Chow v Yang - [2010] SASC 96

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
CHOW & ORS v YANG & ORS
[2010] SASC 96
Judgment of The Full Court
(The Honourable Justice Nyland, The Honourable Justice Gray and The Honourable Justice Vanstone)
9 April 2010
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH JUDGE'S FINDINGS OF FACT - FUNCTIONS OF APPELLATE COURT - WHERE FINDINGS BASED ON CREDIBILITY OF WITNESSES - GENERALLY
PROCEDURE - JUDGMENTS AND ORDERS - INTEREST ON JUDGMENTS - IN GENERAL
Appeal from decision of District Court Judge - contractual dispute relating to purchase of supermarket business - variation of terms of contract for transfer of business - transfer of business never effected - agreement at trial as to failure of consideration - issue at trial as to extent of rundown of stock and of amount unpaid to suppliers in intervening period - Judge did not award interest - whether Judge’s reasons as to defendant’s credit indicative of error - whether findings as to depletion of stock and unpaid suppliers could be sustained - whether Judge erred in assessing credibility of defendant’s evidence - whether Judge erred in declining to award interest - consideration of approach of appellate Court.
Held: primary findings upheld but error as to decision not to award interest - Judge erred in declining to award interest in favour of plaintiff - defendant had use of moneys paid by plaintiff - Judge’s reasons made plain his findings and were adequate - finding as to depletion of stock and unpaid suppliers supported by evidence - Judge entitled to accept evidence of defendant in preference to plaintiff. Appeal allowed in part.
Supreme Court Civil Rules 2006 (SA) r 292, referred to.
Chow & Ors v Yang & Ors [2009] SADC 33; Fox v Percy (2003) 214 CLR 118; Abalos v Australian Postal Commission (1990) 171 CLR 167; Jones v Hyde (1989) 63 ALJR 349; Devries v Australian National Railways Commission (1993) 177 CLR 472; Chew v Amanatidis [2009] SASC 334; State of South Australia v McDonald (2009) 104 SASR 344; Queen Elizabeth Hospital v Curtis (2008) 102 SASR 534; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247; Sun Alliance Insurance Ltd v Massoud [1989] VR 8; Papps v Police (2000) 77 SASR 210, considered.

CHOW & ORS v YANG & ORS
[2010] SASC 96
Full Court: Nyland, Gray and Vanstone JJ
NYLAND and GRAY JJ:

This is an appeal arising from a judgment of a District Court Judge following a trial with respect to a contractual dispute.
Introduction
The dispute related to the sale and purchase of a supermarket business situated in the Chinatown precinct of Grote Street, Adelaide. The vendor, Peter Liu Li Yang, the first defendant in the proceedings and a respondent to the appeal, was the owner of the business through a corporate structure. Mr Yang migrated from Taiwan in 1998 and in that year, with two others, bought the business and the real estate from which it operated. In 2001, Mr Yang bought out the business interests of the other two. The three together continued to hold the real estate. The three entered into a lease agreement with a corporate entity Austaikong International Trading Pty Ltd, the trustee of a unit trust. The unit trust operated the business but Mr Yang ran and controlled it. The lease of the premises was for a term of five years terminating on 30 April 2003 with an option for an extension for a further five years, to April 2008.
In 2003 Mr Yang decided that he would like to retire from the business, but that he wished to retain his interest in the real estate. He approached Raymond Ying Kei Chow, the first plaintiff and appellant, to ascertain if he would be interested in purchasing the business. He had previously had dealings with Mr Chow with respect to the supply of supermarket products. Mr Chow resided in Sydney. They reached an oral agreement for the sale and purchase of the business. A stocktake was undertaken on 14 February 2004. The agreement took effect on 15 February 2004.
The essential terms of the agreement were that Mr Yang would sell the business to Mr Chow, and one of his sisters and three brothers-in-law. Mr Chow’s sister lived in Hong Kong and his brothers-in-law in Taiwan. Each purchaser was to hold a one-fifth share. The total consideration was initially agreed at $526,000.00. This was apportioned $300,000.00 to goodwill and $226,000.00 to stock. The parties agreed that settlement would take place on 30 June 2004.[1]
[1] As a matter of convenience, the purchasers and plaintiffs will be referred to as Mr Chow and the vendors and defendants as Mr Yang.
