STATE RAIL AUTHORITY OF NEW SOUTH WALES v EARTHLINE CONSTRUCTIONS PTY LTD SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL MAHONEY P, MEAGHER JA and HANDLEY JA 4-6 March, 20 December 1996 [1996] NSWCA 494 State Rail Authority (SRA) engages contractors for the hire of equipment for work in connection with railway lines in northern NSW — SRA claimed overpayment to contractors by mistake and instituted proceedings in Commercial Division of Supreme Court to recover overpayment — Trial judge makes order in favour of SRA for $178,000. Appeal by SRA to Court of Appeal - Trial judge's findings on credibility of witnesses, former employees of SRA - Evidence of system of certifying hiring and work dockets - Inferences to be drawn from documentary evidence alone - Whether work paid for had been done - Whether proof of overpayment by mistake - Whether appeal court can disturb trial judge's findings of fact. Held: appeal dismissed: (i) The court on appeal should not set aside the conclusions of the trial judge as to the credibility of the witnesses. Thus the substantial basis of this part of the appellant's case fails. (ii) Regarding the documentary analyses of the alleged fictitious work claims, subject to an error of calculation made by the trial judge in the money judgment entered for the SRA, the court is not persuaded to draw the inferences as to the falsity of the claims which SRA has suggested. (iii) Except for the amount recovered in judgment, the SRA failed to make out a prima facie case that particular payments had been paid by mistake for work which had not been done. Chambers v Jobling (1986) 7 NSWLR 1; Abalos v Australian Postal Commission (1990) 171 CLR 167; Devries v Australian National Railways Commission (1993) 177 CLR 472; Voulis v Kozary (1975) 180 CLR 177; Fabre v Arenales (1992) 27 NSWLR 437; applied. Mahoney P. Between late 1989 and early to mid-1992, State Rail Authority of New South Wales ('SRA') engaged Earthline Constructions Pty Limited ('Earthline') and subsequently Nuline Constructions Pty Limited ('Nuline') to do work for SRA on the northern rail lines in New South Wales. SRA claims that of the amount paid to the companies $8,103,559.25, the two companies made claims for payment from it that were wrong to the extent of some $2,765,002. (It is not necessary in this appeal to distinguish between the two companies). The companies accept that by error (as they claim it to have been) there was an over-payment and that they should repay that amount. In respect of that there is no relevant dispute. In 1992 SRA sued the companies and others in respect of the amount which it claims. No issue now arises in relation to the defendants other than the companies. After a hearing extending over portions at least of some thirty-eight days, the learned trial judge, O'Keefe CJ of CommD, effectively gave judgment for the companies. SRA has appealed to this Court against the judgment in favour of the companies. 2 UNREPORTED JUDGMENTS The appellant SRA has placed before the Court on this appeal a large amount of material. The appeal papers, contained in nine appeal books, extend over more than 1620 pages. The judge's judgment, delivered on 14 September 1994, consists of 145 pages. SRA submitted, as appellant, written submissions of some 85 pages and supplemental submissions of a further 11 pages: these were filed before the hearing of the appeal commenced. The respondents" submissions were limited to some 46 pages. In addition to the submissions, and a narrative of the facts, the appellant filed, for the assistance of the Court, summaries of 'findings against the appellant' and 'findings in favour of appellant'. When the hearing of the appeal commenced, Mr Gyles QC, for SRA, handed to the Court 'a bundle of documents' to replace the documents which had already been filed. Mr Gyles QC then, for the assistance of the Court, carefully analysed the case but in a manner which was different in a number of respects from the analysis of it upon the basis of which the previous documents had been placed before the Court. The grounds of appeal numbering some 65 and the supplemental grounds contained in the Supplemental Notice of Appeal were, if not put aside, at least were not pursued in detail in the oral argument. Thave referred to the material before the Court and to the way in which, during the three days on which oral argument took place, the material was dealt with in order to prevent misapprehension as to the way in which, in my opinion, the appeal should be dealt with. As I have said, the Notice of Appeal details many grounds of appeal. In the written submissions filed before the hearing, a large number of these grounds (but not all of them) were addressed in terms. Subsequently, in oral argument,different submissions were advanced and the issues raised by those submissions were dealt with essentially in the oral argument. I do not propose in my judgment to attempt to deal with all of the issues raised in the grounds of appeal, the written submissions, the amended documents and the oral submissions. What has happened in this appeal (though it has been longer than the appeals ordinarily coming before this Court) is not untypical of what often occurs. Submissions made and issues raised in grounds of appeal or in written submissions are not dealt with orally or are touched upon only as in passing. Often, submissions made and argued are, following dialogue between the bench and counsel, not formally abandoned but not the subject of further comment. In my opinion, it is not the duty of a court, and in particular of this Court, to pursue each issue which counsel has raised, in writing or orally, and deal with it in the Court's written judgment. It is, I believe, sufficient for the Court to draw out from the facts and the submissions which have been made what is the structure of the appellant's case and what are the essential or the main points upon which it turns. It is sufficient for the Court to indicate the conclusions which it has formed in relation to such parts of these as, in the end, are in issue and are of importance in determining the outcome of the appeal. In this appeal, I propose to follow a course generally of this nature. 