Sarina v Mackay

Appeals generally

1. Section 39(1) of the Local Court Act 2007 (NSW) provides that a party to proceedings before the Local 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.
2. Section 40(1) of the Local Court Act provides that a party to proceedings before the Local Court sitting in its General Division 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.
3. Section 41 of the Local Court Act provides that this Court may determine an appeal made under ss 39(1) or 40(1) by either (a) varying the terms of the judgment or order, (b) setting aside the judgment or order, (c) 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) dismissing the appeal.

A summary of the pleadings

1. Mackay is a builder and a director of Robvic Pty Limited. Sarina is a financial consultant and a director of Property Asset Consulting Services Pty Limited ("PASC"). Both parties traded sometimes through their corporate entities and sometimes in their personal capacities.
2. There are loan agreements between the corporate entities dated 16 March 2016 (CB 409) and 12 June 2015 (CB 472) in evidence. Although it is not necessary to set out these agreements in detail, they relate to a property Robvic had purchased in Gosford ("the Gosford Property") with development potential. It was agreed that PACS would carry out work to assist in the funding requirements from time to time of the Development Approval for the Gosford Property, which was not ultimately approved.
3. The 16 March 2016 and 12 June 2015 loan agreements, which I will refer to briefly under grounds 3 and 4 of this appeal, do not comprise the loan agreement being sued upon in these proceedings ("the Loan Agreement"). I will summarise the Loan Agreement relevant to this appeal, which was the subject of the proceedings in the Local Court, later in this judgment.

The statement of claim

1. By statement of claim filed in the Local Court on 18 December 2017, Mackay pleaded that Sarina owed $71,000 in debt together with interest and costs. The sum of $71,000 was pleaded to be moneys lent to Sarina by Mackay pursuant to the Loan Agreement, a written agreement between the parties entered into on 31 March 2017 at the Blues Point Hotel.
2. The terms of the Loan Agreement relied upon by Mackay were that the $71,000 was to be repaid by 28 April 2017 ("the repayment date") and that interest would accrue at the rate of 24% ("the interest term"). Mackay alleged that Sarina had refused to repay that amount.
3. On 15 April 2019, at the conclusion of the first day of the hearing in the Local Court, Mackay conceded that $5,000 had been received from Sarina on 2 May 2017, thus reducing the amount owing to $66,000.

Further amended defence

1. On 6 April 2018, Sarina filed a defence denying the claims. Sarina denied entering into the written agreement or agreeing to the repayment date or the interest term. Sarina admitted receipt of the $71,000 but claimed that the money was paid by Mackay in repayment of money he owed to Sarina. In particular at [2], Sarina made the following serious allegation: "In further answer to paragraph 1 of the Statement of Claim, the Defendant says that he was presented with a document called a 'loan agreement' which he crossed out all clauses relevant to the loan agreement and inserted a heading 'Receipt for Loan' which he signed. This is not the document provided in response to the request for particulars or the document pleaded in the Statement of Claim and says that either the Plaintiff has removed his signature from the document where he cross out all contents and inserted a heading Receipt for Loan or in the alternative the signature appearing on the loan agreement relied upon by the Plaintiff is a forgery."
2. On 26 June 2018, Sarina filed a statement of cross claim against Mackay seeking payment of $91,949.94 plus interest and costs. Sarina claimed that he loaned $162,949.94 to Mackay in 22 separate transactions between 25 September 2015 and 8 August 2017. The loans were payable on demand, save for the initial loan on 25 September 2015 which was repayable in 12 months. The transactions were specifically pleaded in the cross claim, together with the manner of the payment and the parties to whom the payment was made. He alleges that nine of the loans were advanced by Sarina to third parties on the direction of Mackay, and that the balance of the advances was made to Mackay. The cross claim admitted that the amount of $71,000 (the amount initially claimed by Mackay in the Statement of Claim) had been repaid by Mackay.

Defence to the cross claim

1. On 27 August 2018, Mr Mackay filed a defence to the cross claim. Mackay denied that Sarina loaned him money and or advanced the money as pleaded in the cross claim.
2. Mackay admitted the payment of $71,000 to Sarina and relied on the matters pleaded in the statement of claim. In answer to the whole of the cross claim, Mackay claimed that if any money was paid by Sarina, then it was paid to and on behalf of Robvic.

The Loan Agreement

1. It is common ground that the Loan Agreement was personally signed by Sarina at the Blues Point Hotel. It was drafted by Trevor Thomas Laycock, a solicitor. The relevant clauses of the Loan Agreement (Ex C in the Local Court) are as follows: "THIS LOAN AGREEMENT is dated 30th day of March 2017 PARTIES: 1. Stewart Mackay of XXXXX New South Wales (the 'lender') 2. Clinton L. Sarina of XXXXX New South Wales and (the "borrower') RECITIALS: A. The lender has agreed, at the request of the borrower, to provide a loan facility to the borrower the principal amount of which is not to exceed THOUSAND DOLLARS ($,000.00). SEVENTY ONE THOUSAND DOLLARS AUD ($71,000) B. The lender and the borrower have agreed to enter into this agreement to set out the terms and conditions of the loan facility. DEFINITIONS AND INTERPRETATION 1. (1) Definitions In this agreement, unless the contrary intention appears: "Advance" means an amount of Seventy One Thousand Dollars ($71,000AUD) … "Interest" means, a rate of Twenty four dollars ($24.00) per centum per annum. 'Repayment date' means 28-4-2017 or such other date as the lender and the borrower agree in writing subject to the provisions of this agreement relating to accelerated payment of the loan; and … PAYMENT OF INTEREST 5. (1) Rate of Interest Interest is payable by the borrower on the loan at the rate of Twenty four dollars ($24.00) per centum per annum on the balance of the Loan. (2) Payment of Interest The borrower must pay interest in arrears in equal months instalments of dollars (3) per month on each interest payment date. (Based in the Loan being $000.00) $71,000 AUD. ..."
2. There were some entries in handwriting, including the names and addresses of the parties, the amount of the advances and the repayment date. The date of the Loan Agreement was changed in handwriting from an illegible day of March to 30 March 2017.
3. A few clauses were crossed out. They are cls 9(d) (winding up), 11 (power of attorney), 13(1) (protection of lender), 14(6) (general severability and survival of covenants) and 14(14) (caveatable interest).
4. The deleted clauses were initialled by Sarina.

The hearing in the Local Court

1. The Local Court proceedings were heard on 15 April, 24 July and 8 November 2019 before Barko LCM ("the Magistrate"). Mr Crispin appeared for Mackay and Ms Hall appeared for Sarina.
2. At the hearing, Mackay relied upon his affidavits dated 4 December 2018 and 4 February 2019 and the affidavit of his solicitor, Trevor Thomas Laycock, dated 6 February 2019.
3. Sarina relied upon his affidavits dated 5 November 2018 and March 2019, the affidavit of Andrew Patrick Crawley dated 6 February 2019 and the affidavit of Frank Hoare dated 25 June 2018.

