[1973] HCA 59
Agricultural and Rural Finance Pty Ltd v Gardiner 238 CLR 570
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Catchwords
[1973] HCA 59
Agricultural and Rural Finance Pty Ltd v Gardiner 238 CLR 570
Judgment (9 paragraphs)
[1]
Judgment
This is an appeal from the Local Court pursuant to s 39 of the Local Court Act 2007 (NSW).
The appeal is of narrow compass and the amount involved is small ($16,000).
The plaintiff, as the appellant, seeks to challenge a finding of the learned Magistrate, Jacqueline Milledge, that the first defendant was not a party to a loan agreement with the plaintiff and was therefore not liable to repay the sums said to have been loaned by the plaintiff.
The three defendants to the Amended Summons were all defendants in the Local Court, albeit no orders are sought against the second and third defendants.
There was no appearance by the other defendants in the Local Court (and judgment was entered against them) and there is no appearance by those same defendants in these proceedings.
[2]
Background facts
In 2019 the plaintiff retained the second defendant, the building company, to undertake carpentry work on his property at Brookvale. The third defendant, Mr McGuinness Snr, was the principal/director/shareholder of the company. The first defendant, his son Mr McGuinness Jnr, performed some work on the property as a subcontractor. He was not a director or shareholder of the building company. He was still an apprentice.
In this judgment I will refer to the building company as "the company", Mr McGuinness Snr as "Mr McGuinness" and Mr McGuinness Jnr as "the defendant" as he is the only defendant participating in the proceedings.
The plaintiff says that during the period when the defendants (he describes them together) were supposed to be performing work on his property, issues arose as to the payments made by him for the services, the performance of the work and indeed the ability of the defendants to continue to perform the work.
He says that he agreed to loan the defendants (jointly and severally) two amounts (being $10,000 and $6,000) which they were required to repay to him. They did not and thus he pursued proceedings in the Local Court against each of them seeking recovery of the loan amounts.
There were two aspects to the plaintiff's claim in the Local Court being:
1. He sought payment of the sum of $2,734.83 from the company which in some way related to the work performed by the company on his property; and
2. As set out in paras 14 to 18 of the Amended Statement of Claim, he pleaded that he entered into loan agreements with all three defendants, on two occasions being in July 2019 for an amount of $10,000 and in August 2019 for an amount of $6,000 and sought judgment against all of the defendants for those amounts.
The issue in these proceedings relates only to paras 14 to 18 of the Amended Statement of Claim. The contest is only between the plaintiff and the defendant. Unlike the other parties, the defendant filed a defence in the Local Court in which he denied paras 14 to 18.
The matter was heard in the Local Court on 23 August 2021. Orders were made entering a judgment for the plaintiff against the company and Mr McGuinness in the sum of $16,000 (representing the loan amounts). In addition, her Honour ordered the company to pay the sum of $2,734.83 (being the amount related to the work that was performed).
Judgment was entered for the defendant against the plaintiff. The plaintiff was ordered to pay the defendant's costs and the company and Mr McGuinness were ordered to pay the plaintiff's costs.
There was some confusion about the terms of the judgment as her Honour had purported to correct the original judgment but that is not relevant for the purposes of this appeal.
As will be apparent from the terms of the judgment, the plaintiff obtained the orders that he sought against the company and Mr McGuinness but did not obtain a judgment against the defendant.
The reason that the plaintiff did not obtain a judgment against the defendant is that her Honour did not accept that the loan amounts had been loaned to the defendant. In other words, although she accepted that the amounts paid were loans rather than payments for work performed or due to be performed, her Honour did not accept that the defendant was a party to the loan agreements.
Although the amount involved is small and although neither the company nor Mr McGuinness defended the action against them, I can only assume that the judgment sum has not been paid as the plaintiff comes to this Court challenging the judgment in favour of the defendant.