1. THE STRUCTURE OF THE APPELLANT'S CASE: The contention of SRA was essentially that the claims for payment made by the companies which SRA has impugned were false in that the work for which payment was claimed was not done. The basis of the falsity (that is, the way in which the particulars of what was claimed were false) was not the same throughout; the companies, SRA claimed, composed and filed with it claims that were inaccurate in various ways. JOBNAME: No Job Name PAGE: 3 SESS: 1 OUTPUT: Mon Feb 25 18:22:22 2008 /reports/caseml]/case/urj/9607935 \RATE RAIL AUTHORITY OF NEW SOUTH WALES v EARTHLINE CONSTRUCTIONS PTY LTD (Mahoney P) However, the thrust of the matter, as contended by SRA, was that the work for which payment was claimed was not done. In order to understand how claims were to be made by the companies it is necessary to refer to the system adopted by SRA and the companies in relation to themaking of the claims. In principle, the way in which the claims were made is not seriously in question. The companies were to do, and did do, work on several sites from time to time. The work was done by use of an item of plant operated by an operator. SRA employed persons to be upon various of the sites, to observe what was done, and to authenticate the claims as they were made by the companies. In order to secure payment from SRA, the company in question would, on a claim form prepared by it, set out particulars of the work which it claimed was done. The claim ordinarily represented the sum of a number of items of work. The items of work were supported by a document. The supporting document ordinarily provided for particulars such as the site, the name of the contractor (the company itself or a contractor employed by it), the hours worked and the machine used. The document was to be signed by the plant operator. It was to be checked on the site by the SRA employee whose signature was to verify the particulars. The documents were then used by the company to make up a claim. The claim, containing an aggregate of several of such documents, was sent with the documents to the SRA divisional office. It was checked against the terms of the arrangement with the relevant company. (No point now turns upon those terms). It was then sent by the divisional office to the head office of SRA for payment. Payments were then made to the companies. At the trial, SRA contended that although a number of the claims submitted included documents which accurately recorded work done, a number of them included documents which did not accurately record work which had been done. There was, it was claimed, a systematic preparation and submission of documents not prepared in accordance with the procedure and making false claims. As the hearing was conducted, it was necessary for SRA to prove that, in respect of the claims and the dockets which it impugned, the work for which payment was claimed by the companies was not done. It may be inferred that SRA, by investigations of various kinds, had satisfied itself that claims had been made which were false, that is, which related to work which was not done. But it was necessaryfor SRA to prove that this was so. It was, no doubt, faced with a great mass of documents involving a substantial number of sites, items of plant and plant operators. It was no doubt necessary for it to select a method or methods of proof of the falsity of the claims it impugned. The evidence adduced by SRA extended over a substantial area. However, for present purposes it is sufficient to deal with what were, in my opinion, the three main categories of evidence adduced by SRA. These were: (a) Oral evidence, especially the oral evidence of Mrs MN Page; (b) The claim forms and the dockets in respect of the impugned claims and the analysis of them by a firm of accountants; and JOBNAME: No Job Name PAGE: 4 SESS: 1 OUTPUT: Mon Feb 25 18:22:22 2008 /reports/caseml]/case/urj/9607935 UNREPORTED JUDGMENTS (c) Records of the companies, seized under warrant or otherwise: in particular, records said to show and identify the plant used by the companies and the numbers assigned to each item of the plant. (This was necessary in order to identify the plant used on particular sites at particular times with the plant the subject of the claims and the dockets forwarded by the companies). At the trial and before this Court SRA sought to establish the falseness of the impugned claims in two main ways: by a combination of the evidence of Mrs Page and the claims and dockets submitted, as explained in some cases by reference to the company records; alternatively (no doubt against the possibility that SRA could not rely upon Mrs Page's evidence) it relied on an analysis of the documentary evidence to suggest that the claims were false. At the trial, the learned judge held Mrs Page's evidence to be lacking in credibility: he found her evidence unacceptable and, in substance, put it aside. He considered the documentary evidence, unassisted by her evidence and was not satisfied that it established that all, or substantially all, of the impugned claims were false. (He was satisfied that some of the claims were inaccurate: they may perhaps have been false. These involved amounts which the judge quantified in his judgment. It is accepted that the judge made an error of calculation in doing that and that the amount he should have taken into account in this regard was different. No issue arises in that regard). Upon the hearing of the appeal, SRA submitted the judge was guilty of appealable error in putting aside Mrs Page's evidence and that, on a rehearing of the evidence before this