Chioatto v Sandona
[2001] NSWSC 1002
•8 November 2001
CITATION: Chioatto v Sandona [2001] NSWSC 1002 CURRENT JURISDICTION: Common Law FILE NUMBER(S): SC 12489 of 2001 HEARING DATE(S): 24 & 25 September 2001 JUDGMENT DATE:
8 November 2001PARTIES :
SANTE CHIOATTO
(Plaintiff)v
ONORINA SANDONA AS ADMINISTRATIX OF THE ESTATE OF THE LATE ADRIANO SANDONA
(Defendant)JUDGMENT OF: Levine J
COUNSEL : D Ash
R Brender
(Plaintiff)
(Defendant)SOLICITORS: Agostini Jarrett
Beilby Poulden Costello
(Plaintiff)
(Defendant)CATCHWORDS: Appeal from Magistrate - error of law - Local Court (Civil Claims) Act 1970 s 69 LEGISLATION CITED: Justices Act 1902 Part 5 Division 2 s 104(5)
Local Court (Civil Claims) Act 1970 s 69
Supreme Court RulesCASES CITED: Abs v Matheson (1898) 104 LTJ 268
Commonwealth v Verwayen (1990) 17 CLR 394
Coulton v Holcombe (1986) 162 CLR 1
In re Brookers (Aust). Limited (1986) 41 SASR 380
Ogilivie v Adams [1981] VR 101
Owen v Woolworths Properties Limited (1956) 96 CLR 154DECISION: See paragraph 32
DLJ: 1
[2001] NSWSC 1002
- IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
12489 of 2001
JUSTICE DAVID LEVINE
8 November 2001
SANTE CHIOATTO
(Plaintiff)
ONORINA SANDONA AS ADMINISTRATIX OF THE ESTATE OF THE LATE ADRIANO SANDONAv
(Defendant)
: This is an appeal from a decision of a Magistrate exercising jurisdiction under the Local Courts (Civil Claims) Act 1970. It is an appeal as provided for by s 69 of that Act and in particular, (and on this there is no issue), s 69(2) which provides that a party to proceedings under the Act who is dissatisfied with the judgment or order of the Court as being erroneous in point of law may appeal to this Court. The appeal to the Supreme Court from the Local Court exercising the jurisdiction to which I have referred is otherwise acknowledged in the Justices Act 1902 Part 5, Division 2, s 104(5).
2 The mechanism for the institution of such appeals is provided by Pt 51B of the Rules of this Court.
3 By Summons filed on 9 August 2001 the plaintiff in this Court (the defendant in the Local Court) seeks relief as follows:
- “1. An order that the decision of His Worship Mr Gould in Local Court matter 3592/01 be set aside.
- 2. A declaration that the Magistrate erred in his defining of the construction of a contract between the parties.
- 3. A declaration that the Magistrate erred in his finding that the Limitation Act 1969 did not apply.
- 4. An order that the matter to returned ( sic) to His Worship Mr Gould to hear and determine the matter of the appeal.
- 5. The defendant to pay the plaintiff’s costs”.
4 Pursuant to Pt 51B r 8 a Statement of Grounds was filed by the plaintiff. Ultimately the third ground only was relied upon to the effect that assuming the learned Magistrate found correctly that the making of an actual demand was a condition precedent to a liability to pay and that no demand had ever been made, the learned Magistrate erred in law in finding that a cause of action existed at the time the claim was filed because the condition precedent was not satisfied.
5 The material before me (Exhibit A) comprised the pleadings in the Local Court, the exchange of correspondence in relation to particulars, an affidavit of the plaintiff’s solicitor, Ms Shauna Jarrett exhibiting the affidavit of Mrs Sandona read in the Court below, the transcript of proceedings including the learned Magistrate’s reasons and the affidavits of Denis Sandona and Sante Chioatto, both read in the Court below.
6 The proceedings and findings may be summarised as follows:
7 Sandona lent Chioatto amounts of money in the 1970s. The action in the Court below was by Sandona’s executrix for recovery. Judgment was given for Sandona’s executrix on 12 July 2001. No issue of fact is in dispute; the issue is one of law. The Magistrate made the following holdings (at Jarrett’s affidavit, pp 92-93).
- “(a) that Chioatto had not repaid the whole sum due;
(b) that as a matter of law, the moneys were repayable not immediately but on upon a demand in accordance with the terms of the agreements (p 93.33-38); and
(d) Sandona was entitled to judgment (with interest from the 1970s) (p 93.46)”.(c) that no notice of demand was given to Chioatto as required (p 93.42-44); yet
8 The plaintiff in this Court (the debtor) contends that the Magistrate was entitled to find (a), (b) and (c), but having done so could not order (d); the only course was to dismiss Sandona’s suit.
9 Although the Magistrate does not in his reasons particularise the loan agreements, the reasonable inference from (1) his acceptance of Sandona’s case over Chioatto’s case (p 93.40-42); and (2) the giving of judgment in the exact amount sought in the claim (p 93.46), is that the following (drawn from the claim) was found by him;
- “(a) Sandona lent Chioatto $3,000 on 8 May 1976; $3,000 on 7 July 1976; $3,000 on 7 December 1976; and $2,000 no later than 1 July 1977.
