CASTLEREAGH STUD PTY LTD v HOOPER SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KirByY P, HANDLEY and COLE JJA 16 September 1994, 22 September 1994 [1994] NSWCA 43 Appeal — credibility evidence Held — no incontrovertible evidence to authorise appellate disturbance. Costs — indemnity costs — District Court — power to amend — now conferred by statute with retrospective effect. APPEAL — credibility findings — whether displaced by incontrovertible evidence or otherwise glaringly improbable — District Court action for fees for service of mares, agistment and foaling — offsetting claim for sale of prefabricated shed — trial judge accepts evidence as to sale price of shed — evidence supported by witness accepted as reliable — held: The conclusion of the trial judge, based upon evidence found credible, could not be disturbed by the Court of Appeal. Devries and Anor v Australian National Railways Commission and Anor (1993) 177 CLR 472 applied. COSTS — District Court — indemnity costs — whether order valid — held: (upholding order): The decision of the Court of Appeal in Milosevic vy Government Insurance Office of New South Wales (1993) 31 NSWLR 323 (CA) has been reversed by Courts Legislation (Amendment) Act 1993 with power, retrospectively conferred, to make orders for costs on an indemnity basis. Courts Legislation (Amendment) Act 1993. ORDERS Appeal dismissed with costs. Kirby P I agree with Cole JA. Handley JA I agree with Cole JA. Cole JA The principal of the appellant, Castlereagh Stud Pty Ltd, is a Mr Bridge. The first respondent, and principal of the second respondent, SJ Hooper Pty Ltd, is Mr Hooper. Mr Bridge conducted a stud at which various mares owned by Mr Hooper were sent for service. The appellant claimed service, agistment and foaling fees. There was dispute regarding the terms of payment for those services. Mr Hooper, and his company, provided building and electrical work. Work was done on Mr Bridge's stud property. The work comprised electrical work, building work and provision of materials. In addition a shed owned by Mr Hooper was delivered to and partly erected upon the stud property. He alleged an agreement with Mr Bridge to pay him $60,000 for the shed, plus erection and transport costs. The learned trial Judge, Phelan DCJ, found in favour of Mr Hooper and his company in respect of the claims for building work, electrical work, provision of materials and the contract for sale of the shed. In those respects he awarded the respondents the following sums: (a) Electrical works $9,104.00 2 UNREPORTED JUDGMENTS (b) Building works $8,993.00 (c) Materials $1,724.00 provided (d) Shed $60,000.01 (e) Transport costs $1,380.00 TOTAL: $81 201.00 The appellant has appealed against the finding that there was an agreement to purchase the shed for $60,000 (ground 5). The trial Judge did not accept either Mr Bridge or Mr Hooper as witnesses of truth. The agreement alleged in relation to the sale and purchase of the shed was oral, was said to have been made on 25 September 1987. Mr Bridge's evidence regarding this matter was that there was never any agreement to purchase the shed. His evidence was that he did not want the shed, that he had an adequate shed, and that an alternate shed could have been purchased more cheaply. He was corroborated in his evidence in this and other respects by Miss Blair. However, his evidence was contradicted in some respects by a Mr Hogan and Mr Pilkington whom his Honour found to be independent and truthful witnesses. In particular, Mr Pilkington gave evidence, consistent with the evidence of Mr Hooper, that there was a conversation between Mr Hooper and Mr Bridge, at which Mr Pilkington was present, in which Mr Hooper told Mr Bridge that the cost of erecting the shed would be approximately $15,000. Mr Bridge denied any such conversation, his case being that, in so far as he was to receive a shed, it was to be an offset for service and other horse fees. Accepting on this aspect Mr Hooper, whose account was in part confirmed by the independent Mr Pilkington, his Honour found that the oral agreement alleged by Mr Hooper was established. It was valiantly submitted by Mr Leggatt on behalf of the appellant that the evidence of Mr Pilkington did not support the existence of a contract for sale of the shed because his evidence, referring to $15,000, was equivocal. Mr Pilkington's evidence was: Q. "You said that Mr Hooper and Mr Bridge had a conversation were you within earshot of that conversation?' A. "Not a lot of it, just that as I was walking away from it they - there was - Mr Bridge wanted to know how much it was going to cost to have the shed erected." Q. "What was the reply to that?" A. "The only figure I'd heard was $15,000 but after that I was out of earshot and I didn't hear what was going on."