The Magistrate's reasons dated 4 October 2019

1. At the outset, it is important to appreciate that the Magistrate at [45]-[48], and more specifically at [54]-[55] in relation to Sarina, made findings in relation to the credibility of the parties. His Honour stated: "45. Quite frankly neither Mr Mackay nor Mr Sarina were impressive witnesses. It was obvious that their evidence was aimed to be self-serving and that they were quick to protect their own interests. I found it rather extraordinary, given the clear issues between the parties, that neither were able to adequately produce documents when called upon to do so and that they were both rather vague, uncertain, or blatantly incorrect about the payment and/or receipt of monies. I formed the distinct view that there was much more "behind the scenes" that both parties were unwilling to reveal in open Court, perhaps to do with the source of or expenditure of monies. To some extent they were both 'as bad as each other'. It is for these reasons that I was very careful to scrutinise their evidence and in particular have regard to evidence which could, without dispute, corroborate their respective versions. I took into account the fact that Mr Mackay was a builder (meaning absolutely no disrespect) and that Mr Sarina was an experienced businessman and financier when I scrutinised their evidence and the reasons why there may be a failure to do or not to do something in respect of their dealings. 46. It did not take much for Ms Hall to rattle Mr Mackay and cause him to be non-responsive to questions, requiring me to intervene from time-to-time. It was obvious that he had made a mistake in respect to the timing of the second transfer of money and he should not have been so adamant about the sequence of events given they had occurred almost 2 years before he signed his affidavits. He made mistakes in his affidavits that were highlighted by Ms Hall in her cross-examination of him which related predominantly to the timing of events during the period 20 to 30 March 2017. Once it became apparent to him that he must have been mistaken about dates and events he commended to answer questions with 'It's possible' being rather cagey so as not to commit himself. When errors or changes were made in his evidence Mr Mackay became quite defensive rather than answering questions directly and succinctly. 47. Mr Mackay did not produce many documents that could corroborate how the monies he received from Mr Sarina were spent, however he stated that many of the documents were with the liquidator of Robvic. Unfortunately neither party issued a subpoena to the liquidator or produce documents. 48. Likewise Mr Sarina was unconvincing, as a businessman and an obviously intelligent and worldly man, to explain the circumstances surrounding the meeting at the Hotel on 30 March 2017 and the production of documentary evidence in support of his cross-claim. He too had shortcomings in the manner in which he dealt with Mr Crispin's cross-examination albeit that he did present in a more polished fashion than Mr Mackay. … 54. I am satisfied and find that Mr Sarina has consciously lied about what occurred at the Blues Point Hotel on 30 March 2017 and that he did in fact execute the Loan Agreement in recognition of the fact that Mr Mackay had loaned to him in his personal capacity the sum of $71,000. I am also satisfied and find that Mr Mackay's evidence in respect to the background activities and conversations that surrounded the loan is preferable to that of Mr Sarina and that Mr Mackay was genuinely and honestly mistaken about the timing of his deposit of the $46,000 portion of the loan. I am also satisfied and find that Mr Sarina has not re-paid any of these loan monies. I will consider further the legal implications of the written agreement hereunder noting the dispute between the parties as to the enforceability of the Loan Agreement. 55. My negative findings against Mr Sarina in respect of the Loan Agreement invariably have a significant impact on my findings as to his credibility generally. He has made a serious allegation of fraudulent conduct on the part of Mr Mackay by providing what I consider to be irrational and incredible evidence, particularly given his intelligence and financial experience. The findings I have made hereunder in respect of Mr Sarina's cross-claim have also impacted upon my adverse findings against him on Mr Mackay's claim - the findings effectively working hand-in-hand."
2. Under the heading "Onus & Standard of Proof" the Magistrate stated at [49]-[50]: "49. Both Mr Mackay and Mr Sarina bear the onus of proving their respective cases. The standard of proof is legislated in section 140 of the Evidence Act 1995 which reads: '(1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proven on the balance of probabilities. (2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account: (a) the nature of the cause of action or defence, and (b) the nature of the subject-matter of the proceeding, and (c) the gravity of the matters alleged.' 50. Of particular importance in the proof of Mr Sarina's cross-claim is the allegation he has made that Mr Mackay has forged the Loan Agreement so as to remove the pertinent amendments that were made by Mr Sarina concerning the document purely reflecting a receipt of repayments of prior personal loans. This is a most serious allegation of fraudulent criminal conduct and certainly a grave matter alleged."
3. Under the heading "The Crucial Factual Determination" the Magistrate set out his determination in relation to the loan agreement at [51]-[55]. It reads: "51. In my view the crux of Mr Mackay's claim and Mr Sarina's cross-claim falls to be determined by reference to what findings of fact I make in respect of the document signed by Mr Sarina in the Hotel on 30 March 2017. The document has been described as a 'Loan Agreement' by Mr Mackay (see Ex. C) the original of which he alleges was amended, initialled and executed by Mr Sarina. To the contrary Mr Sarina has alleged that the document he amended, initialled, and signed was substantially a different document which he had amended to read 'Receipt', many provisions of which he deleted, and in which he wrote a new provision noting the monies were part repayment of his personal loans to Mr Mackay. Mr Sarina alleges that the Loan Agreement document produced by Mr Mackay has been to a large extent forged by him. 52. As I remarked during the Hearing this issue before me could not have come about by one of the parties being genuine and honest, but perhaps mistaken, about what had occurred at the meeting. This is a scenario in which one of the parties is obviously consciously lying to support his own position. My determination of this crucial issue will sensibly affect the way in which I approach the resolution of other factual disputes between the parties. Likewise, the credibility of the parties on this issue may also be affected by my finding of facts on other areas of dispute and accordingly regard should be had to my findings in respect of Mr Sarina's cross-claim when considering my findings on Mr Mackay's claim. I do however remind myself that just because I reject part of a witnesses' evidence does not necessarily mean that I have to reject it all if there is conflict (see Lemongrove Services Pty Ltd trading as Reimer Winter Williamson Lawyers and Anor v Rilroll Pty Ltd and Ors [2019] NSWCA 174). 