Foilmakers Australia Pty Ltd v Everett Worthington (Aust) Pty Ltd

[2008] NSWDC 85

CITATION:	Foilmakers Australia Pty Ltd v Everett Worthington (Aust) Pty Ltd [2008] NSWDC 85 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	4, 5, 6 and 7 February 2008
JUDGMENT DATE:	18 April 2008
JURISDICTION:	Civil
JUDGMENT OF:	Gibson DCJ
DECISION:	(1) Judgment for the plaintiff for $207,125.22. (2) Defendant pay plaintiff’s costs. (3) Liberty to restore concerning interests and costs. (4) Exhibits retained for 28 days.
CATCHWORDS:	CONTRACT - supply of goods - conflicting evidence of plaintiff's and defendant's witnesses - reliance on objective evidence to determine disputed issues of fact
TEXTS CITED:	Justice David Ipp, “Problems with Fact-finding” (2 September 2006) Lawlink, Supreme Court of New South Wales <
PARTIES:	Plaintiff: Foilmakers Australia Pty Ltd Defendant: Everett Worthington (Aust) Pty Ltd
FILE NUMBER(S):	6132 of 2006
COUNSEL:	Plaintiff: S Sirtes Defendant: P Newton
SOLICITORS:	Plaintiff: Andreones Pty Limited Defendant: Kemp Strang Lawyers

Introduction

1. The plaintiff by way of Statement of Liquidated Claim seeks $188,444.38, being $170,058.24 plus interest for the period 14 November 2005 until 15 December 2006 and interest thereafter at the rate of $41.93 per day, for payment for goods the plaintiff alleges it ordered on behalf of the defendant. The disputed issue of fact fall within a narrow compass and both parties contend that no legal issues arise. The question is whether I accept the evidence of the plaintiff’s witnesses or the defendant’s witnesses as to the contents of the contract.

The circumstances leading to a contractual arrangement between the plaintiff and defendant

2. The circumstances leading up to the series of orders that were placed by the defendant between 12 February 2004 and 12 October 2005 are as follows. The defendant is a company which has manufactured goods in Australia for many years. This includes the production of furniture which is covered by a wood grain foil. The defendant had a longstanding arrangement with a supplier named Leonard Kurz. The arrangement with Kurz was that, as Everett Worthington did not have the capacity to hold the large rolls of foils, Kurz would order on the defendant’s behalf for the next three to six months and Kurz would periodically advise the specific amount of each specific product and enquiry if the defendant would want to order more. In 2003 Mr Graeme Barr, the defendant’s manufacturing manager, learn that Kurz would close down and he looked around for alternative suppliers. He was introduced to the plaintiff by a Mr Weaver, because the plaintiff was taking over Kurz’s business.

3. In February 2004 Mr Barr met with Mr John Gregson, the product manager for the plaintiff, at the plaintiff’s Milperra office. The terms of this conversation are in dispute. Mr Gregson said in his affidavit (Exhibit B) that he was presented with a wide range of wood grain patterns (not black and white) which were in use by the defendant’s company and wanted to know whether these wood grain colours could be matched by the suppliers in the United States.

4. The reason for the concern was that the furniture which was to be manufactured, which consisted of television units and the like, was not manufactured from wood but needed to have a realistic wood finish. Consequently, it was important that the colour be the right colour so as to highlight the similarity of the foil to wood. This is immediately apparent when one looks at the roll of foil that was tendered in these proceedings (Exhibit A) where a wood grain liked pattern appears, together with the tint designed to look like a product made of wood.

5. Mr Gregson said that he could match this colour supply and said:

“The arrangement we have with CFC at the moment is there is $750 charge to match the foil. If we achieve a match within three or four attempts and ultimately place an order they waive that charge.” (Exhibit B, paragraph 4)

6. Mr Barr said this was now urgent so how could this be done. Mr Gregson replied “What I require from you is a purchase order for a colour match. If we can achieve a colour match we will treat the order as a purchase order for a production run which is approximately 7,000 square metres”. Mr Barr replied “That’s fine”.

7. Mr Gregson went on to add “Now, we will carry that order for six months and provide it to you progressively as you need it, but you must understand if it’s not taken within that period we will invoice you for whatever the outstanding balance is”. Mr Barr replied “Yes, that’s fine with me”.

