Mark Peter Wilson v Warren O'Rourke

Supreme Court of NSW|2013-05-16|Before: Bellew J

INTRODUCTION 1By an amended summons filed on 5 November 2012, the plaintiff appeals from a decision of Mr T Keady, Magistrate, delivered in the Local Court of New South Wales on 3 September 2012. In the proceedings heard by the Magistrate, the plaintiff had sued the defendant for breach of contract arising from the sale of an aeroplane. The defendant defended the proceedings and brought a cross-claim against the plaintiff. 2The Magistrate entered a verdict for the defendant in respect of the case pleaded in the statement of claim, and entered a verdict for the defendant (cross-claimant) in the sum of $16,000.00 on the cross-claim. 3The plaintiff brings the appeal pursuant to the provisions of s. 39 of the Local Court Act 2007 ("the LCA") asserting various errors of law on the part of the Magistrate. The plaintiff seeks orders (inter alia) that the appeal be allowed, that the judgment of the Magistrate be set aside and that judgment be entered for the plaintiff in the proceedings. 4Section 39(1) of the LCA is in the following terms: 39 Appeals as of right (1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law. 5The plaintiff relied upon the affidavit of Mark Peter Wilson affirmed on 15 February 2013, to which no objection was taken by counsel for the defendant. That affidavit annexed the pleadings in the Local Court, the transcript of the proceedings before the Magistrate, the Magistrate's decision and the documentary exhibits.

THE PROCEEDINGS BEFORE THE MAGISTRATE 11At the commencement of the proceedings, the Magistrate asked each counsel (being the same counsel who appeared before me) to outline the nature of their respective cases. Counsel for the plaintiff, having outlined the circumstances in which the original purchase agreement was reached and the circumstances in which the plaintiff became aware of defects in the aeroplane following its purchase, said (commencing at T3 L2): "Ultimately in about December of that same year, 2007, the crux of the case is that (the plaintiff) contacted Mr O'Rourke...came to an agreement he says by which he would be refunded a sum of money, that sum being $34,000.00 of the purchase price that he be given back, $16,000.00 of that money was in fact returned to him, to the plaintiff by the defendant to his bank account, the details of which he provided to the defendant to enable that to occur. The plaintiff's case is simply that, that he, after there were a number of discussions, there's no question about it, that was the simple agreement, there was an agreement to refund $34,000.00 and as far as he is concerned, without specifying who was going to keep title or otherwise, that the plane was a matter for then the defendant to do with it what he wished. There were various discussions - - HIS HONOUR: - - So you're saying that it was agreed that something slightly less than the purchase price would be repaid to him and he would then surrender possession of the aircraft - - STUART: Back to the defendant, that he could have it and do with it as he wished, he being the defendant...In the ensuing months, after being paid this $16,000.00 no further moneys seemed to be eventuating with him ......." 12Counsel for the defendant, in outlining his position, said (commencing at T7 L48): "My client's case is that a deal was struck for the repurchase of the aeroplane on 9 December 2007. The terms of which were that my client was going to pay $16,000.00 up front. He did so the next day on 10 December." 13Counsel for the defendant then went on to say (commencing at T9 L7): "Then what happened your Honour is this, is that after Mr Wilson received $16,000.00 he reneged on the agreement. He basically said what you are offering is not enough, I want the entire original purchase price of $36,000.00. After that the parties acted as if they had not reached an agreement. The contract was either terminated or abandoned and my client is entitled to have the $16,000.00 repaid to him. HIS HONOUR: So your costs (sic) claim is for the return of $16,000.00. ALLAN: Correct". 14The transcript then records the following exchange (at T9 L34): "HIS HONOUR: Is that effectively your defence .... essentially is that there was no such agreement? ALLAN: Correct." 15Subsequently, and shortly prior to commencement of the evidence, counsel for the plaintiff raised an issue concerning the pleadings. In this regard, the transcript (commencing at T10 L17) records the following: "STUART: Your Honour, can I just point out before I go any further, my friend has talked about this and your Honour raised it, this $16,000.00 and $15,000.00 and a half, but its really quite a bit acceptance in $32,000.00 there's an admission in the pleadings in paragraph 4 - - ALLAN: That's what I pointed to. STUART: ...that he agreed to buy back at $34,000.00, which has nothing to do with $32,000.00 or $31,000.00 and a half. ALLAN: Did I make a mistake? STUART: So just wondering if my friend doesn't need leave to withdraw an admission that there was an agreement of that amount if he wants to other than say that the amount that's agreed is $34,000.00 rather than $32,000.00 or $31,000.00 and a half as he seems to be saying. Because the pleadings themselves appear to be admission through his solicitor that the sum of $34,000.00 was paid, is agreed to be paid and $16,000.00 was a part payment of such a purchase so in that way that's - - ALLAN: I'm bound by the pleading in that respect. HIS HONOUR: Yes, I would think so. Now you've just got your client to call."

