GLCS Group Incorporated v Dzundza - [2018] SASC 31

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
GLCS GROUP INCORPORATED v DZUNDZA
[2018] SASC 31
Judgment of The Honourable Justice Hinton
16 March 2018
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
Appeal against orders of a Magistrate awarding judgment in favour of the respondent in the sum of $61,337 including interest.
In April 2011 the respondent loaned $40,000 to the appellant for purposes associated with the takeover of a bar, and in July 2011, the respondent transferred a further $30,000 to the appellant for the same purpose. At trial the respondent sought to recover the balance owing on those two advances. Three issues arose for resolution:
1.       What were the terms of the $40,000 loan?
2.       Was the second advance a loan or a donation, and, if it was a loan, what were the terms of that loan?
3.       Had the appellant’s President guaranteed the repayment of both the first and second advances?
On appeal the adequacy of the Magistrate’s reasons in dealing with each of these issues was challenged. There was also an application for permission to amend the Notice of Appeal and in relation thereto to call fresh evidence.
Held: Appeal allowed; permission to amend the Notice of Appeal refused.
1.       The Magistrate did not adequately address issues one and two in his reasons such that this Court could properly perform the appellate function.
Magistrates Court Act 1991 (SA); Supreme Court Civil Rules 2006 (SA), referred to.
Carlson v King (1947) 64 WN (NSW) 65; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247; Resi Corporation v Munzer [2016] SASCFC 15; R v Keyte (2000) 78 SASR 68; Fox v Percy (2003) 214 CLR 118; Masters v Cameron (1954) 91 CLR 353; Briginshaw v Briginshaw (1938) 60 CLR 336; Sands v South Australia (2015) 122 SASR 195; McLaren v Legal Practitioners Disciplinary Tribunal and Another (2010) 26 NTLR 45; CDJ v VAJ (1998) 197 CLR 172, considered.

GLCS GROUP INCORPORATED v DZUNDZA
[2018] SASC 31
Magistrates Appeal: Civil
HINTON J.

This is an appeal against orders made by a Magistrate following the trial of a dispute in which the respondent sought, amongst other things, to recover the balance owing on two advances she made to the appellant in March/April and July 2011, plus interest.
The appellant is an incorporated association. It provides services to the Gay, Lesbian, Bisexual and Transgender community. In July 2011, the appellant commenced operating the Verve Bar and Kitchen, a restaurant and bar located within the Westfield Marion Shopping Complex. The Verve Bar and Kitchen succeeded to the operations of SBar. The takeover of SBar and the establishment and operation of the Verve Bar and Kitchen form the background to these proceedings.
On anyone’s case, in April 2011 the respondent loaned $40,000 to the appellant (the first advance) for purposes associated with the takeover of the SBar and the establishment of the Verve Bar and Kitchen. Further, on anyone’s case, on 20 July 2011, the respondent transferred a further $30,000 to the appellant (the second advance) for the same purposes.
The terms governing the first and second advances and the nature of those advances were agreed by the respondent in dealings with the appellant’s president, Mr Benjamin White. The respective cases of the parties depended upon the credibility and reliability of the respondent and Mr White. To the extent that it was asserted by the respondent that the agreements had been reduced to writing, which was denied, the provenance of the writing also turned on her credibility and reliability.
At trial three primary issues arose for resolution:
1.What were the terms of the first advance?
The respondent’s case was that the loan was for a period of three months attracting interest, being the rate she would receive if the money were held subject to a fixed term deposit. The appellant contended that no terms were agreed.
The Magistrate found that there was no agreement that the loan subject of the first advance was to be for three months. Further, the Magistrate held that the evidence did not allow him to make any finding as to the precise terms of any interest payable. He determined that the respondent was entitled to statutory interest.
2.Was the second advance a loan or a donation, and, if it was a loan, what were the terms of that loan?
The respondent contended that she had made a second loan to, in effect, secure the chances of the first advance being repaid. The appellant denied that the second advance was anything other than a donation.
The Magistrate found for the respondent, concluding that the second advance was a loan to the appellant on the same terms as the first advance. As with the first advance, he concluded that the respondent was entitled to statutory interest.
3.Had Mr White guaranteed the repayment of both the first and second advances?
In the Court below Mr White was joined as the second defendant. He denied that he provided any personal guarantee for either the first or second advance.
The Magistrate was not satisfied on the evidence of the respondent that Mr White had provided a personal guarantee for either advance.
Evidence was adduced at trial of repayments made by the appellant of the first advance. Taking into account those repayments and the statutory interest payable, the Magistrate ordered that the respondent have judgment against the appellant in the sum of $61,337.00 inclusive of interest.
The Notice of Appeal contains eight grounds. In one way or another those grounds attack the adequacy of the Magistrate’s reasons. Counsel for the appellant submitted that the eight grounds may be reduced to the following, namely, that the Magistrate erred in that:
1.he acted on the evidence of the respondent, whose evidence he found suspect, and yet failed to act on the evidence of the appellant’s witnesses, Messrs Gunning and White, the latter whom he accepted in respect of an important issue at trial;
2.he substituted his own opinion about commercial matters where he was not entitled to take judicial notice;
3.he gave insufficient and inadequate reasons for important findings; and
4.he gave insufficient and inadequate reasons for rejecting evidence tendered by the respondent that actually supported the appellant’s case on important issues.
I deal with questions (1), (3) and (4) below under the heading “Inadequacy of reasons”. I have considered question (2) separately despite it being interrelated.
Before dealing with the grounds of appeal it is necessary to say something more about the conduct of the trial.
Background
The respondent claimed that from early 2011 she and Mr White had been in discussions relating to the purchase of the SBar by the appellant. The respondent and Mr White were friends and had previously worked together. The respondent said that Mr White, who was the manager of the SBar, represented to her that from his knowledge of the business the SBar was viable and worth purchasing. He considered that the business was one worth the appellant buying. He said short‑term funding was required in order that the appellant could do so. In her evidence the respondent said that Mr White said to her that he needed “flash money” to pursue the purchase on behalf of the appellant. The respondent described “flash money” as money that made it look like the appellant had money. Mr White knew, she said, that she had money available from the then recent sale of a property. He did not ask her to advance a specific sum, just whatever she could spare.
They talked about the matter on a number of occasions over a couple of months. The respondent visited the SBar regularly.
The sale of one of the respondent’s properties proceeded, leaving her with $40,000 after the mortgage, costs of sale and other expenses were satisfied.
The respondent’s claim asserted that she advanced $40,000 to the appellant “on the proviso that, the loan would be for a term of three months. Further, that interest would accrue daily and that Mr White guaranteed the advance.
The respondent gave evidence largely consistent with her claim. She could only part with the $40,000 for three months as it was all she had at that time. She repeated that Mr White told her that he needed the money for “flash money, to show that he had money in the bank when he went to get the purchase of the business”. She added that she told Mr White that she wanted interest equal to that which she was then getting on the money from the sale of the property which was in a Bank SA term deposit. Mr White was supposed to have drawn up an agreement governing the loan, she said.
Subsequently the respondent was advised by Mr White that the SBar had been placed into receivership by its owners. He said that this prevented him using the assets belonging to the business to secure funding and consequently “needed to find more money to be able to purchase the business”. The respondent gained the impression that the $40,000 might be lost if Mr White could not raise additional finance. The respondent gave the following evidence:
A:… he said ‘I’m having trouble finalising the sale’. He knew I was selling my other house that was my family home, my kids’ house. He knew that I was selling that. He actually helped me get it ready for sale. He helped me with the renovations like painting and tidying up and that sort of thing. He helped me with all that so he knew he was having some more monies. He asked me for some more money to be able to finalise the loan.
Q:Why was there a request for more money from you.
A:Because the business went into receivership and there was a bit more of a mess with it.
Q:What did he say to you about asking you for more money.
A;What do you mean?
Q:What did he say to you precisely.
A:Precisely – he said he needed to find some more money. He asked other people – assuming to no luck.
Q:    What words did he use.
A:    He asked me for more money.
Q:    How much more money did he ask for.
A:He didn’t specify. I wasn’t really comfortable with it at first but like I didn’t want to lose the money he’d already invested so – and it was still only supposed to be short term. It was still only supposed to be flash money. So I agreed to it.
