State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq)
[1999] HCA 3
•9 February 1999
HIGH COURT OF AUSTRALIA
GAUDRON, GUMMOW, KIRBY, HAYNE AND CALLINAN JJ
STATE RAIL AUTHORITY OF
NEW SOUTH WALES APPELLANT
AND
EARTHLINE CONSTRUCTIONS
PTY LIMITED (In Liquidation) FIRST RESPONDENT
NULINE CONSTRUCTIONS PTY LIMITED SECOND RESPONDENT
PHILLIP GEORGE DAVIES THIRD RESPONDENT
IAN NEIL DAVIES FOURTH RESPONDENT
GREGORY CHARLES DAVIES FIFTH RESPONDENT
RONALD THOMAS CHILD SIXTH RESPONDENT
DAVID BRIAN BELL SEVENTH RESPONDENT
THE OFFICIAL TRUSTEE IN
BANKRUPTCY OF THE ESTATES
OF PHILLIP GEORGE DAVIES AND
IAN NEIL DAVIES EIGHTH RESPONDENT
State Rail Authority of New South Wales v Earthline Constructions Pty Limited (In Liquidation) (S34-1998) [1999] HCA 3
9 February 1999
ORDER
Appeal allowed with costs.
Set aside Orders 1, 3, 4 and 5 of the Orders of the New South Wales Court of Appeal made on 20 December 1996. In place of those orders:
allow the appeal to that court with costs;
2.
set aside Orders 1, 2 and 3 of the Orders made by O’Keefe CJ Comm D on 13 February 1998;
order a new trial save of the issues on which the State Rail Authority of New South Wales succeeded against Earthline Constructions Pty Limited (In Liquidation) in the proceedings before O’Keefe CJ Comm D;
order that costs of the proceedings before O’Keefe CJ Comm D abide the outcome of the new trial referred to in par 2(iii) of this Order.
On appeal from the Supreme Court of New South Wales
Representation:
D F Jackson QC with A S Martin for the appellant (instructed by
Clayton Utz)
R S Toner SC with M G Stubbs for the second, third, fourth and fifth respondents (instructed by Crichton-Browne Crossley)
No appearance for the first, sixth, seventh and eighth respondents
Notice: This copy of the Court’s Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
State Rail Authority of New South Wales v Earthline Constructions Pty Limited (In Liquidation) & Ors
Appeals – Circumstances in which appellate court will set aside credibility findings.
Appeals – Nature.
Words and phrases – "palpably misused his or her advantage".
GAUDRON, GUMMOW AND HAYNE JJ. This appeal is brought from the New South Wales Court of Appeal (Mahoney P, Meagher and Handley JJA) dismissing an appeal from O'Keefe CJ Comm D.
The litigation arose from claims by the appellant, the State Rail Authority of New South Wales ("SRA"), that it made payments to two of its contractors, Earthline Constructions Pty Limited ("Earthline") and Nuline Constructions Pty Limited ("Nuline"), by relying upon work dockets containing materially false entries. Earthline and Nuline were engaged by the SRA to supply plant to enable track repair and earthworks to be undertaken. In order to be paid, Earthline and Nuline submitted invoices to the SRA, based upon dockets they prepared and which were certified by representatives of the SRA. The parties involved in the alleged fraud were said to be not only Earthline, Nuline and the persons involved in the management and control of those companies but also persons engaged by the SRA to certify the accuracy of the dockets. The SRA largely failed at the trial and its appeal was dismissed.
In Devries v Australian National Railways Commission[1], Brennan, Gaudron and McHugh JJ observed:
"More than once in recent years, this Court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against – even strongly against – that finding of fact[2]. If the trial judge's finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge 'has failed to use or has palpably misused his advantage'[3] or has acted on evidence which was 'inconsistent with facts incontrovertibly established by the evidence' or which was 'glaringly improbable'[4]."
Deane and Dawson JJ pointed out in the same decision that no short exhaustive formula, such as "glaringly improbable", meets every case[5].
[1](1993) 177 CLR 472 at 479.
[2]See Brunskill v Sovereign Marine & General Insurance Co Ltd (1985) 59 ALJR 842; 62 ALR 53; Jones v Hyde (1989) 63 ALJR 349; 85 ALR 23; Abalos v Australian Postal Commission (1990) 171 CLR 167.
[3]S S Hontestroom v S S Sagaporack [1927] AC 37 at 47.
[4]Brunskill v Sovereign Marine & General Insurance Co Ltd (1985) 59 ALJR 842 at 844; 62 ALR 53 at 57.
[5](1993) 177 CLR 472 at 480.
The gravamen of the appellant's complaint in this Court is the failure by the intermediate court of appeal to accept that the adverse finding by the trial judge with respect to the evidence of one of its witnesses attracted the application of the statement by Jacobs J in Agbaba v Witter[6]. His Honour gave, as an example where primary findings based on credibility of witnesses might be displaced, a case:
"where in a complex pattern of events incontrovertible evidence can only be fitted into the pattern if a different view of the credibility of a witness is taken by the court on appeal".
The appellant further complains that this other body of evidence, largely documentary evidence in character, itself provided an adequate support for its case but that hitherto such evidence has not received adequate judicial analysis.
[6](1977) 51 ALJR 503 at 508; 14 ALR 187 at 196.
The parties
By s 4 of the Transport Administration Act 1988 (NSW), the SRA is constituted a corporation and is classified for the purposes of any Act as "a statutory body representing the Crown". It follows from this provision that the SRA is an "authority" as defined in s 4(1) of the Public Finance and Audit Act 1983 (NSW) ("the Audit Act")[7] and that s 13 of that statute applies to payments of its accounts. Section 13 states:
"An officer of an authority shall not authorise the payment of an account:
(a) unless the account has been approved for payment by a person to whom the power to authorise the payment has been delegated under section 12(1), or
(b) otherwise than in accordance with the Treasurer's directions."
[7]The term "authority" is defined in s 4(1) to mean:
"(a)a Department within the meaning of section 4(1) of the Public Service Act 1979,
(b)the School Education Teaching Service,
(c)a statutory authority, or
(d)a person, group of persons or body prescribed for the purposes of this definition".
In turn, the phrase "statutory authority" is defined in the same sub-section to mean:
"(a)a statutory body representing the Crown, or
(b)a person, group of persons or body (whether or not being a statutory body representing the Crown) to which Division 3 of Part 3 applies".
Division 3 of Pt 3 is not relevant to this appeal.
Earthline, the first respondent, was incorporated on 14 August 1985 under the name of International Indent Pty Limited. It initially traded under the name of "Davies and Wearing Earthmoving & Haulage Contractors". On 30 May 1990, the company changed its name to Earthline and ceased to trade under the name of "Davies and Wearing Earthmoving & Haulage Contractors". Earthline is currently in the process of liquidation and submitted to any orders of this Court save as to costs.
Nuline, the second respondent, was incorporated on 1 November 1991.
At all material times, the directors of Earthline and Nuline were Mr Michael Bruce Wearing and Mrs Mary Andrews Davies. Mrs Davies is the mother of Messrs Phillip George, Ian Neil and Gregory Charles Davies, the third, fourth and fifth respondents in this Court respectively. At all material times, Messrs Phillip, Ian and Gregory Davies managed and controlled Earthline and Nuline, and caused the dockets prepared by the companies to be submitted to the SRA. Messrs Phillip and Ian Davies were declared bankrupt on 12 July 1989. The Official Trustee in Bankruptcy of their estates is the eighth respondent and submitted to any orders of this Court save as to costs.
Three of the persons engaged by the SRA to certify the dockets were Mr Ronald Thomas Child, Mr David Brian Bell and Mr Trevor Raymond Greber. Messrs Child and Bell are the sixth and seventh respondents in this Court, although they did not enter appearances. An application for special leave to appeal in respect of Mr Greber was not pursued and thus he is not a respondent to the appeal in this Court.
The facts
In providing rail services within New South Wales, the SRA was required from time to time to undertake track repair and earthworks. In undertaking such work, the SRA hired plant and equipment from private contractors. Earthline and Nuline were two private contractors who hired plant and equipment to the SRA.
The private contractors employed operators to operate the hired plant and equipment. In turn, the SRA engaged site supervisors and engineers to supervise the work undertaken by the private contractors and their employees.
At the material times, the SRA had adopted procedures for the hiring of plant from, the supervision of, and the making of payments to, private contractors. A SRA engineer initially assessed what plant was required for a particular site. The engineer then completed a document seeking approval for the hiring of the plant. After approval, a document entitled a "Local Purchase Order" was prepared and submitted to the private contractor. It would seem that a component of the Local Purchase Order was a document entitled "Hire of Plant Specification Details". The relevant clauses of this document are:
"1. The Contractor shall supply the plant listed in the Instruction to quote.
2. The Contractor shall undertake the following:-
1.To deliver the plant in good working order and maintain it in that condition at his own expense.
2.To fit suitable and efficient lights to the plant at his own expense when notified that the plant is required for shift work.
3.To provide a competent driver or drivers to operate the plant and pay all wages, overtime, camping allowances and travelling expenses of the driver and of any other personnel necessary for the efficient operation of the plant.
4.To supply at his own expense all fuel, oil, grease and spare parts and anything necessary for the continuous and satisfactory operation of the plant.
5.So to manage the plant that it will be ready to commence operations at the time when other works start on the job.
6.To work the plant continuously as required during the period of hire.
7.To carry out all repairs to the plant of whatever description expeditiously and at his own expense. As far as practicable all adjustments and repairs shall be carried out on wet days or outside normal working hours. Tools and equipment to carry out necessary repairs shall be provided by the Contractor.
8.To provide all replacements of cutting blades, [tyres], wire ropes, etc.
9.To ensure that when unattended the plant is in a safe condition and not liable to be or to become a safety hazard.
3. Payment shall be as follows:
3.1When the plant is in operation – "A" Rate
Single shift work will be paid for at the hourly rate of the offer on the basis of up to eight hours per day for a five day week.
All fractions of an hour worked will be paid for in proportion to the hourly hire rates to the nearest 1/6th of an hour.
All time worked in excess of the hours specified above for each normal working day and all time worked during other days or on Public Holidays will be paid for at the hourly rate as specified plus an amount based on the time so worked equal to the difference between the normal wages rate and the overtime or holiday rate whichever is applicable as prescribed by the Industrial Award governing the employment of the Plant Operator or Operators.
3.2When the plant is rendered idle due to wet weather or for reasons outside the [SRA's] control or during tea breaks for which the Operator is entitled to payment under the Award governing his employment or when the plant is being transported between jobs other than under its own power – "B" Rate
Payment will be made at the hourly rate of the offer for idle periods for the time the plant is so rendered idle. Fractions of an hour shall be paid for in proportion to the hourly idle rate to the nearest 1/6th of an hour.
4. When the plant is transferred from one job to another, both of which are under the control of the [SRA], in addition to the cost of transport, the [SRA] will pay hire at the "B" rate as specified in Clause 4 unless the plant is transferred under its own power, in which case the "A" rate will apply.
5. Payment for hire will not be made for any period the plant is rendered idle due to breakdown or for reasons within the Contractor's control. If the idle period for minor adjustments is less than one-third of an hour per day or shift, there shall be no variation in the applicable rate.
6. This specification is to be read in conjunction with the General Conditions for the Hire of Plant overleaf." (emphasis added)
The General Conditions for the Hire of Plant included:
"10.Any change of operator shall be immediately notified to the Engineer by the Contractor.