! Understood against the background that Mr Hooper alleged an agreement for sale for $60,000 plus an erection cost of $15,000, in my view the evidence is capable only of supporting the view that there was an conversation relating to the cost of erection which confirmed, in part, Mr Hooper's evidence that there was an oral agreement for sale of the shed. It was quite inconsistent with Mr Bridge's case that there was not discussion regarding the sale of or cost of erection of the shed. His Honour was further reinforced in his view by evidence from Mrs Hooper that, on the day in question, her husband had told her that he had sold the shed that day for $60,000. The appellant contends in grounds 3 and 4 that that evidence was inadmissible and not able to be relied upon by the trial Judge. 1. Appeal book, at 350. URJ CASTLEREAGH STUD PTY LTD v HOOPER (Cole JA) 3 That submission must be rejected. At the trial, Counsel formerly appearing for the appellant specifically put to Mr Hooper that he was "now inventing a fabrication" about there having been an agreement for sale2. That allegation having been specifically raised, the respondent was entitled to call Mrs Hooper and lead from her evidence that Mr Hooper's account of the conversation regarding an agreement for sale was not a recent fabrication, and the learned trial judge was entitled to rely upon it for that purpose. The finding of the learned trial Judge regarding the oral contract was dependent on his acceptance of Mr Hooper in preference to Mr Bridge. On credit, on this issue, he preferred the evidence of Mr Hooper supported as it was by evidence of Mr Pilkington and Mrs Hooper. There is no ground for this Court interfering with that decision based on the credibility of the two principal witnesses3. In Devries it was said; 'More than once in recent years, this Court has pointed out that a finding of fact by a trial Judge, based on the credibility of a witness, is not to be set aside because an appellant court thinks that the probabilities of the case are against - even strongly against - that finding of fact. If the trial Judge's finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial Judge "has failed to use or has palpably misused his advantage" or has acted on evidence which was "inconsistent with the facts incontrovertibly established by the evidence" or which was "glaringly improbable".4 The appellant suggested there were six such incontrovertible facts which rendered the finding of credit by the trial Judge unsound. The "incontrovertible facts" suggested were: 1. No claim for payment had been made by Mr Hooper until after the parties had fallen out, and after the appellant had commenced proceedings against him. 2. No bona fide invoice was ever sent to the appellant, at least for three years after the alleged sale. 3. The appellant did not send any invoices to the respondent for service fees for 1987, and that was consistent with a swap of shed for service fees rather than a sale. 4. The appellant had a shed on 15 acres of land at Sandy Hollow for which he had paid $15,000, including the land. It was thus improbable that he would have agreed to pay $60,000 for the shed and $15,000 erection costs. 5. The appellant had two sets of stables and did not need a further shed. His existing stables being in good condition. 6. The shed had been purchased by Mr Hooper in 1974 for $6,000. It was inconceivable a "canny businessman" like the appellant, would pay ten times that sum for such a shed. In my view none of these circumstances, either alone or together, constitute controvertible facts rendering the trial Judge's finding of credit unsound. Regarding fact 1, neither party forwarded invoices to the other for a considerable period of time because their financial arrangements between themselves were informal and amicable. As the trial Judge said: "Given then that no invoices flowed whilst the parties were amicably related, given that no claims were made 2. Appeal book, at 297 3. Devries and Anor v Australia National Railways Commission and Anor (1993) 177 CLR 472. 4. (1993) 177 CLR 472 at 479. 