Manos v Public Trustee No. Scgrg-97-1461 Judgment No. S6952

MANOS v PUBLIC TRUSTEE
[1998] SASC 6952

Magistrates Appeal: Civil

PERRY J. The appellant, who was the plaintiff in an action in the Civil Division of the Magistrates Court sitting at Adelaide, appeals against the dismissal of his claim following a trial before a magistrate.
The respondent, who was the defendant in the action, is Public Trustee for the State of South Australia. In the statement of claim, the appellant claims that Ray Tan (“Mr Tan”), an officer of the respondent, made certain misrepresentations which induced the appellant to take up a loan from the respondent on first mortgage security over certain properties owned by the appellant. It is not entirely clear from the statement of claim whether the appellant based his claim on the Misrepresentation Act or for negligent mis-statement or both. Be that as it may, his claim was for $11,025 plus interest, or alternatively, unspecified damages.
There were only two witnesses: the appellant, who appeared in person before the learned trial magistrate, and Mr Tan. The dismissal of the appellant’s claim followed a finding by the learned trial magistrate in which he accepted the denial by Mr Tan that he had made the alleged misrepresentations.

Background circumstances

In the latter part of 1990, the appellant, who gave his occupation as builder, wished to obtain some funds for future building projects. About three years beforehand, namely, in November 1987, he had obtained a mortgage loan of $200,000 from a company known as Members Mortgage Fund Pty Ltd, a division of CPS Credit Union (“the Credit Union loan”). That loan was for a term of three years, repayable in November 1990.
As the time for repayment of the Credit Union loan approached, the appellant looked over the market in an endeavour to see what might be available by way of a new loan to pay out his existing loan and at the same time to provide some further capital for his business.
One of the matters which was of concern to him was to decide whether to look for a long term or a short term loan. It was clear from his evidence that he used the expression “a long term loan” not in the ordinary commercial understanding of that expression, but in order to identify a loan of, say, three years as opposed to one year.
He approached a number of lending institutions and obtained details of interest rates and other terms and charges. In the course of doing so, he noticed an advertisement in a daily newspaper inserted by the defendant which read in part:

“MORTGAGE
FINANCE
Amounts from
$200,000
         to $2,000,000
         available
Enquiries to:
Mr Ray Tan
         Investment Manager
............”

In response to the advertisement, the appellant rang Mr Tan. Indeed, there were several telephone discussions between them over a short period of time, during the course of which the appellant looked to Mr Tan for some assistance in deciding whether to take up a one year or a three year loan. The appellant’s own view was that interest rates were going to fall, but his evidence was that, according to Mr Tan, they might fall in the “short term” but not in the “long term”.
At one stage Mr Tan faxed to the appellant a copy of an article which had appeared in the magazine Australian Business for 14 November 1990. The article was entitled A Crystal Ball on Interest Rates. Based on an analysis of the interest rate futures market, the author of the article predicted that short term interest rates “had further to fall, but are tipped to move up again after March ....”.
Mr Manos’s evidence in chief was in part:
“.... he (Mr Tan) was tending always to go with the three year rate because he was of the view that while they might come down in the short term, and was saying they were going to come down in the short term, then in the long term they would rise ...... The inference being very strongly I should take out a three year loan now otherwise if I didn’t, if I only took out a one year loan, then I would be stuck re-financing at a higher ..... interest rate at the end of that first year.”
His evidence as to the alleged misrepresentation was that after Mr Tan had sent the faxed copy of the Australian Business, on at least two or three occasions when the appellant discussed the matter with Mr Tan, the latter was alleged to have said:
“‘Well, we won’t be lowering our interest rates. .... That was the statement in the end which decided me to go with the three year loan.”
The appellant’s case was that on the basis of that representation the appellant took up an advance by way of loan from the respondent of $315,000 at a fixed rate of interest of 14.5% per annum for a fixed term of three years.[1] According to the appellant, to his surprise, during the first twelve months of the loan, contrary to what he asserted to have been the representation made by the respondent, the respondent’s three year interest rate had by October 1991 fallen to 12.75%.
[1] In fact the interest rate was expressed to be 15% per annum but subject to a rebate of 0.5% if the interest was paid promptly, quarterly in arrears.
He contacted Mr Tan and put to him the substance of what he asserted to have been the representation given. But according to him, Mr Tan emphatically denied that he “would have said” that “rates would not fall”. In the course of further discussions, Mr Tan offered to recast the loan for a further term of one year from then, that is, from towards the end of 1991, at an interest rate of 10% per annum.
The appellant eventually accepted this offer, at the same time increasing the amount of the advance from $315,000 to $420,000. Settlement of the new advance took place in January 1992. At that time, the appellant was debited with three months penalty interest in accordance with one of the terms upon which the initial advance had been made which provided for such a penalty in the event of premature discharge. The appellant had unsuccessfully asked the respondent to waive the payment of the penalty interest.
The amount of the three months penalty interest was $11,025, hence the appellant’s claim against the respondent for that amount.
In the course of his evidence, Mr Tan said:
“... it’s the policy of Public Trustee not to give advice to clients. We understand our liability in that respect and we always stress that ... the decision is the client’s whether to invest with us, and all we can say is, this is our rate of interest that we are charging.”
As for the article from the Australian Business magazine, Mr Tan said that he had mentioned to Mr Manos that he had read the article, and that if the latter was interested, he would be happy to send him a copy. He denied that he had expressed any opinion of his own as to the accuracy or otherwise of the predictions contained in the article.
He said that it would be ludicrous to suggest that he had made any statement to the effect that Public Trustee would not be dropping its rates for a term of three years. Later he said:
“No-one in their right mind can make such a statement that we will not be lowering our interest rate.”
I have not so far referred to the pleadings, but against the background of the items of evidence to which I have referred, it is relevant to have regard to the manner in which the appellant’s case was pleaded. The appellant pleaded in his statement of claim that Mr Tan had made two statements, namely:
“5.2.1... That he believed interest rates would not fall (“the first statement”)

