Mirzikinian v Tom & Bill Waterhouse Pty Ltd

Mirzikinian v Tom & Bill Waterhouse Pty Ltd - [2009] NSWCA 296 - NSWCA 2009 case summary — Zoe

[14]

The concurrent application for leave to appeal and appeal 2 This is an application for leave to appeal and, if granted, an appeal against a number of orders made by Elkaim DCJ in favour of the respondent against the appellants. 3 The principal order his Honour made was for summary judgment against the appellant in the sum of $250,000. By s 127(2)(d) of the District Court Act 1973, leave to appeal is required in respect of such an order. His Honour made various other orders striking out certain paragraphs of the appellant's defence. The appellant tacitly accepted that that part of the appeal that relates to strike out orders is dependant on the result of the appeal against the order granting summary judgment in relation to the sum of $250,000. Thus, no separate submissions were advanced, either in writing or orally, in relation to the strike out orders. 4 The respondent's claim for $250,000 against the appellant was based on a document headed "Deed of Acknowledgment of Debt" that the appellant signed. I shall henceforth refer to the document as the "Deed". 5 The Deed provided as follows: " Deed of Acknowledgment of Debt This deed is made on 21 st day of March 2007, in Sydney, NSW. I, Warwick Mirzikinian ('Debtor') acknowledge I owe Tom & Bill Waterhouse Pty Ltd ('the Bookmaker') the amount of $250,000 as per the schedule which is annexed hereto and marked 'A' (the Debt) which is presently due and owing for bookmaking services provided to the Debtor at the Debtors request, plus cumulative interest as set out below from 16/09/06. The interest particulars of total year to date amount owing as at this date is annexed hereto and marked 'B'. In consideration of the Bookmaker's forbearance from immediately taking action to recover payment of the amount due on the terms contained in this deed, the Debtor agrees to charge all of the Debtors property: real, personal and shares, in favour of the Bookmaker. The Debtor hereby agrees to pay the full amount, including cumulative interest, as soon as possible and within 30 days of the Burlington Ave, Homebush property's current application is approved in Land & Environment Court. In any case the Debtor guarantees the Debt will be paid by 1 st September 2007. The Debtor hereby agrees cumulative interest will be payable on the Debt at 10% if the Debt is paid in accordance with this agreement or if the Debtor is in default of this agreement, the debtor agrees to pay cumulative interest on the Debt at 20%, dated from 16/09/06 and the Bookmaker may take action. Executed as a Deed: (Signed) Warwick Mirzikinian …………………………………………………… Signed sealed and delivered by the said Debtor (Signed) Louise Waterhouse

[16]

