Silvestro v Ming

CATCHWORDS : Appeal - Local Court Magistrate: return of deposit

LEGISLATION CITED : Local Courts Act 1982 (NSW) - s 74

Allen v Kerr & Anor (1995) Aust Torts Reports 81-354 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Carr v Neill [1999] NSWSC 1263 Codelfa Constructions Pty Limited v State Rail Authority of NSW (1981) 149 CLR 337 CASES CITED : Devries v Australian National Railways Commission (1993) 177 CLR 472 LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 R L & D Investments Pty Ltd v Bisby [2002] 37 MVR 479 State Rail Authority of New South Wales v Earthline Commissions Pty Ltd (In Liq) (1999) 160 ALR 588 Swain v Waverley Municipal Council [2005] HCA 4

Anthony John Silvestro (Plaintiff) PARTIES : Jiang Guang Ming (Defendant)

Mr G Sirtes (Plaintiff) COUNSEL : Mr T Bland (Defendant)

Coleman & Greig (Plaintiff) SOLICITORS : Johninfo Lawyers (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

14450/2005 - ANTHONY JOHN SILVESTRO v JIANG GUANG MING

JUDGMENT (Appeal - Local Court Magistrate: return of deposit) 1 HER HONOUR: By amended summons filed 10 February 2006 the plaintiff seeks firstly, that the judgment and orders of Magistrate Lulham in Local Court proceedings No. 9130 of 2004 be set aside; secondly, an order that there be judgment for the plaintiff in the court below; thirdly, that the defendant pay the costs of these proceedings and the costs in the court below; and fourthly, if leave is required, that leave be granted pursuant to s 74 of the Local Courts Act 1982 (NSW) (the Act). 2 The plaintiff is Anthony John Silvestro. The defendant is Jiang Guang Ming. The plaintiff relied on the affidavit of Paul Gambin sworn 23 February 2006. The plaintiff was the defendant in the Local Court and the defendant in this Court was the plaintiff in the Local Court. For convenience, in this judgment, I shall refer to the parties by name.

3 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the plaintiff. Section 73 of the Act permits a party who is dissatisfied with a judgment as being erroneous in point of law to appeal to this Court. The onus lies on the plaintiff to demonstrate that there has been an error of law. What is a question of law (as opposed to a question of fact) was considered, inter alia, in Allen v Kerr & Anor (1995) Aust Torts Reports 81-354; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156; Carr v Neill [1999] NSWSC 1263 and R L & D Investments Pty Ltd v Bisby [2002] 37 MVR 479. It cannot be said that the judicial officer acted on evidence inconsistent with facts incontrovertibly established by the evidence - see Devries v Australian National Railways Commission (1993) 177 CLR 472 per Brennan, Gaudron and McHugh JJ at 479 and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588. 4 In Swain v Waverley Municipal Council [2005] HCA 4, the Chief Justice at [2] reiterated that in the common law system of civil justice, the issues between the parties are determined by the trial process. The system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal. 5 Section 75 of the Act provides that the Court may determine an appeal by either (a) by varying the terms of the judgment or order or (b) setting the judgment or order aside or (c) by setting the judgment or order aside and remitting the matter fordetermination in accordance with the Court's directions or (d) by dismissing the appeal. 6 On 26 August 2005 Magistrate Lulham entered judgment in favour of Ming in the sum of $16,671.78.

Grounds of Appeal 7 The proceedings appealed from were heard and decided on 26 August 2005 before Magistrate Lulham in the Local Court. The grounds of appeal are firstly, the Magistrate erred in law in construing the contract between the parties (entered on 25 April 2004) as being subject to a requirement that Silvestro provide Ming with a building certificate together with the contract of sale of Silvestro's former residence at 68 Oldfield, Greystanes; secondly, the Magistrate erred in law in holding the existence of a team not pleaded nor otherwise contended by Ming in the court below; thirdly, the Magistrate, in not holding that any terms pleaded in the Statement of Liquidated Claim existed, ought to have dismissed the proceedings or entered judgment for Silvestro and fourthly, the Learned Magistrate erred in law in taking into consideration pre-contract discussions between the parties as a tool for creating terms that did not exist.

