Guzman v Bird [2021] QCAT 65

Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 102, Schedule 3

Queensland Civil and Administrative Tribunal Rules 2009 (Qld) rule 48(3)

Australian Woollen Mills Pty Ltd v Commonwealth [1955] UKPCHCA 3; (1954) 93 CLR 546

Executor, Trustee & Agency Co of South Australia Ltd v Thompson [1919] HCA 51; (1919) 27 CLR 162

Ogilvie v Adams [1981] VicRp 92; [1981] VR 1041

• [1] By an application for a minor civil dispute - minor debt filed 26 June 2019 the applicant, Mr Guzman, sought an order that the respondent, Ms Bird, pay $20,453.20, being a principal sum of $8,522.00, interest of $11,593.00 and the filing fee of $338.20.
• [2] Ms Bird filed a response on 19 July 2019 agreeing that monies were borrowed but asking the Tribunal to:

(a) accept her calculations as to the balance owing rather than Mr Guzman's (namely, that the principal sum outstanding is $7,924.10);

(b) set-off against and claim over and above the amount owing:

(i) a debt Ms Bird says Mr Guzman owes her in the sum of $2,115.90; and

(ii) one-half of the costs (including airfares, insurance, medical costs, loss of income, goods and transport costs) she incurred to travel to Manila to resolve an issue that arose when Mr Guzman failed to repay monies spent by Mr Guzman on their father's credit card after Mr Guzman Sr had passed away, claimed in the sum of $6,402.15;

(c) dismiss Mr Guzman's application for interest on the sum owing on the basis that she says she never agreed to pay interest on the money lent; and

(d) if within the Tribunal's jurisdiction, restrain the applicant from approaching within one kilometre of her home.

• [3] Ms Bird is the elder sister of Mr Guzman and the claims between them arise from arrangements between them that are in the nature of informal, family loans, and that relate to funds spent dealing with family obligations. For example, there were ancillary issues surrounding support given to their brother that were not relevant to this hearing.
• [4] Each party was assisted in the hearing by their respective spouses.

• [5] Schedule 3 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) ("QCAT Act") describes a minor civil dispute, amongst other things, as "a claim to recover a debt or liquidated demand of money, of up to the prescribed amount". The prescribed amount is currently $25,000.00.
• [6] A debt or liquidated demand has been described as a sum of money that can be calculated by reference to a formula, schedule or some other yardstick by which the debt or sum payable can be readily calculated.
• [7] I am satisfied that Mr Guzman's claim is a debt over which the Tribunal has jurisdiction.
• [8] A counter claim cannot be filed in response to a minor debt claim.[1] A separate application is required, which may be, if the interests of justice allow, heard with the claim. The respondent has not filed a counter claim and, therefore, the issues raised in her response can only be considered as a set-off to the claim. To the extent that a set-off exceeds the claim, the surplus cannot be awarded to the respondent.

(a) Mr Guzman lent Ms Bird $22,472.00 in the following advances:

(ii) $6,999.10 on 17[2] or 19[3] January 2012; and

(iii) $7,000.00 on 15[4] or 18[5] June 2012;

(b) Mr Guzman borrowed the sums that he lent to Ms Bird, initially as a cash advance from his credit card and Ms Bird knew this at the time of the advances;

(c) Ms Bird has made repayments (but the parties differed by $548.90 as to the total of those repayments); and

(d) Mr Guzman owes Ms Bird $2,115.90 arising from Mr Guzman's use of their deceased father's credit card (which Ms Bird later had to pay out).

(a) accept Ms Bird's calculation of the debt owing in the sum of $7,924.10; and

(b) offset against that amount the sum of $2,115.90 for the debt Ms Bird said Mr Guzman owed her.

• [11] The items in dispute therefore remained the interest and costs claimed by Mr Guzman and the costs and restraining order sought by Ms Bird.

• [12] Mr Guzman's evidence included an undated letter from his accountant, C & C Professional Accountants (including a ledger of their handwritten calculations of interest) which says, among other things:

The loans were lent through a credit card payment, with an interest rate of 14.39%, up to the 29/07/2015. The loans were then consolidated with other debts of Aldwin and Fredilyn Guzman into a personal loan with an interest rate of 13.99%. On the 03/02/2017 Aldwin and Fredilyn then rolled the debt into another personal loan with the current interest rate of 14.99%.

