Zaknic Pty Ltd v Svelte Corporation Pty Ltd
[1995] FCA 1037
•12 DECEMBER 1995
CATCHWORDS
Evidence - admissibility - allegedly forged signature on deed of guarantee - evidence of various fraudulent acts in respect of other documents - whether relevant - whether evidence could affect the assessment of the probability that the guarantee is forged - whether tendency evidence - whether significant probative value - whether evidence should be excluded on discretionary grounds.
Evidence Act 1995 s 55, s 97, s 118, s 125, s 135, s 138
Pfenning v The Queen (1995) 182 CLR 461 at 474, 485, 486, considered.
D F Lyons Pty Ltd v Commonwealth Bank of Australia (1991) 100 ALR 468 at 476, 478, considered.
Mood Music Publishing Co v De Wolfe Ltd [1976] 1 Ch 119 at 127, applied.
Sheldon v Sun Alliance Australia Limited (1990) 53 SASR 97 at 102, 144‑149, applied.
Boyce v Cafred Pty Ltd (1984) 4 FCR 367 at 370, applied.
Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd (1981) 36 ALR 23, considered.
Gates v City Mutual Life Assurance Society Ltd (1982) 68 FLR 74 at 88, considered.
Berger v Raymond Sun Ltd [1984] 1 WLR 625, considered.
ZAKNIC PTY LIMITED v SVELTE CORPORATION PTY LIMITED & ORS.
No. NG216 of 1994
CORAM:Lehane J
PLACE:Sydney
DATE: 12 December 1995
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )
GENERAL DIVISION ) No. NG216 of 1994
BETWEEN:ZAKNIC PTY LIMITED
(A.C.N. 003 803 496) Applicant
AND:SVELTE CORPORATION PTY LIMITED
(A.C.N. 056 992 877) First Respondent
HARRY SIALEPIS Second Respondent
CRYPTA FUELS PTY LIMITED
(A.C.N. 010 036 512) Third Respondent
ROBERT JOSEPH HAGAN Fourth Respondent
HARRY SIALEPIS First Cross Claimant
SVELTE CORPORATION PTY LIMITED
(A.C.N. 056 992 877) Second Cross Claimant
CRYPTA FUELS PTY LIMITED
(A.C.N. 010 036 512) First Cross Respondent
ROBERT JOSEPH HAGAN Second Cross Respondent
DES MITCHELL Third Cross Respondent
CORAM:Lehane J
PLACE:Sydney
DATE:12 December 1995
MINUTE OF ORDERS
THE COURT ORDERS:
THAT the present application seeking the admission of certain evidence be dismissed.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )
GENERAL DIVISION ) No. NG216 of 1994
BETWEEN:ZAKNIC PTY LIMITED
(A.C.N. 003 803 496) Applicant
AND:SVELTE CORPORATION PTY LIMITED
(A.C.N. 056 992 877) First Respondent
HARRY SIALEPIS Second Respondent
CRYPTA FUELS PTY LIMITED
(A.C.N. 010 036 512) Third Respondent
ROBERT JOSEPH HAGAN Fourth Respondent
HARRY SIALEPIS First Cross Claimant
SVELTE CORPORATION PTY LIMITED
(A.C.N. 056 992 877) Second Cross Claimant
CRYPTA FUELS PTY LIMITED
(A.C.N. 010 036 512) First Cross Respondent
ROBERT JOSEPH HAGAN Second Cross Respondent
DES MITCHELL Third Cross Respondent
CORAM:Lehane J
PLACE:Sydney
DATE:12 December 1995
REASONS FOR JUDGMENT
LEHANE J: This case, and the other matter - Crypta Fuels Pty Limited and Anor v Svelte Corporation Pty Limited & Ors, NG 975 of 1993 - which I am hearing concurrently with it, have assumed considerable complexity. The trial of the two cases has already occupied some 13 sitting days. This judgment relates to the admissibility
of certain evidence tendered on behalf of the fourth respondent, Robert Joseph Hagan.
For present purposes it is sufficient to note that the applicant claims "compensation" for repudiation of a lease entered into by the third respondent, Crypta Fuels Pty Limited, as lessee under which the applicant claims as assignee of the lessor. The applicant claims also that on or about 18 December 1992 the fourth respondent guaranteed the performance by the third respondent of its obligations under the lease. The applicant claims to have the benefit of an assignment of the guarantee as well as of the lease and that, accordingly, the fourth respondent is, as guarantor, liable to the applicant in respect of the compensation claimed from the third respondent for repudiation of the lease.
