Indigo Financial Money Pty Ltd v Bolivar Road Pty Ltd (No 2) - [2011] SASCFC 39

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
INDIGO FINANCIAL MONEY PTY LTD & ANOR v BOLIVAR ROAD PTY LTD & ORS (No 2)
[2011] SASCFC 39
Judgment of The Full Court
(The Honourable Justice Bleby, The Honourable Justice Gray and The Honourable Justice Kelly)
29 April 2011
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT - REOPENING APPEAL
Application to reopen the hearing of an appeal before the Full Court - where the Full Court dismissed an appeal from a decision of a trial judge dismissing civil claims involving alleged undocumented agreements relating to property development projects, including advancement of certain moneys as loans and alleged representations with respect to the guarantee of debts - where order dismissing the appeal had been perfected by sealing - where basis of application to reopen the hearing of the appeal that the Full Court misapprehended three facts said to be material to the dismissal of the appeal.
Held: decline to reopen the appeal - no misapprehension of fact on the part of the Full Court.
Indigo Financial Money Pty Ltd v Bolivar Road Pty Ltd (2010) 108 SASR 120; McAdam v Robertson (1999) 73 SASR 360; Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256; Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300; Byrnes v Kendle (No 2) [2010] SADC 64; Aktas v Westpac Banking Corporation Limited & Anor (No 2) (2010) 85 ALJR 302; Indigo Financial Money Pty Ltd & Anor v Bolivar Road Pty Ltd & Ors [2009] SASC 373, considered.

INDIGO FINANCIAL MONEY PTY LTD & ANOR v BOLIVAR ROAD PTY LTD & ORS (No 2)
[2011] SASCFC 39
Full Court: Bleby, Gray and Kelly JJ
THE COURT:

This is an application to reopen the hearing of an appeal before the Full Court.
Introduction
On 27 August 2010 this Court dismissed an appeal from the decision of the trial Judge in the within proceedings.[1] The order dismissing the appeal has been perfected by sealing. On 13 September 2010, the applicant, one of the plaintiffs at trial, made application to reopen the hearing of the appeal complaining that this Court had misapprehended three facts which were said to be material to the dismissal of the appeal. We decline to reopen the appeal. Our reasons follow.
[1] Indigo Financial Money Pty Ltd v Bolivar Road Pty Ltd (2010) 108 SASR 120.
Jurisdiction
The jurisdiction to reopen a judgment yet to be perfected was addressed in McAdam v Robertson,[2] where Doyle CJ summarised the High Court’s treatment of the power to reopen in Smith v New South Wales Bar Association (No 2)[3] and in Autodesk Inc v Dyason (No 2),[4] before observing:[5]
I therefore proceed on the basis that, the judgment not having been drawn up, the Full Court may review its decision. The power is to be exercised with great caution. The reasons for that are obvious. There is a strong public interest in the finality of litigation. Once a stage in the process of litigation has been completed, ordinarily it should not be revisited. Our system of adversary litigation, with the obligation that it imposes upon the parties to present their whole case and to present their best case, would begin to collapse if courts too readily entertained applications to reopen decisions given after a full hearing. The power can be exercised if some important principle of law has been overlooked, or if there is an apparent misapprehension as to a significant fact, but this is to be distinguished from enabling a party to attempt to persuade a court that it should change its view of a matter that it has considered and decided.
[2]    McAdam v Robertson (1999) 73 SASR 360 at [21]-[40] (Doyle CJ with whom Bleby and Martin JJ agreed).
[3]    Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256 (Brennan, Dawson, Toohey and Gaudron JJ).
[4]    Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300.
[5]    McAdam v Robertson (1999) 73 SASR 360 at [39].
In Byrnes v Kendle (No 2)[6] Doyle CJ, with whom Nyland and Vanstone JJ agreed, adopted and applied the reasons in McAdam v Robertson and went on to consider the power of the Court to reopen a matter where the order of the Court had been sealed. Doyle CJ observed:[7]
[6]    Byrnes v Kendle (No 2) [2010] SASC 64.
[7]    Byrnes v Kendle (No 2) [2010] SASC 64 at [8]-[10].
In Copping v ANZ McCaughan Ltd (1997) 67 SASR 525 Lander J said at 567-569 that r 84.12 of the now revoked Supreme Court Rules 1987 (SA) empowers the Court to set aside a sealed order, with a view to hearing submissions on the substance of the appeal, or an aspect of the substance of the appeal. I agreed with his reasons at 526. It was not necessary for the Court to decide the point, and Bollen J expressed no view on the matter.
In Glenmont Investments Pty Ltd v O’Loughlin (No 6) [2001] SASC 287 this Court proceeded on the basis that Copping was correctly decided, but again found it unnecessary to decide the point: at [17].
