Hansen & Anor v Patrick & Ors

In this decision, the trial judge found that the first appellant had been guilty of a deliberate attempt to create a false impression and to deceive the court and that his evidence was not only unreliable but also deceptively false. As a result, his Honour rejected his evidence in its entirety. However, that allegation had not been made by the defendants, and no such allegation had ever been put to the first appellant in cross-examination. The Court of Appeal held that the findings were erroneously made, and allowed the appeal.

Sofronoff P and Fraser and Morrison JJA

30 October 2018

Background

The first appellant ("Mr Hansen") and the first respondent ("Mr Patrick") entered into a partnership in 1986. [3]. They began to conduct a business where they improved, developed and sold land. [3]. In 1988 the partners adopted a different legal structure, that of "a jointly owned company that conducted the business in its capacity as a trustee of a unit trust" ("the company"). [3]. Together, Mr Hansen and Mr Patrick owned and controlled the company. [3]. The units in the trust were held by companies associated with Mr Hansen and Mr Patrick. [3].

Eventually, Mr Hansen and Mr Patrick decided to part ways. [4]. By two contracts, Mr Hansen’s share in the company and his indirect holding in the unit trust were transferred to Mr Patrick for $365,592.00. [4]. In 2006, Mr Hansen commenced proceedings against Mr Patrick, alleging that he had entered into the contracts in reliance upon representations that Mr Patrick had made to him about the value of certain pieces of land owned by the company. [5]. The appellants claimed damages for fraud, negligent misstatement, breach of fiduciary duty and contraventions of the Trade Practices Act 1974 (Cth). [5].

First Instance

At trial, there was a wide gulf between the versions of events provided by the parties. [18]. Mr Hansen's account "found no support in any documents or in the evidence of any independent witnesses". [18]. Mr Patrick's account, on the other hand, was "supported by the evidence of seemingly independent witnesses and by contemporaneous documents". [18]. The trial judge, North J, found that Mr Hansen had been guilty of "a deliberate attempt ... to create a false impression and to deceive the court" and that his evidence was "not only unreliable but also deceptively false". [23]. As a result, his Honour rejected Mr Hansen's evidence in its entirety. [20], [23]. North J dismissed the appellants' claims. [1].

Court of Appeal

The Court of Appeal (Sofronoff P and Fraser and Morrison JJA) noted that the primary judge’s finding that Mr Hansen set out to deceive the court by giving false evidence was part of the foundation for his Honour’s decision to dismiss the claims. [26]. However, that allegation "had not been made by the defendants and no such allegation had ever been put to Mr Hansen in cross-examination". [26]. While the accuracy, correctness and reliability of Mr Hansen’s evidence was certainly in issue in the trial, "the proposition that he had set out to fabricate a false case, to deceive the court and to perjure himself" was not in issue. [26].

The Court noted that while the rule in Browne v Dunn (1893) 6 R (HL) 67 is "not about judges, a breach of the rule may influence a judge's decision". [29]. The Court noted that Counsel may not put to a witness in cross-examination that they are lying, either because such an allegation is not justified, or for various forensic reasons. [31]–[33]. The Court continued:

"If, after having had the advantage of considering all of this material, and having had the opportunity to consider whether the falsity of a witness’s evidence is due to actual dishonesty or some reason short of dishonesty, counsel has chosen to refrain from raising an allegation of perjury or other dishonesty, it is a very, very great step for a judge to make a finding of that kind." [34].

The Court held that "[i]f such allegations have neither been put nor sought, it would be a rare case indeed in which it would be fair, and therefore in which it would even be open, for a judge to make it". [37]. The Court also referred to Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361, where a majority of the High Court explained that a judicial officer should not criticise a party-witness for deliberately withholding the truth in a fashion crucial to a dismissal of that party's claim unless two conditions are satisfied:

1. (a) first, reasons must be given for concluding that the truth has been deliberately withheld; and
2. (b) second, the party-witness must have been given an opportunity to deal with the criticism. [38].

In the present case, the defence did not allege that Mr Hansen had concocted his whole story. [39]. They did not put to Mr Hansen in cross-examination that he was a perjurer, and they did not invite the trial judge to make such a finding. [39]. The Court of Appeal held that the findings could not stand, and because they constituted essential links in the primary judge’s chain of factual reasoning to judgment, the orders dismissing the appellants' claims had to be set aside. [41]. Accordingly, the appeal was allowed. A cross-appeal on an unrelated issue was dismissed.

M J Hafeez-Baig