Re Alice Springs Abattoirs Pty Limited v Northern Territory Electricity Commission [1986] FCA 6 (24 January 1986)

FEDERAL COURT OF AUSTRALIA

Re: ALICE SPRINGS ABATTOIRS PTY LIMITED
And: NORTHERN TERRITORY ELECTRICITY COMMISSION
No. NTG21 of 1985
Debt Recovery

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NORTHERN TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
Forster J.
Morling J.
Spender J.

CATCHWORDS

Debt Recovery - Action for recovery of moneys allegedly due for supply of electricity - Electricity Commission Act and By-laws - Finding of fact by trial judge that respondent did not become aware at relevant time that appellant had discontinued use - trial judge preferring evidence of respondent's witness to those of appellant in respect of critical issue - whether trial judge considered demeanour of witnesses in relation to assessment of their credibility - whether trial judge failed to use or palpably misused advantage of seeing witnesses at trial. Cases

S.S. Hontestroom v. S.S. Sagaporack (1927) AC 37 Warren v. Coombes [1979] HCA 9; (1979) 142 CLR 531 Brunskill v. Sovereign Marine & General Insurance Company Limited (unreported decision of the Full Court of the High Court delivered 25 September 1985) Whitely Muir and Zwanenberg Ltd v. Kerr (1966) 39 ALJR 505 Da Costa v. Cockburn Salvage and Trading Pty Ltd [1970] HCA 43; (1970) 124 CLR 192 Edwards v. Noble [1971] HCA 54; (1971) 125 CLR 296 Powell v. Streatham Manor Nursing Home (1935) AC 243 Whim Creek Consolidated (NL) v. Federal Commissioner of Taxation (1977) 17 ALR 421

Electricity Commission Act (N.T.) ss. 4, 26, 30

Electricity By-laws 6, 7.

HEARING

ADELAIDE
24:1:1986

ORDER

The appeal be dismissed with costs.

Note: Settlement and entry of order is dealt with in Order 36 of
the Federal Court Rules.

DECISION

I have had the opportunity of reading the reasons for judgment prepared by Morling J. and I agree with him that the appeal should be dismissed with costs. I wish to add a few words of my own.

2. The main, indeed the only fundamental issue in the case, was whether NTEC became aware in July 1983 that the appellant had discontinued the use of the supply of electricity. The appellant argued in the Court below that it did become so aware and the respondent argued that it did not. The evidence principally relied upon by the appellant was that of Hochwallner and Cameron each of whom testified that he so informed Armstrong, the chairman of the respondent. Armstrong strongly denied this. The learned judge preferred the evidence of Armstrong to that of Hochwallner and Cameron and I am quite unable to conclude that he was wrong to do so.

3. It is true that there is no direct indication that the judge arrived at his views as to the reliability of the witnesses by considering the demeanour of Hochwallner and Cameron but I would be prepared to infer that in a case like this of flat disagreement between Armstrong on the one hand and Hochwallner and Cameron on the other the learned judge did take into account the demeanour of the witnesses. He has said that he preferred the evidence of Armstrong to that of Hochwallner and Cameron and he made a specific finding that Armstrong was a truthful and accurate witness. It seems to me that his Honour's disbelief of Hochwallner and Cameron in a situation of direct conflict between Armstrong and them carries a necessary implication that he found Hochwallner and Cameron to be untruthful or inaccurate or both. He could only have reached that conclusion by considering their credibility and a necessary part of that consideration must have included a consideration of the demeanour of the witnesses whether the judge made express reference to this or not. In S.S. Hontestroom v. S.S. Sagaporack (1927) AC 37, Lord Sumner says at p 47 -

"The course of the trial and the whole substance of
the judgment must be looked at, and the matter
does not depend on the question whether a witness
has been cross-examined to credit or has been
pronounced by the judge in terms to be unworthy of
it. If his estimate of the man forms any
substantial part of his reasons for his judgment
the trial judge's conclusions of fact should, as I
understand the decisions, be let alone. In The
Julia (1860) 14 Moo. P.C. 210, 235 Lord Kingsdown
says: 'They, who require this Board, under such
circumstances, to reverse a decision of the Court,
below upon a point of this description, undertake
a task of great and almost insuperable difficulty
... We must, in order to reverse, not merely
entertain doubts whether the decision below is
right, but be convinced that it is wrong.'"