53. I am satisfied that the document entitled 'This Loan Agreement' (Ex. C), is the original (or copy of the original) and is the genuine document that was amended, initialled, and executed by Mr Sarina at the meeting of the parties at the Blues Point Hotel on 30 March 2017. I prefer the evidence of Mr Mackay as to what occurred at that meeting and I reject the allegation that Mr Mackay has forged any document. Albeit that Mr Mackay was not an impressive witness his evidence was more impressive than that of Mr Sarina. My reasons for so finding are as follows: (a) Mr Sarina is an experienced businessman who has specialised in matters of finance. He is accustomed to executing detailed written agreements (see for example PACS consultancy deeds) - it does not make sense that he would delete so many provisions of the Loan Agreement if in fact it was a document that would favour his interests. All Mr Sarina had to do was to change the references on the first page of the document concerning who was the lender and who was the borrower; (b) Mr Sarina does not dispute that his signature appears on page numbered 16 of the document next to the words 'Signed by the Borrower' consistent with Mr Mackay's case - it does not make sense that he did not place his signature next to the words 'Signed by the Lender'; (c) There is no signature on page numbered 17 that follow the words 'Signed by the Lender' - see above; (d) Mr Sarina does not dispute that his initials appear on pages numbered 7, 10, 12, 14, and 16 of the document adjacent to paragraphs which have pen lines written through them, I infer to indicate that the paragraphs are deleted; (e) The initials of Mr Sarina appear on pages which contain numerous paragraphs that are not crossed out or initialled - it does not make sense as to why these other paragraphs were not also crossed out; (f) The paragraphs that are crossed out relate to matters that would be more favourable to a lender, for example: the winding up of the borrower (p. 7); the appointment of the lender as power of attorney in the case of default (p. 10); the provision by the lender of notice (p. 12); and the lodgement by the lender of caveats (p. 16) - It does not make sense that Mr Sarina would amend the document to make it more favourable to Mr Mackay; (g) The provisions and pages of the Loan Agreement appear to flow seamlessly. There was no portion of the document that was highlighted as not being consistent with portions that preceded or succeeded it; (h) There is no issue between the parties that Mr Mackay had deposited $71,000 into Mr Sarina's account before the Loan Agreement was signed; (i) There is no written corroboration produced by Mr Sarina that the $71,000 was paid by Mr Mackay as a repayment of personal loans to him; (j) Prior to Ms Hall's submissions there was no allegation made by Mr Sarina that he was induced into signing the Loan Agreement by Mr Mackay's representations - to the contrary Mr Sarina maintained that he took the upper hand in amending the document to suit his own purposes; (k) Mr Sarina's evidence about the manner in which he amended the Loan Agreement document is absolutely nonsensical, irrational, unbelievable, and inconsistent with the document itself. On the one hand he stated that he always initials the bottom of every page of an agreement he signs and yet his own Consultancy Deed (Ex. 6, CS-1, p. 12-15) does not bear any of his initials. Further on the one hand Mr Sarina highlighted that his signature was not witnessed on the Loan Agreement and yet on the other hand his signature on the PACS Deed for the 50% profit was not witnessed. Further, on the one hand Mr Sarina stated that he would always initial the bottom of every page of an agreement that he signed and yet on the other hand he has not done so on the pages of the loan Agreement that he has conceded bear his initials against amendments made; (l) If the document was to reflect acknowledgment of receipt of re-payments of a loan by Mr Mackay it would have been an extremely simple matter for Mr Sarina to have penned a one paragraph document clearly and concisely evidencing that fact; (m) Mr Sarina made no reference whatsoever to Mr Crawley being present at the meeting in either of his two affidavits; (n) I am satisfied that Mr Mackay deposited $25,000 into Mr Sarina's bank account on 17 March 2017 and $46,000 into the same account on 30 March 2017 shortly before attending the Hotel where the Loan Agreement was signed. Mr Mackay's banking records make this abundantly clear (see Ex. A, SM1, pp. 18, 19, 21 and 22). It Is obvious that Mr Mackay was wrong in his evidence about the timing of the second payment and I accept that this was an honest mistake brought about by his lack of clear recollection and his failure to pay sufficient attention to his own records; (o) Mr Mackay's recollection as to originally dating the Loan Agreement on 29 March 2017 is consistent with Mr Sarina's telephone records (see Ex. 9; ex. 6, CS-1, p. 23) which record that on 29 March 2017 Mr Sarina sent a text message to Mr Mackay which read: 'Bank of Queensland Clinton L Sarina BSB 122748 Acc 21855893 $46K Thanks please TT before 3 today see you Blues Point tomorrow 1pm' I interpret this message to mean that the $46,000 was originally planned to be paid to Mr Sarina on 29 March 2017. (p) No challenge was made to the evidence of Mr Laycock in respect of being asked by Mr Mackay to forward a loan agreement to him as he had loaned Mr Sarina money. I suspect that Mr Laycock relied upon information provided to him from someone else as to the relevant dates as it is clear that by 24 March 2017 there had not been a loan of $71,000 but only $25,000, although Mr Mackay was of the belief that his discussion with Mr Sarina in respect of the further $46,000 occurred on 20 March 2017; (q) No challenge was made to the authenticity of the email sent from 'Simka Doncovski', Mr Laycock's secretary, to Mr Mackay on 27 March 2017 which attached the draft 'Loan Agreement' (see ex. A, SM1, p. 24); (r) Prior to Mr Mackay commencing to demand repayment of the $71,000 there is no written evidence to corroborate Mr Sarina's version that the monies were received by him as repayment of loans made to Mr Mackay. To the contrary, the first piece of written evidence to corroborate what occurred on 30 March 2017 is the text message received by Mr Sarina from Mr Mackay on 26 May 2017 (see Ex. A, SM5, p. 61; Ex. 9, last page; Ex. 6, CS-1, p.25) which read: 'I've made promises to pay debts today on the fact that you promised me to pay the money that you borrowed. I need to talk to you.' There was no written response by Mr Sarina to this statement in particular any response questioning what was meant by it. To the contrary, within days thereafter Mr Sarina forwarded text messages to Mr Mackay (see Ex. 9, last page) which stated: 'Hi how much do you need in your account as I cannot speak completely lost my voice.' 'Deposit made you miserable old bastard your (sic) getting more like Vince everyday have a good weekend.' (s) The first written corroboration of Mr Sarina's allegations is a text message that he sent to Mr Mackay was on 18 October 2017, 7 months after the meeting, (see Ex. 8, first page) which stated: 'I was never a shareholder or director of Robvic. You borrowed funds from me to help with your commitments that I have not received back from you. Furthermore I have no memory of any cash payment from you for anything do not wish to talk text or hear from you again till Tuesday and if…' I note that it was on the same day, 18 October 2017, that a 'Notice of Application to Wind Up Company' was lodged in respect of Robvic. I will refer to this fact further later hereunder; (t) In about November 2017 Mr Mackay wrote to Mr Sarina by text message (see Ex. A, SM6, p. 63; Ex. 6, CS-1, p. 24) which stated: 'I will speak with you because it was you that borrowed the money. If you can't keep your appointment with me than (sic) I will come to you.' To which Mr Sarina responded: 'You are not welcome on my private property if you persist to threaten and not go through the property (sic) channels you will be prosecuted.' There was no response from Mr Sarina to the effect that it was Mr Mackay who owed him money; and (u) Mr Mackay conceded (when he was not required to and in my view to his credit) that he received $5,000 from Mr Sarina in May 2017 as part-payment of the Loan Agreement. Of note is that the Loan Agreement, in clause 7.(3), provided that the borrower had the right to repay the principal at any time by multiple of $5,000. Mr Sarina's payment is consistent with this."
4. On 8 November 2019, the Magistrate made the following orders: 1. Verdict and judgment for Mackay on the statement of claim in the sum of $66,000. 2. Sarina pay Mackay 24% interest per annum on the amount of $66,000 from 30 March 2017 and directed the parties to reach an agreement as to that figure. 3. Verdict and judgment for the cross defendant [Mackay].
5. On 8 November 2019, the costs of the statement of claim and cross claim were also heard and determined. Sarina was ordered to pay Mackay's costs of the proceedings.

