Lawless v Mackendrick [No 3]
[2016] WASCA 208
•1 DECEMBER 2016
LAWLESS -v- MACKENDRICK [No 3] [2016] WASCA 208
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASCA 208 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:94/2013 | 10 AUGUST 2016 | |
| Coram: | NEWNES JA MURPHY JA MITCHELL JA | 1/12/16 | |
| 31 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed | ||
| B | |||
| PDF Version |
| Parties: | KEVIN GERARD LAWLESS ALASTAIR MACKENDRICK PAMELA ALISON GABRIELS CHRISTOPHER DEREK BLAKE THE KING AND I PTY LTD |
Catchwords: | Tort Negligent misrepresentation Deceit Sale of hotel Whether expected profit misrepresented Whether appellant/purchaser aware of expected profit figure before settlement Whether first respondents/vendors were negligent in their statement as to expected profit Whether additional evidence should be admitted on appeal Turns on own facts |
Legislation: | Nil |
Case References: | Leeder v The State of Western Australia [2008] WASCA 192 Minister for Immigration, Local Government and Ethnic Affairs v Hamsher (1992) 35 FCR 359 Robinson Helicopter Company Incorporated v McDermott [2016] HCA 22; (2016) 90 ALJR 679 Saunders v The Public Trustee [2015] WASCA 203 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : LAWLESS -v- MACKENDRICK [No 3] [2016] WASCA 208 CORAM : NEWNES JA
- MURPHY JA
MITCHELL JA
- Appellant
AND
ALASTAIR MACKENDRICK
PAMELA ALISON GABRIELS
First respondents
CHRISTOPHER DEREK BLAKE
Second respondent
THE KING AND I PTY LTD
Third respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : KENNETH MARTIN J
Citation : LAWLESS -v- MACKENDRICK [No 4] [2013] WASC 272
File No : CIV 1146 of 2006
Catchwords:
Tort - Negligent misrepresentation - Deceit - Sale of hotel - Whether expected profit misrepresented - Whether appellant/purchaser aware of expected profit figure before settlement - Whether first respondents/vendors were negligent in their statement as to expected profit - Whether additional evidence should be admitted on appeal - Turns on own facts
Legislation:
Nil
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
Appellant : In person
First respondents : Mr G A Rabe
Second respondent : Ms P Cahill SC & Mr A D Bereyne
Third respondent : Mr P G McGowan
Solicitors:
Appellant : In person
First respondents : Graham Rabe, Barrister & Solicitor
Second respondent : Jackson McDonald
Third respondent : DLA Piper Australia
Case(s) referred to in judgment(s):
Leeder v The State of Western Australia [2008] WASCA 192
Minister for Immigration, Local Government and Ethnic Affairs v Hamsher (1992) 35 FCR 359
Robinson Helicopter Company Incorporated v McDermott [2016] HCA 22; (2016) 90 ALJR 679
Saunders v The Public Trustee [2015] WASCA 203
1 JUDGMENT OF THE COURT: This is an appeal from a decision of Kenneth Martin J, who dismissed the appellant's claims against the respondents for damages for misrepresentation. The claims arose out of the purchase of the Imperial Inn (the Inn) at York by Curtin Hotels Pty Ltd (Curtin), of which the appellant was the sole director. The business subsequently failed and Curtin went into liquidation. The appellant took an assignment from the liquidator of any causes of action that Curtin had against any of the respondents in connection with the sale of the Inn.
2 The appellant subsequently commenced proceedings against the respondents. The appellant alleged, in substance, that Curtin, by the appellant, had been induced to purchase the Inn by a false or negligent statement by the first respondents, the vendors of the Inn, to the effect that the first respondents expected the business to produce a minimum profit of $120,000 per annum. The statement was contained in a letter written by the first respondents to a real estate agent who had then advertised the Inn for sale and introduced the appellant to the property. The appellant said that the real estate agent had provided him with a copy of the letter before Curtin agreed to purchase the Inn and that he had relied upon it. He alleged that each of the second and third respondents had negligently represented to the appellant that the Inn had been making a profit of $120,000 per annum.
3 The primary judge dismissed the appellant's claims. His Honour found that the appellant had not been provided with a copy of the letter before settlement of the sale and was unaware of the statement as to the expected profit until well after the sale had been completed. His Honour further found that even if, contrary to that finding, the appellant had seen the letter prior to settlement, he had not relied on it and, in any event, the statement was not knowingly false or made negligently. His Honour found that the second and third respondents did not make the representations alleged.
4 The appellant contends that the primary judge erred in making those findings and in dismissing Curtin's claims.
Factual background
5 The first respondents are a married couple. Dr Mackendrick was and is an ear, nose and throat surgeon with a practice in Perth. Ms Gabriels is an audiologist who at the material time ran an audiology business in Perth.
6 In 1997, the first respondents acquired the land and business of the Inn. The Inn was a heritage listed building and its business was focused on the provision of accommodation and meals. The first respondents operated the Inn in partnership for a little under three years. During that time, they were living and working in Perth and relied on staff to operate the business during the week. Their personal involvement with the business was limited to visiting on weekends. Although the first respondents managed to increase the turnover of the business, expenses exceeded income at all times. The business made a loss of $256,579 in the financial year ending 30 June 1998, and $248,102 in the financial year ending 30 June 1999.
7 In early 1999, the first respondents decided to sell the Inn. They engaged the third respondent, which operated a real estate agency and was then trading as Colin King Rural WA, to act as their selling agent. Mr Philip Mulcahy, an employee of the third respondent, was the sales representative who had the day to day conduct of the matter.
8 On 21 July 1999, an auction was held at the Parmelia Hilton Hotel in Perth. To facilitate the auction, Mr Mulcahy arranged for a brochure to be prepared. The brochure contained general statements about the Inn and a breakdown of gross revenue for the period 8 August 1997 to 28 April 1999, but no other financial information.
9 No bids were received at the auction, and during the remainder of 1999 Mr Mulcahy continued his endeavours to find a buyer.
10 In about August 1999, Ms Irene Groves, a real estate agent employed by Joseph Charles Learmonth Duffy Pty Ltd, telephoned Dr Mackendrick seeking authority to list the Inn for sale. Dr Mackendrick refused, saying that he had an exclusive agency agreement with the third respondent.
11 On or about 31 October 1999, the first respondents entered into an agreement with the then resident head chef at the Inn, Mr Eaton, in relation to the operation of the Inn. The substantive effect of the agreement was that Mr Eaton was to manage the business and to pay $3,000 per month to the first respondents, with the profits of the business to be split, two-thirds going to Mr Eaton and one-third to the first respondents.