THE EVIDENCE BEFORE THE MAGISTRATE 16The only witnesses called before the Magistrate were the plaintiff and defendant respectively. In each case, their evidence in chief was dealt with by way of affidavit.

The evidence of the plaintiff 17The plaintiff filed an affidavit of 20 January 2012. Having set out the circumstances leading to the original agreement for the purchase of the aeroplane, the plaintiff deposed (commencing at paragraph 13) as follows: "14. During this conversation with Brian O'Rourke I said to him words to the effect that I was not prepared to fly the aircraft because it was unsafe and therefore to fly it would be in breach of CASA Regulations and I believed that he had misled me and misrepresented the aircraft as being airworthy when I purchased it. I recall saying to Brian O'Rourke that I wanted a refund of $36,000.00 I had paid to Warren O'Rourke plus my out of pocket expenses for the LAME Inspection. 15. I said: 'I want the purchase price back plus the money for the LAME Inspection. He said: We're not refunding the price. I said: I expect confirmation within two days that you will agree to give me a full refund and my costs. He said: Will buy the plane back for $30,000.00. 16. I then said words to the effect that I wanted my out of pocket expenses paid. He said: We'll pay $1,500.00 of those expenses. I said: Its not enough. I want the $36,000 plus my expenses and I want you to call me back with your agreement. 17. On the 7th December at 3:35pm I called Warren O'Rourke and we again discussed the refunding of monies and the return of the aircraft to him. Warren O'Rourke said: I'll make an initial payment to your bank account of $16,000.00 by the 10th of December. But I'll pay another $16,000.00. I said: No, I want $36,000.00. You come and recover the aircraft from Leongatha as I am not prepared to fly the aircraft at all. 18. On 10 December 2007, $16,000.00 was deposited into my bank account by Warren O'Rourke. Annexed hereto and marked with the letter G is a true copy of my Westpac statement of account 53-7339 showing the deposit. 19. On or around 12 December 2007 I received a telephone call from a solicitor named Bill Elliott of the firm named B J Murphy and Golinski. Mr Elliott advised that he was acting for Warren O'Rourke. He said words to the effect: 'I want to confirm the terms of the agreement in respect of the refunding of the money paid to you by Warren O'Rourke and the disposition of the aircraft.' I said: I want the balance of the monies being $20,000.00 to be refunded by Warren O'Rourke.' He said: 'Warren O'Rourke is only prepared to refund a further $16,000.00. I said: I will agree to accept a further $18,000.00 in full and final settlement of the matter. The O'Rourkes will have to retrieve the aircraft themselves. I am not prepared to fly the aircraft and I can't ask anyone else to either. He said: I'll get some instructions, but I believe that sum is fine. ... 22. At no stage after paying me the $16,000.00 did O'Rourke contact me to advise where, or when, to return the plane such that I would be entitled to receive the balance of any agreed sum, not to whom to deliver it or to have it inspected on his behalf." 18In cross-examination the plaintiff gave the following evidence (commencing at T27 L11): "Q You would agree on 10 December 2007 $16,000.00 was deposited into your bank account? A I believe so. Q And then you received a telephone call from Mr Bill Elliott, this is at paragraph 19 your Honour of Mr Wilson's affidavit, you agree that you received a telephone call from Mr Bill Elliott? A Are you asking me to confirm that? Q Yes. A I believe so, yes. Q And the first thing he said to you were the words "I want to confirm the terms of the agreement". A I believe so. Q Then you said to him words to the effect that you wanted a further $20,000.00 paid to you? A On top of the $16,000.00, that's correct, the full, in other words the full refund price. Q And you said that to Mr