Jovanovic v Magri
[2017] VSCA 373
•14 December 2017
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2017 0034
| JELENA JOVANOVIC | Applicant |
| v | |
| KEVIN MAGRI | Respondent |
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| JUDGES: | WHELAN, PRIEST and McLEISH JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 14 November 2017 |
| DATE OF JUDGMENT: | 14 December 2017 |
| MEDIUM NEUTRAL CITATION: | [2017] VSCA 373 |
| JUDGMENT APPEALED FROM: | [2016] VCC 1480 (Judge Anderson) |
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APPEAL – Appellate review of findings of fact – Finding that parties lacked credibility – Inferences drawn from established facts – Whether test in Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679 applies to inferences – Advance of monies to purchase unit – Newly commenced intimate relationship – Whether monies advanced as loan or gift –Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679; Fox v Percy (2003) 214 CLR 118 considered – Appeal dismissed.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr D J Farrands with Ms D Foong | |
| For the Respondent | Mr S W Stuckey | Wisewould Mahoney |
WHELAN JA
PRIEST JA
McLEISH JA:
The applicant Jelena Jovanovic purchased and renovated a unit in Surfers Paradise on the Gold Coast, Queensland in 2015. All the funds required for its purchase and renovation were paid by the respondent Kevin Magri. They had met a few months earlier and a relationship had developed. The central issue at trial was whether Mr Magri advanced the funds by way of loan or as a gift. He said that he was just helping a friend and that the payments were a loan. She said that they were much closer than friends and that the amounts in question were a gift.[1]
[1]Magri v Jovanovic [2016] VCC 1480 [1]–[3] (‘Reasons’).
Mr Magri sued in the County Court for recovery of the alleged loan monies. He was substantially successful. The trial judge found that, although the parties were in a closer relationship than Mr Magri had claimed, the payments he made to purchase the unit, but not for its renovation, constituted a loan to Ms Jovanovic. As no agreement had been reached between the parties as to the terms of repayment, the total amount was payable on demand.[2] Ms Jovanovic now seeks leave to appeal against that decision.
[2]Ibid [53]–[57].
For the reasons that follow, leave to appeal should be granted but the appeal should be dismissed.
Factual background
In early March 2015, the parties met and formed a relationship, which the judge found was ‘more than friendship’.[3] When they first met, the applicant told the respondent of her ‘dream’ to buy a unit on the Gold Coast and to live and work there. Shortly afterwards, the respondent suggested that they travel to the Gold Coast together so that the applicant could look at apartments with a view to purchasing one.
[3]Ibid [19].
On 22 April 2015, a lending organisation called Hippo Home Loans sent an email to the applicant with what appeared to be a response to an enquiry by the applicant about its mortgage pre-approval process. The applicant gave evidence that this was only advertising material unconnected with any application by her. The respondent said that she told him that she had approached Hippo Home Loans to inquire about the possibility of a loan.
The respondent encouraged the applicant to look for a unit on the Gold Coast. He told her that he could advance up to $300,000 for the purchase from his own resources.
On 3 May 2015, the parties travelled to the Gold Coast together and looked at a number of units. On the same day, which was the applicant’s birthday, she posted on Facebook a statement to the following effect: ‘My miracle 31st birthday 300 [thousand] / 48 [hours to pick a unit]’.[4]
[4]Ibid [26]. The original was partly in Serbian.
On 5 May 2015, the applicant agreed to purchase interlocking units 1707 and 1708, comprising Lot 1709, 25 Laycock Street, Surfers Paradise (collectively the ‘Unit’), for a purchase price of $235,000 with a deposit of $11,750. The same day, before a purchase contract for the Unit had been signed, the respondent and the applicant attended the offices of Ms Kristina Jukic who acted as the applicant’s solicitor for the purchase.
The applicant and Ms Jukic gave evidence that the respondent introduced himself as the applicant’s boyfriend and that, during the meeting, the applicant told Ms Jukic that the respondent was purchasing the Unit for her as a birthday present. On one view of the evidence, the applicant and Ms Jukic were at that point speaking in Serbian, which the respondent did not understand.
Also on 5 May 2015, the applicant and the seller’s agent signed a disclosure statement regarding body corporate matters relating to the Unit. The respondent witnessed the applicant’s signature.
Either later that day or on 6 May 2015, the applicant signed a written contract dated 6 May 2015 for the purchase of the Unit. The respondent paid the deposit of $11,750 on 6 May 2015. He gave evidence that he did so after the applicant told him that her home loan had not yet been approved and she asked him to pay the deposit.
