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  • Harry Chen

Occam’s Razor or the Principle of Parsimony: The Simplest Explanation Trumps the Complex

Updated: Feb 7

In Slaveski v Nanevski Developments Pty Ltd [2023] NSWCA 145, the New South Wales Court of Appeal (CoA) overturned several findings of fact made by Kunc J in Nanevski Developments Pty Ltd v Slaveski; Mega-Top Cargo Pty Ltd v Nanevski Developments Pty Ltd [2022] NSWSC 1066 and has highlighted principles to be used in making findings of fact where there are competing cases, including Occam's Razor - the parsimonious interpretation of the evidence is often the correct one.


The appellant and respondent had entered into a partnership for the development of two residential properties. The trial judgment stated that certain findings of fact were to be considered upon the dissolution of the partnership and the appellants sought primarily to challenge some of those findings of fact.


$590,000 Loan Issue


At trial, both parties accepted that the appellant had sourced $590,000 from Mega-Top Cargo Pty Ltd, a company that was wholly owned by the appellant, and this amount was advanced from the appellant to the respondent to fund a project outside of the partnership.


However, there was no written loan agreement and the characterisation of this transaction was in dispute between the parties. The respondent argued that this was a $590,000 contribution by the appellant to the partnership, and that $590,000 was subsequently loaned from the partnership to the respondent. On appeal, the respondent conceded that this meant that the respondent owed the partnership $590,000 as they had not made a similar contribution. The appellant submitted that this was a direct $590,000 loan from the appellant to the respondent that fell outside of the partnership. The primary judge had accepted the respondent’s characterisation of the loan.


The CoA held that Occam’s Razor should be applied in this case as the two competing cases are substantially the same and therefore the simpler characterisation ought to be preferred.


Occam's Razor is a philosophical principle favouring simplicity and the removal of unnecessary complexity. In fact-finding, courts have applied the principle when confronted with competing sets of facts provided by different parties and have tended to favour the simplest construction.


On appeal, the respondent conceded that there was no practical difference between the respondent’s contention and the appellant’s contention except as to the issue of interest. As the respondent’s and the primary judge’s characterisation was more complicated than the appellant’s, the CoA overturned the primary judge’s finding because there was no benefit to be gained from the additional complexity. The simpler characterisation is supported by the fact that ‘the parties weren’t talking in any language of legal sophistication’ and there was no written agreement between them so an unnecessarily complicated arrangement was not likely. The CoA also disputed the seven reasons given by the primary judge for his findings based on the evidence.


Claimed $302,500 Cash Payment Issue


The CoA also confirmed the difficulty in proving the existence of large cash payments. Both parties did not dispute the fact that Tom Nanevski, on behalf of the respondent, delivered a bank cheque for $302,500 to McGrath Real Estate as part payment of a deposit for one of the partnership’s properties. This cheque was drawn from a cheque account in the name of Mega-Top Cargo Pty Ltd, which was the appellant’s company.


However, the parties disagreed on who ultimately financed the payment. The respondent submitted that Tom Nanevski, on behalf of the respondent, had delivered $302,500 in $50 cash notes to the appellant, and so had ultimately financed the payment. The primary judge accepted this account. The appellant argued that this did not occur and the payment was financed by him through his company.


The CoA noted that ‘proving that undocumented payments of large sums of cash occurred is fraught’. They approved of Hammerschlag J’s comments in Sergei Sergienko v AXL Financial Pty Ltd [2021] NSWSC 297, who stated:


'A party asserting, and seeking to rely upon, the terms of an alleged undocumented commercial transaction said to involve the transfer of very large sums of cash, ought not to be taken by surprise when he, she or it fails to persuade the Court of its existence.'


The CoA also approved of comments by Dixon J in Briginshaw v Briginshaw (1983) 60 CLR 336, who stated ‘the inherent unlikelihood of an occurrence of a given description … must affect the answer to the question whether the issue has been proved’.


The CoA found that there was an ‘inherent unlikelihood’ in the present day of a large payment in physical cash for a commercial transaction. The CoA, in overturning the primary judge’s finding, noted that there was no evidence to suggest that such a physical cash payment occurred except for Tom Nanevski’s word and the drawing of a Jones v Dunkel (1959) 101 CLR 298 inference from the appellant’s failure to call two witnesses. On the contrary, material evidence submitted by the appellant at trial indicated that the appellant was out of the country at the time the alleged physical cash payment was made, inconsistent evidence was given by Tom Nanevski on behalf of the respondent, and the respondent was having cashflow difficulties shortly, as evidenced by the request for the loan above, before the alleged cash payment. This evidence, and the lack of corroborative evidence supporting the respondent’s claim, weighed against the finding of the cash payment being made by the respondent.


As stated by the High Court of Australia in Lee v Lee (2019) 266 CLR 129 at [55], it is incumbent on the CoA, in an appeal, 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’.


The full judgment can be found here.


If you require any advice, please get in touch with our expert appeals lawyers.


Nick Kidd SC and Charles Robinson (instructed by Valentina O’Regan of Valorum Law Group) acted for the successful appellant.



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