Claudia Leung in her capacity as Executrix of the Estate of the late Robert Ho v Paul Mervyn Fordyce t/as Pmf Legal Trading

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

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

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

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

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

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

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

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

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

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

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

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

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

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

On 24 October 2017, I made the following orders:

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

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

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

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

Section 309 provides:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It is necessary to make some additional observations.

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

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

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

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

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

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

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

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

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

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

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

The pleading in paragraph 43 of the amended statement of claim makes it clear that it is common law, as opposed to equitable, fraud which was being alleged. The distinction between the two of them was explained by the Court of Appeal in Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114, [22] per Leeming JA (Beazley P and Sackville AJA agreeing):

I discuss the authorities in relation to the standard of proof of an allegation of fraud in paragraphs [233] to [238] below. I also remind myself of what was said in Palmer v Dolman [2005] NSWCA 361, [47] per Ipp JA (Tobias and Basten JJA agreeing):

Furthermore, in Ho v Powell (2001) 51 NSWLR 572; [2001] NSWCA 168, [14] (Hodgson JA):

I therefore approach proof of this question on the basis that while the relevant allegations must be established on the balance of probabilities, the Court’s level of satisfaction to that degree must be informed by an appreciation of the seriousness of the allegations. They are not allegations of which the Court should be satisfied by inexact proofs.

There are two reasons why I reject the plaintiffs’ submission that the defendants engaged in fraudulent conduct as pleaded in the amended statement of claim.

First, the fact that the plaintiffs ultimately conceded that the Trading House Letter and Complaints Letter were in fact sent undermines the plaintiffs’ case on fraud. It is to be noted that the allegation pleaded was a global one, i.e. that Mr Fordyce knew that he did not have fee disclosure agreements in any of the matters (including the Trading House Letter and Complaints Letter).

Second, even in relation to the remaining Disputed Engagement Letters, the Court is not satisfied that the evidence goes so far as to establish on the balance of probabilities, and recognising the seriousness of the allegation, that Mr Fordyce knew of the matter alleged in paragraph 43 of the amended statement of claim (as I have set out at paragraph [119] above). I have concluded that Mr Fordyce had what might be called, with no disrespect intended, a “blind faith” in his office practice and, in particular, in his office’s computer systems. This was the case notwithstanding his acceptance that sometimes things went missing from “the system” (see paragraph [95] above). Considering the totality of the evidence, including having carefully observed Mr Fordyce in the witness box, I am not satisfied on the balance of probabilities, having regard to the seriousness of the allegation, that he knew that the Disputed Engagement Letters had not, in fact, been sent on or about the dates which they bore. On the contrary, I am satisfied by that evidence that as at June 2014 Mr Fordyce had persuaded himself that those letters had been prepared and sent. My strong impression was that both at the time he provided what might be described as the replica letters to the Costs Assessor and at the time he was giving his evidence before me, Mr Fordyce was “in denial” of the possibility that the Disputed Engagement Letters had, in fact, never been sent.

The defendants relied on evidence from two former Pmf Legal employees, Ms Klobucar and Ms Wu, and the current principal of the practice, Mr Dadic. Each presented as a witness who had no interest in doing anything other than telling the truth and their evidence was inherently credible or supported by contemporaneous evidence. I accept their evidence.

Given Mr Fordyce’s reliance on technology and determination to run a “paperless office”, a technological novice confronted with the present dispute could be forgiven for the innocent hope that the defendants’ computer records might provide a definitive answer as objective, contemporaneous evidence. A superficially more computer literate observer might inquire about the “metadata”, a term of uncertain meaning in recent public discourse. Unfortunately, the evidence of the parties’ computer experts did not bring the hoped for clarity and left the Court unable to draw many definitive conclusions.

There were three expert reports:

Dr Watt and Mr Carson were each cross-examined.

From the outset, there was disagreement between the experts about computer terminology and about the interpretation and reliability of data.

Dr Watt differentiated between “file” and “document”: a “file” is a receptacle to hold information; a “document” is a file that has readable information. A Microsoft Word file may be created on a certain date but the information it contained on that date may not be the same as the information now contained in the document. Accordingly, Dr Watt said that file creation date cannot be used as proof that there was actually any readable information or content in that file on what the metadata calls the “content created” date. The file may just be a blank document and the metadata does not distinguish between when the file itself was created and when information was added to that file transforming it into a “document”.

Dr Carson did not agree with this distinction between file and document but agreed “with the generalisation that each file… needs to be individually assessed as to what its contents are likely to have been at a point in time”. Further, he agreed that “the existence of a file with the given creation date is not irrefutable proof that the contents of the file are the same now as they were on the given creation date.” To save confusion, I have referred to the “content” of a file or document where relevant. I note also that a computer “subdirectory” is also commonly known as a “folder”.

In preparing their reports, the experts had access to the imaged materials captured by Klein & Co. of the “Listed Things” as defined in the Search Orders (and which focused on the HO90 folder on the X drive where Mr Fordyce had instructed they were stored), copies of the engagement letters, the preliminary Klein & Co. Report of 14 October 2014 (which outlines the process Klein & Co. undertook to obtain the computer images in execution of the Search Orders), the Klein & Co. Report of 24 October 2014 (which was a “initial analysis limited to the files within this HO90 folder”), and various tax invoices from Mr Morgan to Pmf Legal. In addition, Mr Carson was also provided with the Watt Report, an affidavit from Mr Fordyce dated 27 February 2017 replying to the Watt Report, and Ms Wu’s affidavit of 20 July 2017.

It became apparent during cross-examination that Dr Watt had managed to access “a backup of the entire server from around about September 2013” shortly before the hearing commenced but after the Watt Report and the conclave with Mr Carson. Dr Watt agreed that the opinions expressed in the Watt Report (that the Disputed Engagement Letters could not be found in electronic form) were based on his searches of the X drive only and assumed that the Disputed Engagement Letters were created on or filed on the X drive in the HO90 folder. However, he said that he had then searched the rest of the server data which he had recently accessed and had still been unable to find the Disputed Engagement Letters. Mr Carson was not instructed to search the entire server in making his report and stated that “the server images that I was given access to weren’t a complete copy of the server”.

There were concessions made by both experts regarding the reliability of the metadata or their own analysis. During the course of the hearing Dr Watt conceded that he had not stated all of the assumptions underlying the opinions expressed in the Watt Report and that he had not exposed potential flaws in the data or mechanism by which the data was assessed. By way of example, in respect of printing metadata and the 31 January BBQ King Letter, Dr Watt explained in cross-examination that his opinion proceeded on the assumption (that was not stated in the Watt Report) that a file or document was saved by the user after printing. In the circumstance that the user did not save the document after printing, he agreed the “last print” metadata would likely not reflect the most recent incident of printing. This is relevant where he opined in the Watt Report that there was “no evidence” that a Microsoft Word version of the BBQ King Letter was printed on or about 3 April 2012 or any other time in 2012.

It was Mr Carson’s opinion that printing metadata, particularly of Microsoft Word documents, was not necessarily reliable and could not be used to prove definitively that a document was or was not printed. His report states:

Dr Watt later agreed in cross-examination that it was possible that the 31 January BBQ King Letter could have been printed without it being tracked in the metadata because the file was not saved after printing.

A further example, the 31 January BBQ King Letter metadata indicates the file was created on 31 January 2012 at 2:12 pm, something which was agreed in the Joint Report. Dr Watt opined that the document (as distinct from the file) named “120131 Engagement Letter.doc” was created on 7 June 2012. It seems that this was based on the metadata which indicates a “last saved” date of 7 June 2012. However, in cross-examination, Dr Watt agreed that “last saved” metadata is not an entirely reliable basis upon which to assert a first creation date. Mr Carson was of the same view. The 31 January BBQ King Letter is discussed in detail at paragraphs [257] to [271] below.

I am not satisfied that the metadata always present an accurate or reliable picture of the facts. As noted above, the experts agreed that printing metadata were not always accurate. The same was said in respect of the content creation date as Dr Watt explained in cross-examination [T 44:36]:

There was also some controversy about the authenticity of an email sent from Ms Sweet to Mr Fordyce on 31 January 2012. The Carson Report states that the “metadata strongly” indicates that Ms Sweet’s email of 31 January 2012 was created and sent on 31 January 2012 from Ms Sweet to Mr Fordyce. Dr Watt asserted in the Joint Report that the copy of the email provided was “unreliable and likely to be fabricated” because it did not display header detail. He did not substantiate this opinion in the Joint Report. In cross-examination, Dr Watt agreed that email headers arise during transmission from sender to recipient, and that his opinion was expressed in circumstances where he had not looked at the email as received by Mr Fordyce, only as sent by Ms Sweet. He also agreed that he did have access to the email as received by Mr Fordyce yet he had not used this as the basis for his opinion.

