Broadlands (Properties) Pty Ltd & Ors v Burns & Burns Pty Ltd & Ors [1997] FCA 509 (21 May 1997)

I N THE FEDERAL COURT OF AUSTRALIA )

) No. NG 67 OF 1997

NEW SOUTH WALES DISTRICT REGISTRY )

)

GENERAL DIVISION )

ON APPEAL AGAINST A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: BROADLANDS (PROPERTIES) PTY LIMITED

(ACN 000 847 316)

First Appellant

VICTOR VIRGONA and MARIA VIRGONA

Second Appellant

AND: BURNS & BURNS PTY LIMITED

First Respondent

RICHARD BURNS

Second Respondent

and

JULIA BURNS

Third Respondent

CORAM: WILCOX , HILL and SACKVILLE JJ

PLACE: SYDNEY

DATE: 21 MAY 1997

EXTEMPORE REASONS FOR JUDGMENT

WILCOX J: This is an appeal against a decision of a Judge of the Court, Whitlam J, reached after a 35-day hearing. His Honour's decision turned entirely on issues of fact and, ultimately, credibility. There were major discrepancies between the evidence of the second and third appellants, Victor and Maria Virgona, concerning conversations they had with the second and third respondents, Richard and Julia Burns, about the sale of their home at 10 Water Street, Wahroonga. The gist of the appellants' case was that Mr and Mrs Burns, who were estate agents, misrepresented their opinion of the value of the appellants' property. The claims were rejected because the trial Judge concluded he could not believe the evidence of Mr and Mrs Virgona.

The appeal therefore, presents itself as one falling within the principles enunciated by the High Court of Australia in cases such as Abalos v Australian Postal Commission [1990] HCA 47; (1990) 171 CLR 167 and Devries v Australian National Railways Commission [1992] HCA 41; (1993) 177 CLR 472. In that regard it is sufficient to refer to what was said by Brennan, Gaudron and McHugh in Devries at 479, and I quote:

"More than once in recent years this Court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against - even strongly against - that finding of fact. If the trial judge's finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge `has failed to use or has palpably misused his advantage' or has acted on evidence which was `inconsistent with facts incontrovertibly established by the evidence' or which was `glaringly improbable."

Counsel for the appellants accept this statement of principle, but say the trial Judge's conclusions are vitiated by erroneous rulings in relation to the tender of evidence. Absent such errors, they say, the case may have gone another way; consequently a re-trial is necessary.

The first error attributed to the trial Judge was his rejection of para 17 of an affidavit sworn by David Beattie, a solicitor then acting on behalf of Mr and Mrs Virgona. This paragraph referred to a conversation which he said he had with Mrs Virgona shortly after 14 February 1990, and I quote:

"We discussed the fact that she and Victor Virgona has retained Burns & Burns to sell the Water Street property. I said words to the effect: `There is always a risk if you decide to purchase a property without first selling yours.'

She replied: `Yes, but we have been assured by Julia that we can obtain at least $3.5 million on the sale of our property."

Counsel concede that this paragraph was not admissible in their clients' case in chief; it was rightly rejected at that time. But the paragraph was re-tendered at the conclusion of Ms Virgona's evidence and they say it should then have been admitted into evidence as material tending to rebut a suggestion of recent invention. That suggestion, they say, was made in the course of the cross examination of Ms Virgona, the relevant exchanges being as follows:

"You see, what I suggest to you, Madam, is that this whole case has been devised by you and your husband out of an act of revenge on the part of the Burns' for what you regard as having the hide to make a claim for commission, is that not the fact?---That I'd spend a quarter of a million dollars on legal fees?

Only you, madam, can answer that so far as your revenge is concerned?---I'm sorry, but it is absurd. It is absurd what you are saying.

Is it?---Yes."

The leading authority on admission of evidence to rebut a suggestion of recent invention is the High Court's decision in Nominal Defendant v Clements [1960] HCA 39; (1960) 104 CLR 476. That authority supports the view that evidence may be tendered to rebut a suggestion of recent invention made in the course of cross-examination. It is not necessary that there be evidence impeaching the witness's account of the matter. But the requirement is strict. At 479-480 Dixon CJ, with whom Kitto and McTiernan JJ agreed, said:

"If the credit of a witness is impugned as to some material fact to which he deposes upon the ground that his account is a late invention or has been lately devised or reconstructed, even though not with conscious dishonesty, that makes admissible a statement to the same effect as the account he gave as a witness if it was made by the witness contemporaneously with the event or at a time sufficiently early to be inconsistent with the suggestion that his account is a late invention or reconstruction. But, inasmuch as the rule forms a definite exception to the general principle excluding statements made out of court and admits a possibly self-serving statement made by the witness, great care is called for in applying it. The judge at the trial must determine for himself upon the conduct of the trial before him whether a case for applying the rule of evidence has arisen and, from the nature of the matter, if there be an appeal, great weight should be given to his opinion by the appellate court. It is evident however that the judge at the trial must exercise care in assuring himself not only that the account given by the witness in his testimony is attacked on the ground of recent invention or reconstruction or that a foundation for such an attack has been laid by the party but also that the contents of the statement are in fact to the like effect as his account given in his evidence and that having regard to the time and circumstances in which it was made it rationally tends to answer the attack".

