Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd

[1992] HCATrans 297

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Perth No Pll of 1992

B e t w e e n -

NEAT HOLDINGS PTY LTD

Appellant

and

KARAJAN HOLDINGS PTY LTD

First Respondent

and

KEVIN GRANT and LIONEL UNBEHAUN

Second Respondent

MASON CJ
BRENNAN J
DEANE J

Neat(2) 1 12/10/92

TOOHEY J

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON MONDAY, 12 OCTOBER 1992, AT 2.19 PM

Copyright in the High Court of Australia

MR M.D.F. O'SULLIVAN, QC:  May it please the Court, with my

learned friend, MR W. LOFFELMANN, I appear for the
appellant. (instructed by M.A. McAuliffe &

Associates)

MR C.J.L. PULLIN, QC:  May it please the Court, with

MR P.A. MONACO, I appear for the respondents.

(instructed by Godfrey Virtue & Co)

MASON CJ:	Mr O'Sullivan.
MR O'SULLIVAN:	Your Honours have, I think, my outline of

submissions and photocopies of authorities.

MASON CJ: Yes, we do.

MR O'SULLIVAN: Could I just mention one other housekeeping

matter, Your Honours? There was a page of the learned trial judge's reasons omitted from the

appeal book and that page slots in between

pages 494 and 495. We have made available that

page to Your Honours and we apologize for the

oversight.

MASON CJ: Thank you. One thing I should say,

Mr O'Sullivan, is that on the bench we do not have

a copy of the list of authorities. Our tipstaves

have the list of authorities and that is used, of

course, for providing us with the authorities.

MR O'SULLIVAN: Yes, I see. Thank you, Your Honour.

MASON CJ: So, you need to provide us with citations when

you refer to any judgment.

MR O'SULLIVAN: Yes, thank you, Your Honour.

Your Honours, this is an appeal from a

decision of the Full Court which held, by a

majority, that judgment should be set aside and

that there should be a new trial because the

majority considers that the learned trial judge had
misdirected himself as to the exactness of proof
required when fraud is an issue in civil

proceedings. It is apparent from a reading of the

judgments of Their Honours in the Full Court that

the majority came to that conclusion

notwithstanding that they also held that there was

ample evidence to support the conclusions to which

His Honour came and also that His Honour had

discharged his obligation to adequately state his

reasons.

TOOHEY J:  Mr O'Sullivan, there were three causes of action,

were there not?

Neat(2) 2 12/10/92

MR O'SULLIVAN:  Yes, Your Honour.

TOOHEY J: Deceit, action under the Trade Practices Act and

an action under the Fair Trading Act.

MR O'SULLIVAN:	Yes.
TOOHEY J:	How did it come about that the action in deceit seemed to take over both the trial and before the
Court of Criminal Appeal?

MR O'SULLIVAN: It came about in this way, Your Honour: at

the end of the evidence when we were making

submissions to the trial judge, the question of

section 52 was briefly touched upon and I think in

the context of making submissions in relation to

credibility I suggested to His Honour that

His Honour should find deceit and said that if

His Honour was so satisfied, of course, then

essentially the section 52 cause of action fell

away. In relation to negligence -

TOOHEY J: Yes, although the converse would not be true,

would it?

MR O'SULLIVAN:	No.
TOOHEY J:	I mean, in other words, there could be a finding

under either of the statutory causes of action

without necessarily involving a finding of deceit.

MR O'SULLIVAN:  Yes, Your Honour. But that is really all

that was said to discriminate, if you like, between

the section 52 action and the deceit cause of

action. Against that background His Honour found

deceit.

TOOHEY J: Yes, thank you.

MR O'SULLIVAN: Negligence loomed as a cause of action

against the third defendant, Mahney, and the

plaintiff failed against that defendant. There

really was not much discussion or prosecution of

the negligence cause of action against the first

and second respondents.

So, as the matter unfolded then at trial, the central question in the case was whether

representations which had admittedly been made as to the income of the business which the appellant

bought from the respondents - the question was

whether or not those representations had been made

fraudulently.

The majority held, for reasons really

summarized in the reasons for judgment of

Mr Justice Seaman, which I have reproduced at

Neat(2) 3 12/10/92

paragraph 1 of my outline, that in dealing with

this question of fraud the learned trial judge had not approached the evidence properly having regard

to the principles relating to exactness of proof.

The passage in paragraph 1 discloses three

reasons as summarized by Mr Justice Seaman.	He
said:

I am satisfied by the manner in which

His Honour dealt with facts surrounding the

weekly takings book, the absence of any

reference in His Honour's Reasons to the

strictness of civil proof which is required

when the commission of a criminal offence is

an issue and the express reference by have been decided upon the simple balance of

probabilities, reveals that the learned Judge

misdirected himself as to the burden of proof

and in my opinion Ground 4 is made out.

And Mr Justice Nicholson, who is the other judge in

the majority, said it in different words but

substantially the same thing at the references

which I refer to in my outline.

Your Honours, the case concerned the purchase

by the appellant of the business of an amusement

parlour which, I suppose, is an old-fashioned name

for a video game outlet. The evidence was that in

the course of the negotiations leading up to the

contract between the parties, representations were

made by the respondents as to the income of the

business, actual income for some six months since

it had opened, and predicted income.

Those representations were made by giving to

the appellant - the appellant's managing director

and representatives - a document entitled

"Business Profile" which was exhibit 1 at the trial

and which is reproduced at page 442 and following

in the third volume of the appeal book. That was a

document in which the features of the business were

described for the benefit of prospective
purchasers.

At page 450 there appears the representation relating to income and the representation related to projected income, and Your Honours can see that

at that page there is set out the represented

weekly income of the business from 13 April 1990

until 12 October 1990. There were a couple of

weeks omitted but nothing turned on that, and there

was oral evidence to make good the omitted weeks.

Neat(2) 4 12/10/92

The same page contains a representation as to

the projected income, "Turnover Projections"
towards the foot of the page, Your Honours, between

12 October, which was the cut-off date for the

historical representations, and 14 December. It

was said that some $3987 could be predicted as the

weekly income of the business - the likely weekly

income.

Then it was said over the Christmas period for

six weeks $8000 could be expected, and then

essentially after the school holidays had come to

an end for the following 11 weeks it was said that

$5793 p~r week could be expected.

BRENNAN J: Were any particulars given of the projected

income as to what was said to be represented by the

making of those projections?

MR O'SULLIVAN: In terms of formal particulars, no

particulars were given, Your Honour. The trial

proceeded, I think, upon the assumption implied, if

not expressed, that it was said that there was a

reasonable basis for predicting income in that

order and it was accepted by all parties that there

was such a reasonable basis if the historical

figures as to income were true, and His Honour

noted that, that that was common ground between the

parties.

BRENNAN J: In that event, all we are concerned about is the

allegedly actual takings during the period?

MR O'SULLIVAN:  Yes, Your Honour. Essentially that is the

way the trial was conducted. That was the question

for His Honour to determine.

BRENNAN J:  We are not concerned with the outgoings at all?

MR O'SULLIVAN:  No, Your Honour. It was alleged by the

plaintiff that there had been misrepresentations as

to the outgoings but His Honour found that he was

not satisfied that that allegation had been made

out.

The figures set out at page 450 were taken, we

were told in evidence, by the second respondents,

Mr Grant and Mr Unbehaun, who were the directors of

the first respondent. We were told that those

figures had been taken from a document called a

"Weekly Takings Book" which the second respondents

said that they kept contemporaneously over the

period: 13 April to 12 October 1990. The weekly

takings book is set out at page 454 and following
of the appeal book. It consisted simply of an
exercise book in which, apart from some preliminary

matters which are covered in the first few pages,

Neat(2) 5 12/10/92

commencing at page 459 for the week ending

20 April 1990, one sees simply a figure and the

date, and for the first week one sees the words

"Gross Takings 1st Week - $13468".

The second week is the next page, 460.

"27/4", there is just a figure under the

inscription "W/E 27/4". Next week, "4th May", one

sees just a figure again, or "Take $5,690", and so

on. Page 461 is the next two weeks, and so on.

The figures that appear in the business profile

then, we were told, were taken from this

contemporaneously kept record.

It is perhaps important to note that it was common ground that the weekly takings book was·

never shown to the appellant pre-contract or,

indeed, pre-action, pre-proceedings, and it was

exclusively kept by the second respondents. His

Honour noted that and at page 518, line 40, this

evidence from Mr Grant, one of the second

respondents:

In cross-examination Mr Grant admitted

that he did not give to Mr Walters or

Mr Gundill -

they are the representatives of the appellant -

the weekly takings book when he had met them.

The reason he gave for that was because it was

superfluous to information already in the

business profile.

TOOHEY J:  Do you accept that explanation?

MR O'SULLIVAN: Well, I accept the observation that the

weekly takings book contains nothing that is not in
the business profile, Your Honour. It is a matter

of simply looking at the business profile and

looking at the weekly takings book.

TOOHEY J: What is the next step from that, that the

business profile was at odds with the document on

page 450?

MR O'SULLIVAN:  No, I am sorry, Your Honour, the weekly

takings book did contain nothing that was not in

the business profile. There is no - - -

TOOHEY J: Yes, I understood that to be your answer but I

was then asking you what is the next step from

that, because the complaint is made that the weekly

takings book was not made available to the

plaintiffs.

Neat(2) 6 12/10/92

MR O'SULLIVAN:  As a matter of evidence, it is said that the

weekly takings book is not made available, Your

Honour, and it was common ground between the

parties that the weekly takings book was not made

available. The plaintiffs - - -

TOOHEY J: And had it been made available, what would have

followed from that?

MR O'SULLIVAN:  I am not sure what His Honour would have

made of it and what could have been made of it as to its availability, Your Honour. But what I was

about to say and what I will develop a bit later is

that it was common ground that the weekly takings

book was not made available. It is apparent that

the weekly takings book contained nothing which is

not in the business profile. It is also the case

that the evidence of the second respondents is that
they kept the weekly takings book exclusively and

thus the weekly takings book could not stand as

evidence supportive of the respondents' case

verifying the turnover independently of the

credibility of the respondents.

TOOHEY J:  You mean, from your point of view or your

client's point of view, it is a neutral

consideration?

MR O'SULLIVAN: Essentially, yes, Your Honour. It did not

advance the respondents' case independently of the

credibility of the second respondents.

MASON CJ: But how does all this bear on the question of the

standard of proof, that being the only issue in

this appeal?

MR O'SULLIVAN:  I have said all that, Your Honour, to

develop this theme and that is simply to

demonstrate how then His Honour went about coming

to the conclusion that he ultimately came to.	The
position is this, the evidence which unfolded went

this way: after taking over the business, which

was on 29 December 1990, the appellant found that

the income of the business was less and, indeed,
dramatically less than the income which it had been

led to believe would be the case.

His Honour noted that difference at pages 485

and 486 of his reasons, bearing in mind that the

profile had mentioned predicted figures of $8000 as

at the date that the appellant took over,

29 December 1990. His Honour noted at page 485,

line 55, the appellant's income in the first week

of trading, and there was some evidence which threw

some doubt as to whether or not this was a true

figure. It was $5302.20.