I am prepared to assume, without deciding, that Copping is correctly decided, and that the decision applies to r 242 of the Supreme Court Civil Rules 2006 (SA). Rule 242 relevantly provides:
242    Power to correct, vary or set aside judgment
(1)     The Court may correct an error in a judgment at any time.
(2)     If satisfied that the justice of a case so requires, the Court may—
(a)     vary a judgment; or
(b)     set aside a judgment and reopen an action.
Example -
The Court might set aside a judgment and reopen an action if satisfied that the judgment is vitiated by a mistake.
…
Doyle CJ then set out the following observations of Mason CJ and Brennan J in Autodesk[8] as providing relevant guidance in the exercise of the power to set aside a judgment.[9] Mason CJ remarked:[10]
These examples indicate that the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law. As this Court is a final court of appeal, there is no reason for it to confine the exercise of its jurisdiction in a way that would inhibit its capacity to rectify what it perceives to be an apparent error arising from some miscarriage in its judgment. However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases.
Brennan J similarly observed:[11]
…Here the ground on which the appeal was determined had been argued in the courts below and had been the subject of submissions in this Court. The appeal was determined after it was fully heard. That being so, I find no jurisdiction to set aside the judgment already pronounced merely because it is submitted by the unsuccessful party that, on further argument, the Court would be satisfied that it had reached the wrong conclusion in law. …
The observations of Mason CJ, although made while dissenting in the result of Autodesk, have recently been affirmed by the High Court.[12]
[8] Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300.
[9] Byrnes v Kendle (No 2) [2010] SASC 64 at [12] adopting Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300.
[10] Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 at 302-303.
[11] Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 at 309.
[12] Aktas v Westpac Banking Corporation Limited & Anor (No 2) (2010) 85 ALJR 302 (French CJ, Gummow and Hayne JJ).
It is in accordance with the above observations that we approach the present application.
The Application
The applicant seeks to reopen the appeal on the basis that this Court proceeded on a material misapprehension of fact in three respects. To understand the submissions advanced, it is necessary to briefly summarise some of the history of the matter. When this has been done, it is apparent to our minds that there has been no misapprehension of fact. The application did no more than attempt to reargue the appeal.
The case of the appellants at trial was that Walid Najjar and Bolivar Road Pty Ltd had guaranteed the repayment to Indigo Financial Money Pty Ltd of $950,000.00, being a debt allegedly owed by Mr Najjar and Bolivar Road. The Director of Indigo Financial, John Tsoulos, gave evidence that money was “not owed by Rateki [Pty Ltd] and 74 Commercial Road [Pty Ltd]”.
The trial Judge rejected Mr Tsoulos’ evidence and, contrary to the plaintiff’s case, concluded that on the evidence led at trial, she was prepared to find that a personal guarantee had been given by Mr Najjar with respect to what were referred to collectively as “the Rateki loans”:[13]
In finding that Najjar did offer a personal guarantee at the La Trattoria meeting, I place reliance on the evidence of Kentish, who attended the meeting. Whilst a director, shareholder and employee of Indigo, Kentish was a step removed from Najjar, Papastamatis, Tsoulos and Koutsouvelis. Unlike the other Indigo directors, he did not appear to have had a prior social or professional relationship with Najjar, such as to affect his business judgement. I note that, consistent with Najjar’s evidence, Kentish did not say that Najjar told those present that there was, or was to be, any security over the Burton land. Rather, the essence of the statement of Najjar, as Kentish reported it, was that he was personally guaranteeing repayment of the Rateki loans, and that repayment would be made in about June or July of that year, when the blocks of land started to sell (or settle).
…
However, I do not find that such a personal guarantee of the Rateki debt made at the La Trattoria meeting was enforceable. The guarantee was not given in response to a threat to sue or take other action. I refer to my earlier observations about this topic when dealing with the Tsoulos advance. I find that the offer of a personal guarantee of the Rateki debt is unenforceable because of a want of consideration.
[13] Indigo Financial Money Pty Ltd & Anor v Bolivar Road Pty Ltd & Ors [2009] SASC 373, at 168, 171.
It is apparent that the expression the “Rateki loans” had its genesis in two separate written agreements - a loan of $350,000.00 by Domain Funding Pty Ltd to Rateki apparently made on 11 April 2006, and a loan of $150,000.00 by Domain Funding to 74 Commercial Road apparently made on 20 October 2006.
At the time of the meeting between the parties in September 2007, both loans were in default and there had been no payment of any interest or repayment of capital under the loans.
The terms of both the original loan agreements provided that, in the event of default of monthly payments of interest, those payments in default be capitalised with compounding effect. The interest payable under the loan to Rateki in the event of default was $35,000.00 per month. This represented a simple interest rate 120 per cent annually or of the order of 10 per cent per month.
