ADMONT HOLDINGS PTY LTD v LOWE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, SAMUELS and MAHONEY JJA 14-15 September 1989, 17 October 1989 [1989] NSWCA 238 FRAUD — deceit — inducement to enter sublease of rural property — representations made to proposed sub-lessees — whether representations fraudulent — whether properly proved to correct standard of proof — whether sustained by an analysis of the evidence — whether sustained by findings of the trial judge as to the credit of witnesses — whether inducement proved where several considerations (including inspections on site) contributed to the entry into the sublease — rural land leased during drought for grazing and farming — area of land normally swamp dried up — sub-lessees disclose purposes to sub-lessor — disputed representations made as to the extent of land available for grazing and farming — trial judge believes sub-lessees — appeal — held: (1) Having regard to the findings of the trial judge on the credit of the respective parties, the finding of inducement could only be set aside if it was "glaringly improbable". PRACTICE AND PROCEDURE — expert report — provision on day of trial — no application for adjournment — no objection to tender — no application to delay cross-examination — no application to trial judge to exercise his discretion to exclude evidence — appeal on the ground that trial miscarried by reason of admission of report — held: (1) It is the duty of counsel to protect their clients by recording any objections to lately provided expert reports which should be exchanged before trial; (2) At least in the circumstances of the present case, the failure to do so was fatal to the subsequent contention that the trial miscarried; (3) The suggestion that the trial judge had an independent duty in the circumstances to exclude the report and evidence where the parties did not ask him to do so, doubted. LEGAL PRACTITIONERS — barrister — duty to client — belated tender of expert report — report not provided in advance of trial — whether duty to object, apply for adjournment or otherwise seek exclusion under Pt36 Rule 13A — held: In the circumstances, as no objection had been made nor adjournment sought, it could not be said that a miscarriage had occurred which required retrial. FRAUD — duty to plead with particularity — necessity to prove case with clarity — Wallingford v Directors of the Mutual Society (1880) 5 App Cas 685 approved. PRACTICE AND PROCEDURE — slip rule — no evidence against some appellants — belated application to raise ground of appeal of no evidence — disharmony between judgment and judge's reasons — whether to be corrected by slip rule or on appeal — held: In the circumstances it was appropriate to correct the judgment below by orders made in the appeal. Brunskill and Another v Sovereign Marine and General Insurance Co Ltd and Others (1985) 59 ALJR 842; Jones v Hyde (1989) 63 ALJR 349 applied; (2) The evidence did not sustain such a conclusion; (3) Although other considerations (including on site inspection) contributed to the decision to enter the sublease, the finding of the trial judge that the representations contributed in a real way to the entry into the sublease was sustained by the evidence of the sub-lessees and was sufficient to support the 2 UNREPORTED JUDGMENTS judgment in their favour. Gould v Vaggelas (1985) 157 CLR 215 applied; (4) The evidence did not require the conclusion that the sub-lessor was ignorant of the state of swampland on his property and thus that his misrepresentations, if any, were innocent; (5) Accordingly, appeal (from Yeldham J) dismissed. Cameron v Baker, Court of Appeal, unreported, 6 August 1980 referred to. The Government Insurance Office of New South Wales v Fredrichberg (1968) 118 CLR 401, 410 and Builders Licensing Board v Mahoney (1986) 5 NSWLR 210 referred to. ORDERS 1. The appeal by Admont Holdings Pty Limited and Dorothea Lechner allowed; 2. The judgment of Yeldham J of 25 February 1988 insofar as it relates to those appellants (the first and third defendants at the trial), set aside. 3. In lieu thereof, order that judgment be entered in favour of the first and third defendants with no order as to their separate costs, if any, at the trial. 4. No order as to the costs of the first and third appellants of the appeal; 5. Appeal by the second appellant Alfred Lechner dismissed and the judgment entered by Yeldham J on 25 February 1988 against him confirmed so that the judgment previously entered against that defendant and the first and third defendants will be read as a judgment against Alfred Lechner alone. The order therein that the defendants pay the plaintiffs' costs of the proceedings amended to require the second defendant, Alfred Lechner, alone, to pay such costs; 6. The second appellant to pay the respondents' costs of the appeal, so far as it concerned him. Kirby P Australia is, according to the poet, a land of droughts and flooding rains. The respondents subleased from the first appellant a little more than 260 acres of the land of the property "Coomonderry". They did so at a time of severe drought. Their case was that they were induced to enter the sublease by written and oral representations made to them concerning the land and its suitability for the grazing and farming activities which they disclosed. Soon after they entered the sublease, the drought broke. Normal rainfall returned. This reduced a significant area of the land to its normal condition of swamp. In the reduced area of land available, the grazing and farming business of the respondents was not then viable. They later repudiated the obligation to pay rent. The first appellant then determined the sublease. At the threat of proceedings on the part of the first appellant for damages, the respondents initiated the proceedings out of which this appeal arises. Their statement of claim was eventually amended to include a claim for damages for fraudulent misrepresentation on the part of the second appellant (Mr Alfred Lechner). The first appellant is a family company and the third appellant is Mr Lechner's wife. Put shortly, the respondents alleged that they were entitled to damages for the loss of capital and profits which resulted from their entry into the sublease consequent upon the alleged fraudulent misrepresentation. At first instance, the appellants defended the proceedings. They denied the fraudulent misrepresentations alleged. They asserted that the respondents had relied on their own enquiries, investigations and expertise before executing the sublease. They cross-claimed for unpaid rent and for damages alleged to flow from the failure of the respondents to cultivate and farm the premises in a husband-like manner and to keep them and the fixtures attached in good tenantable repair. The claims and cross-claims of the parties, thus briefly described, came before Yeldham J in the Supreme Court. His Honour upheld the respondents' entitlement to damages on the basis of their claim of fraudulent misrepresentation by Mr Lechner. He assessed damages in the sum of $195,025 28. He dismissed the appellants' cross-claim. He awarded interest to the respondents. URJ ADMONT HOLDINGS PTY LTD v LOWE (Kirby P) 3 Judgment was entered against all of the appellants in the sum specified. Having regard to the pleadings, and to the findings by Yeldham J, this created a difficulty which, belatedly, was raised by leave of the Court in an amended ground of the appellants' notice of appeal. The appellants contended that there was no evidence of fraudulent misrepresentation on the part either of the first appellant company or of Mrs Lechner. Those appellants asked for judgment accordingly. The respondents suggested that any disharmony between the minute of the orders of the Court, now entered, and the reasons for judgment of Yeldham J could be corrected under the "slip rule". It will be necessary to return to this contention. In the course of the trial, Yeldham J (in circumstances which it will also be necessary to describe) admitted into evidence a report of an expert civil engineer, Mr Norman Rich. Mr Rich's report concerned the observable characteristics of the subject property. Yeldham J accepted Mr Rich's evidence. His report was clearly influential in his Honour's reasoning. The appellants complain that the report was not provided in advance, as the Rules of Court and fair practice require. They contend that this led to a procedural unfairness and caused the trial to miscarry. This argument raised a point of practice to which it will also be necessary to return. The principal attack of the appellants was upon the conclusion by Yeldham J that the respondents had been induced to enter into the sublease as a result of written and oral misrepresentations fraudulently made to them by Mr Lechner. This is the nub of the appeal. It is therefore appropriate to go straight to it. Evidence of misrepresentations In the nature of the case which has been outlined, it was necessary for the respondents to establish (relevantly): (a) That Mr Lechner had made a number of representations to the respondents concerning the quantity of land available for grazing and farming; the suitability of that land for the disclosed purposes of the respondents; the adequacy of drainage facilities to carry off water from the land; and the fitness of the land for the disclosed purposes of the respondents; (b) That such representations were made fraudulently by Mr Lechner who either well knew that they were false or made them recklessly, not caring whether they were true or false; and (c) That such representations were not only made for the purpose of inducing the respondents to enter into the sublease, but had that effect. The arguments in the appeal may conveniently be examined under these headings. Necessarily the evidence relevant to each overlaps. The fraudulent representations relied upon were both written and oral. The written representation was said to be the advertisement which first drew the property to the attention of the respondents. It was in these terms: FOR LEASE BERRY Farm for lease. 111 ha. (275 acs) with large old house, renovated. Has separate attached flat, close to town, good fences, new cattle yards, all outbuildings, old diary, bails. Improved pastures in assured rainfall area. City water, electricity and telephone connected. Close to beaches and river. Presently run as cattle stud, also suit horses, agistment, riding school, farm holidays or tourism etc. Available after Xmas, will only consider persons with genuine farming experience and good references, long lease negotiable. Please apply in writing. 