11. The Contractor and/or his operator shall furnish such records relating to the operation of the plant as required by the Engineer.
...
14. Payment for hire will be on a monthly basis except for jobs of short duration, which will be paid for on completion of the work performed by the relevant Plant."
Earthline and Nuline entered into Local Purchase Orders with the SRA in terms which incorporated or otherwise adopted the form of this document. The hired plant – consisting of dozers, excavators, rollers, graders, tipper trucks and like machinery – was used at various SRA sites throughout New South Wales, including a number of sites in the Hunter Valley area and a site referred to as the "Hospital site". The "A" Rate and the "B" Rate for Earthline and Nuline apparently were the same.
In order to obtain payment for the plant hired to the SRA, Earthline and Nuline completed a work docket. Each docket identified the client (SRA), the site, the day and date on which the plant was hired, the type of plant hired and its plant number, the location at which the plant was used, the type of work in which the plant was involved and the starting and finishing times for the plant hired. An individual docket number was printed on each docket and provision was made for the signature of the plant operator and a representative of the client. The dockets were printed in a book of 50 and a separate book was used for each item of plant.
The dockets were filled in on behalf of Earthline or Nuline by a secretary or stenographer. A site supervisor or engineer engaged by the SRA then certified the accuracy of contents of the dockets. Messrs Child, Bell and Greber were three persons engaged by the SRA whose duties, among other things, were to check and certify the accuracy of the dockets prepared by Earthline and Nuline.
The dockets, when completed and certified, were grouped together and submitted by Earthline or Nuline to the SRA by way of an invoice. Each invoice indicated the plant used, the date of use, the docket number, the hours of use, the hourly rate for the plant and the total payment sought. Upon an invoice being prepared by an Earthline or Nuline secretary, it was checked by one of the Messrs Davies.
Earthline or Nuline then forwarded the invoice, together with the constituent dockets, to the regional office of the SRA. An engineer within the divisional engineers' office of the SRA checked the entries on the invoice and dockets against the Local Purchase Order and certified that the invoice was correct in accordance with s 13 of the Audit Act. The engineer submitted the invoice, the dockets and the Local Purchase Order to the regional accounts department for payment. After a prescribed taxation payment was deducted, the regional accounts department drew a cheque payable to Earthline or Nuline and forwarded it to the company by mail.
Over the period from late-1989 to mid-1992, Earthline and Nuline submitted in excess of 17,000 dockets to the SRA and received payments totalling $8,103,559.25. As a result of investigations into the payments made to Earthline and Nuline, the SRA claimed that some $2,765,002 had been paid in error. It is these alleged erroneous payments which are the subject of this litigation.
The claims
The SRA commenced an action against Earthline and Nuline in the Commercial Division of the Supreme Court of New South Wales alleging that the companies were paid for certain plant which, although claimed in dockets to have been hired to it at specified dates and times, was not in fact so supplied. The SRA asserted that the dockets provided by Earthline and Nuline contained materially false entries concerning the hire of the plant and that, as a result of such false entries, it was induced to make payments to the private contractors.
The SRA joined Messrs Child, Bell and Greber, alleging that they wrongfully, and in breach of their fiduciary duties owed to SRA, certified the dockets which contained materially false entries. The SRA further joined Messrs Phillip, Ian and Gregory Davies for their alleged involvement in the submission of the dockets by Earthline and Nuline to the SRA and their alleged assistance in the breach of fiduciary duties by Messrs Child, Bell and Greber. Declarations, orders to account, damages and equitable compensation were sought against all of the defendants.
The SRA contended that the fraudulent claims fell into a number of categories. It alleged that 1,038 dockets had fictitious operator names ("the fictitious operator name claims"), 2,264 dockets identified Earthline employees who did not in fact operate the nominated plant ("the non‑machine operator claims") and 429 dockets concerned plant which did not exist ("the fictitious plant number claims"). The SRA also asserted that 227 dockets involved an operator allegedly operating more than one machine at the same time at different locations ("the duplicate operator–different location claims"), 107 dockets concerned an operator allegedly operating more than one machine at the same time but at the one location ("the duplicate operator–same location claims"), 41 dockets related to the one machine being operated at different locations at the same time ("the duplicate plant numbers–different location claims") and 15 dockets involved the one machine being operated by two operators at the same time and at the same location ("the duplicate plant numbers–same location claims"). Finally, the SRA contended that 94 dockets were in respect of plant that was under repair at the nominated times ("the plant under repair claims"). The claims involved payments totalling $2,765,002 made by the SRA to Earthline and Nuline on the basis of 4,215 dockets. In this Court, the SRA confirmed that its case was that no alleged fraudulent claim fell into more than one of the above categories.
Earthline and Nuline filed cross‑claims against the SRA seeking damages totalling $537,358. The cross‑claim of Earthline related to invoices submitted to, but allegedly not paid by, the SRA. The cross‑claim of Nuline concerned a security deposit lodged with, but allegedly not refunded by, the SRA and three invoices submitted to, but allegedly not paid by, the SRA.
The evidence
In order to make out its case, the SRA relied primarily upon the evidence of three former employees of Earthline – Mrs Page, Mrs Meek and Ms Packham – as well as extensive documentary evidence. Evidence concerning the procedures within the SRA, together with the roles of Messrs Child, Bell and Greber, was provided by Mr Vincent, who was employed by the SRA as an investigator.
The evidence of Mrs Page
Mrs Page was the principal witness upon whom the SRA relied. She was employed by Earthline from April 1989 to September 1990 as a site secretary to complete, amongst other things, some of the dockets the company submitted to the SRA. Mrs Page swore two affidavits in the proceedings, the first on 14 October 1992 and the second on 12 August 1993. The first affidavit addressed a range of matters and included:
"9.... Soon after my arrival [Phillip] Davies took me into the site office and showed me the plant hire docket books which were currently in use. We then had a conversation to the following effect:
Davies said:'These are the docket books. Just fill them out the way they've been done previously.'
...
I said:'What hours do I put down?'
Davies said:'Unless I let you know otherwise, just leave the hours at 6.00 to 6.30.'
...
28.I specifically recall whilst I was working as site secretary at the Hospital site, on a date which I can now not presently recall, Davies attended the site office and handed to me a piece of paper with his handwriting on it. He then said to me words to the effect: 'Write up a book with all these machines in it.' The piece of paper contained information as to site locations, the nature of work and the type of machines to be inserted on the docket. The list contained machines to be written up as sub‑contractor machines. I recall this list contained approximately 6 rigid tippers, a dozer and a grader. A conversation then continued to the following effect:
I said: 'What are these machines about?'
Davies said: 'They're dummy machines.'
I said: 'Who am I going to put on these machines?'
Davies said: 'Anyone.'
I then filled in and completed docket forms in accordance with the details contained in this list. I made up false names and signed these names on the dockets as operators of the machines. Upon completing the dockets I then discarded the handwritten list given to me by Davies.
...
30.Whilst I was at the Hospital site and at other sites Davies telephoned me and gave me information concerning the completion of dockets. On these occasions he said to me words to the effect: 'I need you to write up some more docket books for the subbies'. By reference to 'the subbies' I understood Davies to be referring to sub-contractor machines … He then said to me words to the effect: 'Use a plant number being the next number in the plant number series of items of plant actually in existence'. I recall on ... occasion he said to me words to the effect: 'Write up a book for grader No 42'. I was aware at the time that there was not in existence a grader with that number. I then filled in [and] completed the plant hire docket books for the sub‑contractor machines at the request of Davies.
...
33.Whilst I was at the Hospital site the officers of the SRA that attended for the purpose of signing the dockets were Bell, Mr Peters and Mr Trevor Greber ('Greber'). From my recollection Bell did not attend the Kyogle site office every day to sign the plant hire docket books and attended the office quite irregularly. I observed Bell sign the plant hire docket books of [Earthline]. He signed the docket books with such speed as he turned the pages that he was not in fact checking whether the details inserted on those dockets were true or correct. On other occasions Bell very rarely looked at or checked any of the entries contained on the dockets before signing. On one occasion Bell said words to the effect: 'I'm not going to be around for a while. I'll sign these now.' He then signed dockets in 7 or 8 docket books which had no entries contained on them. I observed there were other occasions upon which Bell signed the dockets that had not been completed in any respect.
34.When Greber signed the dockets that I submitted to him he did not look at the entries contained on the dockets before signing.
...
48.Exhibited to me at the time of swearing this Affidavit and marked 'DMP1' are true copies of plant hire dockets completed by myself. Excluding the signature appearing in the space provided by the clients' signature, I have completed these dockets in every respect. The operators' signatures on those dockets are signed by myself as 'T Arthur'. I say that the name T Arthur is a false name I chose to insert on those dockets and is not a person known to myself. To my knowledge there was no person known by the name of T Arthur that worked for [Earthline]. I say that I created this false name and signed it on the dockets in order to complete the plant hire dockets in accordance with the request issued to me by Davies.
49.Exhibited to me at the time of swearing this Affidavit and marked 'DMP2' are true copies of [Earthline's] plant hire dockets completed by myself. Except for the signature appearing in the space provided for the clients' signature, I have completed these dockets in every respect. The operators' signature appearing on those dockets is 'R Adams'. I have a specific recollection of selecting that name to insert on those dockets as I knew a Rachel Adams who was a girlfriend of one of [Earthline's] operators. To my knowledge Rachel Adams worked as a site secretary on occasion for [Earthline] when I was on leave and detailed Davies' car on occasion. I say that Rachel Adams did not operate any earthmoving equipment for [Earthline]. I inserted the signature of R Adams in order to complete the plant hire dockets in accordance with the request of Davies.
50.Exhibited to me at the time of swearing this Affidavit and marked 'DMP3' are true copies of [Earthline's] plant hire dockets completed by myself. Except for the signature appearing in the space provided for the clients' signature, I have completed these dockets in every respect. The operators' signature which I inserted on the dockets is that of 'P Goldspring'. To my knowledge P Goldspring did work for [Earthline] as a driver of a Mack truck low loader used to relocate [Earthline's] machinery from site to site. The dockets in respect of the Mack truck loader were completed by Maitland. I say that I inserted the signature of P Goldspring in order to complete the plant hire dockets in accordance with the request of Davies."
The first affidavit identified nine other names which Mrs Page stated she had inserted on the dockets in circumstances similar to those outlined in par 48. The first affidavit also specified 17 additional names which Mrs Page stated she had inserted on the dockets in a manner similar to that contained in par 49. The first affidavit further identified four other names which Mrs Page stated she had inserted on the dockets in circumstances similar to those outlined in par 50.
Significantly, Mrs Page was not cross‑examined upon her allegations contained in pars 9, 33, 34, 48, 49 and 50 of the first affidavit.
Mrs Page was, however, cross‑examined at great length upon some of the dockets which were exhibited to her first affidavit. She conceded that, despite inaccuracies concerning the operator names, the plant mentioned in 236 of the impugned dockets was in fact used at the specified times and that a roller "was" at sites identified in 237 dockets at the nominated times. Mrs Page also conceded that she had "assumed" that a grader mentioned in 21 dockets had done real work. She further conceded a dozer mentioned in one docket "possibly" did work, a loader in 47 dockets "may" have been working or "could have been" working and that she "did not know" whether an excavator in a series of dockets was working.
