Noble v Noble

The proceedings in the Local Court

1. On 4 February 2021 proceedings were commenced in the Local Court by Panthera Finance Pty Ltd ('Panthera') against the defendant seeking to recover the amount of $48,666.72 - a sum that was alleged to be owed to the CBA on the credit card that it had issued to her. (It should be noted that it was not disputed that the CBA had assigned its "right, title and interest" in the debt to Panthera, and was thus entitled to maintain its claim against the defendant).
2. The defendant filed a defence to that claim, as well as a cross claim against the plaintiff. By that defence, and cross claim, the defendant essentially contended that the debt claimed was a debt of the business (Nobles) and that order 10 made by the Federal Circuit Court entitled the defendant to be indemnified by the plaintiff in respect of her liability for that debt.
3. The plaintiff contested liability: he argued that he had no obligation to indemnify the defendant, and filed a defence to the cross claim to that effect. His argument was that the debt on the credit card was a personal, not business, debt and that he was otherwise unaware of the existence of the debt. (During the course of submissions in this Court, the plaintiff confirmed that this was the way that the case was argued below). Thus, on the plaintiff's argument, there was no obligation to indemnify the defendant because the debt was not a debt of Nobles, but a personal one. Separately, it was argued that even if it were a debt of Nobles, "it was not disclosed to the [plaintiff] in writing at the time of signing" the consent orders - with the consequence that the obligation to indemnify created by order 10 did not arise.
4. The Magistrate did not accept the plaintiff's arguments. The key findings of the Magistrate were as follows.
5. In relation to the issue about the character of the debt: 1. The application was "for a business credit card", rather than a personal one; 2. The email address provided on the application by the defendant, was one identifiable with the business; 3. The "structure of the business … adds support to the [defendant's] submission that the account was primarily a business one"; 4. That "even after the separation [the] account was used regularly for business related expenses" - specifically, by the plaintiff - and further, in relation to the account, the defendant made "personal purchases from time to time using that account"; 5. The "debt was a debt that was at least considerably raised during the business operation of the card"- in this respect, the Magistrate was "not satisfied that the bulk of the debt … was one accrued by the [defendant] on a personal basis".
6. In relation to the issue about the plaintiff's awareness of the card, and the existence of a debt on it: 1. Contrary to what the plaintiff had argued, the plaintiff not only admitted that he was aware of the card, but he was continuing "to make payments" on it; 2. The plaintiff had acknowledged the existence of the credit card balance "in his financial statement tendered to the Federal Circuit Court"; 3. The plaintiff's evidence "was unsatisfactory … particularly around his evidence that he was unaware of the existence of the card".
7. The ultimate conclusion of the Magistrate was: I am quite satisfied to the civil standard that the card was established as a credit card for the business and that the [plaintiff] was aware of its existence. Further, the indemnity that he extends pursuant to the Federal Circuit Court orders is an indemnity which captures the debt, the subject of these proceedings and which is owed to [Panthera] by the [defendant].

The nature of the appeal to this court

1. Section 39(1) of the Local Court Act 2007 (NSW) ('the Act') permits a party to proceedings before the Local Court "who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law". Thus, the existence of a question of law is "not merely a qualifying condition to ground the appeal, but also the subject matter of the appeal itself": TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation (1988) 82 ALR 175; [1988] FCA 119 at [11].
2. Section 40(1) of the Act permits a party to proceedings before the Local Court "who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court". The matters affecting a decision to grant leave under s 40(1) of the Act were considered in Café Du Liban Pty Ltd v Bespoke Garage Pty Ltd [2017] NSWSC 779 at [4] (Beech-Jones J) ('Café Du Liban') and in Namoi Sustainable Energy Pty Limited v Buhren [2022] NSWSC 175 at [34]-[39] (Bellew J).
3. The Court can determine an appeal under s 39(1) or s 40(1) in one of four ways. Section 41(1) of the Act provides: (1) The Supreme Court may determine an appeal made under section 39 (1) or 40 - (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 Local Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal.
4. In an appeal under ss 39 or 40 of the Act, this Court has no power to make any finding of fact: Lesley-Swan v Owners SP 32725 [2013] NSWSC 1635 at [70]-[75]; Café Du Liban at [4]; Rose v Tunstall [2018] NSWCA 241 at [25]-[33]. It follows that if, following the determination of any question of law or, with the grant of leave, any question of mixed law and fact, there remains any factual question to be resolved, then the proceedings must be remitted to the Local Court for further hearing.

