Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Bale & Anor v Mills [2011] NSWCA 226 Hearing dates: 3 June 2011 Decision date: 04 August 2011 Before: Allsop P at [1]; Giles JA at [1]; Tobias AJA at [1] Decision: 1. Appeal allowed. 2. Orders of the District Court made on 4 August and 3 September 2010 be set aside. 3. There be a new trial. 4. The costs of the District Court proceedings to date abide the outcome of the new trial and be dealt with by the District Court. 5. The respondent pay the appellants' costs of the appeal and have a certificate under the Suitors' Fund Act 1951 (NSW), if otherwise qualified. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: APPEAL - civil - fact-finding based on credibility - breach of rule in Browne v Dunn - failure to object to breach of rule does not amount to waiver of it - primary judge erred in assessment of factors fundamental to adverse finding of credit of witness. EVIDENCE - proof - inferences - allegations of dishonesty - need to prove allegations to Briginshaw standard - Evidence Act 1995 (NSW), s 140 considered - inference of dishonesty or deliberate concealment of error not able to be drawn to Briginshaw standard in circumstances where witness not cross-examined on issue. PROCEDURE - Court of Appeal - filing of supplementary material after hearing beyond terms of leave - Court entitled to disregard supplementary material. Legislation Cited: Evidence Act 1995 (NSW), s 140 Fair Trading Act 1987 (NSW), s 42 Suitors' Fund Act 1951 (NSW) Supreme Court Act 1970 (NSW), s 75A Cases Cited: Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1 Anikin v Sierra [2004] HCA 64; 79 ALJR 452 Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336 Browne v Dunn (1893) 6 R 67 Bulstrode v Trimble [1970] VR 840 Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; 147 CLR 246 Chapman v Caska [2005] NSWCA 113 Copmanhurst Shire Council v Watt [2005] NSWCA 245; 140 LGERA 333 Dwyer v Commonwealth of Australia (1995) 31 ATR 48 Firth v Sutton [2010] NSWCA 90 Firth v Sutton (No 2) [2010] NSWCA 109 Fox v Percy [2003] HCA 22; 214 CLR 118 Gordon Martin Pty Ltd v State Rail Authority of New South Wales [2009] NSWCA 287 In the matter of an application by the Chief Commissioner of Police (Vic) [2005] HCA 18; 79 ALJR 881 Jackson v Conway [2000] FCA 1530 Kirwan v Cresvale Far East Ltd (In liq) [2002] NSWCA 395; 44 ACSR 21 Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; 276 ALR 375 Lujans v Yarrabee Coal Company Pty Ltd [2008] HCA 51; 249 ALR 663 R v Theophanous [2003] VSCA 99; 141 A Crim R 216 R v Zhan Yu Zhong [2003] VSCA 56; 139 A Crim R 220 Reid v Kerr (1974) 9 SASR 367 Scalise v Bezzina [2003] NSWCA 362 Seymour v Australian Broadcasting Commission (1977) 19 NSWLR 219 Singh v Secretary, Department of Employment and Workplace Relations [2009] FCAFC 59 Vakauta v Kelly [1989] HCA 44; 167 CLR 568 Willis v Health Communications Network Ltd [2007] NSWCA 313; 167 IR 425 Category: Principal judgment Parties: Peter Earle Bale & George Paul Boshev (Appellants) Howard Mills (Respondent) Representation: N C Hutley SC; M Dicker (Appellants) G R Petty SC; P R Cummings (Respondent) Yeldham Price O'Brien Lusk (Appellants) Thomas Mitchell (Respondent) File Number(s): 2010/282628 Decision under appeal Jurisdiction: 9101 Citation: Mills v Bale & Anor [2010] NSWDC 162 Date of Decision: 2010-08-04 00:00:00 Before: Levy SC DCJ File Number(s): 1839 of 2009 Judgment 1THE COURT : On 8 November 2000, the respondent, Mr Howard Mills, sustained injuries whilst employed as a farmhand by M R Tremayne Pty Ltd, the owner of a farm operated by his brother. On 11 April 2001, he retained the appellants, who are the principals of Bale Boshev Lawyers to act for him against his employer in connection with a common law workplace injury claim for damages. The appellants assigned an employed solicitor, Mr Gregory Schipp, of their Hamilton office to conduct the respondent's case (the principal proceedings). On 1 August 2002, those proceedings resolved by way of a compromise settlement that was effected during negotiations that took place before an arbitration hearing which was due to commence on that day. 2According to the findings of the primary judge, the respondent had an expectation that the monetary value of his damages claim lay in the range of $350,000 to $450,000 clear of workers' compensation payments, together with costs. His claim was settled on 1 August 2002 for $175,000 inclusive of costs of $35,000, but clear of prior workers' compensation payments. The ultimate amount received by the respondent from the settlement was approximately $118,000 following reimbursement of monies to Centrelink and the Health Insurance Commission. 3On 31 July 2008, being one day prior to the expiry of the relevant limitation period, the respondent instituted proceedings against the appellants claiming damages for negligence, breach of contract and, by an amendment to the original statement of claim, misleading or deceptive conduct pursuant to s 42 of the Fair Trading Act 1987 (NSW). Those proceedings were heard on 8, 9, 10 and 11 September 2009 and were then adjourned for submissions, both written and oral, which were made on 24 September 2009. On 4 August 2010, the primary judge delivered his decision in which he found in favour of the respondent and entered a verdict and judgment in his favour in the sum of $703,149.28 together with costs: Mills v Bale & Anor [2010] NSWDC 162. The amount of the verdict was reduced to $666,128.93 in a further decision of his Honour delivered on 3 September 2010: Mills v Bale & Anor (No 2) [2010] NSWDC 189. It is from his Honour's orders that the appellants now appeal to this Court. The amended statement of claim 4By his amended statement of claim (ASC), the respondent commenced by pleading the facts relevant to the principal proceedings including the fact that they were listed for an arbitration hearing on 1 August 2002. In para 8, the respondent alleged that on that date, Bale Boshev Lawyers, by their servants and agents, advised the respondent that the range of damages he was likely to receive, exclusive of out of pocket expenses, a Fox v Wood component and costs, was between $340,190 and $465,283. It should be noted that those figures and the break down of them into the various heads of damage were sourced from notes made by Mr Peter Kirby of counsel, who had been retained by Mr Schipp to appear at the arbitration hearing on behalf of the respondent. 5Paragraph 10 of the ASC alleged that in advising the respondent to accept the insurer's settlement offer of $175,000, the appellants' agent (Mr Schipp) stated that the solicitor for the respondent's employer (or its insurer) had video evidence that was very detrimental to the proceedings and if he, the respondent, did not accept the settlement offer, it was likely he would be unsuccessful (the video representation). 6We interpolate here that although the pleading refers to " detrimental " video evidence, the respondent's evidence, which the primary judge accepted, was that Mr Schipp had told him that the employer's legal representatives in the principal proceedings had " damning video evidence " of the respondent's activities which could cause the respondent to lose the proceedings and get nothing. It was common ground that there was no such video evidence and that the insurer's solicitor had not informed Mr Schipp that such evidence existed. 7Paragraph 12 of the ASC then alleged that Mr Schipp represented to the respondent that if he accepted the settlement offer, he would only be precluded from obtaining Centrelink benefits for a period of 52 weeks from 1 August 2002 (the Centrelink representation), whereas the actual preclusion period was from 1 August 2002 until 10 October 2004, being a period of 115 weeks. 8There was a further representation pleaded alleging that if the respondent was unsuccessful in the proceedings he would not only be liable to pay the employer's costs, but also unable to receive any further workers' compensation benefits. It was also alleged that Mr Schipp had failed to advise the respondent that he would be able to appeal to a judge of the District Court in the event he was dissatisfied with the determination of the arbitration hearing. 9Each of the alleged representations (as well as the alleged failure to advise) was said to have been made negligently and in breach of contract. The video representation was also alleged to be false and thereby misleading or deceptive within the meaning of s 42 of the Fair Trading Act . It may be noted that notwithstanding a deal of reliance placed upon it by his Honour when considering the credibility of Mr Schipp, there was no allegation in the ASC that Mr Schipp was negligent in his preparation of the respondent's case for the purpose of the arbitration hearing. The pivotal issue 10At [8] of his reasons, his Honour noted a submission of trial counsel for the appellants that the respondent's case turned on his allegation that Mr Schipp had a conversation with him about video evidence to the effect that he had been told by the insurer's legal representative that they had " damning video evidence " against the respondent. His Honour then noted that the resolution of this " pivotal issue " was dependent upon credit-based findings that arose in a context that also required the resolution of a number of other issues calling for decision. Notwithstanding that the nature of the case, according to his Honour, necessarily gave rise to a multiplicity of issues, at [23] he accepted that the determination of the " pivotal issue " depended upon the credibility of the testimony that had been given and, in particular, that of the respondent and Mr Schipp. Thus, the central issue was whether in fact Mr Schipp represented to the respondent that he had been told by the insurer's solicitor that they had " damning video evidence " of the respondent's activities which could cause him to lose the principal proceedings and receive nothing. It was common ground that if that representation was made, it was untrue. 11Although the credibility of the respondent was seriously in issue, nevertheless the primary judge (at [334]) rejected the submission that the respondent should not be believed as to his version of the events of 1 August 2002. His Honour found the evidence of Mr Schipp to be an unreliable source for discerning the events of that day, given the view that he had taken with respect to the credibility of his testimony. In particular, his Honour rejected (at [335]) Mr Schipp's evidence based not on his recollection (for he maintained that he had none) but on what he asserted was his " usual practice " because, so his Honour found, Mr Schipp did not follow what was the usual practice for solicitors, namely, to take notes of significant events. His Honour therefore considered (at [336]) that there was no evidence from which it could reasonably be inferred that Mr Schipp adhered to his usual practice on that day. As a consequence, he preferred the evidence of the respondent where it differed from that of Mr Schipp " whose credit had been significantly impugned in these proceedings " (at [338]). 