Grounds of appeal

1. There are four grounds of appeal. They are that the Magistrate erred as follows: 1. in finding that the loan agreement that was produced by Mackay was the document marked up and signed by Sarina; 2. in finding that the Loan Agreement represented the terms on which Mackay advanced the $71,000 to Sarina; 3. in the application of the onus and burden of proof in respect of the statement of cross-claim and defence; and 4. in finding that all the payments made by Sarina to or on behalf of Mackay were advanced to Robvic for the purpose of furthering the Gosford Property project.
2. Mackay's primary submission is that Sarina's appeal should be dismissed on the basis that all of the grounds of appeal only raise issues of fact, which are not appealable to this Court. Counsel for Mackay referred to Sand Ground Engineering Pty Ltd v Super Render Pty Ltd [2020] NSWSC 458 ("Sand Ground Engineering"), where N Adams J dismissed an appeal from the Local Court on the basis that the grounds of appeal merely alleged that the Magistrate should have made different findings of fact. Mackay submitted that this is precisely the situation in these proceedings.
3. Considering the overlapping issues raised in some grounds of appeal, it is convenient that I consider first grounds 1 and 2, followed by 4 and then 3.

Ground 1 - The Magistrate erred in finding that the Loan Agreement that was produced by Mackay was the document marked up and signed by Sarina

Sarina's submissions

1. At [53] of the his decision, the Magistrate found that the document entitled "This Loan Agreement" (Ex C in the Local Court) "is the original (or copy of the original) and is the genuine document that was amended, initialled and executed by Mr Sarina at the meeting of the parties at the Blues Point Hotel on 30 March 2017." Counsel for Sarina submitted that this finding is inconsistent, as the document can only be an original or a copy, whereas the Magistrate found that it was one or the other.
2. Sarina had disputed that the Loan Agreement in evidence before the Magistrate was the whole of the document he signed. It was his case that pages had been replaced, including the first page. Sarina submitted that this issue was of great significance for the Magistrate, as if formed the basis of his credibility findings and the final determination of the parties' respective claims.
3. Sarina submitted that as Mackay sought to propound the Loan Agreement, he bore the evidentiary onus of establishing that the document he produced was the one that was presented to Sarina on 30 March 2017 at the Blues Point Hotel and which Sarina marked up and signed. Sarina issued a notice to produce for the original document, and there was a dispute as to whether the original document was produced. The Magistrate observed that the document produced by Mr Mackay did not have any pen indentation (T 31-32).
4. Both parties were cross examined on the document. The key difference in the parties' positions centred around Sarina's evidence that he amended the document by inserting words and signing the amendments. Mackay does not dispute that Sarina amended the document and initialled the changes, but said he did not initial the changes to the front page. Mackay's evidence was that he had received the document from a solicitor and had filled in some of the details on 29 March 2017, but in cross examination, Mackay was unclear which details had been filled in. Mackay's evidence was that he presented the document to Sarina at the Blues Point Hotel at lunchtime. On the front page the date originally written is crossed out and 30 March 2017 is inserted. These cross outs were not initialled, and neither were any of Mackay's other insertions. Sarina had crossed out parts of the document and initialled those amendments. Sarina's evidence was that he initialled all the amendments including on the front page. He said he also crossed out the words "loan" and changed them to "receipt".
5. Counsel for Sarina noted that the crossed out date was not 29 March 2017 but 24 March 2017, which predated the 30 March 2017 payment. It also is the same date of the alleged conversations between Mackay and Laycock. Mackay and Laycock gave sworn evidence that Mackay said to Laycock on 24 March that he loaned Sarina $71,000. Sarina submitted that this was not the case, as only $25,000 had been advanced at that stage. It is his case that this evidence is false, and constitutes a clear effort on the part of Mackay to reconstruct evidence to corroborate the loan amount through an independent witness. Rather, the 24 March 2017 date fits with the proposition that the loan agreement may not be authentic. The loan agreement was emailed to Mackay on 27 March 2017. The first page of the loan agreement produced by Mackay has a crossed out date of 24 March 2017, as if it had been backdated to fit with the conversation with Laycock and later changed.
6. Sarina's evidence was that he requested a copy of the document from Mackay and Mackay did not provide a copy, which Mackay did not dispute.
7. Due to the dispute and the call for production, absent the original document, Sarina submitted that the Magistrate could place very little weight on Mackay's claims that it was the document that Sarina signed. Sarina submitted that it was not open to make adverse findings against him in respect of his claims that the document produced was not the document he marked up and signed. The document was not independently witnessed and was not signed by Mackay.
8. The Magistrate made a series of findings in respect of the document at [53(a) to (u)] of his decision. Sarina submitted that the Magistrate's findings at [53(a), (b) & (c) (e), (f), and (l)]) were not put to him, and were mere supposition on the Magistrate's part.
9. Sarina also disputed the Magistrate's findings in [53] as follows: 1. The finding at [53(m)] is plainly incorrect, as Crawley was not at the meeting. 2. The findings at [53(g), (p), (q), (j), and (n)] are not inconsistent with Sarina's evidence or position in respect of the document. Sarina never disputed that the document titled "loan agreement" was produced by Mackay, but rather disputed that the copy of the document at Ex C is the complete copy of the document he signed. 3. The in the first sentence of [53(k)] is not open on the evidence, and it ignores the PACS agreement that was signed and initialled. 4. The finding at [53(o)] is inconsistent with the evidence and the documents, as the original date was 24 March 2017 not 29 March 2017. 5. The finding at [53(i)] is perverse, as the document that Sarina disputed as not being the original, and for which he called for at the hearing, was not produced. That document would corroborate his claim. Further, Sarina's evidence was that he asked for a copy of the document from Mackay, which was not produced. 6. The finding a [53(u)] is inconsistent with the terms of the agreement.
10. Further, Sarina submitted that the Magistrate's treatment of Mackay's misstatement of the date of payments to Sarina (20 March 2017), and the corroboration of that mistake with Mr Laycock, a solicitor, as being an "honest mistake", was also perverse. The affidavits setting out the statements which were made were prepared by lawyers, noting the content of the conversations between Laycock and Mackay which also could not have occurred. Sarina submitted that to suggest that these mistakes might be innocent is not one which was open to the Magistrate.
11. For these reasons, Sarina submitted that the findings made were not supported by the evidence and did not establish the authenticity of Ex C, nor did they support the Magistrate's conclusion that the document was amended and signed by Sarina. These findings informed the Magistrate's conclusions that Mr Sarina's lacked credibility, and his conclusion at [55] that where evidence was contradictory, Mr Sarina should not be believed.
12. Sarina contended that the Loan Agreement document did no more than acknowledge the payment by Mackay to Sarina. Whether the money was a loan or a repayment could not affect Sarina's claim for a set off against the moneys Sarina paid to Mackay. He submitted that it was not open to for the Magistrate to find at [54] of the decision that Sarina had not "re-paid" any of the loan money, without first considering the cross claim. He submitted that this finding was also inconsistent with [53(u)], where the Magistrate acknowledged that $5,000 had been repaid.

Mackay's submissions

1. Mackay submitted that there is no question of law asserted in this ground of appeal, nor any question of mixed fact and law. The error asserted by Sarina is that Magistrate made a finding contrary to Sarina's case. It is not argued by Sarina that there was no evidence to support the finding in question, but rather that he accepted evidence which, according to Sarina, ought not to have been accepted. Such an appeal is not available under the provisions of the Local Court Act.
2. It is Mackay's case that even if such an appeal were available, it would be unmeritorious. Appeals that challenge findings based on an assessment of the credibility of a witness are not entertained lightly. In order to intervene, this Court must be satisfied that the decision at first instance is glaringly improbable, or contrary to compelling inferences.
3. Sarina was cross examined at some length in the hearing, during which he was unable to provide any convincing explanation as to how such a document would make for a suitable receipt, nor why he did not simply prepare a receipt himself. Mackay submitted that it was open to the Magistrate to find Sarina's evidence to have been irrational and incredible.
4. The Magistrate found that Sarina had consciously lied to the Court about what occurred at the Blues Point Hotel on 30 March 2017 and that he did in fact execute the loan agreement. If Magistrate's findings were expressed in strong terms, it unsurprising, given his conclusion that Sarina had attempted to deceive him.