Dr Watt eventually agreed that the email was “possibly genuine”. However, he was “not prepared to say a hundred per cent of that email is completely genuine without a lot of other information. There are no Outlook files unfortunately, PST or OST files, on the end user’s devices that would corroborate or provide corroborative evidence to confirm it. All we have is one copy and a backup from the exchange server.” That Dr Watt seemed to require further data (a PST or OST file) to determine conclusively that an email was not fabricated seems to imply that there is not a single email that he could comfortably say was genuine and again points to the forensic limitations of the computer evidence.

Mr Carson’s evidence was also of limited assistance in some respects because of the nature of the defendants’ instructions. For example, Mr Carson was not instructed to examine whether the 2014 versions of the Rhodium Letter, the Amended BBQ King Letter or the Guardianship Letter existed on or about the dates they bear from 2012 and 2013, or to consider whether data “was lost on a failed hard disk, or any other found devices, or had gone missing”. Accordingly, at various points he was unable to comment on the data where Dr Watt had expressed opinions. For example, in relation to the BBQ King Letter, Mr Carson stated that he did not “have enough information to provide opinion on this issue, it was not something I considered — part of my instructions. There may be evidence of this data loss I am not aware of”.

Cumulatively, the issues to which I have referred resulted in gaps in the evidence that affected its utility. At times, the experts simply did not have enough information to make definitive findings or were not instructed to consider aspects of the parties’ case: e.g. Dr Watt’s assertion about email data and Mr Carson not being instructed to consider hypothetical data loss or the 2014 versions of the Disputed Engagement Letters. At other times, the data available were themselves ambiguous and could not provide definitive proof: e.g. printing metadata or when the content of a file was altered. The Court readily adopts the observation in the Watt Report that the metadata exhibit “potentially confusing features” which are open to different interpretation and opinion and which ultimately undermine the objectivity and utility of that evidence. It seems to me that the metadata are far from providing concrete evidence upon which the Court may rely. Save in areas where the experts clearly agreed, I have concluded that the Court cannot reach any other conclusion based on the evidence of the computer experts.

The parties raised a number of other factual issues which it is convenient to deal with at this point. They were:

The entire mail-books for the years 2012, 2013 and 2014 were tendered in evidence and I have inspected them. Although referred to as mail-books, consistently with the defendants’ “paperless office” philosophy, they in fact were Excel spread sheets. Additionally, the parties’ both provided an analysis of the mail-books which compared the invoices recorded as sent to Mr Ho in the mail-books and those received by Mr Ho as detailed in the Costs Assessment Application.

The plaintiffs seek to rely on Ms Klobucar’s evidence in respect of using and maintaining the mail-book, the congruence between what Mr Ho says he received and the mail-book entries, and what they say is the unreliability of Mr Fordyce’s evidence in that regard as proof that the mail-book is a reliable source of evidence of the mail sent out during the relevant period.

The defendants’ assert that the mail-book was kept haphazardly and could be relied on only to show the positive act of sending, not the negative fact or proposition as contended by the plaintiffs. Accordingly, they submitted that absences in the mail-book do not prove that an item of mail was not sent.

While it is clear from inspecting them that the mail-book was not a system which recorded all outgoing mail with perfect accuracy, it is nevertheless the most obviously reliable contemporary source of information. In reaching that conclusion I have not overlooked that the mail-book system relied on the manual input of data by an employee and with that comes the greater potential for human error or simple mistake. Likewise, the recording of an item of mail may have simply been missed (see for example, paragraphs [247 (8)] and [345] below). For instance, Ms Klobucar states that she was absent from work on 4 July 2012. Nonetheless, for the following reasons I regard the mail-book as reliable to the extent that if an item of mail is recorded in the mail-book as sent, it was in fact sent. I will return below to the question of what can be inferred from the absence of an entry in the mail-book.

First, although there is no mention of the mail-book in either of her affidavits, Ms Klobucar’s evidence in cross-examination was that maintaining the mail-book was an aspect of her job and that she would complete the mail-book entry before putting the mail in an envelope to be sent out. I accept her evidence, which was logical, clear and inherently probable. Making an entry in the mail-book was a routine step in the outgoing mail process. Ms Klobucar agreed that sometimes mail items were provided to her but held back to send at a later stage. She would separate any such mail and place it in a secure location such as her office drawer. She could not recall if she would record in the mail-book the date the letter displayed or the date of its actual posting.

Ms Klobucar gave the following evidence in cross-examination [T 216:25]:

Second, Ms Klobucar’s testimony agrees with the mail-books in evidence. The mail-book was kept electronically on an Excel spread sheet. It recorded when, what and to whom mail was being sent. The columns of the spread sheet from left to right record the date of entry, the addressee, the addressee postcode, client identifier and matter number (e.g. HO90/120009), and an item description. Where multiple items of mail were being sent to one client, each of those items would be recorded (e.g. on 16 January 2014 “Statements and Tax Invoices #21125, #21128” or on 28 January 2014 “Engagement Letter and FILE COPY”). There are numerous entries recording postage of mail to various Pmf Legal clients for the years 2012 and 2013. For example in 2012, there are fifty-nine entries recording “engagement letter” being sent to clients of Pmf Legal. I do note that some months in the 2014 mail-book are decidedly sparse. For example, October 2014 contains only two entries. Nonetheless, it seems to me that the mail-book was used regularly.

Third, to the extent that I accept his evidence, this view is consistent with Mr Fordyce’s evidence that the mail-book was kept and, where an entry appears in the mail-book, it could be relied on as evidence of the event of posting.

It follows that an entry in the mail-book is strong, contemporaneous evidence of the item described as having been sent. However, absence of a reference to something in the mail-book is not “conclusive evidence” sufficient, in and of itself, to prove the unrecorded item was not sent. Nevertheless, absence of a reference is a significant piece of evidence which, with other circumstances (including evidence of system or the presence of other entries at or about the relevant date), can be relied on for the conclusion that something was not sent. I develop this point further in paragraphs [217] to [222] below.

As I have already observed, Pmf Legal endeavoured to maintain its files electronically. Mr Fordyce’s affidavit evidence (which accords with the expert evidence and I therefore accept on this point) is that:

Mr Fordyce’s evidence was [T 211:20]:

Mr Fordyce explained that he would backup his computer onto both his own computer hard drive and an external hard drive. He stated “when I left the office every night I would take that copy home with me in case something happened to the computer system so that I wouldn’t lose our records”. He stated that there was a hard drive for each day of the week that would be overridden the next week. He would change the hard drive from time to time however he did not have a backup copy of the server “at, say, a particular date in 2012”.

The expert evidence confirmed that Pmf Legal used a file synchronisation program called SyncToy to back-up its computers. As a matter of theory a file synchronisation system operates by repeatedly updating/backing up a single copy of a document or file as it is modified. It does not result in the creation of multiple historic versions of a document but overwrites the existing copy and requires only as much storage space as is constituted by the files at any given time.

Mr Carson said in cross-examination (emphasis added) [T 241:17]:

While they agreed that SyncToy was being used, the parties could not agree as to how the backup method functioned in practice and what records were or could have expected to have been generated. The plaintiffs construed the expert and Mr Fordyce’s evidence as meaning that there were multiple copies of documents backed up to various devices. The plaintiffs submitted that the absence of backup data supported the conclusion that the Disputed Engagement Letters did not exist in electronic form on the dates recorded on the letters.

The defendants submitted the evidence meant that the back-up was always only a back-up of what existed on the server the day before. They submitted that the absence of backup data was not conclusive proof of the non-existence of the Disputed Engagement Letters specifically because a syncing backup system was used which would override existing documents. Nor, they submitted, was the presence of multiple copies of certain documents a relevant point of comparison where the expert evidence was that the system backed up the same files to multiple locations, or, in the circumstances put in the data loss scenarios, where the original file could not be located.

In relation to the relevance of the backup system files, I have concluded that the absence of backup data does not assist the plaintiffs for two reasons.

First, I do not propose to place any weight on the parties’ expert evidence and will disregard the issue of backup data entirely. This is because I find it extraordinary that given a known program — SyncToy — the experts could not agree on something as apparently fundamental as whether the backup system captured multiple prior iterations of documents or only the latest version. Nor did I find the expert’s explanations of their positions to be particularly clear or persuasive.

Second, if I am wrong to dismiss the issue of backup data for the reasons set out in the preceding paragraph, then I prefer the defendants’ explanation because it seems to me more inherently likely given the purpose of the daily backup, being “not to lose our records”. That would be achieved by backing up the latest iteration of the documents on the server. On that basis, the lack of data does not shed any light on the existence of versions of documents such as the Disputed Engagement Letters at an earlier time than the date of the backup.

The parties accepted that there is an absence of electronic data in relation to the Disputed Engagement Letters.