and

5.2.2..... That the Public Trustee would not be lowering its interest rates (“second statement”).

The appellant went on to plead:

“7..... The second statement, in the context of the previous discussions about a three year loan to the plaintiff and in the context of the first statement, meant and was intended and/or calculated by Mr Tan to mean that:
7.1... There was in existence some decision or policy of the defendant to the effect that the defendant would not lower its interest rates during the next three years. (“the representation”); and
7.2 To express the confidence of the defendant in the opinion expressed by Mr Tan that any fall in interest rates in the next three years would be short term only, and that interest rates would increase or be higher for the majority of that period.”

The appellant pleaded further:

“12.2.... There were no grounds, or alternatively no sufficient grounds, for Mr Tan to make the second statement and or the representation.”

The trial judge’s findings

The critical issue is whether or not either of the statements as pleaded were made, and if they were, whether they amounted to a representation in the terms pleaded.
During the course of his reasons for judgment (which he reserved), the learned trial magistrate said:
“It is necessary to look at the alleged misrepresentations. Mr Manos said that he was of the opinion, at all relevant times, that interest rates would fall. Mr Tan’s opinion was that this might be the situation in the short term however, there would then again be an escalation. The two men differed on their respective opinions. On about 15 November 1990 Mr Tan apparently sent to Mr Manos an article (Exhibit P4) which Mr Tan said supported his view. At about that time Mr Tan said to Mr Manos, words to the effect, that it didn’t matter which way the market fluctuated as the Public Trustee would not be lowering is interest rates. The plaintiff said that this convinced him to then commit himself, to borrowing from the Public Trustee, at a certain rate of interest and for a period that was greatly in excess of the period that he originally desired.”

Subsequently he made the following observations:

“When Mr Tan gave evidence he did not deny that he could have said that the Public Trustee would not be lowering its interest rates. He said however that it was most likely that he would have said that they would not be lowering interest rates in the near future. It was put to him that, to maintain that interest rates would not be lowered for the complete term of three years which was Mr Manos’argument, was a further inducement by him to Mr Manos to have Mr Manos enter into the agreement. Mr Tan’s response to that was to say that it would be ludicrous for him to make such a statement. Although he didn’t particularly remember all of the conversations he denied that he would ever have made such a statement in any circumstances. That would have been not only because he was not authorised to make such a statement, but because of his experience, in the setting of interest rates, which meant that such a statement would be entirely contrary to his training and his knowledge. Mr Manos comprehensively cross examined Mr Tan and emphasised that Mr Tan’s memory was at leat selective. Mr Tan, candidly, did not resile from that but maintained his contention that he would not have made such statements and that Mr Manos possibly misunderstood what had been stated to him.
These proceedings have come to trial many years after the events and, not surprisingly, Mr Tan had a limited recollection of what occurred. On the other hand Mr Manos was careful enough to take notes of the various conversations that he had had with Mr Tan. These notes were produced at the hearing and Mr Manos gave evidence as to same. It must be remarked however, that the misrepresentations complained of were not recorded, by Mr Manos, as having been said at the time. His explanation for that was the comments were so important that he knew he’d never forget them.”