12From the foregoing and what appears below, the following represents a summary of his Honour's reasoning process with respect to Mr Schipp's credit. First, Mr Schipp maintained that except with respect to one irrelevant aspect, he had no recollection of the respondent, his case or the events of 1 August 2002. Second, Mr Schipp relied on his " usual practice " as to what, if anything, he would have told a client such as the respondent with regard to video evidence obtained by surveillance of his client's activities. Third, in accordance with that practice he would never have made the video representation when he had not been informed by the insurer's legal representative that it was in possession of such evidence. Fourth, he would therefore not have made the video representation. Fifth, Mr Schipp did not, however, follow his usual practice on 1 August 2002 (and therefore made the video representation as sworn to by the respondent) because he did not take notes of " significant events " (presumably being the events of 1 August 2002) and because his credit had been significantly impugned in the manner referred to below. 13It might be observed at this point that if Mr Schipp had not made the video representation, one would not have expected him to have made a file note about something that did not occur as distinct from something that did. His Honour's finding concerning the failure of Mr Schipp to take notes of " significant events " as adversely affecting his credit seems to assume that Mr Schipp made the video representation and, therefore, should have made a note to the effect that he had been told by the insurer's legal representative that it had " damning video evidence " of the respondent's activities. If Mr Schipp had made that representation knowing it to be false, the obvious way of covering up his lie would have been to make an, albeit false, contemporaneous note of what he had been told. The absence of such a note, if anything, supports Mr Schipp's denial that he made the representation, not the reverse. 14However, the respondent's allegation at trial concerning the making of file notes and adopted by the primary judge (at [381]) seems to have centred on the making of notes of instructions received from the respondent referable to his response to offers from the insurer and to the making of counter-offers in response to those offers. If this be so, it is a little difficult to see why the failure to make such notes logically supports a finding that Mr Schipp must have departed from his " usual practice " and made the video representation. The relevant evidence of Mr Schipp with regard to the issue of his credibility 15Mr Schipp was admitted to practice as a solicitor in 1994 and joined the appellants' firm in 1996. As at August 2002, he was an employed solicitor responsible for more than approximately 300 active files, of which approximately 50 involved District Court proceedings (the balance, presumably, being workers' compensation matters). 16At [116] of his reasons, the primary judge recorded that Mr Schipp had given evidence that the only thing about the respondent's case he could remember was the circumstances of the accident which he regarded as a little unusual. Apart from that, he stated that he did not remember the events of 1 August 2002 at all. In particular, his Honour observed (at [117]) that Mr Schipp stated that he had no recollection of any discussion about video evidence on that day. He denied that he would have suggested to a client that the defendant had video surveillance film of him if the defendant's representatives had made no reference to such a film. He was adamant that he certainly would not refer to video evidence unless the defendant had told him it had a video of his client or the client had himself raised the issue with him. Critically, his evidence was as follows: "Q. If a defendant's solicitor or counsel had not made any reference to you about a surveillance film in relation to the plaintiff, are there any circumstances in 2002 where you would have suggested to a plaintiff that a defendant did have surveillance film on the plaintiff? A. No, definitely not. ... Q. Did you have a practice at the time of mentioning video evidence if a defendant hadn't actually mentioned it to you? A. I had a practice of mentioning it to my client if it was that the client raised it with me." Furthermore, Mr Schipp stated that he would never have used the words, " They might have some damning video of you ". 17Essentially because of his lack of recollection of the events of 1 August 2002 when asked about them in 2009, some seven years later, Mr Schipp's denial of having made the video representation to the respondent was based, as noted at [12] above, upon evidence of his " usual practice ". 18Mr Schipp's evidence in this regard was the subject of vigorous challenge exemplified by the following exchange recorded by the primary judge at [165]: "Q. Mr Schipp I've put this to you in one sense already, I'll put it again. Another possibility is you simply made up the reference to the detrimental video evidence in a conversation with Mr Mills to get him to settle the case? A. Definitely not. Q. In fact that would be pretty much in accordance with your practice in 2002 wouldn't it? A. No." 19Mr Schipp was also challenged with respect to the Centrelink representation insofar as he had erroneously calculated that the preclusion period would only be 52 weeks. The cross-examiner established that he had wrongly estimated that period at 52 weeks. At Black 264X-267E, he was cross-examined on his method of calculating a preclusion period of 52 weeks and recorded by him at Blue 1/570. He was further cross-examined on the issue at Black 274K-278J in which, again, an attack was levelled at his calculation of 52 weeks. That was the extent of the cross-examination of Mr Schipp with respect to the so-called preclusion period, a matter to which we shall return. The appellants' Grounds of Appeal 20The appellants' amended notice of appeal contained 14 grounds. Those relevant to the disposition of this appeal are Grounds 3 and 4, for if they succeed then the success or otherwise of the other grounds does not affect the outcome of the appeal. Grounds 13 and 14 raise issues of law relevant to a new trial. Expression of view on them would be obiter dicta . The matters are dealt with in Firth v Sutton [2010] NSWCA 90 and Firth v Sutton (No 2) [2010] NSWCA 109 and no advantage would be gained by revisiting earlier unanimous judgments of this Court by way of obiter statements. 21Grounds 3 and 4 are in the following terms: "3 The Trial Judge erred in finding that Mr Schipp had an actual recollection of the settlement negotiations based on an alleged 'unguarded and candid moment' of evidence in the course of his cross-examination which impacted upon his credit, as the alleged evidence was, on a fair reading of the transcript, not evidence of an actual recollection but evidence of Mr Schipp's usual practice in settlement negotiations in personal injury cases (Judgment paragraphs 289-293). 4 The Trial Judge erred in making his findings in relation to Mr Schipp concerning the Centrelink preclusion period issue as: (a) the Trial Judge concluded that Mr Schipp had deliberately concealed the Centrelink preclusion period issue in circumstances where such allegation had not, as a matter of fairness, been properly put to Mr Schipp either in cross-examination or by the Trial Judge (Judgment paragraphs 277-284); (b) the Trial Judge erroneously concluded that the failure to alert the Plaintiff of the error in the Centrelink preclusion period amounted to a breach of fiduciary duty (Judgment paragraphs 283-285)." 22It is appropriate to deal with Ground 4 before Ground 3 as the primary judge dealt with the Centrelink representation referred to in Ground 4 as the first " fundamental matter " affecting Mr Schipp's credit and with the issue raised by Ground 3 as the second " fundamental matter " affecting his credit. The primary judge's findings with respect to Mr Schipp's credibility based on the Centrelink representation 23At [268], the primary judge noted the submission of senior counsel for the respondent (who did not appear on the appeal) to the effect that Mr Schipp's conduct in the case fell far short of the professional obligations he owed to the respondent. In view of the gravity of the allegations relied upon to support that submission (being allegations made against a solicitor in connection with his professional conduct that went to his honesty), both senior counsel and his Honour acknowledged that it was necessary to prove the matters alleged to a higher degree of satisfaction on the balance of probabilities in accordance with the statement of Dixon J in Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336 at 361-362. We have referred to Mr Schipp's position as a solicitor. At the end of these reasons we make clear that we are not to be understood as placing Mr Schipp in some special or protected position by reason of his profession. 24At [269], his Honour considered it appropriate to set out the detail of the matters raised in the submissions made by senior counsel for the respondent concerning the credibility of Mr Schipp's testimony. It is instructive to recite these verbatim: "(a) On 1 August 2002, Mr Schipp was a solicitor with an 'over-committed' workload who was making and responding to offers on behalf of a client without the client's instructions authorising him to do so, in circumstances where: (i) he 'flagrantly' departed from the standard expectation that he keep file notes of instructions received, as well as of offers made and received; (ii) [he] preferred the interests of the defendants, his employers, to the interests of the plaintiff in effecting a settlement of the plaintiff's case because, by reason of the terms of the costs agreement between the firm and the plaintiff, there was no financial benefit to the present defendants to continue from that point and take the plaintiff's case to a trial, being a rehearing in court, after an arbitration hearing; (iii) he deliberately attempted to get the plaintiff to settle the principal proceedings by saying 'something about video evidence in terms of calculated ambiguity intending to give Mr Mills the understanding that the defendant did have such evidence'; (iv) he made a mathematical error in arriving at his advice to the plaintiff as to the extent of the period during which, as a result of the settlement, the plaintiff would be precluded from receiving social security benefits from Centrelink. (b) Mr Schipp was 'by no means lacking in cunning' as is apparent from the Centrelink issues, as follows : (i) Mr Schipp had advised the plaintiff that the preclusion period for receipt of benefits would be 52 weeks, which was a calculation that turned out to be erroneous; (ii) knowing he had made an error in calculating the preclusion period for social security benefits, he 'consciously decided' not to advise the plaintiff of the fact that Centrelink had altered the estimated preclusion period from his own calculated date of 1 August 2003, to the Centrelink calculated date of 15 October 2004. This was in circumstances where he had not provided the plaintiff with a copy of the correspondence in which his error had been revealed, but instead he concealed his error." (emphasis in original) 25It is noteworthy that the video representation attributed to Mr Schipp in para (a)(iii) above is in significantly different terms to that ultimately accepted by the primary judge based upon the respondent's evidence. 