Mr Jugmans expressed the opinion, on the grounds stated, that the marketing expenses adopted by Mr Elliott were overstated.
18 The evidence of Ms Lang supported Mr Jugmans statement that, in the 11 months to 31 May 2005, the business incurred advertising expenses of $8,554.
19 There was, thus, a material dispute between Mr Elliott and Mr Jugmans crystallised by the differing views that I have set out. The judge, however, accepted that marketing expenses should be assessed at $28,000 without any reference to the differing opinion of Mr Jugmans, supported as it was by the testimony of Ms Lang. The judge did not examine this question and gave no rational reason for his decision on this issue.
20 According to Mr Elliott, repair and maintenance expenses for the period 26 January 2004 to 1 July 2004 amounted to about $9,740. This, Rolfe DCJ extrapolated to $22,683.97.
21 Mr Elliott, however, had accepted that some of the items making up the repair and maintenance expenses of about $9,740 were not recurrent expenses. He estimated the recurrent expenses for the period 1 July 2004 to 31 May 2005 at an amount "in excess of $400 per month according to the accounts prepared by Karen Lang". Ms Lang's accounts did not support this statement. Her affidavit showed repairs and maintenance for the period 1 July 2004 to 31 May 2005 as being $995. Mr Young, who appeared for the respondents, submitted that an item of $4,849 in Ms Lang's affidavit relating to "assets less than $100" was part of "repairs and maintenance", but there was no evidence to this effect and this proposition is mere speculation.
22 Mr Jugmans pointed out that Mr Elliott acknowledged that the amount of $9,741 included non-recurrent expenses and asserted that "an extrapolation of an amount that includes non-recurring items will overstate the expected annual expense".
23 Rolfe DCJ made no reference to the issue concerning the non-recurring expenses and the differing views in this respect. His Honour simply extrapolated on a straight-line basis. As was the case with marketing expenses, the judge gave no rational reason for his decision on this issue.
24 For the reasons I have earlier given, Mr Jugmans' opinions in regard to marketing and repairs, had they been upheld, were capable of having an exponential effect on the damages. During the course of argument on appeal, Mr Young correctly accepted that, had the judge adopted Mr Jungmans figures in regard to marketing and repairs, the value of the business would have increased to "something around $125,000". That would have had a concomitantly significant effect on the damages awarded.
25 Mr Young pointed out that the appellant, in his concluding written submissions at the trial, did not expressly raise issues concerning the items relating to marketing and repair expenses. The appellant was then unrepresented and this may explain this omission. It is apparent, in any event, from the judge's reasons, that Mr Jugmans, on the appellant's behalf, had taken issue with Mr Elliott in regard to these items and the differences between them in this regard needed to be resolved. The only basis given by the judge for resolving these issues was that he was not satisfied that he should depart from what, in effect, amounted to an acceptance of the opinions expressed by Mr Elliott. This is not an appropriate way of dealing with disputes of this kind. They required rational examination and analysis: Wiki v Atlantis Relocations (NSW) Pty Ltd (2004) 60 NSWLR 127.
26 Mr Young made various submissions as to the weight that should be attributed to the amounts stated in Ms Lang's affidavit. The matters so raised, however, do not affect the judge's duty to deal with the appellant's contentions concerning the damages. Matters going to weight are matters that his Honour should have dealt with but did not.
27 Mr Young drew attention to the reference made in his Honour's reasons to the written submissions that he had made at trial. He submitted that the judge's reasons should be understood as meaning that he accepted those submissions and this was an appropriate way of giving reasons for judgment. In other words, he submitted that it was permissible for the judge, without recounting the detailed submissions of counsel for the respondents in his judgment, to give, as his reason for finding for the respondents, that he accepted those submissions.
28 At the outset I should say that his Honour did not say that, because he accepted Mr Young's submissions, he upheld the opinions of Mr Elliott and rejected those of Mr Jugmans on the relevant issues. He stated merely that he had taken those submissions into account. This, of course, is something that, in the normal course, one would expect.
29 In any event, the argument so advanced is untenable. In certain situations, particularly in interlocutory matters of a certain kind, it is sufficient for judges, when giving brief reasons for their decisions, to say that their reasons appear sufficiently from the transcript of the argument, or from the submissions advanced by counsel for one of the parties. But that is not the general rule when a final judgment is given after a trial.
30 Reasons for judgment disposing finally of a trial must contain the facts found and the judge's entire reasoning process. Any departure from this rule (by allowing the incorporation by reference to the submissions of counsel without setting those submissions out) would contravene the rule that justice must not only be done but must be seen to be done. There are many other objections in principle to such a practice. It could give rise to an impression that the judge has not properly grappled with the issues in the case (see Whalan v Kogarah Municipal Council [2007] NSWCA 5 at [1]). It would tend to frustrate the losing party's right of appeal, particularly if the parts of counsel's submissions on which the judge accepted were not identified with precision. It would diminish the capacity of the reasons to indicate to the parties the extent to which their arguments have been understood and accepted, it would detract from judicial accountability, and it would prevent the public from understanding properly the basis on which the decision was given (see Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 (at 279 to 280) per McHugh JA). As long ago as in 1866 it was said in Broom's Constitutional Law (1st ed) at 152 to 153 (quoted in De Iacovo v Lacanale [1957] VR 553 at 557 per Monahan J) that: "A public statement of the reasons for a judgment is due to the suitors and to the community at large". Such a practice would not comply with this long-established precept.
31 As I have indicated, the judge has given inadequate reasons for his decision to accept the approach of Mr Elliott in regard to marketing and repairs and to reject that propounded by Mr Jugmans. His Honour's failure to address the disputes on these issues on a rational and reasoned basis gives rise to a material error of law and, through no fault on the part of the respondents, the appeal must succeed. The case needs to be remitted to the District Court so that the quantum can be determined afresh.
32 There are two matters that affect the costs order that should be made. Firstly, the appellant failed in regard to one of the three items of fixed costs that he challenged. Secondly, the appeal books were filed late and this led to the parties being unable to identify the particular pages of the appeal books on which they relied when preparing their written submissions. In fact, even during the hearing of the argument on appeal, Mr Pulsford had difficulty in finding and identifying the particular material on which he sought, from time-to-time, to rely. Mr Young helpfully assisted the Court in this respect by quite properly drawing attention to relevant evidence without regard to the party it favoured. Delay and complications ensued which, had the appellant complied with his obligations in relation to the appeal books, would not otherwise have occurred. In all the circumstances, I propose that the respondents be ordered to pay 75 per cent of the appellant's costs of the appeal. I would not make any order affecting the costs orders made in respect of the trial.
33 I propose the following orders: