AGUILAR v JAUCIAN SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY, CLARKE and MEAGHER JJA 15 February 1989, 15 February 1989 [1989] NSWCA 3 APPEAL from District Court — trial judge unable to accept either the plaintiff or defendant in their competing versions of contract — exclusion of admissible evidence which might have significant bearing on resolution of some critical issues — new trial ordered. ORDERS 1. Judgment in favour of the defendant set aside. 2. New trial of the proceedings in the District Court. 3. Costs of the appeal should be borne by the respondent to the appeal. 4. Respondent to have a Suitors' Fund Certificate. 5. Costs of the first trial to abide the result of the second trial. Priestley JA Shillington DCJ, who tried this case, was confronted with an unusual conflict of evidence between the plaintiff, Mr Aguilar, and his wife on the one hand and the defendant, Mr Jaucian, on the other. Although it was common ground that the plaintiff sold his restaurant business to the defendant and that the defendant took the business over on 8 or 9 April 1984, two deeds, each signed by the plaintiff and the defendant, purported to record the sale. The deed relied on by the plaintiff, (Exhibit B) recorded the consideration as (i) $23,000, payable as to $10,000 by 21 April 1984, the balance payable in thirteen monthly payments of $1,000, the first due on 7 July 1984; (ii) a promise to pay up to $10,000 to the plaintiff's trade suppliers and; (iii) a promise to obtain a release from the owner of the restaurant premises of all obligations under any relevant agreement. The other, relied on by the defendant (Exhibit 4) recorded the consideration as (i) $10,000, payable as to $5,000 by 21 April 1984, the balance payable in five monthly payments of $1,000, the first due on 7 May 1984; (ii) a promise to pay up to $5,000 to the plaintiff's trade suppliers and; (iii) a promise to obtain a release from the owner. Except for the figures and the date of commencement of the monthly instalments, the two deeds were in identical terms. The plaintiff relied on Exhibit B as recording the transaction and said he had received $10,000 from the defendant, and claimed that $13,000 remained owing. The defendant relied on Exhibit 4 and said he had paid the purchase price in full. The plaintiff's explanation for the existence of Exhibit 4 was that after Exhibit B was signed, he was asked by the defendant to sign exhibit 4 so that the defendant could use it in negotiations with the owner of the restaurant business. The defendant said Exhibit 4 was signed first and that he later signed Exhibit B at the plaintiff's request so the plaintiff could show it to his bank manager in support of an application for a loan he intended to seek in connection with a new business venture. The defendant's case was made clear in the course of Mrs Aguilar's cross-examination when counsel for the defendant suggested to her that on 9 April, or perhaps the previous day, the plaintiff and the defendant signed the deed Exhibit 4, that the day after, after the defendant had taken over the business, Exhibit B was signed, the real debt situation between the plaintiff and the defendant was documented by Exhibit 4 and that it was only later when she and 2 UNREPORTED JUDGMENTS the plaintiff were unable to get the loan sought from the bank for the other business that they then sought to exploit the situation in relation to Exhibit B. Mrs Aguilar denied each of these suggestions. Mrs Aguilar had negotiated the details of the sale with the defendant. She said that she had gone to a solicitor, Mr Bracks, and instructed him on the details agreed with the defendant and asked him to prepare the deed, Exhibit B. Mr Bracks was called in the plaintiff's case. In the course of his evidence he identified two documents, one bearing date 4 April 1984 which he said contained notes of a conversation between him and Mrs Aguilar on that date, and the other dated 10 April 1984, which he said contained notes of a later conversation on that date with Mrs Aguilar. He said the conversations noted in the documents related to instructions on the sale to the defendant and as a result of the instructions of 10 April 1984 he drew up a deed, a document of sale. The transcript then records: "(Notes tendered; objected to on the grounds of relevance; pressed, rejected)". There was admitted into evidence a letter dated 13 April 1984 from Mr Bracks to Mr Aguilar, enclosing for perusal and execution if approved a deed in the terms of Exhibit B. The defendant maintained in his own evidence the version of the facts put to Mrs Aguilar in cross-examination, namely that Exhibit 4 had been executed first and Exhibit B some time later at the request of the plaintiff for the reason already mentioned. What I have said so far is only a brief sketch of the course of the trial and the evidence given in it. It is not necessary to go into more detail for the reason I will explain shortly. The judge