On 22 May 2015, the respondent paid a further sum of $234,323.32, being the balance of the purchase price and costs to settle the purchase of the Unit. The Unit was transferred into the name of the applicant alone. The respondent gave evidence that he had asked the applicant about the home loan and she had said that it had not been approved; she had asked him to write the cheque for the balance so that she did not lose her deposit.
The applicant gave evidence that, when the apartment was about to ‘happen’, she had asked the respondent what would happen to the apartment if the two of them did not ‘end up together’ and that he had responded that she did not need to go back to work, the apartment would go to her child and she and her child were ‘settled’.
No documents were prepared by or between the respondent and the applicant recording the character of the sums paid by the respondent as either loans or gifts to the applicant. No security was sought by the respondent in respect of the sums paid and none was provided.
Between June and October 2015, the respondent paid further sums to renovate the Unit. These sums were paid either directly by the respondent to the applicant or by the respondent allowing the applicant to use his credit card. The judge found that there was insufficient evidence that these amounts were advanced as loans.
By November 2015, the relationship between the parties had unravelled. On 17 November 2015, the respondent lodged a caveat over the Unit, asserting an equitable interest on the basis that the applicant held the property on a bare trust for the respondent.
In January 2016, the respondent commenced a proceeding against the applicant in the County Court. Pleadings were exchanged, during which time the applicant was represented. Before the trial, however, the applicant’s solicitor ceased acting for her and she was unrepresented at the trial.
By his amended statement of claim, the respondent sought declarations that the applicant held the property on either a resulting trust or a constructive trust for the respondent and that she was required to account to him for its rental income. Alternatively, he sought damages in the amount of the purchase price. As mentioned earlier, he also sought recovery of amounts subsequently paid, by way of damages for debt.
A six-day trial took place in early October 2016 and judgment was delivered on 26 October 2016. The trial judge concluded that the payments made to purchase the Unit comprised a loan from the respondent to the applicant, and ordered that the applicant pay to the respondent the sum of $246,073.32 together with interest in the amount of $17,436.92. The judge rejected the claim that a resulting or constructing trust had arisen. That finding is not now challenged.
Reasons of trial judge
The trial judge found that each witness who gave oral evidence, including the applicant and the respondent, lacked credibility.[5] As a result, he stated that he had accepted oral evidence only after considering whether it was supported by contemporaneous documents and the chronology of events.[6] Ms Jukic gave her evidence by affidavit and was not cross-examined.
[5]Reasons [15].
[6]Ibid [7]–[14].
The trial judge set out the evidence adduced at the trial,[7] found that the onus of proof was on the respondent as plaintiff,[8] and then made the following findings:[9]
[7]Ibid [17]–[46].
[8]Ibid [47]–[48].
[9]Ibid [49].
a.I accept that Mr Magri and Ms Jovanovic had a relationship which was closer than Mr Magri and other witnesses suggested. There is no dispute that Mr Magri was prepared to advance substantial sums to Ms Jovanovic (he said, his ‘life savings’) within a short time after they established a friendship. In addition, Mr Magri entrusted Ms Jovanovic with his credit cards, not only to use for the renovations to the unit but also for private expenses. This generosity went far beyond the loans he had made to Ms Strechovich, Ms Marenjak and, in the initial stages of their relationship, to Ms Jovanovic;
b.I accept, from the Facebook post made by Ms Jovanovic on 3 May 2015, that it is likely Mr Magri encouraged Ms Jovanovic to look for a unit to purchase on the Gold Coast and had set a limit of $300,000 as the amount he would advance for the purchase from his own resources. I consider, however, that this conclusion is not inconsistent with Mr Magri being prepared to advance the purchase price by way of a loan rather than as a gift;
c.I accept that Ms Jovanovic had, prior to going to the Gold Coast with a view to purchasing a unit, made enquiries from Home Hippo with a view to obtaining finance for the purchase. The wording of the email to Ms Jovanovic from HomeHippo.com dated 22 April 2015 does not simply suggest the forwarding of marketing material. Accordingly, the evidence of Mr Magri that Ms Jovanovic showed him the email on her phone might be accepted as indicating that Ms Jovanovic was only seeking short term finance from Mr Magri until her own borrowings were in place;
d.I do not accept Ms Jovanovic’s evidence that Mr Magri offered her the purchase price of the unit as security for her and her son in the future, if the relationship with Mr Magri did not result in marriage or [was not] to be for the long term. This suggestion only came late in the hearing and was never put to Mr Magri during cross-examination. It also seems inconsistent with the evidence of Ms Jovanovic about the closeness of the relationship and their discussions about their future together as a couple and family unit;
e.the evidence of Ms Jovanovic, supported by the affidavit of Ms Jukic and correspondence from Hasl Haus, that Mr Magri presented as Ms Jovanovic’s husband, partner or boyfriend provides some support for the closeness of the relationship suggested by Ms Jovanovic, but no real assistance in determining the basis upon which the purchase price for the unit was advanced by Mr Magri;
f.I accept that Mr Magri had some familiarity with the purchase of real estate, as a property owner himself. The settlement of the purchase of the unit was effected very quickly — the contract of sale is dated 6 May and settlement occurred on 22 May. It is likely, as Ms Jovanovic suggested and from the presence of Mr Magri at the initial discussions with the estate agent and solicitor, that he was fully aware of what was required to settle the purchase and, from a very early stage, had been prepared to take the necessary steps to facilitate the settlement;
g.I do not accept Mr Magri’s evidence that he had reservations when he advanced the balance of the purchase money and sought to protect himself by providing a cheque in his name, so that there would be a record if something went wrong. This evidence makes little sense as it is difficult to see how Mr Magri might have paid such a substantial sum without the payment being traced back to him as the source of funds. If he had reservations, there were other simpler and more effective ways of recording the payment as a loan and not a gift.
