Iannella v NSW Trustee and Guardian (as executor of the estate of the late Anna Stirans)

[2020] NSWCA 96

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Iannella v NSW Trustee & Guardian (as executor of the estate of the late Anna Stirans) [2020] NSWCA 96
Hearing dates:	14 May 2020
Decision date:	22 May 2020
Before:	Meagher JA; Leeming JA; Simpson AJA.
Decision:	1. Refuse leave to appeal. 2. No order as to costs, with the intention that the parties bear their own costs.
Catchwords:	APPEALS – leave to appeal – Local Court judgment in small amount – parties’ costs exceeded amount in issue – successful appeal would lead to retrial – no case of sufficient injustice to warrant grant of leave
Legislation Cited:	Evidence Act 1995 (NSW), s 140 Local Court Act 2007 (NSW), ss 29A, 39, 40 Supreme Court Act 1970 (NSW), s 101
Cases Cited:	Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Cho v Park [2016] NSWSC 871 Condensing Vaporisers Aust Pty Ltd v FDC Construction & Fitout Pty Ltd (No 2) [2014] NSWCA 89 Iannella v Stirans by her tutor the NSW Trustee & Guardian [2019] NSWSC 1181 Ji v Firth [2013] NSWSC 186 Norfeld Pty Ltd v Amanda Lee Jones [2014] NSWCA 408
Category:	Principal judgment
Parties:	Gerardo Iannella (Applicant) NSW Trustee & Guardian (Respondent)
Representation:	Counsel: P E King, F Sinclair (Applicant) M Klooster, W Richey (Respondent)   Solicitors: George Khoury & Co (Applicant) Chamberlains Law Firm (Respondent)
File Number(s):	2019/307501
Publication restriction:	Nil
Decision under appeal	Court or tribunal: Supreme Court of New South Wales Jurisdiction: Common Law Citation: [2019] NSWSC 1181 Date of Decision: 10 September 2019 Before: McCallum J File Number(s): 2017/213207

Judgment

1. THE COURT: This is an application for leave to appeal from a decision of the Supreme Court dismissing an appeal from the Local Court. The Local Court judgment was relatively small ($19,177.89 plus interest in the amount of $6,600). The plaintiff (Ms Anna Stirans) and the defendant (Mr Gerardo Iannella) were both elderly. The plaintiff has died; Mr Iannella, who seeks to run a second appeal, is now aged 81. Many aspects of the litigation have been less than satisfactory. Each side’s costs dwarf the amount at stake. In order to explain our reasons for refusing leave to appeal, it will be necessary to provide a deal of detail in relation to the underlying facts and the procedural history of this litigation.

Background

2. Ms Stirans was a widow, living alone, who was 77 on 6 February 2012 when she signed an authority in favour of her near neighbour, Mr Iannella, to withdraw money from her bank account. Mr Iannella was aged around 73 at the time. Shortly thereafter, Ms Stirans fell and was taken to hospital where she remained for just over a month. She was assessed as suffering mild cognitive impairment, but returned home in March 2012.

3. Between 9 March 2012 and 29 October 2013, Mr Iannella withdrew some $57,600 from Ms Stirans’ bank account.

4. At least one officer from Anglicare observed Ms Stirans living in squalid conditions in October 2013, and obtained copies of her bank statements from her. These disclosed the withdrawals made by Mr Iannella. These significantly exceeded her expenditure before March 2012.

5. In September 2014, Ms Stirans was again taken to hospital, and later moved into full-time residential care. She died in 2018, after the hearing in the Local Court, but before Mr Iannella’s appeal to the Common Law Division of the Supreme Court was heard. Ms Stirans’ estate was thereafter represented by the present respondent.

6. In November 2013, Mr Iannella’s authority to operate Ms Stirans’ accounts was terminated. NSW Trustee & Guardian appears to have been appointed Ms Stirans’ tutor and commenced proceedings in her name against Mr Iannella in the Local Court of New South Wales by statement of claim filed 24 May 2016.