26With respect to the submissions in para (b)(ii) which relate to the Centrelink representation, it is first necessary to refer to the evidence relevant to that submission. 27On 1 August 2002, the respondent signed a document referred to as an Authority to Settle. Paragraph 8 of that document relevantly provided as follows: "I note I have been advised by my solicitors that there will ... be a charge on my settlement by the Department of Social Security which is estimated to be $12-13,000, based on a benefit of $160/week. I note I have been advised by my solicitors there will ... be a preclusion period for which I am unable to obtain Social Security benefits for approximately 52 weeks from today." 28By letter dated 23 August 2002 (the Centrelink letter), Centrelink wrote to the appellants referring to two relevant matters. The first was that it had calculated that the amount of Centrelink payments to be repaid by the respondent was $7,652.03. The second was that the preclusion period was to commence on 22 December 2001 and end on 15 October 2004. This period was considerably in excess of the 52 weeks erroneously calculated by Mr Schipp and recorded by him at the end of the Authority to Settle signed by the respondent on 1 August 2002. 29On 27 August 2002 Mr Schipp wrote to the respondent a letter (the 27 August letter) which apparently crossed with Centrelink's letter, in which he stated the following: "We refer to the above matter and confirm our attendance upon you in the District Court on 1 August 2002. We note on that date this matter settled in accordance with your instructions by payment to you of $130,000 (less Social Security - estimated to be between $12,000 and $13,000)." This estimate accorded with that recorded by Mr Schipp in the first part of para 8 of the Authority to Settle. 30After receipt of Centrelink's letter of 23 August 2002, which Mr Schipp conceded he would have read, he sent to the respondent a letter dated 10 September 2002 (the 10 September letter) which was relevantly in the following terms: "RE: YOUR CLAIM FOR DAMAGES We refer to settlement of your matter and note collection by you from our office of part payment of your settlement monies in the sum of $114,847.97. The writer confirms that amount is calculated as follows:- To net settlement in your favour $140,000.00 Less Centrelink payback $7,652.03 Less amount paid to Health Insurance Commission (Medicare) $17,500.00 Net settlement monies paid to you $114,847.97 You will note from the above the amount has been repaid to Centrelink. This was somewhat less than estimated by the writer at the time of your settlement which is obviously a pleasing result for you." 31It will be apparent from the 10 September letter that no reference was made by Mr Schipp to the preclusion period identified in the Centrelink letter. 32The foregoing resulted in then senior counsel for the respondent making the following written submissions to the primary judge: "122. Following the resolution of the proceedings, Mr. Schipp was provided with correspondence from Centrelink dated 23 August 2002 (page 6 of Applicant's bundle) which stated that the preclusion period was from 22 December 2001 to 15 October 2004. Amazingly, Mr. Schipp did not provide a copy of this correspondence to the plaintiff or advise the plaintiff that there was an error in his initial calculations. 123. The significance of Mr. Schipp in failing to do so must be considered in the context of the defendant's correspondence dated 10 September 2002 wherein Mr. Schipp stated as follows: 'You will note that the above amount has been repaid to Centrelink. This was somewhat less than estimated by the writer at the time of settlement which is obviously a pleasing result for you'. 124. As the court is aware, Centrelink subsequently raised a debt for the difference between the amount estimated by Mr. Schipp and the amount initially recovered. 125. However, the correspondence from Mr. Schipp dated 10 September 2002 shows that he has specifically considered the correspondence from Centrelink dated 23 August 2002 and has consciously determined not to advise the plaintiff that the preclusion period was 15 October 2004 as opposed to 1 August 2003. 126. There can be no rational explanation for Mr. Schipp's conduct. He cannot state that he did not peruse the correspondence from Centrelink dated 23 August 2002 as it was necessary for him to do so to advise the plaintiff of the misconceived 'pleasing result'. 127. It would usually be difficult to state that a solicitor of the Supreme Court of NSW would consciously mislead a client, however, there can be no other determination in this instance. 128. On 1 August 2002, Mr. Schipp advised the plaintiff that he would be unable to receive Centrelink benefits until 1 August 2003, instead of 15 October 2004. Even though he was mistaken, he became aware of his error by correspondence from Centrelink dated 23 August 2002 and instead of advising the plaintiff of his error, he advised the plaintiff he had obtained a 'pleasing result'. 129. This representation was of critical significance as the plaintiff necessarily applied his settlement monies to his financial situation on the basis that he was entitled to Centrelink benefits from 1 August 2003. For Mr. Schipp not to provide a copy of the correspondence from Centrelink dated 23 August 2002 to the plaintiff or advise the plaintiff that he had to be significantly more careful with his settlement monies, such that, he could not obtain Centrelink benefits until 15 October 2004 shows either a complete disregard for the plaintiff or an obvious attempt by Mr. Schipp to conceal his error. 130. The benefit to the court in relation to the 'Centrelink representation' is that it assists the court in making a determination on credit between the explicit evidence of the plaintiff as compared to the evidence as to the 'practice' of Mr. Schipp as to what occurred on 1 August 2002. 131. Such objective evidence shows that Mr. Schipp had no concern as to his fiduciary duty to the plaintiff following 1 August 2002 and this may be utilised in determining the extent of his concern for the plaintiff on 1 August 2002." 33The primary judge dealt with these submissions at [275]-[283] of his reasons. It is appropriate to set out those paragraphs in full of which [278]-[283] are of particular significance: "275. I consider that the first fundamental matter that adversely affects the credit of Mr Schipp as a witness is that of his dealings with his client. In my view, he lacked the candour and probity expected of a solicitor who had made an error in his professional dealings with his client's affairs, namely with regard to the Centrelink issues. 276. In this regard, there is no doubt that Mr Schipp had made an error in calculating the applicable preclusion period during which the plaintiff would be unable to obtain social security payments from Centrelink. The error in question occurred in the calculations he made on 1 August 2002, in which he estimated the preclusion period to be 52 weeks. Any legal practitioner practising in the field of personal injury litigation ought to have known that according to the applicable formula for calculating preclusion periods, the relevant calculation was in fact longer than 52 weeks, as turned out to be the case. 277. The fact that Mr Schipp made such an error is not the relevant issue that affects his credit. No-one in professional life is immune from making unintended errors. On the evidence, I am satisfied that the calculation error made by Mr Schipp was unintentional on his part. Whilst the error involved inconvenience and financial disadvantage to the plaintiff, of itself it would not support an adverse credit finding and of itself, it would not necessarily support a finding that there was a relevant breach of duty of care. 278. In my view, the true significance of the Centrelink preclusion period issue, so far as the credibility of Mr Schipp is concerned, is to do with the manner in which he dealt with his error once he had discovered that it had been made, and that it would operate to the financial disadvantage of the plaintiff. 279. As a solicitor with fiduciary obligations to the plaintiff, including the duty of candour, I consider that Mr Schipp was obliged to inform the plaintiff not only of the fact that a calculation error had occurred at the time that settlement advice had been given to the plaintiff, but to also inform him of the effect of the error, namely that the plaintiff would be precluded from receiving Centrelink benefits for more than twice as long as had earlier been reckoned at the time settlement advice had been given to him. In this regard, I consider that Mr Schipp did not discharge that duty in the manner expected of him as the solicitor acting in the plaintiff's best interests. 280. Instead, Mr Schipp allowed the record of his correspondence with the plaintiff to be left in a misleading state which concealed his error. I consider that he did so deliberately, as is evident from the documents. 281. Following the settlement, Mr Schipp was provided with correspondence dated 23 August 2003 from Centrelink stating that the preclusion period would be from 22 December 2001 to 15 October 2004, and not 52 weeks from 1 August 2002 as was originally reckoned by Mr Schipp. Surprisingly, Mr Schipp did not provide a copy of this correspondence to the plaintiff for his information and financial records, nor did he advise the plaintiff of the fact of the error, which by then must have been clearly evident to Mr Schipp. Instead, on 10 September 2002, Mr Schipp wrote to the plaintiff to advise that there was a less than estimated Centrelink repayment without mention of the altered preclusion period. His characterisation of this was in the following terms: '... You will note that the above amount has been repaid to Centrelink. This was somewhat less than estimated by the writer at the time of settlement which is obviously a pleasing result for you.' 282. The correspondence dated 10 September 2002 from Mr Schipp to the plaintiff, which in my view clearly shows that Mr Schipp gave consideration to the Centrelink correspondence dated 23 August 2002, leads me to the compelling inference that Mr Schipp not only made a decision not to advise the plaintiff that the preclusion period would continue until 15 October 2004, but chose to misleadingly describe the outcome of the Centrelink correspondence as a 'pleasing result'. 