Consideration

1. Sections 39 and 40 of the Local Court Act permit Sarina to appeal to this Court on a question of law, or on a mixed question of law and fact only with the leave of this Court. Questions of fact alone are not appealable.
2. Distinguishing between questions of law, mixed questions of law and fact, and questions of fact alone is not always a straightforward exercise. In Attorney General for the State of New South Wales v X (2000) 49 NSWLR 653; [2000] NSWCA 199, Spigelman CJ stated at [28]: "28. The determination of whether a particular alleged error in matters such as fact finding, the exercise of a discretion or a process of evaluation answers the description 'question of law', will depend on the scope, nature and subject matter of the statute, including the nature of the body making the relevant decision."
3. Differentiating between errors of fact and law will depend not only on the phrasing of the alleged errors, but on their content.
4. Where a ground alleges there was "no evidence" to support a finding, it will raise a question of law: see Kostas v HIA Insurance Services Pty Limited (2010) 241 CLR 390; [2010] HCA 32 per Hayne, Heydon, Crennan and Kiefel JJ at [90]; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 326; [1990] HCA 33 per Mason J. However, Sarina does not advance his case on this basis. Rather, his submissions point to various findings made by the Magistrate which Sarina says were either incorrect or which "beggar belief".
5. A ground asserting that a decision maker should have made a different factual finding raises a question of fact. Even grounds phrased as Sarina has in these proceedings on the basis that a finding of fact was "perverse" or "illogical" does not raise a question of law: Azzopardi v Tasman UEB Industries Pty Ltd (1985) 4 NSWLR 139 at 156 (Glass JA, Samuels JA agreeing, Kirby P dissenting) ("Azzopardi"). In Azzopardi, the High Court held: "To say of a finding that it is perverse, that it is contrary to the overwhelming weight of the evidence, that it is against the evidence and the weight of the evidence, that it ignores the probative force of the evidence which is all one way or that no reasonable person could have made it, is to say the same thing in different ways. Upon proof that the finding of a jury is vitiated in this way, it will be set aside because it is wrong in fact. Since the Act does not allow this Court to correct errors of fact, any argument that the finding of a Workers' Compensation Commission judge is vitiated in the same way discloses no error of law and will not constitute a valid ground of appeal. It is also pointless to submit that the reasoning by which the court arrived at a finding of fact was demonstrably unsound as this would not amount to an error of law: R v District Court of the Metropolitan District Holden at Sydney; Ex parte White (1966) 116 CLR 644 at 654."
6. However, although an "illogical" finding of fact does not amount to an error of law, it might be relevant to the question of whether there has been a constructive failure to exercise jurisdiction: see State Super SAS Trustee Corp v Cornes [2013] NSWCA 257 ("State Super") (per Basten JA) and Tolson v Roads and Maritime Services [2014] NSWCA 161 ("Tolson") (per Basten JA); as referred to in Sand Ground Engineering at [60]. As Basten JA noted in State Super at [11], this may occur where a decision maker's mistake in understanding the facts reveals "a basic misunderstanding of the case brought by an applicant, [so that] the resulting flaw is so serious as to undermine the lawfulness of the decision in question in a fundamental way" (referring to Dranitchnikov v Minister of Immigration and Cultural Affairs [2003] HCA 26; 77ALJR 1088 ("Dranitchnikov") at [88] (per Kirby J)).
7. As such, there are two questions which must be satisfied in order for the issues raised in this ground to be appealable in this Court. The first is whether the Magistrate made a mistake (or mistakes) in understanding the facts of the case. The second is whether this mistake (or mistakes) reveals a basic misunderstanding of Sarina's case, such that the resulting flaw is so serious that it undermines the lawfulness of the decision in a fundamental way.
8. The errors of fact which Sarina alleges under this ground of appeal are summarised in his submissions as extracted earlier in this judgment. The primary submission concerns the Magistrate's finding that the Loan Agreement document was "the original (or copy of the original)" and was "the genuine document that was amended, initialled and executed by Mr Sarina at the meeting of the parties at the Blues Point Hotel on 30 March 2017".
9. The evidence before the Magistrate as to whether the Loan Agreement that was produced was a copy or a photocopy is as follows (T 32.6-35): "HIS HONOUR: That's what I'm asking. If this is an original, I can't see the indentation made by a pen on the paper. It's obviously a photocopy of something. HALL: Apologies, your Honour. I was informed that that was the original, of SM4. HIS HONOUR: I can't see the slightest indentation at all, made by a pen mark, applied with force. Sufficient to deposit ink. HALL: I should mention, that the original was sought in a notice to produce from our end, so I understood that this was being produced in response to that notice to produce. HIS HONOUR: I've been around a bit and I can't see any impression at all, made on the paper by a pen. Which would lead me to believe that it's a copy. CRISPIN: I'll confirm my instructions during the lunch break, your Honour, but my understanding is that is the original. HIS HONOUR: At this point in time, I'll mark that for identification A. It won't be an exhibit at this stage. I'll return that to you. You might be right, it might just be the pen used, or something like that. MFI #A LOAN AGREEMENT"
10. Later in the hearing, Mackay was shown MFI 1. He gave the following evidence (T 80-40): "Q. Mr Mackay, can you please examine that document quite carefully. In particular, I'd like you to pay attention to what you said was your handwriting in that document. Is that the original of that document? A. Is this the original? Q. Yes. A. Yes. It appears to be. EXHIBIT #C FORMERLY MFI 1 TENDERED, ADMITTED WITHOUT OBJECTION"
11. It is Sarina's case that the Magistrate's finding that the Loan Agreement document in evidence was "the original (or a copy of the original)" is contradictory, such that his findings which flowed from the document, which infect the entirety of the Magistrate's decision, were not available to his Honour. I do not agree. In my view, a fair reading of the Magistrate's reasons is that his Honour had found that the document in front of him, whether it was the original or an identical photocopy, was reflective of the Loan Agreement reached by the parties. I do not accept that this finding, which was a finding of fact, was perverse or illogical.
12. Sarina further challenges the Magistrate's findings that the crossed out date on the Loan Agreement was 29 March 2017 (rather than 24 March 2017); that Sarina never made reference to Mr Crawley's presence at the meetings (which Sarina did not dispute); and that various discrepancies in Mackay's and Mr Laycock's evidence were explicable as "honest mistakes" (considering their respective positions and credibility).
13. The issue for Sarina in advancing this ground of appeal on this basis is that even if the Magistrate erred in relation to these findings, it cannot be said that his Honour failed to understand or engage with the case that was brought by Sarina. At [51] of his reasons, his Honour accurately set out the parties' basic positions, including that Sarina alleged that the Loan Agreement document was not the entire document which he says he signed. The Magistrate then continued from [52]-[53] to consider at length the evidence in support of both of the parties' cases. It was the Magistrate's view that the weight of that evidence, which his Honour considered in great detail from 53-(u)], demonstrated that although neither Mackay nor Sarina had been entirely truthful, it was enough to satisfy his Honour on the balance of probabilities that Mackay's version of events was to be preferred over Sarina's, which was "irrational and incredible" ([55]).
14. For these reasons, it is my view that the errors of fact which Sarina raises under this ground of appeal do not undermine the lawfulness of the Magistrate's decision in a fundamental way, such that they constitute a constructive failure to exercise jurisdiction (Dranitchnikov at [88]). This ground of appeal fails.

Ground 2 - The Magistrate erred in finding that the Loan Agreement represented the terms on which Mr Mackay advanced the $71,000 to Mr Sarina

Sarina's submissions

1. Mackay's pleaded case was that on 30 March 2017, he entered into a written loan agreement with Sarina. Mackay's evidence was that Sarina contacted him on two occasions, 17 March 2017 and 20 March 2017, and requested money which was advanced on those days.
2. Sarina submitted that it is consistent with this position that the following terms were in the existing template document received by Mackay from Mr Laycock's secretary on 27 March 2017: 1. "interest" - clause 5(1) - 24% per annum; and 2. "repayment" - clause 7(3) - right of the borrower to repay at $5,000.
3. It is Sarina's case that the "repayment" clause was illogical in the context of the loan term, which was either (on Mackay's evidence of the oral terms) "two weeks", or (on the handwritten insert under "repayment date" on page 2 of the Loan Agreement) 28 April 2017. The loan agreement allegedly entered into on 31 March 2017 meant that the repayment term was less than one month, with payments permitted to be made in $5,000 instalments.
4. Even more significant is the absence of any "interest" terms discussed either on 17 March 2017, when Mackay claims the first amount of $25,000 was advanced, or 20 March 2017, when Mackay claimed the second amount of $46,000 was transferred. There is also no evidence of any discussion of interest being payable (or claimed) on the moneys advanced at the meeting on 30 March 2017. The only apparent discussion on 30 March 2017 in relation to the terms was that the money would be repaid in full.
5. On Mackay's evidence in his affidavits before the Magistrate, there were two requests for money from Sarina on 17 Mach 2017 and 20 March 2017, in which Mackay agreed to advance $25,000 and $46,000 (less than the amounts requested) on the basis that they would be repaid in a few weeks. Sarina says that Mackay did not intend the Loan Agreement to change the terms of the agreement, which did not include interest. Rather, his evidence was that it was intended to serve as a record "in the event that Sarina was hit by a bus and [there was] no record of the transactions".
6. Sarina says that his evidence that he amended the Loan Agreement document to make it a receipt, in order to reflect that he had "received" the moneys from Mackay, is consistent with Mackay's evidence that the purpose of the written document was to "record the transactions".
7. Sarina also says that the absence of any agreement as to interest is also consistent with the conversation that Mackay says he had with Laycock, when he requested a "simple loan document so he [could] get [Sarina] to sign it." Mackay did not request any terms such as interest. Sarina noted that Laycock had said that he had "a couple of basic agreements in the office" and he would get his secretary to "email [him] one of the agreements."
8. Sarina submitted that this evidence demonstrates that the parties did not agree and did not intend for any interest to be payable on the moneys paid by Mackay to Sarina on 17 March 2017 and 30 March 2017. There was no suggestion that there had been any variation or change to the agreement. This position is also consistent with Mackay's case in respect of Sarina's cross claim that Sarina had advanced money, without interest, to or on behalf of his company Robvic. The terms of the advance, on Mackay's case, were made at the time the money was paid, and there was no suggestion that the terms would be regularised in a written document or loan agreement. This was not a situation where parties reach an agreement of a contractual nature and also agree to subsequently draw up a formal contract.
9. For these reasons, Sarina submitted that the Magistrate erred in concluding that the terms of the Loan Agreement included an obligation to pay Mackay interest. The award of interest at the rate of 24% per annum must be set aside.