(b) The terms of the loans were the same, inter alia that three weeks’ notice had to be given and that the rate of interest would be 12% paid monthly. (The actual terms are exampled at Jarrett’s affidavit, p 13).
(d) As at 30 June 1999, the balance of principal ($10,000) and accumulated interest at 12% made $39,374”.(c) Chioatto paid back $1,000 in or about June 1986.
10 Judgment was entered on 12 July 2001 for $39,374.
11 The critical part of His Worship’s reasons prior to entering the judgment in the above sum are as follows:
- “I accept, and I find, that as a matter of law that the moneys were not payable on demand only upon the condition precedent of being satisfied, namely a demand in accordance with the terms of the loan agreements. The cause of action therefore did not arise unless and until such a demand or demands were given.
- I find that the window’s ( sic) and the son’s accounts as to the conversations which they had with the defendant on this matter are accurate. I am satisfied on the fact that no notice of demand was given to the defendant as required under the terms of the loan”.
12 The terms of the loan were:
- “I the under-written S. Chioatto receive as loan the sum of [words] . $ [figures] From Mr. A Sandona. The payment of the loan will be determined at the pleasure of Mr. A Sandona but in so doing he must given three weeks warning before hand. The cheque given as guarantee cannot be cashed unless three weeks warning has been given to the under-written before hand. The rate of interest will be 12%”.
13 At the hearing, Chioatto argued three alternatives, (1) that he had repaid the whole of the money; (2) that the cause of action on each loan ran from the date of each loan and is barred; and (3) that if one true construction the cause of action on each loan ran from the date of the respective demand, demands were in fact given in the 1970s and 1980s, with the result that each cause of action must be barred in any event.
14 The Magistrate rejected (1) as a matter of fact and no dispute is raised about this. Chioatto does not press (2). In this Court, Chioatto accepts what Sandona argued and what the Magistrate accepted it, that upon true construction, a demand had to be made, such that the cause of action did not accrue until that time; see Ogilvie v Adams [1981] VR 101, 1052; In re Brookers (Aust) Limited (1986) 41 SASR 380, 382 per King CJ. Chioatto’s case was (and is), and the Magistrate accepted it, that if a demand were duly made then the cause of action began to accrue (Jarrett’s affidavit, p 92.6-10). Chioatto then argued (see above) that there were demands made a long time ago, well over six years, such that any cause of action accrued from then and is barred. The Magistrate did not accept this. He said (93.36-44).
- “The cause of action therefore did not arise unless and until such a demand or demands were given. I find that [Sandona’s witnesses] on this matter are accurate. I am satisfied on the fact that no notice of demand was given to the defendant as required under the terms of the loan”.
15 None of this is challenged in this Court by Chioatto. What Chioatto says is that the inevitable result from this point was dismissal of Sandona’s claim, not because it was time-barred but because it had never even accrued.
16 The next issue is whether, if the Court is of the view that the inevitability of dismissal ought to have been raised by Chioatto below (something denied by Chioatto in this Court), the fact that it was not raised precludes it now being raised.
17 The relevant law is that an appeal on law under the Justices Act extends to all questions of law necessarily involved in the Magistrate’s decision, whether his attention was drawn to them or not, unless, assuming the point to have been taken, it is possible that it might have been met by calling further evidence: Owen v Woolworths (1956) 96 CLR 154 at 163.
18 The facts are: (a) Sandona originally pleaded that a demand was made: see claim at para 7; (b) On Sandona’s own case, it is clear that no demand was made after 1992 and prior to commencement of the proceedings in 2000: see Jarrett, p 8 (being Mrs Sandona’s affidavit in the proceedings below at paras 53-57); and see the affidavit in the Court below of her son Dennis Sandona in paragraphs 59-61. (c) Chioatto’s counsel made application for a “no case”, but only on the point that a demand was not made. This application was rejected: Jarrett, p 54.43-51. However, in the course of replying to the application, Sandona’s counsel said to the effect that no demand was ever made: Jarrett, pp 53.40-54.13. (d) Chioatto’s counsel submitted in final submissions and the Magistrate accepted that the cause of action only arises on a demand being made: Jarrett, p 92.6-10. If that is so, it can only be the case that the Magistrate at the time of judgment was or ought to have been aware that he must find a demand for the plaintiff to succeed. He specifically found that no demand was made: Jarrett, p 93.42-44.
19 On these facts, Chioatto contends in this Court first that a legal ground was raised and accepted by the Magistrate and that it was not necessary for Chioatto’s counsel to go further and elucidate the inevitable, and secondly that on Sandona’s own case (positively and not by inference), no demand was made in the last six years and that there could be no further evidence adduced to reach in Sandona’s favour a contrary conclusion.
20 At this point I make the observation that it is quite clear to me that if His Worship accepted the legal propositions advanced for the plaintiff (defendant before him) as to the requirement of the condition precedent for the purposes of a Limitations argument, he fell into error by making no finding as to the making of any demand prior to His Worship entering judgment for the creditor before him.
