Drawing Inferences – the extent that evidence can be inferred

2 June 2021
Scott Couper, Partner, Brisbane

In Ross, in the matter of Print Mail Logistics (International) Pty Ltd (in liq) v Elias,[1] the Federal Court considered the extent to which a Jones v Dunkel[2] inference can be made. There were three factual issues to be determined by the Court and both parties relied heavily on inferences to prove their case. Ultimately, the Court determined that, in a situation where a witness, who has the power to produce pertinent evidence, is absent, an inference should be drawn that the evidence would not have assisted the submission.

Key Facts

Print Mail Logistics Limited (PML), the parent company of Print Mail Logistics (International) (PMLI), had commercial relationships with the following companies controlled by Ms Jennifer Hutson (Hutson):

  • Wellington Capital Pty Ltd (Wellington), which has since changed its name to Southland Stokers Pty Ltd (Southland Stokers); and
  • Armstrong Registry Services Limited (Armstrong) which is now deregistered.

On 14 July 2015, Armstrong was alleged to have loaned a sum of $100,000 to Mr Benjamin Elias (Elias), the founding director of PMLI (the Armstrong Agreement).

On 29 July 2015, Wellington loaned $420,000 to PMLI. The agreement was in writing and comprised a secured loan agreement between PMLI and Wellington, a fixed and floating charge over assets of PMLI, and a second mortgage over property owned by PMLI (the Wellington Agreement).

On the 2 October 2018, PMLI was placed into voluntary administration and on 5 November 2018 was placed into liquidation and Liquidators were appointed.


The Liquidators alleged that:

  • Under the Wellington Agreement, PMLI took responsibility for the personal debts of Elias, including the alleged Armstrong Agreement; and
  • By the Wellington Agreement, the Defendants entered into an insolvent transaction in breach of section 588G of the Act and entered into an uncommercial transaction pursuant to section 588FB of the Corporations Act 2001 (Cth) (the Act).


One of the key issues arising out of the case centred on inferences. Both parties relied extensively on inferences in relation to the alleged Armstrong Agreement.

The Liquidators sought to draw inferences from the contents of the accounting and banking records of PML and the presence of Elias’ signature on three copies of the Armstrong Agreement. The bank records of PML that were tendered showed the receipt of $100,000 on 14 July 2015, which was recorded as “Funds Received from Nigel Elias.” In cross examination, it was revealed that Southland Stokers was funding the proceedings and despite this arrangement, Hutson did not give evidence at trial. The Liquidators contended that the rule in Jones v Dunkel[3] did not apply to allow an inference to be drawn with respect to Hutson’s absence and that this was irrelevant to the issues in dispute.

Elias contended that Hutson wrote the date on the third copy of the Armstrong Agreement. Furthermore, the Defendants argued that as a director of Armstrong, Hutson was in a position to give evidence and since she had not done so, a Jones v Dunkel inference should be drawn that her evidence would not have assisted the Liquidators.

Citing Henderson v State of Queensland,[4] his Honour was unwilling to draw the inference that the $100,000 received into PML’s account related to the Armstrong Agreement. In relation to Hutson’s absence, his Honour rejected the Liquidators’ submission that no Jones v Dunkel[5] inference should be drawn on the basis that Hutson was funding the liquidation and would “very likely be able to explain why Armstrong transferred $100,000.00 to PML on 14 July 2015” and commented that “the evidence was peculiarly within Ms Hutson’s power to produce and it was plainly pertinent to the question about whether the Armstrong Agreement was made as the Liquidators allege and defendants deny.” In relation to the various versions of the Armstrong Agreement, his Honour was unwilling to draw an inference in the Liquidators’ favour that it was duly executed and made by all the relevant parties on or about 14 July 2015 in the absence of Hutton’s evidence.

Accordingly, his Honour held that the Liquidators failed to adduce the evidence necessary to establish that Elias and Armstrong entered into the Armstrong Agreement.

Sections 588G and 588F confusion

The Liquidators alleged that PMLI’s entering into the Wellington Agreement constituted an uncommercial transaction within section 588FB of the Act because there was a detriment to PMLI by doing so.

His Honour stated that because the Liquidators’ case was that PMLI became insolvent by entering into the Wellington Agreement, it necessarily followed that its solvency immediately before was not in issue. His Honour found that as both PMLI and PML continued to pay their debts as they fell due for at least two years after PMLI entered into the Wellington Agreement, there was no relevant reason under section 588FB of the Act to expect that PMLI should not have entered into that transaction.

Essentially, the Liquidators had confused the questions under sections 588G and 588FB of the Act by intertwining PMLI’s conduct of entering into the Wellington Agreement with PML’s separate and distinct conduct of providing the guarantee to Wellington. Accordingly, his Honour held that the Liquidators failed to establish their insolvency allegation against the Defendants.

Ultimately, the Liquidators’ originating application was dismissed, and the Liquidators were ordered to pay the Defendants’ costs of the proceeding to be taxed failing agreement.


  • Although the Court is traditionally cautious in drawing an inference, it will do so where appropriate. If a party is not calling a witness whose evidence, on the face of it, would be critical, the Court is willing to draw a Jones v Dunkel[6] inference and conclude that the evidence would not have been helpful to the party’s case.
  • It is important to not confuse the questions under sections 588G and 588FB of the Act, and to plead and lead evidence to support allegations under these sections separately.

If you found this insight article useful and you would like to subscribe to Gadens’ updates, click here.

Authored by:

Scott Couper, Partner
Tegan Harris, Senior Associate



[1]  [2021] FCA 419.

[2] (2014) 255 CLR 1.

[3] (1959) 101 CLR 298. The rule in Jones v Dunkel related to the unexplained failure of a party to give evidence which may, in appropriate circumstances, lead to an inference that the uncalled evidence would not have assisted the party’s case.

[4] (2014) 255 CLR 1.

[5] (1959) 101 CLR 298.

[6] (1959) 101 CLR 298.

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

Get in touch