On 20 July 2011 the respondent made out a cheque for $30,000 to the appellant. It was a short-term loan advanced on the same terms as the first advance, she said. Again, Mr White said he would arrange for the paperwork to be drawn up. However, because there was still no paperwork for the first loan, the respondent took it upon herself to draft a handwritten agreement. That agreement was received in evidence and marked Exhibit P1. It provided:
Loan Agreement  20^th July date 2011
I, Susan Dzundza of … Lend money to,
Ben White he lives at … With GLCS.
Ben White guarantees to pay the loan of $70K if GLCS cant pay it.
GLCS wants to buy a bar. They need money for ‘flash money’ lease money, stock & wages.
The loan would be paid back in 3 months. Interest on the loan would be the same as Bank SA.
If Ben White or GLCS could not pay, I agreed with Ben to take back the business & run it as it is my money that is starting the business.
Ben & I agree the business is colateral [sic] for my loan.
[signed]  [signed]  [signed]
Ben White                  GLCS  Susan Dzundza
Guaranteed                 Borrowed                  Loaned
Following the making of the second advance, the respondent asserted that for some 10 months the appellant traded as Verve Bar and Kitchen, during which time the respondent made repeated requests for repayment. Following this she demanded that a resolution be reached. Mr White then revealed to her that trade was not as expected.
On 24 May 2012, the respondent sent an SMS to Mr White, which features in the Magistrate’s reasons. It stated:
Hey hope yr well, I will be in tomorrow to discuss repaying the loan. Been about 12 months, was only ment [sic] to be short term, thought 5.95% good rate as that what would got if put in bank, I need my money back struggling heaps …
On the appellant’s case, this was the first time at which Mr White was informed of the respondent’s view that the two advances were loans.
Shortly thereafter she sent a further SMS to Mr White dated 18 June 2012. It stated:
I decided since its my money I will start as manager next week with pay, will overlook everything. I need a job I need money and with 70k holed up in a business I should be helping to run it until I get me repaid. I don’t have anything else to do and a managers wage will help cover my bills. That’s ok yes?
The respondent then commenced employment at Verve Bar and Kitchen that same month. She claimed that was in order to gain insight into its operations and to satisfy herself of its viability whilst Mr White made arrangements to repay the advances. She was reassured by its strong patronage, though she did not have access to its financial information.
During this time the respondent claimed it was agreed that an interim repayment plan of $525 weekly would commence. The respondent claimed she reserved her right to demand the balance though this was denied. However, it was not disputed that a total of $22,575 was repaid before the instalments ceased. The cessation of the instalments coincided with Mr White leaving the Verve Bar and Kitchen to take up a position with a hotel in the city.
On the respondent’s case, in early January 2013, the appellant proposed a “formal” loan agreement in respect of the first advance, and the respondent declined to execute that agreement. She relied upon the handwritten “Loan Agreement” (Exhibit P1). The appellant denied that any such formal loan agreement was prepared.
Between November and December 2013, the respondent received four repayments totalling $6,000. The total amount received by way of repayments equalled $28,575.
On 31 December 2013, Westfield took possession of the Verve Bar and Kitchen premises due to the rent being in arrears. Subsequently the arrears were paid and the business recommenced trading.
Two receipts were tendered through the respondent in her evidence-in-chief, purportedly issued by the appellant on 3 April 2011 and 24 July 2011 (Exhibits P5 and P6). Those receipts are, save the dates and receipt numbers, identical and relate to the second advance. They describe it as a donation. The receipts are signed by a Mr Robinson, the then Secretary of the appellant.
In cross-examination it was established that in 2011 the respondent had an interest in three properties and was operating a business. She recalled handing the cheque for $30,000 to Mr White on 20 July 2011. They met at Spargos restaurant. One month prior she had attended a Board meeting for the appellant. It was proposed at that meeting that she join the Board due to the investment she had made. She maintained that at the meeting with Mr White at Spargos he guaranteed the advances. She said:
Q:What did Mr White say to you about a guarantee.
A:He said that the business would do well. He said he’d guarantee that it would do well, and he could, you know he had full faith in the business. I don’t know.
Q:Did he say that if the business didn’t work out he’d pay the money out of his own pocket.
A:Not in those words but he guaranteed that it would be fine and I wouldn’t lose my money.
Q:He was really talking about his confidence in the success of the venture wasn’t he, would you say.
A:Then why did he sign a guarantee? Why did he sign twice?
Q:We’ll come back to that. What I’m saying is what he said was really he thought the business would go well.
A:He’d say anything he could to see if I could – I don’t know.
Q:Could you speak up. I didn’t –
A:I don’t know. I’m not sure. I can’t say what I think he was saying or not. That’s how I understood it.
The respondent was then cross-examined about the content of Exhibit P1 to suggest that it was drafted after the event, was not signed on 20 July 2011, and was a fabrication. Cross-examination also sought to establish divergence between her evidence and the content of Exhibit P1 such as there being no mention of the asserted agreed interest rate (5.95%) and that it indicated that the money was to be used as more than “flash money”. It was also put to her that, consistent with Exhibits P5 and P6, the second advance was a donation. The respondent denied this.
Mr Anthony Gunning, the Chief Financial Officer for the appellant, was called along with Mr White to give evidence in the appellant’s case. Mr Gunning became Chief Financial Officer in April 2014. He gave evidence that the viability of the Verve Bar and Kitchen has always been a difficult matter. The difficulties had been compounded by the accumulation of tax debts. He also gave evidence of the circumstances in which the landlord took possession of the premises in December 2013 before the business paid the arrears in rent. Despite its difficulties the business was managing to “trade itself forward”, he said. Mr Gunning had searched the Verve Bar and Kitchen’s financial records. Those records showed the receipt of a $30,000 “donation” in approximately June 2011.
In his evidence Mr White stated that he had been President of the appellant since 2009. He said he was a close friend of the respondent and that they had confided in each other in relation to personal and business matters. He learnt that SBar was for sale and, from working at the establishment, formed the view that it was a good business. He said:
… I approached [Ms Dzundza]. GLCS was in financial trouble. We lost our government grants so we couldn’t continue the service on unless we did something drastic so I approached [Ms Dzundza] to see if she knew anybody that could lend GLCS money. I provided her with a business plan, all the details of what the business has done before, the GLCS business plan so she could pass it on to the couple of people that she knew.
The respondent’s “leads” came to nothing. After selling her partner’s house at Reynella, she offered $40,000 to the appellant. Mr White said the money was provided without there being any discussion as to a repayment date or interest. He added that there was no discussion with the appellant about the likelihood of her getting her money back and denied personally guaranteeing the repayment of her money. Mr White agreed with the first advance being described as “a friendly loan without interest or strings attached”.
The effect of Mr White’s evidence was to deny that the appellant invested the second advance because the first was at risk. Whilst the first advance was a loan, the second he said was a donation. He gave evidence that the second advance was made in the form of a bank cheque handed to him at the Verve Bar and Kitchen and not at Spargos.
Exhibit P1 was put to Mr White. He said it was not produced on 20 July 2011 at Spargos restaurant or at all. He denied that it was his signature that featured in it.
It was not until May 2012 that the respondent first mentioned that the advances were loans intended to be “short term”. Mr White’s response was to ask that she come in to the Verve Bar and Kitchen to meet. That meeting took place and the respondent asked for $25,000. The appellant did not have the money. Soon after the respondent started working at the Verve Bar and Kitchen. Not long after this the appellant began making regular payments to the respondent. Mr White accepted that $28,575 of the $40,000 had been repaid and the intent was to pay the balance from trading revenue, but nothing of the $30,000 was repayable as it was a donation. There was discussion with the appellant surrounding the making of the donation at a meeting of the appellant’s Board.

Mr White denied that he ever entered into a contract with the respondent and denied that he ever agreed to have any arrangement reduced to writing. The money was used “to move forward”, to buy the SBar business, he said.
Thus, at the conclusion of the evidence the three issues to which reference has been made above[1] remained in dispute. Resolution of those issues depended upon findings as to the credibility and reliability of Mr White and the respondent. Central to the respondent’s case was Exhibit P1, the handwritten agreement, which on the respondent’s case was signed in her presence by Mr White, recording the terms and conditions of the advances.