The learned trial magistrate then went on to make some observations as to what he considered to be the “relationship between the parties”. Although what he had to say about that aspect of the matter might be subject to some criticism, he returned to the question of the misrepresentations later in his judgment when he said:
“The alleged inducement was as I have set out above. Mr Manos said that he took this to be a statement as to the policy of the Public Trustee. Throughout his evidence Mr Manos made it clear that this statement was crucial to his decision. It had not only caused him to enter into the agreement but further influenced him to extend the agreement from the term that he originally wanted, that is from one year to three years. Although Mr Manos has submitted that Mr Tan really couldn’t comment on whether or not the statement was made, I do not regard that as being a genuine reflection of Mr Tan’s evidence. I understand his evidence to be that it is possible he made some statement that the Public Trustee did not intend to lower their interest rates in the near future. He went on to state that to indicate that for a lender to commit itself, to a static position for a term of three years, would be ludicrous. His comment was that no one, with financial training, would fix a rate for three years and give an absolute assurance as to same. A proposition was put to Mr Manos, by the Public Trustee’s counsel, that if interest rates had dropped and a lender had a policy that they were not going to drop rates, in accordance with the market, this would be most unbusinesslike behaviour. The response from the plaintiff was he didn’t know how the Public Trustee did their business. He expressed the opinion that may be Mr Tan wanted to induce some business. I find that these answers are an unsatisfactory appreciation of the Public Trustee’s position and, given my views on Mr Manos’ expertise which I set out above, then I find these statements mot unconvincing.
In all of the circumstances this will defeat Mr Manos’ claim.”
Although the learned trial magistrate might have expressed himself more clearly, it is plain that he rejected the assertion by Mr Manos that Mr Tan had given any assurance that interest rates would not in the long term fall, in favour of accepting Mr Tan’s evidence as to what the latter had said. It was, as the learned trial magistrate concluded, sufficient to defeat the appellant’s claim.