The plaintiffs’ submission was that there was no evidence consistent with data loss on the X drive as opined by Dr Watt in the Joint Report (noting that Mr Carson was not instructed to examine for data loss) and that there was no evidence suggesting that files were located elsewhere on Pmf Legal’s computer system other than the X drive, which is where Mr Fordyce stated the files would be. They also noted that Mr Fordyce had not indicated there was any significant or noticeable data loss. Accordingly, they asserted that all the data relevant to Mr Ho was present on the individual Pmf Legal computers and the server which had been examined by the experts. The plaintiffs submitted that, if the defendants wanted to rely on data loss as a conceivable explanation for the absence of electronic records, it was incumbent on the defendants to prove that data had been lost. The plaintiffs posited that it was not plausible that only the Disputed Engagement Letters data including the backup data in relation to Mr Ho was missing.

The defendants submissions were:

The defendants had instructed Mr Carson to hypothesise about the missing Disputed Engagement Letters data (the “data loss scenarios”). The Carson Report states:

The plaintiffs tested the data loss scenarios against the evidence on the Rhodium Letter. Ultimately they submitted that it was “beyond credulity” to suggest that three engagement letters, which were not recorded as being sent in the mail-book, had gone missing in relation to one client by reason of an undefined hypothetical data loss scenario. The plaintiffs submitted:

The Joint Report states:

In respect of the data loss scenarios put by the defendants and in accordance with the authorities below at paragraphs [233] to [238], I conclude that it is not incumbent on the plaintiffs to prove that there was no data loss. Rather, it is for the party asserting to prove positively the presence or absence of the state of affairs alleged. In this instance the defendants have not persuaded me to a state of actual satisfaction that there was data loss. This is because:

Another issue raised by the parties was Pmf Legal’s billback system and printing records. The defendants’ evidence was that in 2012 to 2014, Pmf Legal used fully automated billback software, “Reckon”, which marked the printing of documents to a client’s file/account for billing purposes (“the Reckon billing system”). The Reckon billing system produced records which, in the ordinary course, would be backed up onto Reckon’s server. Such records, if they did exist, were not produced in evidence. Mr Fordyce stated that no examination had occurred of the Reckon billing system to verify the printing of the Disputed Engagement Letters on the date they bear when Mr Fordyce says they would have been printed to place on the hard copy matter file. When asked why the Reckon billing system had not been checked, Mr Fordyce stated “I didn’t do it, that’s - I can’t explain any further, I just didn’t think about it” (see further paragraphs [177] to [178] below).

For the purpose of his report, Mr Carson had been instructed that a ransomware virus had attacked Pmf Legal’s computer network in about June 2015 resulting in the destruction of all data on the Reckon server. The instructions state: “The Reckon server which operated the Reckon software was not backed up.”

In written submissions, the plaintiffs posited that a Jones v Dunkel (1959) 101 CLR 298 (“Jones v Dunkel”) inference arose against the defendants from the non-production of the Reckon billing system records particularly in relation to the 31 January BBQ King Letter. They argued that Mr Carson had agreed that reviewing the billing system records would be the starting point for producing evidence of printing at a certain time which they submitted was evidence the defendants should have called in aid of its case.

The defendants submitted that the plaintiffs were not entitled to rely upon a Jones v Dunkel inference because they had not raised the billback system or printing records or the need to examine these records in any of their pleadings, documentary or oral evidence, and accordingly there was no support for the premise that the records actually exist to be produced. They also submitted that the plaintiffs had failed to put any questions in cross-examination about a failure to produce these records. They drew attention to Gleeson J’s statement of law in BCI Finances Pty Ltd (in liq) v Binetter (No 4) (2016) 348 ALR 227; [2016] FCA 1351 (“Binetter”):

Further, the defendants submitted that the plaintiffs had ample opportunity to seek records of the billing system or printing activity which they had not done, and that to raise this contention now was misplaced, particularly in circumstances where the plaintiffs had obtained various other materials and evidence from the defendants since October 2014. In effect, the defendants submitted that the plaintiffs are not entitled to complain about non-production of records when at no point did they ask for the production of the records.

By reference to the transcript, the plaintiffs rejected the submission that no questions were put about the failure to produce the billing records. For clarity, I will set out in full Mr Fordyce’s evidence during cross-examination [T 159:8]:

The plaintiffs submitted that the defendants had not attempted to prove that all of the data recorded by Reckon was destroyed after the ransomware virus attack and that it was not mere speculation from the plaintiffs that there was a source of information about printing that could have been examined, or used to prove that the records have been destroyed. The defendants’ instructions to their expert were printing, at least from the main printer, was recorded by Reckon, which Mr Fordyce confirmed in cross-examination.

Mr Carson was questioned on this point as follows [T 251:26]:

In respect of any printing records, the plaintiffs submitted that the absence of system event logs recording printing in the captured images indicates the Disputed Engagement Letters were not printed. The defendants submitted that the plaintiffs had ignored Mr Carson’s evidence that Windows system event logs and spool files were not a particularly reliable source to evidence the printing of documents. He said “[Windows is] pretty hit and miss with the system keeping track of printing… Windows does not log every print of a document… I wouldn’t expect to find the system logging the printing of those files.”

I accept the plaintiffs’ submissions to the effect that a Jones v Dunkel inference should be drawn against the defendants. The plaintiff’s case required the defendants to “explain or contradict” the proposition that the Disputed Engagement Letters had not been sent. The billback system was in the defendants’ knowledge and control and I am satisfied could have shed some light on the question.

A Jones v Dunkel inference cannot be drawn where the relevant party provides an explanation for the failure to call the witness or evidence. Such an explanation would have been provided by establishing that the data had been lost because of the ransomware attack. However, as the plaintiffs submitted, while such a loss had been put as an assumption, it had not been proven.

Finally, it is to be recalled that a Jones v Dunkel inference does not permit conclusions to be drawn in the absence of evidence. In this case, as I will go on to explain, there is evidence in support of the conclusion that the Disputed Engagement Letters were not sent. However, the Jones v Dunkel inference which arises from the failure of the defendants to call evidence about the billback system’s data (and failure to provide an explanation for the absence of that evidence) would go to the issue of when (if at all) the Disputed Engagement Letters were printed and, therefore, brought into existence. In this case it is unnecessary for me to rely on the Jones v Dunkel inference because, as I explain below, I am satisfied that the Disputed Engagement Letters were brought into existence on or about the date each of them bears.

The plaintiffs tendered the hard copy matter files each of which contained an unsigned hard copy of the Disputed Engagement Letters purportedly sent to Mr Ho on or about the dates they bear. The files are labelled: “HO90/130027 Guardianship Tribunal application by Miss Sarah Ho”‘; “120009…HO90 Proceedings for damages against company and shareholders-BBQ King”; 120024…HO90 Reinstatement of Rhodium Pty Ltd and terminating the winding up”.

The folders were retrieved from Pmf Legal’s storage facility by Mr Dadic in October 2017. Mr Dadic is a solicitor who began working at Pmf Legal in May 2016 before taking over the practice from Mr Fordyce in late 2016. He is the solicitor with carriage of the matter for the defendants. He has sworn an affidavit in these proceeding on 20 October 2017 and was called as a witness for the defendants. His affidavit evidence is that on about 18 October 2017, he and a paralegal searched the secure storage unit where Pmf Legal’s physical files have been housed since January 2017 for files relating to Mr Ho.

Mr Dadic had also visited the storage facility in September 2017. In cross-examination, Mr Dadic stated that he had not added anything to the files in the facility since it was created. The storage unit is secured by an electronic key which is known only to Mr Dadic and his paralegal. However, prior to January 2017, the hard copy matter files were stored and accessible at Pmf Legal’s offices. He could not confirm who else would have had access to the files in the ordinary course of business before the files were moved to the storage facility in January 2017 other than that he himself did not have access to the files.

He gave evidence that the hard copy matter files were stored in various locations around Pmf Legal’s office and that he assumed access was unfettered [T 222:23]:

In line with his efforts to maintain a “paperless office”, Mr Fordyce’s evidence was that he “hardly ever pick[ed] up a, a folder of papers”. He said that he did not fabricate the letters and place them on the relevant hard copy matter files in such a way as to make it look as if each document was prepared contemporaneously with the date it displays.

The plaintiffs submitted that Mr Fordyce’s evidence could not be trusted and that the hard copy versions of the Disputed Engagement Letters were replicas which did not exist in the Pmf Legal hard copy matter files as at June 2014. The defendants disputed this allegation, asserting that Mr Fordyce’s evidence could be trusted and that, in circumstances where equally consistent inferences about whether the hard copy Disputed Engagement Letters were the product or the source of the June 2014 created documents, the plaintiffs had not discharged their legal burden of establishing the non-existence of the hard copy letters as at June 2014.

Pursuant to s 183 of the Evidence Act, I am able to draw inferences from documentary material. I have examined the engagement letters within the hard copy folders (the BBQ King Letter, the Amended BBQ King Letter, the Rhodium Letter and the Guardianship Letter) and noted their position relative to other dated documents in the folder. Each letter appears at the back of the correspondence section of the relevant file, being where one would expect one of the first pieces of correspondence to be found in a file maintained “solicitor fashion”, i.e. proceeding in reverse chronological order from rear to front. On their face, and given their position in the file, the hard copy letters would strongly support the conclusion that they are copies of documents produced on the date they bear.