[1] At [5].
The Magistrate’s reasons
The Magistrate’s reasons are divided into an introduction and three parts. The three parts reflect the three primary issues in dispute.
Under the heading, “The Advances”, the Magistrate commenced by recording what was not disputed, namely, that the two parcels of money the subject of the advances were paid by the respondent to the appellant and that it was not disputed that the first advance was a loan. The Magistrate then turned to consider the nature of the second advance. He said:
… There was unsatisfactory evidence which might suggest that the second advance of $30,000 was a donation to GLCS. Such evidence as does exist was, for some reason, advanced by the Plaintiff and was in the form of two very bad photocopies of separate receipts both addressed to Ms Dzundza and dated 3 April 2011 and 24 July 2011 respectively. The two receipts were given different numbers.
Shortly prior to tendering Exhibit P5, the Plaintiff gave evidence that she had not made a donation to GLCS proclaiming that she was not rich enough to make a donation of that size – T37.
The origins of the two receipts was never satisfactorily explained in evidence but it is easy to conclude that Exhibit P5 is not a genuine document. A $30,000 bank cheque was not drawn until 20 July 2011 and P5 is dated 3 April 2011.
On the whole of the evidence it is simply incredible to suggest that Ms Dzundza would donate the sum of $30,000.00 to GLCS. Whilst Ms Dzundza was not a particularly good witness I accept her evidence that she was not rich enough to make a donation of that size.
It is not totally unlikely that Ms Dzundza was complicit in the generation of the receipts, or one of them, for the purposes of making a false statement on a taxation return but even if that were the case, that would not change the character of the transaction under consideration.
No conceivable basis was advanced for the making of a donation of $30,000 and whilst Exhibit P6 could conceivably be a genuine receipt, based on Ms Dzundza’s evidence and the existence of Exhibit P5, I find that it is not a genuine document. Why it was generated I cannot say. Why it was tendered by [the respondent’s counsel] is a further mystery, but one that I need not resolve in these reasons. I find that the sum of $30,000.00 was provided to GLCS as a loan on the same terms as the previous advance of $40,000.
Under the heading, “Were the Advances Guaranteed by Mr White”, the Magistrate addressed the question of whether Mr White had agreed to guarantee the two advances. As mentioned the Magistrate found that he did not. That conclusion was arrived at in part because of the unsatisfactory evidence given by the respondent on the issue.[2] However, the respondent also relied upon Exhibit P1. In that regard, the Magistrate said:
[2] In this regard the Magistrate quoted the passage set out in these reasons above at [37].
The first thing to say about this agreement is that even if it were genuine, the agreement was signed at a time when the first advance of $40,000.00 had already been made. There is no evidence that Mr White ever guaranteed repayment of the $40,000.00 before that advance was made and past consideration is not good consideration. Therefore the agreement would not adequately evidence a contract to guarantee the first advance.
In any event, I am not able to accept the authenticity of the agreement for the following reasons. Mr White disputed ever signing the document claiming that the signature on it was not his. I am inclined to accept this evidence.
Further to this, the agreement itself suggests that it has been prepared after the loan has been made. It provides that:
The loan would be paid back in three months. Interest on the loan would be the same as Bank SA.
If Ben White or GLCS could not pay, I agreed with Ben to take back the business and run as it is my money that is starting the business.
An SMS message sent by Ms Dzundza to Mr White on 18 June 2012 states:
I decided since its my money I will start as manager next week with pay, will overlook everything. I need a job I need money and with 70k holed up in a business I should be helping to run it until I get me repaid. I don’t have anything else to do and a managers wage will help cover my bills. That’s ok yes?
This request would have been unnecessary had Mr White agreed that Ms Dzundza would take back the business if the loan was not repaid. Her sms makes no reference to this alleged aspect of the transaction.
Taking the evidence as a whole I am not able to accept that the loan agreement was prepared at the time of the second advance or that it was signed by Mr White. I incline to the view that it is a false document. Beyond that, I need not make findings as to its origins.
[emphasis in original.]
The final portion of the Magistrate’s reasons concerned the terms of the loan. He commenced by considering the evidence of the respondent on the issue. He reiterated his earlier comment that the respondent was not a good witness. The Magistrate then said:
An sms message sent 24 May 2012 states:
Hey hope yr well, I will be in tomorrow to discuss repaying the loan. Been about 12 months, was only ment [sic] to be short term, thought 5.95% good rate as that what would got if put in bank, I need my money back struggling heaps…
Because I suspect that Ms Dzundza has produced a false document to support her case and because of the unsatisfactory way in which she gave her evidence I am unprepared to accept her evidence as to the terms of the loan unless there is other evidentiary support for that evidence.
Ms Dzundza claims in the sms that the loan was ‘ment (sic) to be short term’. She makes no mention of 3 months, a time frame that appears first in P1, the handwritten agreement I do not accept as genuine. I do not accept that the loan was to be for 3 months.
The above sms does suggest interest was discussed by the parties when the monies were advanced. Mr White made no comment on the subject in response to the sms. Although no evidence was adduced that Ms Dzundza held monies on a term deposit the defendants did not challenge her statement that she had a term deposit and was being paid around 6% interest.
In addition to this, I find it highly unlikely that Ms Dzundza would agree to withdraw her money from the security of a bank deposit without requiring GLCS to at least pay her the same interest she would have been paid on deposit. I find that the parties agreed that the loan was to bear interest at 5.95%.
It follows that Ms Dzundza lent GLCS the sum of $70,000 at an interest rate of 5.95% per annum repayable on demand. The parties made no specific reference to the manner in which interest should be calculated. Had the money been deposited with a bank then the calculation of interest would have depended upon the term of the deposit.
Whilst I do not accept that the loan was repayable at an agreed time I do accept that Ms Dzundza reasonably expected that the loan would be short term because by his words and conduct, Mr White so suggested. The evidence does not permit adequate findings to be made as to the precise terms of any interest provision in the agreement.
The Magistrate then concluded that the respondent was entitled to statutory interest.
Inadequacy of reasons – the principles
In Carlson v King Jordan CJ said:[3]
… It has long been established that it is the duty of a Court of first instance, from which an appeal lies to a higher Court, to make, or cause to be made, a note of everything necessary to enable the case to be laid properly and sufficiently before the appellate Court if there should be an appeal. This includes not only the evidence, and the decision arrived at, but also the reasons for arriving at the decision. The duty is incumbent, not only upon magistrates, Ex parte Powter; Re Powter, and District Courts, but also upon this Court, from which an appeal lies to the High Court and the Privy Council: Ex parte Reid; Re Lynch.
[citations omitted.]
[3] (1947) 64 WN (NSW) 65 at 66.
The failure to give adequate reasons is an error of law.[4] In Soulemezis v Dudley (Holdings) Pty Ltd, McHugh JA (as he then was) identified three primary purposes for the requirement that a court provide adequate reasons:[5]
The giving of reasons for a judicial decision serves at least three purposes. First, it enables the parties to see the extent to which their arguments have been understood and accepted as well as the basis of the judge's decision. As Lord MacMillan has pointed out, the main object of a reasoned judgment “is not only to do but to seem to do justice”: The Writing of Judgments (1948) 26 Can Bar Rev at 491. Thus the articulation of reasons provides the foundation for the acceptability of the decision by the parties and by the public. Secondly, the giving of reasons furthers judicial accountability. As Professor Shapiro has recently said (In Defence of Judicial Candor (1987) 100 Harv L Rev 731 at 737):
“… A requirement that judges give reasons for their decisions — grounds of decision that can be debated, attacked, and defended — serves a vital function in constraining the judiciary's exercise of power.”
Thirdly, under the common law system of adjudication, courts not only resolve disputes — they formulate rules for application in future cases: Taggart “Should Canadian Judges Be Legally Required to Give Reasoned Decisions In Civil Cases” (1983) 33 University of Toronto Law Journal 1 at 3-4. Hence the giving of reasons enables practitioners, legislators and members of the public to ascertain the basis upon which like cases will probably be decided in the future.
[4] Papps v Police (2000) 77 SASR 210 at [23] (Gray J, Olsson and Wicks JJ agreeing).
[5] Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 279 (McHugh JA).