12 In December 1999, Ms Groves again telephoned Dr Mackendrick seeking to list the Inn for sale. On this occasion he gave her verbal permission to publish a newspaper advertisement and said he would provide some details of the Inn for that purpose. Dr Mackendrick wrote to Ms Groves on 7 January 2000. The letter (the 7 January letter) was brief. In it, Dr Mackendrick said that the first respondents had acquired the Inn in August 1997 and that a special facility liquor licence had been obtained in November 1998. He went on:
As from 1st November, 1999 our chef, Jeff Eaton, took over management of the whole business and will pay us rental and share of profits. I am expecting a minimum of $120,000.00 profits per annum which we will share. Gross annual turnover is between $600,000 and $700,000.
Our asking price is 1.2 million dollars. Thank you for your interest and I look forward to hearing from you.
13 A copy of the brochure prepared for the July 1999 auction was enclosed with the letter.
14 The advertisement appeared in The West Australian newspaper on 9 February 2000. Apart from Ms Groves' contact details, it was as follows:
HOTEL
Magnificent two storey colonial style – 'A Statement' in jarrah and stone - includes proprietors quarters and four motel suites. (original emphasis)
15 The advertisement attracted the attention of the appellant. The appellant had been involved in the operation of hotels for many years, initially in his native Ireland and then in Sydney, where he was involved in the operation of an Irish-themed hotel, before coming to Perth in about 1995. He had, through Curtin, operated a hotel business in the Perth suburb of Manning between 1995 and 2000. The business was known at various times as the Karawara Tavern, the Waterford Tavern, Kitty O'Shea's Irish Bar, and the Curtin Tavern. In November 1999, Curtin had entered into an agreement to sell the Curtin Tavern for $1.5 million and the appellant was looking for new business opportunities.
16 The appellant contacted Ms Groves, apparently by telephone, and obtained the name and address of the Inn. On 12 February 2000, the appellant travelled to York and inspected it. He declined an offer by Ms Groves to accompany him. The appellant had dinner at the Inn and then travelled back to Perth.
17 The following day, 13 February 2000, the appellant telephoned the second respondent (Mr Blake), a real estate agent then working as a financial consultant for a finance broker, who had previously assisted the appellant in obtaining finance for transactions entered into by Curtin. There was a dispute at trial over what was said during this telephone conversation, the details of which it will be necessary to come to in due course. For the moment, suffice it to say that the appellant told Mr Blake that he was interested in acquiring the Inn and Mr Blake said he would contact Mr Mulcahy, whom he knew professionally, to obtain information about it. Mr Blake and the appellant arranged to meet at a Dome café in Applecross on 15 February 2000.
18 What occurred at that meeting was highly contentious at trial. In particular, the appellant contended, and Mr Blake denied, that at the meeting the appellant showed Mr Blake the 7 January letter and Mr Blake agreed to verify its accuracy. Again, it will be necessary to come back to that issue in due course. There was also an issue as to whether (as the appellant contended and Mr Blake denied) there was a second meeting at the Dome café on 18 February 2000 at which Mr Blake confirmed the veracity of the profit expectation.
19 What was not in issue, however, was that, on 18 February 2000, the appellant and Mr Blake travelled to York. They did so in separate cars. In York, they met Mr Mulcahy and inspected the Inn. There was again a dispute at trial over what was said at this meeting. The appellant contended, and Mr Mulcahy denied, that the appellant showed Mr Mulcahy a copy of the 7 January letter and Mr Mulcahy confirmed that the first respondents were making a profit of $120,000, and receiving rental of $35,000, per annum.
20 Later on the same day, Mr Blake prepared two offers by Curtin to purchase the land and business of the Inn. One offer was to purchase the land on which Inn stood for $630,000, and the other was to purchase the plant, equipment and current stock of the business of the Inn for $300,000. The offers did not include any amount for goodwill. The offers were expressed to be conditional on the settlement of the sale of the Curtin Tavern.
21 The appellant signed the offers on behalf of Curtin and they were handed to Mr Mulcahy as the first respondents' representative. Ms Groves appears to have had no knowledge of the offers and to have had no further contact with the appellant before settlement of the sale.
22 The offers were accepted by the first respondents the following day, 19 February 2000.
23 At some point after the offers were accepted but before settlement occurred, Dr Mackendrick and the appellant met by chance at York and had coffee together at the Inn. This appears to have been the only direct contact between the appellant and Dr Mackendrick prior to settlement. There was again a dispute at trial over what was said during this conversation, to which it will be necessary to come in due course.
24 It was not in issue that, by March 2000, Mr Blake had been provided with the annual accounts of the business for the financial years ended 30 June 1998 and 30 June 1999 respectively. The former showed a net loss for that year of $256,579.60 and the latter showed turnover for that year of $602,498 and a net loss of $248,102.96. On 28 April 2000, Mr Blake sent a copy of those accounts to the solicitors acting for Curtin.
25 Settlement of the sale occurred on 30 June 2000. Just before settlement, the appellant raised an issue in relation to damaged and missing property and cleaning issues, and the sale price for the business was reduced by $1,500.
26 It is evident that Ms Groves subsequently got wind of the sale. In October 2000, she telephoned Dr Mackendrick and asked him for information about it. Dr Mackendrick told her that the Inn had been sold to Curtin. Dr Mackendrick rejected a claim that Ms Groves then made for commission on the sale.
27 It was not long before Curtin began to experience financial difficulties. The primary judge considered that he was unable to determine the precise cause of those difficulties because of the unreliability of Curtin's financial records, involving, among other things, significant transactions that did not find their way into the records - what his Honour described as 'an "off the books" economy at work' [124]. While his Honour appears to have accepted that Curtin suffered continuing losses over the period it operated the Inn, he found that the state of its financial records prevented him from reaching any conclusion as to the performance of the business over this period [124] - [125]. The primary judge did note, however, that Curtin had heavy interest commitments to meet, not only in respect of the sum of some $375,000 borrowed for the acquisition of the Inn, but also in respect of another loan secured by a mortgage over a property in City Beach which Curtin had purchased as an investment. By early 2002, Curtin was unable to meet those commitments and, under pressure from the lender, put the City Beach property on the market. It was sold in August 2002.
28 In about mid-2004, the appellant telephoned both Dr Mackendrick and the first respondents' accountant, Mr Chapell, asserting that the turnover figures for the Inn had been misrepresented. Dr Mackendrick authorised Mr Chapell to provide the appellant with the first respondents' tax returns for the financial years ending 30 June 1998 and 1999, which Mr Chapell did.
29 The primary judge found that in October 2005, Ms Groves telephoned Dr Mackendrick and told him that she had the appellant with her. She again asserted that she was entitled to sales commission on the sale of the Inn. She said that she had information about the sale that could be damaging to Dr Mackendrick, and would give it to the appellant unless Dr Mackendrick paid her the sales commission. Dr Mackendrick refused to pay any commission to her.
30 On or about 21 October 2005, the appellant left at the first respondents' home a letter, dated 21 October 2005, in which he alleged that the first respondents had misrepresented the predicted minimum profit figure of $120,000. The appellant subsequently contacted Dr Mackendrick by telephone on several occasions to repeat that assertion.
