Evidence and Discovery: The Ability to Draw Adverse Inferences

In Ithaca (Custodians) Limited v Perry Corporation the Court of Appeal said that “… there is a principle of the law of evidence authorising (but not mandating) a particular form of reasoning.[1] The absence of evidence, including the failure of a party to call a witness, in some circumstances may allow an inference that the missing evidence would not have helped a party's case”.  The Court of Appeal clarified that an adverse inference may only be drawn where (a) the party would be expected to call the witness and could actually could the witness; (b) the evidence of that witness would explain or elucidate a matter that is required to be explained or elucidated; and (c) the absence of the witness is unexplained”.[2] 

To similar effect is the decision of the High Court in Dairy Containers Ltd v NZI Bank Ltd, where it was said  “[i]n short the rule in Jones v Dunkel permits the Court in appropriate circumstances to draw an inference in a civil case, where there is an unexplained failure by a party to give evidence or call a witness or tender documents, that the uncalled evidence would not have assisted that party's case.”[3]  in Innes v Ewing, Eichelbaum J stated that “[w]hen a pertinent witness is not called the natural inference is that he would have exposed facts unfavourable to the party having the choice”.[4]

The New Zealand authorities trace their lineage to the decision of the High Court of Australia in Jones v Dunkel, where it was said that:[5]

The failure to bring before the tribunal some circumstance, document, or witness, when either the party himself or his opponent claims that the facts would thereby be elucidated, serves to indicate, as the most natural inference, that the party fears to do so, and this fear is some evidence that the circumstance or document or witness, if brought, would have exposed facts unfavourable to the party. These inferences, to be sure, cannot fairly be made except upon certain conditions; and they are also open always to explanation by circumstances which made some other hypothesis a more natural one than the party's fear of exposure. But the propriety of such an inference in general is not doubted.

This principle extends to the failure to produce documents.  In Gloria Jean’s Coffees International Pty Limited v Daboko, Gault J considered this principle an extension of the principle as it relates to witnesses.[6]  There his Honour said that the “principle is wide enough to encompass a failure to introduce documents, as well as not calling a relevant witness”.

When you are preparing for a trial or hearing, it is important to be careful about the way in which the discovery exercise is undertaken. And it is important that all relevant witnesses are called, or there is an explanation for the failure to call them. If this is not done, you run the risk of the Court drawing an adverse inference.

[1]           Ithaca (Custodians) Ltd v Perry Corporation [2004] 1 NZLR 731 (CA).

[2]           At [153]–[154].

[3]           Dairy Containers Ltd v NZI Bank Ltd (1994) 7 PRNZ 465 (HC) at 468.

[4]           Innes v Ewing [1989] 1 NZLR 598 (HC) at 607.

[5]           Jones v Dunkel [1959] HCA 8, 101 CLR 298 at 320.

[6]           Gloria Jean’s Coffees International Pty Limited v Daboko [2019] NZHC 1097.