Pleadings in the Local Court

7. The statement of claim was a brief document of 11 numbered paragraphs, and after dealing with the parties and the authority granted by Ms Stirans to Mr Iannella, made the following allegations characterising its claim:

“6. The circumstances of the appointment of the Defendant as a Third Party with Authority to Operate the Plaintiff’s bank accounts created an implied or resulting trust of the Plaintiff’s monies in the Defendant’s hands.

7. In the period from 7 March 2012 until 6 December 2013, the Defendant withdrew a total amount of $57,300.00 from the Plaintiff’s account [number identified] contrary to the Plaintiff’s interest.

8. The defendant has failed to account to the Plaintiff’s Financial Manager for the Plaintiff’s funds had and received by the Defendant.

9. The Defendant has deprived the Plaintiff wrongly of the monies withdrawn from the Plaintiff’s bank account (or a significant part of them) whereby the Plaintiff has suffered loss.”

8. The balance of the pleading was a claim for interest and an allegation that the authority to operate Ms Stirans’ bank account was cancelled on 4 November 2013.

9. The relief sought was specified as damages (as opposed to debt), interest and costs. It was also described as a liquidated claim in the amount of $74,467.75, of which $57,300 was the claim and $16,200.75 was interest (and small amounts for fees).

10. The statement of claim described itself as “Mercantile Law – Debt – Breach of Fiduciary Duty – Undue Influence”. It is difficult to see how any of those descriptions was apposite, save “debt” (notwithstanding that the claim was expressed to be for damages). There was nothing mercantile about the allegation that one elderly person withdrew and failed to account for the personal funds of another over a two-year period. Although it is easy to see how the relations between Ms Stirans and Mr Iannella might be said to be subject to a “fiduciary duty” or “undue influence”, neither term was mentioned in the pleading.

11. It was common ground in this Court that the Local Court lacked jurisdiction to determine claims for breach of fiduciary duty or to enforce a trust.

12. Mr Iannella’s defence admitted that he had withdrawn monies from Ms Stirans’ account pursuant to the authority she had granted him, and positively alleged that he had then given the monies to her or paid bills or made purchases at her direction, and that he “did not retain any of the monies of his benefit [sic]”. The defence did not admit the allegations relating to an implied or resulting trust (paragraph 6) or that he had failed to account for funds had and received (paragraph 8). Nothing was said about the Local Court’s absence of jurisdiction in relation to fiduciary duty or trust.

The hearing in the Local Court

13. The primary judge summarised the course of proceedings in the Local Court, and the judgment, in some detail, none of which was challenged. The following seven paragraphs are drawn from [14]-[23].

14. Many bank withdrawal vouchers signed by Mr Iannella were tendered. All of those transactions were conducted at the St Mary’s branch of the bank. Ms Stirans’ claim (as originally put) was confined to the sum of those amounts. Mr Iannella admitted making each of those withdrawals, but said that on each occasion, Ms Stirans had asked him to do so and that he took the cash directly to her at her home, counting it out into her hand.

15. The withdrawals in the first six months were usually in the order of $2,000, $1,500 or $1,000, declining to $1,000, $800 or $500 thereafter. On two occasions, Mr Iannella made two withdrawals on the same day (for example, on 23 May 2012 he withdrew $2000 and $1000).

16. Ms Stirans’ pension was paid, fortnightly, into the account, in amounts of $748.80, increasing over time to $827.10. The total amounts of pension deposited over the period during which Mr Iannella operated the authority was $35,309.64.

17. Ms Narelle Bossard, the coordinator of the community services provided by Anglicare, gave evidence that she had seen Ms Stirans, personally, on three occasions during the relevant period. She said there was a lack of food and that her clothing was worn and dirty. She said:

“The kitchen was dirty. The floors were dirty. She had long, really, really long, unwashed hair. Her toenails were curling over her feet. She had mud down her legs that had been there for quite some days. The house smelt of urine. She smelt of urine.”

18. Ms Bossard said the air conditioner and television did not work, that the home was generally dirty and ill-kempt, that the lawns were sometimes overgrown and that nothing was being maintained.

19. Ms Bossard said she made a number of attempts to contact Mr Iannella because she had been told that he was doing the banking and shopping for Ms Stirans. She said that on 4 December 2012 she asked him to return Ms Stirans’ bankbook to purchase food; he refused, saying that he was doing the banking and shopping. She said that he would not enter into any further discussion, that he refused to meet her and that he did not answer any of her subsequent messages.