31 In the meantime, on 3 October 2005, administrators had been appointed to Curtin. Curtin was wound up on 27 October 2005 and the Inn subsequently sold by the liquidator. On 15 February 2006, the appellant took an assignment any causes of action Curtin may have against the respondents.
32 The appellant commenced proceedings against the respondents on 16 February 2006.
The pleaded case
33 In the statement of claim, the appellant alleged, in substance, that, in early February 2000, he informed Ms Groves, the first respondents' agent, that Curtin was interested in purchasing a hotel that was profitable, could service its borrowings, and pay for itself. The appellant pleaded that he requested information about the Inn, which Ms Groves had advertised, and Ms Groves then sent him a copy of the 7 January letter and copies of two documents referred to in it.
34 The appellant alleged that the 7 January letter conveyed a representation, in substance, that Dr Mackendrick (acting at all times on behalf of the first respondents) was expecting a minimum profit of $120,000 per annum from the conduct of the business. Further or alternatively, it was alleged that by the 7 January letter the first respondents had impliedly represented that the business had been conducted profitably.
35 It was alleged that the representations were false and made fraudulently as Dr Mackendrick:
• had no honest belief, and was not expecting, that the business would have a minimum profit of $120,000 per annum;
• knew the business did not have any real potential to be operated profitably; and
• knew the business had consistently run at a loss.
36 In the alternative, it was alleged that the representations were made negligently as the business had always traded at a loss and there was no basis for the representation that it was expected to make a profit of $120,000.
37 The appellant pleaded, further or alternatively, that Dr Mackendrick fraudulently concealed from Curtin that the business had consistently operated at a loss, his duty to disclose that fact arising, relevantly, from the representation in the letter.
38 The appellant alleged that Curtin acted on the representations and concealment in acquiring the land and business, and suffered loss and damage as a consequence. It is unnecessary for present purposes to canvass the alleged loss and damage.
39 In their defence, the first respondents denied that Ms Groves was their agent and also denied that Ms Groves sent a copy of the 7 January letter to Curtin or the appellant before Curtin entered into the agreements to purchase the land and business. The first respondents denied that Curtin had relied on the 7 January letter in entering into those agreements.
40 The first respondents further denied that the 7 January letter conveyed the representation alleged by the appellant and pleaded that the statements in it were true. In particular, they pleaded that the statement that Dr Mackendrick was expecting a minimum profit of $120,000 per annum was true and expressed a belief that he honestly held at the time, by reason of various matters that were set out in the defence.
41 Against Mr Blake, the appellant alleged that, on or about 15 February 2000, he had a meeting with Mr Blake at which he asked Mr Blake, among other things, to verify the information in the 7 January letter and to assess the viability of the business, and that Mr Blake agreed to do so. The appellant alleged that in a telephone conversation on or about 17 February 2000, Mr Blake told him that the figures in the 7 January letter were correct and, at a meeting on or about 18 February 2000, Mr Blake said that the first respondents were deriving $120,000 per annum profit and receiving $35,000 in rent from the Inn. It was further alleged that later the same day, at York, Mr Blake said that he had obtained the financial figures for the business and checked them, and that 'everything was ok'.
42 It was alleged, in effect, that Mr Blake was negligent in making those representations without having made adequate inquiries. Had such inquiries been made, it was alleged, they would have revealed that the business was unprofitable and that there was no reasonable basis for the profit expectation in the 7 January letter.
43 Mr Blake denied that he had made the representations alleged or any representations to that effect, and denied that he had been asked by the appellant to make, or had agreed to make, any inquiries concerning the financial affairs of the Inn.
44 Against the third respondent, it was alleged that the third respondent, by Mr Mulcahy, orally represented to the appellant that the business was making an annual profit of $120,000 plus rent of $700 per week. The appellant alleged that the third respondent was negligent in that it made the representation without any adequate inquiry, which inquiry, had it been made, would have revealed that the business was trading at a substantial loss.
45 The third respondent denied that Mr Mulcahy had made the representation alleged or any representation to that effect.
The reasons of the primary judge
46 The primary judge noted that critical to the appellant's claims against all of the respondents was whether the appellant had received a copy of the 7 January letter before settlement of the contracts of sale. His Honour concluded that the appellant had not. He found that the appellant had first obtained a copy of the letter some time in 2005 [225], probably after the failure of Curtin's business in the second half of 2005 [230], with the result that Curtin's claim against all of the respondents must fail.
47 As this is the principal issue on the appeal, it is necessary to trace in some detail the reasons his Honour came to that view.
48 Four witnesses were called by Curtin. Two of the witnesses gave evidence on damages and their evidence is not relevant on the appeal. The other two were Ms Groves and the appellant.
49 His Honour observed that with no notes to assist her, Ms Groves' memory of the relevant events was 'terribly vague'. At trial, Ms Groves had no recollection of ever receiving the 7 January letter or of advertising the Inn for sale [91] - [92]. Ms Groves' only relevant recollection was of speaking to the appellant and arranging for him to inspect the Inn. Ms Groves could not say whether or not she had provided a copy of the 7 January letter to the appellant but said that if she had it would have had a 'condition of supply' endorsed on it; that is, a statement to the effect that no representations as to its contents were made by Joseph Charles Learmonth Duffy. The primary judge noted there was no evidence that such a 'condition of supply' was on the copy the appellant had, although the appellant had the auction brochure, which it was likely he had obtained from Ms Groves [102].
50 The primary judge formed an adverse view of the appellant's credibility. His Honour considered that it was evident the appellant had persuaded himself that he had been seriously wronged by all of the respondents, those 'deep rooted personal assessments' being based, in his Honour's view, more on long-term rationalisations than facts [130]. The primary judge found that the appellant was prone to fabricate evidence when it suited his purpose [139], a conclusion that his Honour illustrated with a number of examples [140] - [153]. His Honour found that the appellant's evidence was generally unreliable and where there was a conflict in the evidence, the appellant's evidence could only be accepted if it was independently corroborated [87], [154].
51 The primary judge found Dr Mackendrick to be a generally measured and responsive witness.
52 His Honour noted that there was no contact between the appellant and Dr Mackendrick before settlement apart from a chance meeting at the Inn after the agreements had been signed but before settlement. As mentioned above, there was a dispute about what was said at that meeting. His Honour accepted Dr Mackendrick's evidence that in the course of the conversation he told the appellant that the first respondents had not made a profit from the hotel and the appellant had responded that he had no doubt he would run the business much better [161] - [162].
53 His Honour found that Dr Mackendrick heard nothing from the appellant after settlement of the sale of the Inn until the appellant began to leave messages at his work and home in 2004 [164]. On those occasions, the appellant alleged that the turnover figures had been falsified. Dr Mackendrick authorised Mr Chapell to provide the appellant with the partnership tax returns for the 1998 and 1999 financial years and no more was heard from the appellant until October 2005 [164] - [166].