8. In his affidavit in reply, Mr Barr says:

“I deny having any conversation with Mr Gregson, in which he suggested an arrangement whereby any order placed by Everett Worthington would commit it to purchasing 7,000 square metres of a particular type of foil. I understood that the plaintiff, Foilmakers Australia Pty Limited (Foilmakers), was taking over the business of Kurz and that the arrangements under which Everett Worthington would purchase foil from Foilmakers would be the same as the arrangements it had with Kurz as detailed in paragraph 5 above.” (Exhibit 1, paragraph 14)

9. In other words, what is disputed in Mr Gregson’s account of this conversation is the reference to the “production run which is approximately 7,000 square metres”. Rather unhelpfully, Mr Barr does not set out what the conversation was which lead him to believe that the arrangements which had been in place with Kurz would continue. If Mr Barr did have any such believe, he would have learnt to the contrary very early in the course of conduct, as the documentation consistently supports the account of events given by Mr Gregson.

Goods are ordered by the defendant

10. Following this conversation, the defendant’s purchase order number 12678 (Exhibit 4) for a colour match for Beech (FCS68901SR) and Cherry (FEM60056SR) was prepared. This contains the notation “There will be no charge to Everett Worthington – Bais [sic – presumably ‘based’] on 3 try [sic – probably ‘tries’] on color match of each”. A notation in another hand of “A$4.00 per sqm” has been added.

11. In addition to the orders for a colour match for Beech and Cherry, the defendant placed a purchase order number 12261 dated 3 March 2004 for some material in another colour, described as Argent or “Astor Grey”. The quantity was described as “2” and the description of goods was “CMX-4818 Jumbo”. The words “production runs” had been added, as is the price “$4.50 per sqm”.

12. A further order (purchase order number 12285) was placed on 15 March 2004 for another colour, Dark Mahogany. The quantity was described as “1” and the description of goods was “CMX-5248 (Dark Mahogany)” which is noted as being “same as Pear Chocolate”. The words “Jumbo Roll” and “Pay as E.W use” appear on the receipt, in the same handwriting as the unit costs “$4.00/pm²”.

13. On 17 March 2004 Mr Gregson sent an email (Exhibit D) to Aaron Dang and Graeme Barr as follows:

“Just keeping you up to date with CFC Foils. Your order for Frost Oak has been cancelled as requested by you due to late delivery. We have ordered two production runs of EB 2909 AC Argent Silver (Refer CMX 4818) these should be manufactured 24/05/04 and arrive in our warehouse last week in June or first week in July. Also we have ordered your chocolate foil now called EB 3514 AC Dark Mahogany (Chocolate) to be manufactured 21/05/04 and arrive in our warehouse first week in July.

Prices for wood grains are $4.00 per square metre for AC products and $4.50 per square metre for silver (argent) and AP products.”

14. A different version of these events is given by Mr Aaron Dang in his affidavit of 19 January 2008 (Exhibit 2). He says that on one occasion (he cannot remember which) when Mr Gregson attended the premises, he ask for size of the rolls and was told:

“For you, a jumbo roll will be one point two metres wide and about three hundred metres long.” (Exhibit 2, paragraph 8)

15. From this, Mr Dang understood that “jumbo rolls” were rolls which were 1,220 millimetres wide and approximately 300 metres long. He claims that Mr Gregson said on another occasion while visiting the premises that “The minimum production run for Everett Worthington will be 2 jumbo rolls” (Exhibit 2, paragraph 10).

16. Given the $750 fee for colour matching, this would mean that if the fee was to be waived, it would involving waiving a $750 fee for two rolls of product which would cost between $1,500 and $1,700 each. Nevertheless, Mr Dang’s evidence was that the following conversation occurred about the cost of colour matching (Exhibit 2, paragraph 11):

Gregson: “CFC want to charge you for colour matching.”
Dang: “I don’t accept that.”

Gregson: “If they match the colour within three attempts, there will be no charge to you.”
Dang: “Okay, that’s fine.”

17. Mr Dang also deposed (Exhibit 2, paragraph 15-16) that purchase order number 12678 was a trial run and no goods were ordered.