The applicable principles were more recently summarised by the Full Court of this Court in Resi Corporation v Munzer:[6]
[6] [2016] SASCFC 15 at [71]-[72] (Lovell J, Sulan and Stanley JJ agreeing).
Of more recent times there have been many decisions on the question of the adequacy of judicial reasons. Many cases turn upon the facts in issue in the particular case. However, a number of general principles relating to the duty to give adequate or proper reasons may be extracted from the cases:
1.“The extent and content of reasons will depend upon the particular case under consideration and the matters in issue”. While a judge is not obliged to spell out every detail of the process of reasoning to a finding it is essential to expose the reasons for resolving a point critical to the contest between the parties.
2.A court when considering the decision under appeal should not be left to speculate from collateral observations as to the basis of a particular finding.
3.A trial judge has a duty to refer to material evidence and make findings about material issues in the case. It is not appropriate for a trial judge merely to set out the evidence adduced by one side, then the evidence adduced by another and assert that having seen and heard the witnesses he or she prefers or believes the evidence of one and not the other. In other words, a bald statement of an ultimate conclusion may not be sufficient. A trial judge is required to engage with the issues canvassed and to explain why one expert is accepted over the other.
4.It will ordinarily be sufficient if by his or her reasons the judge apprises the parties of the broad outline and constituent facts of the reasoning on which he or her has acted.
5.Reasons for decision are to be read fairly and in the context of the manner in which the trial was conducted. Reasons may appear by necessary inference from what is stated expressly.
6.It is not the function of an appellate court to set standards as to the optimal, or even desirable, level of detail required to be revealed in reasons for judgment. The function of the appellate court is to determine whether the reasons provided have reached a minimum acceptable level to constitute a proper exercise of the judicial power.
It is important in this case to read the Judge’s reasons in their entirety and in the context of the manner in which the cases were presented at trial.
[footnotes omitted.]
Reasons answer the question “why?”. Adequate reasons expose the path taken by the decision-maker that lead to the ultimate conclusion. They expose all necessary intermediate or foundational conclusions of fact or law reached, and why such conclusions have been reached. Importantly:[7]
The requirement for reasons was affirmed by the Court of Appeal of the Supreme Court of New South Wales in Soulemezis v Dudley (Holdings) Pty Ltd(1987) 10 NSWLR 247. Although there was some divergence of views as to the extent of the obligation, all members of the Court agreed that there was an obligation to give adequate reasons for a decision that was subject to appeal. The extent of the obligation depended upon the scope of the appellate review. I agree with what Kirby P said (at 259):
“This decision does not require of trial judges a tedious examination of detailed evidence or a minute explanation of every step in the reasoning process that leads to the judge's conclusion. But the judicial obligation to give reasons, and not to frustrate the legislative facility of appeal on questions of law, at least obliges a judge to state generally and briefly the grounds which have led him or her to the conclusions reached concerning disputed factual questions and to list the findings on the principal contested issues. Only if this is done can this Court discharge its functions, if an appeal is brought to it. Where nothing exists but an assertion of satisfaction on undifferentiated evidence the judicial obligation has not been discharged. Justice has not been done and it has not been seen to be done.”
I also agree, without setting it out, with the approach taken by Mahoney JA and his adoption of the approach of McHugh JA when he said (at 280):
“If an obligation to give reasons for a decision exists its discharge does not require lengthy or elaborate reasons … But it is necessary that the essential ground or grounds upon which the decision rests should be articulated. In many cases the reasons for preferring one conclusion to another also need to be given … the extent of the duty to give reasons is related ‘to the function to be served by the giving of reasons’. Thus more elaborate reasons are required where legislation gives a right of appeal against a decision than where no appeal lies.”
[7] R v Keyte (2000) 78 SASR 68 at [48]-[49] (Doyle CJ, Wicks J agreeing).
Whether reasons are adequate will depend on the issues in dispute and whether the content equips an appellate court to discharge its function. As to the latter, an appeal under s 40(1) of the Magistrates Court Act 1991 (SA) is in the nature of a rehearing.[8] Rule 286 of the Supreme Court Civil Rules 2006 (SA) (SCR) provides:
(1)An appeal is to be by way of rehearing (unless the law under which the appeal is brought provides to the contrary).
(2)Subject to any limitation on its powers arising apart from these Rules, the Court may determine an appeal as the justice of the case requires despite the failure of parties to the appeal to raise relevant grounds of appeal, or to state grounds of appeal appropriately, in the notice of appeal.
(3)Subject to any limitation on its powers arising apart from these Rules, the Court may—
(a)     draw inferences of fact from evidence taken at the original hearing and, in its discretion, hear further evidence on a question of fact;
(b)     amend or set aside the judgment subject to the appeal and give any judgment that the justice of the case requires;
(c)     remit the case or part of the case for rehearing or reconsideration;
(d)     make orders for the costs of the appeal.
[8]    Supreme Court Civil Rules 2006 (SA), r 286(1).
In Fox v Percy the High Court was concerned with the nature of the appeal provided for by s 75A of the Supreme Court Act 1970 (NSW). That section provided that an appeal to the New South Wales Court of Appeal was in the nature of a rehearing and conferred powers not materially different to those conferred by SCR 286. As to the nature of the appeal provided for by s 75A, Gleeson CJ, Gummow and Kirby JJ said:[9]
[9] (2003) 214 CLR 118 at [22]-[26].
The nature of the “rehearing” provided in these and like provisions has been described in many cases. To some extent, its character is indicated by the provisions of the sub-sections quoted. The “rehearing” does not involve a completely fresh hearing by the appellate court of all the evidence. That court proceeds on the basis of the record and any fresh evidence that, exceptionally, it admits. No such fresh evidence was admitted in the present appeal.
The foregoing procedure shapes the requirements, and limitations, of such an appeal. On the one hand, the appellate court is obliged to “give the judgment which in its opinion ought to have been given in the first instance”. On the other, it must, of necessity, observe the “natural limitations” that exist in the case of any appellate court proceeding wholly or substantially on the record. These limitations include the disadvantage that the appellate court has when compared with the trial judge in respect of the evaluation of witnesses’ credibility and of the “feeling” of a case which an appellate court, reading the transcript, cannot always fully share. Furthermore, the appellate court does not typically get taken to, or read, all of the evidence taken at the trial. Commonly, the trial judge therefore has advantages that derive from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole.
Nevertheless, mistakes, including serious mistakes, can occur at trial in the comprehension, recollection and evaluation of evidence. In part, it was to prevent and cure the miscarriages of justice that can arise from such mistakes that, in the nineteenth century, the general facility of appeal was introduced in England, and later in its colonies. Some time after this development came the gradual reduction in the number, and even the elimination, of civil trials by jury and the increase in trials by judge alone at the end of which the judge, who is subject to appeal, is obliged to give reasons for the decision. Such reasons are, at once, necessitated by the right of appeal and enhance its utility. Care must be exercised in applying to appellate review of the reasoned decisions of judges, sitting without juries, all of the judicial remarks made concerning the proper approach of appellate courts to appeals against judgments giving effect to jury verdicts. A jury gives no reasons and this necessitates assumptions that are not appropriate to, and need modification for, appellate review of a judge's detailed reasons.
Within the constraints marked out by the nature of the appellate process, the appellate court is obliged to conduct a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge's reasons. Appellate courts are not excused from the task of “weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect”. In Warren v Coombes, the majority of this Court reiterated the rule that:
“[I]n general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge but, once having reached its own conclusion, will not shrink from giving effect to it.”
As this Court there said, that approach was “not only sound in law, but beneficial in … operation”.
After Warren v Coombes, a series of cases was decided in which this Court reiterated its earlier statements concerning the need for appellate respect for the advantages of trial judges, and especially where their decisions might be affected by their impression about the credibility of witnesses whom the trial judge sees but the appellate court does not. Three important decisions in this regard were Jones v Hyde, Abalos v Australian Postal Commissionand Devries v Australian National Railways Commission. This trilogy of cases did not constitute a departure from established doctrine. The decisions were simply a reminder of the limits under which appellate judges typically operate when compared with trial judges.
[footnotes omitted.]

It is this task on an appeal under s 40(1) of the Magistrates Court Act 1991 (SA) that the reasons of a magistrate must facilitate.