4 UNREPORTED JUDGMENTS A post office address was then given to which expressions of interest could be sent. The significance of the advertisement will later become clear. It was suggested by the respondents that, in the context of the reference to pastures in an "assured rainfall area", present use as a cattle stud and the uses for which it was said that the property was suitable, the representation as to the area of the farm (118 ha (275 acres)) was deliberately misleading. As will appear, it was the essence of the respondents' complaint that, despite such representations, the actual area available for grazing and associated farming was of the order of 43 ha (100 acres) less than that advertised by reason of the fact that this was the proportion of the farm which was reduced to swamp in normal non-drought conditions. In isolation, the advertisement would be innocent enough. But it must be considered (as Yeldham J considered it) in the context of the oral representations made by Mr Lechner to each of the respondents. The second respondent (Mr Murray) had experience in farming and grazing. This is his description of what he saw and what he was told by Mr Lechner when he inspected the property in the middle of November 1982: "Q: Did you tell Mr Lechner anything about what you wanted to do with the property? A: Yes. Q: What did you say to him and what did he say to you? A: We wanted to farm it in particular and run vealers or a few breeding cows, and buy vealers and fatten them. Q: So you told him what you wanted to farm was to run some breeding cows and to buy in vealers and fatten them? A: Yes. Q: What sort of farming did you want to do on the property? Did you tell him what type of farming you wanted to do? A: We wanted to farm about 50 acres through the year and to grow feed for the stock like oats and rye grass and stuff. Q: So when you say you wanted to farm it, that is you wanted to grow supplementary crops to feed your stock? A: Yes. Q: What did Lechner say to you about it? A: Good idea, it was all right." Mr Murray agreed that, on his inspection, he saw a "bit of water" and some "swamp grasses". He could see that there was a "wet area; but nowhere near what you would call a flood area". He was cross-examined on this evidence: "Q: Did you see some land which had some great tufts of grass in it near the main drain? A: Right down near the main drain, yes. Q: Wasn't that a peaty type soil? A: It was, yes. Q: Didn't that lead you to conclude it was a swamp? A: No, I knew it was a wet area but not a swamp and that is entirely different. Q: You knew all that area was a wet area? A: Yes, I did. Q: How many acres did you estimate it was wet area? A: About 50 acres. Q: You see, you didn't rely upon anybody to tell you whether this was a good property or a bad property, did you? A: No. Q: Because you formed in your own mind, because you got a lot of experience in the farming industry, whether it was a good property to lease or no.? A: It was a good property to lease if you had the whole lot of it and you could have run your stock there. Q: But it was your view, you formed it from your own experience didn't you? A: Yes, it was perfectly dry when I saw it. Q: Did you go to the north eastern corner of the property? A: Yes, I walked right around the boundary. Q: And right up on that corner was water? A: Further up there was, not on that property, not on Coomonderry there wasn't. URJ ADMONT HOLDINGS PTY LTD v LOWE (Kirby P) 5 Q: I put it to you that there was water there on the property? A: I can assure you there wasn't. Further back towards Berry, up probably half a mile, yes. Q: I put it to you that there was water there? A: I can assure you there wasn't, there was water in that drain in the main channel. Q: But in that north eastern corner was wet land, wasn't there? A: Yes, that is what I am talking about. Q: You knew it to be wet land and you knew, did you not, that when it rained that area would be wet, a big rain? A: Yes. Q: You knew if you put a crop on that it would get subjected to a lot of water, didn't you? A: In that area of about 20 acres? Q: Yes? A: Yes." The other respondent, Mr Lowe, gave his description of the first inspection in these terms: "Q: What did you notice about the property itself? A: Well the first thing I noticed about the property was that it was in a very good state. It was green. There was a body of feed over the entire property and at that time there was an extensive drought over NSW and so, that was the first thing that was noticeable. It was carrying quite a large number of livestock, around about 90 head of cattle and we were taken for more or less an extensive tour of the property including the flatlands and the upper lands. It is not a terribly big property. It is about 275 acres, as advertised and I would say we walked overall about the timber portion. Q: When you looked at it that day was there anything to make you suspect that there was a swamp there? A: Nothing at all. There was no signs of any swamp grasses there. There were a couple of clumps of bulrushes, but these were only in isolated patches as if they were just in low-lying pieces of that country. In other words, in ditches, but there was no sign of any water there and no sign of any swamp grasses. Q: Did you have a discussion with Mr Lechner? A: Yes. We were talking the whole time we were walking around the property. He pointed out various aspects of it. We asked him questions about its suitability for our purposes. Q: There was something said about acreage? A: Yes. Q: What did you say and what did he say? A: Well, the question of acreage arose when I was referring him to the timber on the other side of this watercourse and I said to Mr Lechner, "How much of the country is under timber?" he said, "Oh, I think there is something, 40 or 50 acres in that." He didn't give me a definite figure, but he said, "we do use that for grazing. It is good for roughage for the cattle and suitable for dry cattle." I said, "Well, does that mean that the rest of the property is all available for either cultivation or grazing?" And he said, "Yes. It is. There is 275 acres approximately in the whole property on this side of the road and apart from that timber area you can cultivate down on this portion" indicating the lower land, what I called the low-lying country. He said, "I would prefer you didn't cultivate the pasture-improved ground. I have spent a lot of time improving it. It has been supered many times and it is well-established pasture, but if you are going to do any cultivation at all it should be done here." Q: The pasture-improved country, was that the high country? A: The higher country, yes." Mr Lechner gave very different evidence concerning what he said in conversation with the respondents. He described two meetings at "Coomonderry", each attended by the respondents. One was in November 1982 and the other on 16 January 1983. At the latter, Mr Rendall (a solicitor of the 6 UNREPORTED JUDGMENTS appellants) was present. According to Mr Lechner, he (Mr Lechner) "very clearly pointed out" to the respondents the swamp, a timbered area in one corner of the property, a "fringe area around the swamp" and the "general farm lands". "Q: Did you say anything to them about the swamp area? A: I did indeed. Q: What did you say to them about that? A: We looked at the swamp, we walked up to the edge of it. I did say there was swamp, I talked about its size which was 35 to 40 acres in area, I said a great many things, I said how it was inaccessible to its soft wet corner, and we had put electric fences up to that wet part and were utilising a fringer adjacent to it. I said other things, I said that the swamp was a sensitive area, there was environmental pressure from areas, it was the Shoalhaven City Council, the National Parks and Wildlife Service and environmental groups in this area, they were not too upset with that environmental ecosystem. I showed them where we had a drainage system that provided for a clearing of that swamp, a slow draining of that swamp being the main drain. Q: Can you recall whether anything was said to you by either Mr Lowe or Mr Murray as to their experience in farming? A: May I say I have not quite finished on the swamp. There was some other things regarding the swamp. There was some water in the swamp, Fred Murray asked me does the water ever get any higher. I did reply Yes, the water had arisen to that natural boundary, it did in 1981 when we had a reasonably normal rainfall year and with regard to a marginal area which we were grazing at the time which we had cattle in and they walked through in order to get through the swamp, we had to cross the marginal area." In cross-examination Mr Lechner was pressed on the terms of his representations to the respondents concerning the land available for grazing and farming, the area necessarily unavailable because it was swamp or marginal and the flow off of water from the swamp and marginal lands: "Q: Firstly, you told Mr Lowe that the whole area of the property was some 275 acres, didn't you? A: That is correct. Q: You said that the timber area to the east of the main drain could be used for the grazing of cattle? A: Yes, bullocks and steers, I believe I said. Q: And you told him, didn't you, that the rest of the land would also be suitable for grazing and farming? A: With the exception of the swamp, of course. Q: I suggest to you you said to him the rest of the land would be suitable for grazing and farming? A: No, I did not say that. I pointed out the swamp to him and it was very clear that that was an area that could not be used for grazing or cropping. Anyone can see that. Q: It was so clear that there was no need to say it? A: I did say it. Q: It was so clear that there was need to say it? A: I did say it. Q: But it was so clear that there would have been no need to say it? A: But I did say it. ... COUNSEL: Q: Did you tell Mr Lowe how long the water would be on the property after a storm? A: I told the group, I don't know about Mr Lowe specifically. Q: Did he say to you, "Well, how long would you expect the water to be on the property after a storm?" P.: I don't recall that precise question, no. Q: Did you say, "Just a matter of days?" A: We were talking of specific areas when that was said. We were not talking about the property per se in its entirety, we were talking about specific areas being the cultivation paddocks. URJ ADMONT HOLDINGS PTY LTD v LOWE (Kirby P) 7 Q: Did you say at some stage, "Just a matter of days?" A: I did say, sir, with regard to cultivation paddocks. Q: By that: I guess you mean 40 acres or 65 acres? A: Those areas shaded in red which I believe add up to some 100 acres. Q: So everything that you say was said was excluding the swamp? A: Absolutely, at all times, yes." Mr