The Local Court proceedings 8 The relevant portion of Ming's statement of claim pleaded: "3. On or about 25 April 2004, the Plaintiff [Ming] and the Defendant [Silvestro] signed a document concerning the sale of the property at 68 Oldfield Street, Greystanes ("the agreement"). PARTICULARS In so far as the Agreement was in writing, it consisted of an undated 2 page hand written letter signed by the parties. The property is folio Identifier 145/702642 ("the property"). 4. It was an express and/or implied term of the Agreement that the Defendant would duly convey to the Plaintiff the Property within 6 weeks and/or within a reasonable time. 5. Further or alternatively, it was an express and/or implied term of the Agreement that the Defendant would enter into a formal contract for the sale of the Property within 7 days of the Agreement and/or within a reasonable time. 6. Further or alternatively, the time period of 7 days provided for the exchange of the contract for sale of land following the Agreement was not of the essence. 7. Further or alternatively, it was an implied term of the Agreement that the Defendant would provide the Plaintiff with a copy of the Contract for Sale of Land for its consideration and execution within a reasonable time, being a period less than 7 days from the date of the Agreement.

8. Further or alternatively, it was an express and/or implied term of the Agreement that the Deposit would be refunded in the event contracts for the sale of land did not proceed by reason of a breach of the Agreement by the Defendant or by reason of the Defendant's conduct. 9. It was an express and/or implied term of the Agreement that there would be no structural damage and/or no termites.
9. Further or alternatively, the Defendant warranted that the land is not subject to any adverse affectation. PARTICULARS Schedule 3 of Conveyancing Sale of Land Regulation 2000 11. Further or alternatively, the Defendant warranted that there is no matter in relation to any building or structure on the land that would justify the making of any upgrading or demolition order, or if there is such a matter, a Building Certificate has been issued in relation to the building or structure since the matter arose. PARTICULARS Schedule 3 of Conveyancing Sale of Land Regulation 2000 12. Further or alternatively, it was an express and/or implied term of the Agreement that the deposit would be refunded in the event of any improvements to the Property not being approved by Local Council. 13. ... 14. At all material times, there was no building certificate issued in respect to the property or its improvements." 9 It is common ground that on 25 April 2004 Ming paid Silvestro the sum of $15,000. Ming sought to recover the sum of $15,000. 10 The parties entered into an agreement dated 25 April 2004. They did not proceed to enter into a contract for the sale of land.

The agreement dated 25 April 2004 11 On 25 April 2004 Ming and Silvestro entered into the following written agreement: "Property; 2 Storey Full Brick Residence Address; 68 Oldfield St, Greystanes, NSW Agreed Purchase Price; ($738,000) Seven Hundred and thirty eight thousand dollars only in full. Deposit; ($15,000) Fifteen thousand dollars paid on 25th April 2004 - Non Refundable as per the mentioned terms: Exchange Contract; within 1 week of this date including $58,800 to be paid at time of exchange being a total of 10% including the deposit $15,000 = $73,800. Settlement Within 6 weeks of this agreement to the 31st May 2004 and the balance of $664,200 to be paid on Settlement. Non Refundable Conditions In the event of Non Councill [sic] Approval and/or Non Compliance Sewer Connection under the house/dwelling and irrepairable [sic] structural damage. Subject to any future Council development plans" [Bundle pp 23-24 - my emphasis added] 12 Ming, in his affidavit affirmed 10 July 2005, deposed, at [9]-[14], that at 10.00am on 25 April 2004, he attended the property at 68 Oldfield Street, Greystanes. During the meeting, Ya Qin Jiang, Xiaowen Jiang, Silvestro, Silvestro's wife, Shu-Ping Qui, Fu Zhi Jian and Shu Ping Qui's daughter were present. Upon arriving at the property they sat down while Silvestro drafted the contract. While drafting the contract, Silvestro said "If you don't buy the property, the $15,000 will not be returned to you." Ming replied "I agree, but I have 4 requirements. If there is only one of these requirements, I will consider whether I will buy the house or not. The first is, if I find white ants in the house or if there is structural damage, the second is, if the Government makes a decision to use the land, the third is, if I find there is gas pipe or huge water pipes under the land and the fourth is, if there is some building that is not approved by the Government." Ming then stated "Under these 4 conditions, you have to return the $15,000 to me." Silvestro replied "I agree." Shu Ping Qui translated the agreement into Chinese for Ming. 13 Silvestro, in his affidavit sworn 5 August 2005, deposed at [27] that Shu said "Mr Jiang would like a condition in the agreement that if there is any major problems like a main road going through the house or the house being built on a sewer or any problems that can't be fixed he doesn't have to go ahead with the sale." Silvestro then asked "[h]ow are we going to word this into the agreement." Shu, Mr Jiang and Jack then spoke in Chinese and Shu's daughter said "The non refundable conditions should be written "In the event of non Council approval and/or non compliance sewer connection under the house/dwelling and irreparable structural damage." Silvestro then wrote the words into the agreement.