The parties’ submissions
The starting point for the appellant’s submissions was the observation that the respondent’s case at trial on the first and second of the three primary issues[10] depended upon accepting the evidence of the respondent on those issues as credible and reliable. The appellant then turned to the Magistrate’s findings with respect to the third issue pointing out that the Magistrate “inclined” to the view that Exhibit P1 was a false document. Beyond this conclusion, the Magistrate said, he need not go. The appellant submitted, however, that the Magistrate should have gone further. If the document was false then it had to follow that not only had the respondent concocted the content, but she had attempted to forge Mr White’s signature. Here there was no room for any misunderstanding; a conclusion that the document was likely not genuine, carried with it a conclusion that it was likely fabricated and forged for the purposes of succeeding at trial. Such conclusion fundamentally undermined the credibility and reliability of the respondent on those issues to which Exhibit P1 related, being all three primary issues.
[10] Set out at [5] above.
Next, Counsel pointed to the Magistrate’s treatment of Exhibits P5 and P6. The Magistrate concluded that each, or at least one of them, was not a genuine document. He considered that it was “not totally unlikely” that the respondent had been complicit in the generation of the receipts for the “purposes of making a false statement on a taxation return”.
Counsel then referred to the Magistrate’s finding that the respondent’s evidence was unsatisfactory on the question of Mr White having guaranteed the two advances. Counsel submitted that the respondent’s unsatisfactory evidence on the third issue, taken with the conclusion that Exhibit P1 was a false document, and that Exhibits P5 and P6 were possibly prepared for the purposes of a false taxation return, should have caused the Magistrate to reject the respondent as credible and reliable generally.
Counsel then drew the Court’s attention to the Magistrate’s conclusion that because the respondent had “produced a false document” and “because of the unsatisfactory way in which she gave her evidence”, the Magistrate was unprepared to accept her evidence as to the terms of the loan in the absence of supporting evidence. Counsel made the point that there was no such supporting evidence. No reasons are provided as to why the Magistrate then concluded that interest was due and payable in the absence of such supporting evidence. Further, if this was the Magistrate’s opinion of the respondent’s credibility and reliability, on what basis did he conclude that the second advance was not a donation? To say that it was “simply incredible to suggest that Ms Dzundza would donate the sum of $30,000.00 to GLCS” because “she was not rich enough to make a donation of that size”, and that such conclusion was arrived at despite her not being “a particularly good witness”, overlooked the fact that she was prepared to fabricate evidence. As to the respondent’s financial position at the time of making the second advance there was little evidence. Her own business was still operating, she had not sold the third property, and she trusted in Mr White’s business acumen. None of this was considered by the Magistrate as providing reason why she might invest in the Verve Bar and Kitchen. It was in the following year that the respondent’s financial difficulties took a turn for the worse.
With respect to the finding that the advances attracted interest of 5.95%, that finding, it was submitted, appears to be based upon the content of the SMS of 24 May 2012. That SMS does not, despite the Magistrate’s finding to the contrary, suggest that the payment of interest was discussed at the time of the making of the advances as opposed to sometime proximate to the SMS. The 5.95% is settled upon despite there being no evidence independent of the respondent to support a finding that that was the rate agreed. In the following paragraph the Magistrate then concludes “the sum of $70,000 at an interest rate of 5.95% per annum [was] repayable on demand”, and yet that is contrary to the evidence of the respondent to the extent that the advances were for the period of three months. The Magistrate then refers to the parties as having “made no specific reference to the manner in which interest should be calculated” and in the next paragraph that the evidence “does not permit adequate findings to be made as to the precise terms of any interest provision in the agreement”, however he had already found “that the loan was to bear interest at 5.95%”.
The appellant then alluded to the fact that nowhere did the Magistrate subject Mr White’s evidence to analysis in his reasons save the one positive finding that he did not sign Exhibit P1. Mr White denied that the second advance was a loan. The reasons do not explain why, implicitly, his evidence was rejected. The same may be said with respect to his evidence that the advances were not subject to any term or interest rate. If the respondent’s evidence could not be accepted without supporting evidence, on what basis was the evidence of Mr White rejected?
The appellant contended that the Magistrate had not analysed the evidence, but, rather, injected what the Magistrate considered commercial reality.
Counsel for the respondent submitted that the Magistrate’s conclusion with respect to Exhibit P1 did not necessarily tar the respondent’s evidence in its entirety. It was open to the Magistrate, he said, in circumstances where the respondent had given evidence of limited finances and financial pressures, to conclude that it was unlikely that she donated the second advance. In this regard he reminded the Court that the respondent had given evidence of her business not paying her a wage. Counsel suggested that Mr White was the likely source of Exhibits P5 and P6 and that his credibility had to be viewed in that light. He then proceeded to argue the likelihood of the second advance being a donation, pointing to the evidence of Ms Peterson, who was called on the appeal, to the effect that the financial reports of the appellant showed an outstanding loan of $57,000. He added that the Magistrate:
… looked at the central issue and the central issue in this matter was the issue about how that $30,000 could be a loan, not a gift and in that he was very clear, that he preferred Ms Dzundza, that he preferred the basic fundamental facts of the situation with regards to what had occurred and the simple logic of Ms Dzundza’s situation, that she couldn’t afford the money and the simple logic of the fact these events were caught up in a series of business transactions and a donation cropping up out of nowhere was just simply illogical, and on that his logic and the simple logic of this case seems to cut through.
Counsel emphasised that the advances were made in a commercial context, namely, the desire to secure funding to acquire and establish a business venture.
Consideration
With respect to the first advance the Magistrate was required to determine what the terms of the contract were. As to the second advance, the task was to determine, first, was there a contract, and, second, if there was, what were the terms of that contract. These are two of the three primary issues to which reference was made in opening this judgment.
With respect to the first advance the appellant’s case was simply that the money was to be repaid. No other terms were agreed. In relation to the second advance, the appellant denied the existence of a contract. It was a donation.
The respondent’s case was that the parties had “reached finality in arranging all the terms of their bargain[s] and intend[ed] to be immediately bound to the performance of those terms, but at the same time propose[d] to have the terms restated in a form which will be fuller or more precise but not different in effect.”[11] It was intended that Mr White would arrange for the “the terms [to be] restated” in writing. He failed to do so. Exhibit P1 was then drafted and executed in the alternative. Thus, on the respondent’s case Exhibit P1 reflected the terms of the bargains previously agreed.
[11] Masters v Cameron (1954) 91 CLR 353 at 360 (Dixon CJ, McTiernan and Kitto JJ).
The Magistrate rejected Exhibit P1 as constituting a written agreement. That did not bring the matter to an end; were there two informal contracts, and, if so, what were their terms?
Where an informal contract arising from discussions or negotiations between parties is alleged, the Court must be satisfied that the parties arrived at a consensus as to the terms of the agreement, that the terms were sufficiently certain to be capable of forming a binding contract, and that the parties, by their words and conduct, taken in the context of the surrounding circumstances, evinced a common intention that the consensus at which they had arrived should constitute an immediately binding contract.
Importantly, where a party relies upon words spoken as the foundation for the existence and terms of a contract, the relevant content of the conversation or conversations in their entirety must be sufficiently proved such that the court may feel an actual persuasion that they in fact occurred. Of course, it must also be borne in mind that the intention of the parties must be objectively ascertained from the conversation or conversations in the light of the surrounding circumstances. That is to say, the relevant intention is not the individual subjective intentions of the parties, as such, but, rather, what the law takes to have been their intention at the relevant time. The search for consensus is then a search for what may objectively be said was agreed. Here it should also be borne in mind that proof on the balance of probabilities of a fact can hardly be produced by “inexact proofs, indefinite testimony, or indirect references”.[12]
[12] Briginshaw v Briginshaw (1938) 60 CLR 336 at 362.