Rendall, the solicitor, was called. It was in the course of his evidence that a diary note was produced which led to the recall of Mr Lowe. That note was somewhat cryptic. But it contained a mathematical sum representing the total property from which were deducted areas of land subject to resumption or already on weekly lease to a riding school. The product of these deductions reduced the available land, according to the diary note, to "262 approx". This is clearly a reference to the acreage in the then proposed sublease. There then appears an unexplained entry "100 acres thereabouts". Conflicting explanations were advanced in the competing cases of the appellants and the respondents to elaborate this entry. The appellants asserted that it was the deduction to be made (along with the other deductions) from the aggregate land referred to in the sublease, by reason of the swamp and marginal area. Such an interpretation would tend to support Mr Lechner's assertion that he had disclosed what was, in any case, obvious namely that there were areas of swamp marginal land that would not be suitable for the respondents' revealed purposes of grazing and farming. The respondents, on the other hand, asserted that the reference was to the areas which they had indicated they intended to use for the growing of feed crops - 50 acres at a time; but 100 acres over the whole year. Yeldham J was very critical of the appellants when Mr Rendall's diary note was belatedly produced. It had not been discovered. It had not been opened. Its contents had not been put to the respondents when they gave their evidence. But his Honour received the evidence and then allowed Mr Lowe to be recalled. It was during Mr Lowe's evidence on recall that he stated that the "100 acres", referred to in the diary note, was that area of the property on the western side of the drain which Mr Lechner had described as suitable for use by the respondents for their cultivation purposes. Mr Lowe was then again pressed by the suggestion that the existence of a swamp was obvious to any observer and specifically to him: "Q: I put it to you that you knew full well that that area which adjoined the east-west drain adjacent to the north-south drain was a swamp area when you signed that lease agreement? A: Where we were shown we were indicated by Mr Lechner on inspection that there were a couple of low-lying areas that had visible bullrushes in them, a great distance away, they were right at the far eastern corner against the drain on the western side of the drain. They could be seen in the distance. We did not go near them but you could see there were a couple of low-lying areas, lower lying than the rest of the country and in them there were dead reeds or bullrushes and Mr Lechner said "This is the land in which I want to carry out further drainage during the life of the lease" to which we agreed. He indicated those with his hand and this was a good distance away and that was the swamp. Q: You agree that was the swamp? A: Those areas can be described as a swamp because they were just little - 8 UNREPORTED JUDGMENTS HIS HONOUR: Q: But you knew? A: Those few little areas in the distance which we did not actually approach would be regarded as swamp. They were low-lying areas in the low-lying land. COUNSEL: Q: You knew when it rained that those low-lying areas would fill out with water? A: Yes, they were not enough to make any appreciable difference to our operation - they were small patches of land. Q: Because you were an experienced farmer you approached this lease on your own judgment? A: In part on our judgment and another part representation by Mr Lechner and both by advertisement and word of mouth. Q: You relied upon your own judgment in entering this lease agreement? A: Yes. Q: You did not rely on anything Mr Lechner said? A: Of course we did." Whereas Mr Murray would not concede the presence of a "swamp" but only "wetlands", Mr Lowe eventually agreed to the cross-examiner's question. He used the word "swamp". Whereas Mr Murray talked of 50 acres for cultivation, Mr Lowe said that the respondents "would require 100 acres of cultivation for fodder crops to be able to carry out our project". The difference in the description of the quality of the land as "wet area" or "swamp" may be nothing more than a matter of degree to which a healthy serving of retrospective hindsight has been added. All of the parties certainly now know of the presence of a swamp. The question in issue is what each of them knew, could see or was told at the time before the sublease when the property was being inspected. The difference between Mr Murray's 50 acres and Mr Lowe's eventual 100 acres can be reconciled by reading Mr Murray's 50 to represent 50 acres sewed and Mr Lowe's 100 to represent 50 sewed and 50 harvested. The importance of credibility Enough has been extracted from the evidence to show that it would have been open to Yeldham J to reject the claims of the respondents. He could have done so upon various grounds or a combination of grounds: (a) That he did not believe the respondents' evidence or parts of it; (b) That he accepted the evidence of Mr Lechner as to the limited representations made to the respondents and specifically the candour with which, he said, he had described the swamp area; (c) That he believed that the respondents, particularly Mr Murray an experienced farmer who was aided by his brother also an experienced farmer, had relied upon their own inspections, judgment and experience; (d) That each of the respondents acknowledged that the weather conditions in which they were inspecting the property were exceptional and that the property had, to their knowledge, undergone extreme drought; and (e) That the respondents would know, in entering their venture, that farmers and graziers are, to some extent at least, at the mercy of the elements over which none of the parties had any control. (f) That the respondents had not proved their claims to the standard required when a serious charge of fraudulent misrepresentation is made. Briginshaw v Briginshaw (1938) 60 CLR 336, 362. Instead, Yeldham J accepted the respondents' claim that they had been deliberately or recklessly misled by the representations of Mr Lechner. In doing so, his Honour attached obvious importance to the impression which he had formed concerning the credibility of the evidence to some of which I have referred. Putting it quite bluntly, his Honour believed the evidence of Messrs Lowe and Murray. He preferred their evidence to that of Mr Lechner. These URJ ADMONT HOLDINGS PTY LTD v LOWE (Kirby P) 9 conclusions were variously described in numerous passages throughout the reasons for judgment. Of the respondents, he said that he accepted their evidence "in its entirety and prefer [it] to that of the second defendant (Mr Lechner) and the witnesses called in his case where there is conflict". (at page 16) This finding applies to the evidence of Mr Lowe and Mr Murray. His Honour was emphatic in his acceptance of Mr Lowe's explanation, when recalled, of the conversation which he had had with the solicitor, Mr Rendall. Specifically he accepted Mr Lowe's explanation of the meaning to be attributed to the words "100 acres thereabouts" in Mr Rendall's diary note. After setting out Mr Lechner's version of his conversations with the respondents and his assertion that he did inform them that portion of the property was a "swamp", Yeldham J concluded: "T entirely reject the evidence of Mr Lechner that he had made reference to a swamp or to substantial quantities of water lying upon the property for prolonged periods during any of the conversations which preceded the signing of the lease. I was not greatly impressed by his evidence, and to the extent that it is inconsistent with that of the plaintiffs or any of their witnesses, I reject it." Counsel for the appellants candidly acknowledged (as he was bound to do) the substantial problem which these findings, so expressed, presented for the appellants. The conventional theory accepted in Australia is that a trial judge has marked advantages in evaluating the truth-telling of witnesses from the impression which he derives concerning their truthfulness from their demeanour and appearance in court. Because the appellate court does not see the witnesses, hear them giving evidence, observe their mannerisms, pauses, tone of voice, verbal inflection and the like, the circumstances in which an appellate court may substitute its opinion for conclusions of the trial judge based upon such considerations are strictly limited. Relevantly, it must be shown that the judge misused the advantage which he had, misunderstood or mis-stated the evidence or otherwise reached a conclusion so "glaringly improbable" that the appellate court is authorised to substitute its conclusion for that of the trial judge. See Warren v Coombes and Another (1979) 142 CLR 531; Brunskill and Another v Sovereign Marine and General Insurance Co Ltd and Others (1985) ALJR 842; 62 ALR 53; Lendlease Developments Pty Limited v Zemlicka (1985) 3 NSWLR 207; Moran v McMahon (1985) 3 NSWLR 700; Chambers v Jobling (1986-87) 7 NSWLR 1. Sometimes, appellate courts (including this Court) feel authorised to substitute their opinion on the facts for that of the trial judge because that judge has made it plain that the decision is grounded not in a conviction derived from the impression of witnesses but strictly on an evaluation of objective probabilities which can just as readily be evaluated by the appellate court. Such was the case of Chambers v Jobling. Sometimes an appellate court may feel there is no relevant disadvantage in its review of the probabilities established by objectively proved facts. Such was the case in Akhil Holdings Ltd v Banque Commerciale SA (In Liq), Court of Appeal, unreported, 15 November 1988; (1988) NSWJB 203. But generally, where an essential step in the trial judge's reasoning to conclusion is his preference for the evidence of one witness (or group of witnesses) for another, the appellate court must defer to the trial judge's impression because of the clear advantage which he is held to have in determining the facts in reliance upon that impression. So much is the repeatedly stated authority and practice of this Court. The instances where it is followed are too numerous to mention. Recent examples include Darvall v North Sydney Brick and Tile Co Ltd, Court of Appeal, unreported, 23 March 1989; (1989) 10 UNREPORTED JUDGMENTS NSWJB 63; Kelso Builders Supplies Pty Ltd v Timbreck Pty Limited, Court of Appeal, unreported, 30 May 1989; (1989) NSWJB 91; Askarou v The Nominal Defendant, Court of Appeal, unreported, 4 April 1989; (1989) NSWJB 