testimony, or indirect inferences". Briginshaw v Briginshaw

HELD: dismissing the appeal: (1) The trial Judge's findings should not be disturbed. The appellants' case on fraud failed as it was supported only by "inexact proofs, indefinite testimony, or indirect inferences". Briginshaw v Briginshaw (1938) 60 CLR 336, Rejfek v McElroy (1965) 112 CLR 517, Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 applied. (2) While the trial Judge made some errors in his judgment, they did not vitiate his findings concerning the rate claimed by the respondent for his services. (3) The allegations of procedural unfairness failed - the trial Judge's decision to refuse the appellants leave to re-open was open to him, especially since leave was sought after judgment had been given. Smith v New South Wales Bar Association (1992) 176 CLR 256 applied.

Handley JA This is an appeal by plaintiffs from decisions of Young J of 20 May and 5 September 1996 dismissing their claims for damages for fraud and entering judgment against them for $212,540 on the defendant's cross-claim. The proceedings were commenced in 1990 and the plaintiffs went to trial on an amended statement of claim of 7 January 1992. This alleged that the defendants, Mr and Mrs Huynh, had made representations to them prior to December 1987 that the plastics factory at Nowra, operated by Trily Plastics, was profitable, generating substantial profits (para3(a)), operated 24 hours a day, 365 days a year (para6(m)), and had nett assets in excess of one million dollars (para6(f)). It further alleged that the plaintiffs, Dr and Mrs Le, or in the alternative they and their company, the third plaintiff, relied upon these representations and were induced to purchase a half share in the business for two hundred and fifty thousand dollars (paral0), and to complete that purchase in March 1998 (paral3-paral5). The representations were alleged to have been false (para22) and fraudulent (para25).

The statement of claim pleaded the making of many other representations, but most appear to have been abandoned at the trial, and those that were pressed failed. The appellants initially relied upon six fraudulent representations in this Court, but some were later abandoned.

The first defendant, Mr Huynh, filed two cross-claims, the first on 7 March 1991 against Dr and Mrs Le, and the second on 4 June 1993 against Dr Le alone. The first pleaded requests by Dr Le on behalf of his wife and himself to Mr Huynh, for consultancy services and advice in connection with plastic industry projects in Australia and Vietnam in May 1987, and services and advice provided pursuant to continuing requests in 1987, 1988, 1999 and 1990. He claimed $164,100 for these services on a quantum meruit basis.

The second cross-claim which it seems was intended to be cumulative on the first, pleaded an agreement made in or about August 1986 with Dr Le alone for Mr Huynh to provide services in respect of the establishment of businesses in Vietnam. It alleged an express term that Mr Huynh would be entitled to charge for his services at the rate of $150 an hour and be reimbursed for expenses. These in total were said to amount to $321,893 with a payment on account of $153,824 on 5 March 1988. He claimed the balance of $168,069.

Mr Huynh left Vietnam in 1976 and arrived in Australia in 1977. In 1981 he set up a factory for the manufacture of plastic bags at Bomaderry near Nowra which was operated by a company, Rossville Pty Ltd, as the trustee of the Trivu Unit Trust under the business name of Trily Plastics.

Dr & Mrs Le came to Australia in 1979 and moved to Sydney in 1983 when Mrs Le's mother, Mrs Mai, also came to Australia. She has since lived in close proximity to her daughter. The Les and the Huynhs got to know each other in 1986 after Mrs Huynh had became a patient of Dr Le. Mr Huynh used to drive his wife from Nowra to Cabramatta to see Dr Le and he met Mrs Mai on one of these occasions. The parties became friendly and had dinner in each other's homes. Dr and Mrs Le and Mr and Mrs Huynh entered into a business relationship in November in1986 when they purchased land at Wollongong.

In March 1987 Mr Huynh showed Dr and Mrs Le and Mrs Mai around his Nowra factory. On this occasion Mr Huynh told Dr Le that he could improve the business if he could move to Wollongong and install additional machines. The parties also discussed the possibility of setting up a plastic bag factory in Vietnam. In early December 1987 Mr or possibly Mr and Mrs Huynh were invited to have dinner at Mrs Mai's house with Dr and Mrs Le. It is common ground that on that occasion Mr Huynh handed a typewritten document dated 5 December 1987 to Dr Le. The first page listed assets stated to have a value of $1,216,872 divided into groups described as high density section, low density section, transport, material-in-stock, and finished products in stock. This page was in English. The second page, which was partly in English and partly in Vietnamese, contained statements of liabilities totalling $177,665 and debtors totalling $85,350.

