In Turner v Richards [2025] NSWCA 83 (1 May 2025), the New South Wales Court of Appeal wrote concerning the vexed issue of adjudicating an agreement made orally in a commercial context. The trial judge found the agreement was made. Payne JA (Leeming and Adamson JJA agreeing) wrote:
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[2] These proceedings involve a narrow question relating to several corporate entities associated with the Heartland Motor Group. Ms Joanne Richards and Ms Bernice Hooker, the first and second respondents, are sisters. The applicant is Mr Kieran Turner, who I will refer to as KT to distinguish him from his brother Anthony Turner, the fifteenth respondent, who I will refer to as AT. KT is the nephew of Ms Richards and Ms Hooker; his mother, the late Ms Kathryn Turner, was the sister of Ms Richards and Ms Hooker.
[3] The issued share capital of the holding company of the Heartland Motor Group, B.G. Webb Pty Ltd (“BG Webb”), is owned by Mr and Mrs Webb’s descendants. Ms Richards and Ms Hooker (Mr and Mrs Webb’s surviving daughters) hold the majority of the shares in BG Webb. KT, personally and through his ownership of the shares in Turnercorp Pty Ltd, owns or controls a minority of the issued shares in BG Webb.
[4] BG Webb in turn owns all the shares in the third respondent, Bernley Corporation Pty Ltd (“Bernley”). Since 28 June 2013, Bernley has owned 599 of the issued shares in the fourth respondent, Heartland Group Pty Ltd (I will refer in these reasons to this company as “Heartland Group” and to the corporate group of related entities, including Heartland Group, as “the Heartland Motor Group”). One share in Heartland Group is owned by its wholly owned subsidiary, the fifth respondent, Boyded Industries Pty Ltd (“Boyded”) as trustee for the Rossfield Group Trust (“Trust”). The remaining corporate respondents, the sixth to thirteenth respondents inclusive, are all (directly or indirectly), subsidiaries of Heartland Group.
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[6] The narrow issue in this case relates to the purported appointment of AT as a director of various Heartland Motor Group companies on 6 December 2022. That narrow issue turns on the acceptance or rejection of a single conversation in 2019, which was not recorded in any contemporaneous document, in which KT asserted that he had been validly appointed as chair of the board of directors of all of the companies in the Heartland Motor Group for so long as he retained his direct or indirect shareholding in BG Webb. Two of the participants in that alleged conversation, KT’s grandmother and KT’s mother, had died before the hearing. The primary judge was not satisfied that a conversation occurred in the terms asserted by KT.
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[9] For the reasons that follow, the appeal should be dismissed.
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Grounds of appeal
[56] The applicant’s draft notice of appeal, contained two grounds:
1 The primary judge erred in failing to find that the Appellant was the chairman at meetings of Heartland Group Pty Ltd (Heartland Group), Rossfield Nominees (ACT) Pty Ltd (Rossfield Nominees) and Boyded Industries Pty Ltd held on 6 December 2022, because a meeting had occurred in 2019 at which it was agreed that the Appellant was to be the chair of the companies in the group so long as he held shares in BG Webb Pty Ltd.
2 The primary judge erred in finding that, on the proper construction of the articles of association of Heartland Group and Rossfield Nominees, any appointment of Anthony Turner as a director expired by 31 December 2023.
[57] It was common ground that unless the applicant succeeded in relation to ground 1, ground 2 did not arise.
Ground 1 of the notice of appeal
[58] The primary judge adopted a conventional approach to fact finding in a case based on an alleged oral agreement. His Honour had regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318 –319; Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 at [41]; Varma v Varma [2010] NSWSC 786 at [424] –[425].
[59] His Honour also had regard to the fact that objective evidence, where available, is likely to be the most reliable basis for determining matters of credit that arise as to the affidavit evidence: Armagas Ltd v Mundogas SA [1985] 1 Lloyd’s Rep 1 at 57; Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789 at [10]. The primary judge noted the matters relevant to the assessment of spoken words in the context of a contractual dispute, which were identified by Hammerschlag J in John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451:
[94] Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the court which means that the court must feel an actual persuasion of its occurrence or its existence. Moreover, in the case of contract, the court must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; Helton v Allen (1940) 63 CLR 691 at 712; Rejfek v McElroy (1965) 112 CLR 517 at 521; Watson v Foxman (1995) 49 NSWLR 315 at 319.
[60] His Honour bore in mind the observations of Bell P (with whom Bathurst CJ agreed) in ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24 at [27] –[29] quoting with approval Legatt J in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC (Comm) 3560 at [22]:
…the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose — though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.
[61] There was every reason for the primary judge not to be satisfied about the reliability of KT’s evidence of an asserted 2019 agreement. I do not accept the applicant’s submission that the decision of this Court in Tjiong v Chang [2025] NSWCA 25 at [41] and [502] intended to change the method of fact-finding in cases involving alleged oral agreements. The Court in Tjiong was not describing a new legal principle. The application of Tjiong leads to no different conclusion in this case. The point made by Basten AJA in Tjiong at [41] was that in a case where there is disputed oral evidence, all the evidence must be considered together. This task, the primary judge undertook here. Price AJA in Tjiong at [502] made the point that oral testimony should not lightly be disregarded in a case where there was no cross-examination casting doubt on the evidence and where there was no question of the reliability of the evidence. Here there was cross examination of KT about his account and a significant question about the reliability of that account.
[62] No error has been shown in the conclusion of the primary judge, essentially for the reasons his Honour gave, that he was unable to reach a state of actual persuasion that the 2019 Meeting took place in the manner or substantially in the terms set out in KT’s evidence.