Court: Supreme Court Act 1970 s 75A; this Court should give to her evidence its face value or substantially accept it. Alternatively, SRA submitted that the documentary evidence, standing alone, established that the impugned claims were false. The analyses of it, in the main in two exhibits, were examined and tested by the judge. He held that he should not draw from them the inferences which SRA suggested. I have outlined the structure of the case advanced by SRA in general terms: I have not added all of the qualifications and exceptions appropriate to a fully comprehensive detailed statement of that case. However, this statement of the case is sufficient to enable me to indicate the main issues before this Court which require determination and what is to be said in relation to them. 2. MRS PAGE'S EVIDENCE AND THE USE THAT MAY BE MADE OF IT: The trial judge put Mrs Page's evidence aside: he was not satisfied that he should rely upon it as part of the proof of the case which SRA set up. He gave several reasons for doing this, some general and some related to particular parts of the evidence. His main reasons were three. First, because of the way in which she gave evidence before him, the judge did not accept that, in respect of relevant portions of her evidence, she was trying to give an accurate account of what occurred. For this JOBNAME: No Job Name PAGE: 5 SESS: 1 OUTPUT: Mon Feb 25 18:22:22 2008 /reports/caseml]/case/urj/9607935 \RATE RAIL AUTHORITY OF NEW SOUTH WALES v EARTHLINE CONSTRUCTIONS PTY LTD (Mahoney P) reason, he felt it proper to put her evidence aside. Second, he held that her evidence had in it internal inconsistencies: he instanced internal inconsistencies in her affidavit evidence and differences between the evidence she had given on affidavit and her oral evidence at the hearing before him. And, third, he found her not a credible witness because he concluded that, in the course of giving her evidence, she changed her evidence in relevant respects. As to the first reason: It has long been accepted: see the cases referred to in Chambers v Jobling (1986) 7 NSLWR 1 at 26; that in deciding whether a trial judge should accept and act on the evidence of a witness, he may take into account the way in which the witness gave evidence before him. (The unfortunate term 'demeanour' has been used). The High Court of Australia, by an established line of decisions, has held that where the trial judge's rejection of a witness as not credible has been affected by the way in which she gave evidence before him, an appellate court should not, on a rehearing, accept the witness as a credible witness unless (I put the matter compendiously) the judge has misused the advantage that he had in observing her before him: see Abalos v Australian Postal Commission (1990) 171 CLR 167; Devries v Australian National Railways Commission (1993) 177 CLR 472; or otherwise the evidence is generally inconsistent with the judge's findings: see Voulis v Kozary (1975) 180 CLR 177. SRA has submitted that O'Keefe CJ of CommD misused his advantage as trial judge. Its submissions in this regard were put by Mr Gyles QC with, and they had, some force. They were generally to the effect that some at least of the reasons that the judge gave for putting her evidence aside were wrong in fact; and that the judge failed to take sufficient account of the fact (as it was asserted to be) that there was in the documentary evidence such a substantial corroboration of Mrs Page's evidence that, notwithstanding what he had seen of her in giving evidence, the judge should have accepted her evidence, at least in relevant respects. In determining whether and to what extent he should accept a witness as credible a judge must take into account the evidence of the witness and such other evidence before him as is relevant to the assessment of her credit. Conceptual difficulties are said sometimes to arise because, in determining the credibility of a witness, it may be necessary to determine first which of competing facts the judge accepts; but in making that determination, it may logically be necessary for him first to determine whether he accepts the witness as credible. Submissions in this regardwere dealt with by this Court in Fabre v Arenales (1992) 27 NSWLR 437. What will be sufficient in a particular case to warrant an appellate court putting aside a finding in respect of credibility, which is affected by demeanour, will depend on the circumstances of the case. In considering, inter alia, what Mrs Page said about the claims and dockets, the judge considered allegations made by SRA and by her against certain of the persons employed by it to check the work done at various sites: these were Messrs Greber, Child and Bell. Suggestions were made that they had failed properly to check the documents as they should have and were guilty of other and more serious misconduct. Mrs Page had claimed that, for example, Mr Greber, a site foreman, had JOBNAME: No Job Name PAGE: 6 SESS: 1 OUTPUT: Mon Feb 25 18:22:22 2008 /reports/caseml]/case/urj/9607935 UNREPORTED JUDGMENTS 'never looked at any of the entries on the dockets before he signed them'. The judge, having examined the documentary evidence, and after detailing the documents with which Mr Greber was concerned (see his judgment pp 29 et seq) concluded that Mr Greber may have been guilty of some laziness or incompetence but was not guilty of sustained misconduct of the kind that had been suggested against him by Mrs Page. Mr Child and what he did was the subject of attack. Mrs Page was not concerned with him: a Mrs Packham was the relevant employee of Earthline. The judge (in his judgment pp 31 et seq) collated and examined a large number of the documents with which Mr Child was or should have been concerned. The judge, following that analysis, indicated he was left 'with a sense of unease about accepting her evidence (Mrs Packham) as precise'. His