Against the backdrop of these introductory comments it can be said that the respondent’s case needed to identify the conversation or conversations between herself and Mr White in which consensus as to the terms of each of the agreements was reached, what those terms were, and what in the conversation or conversations was indicative of an intent to be legally bound. Likewise, the Magistrate’s reasons needed to identify the same. This was all the more important once the Magistrate rejected Exhibit P1 as a genuine document. However, nowhere in his reasons does the Magistrate purport to articulate when and where the relevant conversations took place, nor the content of those conversations. I accept that precision in this regard may not be possible and that a judge may be left with a series of conversations that took place somewhere during a period of time. But even findings of that nature are lacking in the Magistrate’s reasons. Taking the second advance, for example, that was said to have been paid over a meeting at Spargos restaurant when Exhibit P1 was signed. However, Mr White denied that meeting ever took place. If it did not take place, when was the necessary consensus reached? Mr White mentioned that the issue was discussed at an earlier Board meeting which the respondent attended. Was it at that time that there was an agreement concluded?
Obviously in any case where the fact, and terms of an oral agreement are disputed, conclusions as to the credibility and reliability of the proponents of the respective positions will be critical to the resolution of the matter. In this connection, I agree with the appellant that the Magistrate’s conclusion that Exhibit P1 was a false document was a significant finding. The respondent admitted that she was the author of the content. It was her evidence that it contained the terms agreed. She reduced the agreements to writing because Mr White had failed to do so. Her evidence was to the effect that Mr White signed Exhibit P1 in the course of their meeting at Spargos restaurant then went into the Verve Bar and Kitchen to photocopy the same so that she could take a copy away with her. In rejecting Exhibit P1 as genuine the Magistrate preferred Mr White’s evidence. Mr White denied that he met the appellant at Spargos and denied that it was his signature that featured beneath his name as written on Exhibit P1. There was no room for any misunderstanding on the respondent’s evidence. Consequently, if Mr White did not sign Exhibit P1, as the Magistrate found, then the respondent lied in her evidence. Further, if that is the case, her lie was premeditated in that she was prepared to present to the Court a document containing a forged signature that she had prepared earlier for the purpose of perpetrating the lie upon the Court.
I appreciate that the Magistrate expressed himself in terms of an “inclination” that Exhibit P1 was false. However, in my view, it was a finding that was made. The Magistrate makes this plain in his reasons when he subsequently expressly refers to Exhibit P1 as “the handwritten agreement I do not accept as genuine”.
I also appreciate that rejecting Exhibit P1 did not necessarily mean that the second advance was not a loan, or that both advances were loans in relation to which the only term was that at some point they would be repaid. Accordingly, the finding in relation to Exhibit P1 did not bring the matter to an end and the Magistrate was correct in so proceeding. However, in view of that finding, it is understandable that the Magistrate decided not to act on the evidence of the respondent absent supporting evidence.
Despite the Magistrate indicating that he did not need to go on to make any additional finding regarding the provenance of Exhibit P1, plainly on the respondent’s evidence alone, she had to know that the document was not genuine. She had to know that she was deploying a false document in support of her case. I agree with the appellant’s submission that the finding regarding Exhibit P1 coloured the respondent’s evidence generally. However, I consider that the Magistrate was alive to this, hence his conclusion that he was not prepared to act on the respondent’s evidence in the absence of supporting evidence (bearing in mind his finding that Exhibit P1 was not a genuine document and that the respondent’s evidence was otherwise unsatisfactory).
Against this background I turn to the Magistrate’s reasons for finding that the second advance was a loan. The Magistrate commented that “[s]uch evidence as does exist”, regarding the assertion that the second advance was a donation, was advanced by the respondent in the form of Exhibits P5 and P6. Respectfully, that is incorrect. Mr White gave evidence that the second advance was a donation. Before the Magistrate the appellant’s case did not depend upon, nor embrace, Exhibits P5 and P6. The Magistrate said:
On the whole of the evidence it is simply incredible to suggest that Ms Dzundza would donate the sum of $30,000.00 to GLCS. Whilst Ms Dzundza was not a particularly good witness I accept her evidence that she was not rich enough to make a donation of that size.
If the Magistrate did have regard to the whole of the evidence, on what basis did he reject Mr White? Does his finding mean that the meeting at Spargos did occur? If so, on what basis did he accept that the meeting took place but reject the contention that at that meeting Mr White signed Exhibit P1? Or was it resolved before the Board sometime before that it was a loan? What then of Mr Gunning’s evidence? Was Mr White correct as to where the terms of the agreement were agreed, but wrong as to their content? And what of the fact that Mr White was accepted on the question of his not having provided a guarantee for both advances?
In my view, adequate reasons required that the Magistrate explain the basis upon which he rejected Mr White’s evidence as to the fact of the second advance being a donation.
In addition, bearing in mind the task required of the Magistrate as set out above, to reason that there had to be an agreement because it was “simply incredible to suggest that Ms Dundza would donate the sum of $30,000.00 to GLCS” as she was not rich enough, focuses upon her conduct and her predicament and fails to analyse the evidence of conversations had, and the circumstances in which they were had, to determine if the required consensus was reached. It does not follow that just because the respondent was of limited means that the appellant agreed that the second advance was a loan. That might have been the respondent’s intention, but on what basis can her intention be said to reflect a consensus reached? The reasons do not adequately address this question.
In the circumstances I am satisfied that the Magistrate’s reasons as to whether the second advance was a loan are inadequate. They do not provide this Court with the necessary comfort that all the evidence was considered, in particular Mr White’s, nor that the Magistrate correctly approached the task he was required to undertake.
I turn to the Magistrate’s treatment of the question of the terms of the two loans. Here, with respect, the reasons are confusing. The Magistrate rejects the contention that the loans were for three months largely because it appears in Exhibit P1. I assume he does not deal with the respondent’s evidence on this question because of his conclusion that absent supporting evidence he could not accept her evidence. However, he could not ignore that the respondent’s case was that the loans were both repayable after three months. The Magistrate’s ultimate finding refutes that case, but equally refutes the appellant’s case. The question arises, on what evidence did the Magistrate arrive at the conclusion that the loans were repayable upon demand.
The Magistrate then turns to the question of interest. He refers to the rate of 5.95% as mentioned in the SMS of 24 May 2012. That message comprised a self-serving statement made well after the event. The Magistrate notes that “Mr White made no comment on the subject in response to the sms”. Mr White neither confirmed nor denied that a rate of 5.95% was applicable. His evidence was that upon receiving the SMS he attempted to get the respondent to come into the Verve Bar and Kitchen to, presumably, discuss her message. That is no response and cannot be considered as a non-denial of the fact asserted such that the Magistrate could more comfortably accept that the fact occurred.
The Magistrate said:
… Although no evidence was adduced that Ms Dzundza held monies on a term deposit the defendants did not challenge her statement that she had a deposit and was being paid around 6% interest.
In addition to this, I find it highly unlikely that Ms Dzundza would agree to withdraw her money from the security of a bank deposit without requiring GLCS to at least pay her the same interest she would have been paid on deposit. I find that the parties agreed that the loan was to bear interest at 5.95%.
I make three points here; first, as to the intermediate conclusion that the respondent had a term deposit, such conclusion appears to have been arrived at abandoning the earlier caution that the respondent’s evidence should not be accepted absent supporting evidence. Second, again, why does the respondent’s conduct evidence the necessary consensus? Third, on what basis is the figure of 5.95% arrived at? What evidence was there of any mention at the relevant time of an interest rate of 5.95%? Exhibit P1 makes no mention of a rate of 5.95% and the SMS of 24 May 2012 is framed in terms of an attempt to agree a rate as opposed to a rate always having been agreed.
The Magistrate then returned to the term of the loans. He declined to accept that the loans were repayable at an agreed time, but did accept that the respondent reasonably expected that the loan would be short term on account of the words and conduct of Mr White. What words and conduct? What was Mr White’s evidence as to the words and conduct? Why was his evidence, whatever it was, rejected? Why was the respondent’s evidence as to his words and conduct accepted, bearing in mind the caution that her evidence should not be relied upon in the absence of supporting evidence? The reasons do not address any of these questions. In my view they needed to.

Curiously, despite earlier finding that the parties agreed that the loan was to bear interest at 5.95%, the Magistrate then stated that the evidence did not “permit adequate findings to be made as to the precise terms of any interest provision in the agreement”.
In my view, for the reasons I have given, the Magistrate’s reasons do not provide this Court with the necessary reassurance that all the evidence was properly evaluated nor that the Magistrate has correctly gone about the task of determining the terms of any agreement according to law.
Did the Magistrate erroneously substitute his opinion on certain commercial matters?