Upon the SRA commencing the proceedings, it entered into a deed of release with Mrs Page by which it released and indemnified Mrs Page from all liabilities connected with or incidental to the proceedings. This deed of release was received in evidence.
The evidence of Mrs Meek
The SRA also relied upon the evidence of Mrs Meek, employed as a secretary for Earthline in the period September 1989 to December 1991 and who, among other things, completed invoices submitted to the SRA. Mrs Meek swore two affidavits in the proceedings, the first dated 26 July 1993 and the second dated 12 August 1993. The first affidavit contained the following:
"4. ... Upon the completion of the invoicing, I was required to hand the invoices to Mr Ian Davies so they could be checked prior to the invoice being forwarded to the client. Annexed hereto and marked with the letter 'A' is a true copy of a manual invoice of Earthline completed by myself. ...
...
8.I say that in early 1991 I observed Mr Greg Davies in his office completing the plant hire dockets of Earthline in every respect excluding the space provided for the client's signature. I observed Mr Greg Davies writing up these dockets when I had occasion to go into his office to ask him a question. I observed Mr Greg Davies completing the plant hire docket books of Earthline approximately once or twice a month. … The dockets Mr Greg Davies wrote up related to sites in the Hunter Valley. ...
...
10. In June 1991, Mr Ian Davies hired an office worker by the name of Ms Katrine Packham ('Ms Packham'). ... I say that I observed Ms Packham completing plant hire docket books in Mr Philip [sic] Davies office for a couple of hours almost every day of the week for a period of six months. I recall on occasions observing Ms Packham signing the plant hire dockets in the space for the operator's signature.
11. I recall when undertaking the invoicing observing an occasional docket not having an operator's signature on it. When I noticed this omission I would take the docket either to Mr Ian Davies, Mr Philip [sic] Davies or Mr Greg Davies and seek their advice as to how to rectify the problem. I recall being directed by Mr Ian Davies and Mr Philip [sic] Davies upon making such enquiries for myself to sign the space for the operator's signature. I do not presently recall the details of these conversations however [I] recall that I was told to sign someone's name from the payroll. I further say that I recall when I enquired of Mr Greg Davies as to how to rectify such omissions that he would sign in the space for the operator's signature himself in my presence.
12. ... During the period of my employment with Earthline I did not observe an operator attend the offices of Earthline and sign a plant hire docket. I do recall however Mr Patrick Fardon an Earthline Site Foreman attended Earthline's office on a regular basis to complete the docket books for the sites he worked at. Excluding Mr Fardon's dockets I do not recall observing any other Earthline Site Foreman or operator completing plant hire docket books."
The second affidavit added:
"8. I refer to paragraph 11 of my earlier Affidavit and say that on approximately half a dozen occasions I observed a docket not having an operator's signature. On these occasions I took the docket to either Mr Ian Davies, Mr Phillip Davies or Mr Greg Davies and said to them words to the effect:
I said:
'This docket has not got a signature on it. What do I do?'
If Mr Ian or Phillip Davies was present one of them said words to the effect:
Ian or Phillip Davies:
'You sign it yourself and use a name of someone you know to be on the pay roll.'
If only Mr Greg Davies was present he signed the docket himself in front of me. I carried out the directions of Mr Ian or Phil Davies.
9. I refer to paragraph 12 of my earlier Affidavit and say that all of my invoicing was checked by either Phil, Ian or Greg Davies before they were forwarded to the SRA."
Mrs Meek was not cross‑examined on the portions of her first and second affidavits outlined above.
The evidence of Ms Packham
A third person upon whom the SRA relied was Ms Packham, a part‑time employee of Earthline in the period June 1991 to November 1991. Like Mrs Page and Mrs Meek, Ms Packham swore two affidavits in the proceedings. The first, sworn on 26 July 1993, contained the following:
"7. The procedure I adopted to complete the docket books was to fill out all docket books for a particular machine as recorded on the handwritten sheets of paper provided to me. Once I had filled in all dockets for a particular machine for the period stated on the sheets of paper, I would then move to the next docket book for the next machine and likewise complete all details for the required period. ...
...
9. On a few occasions when completing the plant hire docket books, I noticed that some of the dockets I had written out were duplicated in that the machine was supposedly working at two different sites on the same day for the same period of time. I recall the first time I noticed the apparent duplication being concerned that I had made an error. I went to [Ian] Davies' office and had a conversation with him in words to the following effect:-
I said:'I was just writing out this docket and I noticed that I had written out a docket for the same machine for the same hours at a different site for the same day. I must have made a mistake.'
Davies:'No, its right don't worry about it.'
I recall Davies attempted at that time to provide some explanation for the apparent duplication however I cannot presently recall what he said.
10. I recall one day when I was completing docket books Davies approached me with a docket book and pointed to the space on the docket for the operator's signature and said words to the following effect:-
Davies:'Katrine, could you just sign this for me'.
I recall signing my own name on this occasion, on approximately 10 dockets contained in the book Davies handed to me. I further recall other occasions where Davies would direct me to sign someone else's name in the space for the operator's signature. I do not presently recall the names I was directed to sign. I say that Davies requested me to sign the operator's signature on only three or four occasions during my employment with Earthline. I further recall observing Mrs Rhonda Meek signing docket books in the space for the operator's signature.
...
12. I say that Mr Child attended the offices of Earthline each week for two or three weeks in a row, usually on a Friday. ... Mr Child would sit across from me in the office and sign the plant hire docket books I had completed in the space for the client's signature. I say that from my observations as to the speed with which he signed the docket books, that he did not check the details contained therein. I further say that when Mr Child attended Earthline's offices to sign docket books that he was in attendance for a [sic] average of three hours each time. During those three hours Mr Child would almost exclusively be signing docket books. I recall on a number of occasions when completing plant hire docket books, the signature of Mr Child appeared on dockets which had yet to be written out in any respect."
Ms Packham swore a second affidavit on 12 August 1993 which added:
"3. I refer to paragraph 10 of my earlier affidavit and say that on about two or three occasions Mr Ian Davies came up to me and said words to the effect:
Ian Davies:'Can you sign these dockets that haven't been signed?'
He was indicating that I sign the operator's signature on the dockets. He then said words to the effect:
Ian Davies:'Sign (he mentioned a name which I can no longer recall) name.'
I did as he directed and signed on each occasion ten dockets using different names."
Ms Packham was asked only one question in cross‑examination. It did not address the matters contained in the portions of her first and second affidavits outlined above.
Mrs Page, Mrs Meek and Ms Packham also alleged in their respective affidavits that Messrs Phillip and Ian Davies had spoken to them concerning the giving of evidence. By way of example, Mrs Page stated that Mr Phillip Davies had informed her:
"If they ask you to go to court just tell them you don't want to go. I've been trying to keep everybody out of court, everybody that I can keep out. I've been trying to keep them out."
Mrs Meek stated that Mr Phillip Davies had said to her:
"If you have to get in the witness stand they will give you a very hard time",
and that Mr Ian Davies had said:
"If you go to court they will get stuck into you. It will be very hard for you."
Other evidence
The SRA also tendered wage records and related documents of Earthline and Nuline. The related documents comprised a list of names of employees of Earthline, their occupations and the dates of their commencement and termination of employment.
The SRA engaged Coopers & Lybrand, accountants, to analyse the dockets submitted by Earthline and Nuline. Coopers & Lybrand prepared two reports. These reports, by way of annexures, indicated the dockets alleged to support, among other claims, the fictitious operator name claims, the fictitious plant number claims, the duplicate operator–different location claims and the duplicate operator–same location claims. The reports, together with annexures, were received in evidence.
Significantly, Earthline and Nuline called no evidence to answer the claims of the SRA or to support their cross‑claims. The solicitor for Earthline, Nuline and Messrs Davies, however, swore an affidavit on 1 September 1993 indicating that a police task force was investigating allegations of fraud, said to have been perpetrated by Earthline and Messrs Davies on the SRA, with a view to prosecution.
The judgment of the trial judge
On 14 September 1994, the trial judge delivered his reasons for judgment. The reasons comprised some 145 pages. His Honour rejected the majority of the claims made by the SRA – the fictitious operator name claims, the non‑machine operator claims, the fictitious plant number claims, the duplicate operator–different location claims and the duplicate operator–same location claims. However, the trial judge accepted the duplicate plant numbers–different location claims, the duplicate plant numbers–same location claims and the plant under repair claims[8].
[8]It is these claims which O'Keefe CJ Comm D accepted which, for the reasons outlined later, are excepted from the new trial.
The findings concerning the SRA procedures
His Honour initially considered the system operating within the SRA for the payment of invoices submitted by Earthline and Nuline. The trial judge concluded:
"I am satisfied that it was not a requirement of the SRA as at February, 1990 or at any time thereafter during the relevant period, that the name and personal or expressly authorised signature of the plant operator be included in each work docket. I am further satisfied that the non inclusion of such information had no effect upon payment by SRA to its contractors in respect of plant hire and that inclusion was not a prerequisite of payment."
This passage indicates that the trial judge saw as a relevant issue whether the signature of an operator on a docket was essential to payment of an invoice by the SRA. However, the case propounded by the SRA was that a large number of operators identified on the dockets, by way of signature, did not operate the plant. The SRA sought to establish its case by showing that some of the operators identified on the dockets did not work for Earthline or Nuline at all or, whilst employed by the companies, did not operate the plant to which the docket related. Accordingly, the relevant issue was not the presence or absence of a signature on the docket but rather whether the operator identified on the docket did in fact operate the plant. As will be seen below, the identification of the incorrect issue by the trial judge influenced his conclusions on the fictitious operator name claims and the non‑machine operator claims.
His Honour next considered the roles of Messrs Child, Bell and Greber. The trial judge was critical of the decision of the SRA to rely on the evidence of Mr Vincent to establish the functions undertaken by these three defendants rather than to seek to lead evidence from a person with more direct knowledge of the matter. His Honour remarked:
"I do not wish to be unduly critical of Mr Vincent, but in the main his evidence cannot be characterised as primary evidence. The decision to seek to prove systems through him was no doubt a decision made by others, one would assume for good reason. However, that decision and that mode of proof leave an unsatisfactory situation in a number of respects, especially where the onus of proof is on the SRA."
The reason for the criticism of the lack of primary evidence concerning the procedures utilised by the SRA for payment of contractors, as well as the roles of Messrs Child, Bell and Greber within those procedures, is not clear. There would seem to have been no dispute at trial as to the duties of Messrs Child, Bell and Greber and, in particular, their function in certifying the dockets prepared by Earthline and Nuline. Moreover, whilst Earthline and Nuline objected to certain portions of Mr Vincent's affidavit, they did not make complaint about his evidence concerning the functions of Messrs Child, Bell and Greber. Earthline and Nuline also did not cross‑examine Mr Vincent on this aspect of his affidavit evidence. Thus, the evidence of Mr Vincent on the functions of Messrs Child, Bell and Greber was unchallenged and there was no adequate basis to conclude that the situation was "unsatisfactory".
The findings concerning credibility
The trial judge then reviewed the allegations made against Messrs Child, Bell and Greber. In so doing, his Honour evaluated the evidence given by Mrs Page and Ms Packham and rejected significant parts thereof. The trial judge did not make an express finding concerning the evidence of Mrs Meek.
