Stuart v Hishon

Background 5Ms Hishon alleged that as at 16 July 2003, Mr Stuart still owed her $28,216.17 plus interest. That date corresponded to the date when Mr Stuart is said to have made his last payment under the loan. The cause of action on the loan agreement would therefore have expired on 16 July 2009 unless there was an intervening confirmation satisfying s 54 of the Act. The proceedings were not commenced in the Local Court until 2011. Ms Hishon pleaded that Mr Stuart's email dated 21 February 2008 was a sufficient confirmation for s 54 purposes. 6The following email sequence is central and critical to the resolution of this dispute. It became exhibit "DD" in the Court below. Both Ms Hishon and Mr Stuart contributed to this sequence dated 21 February 2008, which is as follows: Ms Hishon: "Well, it is now 2008 - please deposit funds to Jaykay Pty Ltd - BSB [supplied] Account No: [supplied]. Urgently - and let me know when it is done and amount. Far too long between deposits not drinks. Katrina." Mr Stuart: "Sorry for the delay in response, but I have had to change ISP as old one giving me major headaches. This is current one and for future. I only clear the old one from time to time. Since last email contact, I had an accident which put me in hospital, then basically bed for 6-8 weeks. Have not been able to work since end October, still not right. So I am in difficulties myself. Coupled with that I was ill earlier in the year for a month or so. I am therefore unable to deal with this matter at the moment. I will contact when I can. Tom." 7Exhibit "CC" in the Court below is an earlier email sequence between the parties. It is also instructive to consider the relevant terms of that sequence. It took place between 17 and 21 October 2007 in the following order: Ms Hishon: "Hi - Wondering what your [sic] doing? Regards Katrina Brown" Mr Stuart: "Kate, A long time between drinks...why now?" Ms Hishon: "Tom, Last time I knew of you, you had gone to NZ and then I think to China for a while - and the last email address I had was bouncing back as not known whenever I tried to email you. So I really didn't know where you were at - and yes, one of the reasons for trying to track you down is to see if you are still intending to honour our financial agreement? Apart from that as a grandmother of 5 now - I'm fine and hope you are too!! Claire has a daughter and a son, Joanna a boy and Alison has 2 boys - 3 weddings in 4 years!! Kate" Mr Stuart: "Yes and back to NZ for another time last year. Have always had this email address. Congrats on the family matters and health. Can't deal with the other until early next year..." 8It is not in issue that the "financial agreement" that is referred to concerned the loan upon which Ms Hishon sued.