During that meeting Dr Le added a lot of information in words and figures in his handwriting to both pages of the document, and Mr Huynh wrote the figures one million, and percentages 70/30, 50/50 and 30/50 on the first page. However each side gave almost diametrically opposed evidence about the conversations. This document as amended in handwriting was the basis of the pleaded representation that the Nowra business had nett assets in excess of $1 million. The other representations were wholly oral.

Dr and Mrs Le alleged that they purchased a half share in the Nowra business for $250,000 with four cheques totalling $96,176.60 paid to other unit holders on or about the 4" March 1988 and a fifth cheque for $153,824 paid to Mr Huynh on the 5" March. There was no dispute as to the fact of these payments or where they occurred. The four cheques were handed over by Dr and Mrs Le to Mr

Williamson in the offices of Devitt & Partners, Solicitors at Dapto, when the Les signed transfer documents. The fifth cheque was handed to Mr Huynh by Dr and Mrs Le in a coffee shop at Dapto.

However Mr Huynh claimed that the cheque for $153,824 had been a payment for his expenses incurred in connection with consulting work done for Dr Le as itemised in an informal statement written in his diary for 28 December 1987. He also claimed to have sent Dr Le a copy of this on 28 February 1988 and given him the original on 5 March immediately after receiving the cheque. Dr Le denied all this and claimed that the statement was a later fabrication.

There was however no dispute that Mr Huynh had visited Japan, Hong Kong, China and Vietnam with Dr Le to investigate business opportunities but the basis on which this and other visits occurred was in dispute.

Almost every one of the representations sued on by the Les were denied, and they denied the cross-claims. As the Judge said, "Whichever way one looks at the facts in this case as alleged by the two principal combatants, one gets into the realm of the incredulous". There is no need to rehearse all the improbable claims and explanations. The Judge said of some of the Les' claims:

"The primary representation sued on by Dr Le is that the nett value of the business into which he was buying a 50% share was $1.1 million and that there was a profit from surpluses... it is hard to credit how anyone would think that they could buy a business (sic) for $250,000 that would be producing that sort of money. The scenario presented is that a business with a nett value of $1.1 million produced an annual nett profit of $1.8 million and would produce cash in hand of $10,000 a month...".

He said that he could not rely on Dr Le as being a witness of truth in anything, that Mrs Le was not a witness of credibility, and that he could not accept the evidence of Mrs Mai. However he said that it was difficult to accept Mr Huynh as a witness of truth. The Judge had difficulties with the document of 28 December 1987 for a number of reasons including the fact that the exchange rates referred to bore no relationship to those prevailing at the time.

Mr Carson, who appeared for the Les, submitted that this document was manufactured after the event in 1990 or 1991 in an attempt to show that the payment of $153,824 had not been made for a share in the business. One of the curiosities about the document is that its amount, plus the amount of the four cheques paid to buy out other unit holders, happened to come to $250,000, the amount which Dr Le had available, but the amount of the cheques was not finally calculated until late February 1988.

The Judge also had doubts about Mr Huynh's letter of 28 February and a letter purporting to have been signed by Dr Le of 2 March that the doctor said was a forgery. Moreover he rejected Mr Huynh's claim in the second cross-claim for air fares, accommodation expenses and remuneration during his 21 day visit to Japan in May 1989 which he found had been a holiday. The Judge said that in the end he was not sure whether he could completely disbelieve Mr Huynh, but he certainly could not accept everything that he had said and that some of the documents on which he relied were "extremely suspicious".

Other parts of Mr Huynh's case were also improbable. On 5 March 1988 Dr Le, who was about to hand over the cheque for $153,824, asked Mr Huynh in the coffee shop at Dapto if he could again see the list of expenses in Mr Huynh's 1987 diary. According to Mr Huynh he had sent a list of these to Dr Le with his letter of 28 February, but he just happened to have his diary in the car and was able to show it to Dr Le. The Judge said "it does seem rather strange that if Dr

Le had been given all the information by letter of 28 February he would have asked to see the diary agreement again on 5 March".

On the other hand the Judge thought it was unlikely that Mr Huynh had spent so much time and money on overseas business trips if he did not have some agreement that he be "remunerated by Dr Le and Mrs Mai for his efforts". He found that Mr Huynh was "slightly more reliable" than Dr Le. He noted that there were "very few" documents of significance whose authenticity was beyond doubt and very few surrounding circumstances that helped.

These findings led him to hold that he was not satisfied that there was a contract to buy a 50% share in the business for $250,000, or that the representations relied upon by the Les had been made. He said:

"T think it is more likely than not that the contract was to buy an interest in the business for approximately $100,000 with the balance of the 'purchase monies' to go to Mr Huynh for past services".