Mackay's submissions

1. Mackay again submitted that this ground of appeal merely asserts an error of fact, from which no appeal is available within the scope of the Local Court Act.
2. Sarina's submissions make much of the difference in terms between the loan terms agreed verbally and those in the written Loan Agreement document. Mackay conceded that clause 5(1) has little if any work to do, and that the interest rate was different from the arrangements in the verbal agreement. However, these distinctions do not assist the plaintiff in escaping from the effect of the Loan Agreement. Clause 7(3) has no application and is, accordingly, of no consequence. The interest rate is given in return for an extension of the time for repayment to be made. Such a rate of interest would impose little burden and be easily met, provided that payment was made on time.
3. Mackay submitted that ultimately, Sarina's difficulty is that he signed an enforceable contract. The subjective understanding of the parties to a contract as to its terms is irrelevant. Sarina claimed to be an experienced financial consultant. Such a professional can be expected to read the terms of a contract he or she intended to sign. Moreover, contractual terms do not cease to have binding effect merely because an accenting party does not understand or fails to read them.

Consideration

1. Sarina's advances this ground of appeal on the basis that the Magistrate erred in his findings concerning the interest and repayment clauses of the Loan Agreement. It is Sarina's case that clause 7(3), outlining the right of the borrower to repay in increments of $5,000, is "illogical" in the context of such a short repayment period. Likewise, clause 5(1), holding the borrower to an interest rate of 24% per annum, is inconsistent with the verbal agreement reached by Sarina and Mackay.
2. As in relation to the errors alleged in ground 1, Sarina broadly submitted that the presence of these clauses in the Loan Agreement document undermines Mackay's case and supports Sarina's version of events. More specifically, Sarina argued that these clauses were superfluous to the agreement and should not bind him, as the weight of evidence demonstrates that they were residual clauses left on the existing template document from Mr Laycock's secretary, and which Sarina signed merely to record his receipt of moneys repaid by Mackay.
3. It is well settled that questions as to the terms of an offer of contract, and the subject matter of any agreement reached, are questions of fact: see Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26 at [22]-[27] (per French CJ, Kiefel and Bell JJ); see also Yousif v Commonwealth Bank of Australia (2010) 193 IR 212; [2010] FCAFC 8 at [42] (per Kenny, Tracey and Jagot JJ).
4. Again, Sarina has not submitted that the Magistrate's alleged errors of fact in relation to this ground of appeal reveal a basic misunderstanding of Sarina's case. On the contrary, the Magistrate set out Sarina's version of events, and explained why his Honour did not find it credible. Amongst the matters which his Honour considered persuasive were that Sarina was an experienced businessman who specialised in matters of finance ([53(a)]); that Sarina had signed the Loan Agreement on the line labeled "borrower", while the line labelled "lender" was unsigned ([53(b)-(c)]); that Sarina had initialled deletions of certain clauses, including clauses more favourable to the lender, and initialled uncorrected pages ([53(d)-(f)]); that there was no written corroboration that the Loan Agreement document was intended to evince repayment of a loan from Sarina to Mackay ([52(i)]); that it would have been "extremely simple" for Sarina to draft a receipt of re-payments of a loan by Mr Mackay rather than amend the Loan Agreement as Sarina claims was done ([53(l)]); and that text messages in the days immediately following the meeting at the Blues Point Hotel refer only to moneys owed by Sarina to Mackay (53[j]).
5. The Magistrate gave extensive reasons in support of his finding that the Loan Agreement document was signed by Sarina as a receipt for money which Sarina borrowed from Mackay. The Loan Agreement included the repayment clause, as well as the interest requirement in consideration of which the payment date was extended. The Magistrate's orders reflect the terms to which his Honour found that Sarina had agreed. As there is no basis on which to conclude that the Magistrate failed to consider Sarina's case, his Honour's findings of fact in relation to the terms of the Loan Agreement are not subject to appeal to this Court. This ground of appeal fails.

Ground 4 - The Magistrate erred in finding that the payments made by Sarina to Mackay were advanced to Robvic for the purpose of furthering the Gosford Property project