I accept Mr Fordyce’s denial of the proposition that he fabricated those copies and placed them on the files in June 2014. I also accept his evidence that they were on the files when he looked at them at that time. Consistently with the view I have taken about Mr Fordyce’s reliability, I have reached these conclusions because Mr Fordyce’s evidence is corroborated by the defendants’ evidence of usual practice, which is the next topic I will consider. It accords with that evidence that copies of those letters would have been placed on the file by a Pmf Legal employee (and not Mr Fordyce) at the time the letter was produced. I accept as inherently credible, given his determination to be “paperless”, that Mr Fordyce would have had nothing to do with placing a physical copy of the letter on the file at the time the copy was produced.

Both the plaintiffs and the defendants rely on the evidence given of the usual practice undertaken at Pmf Legal upon opening a new matter or file as proof of the occurrence of the creation and posting of the Engagement Letters and from which inferences can be drawn in respect of the Disputed Engagement Letters. The plaintiffs argued that, in this instance, the “usual practice” evidence (particularly the absence of records in accordance with the usual practice) proved that the fact in issue — the creation of the Disputed Engagement Letters — did not occur because the usual practice would otherwise have recorded its occurrence. The defendants argued that there was insufficient evidence to suggest that Pmf Legal’s usual practice was not followed in respect of the Disputed Engagement Letters. They asserted that there was a regular and uniform practice followed by Pmf Legal in respect of the creation and posting of engagement letters as demonstrated by the Agreed Engagement Letters and from this the Court could reasonably infer that the Disputed Engagement Letters were sent to Mr Ho.

There was agreement regarding what the components or steps of the usual practice were and what business records might arise from that usual practice, which was supported by direct or objective evidence in respect of the Agreed Engagement Letters. What was not agreed was the degree of adherence to that usual practice and consequently whether the usual practice could be relied upon to infer the posting of the Disputed Engagement Letters.

The evidence relied on to demonstrate usual practice consisted of:

The law in this area was recently explained in SAMM Property Holdings Pty Ltd v Shaye Properties Pty Ltd [2017] NSWCA 132; (2017) 345 ALR 633 per McColl JA (Gleeson JA and Sackville AJA agreeing) citing Connor v Blacktown District Hospital (1971) 1 NSWLR 713 at 721 (“Connor v Blacktown District Hospital“) per Asprey JA (Mason JA agreeing) at paragraph [150]:

Asprey JA explained in Connor v Blacktown District Hospital (at 721):

In respect of the reliability of business records, the observations of Hope JA are pertinent (though I note this was in the context of a large hospital) in Albrighton v Royal Prince Alfred Hospital (1980) 2 NSWLR 542 at 548G (“Albrighton”):

Jacobs JA’s observations in Connor v Blacktown District Hospital (1971) (at 716) should also be recalled (this position is still good law, see, for example Tinnock v Murrumbidgee Local Health District (No 2) [2016] NSWSC 87):

Finally, in Elayoubi v Zipser [2008] NSWCA 335 at [86] Basten JA (Allsop P and Beazley JA agreeing) said (emphasis added):

Mr Fordyce’s evidence was that “the invariable practice was to create the engagement letter when the file was opened. That was an integral part of the process from the time of giving instructions to create the file until the engagement letter was completed and signed.” [T 90:25]

The engagement letter was created electronically and Mr Fordyce gave evidence that, though hard copy matter files were kept, he preferred to use an electronic file system rather than paper/hard copy matter files and “to maintain electronic copies of such hard copy documents as exist.”

In examination-in-chief, Mr Fordyce’s evidence in relation to the preparation of cost agreements was [T 89:37]:

He would review the engagement letter before signing. He said [T 91:6]:

Once signed, the letter would be given back to Mr Fordyce’s personal assistant. He said he could not recall an occasion where he had not signed a cost agreement or engagement letter at or around the same time upon opening a new matter.

While Mr Fordyce admitted that he did not handle the preparation of the mail for postage, he observed [T 92:21]:

Mr Fordyce stated that to his knowledge none of the engagement letters that Pmf Legal sent to Mr Ho’s PO Box were ever returned to him or to Pmf Legal by Australia Post or through any other means.

Mr Fordyce also gave evidence that he observed that his personal assistant would deliver the letter to the office junior, who was stationed opposite his office, and that the office junior would then move across to the franking machine to apply a stamp indicating prepaid post, along with the firm logo and address.

Ms Klobucar was the office junior at Pmf Legal from February 2012 until November 2016. She has sworn two affidavits in these proceedings on 8 September 2015 and 21 December 2015 in which she gave evidence of Pmf Legal’s usual practice during her employment and she was called for cross-examination. I accept her evidence, including the evidence she gave in cross-examination concerning the use of the mail-book (see paragraphs [150] to [151] above).

Ms Klobucar’s evidence was that one of her duties as Pmf Legal’s office junior was to prepare signed mail to be sent out. Her evidence was that she would first make an entry in the mail-book recording details of the mail item or items to be posted; she would then place the mail into an envelope, weigh it to determine the cost of postage and use the office franking machine to stamp the envelope; following which she would deliver the mail to a post office box for posting at some point during the day (the “outgoing mail process”). Ms Klobucar was the “only person in the office” who performed this task unless she was absent from work. This outgoing mail process would occur throughout the day as material was brought to Ms Klobucar. She said that during her time at Pmf Legal all mail posted to clients including invoices was done according to this procedure and that nothing she had posted to Mr Ho’s PO Box had been sent back to her as returned mail.

Ms Wu also gives evidence that during her time at Pmf Legal (from 7 October 2008 until 5 September 2014) “it was a standard practice for engagement letters to be prepared upon the opening of new files and sent to clients”. Ms Wu was formerly employed as a solicitor at Pmf Legal. She has sworn two affidavits in these proceeding on 1 September 2015 and 20 February 2017 and was called as a witness for the defendants. Her evidence largely relates to the Trading House matter (HO90/120035).

Taking all of the evidence together, I am satisfied that the usual practice when opening a new client matter or file was a multistage process that generated various business records most of which were at least initially created electronically. Files were also kept in hard copy but, to the extent possible, Mr Fordyce aimed to run a “paperless office”. I accept and adopt the plaintiffs’ summary of the steps in the usual practice as supported by the evidence:

Accordingly, the plaintiffs contended that a number of “usual records” could be expected to have been generated where usual practice was followed. They submitted that the creation of these records was an element of the usual practice itself and the absence of such records should rouse suspicion with the resulting inference being that the step was not taken at all. The usual records contended for were:

The plaintiffs submitted that Pmf Legal’s office practice was largely computer based with some human intervention required to create files or to consolidate records on the computer system (for example, the electronic mail-book); that the evidence provided by the technology is objective and irrefutable; and suggested that if only three of six Engagement Letters could be traced electronically, then the “invariable” usual practice could be described, at best, as invariably “haphazard”.

The plaintiffs argued that Pmf Legal’s records indicate that there are only two instances of letters being sent in accordance with the usual practice which is documented in multistage records of production, handling and dispatch of these two letters. No such records exist for the other letters, the absence of which throws substantial doubt on their creation at all.

The defendants submitted that full weight should be given to the evidence of usual practice provided by Mr Fordyce and Pmf Legal’s former employees’ which was that when a new file was opened, an engagement letter would be prepared, ultimately signed and sent by prepaid post to the client’s nominated address; that the usual practice was adhered to — as was demonstrated by the Trading House Letter and Complaints Letter; and that Mr Ho’s evidence of when retainers commenced matches the dates Mr Fordyce indicated files were opened and engagement letters prepared corroborating Mr Fordyce’s evidence. Moreover, the defendants submitted there was no suggestion that Mr Fordyce (as a solicitor of many years) did not know his obligations under the Act to make costs disclosure or that he was not aware of the serious career consequences of non-disclosure. Accordingly, it was highly improbable he would not comply with such obligations.

In respect of the Trading House Letter and Complaints Letter, the defendants conceded that these could be viewed merely as instances of the usual practice system working but did not necessitate its application to all. They invited the Court to infer that the usual practice was maintained but it was at times abandoned for various reasons which, with the passage of time, it was now difficult to prove and that full weight should be given to Mr Fordyce and his former employee’s evidence in this regard. Moreover, it could not be assumed that the electronic or hard copy records were perfect or that those using it were infallible — particularly in relation to the mail-book. The defendants submitted that there were feasible explanations for the missing electronic records as indicated by Mr Carson, i.e. the data loss scenarios, and which Dr Watt accepted (discussed at paragraphs [165] to [172] above).