The trial judge found that the length of the parties’ relationship, the limited evidence that the relationship would lead to marriage or something similar, and the respondent’s history of making loans to female friends all tended to make it unlikely that the Unit was a gift to the applicant.[10]
[10]Ibid [51].
On the other hand, the judge found that some of the evidence made it less likely that the amounts were advanced as a loan. In particular:[11]
[11]Ibid [52].
· No adequate record was made of the advance of substantial sums of money.
· It was not clear how the respondent anticipated that the advances would be repaid given that it was ‘obvious that Ms Jovanovic had no money’.
· The respondent had initially claimed that the Unit was to be transferred to him at settlement, whereas it was uncontested that the applicant was to be the sole purchaser on the contract.
The judge concluded that the advances made in respect of the purchase of the Unit were a loan and not a gift, stating that he was ‘primarily persuaded’ by the evidence that the applicant had approached Hippo Home Loans and the likelihood she told the respondent that she had done so.[12]
[12]Ibid [53]–[54].
The trial judge distinguished the sums paid for the purchase of the Unit from those paid for the renovation of the Unit or other purposes. He found that the respondent had authorised those later payments at a time when it appeared he knew that the applicant ‘had no money herself and had no intention and no real means of borrowing money for purposes related to the [Unit]’. He was not satisfied on the balance of probabilities that those advances were ever to be repaid.[13]
[13]Ibid [55], [57]–[58].
The parties’ submissions
The applicant’s proposed ground of appeal is that:
The trial judge erred by concluding that the monies advanced by the respondent to meet the purchase monies for the Unit purchased by the applicant were loans and that the purchase of the Unit was not a gift.
In broad terms, the applicant submitted that the weight of the evidence at trial had supported her contention that the payments were by way of gift, or that the Unit itself was a gift, and that the respondent had not met the onus of proving the loan he alleged. The respondent accepted that he bore the onus of proving the loan but submitted that the findings of the trial judge were open on the evidence and that the Court should not interfere with those findings unless they were inconsistent with established facts or glaringly improbable,[14] or the trial judge had failed to use (or had misused) his advantage in observing the witnesses giving evidence.[15]
[14]Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679, 686–7 [43] (French CJ, Bell, Keane, Nettle and Gordon JJ) (‘Robinson Helicopter’); Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326, 353–4 (Samuels JA).
[15]SS Hontestroom v SS Sagaporack [1927] AC 37, 47, quoted in Abalos v Australian Postal Commission (1990) 171 CLR 167, 178–9; Aqua-Max Pty Ltd v MT Associates Pty Ltd (2001) 3 VR 473, 483–4 [63].
Counsel for the applicant responded that he was not submitting that the findings were not open, nor was he challenging findings of fact. The applicant’s case was that the finding that there was a loan was a conclusion of law, or mixed fact and law, that was against the weight of the evidence.
There were six strands to the applicant’s argument. First, she submitted that the trial judge failed to give sufficient weight to the unchallenged evidence of the applicant’s solicitor Ms Jukic that the applicant had advised her on 5 May 2015 that the respondent was purchasing the Unit for her as a birthday present.
It appeared to have not been in issue until shortly before the hearing of the application before us that the conversation between Ms Jukic and the applicant referred to in Ms Jukic’s affidavit was conducted in Serbian, which the respondent did not understand. The trial judge gave the respondent the opportunity to object to the tendering of this affidavit but he did not do so. As already mentioned, the respondent declined to cross-examine Ms Jukic and her affidavit was admitted into evidence. The applicant submitted that this evidence of her conversation with Ms Jukic was consistent with her Facebook post made two days earlier.
