Buluma Pty Ltd v Shah

[1999] HCATrans 221

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S197 of 1998

B e t w e e n -

BULUMA PTY LTD

Applicant

and

DINESH SHAH, SUSHILABEN C. SHAH, RIKHAV SHAH and JASUBEN SHAH t/as C. DINESH & CO

Respondents

Application for special leave to appeal

GLEESON CJ
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 6 AUGUST 1999, AT 2.45 PM

Copyright in the High Court of Australia

MR A.W. STREET, SC:   If the Court pleases, I appear with my learned friend, MR G.B. EVANS, for the respondent.  (instructed by Blake Dawson Waldron)

MR M.K. ROLLINSON:   If the Court pleases, I appear for the applicant. (instructed by Ramrakha Jenkins)

GLEESON CJ:   Yes, Mr Rollinson.

MR ROLLINSON:   Your Honour, the matter of general importance in this case is the adoption by his Honour the learned President in the Court of Appeal certainly, and possibly also by his Honour Justice Meagher in that Court, of a principle according to which their Honours saw fit to overrule the credibility-based finding of the trial judge.

GUMMOW J:   That is not quite right, is it?

MR ROLLINSON:   Why not, your Honour?

GUMMOW J:   The trial judge was in a state of great perplexity.

MR ROLLINSON:   The trial judge was in a state of perplexity, your Honour.

GUMMOW J:   As to conflicts of the oral evidence.

MR ROLLINSON:   Yes.

GUMMOW J:   What the Court of Appeal was saying was there was some real evidence, namely, some documents.

MR ROLLINSON:   Yes, your Honour, but focus must be placed on the nature of those documents, the documents detailed by Mr Justice Meagher and the learned President.  Of its nature, an invoice is a unilateral document.  Anyone could invoice anyone for anything and not thereby give rise to any inference of an admission or acknowledgment by the invoiced party of the existence of any transaction.  The so-called objective evidence in this case was simply this.  The three invoices, their existence, their dispatch to the defendant, purported buyer, their dispatch accompanying, to put it in a neutral manner, the shipments themselves, the fact of the shipments and the fact of the payments.  The payments, your Honours, were not accompanied – there was no issue about this – by any covering letter explaining what they were for or anything of that kind.  There was simply the fact of payments in certain amounts and there is an interesting coincidence, perhaps, not certainly, as regards one of those amounts by the purported buyer to the purported seller.

The buyer’s explanation at trial was that he was paying only the so‑called third invoice and he evidenced how he had on-sold the goods in the third invoice, where he had got the funds from with which to pay that invoice and how, according to him, by dint of an oral agreement with the purported seller he was selling on consignment and deducting 10 per cent commission.  They are the so-called objective facts in the case and everything beyond that in support of the plaintiffs depended entirely, in my submission, on the credibility of the plaintiff’s witnesses.  The plaintiff comes to court putting forward the invoices and inviting the natural, as it may be, inference from the invoices that they represent a genuine sale in their terms ‑ ‑ ‑

GLEESON CJ:   Mr Rollinson, what were the special circumstances to which Acting Judge Stewart was referring on page 28, line 26?

MR ROLLINSON:   Page 28 of the application book, your Honour?

GLEESON CJ:   Yes.

MR ROLLINSON:   They were, your Honour, that his Honour had held in the preceding pages that in a nutshell he considered the principal witnesses for both sides to have been lying on substantial points in the case.

GLEESON CJ:   That does not make it sound much like a credit‑based finding.  That makes it sound more like an onus of proof‑based finding.

MR ROLLINSON:   Yes, your Honour, but that ‑ ‑ ‑

GLEESON CJ:   All the Court of Appeal did was to undertake a fairly orthodox judicial exercise of saying that in a situation where you simply do not know who to believe for one reason or another, such that you think everybody is a liar or everybody has forgotten or everybody is mistaken, the best way to resolve the case is to look at the documents.  That is not an uncommon approach for courts to take.