The case on appeal

In his notice of appeal, the appellant advances some thirteen grounds. They are:
The Special Magistrate was wrong in law by purporting to apply and rely on purported facts which did not exist at the time relevant to the issues before the Court.
The Special Magistrate was wrong in law in holding that there was or must be a difference between “information” and “advice” in considering whether or not a “relationship” existed between the plaintiff and the defendant.
The Special Magistrate was wrong in law and failed in his duty in so far as he failed to prevent the defendant’s counsel from putting impermissible questions and making impermissible statements on fundamental issues before the Court.
The Special Magistrate was wrong in law in adopting defence counsel’s impermissible and misleading questions and statements and the answers given in relation thereto.
The Special Magistrate misdirected himself on the law relating to “reliance” and did not take into account all the elements thereof.
The Special Magistrate failed to carry out his legal duty to analyse or to adequately analyse the evidence and failed in his duty to give reasons for accepting or rejecting evidence relevant to the issues before him.
The Special Magistrate has failed to use or has palpably misused his advantage of seeing and hearing the two witnesses, namely the plaintiff and the witness Tan.
The Special Magistrate was wrong in law in that he acted on evidence which was inconsistent with facts incontrovertibly established by the evidence.
The Special Magistrate was wrong in law in that he acted on evidence which was glaringly improbable.
The Special Magistrate was wrong in law in failing to give adequate reasons for his decision and in using general and imprecise terms.
The Special Magistrate has erred in not finding that the defendant assumed the duty to advise or knew or should have known that the plaintiff relied on or might rely upon any statements that were made.
The Special Magistrate erred in holding that the decision made by the plaintiff “was his own deliberate decision.
The Special Magistrate erred in holding that a relationship did not develop between the plaintiff and the defendant.
The appellant appeared in person on the hearing of the appeal. He submitted a written outline of his argument which he enlarged upon during the course of oral submissions. Given the restraints on time, I allowed the appellant to lodge further extensive written submissions as to matters which he suggested he did not have an opportunity to develop during the course of his oral presentation.
As to the grounds of appeal which attack the learned trial magistrate’s findings of fact, the appellant is confronted by the difficulty that the central finding of fact, namely, whether or not the alleged representation was made, turned largely upon the learned trial magistrate’s view of the credit of the appellant on the one hand and Mr Tan on the other. It has been made clear by a long line of authority binding on this Court, of which DeVries and Anor v Australian National Railways Commission and Anor [2] is but one example, that a finding of fact made by a trial judge ordinarily must stand unless it can he shown that the judge has failed to use or has palpably misused his advantage in seeing and hearing the witnesses, or has acted on evidence which was inconsistent with facts incontrovertibly established by the evidence, or which was glaringly improbable.
[2] (1992-3) 177 CLR 472.
It was clearly open for him to accept, in preference to the evidence of the appellant, the evidence of Mr Tan as to the critical issue. Mr Tan was a chartered accountant who had acquired a good deal of commercial experience. He was well aware of the methods used by Public Trustee to set interest rates, and of the fact that they were from time to time subject to fluctuation. Both the appellant and Mr Tan were in the witness box for a considerable time, and as I have indicated, were the only witnesses. A number of exhibits were tendered, but these were largely the formal documentation relating to the Credit Union loan and the two loans made to the appellant by the respondent. There was nothing in the written exhibits which could be regarded as having a significant bearing upon the essential issue in the case.
As to the assertion that the learned trial magistrate erred in law in allowing the respondent’s counsel to put impermissible questions and ask “misleading questions and statements”, on my close perusal of the transcript of the trial, I am unable to find any support for that complaint. The course of the trial and the nature of the questions on both sides, given that the appellant was unrepresented, was unexceptional.
Although the learned trial magistrate’s reasons might have been better expressed, and although I have some reservations as to his findings with respect to the question of reliance, those parts of the learned trial magistrate’s reasons as touch upon the essential question of credit between the appellant and Mr Tan and the findings of fact made in the wake of the learned trial magistrate’s view as to credit, do not lend any support to the appellant’s complaints in that regard.
Furthermore, given the wide ranging enquiries made by the appellant of a number of other potential lenders before he entered into the transaction in question, the finding by the learned trial magistrate that the appellant’s decision to borrow from the respondent was “his own deliberate decision”, “a commercial decision”, was fully justified by the evidence.
At the hearing of the appeal and in his written submissions, the appellant departed somewhat from the case as pleaded in the statement of claim, in that he submitted that the relevant misrepresentation was an assertion by Mr Tan, “Well, we won’t be lowering our interest rates” in the context of making a decision as to whether or not he should invest for twelve months or longer, and that the critical period was one year and not three years.
But insofar as the learned trial magistrate accepted that Mr Tan might have made a statement to the effect that Public Trustee “did not intend to lower their interest rates in the near future”, there is nothing to suggest that the interest rates were in fact lowered by Public Trustee at a date so proximate to the date upon which the appellant took out his loan that it could fairly be described as within the meaning of the expression “the near future”.

True it is, that the appellant’s own evidence, the relevant passage of which I have quoted, was in terms of the statement pleaded in paragraph 5.2.2 of the statement of claim (the second statement). But the purport of the second statement was, in paragraph 7.1, alleged to have been that the respondent would “not lower its interest rates during the next three years. That was the appellant’s case at the trial.
It is not open to the appellant to re-argue the case on appeal on a footing clearly different from the basis upon which it was presented at first instance.
The case pleaded in the statement of claim and the manner in which it was presented in the evidence lend no support to the change of direction taken by the appellant on the hearing of the appeal.
Before parting with the matter, I should add that even if the learned magistrate should have found that the alleged misrepresentation had been made, it cannot be assumed that it would have been actionable. However, given the failure by the appellant to prove his case on the facts, it is unnecessary to address that aspect of the matter.
The appeal must be dismissed.

JUDGMENT CITATIONS
LISTED IN ORDER OF APPEARANCE IN JUDGMENT

In fact the interest rate was expressed to be 15% per annum but subject to a rebate of 0.5% if the interest was paid promptly, quarterly in arrears.

(1992-3) 177 CLR 472.

[1998] SASC 6952

20 November 1998