Guijar v ANZ Banking Group

Grounds of appeal 4Mr Guijar appeals the whole of the decision of his Honour Magistrate Maloney dated 30 September 2009 on the following grounds. Firstly, that the Magistrate erred in law in holding that the date of the transaction was not a matter at issue, or alternatively was not a matter of significance, in the proceedings. 5Secondly, the Magistrate failed to determine: (i) whether moneys advanced to the appellant were advanced pursuant to an oral agreement between the plaintiff and Mr Faletoese (Toese) Faapito an employee of the defendant; and, if so, (ii) the terms of that agreement. 6Thirdly, the Magistrate erred in law in determining that the plaintiff was mistaken in concluding that the conversation he had with a Ms Kainz, an employee of the defendant, amounted to an oral contract because the plaintiff's pleaded case was that an oral contract came into existence through a conversation with Mr Faapito. 7Fourthly, in making that determination the Magistrate directed his mind to the wrong question and erred in law. 8Fifthly, the Magistrate further erred in law in failing to give any reasons or sufficient reasons for his decision as to the existence of an oral contract. 9Sixthly, the Magistrate further erred in law in failing to determine at all the plaintiff's claims under the Fair Trading Act 1987, the Trade Practices Act 1974 (Cth) the agreement pleaded in paragraphs 27 to 30 of the amended statement of claim. 10Essentially Mr Guijar asserted that the Magistrate made two errors of law, they being that his Honour determined a case that he had not run and failed to determine the case that he had run.

What is a question of law? 11Section 39 of the Local Court Act 2007 provides that a party who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law. 12Section 40 of the Local Court Act provides that the onus lies with the plaintiff to demonstrate that there has been an error of law or that leave should be granted on a mixed question of law and fact. 13Section 41 of the Local Court Act provides that this Court may determine an appeal either (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal.

Local Court proceedings 14The proceedings were originally commenced in the Equity Division of the Supreme Court. On 18 December 2008, Associate Justice McLaughlin, pursuant to s 146(1) of the Civil Procedure Act 2005, ordered that the proceedings be transferred to the Local Court at the Downing Centre. 15The Magistrate in his reasons for decision dated 30 September 2009 stated that there were two questions to be determined. His Honour stated at [10]: "10 There are two questions to be answered: -

1. Was there an original oral agreement between the plaintiff and the defendant and
2. Was the plaintiff induced by a false or misleading representation made without reasonable grounds to enter into the written agreement as evidenced by a letter dated 5 March 2004, herein referred to as 'the March 2004 offer'?" 16It should be noted that these two questions do not include an issue that was pleaded namely whether there was an agreement dated 21 April 2005 between the parties. 17By amended statement of claim filed 26 October 2007, Mr Guijar sought damages in the sum of $33,509.96 arising from a breach of a loan agreement he alleged he had with ANZ. Mr Guijar pleaded two oral agreements, one on 3 February 2004 ("the February agreement") and the other on 21 April 2005 ("the April agreement"). The original agreement referred to by the Magistrate at [10] (1) is that which is said to have occurred on 3 February 2004.

(i) Whether the Magistrate erred in holding that the date of the transaction was not a matter in issue or of significance in the proceedings 18Counsel for Mr Guijar submitted that in determining what constituted the contract between the parties, it was necessary for the Local Court to determine the date of settlement of the purchase of the Mountain Street property because, if funds were advanced and settlement occurred on 3 March as asserted by Mr Guijar, the written contract dated 5 March 2004 relied upon by ANZ, was not the contract between the parties and ANZ was not entitled to rely upon it to hold Mr Guijar's funds as security for interest payments. This submission is a challenge to a factual finding. 19ANZ asserted that settlement did not occur on 3 March 2004, but rather on 5 March 2004 and that the paperwork was in place prior to settlement. The significance of the differing sequence of events and dates is that under the agreement as articulated by Mr Guijar, the Euros which he was to receive were to be applied in reduction of his principal debt to the Bank whereas under the written documentation relied upon by ANZ, the Euros were to be applied as security for Mr Guijar's interest obligations to ANZ. 20On ANZ's version of events the written documentation came into existence proper to the advance of funds by ANZ and after the date of settlement of the purchase of the Mountain Street property. 21The Magistrate made a clear finding that the date of settlement "did occur on 5 March 2004." (J [30]). This ground of appeal fails.

(ii) Whether the Magistrate erred in that he failed to determine whether moneys advanced to Mr Guijar were advanced pursuant to an oral agreement between him and Mr Faapito Toese for ANZ and if so the terms of that agreement 22Counsel for Mr Guijar submitted that a court is charged with hearing the matter before it and it is obliged to determine the matter argued. Failure to do so is an error of law not of fact: see Attorney General of NSW v X (2000) 49 NSWLR 653 at 661 and Craig v South Australia (1994) 184 CLR 163 at 177. 23Mr Guijar pleaded that he entered into an oral contract with ANZ in discussions with Mr Faapito. (ASC [7]). The pleading was reflected in the case run both in evidence and in submissions. It was further submitted by counsel for Mr Guijar that the Magistrate determined a different question - whether the conversation Mr Guijar had with Ms Hope Kainz amounted to an oral contract and therefore the Magistrate failed to determine the case before him and fell into error.