54 Dr Mackendrick's evidence as to his telephone conversation with Ms Groves in 2005 was accepted by the primary judge. His Honour found that Ms Groves told Dr Mackendrick that she had the appellant with her in her office asking for information about the sale of the Inn and if Dr Mackendrick did not pay her commission on the sale, she would give the appellant all the information about the sale of the Inn, which 'could be quite damaging' to Dr Mackendrick. It was after this conversation that the appellant began to contact Dr Mackendrick again, now alleging that the expected profit figure of $120,000 in the 7 January letter was false [167] - [169].
55 The primary judge found that overall Mr Blake was a reliable witness [178]. His Honour rejected the appellant's evidence that he gave Mr Blake a copy of the 7 January letter at the meeting at the Dome café on 15 February 2000. His Honour accepted Mr Blake's evidence that he had not seen a copy of it at any relevant time [178]. The primary judge rejected too the appellant's evidence that in the telephone conversation on 13 February 2000, and again at the meeting at the Dome café on 15 February 2000, Mr Blake had been asked by the appellant and had agreed to carry out a due diligence exercise in relation to the Inn's financial statements. His Honour also rejected the appellant's evidence that there had been a second meeting at the Dome café, on 18 February 2000, at which Mr Blake had said that he had checked the financial figures for the Inn and confirmed a profit figure of $120,000 per annum. The primary judge accepted Mr Blake's evidence that there was only one meeting at the Dome café, on 15 February 2000, and that he was never asked to verify the Inn's financial position or profitability and that he did not tell the appellant he had done so [184], [213(25)].
56 In relation to the claim against the third respondent, the primary judge noted that there had been an amendment to the appellant's statement of claim on the last day of trial to allege, in place of a plea that Mr Mulcahy had represented that the Inn had made profits of $120,000 per annum, that Mr Mulcahy had represented that the Inn was predicted to make that profit. His Honour noted that there was no evidence to support the former claim and that the amendment reflected 'some forced eleventh-hour ground shifting by [the appellant]' [190] - [191].
57 The primary judge observed that, after 13 years, Mr Mulcahy was understandably a little vague at times in his evidence but overall considered him to be a 'forthright' witness [186]. His Honour rejected the appellant's evidence that at their meeting at the Inn on 18 February 2000, the appellant had shown the 7 January letter to Mr Mulcahy and that Mr Mulcahy had confirmed the profit figure of $120,000 per annum and also rental income of $700 per week. He accepted Mr Mulcahy's evidence that at the meeting the appellant had a copy of the 1999 auction brochure with him and that Mr Mulcahy had told the appellant that the turnover of the Inn had decreased to about $500,000 per annum or $10,000 per week, as Mr Mulcahy was aware that the brochure had a higher turnover figure of approximately $600,000 per annum [192], [199]. But the primary judge found that that the appellant did not show Mr Mulcahy the 7 January letter and that the appellant did not ask, and Mr Mulcahy did not make any statement, about the profitability of the Inn or of rental income [199]. The only discussion was as to turnover, that, in his Honour's view, being the key factor the appellant was interested in [204]. His Honour also noted that Mr Blake's evidence largely supported Mr Mulcahy's account [199]. His Honour found that Mr Mulcahy first saw the 7 January letter in 2007 [206].
58 His Honour concluded that nothing about the financial performance of the business was concealed from Curtin. He found that Dr Mackendrick had forwarded financial information prepared by Mr Chapell to Mr Mulcahy and told Mr Mulcahy that prospective purchasers were at liberty to contact Mr Chapell to review the books of the business [213(8), (17)]. Those books, the accuracy of which was never challenged, showed that the business was running at a loss [213(18), (19)]. The appellant, however, had made no request for financial information about the business, and no effort was made on behalf of Curtin to look at the books of the business before settlement [213(19), (20)].
59 The primary judge concluded that the appellant had received a copy of the auction brochure from Ms Groves in February 2000 but that he did not receive a copy of the 7 January letter at that time [223] - [225]. His Honour found (at [224]) that the following factors weighed against a finding that the appellant received a copy of the 7 January letter:
1. the lack of any documentary evidence that Ms Groves sent a copy to him;
2. the denials of Mr Blake and Mr Mulcahy (which his Honour accepted) that they were shown the letter;
3. the appellant's unreliability as a witness;
4. the fact that the appellant did not allege that he had been misled as to the expected profit until October 2005, having first complained in 2004 that he had been misled about the turnover; and
5. the conversation between Dr Mackendrick and Ms Groves in October 2005, which indicated that the appellant had first obtained the 7 January letter then.
60 His Honour found that the appellant did not receive a copy of the 7 January letter 'earlier than some time in 2005' [225], probably in October 2005 after Curtin's business had failed [230]. His Honour considered that in light of the 'explosive personality' the appellant had exhibited at trial, if he had seen a copy of the 7 January letter before settlement and relied upon it, he would have complained about being misled as to the expected profit well before late 2005 [228]. The primary judge noted that when the appellant contacted Dr Mackendrick and Mr Chapell in 2004 his grievance was that the turnover, not the profits, had been falsified [229].
61 The primary judge concluded that the appellant's case against the first respondents must necessarily fail and with it the case against the other respondents [230].
62 In addition, the primary judge went on to find that, even if he were wrong in finding that the appellant did not receive a copy of the 7 January letter before settlement, the appellant did not rely on it. In that connection, his Honour made (at [232] - [233]) the additional findings that:
1. at the time, the appellant was highly confident in his abilities as a hotelier;
2. the appellant accepted at trial that he would never accept a statement as to future profitability without having a professional check the financial figures;
3. the allegation about being misled as to the expected profit was made very late and indicated a reconstruction of events from the distorted perspective of the failure of the business around October 2005;
4. it was apparent from the evidence that the appellant's concern when he purchased the Inn was the level of turnover, not its profitability, which he believed his expertise could remedy; and
5. the appellant would not have failed to express his grievance for five years if in purchasing the Inn he had placed any reliance on the profit expectation in the 7 January letter.
63 Although the primary judge found that the appellant's claims against Mr Blake and the third respondent must fail in light of his findings in relation to the 7 January letter, his Honour went on to make specific findings in respect of those claims.
64 In relation to Mr Blake, the primary judge did not accept the appellant's evidence that he had asked Mr Blake to carry out what his Honour described as a 'de facto due diligence', noting that as Mr Blake was working as a financial consultant for a finance broker at the time it was very unlikely that he would have agreed to undertake such a task [242].
65 In relation to the third respondent, his Honour noted that the appellant's claim was tied to the contention that Mr Mulcahy had confirmed the contents of the 7 January letter in York on 18 February 2000. Having found that at that time the appellant did not have a copy of the letter, his Honour concluded that the claim against the third respondent must fail [237] - [238]. Any statements that Mr Mulcahy made about the Inn's gross sales had not been shown to be inaccurate [240].