Sarina's submissions

1. Sarina submitted that in finding that all the payments made by Sarina to or on behalf of Mackay were advanced to Robvic, the Magistrate relied on the credibility findings against Sarina in determining the cross claim. At [57] of his decision, his Honour stated that where there was a conflict in their evidence, his Honour preferred the evidence of Mackay over Sarina.
2. The payments, totalling $162,949.94, are particularised at [6] of Sarina's cross-claim and fall into two categories: those made directly to Mackay and those made to third parties on Mackay's behalf.
3. Sarina submitted that in respect of the payments made to Mackay there was objective evidence before the Magistrate in the form of either letters from the respective banks, or contemporaneous receipts of cash deposits made by or on behalf of Sarina into Mackay's personal bank account.
4. Mackay admitted to receiving the following payments as identified in [6] of Sarina's cross-claim and gave the following reasons in relation to them: 1. that the payments identified in 6, (n), (o), (r), (s), (t), (u) and (v) were for expenses for the Gosford Property; 2. that the payments in 6 and (m) were for repayment of a loan Mackay made to PACS; and 3. that the payments in 6 were in relation to a loan to Robvic organised by Sarina.
5. Sarina noted that Mackay did not provide any evidence to corroborate that the payments were made for some business purpose. Similarly, there was no objective evidence of any loan with PACS or of when the moneys were said to have been advanced by Mackay to PACS. Under cross-examination, Mackay conceded that he was not aware what expenses certain payments related to. Sarina submitted that the Magistrate did not address the individual payments in his reasons, but simply stated that the payments were made to Mackay or Robvic in respect of the Gosford Property project. Sarina submitted that this finding was not open on the evidence.
6. Mackay denied receipt of the $8,800 in his affidavit evidence and was evasive on this issue at the hearing before the Magistrate. Sarina submitted that as Mackay did not adduce evidence that the payment was for any purpose associated with the Gosford Property project, the Magistrate's finding at [57(e)] was also not open on the evidence.
7. Mackay did not provide any objective evidence in the form of a loan document or otherwise which was the basis for the claim by Mackay that he did not receive the $10,000, identified in [6(b)] of the cross-claim. The Magistrate does not specifically address the transaction, and Sarina submitted that his Honour's finding at [57] of the decision, to the extent it included the $10,000 payment, was not open or available on the evidence.
8. In respect of remaining payment that Sarina made to Mackay, being a cash deposit of $4,950 on 8 May 2017, Mackay admitted the payment was made but said that it was made to a third party, Hodgestone Finance. As he produced no evidence to support that assertion, Sarina submitted that the Magistrate's finding at [57] of the decision, to the extent it included the $4,950 payment, was not open on the evidence.
9. Mackay admitted the remainder of the relevant payments were made by Sarina to third parties, but said that they were paid for Robvic. PACS, not Sarina, had a commercial or business relationship with Robvic. Sarina provided evidence of the requests by Mackay for each payment made.
10. The Magistrate referred at [57(e)] of the decision to an agreement between Robvic and PACS entered on 12 June 2015 to support his Honour's finding that amounts paid by Sarina (not PACS) to Mackay (not Robvic) were made in relation to the Gosford Property project. However, Sarina submitted that Mackay did not provide for PACS to pay moneys on behalf of Robvic, and his Honour erred in finding that PACS or Sarina would pay moneys.
11. A further agreement was entered into between PACS and Robvic on 16 March 2016. That agreement did provide for PACS (not Sarina), as the consultant, to pre-pay and be reimbursed for disbursements. However, Sarina submitted that the agreement did not operate until 16 March 2016, so any payments before that date could not be characterised as having been made under the agreement. Moreover, the payments made by Sarina were not consistent with being disbursements under that agreement. Sarina submitted that the Magistrate erred at [57(f)] in construing the terms of 12 June 2015 agreement and in finding that the payments were made under the 16 March 2016 agreement.
12. In respect of the payment to South Western Financial Services, Mackay admitted the payment was made on his behalf, as he was a guarantor. However, the Magistrate, against the evidence, found against Sarina on his cross-claim. Similarly, Mackay admitted that the payments to Sommerville Lawyers were for debts for which he was personally liable. Despite this, at [57(h)] of his decision the Magistrate found that those payments were made in respect of legal fees incurred to act for and advise Robvic. Mackay's evidence in cross examination was that Sommerville Lawyers were acting for himself and Robvic and that he was liable for their fees. Sarina submitted that the Magistrate's finding at [57(g)] was not open on the evidence. Sarina supported his claims with objective evidence, which was admitted without objection, and the authenticity of the documents relied upon was not challenged.
13. Sarina argued that the finding at [57(d)] was also not available, as the allegation as to Sarina's knowledge was not put to him. Similarly, the Magistrate's finding at [57(o)] is plainly wrong and against the evidence. Mr Crawley was not at the meeting on 30 March 2017 and Sarina did not suggest that he was. Mr Crawley's evidence corroborated that Mackay requested money and financial assistance from Sarina, and the Magistrate's criticisms misunderstood the relevance and value of that evidence.
14. Sarina submitted that the weight of evidence demonstrates that the Magistrate erred in finding that all the payments made by Sarina to or on behalf of Mackay were advanced to Robvic for the purpose of furthering the Gosford Property project, particularly as Mackay himself did not contend that all the payments made by Sarina were for that purpose.

Mackay's submissions

1. Again, Mackay submitted that this ground of appeal only raises questions of fact. He also disputed Sarina's assertion that Mackay did not discharge his onus to prove that the payments he received were advanced to Robvic. In his December affidavit, Mackay attested to the purpose of the payments in question, and his evidence was accepted. The presence or absence of corroborative evidence is immaterial.
2. The Magistrate addressed the individual payments in [57(h)] of his reasons. His Honour also made it plain that Sarina's failure to provide evidence to support his own case is part of why the cross-claim failed. At [57(k)], [57(l)] and [57(m)], the Magistrate's comments on the extraordinary nature of the failure of a party with Sarina's business and finance experience to keep or produce records to substantiate his cross claim. As this ground of appeal does not raise questions of law which are appealable to this Court, Mackay submitted that it must fail.

Consideration

1. Sarina advances this ground of appeal on the basis that the Magistrate made a series of mistaken findings of fact in his consideration of Sarina's cross-claim. Although errors of fact alone are not appealable, Sarina more broadly alleges that the Magistrate's errors amount to more than the sum of their parts. Together, they are said to have formed the basis of his Honour's conclusion that Sarina advanced moneys to Mackay for business purposes without evidence, such that this ground of appeal raises a mixed question of fact and law.
2. It bears repeating that s 40 of the Local Court Act restricts appeals on a mixed question of law and fact only with the leave of this Court. Generally, leave is not to be granted where a matter does not involve "issues of principle, questions of general public importance or an injustice which is reasonably clear, that is to say goes beyond merely being arguable": R v PL (2009) 199 A Crim R 199; [2009] NSWCCA 256 at [26].
3. In considering whether to grant leave to appeal on this ground, I note the caution expressed by Beech-Jones J in Sayed v Deng [2012] NSWSC 851 at [31]-[33] that the Local Court has a limited monetary jurisdiction, and that unchecked appeals from its decisions could risk the costs of proceedings rising out of proportion to the matters in dispute.
4. The Magistrate's reasons in relation to the cross-claim appear at [56]-[57(a)-(p)] of the decision. As they are extensive and involved, it is convenient to refer to them in summary form.
5. In his written and oral submissions, counsel for Sarina disputed a number of the Magistrate's factual findings. It does appear that certain of these findings do not accord with the evidence. Specifically, his Honour referred at [57(f)] of his decision to payments made by Sarina as being made in accordance with an agreement between Robvic and PACS dated 16 March 2016, despite the payments predating that agreement. The Magistrate also appears to have erred at [57(o)] in his reference to Sarina failing to place Mr Crawley at the meeting on 30 March 2017 in his affidavits. It is common ground that Mr Crawley was not at that meeting.
6. The effect of Sarina's submissions is to evince that Mackay failed to provide evidence that moneys received from Sarina were not for his personal use. However, the Magistrate's apparent errors appear in the context of a decision supported by significant further evidence which his Honour considered in reaching his decision. Relevantly, the Magistrate set out the following at [57] of his decision: 1. The first written corroboration of Sarina's claim that the monies sent to Mackay being personal loans was in a text message dated 18 October 2017. As this was the same date that a winding up application was filed against Robvic, the Magistrate was satisfied that this message was an attempt by Sarina to establish a paper trail stating that Mackay was personally liable for the loans ([57(d)]). 2. Sarina was the sole director and secretary of PACS. As PACS stood to earn close to $2 million if the Gosford Property project came to fruition, it was in Sarina's interests to keep Mackay and Robvic financially stable ([57(c)]). 3. It would have been a "simple matter" for Sarina to require (or write a simple agreement evincing) that Mackay personally guarantee monies paid to Robvic ([57(f)]). 4. Sarina produced no original documentation to support his cross-claim despite a notice to produce from Mackay ([57(g)]). It would have been a "simple matter" for him to subpoena the liquidator of PACS to produce its records ([57(l)]). 5. The bulk of monies were paid to third parties, not Mackay directly ([57(h)]). 6. The evidence before the Magistrate, including a letter from Sarina to BPS Recovery dated 20 April 2018, was that Mackay did not require money to avoid bankruptcy, and had sufficient income to personally stay afloat while the Gosford Property project progressed ([57(i)]). 7. Sarina's failure to document which monies he had advanced to Mackay was consistent with his intention to calculate what reimbursement PACS would receive under its agreements with Robvic after the Gosford Property project was finalised ([57(k)).
7. As for the Magistrate's error in drawing significance from Sarina's failure to place Crawley at the 30 March 2017 meeting (which it is common ground that Crawley did not attend), that finding formed only a part of the Magistrate's extensive reasons for concluding that Sarina lacked credibility. The Magistrate also provided a lengthy explanation for concluding that Mr Crawley's evidence generally was not credible, including that at all relevant times in 2016 and 2017 he was a disinterested observer in the transactions; that the conversations he described overhearing during the period were not corroborated by contemporaneous notes; and that he was a long-term social friend of Sarina and appeared to be attempting to assist Sarina's claim ([57(p)]).
8. The Magistrate's conclusion was also informed by the credibility findings he had made against Sarina generally, and his Honour's view that Sarina's claims did not accord with the behaviour of a person with such extensive business and financial experience. The Magistrate's apparent errors in relation to certain facts appear within a matrix of findings which support his Honour's conclusion that Sarina had advanced moneys to Mackay for the purposes of pursing the Gosford Property project through and in relation to their respective alter egos, PACS and Robvic.
9. For these reasons, I am not satisfied that this ground of appeal raises an issue of principle or a question of public importance. Nor does his Honour's decision to dismiss Sarina's cross-claim, despite having erred in relation to certain facts in dispute, which are not alone appealable to this Court, involve an injustice which is more than merely arguable, such that it warrants the grant of leave. I am therefore of the view that leave to appeal should not be granted. This ground of appeal fails.