At a general level, his Honour stated in relation to Mrs Page:
"Whilst the material included in her affidavit gives the appearance of being quite unequivocal, this appearance did not survive her cross‑examination. I do not accept significant parts of her evidence. It was internally inconsistent in a number of respects. She was argumentative at times, evasive at others. She did not present well in the witness box. On a number of occasions I formed the view that the evidence she gave was made up on the spot to get her out of what she perceived to be a problem. Frequently she paused for periods, some of which were extended, and appeared to be casting around for an answer which she regarded as suitable rather than addressing the question directly. Although it was not put to her in cross‑examination I could not help but feel that she had some animus towards the Davies. However I do not base my assessment of her on this nor on the fact that her services with Earthline were terminated by Earthline. Specific respects in which I reject her evidence emerge in the course of this judgment as do some instances of matters relating to her credit of the kind referred to above. However those instances are by no means exhaustive."
As explained earlier in these reasons, Mrs Page conceded in cross‑examination that some of the dockets which she identified in her affidavit as containing false entries were in fact used at the times specified in those dockets. Yet, significantly, key components of her evidence withstood cross‑examination, including those portions of her affidavits relating to fictitious operator name claims or non‑machine operator claims.
Documentary evidence also supported a number of the allegations made by Mrs Page in her affidavits. The wage records and related documents for Earthline and Nuline were received in evidence and did not contain details relating to a number of persons identified in the dockets as operators. By way of example, Mrs Page alleged in par 48 of her affidavit that "T Arthur" was a false name she chose to insert on the dockets and was not, to her knowledge, a person who worked for Earthline. The wage records and related documents for Earthline did not include a person by the name of "T Arthur".
Moreover, significant portions of Mrs Page's affidavits were corroborated by the unchallenged evidence of Mrs Meek and Ms Packham, particularly the evidence of Ms Packham concerning the one machine operating at different locations at the same time.
In chief, Mrs Page was asked questions designed to assist the admission of certain portions of her affidavit evidence. Such questions filled three pages of transcript. Mrs Page was then cross‑examined, completing some 200 pages of transcript, and re-examined, filling 14 pages of transcript. In light of Mrs Page's evidence substantially withstanding cross‑examination, as well as the corroborating documentary and affidavit evidence, the rejection, as his Honour put it, of "significant parts of her evidence" is surprising.
The trial judge also took into account the deed of release between Mrs Page and the SRA in evaluating her evidence. His Honour added:
"It is not without significance that Mrs Page seems to have believed that she had an indemnity in return for giving evidence for the SRA against the defendants (T 80-82). As Exhibit S shows that indemnity relates only to civil claims which may have been made against her by the SRA. And it is only in respect of such claims that she has a release. However in her mind by giving evidence she was, in my opinion, protecting herself from any claims or prosecution to which she might have been subject. Whilst that may not explain in whole her evidence it is in my opinion an additional factor to be taken into account in assessing her evidence and the weight to be given to it."
This conclusion on the veracity of Mrs Page may have been based upon her appearance whilst providing oral evidence. Yet, Mrs Page misunderstood the effect of the release, believing that it would provide her with indemnity from both civil and criminal proceedings. Accordingly, she may have been more inclined to tell the truth rather than to seek to protect herself from future liability. This suggests that the adverse "significance" which the trial judge attached to the matter was misplaced.
The trial judge analysed the evidence given by Ms Packham. In the context of her evidence concerning the visits by Mr Child to Earthline to sign dockets, the trial judge stated:
"This contrast between that part of her affidavit concerning the frequency and duration of attendance by Mr Child at the Earthline office for the purpose of signing work dockets and that part which refers to the speed at which Mr Child is said to have signed the dockets, leaves me with a sense of unease about accepting her evidence as precise. In my opinion it is more probable that, whilst on some occasions there may have been some speed and absence of checking, it is not established to my satisfaction that this was the invariable practice or even the predominant practice. Absence of cross‑examination does not assist SRA in relation to this conclusion. Nor does her evidence or any other evidence establish which of the work dockets now claimed to relate to work which was not done, were signed by Mr Child in the manner which she describes."
This feeling of "unease" is surprising in light of the failure by Earthline, Nuline and Messrs Davies to object to the relevant portions of Ms Packham's affidavit and the lack of cross‑examination of her on those portions. Additionally, no evidence was called by any of the respondents to contradict Ms Packham, especially evidence from Mr Child as to his practice in certifying the dockets. Moreover, Mrs Page gave evidence as to the speed by which dockets were certified and the absence of thorough checking by persons engaged by the SRA. This evidence lends support to Ms Packham's claims that Mr Child signed the dockets in a quick fashion.
The findings concerning the claims
His Honour next reviewed the evidence concerning each category of the claims which were alleged to contain materially false entries. The trial judge first examined the fictitious operator name claims and the non‑machine operator claims and concluded:
"Insofar as operators are concerned ie categories (a) [fictitious operator name claims] and (b) [non‑machine operator claims] the assumptions include that the name and signature of the operator of a particular machine at a particular site on a particular day for the hours set out in the relevant docket is a matter essential for the certifying officer of the SRA to satisfy himself about and a matter which, if inaccurate or omitted, should result in non payment for the hours included in such docket even though the work referred to in the docket was in fact carried out. For reasons which I have already detailed I reject this proposition. Not only am I not satisfied that the identity and or signature of the operator was essential to proper certification and payment but I am satisfied that the true situation was that what mattered and what was being certified for and paid was the fact that a machine of a given designation or description and hence an agreed hourly rate performed work for the number of hours shown in the day docket."
The conclusion in this passage, which was repeated later in his reasons, indicates a key basis upon which the trial judge rejected the fictitious operator name claims and the non‑machine operator claims. (The other key basis was his rejection of the evidence of Mrs Page.) As explained earlier in these reasons, however, the real issue was not the presence or absence of a signature but rather the actual operation of the plant by the person identified in the docket.
In relation to certain items of plant, the trial judge concluded that they were being operated at the times and locations specified in the dockets. His Honour relied upon the concessions made by Mrs Page in cross‑examination that some dockets relating to the fictitious operator name claims and the non‑machine operator claims concerned plant that was actually used or which she "assumed" to have been used. These concessions concerned approximately 550 of the 2,264 dockets which comprised the non‑machine operator claims. From this foothold, the trial judge proceeded to reject all of the non‑machine operator claims. Importantly, his Honour failed to consider whether the plant identified in dockets which was not the subject of cross‑examination, and which comprised the majority of the non‑machine operator claims, was used for the hours specified.
In terms of the fictitious plant number claims, his Honour found that six of the 13 plant alleged to be fictitious were in fact real. This finding was based on the six items being included in a list of plant received in evidence. The trial judge, though, proceeded to examine the evidence relating to each of the alleged fictitious plant in detail. In relation to machine No 59, a machine which was found not to be real by reference to the list of plant, his Honour remarked:
"In addition M Goldspring is not the only driver of vehicle No 59 shown on the relevant work dockets. Messrs Jenkins, Dickenson and Marsden are also shown on the work dockets as operators of this machine at times when Mrs Page was not performing clerical duties for Earthline. Messrs Marsden and Dickenson appear in Earthline's employment records. The designation of their employment is as operator. Mr Jenkins does not appear in the employment records of Earthline, but he is shown to have driven the vehicle on only two occasions in early April 1990. The possibility of casual employment for this purpose cannot be excluded and no explanation has been given by the employee who completed such work dockets as to the circumstances in which Mr Jenkins' name was included on them."
The trial judge thus relied upon dockets identifying three other employees of Earthline – Messrs Jenkins, Dickenson and Marsden – in assessing whether machine No 59 was fictitious. However, it is important to observe that the evidence of Mrs Page that the name of Mr Jenkins was fictitious withstood cross‑examination and was not contradicted by any of the respondents. Indeed, it would have been relatively easy for the respondents to establish that Mr Jenkins was a real person and an employee of Earthline by calling him as a witness and asking questions directed to such issues. Moreover, an inference that his evidence would not have assisted the respondents can be drawn from his absence as a witness in such circumstances[9]. An explanation for his absence was not provided. Additionally, the trial judge appears to have proceeded in error by referring to Messrs Dickenson and Marsden as operators of machine No 59. The dockets in evidence show that Messrs Dickenson and Marsden were operators of machine No 60, as opposed to machine No 59.
[9]Jones v Dunkel (1959) 101 CLR 298 at 308.
In any event, the list of plant tendered in evidence did not include a reference to a machine No 59. In the circumstances of this case, the strong inference is that the plant was fictitious.
The reference to the possibility of Mr Jenkins being a casual employee, despite the absence of his name on the wage records and related documents, is also suggestive of the application of the criminal, as opposed to the civil, standard of proof. Whilst it is true that a finding of fraud in a civil case should not be lightly made[10], this does not entail that the criminal standard applies. The basic point is that it was not the task of the appellant to exclude every reasonable hypothesis but rather to establish its case on the balance of probabilities.
[10]Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 at 171; 110 ALR 449 at 450.
His Honour evaluated the evidence of Mrs Page in par 28 of her first affidavit concerning the alleged creation of dockets for sub‑contractor machines. The trial judge stated:
"I do not accept [Mrs Page's] evidence in this regard, indeed in a number of critical respects. But even if what she deposes to in paragraph 28 of her affidavit were to be accepted there are still problems for SRA. I shall return to these later when I examine the dockets relating to sub‑contractor machines. In addition no docket book has been pointed out whether completed during the period she was at the Hospital site or otherwise in which there are nine (9) or so sub-contractor machines ie the six rigid tippers, the dozer and grader recorded, as she deposes."
Notwithstanding the statement in the last sentence, the docket books relating to the sub-contractor machines were in evidence (by way of exhibits to Mrs Page's first affidavit), as were the reports by Coopers & Lybrand which identified, in summary form, the 429 dockets comprising the fictitious plant number claims (by way of an annexure to the reports identifying the impugned dockets by docket number). The factual foundation for the conclusion falls away.
The trial judge then examined the duplicate operator–different location claims and the duplicate operator–same location claims. His Honour stated:
"All of the persons referred to in the dockets gathered together in these categories were actual employees of Earthline. None of the work dockets involves any duplication of plant ... Only 81 of the 227 work dockets included in category (d) [the duplicate operator–different location claims] (35%) relate to a period in which Mrs Page was carrying out office duties for Earthline. Only some 30% of the work dockets referred to in category (e) [duplicate operator–same location claims] were completed during a period when Mrs Page was performing clerical duties for Earthline. Upon examination it is apparent that in a number of instances there is in fact no duplication involved. Some of the work dockets were certified by employees of SRA other than [Messrs Child, Bell and Greber]. Messrs Graham, Harkin, Ralston, Fardon, [Owen], Macrae, Kennedy and Howard are such or some of such officers. Against none of them is any adverse suggestion made. None was called to explain the circumstances."
The emphasis, however, upon the percentage of dockets prepared at times when Mrs Page was performing clerical duties for Earthline is largely immaterial. The claims in these two categories were based upon duplicity. Such duplicity was clearly ascertainable by comparing two dockets and determining whether the same operator was stated to be using different machines at the one time. This comparison was made easier by the fact that an annexure to the Coopers & Lybrand report outlined, in table format, the dockets which were said to be duplicated. The acceptance into evidence of these reports, and the reliance upon them by the appellant, was appropriate given the large number of impugned dockets[11]. Unfortunately, the finding by the trial judge that there were a number of instances of non‑duplication is not explained by reference to the dockets. Thus it is difficult to review this finding.