Neat(2) 7 12/10/92

The evidence that threw doubt on that was that there was no clear evidence that the machines from

which money is taken at the end of each week and

which money is counted up to ascertain the income

of the business - there was no independent reliable

evidence that the machines were entirely empty when

the appellant took over. But anyway, the first

week's income that the appellant recorded was

$5302.20 in comparison to $8000 as predicted.

Then at page 486, His Honour noted the income

in the succeeding weeks, for the next four weeks.

Line 15: The income was $3371, less than half the

predicteq. amount; line 35, "In the third week" it

was $3335; fourth week it was $3292; fifth week it was $2825. His Honour commented immediately after

noting those figures at line 40 on page 486:

It can be seen that these takings are nothing like the six weeks projection of

$8,000 which appears in Exhibit "l" to cover

the period December 14 to January 25.

Now, His Honour noted what I would call that

dramatic difference in income against the

background that this was a cash business. It was a
business which had very little by way of records of takings and nothing by way of an independent record

of takings. His Honour further noted that after

the appellant took over on 29 December 1990 there

was no change or essentially no change in the style

in which the business was operated. He noted that

on the basis of the evidence of a man called

Stringer who was a manager of the business who was

employed by the respondents and continued to be
employed after the appellant took over.

At page 508, line 50, His Honour noted the

evidence of Stringer to this effect:

He said that in his opinion the management and

control of the business on a day to day

business -

I think that should be "day-to-day basis" -

has in no way deteriorated since the change in

ownership -

His Honour also noted that Stringer said that the numbers of people coming through the doors of the business, the patrons of the business, did not

change after the appellant took over; remained the

same for at least quite some time. Page 510,

lines 15 to 20:

Neat(2) 8 12/10/92

After Mr Gundill had taken over, there was no noticeable downturn until the kids went back

to school.

Against that background then, the background of the

dramatic difference in takings and of there being

no change in management operations or numbers,

His Honour made this finding at page 518, line 30:

I find that the drop in business was far too

great and far too fast to have been the result

of any failure to run the business properly on

Mr Gundill's behalf, particularly as it was

during the Christmas holiday period.

And that was not, if I might say so with respect,

an unreasonable observation to make because the way

in which the case was conducted, nobody on behalf

of the respondents suggested that there was an

innocent explanation for the dramatic difference in

takings between that said by the respondents to

have been the takings and the appellant's alleged

takings. In fact, Mr Grant, for the second

respondents, conceded that point and said that

there was, in effect, no innocent explanation

available and frankly attacked the appellant's

takings figures as being the explanation for the

difference.

At page 520, the paragraph between 40 and 50,

His Honour noted this evidence, and going over to

page 521. His Honour said:

Mr Grant said that if Mr Gundill was to

tell the truth about the first week of
trading, his receipt of some $5,300 was very

disappointing. With respect to the second

week, he said he did not believe the figure

Mr Gundill had told of that week. Concerning

the weeks after the takeover, Mr Grant said:

"I don't believe the figures. I do not

believe those figures could possibly be

correct."

When it was put to Mr Gundill -

that should be "Grant", I think -

When it was put to Mr Grant that he did

not put the decline in the figures to any
other explanation such as bad running of the
business in the first few weeks by Mr Gundill

after takeover, Mr Grant said:

"No. I wouldn't expect that he could in those

first few weeks change the amount - the amount

Neat(2) 9 12/10/92

could change that much. I just couldn't see

how it could do that."

It was then put to him "It baldly comes down

to this doesn't it:	He must be telling
untruths about his take on your evidence?	He
must be telling untruths?"	Mr Grant's answer
was "Well that's my opinion."	Mr Grant said

"My proposition is that all of the money that

he has earned has not been declared."

So, the question as it developed in the case very much was one of which set of figures - bearing

in mind, of course, where the onus and standard

lies - to believe because there was not an innocent

explanation for the difference.

His Honour held that the appellant's figures

had been kept carefully and accurately at page 532,

line 35:

I accept that Mr Gundill kept records

concerning his takings to the best of his

ability.

I accept the evidence of Mr Gundill that

he kept the figures in his books in a careful

manner and that those figures which he

recorded were accurate.

Essentially, that is the way in which then

His Honour's reasoning proceeded. He was

substantially swayed by this difference in the

figures and needless to say, of course, he came to

the conclusion he came to in the light of all the

evidence: the evidence as to the dramatic
difference; the evidence as to the lack of change

in the business after the appellant took over; the

evidence as to the way in which the appellant kept

its record; and other evidence, including evidence

of managers employed by both the respondents and

the appellant, Mr Stringer, to whom I have already
referred, who spoke of the business having declined

in the first six months of operation from April

until October, notwithstanding that the

respondents' case painted a picture of a growing
business, not a declining business.

Now, Your Honours, on appeal to the Full Court, as I have said, there were essentially

three main grounds of appeal argued and they are to

be found in the amended notice of appeal at

page 547. The main grounds were 3(a):

The learned Trial Judge erred in finding that the Weekly Takings Book did not accurately

Neat(2) 10 MR O'SULLIVAN, QC 12/10/92

record the weekly takings of the business

because:

(a) There was no evidence to support such a

conclusion.

What all Their Honours in the Full Court said about

that was that there was ample evidence to support

such a conclusion.

Then new ground 4 was the next substantial

ground, and that is the one which succeeded, in the

view of a majority of Their Honours:

The learned Trial Judge failed to direct

himself and have regard to the degree of

exactness of proof required where an

allegation of fraud is made.

And new ground 5 failed, again in the view of all

of Their Honours. That was a ground which was to

the effect that the:

Trial Judge failed to discharge his duty to

adequately state the reasons for his

conclusion -

as to the misrepresentations and the accuracy of

the weekly takings book.

I have already taken Your Honours to the

passage in the judgment of Mr Justice Seaman which

really summarizes, I think, the three reasons that

Their Honours in the majority considered led to the conclusion that His Honour had misdirected himself.

If I can deal with those reasons and deal

firstly with what His Honour Mr Justice Seaman

described as the manner in which His Honour dealt

with facts surrounding the weekly takings book.

His Honour explained, I think, what he meant by	that at page 571 - this is His Honour
Mr Justice Seaman - explained what he meant by the
manner in which His Honour dealt with facts
surrounding the weekly takings book at page 571, in
the two paragraphs in the middle of that page, or
the paragraph starting at line 15. He said,
firstly:

It is, in my view, significant that the

learned Judge did not analyse the evidence for
and against the critical question of the
forgery of the weekly takings book.

TOOHEY J: In what sense is the word "forgery" used there?

Neat(2) 11 MR. O'SULLIVAN, QC 12/10/92

MR O'SULLIVAN: His Honour Mr Justice Seaman used it in the

criminal sense, I think. The previous paragraph

starting on page 570, at line 55, makes that clear:

In my view the inevitable conclusion from

his Honour's reasons is that he found to the

civil standard of proof that Mr Grant and

Mr Unbehaun had forged and uttered the weekly

takings book contrary to s 473 of the Criminal

Code and had fabricated evidence contrary to

s 129 of the Code - - -

BRENNAN J:  I notice that the Western Australian Code now

seems to omit the definitions of "false documents"
that is to be found in the Queensland Code, is that

right?

MR O'SULLIVAN: Yes, Your Honour, yes, that is correct.

BRENNAN J: In relation to this suggestion that there is a

forgery contrary to section 473, is that right?

MR O'SULLIVAN:  Well, that is right but those amendments

only came in, I think, in 1990. Just as to whether

or not - - -

BRENNAN J:  The statement by Justice Seaman that here was a

forgery contrary to section 473, is that a

statement correct in law or not?

MR O'SULLIVAN:  I think as to the law as it stood before the

Code was amended, then it might be correct as a

statement of law.

BRENNAN J: Might be?

MR O'SULLIVAN: Yes.

TOOHEY J:  How could it be?

MR O'SULLIVAN: Because section 471, as it used to stand, of

the Code provided that: 

A person who makes a false document or

writing, knowing it to be false, and with

intent that it may in any way be used or acted

upon is genuine, whether in Western Australia

or elsewhere ..... is said to forge the

document - - -

BRENNAN J: Is there a definition of "false document"?

MR O'SULLIVAN:  I am not aware of that. I do not think so,

Your Honour.	I am sorry, Your Honour, the section
goes on to say:

Neat(2) 12 MR O'SULLIVAN, QC 12/10/92

The term "make a false document or

writing" includes altering a genuine document
or writing in any material part ..... and making

any material addition -

and the like.

TOOHEY J: Well then, my question still stands,

Mr O'Sullivan. I am not suggesting that you ought

to agree with the proposition but how is it

supportable in terms of the Code as it then stood?

MR O'SULLIVAN:  How is His Honour's statement as to the

inevitability of the conclusion?

TOOHEY J: Yes.

MR O'SULLIVAN:  He supported it, or

BRENNAN J: That it is a forgery.

MR O'SULLIVAN: Conceivably, it seems to me, that if the

weekly takings was brought into existence

specifically with the knowledge that it was false

and with the intent of using it for the purpose of
defrauding somebody, then it could be regarded as a

forgery.

BRENNAN J: Is there a section 470 in your Code?

MR O'SULLIVAN: It was, Your Honour, yes.

BRENNAN J: What did it relate to? Did it define "false

document"?

MR O'SULLIVAN: Yes, Your Honour, it does. It says that:

A document or writing is said to be false -

in one of four situations.

BRENNAN J:  Do any of those situations apply to this

document?

MR O'SULLIVAN: It would appear not.

BRENNAN J:	In which case it would not be a forgery?
MR O'SULLIVAN:	Yes.

MASON CJ: Did you submit at the trial it was a forgery?

MR O'SULLIVAN:  No, Your Honour. No, there was no

discussion about that at all. This is

Mr Justice Seaman's - - -

Neat(2) 13 MR O'SULLIVAN, QC 12/10/92

BRENNAN J:  Was there a discussion about it in the

Full Court?

MR O'SULLIVAN: Yes, I think my learned friend, Mr Pullin,

made some submissions in that connection. It

received, if I might say so with respect, not very

much attention, but there was some discussion.

TOOHEY J: Did someone keep two sets of books, one for

public display and one under the counter, the one

under the counter truly reflecting the position

and, in fact, revealing an income lower than that

or takings lower than that in the book which was

displayed to the public? Is it right to say that
that person has forged the book that is made

available to the public? Certainly, the person may

have committed an offence of some sort but it just

strikes me as a little curious that you would say
that person forged the book which was made

available to the public.

MR O'SULLIVAN: Yes. With respect, that seems to be

correct. One could readily assume that other

criminal conduct and principally the one that comes

to mind is false pretences.

TOOHEY J:  Some of these matters were discussed by the Court

in Brott. Judgment was handed down some months

ago.

MR O'SULLIVAN: That would appear to be the case in this

matter.