20. Mr Iannella was cross-examined through an interpreter on the afternoon of the first day of the trial, in March 2017, and again on the second day, which was in May 2017. He said he was a “close friend” of Ms Stirans, and agreed to do her banking at her request. He said that he also paid her bills. She would give him the bill itself and the money and he would go to the post office and pay it. He denied that the Anglicare care workers had contacted him and asked to speak about Ms Stirans’ financial affairs. He was asked whether he paid himself to perform services for Ms Stirans. He responded “no, not – not really. All that may have happened is that I put $10 – $20 – $30 for gasoline”. He said Ms Stirans had once paid him $1,600 to trim some trees and remove the clippings.

21. Towards the end of Mr Iannella’s cross-examination on the second day, the solicitor then appearing for Ms Stirans advanced an alternative case, based on the difference between the amount withdrawn by Mr Iannella and the amounts of pension credited during the same period. That case was put to Mr Iannella as follows:

“PATERSON

Q. I put it to you that there are withdrawal slips with your name on it, your signature, for amounts totalling $57,000. What do you say to that?

A. INTERPRETER: What am I supposed to?

Q. I put it to you that in that same period when you withdrew $57,000 from Mrs Stirans’ bank account, her own bank account that you had control of shows that her pension income in that same period was $36,000. What do you say to that?

A. WITNESS: (No verbal reply)

Q. What’s your answer, sir?

A. INTERPRETER: Can I repeat the question?

Q. I'll put it again. In the period that you operated Mrs Stirans’ bank account, $57,000 was withdrawn by you. That’s what I’m putting to you.

A. INTERPRETER: What can - what can I do about that? I might have withdrawn it, but I didn't keep it. I gave - I gave it to her.

Q. In that same period, the same bank account over which you had control shows total income from all sources in that period, both pension and interest, totalling $36,000. What do you say to that?

A. INTERPRETER: What am I supposed to say?

Q. Perhaps you could explain the difference.

A. INTERPRETER: What do you mean? What should I be explaining?

Q. I’ll put it to you directly. You kept that money, didn't you, the difference between what you withdrew and what Mrs lannella (as said) needed?

A. INTERPRETER: I haven’t kept anything. I gave her the money on - I put it onto her own hands.”

22. The cross-examination on this topic then continued as follows:

“PATERSON   

Q. You don’t disagree with me, do you, that the amounts withdrawn by you totalled $57,000?

A. INTERPRETER: I don’t know how much.

Q. Do you agree with me that the total income on the account as controlled by you during that period was some $36,000?

A. INTERPRETER: I don’t remember that.

Q. You’re saying you just don’t know?

A. INTERPRETER: I don’t know how much money went in.

Q. There was much more coming out than was going in, wasn’t there?

A. INTERPRETER: Yes.

Q. That’s what concerned you, didn’t it?

A. INTERPRETER: Yes.

Q. You didn’t do anything about it, did you?

A. INTERPRETER: I did ask - I did ask the lady and I - and she told me that it’s not my business what she did with the money.

Q. You have no idea what she did with the money, do you?

A. INTERPRETER: No.

Q. I put it to you that the reason for that is that she did nothing with the money.

A. WITNESS: (No verbal reply)

Q. I put it to you that you didn’t give her the money, you kept it.

A. INTERPRETER: No.

Q. I put it to you that was because you knew she was vulnerable, an old lady and that there was very little that could be done about it.

A. INTERPRETER: No.”

23. The parties made submissions on the second day. Ms Stirans’ solicitor supplied a written document to the Magistrate, but that was not made available to the primary judge or to this Court. The solicitor made the following oral submission:

“In essence, your Honour, the plaintiff says that it has been established that far more was withdrawn from this account than the defendant can explain, other than with an explanation which, in my respectful submission, your Honour will not accept. If your Honour is not with me on the issue of Mr Iannella keeping this money for himself then the plaintiff’s secondary position is that he is in breach of his duty as a fiduciary to have [prevented] this unfortunate situation occurring in the first place, and secondly, having been alerted to it or aware of it, he did nothing to prevent the position getting worse. He’s in breach of his duty as a fiduciary at the very least.”

