Isaac v Benjamin

[2011] NSWSC 348

Supreme Court

New South Wales

Medium Neutral Citation:

Isaac v Benjamin [2011] NSWSC 348

Hearing dates:

4 March 2011

Decision date:

29 April 2011

Jurisdiction:

Common Law

Before:

Hislop J

Decision:

Amended summons dismissed.

Plaintiff to pay the defendant's costs

Catchwords:

Local court - appeal - contract - no question of law - appeal dismissed

Legislation Cited:

Local Court Act 2007

Cases Cited:

Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430
Mifsud v Campbell (1991) 21 NSWLR 725
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Azzopardi v Tasman UEB Industries Limited (1995) 4 NSWLR 139

Category:

Principal judgment

Parties:

Henrick Isaac (Plaintiff)
Joseph Benjamin (Defendant)

Representation:

Counsel:
K Andronos (Plaintiff)
R Francois (Defendant)
Counsel:
Demir Legal (Plaintiff)
Brown Wright Stein (Defendant)

File Number(s):

2010/237830

Judgment

Introduction

1. On 30 July 2009 the plaintiff filed a statement of claim in the Local Court claiming the sum of $33,355.17 as moneys loaned by the plaintiff to the defendant and not repaid by him. An alternative cause of action for money had and received (unjust enrichment) was also pleaded.

1. The defendant, in his defence, denied the claim and cross-claimed for $18,400.00 being the balance of an allegedly unpaid loan of $20,000.00 made by him to the plaintiff less a credit of $1,600.00 being bond money which the defendant had retained as part repayment of the loan.

1. The proceedings were heard by Magistrate Bradd. His Honour found verdicts for the defendant on the claim and cross-claim, the latter for $18,400.00.

1. The plaintiff has appealed from that decision. The appeal is limited to questions of law (s 39(1)) of the Local Court Act 2007). The plaintiff did not seek leave pursuant to s 40 of that Act.

1. There are four grounds of appeal. They are set out in the amended summons filed by leave at the hearing. The grounds are:

"1. The Magistrate failed to provide reasons or adequate reasons.

2. The Magistrate erred in law in finding a binding agreement between the plaintiff, the defendant and a third party, Mr Fudor Manso the terms of which required the plaintiff to provide legal services to them on the basis that he would personally indemnify them for costs if unsuccessful in the proceedings in which they were plaintiffs.

3. The Magistrate failed to consider the plaintiff's claim for unjust enrichment.

4. The Magistrate denied the plaintiff procedural fairness by:

(a) Rejecting the tender of evidence relevant to the existence of a costs agreement between the plaintiff, Mr Benjamin and Mr Manso, and

(b) Finding that the plaintiff's account was not credible for reasons which included that the plaintiff's demand for payment in April 2009 was motivated by a desperate need for money when such an allegation had not been put in the plaintiff in the course of the trial."

Background

1. At the relevant time the plaintiff was a litigation solicitor and a close friend of the defendant. There was a history of borrowing by the plaintiff from the defendant and vice versa.

1. The plaintiff had acted as solicitor for the defendant and his brother-in-law in litigation against the financier Perpetual Trustees Australia Limited ("Perpetual"). The litigation was unsuccessful and the defendant and his brother-in-law were ordered to pay costs of $62,000.00 to Perpetual. The defendant gave evidence the plaintiff agreed to act for him and his brother-in-law in the litigation on the basis that unless the proceedings were successful the plaintiff would pay all costs of the proceedings. The plaintiff denied any agreement to indemnity the defendant against costs.

1. It was common ground the defendant lent $20,000.00 to the plaintiff in 2004 to be used by the plaintiff to purchase an investment property. The loan was to be re-paid out of the proceeds of the sale of a property. The property was sold in January 2005. There was a dispute as to whether the loan had been repaid.

1. It was also common ground that in January 2005 the plaintiff paid $53,355.17 to the defendant by cheque from the proceeds of sale of a property. The plaintiff claimed the funds were in repayment of the $20,000.00 loan and that the balance was a loan to the defendant repayable within 12 months to enable the defendant to pay part of the costs owing to Perpetual in respect of the unsuccessful litigation. This was disputed. The defendant alleged that the plaintiff told him the $3,355.17 was rent owing to the defendant and that the balance of $50,000.00 was to be paid to Perpetual in respect of the costs ordered against the defendant and his brother-in-law but without Perpetual becoming aware that the source of the funds was the plaintiff.

