TAUBENSCHLAG v AMERICAN EXPRESS INTERNATIONAL INC SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY, PRIESTLEY and MEAGHER JJA 7 APRIL 1993, 7 May 1993 [1993] NSWCA 262 ALLEGED AGREEMENT FOR FUNDING OF CONFERENCE BY DEFENDANT — LETTER WRITTEN CONFIRMATORY OF AGREEMENT — JUDGE REJECTED LETTER AND FOUND NO AGREEMENT — ERRONEOUS REASON FOR REJECTING LETTER — WHETHER NEW TRIAL SHOULD BE ORDERED APPEAL from District Court — Alleged agreement for funding of conference by defendant (American Express International Inc) — Letter written confirmatory of agreement — Judge rejected letter and found no agreement — Erroneous reason for rejecting letter — Whether new trial should be ordered — Held (Meagher JA dissenting): New trial should be held. Mahoney JA I have had the advantage of reading the judgment of Meagher JA. HisHonour's judgment enables me to go directly to what, in my opinion, is the matter upon which principally the appeal turns. The issue in the proceeding was whether, as the defendant's alleged, an oral agreement was made whereby the defendants were authorised to use American Express cards to be issued to them to incur expenses of $50,000 in connection with a conference they proposed should be organised. There were two people present when, as the defendants allege, the agreement was made: Mr Glaser representing the American Express company and Mr Taubenschlag. Their accounts in evidence of the conversation differed as to whether such an agreement was made. The learned trial judge had to choose between them. It is possible, in some cases, for a trial judge to accept as what happened something to which neither party or any witness has given evidence: for a practical example, see Walter T Heazlewood and Sons PtY Ltd v Fisk (Court of Appeal, 9 June 1981, unreported). But, in a practical sense, the problem posed by the evidence in this case involved a choice as to whether Mr Taubenschlag's account was correct or not. Evidence was given as to a number of things relevant to the determination of that question. Reference was made, for example, to subsequent conversations, memoranda, and documents which, it was rightly contended, provided a basis for choosing whether Mr Taubenschlag's account was right or wrong. At least the majority of these supported the conclusion that no agreement was made of the kind contended for by Mr Taubenschlag. But there was one piece of evidence which, in my opinion, was of particular importance. Mr Taubenschlag said that on 22 September 1982 he had written a letter to the American Express company concerning the agreement that had been made and had sent that letter to the company. The company denied receiving the letter. If that letter was written and sent, it provided a strong basis for inferring that, shortly before, an agreement had been made of the kind contended for by the defendants. The agreement contended for was to the effect that the American 2 UNREPORTED JUDGMENTS Express cards could be used to pay for goods and services up to $50,000 without the defendants being obliged to pay the amount to the American Express company. The terms of the letter provide evidence from which such an agreement could be inferred. It refers to the printer agreeing to the card being used to pay for his services; and it refers to the use of the card for the payment of travel expenses which Mr Taubenschlag had, during the conversation, said were to be incurred. As I have said, there was substantial evidence, from Mr Glaser and otherwise, that no such agreement had been made. Therefore, if his Honour had accepted that on or about 22 September 1982, Mr Taubenschlag had written such a letter to the American Express company, he would have been faced with the task, which would have been a difficult task, of deciding between the two bodies of evidence. In the event, his Honour did not enter upon that task. He concluded that the letter had not been written and sent as Mr Taubenschlag claimed. There was evidence on which his Honour could have so found: the fact alone that it had not been received by the American Express company provided some basis for inference that it had not been written and sent. (I put aside whether this was appropriately or sufficiently put to Mr Taubenschlag in cross-examination: Browne v Dunn (1893) 3 R67). But the reason why his Honour concluded that the letter had not been written and sent at the time was because of the date which it bore. His Honour concluded that the meeting between Mr Glaser and Mr Taubenschlag had taken place, not in the second half of September, but during November 1982. He reached this conclusion because of the date appearing on a memorandum which Mr Glaser had prepared in relation to the meeting. He inferred that that date was Mr Glaser's record of the date of the meeting and, accordingly, inferred that the letter of 22 September 1982 could not have been written following and as the result of that meeting. It is common ground - at least it is clear - that his Honour fell into error in concluding that the date on Mr Glaser's memorandum was meant to be