TOOHEY J:  It may be a matter of some importance because

Mr Justice Seaman then seems to have taken that, as

it were, as a foundation point for discussion of

what would be the appropriate standard of proof in

the circumstances.

MR O'SULLIVAN: Yes. I suppose I must not shrink from the

against the respondents is some criminal conduct on	fact that certainly bound up in the conduct alleged
the part - that is what the appellant was alleging
essentially, albeit in civil proceedings. But
whether or not it was forgery or not, there would
appear to be some doubt.

TOOHEY J: But when you say the appellant was alleging some

criminal conduct, can you identify what it was?

MR O'SULLIVAN: Well, I would put it this way: falsely

pretending that the income of the business had been

the figures shown in the business profile.	I will
not go any further than that, Your Honour.

DEANE J: But what was said about the book? I mean, if it

were said that they manufactured this book so it

Neat(2) 14 MR O'SULLIVAN, QC 12/10/92

would be available for evidence and falsely

presented it as a weekly record when in fact it had

been done the day before, that would be forgery by

any standard, would it not?

MR O'SULLIVAN:  Yes, Your Honour, and nothing about that was

said.

DEANE J: The other side of it: if it was, in fact,

something kept week by week in which they put false

figures, on the ordinary understanding, that would

not be forgery.

MR O'SULLIVAN:  Yes, Your Honour.

DEANE J: Well, which was it?

MR O'SULLIVAN: Well, all that unfolded at the trial was

this, that the appellant, as the plaintiff, came to

court saying it was a victim of misrepresentations

which had been made fraudulently and those

misrepresentations were contained in the business

profile. The respondents, in court, answered that

case by denying that the representations were

wrong, were inaccurate or that they had been

fraudulently made, and further saying that they had

been taken from a weekly takings book. To the

extent that the figures in the weekly takings book

were the same as the figures in the business

profile, of course, the plaintiff had to establish

and did establish to His Honour's satisfaction that

the figures were false. But as to how they were

made, as to whether they were at one stage thought

to be genuine and later realized to be false by the

respondents or whether they were a late fabrication

- if I can use that expression loosely - or a

contemporaneous record, the evidence did not travel to those matters. The respondents did not give any

explanation which would have enabled His Honour to

come to any conclusion in relation to those

matters.

The only attack made by the appellant on the

weekly takings book was as to the accuracy of the

figures, and all His Honour held in relation to the

weekly takings book - and this is the important

point, I think - was that the figures were false;

not that they were made knowingly false or, indeed,

entered at any particular time. His Honour said -

and, in my submission, his choice of words is of

some significance - at page 535, line 30:

I find that the business did not have the turnover which was stated in the business

profile and also that the projections of

turnover were known by the second defendants

to be incorrect. I find that the weekly

Neat(2) 15 MR O'SULLIVAN, QC 12/10/92

takings book produced in evidence did not
accurately record the weekly takings of the

business.

And then he said, having dealt with the question of

accuracy, dealing then with the question of

knowledge or fraud, the last sentence of page 535:

I am also persuaded that the misrepresentations -

and that is a reference to the figures in the

profile, which were the only representations -

which were made by the second defendants on

behalf of themselves and the first defendant,

were not innocent but were made knowingly to

induce the plaintiff to purchase the business.

Now, Your Honours, at page 571, His Honour

Mr Justice Seaman has said next to line 15:

It is, in my view, significant that the

learned Judge did not analyse the evidence for
and against the critical question of the

forgery of the weekly takings book.

Leaving aside for a moment the question of forgery

or not, the other difficulty I have with that

comment, with respect, is the description of the

question as being critical because certainly it was

incumbent on the appellant, as the plaintiff, to establish that the figures in the weekly takings

book were false but as to whether or not they were
forged or made knowingly false, that perhaps, in

relation to the weekly takings book or that,

certainly, in relation to the weekly takings book

was not a critical question. What was critical was
whether the misrepresentations contained in the

business profile were made knowing them to be

false.

DEANE J: But why was it not a critical question when the

profile had been sourced back to the weekly takings

book? I mean, one would have expected that the

trial judge would say, "Well now, there are three

possibilities. One is this book has been forged,

that is, it has been produced the day before they

gave evidence, for example, and said to be a weekly

takings book when, in fact, it was not a weekly

takings book. It was something just concocted. Another is that they kept it from the beginning

putting false figures in it every week for the

purpose of using it sometime - nine months time;

or, the third possibility, probably the most
unlikely of the lot, is that week by week they were

thousands out in counting the money." It is, you

Neat(2) 16 MR O'SULLIVAN, QC 12/10/92

would think, the starting point of trying to work

out what is the explanation of this.

MR O'SULLIVAN:  Your Honour, it was not critical in the

sense that it was not necessary for His Honour to

resolve, even to the civil standard, that question.

What was necessary for His Honour to resolve was

whether the business profile which contained the

only set of figures which the appellant saw was

false and made by the respondents knowing it to be

false.

DEANE J: But implicit in a finding was a conclusion that

the weekly takings book was one of the three things

I have just put to you.

MR O'SULLIVAN:  Yes. The possibility of an innocent

explanation for the weekly takings book was perhaps

on the way in which the case was fought, not

realistically open. But as to the date upon which

deliberately false figures were brought into

existence, the respondents, if you like, left

His Honour hanging and left all parties hanging

there because they did not go into the evidence

sufficiently enough to allow His Honour to come to

any firm conclusions in that respect and it was not

necessary for His Honour so to do. It was enough

for His Honour to find that the figures were false.

As to when they were created, in my submission, was

not germane to the plaintiff's case.

Now, in connection with the weekly takings

book, as I have said, Your Honours, the book - and

it was common ground - was kept by nobody other

than the second respondents, and was not shown to
the appellant. Against that background, it was not
possible for His Honour to regard the book as some
piece of evidence having a status independent of

the credibility of the respondents, and so

His Honour looked at the question of the book in

that light but not in the light that the answer to

the question of how the book had been kept and what it contained, and the relationship between the book

and the business profile would resolve the question

of whether there was fraud or not, whether there

had been deceit or not.

So, with respect, His Honour

Mr Justice Seaman, in regarding that weekly takings

book as critical, to use his word, has perhaps seen

the book as having more significance than it, in

fact, had. But that said, in any event, His Honour

did, in fact, examine the evidence surrounding the

weekly takings book in quite some detail, and it is

not accurate to say, with respect, as His Honour

Mr Justice Seaman said at page 571, line 20, that

the trial judge -

Neat(2) 17 MR O'SULLIVAN, QC 12/10/92

did not describe the way in which the book was

said to have been kept -

in fact, he did describe the way in which the book

was said to have been kept, and he did that by

noting the evidence of Grant at page 516, line 55:

Mr Grant said that the turnover from

13 April to 12 October in Exhibit "l" -

that is the business profile

had been taken from the weekly takings book
which was maintained by himself and

Mr Unbehaun. He identified that book and said

that it was maintained from the opening of the

business. In the book is his writing and

Mr Unbehaun's writing.

So there is a description of the way in which the
book was said to have been kept, and if that is

thought to be a rather short description the

evidence itself did not really travel very much

further than that. Unbehaun, in volume II of the

appeal book, at page 383, line 40, just said this
about how the book was kept:

What is that book?---This is a weekly takings

book.

Who maintained that?---Myself or Kevin.

That is Kevin Grant.

Whose handwriting appears in it?---There's

mine for sure and Kevin's, and I believe my

wife.

There was some evidence which does not travel

anywhere as to a few of the early writings in the

book, not in connection with takings, but in

connection with details of capital contributions to

the business being in Mrs Unbehaun's name. Then at

the foot of that page:

This was a book that you kept on a weekly

basis?---Yes.

The top of page 384:

Where was it kept?---! kept it in my briefcase

all the time.

That is really all that Unbehaun said about how the weekly takings book was kept, and all that Grant

said is in the same volume of the appeal book at

page 281, line 35:

Neat(2) 18 MR O'SULLIVAN, QC 12/10/92

And is that a book that was maintained from

the opening of the business?---Yes, it was.

There is writing in that book. Whose writing

can you identify?---That's my writing and

Lionel's writing.

Can you identify anyone else's writing in that

book?---No, I can't identify anyone else's

writing. No.

And that is all the evidence, I think,

Your Honours, that there was as to how the book was

kept, so His Honour fairly summarized that by

saying that Grant said that it had been maintained

by Unbehaun and himself and identifying the

writing.

Mr Justice Seaman, at page 571 next said that

His Honour did not -

expressly deal with the relationship -

of the book -

to the business profile.

Well, again, with respect, that is simply not true.

At page 516 in the passage to which I have already

referred, line 55, His Honour noted Grant's

evidence that -

the turnover from ..... Exhibit "1" had been

taken from the weekly tradings book -

and at page 518 he noted again the same matter at

line 40:

In cross-examination Mr Grant admitted

that he did not give to Mr Walters or

Mr Gundill the weekly takings book when he had
met them.	The reason he gave for that was

because it was superfluous to information

already in the business profile.

So there was a note by His Honour as to the

relationship between the weekly takings book and

the profile. Again, the evidence admittedly did not travel any further than His Honour described

it.

Mr Justice Seaman says, in the last sentence of the paragraph to which I have been referring, at

line 30 on page 571, that His Honour -

Neat(2) 19 MR O'SULLIVAN, QC 12/10/92

made reference to a number of occasions in the

course of the negotiations when it was

produced -

that is, the weekly takings book -

without noting the fact that it contained no

information which could not be found in a much

clearer form in the business profile.

Well, I have already taken Your Honours to passages

at pages 516 and 518, and in particular the one at

518, which really show that His Honour did note

Grant's evidence to that effect.

The only evidence that anyone other than Grant

and Unbehaun saw this weekly takings book prior to

contract, or indeed prior to the proceedings, I

think, or certainly prior to contract, came from

Mahney, the third defendant, the agent. He said

that he had seen it and His Honour said that he
thought that Mahney was mistaken in that regard.

At page 528, line 40, His Honour noted:

Mr Mahney said in his evidence that he saw the weekly takings book when he first

inspected certain books and bank statements of

the business that the vendors presented. I

think Mr Mahney must be mistaken as to this.

The evidence was that Mahney saw - he was engaged

to sell the business in early October 1990 and he

certainly said in evidence that he saw this book

when he first had access to the books of the

business for the purposes of giving advice as to

selling it.

Now, whether he saw it or not in October 1990

was not significant in the sense that it could give
to the weekly takings book some independent

reliable status which would have enabled His Honour

to conclude that that book therefore supported the

respondents' case independently of the credibility

of the respondents.

So it still was not a highly critical

question, to use Mr Justice Seaman's language.

But, in any event, His Honour did consider, and

consider at considerable length, the question of

whether Mahney did see that book in October 1990.

He concluded, as he said at page 528, line 50:

I think Mr Mahney must be mistaken as to this.