66 The primary judge dismissed the claims against all of the respondents.
The grounds of appeal
67 There are six very lengthy grounds of appeal. They can, however, be sufficiently summarised as follows:
1. The primary judge erred in fact in finding that, if the appellant received a copy of the 7 January letter before settlement, he placed no reliance upon the statement in it as to the profit expectation of $120,000 per annum;
2. The primary judge erred in fact in finding that the appellant did not receive a copy of the 7 January letter in early 2000 but only in October 2005, that finding being against the weight of the evidence;
3. The primary judge erred in fact in finding that the failure to prove receipt of the letter in February 2000 necessarily undermined the case against the respondents and his Honour should have found that the first respondents misled Curtin by concealing from it information that showed the Inn was trading at a significant loss;
4. The primary judge erred in fact in finding that nothing about the financial performance of the Inn was held back from Curtin, that finding being against the weight of the evidence; his Honour should have found that Mr Blake and Mr Mulcahy failed to pass on information in their possession which showed that the Inn was making a loss and would never be able to service the borrowings required to purchase it;
5. The primary judge erred in fact in finding that Dr Mackendrick was not dishonest or negligent in making the statement in the 7 January letter as to the profit expectation of $120,000;
6. The primary judge erred in fact in finding that there was only one face to face meeting between the appellant and Mr Blake at the Dome café, being the meeting on 15 February 2000.
The disposition of the appeal
68 An appellant who appeals against a trial judge's findings of fact assumes a substantial burden. The onus on the appellant goes beyond merely showing that an alternative finding was available on the facts. The appellant must show that a factual error was made by the primary judge: Minister for Immigration, Local Government and Ethnic Affairs v Hamsher (1992) 35 FCR 359, 369; Leeder v The State of Western Australia [2008] WASCA 192 [84].
69 If an appellate court concludes that the judge has erred in fact, it is required to make its own findings of fact and to formulate its own reasoning based on those findings. But it should not interfere with a judge's findings of fact unless they are demonstrated to be wrong by 'incontrovertible facts or uncontested testimony', or they are 'glaringly improbable' or 'contrary to compelling inferences': Robinson Helicopter Company Incorporated v McDermott [2016] HCA 22; (2016) 90 ALJR 679 [43].
70 Turning to the grounds of appeal, it is convenient to start with ground 2 as the appellant's claim that he received a copy of the 7 January letter before settlement of the contracts of sale lay at the heart of his case at trial and upon it the appeal substantially turns.
Ground 2
71 It was submitted by the appellant that the finding of the primary judge that the appellant had not seen the 7 January letter before settlement was not supported by the evidence.
72 The appellant argued that once it was accepted, as it should have been, that the appellant had a copy by, at the latest, May 2005, the basis upon which his Honour rejected the appellant's evidence that he had a copy prior to settlement in 2000 was undermined. In particular, his Honour's finding that the lack of any complaint by the appellant about the profit expectation until October 2005 was consistent only with the letter first coming to the appellant's attention at that time, was not sustainable. It was that finding, it was submitted, that had led the primary judge wrongly to reject the appellant's evidence that he had a copy of the letter prior to settlement in 2000. The significance that his Honour attached to the telephone conversation Dr Mackendrick said he had with Ms Groves in October 2005 also fell away. The trial judge should have accepted that the appellant had made no complaint about the profit expectation figure previously because he had no conclusive proof that it was untrue until late 2005.
73 The appellant argued that the primary judge had failed to have regard to evidence that should have led him to conclude that Ms Groves had provided the appellant with a copy of the 7 January letter prior to settlement of the contracts of sale. The appellant relied upon:
1. Dr Mackendrick's evidence that he expected Ms Groves to give the letter to interested purchasers. While Ms Groves could not recall whether or not she gave a copy of the letter to the appellant, it was submitted that it was to be inferred that, as the appellant was a potential purchaser, she would have given him all the information she had, including the letter;
2. Mr Mulcahy's evidence that the appellant had up to date trading figures with him when they met on 18 February 2000. Both Mr Mulcahy and Mr Blake said they did not disclose any financial information to the appellant, leading, it was contended, to the conclusion that the figures the appellant had must have come from the 7 January letter;
3. the evidence of both Mr Mulcahy and Mr Blake that at the time of the sale they were not aware the Inn was leased to Mr Eaton, again leading to the conclusion that the only source of the appellant's knowledge of that could have been the 7 January letter;
4. an internal memorandum by a Bankwest valuer, Mr Stoiche, dated 19 April 2000, which referred to a profit figure of $120,000 per annum. That figure, it was contended, must have been provided to Bankwest. Mr Blake was the finance consultant who prepared the loan applications to Bankwest on behalf of Curtin and dealt with Bankwest, and it is to be inferred that he provided the figure to Bankwest. It is most likely that Mr Blake obtained the figure from the 7 January letter. His evidence that he had not seen the letter before settlement was therefore not credible.
74 The appellant also sought leave to rely upon additional evidence on the appeal in the form of:
• a letter, dated 19 May 2005, the appellant wrote to then Federal MP, Mr Costello, seeking his assistance in which, among other things, the appellant set out his allegation that he had been misled about the profitability of the Inn;
• a letter, dated 22 June 2005, the appellant wrote to the then Premier, Mr Gallop, seeking his assistance in which, among other things, the appellant again set out his allegation that he had been misled about the profitability of the Inn;
• a letter, dated 15 July 2005, the appellant wrote to his then lawyer, Mr John Hammond;
• a Joseph Charles Learmonth Duffy folder that the appellant said contained or accompanied the copy of the 7 January letter he received from Ms Groves;
• portion of a transcript of evidence that Dr Mackendrick had given in proceedings in the Magistrates Court in December 2007; and
• an email dated 4 August 2005 to the appellant from his then solicitors and a draft statement of evidence of the appellant attached to it.
75 This ground of appeal is without merit. It was plainly open to the primary judge to conclude, as he did, that the appellant was unaware of the 7 January letter prior to settlement.
76 Ms Groves' evidence, as the primary judge observed, hindered more than it helped the appellant's case. Not only was Ms Groves unable to recall whether or not she provided the appellant with a copy of the 7 January letter, but she said that if she had, a 'condition of supply' would have been attached to it disclaiming any representations by Joseph Charles Learmonth Duffy as to the contents of the letter (ts 647 - 648). The copy the appellant produced at trial did not have such a condition attached to it.
77 While Ms Groves did not recall a telephone conversation with Dr Mackendrick in October 2005 (ts 663 - 664), his Honour was entitled to accept Dr Mackendrick's evidence that the conversation occurred and as to its substance ([224(e)]).
78 The primary judge rejected the appellant's evidence that he showed a copy of the 7 January letter to Mr Blake and Mr Mulcahy at their meeting at the Inn on 18 February 2000. His Honour accepted the evidence of Mr Blake and Mr Mulcahy that they were not shown the letter at any relevant time. He was entitled to do so. The appellant's assertion that Mr Mulcahy gave evidence that the appellant had up to date trading figures at that meeting misstates Mr Mulcahy's evidence. Mr Mulcahy's evidence in his written witness statement was as follows:
90. I did not give [the appellant] any figures in relation to the trading history of the Inn during our meeting on 18 February 2000.