283. I am comfortably satisfied on the balance of probabilities that the foregoing matters concerning Centrelink issues objectively reveal that Mr Schipp failed in his fiduciary obligations to his client, and that he did so deliberately in order to conceal his error, as his correspondence to the plaintiff tellingly demonstrates. In this regard, I accept the submission made on behalf of the plaintiff that a necessary consequence of these matters is a finding that Mr Schipp's credit and probity as a solicitor must in this instance be regarded as having been successfully impugned." (emphasis in original) 34At [382] the primary judge repeated his finding that Mr Schipp "... was prepared to conceal from his client the true significance of the revised Centrelink calculations" as to the preclusion period. His Honour observed that it was that finding which influenced his view of Mr Schipp's conduct with respect to the settlement negotiations and, implicitly, his making of the video representation in order to force the respondent into accepting the insurer's final offer of $175,000. 35The finding of the Centrelink representation was thus the foundation for a number of other adverse findings with respect to Mr Schipp's credibility such as his Honour's finding, also at [382], that he would also have been capable of resorting to conducting settlement negotiations on the respondent's behalf without first obtaining his instructions as to the amounts of counter-offers: see as a further example at [383]. 36The Centrelink representation finding also influenced what the primary judge referred to as the " next fundamental matter " (his Honour's emphasis) that affected Mr Schipp's credit. At [284]-[285], he observed: "284. The next fundamental matter that affects the credit of Mr Schipp is the consequence of the above finding. Being satisfied that Mr Schipp's conduct concerning his concealment of the Centrelink error was deliberate , and carried out from a position of advantage over his lay client who was in a position of vulnerability relative to Mr Schipp, it remains to consider the motivation behind Mr Schipp's conduct in other respects. 285. On behalf of the plaintiff it was submitted that Mr Schipp displayed cunning in his dealings with the plaintiff. In my view, the findings I have made demonstrate that Mr Schipp had the capacity to deceive his client on a fiduciary issue, which required cunning , and that he exercised that capacity in the circumstances of the plaintiff's case. In that sense, he did display cunning. In my view, this was also evident from an aspect of his oral evidence." (emphasis added) The credibility findings of the primary judge with respect to the Centrelink representation are fundamentally flawed 37The effect of the foregoing findings of his Honour was that he found, as " the first fundamental matter " that had adversely affected the credit of Mr Schipp as a witness and his probity as a solicitor, that he had deliberately determined not to advise the respondent in the 10 September letter that the preclusion period would continue until 15 October 2004; that he misleadingly described the outcome of the Centrelink correspondence as a " pleasing result " (even though the 10 September letter did not refer to the Centrelink letter); that he deliberately left his correspondence with the respondent in a misleading state in order to conceal his error as to the calculation of the preclusion period; and, accordingly, his credit and probity as a solicitor had been successfully impugned. 38These were devastating findings, because, if accepted, they involved a finding of professional misconduct based on conscious dishonesty for relevant personal advantage on Mr Schipp's part. They were findings which his Honour considered " fundamental " to his assessment of Mr Schipp's credibility, especially given that at [274] he had determined that he would not make any adverse credit finding concerning Mr Schipp based on an assessment of his conduct or demeanour in the witness box. His findings were therefore based, he said, upon his analysis of the evidence itself which, relevantly, he confined (at [280]) to the documentary evidence which we have recorded above. Breach of the rule in Browne v Dunn 39The flaw in the findings flows from the fact that Mr Schipp was not cross-examined with respect to either the Centrelink letter or the 10 September letter. Neither of those letters was referred to at all in senior counsel's cross-examination of him. He was therefore given no opportunity to explain whether he appreciated the part of the Centrelink letter that described the true preclusion period; whether he appreciated the significance of the difference between his and Centrelink's calculation of that period; whether he appreciated that the 10 September letter was inadequate and/or misleading; why he did not draw the matter to the respondent's attention; and whether he intentionally misled his client as to the true preclusion period as he was embarrassed by his error in calculating that period. 40It follows that no foundation was laid which was capable of supporting senior counsel's submission that Mr Schipp deliberately wrote the 10 September letter in order consciously to mislead his client and so conceal his error in calculating the preclusion period. 41In oral submissions on the appeal, senior counsel for the respondent (who did not appear at the trial) conceded that paras 126-131 of the submissions of trial senior counsel which we have recorded at [32] above should not have been made without giving Mr Schipp the opportunity to respond to the allegations in question. That concession was properly made. Not only should senior counsel not have made them, but also the primary judge should not have accepted them. 42The failure of senior counsel for the respondent to cross-examine Mr Schipp with respect to the matters referred to brings in to play the so-called rule in Browne v Dunn (1893) 6 R 67 to the effect, relevantly, that unless notice has previously clearly been given to a witness of the cross-examiner's intentions to rely upon matters by putting them to the witness, the cross-examiner cannot rely upon those matters in support of his case especially where that case otherwise relies upon inferences to be drawn from other evidence in the proceedings. Lord Herschell LC at 70-71 articulated the rule in terms which resonate with the present case: "... I cannot help saying that it seems to me to be absolutely essential to the proper conduct of a cause, where it is intended to suggest that a witness is not speaking the truth on a particular point, to direct his attention to the fact by some questions put in cross-examination showing that that imputation is intended to be made, and not to take his evidence and pass it by as a matter altogether unchallenged, and then, when it is impossible for him to explain, as perhaps he might have been able to do if such questions had been put to him, the circumstances which it is suggested indicate that the story he tells ought not to be believed, to argue that he is a witness unworthy of credit. My Lords, I have always understood that if you intend to impeach a witness you are bound, whilst he is in the box, to give him an opportunity of making any explanation which is open to him; and, as it seems to me, that is not only a rule of professional practice in the conduct of a case, but is essential to fair play and fair dealing with witnesses. ... All I am saying is that it will not do to impeach the credibility of a witness upon a matter on which he has not had any opportunity of giving an explanation by reason of there having been no suggestion whatever in the course of the case that his story is not accepted." 43The rule has been the subject of judicial comment in many cases and has been the subject of different formulations. Relevantly, there is a consensus that the rule is one of practice or procedure based upon general principles of fairness, designed to achieve not only fairness to a witness, but also a fair trial between the parties: Bulstrode v Trimble [1970] VR 840 at 846; see generally Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1 at 16-26 where Hunt J discussed the rule in some detail. 44Of particular relevance to the circumstances of the present case is the following statement by Wells J in Reid v Kerr (1974) 9 SASR 367 at 374 where his Honour observed: "It has always seemed to me that if some kind of imputation is to be made against a witness, then, at some stage - ultimately - the precise nature of that imputation should be made clear to the witness so that he is given an opportunity to meet it and, if he can, to explain it or destroy it ... I am well aware that there are more ways of taking a fort than by frontal attack, but I hold it to be a fundamental principle that, when all arts and devices of cross-examination have been exhausted for the purpose of testing whether a particular witness merits adverse criticism, then, at some stage, and in some manner, he should be given the opportunity of meeting the implication and answering it." 45Again, in Seymour v Australian Broadcasting Commission (1977) 19 NSWLR 219 it was accepted by Glass JA (with whom Reynolds JA agreed) that Browne v Dunn expresses a rule of professional practice as well as a rule of conduct which was essential to fair play at the trial and to fair dealing with parties. His Honour observed (at 224): "If counsel proposes to submit that a witness's evidence should not be accepted or that a particular construction should be placed on his conduct, the witness should be allowed an opportunity to deal with the suggestion." 46In Copmanhurst Shire Council v Watt [2005] NSWCA 245; 140 LGERA 333 at [45] Giles JA (which whom Tobias JA and Brownie AJA agreed) also noted that the rule is one of practice with the consequence that a failure to comply with it might bring unfairness and the judge has a discretion as to how best to remedy that unfairness. At [46], his Honour noted that a judge's discretionary armoury included precluding the party in default from submitting that the witness' evidence should not be accepted. 47An overview of the rule is to be found in the reasons of Mason P (with whom Santow JA and Brownie AJA agreed) in Scalise v Bezzina [2003] NSWCA 362. At [96] the President noted that failure to comply with the rule may unfairly have resulted in a witness having lost the opportunity to elucidate or explain the matter upon which he or she was not cross-examined. 48At [97] the President noted that the rule is not a preclusive rule of evidence, but that if the rule has been offended, unfairness may result and the judge has a discretion as to how best to remedy that unfairness so that the trial does not miscarry, including permitting a witness to be recalled or precluding the party in default from addressing upon a particular subject upon which the relevant witness was not cross-examined. 49In response to the proposition that it was not open to the primary judge to adopt the submissions made on behalf of the respondent with respect to the Centrelink representation which we have recorded at [32] above, it was submitted on the hearing of the appeal that in the appellants' written submissions at trial in reply to those of the respondent, no question of the failure to comply with the rule in Browne v Dunn had been raised. On the contrary, the appellants' counsel engaged with those submissions in the following terms: "50. In relation to paragraph 127 of the Plaintiff's submissions, it is submitted that this is a highly serious allegation which could only be established if evidence was accepted to the Briginshaw standard. 