In The Owners – Strata Plan 87265 v Saaib [2022] NSWCA 63 the New South Wales Court of Appeal had to grapple with the inferences that could be drawn from circumstantial evidence, the use of “tendency evidence” and the failure of the respondent Mr Saaib, a licensed builder, to call his nephew, Mr Zaatini, an alleged fraudster to give evidence to corroborate his defence. 

The Appellant was successor in title and the subsequent owner to the developer who believed that they had contracted with Mr Saaib to construct 11 townhouses in Marrickville.  Allegedly unbeknownst to Mr Saaib, Mr Zaatini had forged his signature on the building contract with the developer as well as proposal forms to obtain home warranty insurance for the developer.  The home warranty insurance was void and the Appellants sought to recover against Mr Saaib for the costs of rectification of the defects at the townhouses.

The Issue

Basten JA with whom Gleeson JA agreed said that the case turned on two possibilities. Either Mr Zaatini had acted without the knowledge of his uncle with whom he was in close contact, or his uncle agreed to “front” for him to allow him to undertake a building project for which he was not qualified to obtain the necessary home warranty insurance. There was no documentary evidence corroborating the evidence of either Mr Saaib of the finance broker.

The Evidence that Ought to have been Accepted

In finding for Mr Saaib, the Trial Judge had rejected the evidence of the finance broker who had arranged the home warranty insurance that she had been in communication with Mr Saaib on this issue at the relevant time. Although the Trial Judge had rejected the evidence of the finance broker, the Trial Judge had not made any finding that the finance broker had been part of a scheme of knowing deception. It was implicit that she too must have been a victim of fraudulent conduct on the part of Mr Zaatini. However, Basten JA found that given her association throughout the relevant period with Mr Saaib, that seemed implausible.

The Trial Judge had also refused to receive evidence that Mr Saaib had allowed his name to be used as the licensed builder by the owners, who were alleged his close friends, in a different building project. The Trial Judge did not consider that the evidence had significant probative value and was admissible as tendency evidence. Basten JA said that the evidence ought to have been accepted pursuant to s 97 of the Evidence Act 1999 (NSW).

The Failure to call Mr Zaatini

Further, as the Trial Judge had been unpersuaded that reasonable and definite inferences arose that Mr Zaatini and Mr Saaib had discussed and agreed that Mr Saaib would be named in the building contract as the builder of the Marrickville property, any Jones v Dunkel inference would not have assisted the Appellant’s case as a Jones v Dunkel an inference cannot constitute affirmative evidence to fill a gap. This is despite the fact that relations between Mr Zaatini and Mr Saaib were less than cordial by the time of the trial even though they had been close at the relevant time in 2011 and 2012.  Mr Saaib had lodged a fraud report with the police against Mr Zaatini.

Basten JA held that the circumstantial case relied on by the appellant has sufficient support to permit an inference to be drawn on the balance of probabilities. In that circumstance, Basten JA was able to have regard to the fact that Mr Zaatini was not called and reach the conclusion that the evidence of Mr Zaatini would not have assisted Mr Saaib. 

Conclusion

It seems undeniable that the merits of the case lay with the Appellant.  However, the process of reasoning of Basten JA was a laborious one.  It involved a side-step to avoid the principles in Fox v Percy in relation to appeals against findings of fact, which require that such findings have to be glaringly improbable in order to be overturned, if the findings involve conclusions as to demeanour.  Basten JA said that the finding of the Trial Judge that the evidence of the finance broker was unreliable was not reached on the basis of findings in relation to demeanour.  It is also unrealistic to expect that Mr Saaib to have called Mr Zaatini to give evidence on his behalf in circumstances where they had become estranged by the time of the trial. For these reasons, the writer commends the minority judgment of Macfarlan JA to the readers.  Macfarlan JA’s reasons for dismissing the appeal are logical and powerful in their simplicity.
 
Laina Chan

Liability limited by a scheme approved under Professional Standards legislation.