The interest payable under the 74 Commercial Road loan in the event of default was $30,000.00 per month. This represents a simple interest rate of 240 per cent annually and a monthly interest rate of 20 per cent.
Such interest rates have a relevance to the genuineness of the transactions and could be characterised as pernicious, and could be expected to attract possible remedies for a borrower in such circumstances. These matters were not raised or explored at trial.
In some ill-defined manner, an agreement was reached some time in 2007 purportedly for Domain Funding to assign these loans in radically reconstructed terms, to Indigo Financial. The reconstruction appears to have involved a substantial rewriting, possibly a unilateral rewriting, of both loans. The evidence does not establish if or how this may have been effected.
It was asserted on the appeal that as of September 2006, the outstanding indebtedness on the two loans were merged initially into the one amount of $1,100,000.00, which was then reduced to $950,000.00. At one point during the appeal it was suggested that there be an apportionment of the loan to Rateki - $350,000.00 with $1.25 million interest - giving rise to a total indebtedness of $770,000.00, and the 74 Commercial Road loan - $350,000.00 and $420,000.00 interest – to an indebtedness of $240,000.00 being $150,000.00 and $90,000.00 interest. By this means a total of $1,100,000.00 would be arrived at. The amount would then be reduced proportionately to leave a total “Rateki debt” of $950,000.00. It was further asserted that the interest rate aggregated under the assigned debt was reduced to a rate of 6.75 per cent. The reduced rate was said to apply to the total of $950,000.00. There was no evidence to explain how the indebtedness, as set out, had occurred.
There was no evidence that either Rateki or 74 Commercial Road, the debtor companies, agreed to such a reconstruction or amalgamation. There was no evidence that the debtor companies even received notice of any such reconstruction or amalgamation.
Evidence before the trial Judge about the arrangements between Domain Funding and the debtor companies was entirely unsatisfactory. What does appear to be the case, however, is that Mr Najjar, a principal of Domain Funding, was conducting some form of joint property development with Agostino De Angelis, a principal of both Rateki and 74 Commercial Road. It is apparent that both companies were in severe financial difficulties. One was left to speculate as to what, if any, understandings or side arrangements may have been in place between Mr Najjar and Mr De Angelis. It may be observed that the overall circumstances of both loan agreements would suggest that the transactions were not genuine commercial transactions. The interest changes called for an explanation. That explanation was not forthcoming.
Documents tendered in evidence suggested that Mr Tsoulos, on behalf of Indigo Financial, had instructed solicitors to draw a deed of assignment of debts owing to Domain Funding by Rateki and 74 Commercial Road, from Domain Funding to Indigo Financial. Deeds of assignment were prepared but not executed. Apparently, no notice of the deeds was given to Rateki Pty Ltd or 74 Commercial Road Pty Ltd. It is relevant to note that the deeds simply purport to assign the indebtedness under the two agreements and contain no revision of interest payments or interest rates or total indebtedness. Both Deeds contain the following confirmation to be signed by the debtor companies:
The Debtor confirms that:
(a)it is not entitled to raise any set-off, counterclaim or other right that may affect the right of the Assignee to recover the full amount of the Debt in accordance with its terms; and
(b) it has not previously received a notice of assignment of all or any part of the Debt.
To repeat our earlier observation, there was no evidence that any of these matters were raised or discussed with the debtor companies.
It is this reconstructed amount of $950,000.00 that was then referred to as the “Rateki debt” by those associated with Domain Funding and Indigo Financial
During the course of the appeal, counsel for the appellants could not explain how the figure of $950,000.00 had been arrived at or how it could be ascertained what portion of that amount related to each of the primary loans. Further, it was accepted by the appellant in the course of the appeal that Rateki had been placed in liquidation prior to Mr Najjar offering a personal guarantee. Counsel on the appeal accepted that in this respect, the personal guarantee could not be pursued. This conclusion was not challenged or put in issue on the reopening application.
On the hearing of the application to reopen, counsel could offer no further explanation or clarification on these questions. It was simply asserted repeatedly that Mr Najjar had provided a personal guarantee. The vagueness of the evidence on this topic precludes any finding being made about important, if not critical, matters. No conclusion could be reached as to what indebtedness may have been guaranteed in respect of Rateki or 74 Commercial Road.
On the hearing of the appeal, the appellants challenged the finding of the trial Judge that a personal guarantee was unenforceable because of want of consideration. It is to be noted that in the course of our earlier judgment, this submission was rejected.[14] The applicant seeks to reopen the appeal for further argument on the question of whether there was consideration for the guarantee, which consideration the trial Judge found had not been given. The issue is addressed in paragraphs [32] to [37] of our reasons for dismissing the appeal.
[14] Indigo Financial Money Pty Ltd v Bolivar Road Pty Ltd (2010) 108 SASR 120 at [33].