[11]See Potts v Miller (1940) 64 CLR 282 at 292, 303; Re Montecatini's Patent (1973) 47 ALJR 161 at 169.
The passage set out above also indicates that the trial judge rejected a number of the claims within this category on the basis that the impugned dockets were certified by representatives of the SRA other than Messrs Child, Bell and Greber. Yet, in accepting the duplicate plant numbers–different location claims and the duplicate plant numbers–same location claims, due to the existence of duplicity on the face of the dockets, his Honour was not concerned that a number of such dockets were certified by persons other than Messrs Child, Bell and Greber. An inconsistency of approach to determining the claims is thus apparent.
Finally, in light of the lack of evidence led by Earthline and Nuline, the trial judge dismissed the cross‑claims.
The supplementary decision of the trial judge
On 10 October 1994, the trial judge published his reasons for judgment concerning the amount of damages to which the SRA was entitled against Earthline flowing from the duplicate plant numbers–different location claims, the duplicate plant numbers–same location claims and the plant under repair claims. Those damages, which included interest up to and including 10 October 1994, were calculated as $146,587.63. The reasons for judgment of the same date also addressed the issue of costs, with the trial judge deciding that the SRA would be entitled to 20 percent of its costs, to be paid by Earthline, on a party‑party basis.
The appeal to the Court of Appeal
The SRA appealed to the Court of Appeal on two principal grounds. First, it challenged the approach of the trial judge in rejecting the evidence of Mrs Page and, secondly, it submitted that the documentary evidence, standing alone, established that the impugned claims were false.
Section 75A of the Supreme Court Act 1970 (NSW) applied to the appeal. Sub‑sections (5), (6) and (10) thereof state:
"(5)Where the decision or other matter under appeal has been given after a hearing, the appeal shall be by way of rehearing.
(6)The Court shall have the powers and duties of the court, body or other person from whom the appeal is brought, including powers and duties concerning –
(a)amendment,
(b) the drawing of inferences and the making of findings of fact, and
(c) the assessment of damages and other money sums.
...
(10)The Court may make any finding or assessment, give any judgment, make any order or give any direction which ought to have been given or made or which the nature of the case requires."
On 20 December 1996, the Court of Appeal dismissed the appeal with costs. Mahoney P, with whom Meagher JA agreed, summarised the case put forward by the SRA in the following terms:
"The contention of SRA was essentially that the claims for payment made by the companies which SRA impugned were false in that the work for which payment was claimed was not done. The basis of the falsity ... was not the same throughout; the companies, SRA claimed, composed and filed with it claims that were inaccurate in various ways. However, the thrust of the matter, as contended by SRA, was that the work for which payment was claimed was not done."
This summary implies that the issue in the proceedings was whether work was performed. It is clear, however, that the work, in the sense of track repairs and earthworks, was undertaken by Earthline and Nuline for the SRA. The crucial issue was whether certain plant was used by Earthline and Nuline in undertaking such work, the quantum of use being determinative of the amount of remuneration properly due from the SRA to Earthline and Nuline.
Mahoney P first addressed the ground of appeal concerning the rejection by the trial judge of the evidence of Mrs Page. The President referred to authorities such as Abalos v Australian Postal Commission[12] and Devries v Australian National Railways Commission[13] before concluding that he was not satisfied that the trial judge had misused his position of advantage in assessing the credibility of Mrs Page. Mahoney P stated:
"I shall not repeat the detailed analyses of the evidence made in this regard by the trial judge. It is sufficient that I record that, in general, I agree that in at least a number of respects the analyses which he made and the comparisons between her evidence and the documents provide adequate reasons for rejecting the evidence of Mrs Page. If there were errors of detail in what the [trial] judge did, I think that they do not falsify the general conclusions at which he arrived: there were instances enough to justify his conclusions as to her credibility. I do not think that this Court on appeal should set aside the conclusion which in this regard the [trial] judge reached."
His Honour said that, were Mrs Page's evidence to be put aside to the extent that the trial judge did so, the substantial basis of the claims of the SRA was removed. The President added:
"The evidence that was given by Mrs Page suggesting, for example, that she had had deliberate and detailed instructions from officers of the companies in respect of the falsification of claims and that there was misconduct or negligence of the officers on site employed [sic] by SRA of the kind and extent she suggested is not in my opinion acceptable."
This rejection of Mrs Page's evidence must be considered against the background of a failure by the respondents to object to her evidence on the instructions provided by Messrs Davies and the lack of cross‑examination on the same matter. The uncontradicted and unchallenged evidence of Mrs Meek and Ms Packham on the instructions provided by Messrs Davies to them is also of considerable significance.
[12](1990) 171 CLR 167.
[13](1993) 177 CLR 472.
On the ground of appeal concerning the sufficiency of the documentary evidence, the President agreed with the approach of the trial judge to analysing such evidence and the doubts he had concerning such evidence. Mahoney P concluded:
"It is no disrespect to the industry of counsel that I do not repeat the analyses contained in the judgment ... Notwithstanding the submissions that have been made, I am in general agreement with the way in which the [trial] judge dealt with the details as he there set them forth. ... There are enough matters of substance supporting the [trial] judge[']s analysis of the documents and the use of them in the exhibits to warrant the conclusion that they should not satisfy the court of the falsity of the claims impugned.
...
Having attempted my own analysis of the exhibits and checked again the portions of them to which the judge referred, I am not convinced that I should draw the inferences as to the falsity of the claims which SRA has suggested."
It will be apparent from the observations earlier in these reasons that the acceptance by the President of the reasons of the trial judge was misplaced.
The third member of the Court of Appeal, Handley JA, agreed with the conclusions of Mahoney P concerning the rejection by the trial judge of the evidence of Mrs Page. On the issue of the sufficiency of the documentary evidence, Handley JA stated:
"The first difficulty is that the [SRA] failed to call any of its own employees who had, or should have had, knowledge of the facts. The second difficulty is that the [SRA] failed to make out a prima facie case that particular payments, other than those for which it recovered, had been paid by mistake for work that had not been done. There was evidence which was more than sufficient to excite the suspicion of the Court, but no prima facie case in relation to any other particular payments. Moreover there was no prima facie case that the contractors had charged the [SRA] and been paid for more work than they had truly performed so as to entitle it to recover a proportion of its payments on a global basis, assuming that such a course was open to it as a matter of law."
The criticism of the lack of primary evidence of the procedures adopted by the SRA has been addressed earlier in these reasons. The conclusions concerning the absence of a prima facie case makes no allowance for the weight of much of the documentary evidence, particularly the corroborating affidavits of Mrs Meek and Ms Packham, the wage records and related documents supporting the fictitious operator name claims, the list of plant in relation to the fictitious plant number claims (at least for machine No 59) and the duplicity on the face of the dockets with respect of the duplicate operator–different location claims and the duplicate operator–same location claims. Furthermore, Earthline and Nuline led no evidence other than the affidavit sworn by their solicitor, to which reference is made earlier in these reasons.
The appeal to this Court
By grant of special leave, the SRA appeals to this Court on a single ground:
"The Court [of Appeal] erred in failing to hold that the trial judge was not entitled to reject the evidence of the principal witnesses called by the SRA in circumstances where their evidence was inherently probable, had not been denied or answered in evidence by the respondents, had not been directly challenged in cross-examination by the respondents and had been substantially corroborated by the respondents' own documents."
The SRA contends that the trial judge was in error in three respects. First, the trial judge failed to give sufficient attention to all the evidence of the case,
especially that of Mrs Meek and Ms Packham, as well as the extensive documentary evidence, in evaluating the evidence of Mrs Page. Secondly, the trial judge applied the incorrect standard of proof in analysing the evidence led by the SRA. And thirdly, the trial judge misdirected himself as to the relevant issue concerning the certification of the dockets. For the reasons outlined above when reviewing the judgments of the trial judge and the Court of Appeal, the SRA has established each of these grounds.It is true that the trial judge, in determining whether to accept the evidence of Mrs Page, was heavily swayed by his impression of her whilst giving oral evidence. However, this circumstance does not preclude a court of appeal from concluding that, in light of other evidence, a primary judge had too fragile a base to support a finding that a witness was unreliable.[14] The documentary evidence in this case, comprising unchallenged affidavit material of Mrs Meek and Ms Packham, the wage records and related documents of Earthline and Nuline, the list of plant (at least in relation to machine No 59) and the analysis of Coopers & Lybrand (in respect of the duplicity claims), provides significant support to the allegations made by Mrs Page.
[14]Apand Pty Ltd v The Kettle Chip Company Pty Ltd (1994) 52 FCR 474 at 496-497. See also Voulis v Kozary (1975) 50 ALJR 59; 7 ALR 126; Chambers v Jobling (1986) 7 NSWLR 1.
As Kirby J and Callinan J point out in their reasons for judgment, these were matters to which weight was not given either by the trial judge or the Court of Appeal. The substance of the matter is that there has not yet been a determination of the SRA's case upon a consideration of the real strength of the body of evidence it presented. There must be a new trial at which this consideration will be undertaken.
Orders
The appeal should be allowed with costs. Orders 1, 3, 4 and 5 of the Orders of the Court of Appeal dated 20 December 1996 should be set aside and, in place thereof, it should be ordered that the appeal to that Court be allowed with costs, Orders 1, 2 and 3 of the Orders of O'Keefe CJ Comm D made on 13 February 1998 be set aside and there be a new trial on all issues except those on which the SRA was successful against Earthline before O'Keefe CJ Comm D.
The costs of the proceedings before O'Keefe CJ Comm D should abide the outcome of the new trial.
Order 2 of the Orders of the Court of Appeal, which relates to the dissolution of a Mareva injunction in favour of the SRA, was not the subject of submissions to this Court. Any application to reinstate such relief should be made to the Supreme Court.
KIRBY J. In Ahmedi v Ahmedi[15], in the New South Wales Court of Appeal, I remarked:
"If the mere incantation of Abalos v Australian Postal Commission[16], is henceforth to deprive this Court of the power and duty of review of factual conclusions, a great deal of injustice will be uncorrected and the clearly expressed will of Parliament, defining the jurisdiction of this Court, will be frustrated. I do not believe that that is what Abalos or any other judicial authority does provide or could provide."
[15](1991) 23 NSWLR 288 at 291.
[16](1990) 171 CLR 167.
This appeal, from orders of the New South Wales Court of Appeal[17], challenges the dismissal by that Court of an appeal from a decision given by O'Keefe CJ Comm D in the Supreme Court of New South Wales. Substantially, the appeal required the re-examination of a large amount of factual evidence. It is unusual for this Court to provide special leave in a case involving no suggested point of legal controversy or principle. It is also unusual for this Court to disturb conclusions of fact which have been reached at first instance and confirmed in the primary appeal, although it has occasionally done so[18].
[17]State Rail Authority of New South Wales v Earthline Constructions Pty Limited & Ors unreported, New South Wales Court of Appeal, 20 December 1996 (Mahoney P, Meagher and Handley JJA).
[18]See eg Voulis v Kozary (1975) 180 CLR 177 at 192 per Jacobs J. Another illustration is Warren v Coombes (1979) 142 CLR 531.