Mr Stuart's submissions 9Section 54 requires three elements to be established before there will have been a confirmation. Mr Stuart challenges his Honour's decision upon the compendious basis that two of these elements had not been established. They are whether Mr Stuart's email amounts to a sufficient confirmation of the cause of action upon which Ms Hishon sues for s 54(2) purposes and whether he signed it as required by s 54(4) of the Act. Acknowledgment 10Senior counsel for Mr Stuart referred to Giacci v Giacci Holdings Pty Ltd [2010] WASCA 233 in which Newnes JA summarised some of the relevant principles at [36] - [39] as follows: "[36] The relevant principles can be stated quite shortly. In order to take a debt out of the operation of s 38 of the Act, it is necessary that there be a promise by the debtor to pay the debt. A promise need not be express and a promise to pay will be implied from an unconditional acknowledgement of the debt... In order to constitute such an acknowledgement there must, upon the fair construction of the words read in the light of the surrounding circumstances, be an admission that the debt is owed...But it is not necessary that the acknowledgement specify the precise amount of the debt so long as it is ascertainable from extrinsic evidence... Nor need the acknowledgement be contained in a single document but a number of documents can be combined to make up an acknowledgement... [37] A promise to pay or acknowledgement of debt must be made to the creditor or the creditor's agent...Such a promise or acknowledgement need not be made direct to the creditor or the creditor's agent but it is sufficient that the debtor intends that it be communicated to the creditor or the creditor's agent as an admission of the debt... [38] It is clear from s 44(3) of the Act that an acknowledgement signed by an agent of the debtor is only effective if the agent is duly authorised to sign it. But it is not necessary that the agent have express authority to do so if it is within the agent's general authority... The authority of the agent is to be determined according to the ordinary principles of agency. [39] Ultimately, what amounts to an acknowledgement is a question of construction in each case and previous cases are therefore of little assistance..." [References omitted] 11I was encouraged to read that summary in the light of what was said by Gibbs CJ in Stage Club Ltd v Millers Hotels Pty Ltd [1981] HCA 71; (1981) 150 CLR 535 at 544: "Under the law in force before the Limitation Act 1969 was passed it was necessary, in order to take a debt out of the operation of the statute of James I, that a new promise to pay should be capable of being inferred from the acknowledgment. However, an unconditional acknowledgment was held to imply a promise to pay...Under the Limitation Act 1969 it is not necessary that any promise to pay should be expressed or implied. What is necessary is an acknowledgment of the existence of the debt - and according to the submission for the appellant it must be an acknowledgment that the debt is existing at the time when the document containing the acknowledgment is signed. It is clear enough that, under the former law, it was necessary that there should be an admission that the liability still existed at the date of the acknowledgment, for one could not ordinarily imply a promise to pay from a statement that a liability had existed in the past. There had to be the admission of a present obligation to pay... Although under the Limitation Act 1969, it is no longer necessary that there should be a promise to pay, it is still necessary, in my opinion, that an acknowledgment should admit or recognize the present existence of a cause of action; in other words, where the claim is for payment of a debt, an acknowledgment, to be sufficient, must recognize the present existence of the debt. I respectfully agree with the statement...that 'To acknowledge a claim, as a matter of ordinary English, signifies an admission that it is due'. There is no acknowledgment of a debt unless there is 'an admission that there is a debt . . . outstanding and unpaid'..." [References omitted] 12According to Mr Stuart, there is nothing in Ms Hishon's email that identifies what it related to. Her pleaded case was that Mr Stuart owed money to her, not Jaykay Pty Limited. Her statement of evidence said that this email was an email "requesting payment", but it did not identify of what it was said to be a payment. 13Mr Stuart therefore contended that the terms of the email revealed only the following things. First, that Ms Hishon asked that money be deposited into the account of Jaykay Pty Limited. Secondly, she did not identify or specify the amount of money that she was asking to be deposited. Thirdly, Ms Hishon did not specify the basis for her request. Fourthly, Ms Hishon did not assert any entitlement to the requested payment. Fifthly, Mr Stuart's response did not indicate or convey his agreement to make the requested payment. Sixthly, Mr Stuart's response did not acknowledge or indicate any understanding as to the basis of the request for the deposit or as to Ms Hishon's entitlement to it. Finally, after referring to his ill health and some of its consequences, Mr Stuart merely stated that he could not "deal with the matter" which in context was clearly a reference to the request that a deposit be made. 14No oral evidence of any significance was given in the Court below. 15It was contended on Mr Stuart's behalf that his 28 February 2008 email served neither as the acknowledgment of a debt in general, let alone as an acknowledgment of the debt owed to Ms Hishon in particular. It does not refer to any debt. It does not request that payment be made to Ms Hishon but to a third party. Mr Stuart's response rises no higher than that he was "unable to deal with the request". Signature 16Mr Stuart submitted that s 9 of the Electronic Transactions Act 2000 had no application. That section only applies where a signature is "required" by a law of New South Wales. The email header was also not a signature: see J Pereira Fernandes SA v Mehta [2006] 2 All ER 891. 17Mr Stuart contended that the only part of the email that could amount to a signature was the printed name "Tom". Whether or not that amounted to a signature was said to depend upon whether the common law principle of "authenticated signature" could be applied. That principle was explained by White J in Kation Pty Ltd v Lamru Pty Ltd [2011] NSWSC 219 at [34] - [37] in these terms: "[34] The principle of 'authenticated signature fiction' evidenced in cases such as Leeman v Stocks [1951] Ch 941 appears to be that where a person's name or initial is written on or printed on a document, whether it is at the beginning, end or in the body of the document, that name or initial may be treated as the person's signature if the person or his agent has expressly, or impliedly represented, that the name can be treated as a signature so as to give what has been called 'authenticated expression to the contract.' [35] In Leeman v Stocks there was no signature on the memorandum of the agreement in the ordinary sense by the vendor. But the agreement contained the vendor's name, and the document was given to the purchaser in circumstances that showed that it was not intended to be further signed, but was nonetheless intended to be a 'perfect instrument' ...That is to say, the document was dealt with by the vendor's agent in a way that indicated to the purchaser that the document was intended to be binding on the vendor, which would only be the case if the vendor were treating his name as it appeared in the document as being his signature. It was in this way that the vendor through his agent 'authenticated' or adopted the printed name as his signature. [36] In McGuren v Simpson, Master Harrison (as her Honour then was) referred (at [17]) to a passage from N C Seddon and M P Ellinghaus, Cheshire and Fifoot's Law of Contract 7th Australian ed (1997) Butterworths in which the learned authors said, " If the name of the party to be charged is printed or written on a document intended to be a memorandum of the contract either by himself of [sic] his authorised agent, it is his signature whether it is at the beginning, the middle or the foot of the document." It is arguable by analogy that a name or initial might be treated as a signature for the purpose of s 54(4) of the Limitation Act, if the party so writing the word intended the document to be an acknowledgement of a debt. [37] The decision in Leeman v Stocks ... would indicate that extrinsic evidence would be admissible to determine that question..." 18Mr Stuart argued that for that principle to apply here it would have to be demonstrated that he placed the name "Tom" in the email intending the email to be an acknowledgment of a debt, a matter that required extrinsic evidence of which in this case there was none. He submitted that the email was for those reasons not "signed" for the purposes of s 54(4) of the Act.