Prior to settlement, the parties agreed to a variation to the terms of the agreement. It was agreed that Mr Yang would retain a ten per cent interest and dispose of only ninety per cent of the business.
Mr Chow took possession and commenced operating the business on 15 February 2004. Mr Yang was responsible for the payment of all stock purchases prior to 15 February 2004. Mr Chow appointed a “Mr Joe” to manage the business. He opened a cheque account with Westpac with respect to the business. Mr Chow and his brother-in-law were signatories to that account. Mr Chow then returned to Sydney.
Mr Yang stayed in the shop for several weeks to facilitate the hand-over. In early March he went overseas for about a month.
Mr Chow commenced paying the purchase consideration in instalments. It was agreed by the parties that the adjusted original purchase price was paid on or before 11 June 2004.
Thereafter the parties fell out. In November 2004 Mr Chow left the business. The business had not by that time been transferred by Mr Yang to Mr Chow and his co-purchasers. More particularly, a transfer of the unit trusts was never effected. It appears that Mr Chow was not aware that the business was conducted through a company and trust structure until the time of the trial. There was disagreement on a number of issues and at trial each blamed the other for the falling out.
At trial the parties agreed that the Judge proceed on the basis that there had been a failure of consideration and that the contractual agreement was at an end. It was further agreed that restitution should be made to Mr Chow for the moneys paid, with a set-off for benefits received. The dispute at trial and on appeal related to the value of the benefits received by Mr Chow. The dispute primarily turned on the value of the stock at the time Mr Chow left the business and, in particular, the extent to which the stock had been run down, if at all, by Mr Chow. That dispute involved an analysis of the evidence as to the stocktake said to have been undertaken by Mr Yang after Mr Chow left the business. The findings of the Judge in relation to the stocktake were inextricably linked with his findings as to credit.
The Judge addressed the topic described as “the agreement becomes ineffective” in the following way:[2]
There then arises the question of why the contract became ineffective. The shares were never transferred to the plaintiff. The plaintiff never became the lessee of the premises. Legally it probably does not matter which party is responsible for the contract becoming ineffective. The essential point is that there has been a failure of consideration. It need not be a total failure of consideration. As the defendant concedes “the plaintiff may obtain restitution if they receive a benefit or performance other than the one bargained for” (see Carter and Harland, Contract Law in Australia (4^th ed 2002) par [2306] citing Rowland v Divall [1923] 2 KB 500.
Further, the defendant concedes that it is irrelevant whether it was the plaintiff or the defendant who was in breach. The defendant goes on to argue that he may set off any detriment he suffers.
Notwithstanding that it may not be necessary as a matter of law to make a finding on the question of who terminated the contract, the facts related to that topic are so tied up with the facts related to the matters in dispute that findings of fact will have to be made in relation to this topic. Findings of fact have to be made in relation to the alleged detriment. Did the plaintiff significantly deplete the stock so that its worth went from $226,000 in February to $51,000 in November? Was there a stocktake at all in November? Did the plaintiff leave unpaid suppliers amounting to about $188,000? Did the defendant repay them? The plaintiff denies each assertion posed by these questions. These questions are only resolved by findings of credit in relation to the plaintiff, Austin and Mr Joe on the one hand and the defendant, his wife and his son on the other. The evidence of the plaintiff and the defendant about the circumstances of the termination of the agreement are inextricably tied up with these topics.
[2] Chow & Ors v Yang & Ors [2009] SADC 33 at [25]-[27].
At the time that Mr Chow withdrew from the business in November 2004 the circumstances may be summarised as follows. Mr Chow had paid $473,400.00 cash to Mr Yang – that is ninety per cent of the originally agreed purchase price of $526,000.00. There was, according to Mr Yang, a depletion of stock to a value of about $175,000.00 and substantial debts incurred by Mr Chow to unpaid suppliers. Ultimately, the Judge concluded that the shortfall in stock was to a value of $174,635.76 and the amount unpaid to suppliers totalled $221,547.05. The Judge deducted these two amounts from the consideration paid by Mr Chow, leaving a balance payable to Mr Chow of $91,025.64. The Judge declined to award interest and ordered that Mr Chow pay Mr Yang’s costs on a party/party basis from 17 April 2007. The Judge entered judgment accordingly.