18. A comparison of these accounts of the goods that were provided and the circumstances in which the cost for colour matching was waived shows that the defendant’s account contains a number of gaps and is inconsistent with sensible business practice. I have set out these gaps and inconsistencies and the reasons why they depart from sensible business practice, later in this judgment. However, on 5 April 2004 Mr Gregson sent emails to Mr Barr and Mr Dang which would have left them in no doubt as to what he understood was being ordered:

“After our discussion last Thursday 1/4/04 we have ordered from CFC against your order No 12678 two production runs each of CMX 5249 being a colour match for Kurz FEM 60056SR Cherry and CMX 5427 being a colour match for Kurz FCS 68901SR Beech.

I would also like to remind you that our production runs are the equivalent of approx 7000 square metres each.” (Exhibit B, Annexure C)

19. Both Mr Dang and Mr Barr said in cross-examination that they did not recall ever receiving this email. Mr Barr said he would not deny it, nor could he give any reason why he would not have received it. Mr Dang could not recall receiving this email either. He attempted to say, in relation to emails addressed to himself and Mr Barr, that they were really emails for Mr Barr.

20. Notwithstanding the claims in Mr Barr’s affidavit that he would never have ordered so much material, the usage of foil by the defendant far exceeded the amounts they claim to have ordered. Although the defendant disputes the claim that they were ordering production runs of twenty rolls and were only ordering one roll (or two rolls as the case may be) that were using substantial amounts of the foils ordered. There were three orders of Mahogany in all, two of which were used up, as were orders for Black foil, White foil, and to a lesser extent the Beech and Cherry foils. The precise amounts used can be seen from the schedule at the back of this judgment.

21. On 20 August 2004 the plaintiff sent purchase order number 12541 for “20 rolls” of the dimensions 1270mm x 305m for Dark Mahogany. This would seem to contradict the statement in paragraph 15 of Mr Barr’s affidavit that 7,000 square metres would have represented more than Everett Worthington would utilise in three years and he would never order such an amount.

22. On 27 August 2004 the defendant sent a purchase order (number 12548) for five rolls of Gloss White of 1270mm x 305m. It was the evidence of Mr Gregson that because Black and White did not require colour matching, and were standard production lines, there was no minimum requirement for these items. The fact that five rolls were ordered is consistent with the level of usage reflected in other orders for other colours. As can be seen from orders for the colour Black, substantial amounts of the plaintiff’s product were ordered. However, when I enquired what colour was the most popular, Mr Barr’s evidence was that it was Beech or Cherry, although one client ordered a considerable amount of Black and there were special orders for this client.

23. During this period Mr Gregson regularly sent stock list to Mr Dang which clearly listed the number of rolls of wood grain foils that were in stock. One list was attached to an email dated 3 September 2004 (Exhibit L) and another, which was an updated stock list for September, was date 10 September 2004 (Exhibit J). Although Mr Dang had no recollection of receiving this email, he replied on 13 September 2004 (Exhibit J).

24. On 5 October 2004, Mr Gregson sent an email saying:

“Here is your October stock list. Please remember should you need to re-order any foils it takes approx four months to arrive in our warehouse.” (Exhibit F)

25. On 6 October 2004 the defendant ordered (purchase order number 12600) twelve Black Gloss foil rolls, “560mm wide 183m long” and another thirty three Black Gloss foil rolls “40mm wide and 183m long” (Exhibit B, Annexure B). This foil was used and was paid for.

26. On 13 October 2004 Mr Dang sent an email to Mr Gregson saying:

“I remember a while ago I’ve ordered some more Chocolate foil from the States. Could you please confirm where about they are now. Thanks very much for the stock report.” (Exhibit F)

27. This would tend to confirm that contrary to paragraph 29 of Mr Dang’s affidavit in which he said he did not “recall receiving any monthly statements from Mr Gregson or any other person at Foilmakers listing stock held against purchase orders placed”, he did in fact receive such monthly statement, and this email confirms it.

28. On 14 October 2004 Mr Dang sent an email (Exhibit H) to the plaintiff directing the plaintiff to “Let CFC continue the production run”, which indicates he knew what a production run was.

29. On 15 October 2004 Mr Dang sent an email to the plaintiff enquiring how much Cherry stock was left.

30. On 23 November 2004 the defendant placed an order (Exhibit 5, Annexure G) purchase order number 12792) for one “Jumbo Rolls CMX-5526 Dark Mahogany”. This was signed by Mr Dang and contained the words “PLEASE ADVISE ETA FROM (US). THIS IS A NEW COLOR MATCH FOR DARK MAHOGANY”.