or was the date of the meeting. It was in fact the date of the memorandum. The memorandum was one which had been prepared later based upon notes made by Mr Glaser but "reworked" from time to time. It was, I think, ultimately common ground at the hearing that the meeting took place in the second half of September. Both Mr Glaser and Mr Taubenschlag said so and counsel for the American Express company put questions to Mr Taubenschlag on that basis. Accordingly, his Honour rejected the letter for a reason that was wrong. What follows from this? The appeal is before this Court as on a rehearing. Therefore, this Court must, if it can, decide whether, at the conversation between Mr Glaser and Mr Taubenschlag, the alleged agreement was made. Three things at least must be decided and taken into account in deciding this question: whether the letter of 22 September 1982 was written and sent as Mr Taubenschlag said; the significance of what was said and done after 22 September 1982; and whether Mr Glaser or Mr Taubenschlag is to be accepted as the credible witness in relation to the conversation. As I have said, the letter of 22 September 1982, if written and sent, provides strong corroboration that there was an agreement whereby the credit cards could be used to incur expenses up to $50,000 for the purpose of the pro ect. On the other hand, what occurred after the date of the conversation weighs more strongly in favour of the defendant than the plaintiffs. Accordingly, the acceptance or rejection of the evidence that the letter of 22 September 1982 was written and sent at that time is vital. URJTAUBENSCHLAG v AMERICAN EXPRESS INTERNATIONAL INC (Mahoney JA) 3 If there were nothing to choose between Mr Taubenschlag and Mr Glaser as witnesses of truth, I would be inclined to the view that, the letter having been written and sent, an agreement was made between them as Mr Taubenschlag has alleged. If the letter was not written and sent, I would, on that basis, find for the defendant. But the acceptance or rejection of that letter is affected by the view to be taken of the credibility of Mr Taubenschlag and Mr Glaser as witnesses. If Mr Taubenschlag be accepted as a credible witness, then I would be disposed to accept that the letter was written and sent. There is, in the letter itself, nothing inconsistent with its having been written and sent on the date it bears. What the defendant did after 22 September 1982 suggests that no agreement was made but that depends upon inference: what was then done is not, as such, inconsistent with the letter having been written and sent. It may be that, having seen both Mr Glaser and Mr Taubenschlag in evidence, the trial judge will not be able to choose between the credit of either of them. He may, in deciding whether the letter was written and sent, have to base his decision upon other matters. But it is equally possible that he may be assisted in deciding that question by the manner in which they give evidence before him. am conscious that a finding against the credibility of Mr Taubenschlag in respect of the conversation does not mean inevitably that what he says as to the writing and sending of the letter is to be treated as not credible: he may be credible in respect of one matter and not in respect of the other. But if the trial judge found his evidence as to the conversation not credible, that could, in the circumstances of this case, assist him in concluding that what Mr Taubenschlag had said in respect of the writing and sending of the letter was not correct. In these circumstances, should a new trial be ordered because the determination of the disputed questions as to the conversation and the writing and sending of the letter may but not necessarily be affected by the assessment of Mr Glaser and Mr Taubenschlag as witnesses? The trial judge from whom the present appeal is brought did not in terms express a finding upon this matter. It is to be inferred from the Abalos principle (1990) 171 CLR 167 that, in deciding as he did, he accepted or probably accepted, Mr Glaser rather than Mr Taubenschlag. But in the absence of an indication as to the judge's finding in this regard, I do not think that that inference should determine the matter. It is not clear whether the judge accepted Mr Glaser because he concluded (for a wrong reason) that the letter had not been written and sent or that he accepted Mr Glaser as a credible witness for other reasons, eg, his assessment of him at the trial. If the conclusion arrived at by the trial judge be right, then the inference from it is, if not compelling at least strong, that Mr Taubenschlag fabricated the letter and/or gave false evidence as to the sending of it. The likelihood of the letter having been produced but not sent and of Mr Taubenschlag giving evidence as he did in error is not strong. The conclusion that Mr Taubenschlag fabricated the letter or otherwise gave false evidence as to the sending of it is serious. I am conscious that such things are sometimes done; but the standard of persuasion that it was done in this case must