51. In relation to paragraphs 128-130 of the Plaintiff's submissions, no causation is established in relation to the preclusion period issue. See the Plaintiff's evidence at T73.25. The Plaintiff did not rely on the preclusion period advice and would have proceeded anyway." 50Accordingly, so it was submitted, the appellants had waived any right to object to the primary judge accepting the respondent's submissions with respect to the Centrelink representation insofar as that objection was founded on a failure to comply with the rule in Browne v Dunn . It was submitted that by not taking the point in their submissions in reply, the respondent was denied the opportunity of seeking to have Mr Schipp recalled for further cross-examination. However, it may be noted that Mr Schipp was excused as a witness by his Honour on 11 September 2009 at the conclusion of his evidence and the appellants' written submissions were not filed and served until 23 September, short oral submissions being made the following day after which judgment was reserved. Of itself, this would not necessarily have precluded Mr Schipp being recalled, assuming he was still available. 51In support of the waiver submission, reliance was placed upon the decision of the High Count in Vakauta v Kelly [1989] HCA 44; 167 CLR 568. This was a case of apprehended bias based on the judge's alleged pre-judgment of the credibility of a witness. However, no objection was taken to the judge's remarks by counsel at the trial, as a consequence whereof it was held by Brennan, Deane, Toohey and Gaudron JJ that the defendant had waived any right to appeal against any adverse decision on the ground of what had been said at the hearing. 52At 572, Brennan, Deane and Gaudron JJ observed: "Where such comments which are likely to convey to a reasonable and intelligent lay observer an impression of bias have been made, a party who has legal representation is not entitled to stand by until the contents of the final judgment are known and then, if those contents prove unpalatable, attack the judgment on the ground that, by reason of those earlier comments, there has been a failure to observe the requirement of the appearance of impartial judgment. By standing by, such a party has waived the right subsequently to object. The reason why that is so is obvious. In such a case, if clear objection had been taken to the comments at the time when they were made or the judge had then been asked to refrain from further hearing the matter, the judge may have been able to correct the wrong impression of bias which had been given or alternatively may have refrained from further hearing. It would be unfair and wrong if failure to object until the contents of the final judgment were known were to give the party in default the advantage of an effective choice between acceptance and rejection of the judgment and to subject the other party to a situation in which it was likely that the judgment would be allowed to stand only if it proved to be unfavourable to him or her." See also Toohey J at 587-588. 53It was submitted that the position is no different in the present case in that whereas objecting to a judge continuing to hear a matter where apprehended bias has been alleged involves a matter of procedural fairness, so also a failure to comply with the rule in Browne v Dunn involves a similar failure. Accordingly, if the former can be waived, so can the latter. The parties' filing of supplementary written submissions 54As the waiver and Browne v Dunn points had not been the subject of full argument on the appeal, at the conclusion of the hearing the President, after giving directions for the filing of further written submissions with respect to Grounds 13 and 14, added the following: "I was going to say if either party wishes to add any references to, if may use the expression, perhaps inaccurately in Mr Hutley's view, the waiver point and the Browne v Dunn point, the same timetable applies." 55It is to be noted that the President was there referring to any " references " and not submissions. In other words, the parties were, in the circumstances, invited to provide any curial or extra-curial references with respect to those points, but were not given leave to direct submissions generally to either Ground 3 or 4. However, both have done so, no doubt believing that there was at least some latitude in the President's direction. We should not be taken as being critical of the parties in this respect. 56On 10 June 2011 the appellants filed supplementary written submissions which addressed not only Ground 14 but also Ground 4. In the meantime, on 6 June 2001, the Court received a memorandum from senior counsel for the respondent who indicated that his instructions had been withdrawn in the matter and that he would therefore not be making any supplementary submissions on the matters in respect of which leave had been granted. However, on the same date, the Court received under the signature of the respondent's solicitor a 12 page document containing 92 paragraphs and entitled " Respondent's submissions by leave granted on 3 June 2011 ". Paragraphs 13-25 were directed to Ground 14 whereas paras 26-92 were directed to Ground 4, the Centrelink representation. Paragraphs 87-92 did not fall within the leave granted by the President, however it is understood. 57The parties here, and their legal representatives, may perhaps be forgiven if there was any lack of clarity in the leave granted by the President. It is useful, however, to remind the parties (and through the publication of these reasons the profession and public generally) of the correct position that has been stated, over and over again, by the courts. The High Court, intermediate courts of appeal and other courts have deprecated in strong terms the filing of material after an appeal without, or outside, any leave given: Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; 147 CLR 246 at 258; In the matter of an application by the Chief Commissioner of Police (Vic) [2005] HCA 18; 79 ALJR 881 at 884-885 [19]-[23] and 890 [53]-[54]; Dwyer v Commonwealth of Australia (1995) 31 ATR 48; Kirwan v Cresvale Far East Ltd (In liq) [2002] NSWCA 395; 44 ACSR 21 at [340]; Chapman v Caska [2005] NSWCA 113 at [19]; Willis v Health Communications Network Ltd [2007] NSWCA 313; 167 IR 425 at [35]; Singh v Secretary, Department of Employment and Workplace Relations [2009] FCAFC 59 at [62]-[73]; Jackson v Conway [2000] FCA 1530; R v Theophanous [2003] VSCA 99; 141 A Crim R 216 at 286 [14]; and R v Zhan Yu Zhong [2003] VSCA 56; 139 A Crim R 220 at 221 [2]-[4]. 58Notwithstanding these clear statements the practice still occurs. That the practice still occurs notwithstanding the regular statements of the courts that it should not is no reason not to continue to state clearly to the profession and the public the correct position. 59Not only have the parties and their legal representatives no right (whether they agree among themselves to do it or not) to place before the court without prior leave further material after an appeal has been heard, it is wrong. It undermines and derogates from the principle of the open administration of justice. The practice is not legitimated by sending the material and in that material seeking leave. The proper course (unless prior leave, statute or court rule permits otherwise) is for the proceedings to be relisted so that an application to enlarge the record can be made and determined in open court: see In the matter of an application by the Chief Commissioner of Police (Vic) [2005] HCA 18; 79 ALJR 881 at 890 [54] per Kirby J. 60The appeal is not an occasion merely for a discussion of the issues so that the parties can go away to marshall and develop their ideas further, bearing in mind the discussion with the court. It is the time and place when and where argument, and sometimes decision, occurs. Once the appeal is reserved, the parties' rights to argument and to be heard have been exhausted. 61The consequence of this is not only that sending submissions to the court is wrong, but also the court may (and generally will) ignore what has been sent. The waiver point 62The rule in Browne v Dunn is in a different category to the question of waiver discussed in Vakauta v Kelly . In the case of apprehended bias, a judge is entitled to continue to hear a case unless and until an objection is taken to the judge so doing and he or she is asked to disqualify himself or herself on the ground of apprehended bias. The question of disclosure of a matter known only to the judge is to be assessed by reference to what Gleeson CJ, McHugh, Gummow and Hayne JJ said in Ebner v Official Trustee in Bankruptcy [2000] HCA 63; 205 CLR 337 at 359-361 [66]-[73]. As the plurality stated in Vakauta , it would be unfair and wrong to fail to object until the contents of the final judgment were known as this would give the party in default an advantage of an effective choice between acceptance and rejection of the judgment. 63If no objection is taken to a breach of the rule in Browne v Dunn, there is in no sense an election between inconsistent rights; nor, necessarily, is the position of the party who has breached the rule prejudiced. Waiver can be seen to be a foreign and diverting concept. What happens after the breach of the rule in Browne v Dunn may affect the consequences of any unfairness it causes. It is, however, the fairness of the administration of justice that is central and the whole conduct of the trial should be examined to appreciate the consequences of the breach and what should be done to correct any unfairness. To these questions the lack of objection at the time may be relevant. The continuing and fundamental obligation remains upon a judge in the exercise of judicial power to ensure a fair trial which includes ensuring that a witness is treated fairly, especially where the judge is asked to make a finding impeaching that witness' credit: cf Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; 276 ALR 375 at [69]-[73] and [75] per Heydon, Crennan and Bell JJ. We observe that in Kuhl , unlike the present case, counsel for the relevant party did not, in breach of the rule in Browne v Dunn , allege in final address that the party/witness in question should not be accepted as a person of truth. The error of the trial judge in that case was that he incorporated into his reasons a finding to the same effect as the allegation without providing the party in question with the opportunity to deal with the issues: see, in particular, [75] of their Honours' reasons. 64It was contended by the appellants on the authority of Kuhl that the rule in Browne v Dunn , being one of fairness, applied equally (and presumably, independently) to a trial judge as to counsel. This is no doubt so, but the issue in the present case is how does it apply to a trial judge where counsel raises the allegation in breach of the rule but no objection is taken to its making by opposing counsel; a fortiori where the latter responds by submitting only that the allegation is not made out to the necessary standard of proof. 