The pleading framework in relation to the 3 February 2004 agreement 24In paragraphs [7] to [9] of the amended statement of claim Mr Guijar pleaded that on about 3 February 2004, he and ANZ agreed that ANZ would advance to him the sum of $485,000 ("the principal sum") to complete the purchase of the office unit and car space in consideration of Mr Guijar agreeing to pay bank fees and interest. Mr Guijar alleged that the contract was an oral one and that the parties to the conversation were Mr Guijar and ANZ's employee or agent, Mr Toese Faapito. 25Mr Guijar further pleaded that it was a term of the oral loan contract that when certain funds that were soon to be available to him, being a sum of 75,000 euros, were available, he could apply those funds in reduction of the sum of $485,000. Alternatively, Mr Guijar alleged that ANZ represented to him prior to entering into the oral loan contract, that when the funds were available, he could apply those funds in reduction of the sum of $485,000. 26It was common ground that after advance of the funds and settlement of the purchase of the Mountain Street property, the 75,000 Euros were received by ANZ and from those moneys $A51,000 was deducted by ANZ and placed in an account to be held as security for interest on Mr Guijar's loan. 27There are two versions of what occurred when Mr Guijar approached ANZ in February 2004. 28Mr Guijar's version of the conversation that he says formed this oral agreement is as follows. On or about 3 February 2004, he saw Mr Faapito (the business manager) at the SME-Banking Fairfield Business Centre of ANZ, where words to the following effect were exchanged: Mr Guijar: "I need a loan of $485,000 to finance the purchase of a commercial property in Mountain Street, Broadway. I am buying it for $485,000 plus GST. Settlement is due on the 17 th February, 2004. There is plenty of equity in 128 King Street, Newtown to cover the loan. I expect to be able to let Mountain Street out for $500 or $600 per week." Mr Faapito: "Let's go through the figures." 29Mr Guijar says that Mr Faapito asked him various questions about his properties and loans which he answered. According to Mr Guijar then words (to the following effect) were exchanged: Mr Faapito: "I can't give you the same sort of loan as before." Mr Guijar: "Why?" Mr Faapito: "Because you can't afford to repay." Mr Guijar" "But I have about $100,000 coming from Spain. I want to put that in the loan." Mr Faapito: "No. I'll give you a six month loan and you will have to sell off the Pitt Street properties." Mr Guijar: "Alright. When the money comes in I'll pay the $100,000 off this loan." 30Mr Faapito produced a price of paper and handed it to Mr Guijar and said, "Sign this paper here." Mr Faapito indicated a place on the paper and Mr Guijar said, "What is this?" Mr Faapito said, "It is for the loan." Mr Guijar gave evidence in the Local Court that the last page of the document behind Tab 3 of Mr Hancock's Exhibit 1 looks like that piece of paper, except that the paper he signed did not have his name printed on it. (Aff, A Guijar sworn 26/07/07 - AB 117). The Hancock document is dated 5 March 2004 (not 3 February 2004) and it is a record of investment of a term deposit in the sum of $51,000 in the name of Mr Guijar. 31Mr Guijar deposed (Aff, 10/11/06 -AB 1225) that he saw Mr Faapito who prepared loan documentation for the requested loan of $485,000. As he understood it Mr Faapito would issue him with a fresh loan offer for a loan of $317,000 being the remaining balance of the previously obtained loan. The same loan offer document referred to a sum of $485,000. However it was for terms of six months interest only, at which time it would have to be repaid in full or refinanced. Mr Guijar deposed that this was not what he had required Mr Faapito to do at the time and that he had quite clearly requested that he get the loan of $485,000 on the same terms and condition as the previous loan, ie. principle and interest payments structured over a repayment period of 15, 20 of 25 years. Mr Guijar says that it was quite obvious that Mr Faapito did not adhere to his request and that he did not explain the consequences of the loan and at no time requested him to seek independent legal advice before signing any offer of loan. 32Mr Faapito's evidence (Aff 22.05.09) is that he has no record of a meeting with Mr Guijar on 3 February 2004. Nor could Mr Faapito recall if he met Mr Guijar on 4 February 2004. 33On 3 March 2004, before formal paperwork had been completed, moneys were advanced to Mr Guijar so to enable him to complete the purchase of the Mountain Street property on that same date. On 5 March 2004, ANZ issued a letter of offer to Mr Guijar. One facility was for the sum of $317,000. The other facility was for a six month loan of the sum of $485,000. The last page of that document reveals that Mr Guijar "accepted ANZ's offer". Mr Guijar's signature appears and it is dated 5 March 2004. Thus there was a written agreement between the parties dated 5 March 2004. The written documentation does not refer to the foreshadowed payment of 70,000 Euros. Nor does it refer to the appropriation of that sum to a specific bank account. 