The decision below - Mr Stuart's critique 19His Honour reasoned that the real question was whether the Limitation Act had extinguished the claim. Ms Hishon had apparently argued that her cause of action accrued on 4 December 2002. She had until December 2008 to commence proceedings, unless there was a confirmation of her debt. She relied upon s 54. Mr Stuart's email was in writing and acknowledged a deferral of a financial arrangement and related to the payment of money. Section 54(2) was accordingly satisfied. The principle of authenticated signature applied, so the email was signed. Whether the debt was confirmed depended upon an analysis of both emails. There was an acknowledgement of indebtedness. The cause of action was confirmed from 21 February 2008. 20Mr Stuart was critical of this analysis. There was no pleaded reliance upon the email exchanges in 2007 as resulting in a confirmation. His Honour did not find that they constituted a confirmation of themselves but only as background to the wider email exchanges in 2008. Mr Stuart's 21 October 2007 email was not signed and did not acknowledge any debt. Understandably, therefore, it was not relied upon, except as an aid to understanding what happened later. 21The email exchanges of 2008, however, did not refer to the email exchanges of 2007 and nothing in Mr Stuart's 21 February 2008 email or Ms Hishon's email to which it was a response can be related back to the 2007 reference to "our financial agreement". Even if it could, the later email did not recognize the present existence of any debt. It did no more than defer dealing with whatever request was being made. According to Mr Stuart, that was not an acknowledgment. 22As for Mr Stuart's so-called authenticated signature, his Honour's reasoning was that "in the modern day of exchange of electronic correspondence, there must be some recognition that a signature cannot mean only just a physical scrawl" and that it ought to be inferred that Mr Stuart had "agreed to be bound by the expression before the name". That was not an application of the authenticated signature principle. His Honour failed to understand that authentication requires not merely that the person's electronic name indicated their assent to the content but also that such assent was given for the purpose of providing an acknowledgment of debt. That was a matter requiring extrinsic evidence.

Ms Hishon's responses 23Ms Hishon submitted that Mr Stuart's email satisfied the disputed requirements of s 54 both as to the acknowledgment of her cause of action and the signature upon it. 24Ms Hishon contended that the 21 February 2008 email from Mr Stuart was explained by what occurred in October 2007. She submitted that it was part of the surrounding circumstances and factual matrix to which legitimate reference could be had in order to explain and give content to what was said by Mr Stuart the following February. She submitted that in that context the words "I am unable to deal with this matter at the moment" was to be understood as an unambiguous reference to Ms Hishon's query about whether he was "still intending to honour [their] financial arrangement". She submitted that that amounted to a sufficient acknowledgment of an existing debt that remained unpaid. 25Ms Hishon also contended that the printed word "Tom" on Mr Stuart's email meant that he had signed it for the purposes of s 52(4) of the Act.