91. It appeared to me at the time that [the appellant] already had up-to-date trading figures for the Inn. He did not ask me for any trading figures. He seemed smug about the information he had.
79 In cross-examination, Mr Mulcahy said that he did not give the appellant any financial information because he assumed that Mr Blake had already provided it to the appellant (ts 1051).
80 The acceptance by the primary judge of Mr Blake's and Mr Mulcahy's evidence in preference to the appellant's evidence turned on issues as to credibility. It cannot be said that his Honour acted on evidence which was inconsistent with 'incontrovertible facts or uncontested testimony', or which was 'glaringly improbable' or 'contrary to compelling inferences'.
81 The assertion that the business had been leased to Mr Eaton was raised by the appellant in the course of cross-examination. The appellant said that upon receiving a copy of the 7 January letter from Ms Groves, he rang her concerning the reference in it to the rental payable by Mr Eaton. He said Ms Groves told him that Dr Mackendrick had leased the restaurant to Mr Eaton at a rental of $35,000 per annum (ts 320 - 321). It is evident that the primary judge did not accept that any such conversation with Ms Groves took place.
82 The appellant's reliance upon the reference in the Bankwest's valuer's memorandum of 19 April 2000 to a profit figure of $120,000 per annum is based upon a misunderstanding of the memorandum. The relevant part of the memorandum was as follows:
The most recent turnover figures provided are approximately $600,000 pa and the intending purchaser anticipates increasing the turnover to $800,000 pa. Costs provide in historic figures appear high and given the type of trade the property generates a net profit of at least 20% would be anticipated, that is $120,000.
83 It is apparent that the profit figure of $120,000 per annum did not come from information provided to Bankwest but was based upon the valuer's view as to the likely profit, based on a turnover figure of $600,000, of a business of the nature of the Inn. The accuracy of the turnover figure was not challenged by the appellant.
84 The appellant's explanation that he did not complain about the profit expectation figure in the 7 January letter until October 2005 because he lacked 'substantial evidence to back [his] claims', was inherently implausible.
85 The appellant conceded that by about August 2001 he knew that the business had made a loss of $250,000 for the financial year ended 30 June 2001 (ts 358). (Curtin's tax return for that year shows a loss of $246,742.) The appellant gave evidence that in August 2001 he began an investigation into why the business had incurred such a large loss in contrast to the expected profit of $120,000 and that the investigation was completed by the end of the 2001 - 2002 financial year (ts 335). There was, however, no assertion by the appellant at that point that the profit expectation was false. It was not until about mid-2004 that any complaint was raised with the first respondents and then the appellant asserted that the turnover had been misrepresented. That assertion was wholly without foundation, a factor that did not deter the appellant from making it. In the meantime, the business had incurred a loss of $87,448 for the financial year ended 30 June 2002 and a loss of $40,886 for the financial year ended 30 June 2003, and Curtin had also been forced to sell the City Beach property. The appellant said at trial that he did not have the 2004 and 2005 financial records, but that the Inn never made a profit.
86 With or without what his Honour described as the appellant's 'explosive personality' [228], on the evidence it was clearly open to the primary judge to conclude that the appellant would have complained about the profit expectation figure well before he did if he had seen the 7 January letter before settlement.
87 It is necessary then to turn to the additional evidence upon which the appellant seeks to rely on the appeal. The relevant legal principles are well-established.
88 In deciding whether to allow an appellant to adduce additional evidence on an appeal against a final decision made after trial, the strong public interest in the finality of litigation will be an important consideration. Except in the most exceptional circumstances, a party is bound by the conduct of his or her case at trial. Another important consideration will be whether the additional evidence is properly characterised as fresh evidence which either did not exist at the time of the trial or which could not have been discovered with reasonable diligence at that time. Generally, the discretion will be exercised against admitting evidence that is not fresh in this sense, particularly where the evidence has been deliberately withheld at trial.It will also be relevant to consider the strength of the evidence, whether it is contested and whether there is a significant possibility that the evidence would lead to a different result if admitted. If evidence is contested and would require a new trial to resolve factual disputes if it were admitted, then that will be a factor counting against its admission in the appeal. Ultimately the question is whether it is in the interests of justice to admit the additional evidence, having regard to those considerations. See Saunders v The Public Trustee [2015] WASCA 203 [87] - [90].
89 Turning to the specific documents sought to be adduced, the letter to Mr Costello of 19 May 2005 did not make specific reference to the 7 January letter or to a profit expectation of $120,000. In it the appellant alleged that the Inn 'was sold as a profitable going concern' and that 'glowing references were supplied by the estate agent and the business broker who were working in collision [sic] to mislead, misrepresent and deceive me into making the purchase [of the Inn]'.
90 The letter to Mr Gallop of 22 June 2005 was more specific. In it the appellant made the same allegation as in the letter to Mr Costello but went on to allege that 'the vendor said he expected a profit of $120,000 and a rental return of $35,000 a year.' A similar allegation was made in the letter addressed to Mr Hammond, dated 15 July 2005, the authenticity of which was not accepted by the third respondent.
91 The transcript was of evidence given by Dr Mackendrick in proceedings in the Magistrates Court on 6 December 2007 in which a restraining order was sought against the appellant. In the course of cross-examination in those proceedings, Dr Mackendrick gave evidence that he was not aware 'until about 2004' that the appellant had seen the 7 January letter.
92 We would refuse leave to admit the additional evidence. No point was taken as to its admissibility, but the respondents opposed it being admitted on the appeal on the grounds that (a) the documents existed at the time of trial and were in the appellant's possession; (b) there was no adequate explanation for the failure to seek to adduce the evidence at trial; and (c) in any event, the evidence does not assist the appellant.
93 The letters to Mr Costello, Mr Gallop and Mr Hammond were plainly available to the appellant at trial and there is no satisfactory explanation for failing to seek to rely upon them then. In any event, evidence that the appellant had, or had seen, a copy of the 7 January letter by about mid-2005 is not inconsistent with the finding of the primary judge that the appellant first obtained a copy of it 'some time in 2005' [225] and does not assist him in establishing that he had, or had seen, a copy of it in early 2000.
94 The transcript of Dr Mackendrick's evidence in the Magistrates Court was discovered by the first respondents in the list of documents annexed to Dr Mackendrick's affidavit of discovery of 15 September 2009, a little over three years before the trial commenced. Not only was the transcript available to the appellant at trial but it was referred to by the appellant in his evidence in cross-examination (ts 403). In addition, counsel for the appellant cross-examined Dr Mackendrick as to whether he had ever given evidence that the appellant probably had the information in the 7 January letter in 2004. It is to be inferred that counsel was referring to the same transcript. It was not, however, sought to tender it. In any event, Dr Mackendrick's evidence in the Magistrates Court again does not assist the appellant in establishing that he had, or had seen, a copy of the 7 January letter in early 2000.