34The Magistrate assessed Mr Guijar's credibility by making a finding that he was vague and circuitous and of questionable reliability. So far as the purported oral agreement in February 2004 is concerned the Magistrate stated at [11], [12], [26], [37], [38] and [39]: "11. In respect to the first question the plaintiff states that in or about February 2004 he went to see the assistant manager of the Liverpool retail branch of the ANZ Bank for the purpose of applying for a loan. On this occasion he spoke to a Ms Hope Kainz. The purpose of him requesting this loan was to finance the purchase of property at 88 Mountain Street Ultimo (The Ultimo property). 12. The plaintiff was later referred to Mr Toese Faapito. The plaintiff was already a customer of the bank. The bank had provided various loan facilities to him between 1984 and 2005. He requested Mr Faapito to advance him the sum of $485,000.00 on the same terms and conditions of a loan that he had obtained in September 2003. He wanted a principal and interest loan structured over a period of 15, 20 or 25 years, as he expressed to Ms Kainz. ... 26. It is interesting to note that he entered into the purchase of the Ultimo property on the 27 July 2002 a fact not made known to the defendant in or about August-October 2003. Following the plaintiff receiving a notice to complete the Ultimo premises that was dated 27 January 2004 the plaintiff attended upon Ms Hope Kainz at the Liverpool branch of the ANZ Bank on 4 February 2004 where a file note evidences that Ms Hope Kainz understood the plaintiff's intentions to be as she records them:- 'Mr Guijar is looking for a 3 to 6 months terms bridging and the security he is offering is part equity of his commercial property in Newtown. He has a property in Melbourne he is about to sell to help clear this bridging loan. He is expecting $180,000.00 for its sale and he is being offered $160,000.00. He is also expecting overseas remittance of about $120,000.00 from the sale of his property in Spain. His other option to clear his bridging loan is the sale of his two shops in Pitt Street Sydney. He has an offer of $370,000.00 and waiting for the real estate agent to return from holidays. Mr Guijar would also like to find out what happens if he will not be able to clear a $185,000.00 from his bridging loan will he be able to make a mortgage loan for a 30 year period.' ... 35Critically at [37]: 37. Notwithstanding what Mr Guijar thought was an understanding he had with Ms Hope Kainz or indeed Mr Faapito on receipt of Ms Kainz's memo and record of initial conversation with Mr Guijar, it was open for the defendant to receive an offer from Mr Guijar as to terms of any mortgage or loan agreement, for the bank to consider the same and its own position then offer Mr Guijar terms the bank considered to be in its best interest. This occurs in the ordinary course of commerce between banks and their customers. ..." 36Most of Mr Guijar's conversations with ANZ were with Ms Kainz. The Magistrate made a finding that notwithstanding what Mr Guijar thought was an understanding with Ms Hope Kainz or indeed with Mr Faapito, it did not amount to an oral agreement. The conversations with Mr Guijar only amounted to him making an offer to ANZ. Counsel for ANZ highlighted Mr Guijar's reference that he requested Mr Faapito to get a loan of $485,000 and Mr Faapito did not adhere to this request. I agree that there is an internal conflict in Mr Guijar's own evidence. On the latter version, if Mr Faapito did not adhere to the request that cannot constitute an oral agreement between the parties. In my view the Magistrate did consider whether the communications Mr Guijar had with Mr Faapito constituted an agreement. The Magistrate decided that it did not. There is no error of law.

(iv) Did the Magistrate err in law in determining that Mr Guijar was mistaken in concluding that the conversation he had with Ms Kainz amounted to an oral contract 37Mr Guijar did not plead that the oral conversations with Ms Kainz created an oral agreement. However, the Magistrate considered this issue. The Magistrate considered the evidence of Ms Kainz and Mr Guijar. Ms Kainz's written file note referred to Mr Guijar's expectation that he was expecting a remittance of about $120,000 from Spain. At that time he was also expecting to sell a property for $180,000. According to Ms Kainz's file note, the focus of Mr Guijar conversation with her was to find out what would happen if he was not able to clear his bridging loan and would he still take out a mortgage loan for 30 years. The Magistrate decided that notwithstanding what Mr Guijar thought, the oral conversations did not amount to an agreement. His Honour reaffirmed this view at [42] where he stated that Mr Guijar was "grossly mistaken in concluding that the conversation he had with Ms Kainz amounted to an oral contract". The Magistrate was entitled to come to this conclusion from the evidence, particularly as he made a finding that Mr Guijar's evidence was unreliable. There is no error in the Magistrate's approach. There is no error of law.

(v) Whether the Magistrate erred in failing to determine Mr Guijar's claims under the Fair Trading Act and the Trade Practices Act 38Mr Guijar made a claim pursuant to the Fair Trading Act and the Trade Practices Act in relation to representations made in March 2004. Counsel for Mr Guijar submitted that the Magistrate did not consider or determine this issue. 39Counsel for ANZ submitted that there was an adequate discharge of the Magistrate's obligation to give reasons. In the alternative, Counsel for ANZ submitted that the Magistrate failed to address the issue, as alleged by Mr Guijar, there is no question of law unless the failure to give reasons can be inferred to be deliberate.