…………………………………………………… Witness" 6 Thus, by the Deed, the appellant acknowledged that he owed the respondent $250,000 "for bookmaking services" provided to him at his request and he agreed to pay that sum, including interest, to the respondent as soon as possible and within 30 days of a certain development application being approved, but, in any event, no later than 1 September 2007. 7 The respondent's case as argued before Elkaim DCJ in regard to the $250,000 was that the Deed constituted a contract by which the appellant had agreed to pay the respondent $250,000 by 1 September 2007 and had failed to make that payment. The appellant, on the other hand, contended that, in signing the Deed, he did not intend to create any legal relations between him and the respondent (and, hence, the document had no legal effect). In the alternative, the appellant contended that any obligation he incurred under the Deed was illegal by reason of the Unlawful Gambling Act 1998 and, by s 56 of that Act, any obligation created by the Deed was unenforceable. 8 As regards the respondent's claim based on the Deed as a contract, the appellant submitted to Elkaim DCJ that the document he signed as a deed was no more than a proposal that was to be placed before Mr William Waterhouse (a director of the respondent) for his approval. I shall refer to Mr William Waterhouse as "Mr Waterhouse" or "Bill", as the parties called him. The appellant submitted that, without Mr Waterhouse's approval, the Deed would have no force or effect. 9 The appellant adduced evidence to the effect that on 21 March 2007 he met with Ms Louise Waterhouse (referred to in the proceedings as "Louise") and Robert Waterhouse (referred to in the proceedings as "Robert"), "consultants" of the respondent. At the meeting, Louise gave the appellant the unsigned Deed, which Louise described as a "proposal for repayment" that had been prepared for the appellant to sign. Louise told the appellant in effect that were he to sign the document she and Robert would show it to Mr Waterhouse who would then consider the "proposal for repayment" recorded therein. At the meeting, after he signed the Deed, Louise said to the appellant, "we will show this to Bill and let you know if it is acceptable to him and we will get back to you". The appellant replied, "Okay". 10 The appellant's argument, in essence was that, by the conversations to which I have referred, the parties accepted that, by signing the Deed, the appellant was merely inviting the respondent to treat with him and was not thereby making an offer to the respondent capable of acceptance. The appellant also argued that, if the signed Deed constituted an offer by him, he withdrew it before he had been advised that Mr Waterhouse had accepted it; alternatively, the Deed had expired by the effluxion of a reasonable time before it was executed by the respondent. 11 As regards the appellant's argument based on illegality, he submitted that the $250,000 represented the total of debts he had incurred for bets he had placed on racehorses. He submitted that the Deed implied that he had placed those debts with the respondent. The respondent was incorporated on 12 December 2006 and the debts were incurred prior to that date. Thus, the respondent could not have been duly licensed as a bookmaker when the bets were placed and the debts were incurred. Hence, by s 56 of the Unlawful Gambling Act, the debts were incurred illegally and were unenforceable. 12 His Honour did not uphold the appellant's arguments and granted summary judgment in favour of the respondents. In the proceedings before this Court, the appellant contended that his Honour thereby erred. 13 The respondent filed a notice of contention by which it contended that the order for summary judgment should be upheld on the ground that the Deed was binding on the appellant as a deed. This argument, in effect, was raised in the alternative to the appellant's cause of action based on the proposition that, under the contract constituted by the Deed document, the respondent owed it $250,000. 14 Both parties accepted that the respondent's case as articulated in the notice of contention (that is based on the Deed as a deed) was a stronger case than that based on the breach of contract argument that had been advanced before Elkaim DCJ. Accordingly, before this Court the parties' oral submissions were not, in substance, directed to the breach of contract issue and were directed only to the argument based on the Deed as a deed and the illegality issue. The appellant did not contend that it was not open to the respondent to advance an argument on this basis. 15 The appellant accepted, correctly, that it would be open to this Court to refuse leave to appeal or to dismiss the appeal on the grounds that the respondent was entitled to summary judgment based on its argument that the Deed was a deed. Were the Court to uphold the notice of contention, no substantial injustice would result from the judgment appealed from even though, notionally, the judgment might contain an error of principle. Were the Court to come to such a view, it would be empowered by s 75(10) of the Supreme Court Act 1970 to dismiss the appeal. That section provides that on appeal the court may make any order, "which the nature of the case requires".

[17]