Accordingly he held that there must be a verdict for the defendants on the claim. He then turned to the cross-claims and said:

"There appears to be no doubt at all that some consultancy was done by Mr Huynh for Dr Le and Mrs Mai. The rate charged by Mr Huynh for this work has not been put in dispute and indeed it was the rate which was paid by Dr Le when he paid $153,824 on 5 March 1988. There was little cross-examination of Mr Huynh's account as to what he did in the course of his consultancy work, or who he saw... There was no case in reply presented to Mr Huynh's evidence on the cross-claims.

It thus seems to me that (a) as I have accepted Mr Huynh's evidence as against Dr Le's; (b) there is no answer to Mr Huynh's cross-claim; (c) Mr Huynh was not cross-examined on the details of the cross-claim; and (d) if the details given by Mr Huynh are credible, the cross claimant is entitled to a verdict on his cross-claims".

Following delivery of this judgment, which had been reserved, Mr Carson, the solicitor for the Les who had acted as their advocate, applied to have the question of quantum on the cross-claims referred to a Master for assessment. In an interlocutory judgment on 16 July the Judge held that the issue of quantum could be reopened but only to permit further cross-examination of Mr Huynh on that issue. A further reserved judgment was delivered on 5 September and the Judge entered judgment on the cross-claim in favour of Mr Huynh for $212,540 including pre-judgment interest. He rejected a submission by Mr Brereton, then appearing for the Les, that because of his credibility problems, Mr Huynh's cross-claim should also have failed. The Judge held:

"T thought it more probable than not that Mr Huynh should be accepted even though I was very conscious of his deficiencies as a witness and that on occasions I could not accept him. Mr Brereton's further cross-examination of Mr Huynh again demonstrated Mr Huynh's unreliability in many respects. However this merely decreased his credibility rating from say 58% to 55% and did not otherwise affect the fact that on at least the cross-claim, I could accept that what Mr Huynh said was more likely than not to have been what happened".

The Judge then decided particular issues and entered judgment in favour of Mr Huynh. The only aspect of this later part of his decision that was challenged on

the appeal was the finding that $150 an hour was an appropriate rate to allow for Mr Huynh's services on a quantum meruit basis. On reaching his decision on this

issue the Judge relied on the absence of contrary evidence, the fact that bills were rendered at that rate without objection, and "there was a part payment of $153,824 on 5 March 1988".

Mr Carson, for the appellants, took the Court to Mr Huynh's account of 28 December 1987 which he submitted was the key to the case because it could not be genuine. If this were accepted it followed, in his submission, that the judgment in favour of Mr Huynh on the cross-claim could not stand. This submission was based on a number of considerations, some of which have already been referred to, including the documents in reference to "agreement", when on Mr Huynh's evidence, the basic agreement had been made earlier, the inappropriate reference to goodwill, the incorrect exchange rates (although the errors favoured the Les), the reference to the trip in March 1988 then some months in the future, and the endorsement written diagonally between parallel lines "paid 5.3.88 chq $153,824 banked" written, according to Mr Huynh, on a Saturday before the cheque was banked.

Mr Carson also relied upon the "co-incidence" that the amount of this "agreement" and the four cheques totalling $96,176.60 came to $250,000.60. It was common ground that this was the amount available to Dr Le at the time and that this was known to Mr Huynh. Mr Porter, Mr Huynh's accountant, did not work out the amount of the four cheques to be paid to the other share and unit holders being bought out by Dr and Mrs Le until late February or early March 1988. Yet, as Mr Carson emphasised, the balancing amount, almost to the dollar, was the subject of the alleged agreement of 28 December 1987 thus establishing by necessary inference that the latter was a later fabrication.

Mr Carson also relied upon inconsistencies, or alleged inconsistencies, between Mr Huynh's verified defence of 11 February 1991, the further particulars of 7 March, the verified defence of 22 June 1992 to the amended statement of claim, and the two cross-claims and between these and the "agreement" and Mr Huynh's evidence. There is some substance in these criticisms although the Judge found that the further particulars were not inconsistent with the document but were derived from it and merely more detailed. In any event the significance of these matters was essentially a question to be weighed by the trial Judge when assessing Mr Huynh's credibility. He changed his solicitors more than once and his personal responsibility for the form of these documents was never established. In my judgment arguments based on inconsistencies or alleged inconsistencies between some of these documents, or between these documents and Mr Huynh's sworn evidence at the trial, are not capable of displacing the Judge's findings based on his assessment of Mr Huynh's credibility.