During oral argument in this Court, the applicant submitted that the meeting on 5 May 2015 was not conducted in Serbian, but in English, and that Serbian was spoken only at a later meeting at which the contract was signed. Alternatively, the applicant submitted that Ms Jukic had not been cross-examined and so it could not be concluded that part of the conversation had not been able to be understood by the respondent.
The respondent submitted that the applicant’s statement to Ms Jukic that the Unit was a birthday gift was self-serving hearsay and not evidence as to the truth of the statement. The statement could not be taken as an admission on the respondent’s part. No inferences could be drawn from the respondent’s silence in response to the statement because the applicant and Ms Jukic were speaking in Serbian at the time and the respondent could not understand what was being said.
Secondly, the applicant submitted that the trial judge did not give enough weight to the length and strength of the relationship between the parties, which was sufficient to ground an inference that the respondent had given the Unit to her as a gift. That was particularly so given the trial judge’s finding that the parties were in ‘more than a casual friendship’ and in light of the evidence at trial of their conduct as a couple.[16]
[16]Reasons [45].
The respondent submitted that the length and strength of the parties’ relationship worked against the applicant’s case, particularly given that the Unit was bought within two months of their first meeting. The respondent submitted that it was objectively unlikely that he would have agreed to give away what he described as his ‘life savings’ to a person he had known for only a short period. The respondent also submitted that if the parties were contemplating marriage, as the applicant maintained, that would tell against the Unit being purchased in the applicant’s name alone.
Thirdly, the applicant submitted that the trial judge gave too much weight to the respondent’s history of making loans to friends. It was submitted that the other loans were smaller, of a different character and for different purposes.
The respondent submitted that the trial judge placed no undue weight or reliance on this evidence, but took it into account appropriately along with the other evidence. It was relevant that the respondent’s generosity in the past had taken the form of loans.
Fourthly, the applicant submitted that the trial judge placed too much weight on his findings that the applicant had approached Hippo Home Loans for a loan for the purchase of an apartment, and that she had told the respondent that she had done so. The applicant submitted that the email she received from Hippo Home Loans, which gave rise to the judge’s finding that she had approached them for a loan, was dated two weeks before the parties’ trip to the Gold Coast and therefore before she had looked at or chosen to purchase the Unit. Further, she submitted, the email itself indicated that no application process had begun and there was no other evidence of any communication between her and Hippo Home Loans. A subpoena served by the respondent on Needsmart Pty Ltd (trading as Hippo Home Loans) on 1 September 2016 had produced no documents at all. The applicant further submitted that the trial judge should not have given much weight to his finding that the applicant told the respondent about her approach to Hippo Home Loans because the respondent knew, as the trial judge found, that the applicant had no money, was ill and could not work or had only irregular employment. She submitted that the trial judge should have found that the respondent knew she would not be able to obtain a loan from Hippo Home Loans.
The respondent submitted that the correct inference to be drawn from the existence of the email from Hippo Home Loans was that the applicant had given Hippo Home Loans her name and email address because she wished to obtain a home loan. He submitted that the email lent support to his account that she was already pursuing the purchase of a unit before the parties’ trip to the Gold Coast. The respondent further submitted that the lack of evidence of any subsequent communications between the applicant and Hippo Home Loans was not relevant, since no evidence was led as to Hippo Home Loans’ document retention policy, and the applicant may simply have not pursued the possibility of a loan with Hippo Home Loans or ignored any communications from them once she had induced the respondent to supply the necessary funds.
Fifthly, the applicant submitted that the trial judge failed to give sufficient weight to the following matters, which were said to have been consistent with the respondent having given her the funds to purchase the Unit:
(a) evidence as to the intimate nature of the relationship between the parties;
(b) the respondent’s failure to follow up on the home loan application which he said the applicant had told him about;
(c) the absence of any documentation evidencing the loan alleged by the respondent;
(d) the absence of any explanation why the respondent did not seek security for the alleged loan or fix a date for repayment;
(e) the respondent’s failure to lodge a caveat over the Unit’s title until after the relationship between the parties broke down;
(f) the fact that the caveat was not lodged to secure a loan but rather to secure equitable rights allegedly arising from a bare trust, or a pooling of assets;
(g) a handwritten note, alleged by the applicant to have been written by the respondent, which she said acknowledged that she was the sole owner of the Unit; and
(h) the inconsistency the trial judge found between the respondent’s contentions, on the one hand, that the applicant was to transfer the Unit to him at settlement and, on the other, that the sums were paid as a loan to the applicant.