The circumstances leading to the signing of the Deed and the subsequent relevant facts 16 Over the period 9 September 2006 to 21 October 2006, the appellant placed a number of bets with Mr Waterhouse, in his personal capacity. Mr Waterhouse was a licensed bookmaker. Mr Waterhouse allowed the respondent credit facilities for making those bets. Elkaim DCJ found that, "over a period of time the [appellant], in effect, ran up a bill of $250,000". The notice of appeal does not challenge these findings. 17 From about October 2006, negotiations ensued between the appellant and representatives of Mr Waterhouse regarding payment of the $250,000. During the course of these negotiations the appellant sought "more time to pay". 18 Elkaim DCJ observed: "The [appellant] does not dispute that he placed the bets, nor that he ran up the debt. In fact, as I understand the submissions on his behalf, he does not dispute that he owes someone $250,000. He says, however, that he does not owe it to [the respondent]. He certainly has not paid $250,000 to whoever that someone is." The notice of appeal does not challenge these findings. 19 According to the appellant, on a date prior to 21 March 2007, he had a conversation with Louise to the following effect: "I said: I can't settle the account immediately, I need some sort of arrangement to be put in place to give me time to pay. I can't pay immediately, you kept increasing my credit so I could bet with you to recover my losses. I spoke to Tom and he is ok with a delayed payment as long as I pay interest. Louise said: Tom has no authority to agree to anything, Bill is the boss and he said he would not consider any proposal for payment unless it is signed and in writing from you. Anyway I think we could come and see you and organise something. I know you are betting with other people and we would like to settle this so you can bet with us again." 20 On 21 March 2007, the appellant met with Louise and Robert at a coffee shop in Sydney. The purpose of the meeting was to discuss the repayment of the appellant's debt. According to the appellant, at that meeting he had a conversation as follows with Louise: "Louise said: As you know I have discussed your situation with Bill and he said he wouldn't consider any proposal for repayment until he has something in writing, so we have prepared a document for you to sign so we can show him. I said: Ok that sounds fair enough. Robert said: He likes doing things the proper way." 21 Thereupon, Louise handed the appellant the unsigned Deed, which the Waterhouses had prepared. According to the appellant, schedules A and B to the Deed, which are referred to in the second paragraph of the Deed, were not attached when the document was so handed to him. 22 According to the appellant, he then signed the Deed in front of Louise and Robert and handed it back to Louise. According to the appellant, Louise did not then sign the Deed as a witness to his signature. 23 According to the appellant, the following was said after he gave the Deed back to Louise: "Louise said: We will show this to Bill and let you know if it is acceptable to him and we will get back to you.

[18]

I said: ok." 24 According to the appellant, until proceedings were commenced Louise, Robert and Mr Waterhouse did not inform him whether the terms of payment had been finalised (and, by inference, that Mr Waterhouse had signed the Deed), and he did not see a copy of the Deed. 25 In about August 2007, the appellant had a telephone conversation with Louise in which, according to the appellant, the following was said: "I said: I did not hear back from you with respect to my proposal. Louise said: Sorry I thought it was obvious that's why we have left you alone for so long. I said: Regardless of the offer I do want to settle this matter. The credit that was advanced to me was continuously increased to a point where I couldn't pay you immediately. The approvals on the property have still not come through but would Bill accept that I pay $100,000.00 now and the balance of $150,000.00 in a month. Louise said: I don't think this would be acceptable because there is a lot of interest now but I will discuss it with Bill and Robbie." 26 On 20 August 2007, the appellant sent an email to Robert stating: "I will do my best to clear the account by the end of the month. However I must admit I did not realize that the account would have interest at 20% retrospective and as you know I signed the document in front of you without taking it away and reading it properly. Further the continuous extension of credit was a lot higher than I indicated I could afford at the time and this was discussed with Tommy, hence the delay in payment. Please consider a settlement of $250,000 as full payment by the end of the month and I will do my best endeavours to clear the account and to maintain our mutual interest in resolving this amicably." 27 According to the respondent, Mr Waterhouse signed the Deed on 21 March 2007, but the appellant denied this. 28 The respondent's statement of claim was filed on 5 September 2007. By the statement of claim, the respondent alleged that, by the Deed, the appellant agreed to pay it $250,000 by 1 September 2007 and that sum had not been paid. The respondent sought an order that the appellant pay the $250,000 together with interest as stipulated in the Deed. 29 Paragraph 2 of the respondent's statement of claim alleged that on 21 March 2007 the appellant and the respondent each executed the Deed and pleaded the terms of that document. Paragraph 3 of the appellant's amended defence alleged: "The Defendant denies paragraph 2 of the Amended Statement of Claim and says that the document does not constitute a Deed for the purposes of section 38 of the Conveyancing Act 1919 (NSW) and section 51A of the Conveyancing Act 1919 (NSW) and therefore is unenforceable as a Deed." 30 Elkaim DCJ observed in relation to paragraph 3 of the amended defence that counsel for the appellant, on being directed to various paragraphs of the affidavits of both sides, abandoned the argument contained in paragraph 3. His Honour ordered that paragraph 3 be struck out and there is no appeal from that order. His Honour noted that paragraph 3 of the amended defence concerned "an allegation that the document was not properly witnessed". It was this point that, in effect, the appellant abandoned and he subsequently did not challenge the respondent's contention that the Deed was a deed.