I accept the plaintiffs’ contention that where the usual practice was followed, a number of records of the creation of an engagement letter would usually be generated. It seems to me that the fewer “usual records” discoverable in relation to a particular engagement letter on the date it was purportedly created speaks against the probability that the engagement letter was created on that date. I have come to this view by comparing the records created in relation to the Agreed Engagement Letters, where I accept the usual practice was duly observed, and the records (or absence thereof) available in relation to the Disputed Engagement Letters. At paragraphs [240] to [254] below, I have set out the evidence and my observations on the Agreed Engagement Letters as a point of reference for consideration of the Disputed Engagement Letters.

Having regard to the authorities I have set out in paragraphs [195] to [199] above, I have concluded that the evidence of usual practice must be approached in one of three ways — it being recalled that such evidence is circumstantial evidence which enables the Court to infer the existence of a fact about which there is no direct evidence. This is most easily demonstrated by reference to the evidence about the mail-book.

First, if the Court accepts the evidence of usual practice (e.g. all outgoing mail was recorded in the mail-book), then a proven departure from the usual practice will be a strong foundation on which the Court can (but not must) conclude that the particular thing sought to be proven relying on the usual practice (e.g. the mailing of an item) did not occur.

Second, even when the Court is satisfied that there was a usual practice, the Court can take into account the likelihood of departure from that practice when it is asked to infer a particular fact in reliance upon that usual practice (e.g. how regularly the mail-book was used perhaps by reference to the number of entries in the mail-book generally).

Third, a party cannot rely on evidence of usual practice where it is apparent — by the party’s own admission, or from other evidence — that the practice was regularly departed from unless it is able to be established that the departures themselves could be described as part of the usual practice. In other words, there is either a usual practice or there is not. There are usually not persistent “exceptions” to the usual practice.

Applying this approach to the present case, on the basis of the totality of the evidence, I am satisfied that Pmf Legal had a usual practice in relation to the creation and posting of engagement letters as set out in paragraph [211] above. Insofar as I rely on Mr Fordyce’s evidence in reaching this conclusion, I do so because it is inherently credible as to how an experienced solicitor might be expected to run his practice and is consistent with and corroborated by the evidence of the firm’s former employees. However, having accepted the defendants’ submission that there was a usual practice, I do not accept that it is open to the defendants to “have their cake and eat it” by submitting that there were departures for various reasons which, with the passage of time, it was now difficult to prove or that every inconsistency was explained away with the suggestion that it could not be assumed that the electronic or hard copy records were perfect or that those using it were infallible.

There was no dispute that, in accordance with s 160 of the Evidence Act as it was at the relevant time, if the Court was satisfied that a letter had been posted to Mr Ho it is presumed to have been received four days after posting (noting that the legislation was recently amended to seven days after posting).

Before turning to the Court’s findings in relation to each of the Engagement Letters, the final area of general dispute between the parties which requires consideration is the debate between them about legal burden and evidential burden and the standard of proof in circumstances where the plaintiffs plead fraud but where relevant facts were peculiarly within the knowledge of the defendants. As is apparent from conclusions which I have already expressed in these reasons, different aspects of the dispute about onus of proof have informed different issues in the proceedings.

The plaintiffs’ submitted that only “comparatively slight evidence” was required for them to discharge the onus of proving that the Disputed Engagement Letters were not sent because the relevant facts were peculiarly within the defendants’ knowledge and that the onus shifted to the defendants to explain what occurred in circumstances where they had that knowledge.

Citing Blatch v Archer (1774) 1 Cowp 63 at 65; (1774) 98 ER 969, the plaintiffs submitted that it was incumbent upon the defendants’ to persuade the Court that the Disputed Engagement Letters were sent, particularly given the statutory and fiduciary obligations of a solicitor. The plaintiffs also submitted the defendants were required to prove Mr Ho had informed consent before entering into transactions with Pmf Legal in circumstances where the defendants, in a fiduciary capacity and charging costs on a special basis, wanted to retain the benefit of the transaction (referring to Maguire v Makaronis (1997) 188 CLR 449 at 466; [1997] HCA 23). I do not consider arguments on matters of fiduciary obligation or the survival of any obligations beyond the retainer, or the burden of proving fully informed consent, to be relevant to the existence or non-existence of the Disputed Engagement Letters.

The plaintiffs also submitted that in respect of any data loss, it was sufficient that they prove there was no evidence consistent with data loss as stated in the Watt Report. They asserted that the defendants bore the onus of proving that any data loss had occurred and that it affected data relevant to Mr Ho (citing Ex parte Ferguson; Re Alexander (1944) 45 SR (NSW) 64; (1944) 62 WN (NSW) 15 — which stands for the proposition that the onus is with the defendants where facts are peculiarly within their knowledge).

The defendants’ argued that the onus remained with the plaintiffs as the moving party seeking a negative declaration to prove the serious allegations of fraud by Mr Fordyce and that burden was to be discharged in accordance with the principles articulated by Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 and reflected in s 140 of the Evidence Act.

In respect of allegations of fraud by Mr Fordyce, the defendants referred to Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 at 450–451; [1992] HCA 66 at [2] per Mason CJ, Brennan, Deane and Gaudron JJ where it was said that there is “a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct.”. See also, Re Day (2017) 91 ALJR 262; [2017] HCA 2 at [14]–[19] (Gordon J).

In closing submissions, the defendants agreed that they bore the evidential onus of satisfying the Court on the balance of probabilities that the Disputed Engagement Letters were prepared and sent. This is what Heydon J referred to in Strong v Woolworths Limited (2012) 246 CLR 182; [2012] HCA 5 at [53] as the “tactical burden” on the defendant “to call any or any weighty evidence” in circumstances where “a plaintiff calls evidence sufficiently weighty to entitle, but not compel, a reasonable trier of fact to find in the plaintiff’s favour.” Mr Alexis SC submitted that the defendants had discharged this burden, saying [T 310:10]:

The defendants also rely on the dicta of Fullagar J in Department of Health v Arumugam [1988] VR 319 at 330 specifically that “neither a total absence of explanation nor a non-acceptance of an explanation can by itself provide an element of proof required. It can enable already available inferences to be drawn against dishonest explainers with greater certainty, but that is all”. Accordingly, the defendants submitted that even where facts were exclusively in the defendants’ knowledge or power to explain, this would only allow for existing inferences, grounded in the evidence and favourable to the plaintiffs, to be drawn more confidently.

The defendants submitted that an allegation of fraud is not proved in circumstances such as in the present case where the choice between competing possibilities of equal likelihood can only be resolved by conjecture and that the Court could not be satisfied the plaintiffs had discharged their burden of proof to the requisite standard so as to support a finding that Mr Fordyce has engaged in fraud.

As a starting point, in civil proceedings, the standard of proof is on the balance of probabilities: Evidence Act, s 140. In making a finding, the Court must feel an “actual persuasion of the occurrence or existence” of facts in issue and may take into consideration “the nature of the cause of action or defence, and the nature of the subject-matter of the proceeding, and the gravity of the matters alleged”: Evidence Act, s 140(2); see, e.g., Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (In Liquidation) (No 2) (2011) 297 ALR 56; [2011] FCA 1123.

The Uniform Civil Procedure Rules 2005 (“UCPR”), rr 14.14, 15.3 and 15.4 relevantly provide that allegations in the nature of fraud must be pleaded specifically and with particularity by the claimant, and where any condition of mind is alleged, which includes fraudulent intent, the claimant must give “particulars of the facts on which the party pleading relies”: see Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, 573; [1995] HCA 68; Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39, [26]; Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114, [46].

It is helpful to repeat the entire passage from Neat Holdings at 450–451 referred to above (citations omitted):

The relevant legal principles were conveniently summarised by Gleeson J in Binetter:

Evidential burden is not to be confused with the legal onus. Relevant here are the observations of Heydon J in Strong v Woolworths Limited (2012) 246 CLR 182; [2012] HCA 5 (citations omitted):

In respect of drawing inferences, Beazley ACJ (as her Honour then was) recently stated in Rail Corporation New South Wales v Donald; Staff Innovations Pty Ltd t/as Bamford Family Trust [2018] NSWCA 82 at [76]–[78]:

I summarise the foregoing, and the approach I have adopted, as follows. The plaintiffs bear the legal onus of proving their case on the balance of probabilities, i.e. that the Disputed Engagement Letters were not produced and sent on or about the dates they bear. A finding of fraud is “a finding of seriously wrong conduct” and will not be made lightly: Sgro v Australian Associated Motor Insurer’s Limited (2015) 91 NSWLR 325; [2015] NSWCA 262 at [57] (Beazley P), and the Court requires “a degree of probability which is commensurate with the occasion”: Bater v Bater [1951] P 35 at 36–37 (Denning LJ). To quote Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; [1938] HCA 34: “‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences”. However, as the defendants conceded, once the plaintiffs have raised sufficient evidence to entitle them to, but not compel, a finding in their favour, the defendants bear the evidential onus of proving the creation and sending of the Disputed Engagement Letters in circumstances where “the relevant facts are peculiarly in the knowledge of the defendant or where the defendant has the greater means to produce evidence relating to those facts”: Krstic v Brindley [2006] NSWSC 1414 at [26]. I have also borne in mind the High Court’s observation in Kuligowski v Metrobus (2004) 220 CLR 363 at 385–386; [2004] HCA 34 at [60] that “[a] failure to find a matter alleged does not establish the truth of the contrary of that which is alleged.”