94. Judges of high authority may express the opinion (as Lord Atkin (then Atkin LJ) did in Soc D'avances Commerciales v Merchants Marine Insurance Co (1924) 20 LI L REP 140 at 152) that 'an ounce of intrinsic merit or demerit in the evidence... is worth pounds of demeanour". Judges who share Atkin LJ's opinion that the "lynx-eyed Judge who can discern the truth-teller from the liar by looking at him is more often found in fiction or in appellate judgments than on the Bench" tend nowadays to reason to their conclusion by the analysis of evidence (and the consideration of the probabilities emerging from it) rather than by grounding the conclusion in the impression of truth-telling formed in the artificial environment of the courtroom. Scientific observers, basing their opinions upon empirical studies, may caution judges and other lawyers about the unsafety of reliance upon impression for the assessment of truth-telling. But, for the time being, the authority of the High Court and of this Court is clear. In the High Court it has recently been given emphasis in Baumgartner v Baumgartner (1988) 62 ALJR 29. Even more recently, in Jones v Hyde (1989) 63 ALJR 349 McHugh J (with whom Brennan, Deane, Dawson and Toohey JJ agreed) at 351 said, referring to the circumstances of that appeal from the Full Court of the Federal Court of Australia: "Tt is true that the learned judge did not expressly rely on the demeanour of the plaintiff in making his findings of primary fact. But this does not mean... that an appellate court is in as good a position as the trial judge to determine the primary facts of the case. When a trial judge resolves a conflict of evidence between witnesses, the subtle influence of demeanour on his determination cannot be overlooked. It does not follow that, because the learned judge made no express reference to demeanour and credibility, they played no part in his conclusion; cf Martin v Option Investments Aust) Pty Ltd (No.2) [1982] VR 464 at 468. I do not accept that in this case the learned trial judge's observations of the demeanour of the plaintiff and the defendant and their manner of giving evidence played no part in his findings. I think that they almost certainly did. In accordance with the rules relating to the review of findings of fact based in whole or in part on demeanour, those findings are not open to review in an appellate court." In the present case, Yeldham J made abundantly clear his preference for the evidence of the respondents and his rejection of the evidence of Mr Lechner, where this was in conflict with that of the respondents. As the extracts which I have reproduced demonstrate (and as others not reproduced would elaborate) there were numerous differences between the evidence of the respondents and Mr Lechner. Most critically, for the purposes of the cause of action upon which the respondents succeeded were the differences concerning: (a) The quantity of the subject property which Mr Lechner had represented as available for the respondents' disclosed grazing and farming venture; (b) The detail and specificity with which Mr Lechner had referred to, described (and thereby excluded) the "swamp" area of the land; (c) The speed with which Mr Lechner had asserted that surface rains would be drained from the subject land after a downfall; and (d) The explanation to be given for the words "100 acres thereabouts" in the contemporaneous diary note of Mr Lechner's solicitor, Mr Rendall. URJ ADMONT HOLDINGS PTY LTD v LOWE (Kirby P) 11 In such circumstances, in which the trial judge concluded each of the foregoing points of difference in favour of the respondents, the only way by which Mr Lechner could succeed in this Court would be to show that such conclusions were "glaringly improbable" on the evidence. The appellants' counsel accepted that burden. The conclusion is not "glaringly improbable" In a most thorough analysis of the evidence, counsel took the Court carefully through the proceedings at first instance. I have emerged from a study of that analysis with a clearer understanding of the perspective of the parties to the appeal and of the issues of fact which it fell to Yeldham J to decide. In view of the conclusion which I have reached that Yeldham J'S decision cannot be considered "glaringly improbable", nor is subject to the other epithets which would unlock; the door of appellate review, I do not consider that it is necessary to deal at length with the appellants' written case. Many of the points made were not reviewed in oral argument. It is sufficient to take one or two of the points made to illustrate the conclusion which I have reached. The appellants attack his Honour's conclusion that the word "swamp" was not used in the discussion between the parties at the inspection of the property. Certainly, Mr Murray denies as much. His Honour accepted Mr Murray's evidence and preferred it to that of Mr Rendall. If such acceptance did not put an end to the matter, it is not in my view undermined by the other points of evidence to which the appellants pointed. It is true that the word "swamp" was used in the sublease; but this was a word lost in a legal document which might not have been read by the respondents with the care that would bring the word to their consciousness. Nor does its use there prove the truth of what Mr Lechner claimed he said during the critical conversations which are central to the finding of fraudulent misrepresentation. It is also true that the word "swamp" appears in Mr Rendall's contemporaneous note. This might suggest that it was used at the inspection which Mr Rendall attended. But it does not prove that Mr Lechner used the word; still less that he did so in the presence of the respondents. It might simply have been Mr Rendall's own description, based upon extraneous knowledge which he enjoyed but the respondents did not. Finally, it is true that when recalled, Mr Lowe referred to the word "swamp". But he picked the word up from the cross-examiner's question. In the context he should not, I think, be taken as agreeing that the word "swamp" was used at the time. He does agree that the areas "can be described as a swamp". But this may be nothing more than retrospective wisdom; for he said that, at the time of the critical conversation, the areas in question were not "actually approach[ed] by the respondents". The submissions of the appellants on this, as on other parts of the evidence, represent an attempt to reargue before this Court the merits of the case and the findings of primary fact. If this Court were free to approach the matter strictly on the probabilities, the arguments advanced would have force and persuasion. But because of the way in which Yeldham J approached his conclusions and found the primary facts, a much heavier burden is placed upon the appellants. This is to show, in effect, that no reasonable fact-finding tribunal could have found as 'Yeldham J did. In my opinion the appellants have not come close to discharging that obligation. Once it is accepted that the appellants advertised in the manner they did and that Mr Lechner made the representations to the respondents which the respondents assert, the conclusion which the trial judge reached becomes unassailable in this Court. 12 UNREPORTED JUDGMENTS The correct burden of proof was applied The appellants then complain that such a conclusion, involving as it does the serious allegation of fraudulent misrepresentation, should be reached with that degree of comfortable satisfaction which was described by Dixon J in Briginshaw v Briginshaw and Anor (1938) 60 CLR 336 at 362-3. The appellants used this submission in the following way. Yeldham J did not refer specifically to Briginshaw. Nor did he expressly address, in his reasons, the nature of the issue which the respondents were asserting and the way in which it was therefore affected by the process leading to the attainment of reasonable satisfaction. When the discrepancies between a minute examination of the evidence and Yeldham J's conclusions are revealed, they cast doubt (so the argument ran) that his Honour had properly applied the correct standard of proof in reaching the affirmative conclusion which was necessary to support the judgment against the appellants. It is highly desirable where fraudulent misrepresentation is claimed that alleged discrepancies in evidence relevant to the suggested fraud should be analysed so that the party found to have acted fraudulently will be confronted, in the judge's reasons, with the findings upon the alleged discrepancies, so as to explain the judge's conclusions. On the other hand, the cases of the respective parties presented Yeldham J with a classic problem of fact-finding in which there were two conflicting (if not contradictory) cases as to what was said in the critical conversations just prior to the parties' entering the sublease. Yeldham J had to make a choice. He concluded that the respondents were telling the truth and that their evidence was to be preferred. I would not be prepared, from the absence of reference to Briginshaw, to accept the suggestion that his Honour did not approach the resolution of that conflict with the correct burden of proof clearly in his mind. As to the discharge of that burden, the emphatic way in which his Honour expressed his conclusion in preferring the evidence of the respondents to that of Mr Lechner makes it plain that, in his opinion, they discharged the burden quite comfortably. The knowledge of the respective parties By reference to the evidence, the appellants then urged that his Honour erred in concluding that the misrepresentations which he found Mr Lechner to have made were made knowingly so that they were fraudulent and not innocent or mere puffing of the attributes of his property. The evidence disclosed that Mr Lechner and his wife had purchased the freehold of "Coomonderry" in March 1980. After the purchase of the property, the first appellant, the family company, took a lease from Mr and Mrs Lechner and conducted a cattle stud on the property. March 1980 was quite a wet month but the property was then on the brink of the drought which led to the condition of the drying up of the "swamp" which the respondents saw during their inspections in November 1982 and January 1983. It was therefore suggested that a fatal flaw in Yeldham J's reasoning was his Honour's assumption that the representations made by Mr Lechner were wilfully false. On the contrary, so it was argued, Mr Lechner was himself a victim of the drought conditions. Insofar as he was found to have misrepresented the condition of the land and the extent of the "swamp" and adjacent marginal "wetlands", this was because he himself had only seen the land in such drought conditions. Such conditions were exceptional to the district and were not much better than the two earlier record droughts of 1906-8 and 1940-45. Upon this basis, so it was said, Mr Lechner's URJ ADMONT HOLDINGS PTY LTD v LOWE (Kirby P) 13 representations to the respondents minimising the area of "swamp" or "wetland" were not fraudulent but were themselves the product of the drought upon his mind. A number of rainfall figures were placed in evidence at the trial and referred to in the appeal. These give the statistics for rainfall on or near the subject property for the ninety-eight years of recording such figures before 1980 and, month by month, for the years 1980 to 1985. The mean rainfall taken over ninety-eight years before 1980 shows that the average rainfall for the whole year was 1446 millilitres. According to the exhibit, the annual rainfalls for the years immediately prior to and after the period in question in the appeal were as follows: Ninety-eight year average 1446 1976 1894 1977 1335 1978 1920 1979 1065 1980 719 1981 1386 1982 728 1983 1604 1984 1783 1985 1633 These figures show that 1980 and 1982 were serious drought years. So much was uncontrovertible. 