on proof of payment, by statutory declaration, in the absence of which it was entitled to withhold payment from Project.Built. The immediate and direct consequence of the deceit or contravention was that Fullerton did not withhold payments that it was entitled to withhold, and would otherwise have withheld, under cl 38.2. Yet because the subcontractors had in fact not been paid, Fullerton remained exposed to direct liability to the subcontractors, which it ultimately had to pay itself.

90. In those circumstances, the amounts which it had paid to Project.Built in respect of subcontractors, which but for the contravening conduct it would have withheld, but later had to pay directly to those subcontractors, was at least a proper starting point for calculating Fullerton’s loss caused by the contravening conduct. The lump sum price in the contract, which was terminated for default before it was completed, has nothing to do with it. If, which is not at all apparent, there was some countervailing benefit to Fullerton to be brought to account, that was a matter for the appellant to plead and prove, which it did not.

Conclusion

91. My conclusions may be summarised as follows:

92. All the documents relied on by the trial judge which were received under Evidence Act, s 69, were admissible business records. The trial judge did not err in not exercising the exclusionary discretion under s 135, and was entirely justified in treating the documents as reliable for the purposes for which her Honour relied on them.

93. The amounts which Fullerton paid to Project.Built in respect of subcontractors, which but for the contravening conduct it would have withheld, but later had to pay directly to those subcontractors, were at least a proper starting point for calculating Fullerton’s loss caused by the contravening conduct. The lump sum price in the contract is irrelevant. Any countervailing benefit to Fullerton was a matter for the appellant to plead and prove, which it did not.

94. It follows that the appeal should be dismissed. I agree with the orders proposed by Basten JA.

**********

Endnotes

Decision last updated: 07 May 2021