The amounts paid off the loans, which were supplied by Aldwin and Fredilyn Guzman through bank statements, have been taken into account at the monthly balances. Interest owed on the loan amounts are taken on monthly balances.

As it stands at the 03/04/2019 the monies owed to Aldwin and Fredilyn Guzman on the original loans is $8,522. The interest accumulated from the 13/04/2011 to the 03/04/2019 is $11,593.00 approximately. Aldwin and Fredilyn Guzman provided the information by means of bank statements to assist C & C Professional Accountants to provide these figures.

C & C Professional Accounts do not claim that these figures are accurate to the cent. They were calculated on a reasonable method leaning toward the person to whom the loans were lent in the first instance.

• [13] He also tendered an email sent by Ms Bird on 18 June 2010 (prior to the loans the subject of this application) wherein she initially seeks to borrow money from the parents of Mr Guzman's wife and offers to pay interest to them if the loan proceeded (it did not). The applicant seeks to rely upon this as evidence of the respondent's intention to pay interest on funds borrowed from family.
• [14] Of considerable weight are messages exchanged between the parties wherein, relevantly, the following is said (as translated where necessary by the parties in the hearing):

(a) On 14 July 2016 from Ms Bird to a group that included Mr Guzman:

Hey guys whoever used the credit card of papa kindly pay it please. That [is] the only thing that's hindering me from getting my land title.

..can you pay it first so I can loan the house and then I'll pay you what Ever I owe you kasi [because] at the moment wala din akon pera [I don't have the money] to pay the amount that's why I went home last time para mailoan Ko yung [so that we can loan the] property but nothing happen because of the credit card issue.

(d) Mr Guzman replied with words that roughly translate to offering to "reloan" the money to Ms Bird but expressing concern that he had no "guarantee" that she could return it, and that he would be "in trouble" if she could not reloan [refinance].

(e) Ms Bird then said that she could "reloan without a doubt" because her Aunt was willing to be guarantor and went on to say:

Kaya mga ako umuwi [that's why I am going home] is to reloan the house I use the money from the payout of the car but got disappointed kasi walang [because].. I can't get the title.

(f) She explained that in order for her to return to the Philippines to process the loan, she needed to borrow money in Australia. Once the loan was processed in the Philippines she could "pay the debt immediately".

Ok I can do that, but...big BUT ....we will give you a date when to pay it and if you will not able to make it on that date, you will be responsible for the fines or fee's.... What du think?????

(h) Mr Guzman explained in the hearing that "fines or fee's" was a reference to interest.

You can't be so hard on me to pay the fine on your time frame. My debt would be paid already if it wasn't for the credit card issue. To release the title it will take 15day to clear it then land registration it will take another 15 days or so then to apply for the loan it needs to be assess by the bank within 15 working days then approval might take another 15 working days or more too. It might take 3 months or more.;

(j) In the hearing, when asked what she meant when referring to paying a "fine" in that message, she clarified that she meant that she couldn't pay "ASAP" but needed three months to pay.

Mama La [Ms Bird] I'll be the expecting full payment of $9,572.10 by the end of the year or when you receive your loan. Note: interest not included. Hopefully this will settled so everybody happy...

(l) He then offered to pay the $2,115.90 to clear the credit card amount, but asked, before he did that payment, for Ms Bird to confirm his condition set out in the message of 17 July 2016.

As soon as the loan is approve and the money is in the bank you will be paid the same day.

• [15] Mr Guzman also produced ANZ bank statements and credit card statements for the relevant periods of the advances and repayments.

• [16] Ms Bird tendered the following in evidence:

(b) Messages exchanged between the parties, similar to Mr Guzman's evidence; and

(c) Evidence of costs she incurred to travel to the Philippines in an attempt to arrange the refinance/sale of her home.