This ground of appeal focuses upon the Magistrate’s assumptions that the respondent would not likely donate $30,000 to the appellant on account of her not being rich and that it was unlikely that she would lend such sum without charging interest.
I have largely dealt with this complaint in the course of providing my reasons for concluding that the Magistrate’s reasons were inadequate. It is not so much that the Magistrate has taken judicial notice of notorious facts as opposed to inferring that the respondent would have conducted herself in a certain way because of her circumstances. Irrespective of whether it was safe to draw these inferences, as I have endeavoured to point out, to focus simply upon the respondent’s conduct and draw from it conclusions as to the consensus reached ignores the evidence for the appellant. What about her conduct was evident to the appellant such that, objectively speaking, the appellant would have arrived at the same conclusion and thus that the necessary consensus sufficient to find a binding agreement was reached? The argument exposes further the inadequacy of the Magistrate’s reasons which I have already addressed.
Application to amend the Notice of Appeal and fresh evidence
By application dated 12 July 2016 the appellant sought an order for permission to amend its Notice of Appeal to include the following additional ground:
The Magistrate did not have the benefit of the evidence of David Raymond John Cramp, which casts doubt on the Plaintiff’s trial evidence and part or all of her basis to claim.
Implicit in the application to amend was an application to call fresh evidence from Mr Cramp on the hearing of the appeal. The respondent opposed the application and, in the alternative, indicated she would wish to call evidence in reply. I indicated that I would receive all evidence de bene esse and thereafter determine the application to amend and the question of whether the further evidence should be received at the same time as dealing with the other appeal grounds. The parties consented to my taking that course.
In an affidavit sworn 9 July 2016 Mr Cramp said that he was in a relationship with the respondent and lived with her at his North Plympton address for approximately six months in 2008/2009. Further, in May 2009 he was sentenced to a term of imprisonment for drug trafficking offences. He said that whilst he was imprisoned they maintained their relationship until the respondent ended it in or around November 2011. Until then the respondent had continued to reside at Mr Cramp’s North Plympton address. Mr Cramp was released in October 2013.
Mr Cramp also tells of confiscation proceedings taken by the authorities in consequence of his drug offending in relation to the North Plympton address. Those proceedings were ultimately settled.
At the same time Mr Cramp owned premises at Reynella. Whilst he was in custody, with the assistance of the respondent, he arranged to sell those premises in March 2011. He agreed with the respondent that she should use some of the net proceeds from the sale to attend to outstanding bills, household expenses and the mortgage on the North Plympton property. However, he asserts that the respondent never informed him of her intention to provide any funds to the appellant. He adds that he has no knowledge of the source of funds used to make the second advance. He floats the possibility that the money was his.
In his affidavit Mr Cramp also refers to the fact that there was, on foot, whilst he was in custody in early 2013, de facto property proceedings in the Federal Circuit Court in which he and the respondent were in dispute regarding the division of the property of their relationship. Correspondence received as part of those proceedings includes reference to the respondent having invested $70,000 in the appellant, $40,000 of which was Mr Cramp’s money.
In May 2016 Mr Cramp advised members of the appellant of the position and that he did not authorise the advance of his money by the respondent to the appellant.
Mr Cramp also gave oral evidence on the appeal. He said he instructed the respondent to pay $46,000 of the net proceeds of sale of the Reynella property to the authorities in satisfaction of the confiscation proceedings instituted in relation to the North Plympton premises and to apply the balance to mortgage repayments on the North Plympton premises.
In cross-examination Mr Cramp gave evidence that, in effect, the respondent managed his personal finances during his imprisonment. In this regard she also operated their business whilst he was in custody as well as managing mortgage repayments. He said that for these purposes he had made $100,000 in cash available to the respondent. He did not accept that $55,000 of that sum was paid in solicitors’ fees, though recalled a further $50,000 was paid to a friend, Michael, as a loan.
Mr Cramp also gave evidence that he knew of a caveat which the respondent had placed on the Reynella property, stating that she did it in fear that the authorities would take proceedings in relation to the property. In his affidavit he refers to the respondent claiming she could use $40,000 of the proceeds from the sale of the Reynella property because he owed it to her and agreed she should have the funds for her own purposes. I assume that the caveat was obtained in an endeavour to protect that interest in the event that the authorities took action in relation to Mr Cramp’s interest.
In re-examination, Mr Cramp stated that the respondent was in receipt of $250 rent per week from each of two tenants at the Reynella property prior to its sale, though it became evident in the course of the respondent’s evidence that the tenants were grossly in arrears.
I also received an affidavit of the respondent sworn 25 July 2016 as well as two affidavits she had filed in the Federal Circuit Court proceedings, sworn 1 November 2016 and 4 November 2015.
In the affidavit of 25 July 2016 the respondent confirms that the first advance made to the appellant came from the proceeds of sale of the Reynella property. Those proceeds were paid into an ANZ bank account operated by her and Mr Cramp jointly. She states that she was entitled to freely use the contents of the account. The respondent also confirms that the caveat she obtained over the property was intended to secure her equitable interest. She does not quantify that interest, but makes plain that the contents and application of the ANZ account is subject of the property proceedings in the Federal Circuit Court.
As to the first advance, the respondent says she kept Mr Cramp informed of developments concerning the Verve Bar and Kitchen. In any event, he readily provided his signature on transfer documentation with full knowledge of how the proceeds were to be distributed. The settlement statement for the sale of the Reynella premises dated 22 February 2012 (settlement having taken place on 31 March 2011) indicates that $55,165 was paid for the withdrawal of the caveat. $55,000 of that sum was then paid into the ANZ joint account.
The remaining two affidavits concern the proceedings instituted in the Federal Circuit Court. They detail the circumstances of the relationship between the respondent and Mr Cramp. Importantly from the respondent’s point of view, they justify her interest in the property of the relationship. It is unnecessary to note the detail here.
The respondent gave evidence that the $100,000 in cash which she received from Mr Cramp, an additional $9,000 or $10,000 received in compensation, and $5,000 from the sale of a Mercedes, was quickly spent on his “court fees”, making a loan to his friend, child support and various bills. She estimated Mr Cramp’s legal fees totalled $50,000. She could not recall precisely how the payments were made to the solicitors but “large amounts” came from her bank account and one payment came from the business account.
In relation to the Reynella property, the respondent gave evidence that she had put a caveat on it before Mr Cramp commenced his sentence because she had “done a lot of work to it”. The proceeds of sale were applied to the discharge of the mortgage on that premises, bills and the payment to her of a sum in consideration of her withdrawing the caveat. She accepted the first advance was made to the appellant shortly after the sale and admitted that was derived from the money received in return for withdrawing the caveat she held on the property. She said the Reynella house was sold as she could no longer afford the mortgage repayments. At the time it was sold she said she was also paying mortgages on two other properties, one at North Plympton and the other at Sheidow Park.
Under cross-examination the respondent asserted the second advance was paid out of the proceeds of the sale of the Sheidow Park property. That property belonged to her solely, consequently the proceeds were “not shared”. By contrast the first advance was “money that [Mr Cramp] owed me and it came out of the sale of his house, but it was on the caveat from my earnings and it was for me. It actually came from a joint bank account. We were in a relationship, I put it into joint bank accounts.” She said the confiscation proceedings were settled shortly after Mr Cramp commenced his sentence in 2009 and before the sale of the Reynella property. The respondent also gave evidence that Mr Cramp knew the $40,000 had been applied towards the Verve Bar and Kitchen business, alluding to conversations between Mr Cramp and Mr White.
Evidence was led from the third and final witness on appeal, Ms Andrea Peterson. Ms Peterson was an accountant who had previously provided accounting and audit services to the appellant. She gave evidence that in relation to the work she undertook for the appellant her main contact was Mr Ray Robinson, the former Secretary of the appellant, and Mr White. Examination-in-chief focused almost exclusively on an entry in a balance sheet stating “Dzundza loan $57,000”, which she received in the course of preparing an audit for the period ending 30 June 2012 for the appellant. The implicit assertion made was that the entry was a concession on the part of the appellant that both advances were loans. That entry was addressed in a letter from Ms Peterson to the appellant’s Board, though Ms Peterson said she did not receive any formal response. No questions were put to Ms Peterson in cross-examination.