The pleading framework 40At [15] to [20] of the amended statement of claim, Mr Guijar pleaded as follows: "15. On or about 8 March 2004 the Bank represented to the Plaintiff that the March 2004 Offer was in the best interests of the Plaintiff. [the representation] Particulars (i) Conversations between the Plaintiff and Mr Tooese[sic] Faapito. 16. The presentation pleaded in paragraph 15 was a representation in trade or commerce and was deceptive and misleading or likely to deceive or mislead. In so far as the said representation was a representation as to a future matter, the Bank had no reasonable grounds for making the representation. Particulars (i) The proposal embodied in March 2004 Offer were not in the best interest of the Plaintiff. 17. By reason of the security taken by the Bank referred to in paragraph 10(ii) above and other securities held by the Bank of property owned by the Plaintiff, the Plaintiff was aware, or alternatively believed, that if the March 2004 Offer was not accepted by the Plaintiff, the Bank had the power to sell any properties of the Plaintiff held by the Bank as security. 18. In reliance on the matters pleaded in paragraph 15, and by reason of the Plaintiff's knowledge or belief pleaded in paragraph 17, on or about 8 March 2004 the Plaintiff accepted the March 2004 Offer. 19. In consequence of accepting the March 2004 Offer the Plaintiff, on 31 May 2004, exchanged contracts for the sale of the Shops. Particulars (i) The contracts were in writing; (ii) The purchaser in the case of each shop was Shop 8B: Corner Lot Holdings Pty. Ltd; Shop 8C: Li Mei-kin Rees and Phillip Noah Reed; (iii) The purchase price was $430,000 for each shop. 20. The sale of the Shops was commercially disadvantageous to the Plaintiff." 41Paragraphs 21 to 25, which related to an "October agreement" were not pressed. 42Mr Guijar's affidavit evidence (dated 26 July 2007) is as follows: On 2 March 2004, Mr Faapito said words to the effect, "I can't settle today. It will have to be tomorrow. The bank will pay the day's interest you incur, and the loan won't start until the 5 th March, 2004." On the 3 March 2004, ANZ lent the sum of $485,000 to him, when on that day, it paid that sum on the settlement of his purchase of Suite M5 and Carspace 15 in the Mountain Commercial Suites, Mount Street, Broadway. On 8 March 2004, Mr Guijar checked his account for his Spanish money. He saw that instead of the sum $100,000 odd being in his account, $51,000 had been deducted. He immediately went into the Liverpool branch of the bank and saw Ms Kainz. Who said words to the effect, "I don't know what happened. You'll have to call Toese." She offered Mr Guijar the phone and he telephone Mr Faapito. They exchanged words to the following effect. Mr Guijar said, "What happened to my money?" Mr Faapito said, "We are holding it in case you can't repay the interest." He says that no mention was made of a term deposit. Afterwards Mr Guijar says that he received an investment record of a term deposit by post. Other than monthly figures for the term deposit, Mr Guijar says that he was never given any other document for the term deposit. 43Mr Guijar says that when he received the investment record of the term deposit, he telephone Mr Faapito. Words to the following effect were exchanged. Mr Guijar said, "Why did you put this one in a term deposit. I never asked you to do this. I do not want it." Mr Faaptio said, "I must do this ." Mr Guijar said, " Why? Why didn't you tell me before. Why you do this to me?" Mr Faapito said, "I have to." Mr Guijar said, "I would never have put the money in the bank if I knew you were going to take it." 44About a month later Mr Guijar says that he received the letter of offer dated 5 March 2004. He says that the signature is his, but the dates are wrong and were not written by him or in his presence or at his request. When he received the letter, he went to see Mr Faapito, at the SME-Banking Fairfield Business Centre of ANZ. Words to the following effect were exchanged. Mr Guijar said, "I don't want to sign this." Mr Faapito said, "It is better for you is you sign it. It will be worse for you if you don't." 45Mr Guijar says that he did not want to sign the contract. He wanted to pay his Spanish money to ANZ to reduce his $485,000 indebtedness to $381,000. The $381,000 was to be repaid as principal and interest over 15 or so years. He felt that he had no choice but to sign as ANZ had lent him the money, it had his deeds to Mountain Street and it had taken $51,000 of his Spanish money. He feared that ANZ would sell off all of his properties if he did not sign. He signed the letter of offer. The date of execution was blank when he gave the letter to Mr Faapito. 46So far as the March 2004 communications with Mr Guijar are concerned, Mr Faapito deposed in his affidavit dated 22 May 2009 that he could not recall having a conversation with Mr Guijar as alleged. It was his practice at the time to prepare a diary note to record such matters immediately after the event. He has reviewed ANZ's diary notes for the period and there is no record of such a conversation. Mr Faapito denies that such a conversation took place and denies that he said words to the effect, "It is better for you if you sign it. It will be worse for you if you don't ." 