Sellers v Marchant & Anor [2007] NSWSC 309 | Case summary

JUDGMENT 1 HIS HONOUR: The plaintiff and the defendant made an agreement to carry on a business. Planwise Pty Limited (the company) was to be the vehicle to carry on the business. The plaintiff later changed his mind and the parties purported to make an agreement which would see the defendant acquiring the plaintiff's share of the business. 2 The purported agreement dealt with three areas. Firstly, there was an area concerning certain real property. There was no dispute as to a price of $135,000. Secondly, there was an area concerning a division of a bank account. Again, there was no dispute as to the amount. The third area concerned the remainder of the value of the business. There was dispute concerning it (it involved, inter alia, the amount payable). 3 The plaintiff brought proceedings in the Local Court. The proceedings were defended. The defendant also brought a cross-claim. 4 It was the plaintiff's contention that he was entitled to be paid the sum of $60,000. He conceded that he had been paid two sums ($533.38 and $31,500). The defendant contested the proceedings on the basis that there was an agreement to transfer his share in various items in consideration of him paying one half of the written down value of those items. He further contended that the written down value was $31,500 and, by error, he had paid not half but the full written down value. The sum of $533.38 was the agreed one half of the bank account. 5 The dispute was heard by Bradd LCM. His judgment was given on 23 June 2006. I shall now briefly refer to the structure of that judgment. 6 Paragraphs 1-5 thereof set forth what was in issue between the parties (there is consensus as to the accuracy of what is set forth therein). 7 Paragraphs 6-11 thereof, set forth the Magistrate's analysis of evidence. It commences "The plaintiff relies on a series of emails". 8 The Magistrate's judgment also contains the following :- "12. The series of emails do not show that an agreement was reached by the parties, the emails set out in paragraph 8 declare that an agreement has been reached, but the terms are not disclosed, and subsequent correspondence indicates that the parties were not in agreement. 13. I am not satisfied that the parties agreed that the first defendant would pay to the plaintiff the sum of $60,000. Although the plaintiff is unlikely to have agreed to accept the written down value of the equipment having rejected an offer of $185,000, the fact does not prove that the agreement was for payment of $60,000. 14. I am not satisfied that the parties agreed that the first defendant would pay to the plaintiff the sum of half the written down value of assets valued at $31,500. It appears that the first defendant determined to pay such an amount without an agreement being reached by the parties. I note that the first defendant has pleaded such an agreement was made in the notice of grounds for defence. 15. I am satisfied that the first defendant paid $31,500 by mistake." 9 These findings saw judgment being entered in favour of the defendant on the plaintiff's claim and the defendant recovering judgment on his cross-claim in an amount of $15,750. 10 The plaintiff has brought proceedings in this Court (on 31 July 2006). He now proceeds on an Amended Summons filed in Court on 11 August 2006. He seeks to have the decision of the Magistrate set aside. The grounds of appeal are as follows:- "1. The Learned Magistrate failed to make ruling on the oral evidence, or in the alternative, failed to have regard to the oral evidence. 2. The Learned Magistrate made mutually inconsistent findings of fact regarding the matters in dispute, or in the alternative, failed to make finding of fact regarding the matters in dispute. 3. The Learned Magistrate impermissibly found there was no agreement between the parties in circumstances where it was common ground on the parties' pleading and evidence that there was an agreement. 4. The Learned Magistrate failed to determine the issue tendered for decision on the parties' pleadings, namely the amount of money which was agreed upon for the purchase of the plaintiff's interest in the relevant business. 5. The Learned Magistrate failed to provide reasons or adequate reasons." 11 The appeal was heard on 4 April 2007. The parties were represented by Counsel. 12 The appeal has been brought out of time. An extension of time has been sought. The defendant opposes the granting of such an extension. 13 Little is offered by way of explanation for the default. However, the default is of short duration (in the order of about nine days). 14 Before further considering that matter, I propose to look at the question of the merits of the appeal. It seems to me that it may be determinative of the matter of whether or not an extension of time should be granted. 15 Counsel for the plaintiff has identified Ground 5 as the primary ground of appeal. The other grounds are seen as being aspects or facets of it. 16 The hearing before the Magistrate occupied two days. At the commencement of the hearing, following the taking of what might be described as a preliminary point, the plaintiff amended his pleadings. The Statement of Claim had initially alleged an agreement reached by way of electronic communication. As a consequence of what was done, the case conducted by the plaintiff before the Magistrate was one of oral agreement involving a telephone conversation of 28 August 2004. The case advanced by the defendant was also founded on oral agreement. Both parties contended that agreement had been reached as to the amount payable. 17 Accordingly, the Magistrate had before him pleadings which threw up competing issues involving oral agreement. 18 Both the plaintiff and the defendant tendered affidavit evidence. This material contained competing versions of the disputed oral agreement. Both parties were cross-examined. The plaintiff also tendered certain electronic communications (referred to in the judgment by the Magistrate as emails). 19 In addressing the evidence, the Magistrate directed his concentration to the emails. Largely, there was little reference to the oral evidence. 20 The conclusions reached by him (which are set forth in paragraphs 12-15) give the impression that they were founded on the contents of the emails. If that be the case, he has misdirected himself as to both the issues and the evidence. 21 The issues required him to analyse the contents of the affidavits and the oral evidence, in the light of the emails, and make findings concerning the conflicting material that was before him. The fact-finding process involved assessments of reliability and credibility concerning the evidence given by the plaintiff and the defendant. If the Magistrate did perform such a fact-finding process, the judgment does not sufficiently set out his reasoning process and his findings. 22 Leaving those matters aside, there are other areas of insufficient disclosure (including how he came to be satisfied that the payment of $31,500 was made by mistake). 23 There is no dispute that an insufficient disclosure of reasoning process constitutes error in point of law. This requirement of disclosure is intended to serve a number of purposes (inter alia, to facilitate the appellate process and to enable the losing party to understand the reason for lack of success). Authority makes it clear that what will suffice may vary from case to case. Each case has to be looked at having regard to its own particular circumstances. 24 In my view, the Magistrate has fallen short of sufficiently disclosing his reasoning process in this particular case. 25 The plaintiff bears the onus of satisfying the Court that there is error in point of law that justifies the disturbing of the decision of the Magistrate. In my view, the onus has been discharged in this case. 26 The reaching of that view leads to the decision that, in the circumstances of this case, an extension of time should be granted. It seems to me, that an exercise of such discretionary power in the plaintiff's favour best serves the dictates of justice. 27 The time for the filing of the Summons is extended up to and including 31 July 2006. The decisions of the Magistrate are set aside. The matter is remitted back to the Local Court for determination according to law. The defendant is to pay the costs of the Summons. If so entitled, he is to have a Certificate under the Suitors Fund Act. The exhibits may be returned. **********

Sellers v Marchant & Anor

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Judgment (11 paragraphs)

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