[3]
The nature of the appeal
The present appeal is an appeal by way of rehearing. [1] As set out in s 39 of the Local Court Act, an appeal lies only on a question of law. Counsel for the plaintiff, suggested that the question of law was the failure of the learned Magistrate to draw an inference that the defendant was a party to the loan agreements. It is not necessary to further consider the question of the difference between a question of law and fact, as the defendant accepts that the issue raised by the plaintiff is a question of law.
[4]
The issue for determination
Both parties informed me that there is no new dispute that:
1. The payments were made in July 2019 and August 2019 by the plaintiff by way of loans;
2. There would be an implied term that the loan amounts would be repaid within a reasonable time; and
3. If the plaintiff succeeds in this appeal, the plaintiff would be entitled to judgment against the defendant in the sum of $16,000.
The learned Magistrate accepted that the loan amounts were lent to the company and Mr McGuinness but did not accept that the defendant was a party to any loan agreements. Her Honour was satisfied that the defendant was not a principal of the company and was not in a position where he could engage with the plaintiff in some formal process. He had not even finished his apprenticeship. He simply went to the property to perform work.
There was no writing governing the loan agreements but rather the agreements were partly oral and partly implied. The conversations were between Mr McGuinness and the plaintiff. Although her Honour accepted that the defendant was present during these conversations, he was silent.
[5]
The plaintiff's case on appeal
For the purposes of this appeal (which relates only to whether the defendant was a party to the loan agreements and not whether the money was loaned at all or whether Mr McGuinness was obliged to repay the money), the plaintiff points to a number of matters as supporting his contention that the learned Magistrate erred as follows:
1. Firstly, the plaintiff points to his conversations with Mr McGuinness. He acknowledges that the defendant did not actually say anything during those conversations but, on the plaintiff's case, the reference to "you" and "we" should be taken to be a reference to both Mr McGuinness and the defendant. I assume the plaintiff contends that Mr McGuinness was speaking on behalf of all of the company, himself and the defendant.
2. Secondly, he points to his own diary entries as confirming the payments. There is an entry for Friday 19 July 2019 in his diary with the words "koala $10k". Koala was his nickname for Mr McGuinness. There is a further entry in his diary for 10 August 2019 "Brown Tongue $6k today". Brown Tongue was his nickname for the defendant.
3. Thirdly, he points to text messages sent by him to the defendant on 30 August 2019 and 30 October 2019. In particular, he refers to his own text message to the defendant referring to lending money to "you guys in advance" and having "to chase you guys to finish".
4. Fourthly, the plaintiff submits that at least the second amount ($6,000) was paid directly to the defendant, that is, $6,000 in cash was handed to and received by the defendant.
5. Fifthly, he points to the defendant's bank account statements of July and August 2019 which disclose deposits of $1,000 on 21 July 2019 and $2,500 on 11 August 2019. The plaintiff submits that these deposits must be reflective of receipt by the defendant of the loan moneys.
The plaintiff submits that these matters establish that the defendant was a party to the loan agreements and remains liable to repay the loan amounts.
[6]
The defendant's position
The defendant adopts the findings of the learned Magistrate, submitting that there is no evidence that the defendant was a party to any agreement or even that he received any money.
[7]
Consideration
It is somewhat curious that the plaintiff identifies only two of a number of payments made by him over the period as loans. It is similarly curious that, although the loans were said to be for Mr McGuinness' and the defendant's personal use, the plaintiff maintains and the learned Magistrate accepted that the money was lent to the company as well as Mr McGuinness.
The agreement to loan arose out of two conversations between the plaintiff and Mr McGuinness. On both occasions the defendant was standing next to the two other men but he remained silent.
In his affidavit of 2 March 2021, the plaintiff set out the background to the contract with the company (that is, for the company to perform work) and the quotes and exchanges regarding payment.
After referring to a number of conversations relating to payment for work done, the plaintiff refers at para 57 to what he describes as the first loan conversation as follows:
"[Mr McGuinness]: Time to go to the vault to get more money. You need to get us another $10,000.
Me: I've been keeping tabs on the figures and we're up to date now so you shouldn't really be asking me for any more money unless you've made more progress. Plus, I'm still waiting for you to give me the figures for that additional work.