95 According to the appellant, although the Joseph Charles Learmonth Duffy folder was in his possession, he had only recently found it. It is not suggested, however, that it could not have been located at the time of trial by the exercise of reasonable diligence. In any event, it is of no probative value. Contrary to the appellant's submission, it does not support his case that Ms Groves sent him a copy of the 7 January letter in February 2000. There is a simple explanation for his possession of the folder. The primary judge found that Ms Groves sent the appellant the 1999 auction brochure [223]. It is entirely plausible that it was sent in the folder. The appellant's possession of the folder is incapable of giving rise to an inference that Ms Groves also sent him a copy of the 7 January letter.
96 The appellant's draft statement of evidence which was attached to his then solicitor's email of 4 August 2005 refers to the 7 January letter and sets out its contents. Again, it was in the appellant's possession at the time of trial and, in any event, it does not assist the appellant in establishing that he had, or had seen, a copy of the 7 January letter in early 2000.
97 In the circumstances, it is not in the interests of justice to admit the additional evidence.
98 The finding of the primary judge that the appellant had not seen the 7 January letter before settlement was one that was plainly open to him on the evidence. This ground of appeal should be dismissed.
99 That finding is also determinative of grounds 1, 5 and 6 of the grounds of appeal.It is, however, appropriate to say something about them.
Ground 1
100 In finding that if the appellant did see the 7 January letter before settlement he placed no reliance upon the profit prediction in it, the primary judge made the additional findings of fact set out above at [62]. The appellant submitted that those findings did not support his Honour's conclusion. He argued that:
1. the finding that the appellant was highly confident of his abilities as a hotelier was irrelevant;
2. the appellant's evidence that he would not accept a statement as to profitability without having it checked by professionals did not mean that the statement was not capable of being independently relied upon apart from the investigations by professional advisers;
3. there was no evidence to support his Honour's finding that the appellant's 'key concern' was the level of turnover, not profit;
4. the failure of the appellant to articulate a complaint about the profit statement until 2005 did not mean there had been no reliance on it, in circumstances where the appellant lacked conclusive evidence that the statement was false until 2005; and
5. it was inconceivable that the appellant would have entered into the contracts without either the 7 January letter and the auction brochure or Mr Blake's representation that he had verified the profit figure of $120,000 per annum, or both.
101 This ground of appeal is again without merit. It was not suggested, and on the evidence nor could it have been, that the primary judge was in error in concluding that the appellant had a high opinion of his own ability as a hotelier. It was also evident that the appellant believed that he could run the business much more effectively than the first respondents had done. The primary judge found that the appellant told Dr Mackendrick as much. In the circumstances, it was not surprising that the appellant's focus was on turnover rather than on the profit expectation of an owner whose abilities he obviously did not hold in high regard. Nor was it improbable that the appellant would have focussed on turnover. Such an approach was also taken by the Bankwest valuer, Mr Stoiche, who observed that the historic costs of the business were high and that a business such as the Inn should be capable of producing a net profit of at least 20% of turnover.
102 The finding that the appellant's focus was on turnover rather than on whether the business was profitable, or on the first respondents' expectations as to its profitability, is supported by Mr Blake's evidence that before Curtin made the offers to buy the land and business on 18 February 2000, the only inquiry the appellant made about the financial performance of the business was to confirm with Mr Mulcahy that the turnover was between $10,000 and $12,000 per week. It is also significant that the offers to purchase the land and business were not subject to any further inquiry into the financial performance of the business and that no such inquiry was sought to be made before settlement.
103 The absence of reliance on the profit expectation was consistent too with the lack of any complaint until 2005 that the profit expectation had been misrepresented. The lack of complaint could not be attributed to some natural reticence on the appellant's part. Such reticence was inconsistent with the volatile personality the appellant revealed during the trial and, as the primary judge pointed out, the appellant had not failed to complain just before settlement about a damaged or missing microwave and vacuum cleaner, and cleaning issues, resulting in a discount of $1500 from the purchase price of $300,000 for the business [84(y)].
104 Nor is it surprising that the first complaint made by the appellant in relation to the trading performance of the business, made in about mid-2004, was that the turnover had been misrepresented. That complaint is consistent with the appellant's focus on turnover as the key to the financial performance of the business. No complaint was made at that point that the expected profit figure had been misrepresented, although the business had traded at a significant loss in each financial year since settlement and the appellant said he had commenced investigations into the cause of the losses in August 2001. As we have observed, the appellant's explanation that he had not complained earlier about the expected profit figure because he lacked conclusive proof that it was false, is inherently implausible. It is also inconsistent with his groundless complaint in 2004 that the turnover had been misrepresented.
105 The primary judge was entitled to reject the appellant's evidence that he had relied upon the profit expectation in the 7 January letter and to conclude that the allegation in 2005 that he had relied upon it was simply an attempt to reconstruct an explanation for the failure of the business.
106 This ground of appeal should be dismissed.
Ground 3
107 This ground is not easy to understand. As we understand it, the appellant contends that part of his case at trial was that Curtin had been misled into entering into the transactions by the first respondents' failure to disclose financial information that would have shown the Inn was trading at a significant loss and could not have been expected to make a profit of $120,000 per annum.
108 It seems to be asserted that that was a separate claim by the appellant, independent of reliance upon the 7 January letter. There are two difficulties with that. The first is that the only representation as to an expected profit of $120,000 alleged by the appellant was the statement in the 7 January letter. The second is that the only relevant claims pleaded by the appellant in the statement of claim alleged that the duty of the first respondents to disclose that the business was operating at a loss arose from the statement as to the expected profit made in the 7 January letter.
109 Moreover, the appellant's written submissions go beyond the ground of appeal. In the written submissions it was asserted that the primary judge should have found there was a failure by the first, second and third respondents respectively to disclose the information. No such claim was pleaded against second and third respondents and the basis of the duty on the second and third respondents to make such disclosure is not explained.
110 In any event, there is no basis for a contention that, in the absence of the representation in the 7 January letter, any of the respondents owed a duty to Curtin to disclose financial information about the business. The appellant alleges that three documents which should have been disclosed were not disclosed. They were a document entitled 'Jeff's Transactions', containing details of the Inn's trading between 7 November 1999 and 18 January 2000; a document headed 'Imperial Inn Sales Gross Profit Review', containing details of sales, purchases and gross profits between August 1997 and October 1999; and a document headed 'Jeff [sic] Calculations', containing bank balance details in the period 1 November 1999 to 18 January 2000. (We should note that none of those documents is in the form of a profit and loss statement and none contains a net profit figure for any of the periods they cover.)
111 Those documents were sent by Dr Mackendrick to Mr Mulcahy on 15 February 2000 for the purpose of Mr Mulcahy's meeting with the appellant [213(8)]. The primary judge found that little, if any, of the contents of those documents were discussed at the meeting [213(9)].