I will now set out my reasoning in relation to each of the Engagement Letters. That reasoning proceeds against the background of the totality of the evidence available in relation to the Agreed Engagement Letters, so I will consider those letters first.

On or about 6 June 2012, Mr Fordyce says he received instructions from Mr Wong on behalf of Mr Ho to cease the winding up of Trading House Pty Ltd and to join it as a plaintiff to the BBQ King Proceedings. That evidence is corroborated by the evidence of Ms Wu.

Ms Wu stated that Pmf Legal received instructions about reinstating Trading House while Mr Fordyce was overseas on about 7 June 2012. As instructed, Mr Fordyce’s personal assistant, Ms Sweet, prepared the Trading House Letter with accompanying schedule of fees and expenses. Ms Wu then signed the letter and provided it to either Ms Sweet or Ms Klobucar to send out. The letter was scanned onto the computer. Annexed to Ms Wu’s affidavit of 1 September 2015 is a copy of the signed Trading House Letter. The copy bears the Pmf Legal logo in the top left-hand corner of the first page and on the footer of each page a wave watermark and liability disclaimer. The wave watermark was pre-printed on special paper which was used when sending official firm correspondence to clients rather than a copy being printed just for the office or matter file. The presence of the wave indicates that the copy is a photocopy or scan of the formal letterhead sent to the client.

Ms Wu clarified in a later affidavit that she did not independently recall the date on which she signed the letter but that it was her practice to check the currency of the date on the face of the letter before signing. She agreed in cross-examination that she was not involved in the process of sending out letters once she had signed them and could not speak to that process. When asked about her involvement in various Ho Matters she said “I have no detailed recollection about any of the matters. I have a global recollection.” She could not specify the extent of her involvement in any of the Ho Matters.

Ms Wu’s evidence corresponds with the metadata and expert evidence, which is set out below.

The relevant Microsoft Word metadata is:

The relevant Adobe PDF metadata is:

In summary, the objective contemporaneous evidence indicating that the Trading House Letter was prepared and sent to Mr Ho’s PO Box is as follows:

The parties agree, and on the basis of the foregoing the Court would in any event have found, that the defendants have proven on the balance of probabilities that the Trading House Letter was sent to Mr Ho on or about 7 June 2012 and is therefore presumed to have been received by him four business days later.

Mr Fordyce’s evidence is that on or about 28 January 2014, Mr Ho retained Pmf Legal in relation to the Complaints Proceedings. Mr Fordyce instructed his paralegal to open a new file and to prepare the Complaints Letter. The Complaints Letter was printed and signed by Mr Fordyce and a copy was scanned onto the X drive. It was posted to Mr Ho’s PO Box on or about that date.

Mr Fordyce’s evidence is corroborated by the metadata and expert evidence, which is set out below, as well as the evidence of usual practice.

The relevant Microsoft Word metadata is:

The relevant Adobe PDF metadata is:

In summary, the objective contemporaneous evidence indicating that the Complaints Letter was prepared and sent to Mr Ho’s PO Box is as follows:

The parties agree, and on the basis of the foregoing the Court would in any event have found, that the defendants have proven on the balance of probabilities that the Complaints Letter was sent to Mr Ho on 28 January 2014 and is therefore presumed to have been received by him four business days later.

It will be apparent that the objective contemporaneous evidence including metadata in respect of the Agreed Engagement Letters aligns substantially with the evidence given by Mr Fordyce, Ms Klobucar and Ms Wu about the usual practice at Pmf Legal upon opening a new file and the multiple steps involved in that usual practice, all of which produced relatively consistent data and records which I have set out above.

Bearing this in mind, I will approach the Disputed Engagement Letters in the same way. In the course of these reasons to this point, I have also expressed a number of conclusions which inform my consideration of each of those letters. To avoid repetition in relation to each letter, I summarise those conclusions here:

This letter was not the subject of any evidence from Mr Ho. Its existence was drawn to attention by the defendants and added to their amended statement of claim by the plaintiffs. The plaintiffs submitted that the defendants did not rely on the 31 January BBQ King Letter in the Response and denied that Mr Ho ever received the letter.

The computer evidence shows the 31 January BBQ King Letter file was created on 31 January 2012. However, the precise content of the file on that date is unknown and there is insufficient evidence to make the finding that the 31 January BBQ King Letter was posted to Mr Ho on or around 31 January 2012.

The expert evidence is that the Microsoft Word metadata indicates a file named “120131 Engagement Letter.doc” was created and saved onto the X drive on or about 31 January 2012. On its face, it could be expected that the contents of this file was an engagement letter dated 31 January 2012. The defendants submit that this accords with Mr Fordyce and Mr Ho’s evidence that the retainer in the BBQ King Proceedings commenced on 31 January 2012. However, when “120131 Engagement Letter.doc” is opened it contains an engagement letter dated 3 April 2012.

The 31 January BBQ King Letter was not included in the Costs Response. In his affidavit, Mr Fordyce says that “At that time, I seem to have forgotten or overlooked the fact that the BBQ King Engagement Letter was originally dated 31 January 2012.” Mr Fordyce’s explanation in cross-examination was as follows [T 118:16]:

However, Mr Fordyce’s evidence later was that he had a specific recollection about this letter because it was held back to be posted with the relevant invoice which was “different” to the usual practice [T 158:13]:

Later on, his precise recollection again seemed to change [T 178:30]:

Mr Fordyce also gave evidence of a series of emails sent on 31 January 2012 between Mr Fordyce, Ms Wu and Ms Sweet — copies of these emails were annexed to Mr Fordyce’s affidavit. An email was sent at 11:33 am on that day to Ms Sweet and Ms Wu bearing the subject line “BBQ King restaurant”. The email reads:

Further emails were exchanged one of which includes a business name extract search for BBQ King that states the search was performed on 31 January 2012 at 12:32 pm and specifically lists matter “HO90/120009”.

At 12:14 pm on 31 January 2012, Ms Sweet sent an email to Mr Fordyce with the subject line “HO90/120009 Engagement Letter DRAFT”. The email contained a hyperlink to a file labelled: “X:\H\HO90\120009 – Proceedings for damages against company and shareholders-BBQ King\Correspondence\120131 Engagement Letter.doc”, but which now links through to an engagement letter dated 3 April 2012.

The experts agree that there was a file created on 31 January 2012 named “120131 Engagement Letter.doc”. However, and allowing for their different use of terminology, they agreed that it could not be said what particular content, if any, that file contained and that the “current content of that file may or may not be the content as at 31 January 2012.”

The relevant Microsoft Word metadata is:

In summary, the objective evidence about the 31 January BBQ King Letter is:

While Mr Carson could not say with certainty that the current version of the 31 January BBQ King Letter was created on 31 January 2012 at 2:12 pm, he did not agree with Dr Watt’s finding that “the computer evidence indicates the BBQ King Engagement Letter was created on the day it was last saved, being the 7th June 2012.” The Carson Report notes that “The application creation date is evidence of creation of a document that currently exists as the BBQ King Engagement Letter” but “whether the content now in that document is the same as it was on the day created is another question altogether.” Consistently with the view I have taken of the expert evidence, I am unable to make any finding based on the evidence recorded in this paragraph.

The experts agree that the only version of the BBQ King Engagement Letter identifiable as having been printed is the PDF file named “120403 Engagement Letter to Robert Ho - 120009.pdf” which was created on 10 September 2013.

By reason of the matters set out in paragraph [268] above, the defendants have failed to satisfy the Court that the 31 January BBQ King Letter was either created or sent on the date it is said to have borne. Mr Fordyce’s evidence of his recollections is not accepted because it is uncorroborated. In particular, I have no hesitation in finding on the basis of the absence of a 31 January 2012 entry in the mail-book (when all the other matters in paragraph [268] are taken into account) that the defendants have failed to satisfy the Court that the 31 January BBQ King Letter was ever sent to Mr Ho. Notwithstanding the absence of express evidence from Mr Ho of non-receipt of the letter, the strength of the evidence pointing against the existence or sending of the 31 January BBQ King Letter is sufficient to warrant the making of the declarations the plaintiffs seek.