Now, that was not, in my submission, an

unreasonable conclusion for him to come to, given

that the only people put forward at the trial as

Neat(2) 20 MR O'SULLIVAN, QC 12/10/92

having seen the book at all were Grant, Unbehaun

and Mahney, and Unbehaun did not support Mahney at

all in connection with whether Mahney saw the book

or not. He said nothing about that. Grant was

confusing and contradictory in connection with his

support for the proposition that Mahney had seen

the book in October 1990. His Honour noted

that Unbehaun said at page 521, line 60:

In the first written statement, Mr Unbehaun says:

"We asked Mahney to provide us with his

opinion as to the selling price.	He looked at
the sales brochure, the business.	He asked us

various questions and recommended that we ask

$495,000 for the business including plant."

And His Honour noted:

There is no reference there to a weekly

takings book being shown to Mr Mahney. And at page 523 His Honour dealt with another

aspect of Unbehaun's evidence between lines 15 and

40, and in particular - - -

MASON CJ: But do we need to go into this detail,

Mr O'Sullivan?

MR O'SULLIVAN:  Perhaps not, Your Honour. I simply make

this point, and I can perhaps leave it at that:

that His Honour's conclusion that Mahney was

mistaken when he said that he saw the weekly

takings book in October 1990 was not an

unreasonable conclusion given that it was not

supported by the only other two persons who said at

the trial that they had had access to the book.

DEANE J: But was the point His Honour was making that

nobody had seen the book, therefore it did not

exist? Otherwise, what is it all about?

MR O'SULLIVAN:  I think that His Honour was concerned as to

whether or not the book could be regarded in some

sense as independently corroborative of the

appellant's case.

DEANE J:  I follow that, but what I am asking is was the

point he was considering - whether there was any

evidence that book did exist - with the implication

that in the absence of such evidence the whole

thing was forged, and produced for the purposes of

the trial as a weekly takings book when it was

nothing of the kind?

Neat(2) 21 MR O'SULLIVAN, QC 12/10/92

MR O'SULLIVAN: Well, I think that might have been a

question in His Honour's mind as he went through

the evidence, noting as he noted on a number of

occasions, Your Honour, that there was no reference

to the weekly takings book by other witnesses who

might have been expected to say that they showed it

to Mr Mahney. But at the end of the day,

His Honour does not go so far as to say the weekly

takings book must therefore have been brought into

existence on a certain date knowing it to be false.

DEANE J: Well, that might be the answer, but I do not think

you are doing justice to Justice Seaman in that

paragraph in dismissing his concern about a

judgment that seems to be directing a great deal of

itself to the question whether the book had been
produced for the purposes of the trial, and yet the

matter is not squarely addressed.

MR O'SULLIVAN: Well, Your Honour, in the paragraph starting

at line 15 on page 571 Mr Justice Seaman describes

the question of the forgery of the weekly takings

book as critical, and then makes observations as to

things that His Honour did not do. My submission,

in a nutshell, is that much of what

Mr Justice Seaman said His Honour did not do

His Honour did do, or at least it can be

demonstrated that he set himself the exercise of

doing. Because the respondents' evidence left

His Honour hanging there, it did not lead to the

ultimate result which could have, in different

circumstances, been arrived at, namely, that the

book had been forged at a particular time or had

come into existence knowing it to be false at a

particular time.

TOOHEY J: That is really what I was about to put to you.

What was the cross-examination of the second

respondents on this matter? Was it put to them

fairly and squarely that they had simply concocted

this document?

MR O'SULLIVAN:  No, Your Honour, they were not attacked that

way because, as I have said before, it was not

germane to the appellant's case. It was simply the

respondents saying, "Well look, those figures in

the business profile are right and what is more, we
took them from this book which we kept

contemporaneously." The focus of attention at

trial was the accuracy or otherwise and the known
accuracy of the misrepresentations in the business

profile, not in the weekly takings book.

TOOHEY J: But could one be completely divorced from the

other?

Neat(2) 22 MR O'SULLIVAN, QC 12/10/92

MR O'SULLIVAN:  Not completely, Your Honour, but there was

no future, with respect, at trial in embarking on a

cross-examination which might take one into unknown

waters as to the weekly takings book and as to how

it might have come into existence. The respondents

did not put forward any evidence of any sort of remotely independent nature to suggest that the

weekly takings book could be accurately kept in

some reliable way or other. They just said they

kept it, and those figures from which the figures

in the business profile were taken were accurate.

So in that context, simply the accuracy or

otherwise of the figures was what was in issue.

Your Honours, at the end of the day,

His Honour came to the conclusion, as I have said, and I think as the passages to which I have

referred demonstrate, that the misrepresentations, that is, the figures in the business profile, were made falsely knowing them to be false. His Honour

did not come to the conclusion that the figures in
the weekly takings book were knowingly false at any

particular time, or made knowingly false at any particular time. His Honour simply came to the conclusion that they were false, and he had to go

that far for the plaintiff to succeed.

In my submission, that conclusion was

warranted by the evidence, and there is nothing

about the manner in which His Honour treated the

evidence which leaves one uncomfortable as to the

principle relating to exactness of proof.

Now, as to the question of exactness of proof,

His Honour Mr Justice Seaman said in the passage at page 571, line 50, that -

the absence of any reference in His Honour's
reasons to the strictness of civil proof which

is required when the commission of a criminal

offence is an issue and the express reference	by His Honour to a case which on its face
might have been decided upon the simple
balance of probabilities, reveals that the learned Judge misdirected himself as to the
burden of proof -

In connection with this question of the absence of any reference to the requirement for strictness of proof, Mr Justice Seaman elaborated on that at

page 572, line 50:

It seems to me that in the particular

circumstances of this case Mr Grant and

Mr Unbehaun were entitled to a detailed

analysis of the evidence surrounding the

weekly takings book and a clear application of

Neat(2) 23 MR O'SULLIVAN, QC 12/10/92

the principles emerging from the authorities

to which I have referred -

that is Briginshaw and those cases, and then -

and in particular an express consideration of

the presumption that they were innocent of
forging and uttering the weekly takings book
before His Honour made a finding that is only

explicable on the basis that they had done so.

And at page 582, Mr Justice Nicholson put the

matter in similar sort of terms. At line 30:

In my view, it is not enough in the case of

such a pleading for there to be no express

mention of the relevant considerations or a

failure to state with particularity the manner

in which the standard of proof upon the

balance of probabilities was to be applied.

BRENNAN J:  Mr O'Sullivan, I am right in thinking that the

weekly takings book was put forward by the defence

as the basis for asserting the truth of the figures

in the profile. Is that right? Was it any part of

the plaintiff's case?

MR O'SULLIVAN:  It was no part of the plaintiff's case,

Your Honour. It was put forward by the defence,

yes, in the context of saying these figures were

entered in a book kept contemporaneously by Grant

or Unbehaun.

BRENNAN J: Well, was the plaintiff's case this: "that the

figures that were in the profile could not be true

because the figures that I took are true and the
figures that I took are so far different from the

figures in the profile, the figures in the profile

must be false"?

MR O'SULLIVAN: Yes, Your Honour.

BRENNAN J: That was the plaintiff's case?
MR O'SULLIVAN:	Yes.
BRENNAN J:	The defendant said, "The figures that you took

are not true. The figures in the weekly takings

book are true, and we took the figures in the

weekly takings book"? That is what the issues
were?

MR O'SULLIVAN: Yes, Your Honour, that is right.

Your Honours, in connection with this question of the principle relating to strictness of proof of fraud in civil proceedings and the requirement that

both Mr Justice Seaman and Mr Justice Nicholson

Neat(2) 24 MR O'SULLIVAN, QC 12/10/92

describe as a requirement to make express reference

to such principles, in my submission, and with

respect, that overstates the position. It is not

the law, in my respectful submission, that there
must be in a case such as this, or in any fraud

case, an express reference to Briginshaw and to the

requirement for exactness of proof.

It is, of course, necessary for a trial judge

to have in mind such a requirement, but it is not

in every case, in my submission, that there must be

express reference to that requirement, particularly

when one is dealing with an item of evidence which

is not germane to the plaintiff's case, which is

not essential to the finding of fraud. And the

weekly takings book, as I have said, was not in

that category.

GAUDRON J: It was also a case, was it not, where there was

no innocent explanation, and that must bear

upon - - -

MR O'SULLIVAN:  I am sorry, Your Honour - - -

GAUDRON J: It being ground that there was no innocent

explanation, that does have some bearing on how a

matter has to be approached, does it not?

MR O'SULLIVAN: Yes, that is right, Your Honour. This was

not a case in which it could be said that the

proofs one way or the other were finely balanced,
or that there was a possibility of an innocent

explanation for the matters about which the

plaintiff complained. Fraud was up there if you

like in bright lights for all parties to see.	One
party said, "These are the figures."	The other

party said, "They are the figures", and all parties

agreed that two sets of figures could not sit

innocently together. That was Mr Grant's, the

second respondent's, concession in evidence in a

passage which His Honour noted and to which I have

already taken Your Honours.

So against that background and against the

background that no party, plaintiff's counsel or

defendant's counsel, saw fit to address His Honour
on the question of the requirement for the

strictness of proof, the Briginshaw requirement.

It is, in my submission, going too far to assume

that simply because His Honour did not refer to it,

His Honour must have forgotten or ignored what was

obvious in the case, namely, that there were

overtones or undertones of criminal conduct in the

allegation that the plaintiff was making against

the defendant.

Neat(2) 25 MR O'SULLIVAN, QC 12/10/92

MASON CJ: But the passage at the bottom of page 535

suggests that the trial judge only had in mind the

civil standard of proof, does it not? I can understand your submission that one does not

necessarily expect a trial judge to expressly

advert to the higher standard of proof.	One would
normally presume that he would be aware of it.	But
does not this passage at the foot of page 535
present a difficulty to you?

MR O'SULLIVAN: Well, in my submission, it does not, with

respect, Your Honour. It deals, as His Honour

Mr Justice Murray pointed out, who was the

dissenting judge in the Full Court, with the

submission which ironically enough came from the

defendants, not from the plaintiff.

MASON CJ: Yes, it is peculiar, to say the least of it, and

that may found another submission, an independent

one on your part, that this point was never taken

at the trial.

MR O'SULLIVAN: Yes. In dealing with that submission,

His Honour noted that he had been told that proof

on a balance of probabilities was required and the

burden lay on the plaintiff, and His Honour noted Aston v Halkin. Significantly enough, His Honour said, "I am persuaded to the required degree" of

that fact. That language, I must just say, is

perhaps an echo of the language of this Court in

Rejfek v McElroywhich talks in terms of proof on a

balance of probabilities, but there being a

necessity for the trial judge to be satisfied to

the required degree. If I could just take

Your Honours to that passage in Rejfek,

112 CLR 517, which is number 2 on my list of

authorities. At page 521 the Court said this in

the last paragraph on that page:

But the standard of proof to be applied

in a case and the relationship between the

degree of persuasion of the mind according to

the balance of probabilities and the gravity

or otherwise of the fact of whose existence

the mind is to be persuaded are not to be

confused.