The respondent submitted that the trial judge correctly considered all the relevant evidence and came to the right conclusion. The respondent further submitted that, on either party’s version, he had acted unwisely without regard to his own interests, but that the lack of any loan documentation did not indicate that there was no loan. Further, the respondent submitted that his lodging of a caveat over title to the Unit demonstrated that there came a point where he did seek to protect his interests.
Sixthly, the applicant submitted that the trial judge’s finding that the advances for the purchase of the Unit were a loan was inconsistent with his finding that the other sums paid by the respondent to the applicant were gifts. The trial judge’s main reason for the latter finding, that the applicant had no money with which to repay these amounts, was said to apply equally to the purchase sums.
The respondent submitted that the trial judge had not positively found that the other amounts paid by the respondent were gifts, only that the respondent had not discharged the onus of proving that they were loans. As such, there was no inconsistency in the trial judge’s findings.
Analysis
The issue in the proposed appeal, and the issue relevantly before the trial judge, was whether the evidence sustained the respondent’s contention that he had advanced the moneys to the applicant by way of loan. That was a conclusion to be reached, in the ordinary way, by weighing the probabilities based upon all the evidence.
In the course of undertaking that exercise, the judge made some express findings of fact, to which reference has been made above. He did not specifically accept or reject the evidence of either party as to the circumstances in which the advances were made. However, he concluded that both parties ‘intended’ that the advances were by way of loan rather than gift and that they were to be repaid at some stage in the future unless the respondent decided to forgive the loans.[17] As noted, that conclusion rested primarily on the evidence that the applicant had approached Hippo Home Loans and the ‘likelihood’ that she had told the respondent about that approach.[18]
[17]Ibid [53].
[18]Ibid [54].
Inherent in that conclusion and those reasons are several findings or inferences as to factual matters:
(a) the applicant approached Hippo Home Loans about the possibility of a home loan;
(b) she told the respondent about that approach; and
(c) the respondent provided funds to the applicant at her request, when she required funds by way of deposit and at settlement and had not received a positive response from Hippo Home Loans.
By implication, the judge did not accept the evidence of the applicant to the effect that the respondent had used words of gift. The judge indicated that the length of the relationship, the limited independent evidence that it would lead to marriage or some similar arrangement, and the respondent’s history of making loans in smaller amounts to female friends in need, all made this unlikely.[19]
[19]Ibid [51].
Based on these various findings and inferences, the judge drew the critical inference that both parties intended that the payments were by way of loan rather than gift. While the applicant sought to characterise the ground of appeal as taking issue with the legal consequence of the factual conclusions, rather than the conclusions themselves, in truth the applicant can only succeed if that critical inference of fact is displaced. The legal conclusion depends upon, and follows inexorably from, that inference.
The respondent was therefore correct to draw attention to the authorities concerned with appellate review of findings and inferences of fact.
The High Court restated the law in this area in Robinson Helicopter:[20]
A court of appeal conducting an appeal by way of rehearing is bound to conduct a ‘real review’[21] of the evidence given at first instance and of the judge’s reasons for judgment to determine whether the judge has erred in fact or law. If the court of appeal concludes that the judge has erred in fact, it is required to make its own findings of fact and to formulate its own reasoning based on those findings.[22] But a court of appeal should not interfere with a judge’s findings of fact unless they are demonstrated to be wrong by ‘incontrovertible facts or uncontested testimony’,[23] or they are ‘glaringly improbable’ or ‘contrary to compelling inferences’.[24]
[20](2016) 90 ALJR 679, 686–7 [43] (French CJ, Bell, Keane, Nettle and Gordon JJ).
[21]Fox v Percy (2003) 214 CLR 118, 126 [25] (Gleeson CJ, Gummow and Kirby JJ).
[22]Devries v Australian National Railways Commission (1993) 177 CLR 472, 479–81 (Deane and Dawson JJ); Fox v Percy (2003) 214 CLR 118, 128 [29] (Gleeson CJ, Gummow and Kirby JJ); Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357, 381 [76] (Heydon, Crennan and Bell JJ) (‘Miller & Associates Insurance Broking’).
[23]Fox v Percy (2003) 214 CLR 118, 128 [28] (Gleeson CJ, Gummow and Kirby JJ).
[24]Ibid 128 [29] (Gleeson CJ, Gummow and Kirby JJ). See also Miller & Associates Insurance Broking (2010) 241 CLR 357, 381 [76] (Heydon, Crennan and Bell JJ).
In conducting the ‘real review’ required of it, this Court must bear in mind that it has not seen or heard the witnesses and must respect the advantages that this gave the trial judge. However, the Court cannot rely on this consideration as a basis for avoiding conducting the necessary review. Moreover, when it comes to drawing inferences from established facts, the appellate court is in just as good a position as a trial judge to do so. As the majority explained in Fox v Percy:[25]
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,[26] 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.