Elliott because you had yet to reach an agreement with Mr O'Rourke about Mr O'Rourke repurchasing the aircraft. A Well I was reconfirming with Mr Elliott that's as I understood the agreement. Q What happened is this Mr Wilson is that after you received the $16,000.00 from Mr O'Rourke you used the fact that you had $16,000.00 and had the aircraft to try and strike a better deal with Mr O'Rourke to the deal that you had struck on 9 December 2007, do you agree or disagree with that proposition? A I believed I was - my position was that I was expecting $36,000.00 the refund of the price of the aircraft. Q You would agree on your version of what occurred in the initial conversation between Mr O'Rourke and yourself that first of all you say the conversation happened on 7 December? A I can't read the page, I can't confirm that. Q You would agree that Mr O'Rourke on your version said, I will make an initial payment to your bank account of $16,000.00 by 10 December but I will only pay another $16,000.00? A I don't believe he made that statement. Q You say that Mr O'Rourke did not say that? A Well I'm not entirely certain, like I said the agreement by my expectation was I would - - Q So just answer the question please? Do you agree or disagree that Mr O'Rourke on about 7 December 2007 said to you words to the effect, I will make an initial payment to your bank account of $16,000.00 by 10 December but I will only pay another $16,000.00? A I believe he said I will pay you $16,000.00 as a deposit, I do not recall him saying I will pay an additional $16,000.00 after that. Q And your response to what Mr O'Rourke said is "no, I want $36,000.00, you come and recover the aircraft from Leongatha as I am not prepared to fly the aircraft at all?" A I did say that the aircraft was to be retrieved by Mr O'Rourke from Leongatha where the aircraft was and is and it was not an aeroplane that was safe to fly. Q Do you agree or disagree that you said to him the words, "I want $36,000.00"? A Yes. Q You did not say those words? A I believe I said I want $36,000.00. Q And you would agree the conversation that I have just relayed to you was the extent of the conversation that occurred on 7 December 2007? A There would have been additional information, discussion. Q Can you just answer the question, you disagree that that was the extent of the conversation? A I do. Q Is it your case that you say there was an agreement from Mr O'Rourke to pay you $36,000.00? A Eventually with Mr - yes that's what I was - that was my point of view and reiterated that to Mr Elliott the solicitor who called me. Q Do you agree that in your defence to the statement of cost (sic) claim you admit that the agreement was in fact an agreement to pay $34,000.00? A We agreed finally $34,000.00. Q When was that finally agreed do you say? A Through Mr Elliott I believe. Q When do you say that was finally agreed? A When he told me. Q Do you agree that what Mr Elliott said to you at the end of the conversation with him was that I will get some instructions but I believe that the sum is fine? A Sorry, say it again please. Q Do you recall that you had a telephone conversation with Mr Elliott? A Uh-huh. Q On about 12 December 2007? A Uh-huh. Q And at the conclusion of the conversation Mr Elliott said to you words to the effect of "I will get some instructions? A Yes. Q And you would agree that you did not hear back from Mr Elliott? A Yes, that's correct. Q And you would agree that you did not hear back from Mr Warren O'Rourke? A Yes, that's correct. Q And the only communications that have been sent or received between the parties has been through your solicitors? A No, I believe I made attempts to make some telephone conversations with both Brian O'Rourke the son and Warren O'Rourke the father, however, they refused to talk to me and therefore I asked my solicitors to send them letters and I sent them all registered letters which they received and they never replied to them."