31. On 22 December 2004 Mr Gregson sent an email (Exhibit G) to Mr Dang saying “Here is your stock list for Dec 2004” and attaching a stock list clearly indicating the number of rolls which had been purchased on behalf of the defendant.

32. Clearly this email was received by Mr Dang as he replied on 23 December 2004 with the subject of the email being “RE: Dec stock level” (Exhibit G).

33. On 9 March 2005 the defendant placed a purchase order number 12906 (Exhibit 5, Annexure J) for eight “Jumbo 1270 x 305m” in White Gloss. These were used and paid for.

34. By 4 April 2005 the six month period referred to by Mr Gregson in his original conversation in February 2004 had long since expired and he forwarded the following letter to Mr Dang:

“I would like to confirm the conversation I held with Graeme Barr and yourself in February 2004 regarding orders placed by your company for woodgrain foils where you agreed that all foils were to be taken in six, with a maximum of nine, months of an order arriving in Australia, after which time any foils not used will be invoiced and held in our warehouse awaiting your slitting instructions.

I would also like to remind you that some of these orders are now over that time limit as follows:

- EB2909 Argent Silver, 19 rolls of 1066mm x 305m (order No 12261)
- EB4825 Beech, 33 rolls of 1270 x 305m (order No 12678)
- EB4260 Cherry, 12 rolls of 1270mm x 305m (order No 12678)
- EB4268 Beech Cherry, 19 rolls of 1270mm x 305m (order No 12678)” (Exhibit B, Annexure G)

35. On 12 April 2005 the defendant sent purchase order number 12944 (Exhibit B, Annexure B) for five rolls of Gloss White 305m x 1270mm. Again this product was used and paid for.

36. On 19 April 2005 Mr Gregson sent the April stock list to Mr Dang.

37. On 24 May 2005 the defendant placed the purchase order number 12993 (Exhibit B, Annexure B) for eighteen rolls of White Gloss at 305m x 1200mm. Again this was used and has been paid for.

38. In June 2005 the plaintiff sent the June 2005 stock list to the defendant. On 7 June 2005 the defendant wrote to say:

“It is a regret that I advise you that the Directors have decided to cease manufacturing in Australia and as a consequence the Revesby manufacturing facility will close permanently on the 13th July 2005. The Revesby factory will continue with production until the 13th of July.

Commencing immediately all deliveries made from this date forward must be accompanied by a purchase order that contains at least two (2) of the three signatures that appear below; otherwise we are unable to assure you of payment. This includes all existing back orders .” (Exhibit 5, Annexure H)

39. On 12 October 2005 Mr Gregson sent an invoice for uncollected but ordered goods from Foilmakers to Everett Worthington.

40. In November 2005 Steve Howe, the Chief Financial Officer of Criterion Group Limited, which was continuing the plaintiff’s activities from New Zealand placed a further order for thirteen rolls of Matt Silver (Argent), one roll of Matt Silver Offcuts (Argent) and one roll of Offcuts (Dark Mahogany). Mr Howe asked for “the invoice number SIN067804 be credited to Everett Worthington (Aust) PTY Limited in full” (Exhibit B, Annexure K).

41. No explanation was put forward as to how it was that Mr Howe would be ordering the large amounts if he had been informed that the defendant had the practice for many years of only buying one or two rolls at a time in the manner deposed to by Mr Barr, Mr Dang and Mr Maycock.

42. At all relevant times the defendant had an arrangement with the plaintiff (and prior to that with Kurz) for foil to be stored away from its premises. This is more likely to be consistent with orders of a large size being placed, rather than the mere hand full of rolls asserted. The claim that the American company would throw in a colour match for free rather than charge $750 for an order which could be worth as little as $1,500 is, as I have already indicated, contrary to business sense.

43. However, the two most consistent pieces of evidence which contradict the defendant’s claims are the fact that, as the schedule below shows, the defendant was in fact using the products that were ordered. The first two Mahogany orders appear to have been used in their entirety, as were the orders for Black, White and Matt Silver.