The Judge’s conclusions about the evidence, and in particular his preference for the evidence led by Mr Yang as against that led by Mr Chow, were expressed in the following terms:[3]
For reasons that I will discuss I prefer the evidence of the defendant and his witnesses over that of the plaintiff and his witnesses wherever they differ. I find that the defendant was doing his best to recollect events accurately and he was truthful. I find that the plaintiff on the other hand was evasive, contradictory and unreliable.
The Judge explained:[4]
There are several discrete topics upon which the parties’ evidence differs markedly and I will discuss why I prefer the evidence of the defendant over that of the plaintiff on those topics. I will then comment on other aspects of credit which lead to the same conclusion. The fundamental differences between the parties centre on two matters. First, each blames the other for the contract not being completed. While legally it may not matter who terminated the contract, that issue is so central to the credit of each of them that it is necessary for me to make factual findings on it.
[3] Chow & Ors v Yang & Ors [2009] SADC 33 at [29].
[4] Chow & Ors v Yang & Ors [2009] SADC 33 at [30].
The Judge proceeded to discuss a number of the disputed topics and explain in detail his reasons for his preference for Mr Yang’s account as against that of Mr Chow. He concluded that Mr Chow was responsible for the contract not proceeding and observed:[5]
The defendant says that when he got back from overseas he told Mr Joe he did not want anymore to do with the business. He also told the plaintiff that. The plaintiff was angry. On 11 November the plaintiff told him that he had found a buyer for the business but the buyer wanted the real estate. The plaintiff complained about the income of the business. The defendant said that the plaintiff wanted $150,000 back of his purchase price. I accept this evidence of the defendant. It is a more rational explanation for the settlement not taking place than an inexplicable refusal on the part of the defendant to effect the transfer. I find that the defendant always wanted to proceed to divest himself of the business. Even though he willingly re-entered the business after the plaintiff left it, and stays there to this day, I am satisfied that in 2003-4 he wanted to sell the business. He remained willing to sell it but the plaintiff would not give him the information that enabled him to do so. For whatever reason the plaintiff either wanted to get out of his agreement with the defendant or, he wanted more advantageous terms.
I find that the evidence of the plaintiff is unreliable and unbelievable on the topic of who caused the agreement to become ineffective. I find that he, not the defendant, caused it to remain uncompleted.
[5] Chow & Ors v Yang & Ors [2009] SADC 33 at [44]-[45].
The Judge then turned his attention to the critical question on appeal – the depletion of stock. In that respect it is convenient again to refer to the reasons of the Judge:[6]
The second major factual dispute between the parties concerns the state of the stock in the business in the latter part of 2004. The defendant says the stock was radically reduced from what it had been in February. The plaintiff maintains that it had not been reduced at all. The plaintiff denies that there was a stock-take undertaken by the defendant after he left the shop. In effect, he is saying that, the defendant and his witnesses are lying when they say they conducted a stock-take and that it showed a gross reduction in stock. The defendant is, in effect, saying that the plaintiff ran the business down. In my view the evidence is overwhelming that the plaintiff ran the business down. The plaintiff’s evidence was evasive and at times, simply unbelievable. I digress to say something of the mastery of English of each of the parties. A reading of the transcript of his evidence might suggest that the plaintiff had a difficulty with English and was at a disadvantage in the witness box. That is not at all my impression. He seemed alert to the questions being asked and, when he chose, was precise about his answers. He did not seek an interpreter and in my view, did not need one. The defendant’s command of English was not as good as that of the plaintiff, yet, when spoken to in clear language, he too was able to give evidence without the benefit of an interpreter.