65In the foregoing context, it was accepted by the appellants that being a rule of practice, objection to senior counsel for the respondent's written submissions in breach of the rule should have been taken at trial: Gordon Martin Pty Ltd v State Rail Authority of New South Wales [2009] NSWCA 287 at [69] per Beazley JA, with whom Giles and Ipp JJA agreed. It was thus conceded that that failure to object meant that the primary judge was entitled to consider those submissions, although that did not end the question of the approach his Honour should have taken in any such consideration to the fact that the rule in Browne v Dunn had been breached. 66Fairness in the administration of justice extends not only to ensuring a fair trial for the actual parties but also to ensuring that a witness who is not a party is treated fairly. It is especially important in circumstances such as the present, where a witness such as Mr Schipp had himself no right to object to his credit being impugned with respect to the Centrelink representation and where he was not given the opportunity to respond to what was clearly an extremely serious allegation not only going to his credit as a witness but also, as the primary judge was at pains to emphasise, to his honesty as a person and to his probity as a solicitor and an officer of the court. Further, the unfairness consequential upon the breach struck directly at the entitlement of the appellants to a fair hearing and procedural fairness in the making of findings by the District Court. 67Here, fairness dictated that, in the absence of any cross-examination on the subject of the Centrelink correspondence, the primary judge refrain from making findings about dishonesty arising from that correspondence. 68The question of waiver, ultimately, however, is not critical to the resolution of the appeal. This is because it was not open to the primary judge to be satisfied on the material that Mr Schipp had deliberately concealed from the respondent his error with respect to the calculation of the preclusion period. To that issue we now turn. The inference arising from the letter concerning Centrelink and the Briginshaw issue 69This issue must be evaluated in the context of the role of this Court on appeal as governed by s 75A of the Supreme Court Act 1970 (NSW) which is by way of a rehearing. Section 75A requires the Court to conduct a real review of the trial and the evidence: Fox v Percy [2003] HCA 22; 214 CLR 118 at [25]; Anikin v Sierra [2004] HCA 64; 79 ALJR 452 at [37]; and Lujans v Yarrabee Coal Company Pty Ltd [2008] HCA 51; 249 ALR 663 at [2] and [31]-[32]. 70The standard of proof which the primary judge was required to apply to the issue raised by the Centrelink representation was proof on the balance of probabilities. However, s 140 of the Evidence Act 1995 (NSW) sets out a non-exhaustive list of " matters " to be taken into account. Thus, s 140(2) provides as follows: "(2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied [that the case has been proved on the balance of probabilities] it is to take into account: (a) the nature of the cause of action or defence, and (b) the nature of the subject-matter of the proceeding, and (c) the gravity of the matters alleged." 71As Ipp JA, with whom Tobias and Basten JJA agreed, observed in Palmer v Dolman [2005] NSWCA 361 at [40], s 140(2) provides for no new principle. Nevertheless, the well-known statement of Dixon J in Briginshaw at 361-362 has been consistently applied. The most relevant recent statement by the High Court of that principle is that of Mason CJ, Brennan, Deane and Gaudron JJ in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; 67 ALJR 170 at 171 [2] where the following was stated: "... the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary 'where so serious a matter as fraud is to be found'. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting 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." (citations omitted) 72In Director General of Department of Community Services; Re Sophie [2008] NSWCA 250 Sackville AJA, with the agreement of Giles JA and Handley AJA, after referring to s 140(2)(c) of the Evidence Act observed at [50] that the decision in Briginshaw pre-dated the enactment of the Evidence Act and that: "More recent authorities have pointed out that s 140(2)(c) does not impose any hard and fast rules governing the proof of serious allegations from circumstantial evidence. The requirement stated in Briginshaw v Briginshaw , that there should be clear and cogent proof of serious allegations, does not change the standard of proof, but merely reflects the perception that members of the community do not ordinarily engage in serious misconduct." (citations omitted) 73The question which therefore arises for consideration is whether, given the extremely serious nature of the allegation made against Mr Schipp with respect to the Centrelink representation, the primary judge should have been satisfied, on the balance of probabilities, that Mr Schipp had been guilty of such conduct in circumstances where, absent any cross-examination of him upon the Centrelink letter, it could properly be inferred that he intentionally and deliberately set out to mislead the respondent by failing to refer to the preclusion period in the 10 September letter. 74The appellants submitted that the primary judge was obliged to take into account the breach of the rule in Browne v Dunn by senior counsel for the respondent in determining whether the Briginshaw standard was satisfied with respect to the allegation of deception and this was so notwithstanding that no objection was taken at trial by the appellants to that breach. Reliance was placed upon the following statement of Giles JA, with whom Beazley and Ipp JJA agreed, in Shimokowa v Lewis [2009] NSWCA 266 at [171] where his Honour observed that although in that case the appellant did not at trial clearly assert failure to comply with the rule in Browne v Dunn , nevertheless the failure to put directly in cross-examination the version of events asserted by the respondent meant: "... that particular care and caution were required in finding that the witnesses were mistaken, and the more so in finding that they were untruthful. Yet ... the trial judge found adversly to the witnesses on some matters which had not been raised with them in cross-examination at all." 75It was thus submitted that in a case such as the present the primary judge was obliged to exercise particular caution in finding that Mr Schipp had deliberately not informed the respondent of the true position with respect to the preclusion period when the alleged motive for Mr Schipp sending the 10 September letter in the form it took was never put to him. Accordingly, his Honour acted unfairly in making the finding he did based on the respondent's written submission at trial. 76In his supplementary written submissions, the respondent contended that the appellants should not be permitted to argue that the primary judge's finding on the Centrelink representation could not have satisfied the Briginshaw standard or otherwise lacked a sufficient evidentiary basis, as there was no reference to that standard or insufficiency of evidence in Ground 4 or in their original written submissions dated 22 December 2010, or in the appellants' oral submissions on the appeal until senior counsel's reply at 3.30 pm on 3 June 2011. Accordingly, until then it had never been an issue in the appeal. 77These submissions should be rejected. They overlook the concession properly made by senior counsel for the respondent on the appeal to which reference is made at [41] above and his response to the issue raised by that concession based on waiver. The appellants were entitled to argue on the appeal the very matter raised in their reply at trial to the Centrelink representation and which his Honour had rejected. Both Ground 4 and the appellants' written submissions raised squarely the issue and the respondent relied on the appellants' submissions in reply at trial in response. That reply raised the Briginshaw issue. No question of the respondent being denied procedural fairness with respect to this issue arises. 78The respondent then attended to the merits of the matter, submitting that the unavoidable inference from the documentary evidence was that Mr Schipp must have been aware that he had miscalculated the preclusion period when he composed and sent the 10 September letter and so had intentionally deceived the respondent by not advising him of the true position. 79The inference sought was one, but only one, possibility. The matters to which we have already referred at [39] above in discussing what was not put to Mr Schipp reveal that a recognition of error and conscious dishonesty are not the only possible explanations. The inference that Mr Schipp was aware of the error and intentionally deceived his client is a possibility. It is a possibility about which minds might differ as to whether it is sufficiently probable to be a proper inference, that is more probable than not: Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 cited and applied in Holloway v McFeeters [1956] HCA 25; 94 CLR 470 at 480-481 per Williams, Webb and Taylor JJ; and Jones v Dunkel [1959] HCA 8; 101 CLR 298 at 305 per Dixon CJ. In our view that inference cannot be drawn as more probable than not, for the reasons set out below. Most importantly, however, could it be drawn with the requisite confidence in circumstances where that inference and its significance was never raised with Mr Schipp so that he was deprived of any opportunity to respond to it? The answer is plainly, no. 80An example of the unfairness of the finding for which the respondent contends is to be found in paras 54 and 55 of his supplementary written submissions where he asserts the following. First, Mr Schipp must have applied the same reasoning process both to his estimate of the amount repayable to Centrelink and to his calculation of the preclusion period. Second, as there was only one reasoning process applied by Mr Schipp to both estimates, if he knew that the Centrelink repayment was less than he had originally estimated, he must also have known that the preclusion period was more than he had estimated. It may be that the one reasoning process produced both estimates: there was no evidence that this was so and no such submission was made at trial or accepted by the primary judge. But, critically, Mr Schipp was never given the opportunity to agree or disagree with the underlying premise of the submission. In those circumstances, especially where the assertion of the one reasoning process is not self-evident, how can it be fair or proper to accept the submission as establishing an evidentiary fact? 81Paragraphs 60-66 of the respondent's supplementary written submissions purport to deal with the failure of his senior counsel at trial to cross-examine Mr Schipp on the Centrelink representation issue. Reference is made to the appellants' submissions at trial to the effect that the evidence did not justify the serious allegations made against Mr Schipp on this issue. Paragraph 66 then says: "If the Centrelink finding was not perceived to have been available on the evidence at a Briginshaw standard, they would not have been submitted by them." 82We do not understand the relevance of this submission to the present issue and reject it. 83Paragraphs 67-75 of the respondent's supplementary submissions seek to assert a demeanour issue with respect to Mr Schipp's performance in the witness box but which the primary judge expressly eschewed (at [274]). It therefore takes the present issue no further. 