conclusion was that 'whilst on some occasions there may have been some speed and absence of checking, it is not established to my satisfaction that this was the invariable practice or even the predominant practice'. His conclusion was that 'there was some, probably few, occasions on which Mr Child signed work dockets without adequately checking them and on more than one occasion signed work dockets in which the details had not been completed but the work dockets cannot be identified'. The judge examined the evidence in respect of Mr Bell and what Mrs Page had said against him (in his judgment at pp 37 et seq). He concluded that: Mr Bell probably did, on occasions, sign work documents fairly rapidly, and sign some work dockets in advance of the details being included on them or completed. When this occurred or where it occurred, I am not able to say on the evidence. Precisely how many work dockets were involved, cannot, in my opinion, be known as a probability and whether the work dockets which were so signed were later filled in with claims which were not correct, is a matter on which there is no evidence. Mrs Page does not say that she later filled in such dockets, nor is there anything to indicate that any other employee of Earthline did so. In this context, I come to the judge's conclusions in respect of Mrs Page. (These are set out in his judgment at pp 41 et seq). His Honour, over a number of pages (pp 41-48 of his judgment and subsequently) considered the acceptability of her evidence. He saw it, in my opinion correctly, as 'pivotal in many respects to the success of the SRA case'. He concluded that her affidavit evidence 'was internally inconsistent in a number of respects' and that she 'was argumentative at times, evasive at others. She did not present well in the witness box'. His Honour said the 'specific respects in which I reject her evidence' as referred to in the judgment, were 'by no means exhaustive'. His Honour concluded that 'in her mind by giving evidence she was, in my opinion, protecting herself from any claims or prosecution to which she might have been subject'. Having regard to his Honour's detailed examination of what had been said in respect of Mr Greber, Mr Child and Mr Bell, insofar as it was said by Mrs Page, and to the detailed examination made by the judge of the documentary material, I am not satisfied that his Honour misused his position in arriving at his assessment of the credibility of Mrs Page. JOBNAME: No Job Name PAGE: 7 SESS: 1 OUTPUT: Mon Feb 25 18:22:22 2008 /reports/caseml]/case/urj/9607935 \RATE RAIL AUTHORITY OF NEW SOUTH WALES v EARTHLINE CONSTRUCTIONS PTY LTD (Mahoney P) His Honour dealt with Mrs Page's evidence, not merely by reference to these three witnesses, but otherwise. She had, in substance, suggested that Mr Davies, one of the persons representing the companies, had directed her to falsify claims. Inrelation to evidence which she gave touching Mr Davies, his Honour, after an examination of the relevant evidence, found her demeanour 'unsatisfactory' and referred to "frequently inconsistent evidence and lack of specificity when pressed'. It is no disrespect to the detailed submissions made by Mr Gyles QC that I do not go in detail to the matters which he advanced to suggest that the judge was in error in findings of fact by reference to which, it was said, he had formed his adverse view of Mrs Page's credibility. He made submissions in relation to, eg, various portions of her affidavit evidence. But, in the end, the judge, referring to evidence which she gave, said: When she was giving this evidence she gave the appearance of a person who was literally making her evidence up as she went along. This was a not uncommon occurrence in Mrs Page's evidence. It is one of the many matters already adverted to and matters which are adverted to later, which cause me not to accept Mrs Page as a witness whose evidence should have reliance placed upon it. I shall not repeat the detailed analyses of the evidence made in this regard by the trial judge. It is sufficient that I record that, in general, I agree that in at least a number of respects the analyses which he made and the comparisons between her evidence and the documents provide adequate reasons for rejecting the evidence of Mrs Page. If there were errors of detail in what the judge did, I think that they do not falsify the general conclusions at which he arrived: there were instances enough to justify his conclusions as to her credibility. I do not think that this Court on appeal should set aside the conclusion which in this regard the judge reached. If Mrs Page's evidence be put aside, to the extent that the judge put it aside, then, in my opinion, the substantial basis of this part of the appellant's case is removed. The evidence that was given by Mrs Page suggesting, for example, that she had had deliberate and detailed instructions from officers of the companies in respect of the falsification of claims and that there was misconduct or negligence of theofficers on site employed by SRA of the kind and extent she suggested is not in my opinion acceptable. . THE DOCUMENTARY ANALYSES OF THE CLAIMS: SRA had various analyses made of the claims. Its contention was that these analyses provided evidence from which it should be inferred that the claims or the relevant number of them were false. The analyses were evidenced in the main by two exhibits, Exhibit CC and Exhibit AA. The judge (in his judgment at pp 82 et seq) put aside Exhibit CC. He concluded that on the basis of Exhibit CC 'the work which is said not to have been done represents a false claim of more than 64% in excess of the true value of the work done'. His Honour found that: ... disproportion between the amount of work said by the SRA not to have been done and the work which was actually done so great as to make it improbable that it would not be detected by the routine inspections