4 UNREPORTED JUDGMENTS on the other until they fell out, the only rational inference in my mind is that there was a quid pro quo, although its terms have to be determined."5 The above also explains fact 2 and fact 3. Regarding facts 4, 5 and 6, it was accepted by counsel for the appellant that Mr Bridge did not know the price for which Mr Hooper had originally purchased the shed. The evidence of Mr Bridge that he did not require another shed because his shedding was adequate and in good condition was rejected by his Honour. There was evidence from Mr Hogan that one of the sheds on the property was severely defective and unsuitable for housing horses. There was evidence from Mr Potts that, having regard to the amount of the steel in the shed, type of steel, its method of construction, its strength, and its good condition, the shed was valued at $56,281. The circumstances in relation to the Sandy Hollow shed were unexplored in any detail. In those circumstances none of facts 4, 5 and 6 constitute incontrovertible facts, sufficient to require a reconsideration of the Judge's finding upon the credit of Mr Hooper in respect to the alleged agreement for sale of the shed, particularly where Mr Hooper's evidence was reinforced by the accepted independent evidence of Mr Pilkington, and the confirmatory evidence of Mrs Hooper. Nor is there any basis for the Court to interfere with the trial Judge's finding upon the credit of Mr Bridge or Miss Blair as sought in grounds | and 2. The first five grounds of appeal thus fail. Mr Hooper, or his company are entitled to recover the sum of $81,201, subject to such offset as is appropriate for the service and horse related fees. Regarding the appellant's claim for service and related horse fees, his Honour made separate findings in respect of three years. His Honour found: (a) 5 service fees at $1000 $5000.00 (b) Dry mare agistment $3204.00 (c) Wet mare agistment $5018.00 (d) Foaling fees (6 at $60) $360.00 Item (b) above was agreed. The appellant claimed 6 service fees at $2000 in respect of item (a). There is no appeal against the finding of 5 rather than 6 mares successfully served. Whilst it claimed slightly greater sums in respect of items (c) and (d) there has been no appeal in respect of those items. (a) Agreed service fees (4 at $1000) $4000.00 (b) Kangaroo service fees (3 at $2000) $6000.00 (c) Dry mare agistment $342.00 Item (a) was agreed. Items (b) and (c) were as claimed by the appellant. There is no appeal in respect of the 1988 findings. (a) Eskimo service fees (2 at $1000) $2000.00 (b) Kangaroo service fees (5 at $2000) $10,000.00 5. Appeal book, at 530 URJ CASTLEREAGH STUD PTY LTD v HOOPER (Cole JA) 5 The appellant contended that the agreed fee for Eskimo was $1500, not $1000. Regarding Kangaroo, the respondent had claimed the fee was $1000, whilst the appellant contended that the agreed fee was $3500. These disputes form the basis of appeal grounds 8, 9 and 10. Regarding 1987 service fees, the respondent contended that the agreement initially made was that Kangaroo and Eskimo would each stand for a period of three years at a fee of $1000. The respondent gave evidence that the fee of $1000 was struck after a discussion in which he informed Mr Bridge that he could obtain acceptable service for his mares elsewhere for $1000. Mr Bridge's evidence was that in 1987 the standard terms for Kangaroo were $2000 per service payable on a forty-five day positive pregnancy certificate. His Honour believed, at least in part, Mr Hooper, preferring his evidence to that of Mr Bridge in respect of the service fee for 1987. That decision depended upon the trial Judge's assessment of credit of the two witnesses. Accordingly the finding was that the fee for Kangaroo in 1987 was $1000. The fact that the standard fee for Kangaroo in 1987 may have been $2000 is not in itself a fact sufficient to permit or require this Court to interfere with the trial Judge's assessment of the credit of the witnesses. Nor is the contention raised in ground 6, that his Honour misquoted or misunderstood Mr Bridge when he stated: "The protestation by Mr Bridge on several occasions that he would not ever lower his fees beyond the advertised price was shown to be at times quite false". His Honour was obviously referring to that evidence because it supported a finding that the mere statement that $2000 was the standard service fee in 1987 did not mean that agreement could not have been reached for service at a lesser fee. Grounds 6 and 7 fail. Regarding the service fee for Kangaroo for the 1989 year, the appellant contended that the agreed fee was $3500. He relied upon written documents called "confirmation forms" showing such a fee. Evidence in support of a fee of $3500 was given by each of Mr Bridge and Miss Blair both of whom were rejected by his Honour in this respect as witnesses of truth. The confirmation forms purport to set out the agreement confirming the terms for the service of a mare. They were signed by Mr Hooper and show a fee of $3500. However Mr Hooper gave evidence that the documents were signed as part of a conspiracy between himself and Mr Bridge to defraud others. Mr Hooper's evidence was as follows: A. "He (Mr Bridge) said Steve I've got something to put