MR ROLLINSON:   No, I do not pretend otherwise, your Honour.

GLEESON CJ:   It does not sound like a special leave issue.

MR ROLLINSON:   But the point is, your Honour, that first at page 28, line 25, his Honour is addressing the matter of costs and the result of his Honour’s deliberation was that although the defendant buyer, so-called, one, the defendant buyer was entirely refused costs, the special circumstance being that, I concede, his Honour found that the principal witnesses for the defendant buyer were dissembling, in his Honour’s words, about the transactions in question.  His Honour also found that the principal witnesses for the plaintiff were likewise dissembling and his Honour speculated that there might be a real story underlying it all that the court was not to be made privy to, so be it.

But, your Honour, the trouble with treating the case, in my submission, as one in which there being a conflict of oath against oath the documents must rule and, if need be, overrule, is that the documents in this case are pre-eminently the invoices which are entirely unilateral, the work of the plaintiff purported seller and the letters of demand of the, again, plaintiff purported seller which are of their nature self-serving, as are the invoices.

The only objective fact, apart from those that can be married to them and create a situation, in my submission, in which the documents can overrule the credit issues are circumstances as to which there was a real issue below and as to which there is not that element of admission necessarily or acknowledgment implicit in them on the part of the buyer.  It is not enough to say, in my submission, that the more or less coincidence of payments to the plaintiff with invoices from the plaintiff amount to an admission that the payments marry the invoices, not in the case where the defendant/so-called buyer was not silent about the purpose of the payments, but rather said, “No.  There was one transaction, one shipment, one invoice, for which my organisation was responsible.  It was the so-called third invoice.  The deal was 10 per cent commission.  I would take on consignment, on-sell and remit with 10 per cent commission.  That is what I did, that is what my payments were directed to.”

Admittedly, your Honour, the word of the defendants’ witness must be taken as to the veracity of that explanation, but there is no objective fact of an admission, in my submission, in this case that can be thrown into the equation and negate that explanation.  In the end, there must be room for the burden of proof to operate.  The decision, in my submission, of the learned trial judge was simply, to boil it down, that in a case where the relevant witnesses are being untruthful on substantial matters, party witnesses, in effect, in this case, the burden of proof must operate in such a way as to cause the plaintiff to lose.  Importantly though, your Honours, the class of witnesses as to whom the learned trial judge found worthiness of credit were the witnesses put forward by the defendants’ camp which gave the lie to the claims of the plaintiff’s witnesses.

The case, as your Honours will have seen, was one in which the plaintiff’s witnesses flatly denied that they were, in the course of their visits to Australia which coincide with these shipments, selling diamonds in their own right in Sydney.  His Honour the learned trial judge found that those denials were lies and that the plaintiff’s representatives were, indeed, selling diamonds, or attempting to, in their own right in Sydney.  In the absence of any explanation from them as to where they had got those diamonds from, if such diamonds were not the diamonds in invoices one and two, an inference could arise that they were selling the diamonds in invoices one and two and such inference would to this extent corroborate the evidence of the defendants’ representative that, indeed, that was what happened.  The goods represented by invoices one and two arrived unannounced, uninvited and unwanted.  There was a dialogue between the representatives of the two parties and the plaintiff’s representatives said, “Don’t worry, it’s our responsibility, we will take them, we will look after them”.  In other words, the invoices did not represent a genuine transaction between the two parties.  In a nutshell that is the case, your Honours.

In view of the peculiar circumstances, this was classically a credibility-based case for trial.  In the end relevantly, I submit, the inferences to be drawn in isolation on first blush from the documents fell away and what mattered was the impression on the learned trial judge of the respective credit of the witnesses for each camp.  The learned trial judge arrived at a certain conclusion.  That conclusion was one that the burden of proof was not discharged by the plaintiff, and the Court of Appeal ought not to have interfered, in my submission, with that finding on the grounds advanced by that court.