The evidence of the defendant 19The defendant swore an affidavit of 1 February 2012 in which he deposed as follows (commencing at paragraph 13): "13. On 19 December 2007 I had a conversation with Mark Wilson consisting of words to the following effect: I said: I will purchase the aircraft from you on the following conditions. That is, I will pay $30,000.00 for the aircraft and $15,000.00 for the maintenance. I will pay $16,000.00 up front and the balance when the plane is delivered to Luskintyre Airport. He said: There is no maintenance release. I said: You can get a permit to fly because you own the plane and if the plane is in the same condition as it was when we sold it to you, I will give you the balance of $31,500.00. He said: Yes, okay. 14. On 10 December 2007 I paid $16,000.00 to Mark Wilson. 15. On 12 December 2007 I received a phone call from Mark Wilson and we had a conversation consisting of words in or to the effect: He said: I am not going to fly the plane. I still want a total of $36,000.00 back and the cost of maintenance and storage of about $5,600.00. I said: No, we had an agreement. He said: I want all my money. When I made that agreement I had just flown in from England. 17. On 12 December 2007 I instructed Bill Elliott to contact Wilson in an attempt to settle the matter." 20The defendant was firstly cross-examined in relation to the contents of paragraph 13 of his affidavit. He agreed (commencing at T5 L4) that in view of the fact that he had made a payment on 10 December, the date of 19 December referred to in paragraph 13 as the date of a conversation may have been incorrect. He agreed (at T5 L18) that it was more likely that the conversation had taken place on 10 December. 21Counsel for the plaintiff then turned to the terms of the defence which had been filed, at which time the defendant gave the following evidence (commencing at T7 L24): "Q Now if you quickly read that defence it says that on your behalf, the solicitors say that you in fact agreed to refund the sum of $34,000.00? A Yes, well, that - - that must be incorrect because $16,000.00 is half of $32,000.00 which I agreed to. Q Well I think the court and myself can both agree that half of $32,000.00 is 16, but just - you do note that that is filed on your behalf by your lawyers? A Yes. Q But it admits and tells the court that you in fact agreed to pay $34,000.00, not $32,000.00, do you see that? A I can see - I can see the figures here, yes, but the figures don't add up." 22The cross-examination continued (commencing at T8 L9): Q Now you still maintain do you that you agreed to only pay $32,000.00? A Yes, that's correct. I agreed to pay $30,000.00 plus $2,000.00 towards the cost of maintenance which was quoted at $4,000.00. And I agreed to pay $2,000.00 and half of that was $16,000.00 Q So can I ask you, I think you accept that in paragraph 17 of your affidavit you had a Mr Elliott, a solicitor call Mr Wilson on 12 December 2007, is that right? A Yes, that would be correct. 23The cross-examination continued (commencing at T12 L48): Q Well what you're saying is "I struck an agreement for $32,000.00 to buy back the plane"? A Yes, correct. Q I paid a deposit - - A Yes. Q - - "and provided that Mr Wilson delivered the plane back to Luskintyre" - - A Yes. Q "And deliver it on certain terms", in other words the way it was when he bought it I think - - . A Yes. Q In its original condition? A Yes. Q That you would then pay the balance? A Yes that's correct. Q And you were prepared to wait about a year perhaps to get the plane back? A That's an assumption, I wouldn't know. Q Well was it ever delivered back to you? A No." 24Finally, the following further evidence was given (commencing at T17 L28): Q What I am suggesting to you is you instructed your lawyer to file a defence to Mr Wilson's claim that you admitted the fact that you had an agreement of $34,000.00, is that true? A Possibly, but the - the actual figure was $32,000.00. Q Well why would you have told them it was $34,000.00 when it was $32,000.00. A Because it was very confusing, the total of calls, the - the total amounts, the argument continually from Mr Wilson was very confusing, but I did have an agreement to pay $30,000.00 - I was making an offer remember, and it was to pay $30,000.00 for the aircraft plus $2,000.00 towards a $4,000.00 maintenance deal. Q I am going to suggest one thing to you. A Yes Q You've agreed that you owed the $34,000.00. A No. Q - - in your defence - - A I may have, but I did not. Q You may have agreed but you didn't agree, is that what you're saying? A I may have agreed but the figure was incorrect. Q Right, what I am suggesting to you, and you're free to say no, alright, is that you agreed that it was $34,000.00 in your defence and to your lawyers because it was true because Bill Elliott had come back to you to say that that was the deal struck with Mr Wilson on 12 December? A No. The agreement was made on 10 December to pay $30,000.00. Q So you disagree with me, and please feel free to simply say "I disagree with that". A Well I disagree with the thing, yes, in time."