21 Essentially the defendant before me argues that it is not open to the plaintiff to raise the question of demand it not having been pleaded below; it is submitted that where a debtor alleges non-performance of a condition precedent he must specifically plead it (Abs v Matheson (1898) 104 LTJ 268). Further that case was inconsistent with the plaintiff’s case below where the plaintiff defended the matter by alleging repayment in full or in the alternative that the contract was uncertain and void ab initio. The learned Magistrate rejected the plaintiff’s evidence that all the money was repaid.
22 Pursuant to what is said to be the principles enunciated in Coulton v Holcombe (1986) 162 CLR 1 the matter cannot be raised at this stage. Had the matter been raised below, it is contended, the plaintiff could in the Local Court have elected to non-suit herself and start again.
23 A further argument was advanced on the basis of an elusive kind of estoppel in that the plaintiff is precluded from relying on the necessity for notice by reason of what is said to be “waiver, election or estoppel”. The case below proceeded and it would be contrary to good sense, the defendant before me submits, to permit the plaintiff to raise it for the first time on appeal thereby requiring the defendant here to provide fresh three weeks warning and to re-litigate. The defendant should have been permitted to explore what was described as an estoppel by conduct, as I understand it, which amounts to a waiver or amendment to the contract which could have been litigated in reply.
24 It is finally submitted for the defendant before me that the initiating proceedings in the Local Court in any event constitute notice.
25 I reject the submission to the effect that the initiating process would constitute the demand. The initiating process required the setting out of the cause of action upon which the plaintiff in the Court below sued which required the pleading of a condition precedent. I see no merit in this point at all.
26 As to the estoppel point, insofar as it was based on what fell from their Honours variously in the Commonwealth of Australia v Verwayen (1990) 17 CLR 394 it seems to me that the plaintiff’s submission as to their not being available an “unconscious” estoppel is valid. Viewing the position of the plaintiff as defendant below it cannot on any sensible basis be submitted, in my view, that the matter of the condition precedent having been vigorously raised on the limitation point thereupon died and that there was an obligation upon counsel to further pursue that matter in submissions. I am of the view on considering the material that there is a reasonable basis for coming to the conclusion that it was live throughout. I add that I am not persuaded that this was the case where what was seeking to be done is to add now something that was “new” and not dealt with below (cf. Coulton supra). Further, the present exercise even if necessary to do so, would involve the examination of questions of law necessary to his decision whether his attention was drawn to them or not (see Owen v Woolworths Properties Limited (1956) 96 CLR 154 at 163).
27 An immensely persuasive factor in the determination of the issues before me is that below the plaintiff’s own evidence shows that there was no contact within six years prior to the commencement of the action. Even if the defendant’s submissions here might be viewed in some way as strictly correct in relation to waiver by conduct, if in some way the cause of action was thereby reinstated, it could only have happened or arisen on the evidence before the Magistrate, more than six years before the institution of proceedings. The state of the evidence before the Magistrate was that no demand was made within any relevant time, yet as a matter of law His Worship found and correctly so, in my view, that the demand was a condition precedent. No actual or forensic prejudice I find to have been suffered by the defendant by the conduct before the Magistrate of the plaintiff in defence of the defendant’s action there. I am of the view that this is a clear case where the learned Magistrate fell into fundamental error of law the more apparent when that legal issue as to the requirement of the demand was live, it having been agitated before him on the Limitations point.
28 A remaining issue of complaint is that the learned Magistrate erred in his computation of interest bringing about the entry of judgment in the sum referred to above.
29 It is claimed that the amount awarded is excessive it having been awarded from the date of the loans and that, on any view, this must be wrong. It is submitted that first, it is “against all authority” that interest on a debt due and payable can accrue before the debt is due and payable. There is nothing in the contract necessitating a different result. Secondly, if interest is due and payable independently of the debt becoming due and payable – what is said to be a strained but not impossible construction – then it is an independent cause of action which accrued from the dates of the respective loans and is on any view, barred. If this is the proper construction then the appropriate reasoning leads to a finding that a cause of action on the loans is not accrued; independently interest under the contract accrued from the giving of the money and is barred, neither result precluding the operation of statutory interest which however cannot accrue until the cause of action arises.
30 This was a point which was simply not raised below and in the light of the outcome I propose to the Summons before me is one that more properly can be litigated, if considered appropriate, in the event of a further action being instituted.
31 With respect, the error of law made by the Magistrate was so patent on the issue of liability, there is no necessity for me to resolve this particular component of the verdict entered consequent upon the error of law committed by the Magistrate. I will do no more than indicate that I am not predisposed to accept the submissions for the plaintiff before me.
32 Accordingly, I make the following orders:
1. That the decision of the Local Court entering judgment in favour of the defendant before me in the sum of $39,374 be set aside.
2. I declare that the learned Magistrate erred in law in having found that the making of a demand was a condition precedent for any liability in the plaintiff before me to the defendant, in not making any finding of fact in the light of that construction and, notwithstanding entering judgment for the defendant (the plaintiff below).
4. The defendant is to pay the plaintiff’s costs of the proceedings in the Local Court and before me.3. That the proceedings of the defendant as plaintiff in the Local Court be dismissed.
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