44. Finally, and most importantly, all of the documentation makes this clear that the plaintiff was telling the defendant how much foil was available. The email from Svetlana Stevenson provides as follows:

“Hi Aaron, as requested please find following info on Woodgrain foils that are coming for EW from overseas:

All the foils are coming apprx 2nd week July

Dark Mahogany (Chocolate) – EB3514AC – 20 rolls (1270mm x 305m)
Beech – EB4825AC – 40 rolls (1270mm x 305m)
Cherry – EB4260AC – 19 rolls (1270mm x 305m)
Beech Cherry – EB4268AC – 20 rolls (1264mm x 305m)
Argent Silver – EB2909AC – 40 rolls (1066mm x 305m)” (Exhibit E)

45. If Mr Dang had read this email, he would have seen that according to what he understood, there had been an over ordering by Foilmakers of 139 rolls rather than 7. Leaving aside question as to why 7 rolls would need their own container, about which I have no evidence, this should have seriously alarmed him. In addition, it is implausible. Mr Dang was, on his version of events, placing one order in March for Dark Mahogany and then in August a second order for 20 times the quantity of the first, notwithstanding of Mr Barr that orders of this quantity was never made.

46. Finally, most tellingly, there is the constant stream of stock updates, emails and letters, all of which Mr Dang and Mr Barr said they could not recall receiving.

47. It is against this background of conflicting accounts as to what was ordered, what was understood by the terms used in these orders, and what the terms of the agreement were that I must consider whether to accept the evidence of the witnesses of the plaintiff or the defendant.

The conflict of evidence between the parties

48. The plaintiff draws my attention to the following matters which support the claim of the plaintiff:

(a) It is not in dispute that the arrangement the defendant had with the plaintiff, like the arrangement it had with its former supplier, was to store the foils at the plaintiff’s warehouse. A portion of one of the rolls was tendered in evidence. The plaintiff submits that this conduct is consistent with container loads of orders being placed as opposed to hand full of rolls. In what was clearly a sweetener for the deal, a $750 colour match be charged by the American supplier, CFC, was waived. If only one roll, costing between $1,200 to $1,500, had been purchased, this would have made no commercial sense.

(b) All of the documentation goes one way. It corroborates the plaintiff and is inconsistent with the evidence of the witnesses of the defendant. Indeed, the only answer that the defendant’s witnesses had was the continued claim that emails and letters had never been received.

(c) Mr Barr and Mr Dang repeatedly claimed not to recall events, not to have received documentation and other testimony consistent with, if not poor memory, their unwillingness to remember anything inconsistent with their version of events.

(d) The objective evidence clearly shows that the defendant’s use of foil considerably exceeded the amounts they alleged that they ever ordered. The plaintiff submits there is a patent, inexplicable and irreconcilable inconsistency between the defendant’s assertions as to how much it ordered compared to its usage. Neither Mr Barr nor Mr Dang could explain how it was that they came to use more than the amounts they asserted they had ordered.

49. Part of the problem in these proceedings arose from the fact that there was some late discovery by the plaintiff of documents. The affidavits that had been prepared for all of the witnesses were based on the fairly limited discovery that had been provided by the plaintiff.

50. Accordingly, a number of assertions were made by Mr Barr and Mr Dang in their affidavits (for example, claims that no stock lists were sent) were clearly wrong. The defendant complained vigorously about the impact of this late discovery. It was contended that this was unfair and perhaps deliberate.

51. There are two reasons for not accepting the defendant’s complaints. The first is that discovery is an ongoing process and the plaintiff offered reasonable explanations for the failure to provide the documents earlier. The second, and by far the most compelling, is that most if not all of the documents discovered were in fact documents which had been sent to the defendant. In other words, these were documents that had been in the defendant’s possession or should have been at all relevant times.

52. It was the evidence of both Mr Barr and Mr Dang that they had not seen any of the defendant’s documents, including emails, manually written purchase orders, computer purchase orders or the invoices of the plaintiff. While this will go some way to explaining some of their uncertainties, particularly in cross-examination, and while I note that Mr Dang in particular conceded that his recollection was vague, even when it was glaringly obvious from his own former employer’s documents, Mr Dang persisted in claims that he had never received documents and in repeating statements which were contained in his affidavit but which were clearly inconsistent with the evidence. For example, it was obvious that Mr Dang knew exactly what a “production run” was because correspondence in which he used the expression himself was tendered. In addition, his inability to explain how it was that his employer had used far more foil that he had ever ordered was hard to follow. He insisted he had only ever ordered one or at most two rolls for the colours Mahogany, Beech, Argent and Cherry.