The Magistrate's judgment 25Having summarised the pleadings and the evidence the Magistrate (at [51]) said (the emphasis in each case appearing in the judgment): "[51] The issue remaining is whether there was a binding contract between the parties for the purchase of the aircraft by Warren O'Rourke. [52] Plaintiff's counsel opened his case with the contention that Mr Wilson and Warren O'Rourke agreed in December that the defendant would purchase the aircraft for $34,000.00 with $16,000.00 paid as a deposit. Mr Elliott is then said to have contacted the plaintiff to confirm the arrangement, in other words, to settle the details of the agreement already made. However, in cross-examination Mr Wilson said there was no agreement with Mr O'Rourke before he spoke to Mr Elliott and the agreement he contends for was actually reached with Mr Elliott. [53] The following emerged from Wlison's answers in cross-examination: In a phone conversation with Warren O'Rourke on 9 December, Mr O'Rourke offered to purchase the aircraft for $31,500.00, with $16,000.00 up front and the remainder on delivery at Luskintyre; Mr O'Rourke suggested Mr Wilson obtain a permit to fly the aircraft to Luskintyre where the balance of the purchase price would be paid if the plane (sic) in the same condition as when Mr 'O'Rourke sold it; He 'didn't strike a deal' with Mr O'Rourke in this conversation (T27); Mr Wilson persisted with his demand for a total of $36,000.00 'the refunded price of the aircraft' (T27). [54] Mr Wilson claimed he agreed to finally accept $34,000.00 in discussion on the phone with Mr Elliott. This assertion implies Mr Elliott had authority at the time of the conversation to contract on behalf of and to bind Mr O'Rourke. [55[ However, Mr Wilson also agreed that, at the end of their conversation, Mr Elliott said he would have to get some instructions. Since then, Mr Wilson conceded he has heard nothing back from Mr Elliott or Warren O'Rourke... ... [58] Mr Elliott may have told Mr Wilson he though the demand for $18,000.00 was 'fine', thus encouraging confidence that Mr O'Rourke would agree to pay him $18,000.00, but Mr Wilson's own evidence confirmed Mr Elliott's concluding words were that he needed instructions from his client, thus reserving his position. Mr Wilson concedes that no later communication was received from the defendant agreeing to his demand for $18,000.00. [59] Mr Elliott's proviso that he required Mr O'Rourke's instruction is what would be expected of a solicitor who, in negotiating on behalf of a client, receives an offer he lacks authority to commit to and which he is obliged to refer for instructions. What then passed between Mr O'Rourke and Mr Elliott is not in evidence, but what is in evidence is the lack of acceptance by Mr O'Rourke of Mr Wilson's demand or offer. [60] This evidence leads inevitably to the conclusion that whilst differing offers were advanced by each party to the other, no agreement was reached between them. The parties were never ad idem." 26The Magistrate then turned to the cross-claim: "[62] The defendant's cross-claim pleads an agreement for payment by Mr O'Rourke to Mr Wilson of $34,000.00. At paragraph 13 of his affidavit (Ex. 3) Mr O'Rourke said the agreement was for $31,500.00. In his evidence to the court he claimed the agreement was for $32,000.00. His counsel told the court he was bound by the amount pleaded, although, in some circumstances failure to amend particulars to make them accord with the facts which emerge in evidence will not preclude a party from seeking a verdict in reliance on the facts actually established: Mohamed v Mohamed [2012] NSWSC 852 at [99]." 27The Magistrate then recounted aspects of the evidence before continuing: "[65] Remaining to be considered is the payment of $16,000.00. The fact of its payment would tend to suggest Mr O'Rourke believed he had an agreement which required a part payment to be made. However, it is notable that Mr O'Rourke made no attempts subsequently to assert the existence of the agreement he now contends for. No response was made to Mr Wilson's letters to Mr Elliott and, as recounted above, Mr Elliott was appointed to negotiate after this agreement was supposed to have been reached. Mr Elliott's appointment as negotiator makes no sense if, as Mr O'Rourke claims, an agreement already existed. [66] Mr O'Rourke's silence in the face of subsequent demands by Mr Wilson does not assist the credibility of his claim that an agreement was reached on his terms and his evidence needs to be treated with caution because of the difficulty he had with his recollection of events. [67] The payment may have been a tactical or pre-emptive move by Mr O'Rourke who, by taking this unilateral step, may have hoped to persuade Mr Wilson to his point of view or Mr O'Rourke, who conceded a poor memory may simply be confused about the outcome of his conversation with Mr Wilson. The current circumstances may be similar to those commented on by McClellan CJ at CL in Watson v Foxman (1991) 49 NSWLR 315: "Human memory of what is said in conversation is fallible for a variety of reasons and ordinarily the degree of fallibility increases with the passage of time, particularly where dispute or litigation intervene and the processes of memory are overlaid, often subconsciously, by perceptions of self interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then again, often, subconsciously, constructed. All this is a matter of ordinary human experience." [68] Whatever be the case the evidence does not support Mr O'Rourke's claim that his offer was accepted by Mr Wilson. In the absence of agreement, there was no legal basis or requirement for the payment; there is still no agreement between the parties; and Mr Wilson has not established a contractual entitlement to the $16,000.00". [69] The result, therefore is a verdict for the defendant in respect of the Statement of Claim. In relation to the Amended Cross Claim the claim is pleaded in clauses 1,2 and 3 are dismissed, but there will be verdict for the defendant/cross-claimant in relation to clause 5. [70] There will be judgment for the cross-claimant in the sum of $16,000.00 plus interest."