Other matters in Mr Huynh's evidence were as Mr Carson contended improbable, but in my judgment singly or collectively they do not make the Judge's credit based findings "glaringly improbable", nor have those findings been shown to be inconsistent with facts "incontrovertibly established". Some of the Judge's subsidiary findings and reasons are open to challenge, but not his central findings on credit.

The Judge said at one point that he could not obtain much assistance from the documents or the surrounding circumstances. However earlier in his reasons he referred to the evidence of Mr Williamson, the solicitor, which he accepted which was inconsistent with evidence of Dr Le which he rejected. The hearing of the appeal provided an opportunity for a closer examination of the evidence about the meeting between Mr Williamson and Dr and Mrs Le early in March 1988 and the surrounding events, and these should now be examined.

The affidavit of Mr Porter, a public accountant who practised at Dapto and acted for Mr Huynh and his companies, annexed a letter to him dated 13 January 1988 from Mr Huynh's secretary which provided details of proposed share transfers to Dr and Mrs Le and Mr and Mrs Huynh. It showed a Mr Manning as one of the proposed vendors. On 5 February Mr Porter wrote to Mr Huynh enclosing a schedule showing the amounts to be paid by the various purchasers to the various vendors. Mr Manning was shown as a vendor who was to receive $14,147.94. Mr Huynh in his affidavit of 8 December 1993 (para22) said he discussed this schedule with Dr Le and this resulted in some changes which were reflected in a revised schedule prepared by Mr Porter (annexure J). This still showed Mr Manning as one of the vendors, but at a later stage his name on this schedule was struck out in ink reducing the purchase price payable by the Les by $14,147.94.

Mr Huynh claimed he sent a letter to Dr Le on 28 February (annexures L1 and L2), which purported to enclose a detailed list of monies to be paid to the vendors, and the expense breakdown for the $153,824. Dr Le denied receiving this letter and the Judge said that he had "some doubts" as to its authenticity.

Mr Williamson, a solicitor practising at Dapto, said in his affidavit that he received a copy of a schedule prepared by Mr Porter to enable him to prepare the necessary share and unit transfers and that a number of changes were made before the final list was settled. He could not be confident about the details because his file had been lost. He recalled meeting Dr Le and his wife at his office when they signed the transfers and he witnessed their signatures. According to his recollection, Dr and Mrs Le arrived with cheques already filled out and signed in favour of the vendors. The Judge accepted this evidence in preference to the evidence of the Les that the cheques were written out and signed in Mr Williamson's office. This means of course that the Les knew before the meeting who their vendors were and the amounts payable to them and must have obtained this information from Mr Huynh. On 15 March Mr Williamson wrote to Mr Porter stating:

"We advise that all the share and unit transfers have been signed as at 11 March 1988.

Cheques were paid on the basis of the written instructions from Dr Le of the 2"4 March 1998. A copy of which we enclose... ".

He enclosed a letter dated 2" March addressed to Mr Williamson which appeared to be signed by Dr Le which stated:

"This correspondence is in reference to the telephone conversation you had yesterday with Mr Van Tri Huynh.

I Le Tan Thanh and my wife Le Dinh Thi Thanh are enclosing the following cheques with amounts as following:

1/ Cheque No 736936 (number corrected in ink) $54023.76 for Mrs & Mr QUOC HUNG VU and HIM HONG VU.

2/ Cheque No 736398 (number corrected in ink) $14150.95 for Mrs NGOC CHI HOLMICK.

Before these cheques are handed over please be sure the shares and units in the Tri Vu Unit Trust been signed and transferred to my name and my wife name with you acting as witness".

Dr Le said that his signature to this letter was a forgery and that his wife received it by post some weeks later, but it was established that Dr Le handed this letter to Mr Williamson in his office. Dr Le had therefore been told by Mr Huynh the names of his vendors and the amount payable before the meeting with Mr Williamson and he and his wife had drawn the cheques and knew the numbers in advance. Mrs Le, who did their bookkeeping, admitted that the altered cheque numbers on this letter were in her handwriting.

This does not necessarily establish that Mr Huynh's letter of 28 February was genuine, but it does establish that some of the information in that letter was known to Dr Le by 2"" March before his meeting with Mr Williamson. One can only speculate why the evidence of Dr Le on these matters, which included his unsupported allegation of forgery, should be so wrong.