The determination of the grounds

1. Before addressing the substance of the plaintiff's arguments on appeal, it is necessary to note two difficulties with the form of the plaintiff's summons. The first is that, although apparently drafted with the assistance of a lawyer, the summons fails to appreciate the confined nature of the right to appeal to this Court from the Local Court. For example, several of the "grounds" appear - though they are by no means clear - to be directed to questions of fact alone. As is apparent from the terms of ss 39 and 40 of the Act, no appeal lies to this Court from a question of fact. The second - and more fundamental difficulty - is that the summons fails to specify the grounds of the appeal with particularity and, furthermore, fails to identify the error of law (or error involving a mixed question of law and fact) alleged: r 50.4(2) of the Uniform Civil Procedure Rules 2005 (NSW).
2. As to this last matter - viz., failing to clearly identify the grounds of appeal in the initiating process - it is sometimes the case that the precise ground or grounds are revealed by the written submissions filed (an approach that is to be deprecated: see Director of Public Prosecutions (NSW) v Mahamed [2022] NSWSC 147 at [37] (Dhanji J)). However, in this case, no written submissions were filed by the plaintiff.
3. In order to understand the nature of the errors alleged to arise from the decision of the Magistrate, during the course of submissions in this Court, the plaintiff explained his complaints about the decision of the Magistrate as involving the following: (a) the credit card debt was the defendant's personal debt, and not a business debt of Nobles ("business debt" being a short-hand description of the debt that was within the indemnity provided by order 10); and (b) he had no notice (or knowledge) of the existence of the credit card - matters that also tended to support the characterisation that the credit card (and the debt incurred on it) were personal rather than "business debt", and also meant the exception expressed within the indemnity contained within order 10 might be engaged. The plaintiff's explanation of his case on appeal is consistent with the way the Magistrate understood the plaintiff's case when argued in that Court: see [13]-[17], above.
4. What was not in issue should also be noted. No issue was raised, below or on appeal, about the proper construction of the indemnity. The proper construction of the indemnity would, of course, involve a question of law: Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126, 147; Jennings v Credit Corp Australia Pty Ltd (2000) 48 NSWLR 709; [2002] NSWSC at [11]. Nor was there any discrete issue raised about whether the business debt on the credit card was a "business" debt within the meaning of the indemnity. In the absence of any ground of appeal directed to this issue, it is unnecessary to attempt to categorise whether such a challenge could involve a question of law or a question of mixed law and fact (as to which, see generally, Orr v Cobar Management Pty Limited [2020] NSWCCA 220 at [31]-[61]).
5. The immediate difficulty with the plaintiff's complaint, in connection with the characterisation of the debt as business, rather than personal, debt is that an issue of that kind is quintessentially a matter of fact - of which there is no right to appeal. The position is not otherwise because the summons contained an overarching complaint that the Magistrate "made the wrong findings". That is because a finding that "is against the evidence and the weight of the evidence, that it ignores the probative force of the evidence which is all one way" is an error of fact, not of law: Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139, 155 ('Azzopardi'). Moreover, "no error of law occurs simply because the judge prefers one version of the evidence to another or one set of inferences to another": Azzopardi at 151.
6. It should be emphasised that no attempt was made to argue that the finding that the credit card debt was business debt involved a mixed question of law and fact (see [25], above): the way the case was argued in this Court, and below, was that a finding that the debt was a business debt satisfied the description of "debts of the company" within the indemnity in order 10.
7. The summons contained a broad - and overarching - complaint that there was "no evidence" to support the findings of the Magistrate. Of course, whether "there was no evidence to support a factual finding is a question of law, not of fact": Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 at [91]. However, in this case, there is no substance to this complaint (assuming it was directed to this issue). That is because there was, undeniably, evidence to support the finding challenged: see [15], above.
8. The plaintiff's complaint concerning the finding that he had notice (or knowledge) of the existence of the credit card suffers from the same problems as the first complaint, in my view: viz., the finding is one of fact: see [26], above. It is not therefore susceptible to review by an appeal to this Court.
9. In any event, I would add the following. In my view the finding made - particularly in light of the fact that the plaintiff's evidence on the topic was rejected by the Magistrate - was inevitable having regard to the intermediate findings also made: namely, that the plaintiff had made payments on the card and account, and acknowledged its existence (and the amount of the debt at that time) in the financial statements that he tendered to the Federal Circuit Court: see [16], above.
10. Again, as with the first complaint, no attempt was made to argue that this involved a mixed question of law and fact: the way the case was argued in this Court, and below, was that a finding that the plaintiff knew of the existence of the card and the debt meant that the exception within order 10 (and the limitation in order 11(f)) would not be engaged.
11. In those circumstances, the plaintiff has failed to demonstrate any error.
12. Finally, for completeness, the following should be noted. On one view of the evidence, and based upon some of the findings, it appears to be the case that some of the expenses incurred on the credit card were of a private character; that is, they were not business-related. When raised with the parties, during submissions, both the plaintiff and defendant stated that the case conducted below did not involve any argument that if the plaintiff's primary case were rejected, there should be a reduction in the amount to be indemnified to reflect that position.

Orders

1. For the above reasons, I make the following orders: 1. Order that the summons filed 25 February 2022 be dismissed. 2. Order that the plaintiff pay the defendant's costs of the proceedings in this Court.

Amendments 14 November 2022 - Format 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: 14 November 2022