Consideration
96In the well-known passage in the judgment of the High Court in Fox v Percy [2003] HCA 22; (2003) 214 CLR 118, the High Court reaffirmed the advantage that the trial judge had in seeing and hearing the witnesses at trial. However, the High Court explained that that did not, and could not, prevent the performance by the Court of Appeal of its functions, particularly when incontrovertible facts or uncontested testimony demonstrated that the trial judge's conclusions were erroneous even though they appeared to be based on credibility findings, or where the decision at trial was glaringly improbable or contrary to compelling inferences: Fox v Percy supra at [28]-[29].
97In the present case, RFS2 did not contend that the conclusion reached by the primary judge was glaringly improbable. Rather, it contended that the primary judge either failed to take into account or did not refer to important pieces of evidence which, had they been considered, could have led him to a contrary conclusion. In addition, it contended the primary judge failed to expose his reasoning on critical matters to the extent it was unsafe for the verdict to remain. It was for these reasons that a retrial rather than a judgment in favour of the appellant was sought.
98In dealing with these issues there are a number of matters which should be borne in mind. First, the fact that a particular item of evidence was not taken into account will not automatically result in a retrial. It is only where the evidence not taken into account demonstrates that the primary judge had too fragile a base to support his or her finding based on credibility that the findings will be overturned and a new trial ordered. This is because in those circumstances there will not have been a determination of the appellant's case based on the real strength of the evidence: State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In liq) [1999] HCA 3; (1999) 73 ALJR 306 at [63]-[64]; Fox v Percy supra at [90]; Nominal Defendant v Clancy [2007] NSWCA 349 at [6].
99So far as the failure to give reasons is concerned, the general requirement for a trial judge to expose his or her reasons, at least in cases where appellate review is available, is well established: Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 257-259, 269, 274, 280-281; Yates Property Corporation Pty Ltd (In liq) v Darling Harbour Authority (1991) 24 NSWLR 156 at 160, 171, 182; Nominal Defendant v Clancy supra at [13]; Zurich Australian Insurance Ltd v Raman [2009] NSWCA 221; (2009) 53 MVR 273 at [74]-[75], although the latter case dealt with expert evidence.
100RFS2 placed particular reliance on what was said by Ipp JA in Goodrich Aerospace Pty Ltd v Arsic supra at [29]-[31]:
"[29] Often important issues of credibility involve sub-issues. Often, objective facts, or facts that are probable, are capable of having significant bearing on the sub-issues. In cases of this kind, it is incumbent upon trial judges to resolve the sub-issues and to explain, by reference to the relevant facts, the conclusions to which they have come. This having been done, they should then turn to the ultimate facts in issue and explain how their decisions on the sub-issues have assisted them in forming a conclusion on the ultimate issue. It is only when adequate reasons of this kind are given that an unsuccessful party will be able to understand why the judge has believed his or her successful opponent.
[30] In the influential case of SS Hontestroom v SS Sagaporack (1927) AC 37 at 50, Lord Sumner said that one of the material questions in determining whether the credibility finding in that case was erroneous was: '...Is there any glaring improbability about the story accepted, sufficient in itself to constitute 'a governing fact, which in relation to others has created a wrong impression,' or any specific misunderstanding or disregard of a material fact ... that has had the same effect?' It is in this context that the following remarks of Hayne J in Waterways Authority v Fitzgibbon (2005) 79 ALJR 1816 at 1835 [130]; 221 ALR 402 at 428 [130] are particularly relevant:
'...Rather, because the primary judge was bound to state the reasons for arriving at the decision reached, the reasons actually stated are to be understood as recording the steps that were in fact taken in arriving at that result. Understanding the reasons given at first instance in that way, the error identified in this case is revealed as an error in the process of fact-finding. In particular, it is revealed as a failure to examine all of the material relevant to the particular issue.'
[31] A failure by a judge, when making a demeanour finding, to deal with an improbability constituting a 'governing fact' in the SS Hontestroom sense may constitute 'an error in the process of fact-finding' as explained by Hayne J."
See also Nominal Defendant v Kostic [2007] NSWCA 14.