The fourth respondent denies the guarantee. By his defence he denies the allegations concerning the supposed guarantee in the applicant's Statement of Claim and "denies that he ever knowingly signed a document guaranteeing the payment of rent and outgoings under the lease ... and denies that any liability ever arose pursuant to such an alleged guarantee". The alleged guarantee is in evidence. There is a signature on the final page, which purports to be that of the fourth respondent (and which the fourth respondent does not deny) and to have been written by way of execution of the document. On each of the preceding pages of the document there are initials, purporting to be those of the fourth respondent, which he says that he did not write or authorise anyone else to write; on the second last page of the document there is
also a signature, purporting to be that of the fourth respondent, which also he says he neither wrote nor authorised anyone else to write on his behalf. Those denials of the fourth respondent are supported by evidence given by a handwriting expert. Much about the way in which the document came into existence and about its history since that time remains obscure. What matters for present purposes, however, is that the fourth respondent denies that he knowingly signed a document which he believed to be a guarantee and asserts that the document purporting to be his guarantee is a forgery.
In those circumstances the fourth respondent seeks to tender certain evidence which, he says, should be admitted as relevant to the question whether the guarantee is genuine. The evidence comprises material said to show that persons in whose interest it was to propound the supposed guarantee (not the applicant or persons associated with the applicant) have been concerned in various disreputable acts including the backdating of documents and transactions, the production for fraudulent purposes of false documents and the placing on documents of unauthorised and false signatures. This evidence, the fourth respondent says, could rationally affect the assessment of the probability that the guarantee is forged and is therefore relevant (Evidence Act 1995 s 55(1)), is not excluded by the tendency rule (Evidence Act, s 97) or on any other ground and should not be excluded on a discretionary basis under s 135 of the Evidence Act or otherwise. The evidence tendered falls within the category of what is often called "similar fact" evidence, though with the complication that it would be relied on not, once forgery had been established, to identify the forger, but as relevant
to the initial question whether or not the document was forged. It may perhaps be said at the outset that the most recent pronouncement of the High Court in this area of the law - albeit in a criminal case, and before the Evidence Act 1995 took effect - offers little encouragement to the enterprise: Pfenning v The Queen (1995) 182 CLR 461 at 474, 485, 486.
This, however, is not a criminal case and questions of admissibility are now to be decided having regard to the Evidence Act. Before coming to what is, I believe, the heart of the issue, I should deal briefly with two arguments which were raised in passing against the admission of some, at least, of the evidence. One of those was that I should exclude certain of the evidence under s 138 of the Evidence Act on the basis that it was obtained improperly or in contravention of an Australian law. All I need say about that, I think, is that none of the evidence is evidence of a kind that could only have been obtained in contravention of law, or improperly, and there is no evidence that any of it was in fact illegally or improperly obtained. The other suggestion made was that certain of the evidence could not be adduced because of a privilege arising under s 118. As to that, I think it is clear that the evidence concerned would, by reason of s 125 of the Act, not have the benefit of the privilege. That narrows the questions to be answered in relation to the evidence sought to be tendered to the following: first, is it relevant as that expression is defined in s 55? Secondly, is it excluded by the tendency rule (s 97)? If not, then thirdly, should I in any event exclude it in the exercise of a discretion under s 135(a) or (c)?
Before embarking on those questions I should describe briefly the nature of the evidence. First, there is an affidavit sworn on 28 June 1995 of Geoffrey Alan Thibou. Mr Thibou deposes to the forgery by one of the persons in whose interest it was to propound the guarantee (to whom I shall refer as "X") of his signature on a loan application and to words said to him by X which might be taken as an admission of the forgery. He deposes also to a conversation which he says he had with another person in whose interest it was to propound the guarantee (to whom I shall refer as "Y") in which he accused Y of uttering the forged loan application and Y said words which might be taken as an admission of the truth of that accusation. Finally, he deposes to seeing X forge the signature of X's wife on finance applications and to his own removal, without his consent, from the position of director of a company of which X also was a director.