Although the conversation at the meeting in the coffee shop at Dapto on 5 March 1988 was in dispute, it was common ground that the meeting had occurred, and that Dr Le had handed over a cheque for $153,824 to Mr Huynh, without receiving any share or unit transfers in exchange. On Dr Le's case, this cheque was in a part payment for a share in the business, but if so, why didn't he hand over this cheque to Mr Williamson at the same time as he delivered the others, and why didn't he obtain a share or unit transfer in return? The evidence provides no answers to these questions, but the objective facts demonstrate that this payment was different from the others, and thus supports Mr Huynh's general case.

The evidence about the proposed sale by Mr Manning is not without its importance in this context. His name had been included in the schedules prepared by Mr Porter, but had been ruled through in the last version. Dr Le, in his affidavit of 14 September 1993 (para35), said that at the meeting in Mr Williamson's office, he was asked to write out a cheque in favour of Colin Robert Manning for $14,147.95. He said that some weeks later his wife gave him the letter of 2 March and returned one of the cheques (para39). In her affidavit sworn the same day, Mrs Le said (paral 9) that a number of weeks later Mr Huynh came to her beauty salon and handed her a letter and the cheque she had written out in the solicitor's office payable to Colin Robert Manning. Mr Huynh said there never was any cheque for Mr Manning, and Mr Williamson said that he received the letter of 2 March from the Les and we know he sent it to Mr Porter on 15 March.

Mr Manning's name is not mentioned in the letter of 2 March, and if Dr Le did hand over a cheque for $14,147.94 in favour of Mr Manning which he did not get back until "some weeks later" why, one may ask, did he pay Mr Huynh $153,824 on 5 March instead of $139,677 which would have exhausted the $250,000 he had available? If Dr Le and his wife had written out the cheques in Mr Williamson's office, including the cheque for Mr Manning, his cheque butts would have included a fifth butt next to the other four with the details of Mr Manning's cheque. Dr Le said that the cheques were drawn on the account of his medical service company, Thanh Van Le Pty Ltd. The proceedings were commenced in 1990 and Dr Le's affidavit referring to these cheques was sworn in September 1993, less than six years after these transactions. The cheque book of the service company for the relevant period should still have been available, but was not produced. Interestingly the Les' amended statement of claim of 7 January 1992 pleaded the delivery of four particularised cheques to the solicitor which did not include a cheque payable to Mr Manning (paral3-para15).

In these circumstances there is no reason for this Court to disturb the Judge's finding that the cheque for $153,824 was paid to Mr Huynh to reimburse him for expenses incurred in investigating business opportunities on behalf of Dr Le. If it was not paid for a share in the business, what else could it have been for?

The appellant's case of fraud pressed on appeal was based on representations that the business had nett assets in excess of $1 million, and that the business was very successful and operated 24 hours a day, 365 days a year. Representation that the business had nett assets in excess of $1 million was alleged to have been made both orally and in the typewritten document of 5 December 1987. This representation was denied by Mr Huynh and the Judge rejected it as inherently improbable for the reasons referred to, and because he did not accept Dr Le's evidence. This finding cannot be disturbed.

The claim based on the typewritten document is more plausible, but according to Mr Huynh the asset figures related not only to the existing business but also to that business if it were to be expanded along the lines being discussed by the parties at the time. The document does not unequivocally convey the representation relied upon. If the oral evidence of Mr Huynh were accepted, Dr Le knew that no such representation was being made and the probabilities favour this view. It follows that the finding by the Judge that no such representation was made must stand.

The other representation that was pressed was that the business was very successful and operated 24 hours a day 365 days a year. This was wholly oral but was not disputed by the Huynhs. Mr Huynh gave this evidence in cross-examination (228):

"Q. Mr Huynh, on many occasions during 1987 you said to Dr and Mrs Le that the business was very successful and that it operated 24 hours a day 365 days a year, that is correct, isn't it?

Mrs Huynh said in her affidavit (609), referring to her husband:

"T can recall him saying that our business was a good one and that the machines were capable of operating 24 hours a day, 7 days a week".

The appellants are therefore entitled to a finding that this representation was made. Mr Harris submitted that reliance could not be found because the Judge had rejected the Les' evidence and their evidence of reliance could not be acted on. However where a material representation has been made which is likely to induce the representee to act in a particular way, and he does so, the Court may infer reliance, even when the representee is not called as a witness. See Gould v Vaggelas (1985) 157 CLR 215, 219, 263, 250-1. Mr Harris was on firmer ground in submitting that the representation was not shown to be false.