His Honour here has said, "I am persuaded to the

required degree". That, in my submission, is an

echo of this requirement that the trial judge has

to be persuaded on a balance of probabilities, but

obviously the degree of persuasion within that

requirement is something which depends upon the

nature of the case ..

The other point I might make about this aspect of the majority's reasoning is this, if I might:

Neat(2) 26 MR O'SULLIVAN, QC 12/10/92

the onus, of course, is upon an appellant and upon

the respondents as the appellants in the

FulL Court, to show that His Honour has misdirected

himself. While the omission to refer to an

essential principle can, of course, amount to the

discharge of that hurdle, it is not a conclusion

which appeal courts should easily or readily come

to, in my submission.

Here, in a case where there is no innocent explanation for the misrepresentations, and where

His Honour has used language such as the language

of being not just satisfied on a balance of

probabilities but satisfied to the required degree,

in my submission, there is no warrant for

concluding that there has been an error.

As to the third and last reason advanced by

the majority for concluding that His Honour had

misdirected himself, the reference to Aston v

Halkin, that was a case which bore some passing

similarity to this case. It was a case in which a

buyer took over a business and the takings of the

buyer in the business were less than the

represented takings. The trial judge in Aston v

Halkin held that the case had not been made out on a balance of probabilities, and did not discuss

Briginshaw and the requirement for exactness of

proof. Against that background, the majority

considered that the reference by the learned trial

judge to Aston v Halkin somehow demonstrated that

His Honour had forgotten the requirement or

overlooked the requirement for exactness of proof.

In my submission, that conclusion by the

majority overlooks the way in which Aston v Halkin

came to be referred to by His Honour in the first

place. As I have already said, it came to be

referred to by His Honour in the context of dealing

with a submission which came from the defendants,
not from the appellant.	Mr Justice Murray really
deals with the matter at pages 592 and 593.	He
says, next to line 20:

I have investigated what occurred at

trial.

At line 25 he observes:

Very little was said about the standard of

proof required.

I might say that really that nothing was said at

trial. He then says, next to line 50 on page 592:

For the present appellants -

Neat(2) 27 MR O'SULLIVAN, QC 12/10/92

that is, for the respondents here -

a submission was made which is in fact

reflected in the passage quoted above from his

Honour's reasons. The submission was made

very much in those terms first in the outline

to which counsel was then speaking. At the

transcript 612 he said:

"So far as actual turnover is concerned your

Honour needs to be persuaded by the plaintiff

that on the balance of probabilities the

turnover stated in the business profile was

not received by the first defendant. I have

referred to a case of Aston v Halkin which is

useful simply because it has similar type facts, and in that case the court was not

persuaded."

And as His Honour Mr Justice Murray comments:

It is evident that that submission was not one

directed to elucidating the standard of proof

to be applied.

In my submission, that is, with respect, obvious.

BRENNAN J: There is no real dispute about the standard of

proof, is there?	I mean, it is balance of
probabilities and that is all there is to it.	The
question is the degree.

MR O'SULLIVAN: Yes, Your Honour. It really was a case in

which no party addressed His Honour on the

question. The issue was clear. To assume that

His Honour had forgotten or overlooked the

requirement to be satisfied, having regard to the
nature of the case and the nature of the

allegations is, in my submission, not warranted by

a reading of His Honour's reasons. If Your Honours

please, those are my submissions.

MASON CJ: Yes, thank you, Mr O'Sullivan. Mr Pullin.

MR PULLIN:  Thank you, Your Honour. Your Honours, these

points have emerged so far: that there were

several misrepresentations alleged and they all

failed but two. One was about the turnover, the

actual turnover, and the other was about the
projected turnover, but that was consequential upon
the actual turnover.

The represented turnover was contained in the business profile and there is no doubt that this

accurately recorded what was in the weekly takings

book. So the issue then arose as to the accuracy

of the weekly takings book, given - - -

Neat(2) 28 12/10/92

BRENNAN J: What do you mean by "the issue then arose"?

MR PULLIN: Well, the way His Honour's judgment was

formulated. That issue arose, and it is

evident - and I will take the Court to just a few

references in that judgment which indicates quite

clearly how His Honour approached the problem which

made it essential that he decide what the story

was, if I can use the vernacular, about the weekly

takings book, and that was the way that he

approached it.

My learned friend says, "We didn't approach it

in that way. The way we approached it was to say,

'Well, here are the represented figures and here

are the figures that we derived'", as Your Honour

Mr Justice Brennan indicated in my learned friend's

argument. But the fact is His Honour did not

approach it in that way. His Honour really quite

clearly approached the matter on the basis that my

clients had come along and testified as to the

weekly takings book being a record of the business.

That evidence, by the way, was not challenged in cross-examination. My learned friend has referred

to the evidence in-chief on the subject, but there

was no cross-examination which suggested that the

weekly takings book was in any way fabricated or

false.	It was just ignored. The approach was to
say, "Well, here are our figures.	You should draw
a conclusion from it."

But said against that was the evidence of my

clients who said, "Well, we recorded accurately the

figures that were taken from week to week." We

added to that evidence of an accountant who came

along and said, "Well, we can actually audit these
figures to a degree. We can audit them by looking at the bankings each week which then proved a part of the figure; the wages that were paid for each

week, which dealt with another portion of it", and

it then left a portion which was explained to be

owners' drawings. In other words, when they wanted
drawings - they were living off this business -

what remained was the difference between the weekly

takings book and the total of the wages and the

amount which had been banked.

The expert evidence was that that appeared to

be a reasonable amount which had been taken

although, of course, it was a factual question to

be determined by His Honour, and the records were

generally praised as being a reasonable set of

figures for this kind of business.

BRENNAN J:  Was it suggested that these figures that were in

the weekly takings book were precise, that they

actually were the money that was in the hand?

Neat(2) 29 12/10/92

MR PULLIN: Yes. I mean, I do not - - -

BRENNAN J:  So that in two weeks following you had $4300, $5400, $3800 and $5600 precisely?

MR PULLIN: Well, as I recall it, that was the evidence,

Your Honour. It came from a number of sources,

bearing in mind that this is money in machines

which goes in in dollar coins or 50 cents coins.

BRENNAN J: Well, that is what surprised me because looking

at the figures that came out at the end, for

example, you end up with 20 cents. Here they are

round hundreds for weeks on end.

MR PULLIN:  I do not want to get into that. I am sure I

could find all the evidence on it, Your Honour.

BRENNAN J: All I wanted to know is was it said, "We put it

in there rounded off" or was it said, "We counted

the money and as soon as we counted it we put it in

the book"?

MR PULLIN:  I recall there being - having seen in the

transcript that there was evidence that in fact the

figures were collected from, I think, four sources,

written on a piece of paper - because it came from

four sources - and then that total was then

recorded in the weekly takings book. So, my memory

is that the figure was said to be an accurate

figure, not a rounded-off figure.	I am told that
is correct, Your Honour.

BRENNAN J: It defies belief, that proposition, does it not?

MR PULLIN:  I am told there is no evidence, Your Honour,

about rounding off, that they were said to be

accurate figures. I must say that had not struck

me, Your Honour, but that is one of the advantages

of wending one's way through the appeal courts that

some new aspect is then noted. But I must say I

just had not looked at the list of figures with

that in mind. I know that the total, which is on

page 450, had not struck me as being unusual.

There is a list of figures - I will not read them

all out - but they had not struck me as being

particularly unusual or rounded-off figures. But

obviously Your Honour has a slightly different view
of some of the weeks where it looks as though four

in a row were rounded-off figures, but most of the

others have odd numbers, Your Honour.

BRENNAN J: Yes, indeed.

MR PULLIN: So, that is a point, I suppose, that could be

taken into account. It is a matter of comment. I

Neat(2) 30 12/10/92

do not think I can take it any further,
Your Honour.

The fact is that His Honour approached the

matter on the basis that it did come down to the
accuracy of the weekly takings book and that is

seen at page 516.	A portion of this was referred
to by my learned friend.	The bottom of page 516,

His Honour said, at line 55:

Mr Grant said that the turnover from

13 April to 12 October in Exhibit "l" had been

taken from the weekly takings book which was

maintained by himself and Mr Unbehaum.	He
identified that book and said that it was

maintained from the opening of the business.

In the book is his writing and Mr Unbehaun's

writing. The weekly takings book became

Exhibit "36".

I am satisfied that if the turnover

figures as recorded in Exhibit "l" were

correct, the turnover projections were

reasonable. The question is whether the

turnover as recorded in Exhibit "l" was the

correct turnover.

Having just stated it is just the reflection of

what is in the weekly takings book. So, that is

how the scene was set.	The projections therefore
depend upon the accuracy of these figures.	I had
four possibilities open to His Honour whereas
Your Honour Justice Deane mentioned three

possibilities, but I have ·1ooked at it from the

point of view of the judge trying to make a

decision.

The first alternative is, of course, that the

weekly takings book did accurately record the

turnover figures, and then there are the other

three alternatives, that is, it was a genuine book

but with mistakes in it, in which case it could not

have been fraudulent misrepresentation, I might

add, unless there was some recklessness as to the

representations. But if it is a genuine book with

simply mistakes that had been undetected, then that

would be innocent misrepresentation and would not

support a fraudulent misrepresentation finding.

More sinister is the possibility that there

was a fabrication with an eye to misrepresenting

the business at some later time, and that would be

a forgery, assuming that the book itself was a

genuine book but there were false figures written

in it because it might partly have been a genuine

book in which case it would satisfy the test of

false document that Your Honours Brennan and Toohey

Neat(2) 31 12/10/92

were mentioning because, in those circumstances, it
would then constitute forgery; that is, a genuine

book with false entries in the book.

BRENNAN J:  I do not want to delay you with it but I must

confess I do not understand how it answers any of
the statutory descriptions which, I gather, were

then in force at the time.

MR PULLIN: Section 471, which defined "forgery" - in the

side note indicating that it defines forgery:

A person who makes a false document or

writing, knowing it to be false, and with

intent that it may in any way be used or acted

upon as genuine, whether in Western Australia

or elsewhere, to the prejudice of any person
or with intent that any person may, in the
belief that it is genuine, be induced to do or

refrain from doing any act ..... is said to

forge the document or writing.

And then:

The term "making a false document or writing" includes altering a genuine document

or ..... making any material addition to the

body of a genuine document or writing -

Now, the document itself could be the record of takings over a period of time, part of which has

gone into the business profile because it stopped

in October, I think.

BRENNAN J: As I understood it, the definition of "false

document" which then stood in the Code as I think

it was section 473 at the time exhausted the

definition of "false" and as I read those four paragraphs, not one of them covers the present case.

MR PULLIN: That is 470, but 471

BRENNAN J: Section 470, is it?

MR PULLIN: That is 470, yes, but 471, which defines the

term "make a false document or writing" says:

The term "make a false document or

writing" includes altering a genuine

document ..... and making any material addition

to the body of a genuine document or

writing -

TOOHEY J: But you seem to be suggesting, Mr Pullin, that if

you go down to the stationers and buy a blank book

and then put false information in it that that

Neat(2) 32 12/10/92

comes within the definition of making a false

document.