4. In this passage as it seems to me his Lordship makes it clear that if the judge's estimate of a witness necessarily forms a substantial part of his reasons for his judgment then it does not matter that he has not pronounced a witness whom he disbelieves to be unworthy of credit. In the present case the learned trial judge's estimate of Hochwallner and Cameron necessarily formed a substantial part of his reasons for his judgment and I consider that it matters not whether or not he expressly referred to the demeanour of each.

This is an appeal from a decision of a judge of the Supreme Court of the Northern Territory of Australia in proceedings brought by the respondent ("NTEC") to recover moneys alleged to be due to it by the appellant ("ASAPL") for the supply of electricity. NTEC brought two actions against ASAPL and these actions were, by consent, heard together. In the first action NTEC sought to recover moneys alleged to be due for the supply of electricity to 30 November 1982. In the second action NTEC sued for moneys said to be payable to it by ASAPL for electricity supplied between 21 September 1983 and 13 December 1983. The learned trial judge found a verdict for NTEC in each case. Appeals were lodged in both cases but the appeal in respect of the first action was not pursued. Accordingly it is necessary to consider only the correctness of his Honour's decision in the second action. It was agreed at the trial that if ASAPL was liable to pay for the electricity supplied between 21 September 1983 and 13 December 1983, the amount recoverable in the second action was $75,818.95.

2. NTEC is a body corporate pursuant to s.4 of the Electricity Commission Act and is a supplier of electricity within the Northern Territory. ASAPL has, since 1970, held a lease of land at Alice Springs known as the Alice Springs Abattoirs. NTEC has supplied power to these premises, with occasional interruptions, since ASAPL has leased them. Some time after it became the lessee ASAPL made application for the supply of electricity to the abattoirs. The learned trial judge's finding that ASAPL was the only company that applied for a supply of electricity to the abattoirs was not challenged on appeal.

3. Since there was no contest at the trial as to the value of the electricity supplied the only question which fell to be determined was whether ASAPL was liable to pay the agreed amount of the electricity charges. The basis of its defence was that a separate legal entity, Alice Springs Abattoirs (N.T.) Pty. Limited ("ASANT") was the occupier and operator of the abattoirs during the relevant period and that ASANT, and not ASAPL, was responsible for payment of the electricity charges.

4. To understand the case made against ASAPL, and its defence to the claim, it is necessary to make brief reference to the Electricity Commission Act and the Electricity By-laws made thereunder. Section 30 of the Act provides as follows:

"30. CHARGES FOR SUPPLY OF ELECTRICITY

(1) The Minister may, from time to time, by
notice in the Gazette, fix or vary the charges that
are payable to the Commission or a licensee for or in
relation to the supply of electricity and, in the
same or a subsequent notice, may specify the method
by which a charge shall be calculated in respect of a
charge period during which the charges are fixed or
varied.

(2) A notice under sub-section (1) may specify
different charges for or in relation to the supply of
electricity for different uses, in different
localities or in different circumstances.

(3) A person to whom electricity is supplied or a
service is provided by the Commission or a licensee
is liable to make payment to the Commission or the
licensee, as the case may be, in accordance with a
notice under sub-section (1)."

5. Section 26 provides that the Commission may make by-laws for, inter alia, fixing the terms and conditions of supply of electricity. By-law 6 provides that a person may apply to the Commission for the supply of electricity to premises owned or occupied by him at which there is, or is to be, an electrical installation. The by-law provides that the application shall be in an approved form and shall include the consumer's address.

6. By-law 7 provides, in part, as follows:

"7. TERMS AND CONDITIONS OF SUPPLY

The following terms and conditions are the terms
and conditions of the supply of electricity by the
Commission to a consumer:

(a) ...