[Mr McGuinness]: I will get you the figures.
Me: I don't think we're there on the works yet, but I'll give you the money as an advance loan and we can sort it out later. Worse comes to worse you can work off the money you owe by doing those additional works."
At para 64 of his affidavit he refers to the second loan conversation as follows:
"[Mr McGuinness]: Can you get us another $10,000?
Me: You're not getting another $10,000. I've given you money before and you're still not there on the progress and you still haven't given me any figures on what you think I owe you.
[Mr McGuinness]: Would you do $6,000 then? We really need the money. We haven't been able to pay the rent.
Me: Surely, there's other people you can get the money from?
[Mr McGuinness]: There's no one else I can rely on. I wouldn't ask if we really didn't need it.
Me: Ok, I'll give you another $6,000. Same arrangement as last time and we can figure out how you get it back to me or work it off."
He went on to say that when Mr McGuinness and the defendant were at the property providing the services, he handed Mr McGuinness $10,000 in cash in an envelope. He says he did this in direct response to the first loan conversation on the basis of his understanding that he was lending the money to both Mr McGuinness senior and the defendant.
Of course, evidence of the plaintiff's belief is not admissible or relevant in these circumstances.
There is no statement, admission or even response to text messages or emails from the defendant which would tend to suggest that he had received any moneys by way of a loan from the plaintiff. Indeed, the evidence (his oral evidence) is to the contrary.
Remaining silent whilst other people are talking is not, in these circumstances, an admission or confirmation of a contractual arrangement. Similarly, declining to respond to self-serving text messages does not constitute agreement to that which was said.
The plaintiff also observed that, although her Honour did not accept that the money had been loaned to the defendant, she found his evidence lacking in credibility and did not accept parts of it. That may be so but rejection of part of a witnesses' evidence does not prove the opposite of that which the witness asserts. Her Honour plainly found the defendant lacking in credibility but it is also quite clear that she did not accept the plaintiff's case against him.
In my view, there are a number of problems with the plaintiff's case as against the defendant as follows:
1. Firstly, although the plaintiff wished to characterise these loans as being unrelated to the work being performed by the company at his property, it is difficult to accept that the plaintiff simply decided to lend these two men money for their personal use (and seemingly the company for its personal use) without believing that in some way it would assist in the defendants completing the work on the property.
2. Secondly, the conversations constituting the agreements were between the plaintiff and Mr McGuinness. True it is that the defendant was standing next to them and there is reference to "we", "you" and "us" but there is considerable uncertainty as to who was being referred to when the plural was used. The defendant was not a director of the company. He was an apprentice being paid to do work by the company. I doubt that his silence, without more, during conversations between the plaintiff and Mr McGuinness, leads to the conclusion that he was entering into an agreement with the plaintiff to receive from and repay money to the plaintiff.
3. Thirdly, although the plaintiff originally submitted that the defendant had personally received both the initial $10,000 and the subsequent $6,000, it is clear from the plaintiff's own diary that he paid the $10,000 to Mr McGuinness. Further, although the defendant accepted in cross-examination that he had physically received the $6,000, he said that he had handed it straight over to his father. Indeed, his father said the same thing in his evidence. It was not put to the defendant or Mr McGuinness that this did not occur.
4. Fourthly, the plaintiff's point about deposits of lesser amounts into the defendant's bank account is somewhat ambitious. The defendant was working at the time. I do not accept that evidence of deposits made by the defendant in the days following each loan is evidence of him receiving the money from the plaintiff absent any admission or other proof to that effect. It would be somewhat strange if a person could prove that someone was a party to a contract by pointing to a bank statement and suggesting that the person was making deposits into his own bank account around the time that the loans were made.