1981 would also have been well below the average but for an exceptional and extraordinary measurement of 317 millilitres in February of that year. The ninety-eight year mean for February is 151. From these statistics the argument was mounted that 1979 to March 1983, were, effectively, all drought years. Accordingly, Mr Lechner's ignorance concerning the extent of swamp land on his property was explained. The extent to which he minimised the swamp, in conversations with the respondent, was thereby justified. On the face of the statistical evidence of average rainfall, this argument is attractive. Its importance was that one could accept Yeldham J'S findings as to what Mr Lechner said and still excuse it as being based on Mr Lechner's true beliefs although not (as ultimately proved) upon objective fact subsequently revealed. However, there are many difficulties in accepting this argument, quite apart from the fact that it is not really reflected in the way Mr Lechner gave his evidence. First, there was received in evidence a letter dated 17 January 1983 addressed by a number of land owners adjoining the subject property to the Shoalhaven City Council. Mr Lechner signed this letter. It stressed "the financial struggles and losses suffered by all farmers at this time and also for some time past". Clearly this is a reference to the drought. But it then proceeds with a request for assistance in respect (amongst other things) of: "Artificial wetlands created by council: The natural drainage of swamp has been blocked and prevented when Council built the new bridge overflow at an incorrect level, which was set about 2 feet too high. This has the effect of preventing the natural drainage and creating an artificial wetlands situation. This 14 UNREPORTED JUDGMENTS in turn places an unreasonable financial burden on us as farmers and landholders. It restricts the use of the land for agricultural purposes which in years past were very productive, and lowers the land values. " The letter also refers to clearing of existing drainage channels: "We submit that the existing drain should be cleaned out and natural drainage should be reinstated by alterations to the level of the causeway at the bridge, so as to not incur us any further financial losses. Some contributions could be made towards the cost of this work by some members of the association [of land owners]. " From this letter it was suggested that Yeldham J was perfectly entitled to conclude (quite apart from his impression of witnesses) that Mr Lechner was fully aware that a significant section of his land was in an "artificial wetlands situation" and thereby restricted in the use that could be made for agricultural purposes. Secondly, the report by Mr Rich, whose evidence Yeldham J accepted, records that the "drying up of the swamp" on the appellant 's property did not occur until "towards the end of 1982 '. According to Mr Rich: " [This] was probably only the fourth or fifth time it had occurred in this century, and 14 years since it had last occurred in 1968, a year of severe drought. In layman terms, it therefore represents a rare event; hydrologists would consider it as an event having a probability of occurrence of about once in 20 years." The significance of this evidence for present purposes is that it undermines the suggestion that Mr Lechner acquired the property, already dry, in drought conditions. Thirdly, when the monthly and annual rainfalls are examined, it can be seen that there were good rainfalls at the beginning of 1980 and in the end of 1981; that the fall off really occurred in the latter part of 1980 and the early part of 1982; so that Mr Rich's statement that the exceptional drying out of the swamp did not occur until nearly two years after Mr Lechner had purchased the property seems fully justified. Furthermore, the aggregate rainfall for 1981 was 1386 millilitres, a bare 60 millimetres short of the ninety-eight year average (1446). This evidence, the respondents used to demonstrate that, when he had the critical conversations with them, Mr Lechner would already have had many months of experience of the property before the exceptional drought led to the drying out of the swamp. From this, and his natural interest in the property as owner, it was argued that Yeldham J's conclusion that his representations were knowingly false could readily be accepted. I agree. Other evidence supports the same conclusion. I do no more than to refer to the application for a subdivision which made reference to the swamp; the evidence of Mr Rumble, a neighbouring farmer and of Mr Downey, the flood mitigation engineer with the Shoalhaven City Council; the evidence of Mr Rendall; the reference to the swamp in the sublease and the indication by by Lechner to the respondents that he would need access to the property for drainage, presumably of the swamp land. The suggestion that Mr Lechner was himself, with the respondents, an innocent victim of the atypical and unseasonal drought conditions so that he was not fully aware of the extent of swamp on his property in ordinary times is unconvincing. The contrary conclusion, far from being "glaringly improbable" is fully sustained by the evidence. Reliance on the misrepresentations A great part of the argument, both at first instance and before this Court was based upon the appellants' contention that the respondents relied upon their own knowledge, experience and expertise, did not URJ ADMONT HOLDINGS PTY LTD v LOWE (Kirby P) 15 rely upon Mr Lechner's representation and were thus not induced by any allegedly false statements on the part of Mr Lechner to enter into the sublease. The reliance of the respondents on Mr Lechner was clearly asserted by Mr Lowe and Mr Murray in their evidence. Mr Lowe said: "Q: Did you speak with anyone at the council in relation to the Coomonderry swamp? A: No, never heard of the Coomonderry Swamp. Q: Do you mean to say you inspected this property and you say that the word Coomonderry swamp was never mentioned? A: Never. Q: Are you sure about that? A: Absolutely sure. Q: There was never any mention of the word swamp or water at all? A: Not at all, only water in relation to drainage water, going down the drains. Q: Where did that main drain come from, did anybody ever tell you that? A: No. Q: Did you inquire where the main drain came from? A: No I didn't, just a watercourse as far as I was concerned. Q: Did you make any inquiries of any person other than Mr Lechner? A: No. Q: You relied upon you say? A: Yes." When Mr Lowe was recalled in the circumstances previously described it was put to him bluntly that he had decided to enter the sublease on the basis of his experience as a farmer: "Q: Because you were an experienced farmer you approached this lease on your own judgment? A: In part on our judgment and another part representation by Mr Lechner and both by advertisement and word of mouth. Q: You relied upon your own judgment when entering this lease agreement? A: Yes. Q: You did not rely on anything Mr Lechner said? A: Of course we did." Mr Murray made his position even more plain in answer to a question by his Honour: "Q: If you. had known the water problem was as you have told me it was before you entered into that sub-lease, would you have entered into the transaction at. all? A: No way." Counsel for the appellants tried to retrieve the result arising from that answer (believed by Yeldham J) by securing from Mr Murray the extent of his expertise in farming. Obviously, this was designed to show Mr Murray's dependence on his own experience and what he saw when he inspected the property, walked around it, saw its condition and made the normal enquiries which a person would make before entering into such a sublease. "Q: You walked all over the property? A: Yes. Q: And to put it bluntly, you were not interested in what anybody else's view as to whether the property was a good property for growing crops, grazing, cattle or growing vegetables? You formed your own opinion as to whether it would be suitable? A: I looked all around that area, Berry and Nowra, before I went out on that property. What they were growing down there was enormous seeds and I saw that area was a 16 inch rainfall and it could grow anything. Q: You thought the rainfall in that area would be very, very good? A: I did, yes. Q: And the reason you thought it would be good was because there was a drought in the country at the present time and you wanted to bring cattle down to fatten them up in that area where there was plenty of rain? A: Yes. Q: You knew that low lying area would fill up this water, didn't you? A: No, I did not. Q: Are you seriously telling this court... A: Do you think we would spend $12000 if we thought it was going to be flooded and buy cattle? Do you honestly think that?" Yeldham J's acceptance of the evidence of the respondent necessarily means that the Court must approach this argument of the appellants on the basis that it is accepted that each of the respondents did rely, at least in part, upon what Mr Lechner had told them and would not have entered into the sublease but for that 16 UNREPORTED JUDGMENTS consideration. Such a conclusion may seem a surprising one in people as experienced as the respondents, who walked all over the property, saw bullrushs and other evidence of wetlands, saw drainage and had in the sublease provisions relating to a swamp and access for drainage purposes. If one were approaching the matter on the basis of the probabilities, the