of the JOBNAME: No Job Name PAGE: 8 SESS: 1 OUTPUT: Mon Feb 25 18:22:22 2008 /reports/caseml]/case/urj/9607935 UNREPORTED JUDGMENTS extent of the work which were carried out. Its magnitude should, in my opinion, have been just too great to escape detection. His Honour examined at length Exhibit AA and the conclusions which were said to be derived from it (see the judgment at pp 83 et seq). His Honour examined the exhibit and the inferences suggested to flow from it in several respects: he referred to sub-contractor machines, duplicate plant numbers, and other ways in which the material was itemised or assembled. It is no disrespect to the industry of counsel that I do not repeat the analyses contained in the judgment (pp 88-131). Notwithstanding the submissions that have been made, I am in general agreement with the way in which the judge dealt with the details as he there set them forth. His conclusion was that the extent of the disproportion which, as the result of Exhibit AA, SRA had suggested was so great that 'it is improbable that overclaims to such an extent would not be detected by the system to which I have adverted when dealing with a like consideration in relation toExhibit CC'. Again, this matter is not to be decided by whether there are some individual errors of detail in the judge's analysis. There are enough matters of substance supporting the judges analysis of the documents and the use of them in the exhibits to warrant the conclusion that they should not satisfy the court of the falsity of the claims impugned. SRA, in addition to these analyses, had placed in evidence as Exhibit EE 'eight boxes and fifteen lever arch files of documents', the files containing invoices and the boxes 'a morass of unsorted documents which are in no apparent order and not the subject of any summary sheets or indexes'. His Honour noted that no reliance was placed on Exhibit EE in submission and, in my opinion correctly, he put those documents aside. The documentary material upon which the summaries contained in the exhibits were based was, I think, to some extent affected by the judge's rejection of the credibility of Mrs Page. But, if that be put aside, I find the doubts which, as I infer, his Honour had as to the effect of the analysis of the documentation understandable. Having attempted my own analysis of the exhibits and checked again the portions of them to which the judge referred, I am not convinced that I should draw the inferences as to the falsity of the claims which SRA has suggested. For these reasons, I am of opinion that, subject to the adjustment for error to which I have referred, the judgment of the learned judge was correct. Subject to that variation, I am of opinion that the appeal should be dismissed with costs. I agree with the orders proposed by Handley JA. 45 Meagher JA. I agree with Mahoney P. Handley JA. The State Rail Authority (the Authority) has appealed from a decision of O'Keefe CJ Comm Div dismissing its claims to recover monies paid by it to its contractors, Earthline Constructions Pty Limited and Nuline Constructions Pty Limited (the contractors), under mistakes of fact induced by 50 the frauds of those companies, for relief against three of its former officers for breaches of fiduciary duty, and against other defendants for knowingly assisting \RATE RAIL AUTHORITY OF NEW SOUTH WALES v EARTHLINE CONSTRUCTIONS PTY LTD (Handley JA) in those breaches. I agree that the appeal fails for the reasons given by Mahoney P, but will add further reasons of my own. During the period between February 1990 and May 1992 the Authority paid the contractors $8,103,599 for the hire of earthmoving plant equipmentand vehicles at contract rates in connection with work done on its lines in northern New South Wales. It formulated its claims to recover over-payments on alternative bases, one documented in exhibit CC for $2,765,002, the other documented in exhibit AA for $1,757,609. Its case was that fraudulent dockets for work that was not done by the contractors were authenticated by the three officers Greber, Child and Bell, in breach of their fiduciary duties, submitted to the Authority and paid. Exhibit CC covered 4,215 transactions, principally during 1990 and the first half of 1991, alleged to have been fraudulent because the operators shown in the work dockets were fictitious or duplicated, were not employees of the contractors, the items of plant were fictitious, or duplicated, or were under repair at the time. None of the subject transactions occurred during 1992. The over-payments claimed in exhibit CC represented 34% of the total monies paid to the contractors during the period. Exhibit AA covered 2,895 transactions allegedly made in respect of fictitious machines, the great bulk of these being during 1990 and the first half of 1991. None of the subject transactions occurred during 1992. The over-payments claimed represented 22% of the total payments made by the Authority. If either exhibit were substantially correct, the proportion of allegedly fraudulent transactions to total transactions during 1990 and the first half of 1991 must have been very high indeed, although the evidence does not enable one to determine with any accuracy the volume and value of the genuine transactions during this period. The contractors filed cross-claims. for work allegedly performed for the Authority between November 1991 and May 1992 to a value of $537,358. The judge upheld a small part of the Authority's claim in respect of duplicated claims for the same work and judgment was entered in its favour for those claims and interest amounting to approximately $178,000. The order was not taken out, and the precise figure does not appear in the appeal books. The Authority's claims were otherwise dismissed. The contractors called no evidence in answer to the Authority's claims, or to substantiate their own, and judgment was entered for the