Despite the unpromising features of the matter, it is clear enough that special leave was granted because of a concern that an injustice had been done to the appellant[19]. This concern arose when the decision of the primary judge, affirmed on appeal, was compared with apparently reliable and incontrovertible documentary evidence, a significant amount of uncontested oral testimony and the absence of relevant testimony from the respondent parties to refute or meet the significant case presented against them. Standing in the way of intervention by this Court, it was suggested, was its own instruction in Abalos v Australian Postal Commission[20].The Court was warned that any retreat from that instruction would make a rod for its own back and, by inference, for other appellate courts sheltered from unpromising appeals by the Abalos line of authority[21].
[19]cf Judiciary Act 1903 (Cth), s 35A(b).
[20](1990) 171 CLR 167.
[21]Jones v Hyde (1989) 63 ALJR 349; 85 ALR 23; Devries v Australian National Railways Commission (1993) 177 CLR 472.
In my opinion the appeal should be allowed. My reasoning runs along the same general lines as that of Callinan J. Although, in the Court of Appeal Mahoney P expressly invoked Abalos[22], Meagher JA agreed with him and Handley JA did likewise (adding some reasons of his own), this was not an appeal in which the principles stated in Abalos governed the proper appellate analysis to the point of relieving the Court of Appeal of its statutory function[23]. Although the appellant's counsel disdained any suggestion that new principles were required to guide appellate courts in the performance of their functions in cases such as this, the appeal illustrates the danger of attaching too much significance to the words of restraint expressed in Abalos and allowing those words to deflect the appellate court from its duty. If this decision has importance beyond the correction of a perceived injustice in a particular matter, it is as it permits this Court to reaffirm the true principles which govern appellate courts in deciding appeals in civil matters brought from orders made by a judge sitting without a jury.
[22]State Rail Authority of New South Wales v Earthline Constructions Pty Limited & Ors unreported, New South Wales Court of Appeal, 20 December 1996 at 7.
[23]Supreme Court Act 1970 (NSW), s 75A(5).
Appellate review of facts: history
Appeal is an invention of statute[24]. At common law there was no room for appeal on questions of fact. There, the resolution of disputed facts was, in virtually every case, the province of the jury[25]. So far as the writ of error was concerned, which preceded appeal, it did not invite, or permit, review of the facts[26]. In R v Earl of Banbury[27], Lord Holt CJ expressed the attitude which prevailed:
"[A]ll causes generally consist more of matters of fact, than of law, and it is beneath the dignity of their Lordships, to be troubled with matters of fact".
[24]Attorney-General v Sillem (1864) 10 HLC 704 at 720-721 [11 ER 1200 at 1207-1208]; South Australian Land Mortgage and Agency Co Ltd v The King (1922) 30 CLR 523 at 553; Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73 at 108; Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220 at 225; Grierson v The King (1938) 60 CLR 431 at 436; Da Costa v Cockburn Salvage & Trading Pty Ltd (1970) 124 CLR 192 at 202; Gipp v The Queen (1998) 72 ALJR 1012 at 1035; 155 ALR 15 at 46; Merribee Pastoral v ANZ Banking Group Ltd (1998) 72 ALJR 1055 at 1060; 155 ALR 1 at 7-8; CDJ v VAJ (1998) 72 ALJR 1548 at 1562; 157 ALR 686 at 705-706; Fleming v The Queen (1998) 73 ALJR 1 at 6; 158 ALR 379 at 385.
[25]There was a practice in Chancery, before the enactment of legislation in the mid-nineteenth century, to send issues of disputed legal rights, titles and interests to the common law courts to be tried before a jury by way of special case: First Report of the Commissioners into the Process, Practice, and System of Pleading in the Court of Chancery, (1852) at 10, reprinted in British Parliamentary Papers, Legal Administration, General, vol 8, "Court of Chancery" at 54.
[26]Story, Commentaries on the Constitution of the United States, 1st ed (1833), vol 3, §1756.
[27](1694) Skinner 517 at 523 [90 ER 231 at 235]. See Paterson v Paterson (1953) 89 CLR 212 at 219; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 277 per McHugh JA.
When, in the nineteenth century, in England, a facility of appeal was provided by Act of Parliament, first in Chancery[28] and then more generally[29], there were probably still some judges (there may be some today) who regarded the injustices that can occur from erroneous factual determinations as beneath their dignity. Certainly, such errors do not typically present the kind of controversies, analytical and conceptual, which are congenial to most trained lawyers. So when the obligation of deciding appeals from the decisions of single judges in civil causes was imposed by statute, it was natural enough that the early appellate judges should look to the only precedents on offer. In the case of the English Court of Appeal, this involved reaching back to the jurisprudence in Chancery appeals. These, in turn, had derived guidance from Admiralty cases heard before the Privy Council[30]. In these, the Board had warned, often in the context of conflicting oral evidence about ship collisions, of the need to respect the conclusion of the trial judge in reviewing the evidence, and to acknowledge the advantages which that judge enjoyed from his opportunity to see witnesses and observe their demeanour. According to this line of authority, the appellate court's intervention was to be confined to cases where the examination of the record of testimony led the appellate court to a feeling of "extreme and overwhelming pressure" to substitute their conclusion for that reached at trial[31].
[28]In 1621, in Bourchier's Case (Hale, Jurisdiction of the House of Lords at 195) an "appeal" from the decision of the Chancellor to the House of Lords was attempted but the House of Lords refused review for want of jurisdiction except in cases of bribery or corruption of the Chancellor. For a time, after the Restoration, the House of Lords exercised an appellate jurisdiction from the Chancellor. See eg Shirley v Fagg (1675) 6 ST 1122. However, this was much criticised for want of suitable expertise in their Lordships. See Potter, An Historical Introduction to English Law and its Institutions, 3rd ed (1948) at 173-175. In 1851, by 14 & 15 Vict c 83, the Court of Appeal in Chancery was created. It was later absorbed in the Court of Appeal established by the Judicature Act 1873 (UK). By rr 50 and 52 in the Schedule to the Judicature Act it was provided that all appeals to the Court of Appeal should be by way of rehearing. These provisions were widely copied, including, eventually, in New South Wales.
[29]Judicature Act 1873 (UK), Pt II. The Act formed a Supreme Court of two Divisions: the Court of Appeal and the High Court of Justice. See Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 143-145.
[30]See eg The "Julia" (1860) 14 Moore 210 [15 ER 284]; The "Alice" (1868) LR 2 PC 245; cf Scott v Pauly (1917) 24 CLR 274 at 279 per Isaacs J.
[31]Discussion in The Glannibanta (1876) 1 PD 283 at 287.
Here, then, in the earliest days of the elucidation of the judicial role in civil appeals were the seeds of the controversy which has persisted for 150 years. Appellate judges must necessarily perform their statutory function. They must rehear the matter and form their own conclusions on the evidence recorded at the trial. Rising to their duty, they must condescend to a re-examination of the facts, if their statutory charter so requires or permits. Yet that re-examination obliges appellate judges to take into account, and give full weight to, the advantages which the trial judge had and which, in the nature of their different functions and purpose, they may not have.
These principles were stated and re-stated several times in the decisions of the English Court of Appeal between the date of its establishment in 1875 and the establishment of this Court[32]. In the earliest days of this Court it was unsurprising that the Justices, themselves then answerable to the Privy Council, should have adopted and applied a like approach to the problem, and expressed it in identical language. In Paterson v Paterson[33], Dixon CJ and Kitto J suggested that the "earliest occasion on which this Court dealt with the matter was probably in Dearman v Dearman[34]". Certainly that was one of the first cases. In it the Court restored the orders of a trial judge who had declined to act on the evidence of witnesses who testified to adultery. However, the first case actually arose in the first year of the operation of this Court, a matter remarked upon by Priestley JA in Moran v McMahon[35]. The decision is McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2)[36]. The passage in question appears in the reasons given for the Court by Griffith CJ. He said[37]:
"Now, although when a cause has been heard by a Judge on vivâ voce evidence, a Court of appeal is naturally reluctant to differ from him on a question of fact, yet the Court must bear in mind that it is required to re-hear the cause, and to form its own conclusions upon the evidence. (See Coghlan v Cumberland[38]). The difficulty which the Court of appeal feels is greater when there is a conflict of evidence, or when the weight to be attached to uncontradicted testimony depends to some extent upon the demeanor of witnesses, than when the facts are not contradicted, and the main question is as to the proper inference to be drawn from them, or when the case is substantially one of circumstantial evidence."
[32]See eg Robertson v Robertson (1881) 6 PD 119 at 121; Bigsby v Dickinson (1876) 4 Ch D 24 at 28-29; Coghlan v Cumberland [1898] 1 Ch 704. See also Montgomerie & Co Limited v Wallace-James [1904] AC 73; Nocton v Ashburton (Lord) [1914] AC 932 at 945.
[33](1953) 89 CLR 212 at 220.
[34](1908) 7 CLR 549.
[35](1985) 3 NSWLR 700 at 715.
[36](1904) 1 CLR 243.
[37](1904) 1 CLR 243 at 277.
[38][1898] 1 Ch 704.
The decision in Coghlan v Cumberland, which was approved and applied by this Court in McLaughlin, examined the dilemmas which have faced appellate judges in Australia and elsewhere ever since the statutory facility of appeal was introduced. How can they reconcile the obligation to conduct an appeal by way of rehearing on the facts as well as on the law, whilst respecting the advantages enjoyed by the trial judge which the appellate court can never wholly recapture? In Coghlan, the English Court of Appeal had said[39]:
"It is often very difficult to estimate correctly the relative credibility of witnesses from written depositions; and when the question arises which witness is to be believed rather than another, and that question turns on manner and demeanour, the Court of Appeal always is, and must be, guided by the impression made on the judge who saw the witnesses. But there may obviously be other circumstances, quite apart from manner and demeanour, which may shew whether a statement is credible or not; and these circumstances may warrant the Court in differing from the judge, even on a question of fact turning on the credibility of witnesses whom the Court has not seen."
The approach adopted in these words was applied in many later decisions of this Court[40].
[39][1898] 1 Ch 704 at 705.
[40]See eg Federal Gold Mine Ltd v Ennor (1910) 13 CLR 276 at 279, 284; Craine v Australian Deposit and Mortgage Bank Ltd (1912) 15 CLR 389 at 399; Pearce v W D Peacock & Co Ltd (1917) 23 CLR 199 at 207. Other cases are collected by Asprey JA in Ravagnani v Hollywood Sands Pty Ltd [1972] 1 NSWLR 362 at 367-368.
More recently, it has become common to cite the well-known passage in Lord Sumner's speech in SS Hontestroom v SS Sagaporack[41]. But that speech did not, in my respectful opinion, add anything of substance to what had been said 30 years earlier in Coghlan.Nor for that matter to what had been said by Griffith CJ in McLaughlin.All that was added was the somewhat unfortunate reference (as it seems to me) to the consideration of whether "it can be shown that [the trial judge] has failed to use or has palpably misused his advantage"[42]. These words carry the flavour of judicial misconduct which is rarely shown, or even suggested[43]. How one distinguishes an alleged judicial "misuse" of advantage which is "palpable" from one which exists but is not "palpable" has never been clear to me. Nor is it clear why misuse must be "palpable" but the failure to use the advantage given to the judge need not be "palpable". Lord Sumner's formula is, in my respectful opinion, flawed. It may lead appellate courts to an assumption about the burden of demonstrating error that is unduly onerous: warranted neither by the statutory formulae applicable to such cases nor by the notion of "appeal" itself.
[41][1927] AC 37 at 47.