It is clear that towards the end of his occupation of the business the plaintiff made plans to remove and secure for himself the income from the shop. The defendant does not dispute that he was entitled to do so. However, it is the secretive method that he went about it that informs what he was really doing. The plaintiff says in his evidence that at all times he kept the stock up to the level it was at in February 2004. The defendant says that the stock had been serious depleted. The plaintiff had installed Mr Joe in the shop from about May. Mr Joe obeyed the orders of the plaintiff. I found his evidence generally evasive, but concessions that he made are informative about where the truth lies. It is clear that for a time before 11 November, Mr Joe was not banking the takings. He was keeping the cash receipts for the plaintiff. In cross-examination he was asked questions about that topic. The questions concerned the period around late September to mid October. The defendant was overseas from 30 September to 19 October. ...
Referring to extracts from the evidence of the manager appointed by Mr Chow, “Mr Joe”, the Judge observed:[7]
[Mr Joe] maintained that the stock was kept up to its earlier level. However, it is plain that suppliers were complaining about not being paid. The defendant says that people were complaining to him and he referred them to the plaintiff. The plaintiff agrees that some suppliers were complaining to him and he referred them to the defendant. He said that the business was not his and to take their complaints to the defendant. The plaintiff admits that sometime before 11 November when he came to Adelaide, he instructed Mr Joe to stop banking cash receipts. He agrees that he took cash from Mr Joe when he visited Adelaide on 11 November. The quantum of cash he took is unclear. At one stage it was $25,000 cash and at another it was a lesser sum. The amount he took on the 11 November when he came to Adelaide is separate and distinct from the further amount that Mr Joe collected between 11 November and 22 November. The evidence is more consistent that that sum was about $10,000. Mr Joe says he gave it to a friend to look after in Adelaide and then eventually saw it into the hands of the plaintiff. The plaintiff agrees that on 11 November he withdrew $120,000 from the Westpac cheque account and sent it to one of his sisters in Hong Kong. That sister is not one of the proposed purchasers. Mr Joe said that he forgot what instructions it was that the plaintiff gave him on 22 November, the day that Mr Joe left the shop, and he initially forgot where he had kept the cash, but he was instructed to take it to the plaintiff (T213-244). The plaintiff agrees that he told Mr Joe on 13 November to do that.
The Judge set out further extracts from the transcript and then concluded:[8]
I think that really shows what was happening between the parties. The defendant says that he always wanted to divest himself of the business. He says that he stayed on to help out at the plaintiff’s request. I think it is plain that at about the time of his second trip overseas the defendant made it clear to the plaintiff that he wanted to have nothing more to do with the business. For reasons that are not entirely clear to me, I find that the plaintiff was unwilling to complete the contract. Whether he wanted to avoid the contract entirely or whether he wanted to put pressure on the defendant to sell him the real estate or give him back some of his money, I am not sure. I am satisfied however, that it was he who was unwilling to go ahead with the contract in the terms which had been agreed in February. I further find that at about the time the defendant came back from his second trip on 19 October 2004 the plaintiff instructed his manager, Mr Joe, to withhold takings. It is, in my view, inevitable that that meant that suppliers were not being paid. Only those suppliers who traded in small amounts of cash, were being paid. I am satisfied that that meant that the stock was being run down. I have no reason to disbelieve the truthfulness or the reliability of the evidence of the defendant and his witnesses about the stock-take he undertook on 22 November. The plaintiff was supplied with details of the stock-take and he took no interest in it. He never complained about its accuracy to the defendant and, except for a few minor aspects of the stock-take, there has in the trial, been no real challenge to the detail of it. The plaintiff alleges something more serious. He alleges that the defendant has simply just misrepresented the stock-take. He says that no stock-take took place at all. That is what his counsel put to the defendant (T404) and to the witnesses who say they were present at the stock-take. I find there was an accurate stock-take undertaken by the defendant on 22 to 23 November 2004 and that it showed the substantial reduction of stock that the defendant claims.
[6]    Chow & Ors v Yang & Ors [2009] SADC 33 at [46]-[47].
[7]    Chow & Ors v Yang & Ors [2009] SADC 33 at [50].
[8]    Chow & Ors v Yang & Ors [2009] SADC 33 at [29].