to you that's very important and I would like you to help me. I said what is it. Mr Bridge said, Steve I've had a disappointing 1988 season, I have had very poor response to the stallion Kangaroo. I have increased his service fee and I just have not attracted the mares that I would have expected to attract to the stallion. He said I would like you to help me by signing some documents and we will put the fee of $3500 on those documents. I would like you to sign those documents because I would like to be able to show those to other people in order to say that a major stud which mine had become because of my mares and my racing improvements, to say that you are paying the full service fee." Q. "And then what happened?" A. "TI said I don't mind helping Ken. I have helped you at auctions, run up yearlings to the price that you wanted them to be sold for. I said I don't mind helping you but I said I'm a little confused of what this might do. He said what do you mean. I said because if I sign these forms you might ask me to be 6 UNREPORTED JUDGMENTS committed by those forms. He said no Steve I wouldn't do that. I said, we will fill out these forms and I will take them home and I will consider my position in respect to this request.''¢ The learned trial Judge accepted that evidence. His finding was: "Mr Hooper says of these that such documents were fraudulently constructed by the principals. Dishonest though I find Mr Hooper to be it seems to me that he spoke the truth regarding certain aspects of this evidence on these documents. They do not, I find, represent the agreement between the parties, they are fraudulent documents. They were designed so that each would benefit from them. Mr Bridge could use them in a sales pitch to the owners of other mares. Mr Hooper was to get services at a reduced fee. This I find to be the fee referable to the prior season, that is $2000. This is to be an implied and inferred term. There was, I find, no further term regarding the live foal agreement."7 The above finding was open to the trial Judge depending upon his assessment of the credit of the witnesses. Thus explained, the documents do not constitute an incontrovertible fact inconsistent with the trial Judge's finding sufficient to permit or require this Court to interfere with that finding'. Accordingly grounds 8 and 9 fail. Ground 10 appeals against his Honour finding that the fee for Eskimo in 1989 was $1000, not $1500 as claimed by Mr Bridge. His Honour said: "T am not persuaded by Mr Bridge that the fees for Eskimo in 1989 were $1500. Therefore I find that $1000 is due for Bell's Secret and Little Brown Girl. That is for each of those mares."? The appellant contends that finding is not logical because rejection of Mr Bridge's evidence "does not prove the converse". This submission ignores the prior statements by his Honour that the onus of proving the sum claimed for service fees rested on the appellant. The respondent conceded an obligation to pay at the rate of $1000 per service. The appellant contended there was an agreement for $1500 per service. His Honour found that the appellant had not discharged the onus of establishing that agreement. Accordingly he found a service fee of $1000 for mares served by Eskimo. Ground 10 fails. Ground 11 depends upon grounds | to 10 having been sustained. As they have failed, so does it. Ground 12 appeals against a costs order whereby his Honour ordered that the cross-defendants (Castlereagh Stud) "pay the cross-claimants' costs on a party/party basis at the scale referable to the verdict sum. From 27 March 1992 until completion of the matter the costs are to be paid on an indemnity basis". In ordering indemnity costs, his Honour purported to exercise a discretion said to be available under Pt19A His Honour's decision was given before the decision of this Court in Milosevic v Government Insurance Office of New South Wales!°. The decision in Milosevic has been reversed by Courts Legislation (Amendment) Act 1993 to confer retrospectively a power to make orders for costs on an indemnity basis. There is no ground for disturbing the trial Judge's discretion on costs. I understood that this ground was, in any event, not pressed. Appeal book, at 261 Appeal book, at 539 Devries and Anor v Australia National Railways Commission and Anor (1993) 177 CLR 472 at 477 9. Appeal book, at 538. 10. (1993) 31 NSWLR 323 en URJ CASTLEREAGH STUD PTY LTD v HOOPER (Cole JA) 7 I would propose that the orders of the Court be: Appeal dismissed with costs. Appeal dismissed with costs. 5 Counsel for the Appellant: CJ Leggat Instructed by: Archibald Cole McLellan Counsel for the Respondent: RM Holmes QC/ AS Kostopoulos 10 Instructed by: Hallet and Associates