• [17] A legally enforceable agreement (contract) requires an offer, acceptance of that offer, consideration for the promises made and an intention to create legal relations.[6] The terms must be certain, and the parties must have capacity to contract.
• [18] Most contracts need not be in writing, with some exceptions, including section 11 of the Property Law Act 1974 (Qld) ("PLA 1974") that requires an agreement creating an "interest in land" to be in writing.
• [19] Loans between family members are not commonly formalised in a written loan agreement and often do not stipulate when or how the loan is to be repaid. Commonly, parties to such arrangements have difficulty establishing that they have an enforceable contract because it is difficult to prove an intention to be bound by the promise to repay and because the terms are not certain.
• [20] If it is established that the arrangement is a loan, and not a gift, then without a finite repayment date or a formal loan agreement, the loan is considered a "loan payable on demand".
• [21] When a loan is payable on demand, the lender has an immediate right to sue for recovery of the debt, and the lender will only have six years to pursue the borrower for the debt,[7] commencing on the date of the advance.[8]
• [22] The limitation period will "re-start" upon acknowledgement or confirmation by the borrower of the debt, provided that the confirmation "supersedes the old debt entirely" and goes beyond a mere promise to pay an existing debt.[9] An agreement to forbear from suing on a loan may be taken to suggest that the parties wish to put their relationship on a new footing.
• [23] Section 35(3) of the Limitation of Actions Act 1974 (Qld) provides that:

35(3) Where a right of action has accrued to recover a debt or other liquidated pecuniary claim...and the person liable or accountable therefor acknowledges the claim or makes a payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment.

• [24] The acknowledgement of debt referred to in section 35(3) of the Limitation of Actions Act 1974 (Qld) must be in writing and signed by the person making the acknowledgment.[10]
• [25] An "account stated" is different again, as explained by Isaacs J,[11] as being when:

...several items of claim are brought into account on either side, and, being set against one another, a balance is struck, and the consideration for the payment of the balance is the discharge of the items on each side. It is then the same as if each item was paid and a discharge given for each, and in consideration of that discharge the balance was agreed to be due.

...the constructive payment is referred to only as the reason for the constructive discharge; and then it is in consideration of the discharge that the new balance is agreed to be paid. That balance supported by new valuable consideration is a new obligation, entirely superseding the old.

• [26] I do not have jurisdiction to make a restraining order. If I did, there was no evidence tendered that would, in my view, justify such an order. To the extent Ms Bird's response sought such an order, that request is refused.

• [27] Relying upon the emails and messages exchanged between the parties, and the evidence of the parties given at the hearing, I find that the parties entered three loan agreements, intending to be bound, on the following terms:

(a) that the loans were interest free (even though both parties knew that Mr Guzman was borrowing the money himself at a significant interest cost);

(b) that Ms Bird would make ongoing payments as and when she could, commencing when she found employment which was expected to be in or around April or May 2012; and

(c) that the loans were expected to be short-term in nature, with Ms Bird to repay them in full upon the earlier of the sale or refinance of her home in the Philippines.

• [28] When the loans were still unpaid in July 2016, and after Mr Guzman conceded an obligation to pay Ms Bird the sum of $2,115.90, a new agreement was reached whereby Mr Guzman would waive interest on the loans, the sum of $2,115.90 was to be offset against them, and the loan balances were rolled into one amount, with Ms Bird to pay the balance owing in the sum of $9,572.10 in full by 31 December 2016.
• [29] The agreement reached on 17 July 2016 was an "account stated" arrangement within the contemplation of section 35(3) of the Limitation of Actions Act 1974 (Qld) and Mr Guzman's claim in relation to it is not time-barred.
• [30] Ms Bird did not repay the loan in full by 31 December 2016 and Mr Guzman did not pay the $2,115.90 he agreed he owed Ms Bird.
• [31] By consent of the parties reached in the hearing, Ms Bird is liable to Mr Guzman for $5,808.20 as the principal debt, being the sum of $7,924.10 they agreed was owing, less the agreed offset of $2,115.90.

