| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : MUELLER -v- PSAL LTD [2014] WADC 42 CORAM : EATON DCJ HEARD : 19 MARCH 2014 DELIVERED : 9 APRIL 2014 FILE NO/S : APP 8 of 2013 BETWEEN : KARL PAUL MUELLER Appellant
AND
PSAL LTD
Respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA Coram : MAGISTRATE BROMFIELD File No : GCLM 433 of 2010 Catchwords: Appeal from Magistrates Court - Contract - Offer of a loan and acceptance - Subsequent withdrawal by borrower - Liability for fees, charges and interest Legislation: Nil Result: Appeal dismissed
Representation: Counsel:
Appellant : In person
Respondent : Mr G Stubbs
Solicitors:
Appellant : No appearance
Respondent : Michael Sing Lawyers
Case(s) referred to in judgment(s):
Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194
1 EATON DCJ: Karl Paul Mueller, on 29 January 2013, filed a notice of appeal in this court against a decision made by his Honour Magistrate Bromfield in the Perth Magistrates Court on 7 January 2013. On 4 February 2013 the respondent to the appeal, PSAL Ltd, gave notice that it would oppose the appeal.
2 The notice of appeal has seven grounds of appeal. The first alleges that Magistrate Bromfield erred in that he commenced hearing the matter 'without proper preparation'. The third ground of appeal appears to complain about what were pre-trial procedural matters. The remaining grounds of appeal are not succinct and represent a mixture of complaints about certain findings by the magistrate, his conduct of the trial and the conduct of counsel for the respondent, Mr Stubbs. For example, ground 5 alleges that the magistrate erred in allowing the claimant's barrister (Mr Stubbs): 'accusing the defendant of lying on several occasions including of lying under oath as documented of page 111 of the transcript dated 29/11/12'. That error, asserts the appellant 'further unsettled the defendant and he felt intimidated and threatened and without protection'. 3 On 18 June 2013 Deputy Registrar Hewitt listed the appeal for hearing for one day on 23 October 2013, stayed the judgment in the Magistrates Court until further order and gave liberty to apply. 4 On 21 October 2013 Mr Mueller applied to adjourn the hearing to allow him time to recover from a serious motor vehicle accident. Shortly after, his Honour Judge McCann adjourned the hearing to a date to be fixed. 5 On 31 October 2013 the matter was administratively re-listed for hearing on 6 December 2013. That listing was vacated on the application of the appellant. The matter was administratively listed again for hearing on 19 March 2014. 6 Section 40 of the Magistrates Court (Civil Proceedings) Act 2004 provides that a party to a case that is not a minor case may appeal to this court against any order made by the Magistrates Court in the course of proceedings or the judgment of the Magistrates Court in the case. An appeal cannot be commenced more than 21 days after the date of judgment, unless the District Court gives leave to do so. The appeal must be conducted in accordance with the rules of this court. The court must decide the appeal on the material and evidence that were before the Magistrates Court and any other evidence that I give leave to be admitted. Leave may only be given in exceptional circumstances. In this matter there was no application to admit further evidence and no such leave was given. 7 It is settled law that such an appeal is by way of a rehearing and that the ability to admit additional evidence does not render the appeal a hearing de novo. In the absence of further evidence and in the absence of any retrospective change in the law, in dealing with this matter as a rehearing, I may exercise my appellate powers only if satisfied that there was an error on the part of the primary decision-maker: Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47 [14]; (2000) 203 CLR 194, 203 - 204. Thus, the appellate powers of the court are only exercisable if the appellant demonstrates that the decisions made by the magistrate the subject of the appeal are the result of some factual, legal or discretionary error: Allesch v Maunz [2000] HCA 40 [23]; (2000) 203 CLR 172, 180 - 181. 8 Rule 61 of the rules of this court provides that at least seven clear working days before the date of the hearing, each party must file and immediately serve a list of all documents, including any affidavits, on which the party intends to rely or to which the party intends to refer at the hearing and that, at least two clear working days before the date of the hearing, each party must file and immediately serve an outline of submissions. 9 In this matter the solicitors for PSAL Ltd filed written submissions and provided copies of decisions said to be relevant under cover of a letter to the court dated 14 March 2014. Mr Mueller presented written submissions on the morning of 19 March 2014. Neither party filed the requisite list of documents. 10 The background to this matter is that on 15 January 2010 PSAL Ltd filed a general procedure claim in the Magistrates Court at Perth seeking an amount of $13,706.63 from Mr Mueller pursuant to the terms of a written agreement between them. Mr Mueller defended the claim and filed a statement of defence on 2 June 2010. The claimant applied for summary judgment. That was dismissed by Magistrate Cockram on 9 July 2010. 11 On 18 March 2011 Mr Mueller filed a counterclaim seeking $65,421.30. He then sought default judgment on the counterclaim. That was dismissed by Magistrate Boon on 4 January 2012. On 19 July 2012 Mr Mueller discontinued part of his counterclaim. On 26 September 2012 the matter was listed for trial for one day on 29 November 2012. On that day the counterclaim was dismissed. The second ground of appeal appears to deal with the appellant's counterclaim. It is the case that the magistrate, in giving his reasons for judgment, made no mention of it. That is because, when the matter was before him on 29 November 2012, following a discussion with Mr Mueller, no evidence was offered in support of the counterclaim and it was dismissed. The question of costs was deferred. 