47Mr Faapito gave evidence that the proposal was prepared on information given by Mr Guijar and sent to his superiors as it was outside his authority to get approval. On or about 3 March 2004, Mr Faaptio received advice that the loan would be approved subject to confirmation of a sale strategy which was to sell Shops 8B and 8C on Pitt Street in Sydney and property at Speed Street Liverpool and that if there was no sale within 6 months the Ultimo property would be taken to auction and the customer (Mr Guijar) would undertake to meet the market price and sell. 48The Magistrate stated that it appeared from Mr Faapito's oral evidence that Mr Faapito was aware of what written advice was forthcoming from his superiors and consequently he did what he could to facilitate settlement on or about 5 March 2004. The Magistrate further stated that the contents of the letter dated 9 March 2004 from ANZ amounted to what used to be known as an epitome of mortgage, wherein $485,000 was the loan advance. It was advanced on 5 March 2004 at a certain interest rate for six months only and it was clearly a bridging loan and no other type of loan. (J [28] - [31]). 49Mr Guijar during gave much evidence cross examination before Magistrate Maloney on the topic of the events surrounding the signing of the 5 March 2004 document. It is as follows (at T 26/06/09 41 - 44): Q. ...You see there, don't you Mr Guijar, the latter of offer dated 5 March 2004. A. INTERPRETER: I didn't put there in there. Mr Faapito put that there. Q. Mr Guijar, the reasons you're getting agitated is because you've annexed to your own affidavit in October 2006 this very loan offer you say you never received. Sir, you know the error-- ... Q. And you know the error you've made, Mr Guijar, because on that document, Mr Guijar, says customer copy, does it not? ... Q. Mr Guijar, do [you] say that Mr Faapito annexed that document to your affidavit and had you swear on oath the contents of that affidavit? A. WITNESS: No. Q. You received that letter of offer on 5 March 2005, didn't you, Mr Guijar? A.WITNESS: No. HIS HONOUR Q. How did it get in your affidavit in October 06? A. INTERPRETER: When was signed? When was it signed? I refuse to sign it. And he threatens me with the bank selling everything, that's how it was. If I didn't sign everything, everything would have been sold and I would have been thrown out onto the street. He then put me into a term deposit that I didn't want and I didn't known about. All force, everything that is done. ... HIS HONOUR Q Didn't you say that that letter of offer - you never received it? A. INTERPRETER: The date that he says, no. Listen to the letter of offer - I didn't accept it. Q. So you did receive it. A. INTERPRETER: Not on 5 March. But I didn't accept it, I didn't want to sign it. He changed the loan that I've - with respect to how we had spoken about it. He took out the money and didn't put in a term deposit - he didn't want me to know about it. ... Q. So you did receive it. A. INTERPRETER: Not on 5 March. But I didn't accept it, I didn't want to sign it. He changed the loan that I've - with respect to how we had spoken about it. He took out the money and didn't put in a term deposit - he didn't want me to know about it. HIS HONOUR Q. Mr Guijar or Senor Guijar, remember I've asked you about three times and even your own barrister has asked you just to answer the question that's asked. Agreed? A. INTERPRETER: Okay. There's a moment when you get to- Q. I know it's difficult but please just answer the question that's asked of you. If you don't do that and you start giving eulogies, speeches, you're not doing yourself any favours and perhaps that could be translated into his mother tongue if you could do that please. A. (No verbal reply) CASSELDEN Q. And Mr Guijar, on 5 March 2004 you authorised Mr Faapito to transfer $51,000 into a term deposit account and secured it for 12 months of interest. A. WITNESS: No. Q. And he informed you that you would need to sign a formal document granting the bank, in effect, to charge on those moneys. A. WITNESS: No. Q. The reason you authorised that is because without that authorisation the bank was not prepared to advance you the $485,000. A. INTERPRETER: There was no money to do that. How could I take on a term deposit if there is no money? Q. Mr Guijar, you well knew on 5 March 2004 that if you did not sign the letter of offer and if you did not sign the mortgage and if you did not authorise the transfer of the $51,000 you would not have been able to complete the property in respect of Mountain Street. A. INTERPRETER: No, but if it didn't cover things then I shouldn't have been thrown out onto the street. I could have gone to another bank. Q. Then why didn't you, Mr Guijar? A. WITNESS: Because Mr Faapito would not let me go. A. INTERPRETER: He didn't allow me to leave. HIS HONOUR Q. Did he stop you walking out of the bank, did he? INTERPRETER: Your Honour, he's misunderstood. I'll repeat it. WITNESS (THROUGH INTERPRETER): He didn't ask me to leave the bank, no. HIS HONOUR Q. He didn't keep you in the bank, did he? A. INTERPRETER: What I want to say is that if I didn't meet the conditions that the bank wanted, then I should have been given my papers and allowed to leave. Q. But you knew you couldn't leave- A. WITNESS: No. Q. --because the purchase on Mountain Street had to be made. A. INTERPRETER: It was not necessary. I had money in my hand. CASSELDEN Q. Mr Guijar, the reason that you had to complete the sale of Mountain Street was that you didn't want to lose your 10% deposit, did you? A. INTERPRETER: I wouldn't lose the 10%, no. Q. You didn't want to be open for a claim in damages, did you? A. INTERPRETER: No, because I had two properties-tell him, I had money with me. Q. Mr Guijar, you knew the bridging loan was for a term of six months, didn't you? A. INTERPRETER: Yes, I knew that it was for six months, yes. Q. You had to pay back the bank in full by 5 September 2004, didn't you? A. INTERPRETER: Yes, he put conditions on me. ... Q. You accept that is a document entitled "record of investment", which relates to the $51,000 in the term deposit. A. INTERPRETER: I received it, yes. But what I didn't receive was the letter from the bank that says that I invested that money. Where are the rest of the record? Q. We'll come to those. A. INTERPRETER: He said that's all he could do for me. "That's all I can do for you", he said. Q. You received that record on or about 5 March 2004. A. INTERPRETER: It's the 8th or the 9 th . 