THE GROUNDS OF APPEAL 28A total of 11 grounds of appeal were pleaded in the amended summons in the following terms: (1)His Honour erred at law by finding that neither the plaintiff nor cross claimant (the defendant) had a binding agreement with the other. (2)His Honour erred at law in finding that the plaintiff did not have a binding agreement with the defendant. (3)His Honour erred by not finding that the defendant's pleadings in the Amended Cross Claim constituted a full admission of liability to the plaintiff's claim of an agreement against the defendant in the sum of $18,000.00. (4)His Honour erred at law in failing to give any reasons by which the pleadings of the defendant/cross-claimant did not constitute a binding admission of liability. (5)His Honour erred by failing to give any reasons not to take into account the pleadings of the defendant in coming to a conclusion that there was no agreement between the plaintiff and the defendant. (6)His Honour erred at law by misdirecting himself as to the proper course of reasoning after deciding that the cross claimant (defendant) did not have a binding agreement with the plaintiff on the terms claimed by the cross claimant (defendant). (7)His Honour erred at law in finding that the evidence of the cross-claimant (defendant) in the circumstances could support a verdict different from the case particularised in its pleadings, despite the fact that counsel for the cross claimant (defendant) confirmed to the court that the cross claimant was bound to the pleadings. (8)His Honour erred at law in finding that the payment of the sum of $16,000.00 by the cross claimant (defendant) to the plaintiff was other than by way of a deposit on an agreement. (9)His Honour erred at law in finding that the payment of the $16,000.00 by the cross claimant (defendant) to the plaintiff was a "tactical or pre-emptive move" when there was no evidence for such a finding, and contrary to the evidence of both the plaintiff and the cross claimant (defendant) that it was paid as a deposit on an agreement. (10)His Honour erred at law in finding that there was no legal basis or requirement for the payment of the "deposit" to the plaintiff by the cross claimant (defendant) when the evidence of both parties and the cross claimant (defendant's) pleadings admit the payment by way of deposit. (11)His Honour erred at law in finding that the plaintiff had to repay the deposit of $16,000.00 as an unjust enrichment, or similarly. 29In the course of the proceedings before me, ground (11) was abandoned by counsel for the plaintiff.

GROUNDS (1) TO (7) The submissions of the parties 30Some of the grounds of appeal (for example grounds (1) and (2)) asserted that the Magistrate had erred in finding that no agreement had been reached between the parties. However, counsel for the plaintiff did not advance the submission that the Magistrate's finding in this respect constituted an error because the evidence, and the inferences capable of being drawn from it, were insufficient to support the conclusion he reached (see for example Australian Gas Light Company v The Valuer-General (1940) 40 SR (NSW) 126; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321). Rather, the primary submission advanced by counsel for the plaintiff in support of grounds (1) to (7) was that on a proper construction of the pleadings, there had been an admission made by the defendant as to the existence of an agreement and that accordingly, the finding of the Magistrate that there was no agreement between the parties was an error of law. In advancing this proposition, counsel submitted that the Magistrate had "ignored" the pleadings without giving reasons for doing so. 31In the course of the hearing before me, and although it was not specifically asserted in any ground of appeal in the amended summons, counsel for the plaintiff further submitted that in light of the pleadings, the Magistrate had an obligation to inform the parties that he was contemplating reaching the conclusion that there was no agreement. Counsel submitted that the Magistrate's failure to do so constituted a denial of natural justice and procedural fairness. 32In response, and bearing in mind the provisions of s. 40 of the LCA pursuant to which the plaintiff's appeal was brought, counsel for the defendant firstly submitted that Magistrate's conclusion that no agreement had been reached was a finding of fact, and was one which did not involve a question of law. 33Secondly, and in answer to the primary submission put on behalf of the plaintiff, counsel for the defendant submitted that when the pleadings were read as a whole, and particularly having regard to paragraph (5) of the defendant's cross-claim, the question of whether or not any agreement had been reached between the parties was clearly a question the Magistrate was being asked to decide. 34Thirdly, and in response to the proposition that the Magistrate had denied natural justice and procedural fairness to the plaintiff, counsel for the defendant pointed out that the hearing before the Magistrate, to the knowledge of both parties, had proceeded on the basis that the existence of an agreement was very much an issue. In the course of submissions before me, and in circumstances where the final addresses made to the Magistrate were not transcribed, both counsel agreed that the issue of the existence of an agreement was the subject of submissions at the conclusion of the evidence. In these circumstances, counsel for the defendant submitted that there had been no denial of natural justice or procedural fairness.