[42][1927] AC 37 at 47.
[43]cf Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 at 92 per Meagher JA.
It was natural, after McLaughlin, that the problem would quickly return to the Court for this is the question which stands at the threshold of the consideration of most civil appeals. Return it did in Dearman v Dearman[44]. There, Isaacs J offered the first of what would become several examinations by him of the appellate function. With a nod to the early Privy Council opinions and the decisions of the English Court of Appeal, Isaacs J gave voice to the apparently competing requirement falling on the appellate court: the first is "the primary duty, and in fact the whole duty, of every Court of Appeal [which] is to give the judgment which in its opinion ought to have been given in the first instance."[45] The second is to observe the "natural limitations" which exist in the case of any appellate court[46]. It is to accept that the trial judge might have found significance in "[a] look, a gesture, a tone or emphasis, a hesitation or an undue or unusual alacrity in giving evidence" which cannot be attributed to the witness "in the mere reproduction in type"[47]. Isaacs J accepted that, in some cases, the effect of "unrecorded material" would be "very small, indeed insignificant, and utterly outweighed by other circumstances"[48]. An appellate court was not excused from the task of "weighing conflicting evidence and drawing its own inferences and conclusions"[49]. However, it would always "bear in mind that it has neither seen nor heard the witnesses, and should make due allowance in this respect"[50]. Most of the problems which have repeatedly presented themselves in the 90 years since Dearman was written are reflected in the reasons given in that case.
[44](1908) 7 CLR 549.
[45](1908) 7 CLR 549 at 561. See also Scott v Pauly (1917) 24 CLR 274 at 278-281; London Bank of Australia Ltd v Kendall (1920) 28 CLR 401 at 406-407; cf SS Hontestroom v SS Sagaporack [1927] AC 37 at 47.
[46](1908) 7 CLR 549 at 561. See also Scott v Pauly (1917) 24 CLR 274 at 278-281.
[47](1908) 7 CLR 549 at 561.
[48](1908) 7 CLR 549 at 561-562.
[49](1908) 7 CLR 549 at 564 citing The Glannibanta (1876) 1 PD 283 at 287.
[50](1908) 7 CLR 549 at 564.
There is no point in reviewing the many decisions after Dearman and before the Abalos trilogy[51]. A description of the first 50 years of this Court's decisions on the matter was offered by Dixon CJ and Kitto J in Paterson v Paterson[52]. That examination included, after Dearman, reference to Craine v Australian Deposit and Mortgage Bank Ltd[53], Perpetual Executors and Trustees Association of Australia v Wright[54], Scott v Pauly[55], Federal Commissioner of Taxation v Clarke[56], and Webb v Bloch[57]. There were doubtless many other cases. The reason for such a multitude of dicta was explained in Paterson v Paterson[58] by Dixon CJ and Kitto J:
"In the course of our work we are constantly reminded by counsel of the particular aspect of such a matter emphasized by one or other of the cases which have more recently dealt with the duty of a court of appeal when reviewing findings of fact. Some of the earlier judicial statements seem to have fallen from the honoured place they once held in the armoury of respondents in this court."
[51]Abalos (1990) 171 CLR 167; Jones v Hyde (1989) 63 ALJR 349; 85 ALR 23; Devries v Australian National Railways Commission (1993) 177 CLR 472.
[52](1953) 89 CLR 212.
[53](1912) 15 CLR 389.
[54](1917) 23 CLR 185 at 190-191.
[55](1917) 24 CLR 274 at 278-281.
[56](1927) 40 CLR 246 at 262-266.
[57](1928) 41 CLR 331 at 356.
[58](1953) 89 CLR 212 at 219.
The same words might be repeated nearly half a century later. In that interval, further cases dealing with the problem of the duty and limitations of appellate review have regularly presented themselves for decision. They have included Whiteley Muir and Zwanenberg Limited v Kerr[59], Voulis v Kozary[60], Taylor v Johnson[61], Brunskill v Sovereign Marine & General Insurance[62] and Baumgartner v Baumgartner[63] and many others.
[59](1966) 39 ALJR 505.
[60](1975) 180 CLR 177.
[61](1983) 151 CLR 422.
[62](1985) 59 ALJR 842; 62 ALR 53.
[63](1987) 164 CLR 137.
Emphasis on the duty of appellate review and its constraints
In his submissions, Mr Jackson QC for the appellant did not suggest that any different principle from that stated by this Court in Abalos v Australian Postal Commission[146] needed to be developed or applied. The submission, in essence, is that notwithstanding the advantages that the trial judge had, because his Honour overlooked some important matters, especially the nature of the indisputably false documents, failed to give the significance to others that they plainly deserved, and because he did not give proper weight to the corroborative effect of the evidence of Mrs Page and Mrs Meek who were not relevantly cross-examined at all, and because he misconstrued the nature of the contract, his Honour fell into appellable error.
[146](1990) 171 CLR 167.
At the forefront of the appellant's case is the proposition that the claim was not made as a claim for overpayment, or payment for work not done. The contract in respect of which claims became payable was a contract for the hire of plant and equipment, not for the performance of any given quantity of work. The respondents admitted that the contract was a contract for the hire of equipment. The pleadings truly reflected the contract entered into by the parties and consisting of the tender documents, the specifications, and the standard form of contract. Some of the relevant contractual terms were as follows:
"2. The Contractor shall undertake the following:-
1.To deliver the plant in good working order and maintain it in that condition at his own expense.
…
3. To provide a competent driver or drivers to operate the plant and pay all wages, overtime, camping allowances and travelling expenses of the driver and of any other personnel necessary for the efficient operation of the plant.
…
6. To work the plant continuously as required during the period of hire.
…
3. Payment shall be as follows:
3.1When the plant is in operation – 'A' Rate
Single shift work will be paid for at the hourly rate of the offer on the basis of up to eight hours per day for a five day week.
All fractions of an hour worked will be paid for in proportion to the hourly hire rates to the nearest 1/6th of an hour.
All time worked in excess of the hours specified above for each normal working day and all time worked during other days or on Public Holidays will be paid for at the hourly rate as specified plus an amount based on the time so worked equal to the difference between the normal wages rate and the overtime or holiday rate whichever is applicable as prescribed by the Industrial Award governing the employment of the Plant Operator or Operators.
3.2When the plant is rendered idle due to wet weather or for reasons outside the Authority's control or during tea breaks for which the Operator is entitled to payment under the Award governing his employment or when the plant is being transported between jobs other than under its own power – 'B' Rate
Payment will be made at the hourly rate of the offer for idle periods for the time the plant is so rendered idle. Fractions of an hour shall be paid for in proportion to the hourly idle rate to the nearest 1/6th of an hour."
A number of consequences flow from these provisions. Some of them were the subject of affidavit evidence by Mr Vincent:
"2. The standard accounting procedure followed by the SRA with respect to the processing and payment of invoices submitted by contractors in the Newcastle and Grafton Regions in the period June 1987 to in or about November 1991 was as follows:
(a) invoices and supporting documentation were submitted by contractors to the particular Regional Division of the SRA responsible for contracting the particular contractor;
(b) upon receipt of the invoice, the following was undertaken:
(i) the invoice was checked against the Local Purchase Order which ordered the performance of the work;
(ii) the invoice was certified in accordance with section 13 of the Public Finance and Audit Act 1983 as to the performance of the service the subject of the invoice;
(iii) the invoice was also certified in accordance with section 13 of the Public Finance and Audit Act 1983 as to the rates of charge. The rates of charge were checked with reference to the rates submitted by the First Defendant in the plant hire schedule for the relevant region;
(iv)the invoice was then checked and certified as to the calculations and additions contained therein.
(c) calculations were then made as to the prescribed taxation deduction. This was a standard deduction formula. The prescribed taxation payment was then deducted from the value of the invoice to arrive at the total amount payable to the contractor;
(d) a cheque was then drawn by the particular Regional Division of the SRA from its Advance Account and made payable to the particular contractor in respect of the invoice or invoices. If more than one invoice was processed for any particular contractor on one day, only one cheque was drawn from the Advance Account. The Advance Account was an account operated by the Regional Division for the purposes of local expenditure;
(e) the Regional Division of the SRA then completed an Advance Account Recoupal Claim form and attached the invoices for which payment had been made. This form served 2 functions. Firstly, to account to Head Office for payments made out of the Advance Account and secondly, to reimburse the Advance Account. Upon receipt of the Advance Account Recoupal Claim form, Head Office drew a cheque in the amount of the claim being made and paid that money directly into the Regional Division's Advance Account."
His evidence was that a different, decentralised but still highly structured procedure for the acceptance and payment of accounts was adopted after November 1991.
The significance of these matters is that it was not open to an employee of the appellant such as Messrs Child, Bell and Greber, or anyone else to make decisions of the kind that the respondents submitted were made, and not improperly so: that if they thought a certain quantity of work had been done, payment should be authorised and made as if a certain number of hours on a certain machine by a certain employee of the respondent companies had been worked.
The respondents submitted that cl 4.3.3 of the specification was to a different effect from the contractual provisions to which I have referred and justified payment on the basis of the quantity of work done. That clause was as follows:
"Develop your own system (or use a local standard system if your Field Controlling Officer wants it) for keeping accurate details of hours worked, 'A' and 'B' times, time machine was off-hired, etc, so that the invoice can be certified confidently and quickly. Use the contractor's daily work dockets, a diary, the Ganger's note book or other suitable system. You must keep these papers for at least 2 years in case the account is questioned."
I do not so read it. The reference to the keeping of "accurate details of hours worked, 'A' and 'B' times, time machine was off-hired, etc," is entirely consistent with the other contractual terms I have quoted.
Unfortunately both the trial judge and the Court of Appeal approached the matter upon the basis that the respondents invited this Court to adopt. The approach is exemplified by the statement by Handley JA that I have quoted in which his Honour thought it relevant and persuasive that there was no prima facie case that the contractors had been paid for more than they had truly performed. Once the falsity of the dockets and the improper process by which they were produced were deposed to by witnesses a prima facie case was plainly raised. The statement from the reasons of Handley JA that I have quoted also speaks of recovery of "a proportion of [the] payments on a global basis". That is not what the appellant claimed at all. The amount claimed represented the sum of a number of different amounts falling within different categories and in respect of which a prima facie case had been raised by the documentary evidence and the evidence of Mrs Page, Ms Packham and Mrs Meek.
The fact that no claim was made in terms by the appellant that a certain quantity of work had not been done does not assist the respondents. It was their obligation to ensure that all relevant details, as to time, place, and actual machinery worked were accurately recorded and notified as the basis of payment. The importance to the parties of the accuracy of this information was reinforced by the inclusion on the docket of a space for the signature of the employee operating each machine and the emphasis placed upon the need for a signature in that space. It is unthinkable that the principals of the respondent companies, and indeed the appellant's own employees, Messrs Child, Bell and Greber would not appreciate that the dockets were the foundation for payments which, being made off-site as they were, would be made on the faith of their accuracy and proper verification on site. This inference is, in my opinion, particularly in the absence of any evidence to contradict it, irresistible.
The respondents' case here, as it was in the Court of Appeal, is effectively that once the trial judge rejected Mrs Page, the appellant could not succeed because its case rested entirely on Mrs Page's evidence. That approach overlooks the evidence of Ms Packham and Mrs Meek which remained unchallenged in some critical respects.