MR PULLIN: What I am suggest is, Your Honour: take the

situation where I keep my records accurately.	So I
have a book which I have bought which I have

started to use as a record in my business and then

I think that I will just add a few sales that are

not otherwise genuine sales. I am then making a

material addition to the body of a genuine document

or writing.

Now, it is a matter of degree as to whether or

not to write one week's figure is in fact a
material addition to the body of a genuine document

or not is a matter of debate but clearly it is a

possibility which needs to be fully explored and it

is one of the things that a trial judge, in

contemplating that possibility, should fully

explore, and that is part of the difficulty, that

we say, because that was a possibility that was

open. And then we get to the more sinister aspect

that Justice Deane mentioned. That is that there

has been a fabrication the day before the trial:

"Well, I'm on tomorrow. I'd better find myself

some evidence and I will get the exercise book from

the shop and I'll write it up to correspond with
the business profile". That, quite clearly, is awn

offence against section 129 of the Criminal Code

which makes it an offence for:

Any person who, with intent to mislead any

tribunal in any judicial proceeding -

(1) Fabricates evidence by any means other

than perjury .....

is guilty of a crime - - -

GAUDRON J: But, Mr Pullin, if you were serious in this

contention that they should have been addressed,

they are matters you would have asked the trial

judge to address.

MR PULLIN:  Your Honour, the position is that we had been

confronted with this allegation, that there had

been a misrepresentation. The parties come to

court and our clients go into the witness - and I

must add, have discovered the weekly takings book

long before the trial, contrary to an impression

that His Honour gave it, it is first mentioned

during the course of the trial, which he did

mention.

GAUDRON J: It had been missing at some stage, had it? The

evidence was it had been missing at some stage?

Neat(2)	33	12/10/92
MR PULLIN:	No.	There was a daily takings book which caused

some confusion but that was just to record notes

that were taken. That one went missing but not the

weekly takings book. The position is that they

came to court and they said, "Well, look, this is

the system we used: we used to get money from the

machines and money from birthday parties and money

from selling a few products and in the end we would

collect together the figures, the results at the

end of each week, and we would make a note of the

total in the weekly takings book."

Now, that was their evidence and you would

think, "Well, now they are going to be - - -

GAUDRON J: But you did not invite the trial judge to

consider whether he would make a finding of forgery

against your client?

MR PULLIN: Certainly not, Your Honour.

GAUDRON J:  No. Why should he therefore have done it?

Nobody else invited him. It was a side issue, in a

sense.

MR PULLIN:  We would not invite it, Your Honour.

GAUDRON J: It was unnecessary.

MR PULLIN: Well, not when I have gone through the

references, Your Honour, that I think make it clear

how His Honour approached it. He did not approach

it on the basis that my learned friend has

suggested, and perhaps I should do that now because

it does make it evidence about what His Honour was

doing. I can just give these references - just

take you through these references fairly quickly,

but I would like to just - they are a sentence at a

time sprinkled over a number of pages. Starting at

page 513 at line 15, His Honour said: The first time a weekly takings book was

mentioned in evidence was when Mr Bonavita was

giving evidence.

And that was the accountant for the other side.

Now, you immediately think, "Ah, something is developing here about an approach of the trial

judge as to how he is regarding the evidence", and

it would be a worrying development, reading the

judgment - not that I read it having been through

the trial. But reading the judgment, you would

think, "Now, why is he saying this?", because the

weekly takings book had been deposed to by the

respondents; there had been no cross-examination to

say that it had been fabricated; there was no

inkling from our side that there was going to be a

Neat(2) 12/10/92

suggestion that it was a forged book or somehow

fabricated, because it had already been discovered

in the course of proceedings.

GAUDRON:  Or false?

MR PULLIN: Forged.

GAUDRON:	Or false.
MR PULLIN:	Or false for one of the reasons that His Honour

Justice Deane has mentioned, yes. So, if I can

just give these references: 516, we then see, at

line 35~ or that paragraph:

Mr Grant said that on the third visit

Mr Gunill brought with him a Mr Walters and

they asked for, and were shown bank

statements, wages book and invoices. That

also agrees with Mr Gundill's and Mr Walters'

evidence. Again there is no mention of the

weekly takings book which is surprising.

Page 517, under the passage that I referred to a

little earlier, opposite line 25, referring to

Mr Grant, in his statement, saying, that when they asked Mr Mahney, who was the agent, to provide an

"opinion as to the sales price", that is, long

before negotiations started.

There is no mention there of him looking at

the weekly takings book.

Page 518, opposite line 25:

The point was as I find, that they had not supplied the weekly takings book to Mr Gundill

or Mr Walters.

Page 519, the top of the page, after referring to

instructing the agent: 

Again he does not refer to his weekly takings

book.

Line 25:

Again there is no mention of a weekly takings

book.

Page 520, after talking about, once again, a

statement supplying Mahney with various things,

line 20:

There is no mention of the weekly takings

book.

Neat(2) 35 12/10/92

Page 521, line 35:

I find that neither Mr Gundill nor Mr Walters

saw the weekly takings book prior to the

contract.

Page 522 - I am getting to an end of this, I am

sorry to go through this tedious process - line 15:

There is no reference there to a weekly

takings book being shown to Mr Mahney.

Line 50 on that same page:

Again there is no mention of any weekly

takings book in that statement -

which was a statement about negotiations.

Page 523, a reference to other evidence of

supplying the agent -

There is no mention of a weekly takings book.

Right between lines 40 and 50.	Two other
references: 528, line 40:

Mr Mahney said in his evidence that he saw the weekly takings book when he first

inspected certain books and bank statements of

the business that the vendors presented. I

think Mr Mahney must be mistaken as to this.

And 529, line 35:

I accept that Mr Walters never saw the

weekly takings book.

Now, is all this comment on the fact that the

weekly takings book was not noted to resolve an

issue that Grant and Unbehaun had come along to

court and said, "We showed Mr Gundill the weekly	takings book and he denied it and here's all the
observations that I make on the evidence which leads me to the conclusion that Mr Gundill didn't
see it." Well, it was never an issue. At appeal
book 316, line 60 - I need not take you to it -
there was a concession as soon as our clients were asked about whether or not the weekly takings book
was shown to the purchasers, the intending
purchasers, he said, "No." And when he was asked, "Why not?", he said, "Well, it only had in it what
was in the business profile. It wouldn't have
helped them any more." They apparently looked at
the bank statements and the wages records and
checked those but nothing more would have emerged
from looking at the weekly takings book that was

Neat(2) 36 12/10/92

not already in the business profile.	They were the
same figures.

Now, also, you would think he must be coming

to the point of deciding.	I have said this on -
that was 12 occasions that I read out.	I thought I

had got 23 when I was arguing it before the

Full Court but, anyway, there is 12 that I have

referred to that what His Honour is going to now

say is that, "I conclude that the weekly takings

book which is the record that the respondents

produced to prove the fact that they took these

figures was fabricated in some way, either of
forgery in the sense of fabrication at some earlier

time or in fact fabricated for the purpose of

coming along to the trial."

Really, the Full Court has said, "Well,

His Honour just never follows it through." Having

made this point about the weekly takings book on so
many occasions, it is never followed through and no

conclusion is ever reached, to the point where the

Full Court speculates about what His Honour meant

and draws the terrible conclusion which

Justice Seaman does, standing now in writing

against our client, that they have committed

criminal offences.

BRENNAN J: Well, that is the difficulty I see about your

argument, Mr Pullin. Why should the trial judge

address the issue which your client set up as its defence and seek to pilary your clients as having

committed criminal offences? The question for the

judge is whether or not the figures in that profile

were true or untrue to the knowledge of your

clients.

MR PULLIN: Yes.

BRENNAN J:  He finds adversely against you on other

material, the implication of which is that those

figures in the weekly takings book cannot be true.

Why should he go beyond that point? Why should he

say, "And therefore they have done this or

therefore they have done that"? Why not simply

leave it on the basis, "Those figures are untrue"? It matters not as to what the truth is about those

figures; how they came to be there.

MR PULLIN: Because, Your Honour, we would say that the way

that His Honour has approached it is to decide it

on the basis of the accuracy of the figures in the

business profile which necessarily means a decision

about the weekly takings book.

BRENNAN J: That is an implication of it but it is not the

way His Honour decides it, is it? The way

Neat(2) 37 12/10/92

His Honour decides it is that he finds that the figures taken by the plaintiff are accurate. There

is no innocent explanation, ergo, the figures of

the defendant are false.

MR PULLIN: Well, in fact, there was an issue, Your Honour,

about the accuracy of the figures presented by the

plaintiff.

BRENNAN J:	No doubt there was.
MR PULLIN:	And His Honour unfortunately did not really

reach a.conclusion - he recorded what the evidence

was but, once again - and I might say this, that

the judgment consists of, I think, 58 pages.	I
think about 50 pages do not actually draw any
conclusions but really simply summarize the
evidence that was given.

BRENNAN J: What His Honour did was to go through the

evidence somewhat closely of all the witnesses,
first on the plaintiffs' side, then on the

defendant's side.

MR PULLIN:  He summarized it but drew very few conclusions

and in many areas did not draw a conclusion as to

what flowed from the issues that were thrown up

and, in relation to this aspect we submit that the

conclusion that His Honour reached implicitly was

that - perhaps I will start back: that the issue

was implicitly that our clients had said the

figures were as stated in the weekly takings book,

and he had to resolve that issue and that is why he

referred to it on so many occasions during the

course of his reasons for decision in order to make a decision which, in the end, is not spelled out in any respect at all, to the point where the

conclusion had to be drawn or speculation was

engaged in by the members of the Full Court of the

Supreme Court.

BRENNAN J: What do you say about page 532?

MR PULLIN: There is another reference that I want to just

find for Your Honour, and I will deal with that.

BRENNAN J: It starts at the bottom of page 531.

MR PULLIN: Yes. In dealing with that subject, Your Honour,

he does analyse the evidence which was presented by

the plaintiff and talks about the fact that

Mr Gundill kept records concerning the takings to

the best of his ability; that he kept them in a

careful manner and that he did a bad deal,

basically.

Neat(2) 38 12/10/92

BRENNAN J: And that those figures were accurate. That is

at page 532, line 42.

MR PULLIN: That is correct. But on page 535 he makes the

finding, on line 35:

I find that the weekly takings book produced

in evidence did not accurately record the

weekly takings of the business.

And it is from that that His Honour then concludes,
when he finally makes a decision about fraud, at

the bottom of the page:

I am also persuaded that the misrepresentations which were made by the

second defendants on behalf of themselves and

the first defendant, were not innocent - What Your Honour has really identified on those

pages is the fact that the representation was false
but we are still not at fraud, having analysed the

truth or falsity of the representation. There is

still the important step to take - - -

BRENNAN J:  I thought it was common ground that there could

not be an innocent explanation.