(b) that the consumer shall pay to the
Commission, within 14 days after the
posting or delivery to him of an account
for electricity supplied to him, the amount
due by him to the Commission for the supply
of electricity in respect of the period
specified in the account;

(c) that if the consumer intends to discontinue
the use of electricity, he shall give to
the Commission not less than 48 hours
written notice of his intention to so
discontinue and that if no such notice is
given, the consumer will be liable for the
cost of electricity supplied to his
electrical installation until such time as
the meter is first read after the
Commission becomes aware that the consumer
has discontinued the use of the supply of
electricity;"

7. It was common ground at the trial that ASAPL had not given written notice of its intention to discontinue the use of electricity at the abattoirs. However, ASAPL contended that, in accordance with by-law 7(c), it ceased to be liable for the cost of electricity supplied to the abattoir after July 1983 because NTEC became aware at that time that ASAPL had discontinued the use of the supply of electricity at the abattoir.

8. Thus the critical, indeed the only, issue at the trial was whether NTEC did indeed become aware in July 1983 that ASAPL had discontinued the use of the supply of electricity at the abattoirs. The learned trial judge found that it had not. Counsel for ASAPL conceded that this was a finding of fact but argued that, in accordance with well established principles, the court should set aside the trial judge's decision and enter a verdict for his client.

9. ASAPL's case at the trial was that the abattoir was leased during the relevant period by ASAPL to ASANT, an entirely unrelated company. There is no doubt that, at the relevant time, ASANT operated the abattoir and used the electricity which was supplied to it. Mr Hochwallner, ASAPL's General Manager, gave evidence to the effect that during a telephone conversation on 14 July 1983 he advised Mr Armstrong, the Chairman of NTEC, of the facts relating to ASANT's use of the electricity supply. ASAPL also led evidence from Mr Cameron, the Secretary of the Department of Primary Production in the Northern Territory, that he had also apprised Mr Armstrong of the fact that ASAPL had discontinued its use of the supply of electricity at the abattoir. Later in these reasons I shall refer in more detail to Mr Cameron's account of his conversation with Mr Armstrong. Mr Armstrong admitted having conversations with Messrs Hochwallner and Cameron concerning the charges for electricity supplied to the abattoir, but denied that he was informed during those conversations that ASAPL had discontinued its use of electricity at the premises. It is clear from his Honour's reasons that he accepted Mr Armstrong's denials, and that he preferred Mr Armstrong's evidence to that of ASAPL's witnesses.

10. Having regard to his Honour's findings, the task of persuading an appellate court that it should set aside the trial judge's decision is attended by considerable difficulty. This difficulty was recognised by counsel for ASAPL in his careful argument, but he submitted that, consistent with authority, the trial judge's decision should be set aside.

11. In substance, the argument in support of the appeal was that the trial judge was in error in not accepting the evidence of Messrs Hochwallner and Cameron in preference to that of Armstrong. According to Mr Hochwallner, he had a telephone conversation on 13 July 1983 with Mr Armstrong. He said that Mr Armstrong asked him what the position was regarding "a long outstanding electricity account" and that he told Armstrong that "since we have not been operating the works since 1980 I doubted whether there were any outstanding matters with NTEC". He also said that he informed Armstrong "that he has contacted the wrong company. That he will have to contact Mr Lindsay Hart of Alice Springs Abattoirs (N.T.) as that company has been leasing the works from us since the beginning of the 1981 season". Whilst admitting that he had a conversation with Mr Hochwallner on 14 July, Mr Armstrong denied that he was told that Hart's company was leasing the plant and that the electricity account was that company's responsibility. He said that if he had been told those facts, "I would've immediately rung some tremendous alarm bells, because - because that indicates a whole new consumer . . .".

12. The trial judge said that he accepted Mr Armstrong as a truthful and accurate witness and that where his evidence conflicted with that of Mr Hochwallner, he accepted Mr Armstrong's evidence.

13. According to Mr Cameron he had a conversation with Mr Armstrong about 13 July 1983. He said: "I advised Mr Armstrong I'd been in contact with the Wales Meats office in Sydney, and that they had informed me that Alice Springs Abattoirs Pty. Limited was a separate corporate entity to Alice Abattoirs (N.T.) Pty. Limited, that the latter company was the lessee of the works, and that they disclaim any liability for the electricity account." He said that he also told Armstrong that "I was a little sceptical of the relationship between the two companies . . .".