dismissed the plaintiff's claim. He pointed out that the plaintiff and Mrs Aguilar in their version of what had happened had participated in the production of a false document (Exhibit 4) to enable the defendant to deceive another person. The defendant also, in his version of what had happened, had joined in making a false document (Exhibit B) with a view to deceiving another person. The judge thought that each side on its own case participated in criminal acts. He thought the credibility of the three principal witnesses was such that he could only accept what any of them said if supported by what at one point in his reasons he described as "substantial and thoroughly reliable evidence" and at another as "telling" evidence. He did not regard the evidence of Mr Bracks that had been admitted as being of this character because, without questioning Mr Bracks' own credibility, he was not sure when the letter dated 13 April 1984 was in fact despatched. Thus I infer he did not think that letter could be relied on in fixing the date when Exhibit B came into existence. There were a number of features of the plaintiff's evidence, which I have not set out, which justified the trial judge in thinking him, at the least, to be unreliable. In the appeal to this Court it was contended for the plaintiff that the judge erred in requiring "substantial and thoroughly reliable evidence" before he could resolve the conflict in the versions before him. While there might be some force in this criticism if the words last quoted are looked at in isolation, when looked at in the full context of all the materials, it does not seem to me that it can fairly be said that his Honour adopted a wrong approach. When the whole of the materials are looked at it seems to me that his Honour was doing no more in essence in his analysis of the evidence than saying that in view of admissions made by the three principal witnesses and in view also of various conflicts and discrepancies in the testimony of each of them and in URJ AGUILAR v JAUCIAN (Priestley JA) 3 view of the readiness of each of them to engage in dishonest conduct, he would have to be guided in trying to arrive at conclusions on disputed issues by evidence independent of what was said by each of those three principal witnesses except to the extent that what they said was either common ground or undisputed. Such an approach is one to which courts must frequently resort. It was conceded in argument that if in truth that was what his Honour was doing, then the submission put on behalf of the plaintiff would have to fail, but it was asserted that the words used and the reference to the criminality of the behaviour of the parties showed that his Honour was in fact adopting a more restrictive approach to the evidence in a way which worked unfairly against the plaintiff. I do not think that view of what his Honour did should be accepted. It is true that there was reference to and perhaps an emphasis upon what his Honour assumed was the criminality of what each of the witnesses admitted to, but that does not, I think, detract from the fact that his essential method in approaching the evidence was as I have described. It was then urged on behalf of the plaintiff that upon a full analysis of all the evidence before the Court, and in particular in light of circumstances of an objective kind, independent of the credibility of the plaintiff and his wife, the court should conclude, notwithstanding the trial judge's dissatisfaction with the evidence of the plaintiff and his wife, that Exhibit B did represent the true agreement between the parties. Counsel for the plaintiff put powerful arguments in attempting to demonstrate that the defendant could not be believed and that in the circumstances of the case it followed that the plaintiff should succeed. The first part of the argument may well be correct. The trial judge accepted it but I am not persuaded that there are features of the case which reasonably require this court to take the next step. On the evidence before the trial judge I do not think he can be said to have been wrong in not being satisfied with the plaintiff's account of events. Having seen the plaintiff and heard his evidence he was not satisfied that he should accept his account. There were discrepancies and various matters apparent from his evidence which in my opinion entitled the judge not to accept his case, although they were not of such an overwhelming kind as to oblige an adverse decision. On the evidence admitted in the trial and in the light of his Honour's findings concerning the credibility of the plaintiff and his wife, I would not think this court should interfere with his decision to the extent of entering judgment for the plaintiff. At the most the plaintiffs argument to this point might show that a new trial should be considered. However, it is unnecessary to decide this question because of the further submission put to the court. This was that the judge should