Leiseboer v Phillips

[2023] NSWDC 247

District Court

New South Wales

Medium Neutral Citation:

Leiseboer v Phillips and Anor [2023] NSWDC 247

Hearing dates:

31 May 2023

Date of orders:

31 May 2023

Decision date:

31 May 2023

Jurisdiction:

Civil

Before:

R Newlinds SC DCJ

Decision:

1. The plaintiff’s claim is dismissed.

2. The plaintiff pay the first and second defendants’ costs of the proceedings (as agreed or assessed).

Catchwords:

CONTRACT – contract between family members

Category:

Principal judgment

Parties:

John Leiseboer (Plaintiff)
Wayne Richard Phillips (First Defendant)
Jo-Ann Christina Phillips (Second Defendant)

Representation:

Counsel:
Mr B Hemsworth (Plaintiff)

Solicitors:
Somerville Legal (Plaintiff)
(First and Second Defendants self represented)

File Number(s):

2022/207759

Publication restriction:

None

judgment:  EX TEMPORE

1. HIS HONOUR:  This is my judgment in proceedings number 2022/00207759.  I have decided, after hearing the evidence and submissions, to dismiss the plaintiff's claim.  My reasons are as follows.

2. This is a claim by the plaintiff against the second defendant, who is his daughter, and the first defendant, who is his son‑in‑law.  One really does not need to say more than that to identify that, firstly, this is a very sad case; but secondly, because it is a case about a contract ‑ and relevantly, an oral contract ‑ it is a case that involves me having to determine whether a series of conversations and text messages and other conduct, taken together, persuade me that a contractual relationship was embarked upon by the parties as alleged by the plaintiff.  The parties agree that by a written agreement dated 15 May 2020 the plaintiff agreed to lend to the first defendant, Mr Phillips $140,000, which Mr Phillips had an obligation to repay, at the earliest, five years after the date of the loan agreement. (The Agreement is at p 51 of the Court Book). It is attached to these revised reasons at Annexure “A”.

3. As I have said, Mr Phillips does not dispute that he is bound by the terms of that agreement.  His position is that it still stands, and essentially his defence to the claim for repayment of money is that it is premature, that the time for payment under the loan agreement has not fallen due.  The plaintiff would accept that, but for the alleged variation of the loan agreement pleaded in paragraph 6 of the statement of claim, where the plaintiff alleges in essence that on 20 January 2021 the parties either agreed to abandon that earlier loan agreement and to put in its place a new loan agreement, or to vary the original loan agreement.  It does not matter which because the effect would be the same; the upshot of which would be that the agreement became that there was a promise by both of the defendants that they would repay the $140,000 which was then outstanding in full within six months, and that from 1 February 2021 interest would be paid monthly in the sum of $350 to recompense the plaintiff for what the loan was costing him by not being in his offset loan account.

4. If there was such a variation to the agreement or new agreement, it is common ground that the time had come for repayment, and therefore the plaintiff would be entitled to judgment.  Which brings me to the issue at hand:  am I satisfied on the balance of probabilities that there was a variation or new loan agreement made on or about 20 January 2021 as alleged by the plaintiff?

5. What happened on 20 January 2021, according to everyone, is that there was a conversation; that it did involve discussions about early repayment of the loan.  It did involve discussions about a payment of $350 per month.  There is a dispute about whether that was characterised as interest or not, but there is no doubt there was a discussion about ongoing payments of $350 per month.  I know that must have been discussed because objectively payments did commence on or around 1 February 2021 at $350 a month, and they were paid for about 18 months ‑ the details do not matter ‑ until this dispute blew up, at which point they stopped.