14. Mr Armstrong's version of this conversation was quite different. He agreed that he had had a conversation with Mr Cameron and that Cameron had told him that the abattoir was owned by "Wales Meat". It appears that Mr Whitaker, the managing director of ASAPL, was also a director and shareholder in both Wales Meat Pty. Limited and Wales Australian Resources Pty. Limited. Mr Armstrong also denied that Mr Cameron told him that "Mr Hart's company (i.e. ASANT) was a different company from that of Wales Meat and Alice Springs Abattoirs Proprietary Limited."

15. The learned trial judge did not accept the accuracy of Mr Cameron's version of his conversation with Mr Armstrong, giving as his reason that he found Mr Cameron's evidence to be "variable".

16. The appeal cannot succeed unless his Honour's findings as to the reliability of Hochwallner's and Cameron's evidence are disturbed. Counsel for NTEC submitted that his Honour must have taken into account the demeanour of the witnesses at the trial and that, not having had the advantage of seeing the witnesses, an appellate court should not, for that reason alone, disturb his Honour's finding. However, I do not find in his Honour's reasons any clear indication that he arrived at his views as to the reliability of the witnesses by observing their demeanour. I therefore do not think that is an obstacle in the path of the appellant.

17. Counsel for ASAPL attacked the trial judge's finding as to the reliability of Hochwallner's evidence because, so he argued, the reasons given by his Honour for rejecting his evidence were unsatisfactory. His Honour said that ASAPL and ASANT had sound commercial reasons for, in effect, maintaining the identity of the two companies. It was submitted that the evidence did not support the conclusion that ASAPL had any sound reason, commercial or otherwise, for concealing from NTEC that ASANT was leasing the abattoir and using the electricity, and was not associated with ASAPL. I think there is much to be said for this submission, but I do not think that his Honour was obliged as a matter of law to accept it. The evidence established that ASANT was paying substantial weekly sums to ASAPL for the right to use the abattoirs and it was open to his Honour to come to the conclusion that it suited ASAPL's purposes that NTEC should not appreciate that there was a new customer liable to pay for electricity charges.

18. His Honour's finding as to Hochwallner's credibility was also criticised because of his failure to mention in his reasons the fact that when, on 11 January 1984, Mr Hochwallner sent a telex to NTEC alleging that on 14 July 1983 he had spoken to Mr Armstrong and advised him that ASAPL had not been a customer of NTEC since late 1980, NTEC replied that "Mr Armstrong had no recollection of having contacted your office". It was argued that this clearly showed that Mr Armstrong's recollection of the July 1983 conversation with Hochwallner was faulty, and should not have been accepted by his Honour. I am bound to say I see the force of this argument, because Armstrong's explanation of the telex was, to say the least, unsatisfactory. Also, the fact that immediately after Armstrong's conversation with Hochwallner he (i.e. Armstrong) wrote to ASANT requiring the payment of the electricity account appears to me to be confirmatory of Hochwallner's version of the conversation.

19. Moreover, the account given by Cameron of his convers ation with Armstrong is entirely consistent with Hochwallner's account of his conversation with Armstrong. It was not suggested that Cameron was not an independent witness. As I have observed, his Honour gave as his reason for not accepting the reliability of his evidence that it was "variable". His Honour appears to cite the following extract from the evidence as justifying this assessment of Cameron's evidence:

"I suggest that Mr Hochwallner told you 'Look, it's
not the Wales Meat company, it's Lindsay Hart's
company, Alice Springs Abattoirs (NT) Proprietary
Limited'?---Well he said 'Look, we have leased the
plant to a company called Alice Springs Abattoir
(NT) Proprietary Limited', and he disclaimed any
liability for that account.

Well he told you that the man to contact was
Lindsay Hart in Alice Springs, didn't he?---Yes, he
probably - yes, he would've, yes.

What I suggest to you that you passed on to Mr
Armstrong was that he had had a discussion with
Wales Meats and that Mr Hochwallner had told you it
wasn't Wales Meats, it was Lindsay Hart's company,
Alice Springs Abattoirs, that was
responsible?---Yes,that's correct'."

20. It was argued by counsel for NTEC that the "Alice Springs Abattoirs" referred to in the last question contained in the above extract was a reference to ASAPL, and that Cameron's answer to that question disclosed that he conveyed to Armstrong the impression that Lindsay Hart's company (i.e. ASANT) was no different from ASAPL. I do not think this is a fair interpretation of the answer. What Cameron did was to assent to a question put to him by the cross-examiner, and it can be plainly seen from the first question contained in the above extract that the cross examiner's reference to "Alice Springs Abattoirs" was a reference to ASANT.