Quite apart from the factual matters that are detailed in the written submissions, your Honours, the Court of Appeal appears, in my submission, to have – although referring to authorities, the case of Khafam Development and Voulis v Kozary which are in the trend of authorities on interference with credibility-based decisions – appears to overlook the fact, in my submission, that at the end of the day ‑ ‑ ‑

GUMMOW J:   You keep saying credibility based ‑ ‑ ‑

MR ROLLINSON:   Yes.

GUMMOW J:   But, as the Chief Justice has put you, this is really a problem that arose out of the requirements of the onus of proof, was it not?

MR ROLLINSON:   Yes, your Honour, but the point is this.  On the plaintiff rested the onus of proof.  The plaintiff did not have in its favour sufficiently, in my submission, documents as objective facts from which inferences could be drawn that could discharge the onus of proof, not in the face of the denial, in my submission, of the defendant of the transaction that was alleged to underlie the invoices.  In such a case, your Honour, that is unilateral documents, so-called invoices, invitation to infer that a transaction of a genuine character underlies the invoice ‑ ‑ ‑

GUMMOW J:   If you are right for present purposes, where is there a general leave point in the contention that the Court of Appeal misapplied in this particular circumstance what can be done by way of these documents?

MR ROLLINSON:   Simply, your Honour, that at pages 41 and 42 in the case of the learned President  ‑ ‑ ‑

GUMMOW J:   Yes, but what error of principle would be involved if what you say is right?

MR ROLLINSON:   It is, your Honour, that the learned President says that the principles are well known, by which the learned President, one imagines, was referring to the rule that a credibility-based finding at trial ought only to be overruled if the appellate court comes to a conviction, as some have described it, or a very strongly felt conclusion at the least, that ‑ ‑ ‑

GLEESON CJ:   But the proposition you want to challenge is the assertion on page 42, lines 10 and 11, that:

There were records of payments which strongly supported the appellant’s case ‑ ‑ ‑

MR ROLLINSON:   Yes.

GLEESON CJ:   Your entire argument is directed towards contradicting that proposition.

MR ROLLINSON:   No, your Honour.  My argument is that the learned President appears to be deriving from the case of Khafam and the facts of that case, namely, payments and records of payments to which both parties in that case were privy, a principle which the learned President believes applies to this case that such admissions have great probative value.  The learned President appears, with all respect, to have overlooked the fact that Khafam was a case in which the records of payments and the statements and the associated documentation referred to in the judgment in that case were bilateral, not unilateral.  The matter that is absent in this case – and which, in my submission, required as a matter of principle a different treatment – is the absence of a bilateral document or other communication that tends to corroborate the case of the plaintiff.

GLEESON CJ:   But at the end of the day what you want the High Court to determine is whether the records of payments in truth strongly supported the appellant’s case.  That is the issue ultimately you would have us decide.

MR ROLLINSON:   Yes, your Honour, but in order to do so I pretend only to submit to your Honour that a matter of principle arises from the way that the Court of Appeal has disposed of this case.  The Court of Appeal has applied a wrong principle, in my submission, in disposing of this case, namely, the principle explicitly, according to his Honour, applied by the learned President and perhaps implicitly applied by his Honour Mr Justice Meagher deriving from what the court appears to consider to be some such class of cases in which there are payments recorded and statements surrounding payments that strongly support a case in a way that makes easier than otherwise the overruling of a credibility-based finding.

In effect, your Honour, to some extent an unsatisfactory situation has arisen.  I have submitted to your Honours that it is an interpretation of the three judgments of the Court of Appeal that Mr Justice Meagher is in agreement with the principle derived, as I have submitted it is, by the learned President.  Alternatively, though, the learned President is the only member of the Court of Appeal who, with all respect, has applied a principle which I submit is wrong.  Mr Justice Meagher rather can be understood to have simply been applying accepted principles but, if your Honours were of the opinion that Mr Justice Meagher was doing that latter, then the deficiency in his Honour’s reasoning is a purely factual one, albeit, as I submit, a very glaring one.  But, your Honour, purportedly applying those same principles not stated – and they did not need to be ‑ ‑ ‑

GUMMOW J:   What do you say about Justice Fitzgerald?