Mr Fordyce’s evidence is that on 3 April 2012 he or his personal assistant altered the date of the 31 January BBQ King Letter from 31 January 2012 to 3 April 2012. No other content was changed. The change of date followed email discussions between Mr Fordyce and Mr Wong from 30 March 2012 to 3 April 2012 regarding estimated costs in the matter and what billing method would be used. Mr Fordyce says the letter was re-issued in order to confirm that Pmf Legal was continuing to act pursuant to time-based costing and “to make it clear Pmf Legal’s hourly rates continued to apply”. He asserted that it was implicit in his email that a signed copy was required and by copying Mr Wong and Ms Leung in on the email he was alerting them to the need for a signed copy. The emails are in evidence but are silent in relation to the issuing of a further engagement letter and say nothing in terms about hourly rates continuing to apply. Nor can I accept from any of the emails that it was “implicit that signed copy was required”. This seems to be a wishful, after-the-fact interpretation on the part of Mr Fordyce.

The hard copy BBQ King matter file in evidence contains an engagement letter date 4 July 2012 which is followed directly by an engagement letter dated 3 April 2012. Mr Fordyce says that when he searched the hard copy matter file in June 2014, he found the 4 July 2012 document and removed it from the file in order to make a copy. He says he did not see or notice that the following document was the 3 April 2012 letter (“I just took out the document I wanted”) and that he did not search the files to see if a hard copy of the 3 April 2012 Engagement Letter existed.

A printed copy of BBQ King Letter sits, unsigned, on the hard copy BBQ King Proceedings file (see paragraph [190] above). The BBQ King Letter is the final document of the divider section labelled “corro” in the folder and it is preceded by the Amended BBQ King Letter.

There is no entry in the mail-book recording that the BBQ King Letter was sent to Mr Ho on about 3 April 2012. Ms Klobucar’s evidence is that she was not absent on that day. There are numerous entries in the mail-book for March and May 2012, but only seven pieces of correspondence in April. Of those seven, there are two entries for 3 April (neither being letters to Mr Ho), three on 5 April 2012 (including a tax invoice to Mr Ho) and two on 20 April 2012 (including another tax invoice to Mr Ho).

An electronic Microsoft Word version of the BBQ King Letter does not exist as a separate file created on 3 April 2012 (which, following the file naming convention, it could be assumed might be labelled “120403 Engagement Letter.doc”). However, when opened, the “120131 Engagement Letter.doc” bears the date of 3 April 2012. The Microsoft Word metadata is the same as that of the 31 January BBQ King Letter reproduced above. The only other electronic iteration of the BBQ King Letter is a PDF version created (and most likely printed) on 10 September 2013 (“120403 Engagement Letter to Robert Ho - 120009.pdf”). In relation to the PDF version of the BBQ King Letter, the relevant metadata is:

I note that the PDF version is saved into the “130027” matter sub-directory, rather than in the “120009” sub-directory.

In the Joint Report, the experts agree that there was no evidence to indicate the file or document named 31 January BBQ King Letter was created, modified or printed on 3 April 2012. As an agreed matter between them, I accept that evidence. Dr Watt asserted that the evidence suggested the 31 January BBQ King Letter was created on 7 June 2012. Mr Carson said the only evidence to suggest that was the “last modified date” which was not a strong basis for this also been the creation date. Dr Watt agreed in cross-examination that if the date in “120131 Engagement Letter.doc” was amended to “3 April 2012” this was on or before 7 June 2012, the “last modified” date for the file.

The defendants contend that the BBQ King Letter was a modified version of the 31 January BBQ King Letter re-issued on 3 April 2012 to Mr Ho in order to clarify the time-based costing mechanism Pmf Legal was applying. They rely on the usual practice, as stated by Mr Fordyce and Ms Klobucar, to conclude that it could reasonably be inferred that the BBQ King Letter was printed, signed and sent to Mr Ho on or about 3 April 2012. The defendants argued that, given its “decidedly haphazard content”, the absence of an entry in the electronic mail-book recording the letter as sent to Mr Ho was not conclusive evidence that the letter was not sent when Mr Fordyce says it was. They submitted that the Microsoft Word metadata were unhelpful in identifying when the “3 April 2012” date was inserted into the letter because the “track changes” function had not been enabled and Dr Watt could only positively state that the date change occurred before 7 June 2012, which was the “last modified” date for the file. In relation to paragraph [273] above, the defendants submitted that in admitting he did not recall seeing the letter on the file, Mr Fordyce was actually making a concession against his own interest which supported his credibility because, they said, he could have stated the letters were both there when he checked in June 2014.

Further, they submitted that the fact the BBQ King Letter was provided to the NSW Trustee and Guardian on 10 September 2013 and in the Costs Response indicated that the file existed at least in September 2013 and demonstrated a consistent pattern of the BBQ King Letter being provided to third parties as proof of an existing retainer between Pmf Legal and Mr Ho in the BBQ King Proceedings. The defendants argued that it was reasonable to expect that an express reference in Mr Fordyce’s reply to the NSW Trustee and Guardian to an engagement letter in the BBQ King Proceedings may have prompted a response from Mr Wong or Ms Leung (who were sent a copy of Mr Fordyce’s reply) if they did not believe the document existed as at September 2013. The defendants submitted that their lack of response should be taken as tacit consent or acquiescence.

The defendants argued the same in respect of Mr Fordyce’s email of 18 September 2013 to Ms Wu, which was copied to Mr Wong and Ms Leung, containing notes of a telephone conversation with the NSW Trustee and Guardian on that date in which he stated: “Need copy of executed cost agreement with Mr Ho”. Neither Mr Wong nor Ms Leung responded to that email. The defendants again submitted that Ms Leung’s failure to respond was particularly significant given her role as executor and that the allegations being maintained against Mr Fordyce do not sit comfortably with the references in September 2013 to existing retainers with Mr Ho, even in circumstances where Ms Leung was not the direct recipient of the letters and emails referred to. They asserted that the Court was entitled to take into consideration that Ms Leung had not conducted independent searches for the Disputed Engagement Letters, yet maintained the proceedings.

The plaintiffs submitted that there is no objective evidence to support the contention that “120131 Engagement Letter.doc” was opened, modified or saved on 3 April 2012 to create the BBQ King Letter. They submitted that there are no backup copies of the 31 January BBQ King Letter file bearing a date of 3 April 2012; there are no fragments of a deleted or overwritten file that may have been the BBQ King Letter before the 7 June 2012 modification date when the file was opened to create the Trading House Letter or between 3 April 2012 and 7 June 2012; there is no evidence of the “120131 Engagement Letter.doc” being printed on 3 April 2012; no signed copy of the BBQ King Letter exists in hard copy or electronic format and only an unsigned copy exists on the hard copy matter file; and, that there is no entry in the 2012 mail-book recording postage of the BBQ King Letter to Mr Ho’s PO Box in accordance with the usual practice.

The plaintiffs submitted there was no dispute that from 10 September 2013 at the latest, the 31 January BBQ King Letter file bore a date of 3 April 2012. This was the first date on which the metadata indicates the BBQ King Letter was printed (seemingly to create a PDF version to send to the NSW Trustee and Guardian) and, it submitted, the first date on which it was possible that a hard copy of the BBQ King Letter was placed on the hard copy matter file. The plaintiffs submitted that, given the position and proximity of the letters in the hard copy matter file (one on top of the other), it was unlikely that Mr Fordyce simply failed to see the second letter but that both letters were placed in the file after they were created in June 2014. I have already dismissed that line of argument in paragraphs [184] to [191] above.

The plaintiffs noted that the copy of the letter to the NSW Trustee and Guardian sent by email to Mr Wong and Ms Leung on 12 September 2013 did not enclose a copy of the BBQ King Letter which was being sent to the NSW Trustee and Guardian. Accordingly, the defendants were overstating the evidence in their submission that the BBQ King Letter was brought directly to Ms Leung and Mr Wong’s attention by no later than 12 September 2013. The plaintiffs asserted that the defendants’ reliance on the correspondence in relation to the Trustee’s request was misconceived and that the communications were ambiguous at best. They submitted that Ms Leung was not required as part of this case to give evidence of the proper discharge of her duties as executrix and that even if she had conducted independent searches, it would not add to the body of evidence in the case on the plaintiffs’ case.

But for the existence of the hard copy letter on the hard copy matter file, I would not be satisfied that the BBQ King Letter was created on or about 3 April 2012. For example (as the defendants submitted, see paragraph [279] above), the Microsoft Word metadata only reveals a “last modified” date, it does not specify when the date displayed in the 31 January BBQ King Letter file was changed. As the Carson Report states “The date exists as a text entry without any associated information about when it was entered.” The experts could only narrow this to a range of between 31 January 2012, the file’s “creation date”, and 7 June 2012, the “last modified” date.

Similarly, there is no evidence that the 31 January BBQ King Letter file was modified, saved or printed on or around 3 April 2012 and there is no entry in the mail-book recording that the letter was sent. And there is no separately existing Microsoft Word version of the BBQ King Letter on the server or in the backup files verifying the creation of the letter on 3 April 2012. The only indisputable computer evidence is that a PDF version of the BBQ King Letter was created and probably printed on 10 September 2013 to send to the NSW Trustee and Guardian.