Consideration and conclusion 35In my view, the submissions advanced on behalf of the plaintiff in support of grounds (1) to (7) should be rejected. I have come to that view for a number of reasons. 36Firstly, as I have noted, the present appeal has been brought pursuant to s. 39(1) of the LCA, on the basis that the Magistrate's conclusion involved a question of law. Although there is no universally applicable test for distinguishing questions of law from questions of fact (see Collector of Customs v Agfa-Gevaert Limited (1996) 186 CLR 389 at 394) a determination as to the intention of the parties objectively ascertained as to whether a contract has been formed is essentially a question of fact, or a question of mixed law and fact (see Loudoun-Shand and anor v Jadasi Investments Pty Limited (2007) NSWCA 316 at [42] per Tobias JA). It is to be noted that although s. 40 of the LCA provides a mechanism to seek leave to appeal against a decision of a Magistrate which involves a question of mixed law and fact, that is not the provision under which the present appeal has been brought. 37It follows that to the extent that the grounds of appeal do no more than assert that the Magistrate erred in concluding that no agreement had been reached (see for example grounds (1) and (2)) they do not involve any question of law. 38A finding of fact may nevertheless involve a question of law if the decision maker has, in some way, misdirected himself (see for example Hope v Bathurst City Council (1980) 144 CLR 1 at 10; Australian Gas Light Company v Valuer-General (supra) at 138; Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139 at 156). As I understood the submissions of counsel for the plaintiff, it was on this basis that a question of law was said to arise in terms of grounds (1) to (7). In particular, it was argued that the Magistrate had misdirected himself by reaching a conclusion which was inconsistent with the pleadings. 39In my view, the Magistrate did not misdirect himself in any way. Moreover, he did not reach a conclusion which was inconsistent with the pleadings, and did not "ignore" the pleadings in the sense suggested by counsel for the plaintiff. 40Proper pleadings are fundamental to the basic requirement of procedural fairness (see Banque Commerciale (SA) (in liq) v Aklul Holdings Limited (1990) 169 CLR 279). They serve, amongst other things, to identify the issues in dispute, and the relevance and admissibility of the evidence which is adduced in the trial (see Dare v Pulham (1982) 148 CLR 658 at 664). 41In the present case, the proposition that no agreement had been reached between the parties was clearly and unequivocally pleaded. Consistent with that, counsel for the defendant, in the course of opening his case, explained to the Magistrate (at T9 L10) that it was part of his case that the defendant was entitled to a return of the money he had paid the plaintiff. The exchanges between the Magistrate and counsel for the defendant referred to in [13] and [14] above make it clear that one of the issues the Magistrate was being asked to determine was whether or not any agreement was ever reached. That was an approach which was consistent with the pleadings. 42Further, the evidence of the defendant, which formed (at least in part) the basis of the Magistrate's conclusion that no agreement had been reached, was admitted without objection. Finally, as I have previously indicated, it was accepted by both counsel that the issue of whether an agreement existed between the parties was the subject of submissions made to the Magistrate at the conclusion of the evidence. 43It follows that this was not a case in which the evidence raised any fresh issue which was not already evident on the pleadings. Even if this had been the situation, it has been observed that cases are decided on the evidence, and that modern pleadings have never imposed so rigid a framework that the case is to be decided upon a basis which does not embrace the real controversy between the parties (see Banque Commerciale (SA) (supra) per Dawson J at (296 - 297); Vale v Sutherland (2009) 237 CLR 638 at [41]). 44In all of these circumstances, I do not accept the proposition that the Magistrate erred in determining the matter in a way which was inconsistent with the pleadings, nor do I accept that he "ignored" the pleadings. 45In addition, I do not accept that there was any denial of natural justice or procedural fairness visited upon the plaintiff. It is obviously an dispensable requirement of justice that a person whose interests may be adversely affected by a decision is afforded a fair opportunity, prior to such decision being made, to put its case by adducing evidence and making submissions (see generally Allesch v Maunz (2000) 203 CLR 172 at [35] per Kirby J; Beveridge v Dontan Pty Limited (1991) 23 NSWLR 13). However, the matters to which I have previously referred, and particularly the fact that both parties in the present case were given the opportunity to make submissions as to the issue of whether or not an agreement had been reached, make it clear that the plaintiff was given a fair opportunity to put his