[22]

And at 356: "No particular form of words or act is necessary to constitute delivery - any words or acts that sufficiently show that it was intended to be finally executed will do … it is not necessary that the deed be delivered into the possession or custody of the person intended to take the benefit of the deed or to someone on his behalf … it will frequently be inferred from execution." 34 His Honour's reasoning was followed in Scook v Premier Building Solutions Pty Ltd and others (2003) 28 WAR 124 where Steytler J (with whom McKechnie and Hasluck JJ agreed) said at [25]: "It is enough to meet the requirement of delivery that there by acts or words sufficient to show that the document is intended by the party to be executed as his or her deed presently binding on him or her: Tupper v Foulkes (1861) 142 ER 314 at 319; Xenos v Wickham (1867) LR 2 HL 296 at 312, per Blackburn J; Windsor Refrigerator Co Ltd v Branch Nominees Ltd [1961] Ch 88 at 98, per Cross J; and Vincent v Premo Enterprises (Voucher Sales) Ltd [1969] 2 QB 609 at 619, per Lord Denning MR. There is no need for any physical handing over of the deed: Doe d Garnons v Knight (1826) 108 ER 250 at 257; and Xenos v Wickham (HL) (at 323). Whether there has, or has not, been delivery is a question of fact: Xenos v Wickham (HL) (at 309, 311, 319); Ansett Transport Industries (Operations) Pty Ltd v Comptroller of Stamps (Vic) [1985] VR 70 at 78. Intention to deliver may be expressly proved or inferred from circumstances: Re Carile; Dakin v Trustees , Executors & Agency Co Ltd [1920] VLR 427 at 433. While intention is to be ascertained from circumstances prior to or contemporaneous with delivery, it is permissible to look at later events in order to ascertain what was the intention of the person concerned at the critical time: Poole v Neely [1976] 1 NZLR 529 at 541 and Monarch Petroleum (at 356)" (at [25]). 35 On 21 March 2007, Louise told the appellant that Mr Waterhouse would only consider a proposal for repayment of the appellant's debts if he had "something in writing". According to Robert, Mr Waterhouse liked "doing things the proper way". Louise explained that with that in mind they had prepared the Deed for the appellant to sign, "so we can show him". The appellant replied that that seemed "fair enough". Thereupon, Louise handed the appellant the Deed. According to the appellant, he then signed the Deed in front of Louise and Robert and handed it back to Louise. 36 In my opinion, the circumstances described in the previous paragraph establish unequivocally that the appellant intended the Deed "to be finally executed", that is, that the appellant intended to execute the Deed as his deed and it was immediately to be binding on him. 37 Mr Pritchard sought to place reliance on Hooker Industrial Developments Pty Ltd v Trustees of the Christian Bros [1977] 2 NSWLR 109. That case concerned a deed executed for the purposes of a contemplated conveyancing transaction. The grantor of the deed executed the deed and gave it to its solicitor. The solicitor did not proceed to exchange the deed to complete the conveyancing transaction. Helsham CJ in Eq held that the deed had not been delivered as it was not intended to operate as a deed until it had been exchanged and no exchange had occurred. In my opinion, Hooker does not assist the appellant, as the deed in that case had never left the possession of the grantor's solicitor. That is to be contrasted with the present case where the appellant unconditionally delivered the Deed to Louise and no question of exchange of deeds (as normal in a conveyancing transaction) was contemplated. 38 I would emphasise that delivery of the Deed in the manner I have described occurred before the further conversation between the appellant and Louise, when Louise told the appellant that she and Robert would show the signed Deed to Mr Waterhouse and let the appellant know "if it is acceptable to him" and said that "we will get back to you". In my opinion, delivery of the Deed as a deed was complete and the Deed was binding on the appellant before that conversation took place.