Finally, the plaintiff's reliance on post-contractual conduct (by him) is misplaced. Generally, post-contractual conduct cannot be used as an aid to the construction of a contract or its terms. [2] However, post-contractual conduct may be admissible on the question of whether a contract was, in fact, formed, and thus may assist the court in identifying whether a particular person is a party to that contract. [3] In County Securities Pty Ltd v Challenger Group Holdings Pty Ltd & Anor, [4] McColl JA stated:
"… The present state of the law throughout Australia on whether, and if so when, it is possible to use post-contractual conduct as an aid to construction of the contract is not yet settled, the view, favoured in this Court, being that subsequent communications cannot be looked to as an aid to construction of a contract, but can be looked to as an aid to deciding whether a contract has been entered into: Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154; (2007) Aust Contract R ¶90-263 (at [59]) per Campbell JA (Beazley JA agreeing); Sagacious Procurement Pty Ltd v Symbion Health Ltd (formerly Mayne Group Ltd) [2008] NSWCA 149 (at [99] ff) per Giles JA (Hodgson and Campbell JJA agreeing).
However it is permissible to have regard to the conduct of parties, even subsequent conduct, as constituting an admission of the state of the parties' rights: see Pitcher v Langford (1991) 23 NSWLR 142 (at 160); Grey v Australian Motorists & General Insurance Co Pty Ltd [1976] 1 NSWLR 669 (at 684-685); Jones v Sutherland Shire Council [1979] 2 NSWLR 206 (at 231); Eslea Holdings Ltd v Butts (1986) 6 NSWLR 175 (at 188E), although care must be taken about identifying the fact said to have been admitted: Sagacious (at [106])."
The post-contractual conduct in this matter consists of the plaintiff sending text messages to the defendant (as well as inconsistent emails to Mr McGuinness) and the defendant not responding. He said in oral evidence that he did not respond because they (meaning the reference to the loans) had nothing to do with him.
Even if post-contractual conduct can be looked at as an aid to determining whether a contract has been entered into (that is, between the plaintiff and the defendant), statements made by one party (in text messages well after the event) to the effect that he loaned the other person money (without response from the other person) could hardly be given any real weight. The idea that a person could prove that another person is a party to a contract by saying some time later that the other person owed him money (without any acknowledgment or admission from the other person) seems somewhat absurd. There is no claim in estoppel.
[8]
Conclusion
The plaintiff has not established error on the part of the learned Magistrate. The evidence is insufficient to establish that the defendant was a party to either of the loans.
Indeed, the evidence rather points in the other direction. No words were spoken by the defendant at any time during the two conversations between the plaintiff and Mr McGuinness which would suggest that he was entering into any agreement with the plaintiff to receive from and subsequently repay moneys to the plaintiff.
Although the payments were accepted by her Honour to be loans (perhaps because there was really no opposition from the company and Mr McGuinness), the defendant denied that he had any contractual obligation to repay any money to the plaintiff. He made no concession in oral evidence which would assist the plaintiff and the plaintiff cannot point to any words or conduct by him which would support his proposition that he agreed to enter into agreement with the plaintiff on one or both of the occasions on which money was lent. Declining to respond to post-contractual assertions by a person would not generally be evidence of an agreement.
In the circumstances, the amended summons is dismissed. The orders I make are as follows:
1. The amended summons is dismissed against each of the defendants.
2. The plaintiff is to pay the first defendant's costs.
As the other defendants did not appear and no orders were sought against them, I make no order for costs in respect of the second and third defendants.
[9]
Endnotes
Supreme Court Act 1970 (NSW), s 75A(5).
Agricultural and Rural Finance Pty Ltd v Gardiner 238 CLR 570 at [45] (Gummow, Hayne and Kiefel JJ); [2008] HCA 57; Whitworth Street Estates Ltd v Miller [1970] AC 583 at 603 (Lord Reid), repeated in Administration of Papua and New Guinea v Daera Guba (1973) 130 CLR 353 at 446 (Gibbs J); [1973] HCA 59.
Tomko v Palasty [2007] NSWCA 258 at [68] (Mason P).
[2008] NSWCA 193 at [161]-[162] (Beazley JA agreeing).
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Decision last updated: 29 March 2022