[25](2003) 214 CLR 118, 126–7 [25] (Gleeson CJ, Gummow and Kirby JJ) (citations omitted).
[26](1979) 142 CLR 531, 551 (Gibbs ACJ, Jacobs and Murphy JJ).
The majority in Fox v Percy continued:[27]
[T]he mere fact that a trial judge necessarily reached a conclusion favouring the witnesses of one party over those of another does not, and cannot, prevent the performance by a court of appeal of the functions imposed on it by statute. In particular cases incontrovertible facts or uncontested testimony will demonstrate that the trial judge’s conclusions are erroneous, even when they appear to be, or are stated to be, based on credibility findings.
… In some, quite rare, cases, although the facts fall short of being ‘incontrovertible’, an appellate conclusion may be reached that the decision at trial is ‘glaringly improbable’ or ‘contrary to compelling inferences’ in the case. In such circumstances, the appellate court is not relieved of its statutory functions by the fact that the trial judge has, expressly or implicitly, reached a conclusion influenced by an opinion concerning the credibility of witnesses. In such a case, making all due allowances for the advantages available to the trial judge, the appellate court must ‘not shrink from giving effect to’ its own conclusion.
[27](2003) 214 CLR 118, 128 [28]–[29] (Gleeson CJ, Gummow and Kirby JJ) (citations omitted).
Subsequent decisions have revealed two interpretations of the High Court’s reasons in Robinson Helicopter. On one view, the appellate court when conducting its review must disturb a judge’s conclusion of fact only if satisfied that the judge had erred by reference to ‘incontrovertible facts or uncontested testimony’, or that the judge’s conclusion was ‘glaringly improbable’ or ‘contrary to compelling inferences’. On this view, these tests apply both in the case of primary findings of fact and inferences drawn from those facts.[28] That is because the High Court spoke in general terms about errors of fact and because authorities to which it referred, including Fox v Percy itself, were cases about inferences.[29] On this approach, the ‘real review’ that is required to be conducted makes due allowance for the advantages enjoyed by the trial judge but does not ‘shrink’ from substituting its own view where error is shown according to the identified tests. In that regard, while it may be in as good a position as the trial judge to draw inferences, the appellate court is still concerned with the identification of clear error on the part of the trial judge.
[28]See, eg, Melbourne City Investments Pty Ltd v UGL Ltd [2017] VSCA 128 [90], [105]–[106]; Food and Beverage Australia Ltd v Andrews [2017] VSCA 258 [95]; Stevens v Spotless Management Services Pty Ltd [2016] VSCA 299 [131].
[29]Fox v Percy (2003) 214 CLR 118, 131 [40] (Gleeson CJ, Gummow and Kirby JJ).
On an alternative view, the High Court’s references to the above tests are to be read as applying only to the review of findings of fact and not inferences drawn from those facts. That is because Robinson Helicopter was about a finding of fact and the reasons do not displace the authorities since Warren v Coombes establishing that an appellate court is in as good a position as a trial judge when it comes to drawing inferences from undisputed facts and facts established upon disputed evidence.[30] The appellate court is then reaching its own conclusion rather than deciding whether there was any error made by the trial judge (beyond drawing the impugned conclusion).
[30]See, in particular, Springfield v Duncombe [2017] NSWCA 137 [13]–[20] (Basten JA); see also Southern Colour (Vic) Pty Ltd v Parr [2017] VSCA 301 [78]–[79], quoted in He v Huang [2017] VSCA 349 [44].
In the present matter the parties did not address any argument as to which of these two interpretations is correct, although the respondent submitted that the applicant must show that the judge’s conclusion that both parties intended a loan was wrong by reference to ‘incontrovertible facts or uncontested testimony’, or was ‘glaringly improbable’ or ‘contrary to compelling inferences’. The different understandings of Robinson Helicopter show that, to the extent that the conclusion involved or amounted to an inference of fact, that approach might be open to question.[31] In the absence of argument, it is preferable not to decide the point. In the circumstances, we propose to proceed on the basis that the Robinson Helicopter test need not be satisfied in relation to inferences of fact. Rather, we shall consider whether the judge’s conclusion that both parties intended a loan was correct, based on the judge’s findings of fact and the other evidence.
[31]The distinction between findings of fact and inferences drawn from them is not necessarily readily drawn. The interrelationship between findings and inferences was described in Box Hill Institute of TAFE v Johnson [2015] VSCA 245 [37]; see also Louth v Diprose (1992) 175 CLR 621, 635 (Deane J).