24. No objection was made on behalf of Mr Iannella to the submission based on a breach of fiduciary duty. This had been introduced during the cross-examination in response to an objection. It will be seen that the alternative more modest case corresponded with the cross-examination reproduced above.

The Magistrate’s reasons for judgment

25. The learned Magistrate reserved her decision, delivering an oral judgment on 16 June 2017.

26. The judgment dealt with the evidence and the parties’ submissions in a manner which need not be summarised. It referred to the principles governing fiduciary relationships, and then the dispositive reasoning is as follows:

“She was earlier diagnosed by aged care workers as having mild cognitive impairment, it was at this stage in her life she asked the defendant to help her. lannella was clearly in a position [of] trust, she relied on him, he had unfettered access to her finances. Ms Stirans was living in squalid conditions that did not support [Mr] lannella’s assertion that he was purchasing food, cutting lawns and maintaining her property. Apart from the authorisation to access the accounts and the voluntary nature of [Mr] lannella’s participation in paying bills et cetera I do not find that this was a fiduciary relationship.

However, I find that [Mr] lannella, having constructively assumed the role of support person for Ms Stirans he was in a position of trust and therefore owed her a duty of care. In assuming this role he had responsibility to the plaintiff. During his stewardship her funds were significantly depleted. It appears on the face of it that lannella may have been siphoning monies for his own benefit although the evidence does not support my finding of that on the Briginshaw standard of proof.

It is inconceivable that he cannot account for any bill he paid nor explain the reasons he had for drawing significant amounts of money, sometimes in back to back transactions. On 5 March he withdrew $2,000 at 10.26am and then at 11.18am withdrew $1,000, the same bank but different tellers. On 22 August, $1,000 was withdrawn at 10.12am, and then $1,000 at 10.47am. On 13 September $300 was withdrawn from the EFTPOS Post Office at St Marys and $500 was withdrawn from the bank at St Mary’s on the same day. These transactions are irregular and should be able to be explained.

Mr lannella denies taking any money for himself either by siphoning the funds or overpaying himself for his limited services. I find that he was asked by Ms Bossard on numerous occasions to return the bank books and to meet with her, he refused. I find that the air conditioning was not working and that a conversation to that effect was had with Ms Bossard. At the time Mr lannella was relieve[d] of his position and his authority was withdrawn he was under a duty to account for the funds that he withdrew, he failed to do that with no good reason.

Mr lannella failed to answer a notice to produce documents and bank statements during the course of these proceedings, he denied the Trustee and Guardian any timely review of her excessive payments and the ability to identify where moneys could be recovered. He has b[r]eached his duty of care and as a result of the plaintiff has suffered.

I FIND IN FAVOUR OF THE PLAINTIFF AND I AGREE WITH THE STATEMENT OF CLAIM WHERE IT IS CLAIMED THAT THE CIRCUMSTANCES OF THE APPOINTMENT OF THE DEFENDANT AS A THIRD PARTY WITH AUTHORITY TO OPERATE THE PLAINTIFF’S BANK ACCOUNTS CREATED AN IMPLIED OR [RESULTING] TRUST OF THE PLAINTIFF’S MONEY IN THE DEFENDANT’S HANDS AND THAT THE DEFENDANT HAS FAILED TO ACCOUNT TO THE PLAINTIFF’S FINANCIAL MANAGER FOR THE PLAINTIFF’S FUNDS AND THAT HE HAD AND RECEIVED BY THE DEFENDANT. AS A RESULT, AS I SAID, THE PLAINTIFF HAS SUFFERED A LOSS.

I FIND AGAINST THE DEFENDANT, SO THERE WILL BE JUDGMENT FOR THE PLAINTIFF IN THE MATTER.”

(The capitalisation is as per the transcript in the appeal book; it is unclear whether it was ever revised.)

27. The Magistrate thereafter invited Ms Stirans’ solicitor to identify the amount by which the account had diminished, as to which he had cross-examined Mr Iannella, which was confirmed as $19,177.89. Interest had been calculated as $6,600. The transcript records “judgment and verdict” being entered in the amount of $19.177.89 and “interest” being entered in the amount of $6,600. If there was a more formal record of the Local Court’s orders made, it was not in the materials made available to this Court.