Mrs Meek's evidence as follows was not only unchallenged but also uncontradicted and persuasive. Because she was not cross-examined on any relevant matters this Court is in as good a position to assess her evidence as the trial judge. Among other things she deposed as follows:
"8. I say that in early 1991 I observed Mr Greg Davies in his office completing the plant hire dockets of Earthline in every respect excluding the space provided for the client's signature. I observed Mr Greg Davies writing up these dockets when I had occasion to go into his office to ask him a question. I observed Mr Greg Davies completing the plant hire docket books of Earthline approximately once or twice a month. I recall in or around that time the only docket books we received from actual sites were from Mr Patrick Fardon at a site near Coffs Harbour. The dockets Mr Greg Davies wrote up related to sites in the Hunter Valley. I say this because I was required to examine those dockets for the purposes of invoicing and recognised Mr Greg Davies' handwriting on dockets relating to sites in the Hunter Valley.
9. In or about the same time that I observed Mr Greg Davies completing plant hire docket books, I further observed Mr Ron Child attend the offices of Earthline on average twice a month. On those occasions I observed Mr Child, usually sitting in Mr [Phillip] Davies' office signing all the docket books that Mr Greg Davies had completed. I say that prior to Mr Child attending the office for that purpose I had observed the docket books sitting in piles on Mr [Phillip] Davies' desk.
10. In June 1991, Mr Ian Davies hired an office worker by the name of Ms Katrine Packham ('Ms Packham'). I say that Ms Packham's main duties were to complete the plant hire docket books of Earthline. I say that I observed Ms Packham completing plant hire docket books in Mr [Phillip] Davies' office for a couple of hours almost every day of the week for a period of six months. I recall on occasions observing Ms Packham signing the plant hire dockets in the space for the operator's signature.
11. I recall when undertaking the invoicing observing an occasional docket not having an operator's signature on it. When I noticed this omission I would take the docket either to Mr Ian Davies, Mr [Phillip] Davies or Mr Greg Davies and seek their advice as to how to rectify the problem. I recall being directed by Mr Ian Davies and Mr [Phillip] Davies upon making such enquiries for myself to sign the space for the operator's signature. I do not presently recall the details of these conversations however recall that I was told to sign someone's name from the payroll. I further say that I recall when I enquired of Mr Greg Davies as to how to rectify such omissions that he would sign in the space for the operator's signature himself in my presence.
12. I say that from the time Mr Greg Davies commenced writing the plant hire dockets, the majority of the docket books remained in the offices of Earthline at Rutherford however occasionally I observed docket books were missing. I later observed those docket books had been returned. During the period of my employment with Earthline I did not observe an operator attend the offices of Earthline and sign a plant hire docket. I do recall however Mr Patrick Fardon an Earthline Site Foreman attended Earthline's office on a regular basis to complete the docket books for the sites he worked at. Excluding Mr Fardon's dockets I do not recall observing any other Earthline Site Foreman or operator completing plant hire docket books.
13. I was responsible throughout the course of my employment with Earthline for the calculation and payment of wages to its employees. I recall on a number of occasions complaining to Mrs Mary Davies as to the manner in which wages were calculated and paid. I say that the system involved the payment of all casuals at a flat rate per hour with no additional payment being made with respect to any overtime worked. If in fact a casual employee worked overtime I was then required to adjust the hours worked figures on their time sheet so that the hours worked equalled a payment as if overtime had been paid in accordance with the applicable award although payment was made for each hour worked at a flat hourly rate. This was achieved by reducing the number of hours worked as recorded on each individual employee's timesheet.
14. I recall when I commenced employment with Earthline and for a period of approximately three or four months Mr [Phillip] Davies ran a system whereby employees could elect not to receive their full wage for any particular pay period on the basis that a proportion of that wage would be recorded in a book kept by him and later be available for those employees to draw upon when required. In effect the system avoided the payment of tax as it reduced each employee's weekly wage with the payments recorded in the book later being received in a lump sum form. I say that whilst this system ceased to operate for casual employees of Earthline in or around early 1990, Mr Alan Sneddon, Mr Trevor Hall and Mr Paul Hedges remained on that system up until the time my employment with Earthline ceased in December 1991.
15. In or around late 1989 or early 1990 I recall, whilst sorting through mail I observed an account from Grace Bros Removalists in the sum of approximately $1,500. I recall at that time having a conversation with Mr [Phillip] Davies in words to the following effect:-
I said:'I have this invoice here from Grace Bros Removalists can you tell me what it is about'.
Davies:'Oh, that's for David Bell we worked out its easier for the account to come through here and he can pay us back.'
I said: 'That's fine'."
In another affidavit sworn by Mrs Meek she said:
"3. In 1989 or 1990 either Mr Ian Davies or Mr Phillip Davies said to me words to the effect:
Ian or Phillip Davies: 'Invoice out machine 34 to Michael Gillart. The machine is owned by Ron Child.'
I did as I was directed. Some time later I had a conversation with Mrs Davies to the following effect:
I said: 'Who is Michael Gillart?'
Mrs Davies: 'That is Ron Child's son.'
…
7. I refer to paragraph 8 of my earlier Affidavit and say that after I observed Mr Greg Davies completing the Plant hire docket books of Earthline Greg Davies said to me words to the effect:
Greg Davies: 'I have been writing so long I have writer's cramp.'
8. I refer to paragraph 11 of my earlier Affidavit and say that on approximately half a dozen occasions I observed a docket not having an operator's signature. On these occasions I took the docket to either Mr Ian Davies, Mr Phillip Davies or Mr Greg Davies and said to them words to the effect:
I said: 'This docket has not got a signature on it. What do I do?'
If Mr Ian or Phillip Davies was present one of them said words to the effect:
Ian or Phillip Davies: 'You sign it yourself and use a name of someone you know to be on the pay roll'.
If only Mr Greg Davies was present he signed the docket himself in front of me. I carried out the directions of Mr Ian or Phillip Davies.
…
11. I altered the hours on the time sheets in the following manner. If a worker worked 60 hours 20 of those hours were overtime. I altered his hours by indicating actual hours worked at normal time being 40 hours, 12 hours at time and a half, and one hour at double time. The result being that he received the same amount of money being 60 times $13.20 so the actual hours I recorded that he had worked would be 53 hours not 60 hours. This system applied the whole time I worked there for every casual. Accordingly if you divided the gross wages by the hourly rate of $13.20 or $14.50 you would arrive at the hours the person actually worked. I had an exercise book that recorded all the actual hours the workers worked. I believed that this system was wrong however as I was an employee I carried out my instructions. I had a conversation with Mrs Davies about the system to the following effect:
I said:'The way you are doing the wages is wrong. If someone doesn't like Phil they could dob him in and he could get into trouble.'
Mrs Davies: 'I agree.' "
Ms Packham's first affidavit contained these paragraphs:
"9. On a few occasions when completing the plant hire docket books, I noticed that some of the dockets I had written out were duplicated in that the machine was supposedly working at two different sites on the same day for the same period of time. I recall the first time I noticed the apparent duplication being concerned that I had made an error. I went to Davies' office and had a conversation with him in words to the following effect:-
I said:'I was just writing out this docket and I noticed that I had written out a docket for the same machine for the same hours at a different site for the same day. I must have made a mistake.'
Davies: 'No, it's right don't worry about it.'
I recall Davies attempted at that time to provide some explanation for the apparent duplication however I cannot presently recall what he said.
10. I recall one day when I was completing docket books Davies approached me with a docket book and pointed to the space on the docket for the operator's signature and said words to the following effect:-
Davies: 'Katrine, could you just sign this for me.'
I recall signing my own name on this occasion, on approximately 10 dockets contained in the book Davies handed to me. I further recall other occasions where Davies would direct me to sign someone else's name in the space for the operator's signature. I do not presently recall the names I was directed to sign. I say that Davies requested me to sign the operator's signature on only three or four occasions during my employment with Earthline. I further recall observing Mrs Rhonda Meek signing docket books in the space for the operator's signature.
11. I recall on a few occasions Davies saying to me words to the following effect:-
Davies: 'Ronnie Childs is going to be in at the end of the week to sign the dockets so make sure they are up to date.'
By referring to 'Ronnie Childs', I understood Davies to be referring to Mr Ron Child.
12. I say that Mr Child attended the offices of Earthline each week for two or three weeks in a row, usually on a Friday. His attendance would be consistent for a few weeks and then he would not attend the offices for sometimes up to six weeks. I say that when my sole function with Earthline was to write up docket books, that Mr Child would sit across from me in the office and sign the plant hire docket books I had completed in the space for the client's signature. I say that from my observations as to the speed with which he signed the docket books, that he did not check the details contained therein. I further say that when Mr Child attended Earthline's offices to sign docket books that he was in attendance for an average of three hours each time. During those three hours Mr Child would almost exclusively be signing docket books. I recall on a number of occasions when completing plant hire docket books, the signature of Mr Child appeared on dockets which had yet to be written out in any respect."
Her second affidavit was short and bears repeating in full:
"1. I refer to paragraph 4 of my earlier affidavit sworn on 26 July 1993 ('my earlier affidavit') and say that in about July 1991 whilst I was working at Lot 1, Kyle Street, Rutherford I had a conversation with Mr Phillip Davies to the following effect:
I said:'What do the numbers on the docket books relate to?'
Phillip Davies: 'Every machine has a number.'
I said: 'Which machine has what number?'
Phillip Davies: 'Dump trucks are numbered (he mentioned a range of numbers which I am now unable to recall) and excavators are numbered (he mentioned a different range of numbers which I am now unable to recall).'
2. In about August 1991 I had a conversation with Mr Phillip Davies whilst I was working at the offices at Lot 1, Kyle Street, Rutherford to the following effect:
I said: 'What does SUB mean?'
I was referring to the letters which I was required to write down next to plant No. on the dockets.
Phillip Davies: 'It is a subcontractor's machine.'
3. I refer to paragraph 10 of my earlier affidavit and say that on about two or three occasions Mr Ian Davies came up to me and said words to the effect:
Ian Davies:'Can you sign these documents that haven't been signed?'
He was indicating that I sign the operator's signature on the dockets. He then said words to the effect:
Ian Davies:'Sign (he mentioned a name which I can no longer recall) name.'
I did as he directed and signed on each occasion ten dockets using different names.
4. I refer to paragraph 11 of my earlier affidavit and say that on the occasions Mr Child attended the offices of Earthline … [h]e made himself cups of coffee without asking. He walked around the office and made himself at home.
5. In mid-1993 I received a telephone call from Mr Ian Davies in which he said to me words to the effect:
Ian Davies:'If you go to court we'll get stuck into you. We will be very hard on you.' "
Ms Packham's cross-examination consisted of only one question which she answered by confirming that she had never visited any of the work sites.
The evidence of Mrs Page was therefore corroborated in material particulars by Mrs Meek and Ms Packham. It was given further force by the respondents' decision not to cross-examine those corroborators, the failure of the respondents to call any evidence in refutation, and by the attempts at subornation by MessrsDavies, matters to which neither the trial judge nor the Court of Appeal accorded any weight.
Accordingly the submissions of the appellant that I have summarised earlier have been made out. That is enough to dispose of the appeal which must be allowed. All parties proceeded on the basis that if the appeal is allowed there must be a retrial.
I would order that the appeal be allowed with costs, that the respondents pay the appellant's costs of the appeal to the Court of Appeal and that the costs of the trial abide the outcome of the retrial.
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