The judgment

1. His Honour commenced his judgment by outlining the background and issues. He then, under the heading "Evidence" wrote:

"6. On 27/01/2005, Mr Benjamin sent an email to Mr Isaac. The email refers to: 'Your Cheque: $53,355.17 My cheque to you: $50,000 Amount left from cheque: $3,355.17 Your rent: $1,516 Foxtail: $35.91 Internet: $41.52 Total: $1,593.43 Amount left from cheque $3,355.17 - $1,593.43 = $1,761.74 Now you borrowed $20,000 Interest: 18.25 per year Principle + Interest = $20,000+3650 = $23,650 Monthly payment: 23,650/12 = $19,70.83 2 payments due now 1970*2 - $3941.67.

7. Mr Isaac sent a response as follows: - 'Okay, I will put it into your account. Could you email me your account details again

8. On 04/02/2005, Mr Benjamin sent Mr Isaac a further email titled 'Some new charges'. In the email, Mr Benjamin deducted the Amount left from the cheque $1761.74 from the 2 payments due $3941.67-$1,761.92 = $2,179.92. He then added charges for rent, Foxtail, and electricity due on 8 days being an amount of $1,648.91 and stated 'Due in 8 days: $3,828.83'.

9. Mr Isaac sent an email to Mr Benjamin a few hours later, where he stated: 'I have sent the cheque for $50K to Royal Guardian Solicitors. However, this cheque is for their legal costs.'

10. Mr Isaac agrees that he never rendered any invoice to Mr Benjamin or Mr Manso in relation to the proceedings against Perpetual, despite drafting affidavits for Mr Manso, and attending court for two days.

11. On 06/04/2005, Mr Benjamin sent an email to Mr Isaac stating: 'If you have any money this would be a very good time to make a payment for your loan'. Mr Isaac replied by email stating: 'I will see what I can do.'

12. On 20/04/2005, Mr Isaac sent an email to Mr Benjamin stating 'Can you calculate the rent and the bond and let me know if I owe you any money?' Mr Benjamin responded stating: 'Rent nil. Bond $1,400. Unfortunately I don't have the money to pay you as you know. We can subtract it from your loan $20,000+18.5% interest.'

13. Mr Isaac says he had a conversation with Mr Benjamin in 2004 where Mr Benjamin was concerned that Mr Manso and his wife would lose their house because Perpetuals costs in the 2002 proceedings had not been paid. He says that he agreed to loan Mr Benjamin $53,355.17 to pay the costs. A cheque drawn in favour of Perpetual in the sum of $50,000 is dated 01/02/05.

14. Mr Isaac says that in 2005, he argued with Mr Benjamin about whether he had repaid the $20,000 loan through the payment of the amount of $53,355.17.

15. Mr Isaac says he next met Mr Benjamin in 2007, where they both agreed to meet again talk about monies owed, however they did not do so. Later that year he sent an email to Mr Benjamin seeking a meeting, but it did not occur.

16. The next communication occurred in 28 April 2009 when Mr Isaac sent an email to Mr Benjamin, wherein he claimed that Mr Benjamin owed him $33,355.17.

17. Mr Isaac agrees that he paid Perpetual $12,000 towards the costs of the 2002 proceedings, and $9,000 towards the costs of the 2004 proceedings. He further agrees that he did not seek to recover from Mr Benjamin or Mr Manso the monies he paid towards the costs.

18. The following is an extract from the cross-examination of Mr Isaac:

Q What are the breaches of the Legal Profession Act in regulations that caused the Legal Services Commissioner to suspend your practicing certificate on 18 February 2010?

A I received some money which I was supposed to deposit in a trust account, and I deposit those moneys into my general account. From those funds I was supposed to pay a barrister some money and I did not pay him.

Q When did that occur?

A I think - I think early 2009.

19. In relation to the cheque for $50,000, Mr Benjamin says that he gave Mr Isaac a blank cheque. He says that Mr Isaac told him that he did not want Royal Guardian to know that he was making the payment. Mr Isaac agrees that he filled in the details prior to the cheque being signed by Mr. Benjamin."

1. His Honour then continued:

"20. The claim made by Mr Isaac is not credible for the following reasons:

Mr Isaac did not issue a costs agreement, nor did he prepare and send a tax invoice;

Mr Isaac did not contradict the claims made by Mr Benjamin in the emails after he received them.

Mr Isaac did not inform Mr Benjamin of his claim until 28/04/2009, more than four years after sending the cheque to Mr Benjamin.