21. I am bound to say that I find persuasive the reasons advanced by counsel for ASAPL as to why the trial judge should have accepted the reliability of the evidence given by Cameron and Hochwallner. But that is not to say that the decision under appeal should be set aside. This is not a case of drawing inferences from either undisputed facts or findings made by the trial judge. If it were such a case, this court would be in as good a position as the trial judge to decide what inferences should properly be drawn from the evidence (cf. Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531). To succeed in this case the appellant must challenge the findings of fact upon which the decision is based. In Brunskill v Sovereign Marine and General Insurance Company Limited (25/9/85 - unreported), a Full Bench of the High Court (Gibbs C.J., Wilson, Brennan, Deane and Dawson JJ.) said:

"The authorities have made clear the distinction
which exists between an appeal on a question of fact
which depends upon a view taken of conflicting
testimony, and an appeal which depends on inferences
from uncontroverted facts. In the former case,to use
the well-known words of Lord Sumner in S.S.
Hontestroom v S.S. Sagaporack (1927) AC 37, at p.47,
which was cited in Paterson v Paterson (1953)
80 CLR 212, at p.222:

'... not to have seen the witnesses puts
appellate judges in a permanent position of
disadvantage as against the trial judge,
and, unless it can be shown that he has
failed to use or has palpably misused his
advantage, the higher Court ought not to
take the responsibility of reversing
conclusions so arrived at, merely on the
result of their own comparisons and
criticisms of the witnesses and of their own
view of the probabilities of the case'."

22. And in Whitely Muir and Zwanenberg Ltd. v Kerr (1966) 39 ALJR 505 at 506, Barwick C.J. said:

"No doubt where the conclusion of the trial judge
is not based upon or in any respect influenced by his
opinion of witnesses orally examined before him, the
appellate court is in an equal position with the trial
judge as to what inferences can be drawn from the
facts as proved before him. But this does not mean
that the appellate court should treat the appeal as a
hearing de novo. The trial judge, although not
depending in any respect on the credibility of any
witness, may have preferred one possible view of the
primary facts to another as being in his opinion the
more probable. Such finding may, in my opinion, be
disturbed by an appellate court but this should only
be done if other probabilities so outweigh that chosen
by the primary judge that it can be said that his
conclusion was wrong."

See also Da Costa v Cockburn Salvage & Trading Pty. Ltd. [1970] HCA 43; (1970) 124 CLR 192 at 206-208 per Windeyer J.

23. I do not think it can be said in the present case that the trial judge either failed to use or palpably misused the advantage which he had of seeing the witnesses. It is true that he appears not to have relied upon the demeanour of the witnesses, but that is not the end of the matter. Although a judge may think that all witnesses bear honest demeanours, he is entitled to have regard to his general assessment of a witness's reliability in preferring one to another. Nor can it be said that the probabilities so outweighed the facts found by the trial judge as to show that his finding was wrong.

24. Moreover, it has to be kept in mind that the critical question for his Honour was whether NTEC became "aware" that ASAPL had discontinued the use of the supply of electricity at the abattoirs - vide by-law 7(c). It is to be remembered that Mr Cameron told Mr Armstrong that he was sceptical of the relationship between ASAPL and ASANT. I think it was open to the trial judge to conclude that even if Armstrong was aware of the existence of both ASAPL and ASANT and the general relationship between them, he was not fully aware of the fact that ASAPL had discontinued using electricity at the abattoirs.

25. Counsel for the appellant conceded, correctly in my opinion, that his client carried the onus of establishing that NTEC was aware of the true facts. Notwithstanding that I may well have come to the view, on the same evidence, that this onus had been discharged, I do not think it can be said that his Honour was in error in coming to the contrary view. For these reasons the appeal should be dismissed with costs.

I have had the advantage of reading the Reasons for Judgment of my brother, Morling J. It is therefore unnecessary to repeat the facts there set out. I agree that the appeal should be dismissed with costs.

2. In my opinion, the conclusion to which the primary judge came was properly open to him and, for myself, I see no reason to be anxious about its correctness.