appellants' criticism of the conclusion which Yeldham J reached has much force. But his Honour reached his conclusion upon the premise that he accepted the evidence of each of the respondents. Where it conflicted with that evidence, he rejected the evidence of Mr Lechner. Yet the evidence of the respondents, once accepted, is fatal to the appellants on this point when the proper legal test is applied. That test is stated by the High Court of Australia in Gould and Anor v Vaggelas (1985) 157 CLR 215. At 250 Brennan J examined the extent to which, where a number of considerations have induced a party to enter a contract, the fact that one of the considerations is a fraudulent misrepresentation can give rise to an action in deceit: "An inference of inducement may be drawn when a party enters into a contract after a material representation has been made to him, but it is no more than an inference of fact and it is settled law that such an inference may be rebutted by the facts of the case: HoLmes v Jones (1907) 4 CLR 1692 at 1707, 1711; Smith v Chadwick (1884) 9 App Cas 187 at 196. The tribunal of fact may infer that such a material representation induced the representee to enter into the contract and the fact that there were other inducements to him to do so does not necessarily preclude the drawing of that inference. The relevant question for the tribunal of fact to answer on all the evidence is whether the misrepresentation alone, or notwithstanding other things that accompanied it, was a real inducement, or one of the real inducements to the plaintiff to do whatever caused his loss: Nicholas v Thompson [1924] VLR 554 at 556 per Cussen ACJ; Edgington v Fitzmaurice (1885) 29 ChD 459 at 483 per Bowen LJ; Arnison v Smith (1889) 41 ChD 348 at 369 per Lord Halsbury LC." There is nothing to suggest that Yeldham J applied any other test to the facts of this case. Mr Lowe and Mr Murray both made it plain that the statements by Mr Lechner were causative in the sense that they represented one of the considerations which induced them to enter into the sublease (Mr Lowe) or that without such representation they would in "no way" have entered into the sublease (Mr Murray). Yeldham J's acceptance of the truthfulness of the evidence of the respondents bars the path to the challenge by the appellants that the relevant causal connection was not established between the misrepresentation found and the damage claimed. It would, of course, have been open to Yeldham J to have concluded that persons with the experience of the respondents made up their own minds, particularly in the light of what they knew and saw as they conducted their own inspections of the property. But his Honour accepted what they said. He had the advantage of seeing them give their evidence. His conclusion is by no means "glaringly improbable". It may not, therefore, be disturbed in this Court. Admission of the expert's report The appellants then challenged the admission by Yeldham J of the report of the engineer, Mr Rich. His Honour accepted the truthfulness of Mr Rich's evidence and was clearly influenced by the contents of his report. The complaint of the appellants is that the trial miscarried because the admission of the report was, in the circumstances, unfair. The report had not been served upon the appellants before Mr Rich was called. His evidence was interposed at the beginning of the trial. The transcript records that counsel then appearing for the appellants advised his Honour that "the defence has not URJ ADMONT HOLDINGS PTY LTD v LOWE (Kirby P) 17 previously seen Mr Rich's report". In these circumstances, his Honour ruled that "anything in the report that the plaintiff has told Mr Rich will be treated at this stage as being an assumption". Cross-examination was delayed only a short time until the afternoon of the first day of the trial. The appellants say that, in these circumstances, the admission of such a complex report, without notice, represents the kind of "trial by ambush" which modern practice in the courts, the provision of the Rules (Supreme Court Rules Part 36, Rule 13A) and the obligation of fairness in the conduct of litigation combine to forbid. There is no doubt that the report of Mr Rich, and his oral evidence to elaborate it, were important for the issues for trial. Because of surprise, it is said, important questions in cross-examination were not put to Mr Rich. These included the effect of the drought conditions in the years 1978-83; the appearance of an extent of swamp and wetlands; and the rate of drainage of the land. It is argued that such unfairness was especially manifest because of the fact that, only on the first day of the trial did the respondents secure leave to amend their statement of claim to allege fraudulent misrepresentation. It was this amendment (so the argument runs) that made the earlier effect of drought conditions preceding the appellants' acquisition of the property and the rate of drainage "suddenly" an issue. Its relevance had not fully been appreciated at the time. The appellants argued that such was the unfairness thereby suffered by the appellants that the trial had miscarried. They contended that there should be a retrial at which the issues could be properly and fairly litigated. At least in the circumstances of this case, the argument of the appellants cannot be accepted. There was no objection by counsel then appearing for them to the tender of Mr Rich's report. Such objection was counsel's first obligation if he considered that his clients suffered a relevant unfairness in the procedure which the appellants had adopted in the circumstances. Secondly, there was no application for a delay in the trial or for an adjournment beyond that which Yeldham J gave. This, it will be recalled, had delayed the cross-examination of Mr Rich until after the luncheon adjournment on the first day. Had a longer adjournment been sought, it seems likely that it would have been granted. Thirdly, counsel did not seek to reserve further cross-examination until a later time in order to protect his clients should later instructions or time for reflection suggest further questions. Instead, counsel proceeded with the cross-examination to conclusion, electing to conduct the case in that way. Fourthly, there was no later application to recall Mr Rich. There is, no reason to believe that Yeldham J would not have considered favourably such an application. After all, he did permit, belatedly, the file note of Mr Rendall to be tendered and took steps then to repair the unfairness which he considered, had been caused by the failure to produce it earlier. This included the reopening of the respondents' case and the recall of Mr Lowe. Fifthly, attention must be paid to the terms of Pt36 R13A upon which the appellants relied. They asserted that the judge, confronted with the tender of an expert report which had not been served, had an independent discretion under sub-rules (3) to (5), of his own motion, to reject the tender of Mr Rich's report in the circumstances. He should have done so whatever stand was taken in respect of it by counsel for the parties most affected. It is not necessary in this case to determine the existence, and if it exists, the extent, of any such duty independent of the parties. The provisions of an equivalent rule in the District Court Rules were considered by the Court in Cameron v Baker, Court of Appeal, 18 UNREPORTED JUDGMENTS unreported, 6 August 1980. That was a case where a medical report had not been served and the evidence was excluded. The Court there stressed the unfairness which can arise where a party is prevented from presenting the whole of the case which it wishes to make. Unfairness in that case arose from the exclusion of the report. Here the unfairness is said to have arisen from the failure of Yeldham J to exercise an independent discretion under the Rules, or otherwise, which counsel for the parties never sought to invoke. It would have been extraordinary, in the circumstances which I have outlined, had Yeldham J intervened, in default of an application on behalf of the appellants, to exclude of his own motion Mr Rich's report and other evidence. For all Yeldham J knew, the appellants were fully equipped to meet the "surprise" presented by the expert evidence of Mr Rich. I do not say that there may not be circumstances where such a substantial injustice has been caused by the way counsel conduct the case on behalf of their clients that the admission of evidence which was never properly tested would warrant the conclusion that the trial had for that reason miscarried and that there must be a retrial to avoid a serious miscarriage of justice. But parties are bound by the way cases are conducted on their behalf by their legal representatives. No other rule could be adopted for the conduct of litigation by advocates. The obligations that therefore alight on those representatives are heavy. They must be vigilant in defending their clients' interests, in noting objections, calling relevant provisions of the Rules to attention and, where necessary, seeking adjournments. See Blackler v McElhone (1913) 13 SR (NSW) 487; The Government Insurance Office of New South Wales v Fredrichberg (1968) 118 CLR 403, 410; Mears v Coal and Allied Industries Ltd, Court of Appeal, unreported, 27 May 1986; (1986) NSWJB 159; Builders Licensing Board v Mahoney (1986) 5 NSWLR 96; Harvey v Waratah Sawmilling Co Pty Ltd, Court of Appeal, unreported, 14 July 1987; (1987) NSWJB 210; Singleton and Another v Ffrench (1986) 5 NSWLR 425. Having regard to the response which the appellants' then advisers made to the belated supply of the expert testimony of Mr Rich and to what followed, I would reject the contention that Yeldham J erred in failing to force upon the parties an adjournment or to insist for his own part on further time which those representing the appellants did not seek. Nor do I consider that the result of what occurred was such an unfairness as requires this Court, exceptionally, to order a new trial on the ground that the first trial thereby miscarried. Although the amendment of the statement of claim was formally made only on the day of trial, the respondents point out that notice of the amendment had earlier been given. Furthermore, in the way in which the trial was conducted, I am not convinced that any relevant evidence which Mr Rich or anyone else could have given was lost by reason of the failure to provide his expert report in advance. Nothing I have said in this case should be taken to undermine the achievement of the object of Pt36 Rule 13A. That rule is designed to avoid the surprise to parties and their representatives which the late supply