Ground 3 - The Magistrate erred in the application of the onus and burden of proof in respect of the cross claim and defence

Sarina's submissions

1. Sarina submitted that the Magistrate correctly set out at [49] and [50] the respective onuses of proof, being that each bore the onus of proving his respective case. However, Sarina submitted that it is apparent from the decision and the findings made that his Honour only considered the burden of each claimant party.
2. At [50] the Magistrate found that Sarina, in his cross claim, bore the onus of proving that the Loan Agreement which Mackay produced was not the actual loan agreement Sarina says he signed. Sarina submitted that this was not the correct application of the evidentiary onus, and that it was not an element necessary for Sarina to establish his cross-claim. Sarina admitted the receipt of the $71,000 from Mackay. The terms on which the moneys were advanced were of less import if Sarina established that he had advanced moneys to Mackay or for his benefit.
3. More significantly, Sarina noted that Mackay admitted that Sarina had made payments as set out in the cross-claim but alleged that the payments were made to or for the benefit of Robvic and/or the Gosford Property project. Sarina submitted that where he had established that payments were made, the onus then shifted to Mackay to prove his claim that the payments were not made to him personally but to Robvic and/or for the purposes of the Gosford Property project. Sarina did not have an evidentiary onus to prove a negative.
4. On this basis, Sarina alleges that the Magistrate's error in applying the burden of proof caused his Honour to fall into error in respect of the determination of the cross-claim.

Mackay's submissions

1. Mackay submitted that Sarina's submissions on this ground of appeal are without merit. Mackay submitted that ground 3, like grounds 1 and 2, raises a question of fact. The fundamental complaint is that the Magistrate made findings that were fatal to Sarina's claim.
2. Sarina has portrayed the Magistrate's reasons at [50] as a wrongful determination that Sarina bears the onus of proving his allegations of forgery as part of his cross-claim. Mackay submitted that Sarina's portrayal of the Magistrate's reasons is misconceived. In his pleadings, Sarina expressly adopted the burden on proving this allegation in [2] and [3] of his further amended defence. Sarina did not merely deny that he signed the agreement, but positively asserted serious criminal wrongdoing.
3. The significance of Sarina's case having failed to meet this burden does not arise from an assessment of the terms of the Loan Agreement, but in its existence and character as a contract for the repayment of money owed by Sarina to Mackay.
4. Further, Mackay submitted that it was erroneous to assert that the onus of proof shifted from Sarina to Mackay once it had been established that payments had been made. At [4] of the cross-claim, Sarina positively asserted that payments were made to the cross defendant in his personal capacity. Further, at [14] of the cross-claim, Sarina pleaded that at or about the time of the repayment of the loans, he was presented by Mackay with a document purporting to be a Loan Agreement, which he altered into a receipt and then signed. Significantly, as noted by the Magistrate in [58] of the decision, Sarina did not plead that the Loan Agreement was unenforceable. Mackay submitted that Sarina's own pleadings render this ground untenable.

Consideration

1. At [49] of his decision, reproduced earlier in this judgment, the Magistrate correctly set out the relevant standard of proof by reference to s 140 of the Evidence Act 1995 (NSW), being that Mackay and Sarina each bore the onus of proving their respective cases. It is Sarina's case that despite setting out the proper statutory test, the Magistrate's reasons reveal that his Honour reversed the onus of proof in relation to Mackay's claim and Sarina's cross-claim. This ground of appeal therefore raises a question of law for which leave is not required.
2. Sarina alleges that the Magistrate shifted the burden of proof in two respects. The first was in requiring that Sarina prove that the Loan Agreement was fraudulent, rather than requiring that Mackay, who had produced the document, prove that it was genuine. The second was in requiring that Sarina, not Mackay, prove that certain payments were not to Mackay personally but to Robvic for the purposes of the Gosford Property project.
3. As to the first, the Magistrate began at [50] by stating that "the crux" of both Mackay's claim and Sarina's cross-claim fell to be determined by his Honour's findings in relation to the authenticity and terms of the Loan Agreement. His Honour noted that "[o]f particular importance in the proof of [Sarina's] cross-claim is the allegation he has made that [Mackay] has forged the Loan Agreement". For the reasons outlined earlier in this judgment, the Magistrate carefully at [51]-[53(a)-(u)] set out the evidence presented by both parties and his Honour's reasons for concluding that Mackay had not forged the Loan Agreement document.
4. Importantly, this was not a case in which Mackay produced the Loan Agreement and Sarina merely denied that he had signed it. Rather, Sarina defended the claim by making a positive allegation of forgery which was, as the Magistrate noted at [50], a "most serious allegation of fraudulent criminal conduct". That allegation is one for which Sarina bore the standard of proof. His Honour's reasons reveal no error for reasoning on this basis.
5. As for the second aspect of this ground of appeal, Sarina submitted that the Magistrate erred in law by shifting the burden of proof to Sarina, not Mackay, to prove Mackay's claim that Sarina's payments had been made to Robvic and/or to further the Gosford Property project.
6. I have set out the Magistrate's reasoning on the issue of the cross-claim in relation to ground 4. It is important to note, as did the Magistrate at [52] of his reasons, that this was not a case where one party could have been telling the truth and another operating under an honest misunderstanding. Rather, it was one in which (at least) one of the parties must have consciously lied to further his case.
7. The Magistrate set out extensive reasons for not considering the version of events advanced in Sarina's cross-claim to be credible. Rather, his Honour was satisfied that the moneys had been advanced for business purposes. The evidence his Honour considered persuasive included that it was in Sarina's interests to keep Mackay and Robvic financially stable, as PACS, Sarina's "alter ego", stood to earn close to $2 million if the Gosford Property project came to fruition and so ([57(c)]); that the bulk of moneys were paid to third parties and not Mackay directly ([57(h)]); that Sarina himself had acknowledged that Mackay did not personally require the money to avoid bankruptcy and had sufficient finances to stay afloat ([57(i)]); and that Sarina's failure to document the alleged personal loans was consistent with an intention to be reimbursed through PACS under its agreements with Robvic after the Gosford Property project was finalised ([57(k)]).
8. In my view, it cannot be said that the Magistrate reversed the onus of proof in considering Sarina's cross-claim. It was his Honour's view that the evidence before him was sufficient to satisfy him that Mackay's version of events was to be preferred over Sarina's and that Mackay had discharged his evidentiary onus. The Magistrate's factual findings which inform his decision are not subject to appeal in this Court, for the reasons given in relation to ground 4. This ground of appeal also fails.

Result

1. The result is that the plaintiff's appeal fails.

Costs

1. Costs are discretionary. Costs usually follow the cause. The plaintiff is to pay the defendant's costs on an ordinary basis.

The Court orders that: 1. The further amended summons filed 13 August 2020 is dismissed. 2. The plaintiff is to pay the defendant's costs on an ordinary basis.

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: 22 March 2021