Authority on the cross-claims. The Authority attempted to prove its case by calling three persons who were formerly employed by the contractors in clerical capacities, the most important being Mrs Page. It also relied on a mass of documents generated by the contractors including dockets and invoices produced from its own custody. Other documents which were tendered, such as the contractors" wage records, plant lists and docket books had been seized from their custody under search warrants issued by the Independent Commission Against Corruption. The trial judge did not accept the substance of the evidence of the former employees, particularly that given by Mrs Page. I agree with Mahoney P that this Court cannot disturb the Judge's findings on the witnesses. The judge then analysed the Authority's claim in Exhibit CC in some detail, and held, for the reasons he then gave, that it could not be accepted. The Authority's claim in Exhibit CC was not pressed in this Court. 10 UNREPORTED JUDGMENTS Exhibit AA, with a few exceptions, purported to detail the claims made and paid in respect of what were alleged to be fictitious machines. The judge rejected the claims in exhibit AA, except those involving duplication. The Authority's claims that the other machines included in this exhibit were fictitious depended on Mrs Page's evidence, or on the fact that the items of the plant in question were not included in the contractors" plant lists seized under search warrants on 12 and 15 November 1991. Two of these were dated 11 November 1991, but the others were undated. The rejection of Mrs Page's evidence significantly undermined the Authority's claims in this exhibit. The contractors" plant lists were not explained by other evidence either from the contractors" records or otherwise. In my judgment these lists on their own provided a dubious foundation for a claim that machines that were not included were not available to the contractor at any time between February 1990 and November 1991. The judge noted that exhibit AA included 13 numbered machines, but that 6 were included in one or other of the plant lists, and 2 more were on one list but had been ruled through which possibly indicated that they had previously been available to the contractors. The claims included in exhibit AA in respect of these 8 machines comprised $615,150 or 35% of the total. The attempt to prove the Authority's claims from the contractor's documents, and by calling former employees of the contractors, substantially broke down for the reasons given by the judge. The Authority did not call any of its officers who had personal knowledge of the work being done by the contractors, or who had any responsibility for ordering or supervising that work. The only witness called who was an officer of the Authority was a Mr Peter Vincent, who had been employed since October 1990 in its Internal Audit and Investigation units. It appears from his evidence that the Authority undertook track repair work by hiring manned plant and equipment from private contractors. Standing tenders for this work were accepted and then availed of as the need arose. Administrative Practice AP 8501 of 21 October 1988 contained the guidelines that were in force at the relevant times. In his affidavit of 26 May 1992 Mr Vincent said (paras 7-8) that before the Authority hired private plant or equipment 'an SRA engineer made an assessment of what plant and equipment were required for a particular site'. After making that assessment the engineer completed a document which sought approval for the hiring of the necessary plant and equipment which was submitted to a staff member with the requisite delegated authority to approve the hire. After approval, a local purchase order was prepared and sent to the contractor. The Authority's system required the contractor to complete a daily hiring docket detailing the hours each item of plant or equipment had been hired during the day. The contractor was required to submit these to the Authority's site supervisor or engineer for his signature. After the site supervisor or engineer had satisfied himself that the contents of the docket were accurate, he signed it, and returned it to the contractor, who then prepared invoices supported by the hire dockets and forwarded them to the regional office of the Authority. An engineer at the divisional engineer'soffice checked the invoices and hire dockets against the local purchase order and certified that the invoice was correct in accordance with s 13 of the Public Finance and Audit Act 1983. The engineer then forwarded the invoices, hire dockets and the local purchase order to the accounts department so that payment could be arranged. \RATE RAIL AUTHORITY OF NEW SOUTH WALES v EARTHLINE CONSTRUCTIONS PTY LTD (Handley JA) The relevant paragraph of AP 8501 was 4.3.3 which provided: Develop your own system (or use a local standard system if your Field Controlling Officer wants it) for keeping accurate details of hours worked, ..., time machine was off-hired, etc so that the invoice can be certified confidently and quickly. Use the contractor's daily work dockets, a diary, the ganger's notebook or other suitable system. 