When accepting that a personal guarantee of what was described as the “Rateki debt” had been given by Mr Najjar, the trial Judge relied on the evidence of the witness Nathan Kentish, a director of Indigo Financial. The trial Judge found that this personal guarantee was given at a meeting in February 2008, but that the guarantee was unenforceable for want of consideration. The reasons of the trial Judge are as set out in our earlier judgment.[15]
[15] Indigo Financial Money Pty Ltd v Bolivar Road Pty Ltd (2010) 108 SASR 120 at [32].
It is apparent that the trial Judge was not prepared to find that the guarantor, Mr Najjar, had made a request of Indigo Financial that there be a forbearance to sue or any other indulgence. The trial Judge also declined to find that a promise not to sue had been made. Our earlier reasons set out at some length the trial Judge’s conclusions in regard to the credibility of the principal witnesses at the trial and in particular, the trial Judge’s observations about Mr Kentish. As we there observed:[16]
The complaint on appeal was that the Judge failed to give full effect to the evidence of Kentish. It was said that his evidence provided powerful support for many of the allegations advanced by Tsoulos and Indigo Financial at trial. In our view, this reads too much into the Judge’s conclusions concerning the evidence of Kentish. A careful reading of the Judge’s reasons demonstrates that each of the findings with respect to the evidence of Kentish is restricted to the particular matter then under discussion. The Judge stopped short of a general acceptance of Kentish’s evidence. The reasons extracted above demonstrate the care with which the Judge made use of the evidence of Kentish. The Judge was not bound to accept all of his evidence and was entitled to use his evidence in the way that has been explained in her reasons for judgment.
[Emphasis added]
[16] Indigo Financial Money Pty Ltd v Bolivar Road Pty Ltd (2010) 108 SASR 120 at [25].
The trial Judge observed in her reasons:[17]
…But in this case there is no evidence that Najjar made such a request, or that Tsoulos threatened, or, at that time, even contemplated, legal proceedings. This is reinforced by the fact that there is no evidence that he ever instructed Lumley or Patsouris to draw documents reflecting the arrangement he had with Domain PL and Najjar with respect to his personal advance. His inaction falls short of providing consideration for a guarantee, even if one were given at the investors’ meeting.
[17] Indigo Financial Money Pty Ltd & Anor v Bolivar Road Pty Ltd & Ors [2009] SASC 373 at [139].

The applicant seeks to reargue this issue, by re-agitating issues canvassed on the hearing of the appeal. We do not consider that this is a proper matter to be reargued under the guise of the present application.
In our earlier reasons, we addressed the responsibilities of an appeal court reviewing findings of fact by a trial Judge. The trial Judge was not prepared to draw the inferences that would allow the conclusion to be reached that the personal guarantee was given for consideration. This was a course open to the trial Judge.
We do not consider that there has been any misapprehension of fact on our part.
It was next submitted by the applicant on the application to reopen, that this Court had misunderstood admissions made and the evidence led concerning an assignment of debts said to be the subject of the guarantee. This topic has been discussed above. There was no misapprehension of fact for the reasons discussed above. This submission fails to recognise or address the import our earlier reasons.
The applicant further complained on the application to reopen about the following paragraph of our earlier reasons:[18]
On the hearing of the appeal, counsel for Indigo Financial and Tsoulos sought to argue that a portion of the Rateki debt related to moneys advanced to a different entity. The evidence on this topic was vague and did not allow any clear finding to be made, either at trial or on the appeal. Further, there was no evidence of there being any assignment effected between Domain Funding and Indigo Financial or of any agreement to such an assignment by Rateki or any other debtor of Domain Funding.
[18] Indigo Financial Money Pty Ltd v Bolivar Road Pty Ltd (2010) 108 SASR 120 at [36].
It was submitted that it was admitted and proved that 74 Commercial Road was one of the borrowers comprised within the phrase “Rateki debt”. The difficulty with this submission is that, as noted in our earlier reasons for judgment, the nature of the “Rateki debt” of $950,000.00, was at the least obscure.
Our review of the evidence in the light of the discussion on the hearing of the application has confirmed our view that the history of the so called “Rateki debt” of $950,000.00 was and remains both incomplete and obscure. The evidence does not allow any satisfactory explanation of the circumstances surrounding this debt. Counsel was unable to proffer any meaningful explanation. As discussed above, it appears that moneys were advanced to support real estate developments that were in financial difficulties. The loans to support those developments were usurious. Once default occurred, compounding interest at extortionate rates operated. By some process, these alleged debts were reconstructed to form the one total indebtedness of $950,000.00. It is unclear as to the extent of the indebtedness of either debtor.
We do not consider that there has been any misapprehension of fact, material or otherwise on our part.
Conclusion
The application is dismissed.