6. The impression I formed of all of the witnesses in this case, which were the plaintiff and both defendants, is that they were all honest and doing their best to remember conversations between them, and in particular the 20 January conversation, which conversations would have involved some high emotion at the time.  And whilst it was put to the Phillips that they were lying in relation to their recollection of the conversation, I do not accept that; but that does not mean I think that the plaintiff was lying either.  I simply approach the matter upon the basis that I form the view that everyone has given their best recollection of what was said.  Based on the oral evidence I am satisfied that there was a discussion to the point about where Mrs Phillips said that $140,000 would be paid back earlier than the five years required by the loan agreement ‑ I find something to that effect was said, and I think Mrs Phillips as much as agreed with that in cross‑examination.  The question that vexes me for the purpose of deciding this case is:  am I satisfied that such a promise was said in a context so that, to a reasonable bystander, they would form the view that there was an intention by the parties that that conversation would form the basis of a new and different contractual relationship, that is, a relationship that could be sued upon at law?  And whilst I find the matter evenly balanced, the reasons I cannot get to that level of satisfaction are as follows.

7. Firstly, the parties did go to the trouble of setting out what I will call the original loan agreement in writing.  It is not drafted, it seems, by a law firm who might have been drafting a difficult commercial contract; but someone has gone to the trouble of drafting what is, to my mind, a pretty clear document which was obviously intended to have legal force.  The parties went to the trouble of signing that document in a formal way, which again satisfies me that if this case was about the contract recorded in that document, there would be no doubt in my mind that the parties intended to be contractually bound; notwithstanding the family relationship between them. It has long been recognised in the law of contract that whilst usually the question of whether parties intended to be legally bound by promises they make ‑ usually the answer to that question is that they do ‑ that there is an exception to that in family relationships because common human experience proves that often people within families make promises to each other where a reasonable bystander listening to the conversation might think to themselves, "Okay, that's been said but I don't think anyone really intends to go to Court over that promise".  So, that is my first reason, the very fact that the original agreement was formally recorded in writing, combined with the fact that the alleged variation or new agreement was not recorded in the same way, which is one of the points Mr Phillips made in his submissions.

8. Mr Hemsworth, who has presented the case for the plaintiff ‑ if I may say so, very efficiently and effectively and has put it at its highest ‑ has taken me through a series of email or Facebook communications and other correspondence between the parties and has pointed to statements within those documents which he says corroborate or are consistent with his client's version of events and also are consistent with me being satisfied that the arrangement, if it be a new arrangement, was intended to have contractual force.  I do not propose to go through those documents in detail in these reasons.  I think during the discussion between Mr Hemsworth and myself during his submissions, I teased out my reaction to most of those documents, which really boils down to this.  I think they can all be described as either equivocal on the question ‑ that is, they point in different directions ‑ but also they actually confirm to me the informal family relationship‑type arrangements that these discussions are about.  For example, the email at p 69 of the Court book where the plaintiff says, in what is an emotionally charged document, referring to the loan agreement, "As far as I'm concerned, the loan agreement still stands."  Mr Hemsworth submits that is evidence that is corroborative of the plaintiff’s case because his case is there was a loan agreement; it was the loan agreement as varied.  On the other hand, even though the Phillips did not say this, it is obviously open to them to say that is entirely consistent with their case, which of course is that there is a loan agreement but it is the earlier written loan agreement.  So, I find that document entirely neutral in relation to whose version of events assists.

9. If I then go to the document at p 70 of the Court Book, where the plaintiff says, "Wayne, would you please make arrangements to pay back the 140 loan; payment by the end of April 2022 would be appreciated". That was written in March 2022, which is some 18 months after the alleged variation where the money was meant, on the plaintiff’s case, to be paid in six months' time.  And then the response is, from Mr Phillips, "Wow, I guess you guys are taking things down a path of finality."  What is said against the Phillips by Mr Hemsworth is they do not at that point say, "What are you talking about?  We have another six years".  I can see the force in that.  But then again, against the plaintiff, he did not say in his request to be paid by April 2020, "By the way, can I just remind you that you're actually hopelessly in default of the agreement we made 18 months ago to pay this money within six months".  So, again I find that exchange, whilst it gives me an insight into the relationship between these people as it is going along, points too much in opposite directions to really help either side's case.