3. The only issue in the trial was whether in July 1983, the Northern Territory Electricity Commission ("NTEC") became aware that Alice Springs Abattoirs Pty.Limited ("ASAPL") had discontinued the use of the supply of electricity to its electrical installation.

4. ASAPL asserted that the abattoir was leased to Alice Springs Abattoirs (N.T.) Pty.Ltd. ("ASANT") at the relevant time. There was no written lease. The sums paid by ASANT to ASAPL for the use of the abattoir were substantial. It is far from clear to me that in those circumstances the lessor does not continue to use the supply of electricity to its electrical installation.

5. However, the issue in the trial and on the appeal concerned a number of telephone calls in July 1983 with Mr. Armstrong, the Chairman of NTEC.

6. These telephone communications took place between Mr. Armstrong and Mr. Hochwallner, general manager for ASAPL, and between Mr. Armstrong and Mr. Cameron, the Secretary of the Department of Primary Production. The learned primary judge preferred Mr. Armstrong's account of what occurred in these communications to the accounts of Mr. Hochwallner and Mr. Cameron.

7. In attacking this preference, counsel for ASAPL submitted that, there being no express reference in the learned primary judge's reasons to the demeanour of the various witnesses, the inference to be drawn is that in reaching his conclusions he was not guided by any such considerations. The Appeal Court could therefore properly inquire into the various accounts and accept the version advanced by ASAPL as the more probable.

8. Relevant to the correctness of this submission are a number of findings by the learned trial judge:-

"Mr. John Armstrong, Chairman of NTEC at the
relevant time gave evidence and I accept him to be
a truthful and accurate witness. Where his
evidence conflicts with the testimony of
Hochwallner I accept his version."

... ...

"Armstrong was closely cross-examined by Mr.
Mildren Q.C. as to the corporate identity of the
consumer and as to his conversation with
Hochwallner, which was referred to in the latter's
telex of 11 January 1984 (Ex. D.41) which is set
out above. He positively refuted that Hochwallner
had suggested that the defendant 'had not been a
customer of NTEC since late 1980/1' and I accept
his denials."

... ...

9. When speaking of Mr. Cameron's account of his telephone call with Mr. Armstrong, the learned trial judge said:-

"I do not accept the accuracy of this conversation.
This witness' evidence of the conversation with
Armstrong was variable and I am not satisfied,
despite his insistence, that he conveyed to
Armstrong the details he deposed to."
... ...
"I have previously commented on the view I have
formed as to Armstrong's evidence. His denials to
the proposition that Baden Cameron had, in effect,
warned him concerning separate corporate entities
were emphatic and I accept his testimony on this
issue also in preference to that of Baden
Cameron."

10. In the light of these findings, in my view, it is not possible to conclude that His Honour made his findings on credibility independently of the assistance offered to a trial judge by his opportunity to hear and observe the various witnesses. It is not necessary for a trial judge to express in detail the basis of his findings by reference to demeanour or any other factor.

11. In my view, it is quite impermissible to conclude from the absence of such a reference that those aspects played no part in the reaching of the findings on credibility at which the very experienced trial judge arrived.

12. In this case, there was conflicting testimony before the learned trial judge. This Court can disturb his findings resolving that conflict only if it is satisfied that in reaching his conclusions, he clearly misused the advantage possessed by a trial judge in seeing and hearing the witnesses: Da Costa v. Cockburn Salvage & Trading Pty.Ltd. [1970] HCA 43; (1970) 124 CLR 192 at pp 207-208; Edwards v. Noble [1971] HCA 54; (1971) 125 CLR 296 at p 307; Powell v. Streatham Manor Nursing Home (1935) AC 243 at p 250; Whim Creek Consolidated (NL) v. Federal Commissioner of Taxation (1977) 17 ALR 421 at p 426; Brunskill & Anor. v. Sovereign Marine & General Insurance Co.Ltd. & Ors. (unreported decision of the Full Court of the High Court delivered 25th September, 1985).

13. Lord Sumner observed in S.S. Hontestroom v. S.S. Sagaporack (1927) AC 37 at p 47,

"If his estimate of the man forms any substantial
part of his reasons for his judgment the trial
judge's conclusions of fact should, as I
understand the decisions, be let alone."

14. This is such a case.