There was evidence from Mr Huynh that the factory was operated continuously 7 days a week until April 1989 (652) and no evidence to the contrary. Mr Carson however submitted that there was evidence that the business was not a good one at that time. Mr Porter, the accountant, valued the shares and units for stamp duty purposes on the basis of the company's nett tangible assets. The balance sheet for the year ended 30 June 1986 showed nett tangible assets of $48,362.69 (493), and profits for the year of $13,903.89. Mr Huynh said that he gave a copy to Dr Le (223-4).

Mr Porter calculated the nett assets of the business as at 31 March 1988 by taking the figures in the balance sheet for the year ended 30 June 1987 and adjusting them to reflect the trading to 31 March. The balance sheet showed nett assets of $88,716.29 (627) which was adjusted to $53,855.90 (626) to reflect a loss of $34,860 during the 9 months.

The company ceased trading in April 1990 as a result of the deadlock between Dr Le and Mr Huynh. A provisional liquidator was appointed on 23 July on the application of Mr Huynh, and the company was wound up on 4 September. The liquidator's report to creditors of 7 October 1991 stated that the company had traded for some ten years in the manufacture of plastic bags under the directorship of Mr Huynh and Dr Vu. Dr Vu then sold his shares in the company and the trust to Dr Le and resigned as a director, being replaced by Dr Le. The report continued:

"Dr Le's involvement would indicate the initiation of a change in the trading activities of the company by the introduction of the purchase and resale of telecommunication cabling which was ultimately sold to Vietnamese interests in Vietnam.

With regard to the sale of telecommunication cables, Rossville Pty Ltd purchased them from companies domiciled in Melbourne at what appears to be arm's length transactions. These cables were then on-sold to a company named Sercir Pty Ltd. Sercir in turn sold these cables to Vietnamese companies domiciled in Vietnam. At the same time Rossville was selling equipment to Sercir for exportation to Vietnam. In a period of 2 years it would appear approximately $920,000 worth of sales of these types of items took place between Rossville and Sercir. According to the company's limited records it would appear Sercir owes Rossville some $104,000 out of the original $920,000 invoiced to this company. The liquidator has had no success in recovering these monies.

Sercir may have on-sold these items of equipment and telecommunication cables for a substantial profit, however this has not been proved".

The report stated that substantial payments were made by the company in 1988 and later to building contractors engaged in the construction of factory premises near Wollongong on land said to be owned by Mr Huynh, which was the land at Bellambi contracted to be sold to the Huynhs and the Les.

Mr Huynh's version of the events leading to the deadlock was that Dr Le refused to sign cheques in retaliation for Mr Huynh's refusal to sign a false document to deceive an important customer in Vietnam (484-8, 699-701). He also referred to the refusal of Sercir, said to be controlled by Dr Le and his wife, of which they were certainly directors, to pay Rossmore its debts of $104,000 for telephone cable and $73,000 for equipment (699). Mr Huynh also said that he spent too much time on Dr Le's projects and not enough time on Rossmore, and this and a substantial rise in the cost of the company's raw materials after April 1988 had contributed to the company's later difficulties (697-8).

During 1987 and early 1988 the company was certainly successful in the sense that it was operating its factory around the clock supplying plastic bags to major customers such as Woolworths and Franklins. The appellants' case on the falsity of this representation was not supported by evidence that the business was insolvent in March 1988, and Mr Porter was not cross-examined on that question. The reasons for the apparent loss of nearly $35,000 in the 9 months to 31 March were not explored in the cross-examination of Mr Huynh or Mr Porter. Had this issue been squarely raised at the trial, Mr Huynh may have been able to establish that the apparent loss was due to payments (perhaps irregular) made by the company to the contractor erecting the factory on the Bellambi land.

The company's trading with Sercir, after the Les acquired their interest, which involved a turnover of $920,000 in two years, does not suggest that the business was not a good one at the start of this period. The failure of Sercir to pay debts

totalling $177,000 would have been enough to destroy most medium sized businesses. These debts may not have been owing, but again this issue was not thoroughly explored at the trial, and Mr Huynh's evidence was not effectively challenged.

In Rejfek v McElroy (1965) 112 CLR 517 at 521 the Court said that "proof of fraud should be clear and cogent such as to induce, on a balance of probabilities, an actual persuasion of the mind as to the existence of the fraud". In Briginshaw v Briginshaw (1938) 60 CLR 336 at 362 Dixon J said that "in such matters reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences". See also Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 at 171.

The appellants, in their attempt to establish the falsity of this representation, are unable to point to anything more than "inexact proofs, indefinite testimony, or indirect inferences". In my judgment the falsity of this representation was not established and the appellants' case on fraud therefore wholly failed.