necessarily be appropriately high. It has frequently been said that retrials are evils which the courts should strive to avoid: see generally Orr v Holmes (1948) 76 CLR 632 at 640-1. But there are some cases in which it is not possible to do justice in the absence of a retrial. In my opinion, this unfortunately is such a case. 4 UNREPORTED JUDGMENTS lam of opinion that the interests of justice require that there be a new trial. The judgment in favour of the American Express company should be set aside and the matter should be returned to the District Court for retrial. The plaintiff should pay the costs of the appeal. The costs of the first trial should abide the event of the proceeding. The company should, if entitled, have a certificate under the Suitors Fund Act. Priestley JA I have had the benefit of reading in draft the reasons of both Mahoney and Meagher JJA in this appeal. Each of them recognises (as indeed the respondent conceded) that the trial judge made an error concerning the date of the meeting (which it was common ground took place) at which, according to the appellant, the contract relied on in the proceedings was agreed on (which the respondent disputes). The consequences of that error (described in detail by Mahoney JA) seem to me to have affected the trial judge's assessment of the credibility of the appellant to a marked degree, both generally and as bearing on the acceptability of parts of the evidence relevant to the principal issue in the appeal, viz, whether the contract was made as alleged. The trial judge may have reached the right result in the case, but if he did he did so on what was in my opinion a flawed assessment of the appellant's credibility, and his credibility was of basic importance in the case. I therefore agree with the view formed by Mahoney JA that the appropriate course to take is to set aside the judgment against the appellant, and order a new trial. I agree with the orders proposed by Mahoney JA. Meagher JA American Express International Inc. ("Amex") sued Mr and Mrs Taubenschlag in the District Court for moneys owing to it by them on their Amex credit cards, Mr Taubenschlag in the sum of $11,118.85 and Mrs Taubenschlag in the sum of $4,087.03. It was successful before Acting-Judge Whealy. Mr and Mrs Taubenschlag's defence was that by agreement between the parties they were entitled to $50,000 worth of goods and services on their credit cards in return for appointing Amex one of a number of sponsors of an enterprise conducted by them. His Honour rejected this defence, and it is on this point that Mr and Mrs Taubenschlag are appealing to this Court. The evidence is more than usually confusing, but I shall endeavour to summarize it. In mid 1982, Mr and Mrs Taubenschlag were executive directors of a company called Integrated Computer Services Pty Ltd ("I.C.S"). In fact, they seem to have been two of the Company's three directors, the third being a Dr Garth (or Garthl) Wolfendale. I.C.S was planning and promoting a large scale venture to be known as "Impact '84'. The detailed nature of this venture was set out in a document published by I-C.S and admitted into evidence. The venture is described as "the first World Congress, Forum and Fair on Computer and Information Technology Impact to be held in Canberra, Australia, February 1984". There were thus said to be three proposed ingredients: a "congress" lasting three weeks designed to maximise the flow of information technology to the highest level specialist from developed and developing countries; a "forum", lasting one week, to be attended by an audience of more than five thousand from overseas and Australia at which "impact reports" would be given along with "presentations" by "keynote" speakers; and a "fair", lasting one week, held alternatively in Canberra and Sydney, at which manufacturers and other bodies would present their products (needless to say, in a "dynamic" manner), placing special stress on the "relevance and impact upon society in general". URJ TAUBENSCHLAG v AMERICAN EXPRESS INTERNATIONAL INC (Meagher JA) 5 This venture, assuming it made any sense at all, would obviously require considerable funding, and to this end I.C.S looked to obtain sponsors. With a view to enrolling Amex as one such sponsor, Mr Taubenschlag saw a Mr Glaser (whose name is often misspelt in the transcript as either "Glazer" or "Glasser") at Amex's Sydney office. It is common ground between the parties that Mr Taubenschlag and Mr Glaser met on more than one occasion. It is also common ground that they had only one long meeting of substance. At the conclusion of that long meeting (whenever it was) Mr and Mrs Taubenschlag allege that a legally binding contract emerged. According to Mr Glaser, at the end of that meeting the parties were still in negotiation. The terms of the agreement which Mr and Mrs Taubenschlag allege was reached at that agreement were: Amex would become a sponsor of Impact '84; in return Amex would issue Amex credit cards to both Mr and Mrs Taubenschlag, and allow them to incur debts of $50,000 on their cards, $25,000 of which being used to pay the bill of a printer selected by Amex to prepare brochures, and $25,000 being used to finance a promotional trip around the world. This alleged contract was "confirmed" by a letter allegedly written by Mr Taubenschlag to Mr Glaser on 22 September 1982. Since it is a document of some importance, it should be reproduced in full: 22nd September 1982 American Express Inc. Australia Attn. Mr Paul Glaser Director-Sales American Express Tower, Sydney Dear Mr Glaser It has been for me a great pleasure to know that American Express decided to sponsor Impact "84. The project, without any doubt, will attract worldwide attention, and it will be for your Company a source of pride, to have sponsored such a magnificent contribution to the transfer of technology "from those who have it to those who need it". Following your instruction I have contacted the printer you recommended and he is now preparing a formal quote for your approval. He has accepted that payment of his work, some $25,000 dollars will be paid to him with the AMEX card. I will be waiting for further instructions from your office in regard to the procedures to arranged (sic) for the issue of the Cards in the directors of I.C.S names (except Dr Wolfendale, who as you know, already has one issued), as arranged in our meeting at your office in order to use the $25,000 dollars balance to finance the promotional trip around the world. Gratefully Yours George Taubenschlag, Managing Director Integrated Computer Services Pty Ltd." Mr and Mrs Taubenschlag were out of Australia from 13 October 1982 to 29 November 1982 and from 9 December to mid February 1983. Otherwise they were at all times relevant to this case in Australia. In October 1992 Amex Cards were issued to each of Mr and Mrs Taubenschlag, one in Los Angeles, the other in Argentina. Most curiously, both were issued without contract or conditions, a fact no one could explain. Use by them commenced almost immediately. It now becomes necessary to consider the questions of the authenticity of the letter which I have set out and which is apparently dated 22 September 1982. Amex denies the receipt of it, and his Honour accepted that denial. In addition, there is much internal evidence to suggest that if it were sent at all it must have been sent considerably after the date it purportedly bears, and the lengthy conversation to which it alludes must have taken place rather later than 6 UNREPORTED JUDGMENTS the letter would suggest. We know that in the conversation which is allegedly "confirmed" by the letter, Mr Taubenschlag said to Mr Glaser: "We already have sponsorship agreements with... Air India'".,. In fact, no formal request was made to Air India for sponsorship until 21 September 1982, which could hardly have been considered and acceded to by 22 September 1982. Again, Mr Taubenschlag gave a number of different versions of the date of the conversation, but the date which he most favoured seemed to be a date a few days prior to his going away: since we know he did not go abroad until October 14 1982, this would place the conversation about the beginning of October and not the middle of September. The mysteries surrounding the letter are hardly clarified by Amex's documentation. Mr Taubenschlag said that Mr Glaser made extensive notes of the vital meeting, and Mr Glaser said the same thing. Mr Glaser produced those extensive notes, five pages of them, partly typed and partly handwritten. They obviously refer to the same meeting as that described by Mr Taubenschlag in his evidence. To a large extent, they replicate or expand what Mr Taubenschlag said. However, they contain two very significant differences. The first is that they seem to place the vital meeting as happening on 30 November 1982. Amex now concedes that this date could not possibly be correct. When exactly the meeting took place no one knows. Mr Taubenschalg produces a document which suggests a highly unlikely date, and Amex produces a document which asserts an impossible one. The difficulty posed by the 30 November date may be explained by the evolution of the document. It commenced as hand-written notes, then typed, and possibly even re-typed. One may speculate that the word "November" was a typographical error for "September"; or possibly that 30 November was the date of the ultimate recension of the document. However, either possibility is no more than speculation. The other major difference between Mr Glaser's notes and Mr Taubenschlag's oral account of the vital meeting is that Mr Glaser's notes made it plain that Amex whilst it was very interested in the venture, had not reached any concluded agreement. Mr Taubenschlag's version, on the other hand, bespoke a concluded agreement. The learned trial judge was thus called upon to make some ruling on the alleged letter of 22 September 1982. His Honour decided that it was never received by Amex, and presumably never sent to Amex by Mr Taubenschlag. It must also, I think, be implicit in his Honour's language that the letter was not written on the date it bears. (at