Mr Isaac has not sought to obtain any money from Mr Manso for costs.

Mr Isaac had previously drawn two cheques in relation to costs, supporting the assertion of Mr Benjamin and Mr Manso about the financial arrangement with Mr Isaac.

The claim of Mr Isaac coincided with a defalcation of trust monies, indicating he was desperate for money at the time he made the claim.

21. Both Mr Benjamin and Mr Manso were credible witnesses.

Conclusion

22. Mr Isaac sent a cheque to Mr Benjamin, and then completed a cheque on the account of Mr Benjamin in payment of costs. He did so because he had agreed to pay any costs of the 2002 proceedings, but did not want Perpetual to know that he was paying the costs.

23. Mr Isaac has not made out his claim that Mr Benjamin has been unjustly enriched.

Cross-Claim

24. The parties agree that Mr Benjamin loaned Mr Isaac $20,000, upon certain terms. The evidence of Mr Isaac that he repaid the amount is not credible for the reasons mentioned in relation to the claim."

Consideration

Ground 1 - The Magistrate failed to provide reasons or adequate reasons.

1. The relevant principles are as follows:

(a) "It is well settled that a judge or magistrate at first instance in particular cases has an obligation to provide reasons for the judgment given" - Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 per Meagher JA at 441.

(b) "...the content of the reasons depends on the particular circumstances of the matter being considered by the court" ( Beale at 442). "...the content required of a statement of reasons is to be measured against the [time and costs] burden that the provision of reasons imposes on the judicial system" ( Beale at 444).

(c) "... it is an incident of judicial duty for the judge to consider all the evidence in the case. It is plainly unnecessary for a judge to refer to all the evidence led in the proceedings or to indicate which of it is accepted or rejected. The extent of the duty to record the evidence given and the findings made depend, as the duty to give reasons does, upon the circumstances of the individual case" ( Beale at 442) quoting Samuels JA in Mifsud v Campbell (1991) 21 NSWLR 725 at 728.

(d) "...a judge is bound to expose his reasoning in sufficient detail to enable a losing party to understand why they lost" ( Beale at 442).

(e) "It does not automatically follow that because the reasons for decision are inadequate then an appealable error has occurred. Examination of nearly any statement of reasons with a fine-tooth comb would throw up some inadequacies. Indeed, an appeal court will reserve any intervention to those situations in which it is left with no choice: where no reasons have been given in circumstances where there was an obligation to provide them and in circumstances where a statement of reasons is so inadequate as to constitute a miscarriage of justice. In other words, the statement of reasons must be looked at as a whole and the material inadequacies identified and considered". ( Beale at 444)

1. The plaintiff submitted "individually and cumulatively", the reasons relied upon by the magistrate did not adequately explain his decision. They did not provide anything but the most superficial and selective survey of the evidence, ignoring without comment evidence in Mr Isaac's favour and preferring an account which is so inherently implausible that it ought to have been treated with great suspicion.

1. His Honour referred to the background, the issues, the evidence and analysed the evidence in reaching his conclusion. The critical issue in this case was the credibility of the plaintiff, the defendant and Mr Manso. His Honour expressly held that the defendant and Mr Manso were credible witnesses. He expressly held the claim by the plaintiff was not credible. He expressly stated his reasons for his conclusion.

1. The parties analysed his Honour's stated reasons. The plaintiff's analysis largely consisted of a series of submissions that his Honour's reasoning was illogical. This provides no basis for an appeal. As Mason CJ observed in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 356:

"... at common law, according to Australian authorities, want of logic is not synonymous with error of law. So long as there is some basis for an inference - in other words, the particular inference is reasonably open - even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place."

1. This statement was accepted by Meagher JA in Beale at 446 as applicable to judicial hearings.

1. Essentially the decision turned on credibility issues. His Honour's findings were open to him and in my opinion clearly expressed. It cannot be said that the reasons are inadequate or such as to constitute a miscarriage of justice. This ground fails.

Ground 2 - The Magistrate erred in law in finding a binding agreement between the plaintiff, the defendant and a third party, Mr Fudor Manso the terms of which required the plaintiff to provide legal services to them on the basis that he would personally indemnify them for costs if unsuccessful in the proceedings in which they were plaintiffs.