The first appellant challenges the judgment on the cross-claim in favour of Mr Huynh on procedural and substantive grounds. These include the absence of necessary findings in favour of Mr Huynh on the issues pleaded in the cross-claims, significant errors in the Judge's reasons for judgment, errors in fact finding, and procedural unfairness.

The first cross-claim filed on 7 March 1991 against Dr and Mrs Le pleaded that Mr Huynh performed services for them at their request during and after May 1987, such services being performed until 1990. These were claimed for at the rate of $150 an hour. This cross-claim sought judgment for $164,100 and did not refer to the payment of $153,824 made to Mr Huynh on 5 March 1988.

The second cross-claim filed on 4 June 1993 against Dr Le alone pleaded an express agreement made in or about August 1986 for the provision of services. Para3 alleged an express term for remuneration at the rate of $150 an hour and reimbursement of his expenses. It pleaded a claim for remuneration and expenses totalling $321,893 and gave credit for what was said to be a payment on account of $153,824 made on 5 March 1988. The actual claim was $168,069.

The Judge allowed Mr Huynh's claim against Dr Le in the amount of $109,374 which, with interest, resulted in a judgment for $212,540. He noted that the details of the cross-claim which was pressed at the trial were contained in Mr Huynh's affidavit of 20 January 1994 (646 and foll).

This affidavit does not refer to any agreement made in August 1986 as pleaded in the second cross-claim, and places Dr Le's first request in March 1987 (654). It alleges an express agreement with Dr Le for Mr Huynh to be remunerated at the rate of $150 an hour made at that time (655), and an arrangement for Mr Huynh to bill the doctor every six months or so (655). Mr Huynh said that he went overseas in May 1987 to make enquiries on behalf of Dr Le at his request (658), and that he undertook the trip to Thailand, Japan and Vietnam in April 1988 at Dr Le's request also (669).

Mr Huynh met Mrs Mai, Dr Le's mother-in-law in Vietnam, and she was present with Dr Le and sometimes with her son at most, if not all, of the business meetings held there (671-5). Mr Huynh however described the projects under consideration as "Dr Le's business projects" (675).

After the filing and service of this affidavit it was clear that Mr Huynh was not attempting to prove an express agreement with Dr Le made in August 1986 (second cross-claim), or a claim against Dr and Mrs Le, for reasonable

remuneration for services performed at their request after May 1987 where there was no express agreement as to the rate of remuneration (first cross-claim).

The claim sought to be litigated by the evidence in the affidavit was for the value of services rendered to Dr Le, at his request, after March 1987 at an agreed rate of $150 an hour. Mr Huynh's affidavit of 20 January 1994 was strictly inadmissible because it was not relevant to any issue raised in the cross-claims as pleaded. However it was read at the trial without this objection being taken. If it had been taken, the Judge would have been bound to uphold it, unless and until the pleadings were amended, but he would also have been bound to allow amendments consistent with the affidavit.

Since this objection was not taken it is clear that the parties chose to disregard the cross-claims as pleaded and fought Mr Huynh's claim against Dr Le on issues chosen at the trial. See Banque Commerciale SA en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 287, 288, 293, 303-4.

This affidavit also disposes of Mr Carson's submission that the services were performed for Mrs Le and Mrs Mai as well, and that judgment could not properly be entered on the cross-claim against Dr Le alone. One or both of these ladies were involved in some of the meetings and inspections, but Mr Huynh's claim in this affidavit was against Dr Le alone. Moreover, as the Judge said, there was little cross-examination of Mr Huynh on this affidavit either as to the work which he did, or otherwise, and there was no case in reply. It is also significant that the cheque for $153,824 on the objective evidence, and the Judge's findings, was paid in respect of services rendered by Mr Huynh. No one suggested that Mrs Mai contributed funds for this payment, and Mrs Le's role was not inconsistent with the legal liability being in her husband alone.

Mr Carson submitted, correctly, that the Judge was in error when he held that the rate of $150 an hour "was the rate which was paid by Dr Le when he paid $153,824 on 5 March 1998". That payment may have referred, as Mr Huynh claimed, to the account written in his diary for 28 December 1987, but that did not include any remuneration for himself, let alone at the rate of $150 an hour. If the payment did not relate to that account, there was no other evidence of the basis on which it was computed. The Judge made the same mistake in his later judgment of 5 September1996 (1553).

In my opinion these errors did not vitiate his Honour's judgments on this issue. The error related to one only of his reasons for accepting the rate of $150 an hour. Mr Huynh relied upon an express agreement for payment at this rate made in March 1987 (55), which was not directly challenged in cross-examination or by evidence in answer. Mr Carson relied upon evidence that Mr Huynh was remunerated by other clients by a success fee based on a percentage of the project cost and a commission on the cost of capital equipment (eg 650). However in the case of Dr Le, according to Mr Huynh he was to be remunerated at the agreed hourly rate.