The appellant submitted that Mr Cramp’s evidence was fresh evidence as that term is understood in the authorities. The evidence raised two questions; first, it suggested that the respondent had not been truthful in the evidence she gave before the Magistrate as to the source of the first advance. Second, it raised the question of whether the respondent had a legitimate claim to the $40,000 subject of the first advance.
The respondent submitted that Mr Cramp’s evidence was not fresh evidence and should be rejected.
As mentioned, this appeal is instituted pursuant to s 40(1) of the Magistrates Court Act 1991 (SA). That section provides that the right to appeal contained in s 40(1) is to be exercised in accordance with the rules of the Supreme Court. SCR 286 provides that, subject to express provision to the contrary, an appeal is by way of rehearing. SCR 286(3)(a) provides, amongst other things, that this Court may, in its discretion, hear further evidence on a question of fact. In Sands v South Australia the Full Court commented on the application of SCR 286(3)(a). It said:[13]
Pursuant to r 286(3)(a) of the Supreme Court Civil Rules, the Court is empowered in its discretion on the hearing of an appeal to hear further evidence on a question of fact.
In CDJ v VAJ, the High Court considered the equivalent power to r 286(3)(a) in the Family Law Act 1975 (Cth), namely s 93A(2). The Court held that the express power conferred to receive further evidence on appeal is not confined by the common law principles applicable to the receipt of fresh evidence. The power is discretionary and remedial. Its principal purpose is to permit the admission of further evidence when that evidence, if accepted, would demonstrate that the order under appeal is erroneous. The power exists to facilitate the avoidance of errors that cannot be otherwise remedied by the application of the conventional appellate process. But the power is to be exercised against the background of the distinction between the exercise of original and appellate jurisdiction. The power should not be construed in a way that would have the practical effect of obliterating that distinction. In the exercise of the discretion, the critical factor is the subject matter of the proceedings with which the appeal is concerned. Ordinarily the power should not be exercised unless the appellate court is satisfied that the further evidence would have produced a different result if it had been available at the trial; otherwise it would be contrary to the interests of justice to deprive a respondent of the benefit of the orders made by the trial judge and put that person to the expense, inconvenience and worry of a new trial. The discretion is not so wide that an appeal court can admit further evidence merely because it is useful. As the power must be exercised judicially, the evidence must be credible and, if the evidence existed at the time of the trial, it would ordinarily be relevant to consider whether by the exercise of reasonable diligence it could have been tendered at the trial. When a party, knowing of its existence, chooses not to tender it there, that fact may afford a reason for rejecting it on appeal.
[footnotes omitted.]
[13] Sands v South Australia (2015) 122 SASR 195 at [366] to [367] (Blue, Stanley and Nicholson JJ).
In McLaren v Legal Practitioners Disciplinary Tribunal and Another Mildren J helpfully distilled the following propositions from CDJ v VAJ [14] which, in my view, are applicable to SCR 286(3)(a):[15]
[14] (1998) 197 CLR 172 at [50]-[57] (Gaudron J), [100]-[103] (McHugh, Gummow and Callinan JJ), [186] (Kirby J).
[15] (2010) 26 NTLR 45 at [217].
... In the light of that decision [CDJ v VAJ], the following propositions may be stated:
1.The court is not restricted by the common law rules which restrict the power to “fresh evidence”.
2.There is nothing which restricts the power to those cases where the object of the appeal is to set aside the decision of the Tribunal.
3.The power is remedial in nature. It is designed to facilitate the avoidance of errors which cannot otherwise be remedied by the conventional process. A subsidiary purpose is to allow the court to admit evidence to buttress the findings made by the tribunal.
4.The provision should be construed liberally.
5.The court is not merely exercising appellate jurisdiction because the appeal is from the tribunal and not a court. In this sense, the court is exercising original jurisdiction.
6.Nevertheless, the distinction between original and appellate jurisdiction should not be altogether obliterated.
7.The power exists to serve the interests of justice.
8.Further evidence would be not be admitted if it will not affect the result.
9.The court will not admit the evidence merely because it is useful.
10.Further evidence is more readily admitted if it will avoid a rehearing, particularly if it is not in dispute.
11.Further evidence is more readily admitted where it relates to events after the hearing.
12.Where there is no need for a new trial or the extensive taking of evidence, factors such as the availability of the evidence at trial and the need for finality in litigation are likely to be more relevant to the exercise of the discretion.
13.The failure to adduce the evidence at the hearing is a variable factor, the weight of which will depend on all the factors pertinent to the case.
14.Where the evidence has been deliberately withheld, the failure to adduce it will ordinarily weigh heavily in the exercise of the discretion.
15.Where the evidence could have been discovered by reasonable diligence, this may be of little significance.
16.No invariable rule should be laid down or can be made concerning the failure to call the evidence.
As is plain from the summary of the evidence received on this appeal, it was not agreed. From cross-examination of the respondent in the Court below, it is apparent that counsel for the appellant knew of Mr Cramp’s existence, knew of his having been in a relationship with the respondent, and knew of the possibility of him having an interest in two of the three properties about which the respondent gave evidence. If the appellant did not know these things before trial, they became clear in cross-examining the respondent. At no stage did the appellant apply for an adjournment or undertake any other course designed to investigate the nature of the financial relationship between Mr Cramp and the respondent and the possible relevance thereof to the defence of the proceedings in the Magistrates Court consequent upon the cross-examination. No explanation has been provided by the appellant as to why the evidence could not have been obtained and led at trial. I am inclined to think that the evidence Mr Cramp gave in this Court could, with reasonable diligence, have been obtained for the Magistrates Court proceedings.
Putting Ms Peterson’s evidence to one side, the evidence received on appeal does not assist in the resolution of the issues arising concerning the second advance. To the extent that it may be said to further undermine the respondent’s credibility it is of little assistance. I was left with the impression that the respondent is a person who adopts a fluid approach to her financial relationships with individuals in the sense that obligations are rarely the subject of finite agreement but tend to evolve. In that evolution fertile room for misunderstanding arises. I am conscious that this impression, however, relates in particular to her dealings with Mr Cramp in the context of an emotional relationship. The evidence I heard does not allow me to conclude that the same approach necessarily applied in relation to Mr White. I suspect it did. That does not mean, however, that there was no agreement, or that no consensus as to terms was not reached. Here it may be said that receipt of the additional evidence is useful, but the fact that it is useful in itself does not merit receipt on appeal.
As to Ms Peterson’s evidence, it merely reflects that an officer of the appellant has recorded monies received as a loan. The President, in effect, disputes the accuracy of the record. The record does not assist in resolving the dispute.
As to the first advance, the question of whether the evidence received on appeal had the consequence that the respondent had no lawful claim was not pursued by the appellant with any great vigour. No doubt this was because the issue is collateral to those contested in the Court below and would, if entertained by this Court, obliterate the distinction in relation to these proceedings between original and appellate jurisdiction. What is put to me is an entirely new ground of dispute, one not pleaded in the Court below and not pleaded in this Court save to the extent implicit in the draft additional ground of appeal. It is one that represents a sea change in the forensic contest.

The power to receive fresh evidence on the hearing of an appeal is designed to facilitate, amongst other things, the avoidance of errors which cannot otherwise be remedied by the conventional process. In view of my decision as to the adequacy of the Magistrate’s reasons, any error that may be said to arise from the non-receipt of the additional evidence by the Magistrate can be addressed at a re-trial. Further, the additional evidence will not affect the outcome of the appeal.
Lastly, bearing in mind the conclusion I have arrived at in relation to the adequacy of the Magistrate’s reasons, receipt of the evidence adduced on appeal will not avoid a rehearing.
For these reasons I refuse the application to amend the Notice of Appeal and related application to call fresh evidence on the hearing of the appeal. In consequence of those conclusions, I also decline to receive the respondent’s evidence adduced on appeal in reply.
Conclusion
The appeal is allowed. The orders of the Magistrates Court of 18 April 2016 are set aside. As resolution of the claim turns on the credibility and reliability of the protagonists I am in no position to resolve the matter myself, not having heard all the evidence nor seen and heard all of the witnesses. In the circumstances I remit the matter for retrial. I will hear the parties as to costs.