112 The absence of disclosure of their contents does not assist the appellant. Disclosure was not called for. On his Honour's findings, no financial information concerning the Inn beyond the turnover was ever sought by Curtin at any relevant time and no statements as to the financial performance of the business were made by any of the respondents, beyond the unchallenged statement as to its turnover. As explained earlier, the primary judge rejected the appellant's evidence that he had asked Mr Blake to investigate the financial position of the business and accepted Mr Blake's evidence that he was not asked to, and did not agree to undertake, such a task. His Honour also rejected the appellant's evidence that Mr Mulcahy had confirmed the figures in the 7 January letter.
113 In the circumstances, there was no duty on any of the respondents to bring the information contained in those documents to Curtin's attention. Moreover, there is no evidence that might support a finding that that material, or any other financial information concerning the Inn, was concealed from Curtin. The primary judge found that Dr Mackendrick told Mr Mulcahy that prospective purchasers were at liberty to contact the accountant for the business to inspect the books [213(17)]. That finding is not challenged. As it turned out, Curtin showed no interest in the financial affairs of the business beyond the amount of the turnover and no other inquiries were made of Mr Mulcahy or any of the other respondents about its financial affairs.
114 This ground of appeal should be dismissed.
Ground 4
115 This ground covers much the same ground as ground 3 and must fail for the same reason.
Ground 5
116 This ground of appeal must be dismissed in light of the conclusion we have reached on ground 2. In any event, it is without merit.
117 In support of this ground the appellant submitted, in effect, that Dr Mackendrick did not have reasonable grounds for the profit expectation figure in the 7 January letter in circumstances where:
1. he knew that the business was incurring consistent losses of up to $250,000 per annum;
2. figures provided in the document headed 'Jeff's Transactions' showed a 26% fall in turnover to January 2000; and
3. he had told Ms Gabriels on 23 December 1999 that the business required a loan from her of $20,000 to pay wages and creditors.
118 The appellant also sought leave to rely on additional evidence in the form of (a) communications from the Office of Liquor Licensing to the effect that the first respondents were the licensees of the Inn between 14 December 1998 and 30 June 2000, and (b) a letter, dated 4 August 2000, from solicitors for the first respondents to Mr Eaton demanding that he transfer back to them the business name 'Imperial Inn'. The appellant sought to rely on that material to challenge the finding of the primary judge as to the credibility of Dr Mackendrick, contending that it demonstrated that the evidence Dr Mackendrick gave as to the first respondents' arrangements with Mr Eaton was false.
119 We would refuse leave. The evidence was available at the time of trial and no satisfactory explanation has been provided as to why it was not sought to be relied upon at trial. In any event, it does not establish that Dr Mackendrick's evidence was false or cast doubt on his Honour's finding as to Dr Mackendrick's credibility. The documents have no probative value.
120 Dr Mackendrick gave evidence at trial that his expectation of a profit of $120,000 was based on the following:
• significant improvements had been made to the infrastructure, plant, equipment and facilities to convert the business from a basic bed and breakfast to a full hotel business with licensed restaurant, bar and café;
• turnover had increased in each year the first respondents had the business, with a turnover of $613,157 for the financial year to 30 June 1999;
• the first respondents had seriously overspent on ineffective marketing and promotion of the Inn;
• significant cost savings would result with an onsite owner/operator of the business, saving the salaries of a manager and maintenance person and reducing the 'leakage' that occurs when a hospitality business is run from a distance.
121 Dr Mackendrick was cross-examined at length on that evidence by counsel for the appellant. The substance of the appellant's attack was that, as at 7 January 2000, Dr Mackendrick could not have had a reasonable expectation of a profit from the business when he knew that the business had always run at a substantial loss. Dr Mackendrick's evidence was that at that time things were looking up. The figures for the first four months of the 1999/2000 financial year looked a lot better; the income was much higher and the losses for that period were only $20,000 (ts 758, 819). Dr Mackendrick said he knew there would be a loss for the financial year ended 30 June 1999 but that at the time he wrote the letter, income and turnover for the first six months of the 1999/2000 financial year were up and costs were being cut, and he was optimistic that they were going to turn the business around and make a profit (ts 823).
122 The primary judge accepted Dr Mackendrick's evidence and found that the appellant had failed to establish that the profit expectation had been made dishonestly or negligently [176]. That finding was clearly open to his Honour. Dr Mackendrick's evidence was not inconsistent with the contemporaneous financial records of the business or 'glaringly improbable', and the primary judge was entitled to accept it.
Ground 6
123 In light of the conclusions we have already reached, this ground of appeal must be dismissed. In any event, it is without merit.
124 There was a direct conflict between the evidence of the appellant and Mr Blake as to whether they met at the Dome café on 18 February 2000 before travelling to York. The appellant's evidence was that there was at a meeting at 11 am that day at which Mr Blake said he had checked the financial figures for the Inn and confirmed the profit figure of $120,000 per annum. Mr Blake's evidence was that there was only one meeting at the Dome café, on 15 February 2000, and that their only meeting on 18 February 2000 was in York, at 11.30 am. The primary judge preferred Mr Blake's evidence.
125 In support of this ground the appellant sought leave to rely on additional evidence on the appeal. That evidence was in the form of Telstra records of telephone calls made from Mr Blake's mobile phone in January and February 2000, which record that Mr Blake made a telephone call from a region described in those records as 'Perth' at 11.02 am on 18 February 2000. The evident purpose of the proposed evidence was to establish that Mr Blake was in the Perth metropolitan area at that time and could not therefore have met the appellant at 11.30 am in York - albeit the records do not identify the boundaries of 'Perth'.
126 We would refuse leave. The applicable principles are referred to above. Again, this evidence was available at trial. Records of telephone calls made from Mr Blake's mobile telephone covering that date were the subject of a subpoena, dated 17 December 2008, issued to Telstra at the request of the appellant. Telstra produced the records in response to the subpoena under cover of a letter to the registrar dated 5 January 2009. It appears from the transcript of the trial that counsel for the appellant had a photocopy of the records at trial (ts 163), although the primary judge understood that by then the original records produced by Telstra had been returned to it (ts 267). In fact, the original records were subsequently found in the court but in the meantime a fresh subpoena had been issued, to which Telstra responded on 18 February 2013. Mr Blake had not given evidence at that stage (ts 748). When he subsequently gave evidence, no reference was made to the Telstra records by counsel for the appellant in the course of his cross-examination. It is to be inferred that that was a deliberate forensic decision by the appellant's counsel. Moreover, we do not consider the Telstra records to have any significant probative value. In the circumstances, it is not in the interests of justice that the appellant now be permitted to rely upon them.
127 This ground of appeal should be dismissed.
Conclusion
128 None of the grounds of appeal have any merit and the appeal should be dismissed. The appropriate orders are:
1. The appellant's applications for leave to rely upon additional evidence:
(a) by application dated 11 June 2014, and
(b) by oral application made on 10 August 2016,
be dismissed.
2. The appeal is dismissed.
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