page 7) To some extent his Honour came to this conclusion because of his belief that Mr Glaser's notes in their present form were entirely accurate and truly record that the vital conversation between the parties took place on 30 November, 1982. In this he was wrong. Amex now concedes as much. However, this is not the only reason why his Honour held the view he did. There were many other reasons for coming to the same conclusion. Some examples are: (i) The story of Mr Tsubenschlag is, on the face of it, somewhat unlikely; (ii) As at September, (and, indeed, in October and November) all plans were in a very preliminary state, sponsors were not in place, finance was not at hand. Why would a binding contract be concluded in these circumstances?; (iii) The "agreement" relied on was not in the form used by Amex, which required all agreements to be in writing and did not finance ventures through credit cards; URJ TAUBENSCHLAG v AMERICAN EXPRESS INTERNATIONAL INC (Meagher JA) 7 (iv) The version of Mr Taubenschlag does not correspond with other evidence. It must be recalled that, apart from the dating problem, Mr Taubenschlag's letters seem to have been accepted-as accurate. Yet, they contain no reference to the financing through credit cards of $50,000. (v) In a report by I.C.S of the progress of Phase 1 on 29 November 1982, no mention is made of the supposed agreement. (vi) Amex began billing Mr and Mrs Taubenschlag in the usual way after they commenced using their cards in October, and met with no protest from either of them. (vii) On 13 December 1982, Mr Taubenschlag sent a telex to Mr Glaser commencing with the words "Following our negotiations" and quite inconsistent with the existence of any concluded agreement. (viii) In later December 1982 Mr and Mrs Taubenschlag found themselves stranded in Hong Kong trying to penetrate China in search of yet more sponsors. Their money had run out. Amex in Hong Kong knew not of any agreement to lend money. Nor when Amex Hong Kong faxed Amex Sydney did the latter know. If the "agreement" of September 1982 really existed was this not the moment to assert its existence? Yet, at this moment Mr and Mrs Taubenschlag, far from asserting an agreement, sent a number of telexes which are wholly inconsistent with the existence of any such agreement. To begin with they refer to "negotiations" and "preliminary discussions" with Amex, not to "contract" or even "agreement"; they say that those "negotiations" were directed to the "payment" by Amex to Mr and Mrs Taubenschlag of $50,000, not use of credit cards to that amount; and they suggest that they will appoint the printer of the brochures - ironically enough, Pergamon Press - not, as the September letter suggests, that the printer will be chosen by Amex; (ix) In their answer to interrogatories Mr and Mrs Taubenschlag both asserted that the only "written evidence" of the contract alleged by then was Mr Glaser's notes of their conversation. If the September letter were genuine it would surely have rated a mention; (x) In the whole history of the dispute between the parties the letter never seems to be mentioned; (xi) There is, I think, a hint in his Honour's reasons of a finding against Mr Taubenschlag's credit not resting solely on the mistaken finding that no vital meeting took place on 30 November 1982. This seems to me hardly surprising as a reading of the transcript demonstrates Mr Taubenschlag's testimony to be usually extravagant, often obviously false and sometimes even tinged with a little paranoia. In summary, I am of the view that his Honour's rejection of the letter allegedly written on 22 September 1982 should be affirmed, notwithstanding his mistakes. There would be no point in ordering a new trial if, as think the evidence which Ihave endeavoured to summarise demonstrates, no conclusion would be possible other than that reached by his Honour. Two other grounds were relied on by the appellant. One was that his Honour used the word "loan" when summarizing the allegations of Mr Taubenschlag; in my view it is clear enough from his Honour's judgment that he was under no misapprehension as to the nature of Mr Taubenschlag's case. The other was that Counsel for Amex initially said that he was going to call two extra witnesses - Mr Liam Kenny, an executive of Air India, and a Mr Peter Higgs - but eventually did not do so. In my view, Mr Taubenschlag was quite able 8 UNREPORTED JUDGMENTS to look after himself; the witnesses were in Court; there was nothing to stop him asking the judge to re-open his case and call the witnesses. The appeal should be dismissed with costs. (By majority) Appeal allowed; judgment below set aside. Proceeding returned to the District Court for retrial. The respondent to pay the costs of the appeal. The costs of first trial should abide the event of the proceeding. The respondent should, if entitled, have a certificate under the Suitors Fund Act. WRwWNE Counsel: Appellant: RB PHILLIPPS Respondent: PH BLACKBURN-HART Solicitors: Appellant: CRADDOCK, MURRAY and NEUMANN Respondents: CARROLL and O'DEA