of expert reports can sometimes produce. Such surprise can lead to injustice from which, in a proper case, relief will be granted. But that case is rare. It is rarer still where, at the time at which the party is confronted with surprise no application is made to exclude the expert evidence, to delay cross-examination of the witness or to adjourn the proceedings. URJ ADMONT HOLDINGS PTY LTD v LOWE (Kirby P) 19 Form of judgment and issue of damages At the hearing of the appeal, the appellants sought leave to amend their notice of appeal. At first, the amendment claimed relief on the ground that there was no evidence that the third-named appellant (Mrs Lechner) had made representations to the respondents or had authorised or permitted representations to be made on her behalf. Accordingly, it was argued, that there was no basis for the orders made by Yeldham J against her. When, later in the hearing the Court drew attention to the pleadings, this ground was enlarged to include also the first-named appellant (the family company). The pleadings referred to are paragraphs 12 and 13 of the amended statement of claim. After asserting that the second defendant (Mr Lechner) made the specified representations, the document proceeds to say that these were made by him fraudulently either well knowing that they were false and untrue or recklessly not caring whether they were true or false. The claim against the first and third appellants is then stated in these terms: "Further or in the alternative, if the said representations were not made fraudulently, the conduct of the Second Defendant, on behalf of himself and/or of the First and Third Defendants, amounted to misrepresentation." It was properly conceded by counsel for the respondents that no evidence had been led at the trial of any separate representations made to the respondents by Mrs Lechner or by the company, otherwise than by Mr Lechner, one of the company's directors. It does not appear that, at the trial, the distinction between the appellants, in the manner in which the amended statement of claim was pleaded, was specifically called to Yeldham J's attention. On the contrary, some of the written submissions which have been produced, whilst making no mention at all of Mrs Lechner's fraudulent misrepresentation, appear to have proceeded on the assumption that, in some way, the company was fixed by the representations made by Mr Lechner. That assumption would appear neither to be supported by the final pleadings nor by the evidence. In the end, counsel for the respondents conceded as much. A bank guarantee addressed to the Registrar of the Court of Appeal in respect of a security deposit by Mr and Mrs Lechner was produced. By the guarantee, the bank unconditionally undertook to pay on demand to the Registrar a sum adequate to cover the judgment debt. Counsel for the respondents expressed concern that the late amendment of the notice of appeal could jeopardise a demand upon the guarantee if the judgment against Mrs Lechner were set aside. Upon this basis, it WCLS suggested that the Court should proceed under the slip rule to amend the judgment entered pursuant to Yeldham J's reasons and should do so upon terms which required a fresh guarantee in the name of Mr Lechner alone. That course is not appropriate. First, fraud, in whatever form, is a serious allegation. By convention, it must be pleaded wit:h specificity, proved in civil proceedings to a comfortable satisfaction and argued by legal representatives with care and upon instructions appropriate to the matter charged. I agree with what Mahoney JA has written on this point. It is therefore not appropriate, where no evidence exists to sustain a judgment on the ground of fraudulent misrepresentation, to allow such a judgment to remain against parties who complain of a total want of evidence against them. If there is no evidence, that is a proper appeal point. It should lead to the appeals of those parties being allowed. On the other hand, as the point was raised belatedly, a discretion arises in the Court as to whether the amendment of the notice of appeal should be allowed. I do not consider that the bank guarantee stands in the way. Quite apart from its 20 UNREPORTED JUDGMENTS terms, there are other proper steps which, following disposal of the appeal, the parties may take to protect their respective positions. The guarantee provides no reason for refusing the amendment and allowing the ground which is not otherwise resisted. Nor is the application of the slip rule appropriate as the respondents urged. The case is before the Court by way of appeal. The judgments below have been formally entered. This occurred despite the pleadings and (so far as Mrs Lechner is concerned) despite the fact that Yeldham J's reasons for judgment make absolutely no finding of fraudulent misrepresentation on her part. The finding in respect of the company is expressed in equivocal terms. There is a disharmony between the reasons and the minute of judgment which can readily be cured by this Court in the normal way. This is by allowing the appeal and setting aside the judgment on the amended ground of appeal which I would, for that reason, allow the appellants to have. One consequence of the late filing of the amended ground of appeal on the day of the hearing of the appeal is that additional costs have not been incurred on this point. The substance of the appeal concerned the challenge to the finding against Mr Lechner. As that issue is determined against him, he must bear the costs of the appeal. It remains only to note that a number of interesting and important questions were dealt with by Yeldham J in a second judgment concerning the principles to be applied in the assessment of the damages payable to the respondents consequent upon the finding in their favour. Although the assessment by his Honour of those damages was originally challenged in the notice of appeal, that challenge was abandoned at the hearing. Those issues will therefore not be passed upon by this Court. Curiously, the notice of appeal contained no challenge to the order by Yeldham J dismissing the cross-claim brought by the appellants against the respondents for unpaid rent and damages. Consistent with Mr Lechner's claim that he had made no misrepresentations - or only innocent misrepresentations - it might have been expected that the dismissal of the cross-claim would also have been appealed. This apparent inconsistency in the case of the appellants was drawn to their notice by the Court. However, we were later informed that no application would be made to amend the notice of appeal in this regard. It was in this way that the appeal was confined to the issues dealt with in these reasons. [Ed. The order by KIRBY P has been moved to the end of the judgment.] Samuels JA I agree with Kirby P. Mahoney JA In February 1983 the defendant company granted to the plaintiffs asub-lease of land of which it was the lessee from Mr and Mrs Lechner, the second and third defendants. The plaintiffs claim that they were induced to take the sub-lease because of, inter alia, fraudulent misrepresentations made by Mr Lechner. They subsequently terminated the sub-lease and sued the company and Mr and Mrs Lechner for damages. The learned judge held that there had been fraudulent misrepresentation and gave judgment for the plaintiffs against the defendants for $195,025.28. The defendants have appealed to this Court against that judgment. I have had the advantage of reading the judgment of Kirby P. I agree with the orders proposed by the President and, in general, with his Honour's reasoning. As the matter involves a finding in fraud I shall set forth the reasons which, in relation to the essential allegation of fraud, have led me to concur in the orders proposed. URJ ADMONT HOLDINGS PTY LTD v LOWE (Mahoney JA) 21 The Form of the Judgment: The judgment appealed against is in form a judgment against all of the defendants. It is clear that it is based, and based only, upon the finding of fraudulent misrepresentation in respect of the relevant matters which the learned trial judge specified. It is not in contest but that judgment against the company and against Mrs Lechner cannot stand and that, if the judgment is to be upheld, it can be upheld only against Mr Lechner. Therefore, it is, in my opinion, proper that the judgment be amended accordingly. The claim in fraud, as it was pleaded, was a claim made only against Mr Lechner. The claim was that "the second defendant represented to the plaintiffs..." the matters in question. It was not alleged, nor was it proved, that the representations were made by Mr Lechner as agent for either the company or Mrs Lechner. There is, therefore, in the pleadings, a proper basis for judgment in fraud against Mr Lechner and there is no basis, in the pleadings or in the evidence, for a finding against the company or Mrs Lechner. The judgment should therefore be amended accordingly. The Judgment in Fraud against Mr Lechner: In my opinion, the judgment in fraud against Mr Lechner should stand. The allegation in the pleadings was that certain representations were made by Mr Lechner "by and are to be inferred from" conversations "in or about November 1982" and "in or about December 1982"; that the plaintiffs acted on the faith and truth of those representations; that they were untrue; and that Mr Lechner made them "fraudulently and either well knowing that they were false and untrue or"... "not caring whether they were false or true". The representations were pleaded in the following way: "7. In order to induce the plaintiffs to make and complete the said contract and pay the said money, the second defendant represented to the plaintiffs and in consideration of his so doing, warranted: (a) 260 acres of land available for grazing, cropping and growing vegetables. (b) The property was suitable for grazing, cropping and growing vegetables. (c) Adequate drainage facilities either existed on the said property or would be completed at the defendants' expense. (d) The property was fit for grazing, cropping and growing vegetables for trade and sale for profit." An allegation of fraud is a serious matter. A finding of fraud is even more serious. If fraud is to be alleged, it is long settled that what was done must be pleaded with particularity: see, eg, Wallingford v Directors of the Mutual Society (1880) 5 App Cas 685. The plaintiff must prove the case which he has alleged and not some other or more general claim which the defendant has not been called upon to meet: see generally Kerr on Fraud and Mistake, 7th ed, at 644. And the case must be proved with the clarity appropriate to an allegation of such seriousness: see