84Finally, paras 76-86 purportedly provide some " specific instances " illustrating what was alleged to be " guarded " evidence of Mr Schipp relating to his error in calculating the preclusion period. These submissions do not answer the fundamental issue based on the failure to cross-examine Mr Schipp with respect to the Centrelink or the 10 September letter. 85When determining whether, given the serious nature of the allegation in question, the evidence was sufficient to support the primary judge's finding on the balance of probabilities that Mr Schipp had deliberately deceived the respondent as to the correct preclusion period, this Court is entitled to take into account the lack of any cross-examination of Mr Schipp with respect to the Centrelink letter. The Court may also take into account any explanation which he may have been able to proffer, had the matter been put to him, as to why the preclusion period was not referred to by him in the 10 September letter. 86Given that this Court on a rehearing is required to examine for itself all the evidence, including that which exists and that which does not, it is not possible to be persuaded to draw the inference to the necessary standard that Mr Schipp was deliberately dishonest in drafting the 10 September letter and dispatching it to the respondent. Even if one puts to one side the failure to cross-examine Mr Schipp with respect to the matters in question, a real issue still arises as to whether it could be inferred simply from the correspondence and Mr Schipp's knowledge of it, that he intentionally and deliberately set out to mislead the respondent as to the correct preclusion period. This Court is in as good a position to determine that issue as was the primary judge. For the reasons which follow, it was not open to the primary judge to be satisfied on the balance of probabilities that Mr Schipp had engaged in conduct which involved the deliberate concealment from his client of his error in calculating the relevant preclusion period. 87As noted at [39] above, there may have been any number of explanations as to why Mr Schipp did not refer to the preclusion period as determined by Centrelink in his letter of 10 September 2002. He may have simply overlooked it. It may not have been a matter that attracted his attention given that it was equally probable that the 10 September letter was a follow up to the 27 August letter in which he had estimated the amount to be repaid to Centrelink as between $12,000 and $13,000, but had now been informed that it was only $7,652. There was no reference in the 27 August letter to the 52 week preclusion period, so that it is at least a possible inference or explanation that Mr Schipp was concerned only with the amount of the payback when he read the Centrelink letter and when he wrote the 10 September letter advising the respondent as to the net amount he would receive from the settlement. In other words, he was focused upon advising the respondent as to the net amount he was to receive which had no direct relationship to the preclusion period. 88Even more plainly the primary judge was not entitled to draw the inference having regard to the Evidence Act , s 140 and Briginshaw . 89In the foregoing circumstances and even assuming there was some form of waiver of the nature of that asserted by the respondent, nevertheless it was not open to the primary judge to be satisfied on the balance of probabilities that Mr Schipp intended, when he sent the 10 September letter to the respondent, to conceal deliberately from him his error in calculating the preclusion period. It follows that his Honour's error in his finding of deliberate concealment in turn undermines his finding that that concealment was a " fundamental matter " which impugned Mr Schipp's credit as a witness and probity as a solicitor. The primary judge's findings with respect to Mr Schipp's claimed lack of recollection 90At [284]-[291] the primary judge considered what he described as the " next fundamental matter that affects the credit of Mr Schipp " (his Honour's emphasis). In his written submissions at trial, senior counsel for the respondent had submitted that on his performance in the witness box, Mr Schipp was " by no means lacking in cunning ". As already observed at [36] above, his Honour noted at [285] the submission that Mr Schipp had displayed cunning in his dealings with the respondent and expressed the view that the findings he had made with respect to the Centrelink representation demonstrated that Mr Schipp had the capacity to deceive his client on a fiduciary issue and that he exercised that capacity in the circumstances of the respondent's case. In that sense, the primary judge held: "... he did display cunning. In my view, this was also evident from an aspect of his oral evidence ." (emphasis added) 91To accuse any professional person including a solicitor, an officer of the court, of cunning and deception was a particularly serious allegation and one which, generally speaking, should not be made except upon reasonably compelling evidence. 92At [286], the primary judge noted that Mr Schipp's oral evidence was based on the stance that he had no recollection of the respondent, his case, the negotiations leading to the settlement of the case, or the circumstances of the settlement, although he had some limited recollection of the description of the circumstances of the respondent's injury because those circumstances were unusual. Mr Arnold, the insurer's solicitor, also had a similar recollection of the unusual circumstances of the respondent's injury but, like Mr Schipp, no other recollection of the matter. As his Honour noted, Mr Schipp repeatedly relied on his lack of recollection when answering questions, reverting to evidence of his own " usual practice " and his understanding of the " usual practice " of Mr Kirby in dealing with such cases. 93The primary judge then continued in the following terms: "287. A serious question arises as to whether this stance was based on a genuine absence of recollection on Mr Schipp's part, or whether it was a convenient subterfuge utilised by him to avoid having to face and explain difficult questions concerning his conduct of the plaintiff's case, in circumstances where he failed to keep any file notes of significant events occurring in the litigation. It is useful to make comparative reference to the evidence of Mr Arnold, who was an experienced and senior solicitor. Mr Arnold agreed, albeit in abstract, that the failure of an employed solicitor to make such notes was regarded by him as being a very disturbing circumstance. 288. I find that Mr Schipp's lack of recollection of the plaintiff and the plaintiff's matter, even after an examination of his former file, to be incredible. 289. I find it difficult to believe that an experienced solicitor, without evidence of infirmity on his part, would not be able to reconstruct any detail of any relevant events from an examination of the documents in his former file. I find this to be especially so in circumstances where he had the sole carriage of that file from the inception of the litigation to its conclusion over a period of some 16 months. I do not make this finding lightly. I consider that my finding in this regard is supported by an aspect of Mr Schipp's evidence by which I consider he inadvertently revealed that he did in fact have a relevant recollection of the matter, notwithstanding his other evidence to the contrary. 290. In this regard, I consider the relevant evidence which inadvertently revealed that Mr Schipp had a recollection of events despite his repeated statements that 'I don't remember the day at all' : T 216.4, was when he answered questions concerning Mr Arnold's record of settlement negotiations. In this regard, he said ' we talked to him about the offers that had been made and what he wanted to do with respect to making a counter offer' : T 219.49. In this context, ' him ' obviously referred to the plaintiff. In my view these two positions that were articulated within the evidence of Mr Schipp are irreconcilable where Mr Schipp did not claim to have a recovered recollection. This leads me to the conclusion that Mr Schipp was not being truthful in stating that he had no recollection of the day or the events of the day. 291. I consider that his answer regarding a recollection of the negotiations on the day in question was given in an unguarded and candid moment. I consider this revealed that he did have a relevant recollection, which he in fact called upon in aid of defending his position when he felt he was under attack. I consider that this small but important piece of evidence serves to discredit Mr Schipp's evidence in this case concerning his claimed lack of recollection of relevant events. I consider that his asserted position of having no relevant recollection of the relevant events was a position that was adopted by him to avoid the embarrassment of having to speak in detail of the manner in which he had dealt with the plaintiff's principal proceedings and the manner in which he dealt with the plaintiff in the lead-up to the settlement of those proceedings." The primary judge's recollection finding is insupportable 94It is apparent that the " aspect of his oral evidence " referred to by his Honour at [285] and which illustrated a display of " cunning " by Mr Schipp, was that referred to by the primary judge at [290]. A reading of the transcript from Black 218K-220K makes clear that the answer relied upon by his Honour at [290] as " an unguarded and candid moment " when Mr Schipp revealed that he actually had a recollection of the events in question, was an answer made in the context of Mr Schipp's evidence as to his " usual practice ". On the hearing of the appeal, it was conceded by senior counsel for the respondent, entirely properly in our view, that his Honour had misread the answer in question and that, therefore, that answer did not provide any support for his Honour's finding that Mr Schipp was not being truthful in stating he had no recollection of the day or the events of that day. It accordingly follows that the second " fundamental " matter upon which his Honour relied to impugn Mr Schipp's credibility and honesty was fatally flawed. We would note that so far as the findings at [290] and [291] of the primary judge's reasons are concerned, unlike the Centrelink representation, they did not find any support in the submissions of senior counsel for the respondent at trial. 