28. It is convenient to note the following matters immediately concerning the passage reproduced above.

29. First, despite the absence of any equitable jurisdiction in the Local Court, and the absence of any allegations of fiduciary relationship, the first two paragraphs address whether there was a fiduciary relationship between Ms Stirans and Mr Iannella, and appear to conclude that, subject to what followed from Mr Iannella’s position as an agent, her Honour rejected Ms Stirans’ claim that Mr Iannella was a fiduciary. Perhaps this reflects the written document that was supplied to the learned Magistrate. In any event, if this was Ms Stirans’ principal case, it is as well it was rejected, having regard to the Local Court’s limited jurisdiction.

30. Secondly, because Mr Iannella had “constructively” assumed the role of a support person, it was said that he was “in a position of trust and therefore owed her a duty of care”. It is, with respect, very difficult to give legal meaning to that reasoning. No case was pleaded, or advanced, that somehow Mr Iannella had failed to take reasonable care when he withdrew money from Ms Stirans’ account. The facts underlying her case were simply that he had taken her money and was required to repay it; his case was that he had given it all to her or disbursed it in accordance with her instructions.

31. Thirdly, there is the important sentence “during his stewardship her funds were significantly depleted”. Read together with the balance of the reasons, that is a reference to the net depletion of funds, allowing for the fortnightly pension payments that were made. This is difficult to understand. Mr Ianella was subject to the same duty whether or not he was withdrawing funds equivalent to Ms Stiran’s fortnightly pension, or funds which exceeded the pension. Nonetheless, the ultimate judgment of $19,177.89 reflected the difference between the amounts withdrawn by Mr Iannella and the pension payments paid in during the period he was authorised to operate the account. It is this difference which was the “significant depletion” to which the learned Magistrate referred. This was consistent with the way Mr Iannella had been cross-examined as reproduced above.

27. Fourthly, there is an absence of finding about whether Mr Iannella had been siphoning monies for his own benefit (which Ms Stirans’ solicitor had put to him in cross-examination and which he denied). Although her Honour stated that it “appear[ed] on the face of it” that that was what Mr Iannella had been doing, it is plain from the balance of the sentence that her Honour, applying the elevated standard in s 140 of the Evidence Act 1995 (NSW) and Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34, was not prepared to make such a finding.

28. Contrary to oral submissions initially made in this Court, that is quite different from a positive finding that Mr Iannella had not been siphoning monies for his own benefit. It is one thing not to be satisfied that a person is a fraudster; it is another thing entirely to be satisfied that he or she is not a fraudster.

29. This is significant, because Mr Iannella’s primary submission in this Court was that there was a finding entitling him to a judgment in his favour.

30. Contrary to Mr Iannella’s submission, what has been said above is the natural meaning of the words used by the learned Magistrate. Further, if indeed her Honour had positively found that Mr Iannella had not “siphoned” any monies from Ms Stirans’ account, but had accounted to her for all of the cash withdrawn, then it is difficult to see how the balance of the reasons, including the immediately following words, and indeed the judgment entered against Mr Iannella, could be reconciled with that.

31. Fifthly, immediately after her Honour’s statement that she was not, in light of Briginshaw, prepared to make a finding which was tantamount to fraud, the learned Magistrate identified certain transactions which were, to say the least, difficult to reconcile with Mr Iannella’s account that he was withdrawing cash and delivering it to Ms Stirans at her request. Indeed, it is difficult to see how he would have had time on 22 August 2012 to withdraw $1,000 at 10:12 am, deliver it to Ms Stirans, and then withdraw a further $1,000 at 10:47 am, some 35 minutes later. The Magistrate was critical of Mr Iannella’s absence of explanation. Mr Iannella’s affidavit dated 6 March 2017 expressly acknowledged that he had withdrawn each of the sums in the evidence served as part of Ms Stirans’ case, and said “Every time I would count the money as I placed it in the palm of [Ms Stirans’] hand”, but it did not explain how that could be reconciled with the transactions of 22 August 2012. That said, as the respondent acknowledged during the hearing in this Court, the cross-examination of Mr Iannella, even though it extended over two days, did not confront him with those particular transactions.