have admitted into evidence the two handwritten documents of Mr Bracks. I think this contention is correct. The court has before it photostats of the two documents. The second I translate as follows: "10.4.84 T" which I take to be an abbreviation for "telephone": "Mrs Aguilar. Moved out last Saturday. ML" or "Mr L to arrange up to $10,000. $10,000 cash in two weeks. $1,000 payable for 13 months. First payment 3 months from last Saturday." Then follows the plaintiff's address and then finally: Letter to suppliers L taking over outstanding." Photostats of the notes were before this court pursuant to a procedure to which no objection was taken by counsel, quite properly so, as it seems to me. If the note dated 10 April 1984 is 4 UNREPORTED JUDGMENTS authentic - and I am not suggesting it is not but merely recognising that it could have been the subject of testing had it been admitted into evidence - then it seems to me it would tend to establish at least two facts of which direct oral evidence would have been admissible: (1) whether or not Exhibit B came into existence before Exhibit 4; and (2) whether or not Mr and Mrs Aguilar had Exhibit B in their possession on 8 or 9 April. The answers to these questions would have been directly relevant, it seems to me, to a determination of which document was signed first. When counsel for the defendant was asked to support the trial judge's decision that the document should be excluded from the evidence seemingly, so far as the transcript goes, solely on the ground that it was not relevant, he sought to maintain that position but after some discussion, as I understood him, agreed that it was relevant to some matters in issue before the court. It seems to me that to have attempted to maintain the contrary proposition was really an impossible task. He then put a submission with greater substance. The submission was that there was sufficient evidence from Mr Bracks admitted at the trial to enable the court to reach the same conclusions as it would have reached had the notes additionally been in evidence. There is some substance in this but from what I have earlier said it appears that the trial judge to some extent discounted Mr Bracks' evidence because of uncertainties which the judge thought related to the date of composition and despatch of the letter of 13 April 1984. Had the two handwritten notes been admitted in evidence, and in particular had the later one been admitted, there would have been material before the judge which, depending upon how the case developed after the admission of the documents, may well have led him to give more weight to Mr Bracks as furnishing "telling" evidence. The document seems to me to go directly to the issue of what the real price of the sale of the restaurant was and to do so in a way potentially carrying greater weight than so much of the evidence of Mr Bracks as was admitted. Thus I do not think that counsel for the defendant made good his main submission on this point. Another submission was that it was open at the trial for oral evidence to have been led from Mr Bracks of the conversations, notes of which were recorded in the two documents. I think he is right in saying that such evidence could, under the ordinary rules, have been led but it appears from the transcript that the course taken by counsel examining Mr Bracks was to lead him to the point where he had said the conversations had taken place, then to put the notes before him and then to seek to tender the notes, I would assume with the object of drawing further evidence from him concerning the conversations after the notes went into evidence. However, the judge rejected the notes on the ground of relevance. It would follow from his ruling on that point that he must necessarily also reject evidence of the conversations recorded in the notes on the same ground. I do not think that in the circumstances it can be said that counsel failed to take a course which would otherwise have been open to him. The only matters argued in regard to the two notes were the two I have mentioned, that of relevance which was not pressed, and then that had the notes been admitted in evidence it is not likely there would have been any difference in the result. In this court the admissibility of the notes had been put by counsel for the plaintiff on the footing of both s14B and s14CE of the Evidence Act. It was not argued that one or other of those sections did not apply to the notes. Because of that, the court has not investigated the applicability of those sections URJ AGUILAR v JAUCIAN (Priestley JA) 5 but, having myself looked at the terms of s14B in connection with the question before the court, it seems reasonably clear that the terms at least of that section are directly applicable to the notes in question. A further matter of evidence was argued which would not in itself have warranted either an appeal or the consideration of this court in the appeal. Since the court is minded to order a