In any event, it may be accepted that, because that conclusion rested on inferences from established facts and because the credibility of the witnesses ultimately played little role in the judge’s reasoning (their evidence having been found generally unsatisfactory), the conclusion is based substantially on the objective evidence and this Court is in as good a position as the trial judge to draw its own conclusions from that evidence. That is so, notwithstanding that, as in an undue influence case, the judge undoubtedly enjoyed a considerable advantage in evaluating the characters of the primary parties.[32] In the end, that advantage does not seem to have significantly influenced the judge’s findings.
[32]Louth v Diprose (1992) 175 CLR 621, 626 (Mason CJ), 633 (Deane J), 640 (Dawson, Gaudron and McHugh JJ).
It is then convenient to turn to the six challenges advanced by the applicant.
The first matter concerns the evidence of Ms Jukic to the effect that the applicant told her in the presence of the respondent that he was purchasing the Unit for her as a birthday present. Counsel for the applicant invited us to conclude that this statement was made in English. That submission needed to deal with the following evidence of the respondent:
Where did you go to purchase the property?---We went to O’Reilly’s office, and Jelena and Justina [sic] started talking, and they started talking in Serbian, and I just sat there like an idiot, and the both of them were talking in Serbian, or Croatian, or a dialect I don’t know, but I didn’t understand it at all. Not one — occasionally she would stop and say something, and I didn’t understand a word she said.
Later, when being cross-examined by the applicant, the respondent gave the following further evidence:
Yes, when I was signing the contract?---Yes. When you were signing the contract you and Kristina Jukic spent the whole conversation in Serbian or in your language, I didn’t have a clue what you were saying. I did not have a clue what you were talking about. The arrangement was already done that if your home loan wasn’t approved by then, that the home loan was going to be approved and when it wasn’t approved - - -
Counsel for the applicant submitted that the evidence showed that the meeting which was conducted in Serbian took place when the contract was being signed, which (since the contract was dated 6 May 2015) was the day after the meeting described by Ms Jukic. He pointed out that Ms Jukic gave evidence that the applicant told her that the contract was being prepared by another firm of solicitors and that she would be signing it after the meeting. It was said that there were therefore clearly two meetings, a day apart, and the respondent’s evidence went to the second of those meetings. Further, the respondent gave evidence that the applicant had told him ‘through Kristina Jukic’ to put the deposit under his name. It was submitted that this showed that the conversation regarding payment of the deposit had been conducted in English.
The best that can be said of this evidence is that it is clear that at some point in the discussions involving Ms Jukic the conversation was conducted in a language the respondent did not understand. The fact that the contract was signed subsequent to the first meeting does not ultimately assist in determining which parts of that meeting were conducted in English and which were not. The respondent gave evidence that the applicant and Ms Jukic spoke in a language he did not understand both when they went to Ms Jukic’s office and when the applicant was signing the contract.[33] Whether or not they were separate occasions, this encompasses the meeting about which Ms Jukic gave evidence.
[33]The evidence regarding the ‘signing’ could also be taken to refer to the signing of the disclosure statement on 5 May 2015, which appears to have happened at or soon after the meeting with Ms Jukic: see [10] above.
In the circumstances, the evidence of Ms Jukic that the applicant told her in the presence of the respondent that the Unit was to be a birthday gift must be of little if any weight. The significance of that evidence could lie only in the absence of any protest to the statement on the part of the respondent, giving rise to an implied admission. Given the respondent’s unchallenged evidence that at least part of that meeting was unintelligible to him, it is not possible to use the evidence in that way. Nothing turns on the fact that Ms Jukic was not cross-examined. She did not give evidence as to the language in which the relevant exchange was conducted, nor did she say that the respondent appeared to understand what was said. In fact, she confined herself to saying that she clarified to the respondent that the applicant was to be the sole owner of the Unit as his name would not be on the contract of sale as a purchaser and that he did not object.
The next issue is whether the judge gave inadequate weight to the length and strength of the relationship between the parties. In our opinion, there is no substance in this submission. Even accepting that the respondent described himself as the ‘boyfriend’ of the applicant, it is unusual for a person unconditionally to give their life savings to a person with whom they have been in a relationship for only two months. In any case, the evidence does not support the conclusion that the parties were contemplating marriage or had committed to a life together. On the applicant’s evidence, the respondent’s assurance that she and her child were ‘settled’ was given only after she asked him what would happen to the apartment if the two of them did not ‘end up together’.[34] As the respondent submitted, if the relationship had been as close as the applicant alleged, the much more likely course would have been for the Unit to have been acquired in their joint names.
[34]Reasons [34].