The Magistrate's decision 14 The Magistrate made a finding that there was a patent ambiguity in the clause "Non Refundable Conditions". Not surprisingly this finding is not challenged as both parties discussed these "non refundable" conditions as being ones which would enable Ming to have a refund of $15,000. 15 After referring to Cheshire & Fifoot's 7th ed at 327, the Magistrate stated that it was permissible to consider the background of the contract. Evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed - see Codelfa Constructions Pty Limited v State Rail Authority of NSW (1981) 149 CLR 337 at 352. 16 The Magistrate continued (at t 4.17-29): "… that in the agreement dated 25 April the heading "Non-refundable conditions" was incorrect and the only meaning to be given to those words to make the agreement sensible, effective and also the absolute overwhelming evidence of all of the parties including Mr Silvestro and particularly Mrs Silvestro who all agreed that four conditions were imposed and if those conditions were not met then the purchaser would be entitled not to have to proceed with the contract and would be entitled to his deposit of $15,000 back. The four conditions were non-council approval, non-compliance sewer connections under the house, a dwelling, irreparable structural damage and subject to any future council development plans." 17 The Magistrate need not have gone any further except so as to establish that no council approval had been obtained. The Magistrate did not make this finding. The Magistrate made a finding as to the provision of a certificate. Mrs Silvestro was cross examined and gave evidence that they did not have a certificate (t 23.30). There is evidence in Silvestro's affidavit at [43] that the roof was not council approved. There was no evidence to the contrary. 18 Silvestro submitted that Ming is not entitled to judgment on an unpleaded cause of action. It was pleaded that it was an express and/or implied term of the agreement that the deposit would be refunded in the event of any improvements to the property not being approved by local council. This issue was properly pleaded. This ground of appeal fails. 19 On 26 August 2005 Magistrate Lulham entered judgment in favour of Ming. He stated (at t 5.11-33): "The purchaser was prepared to enter into the contract with the clause making the contract subject to the vendor providing the certificate. My understanding is that it is the owner who has to apply and obtain the certificate on his behalf. In my view that is the construction to be given to the contract. It was the clear intention of the parties when they entered into the contract and in my view the purchaser was entitled not to enter into a contract of sale without that condition and if that condition was not included then he was entitled to a refund of his deposit of $15,000. … On that basis I am satisfied that the plaintiff is entitled to a refund of the deposit. In my view the plaintiff is not entitled to any other damages." 20 The Magistrate in reaching this conclusion considered post agreement conduct - see LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 at [62] - [68]. 21 The Magistrate's decision is not one which this Court would disturb. It is my view that the result was correct. As previously stated once the Magistrate held that one of the refundable conditions was non council approval he need not to have gone further. He was not obliged to make a further finding as the requirement for a certificate. 22 The appeal is dismissed. The decision of Magistrate Lulham dated 26 August 2005 is affirmed. The amended summons filed 10 February 2006 is dismissed. 23 Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed.

(2) The decision of Magistrate Lulham dated 26 August 2005 is affirmed.

(3) The amended summons filed 10 February 2006 is dismissed. (4) The plaintiff is to pay the defendant's costs as agreed or assessed. **********

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.