Briginshaw v Briginshaw 60 CLR 336 at 362. In the appeal, the argument has been directed, and I think directed exclusively, to CL7(a) of the Statement of Claim; I shall deal with the matter on that basis. It is therefore necessary to consider whether that representation was made, was relevantly false to the knowledge of Mr Lechner and was relied on by the plaintiffs. The plaintiffs pleaded and the evidence showed that the conversations in November and December 1982 resulted from an advertisement in a newspaper published on 4 November 1982. That advertisement is set forth in the judgment of Kirby P. It refers to 275 acres of land. In fact, the land owned by Mr and Mrs Lechner comprised relevantly 283 acres. Of this eight acres had been leased to 22 UNREPORTED JUDGMENTS a riding school and sixteen acres had been resumed. Therefore 259 acres remained for disposition. It was an area of these dimensions which therefore was to be dealt with. The learned judge based his finding as to the representation which was made as to the land available to the plaintiffs primarily on the evidence of Mr Lowe. Mr Lowe gave evidence of a discussion with Mr Lechner as follows: "Q. What did you say and what did he say? A. Well, the question of acreage arose when I was referring him to the timber on the other side of this watercourse and I said to Mr Lechner, 'How much of the country is under timber?' He said, 'Oh, I think, there is something, 40 or 50 acres in that. He didn't give me a definite figure, but he said, 'We do use that for grazing. It is good for roughage for the cattle and suitable for dry cattle.' I said, 'Well, does that mean that the rest of the property is all available for either cultivation or grazing?' And he said, 'Yes. It is. There is 275 acres approximately in the whole property on this side of the road and apart from that timber area you can cultivate down on this portion indicating the lower land, what I called the low-lying country. He said, 'I would prefer you didn't cultivate the pasture-improved ground. I have spent a lot of time improving it. It has been supered many times and it is well-established pasture, but if you are going to do any cultivation at all it should be done here."" If the evidence I have quoted had been the only evidence on the matter, the appellants clearly could not succeed. The learned judge accepted the evidence of Mr Lowe. The plaintiffs were then or became aware before the sub-lease was granted that some areas of the land were not available because of the lease to the riding school and the resumption; they therefore knew that Mr Lechner, in what he said, was referring to approximately 260 acres. Therefore, the judge would have been entitled to find and this Court to accept that the representation was made as alleged in the statement of claim. The thrust of the argument for Mr Lechner in this regard was that the judge, and accordingly this Court, should not accept this part of the evidence of Mr Lowe as establishing that the relevant representation was made. The contention was, I think, that this portion of Mr Lowe's evidence was inconsistent with what he subsequently said; that it was inconsistent with what was said by other witnesses; and that, in the light of the whole of the evidence which the judge accepted, there could not be the required degree of satisfaction that Mr Lechner had said what he was alleged to have said. At the conversation to which Mr Lowe referred, Mr Murray, Mr Cooper and Mr Lechner were present. At least, it is probable that they were. Mr Murray's evidence did not refer to the area of the land available with the same particularity but it was not inconsistent with, and I think provided some general support for, what Mr Lowe had said. Mr Cooper, a solicitor, referred to his several visits to the property. In cross-examination he said: "MR PAPE: Q. On how many occasions did you inspect the property with Mr Lowe? HIS HONOR: Do you mean before the lease? WITNESS: Before the lease, 3 or 4 times is my recollection. MR PAPE: Q. On each of those occasions Mr Lechner was present, I think? A. Yes. Q. Can you recall during any of those inspections and conversations any representations made by Mr Lechner to Mr Lowe about the number of acres of land which were suitable for grazing cattle, and cropping of vegetables? A. Yes and to me too. URJ ADMONT HOLDINGS PTY LTD v LOWE (Mahoney JA) 23 Q. How many acres was it said at that time that were suitable? A. My recollection is that there were 240 acres suitable for grazing, but in subsequent discussions with Mr Lechner the question of cropping and vegetable growing was raised. Q. Did you know the number of acres in the property? A. I think there was 280, but in discussions with Mr Lechner certain areas were excluded for certain reasons, but I think it was 240 that was available. Q. You saw the north/south drain? A. Yes. Q. You saw to the east of the north/south drain a lot of timbered country? A. Certainly across the big drain there was some timbered country, yes. Q. It is a fact, is it not, that that was said to be not suitable for grazing country? A. That's right, but - Iam sorry - no. I beg your pardon. Cattle could be run across there, but it could not be cleared. Q. It was, in effect, also said to be marginal country? A. Yes. So too was the - Mr Lechner used the term, 'marginal country' bordering the big drain if I might use that expression." In my opinion, his Honour, having considered all of the evidence, was entitled to conclude that Mr Lechner made the representation alleged in the statement of claim. The general effect of what was said by the witnesses was that, in substance, the whole of the relevant part of the land, excluding the leased and the resumed portions, was available for use as the plaintiffs desired. In particular, it was not suggested that any substantial part of the land to be sub-leased would not be available for such use, because it was swampy or apt to be waterlogged or otherwise. But considered strictly, the representation alleged was not merely that the whole of the relevant part of the land was available but that that part amounted to 260 acres. I am satisfied that that representation was proved to be made: at least his Honour could so find if he accepted Mr Lowe as he did. Mr Lowe's evidence, in the passage to which I have referred, so indicated. Mr Cooper "thought" "it was 240 that was available". His Honour was entitled to conclude that Mr Lowe's account of the original conversation and the calculations based on it was a correct account of what had occurred. Reference was made in argument to statements subsequently made by Mr Lowe which, it was suggested, were inconsistent with the passage to which I have referred. The suggestion was, I think, that because of what subsequently was said his Honour could or should not have accepted that the representation was made. Late in the trial, Mr Lowe was recalled to give evidence generally in the context to which the President has referred. He spoke as to areas available for farming as distinct from grazing and particular areas and calculations were suggested. He denied in terms that only 162 acres was said to be available. I do not think that the evidence frequently given by him required that the learned judge put aside his original evidence or the conclusions which, as I have said, were to be drawn from it. The evidence of the persons who could speak as to the conversation or conversations, other than Mr Lechner, was not precisely congruent: there were discrepancies. I am conscious that, before being satisfied that the representation alleged was made, the court must have the degree of satisfaction appropriate to a case of fraud and that that satisfaction is not to be achieved by "inexact proofs, inadequate testimony or indirect inferences": Briqinshaw v Briginshaw at 362. But his Honour was entitled to accept the evidence of Mr Lowe in preference to that of Mr Lechner. He was entitled, in the manner he indicated, to accept the 24 UNREPORTED JUDGMENTS evidence of the other witnesses. There was no such discrepancy between them as would make it wrong for him to do so. And, on that basis, he was entitled to be satisfied that the representation was made. Having considered all of the evidence, I am so satisfied. If the representation was made, there is little doubt that it was relevantly false, to the knowledge of Mr Lechner. Mr Lechner conceded that a substantial part of the land was, in times other than drought, swampy or apt to be waterlogged and it was accordingly not suitable for the purposes of cultivation or grazing. The only question, in his mind, was how much was of this kind. Whatever be the amount, Mr Lechner did not, I think, contest - at least it is in my opinion clear - that, making allowance for the swampy land of this kind, the amount available was much less than 260 acres. It was then suggested in argument that the plaintiffs did not rely upon the representations made by Mr Lechner. But there was evidence from them, in terms, that they did. If believed, that evidence is sufficient to establish this part of their case. And it is clear that his Honour believed the relevant evidence. The matter has been dealt with in argument essentially by reference to the representations set forth in CL7(a) of the Statement of Claim. I have dealt with the matter on that basis. It is not necessary to consider whether the other representations pleaded have been made out. Such matters would go, inter alia, to the measure of damages. However, having regard to the way in which the appeal has been conducted, it is not necessary to pursue that aspect of the matter. I agree with the orders proposed by Kirby P. 1. The appeal by Admont Holdings Pty Limited and Dorothea Lechner allowed; 2. The judgment of Yeldham J of 25 February 1988 insofar as it relates to those appellants (the first and third defendants at the trial), set aside; 3. In lieu thereof, order that judgment be entered in favour of the first and third defendants with no order as to their separate costs, if any, at the trial; No order as to the costs of the first and third appellants of the appeal; Appeal by the second appellant Alfred Lechner dismissed and the judgment entered by Yeldham J on 25 February 1988 against him confirmed so that the judgment previously entered against that defendant and the first and third defendants will be read as a judgment against Alfred Lechner alone. The order therein that the defendants pay the plaintiffs' costs of the proceedings will be amended to require the second defendant, Alfred Lechner, alone, to pay such costs; 6. The second appellant to pay the respondents' costs of the appeal so far as it concerned him. ws