Secondly, there is an affidavit sworn on 1 December 1995 by X's wife. She exhibits to her affidavit a copy of a transcript of part of proceedings in the Family Court of Australia between herself and X. I shall refer in more detail to that transcript later in these reasons. She then asserts that certain documents given to a bank in respect of financing transactions bear signatures which purport to be hers but are, she says, not hers and are in handwriting which she recognises as that of X. She then deposes to statements which she says were made to her by X that he had signed certain documents "for my mother". She deposes also to an alleged practice of X of bringing home for her signature the signature pages only of documents which he wanted her to sign. She then annexes to her affidavit documents purporting to be signed by her late
brother and by Mr Thibou and says that she has been informed by both that the signatures on those documents are not theirs. Finally, she attaches a copy of an affidavit sworn by her in the Family Court proceedings in which she says that signatures on certain documents, purporting to be hers, are not hers and that the signatures appear to be written in the handwriting of X "although I prefer to have that verified by an expert in the event that the husband denies this particular allegation".
Thirdly, there is an affidavit of Stewart Alan Levitt sworn on 6 December 1995 annexing further transcript of the proceedings in the Family Court. I was referred to and have read a number of passages in the transcript (that is, all the portions of the transcript exhibited, or attached, to the affidavits of Mrs X and Mr Levitt). In a general sense, it might be thought that those passages of the transcript raise questions concerning the conduct of X and Y, including questions as to the veracity of evidence given by each of them. There is not, however, in any of the passages to which I was referred, any evidence clearly indicating the forgery of documents by either of them.
Fourthly, and finally, there is an affidavit of Stewart Alan Levitt sworn on 5 December 1995 annexing a copy of a transcript of a recording made by the National Crime Authority of a conversation between three people, two of whom apparently were X and Y. The conversation might, I think, be taken to include admissions by both X and Y as to their participation in what might be described as a rearrangement of the affairs of X, and persons and bodies associated with him, so as to lead to a more
advantageous result in the Family Court proceedings than might otherwise ensue. But there are other particular features of the recorded conversation. One is that it contains statements by both X and Y which indicate their concurrence in a plan to backdate certain documents and transactions. Perhaps more relevantly, it contains statements evidencing their concurrence in a plan to prepare a false document by typing it in such a way as to indicate that it was a relatively old document, rather than a recent one, and to make assurance doubly sure by destroying the original document after photocopying it, so that photocopies only would be retained and the original unavailable for any forensic examination which might otherwise occur.
I received the evidence on the voir dire. What I now have to decide is whether any of it should be admitted in the proceedings as relevant to the question whether the guarantee purportedly given by the fourth respondent is a genuine document.
The first question is that of relevance, i.e. could the evidence (or any of it) rationally affect the assessment of the probability that the guarantee is forged? Where the question is not, once forgery has been found, who was the forger but was the document forged, Pfennig must, I think, throw some doubt on the relevance of any of the evidence. However, the test in s 55 requires only some rational effect on the assessment of the relevant probability and that effect may be direct or indirect. In that context, the strength of the argument of counsel for the fourth respondent is that where there is already evidence to suggest that the document in question may be forged, evidence to the effect that it was propounded by persons with a propensity to
forge, or utter forged documents, and a history of doing so, can rationally affect an assessment of the probability of forgery. On that basis, I would still have grave doubts about the relevance of any of the material in the transcript of the Family Court proceedings; but I think that certain statements, to which I have referred, in the NCA transcript, and certain of the allegations of Mrs X and Mr Thibou, may well be relevant in the statutory sense.
That takes me to s 97. The evidence with which I am concerned is clearly, I think, evidence of the conduct of persons (X and Y), or of a tendency that those persons have or had. Its use in the assessment of the probability that the guarantee is forged must depend on it being taken to prove that X or Y, or both, have a tendency to act in a particular way, viz to forge documents. Thus, the evidence can be admitted for that purpose only if reasonable notice is given as required by para 97(1)(a); and it is not admissible if the Court thinks that the evidence would not, either by itself or having regard to other evidence adduced or to be adduced by the fourth respondent, have significant probative value: s 97(1)(b). Stephen Odgers in his commentary on the Act suggests (at 97.2) that in most circumstances evidence of this kind will not satisfy the test of "significant probative value" and cites the expressed intention of the Australian Law Reform Commission that such evidence "should not generally be admissible". At all events, what is clearly required, if evidence is to be admissible, is that it could rationally affect the assessment of the probability of the relevant fact in issue to a significant extent: i.e., more is required than mere statutory relevance.