There is one other important matter as to credit. The Judge made the following specific observation:[9]
There is one further topic which in my view demonstrates the plaintiff’s unreliability. The plaintiff falsely told his solicitors that he had not received money from the business. In a letter from his then solicitors, Core Legal, to the defendant’s solicitors dated 13 December 2004, the solicitors wrote this:
We are instructed that our client did not remove the takings of the business from 11 November 2004 to 21 November 2004. If your client maintains that such takings were not banked, please provide us with additional particulars in relation to the amount of money that you allege has not been banked with the Westpac Bank.
The plaintiff evaded admitting the falsity of that instruction for some time in cross-examination. Only when it was no longer possible to deny it did he admit that he had misrepresented the situation to his lawyers.
Preliminary Matters
[9] Chow & Ors v Yang & Ors [2009] SADC 33 at [51]-[52].
The approach of the appellate court

Both counsel addressed the Court as to the appropriate approach of an appellate court when faced with a challenge to findings of fact turning in part on the issue of the credit of witnesses called in the trial.
The appeal to this Court is by way of rehearing. The Court’s function in respect of such an appeal was considered in Fox v Percy.[10] Gleeson CJ, Gummow and Kirby JJ noted that, while an appeal court should conduct a “real review”[11] of the trial and the trial judge’s reasons, there was nevertheless a need for “appellate respect for the advantages of trial judges”.[12]
[10] Fox v Percy (2003) 214 CLR 118.
[11] Fox v Percy (2003) 214 CLR 118 at 126 [25].
[12] Fox v Percy (2003) 214 CLR 118 at 127 [26].
The majority also considered that an appeal court should give weight to the trial judge’s reasons for making his or her findings. The Court should also take into account “the ‘feeling’ of a case which an appellate court, reading the transcript, cannot always fully share”[13] and “the unexpressed considerations that went into the judge’s conclusion”.[14]
[13] Fox v Percy (2003) 214 CLR 118 at 126 [23].
[14] Fox v Percy (2003) 214 CLR 118 at 132 [41].
In particular, the majority of the High Court endorsed the statement of principle to be found in Jones v Hyde,[15] Abalos v Australian Postal Commission,[16] and Devries v Australian National Railways Commission,[17] that a finding of fact by a trial judge, based on the credibility of a witness may only be set aside upon appeal where incontrovertible evidence or uncontested testimony demonstrate that the judge’s conclusions are erroneous,[18] or that alternatively, a decision at trial may be set aside where a finding of fact is “glaringly improbable” or “contrary to compelling inferences”.[19] Fox v Percy has subsequently been applied many times by this Court.[20]
[15] Jones v Hyde (1989) 63 ALJR 349 at 351-352.
[16] Abalos v Australian Postal Commission (1990) 171 CLR 167 at 179.
[17] Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479, 482-483.
[18] Fox v Percy (2003) 214 CLR 118 at 127 [26]-[28].
[19] Fox v Percy (2003) 214 CLR 118 at 128 [29].
[20] See, for example, Chew v Amanatidis [2009] SASC 334; State of South Australia v McDonald (2009) 104 SASR 344; Queen Elizabeth Hospital v Curtis (2008) 102 SASR 534.
Preliminary Matter – Adequacy of Reasons
Counsel for Mr Chow submitted that a number of important matters relevant to and probative of Mr Yang’s lack of credit were not the subject of mention or comment by the Judge. It was said that these matters should have been the subject of reasons and the inadequacy of reasons was, in the circumstances, indicative of error.