However, consistent with my acceptance of the defendants’ evidence of usual practice, based on the presence of the unsigned copy of the BBQ King Letter on the matter file, in circumstances where the Court has not accepted the plaintiffs’ submission of fraudulent recreation and placing of the letter on the file by Mr Fordyce, I find that the letter was brought into existence on 3 April 2012.

Nevertheless, based on that same evidence of usual practice, by reason of the absence of an entry in the mail-book on 3 April 2012, when taken with the existence of the other entries for April recorded in paragraph [275] above (including other letters being sent to Mr Ho), the defendant has failed to satisfy me on the balance of probabilities that the BBQ King Letter was sent to Mr Ho’s PO Box on 3 April 2012 or at all. I do not accept that the relatively few entries for April 2012 means the regular use of the mail-book fell away, especially when the number of entries increases again in May. I consider that the possibility of the usual practice being abandoned for one month is far less plausible than, for example, an explanation (admittedly not explored in the evidence) of the effect of the April school holidays on the business of Pmf Legal.

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

The evidence of an unsigned copy of the BBQ King Letter being sent to the NSW Trustee and Guardian may be consistent with the letter having existed, but says nothing about whether it was ever sent.

I am also not persuaded by the defendants’ submissions in relation to the 18 September 2013 email. The statement “Need copy of executed cost agreement with Mr Ho” is ambiguous. It could be interpreted as meaning an executed costs agreement existed and needed to be produced, or that a costs agreement needed to be executed and then produced. In my opinion, the email does not clearly confirm the existence or non-existence of a signed costs agreement and certainly casts no light on whether it was sent.

Furthermore, the email was directed to Ms Wu, not to Mr Wong and Ms Leung, and reads like an internal email requesting information of Ms Wu, not Mr Wong or Ms Leung. It does not ask Mr Wong or Ms Leung to acquire a signed copy from Mr Ho or attach a copy of the document to send to the NSW Trustee and Guardian. There is also no evidence to suggest Mr Fordyce or Ms Wu chased Mr Wong or Ms Leung to obtain a signed copy of the relevant Engagement Letters. Accordingly, it does not seem to me that the absence of response from Ms Leung at that time points to a dereliction of her duties as executrix (assuming, without deciding, that would otherwise have been the case).

Neither do I accept the defendants’ arguments about the circumstantial evidence (e.g. the sending of unsigned copies of documents to third parties) to be sufficient to infer that the letter was sent.

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

Mr Fordyce’s affidavit evidence is that the letter was first created on or about 4 July 2012 when he says he amended the content of the existing BBQ King Engagement Letter (the 31 January BBQ King Letter) to create the Amended BBQ King Letter. In cross-examination, when asked to confirm he meant the “120131 Engagement Letter.doc”, he stated “I think that would have been the way it would have been done yes”. He says he altered the content of the 31 January BBQ King Letter to add and identify Rhodium Pty Ltd and Trading House Pty Ltd as clients and recipients of the letter in addition to Mr Ho following their reinstatement, he added “AMENDED” to the subject line, and changed the date to 4 July 2012 to reflect those amendments.

In cross-examination, Mr Fordyce agreed that if the 31 January BBQ King Letter was opened to use as a template, the content altered, and the document or application exited, a system prompt would have appeared asking whether the user wanted to save changes before closing. He also accepted that if usual practice had been followed a file called “120704 Engagement Letter.doc” (the name reflecting the creation date) would have been created and saved onto the X drive in respect of these changes. He could not recall the manner in which the file was closed or whether it was saved or printed before he closed the application. He agreed the letter was “an important document … for the conduct of [his] practice” which he “felt significant to create”. He stated there was a “possibility” the file was not saved at all upon closing even though he said “I hoped I would have said yes” to a system prompt to save the file. He said “I’ve lost many documents where I haven’t done that.”

His cross-examination proceeded as follows [T 164:4]:

An unsigned printed copy of the Amended BBQ King Letter exists on the hard copy BBQ King Proceedings file (see paragraph [190] above). It is the penultimate document of the divider section labelled “corro” in the BBQ King Proceedings folder. The only identifiable electronic copy of this file is the version created in June 2014 (which is not disputed).

There are no signed copies of the Amended BBQ King Letter either in hard copy or electronically, and there is no mail-book entry recording its posting on or about 4 July 2012. Ms Klobucar’s evidence is that she was absent on that day. However, the mail-book does record 19 letters being sent out on 4 July 2012, including one to Mr Ho enclosing a tax invoice in another matter. It also records a tax invoice to Mr Ho in another matter being sent out on 20 July 2012.

No electronic version of the Amended BBQ King Letter (“120704 Engagement Letter.doc”) exists on the server or in the backup files in either a Microsoft Word or PDF format. Mr Carson’s evidence was that this indicated usual practice was not followed — the missing files were “dealt with, or opened, or created differently, potentially, or in different places. There would have to be an explanation why they are different to the other files.” He agreed that it could be expected that if a file was created it should ordinarily be propagated across the backup copies as they occurred from time to time and be traceable through those backup copies upon examination of the system (forensic or otherwise).

The metadata does not indicate that the 31 January BBQ King Letter was opened on 4 July 2012 when Mr Fordyce asserts he modified the file to create the Amended BBQ King Letter. There is no system print data of the Amended BBQ King Letter on or about 4 July 2012 (there is only a record of the June 2014 version being printed). It does not appear that any other Ho matter file was opened and used as a template document for the creation of a new document through the “save as” function on 4 July 2012.

The only metadata in evidence in relation to the Amended BBQ King Letter is that of the June 2014 Microsoft Word version which is as follows:

In respect of the “Application printed” date, the Watt Report explained that this is not uncommon where a file has been used as the template for a new document through the “save as” function and that this date “simply represents the last print date of the old file from which the BBQ King Amended Engagement Letter was created.”

It was not disputed that the electronic copy of the Amended BBQ King Letter was created in June 2014. The issue that arises is whether the hard copy document was placed on the file on or about July 2012 and was used by Mr Fordyce in June 2014 as a template document to create the 2014 electronic version.

The defendants submitted that the hard copy of the Amended BBQ King Letter is a true copy of the engagement letter sent to Mr Ho on or about 4 July 2012 in accordance with Pmf Legal’s usual practice. They again argued that the absence of an entry in the mail-book was not probative; that there were feasible explanations for the absence of electronic evidence of the Amended BBQ King Letter; and, that Mr Fordyce had no motive to commit fraud — particularly where the Amended BBQ King Letter did not change the contractual relations between Pmf Legal and Mr Ho in relation to the BBQ King Proceedings retainer. Accordingly, they submitted that the Amended BBQ King Letter was of marginal relevance where the contractual relations between Pmf Legal and Mr Ho were established in the first retainer in the BBQ King Proceedings e.g. the 31 January BBQ King Letter.

The plaintiffs submitted that had usual practice been followed a file called “120704 Engagement Letter.doc” would have existed on the X drive, which it did not. The explanation for this (that the file was opened and altered without saving) was not supported by records and was, again, contrary to usual practice. And there would have been other records such as the mail-book showing that the Amended BBQ King Letter was printed and sent to Mr Ho. Moreover, the metadata did not show that 31 January BBQ King Letter was opened at any time after 7 June 2012 until September 2013 which contradicted Mr Fordyce’s evidence that he thought he would have used the 31 January BBQ King Letter as the template for the Amended BBQ King Letter.

In relation to the hard copy letter, the plaintiffs submitted that Mr Fordyce’s claim that he did not recall seeing the BBQ King Letter when he took the Amended BBQ King Letter out of the file to create the electronic replica in June 2014 was highly improbable given the position of the BBQ King Letter and the Amended BBQ King Letter in the hard copy matter file (one on top of the other) and undermined the idea that the documents were accessed in June 2014. They submitted that it was more probable that the hard copy letters were not in the file at that time but were placed on the BBQ King file in late June or July 2014 when Pmf Legal was preparing for the Recovery Proceedings.

The plaintiffs submitted that Mr Fordyce had the relevant motive to insert documents fraudulently into the hard copy matter files because he was barred from commencing proceedings under the Act where costs disclosure had not been made until costs assessment had occurred. They contended that Mr Ho had no motivation to lie about costs disclosure particularly in circumstances where, they suggested, Mr Ho would have been labouring under the belief that what he claimed could easily be proved false by Pmf Legal’s records. Their final submission was that Mr Fordyce’s evidence about “re-creating” the June 2014 documents from pre-existing hard copy documents was a recent invention, and that the suspicious absence of usual business records coupled with Mr Fordyce’s actions — such as omitting from his affidavits that the letters were recreated in June 2014 — spoke to his efforts to conceal his fraud.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Confronted with the choice between accepting that:

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

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

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

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

The relevant Adobe PDF metadata is:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Second, confronted with the choice between accepting that:

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

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

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