53. When looking at these memory lapses, I note that they were apparent only in relation to witnesses in the defendant’s case. They had no difficulty with often minute recollections concerning documents that did not contradict their case. By comparison, there are two documents in particular to which the plaintiff draws my attention which Mr Barr and Mr Dang denied all knowledge. These were the 17 March 2004 emails in which Mr Gregson told them that two production runs had been ordered, and a 5 April 2004 email where Mr Gregson state categorically that a production run was approximately 7,000 square metres, which I note would be approximately 20 rolls.

54. As I have already indicated, the documentation contradicts the defendant’s witnesses’ version of events. The plaintiff has provided a most helpful list of this documentation, which summarises as follows:

(a) It is clear from the defendant’s purchase orders, which refer to “Jumbo Roll” when viewed in the context of the whole transaction indicate that Mr Barr and Mr Dang must have known what a “Jumbo Roll” was, and that it was different from ordering just a “roll”. The use of phrases such as “Jumbo Rolls” and “Production Run” for a single roll of foil is of itself implausible.

(b) Both Mr Barr and Mr Dang were told in correspondence that a “production run” was 1,700 square metres. It is important to note that this document referred to a discussion that the parties have had about four days beforehand. When Mr Gregson said that he would like to “remind” Mr Barr and Mr Dang that the production runs are the equivalent of approximately 1,700 square metres each, the likelihood is that he is using the word “remind” because this topic came up in the meeting. This puts Mr Barr and Mr Dang in a position of having to deny not only the email but also any discussion at the meeting.

(c) The email from Ms Stevenson to Mr Dang (which he conceded he had received) would not have made it clearer that a very substantial number of rolls of material were being held on the defendant’s behalf. If Mr Dang genuinely believed he had only ordered one roll of Dark Mahogany, Beech, Cherry, Beech Cherry and Argent, the discovery that the plaintiff was holding 20, 40, 19, 20 and 40 rolls respectively should have come as a complete shock. The plaintiff’s counsel points out that this would represent an over ordering of almost 2,000% (i.e. 139 rolls rather than 7). There is also the implausibility of 7 rolls of this material needing its own container of needing to be shipped and taking 5 working days to clear and be unloaded.

(d) Mr Dang was very familiar with containers; on 12 July 2004 he was asking about whether the container had been picked up. Mr Dang’s primary concern in all of his emails was to obtain the material as quickly as possible. If he thought he was ordering such small quantities, they could have been obtained much more quickly than by the long process of shipping.

(e) Purchase order 12541 for 20 rolls of Dark Mahogany makes it clearly that 20 rolls were being ordered. Mr Dang asks the court to believe that he placed an order for a single roll in March for Dark Mahogany and then placed a second order for 20 times and quantity, without ever noticing that he had used up to 20 times the quantity that the amount he ordered in March. The only consistent way to read this evidence is to come to the conclusion that when Mr Dang placed an order for 1 “Jumbo Roll” in March 2004, he knew he was ordering 20 rolls, and that when a significant portion of this material had been used he followed up a second order for the same amount in August 2004, several months later.

(f) There is a constant stream of stock updates provided by the plaintiff to Mr Barr and Mr Dang. Mr Dang had claimed in his affidavit that these documents had not been received. They were discovered late. Mr Dang was in a difficult position. He initially could not recall the October stock list but then accepted that it had been received. Again, the quantities in the stock list are entirely consistent with the plaintiff’s claim and inconsistent with the evidence of Mr Dang. A topical example is the email of 3 September 2004 listing all the wood grain foils that the plaintiff was holding in stock for the defendant. Mr Dang attempted to suggest that the expression “Matt Silver” was a reference to some other colour or foil different from Argent Silver, although he was later forced to concede that the code EB2909AC was the code for Argent Silver. Mr Dang went on to receive updated stock list on 10 September (to which he replied saying “Thanks John”), 13 September, 5 October (to which he responded on 13 October saying “Thanks very much for the stock report”) and 14 October (when he asked the plaintiff to “let CFC continue the production run”). Mr Dang claimed in his evidence he did not know what the expression “production run” meant, despite using it himself. A further stock list was sent on December 2004 to which Mr Dang replied “Thanks John” the following day.