[24]

See also Scook at [26]. 40 When the appellant delivered the Deed he did not do so subject to any express condition that it not take effect as binding upon him until some condition was fulfilled or performed. There was nothing in what he said or in any of the surrounding circumstances that indicated that the Deed was not being delivered absolutely. 41 It occurred to me during the course of argument that the acknowledgement of indebtedness in the first paragraph, and the undertaking to pay in the third paragraph of the Deed, are arguably concurrent with and mutually dependent on the forbearance from immediately taking action until 1 September 2007 as expressed in the remainder of the Deed. On that basis, it might arguably be said that the acknowledgement of indebtedness and undertaking to pay were conditional on the respondent's agreement to refrain from taking action against the appellant until 1 September 2007. The consequence, arguably, might be that, although the delivery of the Deed was valid, the acknowledgement of indebtedness and undertaking to pay only became effective on Mr Waterhouse's signature (and, hence, agreement to the terms of the Deed). On this basis it might be said that the Deed was delivered in escrow, subject to the fulfilment of the condition relating to Mr Waterhouse's signature. 42 On reflection, however, I am of the firm view that the acknowledgement of indebtedness and undertaking to pay were given unconditionally. According to the second paragraph of the Deed, the consideration for the "forbearance from immediately taking action" was the appellant's agreement to charge his property. The appellant's acts in acknowledging his indebtedness to the respondent and his undertaking to pay were made absolutely, and without any condition attaching to them. No reliance can be placed on them for an argument that the Deed was delivered in escrow. 43 I would add that in Lady Naas v Westminster Bank Ltd [1940] AC 366 Lord Wright referred (at 402) to the judgment of two members of the Court of Appeal who had construed the deed in question in that case as a consensual document "requiring for its operation that the first appellant should concur in it by executing it". His Lordship pointed out that there was no express provision in the deed to that effect and the view of the Lords Justices "was based on an argumentative interpretation of the deed". Lord Wright went on to say (at 403): "The deed might well have been drawn in such a way as expressly to make the declaration of trust conditional on the first appellant executing it. In that case it would not have taken effect unless she had done so. But there is nothing of the sort expressed in the deed. On the contrary, the declaration of trust is absolute and unconditional in terms. It may have been expected that the first appellant would execute the deed, but it was certainly not made a condition of the conveyance. In my opinion the settlement was unilateral. I think it is misleading to import into the law of deeds analogies from an entirely different region of law, that of simple contracts. They indeed are consensual and depend on a meeting of minds in a common intent, evidenced by words or conduct. It is from this mutual consent that the rights and duties under the agreement arise. This might be the position in a case of a simple agreement to convey property. But the deed in question is something different. The declaration of trust by the settlor depended not on the other party's consent any more than mutual consideration. It depended on the act of the settlor in executing the settlement. The beneficiary might, it is true, disclaim, but her acceptance was immaterial except perhaps as ruling out disclaimer. There is nothing in the deed which could be construed as an express condition and no legal principle on which a condition such as is suggested could be implied. The law as to obligations or transfers under seal was fixed in days before the nature of the consensual contract was realized. In my judgment, the views of the Lords Justices cannot be supported."

[25]