case and to make such submissions to the Magistrate as his counsel wished to make. 46Further, I do not accept that the Magistrate was under an obligation to provide some advance indication that he was minded to find in favour of the defendant on the basis upon which he ultimately did so, and that his failure to do so was somehow unfair. Fairness is not an abstract concept. It is essentially a practical one. Whether one speaks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice (see Re Minister for Immigration and Multicultural Affairs; ex parte Lam (2003) 214 CLR 1 at [37] per Gleeson CJ). In Commissioner for ACT Revenue v Alpha One Pty Limited (1994) 49 FCR 576 Northrop, Miles and French JJ observed (at 590 and ff): "It is a fundamental principle that where the rules of procedural fairness apply to a decision-making process, the party liable to be directly affected by the decision is to be given the opportunity of being heard. That would ordinarily require the party affected to be given the opportunity of ascertaining the relevant issues and to be informed of the nature and content of adverse material...The subject is entitled to respond to any adverse conclusion drawn by the decision maker on material supplied by, or known to, the subject which is not an obvious and natural evaluation of that material. The decision maker is required to advise of any adverse conclusion which has been arrived at which would not obviously be open on the known material". 47On the evidence in the present case, it could hardly be said that the Magistrate's conclusion was not obviously open to him. Moreover, as I have pointed out, the issue of the existence of an agreement was the subject of submissions by both parties at the conclusion of the evidence. In that sense, this was not a case in which the plaintiff could be said to have been caught by surprise by the Magistrate's conclusion. The Magistrate had been urged reach such a conclusion by counsel for the defendant. Counsel for the plaintiff was given the opportunity to (and apparently did) make submissions in support of the contrary conclusion. 48For these reasons, grounds (1) to (7) are not made out. GROUNDS (8) - (10) The submissions of the parties 49In support of grounds (8), (9) and (10) counsel for the plaintiff submitted that the Magistrate's finding concerning the defendant's payment of $16,000.00 was one which was contrary to the evidence. Counsel for the plaintiff relied, in particular, upon the evidence of the defendant that he thought he had paid, or had intended to pay, a deposit pursuant to an agreement. 50Counsel for the defendant submitted that the Magistrate's finding in this respect was a factual one which did not involve any question of law. Consideration and conclusion 51In my view the submissions of the plaintiff in support of these grounds should be similarly rejected. 52Firstly, the assertion in ground (9) that the Magistrate "found" that the payment of $16,000.00 by the defendant was a "tactical or pre-emptive move" fails to have regard to the terms in which paragraph [67] of the Magistrate's judgment was expressed. On a fair reading of that paragraph the Magistrate was doing nothing more than giving consideration to competing possibilities in terms of the purpose of the payment. He made no finding at all in the terms asserted in ground (9). 53Secondly, paragraph [65] of the Magistrate's judgment makes it clear that he took the view that parts of the objective evidence tended against the conclusion that any binding agreement had been reached. In my view, that conclusion was well open to him. In particular, and on the plaintiff's own evidence, the last conversation he had with Mr Elliot concluded with Mr Elliott indicating that he would obtain further instructions. As the Magistrate properly pointed out, there was no evidence that Mr Elliott had any further discussions with the plaintiff after that time. Those circumstances are at odds with a conclusion that an agreement had been reached. 54Thirdly, the plaintiff's reliance upon the evidence of the defendant referred to in [49] above overlooks two important considerations. The first is that irrespective of what the defendant might have thought or intended, issues of contractual intention are normally determined by the application of an objective, as opposed to a subjective, test (see generally Baird Textile Holdings Limited v Marks and Spencer PLC [2002] 1 All E R (Comm) 737). The second is that such intention is capable of being impliedly negatived by other evidence (see Baird Textile Holdings Limited (supra)). In the present case, that other evidence included the intervention of Mr Elliott, and the terms of the discussions which took place between he and the plaintiff after the payment of $16,000.00 was made. Such evidence clearly supported the Magistrate's ultimate conclusion.

ORDERS 55For the forgoing reasons I make the following orders: (1)The amended summons is dismissed. (2)The plaintiff is to pay the defendant's costs.

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: 30 July 2013

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Cases Cited (13)