MR PULLIN:  My learned friend says that. It was not common

ground at the trial. In fact, His Honour recorded

the kind of evidence that was put before the court and it was very much a challenge in the case as to

whether or not Mr Gundill had accurately recorded

his figures and, indeed, there were concessions by

Mr Gundill in his evidence that he had done things

like this: he had introduced a new machine; he had

then only recorded half of the takings from that

machine because he had somebody who was in

partnership with him. Of course, what he should

have been recording, if he is going to compare the

figures that we were recording with his figures,

was to record figures from the whole of the

machine. He changed the nature of the business:

he opened up a back room and started a pool parlour

which was thought to be incompatible with the idea
that you get young 10 and 11-year-olds going and

playing on the games; that you then introduce an

element where you get the pool table crowd coming
in, spending a lot of time playing pool, which was

thought to be inconsistent with the kind of

business.

There were various changes which he made to

the business and that was very much an issue in the

case and what we are saying is that His Honour

found the representation was false based on the

matters that Your Honour Justice Brennan has

Neat(2) 39 12/10/92

referred me to on page 532, but he still had to

deal with the question of whether or not there was

any fraudulent conduct.

TOOHEY J:	The case is a bit like ships that pass in the night, is it not? The plaintiff sets up a case
based on inference; the plaintiff does not adduce
evidence as to the takings pre-hand-over except by
way of inviting the court to infer that they could not have been as represented, having regard to what
they were after hand-over.  The defendants' offer
by way of explanation the takings book designed to
support the business profile, which they say was the material made available to the plaintiff, and the defendants are not cross-examined as to the accuracy of the material in the takings book.

MR PULLIN: That is right, and then His Honour says the

projections are right if the actual figures are

right. So, we were fighting it on the right basis

because we said, "Well, look, the whole issue in

this case is about the actual takings from this,

the historical takings", because His Honour has
recorded, and I think Mr Justice Seaman recorded,
the fact that if the historical figures were

correct we made no misrepresentation concerning the

projections.

Now, how does that lie with what His Honour

Mr Justice Wallwork has concluded if he is saying

on the one hand, "If the historical figures are

accurate, the projections are not misrepresented

because they are reasonably based on this

historical information.", yet, then to deal with

the case by saying, "Well, having stated on at

least 12 occasions that 'Look at all this material

about when the weekly takings book was not

produced', he then does not reach any conclusion

about it."?

Quite clearly, he is setting it up on the

basis that the defendants have come to court to

fight the issue about the weekly takings on the basis of their records which are not then - you

would expect there to be cross-examination; you

would expect, with the other side in that

situation, saying, "Right, the issue is that if

these figures - the historical figures are
accurate, then we're stuck because the projected

figures are going to be accepted as reasonably

based on those figures." So, you would think that

they would say, "Well, look, your figures that
you've recorded in this book are all a lot of

nonsense, they are not the actual figures at all."

But they were never tested on it.

Neat(2) 12/10/92

So, it is not us that have done anything in

the conduct of our case which can be criticized,
but the other side can be criticized in not

challenging the point which was seen as the central

point in the whole case. Now, they did not

challenge us on it; no cross-examination

whatsoever. In fact, that was one of the points

that was dealt with at some length in the court

below.

Could I just also summarize the evidence about the weekly takings book? It was seen by Mr Mahney,

according to his testimony - there are some pages

which we have told my learned friend about which

have not been included in the appeal book. Could I

just hand these to Your Honours.

TOOHEY J: But there is a finding by the trial judge that

Mr Mahney was mistaken and that has, in a sense,

the basis of a concurrent finding by the

Full Court.

MR PULLIN:  Yes.

TOOHEY J: At least it does not appear to have been

challenged.

MR PULLIN:  Yes, if it was the only point, then I would not

refer this to you but I just want to refer to

10 points that we say His Honour should have dealt

with, and I can deal with them fairly quickly

without reference to this document other than by

referring to two pages. If Your Honours look at

page 548, that is the small number at the bottom

right-hand corner, you will see that he was shown

exhibit 36 which was the weekly takings book and he

identified that. Opposite lines C and D he said:

Yes. I saw the weekly takings book which summarised just the week's takings which was

only one entry in a book.

And this is at a time before the appellants came

into the picture. And then the only other

reference is at transcript page 557 where he was

cross-examined by my learned friend about half-way

down that page of transcript:

The weekly -

takings book -

I had a look at that.

How did the analysis help you in that

regard?---To back that up then I had to go to

Neat(2) 41 12/10/92

the wage book, the banking, etcetera, to see

if it all married up.

And it didn't, did it?---No, it didn't.

What did you do then? Did you investigate the

matter further?---Yes.	I said, "Okay, that's
fair enough.	Now, where's the balance?" and

they said, "That's in drawings," and I thought

that was quite acceptable.

That was the only cross-examination about the
weekly takings book. So, so far we have got it was

seen by Mahney who was not cross-examined on it.

It was testified to by Mr Grant and Mr Unbehaun.

They gave evidence that it existed, and they were

not cross-examined on it. It was seen by Mr Tatam,

who was an accountant, who prepared financial

statements, profit and loss statements for the
purpose of tax returns which reflected the figures

in the weekly takings book, not some reduced

figure. It is worthy of comment to note that they

were going to pay tax on the misrepresented figures

months before there was any complaint about a

misrepresentation.

MASON CJ: But after, of course, the business has been sold.

He saw it after the business had been sold.

MR PULLIN:  He saw them - the takeover was at the end of

December 1990, and in January - - -

MASON CJ:  And he saw it in January 1991.

MR PULLIN: - - - 1991, that is correct, Your Honour. So,

he saw them then. There was no rescission until

17 April 1991, and that was the first inkling that

anything was wrong and there had been any

complaint. In fact, the parties had seen each

other in the meantime. There had been no hint of

any complaint. So, the books had been given to the

accountant for the purpose of preparing profit and

loss statements which the other side's accountant

said that the profit and loss statement, which had

been prepared in March, before rescission, did

reflect the takings which were in the weekly

takings book and in the business profile. So they

are going to be paying tax on the misrepresented

figures.

They were 10 points that needed to be

addressed by His Honour, rather than just saying at the end, "Wasn't it strange that the weekly takings

book wasn't produced, and I find fraud". Now, that

is what he did.	He did not reason out and deal
with all of that material.	Now, all of this

evidence, not inherently improbable, not challenged

Neat(2) 42 12/10/92

in cross-examination, leads to a conclusion that

His Honour should have accepted the weekly takings

book as being authentic.

Mr Justice Gibbs in Precision Plastics v

Demir, 132 CLR 362, which is not on my list of

authorities, at page 371 makes that statement.

There is all the other authorities which are gathered together in a useful article in the

Australian Bar Review which is volume 6, September
1990, an article by Mr Justice Young about

uncontradicted evidence, and this was at page 202

of that journal, stating it in these ways, as a

general.rule:

the only evidence before the court on an issue

is uncontradicted, then the court is bound to

accept it unless the evidence is, "in itself

so incredible and unreasonable that no

reasonable man could accept it".

That is quoting Holman v Holman, (1964) 81 WN

(Pt 1) (NSW), 374 at 378, which was applying
Richards v Jaga, (1909) VLR 140, at 147, and in

Swinburn v David Syme, (1909) VLR 550, at 565 it

was said:

A manifest rejection of uncontradicted

evidence must be explained by some

circumstances appearing from the evidence

itself, and must not be unreasonable.

TOOHEY J: But when you say "uncontradicted evidence", the

evidence, in a sense, was contradicted here. It

was contradicted by the plaintiff's case if the

trial judge chose to accept it. Let me put this to

you, that you complain, and I understand the force

of the complaint, that the defendants were not
cross-examined as to the weekly takings book. Say

they had been cross-examined and they had stoutly

affirmed the accuracy of the contents of the

document. Would it have been still open to the

trial judge to say, "Well, without making any

finding of perjury or forgery or anything of that

sort, I prefer the evidence of the plaintiff which

leads me to the conclusion that the turnover of the

business was misrepresented and that it must have

been known to the defendants"?

MR PULLIN:  Yes.

TOOHEY J: That is a possible view of the matter, is it not?

MR PULLIN:  I agree with that, Your Honour, and I think

recently that has been pointed out in Smith v The

New South Wales Bar Association decision where the

conclusion does not have to be drawn, I think in

Neat(2) 43 12/10/92

that case, where the barrister said he had been

briefed in a conversation in a car park and I think

Justices of Appeal Mahoney and Meagher had thought

that this meant that he must be lying if there was

decision to the contrary effect and I think this
Court has said, "Well, that is not the conclusion that necessarily flows, there are other

explanations that are open.".

But that is our point, Your Honour, that it is

possible that His Honour could have reached that

conclusion or he could have reached the conclusion,

as he looked as though he was going to by all his

references, to say, "Well, look" - not that, "I

have dealt with the issue about the figures by
hearing this evidence and that evidence and I

accept that this evidence leads to the inference

that the other figures, the figures in the weekly

takings book were inaccurate"; what he has done is
to constantly point out that the weekly takings

book was not there when one would expect it to be

there. We fought the case on what one would think

would be the correct approach: "The other side

says, 'These figures are misrepresented' and we

testify to the accuracy of those figures." The

other side says, "Well, we don't want to

cross-examine on that, that's a bit hard. We will

lead a case that says, 'Look, what we earned after

the event. '"

Now, ours was the correct approach. We were

dealing with the direct allegation made against us by testifying to the accuracy of the figures. The

other side said, "Well, we won't fight that case. figures and look what they suggest by way of

inference.'" Now, in our submission, if that is

going to be the way that His Honour resolves the

matter, then he should have done so, but he did

not.

BRENNAN J: Did your side cross-examine about the

plaintiff's figures?

MR PULLIN:  Very much so, yes. There was a deal of

that - - -

BRENNAN J:  As to the accuracy of the keeping of them?

MR PULLIN: Of the plaintiff's figures, yes. That was an

issue in the case and His Honour, in fact, recorded

in some places the points which had been picked up

in the evidence.

BRENNAN J: That is about the sharing of the - - -

Neat(2) 44 12/10/92

MR PULLIN:  The sharing of the machines; the changing of the

pool. Your Honour, there is a lot of evidence

about that.

BRENNAN J: That was the changing of the business, but so

far as the figures are concerned, was there

anything apart from the sharing of the takings of

the machine?

MR PULLIN:  The things that I remember, Your Honour, was the

change of some machines; the sharing of proceeds

with somebody else, a partner; the opening of the

pool table room, a new room at the back; issues

about whether that attracted undesirable elements

or not and the like.

TOOHEY J: But are you not blurring two matters when you put

it like that, Mr Pullin? One is cross-examination

as to why the takings may have fallen; another is

cross-examination designed to show that the figures

recorded by the plaintiff were, in fact,

inaccurate. So that matters such as opening a new

room and so on would really go to the possible

explanation for a fall in takings, would it not?

MR PULLIN:  Yes, I agree that I am doing that, Your Honour. So, there were two aspects to it, yes.

TOOHEY J: But do you say that the plaintiff was

cross-examined not only as to reasons why the

takings fell but as to the accuracy of what he

recorded?