I emphasise the words "not only that the account given by the witness ... is attacked on the ground of recent invention or reconstruction". There must be a specific allegation of recent invention, in respect of a specific statement. A mere general allegation about dishonest motives in commencing proceedings is not enough. Menzies J said, at 490:

"I regard evidence of an earlier consistent statement as admissible in accordance with this exception only when the Court itself considers that the evidence of a witness has been impeached as a later contrivance and this has been done by the opposite party in the conduct of the case, whether by the cross examination of the witness, or by eliciting evidence of the fabrication from another witness, or in some other positive way."

See also Windeyer J at 495:

"There must be an imputation, clearly made and not unequivocally disclaimed, that the witness is not speaking from his own recollection of events, but is recounting a story subsequently made up by him or for him."

The suggestion put in the cross-examination in this case does not go anywhere near meeting the requirements stipulated in Clements. It seems to me his Honour was correct in rejecting the re-tender of Mr Beattie's evidence.

The appellants' second complaint relates to alleged wrongful admission of evidence. Two incorrect rulings are claimed. The first concerns a memorandum from one Westpac bank officer to another, dated 5 February 1993. The memorandum related to the Virgonas' financial affairs and contained unflattering comments about Mrs Virgona, especially her selective memory. Counsel for the appellants say the memorandum was irrelevant; it potentially damaged their clients' case and ought not have been admitted.

In my opinion the document at best had peripheral relevance to the issues. I am not sure that it ought to have been admitted into evidence, but there is no reason to believe it played any part in his Honour's reasoning. His Honour did not refer to it in his Reasons for Judgment. In those Reasons he made clear that he based his findings about Mrs Virgona directly on his impressions of her as a witness and the improbabilities and inconsistencies in the appellants' case. He said, in effect, that the version of events advanced by Mr and Mrs Virgona could not be reconciled with important incontrovertible facts. His Honour observed Mrs Virgona in the witness-box over some days. In that situation it is fanciful in the extreme to think he would have been influenced by a throw-away comment about her in a bank memorandum.

The second item of allegedly wrongly admitted evidence relates to a transaction undertaken by Mr and Mrs Virgona in relation to property at Hopetoun Avenue, Mosman. I am not persuaded this material was irrelevant. The Mosman transaction took place in the year immediately following the attempted sale of the Wahroonga property. I think the documents were admissible on the basis that they provided some evidence as to the business acumen and financial position of Mr and Mrs Virgona, both these matters being central to their claim against the present respondents. What weight they ought to be given was another matter, and in fact his Honour seems not to have relied on them at all, but I think they were admissible.

The appellants' remaining arguments are gathered together in their Outline of Submissions under the heading "Errors in Assessing Evidence". The items are numerous. Counsel have taken us through them one by one. In relation to some items, it seems to me that detailed analysis of the evidence demonstrates that the trial Judge's finding was clearly right. In relation to other items the proper conclusion is not so clear, but there is no item in relation to which his Honour reached a conclusion not open to him.

One of the last complaints by the appellants, made in respect of a number of items, is that his Honour did not make a finding. That is true; but it would have been a formidable, perhaps impossible, task for him to make findings about every one of the multitudinous issues raised during the course of this long hearing. Moreover, it was unnecessary to do so. The central task of the trial judge was to determine which of two starkly conflicting versions of conversations he would accept. He performed that task and made clear findings about it that are supported by the evidence and exhibit no defective reasoning. It is not to the point that his Honour failed also to resolve every peripheral point.

In my opinion the appeal should be dismissed with costs.

HILL J: I agree.

SACKVILLE J: I agree with the judgment of the learned presiding Judge. I would add only one comment.

In relation to the first argument put by Mr Jackson, it is also of importance to note the second limb of the test put forward in Nominal Defendant v Clements [1960] HCA 39; (1960) 104 CLR 476, at 479-480, in the judgment of the Chief Justice. It is necessary, in order for the evidence to be admissible, that "the contents of the statement are in fact to the like effect as his [that is, the party's] account given in his evidence and that having regard to the time and circumstances in which it was made it rationally tends to answer the attack".

The material that was tendered appears in an affidavit of Mr Beattie, the solicitor for Mr and Mrs Virgona. In Mr Beattie's affidavit, at para 17, he recounts a conversation in which he said to Mrs Virgona:

"There is always a risk if you decide to purchase a property without first selling yours".

According to Mr Beattie, Mrs Virgona replied:

"Yes, but we had been assured by Julia that we can obtain at least $3.5 million on the sale of our property."

The statement which, according to Mr Beattie, was made by Mrs Virgona, does not in my opinion satisfy the second limb of the test laid down in Nominal Defendant v Clements. The contents of that statement do not sufficiently conform to the case as pleaded by the appellants (and to Mrs Virgona's evidence in chief) to justify the conclusion that the statement is to the like effect as Mrs Virgona's evidence and that it tends rationally to answer the attack on her evidence.

Accordingly, in my opinion, the second element in the test specified in Nominal Defendant v Clements has not been satisfied in the present case. In the result I agree with the orders proposed by the learned presiding Judge.

WILCOX J: The order of the Court will be that the appeal be dismissed and that the appellants pay the respondent's costs of the appeal.

I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment herein of the members of Court.

Associate:

Dated: 21 May 1997

APPEARANCES

Counsel for the Applicant: D Jackson QC, M Dicker and M Condon

Solicitor for the Applicant: Magney & Rhodes

Counsel for the Respondent: J R Sackar QC and M T McCullock

Solicitor for the Respondent:: Minter Ellison

Date of Hearing: 21 May 1997