101However, it must be borne in mind that it is not necessary for a trial judge to state expressly his or her reasons for each factual finding made which led to, or was relevant to, his or her ultimate conclusions of fact: Soulemezis v Dudley (Holdings) Pty Ltd supra at 271, 273-274, 279-281; Yates Property Corporation Pty Ltd (In liq) v Darling Harbour Authority supra at 171, 182; Nominal Defendant v Clancy supra at [13]. As was said in Soulemezis at 280 by McHugh JA, as his Honour then was, what is necessary is that the essential ground or grounds upon which the decision rests should be articulated. Further, in this context, what was said by McHugh J when a member of the High Court in Abalos v Australian Postal Commission [1990] HCA 47; (1990) 171 CLR 167 at 178 must be borne in mind:
"Consequently, where a trial judge has made a finding of fact contrary to the evidence of a witness but has made no reference to that evidence, an appellate court cannot act on that evidence to reverse the finding unless it is satisfied 'that any advantage enjoyed by the trial judge by reason of having seen and heard the witnesses, could not be sufficient to explain or justify the trial judge's conclusion': Watt or Thomas v. Thomas [1947] AC 484, at p 488."
102I have outlined the material facts as they emerged in the proceedings above. What the primary judge was confronted with was a series of transactions of an unusual nature, either not documented at all or inadequately documented. The primary judge clearly set out his reasons for declining to accept the evidence of Mr Cassaniti by reference both to his demeanour and the apparent implausibility of his evidence. To the matters to which the primary judge referred might be added these matters. First, none of the cheque butts tendered indicated the transactions were loans, much less loans from the previous trustee. Second, the primary judge's conclusion that he should not draw any inference adverse to RFS2 from the absence of books and records of the Trust evidencing the transactions, was if anything favourable to RFS2. In accepting Mr Cassaniti's evidence that records were stolen from his office as a reason for the failure to produce any such records, the primary judge did not refer to Mr Cassaniti's later evidence that records were kept as to the source of funds for the Trust but he did not have access to them: see par [13] above.
103It is in that context that the criticism of the reasoning process of the primary judge falls to be considered.
104The first matter complained of was that the primary judge failed to make specific findings as to whether the $550,000 or the $900,000 advances occurred.
105If what is suggested was that the primary judge was required to make a specific finding that an advance in the sum of $550,000 was made, I do not agree. What he was required to do was to form a view that the payments said to be loans were in fact repayments of advances made by the respondent. The relevance of the $550,000 loan was that if made, it supported the contention that the payments made out of the accounts of Cassaniti and Associates at the time of the Loan Agreements were repayments of past advances made by the respondent. The primary judge concluded that there had been prior advances by the respondent and the payments made around the time of the Loan Agreements were a repayment of those advances. It was not necessary for him, in those circumstances, to make an express finding about the actual amount of the advance or how much was outstanding from time to time.
106In dealing with the $550,000 loan, the primary judge noted at par [28] that Mr Cassaniti denied that the advances were made, but referred to his reservations concerning his evidence. He described the $321,000 entry in the blue book as consistent with the borrowing of $350,000 by the respondent from Mr Andre Abdallah. He accepted Mr Andre Abdallah's evidence, describing it as broadly supportive of the respondent's account of the $550,000 transaction. He took into account the absence of any evidence as to the source of the $200,000 said by the respondent to have been provided from his own funds and the matters reflecting adversely on the credit of the respondent: judgment par [34]. The primary judge also rejected a submission by RFS2 that if such a loan were made, it was repaid prior to the entry into the Loan Agreements: judgment par [36].
107In those circumstances, it is clear that the primary judge had concluded that advances had been made by the respondent to Mr Cassaniti prior to the payments made at the time of the Loan Agreements and, further, that the payments made at that time were in satisfaction of that indebtedness. It follows that to the extent the primary judge failed to find the precise amount of the advances, it was unnecessary for him to do so.