55. On 4 April 2005 the plaintiff sent a letter to Mr Dang confirming a conversation that Mr Barr, Mr Dang and Mr Gregson had in February 2004 concerning orders. Again, Mr Dang denied receiving this letter. Again the contents of this letter is completely consistent with the plaintiff’s conduct.

56. I am satisfied that the objective evidence of contemporaneous documentation is all one way and all favours the account of the terms of the contract given by Mr Gregson on behalf of the plaintiff.

Usage of the material

57. In addition to documents reflecting the amounts ordered, the evidence of the amounts actually used speaks for itself. Again, in circumstances where very small amounts were allegedly ordered, there is usage far in excess of what was ever ordered.

The credit of Mr Barr and Mr Dang

58. Counsel for the plaintiff referred me to a most helpful article “Problems with Fact-finding” by Justice David Ipp, available on the Supreme Court website, from which I have drawn the following observations.

59. One of the basic foundations of the justice system is the assumption that “witnesses are capable of accurately describing events that took place years ago, and that judges can reliably tell what evidence is true and what is false”. However, witnesses may have imperfect observation, faulty memory, an over-active imagination, emotional disturbances, self-interest or deliberately untruthful. This may relate to part or all of their evidence. The question of how to deal with what is accurate or inaccurate in the testimony of a witness had been the subject of a number of studies and also of a number of judgments of the Court of Appeal, particularly where such findings relate to issues of credit and demeanour.

60. A submission commonly made on behalf of a party in the District Court is that a particular witness “gave evidence in a straightforward manner” and “was not shaken upon cross-examination”. Similar submissions were made in these proceedings on behalf of the defendants.

61. However, the correct approach to fact-finding has been helpfully explained in a number of cases referred to by Justice David Ipp in his article. Essentially the task of the court is to have regard to the objective evidence in the case. Contemporaneous documentation should be given greater weight than an assessment of a witness’s demeanour in the witness box. A measuring of the factual events and an analysis of these actual events for internal inconsistencies and obvious implausibilities is preferable to subjective opinions of a witness’s conduct in the witness box.

62. For example, an assertion often made in litigation is that a particular letter or email was sent. Receipt is denied. The tribunal of fact may indeed be sceptical about whether or not this letter was sent. However, if an assertion is made that not one but an entire series of letters were not sent, then the plausibility of this evidence starts to diminish. If a person who denies ever receiving a stock report sends a reply shortly after, saying “Thanks very much for the stock report”, then this scepticism of the court is likely to be increased. If there are several such letters, the likelihood of an assertion of non receipt of such a documentation is likely to be viewed with extreme scepticism. Finally, if the contents of these letters favours the interpretation of events raised by the party asserting that the letters had been sent, the likelihood of accepting such evidence is very slight indeed.

63. It is by this process of objective analysis of seeking truth from facts that the most likely interpretation of events will emerge. As Justice David Ipp points out in his article, questions of credibility of witnesses should always come at the bottom of the list of forensic tools at the judge’s disposal. In several of his Honour's judgments, Kirby J has referred to the old saying “an ounce of evidence is worth pounds of demeanour”. This case is a good example of this maxim.

64. However, I should make some finding about the credibility of Mr Barr and Mr Dang. First of all, witnesses who are unable to remember substantial details about transactions which are the subject of the claim cannot be surprised if the degree of readiness the court feels for accepting their evidence is lessened. Secondly, when implausible assertions, such as the claim that no stock list were ever received, or those emails Mr Dang had replied to were not received, the credibility of such a witness must be open to question.

Conclusion concerning the evidence in these proceedings

65. The evidence in this case paints a very clear picture of parties who have reached an agreement of some informality but for which the terms had been clear from the first. All of the evidence points to the defendant having ordered the goods as set out in the Statement of Claim. I do not regard either Mr Barr or Mr Dang as witnesses of credit and I would not accept their evidence on contested issues in this trial unless it was corroborated by documentation. There is no documentation to corroborate any of their evidence.

66. Accordingly I give judgment for the plaintiff for the sum of $207,125.22, being $170,058.24 with interest calculated from 14 November 2005 until 15 December 2006 of $16,605.14, plus interest thereafter at the rate of $41.93 cents per day to 17 April 2008, being $20,461.84.

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29/05/2008 - Typographical error - Paragraph(s) Catchwords