MR ROLLINSON:   That Mr Justice Fitzgerald correctly applied the principles, the rule of restraint that applies to cases in which there is a credibility-based finding below.  Mr Justice Fitzgerald in the end looked at the coincidences that supported the plaintiff – this appears particularly from pages 51 and 52 of the application book – concluded that it become a case of oath against oath, it became a case of independent, so-called by his Honour, witnesses in the defendants’ camp against oath of the plaintiff’s witnesses; and in such a case, married with flat denials found to be false on part of those in the plaintiff’s camp, one is confronted with a credibility‑based finding as to which a rule of restraint, Abalos, Zuvela, Devries, Earthline, has to be applied and his Honour, with respect, correctly applied it.

My final submission, your Honours, is this.  If your Honours are against me on leave to appeal in the general matter, my subsidiary submission is that for no expressed reason the Court of Appeal by majority reversed the costs order of the District Court and awarded to the plaintiff costs in that court, as well as on appeal.  Plainly, in my submission, your Honours, the discretionary decision of the trial judge set out on pages 28 and following of the application book was not challengeable and ought not to have been reversed.  The Court of Appeal has done so for unstated reasons and in the interests of the administration of justice in this case ‑ ‑ ‑

GUMMOW J:   They were just making costs follow the event, were they not?

MR ROLLINSON:   Yes, your Honour, but ‑ ‑ ‑

GUMMOW J:   Including the event which they were saying should have been the event in the District Court. 

MR ROLLINSON:   But, your Honour, the position is this.  In the District Court the event was in favour of the defendant.

GLEESON CJ:   No, but that was the District Court that made a special order as to costs.

MR ROLLINSON:   Yes.

GLEESON CJ:   The Court of Appeal, reversing the decision of the District Court, simply made the usual order as to costs.

MR ROLLINSON:   Yes, your Honour, but my submission is that the Court of Appeal in so doing, and in extending its order to the proceedings in the District Court, overlooked those considerations which had justified, in my submission, the trial judge in depriving the defendant of costs at trial.  The special circumstances so described of the case were that the trial judge found a serious absence of credit on the part of witnesses on both sides of the record.  In that circumstance, I submit, the defendant winning is deprived of costs.  Had the plaintiff won – a hypothetical proposition – the plaintiff must equally have been deprived of costs owing to the plaintiff’s want of frankness in evidence.  It must follow from the analysis made by the trial judge who was best in the position to assess the matter.  The costs of the appeal are a different matter, but there was no warrant, in my submission – and this was not the subject of any cross-appeal by the defendant – in the Court of Appeal’s overturning the costs order as regards the District Court costs in this case.  Those are my submissions.

GLEESON CJ:   Thank you, Mr Rollinson.  We do not need to hear you, Mr Street.

This case raised issues of fact.  The majority in the Court of Appeal took a different view of the facts from the view taken by the trial judge.  In doing so, the Court of Appeal had due regard to the principles which guide the conduct of appellate courts in considering challenges to findings of fact.  In relation to the order as to costs that was made by the Court of Appeal, there is no indication of any discretionary error in that respect.  The case appears to raise no issue of fact suitable to a grant of special leave, and the application for special leave to appeal is refused.

MR ROLLINSON:   If the Court pleases.

GLEESON CJ:   Can you resist an order for costs, Mr Rollinson?

MR ROLLINSON:   No, your Honour.

GLEESON CJ:   The applicant must pay the costs of the respondent.

MR ROLLINSON:   If the Court pleases.

AT 3.07 PM THE MATTER WAS CONCLUDED