108So far as the $900,000 loan was concerned, the primary judge referred to the evidence of the respondent on this issue to the effect that the payments made to Cassaniti and Associates, Dean Korkis and Patricia Cassaniti in August and September 2003 comprised part of that advance: judgment par [37]. He accepted Mr Ayssor Abdallah's evidence, concluding that there was no inconsistency between his evidence and that of the respondent. He accepted the evidence of Mr Brian Abdallah and concluded that such inconsistency between his evidence and that of the respondent as existed supported, rather than impeached, their credit: judgment par [40]. He dealt with the failure to call Mr Lahood, the entries in the blue book and the giving of the guarantee: judgment pars [46]-[48]. He concluded that the reference in the blue book to the $900,000 indicated at least the respondent's understanding that the earlier amounts paid by Cassaniti and Associates were not loans, since otherwise the $900,000 transaction would not have given rise to a liability in that amount. The primary judge also referred to the evidence of the provision of security and the denial by Mr Cassaniti that he had provided the Certificates of Title, and to the repayment notation on the cheque butt: judgment pars [49]-[50]. He also referred to Mr Gino Cassaniti's evidence of the conversation between him and Mr Cassaniti at Silverwater Prison, which evidence he accepted in preference to that of Mr Cassaniti. The primary judge stated that Mr Gino Cassaniti's evidence tended to undermine the evidence of Mr Cassaniti of subsequent conversations between Mr Cassaniti and the respondent in which the additional payments were acknowledged to be subject to the Loan Agreements: judgment par [53]. As I indicated earlier, he rejected Mr Cassaniti's evidence of this conversation. I have set out the primary judge's ultimate conclusions in par [59] above.
109This review of the evidence shows that the primary judge rejected the contention that the payments made after the Loan Agreements were entered into were advances by the previous trustee to the respondent, but rather, were repayments of advances made by the respondent to Mr Cassaniti. It is correct that the primary judge did not expressly state that an advance of $900,000 was made. However, his acceptance of the evidence of the respondent, that of his brothers and Mr Gino Cassaniti, along with his acceptance of the veracity of the entries in the blue book, indicate that his conclusion was that an advance had been made by the respondent to Mr Cassaniti in about August or September 2003 and that subsequent payments thereafter out of the Cassaniti and Associates' accounts were in repayment of that advance.
110In these circumstances, the criticism made of the failure of primary judge to make express findings in relation to the $550,000 and $900,000 advances are not made out.
111Nor do I think the specific criticisms of the reasoning of the primary judge are made out. Contrary to the submission of RFS2, the primary judge expressly referred to the fact that the loan of $550,000 was not mentioned in the respondent's first four affidavits: judgment par [34]. Even if he did not, a mere failure to refer to this matter does not compel a contrary conclusion to that reached by the primary judge, or much less mean that his conclusion was glaringly improbable. It was not a matter which pointed decisively or even persuasively to a contrary conclusion taken in conjunction with the whole of the evidence: Fox v Percy supra at [90].
112The criticism by RFS2 of the absence of contemporaneous documents evidencing the loan of $550,000, the absence of evidence of the source of the funds to make the loan and the inconsistency of the evidence of Mr Andre Abdallah with the entries in the blue book were all matters taken into account by the primary judge: judgment pars [26]-[34]. These matters did not incontrovertibly lead to a contrary conclusion to that reached by the primary judge or make his findings glaringly improbable.
113Similarly, it was open to the primary judge to find that although Mr Gino Cassaniti gave evidence that he did not see the actual $550,000 cash handed over, his evidence was not inconsistent with the respondent's evidence that it was contained in a bag which was handed to Mr Cassaniti at his office. The primary judge was not required to draw an inference that Mr Gino Cassaniti's evidence would not have assisted the respondent on this point by virtue of the issue not being raised in re-examination: see Manly Council v Byrne [2004] NSWCA 123 at [52].
114Whilst submitting that the primary judge was not entitled to discard the importance of the date alongside the $321,000 entry in the blue book on the basis that entries in the blue book only commenced to be made in 2003, RFS2 did not proffer any reason why the primary judge was not entitled to accept the evidence of the respondent to that effect. The acceptance or rejection of the respondent's evidence on this point depended upon the assessment by the primary judge of his credibility and the conclusion which the primary judge reached has not been shown to be glaringly improbable or contrary to incontrovertible evidence.