Consideration 26In my opinion his Honour did not fall into any of the errors nominated by Mr Stuart and his appeal should be dismissed with costs. This is for the following reasons. Acknowledgment 27Ultimately what amounts to an acknowledgment is a question of construction of the written words in each case. That question is itself informed by the context in which it arises. In the present case that context includes the undisputed relationship of lender and borrower that existed between Ms Hishon and Mr Stuart and the fact that some at least of their correspondence particularly referred to it. Ms Hishon's inquiry about whether or not Mr Stuart still intended to honour their financial agreement was a specific reference to the still undischarged loan from her to him. Mr Stuart's reference to him not being able to "deal with the other until early next year" was, in my view, a generally worded statement that he was not financially in a position to resume payments due to Ms Hishon. The email in which he said so was not signed on any view and so did not attract the operation of the relevant Limitation Act provision. 28However, Ms Hishon was clearly following the matter up on 21 February 2008. Mr Stuart's response was quick to emphasise that he had not worked since October the previous year and was "still not right". He had had an accident, had been in hospital, and was still "in difficulties". Mr Stuart's protestation that he was still "unable to deal with this matter at the moment" was clearly a reference to Ms Hishon's inquiry about whether he intended to honour their financial agreement. It was just as clearly an indication that he could not do so at that time, or "at the moment" as he described it. 29The email sequence in October operates as an aid to understanding the email sequence in the following February. So understood, a plain reading of it clearly reveals that Mr Stuart was saying that he was not then able to pay the balance of the debt then owing to Ms Hishon. Gibbs CJ considered in Millers Hotel that an acknowledgment should admit or recognize the present existence of a cause of action. As his Honour said in that case, "where the claim is for payment of a debt, an acknowledgment, to be sufficient, must recognize the present existence of the debt". He agreed that that, "as a matter of ordinary English, signifies an admission that it is due". He went on to conclude that there can be "no acknowledgment of a debt unless there is 'an admission that there is a debt... outstanding and unpaid'." 30What as a matter of plain English do Mr Stuart's words say if not that he was unable then to pay the presently outstanding debt that he owed to Ms Hishon? That in my view is as clear an acknowledgment of what s 54(2) contemplates as one could find, short of a statement by Mr Stuart in terms that "I acknowledge the existence of the money I owe to Katrina Hishon" or some similar, but realistically unlikely, formulation. It would in my view be wholly unrealistic to read the words "I am therefore unable to deal with this matter at the moment" in Mr Stuart's email, in the context of the relationship between the parties and their earlier correspondence, in any other way. It would also be pedantic and wholly artificial to do so. The concluding words "I will contact when I can", again when read in context, are a further reference to Mr Stuart's intention to pay the outstanding debt when he is in a position to do so. Signature 31White J said in Kation that "a name or initial might be treated as a signature for the purpose of s 54(4) of the Limitation Act, if the party so writing the word intended the document to be an acknowledgement of a debt". I have determined that Mr Stuart intended what he said in his February email to be an acknowledgment of his debt to Ms Hishon. Mr Stuart at the very least "impliedly represented...that the name [Tom] can be treated as a signature." It had no other conceivable purpose. It is not in contest that Mr Stuart wrote the email. The printed name "Tom" was an attestation by him of authorship of a document that acknowledged the debt. It is not as if the name only appears in some collateral context, as if only a witness to another's signature or the authentication of an alteration to it. 32Mr Stuart has contended that there is a need for extrinsic evidence to establish that Mr Stuart placed the printed name upon his email intending it to be an acknowledgment of the debt, and that none exists in this case. He relied upon what White J said in Kation as mandating such an approach. It was however in that case his Honour's concern to indicate that extrinsic evidence would be admissible to establish the necessary intention, not that it was incapable of being established in any other way. In any event, in the present case I consider that the evidence clearly supports the inference that Mr Stuart had the requisite intention when he put his name on the email and sent it. His printed name was an implicit endorsement of the contents of the email. 33In Kavia Holdings Pty Ltd v Suntrack Holdings Pty Ltd [2011] NSWSC 716, Pembroke J accepted that a requirement that notice be given "in writing" could be satisfied by a communication via email. In C & P Syndicate Pty Ltd v Reddy [2013] NSWSC 643 at [111], Lindsay J referred to the use of emails to effect service of notices in contractual contexts as being "consistent with the policy objectives of the Electronic Transactions Act ... as well as modern business practice and the routine course of communications between the respective solicitors" involved in the transaction. I note that Mr Stuart has unsurprisingly taken no point that email communication as such was somehow incapable otherwise of meeting the requirements of the section. 34Modern business practices and current mercantile trends also reliably inform what was taking place in October 2007 and February 2008 between Mr Stuart and Ms Hishon. Electronic signatures are a fact of modern commercial life. No more suspicion should attend the assessment of Mr Stuart's "signed" email than if he had chosen to communicate with Ms Hishon in identical terms written on paper and signed by him in ink. The electronic nature of the signature does not in my view detract from or diminish its place or its significance as one complying with s 54(4) of the Act. This is not a case where resort to a letterhead on a printed form containing Mr Stuart's name is necessary to establish that he signed it without any other manual or electronic signature. Mr Stuart typed his name on the foot of the email. He signed it by doing so. It would be an almost lethal assault on common sense to take any other view.

Conclusions and orders 35It follows that the appeal to this Court should be dismissed with costs.

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