• [32] On balance, Mr Guzman has not satisfied me that Ms Bird agreed to pay interest to Mr Guzman when funds were originally lent. Whilst she offered to pay interest when seeking money from Mr Guzman's parents-in-law in 2010, there is simply no evidence of an agreement to pay interest between when he advanced funds to Ms Bird in 2011 and 2012.
• [33] To the extent that Mr Guzman seeks that interest be paid from the date the loans were advanced under the terms of those loans, that part of this claim must be dismissed.
• [34] However, Ms Bird breached her obligation to repay the loan to Mr Guzman and he has suffered, and continues to suffer, loss because of that breach. That loss is the interest that Mr Guzman has incurred, and still incurs, on the sum he borrowed and is recoverable from Ms Bird because:

(a) it is liquidated as the out-of-pocket sum it has cost him to borrow the money that he lent to Ms Bird; and

(b) it was not only reasonably foreseeable that he was incurring that cost, and that he would continue to incur that cost for as long as the loan remained unpaid, but it was specifically known by Ms Bird before she borrowed and throughout the loan term that Mr Guzman was lending her money that he had, in turn, borrowed at credit card interest rates.

• [35] Ms Bird should therefore compensate Mr Guzman for those losses he has incurred after she failed to repay the loan on 31 December 2016.
• [36] Mr Guzman has a duty to mitigate his losses and did not explain why he had to refinance from a lower to a higher interest rate in February 2017. He also gave no evidence as to why he could not, given the lowering of interest rates in 2019 and 2020, have refinanced since 2017 to a lower rate.
• [37] Having said that, the evidence of Mr Guzman's accountant and the bank and credit card statements that he submitted would support a reasonable assumption that his financial situation is unlikely to put him in a strong borrowing position to negotiate a better rate.
• [38] Under the circumstances, I find Ms Bird liable to Mr Guzman for interest on the sum of $5,808.20 (the agreed net sum outstanding) from 1 January 2017 to 15 January 2021, which I calculate, compounding monthly as Mr Guzman's lenders have, at the lower rate of 14.39% per annum, as follows:

(a) From 1 January 2017 until 31 December 2020, $4,484.62; plus

(b) From 1 January 2021 to 15 January 2021, $60.86.

• [39] Had Mr Guzman not conceded the debt of $2,115.90 to Ms Bird I would not have had jurisdiction to award it. The transaction giving rise to the debt took place in the United States of America, on a credit card account that was owned by Mr Guzman Sr, deceased, based in the Philippines.
• [40] The debt, if there was one, would properly have been owed to the estate of Mr Guzman Sr, in the Philippines and it is his estate that ought to have recovered it, even if Ms Bird paid the debt because her home was cross-collateralised with Mr Guzman Sr's debts.
• [41] Given that I would not have had jurisdiction over that debt, I do not have jurisdiction to award any losses Ms Bird says she incurred from Mr Guzman's failure to pay it.
• [42] Even if I did, I am not convinced that those costs were reasonably incurred, that they had an appropriate nexus to any failure by Mr Guzman to pay the money, or that they have been adequately quantified.
• [43] To the extent that Ms Bird seeks to offset those costs, that request is refused.

• [44] As Mr Guzman has been largely successful, it is appropriate in my view that Mr Guzman be recompensed for the filing fee. I award him the sum of $338.20 pursuant to section 102 of the QCAT Act.

1. Within 45 days of the date of this Order, the respondent is to pay the applicant the sum of $10,691.88 comprising:

[1] Rule 48(3) of the Queensland Civil and Administrative Tribunal Rules 2009 (Qld).

[6] Australian Woollen Mills Pty Ltd v Commonwealth [1955] UKPCHCA 3; (1954) 93 CLR 546.

[7] Section 10(1)(a) of the Limitation of Actions Act 1974 (Qld).

[8] Ogilvie v Adams [1981] VicRp 92; [1981] VR 1041.

[9] Executor, Trustee & Agency Co of South Australia Ltd v Thompson [1919] HCA 51; (1919) 27 CLR 162 per Isaacs J at 170 - 171.

[10] Section 36.

[11] Executor, Trustee & Agency Co of South Australia Ltd v Thompson [1919] HCA 51; (1919) 27 CLR 162 per Isaacs J at 168-170, citing Blackburn J (as he then was) in Laycock v Pickles [1863] EngR 944; (1863) 4 B&S 497 at 506.