115I have dealt to a large extent with the criticism of the acceptance by the primary judge of the evidence of Mr Andre Abdallah in pars [68]-[70] above. At pars [31]-[32], the primary judge referred to the fact that Mr Andre Abdallah was an admitted drug dealer and to the other problems associated with his evidence. Notwithstanding this, the primary judge stated he was prepared to accept Mr Andre Abdallah's evidence, no doubt based on his assessment of him in the witness box. It is difficult to see what further analysis the primary judge could or should have undertaken prior to accepting or rejecting Mr Andre Abdallah's evidence. Although RFS2 criticised the primary judge for failing to give reasons why he accepted this evidence, no further analysis was suggested.
116As I pointed out at par [69] above, there was no inconsistency between the statement by the respondent that he had been repaid the $550,000 loan by Mr Cassaniti and the evidence of Mr Andre Abdallah that his loan to the respondent had not been repaid. A further issue which arose was whether the statement by the respondent that the $550,000 had been repaid was inconsistent with the payments made out of the Cassaniti & Associates' accounts to the respondent at the time of the Loan Agreements and the subsequent payments made to the respondent and High Rise up to August 2003 being repayments of that loan. The importance of that question is that such payments could not have been repayments of the $900,000 loan as it was only made on the respondent's evidence in August or September 2003.
117I do not think there was any inconsistency. The respondent's evidence was that Mr Cassaniti commenced repayment of the $550,000 loan at the time of the entry into the Loan Agreements. The evidence was as follows:
""Q. You now claim do you that when you first met Mr Cassaniti he asked you to sign these three loan agreements, is that right?
A. Not when I first met him, no. After I gave him the $550,000.
...
Q. When you claim you gave him this $550,000 cash, one of the things he said to you was please fill in these three documents?
A. When he started to pay me the money back he suggested we fill out agreements so if the police do investigate him it doesn't look like he's money laundering. Okay? That was what I was trying to say."
118So far as the absence of a receipt for the $550,000 was concerned, having regard to the unusual nature of the transactions alleged, the primary judge in my opinion was entitled to discount the absence of such a receipt.
119Finally, in respect of the $550,000 loan, RFS2 submitted that the primary judge did not adequately deal with the attack on the credibility of the respondent. However, the primary judge did take the changes to the respondent's evidence concerning the reasons for the entry into the Loan Agreements into account in assessing his credibility, describing them as "significant changes" and "at best, inaccurate". It is correct, as RFS2 submitted, that the respondent gave his final explanation prior to the issue of a certificate under s 128 of the Evidence Act. However, the respondent consistently maintained that the Loan Agreements did not record any advances actually made and his reluctance to reveal potential money laundering and tax evasion is understandable. The fact that the primary judge did not deal with the explanation given by the respondent as to what he meant by forgery does not, in my opinion, undermine the credit finding by the primary judge in circumstances where he expressly took into account the unsatisfactory evidence of the respondent on this issue.
120The findings of the primary judge in respect of the $900,000 loan were based on an assessment of the credibility of the respondent compared to that of Mr Cassaniti to which I have referred earlier. The particular criticisms made of the primary judge in relation to this advance were not that he overlooked relevant evidence but rather went to his treatment of it. In circumstances where it was not contended that his findings were glaringly improbable, it does not seem to me that these criticisms were such as to warrant a retrial.
121The first criticism, namely, that the trial judge erroneously concluded that the evidence of Mr Ayssor Abdallah was not inconsistent with that of the respondent is in fact incorrect. Whilst it is correct that Mr Ayssor Abdallah did not corroborate the evidence of the respondent, it was not inconsistent with it. Mr Ayssor Abdallah drew a cheque in the sum of $200,000 in favour of Blue Jeans and it was not put to him in cross-examination that the cheque was not handed to Mr Cassaniti in his presence: see par [25] above.
122RFS2 did not challenge the evidence of Mr Brian Abdallah that he advanced $100,000 to the respondent. However, it submitted that the primary judge was incorrect in finding that his evidence was that an advance of $150,000 was made. The evidence of Mr Brian Abdallah was somewhat ambiguous on this point. At the start of his cross-examination he affirmed he loaned the respondent $150,000. Subsequently, he gave the answer to which I have referred in par [27] above; "it was 100 and the interest I made I gave to Michael so I can make more interest". It was submitted that this answer showed that the amount advanced was $100,000 and the $50,000 was accrued interest. The primary judge took a contrary view and concluded that, consistent with the evidence of the respondent, the total advance was $150,000. In my opinion, having regard to the ambiguous nature of the evidence he was entitled to do so.