32. Sixthly, there is no way of reading the conclusion of breach of a duty of care as a result of which Ms Stirans suffered loss other than as a rejection of Mr Iannella’s account that every cent of the $57,600 which he had withdrawn under her authority had been returned to her.

The appeal to the Supreme Court

38. Mr Iannella appealed pursuant to ss 39 and 40 of the Local Court Act 2007 (NSW). That appeal lay as of right on a question of law, and by leave to the extent that a ground involved a ground of mixed law and fact. His appeal was heard by the primary judge on 22 November 2018 and judgment was delivered on 10 September 2019: Iannella v Stirans by her tutor the NSW Trustee & Guardian [2019] NSWSC 1181. Neither the transcript before the primary judge nor the evidence tendered before her was made available to this Court.

39. Her Honour considered that some of the grounds of appeal were based on misconceptions and refused leave. No challenge was made to that aspect of the judgment, and those grounds need not be summarised.

40. Grounds 2, 3 and 6 were as follows:

“2. In the premises the court erred in holding that there was an ‘implied or result in (sic) trust’ of [Ms Stirans’] money in [Mr Iannella’s] hands.

3. The court erred in holding that [Mr Iannella] owed a duty of care to account to [Ms Stirans].

…

6. Further, the court had no jurisdiction to award equitable relief or make declarations of trust.”

41. The primary judge addressed these grounds at [35]-[43]. Her Honour noted that it was common ground that the Local Court lacked jurisdiction to enforce or execute a trust or take accounts. However, her Honour noted the submission from counsel then appearing for Ms Stirans that the substance of her case “at its core, contained a simple claim for monies had and received”, which did fall within the Local Court’s jurisdiction. Her Honour noted that while the Magistrate’s findings included the failure to account for Ms Stirans’ funds that he had “had and received”, her Honour referred to the proposition that appeals lie only against the Court’s order or judgment, not the reasons.

42. Mr Iannella was critical of the reasoning in [39], which is best reproduced verbatim:

“Furthermore, the approach in such matters in this Court has been to consider the substance of the claim in the Local Court rather than being too wedded to the language in which it was framed. Mrs Stirans noted in that context the decision of Campbell J in Cho v Park [2016] NSWSC 871 in which his Honour refused an application to have a claim transferred from the Local Court to the Supreme Court on the basis that declaratory relief was sought. Justice Campbell said at [8]:

‘By and large I am of the view that most of what is sought by way of declaration and rectification is really in the category of a conceit and that the real remedy sought in respect of such matters is a monetary sum, whether it is called damages, contribution or restitution. Those latter remedies are available within the usual monetary jurisdiction of a local court.’”

43. Her Honour also referred, in [40], to the reliance placed by Ms Stirans on what had been said in Ji v Firth [2013] NSWSC 186 at [30] that, “stripped of the unnecessary claims for equitable relief, and the reliance upon breach of fiduciary duty”, the Local Court would have had jurisdiction to hear a claim for overpayment of legal fees as a claim for monies had and received.

44. The dispositive paragraph of her Honour’s reasoning was [41]:

“The primary claim in the present case, at least in closing submissions, was that Mr Iannella had retained the cash he withdrew from the account for his own benefit. However, that case had not been squarely pleaded or put in cross-examination. It is unsurprising, having regard to the way in which the case was conducted, that the Magistrate did not make that finding. The alternative case was framed, unnecessarily and inappropriately, in terms that combined notions of equitable duty and a simple common money count. I am satisfied that the substance of the alternative claim was a common money count and that that was, in substance, the basis for the relief granted. Ground 6 is not made out.”

Mr Iannella’s second appeal to this Court

45. Mr Iannella, by summons dated 9 December 2019, sought leave to appeal from that judgment. His appeal is pursuant to s 101 of the Supreme Court Act 1970 (NSW), but requires leave, because the amount in issue is significantly less than the $100,000 threshold in s 101(2)(r). Costs, even costs the subject of the Local Court judgment, do not contribute to the $100,000 threshold: Condensing Vaporisers Aust Pty Ltd v FDC Construction & Fitout Pty Ltd (No 2) [2014] NSWCA 89. In light of the history of the matter, the application for leave was heard concurrently with the appeal, and the Court had the benefit of full submissions going both as to leave, and on the merits.