95In the foregoing context, senior counsel for the respondent conceded on the hearing of the appeal (at Appeal Transcript 57(30) - 58(10)) that subject to the question of waiver with respect to the Centrelink representation, if this Court were otherwise to accept that each of the two " fundamental " matters upon which the primary judge relied for his adverse credit finding with respect to Mr Schipp were flawed, then his Honour's adverse finding with respect to Mr Schipp's credit was in error and could not stand. Senior counsel accepted that in those circumstances, he could not submit that there had been no miscarriage of justice or that the primary judge's other findings as to Mr Schipp's evidence and motives could, on their own, support his rejection of Mr Schipp's credibility and probity. The consequence would be that the appeal should be allowed and a new trial ordered. 96It is interesting to note that his Honour's misreading of Mr Schipp's evidence referred to at [290] of his reasons was in a sense replicated a little later on in the transcript in the following exchange: "[Senior Counsel for the respondent] ... Q. You knew, didn't you that the client in a personal injuries matter, the plaintiff was dependent upon either you or counsel, in this case Mr Kirby, to explain what they were likely to get. That's correct, isn't it? A. Yes, as I say Mr Kirby would do that in the conference. Q. That is Mr Kirby, you observed him, would give the range of damages that he thought the client was likely to obtain? A. We, as I said, Mr Kirby would go through the heads of damages and he would explain how they were calculated and then he would tell the client about what he thought we should start with as an offer. Q. Well, how did you or Mr Kirby put the client in a position where he could make an informed decision about whether the figure to start with was right or wrong? A. We, Mr Kirby sat down with them and went through each head of damages, like I said, and explained it to them and came up with a figure. HIS HONOUR Q. How do you know that? A. Well, I'm talking in general practice. As I say, I don't remember this day. I don't remember this conversation or this conference. Q. Had I not asked that question, I would have been left with the impression that to your knowledge these events took place. A. I'm sorry. I thought that I'd said before that I don't recall this conference at all with Mr Kirby and I don't recall the day in question at all. I thought I'd said that. I'm sure I've said that." 97The foregoing exchange and, in particular, his Honour's question is further illustrative of his attitude towards Mr Schipp's asserted lack of recollection of the events in question. In this context, it should be remembered that as at August 2002, the evidence established that Mr Schipp was involved in some 300 matters, of which 50 involved proceedings in the District Court. He gave his evidence on 10 September 2009, some seven years later. It would be reasonable to infer that over those years he must have been involved in many hundreds of cases involving claims with respect to workplace injuries. 98Furthermore, the respondent's statement of claim was not filed until 31 July 2008, some six years after the events in question. No questions were put to Mr Schipp as to when he was first requested to recollect the events of 1 August 2002, whether before or after the filing of that statement of claim. In fact, if anything, the evidence would seem to indicate that he was not required by the appellants, his employer, to recollect those events until the time he gave evidence. At Black 224X-225C, he was asked whether he had looked though a copy of his file in the course of preparing his evidence, to which he responded that he had not, as he did not have a copy of it, it being with the appellants' solicitors. 99There is also a certain irony to his Honour's findings at [290] and [291] of his reasons, given his later finding at [335] that Mr Schipp had not either made or kept any notes of what he referred to as the " significant events " of 1 August 2002. He was criticised for not keeping such notes upon the basis that it was his professional responsibility to do so, notwithstanding that the appellants' standard fee arrangement which had been entered into with the respondent was for a flat fee of $35,000 which would be earned as at the date of the arbitration, with the consequence that it was unnecessary for Mr Schipp to keep notes of conferences and the like, at least for billing purposes. 100In any event, as observed at [14] above, the primary judge's concern with respect to Mr Schipp's failure to keep notes seems to have been confined to notes of instructions received from his client as to the making of counter-offers in response to the rejection of offers made on behalf of the insurers. How that fact could logically and rationally reflect adversely on Mr Schipp's evidence that he would have followed his " usual practice " in the settlement negotiations is difficult to fathom. He was also criticised (at [153]), at least implicitly, for failing to keep file notes of his attendances upon the respondent. The same comment applies to this asserted failure. 101At [357] of his reasons, the primary judge noted that the difference in the position of the respondent and Mr Schipp on the issue of keeping notes was that whereas Mr Schipp claimed not to remember the events of the day at all because the respondent's case was one of many, and much time had passed, the respondent, being the person most affected by what was going on at the time, had good reason to focus on those events and, therefore, arguably, was more likely to remember them more accurately than Mr Schipp. At [358], his Honour concluded in the following terms: "In those circumstances, on a factual contest as to who was the more likely to accurately recall relevant events, I consider that Mr Schipp had little prospect of remembering anything about the events with reasonable accuracy without access to notes that he was expected to keep in order to assist him should he need to refresh his memory to recall salient facts." 102The finding in the paragraph referred to seems to support Mr Schipp's testimony that he did not have a recollection of the events in question. This is at odds with his Honour's findings at [290]-[291]. It is also inconsistent with his finding at [288] that Mr Schipp's lack of recollection of the respondent and his matter, even after examining his former file, was " incredible ". These matters provide a further basis upon which to conclude that his Honour was in error in finding that Mr Schipp not only did have a recollection of the events in question, but also that his assertion that he did not was not genuine, but a convenient subterfuge utilised by him to avoid having to face and explain difficult questions concerning his conduct of the respondent's case in circumstances where he failed to keep any file notes of " significant events " occurring in the litigation. Yet it was that very failure which prompted his Honour (at [358]) to accept that Mr Schipp had little prospect of remembering anything about those events with reasonable accuracy. 103We have already noted that the primary judge made a number of other adverse findings with respect to Mr Schipp's credibility. These are to be found at [294]-[308] of his reasons. They include a finding that references by Mr Schipp to his file being incomplete when confronted with the file in the witness box was an attempt on his part to try and deflect and avoid criticisms made of his conduct in cross-examination (at [295]); that he gave evasive answers which reflected poorly on his credit (at [298]); that his retreat to matters of " usual practice " was selective and invoked by him in an attempt to shelter himself from criticism, as well as attempting in some way to inculpate Mr Kirby of counsel with some responsibility for the events in question (at [299]); that his resort to matters of " usual practice " was " somewhat artificial " (at [304]); and that his approach, as described by the primary judge, was " unrealistic, and aimed at protecting himself from criticism in these proceedings rather than relating matters of fact that ought to have been within his knowledge ", which led his Honour to doubt that Mr Schipp had followed his " usual practice " on the day in question (at [307]). 104Each of these findings were said by his Honour at [293] to have affected Mr Schipp's credit as a witness and, significantly, that they followed on from his finding concerning Mr Schipp's recollection of the events in question, a finding which it was conceded his Honour was in error in making. It must therefore be the case that the findings to which we have referred in the preceding paragraph are equally flawed. Conclusion on liability 105For the foregoing reasons, the primary judge's " fundamental " credibility findings with respect to Mr Schipp's testimony were fatally flawed. As those findings underpinned his Honour's other findings which reflected adversely upon Mr Schipp's credibility, it follows that his conclusion at [308] that he should entertain serious reservations about the credibility of Mr Schipp's testimony, cannot stand. As his Honour's findings as to the liability of the appellants was founded upon his acceptance of the respondent's evidence as to the video representation and as that acceptance was in turn dependent upon his Honour's rejection of Mr Schipp's evidence on the same issue, it follows that the appeal should succeed and the primary judge's findings on liability set aside. As there has been a substantial miscarriage of justice, it follows that there should be a new trial. 106It should not be thought that the unfairness and the error in and about how Mr Schipp was treated exist only because of his position as a lawyer and an officer of the court. He was not in a special position because of that, although, as would have been apparent to the primary judge and those at the trial, the particular and special consequences likely to flow from the devastating findings of serious personal dishonesty bring about a clarity of appreciation of the seriousness of the findings. Any witness about or against whom the grave submissions or findings of dishonesty are to be made should be confronted with and thus afforded an opportunity to explain the dishonesty of which he or she is to be accused. The result of this case would have been no different had Mr Schipp not been a lawyer. 107For the above reasons we would make the following orders: 1. Appeal allowed. 2. Orders of the District Court made on 4 August and 3 September 2010 be set aside. 3. There be a new trial. 4. The costs of the District Court proceedings to date abide the outcome of the new trial and be dealt with by the District Court. 5. The respondent pay the appellants' costs of the appeal and have a certificate under the Suitors' Fund Act 1951 (NSW), if otherwise qualified. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 August 2011