'You must keep these papers for at least 2 years in case the account is questioned. The Authority did not tender any of the documents that were or should have been generated in accordance with its official procedures laid down by AP 8501 and the system described by Mr Vincent. In particular no attempt was made to prove that the required work was not done. In fact Mrs Page said that it was. The judge said (114): The evidence reveals that before work was undertaken at a given site estimates were made by various SRA engineers as to the value of the work to be performed. This means that its extent had to be determined or assessed. One would expect that an undertaking of such magnitude involving, as it did, an upgrading of the safety and security of the State's main northern railway line, would have been the subject of some design and that there would be plans and specifications. It would, in my opinion, be almost unthinkable that this would not be so. No estimates, plans or the like were tendered. However there were clearly construction drawings ... detailed programmes of work, estimates of the amount of work involved at various sites ... regular inspections and monitoring of programmes ... Not infrequently where earthworks are involved a reasonablyprecise estimate of quantities is prepared ... the evidence does reveal that regular inspections were carried out at the various sites by quite senior SRA engineering officers who no doubt would have available to them the plans, estimates and work programmes for the purposes of their inspections and thus be in a position to make a meaningful assessment of the situation as to the amount of work done. ... having regard to the evidence of inspections of the work made by SRA engineers, of the supervision of such work by various employees of the SRA (excluding for present purposes the defendant employees) of various grades in the SRA hierarchy ... it is difficult to accept that claims for so much work would escape detection if none of that work had been done. No attempt was made to prove that the work took longer, cost more, or required more machines than had originally been estimated. It is apparent that at some stage the Authority began to suspect that it had been defrauded by the contractors, but it did not prove what it was that aroused its suspicions, or how they were confirmed. The judge found that the defendants, Messrs Greber, Child and Bell, 'were relatively lowly employees' with the SRA, and that they were subject to direction and control, including supervision by others immediately above them in the hierarchy, and yet others higher again, the former on a continuous basis, and the latter intermittently. A further difficulty with the Authority's case is that many work dockets comprised in the claim in exhibit AA were certified by officers other than the three who were defendants in the proceedings. (AB 103, 105, 107, 157, 160.) The largest single group of claims included within exhibit AA were those relating to alleged sub contractors which were said to be fictitious. A total of 919 transactions were involved to a value of $541,082. The judge pointed out that at least 60% of the work dockets relating to this category had been signed by employees other than Mrs Page after she ceased to be engaged on clerical duties. The judge also pointed out that some 7.5% of the work dockets in this category had been completed by employees of the Authority other than 12 UNREPORTED JUDGMENTS Messrs Greber, Child and Bell. There was no evidence implicating these other Authority employees, or the clerical employees who took over from Mrs Page. A number of duplicated claims for the same machine at the same time were proved, but to these the judge said: The infrequency of duplication, the absence of any pattern, and the space in between the occurrences of duplication suggest that perhaps there may have been a mistake in the recording of the plant number on one of the work dockets. Many of the work dockets in this category have been signed by SRA employees who are not defendants and against whom no allegation of dereliction of duty is made in the pleadings or otherwise. After reviewing a large number of the transactions comprised in exhibit AA, the judge concluded that this claim, except for the duplicated items, had not been established. On an overview of this claim, the Authority acknowledged that work was done to the value of $6,345,990, and asserted that the contractors had been overpaid $1,757,609. On this basis the contractors were paid for doing 28% more work than they really did. The trial judge used somewhat different figures which were incorrect, but the differences are not significant. He concluded: The extent of this disproportion suggests that it is improbable that over claims to such an extent would not be detected by the system .... The Authority did not attempt to prove the total volume and value of transactions certified by each of the three officers during the relevant period. Exhibit AA comprised 1,106 allegedly fraudulent transactions by Greber involving $678,987, 789 by Child involving $460,879, and 219 by Bell involving $148,486. Strangely exhibit CC comprised 1261 such transactions by Greber involving $856,649, 1,297 by Child involving $830,669, and 257 by Bell involving $172,157. Why an examination of the same work dockets should produce such widely different results did not appear. There was no evidence of the number or value of all transactions certified by these officers during the same period. Such evidence would have enabled the Court to determine what proportion of the totals were genuine. This in turn would have enabled the Court to assess the probability that these officers had engaged in fraud to the extent claimed. Some of the claims made by the Authority were, on their face, quite extraordinary. At 3/441 and 443, Mrs Page, in cross-examination said that for a period of 6 weeks during May and June 1990, she had submitted dockets for 10 fictitious machines, 8 of which were claimed to be working on site 824 at Kyogle. There was no evidence to establish the total number of machines at site 824 Kyogle for which the contractors claimed payment, but one wonders how the Authority could have paid for 8 fictitious machines on the one site over a continuous period of 6 weeks. One also wonders how any contractor would attempt to defraud the Authority on such a scale over such a period, and how such a fraud could have possibly escaped detection at the time. The extent to which some of Mrs Page's evidence was broken down in cross-examination may be gauged by comparing paragraph 70 of her affidavit of 14 October 1992 (4/656) with her oral evidence. In paragraph 70 she referred to exhibit DMP 23 which comprised dockets 13383-14000. She then said: I say that at the time I inserted the signature of P Dare on these dockets I was aware that P Dare did not operate any of the machines referred to therein and that the machines were not in operation on those particular sites specified in the dockets. WATE RAIL AUTHORITY OF NEW SOUTH WALES v EARTHLINE CONSTRUCTIONS PTY LTD (Handley JA) In her cross-examination at 2/374 she said: If you go to the exhibit, namely DMP 23 — do you have those? Yes. The first invoice is 10383 (13383). Do you have that? Yes. Once again this was a real machine, is that right? Yes. And it really worked at the Borderloop? Yes. And it really worked at the Borderloop at the times described on the invoices which form exhibit DMP 23; is that right? Yes. What is wrong about it is that Mr Dare was not the operator of that truck. Is that right? He would have occasionally. But he was not the operator of the truck on each occasion where work is described on those dockets; is that right? A. Not this amount of time driving the truck, no. Mrs Page said in her affidavit of 14 October 1992 that while she was at the so-called hospital site at Kyogle (site 832), she prepared plant hire dockets for site 824 Kyogle, the Borderloop, Murwillumbah, Borderloop-Cougal, Loadstone, Paradise Road Algester, Balls Quarry Casino, and Tamrookum. She claimed that many of the dockets she prepared were false, and gave evidence of having received instructions from Mr Phillip Davies for their preparation. It is clear that she had no personal knowledge of the number of machines at work on most of those sites, the identity of their operators, or their hours of work. Another extraordinary fact is that the evidence disclosed that many of the engineering and accounting staff of the Authority involved in these transactions who were not called as witnesses were still employed by the Authority at the time of the trial. The evidence of Mrs Page and the other clerical employees of the contractors was certainly damming on its face, and much of it was not directly challenged in cross-examination. The serious allegations of fraud she made against Mr Phillip Davies, and her evidence about his attempts to suborn her prior to the hearing before the Independent Commission Against Corruption, were not denied. The contractors abandoned cross-claims for $537,358 rather than give evidence. They may have failed to recover judgment for the disputed work in Ex AA had they been forced to sue the Authority for the amount covered by that exhibit. However the Authority had paid for that work. To recover monies it had paid it had to prove that particular payments had been made by mistake, induced by the contractors" fraud, and that the work for which it had paid had not been done. The Authority's case broke down at this point. It accepted that work to the value of $6,345,990 had been done. It had to establish that particular payments were recoverable, but it failed in its proof except for the amount for which it recovered judgment. Mr Gyles QC for the Authority invoked the rule in Jones v Dunkel (1959) 101 CLR 298. The first difficulty is that the Authority failed to call any of its own employees who had, or should have had, knowledge of the facts. The second difficulty is that the Authority failed to make out a prima facie case that particular payments, other than those for which it recovered, had been paid by mistake for work that had not been done. There was evidence which was more than sufficient to excite the suspicion of the Court, but no prima facie case in relation to any OP OP OPOPOPOPO 14 UNREPORTED JUDGMENTS other particular payments. Moreover there was no prima facie case that the contractors had charged the Authority and been paid for more work than they had truly performed so as to entitle it to recover a proportion of its payments on a global basis, assuming that such a course was open to it as a matter of law. In my judgment therefore the appeal fails. However it appeared that they may have been some mistake as to amount in the money judgment entered by the trial judge in favour of the Authority. The convenient course is to formally set that judgment aside, and return the proceedings to the Division to enable judgment to be entered for the correct amount. The following orders should be made: (1) Subject to the variation herein after appearing, appeal dismissed with costs. (2) The existing Mareva injunctions in favour of the Authority are dissolved. (3) The money judgment in favour of the Authority entered by the trial judge is set aside. (4) The proceedings are returned to the Commercial Division for the entry of judgment in favour of the Authority for the correct amount and the making of any orders consequential upon the discharge of these injunctions or upon the earlier discharge of other injunctions granted by that Division. (5) The costs of any further proceedings in the Commercial Division are to abide the further order of that Division. _ . Appeal dismissed with costs. 2. The existing Mareva injunctions in favour of the Authority are dissolved. 3. The money judgment in favour of the Authority entered by the trial judge is set aside. 4. The proceedings are returned to the Commerical Division for the entry of judgment in favour of the Authority for the correct amount and the making of any orders consequential upon the discharge of these injunctions or upon the earlier discharge of other injunctions granted by that Division. 5. The costs of any further proceedings in the Commercial Division are to abide the further order of that Division. Counsel for the appellant: RV GYLES QC/AS MARTIN Solicitors for the appellant: CLAYTON UTZ Counsel for the respondent (1): Submitting appearance Counsel for the respondent (2)-(5): RS TONER Solicitors for the respondent (2)-(5): CRICHTON BROWNE-CROSSLEY