In his judgment of 5 September the Judge said "... the only evidence was that bills were rendered in the sum of $150 an hour (and) there was never any quarrel with that rate". Mr Huynh gave evidence about the rendering of such bills, but Dr Le said that he did not receive them at the time and claimed in effect that these bills were a later fabrication. The Judge made no express finding that these accounts were genuine and sent at the relevant times. Without some finding to this effect he could not properly rely on these bills, and on Dr Le's acquiescence in the rate charged. Since, in broad terms, he accepted Mr Huynh's evidence and rejected that of Dr Le, this passage may indicate that he accepted Mr Huynh's

evidence on this particular issue. However in a case such as this I am not prepared to infer that the Judge made a finding based on disputed oral evidence which he did not express.

While Mr Carson has made good some of his criticisms of the Judge's primary findings on this issue, in my judgment this does not entitle us to set aside his ultimate finding that the rate claimed should be accepted. It was not unreasonable on its face, and there was evidence from Mr Huynh of an express agreement. In the absence of cross-examination directed to this issue and a case in answer that, in my judgment, was sufficient to support this finding and it should be accepted.

The remaining issue concerned alleged procedural unfairness in the conduct of the trial. In his principal judgment of 20 May 1996 the Judge found in favour of Mr Huynh on his cross-claims, and stood the proceedings over until 11 June for short minutes. On that day Mr Harris, counsel for Mr Huynh, sought judgment for $322,483, but Mr Carson sought an order referring quantum to a Master relying on an intimation by the Judge during his cross-examination of Mr Huynh that he need not pursue the issue of quantum and would be protected. The transcript contained no statement to this effect, and the Judge and Mr Harris had no recollection of it being made. The Judge directed that any further evidence in reply, and any further submissions on quantum, be filed by 21 June and stood the matter over to 16 July.

On that day the Judge received, without objection, affidavits from Mr Martin, Mr Harris's instructing solicitor, and from Miss Cheeseman who had assisted Mr Carson during the trial, directed to the procedural question. Mr Brereton of counsel, who then appeared in place of Mr Carson, also tendered an affidavit of Mr G Easton sworn 15 June, which contained evidence relevant to the quantum of the cross-claims. It was objected to by Mr Harris and sought to be read "'on the basis that it showed what evidence would be adduced if opportunity were afforded". Miss Cheeseman was also cross-examined.

His Honour delivered a further judgment on 23 July 1996. He found that no such assurance, as Mr Carson claimed, had been given although he did not question his bona fides or those of Miss Cheeseman. He held nevertheless that the court should do what it could to put the plaintiffs in the position they would have been in had no mistake been made. However he said that the plaintiffs must not be put in a better position. There was no suggestion of mistake until the fourth day of the trial. Directions had earlier been given for the filing of affidavits and none relevant to the quantum of the cross-claim had been filed on behalf of Dr Le. Accordingly the Judge refused leave to file the affidavit of Mr Easton, but allowed the cross-examination of Mr Huynh to be reopened. This took place on 2 August 1996 (290-327) and after further addresses judgment was again reserved. In his final judgment of 5 September his Honour reduced the verdict on the cross-claim from the sum of $322,483 including interest sought on behalf of Mr Huynh on 11 June to $212,540.

Mr Carson submitted that the Judge erred in rejecting the affidavit of Mr Easton and that he should have allowed Dr Le to reopen his case on the quantum issue, and to call evidence. He relied on cases dealing with the position during the trial where a party seeks leave to reopen or recall a witness. However the application to reopen in this case was not made until after judgment, and the stricter test referred to in Smith v New South Wales Bar Association (1992) 176 CLR 256 applies at this stage. At 265 the Court said:

"The power is discretionary and, although it exists up until the entry of judgment, it is one that is exercised having regard to the public interest in maintaining the finality of litigation. Thus if reasons for judgment have been given the power is only exercised if there is some matter calling for review".

In my opinion the Judge's decision to reject the affidavit of Mr Easton was well within his discretion and was not affected by any error of principle. Indeed in my judgment his decision was correct.

All grounds having failed, the appeal should be dismissed with costs.

Beazley JA I agree with Handley JA. Stein JA I agree with Handley JA.

Solicitors for the appellant: Blake Dawson Waldron Counsel for the respondent: C M Harris

Solicitors for the respondent: Maclarens Merrylands