1. In Azzopardi v Tasman UEB Industries Limited (1995) 4 NSWLR 139 Glass JA (with whom Samuels JA agreed) said:

"To say of a finding that it is perverse, that it is contrary to the overwhelming weight of the evidence, that it is against the evidence and the weight of the evidence, that it ignores the probative force of the evidence which is all one way or that no reasonable person could have made it, is to say the same thing in different ways. Upon proof that the finding of a jury is vitiated in this way, it will be set aside because it is wrong in fact. Since the Act does not allow this Court to correct errors of fact, any argument that the findings of a Workers Compensation Commission judge is vitiated in the same way discloses no error of law and will not constitute a valid ground of appeal. It is also pointless to submit that the reasoning by which the court arrived at a finding of fact was demonstrably unsound as this would not amount to an error of law."

See also Mason CJ in Australian Broadcasting Tribunal v Bond at 356.

1. The plaintiff submitted "the plaintiff does not contend that an error or law arises simply because there is a wrong finding of fact, although the findings of fact are wrong. The relevant error of law is that there is no evidence to support a finding that Mr Isaac undertook to indemnify Mr Benjamin against an order for costs".

1. A finding that there is no evidence can constitute an error of law - Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 356.

1. The defendant does not sue upon an indemnity in this case. Rather he resisted the plaintiff's claim that certain moneys were a loan. The evidence upon which the Magistrate could properly find that the disputed moneys were not a loan and the plaintiff had agreed to pay any adverse costs orders associated with the proceedings included:

(a) the defendant's evidence that the plaintiff, an experienced litigation solicitor said to him "Don't worry, if you don't win you don't have to pay anything". Such a statement to a lay person was to be construed in its literal terms. The plaintiff did not say, if you don't win you won't have to pay me. The defendant's construction was inherently plausible where the defendant was reluctant to be involved in litigation, had participated only for the benefit of Mr Manso and there was evidence that the plaintiff thought he was going to make millions from the litigation;

(b) the plaintiff paid adverse costs orders made against the defendant and Mr Manso;

(c) the emails between the parties in 2005 demonstrated the payments were not a loan as there was no demand for their repayment or protest as to the manner in which the moneys had been characterised in the emails.

1. In my opinion there was evidence to justify his Honour's conclusion. The attempt to argue that there was no evidence was essentially a thinly disguised attack upon the merits. This ground fails.

Ground 3 - The Magistrate failed to consider the plaintiff's claim for unjust enrichment.

1. His Honour dismissed the unjust enrichment claim in these words:

"Mr Isaac has not made out his claim that Mr Benjamin has been unjustly enriched."

1. The plaintiff submitted the "unjust enrichment claim received no analysis. If the Magistrate was not satisfied that Mr Isaac had a contractual right to reimbursement and was not satisfied that Mr Benjamin had made good his claim of a contractual indemnity (which Mr Isaac says was the only available finding on the evidence), his Honour was bound to consider Mr Isaac's claim for moneys paid by Mr Isaac for Mr Benjamin's benefit at his request ... The Magistrate clearly failed in his duty to give any reason for the pre-emptory dismissal of this claim".

1. However his Honour was satisfied that the defendant had made good his claim of a contractual indemnity. Accordingly the claim for unjust enrichment ceased to be a live issue and did not require analysis by his Honour. No error has been demonstrated.

Ground 4 - The Magistrate denied the plaintiff procedural fairness by (a) rejecting the tender of evidence relevant to the existence of a costs agreement between the plaintiff, Mr Benjamin and Mr Manso and (b) finding that the plaintiff's account was not credible for reasons which included that the plaintiff's demand for payment in April 2009 was motivated by a desperate need for money when such an allegation had not been put in the plaintiff in the course of the trial.

1. Ground 4(a) was withdrawn by the plaintiff at the hearing.

1. There was evidence that the plaintiff's Practising Certificate was suspended as a result of him depositing trust moneys into his general account in early 2009.

1. His Honour in assessing the credibility of the plaintiff's claim said:

"The claim of Mr Isaac coincided with the defalcation of trust moneys, indicating he was desperate for money at the time he made the claim."

1. The proposition that the plaintiff was in financial difficulty in 2009 was clearly put him in cross-examination where he was asked "You have come to this Court and concocted a story because in 2009 you ran into financial difficulties".

1. In the circumstances it was open to his Honour to infer the defalcation of trust moneys was evidence of financial difficulties experienced by the plaintiff in 2009. The alleged procedural unfairness has not been demonstrated.

Conclusion

1. The appeal should be dismissed with costs.

Orders

1. I make the following orders:

1. Amended summons dismissed.

2. The plaintiff to pay the defendant's costs.

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Decision last updated: 29 April 2011