46. On the question of leave, Mr Iannella was permitted, without objection, to read an updating affidavit sworn 9 March 2020 concerning his limited financial circumstances, ongoing health issues and (which is of particular pertinence) the costs which he says have been incurred. In addition to the Local Court judgment sum of principal and interest he says that he faces legal costs of $50,000 to his own lawyers and about $50,000 to the respondent’s lawyers. It was not suggested by the respondent that those estimates were wildly inaccurate. It will be noticed that both sides’ costs vastly exceed the amount at stake. This evidence was put forward in order to demonstrate the level of injustice to Mr Iannella, in his particular personal circumstances, if there were not a grant of leave.

47. Mr Iannella said it was not possible to proceed to a common law kernel of the equitable claims adjudicated in the Local Court, in the approach adopted by the primary judge. He submitted, rightly, that the primary judge erred in relying on Ji v Firth and Cho v Park [2016] NSWSC 871. The former was an elaborately pleaded claim commenced in the Supreme Court, which had been compromised for a small amount, and there was a question as to the costs which should be ordered. It is not authority for an approach of considering the substance of the claim in the Local Court; Campbell J had merely said that a simpler claim could have been litigated in the Local Court. In Cho v Park, proceedings were in fact transferred from the Local Court into the Supreme Court, and his Honour’s statements about the relief sought by way of declaration and rectification were obiter, and ultimately did not stand in the way of the matter being transferred.

48. But the substance of what was put forward in the Local Court was a “money claim” – defined in s 29A to mean “a claim for recovery of any debt, demand or damages (whether liquidated or unliquidated)” – for the $57,600 withdrawn by Mr Iannella. The pleading was confused, but it embraced a money claim for the return of the amounts withdrawn. The gravamen of the alternative case which Ms Stirans was permitted to run in the Local Court was that if, contrary to the primary case, the Local Court was not prepared to find that Mr Iannella had kept the entirety of the $57,600 for himself, and was in fact paying some of her bills and giving some of the withdrawals to her or spending them at her direction, then it could nonetheless be comfortably satisfied that he had kept so much as represented a diminution of her funds over and above the pension payments. After all, he had accounted for none of those funds in any detail, and some of the transactions called for explanation. In particular, the transactions involving multiple withdrawals of amounts of $1,000 and $2,000, on the same days (5 March and 22 August) are very difficult to reconcile with Mr Iannella’s case. Ms Stiran’s actual expenditure prior to conferring authority on Mr Iannella was significantly less than the amounts withdrawn by him, and there was nothing to suggest that Ms Stirans’ expenses had increased in 2012 and 2013 from what they had been in 2011.

49. That is the case which appears to have been advanced in cross-examination, and may be seen as corresponding with the fallback case articulated in oral submissions. It may be assumed it was articulated in additional detail in the written submissions provided to the learned Magistrate, but these have not been made available to this Court. There is nothing to suggest that Mr Iannella sought to prevent Ms Stirans from advancing that fallback case.

50. Large parts of this litigation have been quite misconceived. The originating process in the Local Court was in large measure outside that Court’s jurisdiction. Ms Stirans was permitted during the hearing to expand her claim to include a breach of fiduciary duty, which was likewise outside that Court’s jurisdiction. Neither in his defence, nor at any stage during the trial, did Mr Iannella refer to the jurisdictional limitations upon the Local Court.

51. Moreover, although Mr Iannella maintained in his affidavit that he had paid the rates owing on Ms Stirans’ property, Ms Stirans tendered rate notices, including for the 2012 and 2013 years, with a view to establishing that in fact they had been paid by NSW Trustee & Guardian.

52. Mr Iannella’s draft notice of appeal seeks orders allowing the appeal, setting aside the judgment of the Common Law Division and in lieu thereof allowing the appeal from the Local Court, setting aside the judgment against him, and instead dismissing the proceedings against him. Those orders would only be available if his appeal to the Supreme Court had been successful and the inevitable outcome was judgment in his favour, so as to avoid a retrial. As the outcome of the proceedings depended upon credit findings with respect to, particularly, Mr Iannella, that result is not possible.