50At [33] and [35] the Magistrate stated: "33. The plaintiff says that he was "forced" to sign the letter of acceptance to do otherwise would leave him liable to the vendor of the Ultimo premises rescinding the contract and Mr Guijar losing his deposit monies and liable to a claim for damages should that ever eventuate. ... 35. The answer to either of the two questions raised in this matter can be found in the letter of Mr Me Ling to the plaintiff, which is dated 13 May 2004. Although Mr Me Ling says that settlement occurred on 3 March and he gives the usual advices as to what has occurred on settlement by way of adjustments and notices of sale having been issued, Mr Me Ling goes on to say in paragraph 5 "you were obliged to settle within 21 days of the due notification by the vendor, and an extra week was negotiated. Your finance was not ready in time . Partly this was due to the vendor's not making the keys of the suite available for your bank's valuer to gain access, but the vendor's deny this and without a fairly detailed account from the bank we do not think that the point can be effectively pursued. And although a lot of interest was paid, a few days here or there is not worth fighting about. The essential problem is that although before Christmas the vendors notified us - in response to the writer's enquiry - of the estimated time of completion, and although we warned you had not organised your finance "." 51And at [38]: "38. By letter of offer dated 5 March 2004 the bank clearly expressed its intentions and simply because Mr Guijar had run out of time to complete the purchase and let the matter lapse for so long and not sought the advice of Mr Mee Ling to act on the mortgage then as there has been a loss suffered by Mr Guijar the loss is entirely his. I further note he had not told the bank in or about the time of his King Street Newtown purchase that he had also exchanged contracts on the Ultimo property." 52On whether or not the Magistrate firstly, failed to provide adequate reasons and secondly, whether that constituted an error of law, counsel for ANZ referred to Beale v Government Insurance Office (NSW) (1997) 48 NSWLR 430; Mifsud v Campbell (1991) 21 NSWLR 725; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247; Sasterawan v Morris [2008] NSWCA 70 at [33] ; SAS Trustee Corporation v Pearce [2009] NSWCA 302; Workers Compensation (Dust Diseases) Board v Smith [2010] NSWCA 19; and Dayeian v Davidson [2010] NSWCA 42. Counsel for ANZ submitted that the Court of Appeal in SAS Corporation v Pearce [2009] NSWCA 302 has recently redefined what amounts to a "question of law" and it occurs only in a situation where a Magistrate makes a conscious decision not to deliver reasons or state findings of fact that were necessary for him or her to have resolved in order to enter a verdict. This proposition was stated by Asprey JA in Pettitt v Dunkley [1971] NSWLR 376 at 383D-384 and this passage was discussed by Basten JA in SAS Corporation v Pearce at [119]. 53It is an uncontroversial proposition that a failure of a court to give adequate reasons for its findings constitutes an error of law. But whether such a failure involves a decision of the court below in point of law is less clear. Basten JA stated that there may be circumstances in which it does, but those may be restricted to the case where the court or tribunal has expressly or implicitly decided that certain matters should not be dealt with in the reasons. Basten JA referred to Pettitt v Dunkley at 383-4 as authority for that proposition. But here it is whether there is failure to give reasons on a question of law. 54Counsel for ANZ submitted that an error on a question of law arises, in only two circumstances. They are, firstly where a judge makes a conscious decision not to deliver reasons; and secondly, where a judge fails to state findings of fact which are necessary to have been resolved in order to enter judgment. 55Counsel for ANZ also referred to a passage in Soulemezis v Dudley (Holdings) Pty Limited where McHugh JA stated at 248: "In a case where a right of appeal is given only in respect of a question of law, different considerations apply from the case where there is a full appeal. An ultimate finding of fact, which is not subject to appeal and which is in no way dependent upon the application of a legal standard, can be treated less elaborately than an issue involving a question of law or mixed fact and law. If no right of appeal is given against findings of fact, a failure to state the basis of even a crucial finding of fact, if it involves no legal standard, will only constitute an error of law if the failure can be characterised as a breach of the principle that justice must be seen to be done. If, for example, the only issue before a court is whether the plaintiff sustained injury by falling over, a simple finding that he fell or sustained injury would be enough, if the decision turned simply on the plaintiff's credibility. But, if, in addition to the issue of credibility, other matters were relied on as going to the probability or improbability of the plaintiff's case, such a simple finding would not be enough." 