The obligation of a trial Judge to give reasons for decision has been the subject of considerable judicial discussion. In Soulemezis v Dudley (Holdings) Pty Ltd[21] a detailed review of the history and rationale of the scope of the judicial duty to give reasons was undertaken. Kirby P dealt with the duty in the following terms:[22]
The duty of judicial officers to record the reasons for their decisions has been developed in recent decades in this, as in other jurisdictions of the common law as an attribute of the judicial process and an incident to the necessities of appellate review. Jordan CJ, in Carlson v King (1947) 64 WN (NSW) 65 at 66, stated the principle:
... It has long been established that it is the duty of a Court at first instance, from which an appeal lies to a higher court, to make, or cause to be made, a note of everything necessary to enable the case to be laid properly and sufficiently before the appellate court if there should be an appeal. This includes not only the evidence, and the decision arrived at, but also the reasons for arriving at the decision. The duty is incumbent, not only upon magistrates, Ex parte Powter; Re Powter (1945) 46 SR (NSW) 1 at 4-5; 63 WN 34 at 36 and District Courts, but also upon this Court, from which an appeal lies to the High Court and the Privy Council: Ex parte Reid; Re Lynch (1943) 43 SR (NSW) 207 at 212; 60 WN 148 at 150. In the context of the obligation of District Court judges, the principle was restated and explained by this Court in Pettitt v Dunkley [1971] 1 NSWLR 376. Asprey JA (at 382), after citing Carlson, expressed the judicial obligation in these terms:
“…where in a trial without a jury there are real and relevant issues of fact which are necessarily posed for judicial decision, or where there are substantial principles of law relevant to the determination of the case dependent for their application upon findings of fact in contention between the parties, and the mere recording of a verdict for one side or the other leaves an appellate tribunal in doubt as to how those various factual issues or principles have been resolved, then, in the absence of some strong compelling reason, the case is such that the judge's findings of fact and his reasons are essential for the purpose of enabling a proper understanding of the basis upon which the verdict entered has been reached, and the judge has a duty, as part of the exercise of his judicial office, to state the findings and the reasons for his decision adequately for that purpose. If he decides in such a case not to do so, he has made an error in that he has not properly fulfilled the function which the law calls upon as a judicial person to exercise and such a decision on his part constitutes an error of law.”
[21] Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247.
[22] Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 257-258.
Kirby P considered the question about the extent of reasons on particular issues and said:[23]
This decision does not require of trial judges a tedious examination of detailed evidence or a minute explanation of every step in the reasoning process that leads to the judge's conclusion. But the judicial obligation to give reasons, and not to frustrate the legislative facility of appeal on questions of law, at least obliges a judge to state generally and briefly the grounds which have led him or her to the conclusions reached concerning disputed factual questions and to list the findings on the principal contested issues. Only if this is done can this Court discharge its functions, if an appeal is brought to it. Where nothing exists but an assertion of satisfaction on undifferentiated evidence the judicial obligation has not been discharged. Justice has not been done and it has not been seen to be done. Where it is necessary, for default of reasons, to resort to inferences which point to a reason for the decision of highly dubious relevance to the statute being applied, the result is that an error of law has occurred which this Court can and should correct. To adapt the words of Chilwell J in Connell v Auckland City Council [1977] 1 NZLR 630 at 634 the failure of a court to afford reasons in such a case may, in a modern community, result in a litigant who is not only "disappointed" but "disturbed". Such a result would be unacceptable precisely because of the statutory limitation on appeals to this Court. It would be doubly so because of the strict approach taken by the Court to that limitation. The corollary of the Court's strict approach is the obligation of the judge of the Compensation Court, by his reasons, to demonstrate, in his determination of relevant factual disputes, that his conclusion amounts to a proper application of the statute. That was not done here.
[23] Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 259.
These observations have been applied throughout Australia, including by the Victorian Supreme Court in Sun Alliance Insurance[24] and this Court in Papps.[25]
[24] Sun Alliance Insurance Ltd v Massoud [1989] VR 8.
[25] Papps v Police (2000) 77 SASR 210.
In the present proceeding, the Judge’s reasons make plain his findings and conclusions. The reasons spell out how and why he reached those findings and conclusions. Mr Chow has been able to identify and develop grounds of appeal and make full submissions in regard to those grounds. A Judge is not bound to give written reasons dealing with every factual aspect of a party’s submissions.
The Appeal
On appeal Mr Chow complained that the findings of the Judge regarding the depletion of stock could not be sustained. The resolution of this issue required a consideration of the Judge’s findings as to credit. As a consequence the submissions on appeal were wide-ranging. Many aspects of the Judge’s general findings on credit came to be analysed, explored and tested. Other complaints, with the exception of a challenge with respect to the Judge’s refusal to award interest, were not pursued.