Thirdly, the judge gave weight to the respondent’s history of making loans to female friends. That conduct revealed a certain pattern of behaviour, albeit that the amounts in question on previous occasions were not comparable with that in this case. The respondent’s propensity to make loans to friends does not mean that he necessarily made a loan on this occasion. But it does sit rather uncomfortably with him now making a gift of a significantly larger amount, rather than a loan. Moreover, it may help to place in context his failure to document the transactions or to seek any security in respect of the payments he made. The history of prior loans is relevant at least in these ways.
Fourthly, the applicant took issue with the reliance the trial judge placed on the approach made by the applicant to Hippo Home Loans. It was submitted that the respondent knew that the applicant would not be able to repay any such loan. If anything, therefore, it was suggested that this knowledge indicated that the respondent must have appreciated that the applicant would never be successful in obtaining a home loan.
However, the fact that the applicant had made an approach in relation to obtaining a home loan and, as the judge found, had told the respondent about that approach tends to support the respondent’s evidence that she asked him to pay the deposit and the purchase price on the basis that she had not yet arranged finance with Hippo Home Loans. Moreover, the finding that the parties had discussed the possibility of the applicant obtaining finance is consistent with a conclusion that the respondent agreed to provide, in effect, bridging finance while that process was undertaken.
The applicant next relied on a number of factors which it was submitted pointed to there having been a gift. They have been set out earlier in these reasons.[35] Of course, the onus of proof rests on the respondent, as the plaintiff seeking to establish the loan. But none of the matters relied upon represents a reason for finding that that onus had not been discharged.
[35]See [39] above.
It is true that the relationship between the parties was of an intimate nature and that the respondent did not seek security for the loan which he alleged, or nominate a date for its repayment. It is also true that the respondent did not lodge a caveat until the relationship had broken down, and that when he did so he alleged a bare trust rather than security for a loan. Likewise, there was no documentation evidencing the alleged loan. However, it is clear that the respondent was not given to documenting financial transactions, whatever their legal complexion. It is also not in doubt that he intended to significantly assist the applicant in the purchase of the Unit while their relationship was on foot. It is not surprising that he did not lodge a caveat while that relationship continued. Nor, given that he had not stipulated for any security for the loan which he alleged, is it significant that the caveat did not refer to any loan. The matters relied on by the applicant do not significantly tell against the respondent’s case.
The applicant also placed reliance on a handwritten note which was said to be signed by the respondent and to constitute an acknowledgement on his part that the applicant was the sole owner of the Unit. The note read as follows:
I Kevin Magri
off [address] wish to finance off Gold Coast apartment in Mantra Legends Hotel to the sole owner of Jelena Jovanovich of [address]. Thank you.
But sole ownership is not inconsistent with an unsecured loan. More importantly, this note, far from confirming a gift, refers expressly to the respondent providing ‘finance’. In our opinion, even if the respondent signed the note (as to which the judge was unable to make a finding), it would favour the case of the respondent rather than the applicant.
As to the fact that the respondent also asserted that the applicant was supposed to transfer the Unit to him at settlement, inconsistently with the alleged loan, this was a matter going to the respondent’s credit. Since the trial judge regarded the respondent’s evidence as unsatisfactory in any event, and this Court proceeds on the same basis, this consideration does nothing to advance the applicant’s case.
It was finally suggested that the judge’s finding that the other sums paid by the respondent to the applicant were not loans was inconsistent with his finding that the sums that went towards the purchase of the Unit were a loan. However, as the judge pointed out, these other payments were made by the applicant in full knowledge of the fact that the applicant was not in a position to repay them. No question of finance by a third party was then in issue. Moreover, the sums were substantially lower. There is no inconsistency in the findings in those circumstances.
Having reviewed all the evidence that was placed before us and the detailed submissions advanced on behalf of the applicant, we have concluded that the judge was correct to find that the respondent had established that the amounts provided by him to the applicant for the purchase of the Unit were paid by way of loan. In the context of a budding relationship, it was not necessarily surprising that the parties proceeded on trust and that the transactions were not documented and no security was discussed. Given the nature of their relationship and the fact that the amounts were very substantial, all things being equal, it is more likely that the payments were made by way of loan rather than gift. But in any event, the applicant had already sought to pursue the possibility of finance to enable her to acquire an apartment. The respondent was aware of this and gave evidence that he stepped in when that finance had not yet been forthcoming. We would infer, as the judge did, that in the circumstances he did so by way of loan rather than as a gift.
For these reasons, while leave to appeal should be granted on the basis that the appeal was not fanciful,[36] the appeal should be dismissed.
[36]Supreme Court Act 1986, s 14C; Kennedy v Shire of Campaspe [2015] VSCA 47 [12].
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