123The other issue raised by RFS2 in relation to the evidence of Mr Brian Abdallah was what might be described as the timing point. Mr Brian Abdallah referred to the loan being made about a month after he returned from Lebanon in late 2002 or early 2003, rather than in August or September 2003. The primary judge made no express finding as to when the advance by Mr Brian Abdallah was made, regarding the fact of the advance as what was important. Whilst there is no doubt that there was inconsistency between the evidence of the respondent and Mr Brian Abdallah on this issue, the primary judge did take it into account and his conclusion on the issue was not glaringly improbable.
124RFS2 criticised the primary judge for failing to give reasons as to why he concluded that the reference to a loan of $900,000 in the blue book was a reference to a loan to Mr Cassaniti. The primary judge referred to the entry in the blue book showing $900,000 was owing by Mr Cassaniti. He then considered and rejected the submission that that entry referred to monies due by Mr Lahood, stating that he accepted the respondent on this point. That finding was made in conjunction with the other findings in the judgment of the primary judge which he said supported the fact that a loan was made by the respondent to Mr Cassaniti, namely, the granting of a security (judgment par [49]), the repayment notation on the cheque butt (judgment par [50]) and Mr Gino Cassaniti's evidence of the conversation at Silverwater Prison (judgment par [53]). In my opinion, that process of reasoning adequately indicated why the primary judge accepted the entry in the blue book as correct.
125RFS2 finally submitted that in expressing views as to the unlikelihood of RFS2 advancing $2.8 million in the manner alleged, the primary judge ignored that fact that the previous trustee was "an accounting firm not a bank". The submission fails to recognise that the previous trustee was a trustee. The primary judge, in my opinion, was entitled to conclude that it was inherently unlikely that a trustee acting consistently with its duties would make advances in the fashion in which the alleged advances were claimed to have been made.
126In these circumstances, none of the particular criticisms made of the approach of the primary judge have been made out.
127The most significant criticism of the reasoning of the primary judge was that in considering whether the Loan Agreements were shams he incorrectly reversed the onus of proof. It is correct that the onus of establishing that the agreements were shams was borne by the respondent and to the extent the primary judge proceeded on the basis that RFS2 bore the onus he was in error. Further, it would appear from par [54] of his judgment taken in isolation that the primary judge did fall into this error.
128However, par [54] of the primary judgment must be read with par [56] and the overall approach of the primary judge to which I have referred above. It is apparent from a reading of the whole of the judgment that the primary judge preferred the evidence of the respondent and the witnesses called by him to the evidence of Mr Cassaniti. That led the primary judge to conclude on the balance of probabilities that the payments out of the Cassaniti and Associates' accounts were repayments of advances made by Mr Abdallah, rather than advances made by RFS2. The primary judge having determined that issue on the balance of probabilities was entitled to conclude that the Loan Agreements were not intended to operate according to their terms. Further, in par [68] of the judgment, the primary judge expressly stated that he concluded on the balance of probabilities that the Loan Agreements were not intended to have their stated effect.
129In relation to the advances subsequent to the Loan Agreements, the onus was on RFS2 to prove that they were in fact advances covered by the all monies clause in the Loan Agreements. At [68], the primary judge concluded that this onus had not been discharged. For the reasons given he was entitled to do so.
130In these circumstances, the primary judge did not misuse his position as the trial judge by ignoring uncontroverted facts or uncontested testimony contrary to his conclusions, nor were his conclusions glaringly improbable. It follows the appeal should be dismissed.
131It is unnecessary in these circumstances to deal with the conclusion of the primary judge that if loans were in fact made to Mr Abdallah they were made by Cassaniti and Associates rather than by the previous trustee. If a retrial had to be ordered that was a matter which may have arisen for consideration. However, for the reasons given a new trial will not be ordered.
132Nor is it necessary to deal with the conclusion of the primary judge that the third Loan Agreement was void for uncertainty. Even if it were, the advances would have been recoverable as monies repayable on demand. However, having regard to my conclusion this issue does not arise.