See also Lord Romer at 408-409. 44 On this authority it is not open to construe a deed in order to ascertain whether it impliedly contains provisions that, properly construed, indicate that it was delivered in escrow. 45 Mr Pritchard submitted that, in the conversation that took place between the appellant and Louise after the Deed had been delivered, the parties agreed that the Deed would be delivered in escrow. It will be recalled that in this conversation Louise told the appellant that she and Robert would show the Deed to Mr Waterhouse and let the appellant know if the Deed was acceptable to Mr Waterhouse. 46 I have some doubt as to whether an escrow can be impressed on a Deed after it has been unconditionally delivered. The authorities that I have examined all refer to the creation of an escrow by circumstances that occurred prior to or contemporaneously with delivery. The issue was not argued in depth, however, and I shall not express a concluded view on the issue. 47 In my view, the discussion between the appellant and Louise did not result in an agreement by Louise on the part of the respondent that the Deed was to be held in escrow until Mr Waterhouse approved of it and the appellant was advised of his approval. I have observed that the acknowledgement of indebtedness and undertaking to pay were given unconditionally in the Deed and there is nothing in what was said by Louise, to which the appellant agreed, that in any way watered them down or made them subject to a condition. The factor that awaited Mr Waterhouse's approval was the forbearance and the proposed charge, as well as the other provisions of the Deed. In my opinion, nothing that was said had any bearing on the absolute nature of the acknowledgement of indebtedness and undertaking to pay. 48 Mr Pritchard pointed to the fact that the appellant's bets were not placed with the respondent and his indebtedness, prior to the execution of the Deed, was not to the respondent. That is correct, but I do not see how that fact meant that the acknowledgement of indebtedness and undertaking to pay subsequently became subject to Mr Waterhouse's execution (or approval) of the Deed. The words uttered by Louise during the conversation in question did not have that import. 49 There is another ground on which I would reject the argument that the Deed was in escrow until Mr Waterhouse signed it and the appellant was informed that he had done so. 50 There is authority for the proposition that the grantee of a deed, who is intended to be a party to the deed, may sue the grantor although the grantee has not executed the deed and the deed contains cross-covenants on the part of the grantee. It was so held in Morgan v Pike (1854)14 CB 473; 23 LJCP 64; 2 W R 193 by Jervis CJ, Cresswell J and Williams J agreeing. Lord Romer in Lady Naas v Westminster Bank Ltd at 409 quoted Morgan v Pike with approval. 51 In Lady Naas v Westminster Bank Ltd Lord Wright (at 402) made the following remarks which are consistent with Morgan v Pike: "[I]n Bowker v Burdekin 11 M & W 128, … a partner executed a deed conveying to a trustee for the benefit of creditors all the personal property of the partners. He was held bound by it though it was clear that he only executed it on the footing that the other partners also executed it, which they failed to do. But there was no express condition to that effect. Parke B. said that an instrument executed as a deed cannot be denied its effect for transferring property according to its terms.

[32]

See also at [30]. 64 Kennedy J in Monarch (at 357) had earlier made the same point. His Honour said: "Once an intended deed has been delivered as an escrow, it cannot be withdrawn, recalled or repudiated - Beesly v Hallwood Estates Ltd [1961] Ch 105 at 118, Kingston v Ambrian Investments Co Ltd [1975] 1 WLR 161 at 166; 1 All ER 120 at 125 and Alan Estates Ltd v W G Stores Ltd [1982] Ch 511 at 523, 527." 65 Accordingly, it was not open to the appellant to revoke the Deed in the way Mr Pritchard submitted he had. 66 Mr Pritchard submitted, in the alternative, that the Deed had expired by reason of the effluxion of a reasonable time before the conditions were fulfilled. 67 In Monarch, Kennedy J, after considering a number of authorities, concluded at 361 that what emerged from them was that: "[I]n the absence of any condition as to time, the only remedy … for delay on the part of the non-defaulting parties in assenting to deeds [is] to seek the aid of equity to have them delivered up for cancellation." 68 His Honour was unable to accept that there was any sufficient basis for the view that the mere lapse of time before the execution of a deed by another party either enabled the party who had delivered the deed to renounce it or prevent the other party from assenting to it. 69 In Scook Steytler J at [38] said: "Whatever may be the position in England, it seems that, in Australia, equitable relief is required in a case in which the condition imposed by the grantor has not been fulfilled within a reasonable time and the grantor wishes to be relieved of his or her obligation under the deed." 70 At [39] Steytler J approved Kennedy J's observations on this issue and accepted that: "The only remedy for delay on the part of non-defaulting parties in assenting to deeds was to seek the aid of equity to have them delivered up for cancellation." 71 The appellant has not sought relief of the kind mentioned. 72 Finally, Mr Pritchard sought to make a point of the fact that schedules A and B were not attached to the Deed when the appellant signed it. In my view the omission of the schedules has no significance. Schedule A sets out how the $250,000 is arrived at. Schedule B deals with the interest owing on the $250,000. Neither schedule bears on the acknowledgement that the appellant owes the respondent $250,000 and the matters referred to in the schedules can be proved by extraneous evidence.

At a glance

Court

Decision date

Before

Source

Judgment (36 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (3)

Cited By (10)