new trial of this matter, it is convenient to mention this ground briefly. In the course of the trial Mrs Aguilar was cross-examined to the effect that she knew that at the time when she was negotiating with Mr Jaucian the restaurant business was of very little worth. This cross-examination was directed to showing that it was more likely that the lower than the higher price in the two deeds was the true one. It was sought to counter the effect of this cross-examination by showing that not long before the negotiations Mrs Aguilar had been trying to find buyers for the restaurant at a price in the region of $80,000. Cross-examination obviously directed to showing the unlikelihood of this was quite vigorously pursued. The letter, which again is before us by the same method as that I have already mentioned in regard to the notes, was a letter of 4 November 1983 written by Mr Bracks to Mr Aguilar recording the state of affairs on that date concerning a possible buyer at a price of $70,000 for the business. I see no reason why this letter was not relevant to an issue which had become of some importance in the case. It is not a letter which, in all the circumstances of the real dispute between the parties, is of any great significance but so far as relevance is concerned it seems to me that it cannot be said to be irrelevant and in my view that ground of objection to its admission should not be upheld. The final position that I reach then is that the materials in the appeal book show a number of factual disputes between the parties upon which the evidence from both sides is unreliable and contains many difficulties of explanation. The submission made on behalf of the plaintiff that judgment should now be entered for the plaintiff would, if accepted, involve the court in attempting to decide upon a number of issues in which credit is involved, the witnesses whose credit is involved being those none of whom the judge was prepared to accept. With the further material available from Mr Bracks' notes it should be possible for a court to make more definite findings on at least some of the matters in issue and indeed on a question to which not a great deal of attention appears to have been paid at the trial, that is: if the defendant's version of events is correct, who drafted Exhibit 4 and when? In circumstances such as these it seems to me quite beyond the proper competence of this court to attempt to resolve the issues both major and minor between the parties involving credit and uncertainty in the way that they do, simply on the transcript before the court. The result is, in my opinion, that the judgment in favour of the defendant should be set aside and a new trial ordered of the proceedings in the District Court. The costs of the appeal should be borne by the respondent to the appeal. I leave other costs questions until after the other members of the court have said what they want to say. PRIESTLEY JA: Two questions arise: what should happen about the costs of the hearing before the trial judge and is there any question of a Suitors' Fund Certificate? GRAY: I would seek a certificate. PRIESTLEY JA: Should the costs of the first trial abide the event of the second, or have you any alternative to propose? 6 UNREPORTED JUDGMENTS GRAY: Subject to seeking instructions, I would submit that was the appropriate course. MURR: I think it would have to be that. PRIESTLEY JA: The orders of the court will be as earlier indicated, together with an order that costs of the first trial should abide the result of the second trial. The respondent should have a Suitors' Fund Certificate. MURR: Obviously it is not for this court to be dictating anything to the District Court so far as its internal procedure goes, but in view of the time that has elapsed and the amounts of money involved, which are relatively small but, with the growing interest, getting out of all proportion, might I respectfully submit that this would be a case, both in the interests of the parties and in the administration of justice, to be expedited before the District Court and if your Honours agreed with that proposition, would it be possible for you to make an observation to that effect? PRIESTLEY JA: I do not think we can make any order. I am happy to observe what I think everybody would unite in saying, that is, that the sooner this case can be disposed of the better for everybody and the more likely it is to be disposed of effectively, but I should also add that that is entirely a matter for the District Court. Judgment in favour of the defendant set aside. New trial of the proceedings in the District Court. Costs of the appeal should be borne by the respondent to the appeal. Respondent to have a Suitor's Fund Certificate. Costs of the first trial to abide the result of the second trial. WRwWN ES Counsel for the Appellant: DH Murr Solicitors for the Appellant: Noel F Bracks Counsel for the Respondent: PW Gray Solicitors for the Respondent: WJ Enright and Sons