MR PULLIN: Yes, and some of those were picked up and

recorded by His Honour.

Now, if His Honour, having identified the fact

that he was suspicious about the weekly takings book

conclusions that have been posed as possible	and had then thought, "Now, where does that lead me? It leads me to have to reach one or other of these
conclusions." If His Honour had carried that
through he may well then have addressed the problem that he was faced with: having reached the
conclusion that the representations were false, as
indicated by Justice Brennan, at page 532, to then deal with what he was really setting up in mentioning on all these occasions what was wrong
with the weekly takings book because he had got to the point at page 532 to say the representations
were false but he never followed through and dealt
with - he just then said, "and I find fraud", and that is the essence of our complaint.

That then, of course, led the Full Court to

speculate and that also indicates the problem

because the speculation by Mr Justice Seaman is of

Neat(2) 45 12/10/92

terrible concern, of course, to two men, one of

whom was - Mr Grant was a Bachelor of Commerce from

the University of Queensland, 1979. He had worked

for BHP for 15 years ending up as the manager of

the steel division. He had worked two years in his

own business. In 1989 he .had been a business

broker. Mr Unbehaun had worked in the merchant

navy; he had worked as a real estate agent with a

licence, and had also worked as a business broker.

Now, all of these things should have been taken into account by His Honour, recognizing that there

was a presumption of innocence and that it was not

enough to say, "I've looked at the Gundill figures.

I compare them with the Grant and Unbehaun figures.

I reach a conclusion that the representation was

false." He should then have explained and dealt

with the 10 points that made it inherently probable

that the figures that had been recorded had existed

at all times, and for a very long period of time

and certainly at the times that they were said to

exist, and so not warranting the comment, and

should then have thought very carefully about

reaching a conclusion that we had engaged in any

fraudulent or deceitful conduct.

Mr Justice Nicholson, at page 581, really says

this in a more succinct way. In fact, at page 579,

starting at line 30 - I will not read it but you
will see that His Honour Justice Nicholson has

there summarized this continual reference to the

fact that the weekly takings book had not been

produced, you will see it down there at line 55: saw the weekly takings book prior to the

contract and that there was not evidence that

the book was shown to Mr Mahney or made

available by Mr Unbehaun along with bank

statements, wages book and invoices.

Then over the page: 

his Honour accepted that there was a dramatic

downturn ..... accepted that the downturn did

not occur because of bad management ..... He
then accepted "the proposition of counsel for

the plaintiff that the real issue in this case

boils down to who is telling the truth about

the turnover, Mr Gundill or the two second

defendants".

And that is the representation that is made, "Do

these two men come along and testify to what is in
the weekly takings book? Is that correct, and
therefore is the weekly takings book correct

because that is the record that they produce, or is

Mr Gundill correct?" Then His Honour

Justice Nicholson sets out the passage, the two

Neat(2) 46 12/10/92

paragraphs from Mr Justice Wallwork's judgment, and

then he says at the bottom of the page:

For my part I am unable to find, in what

precedes these conclusions of his Honour,

findings which would support the conclusion

that the projections of turnover were known by

Messrs Grant and Unbehaun -

and that is the point, "known by"; not that they

are false, excepting the page 532 conclusion -

which would support the conclusion that the

projections of turnover were known by

Messrs Grant and Unbehaun to be incorrect and

that the weekly takings book did not
accurately record the weekly takings. Those
are not inferences which I consider are open

from the occasions of non-production of that

book referred to in the reasons.

And then His Honour says:

It is in that context that it is

necessary to consider the fourth ground of

appeal. It is true that his Honour said:

"It was submitted for the first and second

defendants that the Court has to be persuaded

by the plaintiff that on the balance of
probabilities that turnover stated in the

business profile was not received by the first

defendant. I am persuaded to the required

degree of that fact."

And His Honour points out that:

Aston v Halkin Investments is not one which

assists in evidencing that his Honour had in

mind the matters referred to in Rejfek. In my

opinion, it is not apparent from this or the course of the reasons that the learned judge

had in mind the exactness of proof required in

relation to the issue of fraud. He relied

substantially upon the occasions on which the

weekly takings book was not produced and that

reinforces my impression that his mind had not

addressed the issue with advertence to the

clarity of proof required.

It is for that reason and the fact that the court

was left to speculate that the court said that the only way to deal with this is to have a retrial so that the matter can be properly addressed.

The giving of proper reasons has been said to

be an incident of the judicial process by the New

Neat(2) 47 12/10/92

South Wales Court of Appeal in two decisions which

are Pettitt v Dunkley, (1971) 1 NSWLR 376, at

pages 387 and 390; Housing Commission of New South

Wales v Tatmar Pastoral Company Pty Limited,

(1983) 3 NSWLR at page 378, and this Court, I

think, has accepted the Tatmar decision in the case

of Public Service Board v Osmond, 159 CLR, at

page 656. This Court has accepted the proposition

in Lloyd v Farone, (1989) WAR 154, at page 163, and

I might, with respect, put forward the test that

His Honour the Chief Justice stated there, that is,

because it is accepted that not every decision has

to be accompanied by reasons - that would be

burdensome on many occasions where there simply was

no need for it - but His Honour the Chief Justice

in this Court in Lloyd v Farone said:

The reasons must be revealed to such an extent

as will enable an appellate court to consider

and determine whether or not the judgment is

erroneous.

And we would respectfully adopt that test as a

reasonable test for viewing some reasons for

decision to see whether or not the duty, which is

imposed on the judicial officer, has been

satisfied.

What we are left with, and I might conclude

with this, is that this is a case which has been

established by "slender and exiguous proofs by

circumstances pointing with a wavering finger to an

affirmative conclusion", to quote

Justice Rich - - -

BRENNAN J: It is not an adultery case.

MR PULLIN:  No, it is not - Justice Rich in Briginshaw.

"Fraud must be proved clearly, unequivocally,

strictly and with certainty and a conclusion of	such a serious nature should not be produced by
inexact proofs, indefinite testimony or indirect references", and we say that the impression that is
left is that this conclusion has been reached in
this case by those means and that that is why we
complained about them and, in our submission, that
is why the Full Court sustained our complaint.

DEANE J:  Is there anything in any of the cases you have

looked at which helps on a question of .onus of

proof in a case where a court is called upon to

resolve conflicting allegations, each of which involves fraudulent conduct on the part of the

other party?

Neat(2) 48 12/10/92

MR PULLIN:  I must say I have not seen them and I must say I

had not thought of that problem as I was looking at

the authorities, Your Honour.

DEANE J:  I mean, it does not directly arise here but on one

approach you are alleging that the plaintiff was

guilty of the same sort of fraudulent conduct,

without using "fraud" in a very wide sense, that

the plaintiff is alleging against you and the query

does arise how one can really apply all these

comments about the gravity and the degree in that

sort of context.

MR PULLIN: Yes. Of course, the issue arose in that

situation with the onus quite clearly at all times

on the plaintiff but, of course, there would be an

evidentiary burden which would develop once we

started to say that the figures of the plaintiff

were

DEANE J:  But the unspoken assumption in these onus of proof

cases is the assumption that people just do not do

very nasty things and, therefore, you need pretty

strong proof.

MR PULLIN: Yes. Yes, I am afraid I cannot help Your Honour

there with that particular point.

I might just conclude with this point. referring to the issues which arose in the case I was

about Mr Gundill and his figures and a recording of

the evidence appears at page 489 where there is a

general reference to the evidence, but it is one of
those areas where His Honour did not deal with the
issues which were thrown up and they took a fair
bit of time up but it was never resolved in any

specific sense. His Honour here is simply saying

this is what happened in the evidence; this is what

various people said, and it goes on over the page

to page 490 and you will see what was being put to

Mr Gundill at the top of the page. At the bottom

of page 491 you will see what was put to

Mr Gundill, and at the top of page 492 what
Mr Gundill said. But His Honour, as I say, simply

records what could be read in the transcript here

without actually resolving that.

They are my submissions, if it please the

Court.

MASON CJ: Thank you, Mr Pullin. Yes, Mr O'Sullivan?

MR O'SULLIVAN:  May I just make a couple of brief points,

Your Honours? Firstly, it certainly in my

submission was common ground that there could not

be any innocent explanation for the discrepancy

Neat(2) 49 MR O'SULLIVAN, QC 12/10/92

between the plaintiff 1 s figures and the defendants'

figures.

Your Honours have already seen the reference

by the trial judge to that evidence. It is at

page 520. His discussion of that evidence at

page 520, going over to page 521, really is based

on the evidence of Mr Grant which is at page 350 in

the second volume of the appeal book, and at

page 350, he was specifically asked this question

which His Honour did not reproduce in his reasons,

at line 20:

Assuming everybody is telling the truth for a
moment, can you advance to His Honour

plausible explanation for the decline in the
business, in the turnover of the business,
between, say, the last few weeks that you had

it and the immediate weeks following

Mr Gundill's takeover?

The answer to that is:

I don 1 t believe the figures. I do not believe

those figures could possibly be correct.

You simply deny, do you, that Mr Gundill is

telling the truth about what he says are the

turnover figures?

And Mr Grant went on to say, in effect, "Yes." And

then at the foot of the page, line 60:

It baldly comes down to this, doesn 1 t it:	he
must be telling untruths about his take on
your evidence.	He must be telling

untruths?---Well, that 1 s my opinion.

So, it is not a case of an innocent explanation

lurking around the corner and His Honour not

applying his mind properly to that possibility.

Secondly, Your Honours, the second point I

would make is this:  I think my learned friend has

suggested that there was no cross-examination by

plaintiff's counsel of the defendants on the weekly

takings book. There was not, that I recall, any,

or any great deal of questions asked of the

respondents, of the defendants, concerning how that

book was kept but there was certainly a wealth of

cross-examination on the question of the accuracy
of the figures in the business profile which are

the same as the figures in the weekly takings book.

And Mr Justice Seaman made that point at page 567,

line 20, the short paragraph there:

Neat(2) 50 MR O'SULLIVAN, QC 12/10/92

The weekly takings book was put in

evidence through Mr Grant and he was very

closely cross-examined about the cash takings

of the business and its records and in
particular the lack of any record of the vital

ingredient of the directors' drawings.

There was a great deal of evidence bluntly

attacking the respondents on the accuracy of their

figures.

Your Honours, the third and final point I will

just make briefly is this: in the final analysis,

of course, all that Briginshaw and those cases says

is that a trial judge must have the appropriate

degree of confidence as to the probability of an

allegation and in this particular case, in my

submission, there is nothing about the way in which

His Honour has treated the evidence or set out his reasons to suggest that His Honour could not, on an

objective standard have had that appropriate degree
of confidence and did not, on a subjective

standard, assuming that both criteria apply, have

that degree of confidence. If Your Honours please.

MASON CJ: Thank you, Mr O'Sullivan. The Court will

consider its decision in this matter.

AT 4.43 PM THE MATTER WAS ADJOURNED SINE DIE

Neat(2) 51 12/10/92