56McHugh JA also explained one of the purposes served by a judicial decision is that: "[I]t enables the parties to see the extent to which their arguments have been understood and accepted as well as the basis of the judge's decision. and that (at 278-279): "...[A] judicial decision must be a reasoned decision arrived at by finding the relevant facts and then applying the relevant rules or principles. A decision which is made arbitrarily can not be a judicial decision; for the hallmark of a judicial decision is the quality of rationality..." 57So far as Mr Guijar's claims under the Fair Trading Act and Trade Practices Act he needs to establish firstly, conduct on the part of the defendants; secondly, conduct that is misleading or deceptive; thirdly, that there was reliance on the conduct; and fourthly, loss or damage caused by the conduct : see Ronald Wallace Gould & Anor v Peter Vaggelas & Ors (1984) 157 CLR 215 and Jebeli v Modir and Goylyaei [2005] NSWCA 184. 58The relevant representation that Mr Guijar says Mr Faaptio made was, "It is better for you if your sign. It will be worse for you if you don't." Mr Faaptio denied he made this statement. Thus, the making of this oral representation was in dispute before the Magistrate. So far as Mr Guijar's credit was concerned, the Magistrate noted that "he was vague and [sic] circuitous and in content of reliability . " 59The Magistrate made a finding that "...simply because Mr Guijar had run out of time to complete the purchase and let the matter lapse for so long and not sought the advice of Mr Mee Ling [his solicitor] to act on the mortgage then as there has been a loss suffered by Mr Guijar, the loss was entirely his." (J [38]). It is my view, that although the Magistrate did not make a specific finding as to whether the representation was made, his Honour did find that there was no loss caused by ANZ's conduct. There had to be loss or damage caused by ANZ's conduct to establish a claim under the Fair Trading Act or the Trades Practices Act . 60The Magistrate had identified the issue he had to decide as being whether the plaintiff was induced by a false or misleading representation, made without reasonable grounds, to enter into the written agreement as evidenced by a letter dated 5 March 2004, referred to as "the March 2004 offer". The Magistrate answered the question in the negative. In other words the Magistrate concluded that Mr Guijar was not induced by a false and misleading representation, made without reasonable grounds, to enter into a written agreement as evidenced by the letter dated 5 March 2004. In my view, the Magistrate has given adequate reasons in relation to the Fair Trading Act claim and there is no error on a question of law.

The purported agreement dated 21 April 2005 61Counsel for Mr Guijar submitted that the Magistrate simply did not consider or determine this issue. ANZ submitted that at the hearing in the Local Court Mr Guijar's counsel barely addressed these issues in oral submissions and The Magistrate provided adequate reasons. 62At [28] to [30] of the amended statement of claim Mr Guijar pleaded that: "28. On 21 April 2005 the Plaintiff and the Bank entered into an agreement ("the April Agreement") whereby the plaintiff and the Bank agreed that: (i) the net proceedings of sale of Shop 8C would be paid by the Plaintiff to the Bank to be applied in reduction of the principal sum; (ii) the deducted moneys would be applied by the Bank in reduction of the Principal Sum; (iii) The Bank would refinance the remaining part of the principal sum in the sum of $26,000. 29. In pursuance of his obligations under the April Agreement, the Plaintiff on 21 April 2005 forwarded to the Bank the net proceeds of sale of Shop 8C in the sum of $404,184.33. 30. In breach of its obligations under the April agreement, the Bank: (i) did not apply the net proceedings of sale of Shop 8C in reduction of the principal sum; (ii) did not apply the deducted moneys in reduction of the Principal Sum; (iii) did not refinance the remaining part of the principal sum in the sum of $26,000 or in any sum; (iv) returned the net proceeds of sale of Shop 8C and called up repayment of all moneys owing to the Bank by the Plaintiff; Iv) issued notices to the Plaintiff under section 57(2)(b) of the Real Property Act in relation to xx/xx xxxxxxxx xxxxxxxx, Liverpool, xxx xxxx xxxxxx, Newtown, and Suite M5 and Carspace 15, xx-xx xxxxxxxx, Broadway." And Mr Guijar sought damages for breach of the April 2005 agreement. 63Mr Guijar's version of this oral agreement is as follows. On 21 April 2005, at about 9:30 am, he went to the Liverpool branch of the ANZ with cheques. He saw Ms Kainz and words to the following effect were exchanged: Mr Guijar "I want to pay off $404,184.33 from my $485,000 loan, using these cheques and pay in the $54,000 term deposit you are holding, leaving about $26,000 outstanding, which I want to add to the King Street loan." Mr Kainz: "I'll have call the assistant manager, Christine Ngai." 64Ms Kainz made a number of telephone calls and they had to wait until about 10:00 am for her to get through. She had a conversation with an unspecified person. She then said to Mr Guijar words to the following effect, "I can't release the term deposit. We can't do this." This exchange does not amount to an agreement. 65However, on the same day at about 11:00 am or 12:00 pm, Mr Guijar says that he went to see Mr George Louca at the SME Banking Fairfield Business Centre of ANZ. Mr Guijar gave him the cheques and words to the following effect were exchanged: Mr Guijar: "I want to pay this into the $485,000 loan, plus the term deposit, and add the remaining money outstanding to my King Street loan." Mr. Louca: "All right." 