Because that is so, I think it is permissible to turn for guidance to cases decided before the Act came into force. I do not propose to review the authorities in detail. They do not by any means speak with one voice and in some of them the concept of "relevance" is used in what may, perhaps, be described as a somewhat special sense which may not survive the Evidence Act, s 55: D F Lyons Pty Ltd v Commonwealth Bank of Australia (1991) 100 ALR 468; Frank Bates, "Similar Facts in Civil Cases" (1992) 108 LQR 200. It is probably true that, in civil cases the standard required in criminal cases for the admission of evidence of this kind did not fully apply: Mood Music Publishing Co v De Wolfe Ltd [1976] 1 Ch 119 at 127; Sheldon v Sun Alliance Australia Limited (1990) 53 SASR 97 at 102, 144‑149; D F Lyons v Commonwealth Bank of Australia, supra. What is clear is that courts have exercised a considerable degree of caution in admitting similar fact or tendency evidence. They have described the degree of cogency required of such evidence in a number of ways, some at least of which give some guidance, I think, as to the meaning of the concept of "significant probative value" which appears in s 97. For example, there are the phrases "striking similarities" and "underlying unity" seen in some of the criminal cases (see the discussion by Gummow J in D F Lyons at 476); "sufficient probative weight to be relevant to this issue "(Mood Music Publishing Co at 127); "a strong degree of probative force, ... a real nexus, judged according to experience and common sense, between the evidence and the fact in issue "(Boyce v Cafred Pty Ltd (1984) 4 FCR 367 at 370). It is clear also that where in reported cases evidence of this kind has been admitted, it has been, as a matter of common sense, clearly and strongly probative of the relevant fact in issue: see, e.g. Mood Music Publishing Co; Sheldon;
Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd (1981) 36 ALR 23; Gates v City Mutual Life Assurance Society Ltd (1982) 68 FLR 74 at 88, Berger v Raymond Sun Ltd [1984] 1 WLR 625.
If with that background one turns to the evidence sought to be tendered here, it is clear, I think, that it does not have significant probative force in relation to the genuineness or otherwise of the guarantee. The evidence so far, as I have said, is that the document bears at its foot a signature which apparently is that of Mr Hagan and bears elsewhere a signature and initials which may not be. It appears to be a complete document. The evidence as to its origination and execution is unclear. It cannot be said of any of the evidence now sought to be tendered that it tends with any degree of cogency to fill in, in any specific way, any of the gaps in the evidence as it now stands.
For those reasons, I do not think that any of the evidence sought to be tendered (which I have identified earlier in these reasons) is admissible and I reject it.
I should add that it was put to me by counsel for the applicant, and also by counsel for the first respondent and counsel appearing for the third and fourth respondents in the proceedings being heard concurrently with these, that if I thought the evidence was otherwise admissible, I should nevertheless reject it on discretionary grounds under s 135 of the Act. In particular, it was put to me that the evidence would be both unfairly prejudicial and might cause or result in undue waste of time because it
might require parties other than the fourth respondent to undertake, at a late stage in the trial, a lengthy exercise of rebutting complex evidence of peripheral relevance. The circumstances with which I have to deal here, bear in this respect, a considerable similarity to those which faced Gummow J in D F Lyons; and all I need do is indicate, as his Honour did (at 478), that had the evidence been otherwise admissible I would have been inclined to reject it on that discretionary basis.
I add also that, given my decision to reject all the evidence on the basis of the tendency rule, it is unnecessary to consider other objections raised in relation to certain parts of the evidence.
Finally, I should say, though it may hardly be necessary, that my rejection of the evidence on the basis on which it is now tendered does not bear upon its possible use, for example, in cross‑examination as to credit.
I certify that this and the preceding 10 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lehane.
Associate:
Dated: 12 December 1995
Heard: 7, 8 December 1995
Place: Sydney
Decision: 12 December 1995
Appearances: Mr G M Thomas of counsel instructed by Stewart Levitt & Company appeared for the applicants in
proceedings NG 975 of 1993 and for the third and fourth respondents and first and second cross respondents in proceedings NG 216 of 1994.
Mr C M Harris of counsel instructed by Robert A Harper & Co. appeared for the applicant in proceedings NG 216 of 1994.
Mr C J Hockey of counsel instructed by Galloways Solicitors appeared for the first respondent in proceedings NG 975 of 1993 and for the first respondent and second cross claimant in proceedings NG 216 of 1994.
Mr G A Moore of counsel instructed by G J Mavrakis & Associates appeared for the third and fourth respondents in proceedings NG 975 of 1993.
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