[63] KT’s case was essentially a simple one. Shortly put, it was that in the absence of an adverse credibility finding about KT’s evidence there was no reason not to accept his evidence about the 2019 agreement. KT stressed that the primary judge made no adverse finding about his credibility. KT emphasised that what he said was a realistic possibility, namely that the meeting could have occurred before 14 February 2019. Accordingly, it was submitted that the primary judge erred in not reaching a state of actual persuasion that the alleged 2019 oral agreement had been reached in the terms asserted by KT.
[64] I am unable to accept this submission. The primary judge made a finding of fact. Although no adverse credibility findings were made against KT or Ms Richards, the primary judge’s failure to be persuaded by KT’s evidence was affected by his Honour’s assessment of the reliability of that evidence, having seen and heard KT and Ms Richards being cross-examined.
[65] As Lord Pearce said in Onassis v Vergottis [1968] 2 Lloyd’s Rep. 403 at 431:
‘Credibility’ involves wider problems than mere ‘demeanour’ which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be… Witnesses, especially those who are emotional, who think that they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance. And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of a witness. And motive is one aspect of probability. All these problems compendiously are entailed when a Judge assesses the credibility of a witness; they are all part of one judicial process. And in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part.
[66] In Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55], Bell, Gageler, Nettle and Edelman JJ made clear that a court of appeal is bound to conduct a “real review” of the evidence given at first instance and of the judge’s reasons for judgment to determine whether the trial judge has erred in fact or law. Appellate restraint is, however, warranted in relation to a trial judge’s findings of fact unless those findings are “glaringly improbable” or “contrary to compelling inferences” if those factual findings “are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence” (emphasis added).. This principle of restraint applies to findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts.
[67] KT’s evidence was given more than five years after the date of the alleged conversation in a context of ongoing hostility and litigation between the parties. The conversation was unsupported by any contemporaneous record and was inconsistent with a number of such records. I reject the applicant’s submission that the reliability of KT’s account was not challenged before the primary judge. The principal submission on behalf of Ms Richards at the trial was that KT’s evidence about this conversation should not be accepted as reliable. The reliability of KT’s account was expressly challenged in cross-examination.
[68] The applicant submitted that there was nothing exceptional about the subject matter of the 2019 Meeting that might cause anyone to wish to record it. I do not agree. If such an agreement had been reached, it would have been a significant matter in the history of the Heartland Motor Group. While the Heartland Motor Group had a practice of the CEO of each company in the group acting as chair of the company, never before had there been a formal agreement to appoint a chair, in advance, dependent upon the CEO continuing to hold or control shares in BG Webb. There would have been every reason to have documented such a significant change.
[69] Such contemporaneous documents as there are do not support the existence of an agreement in the terms asserted by KT. The high point of the applicant’s case is what the applicant submits is “a relatively contemporaneous” email of 27 June 2019 recording KT’s understanding that he was chair of the Heartland Group of companies. While this document does contain a reference to a subjective belief on KT’s part consistent with his case, at best it is neutral. The date of the email, 27 June 2019, is months after the conversation, if it occurred, must have taken place. The document is more consistent with the primary judge’s finding that it was a reflection of a long standing informal company practice of the CEO acting as chair, rather than a result of the asserted agreement.
[70] It is true that the minutes of a directors’ meeting of BG Webb on 30 November 2022 contain the following:
(KT) opened the meeting and stated that he was the chairman, (JR) advised she would put herself up as chair for the meeting and voted in favour of her appointment. (BH) voted in favour of (JR) being appointed chair. (KT) said is the paid and appointed chairman.
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Meeting proceeded with (KT) saying he was the chair.
[71] By November 2022, relations between KT and Ms Richards had become fraught. Despite the claim by KT the “he was the chair” there is no record of his asserting that an agreement had been made with, inter alia Ms Richards, that he be appointed chair for so long as he held or controlled shares in BG Webb.
[72] There is also a recorded claim by KT of the existence of the asserted agreement on 29 May 2024, where KT is recorded as saying he was “voted Chairperson in 2018 for the duration of while he is a shareholder”. As well as referring to the wrong year, the primary judge observed that by 2024, the dispute between KT and Ms Richards was well-advanced. Further, KT participated in and signed minutes in a series of 2021 meetings of various of the Heartland Group of companies which record the separate election of KT as chairperson “of the meeting”: Boyded Industries Pty Ltd directors minutes 7 June 2021 (signed by KT on 22 June 2021); Chicago Properties Pty Ltd directors minutes 7 June 2021 (signed by KT on 22 June 2021); Heartland Blacktown Pty Ltd directors minutes 7 June 2021 (signed by KT on 22 June 2021). These company records are inconsistent with the existence of the oral agreement KT asserts was made. If such an agreement existed there would be no need separately for KT to be elected as chairperson “of the meeting”.
[73] The primary judge was entitled to find, having considered all of the evidence, that his Honour was simply not persuaded that KT had proved to his satisfaction that a conversation occurred in the terms asserted by KT. The case was decided by considering whether KT had discharged his onus of proof. No doubt if his Honour had made a credibility finding, it would have been difficult for him to sit on the potential future stages of the proceedings. His Honour was also no doubt conscious that there was a possibility that more cogent evidence might come to light in the continuation of the trial that bore upon findings his Honour might have made as to credibility or reliability of the evidence he was considering.
[74] The primary judge had the advantage of seeing and hearing KT and Ms Richards give evidence. Weight must be given to the advantage that the primary judge had in those circumstances. No error has been shown in the conclusion of the primary judge that his Honour was not satisfied of the existence of the oral agreement KT asserts was made.
[75] I would dismiss ground 1.
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(emphasis added)
The link to the full decision is here.