66Mr Guijar deposed that Mr Louca got some papers from a drawer, filled them out and signed them. He then gave them to Mr Guijar to sign. They were firstly, a document about paying out the $485,000 loan, using the cheques Mr Guijar was paying in, the money from the term deposit and debiting $26,000 to the King Street Newtown loan (giving the King Street loan number); and secondly, a form of release for the term deposit. Mr Guijar signed them and gave them back to Mr Louca. Mr Guijar says that he was not given any copies and he then left. Mr Louca agreed that he prepared documents "in relation to the payment of $485,000 loan" using money from the cheques and money from the term deposit (the previously deducted $51,000) and that Mr Guijar signed those documents. Mr Guijar says that about half an hour after he left the meeting, he received a telephone call from Mr Louca, where words to the following effect were exchanged: Mr Louca: "Sorry, you must come back to the office." Mr Guijar: "Why?" Mr Louca: "Because Christina won't let me do this. You must do it yourself. She won't let me release the Term Deposit." 67Mr Louca agreed that this conversation did take place. 68Mr Guijar returned to Mr Louca's office. He saw the cheques and the papers they had signed on Mr Louca's desk. He said words to the effect, "I'm sorry, Arthur, I can't do anything. This woman won't let me do it. She won't let me release the term deposit." 69Counsel for Mr Guijar, in closing submissions before the Magistrate [T 21/08/09 at 61] stated that in relation to paragraph 28 of the amended statement of claim, an agreement was struck in about late April 2005. According to Counsel, the effect of the agreement was that Mr Guijar would make certain payments and give security to ANZ, which ANZ accepted. Counsel submitted that Mr Louca entered into that agreement on behalf of ANZ and after having spoken with Ms Ngai, contacted Mr Guijar and in substance repudiated the agreement. Counsel further submitted that the loss Mr Guijar suffered as a result of that repudiation, was that he was obliged to pay loan enforcement expenses, legal costs to Gadens, and establishment fees to Citibank which total about $5,000. 70Counsel for ANZ submitted at the hearing of this appeal that Mr Guijar's case is not supported by his evidence and referred to Mr Guijar's own evidence he did not negotiate any contract, he merely expressed a desire that certain things should occur and filled out forms that were necessary to give effect to the desire. Mr Guijar said "I want to pay this into the $485,000 loan, plus the term loan deposit, and add the remaining money outstanding to my King Street loan." As previously stated, Mr Louca replied, "All right." 71The Magistrate stated at [41]: "41. The loan was due to be paid out on 31 March 2005. Thus Mr Guijar had effectively obtained a 12 month bridging loan. On 29 March 2005 Mr Guijar advised that he was to obtain forfeiture of the 5% deposit on 8C/370 Pitt Street Sydney. He also asked for a further extension. By this stage none of the banks conditions (which were now in excess of 12 months of age) had been met and his situation had been compounded by his need to borrow $500,000.00 from a friend to complete the Petersham purchase. The bank refused his request. Eventually he obtained other finance but claims he suffered the loss the subject of this litigation." 72Certainly, from this summation of events up until March 2005, it does not seem likely that ANZ would be amenable to a further agreement in April 2005. 73Although the Magistrate identified two issues he had to address, they did not include the issue of whether or not the conversation between Mr Guijar and Mr Louca in April 2005 amounted to an agreement. Both Mr Guijar and Mr Louca agreed on the contents of a conversation that took place between them on 21 April 2005. The Magistrate's reasons do not mention the evidence given by Mr Guijar and Mr Louca in relation to the purported agreement outlined above. On one view of it, the contents of the conversation could constitute an agreement but another interpretation is possible, namely that Mr Louca was only saying "All right" to indicate that he understood what Mr Guijar was asking ANZ to do. Counsel for Mr Guijar did address this agreement in closing submissions before the magistrate. It is my view that as there is the absence of any reasons as to why this conversation, which took place in April 2005, did not amount to an agreement. The Magistrate's reasons are inadequate. There is an error on a question of law. 74In my view the Magistrate provided adequate reasons in relation to whether there was binding oral agreement entered into on 3 February 2002 and in relation to the claim under the Trade Practices Act but his Honour did not give adequate reasons as to whether there was an agreement entered into between the parties on 21 April 2005. Hence, there is an error on a question of law. The appeal is upheld. The decision of his Honour Magistrate Maloney dated 30 September 2009 is set aside. The matter is to be remitted to the Local Court to be determined according to law. 75Costs are discretionary. Costs usually follow the event. The defendant is to pay the plaintiff's costs as agreed or assessed.

The Court orders: (1) The appeal is upheld. (2) The decision of his Honour Magistrate Maloney dated 30 September 2009 is set aside. (3) The matter is remitted to the Local Court to be determined according to law. (4) The defendant is to pay the plaintiff's costs as agreed or assessed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 March 2011