Challenge to factual findings
Counsel for Mr Chow submitted that the trial Judge’s findings in respect of the depletion of stock were flawed. It was said that a thorough review of the evidence disclosed that there were serious doubts about the credibility of Mr Yang and the reliability of his evidence and that of his witnesses. It was said that the Judge erred in accepting Mr Yang’s evidence as a consequence of his unfavourable credibility findings in relation to Mr Chow. It was claimed that the Judge should have independently reviewed Mr Yang’s evidence.
Counsel for Mr Chow submitted that a review of the evidence by this Court would lead to the conclusion that the Judge’s findings were glaringly improbable – or at the very least, that the Judge’s findings had been materially undermined by a number of matters. It was said that there should be a retrial. Three matters of particular significance were identified. It was pointed out that the Judge made no comment about the absence of any reference to a stocktake in contemporaneous correspondence of complaint from Mr Yang’s solicitor; that documents said to relate to the stocktake appeared to bear a different date in several instances; and that there was differing evidence as to who assisted in the alleged stocktake. It was further pointed out that there was no evidence from suppliers about the non-delivery of replacement stock.
It is convenient to turn immediately to the evidence about the stocktake. Mr Yang, his wife and his son gave evidence as to the undertaking of the stocktake. Each of those witnesses gave direct and specific evidence about the stocktake. The Judge was entitled to accept this evidence. The Judge did so against the background of other evidence that provided support for the witnesses’ oral testimony. Mr Chow’s manager had been instructed only to pay small amounts to suppliers when the demands were pressed. As a consequence there was a substantial body of unpaid suppliers. These factors, as the Judge observed, suggest that there was likely to be a problem with stock. It was against the background of this evidence that the Judge considered and weighed the oral testimony. The Judge was in the best position to assess that oral evidence.
At trial, counsel for Mr Chow directly challenged Mr Yang and suggested that his evidence was a fabrication and that no stocktake had been undertaken. However, it is relevant to record that there was no direct suggestion to the supporting witnesses, Mr Yang’s wife and son, that their evidence was fabricated and that there had been no stocktake at all. On Mr Chow’s case, this was dishonest evidence, yet that suggestion was not put to those witnesses.
Our review of the evidence has disclosed ample evidence to support the Judge’s findings. No basis has been shown on which those findings could or should be disturbed.
In these circumstances the appeal in respect of the Judge’s primary factual findings should be dismissed.
Interest
In declining to award interest, the Judge took the view that on resuming the business, Mr Yang had to borrow money to replenish stock and to pay outstanding suppliers. The Judge reasoned that as a consequence, Mr Yang incurred interest in respect of borrowings. In those circumstances, the Judge concluded that it would be unfair to award interest in favour of Mr Chow in respect of the judgment sum.
However, in the exercise of his discretion as to interest the Judge overlooked a material fact. That fact was the payment by Mr Chow to Mr Yang of $473,400.00 prior to 11 June 2004. Mr Yang has had the use of this money since that date. The amounts that Mr Yang outlaid in increasing the stock levels and paying suppliers was substantially less than the amount of $473,400.00. Counsel for Mr Yang conceded that this fact was material and had been overlooked. Counsel contended, however, that in any event the Judge’s refusal to award interest was appropriate.
We disagree. We have reached the conclusion that the Judge erred in declining to award interest in favour of Mr Chow. Mr Yang has had the benefit and use of the moneys that should have been repaid. Interest should be paid on that amount from the date of payment of the moneys until the date of judgment. Otherwise Mr Yang will have received a windfall, an unjustified betterment.
Both counsel agreed that in the event that interest should be paid, an appropriate rate over the entire period was five per cent and that in the circumstances it would be appropriate to fix a lump sum. We would therefore allow the appeal to the extent that we would make an award of interest to Mr Chow. We would fix a lump sum of $25,000.00 with respect to interest.
Conclusion
In accordance with these reasons, Mr Chow is entitled to judgment in the sum awarded of $91,025.64 together with interest of $25,000.00 taking effect on the day that the District Court Judge entered judgment, namely 11 June 2009. Since that date in respect of any unpaid amount, interest should be paid in accordance with the Rules of Court.
In the circumstances we would hear the parties as to costs.
VANSTONE J: I agree with the orders proposed by Nyland J and Gray J and with the reasons they have provided.