10. I then wanted to just use again as an example the document at p 76 of the Court Book, where the plaintiff said in April 2022, "Hi Wayne, I hope your claim with GJG is going well.  As it is now approaching the end of April I wanted to remind you that we're looking for repayment of the $140K by the end of the month."  Again, it was put on behalf of the plaintiff, that is consistent with the money being due; and it is.  But then again, it does not assert the varied agreement created an enforceable obligation.

11. The first assertion we get of the alleged variation is in the chain of emails that starts at p 78 and goes through to about p 82 of the Court Book.  Mr Hemsworth puts great weight on this passage of his client's email, which is halfway down p 80, where it is said by him, "Then the house in Batemans Bay was sold.  Loan purpose was complete, nice little profit - end of first loan."  Just pausing there.  As a matter of construction, I do not think that was the end of the first loan.  Whilst I can see in the original loan agreement ‑ the written one ‑ that there was a purpose, it is plain almost beyond doubt that if that purpose was not fulfilled, that was not an event that accelerated repayment, because the events that caused repayment are clearly spelled out.  The email then goes on:

"When we asked you for repayment at that point you/Jo-Ann asked if you could keep the money in the bank to help you obtaining a loan for the GJG house.  You set the expectation that you would have the bank loan and the house within six or so months of Jo-Ann starting work for GJG and that you'd pay back this (second) loan pretty quickly after that.  Things haven't gone to plan.  Six months has drawn out to, what, 12 months?  18 months?  In any case, I think it is now reasonable to expect repayment now."

12. The response from Mr Phillips, relevantly, commenced with, "What your saying regarding the loan in not incorrect [sic]”, but then goes on with an explanation as to why the money had not been repaid, which culminates in he did not have the money to repay it at that time.

13. I do accept the force of the submissions that are put by Mr Hemsworth in relation to that exchange, but of course, they again cut both ways, because what the plaintiff did not do was identify in his email with any sort of precision the case that is actually being run before me. What he asserts at that point was the expectation ‑ I dwell on the word "expectation" because he does not assert it was an agreement ‑ that the house would be sold "within six or so months of Jo-Ann starting work" and that the loan, the money, would be paid back "pretty quickly after that".  It is open to read the email as no more than an acceptance that an expectation had been created. Which takes me back to the heart of my reasons.  I find such an expectation was created in a conversation in January 2021.  I find the reason that expectation was created was for reasons Mrs Phillips explained in cross examination:  she wanted to avoid conflict with her father, and in any event, if they could they would repay the money not because they were going to stick to their legal position under the loan agreement but simply because her father asked her to.  I also find it was a pretty vague, emotionally charged conversation, which is why the plaintiff's version of it and the email at paragraph 80 is so lacking in conformity with the precise case that is now pleaded.

14. I am just not persuaded that whatever was said in the January conversation ‑ and accepting that it probably did create expectations in the plaintiff's mind ‑ was such that the parties intended such expectations to create a new regime of legal relations.  So, for those reasons, I have formed the view that the plaintiff's claim must be dismissed.

15. I should record, though, that it has been stated in open Court repeatedly by the Phillips that they accept that the original loan agreement is valid and enforceable.  I think they accept that at the five year point it would be open to the plaintiff to demand payment, and they accept that whatever that point in time is, they will have to repay the money.  They of course say that the moneys that have been paid in the interim should come off whatever is owing at that time as credits, which I think is the correct approach, and that no interest would run on the principal sum, which I also think is the correct result.

16. Mr and Mrs Phillips, I do not believe I have the power to ‑ but even if I did, I am not going to order that you be recompensed for your expenses in coming here or the wages that you say you have lost.  Whether you can get expenses in coming here will be a matter for a costs assessor, who will work out how much costs you are entitled to.  I would like to think that, having gone through this exercise, the question of the costs consequence of this case could be sorted out between the parties by discussion.  But if they cannot be, you will have to go off and go through a formal process of assessment; I do not do that.

17. My orders will be:

1. The plaintiff’s claim is dismissed.

2. The plaintiff pay the first and second defendants’ costs of the proceedings (as agreed or assessed).

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Decision last updated: 10 July 2023