53. Mr King appeared in this Court, but not below. His primary submission was that there was a finding in his favour about Mr Iannella returning all the money he had withdrawn. That submission has already been rejected at [32]-[35] above.

54. Mr King’s fallback submission was that Mr Iannella had given sworn evidence that he handed over all of the amounts withdrawn to Ms Stirans, and “the only factual inference that can be drawn” accorded with that evidence.

“MEAGHER JA: He asserted that he paid rates; he would have been paying rates for the years 2012 and 2013.

KING: Yes, that’s right, your Honour. There’s no doubt that he did that.

LEEMING JA: When you say, Mr King, there’s no doubt that he did that, I had understood you to be saying that in the absence of any express finding by the magistrate, the only inference that can be drawn on the evidence is that all of the $57,000 your client withdrew was handed over in cash to the lady.

KING: That’s his sworn evidence, your Honour.”

55. It is true that Mr Iannella gave that evidence. But the case against him was that he had failed to account for the money he owed to Ms Stirans. The learned Magistrate rejected his evidence that the airconditioning was working. The pattern of withdrawals, including the multiple withdrawals of large amounts on the same day, is difficult to reconcile with his affidavit, and was not explained by him. And he was cross-examined on a basis which invited the Court to disbelieve his account.

56. For those reasons, we reject Mr King’s alternative submission that Mr Iannella was entitled to judgment in his favour based on his sworn evidence.

57. In the further alternative, the Court raised and Mr King embraced the possibility that there was an injustice warranting a grant of leave, arising from the unresolved serious allegation advanced by the respondent that Mr Iannella had misappropriated more than $57,000 of Ms Stirans’ funds, which the magistrate had not accepted but had also not rejected.

58. Although the Local Court judgment discloses numerous errors, many are attributable to the way the parties conducted the case. Given:

1. the fact that Ms Stirans has died;

2. the fact that Mr Iannella is elderly and unwell;

3. the fact that more than 8 years have passed since Ms Stirans gave Mr Iannella authority to operate her account;

4. the smallness of the amount in question; and

5. the magnitude of the costs both sides have incurred,

only if there were a very clear injustice would this Court order a new trial.

59. We do not consider that there is such injustice in the result which has been reached which warrants a grant of leave. There is no point of principle or general importance. Although the Local Court’s decision is replete with error, they are not errors which will be perpetuated in other cases, nor do they result in injustice to Mr Iannella. Aspects of Mr Iannella’s evidence were disbelieved by the learned Magistrate, and he did not give an explanation of the multiple withdrawals of thousands of dollars of Ms Stirans’ money on the same days.

60. Mr King accepted, properly, that he needed to establish a clear injustice in order to obtain a grant of leave. The hearing of this application proceeded on the basis that the grant or refusal of leave would turn on an assessment of the merits of the case. Looking at the merits of the case, we are unpersuaded that any sufficient case of injustice has been made out so as to warrant a grant of leave. That conclusion is informed by the merits of the case, and also the facts that the parties’ costs to date dwarf the amount at stake, and that if the appeal were allowed, there would need to be a retrial. The position is on all fours with what was said in Norfeld Pty Ltd v Amanda Lee Jones [2014] NSWCA 408 at [36]:

“In the present case there is no question of general principle or public importance. The monetary amount in issue, though approaching the threshold, is still relatively small and likely to be dwarfed by the overall costs if leave is granted and the appeal succeeds in giving rise to a re-trial. This is a matter that has already occupied considerable court time (four days’ hearing in the Local Court and a one day appeal in the Supreme Court after various interlocutory applications) and what is now sought, if leave were to be granted and the appeal successful, is a re-trial in the Local Court.”

61. In those circumstances, there should be a refusal of leave to appeal. We would not make any order as to costs, on the basis that the deficiencies which have beset this litigation are in part the consequence of the way in which Ms Stirans advanced her case in the Local Court.

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Decision last updated: 22 May 2020