12 The trial before Magistrate Bromfield began on 29 November 2012 at 10.15 am and at 5.08 pm was adjourned to 13 December 2012. On that day the matter was re-listed for further hearing on 7 January 2013. On that day the hearing continued at 10.13 am and concluded at 1.14 pm. 13 After dealing with preliminary matters Mr Stubbs, counsel for the claimant, opened the claimant's case. Having done so, he called Peter Gray Flanders who gave evidence that he was a director of the claimant. He was referred to his affidavit sworn 29 June 2010. He confirmed that its contents were true and correct. That affidavit and its attachments became exhibit A20. He was referred to his affidavit sworn 2 September 2010. He confirmed that its contents were true and correct. That affidavit and its attachments became exhibit A21. 14 Mr Flanders gave evidence to the effect that on or about 1 September 2009 the claimant, PSAL Ltd, received from Foundation Finance, a mortgage broker, a copy of a written finance application from Karl Paul Mueller. The copy application, annexed to Mr Flanders' first affidavit and marked with the letter 'A', was dated 26 August 2009. It was said to be urgent. The applicant was seeking to borrow $286,000 for four months for the purpose of re-financing an existing mortgage. The applicant offered as security a property in William Street, Midland. 15 Mr Flanders said that on or about 1 September 2009 PSAL Ltd approved the application and forwarded to the applicant, Mr Mueller, a formal letter of offer to loan him $326,673 for four calendar months. A copy of that letter was received by PSAL Ltd by facsimile transmission from Mr Mueller on 1 September 2009. The original appears to have been signed and initialled by Mr Mueller. A copy of the document received was annexed to Mr Flanders' first affidavit and marked with the letter 'B'. 16 That document evidences Mr Mueller's acceptance of the offer and nominates his solicitors as Heather Watson & Associates of 29 Spring Park Road, Midland. The balance available at settlement would be $286,000. The offer, as accepted, nominated Balani Pty Ltd as the lender. 17 Mr Flanders gave evidence to the effect that upon receipt of the acceptance of the offer, PSAL Ltd gave instructions to Gallilee Solicitors of Perth to urgently prepare loan and mortgage documents for execution by Mr Mueller. 18 PSAL Ltd called Melanie Anne Vance, a solicitor in the employ of Gallilee Solicitors. She was referred to her affidavit sworn 23 December 2011. She confirmed that its contents were true and correct. It became exhibit B23. She deposed to having been a solicitor in the employ of Gallilee Solicitors between April 2006 and April 2011. She received instructions on or about 1 September 2009 from PSAL Ltd to prepare loan, mortgage and supporting documents for a loan to Karl Paul Mueller. She said that he (Mr Mueller) collected and returned documents to her on about 7 September 2009 and that certain documents were missing. There was, she said, no evidence of insurance for either property offered as security, no copy of the applicant's motor drivers' licence certified by a Justice of the Peace as requested and no certificate indicating that the applicant had obtained legal advice or had waived his right to do so. Finally, she said that the documents that were returned had been signed in the presence of a Justice of the Peace and not a solicitor, as requested. She deposed to having, on 7 September 2009, provided Mr Mueller with a new set of loan, mortgage and supporting documents, advising that the documents needed to be witnessed by a solicitor and that he was required to obtain independent legal advice before proceeding with the loan. Those new documents, she said, were not returned. 19 Ms Vance referred to a copy of a letter written by her to Mr Mueller dated 9 December 2009, a copy of which is annexed to the affidavit of Peter Gray Flanders sworn 29 June 2009 and marked with the letter 'C'. That letter is on the letterhead of her employer, Gallilee Solicitors. In that letter she referred to earlier communications and noted that the various loan documents had not been returned by him. The letter further advised that 'under the letter of offer our client is entitled to be indemnified for the loan and legal costs associated with the preparation of the documents and loan approvals. We enclose our client’s tax invoice for your attention'. The letter indicated to Mr Mueller that payment should be made within 10 days and that, in the event of non-payment, legal action to recover the amount claimed would be taken. In evidence Ms Vance explained that the letter referred to her as Melanie Harper, which was her married name at the time. She explained that, at the time of giving evidence, she had reverted to the use of her maiden name. 20 In cross-examination Ms Vance confirmed that she had initially received instructions to prepare security documentation from PSAL Ltd and that new security documents were prepared for execution because the first set of documents had not been witnessed by a solicitor as required by the lender. She said that, to her knowledge, Balani Pty Ltd did not pay any money to Mr Mueller. 21 At the conclusion of Ms Vance's evidence, counsel for PSAL Ltd closed its case. 22 Mr Mueller gave evidence. He confirmed the truth of his witness statement dated 30 April 2012, which became exhibit 1A. Mr Mueller said that he did not contact PSAL Ltd but rather he sent an application for finance by facsimile transmission to Foundation Finance. That firm introduced him to PSAL Ltd who he initially took to be a lender rather than a broker. 23 In the course of evidence-in-chief Mr Mueller made reference to a further affidavit sworn by him on 31 August 2010. He confirmed the truth of that affidavit. It became exhibit 1B. 24 In cross-examination Mr Mueller said that he took the documents given to him back to Melanie Vance at Gallilee Solicitors in September 2009, about an hour after collecting them from her. Mr Mueller confirmed that he had never had any direct contact with Balani Pty Ltd. 25 In the course of his cross-examination Mr Mueller said: You're talking about something that happened two years ago. I was under enormous pressure to – by- what's the other one, Foundation Finance, by PSAL, by Melanie Harper to sign, and that's how – and because I didn't have legal advice, that's why everything happened like that. That's why all this mess has arisen from that. 26 It is apparent from a perusal of the transcript that cross-examination became somewhat heated with the magistrate adjourning for a time to allow composure to be restored. He admonished counsel for PSAL Ltd for 'badgering' the witness and failing to allow him to answer questions. Immediately prior to the adjournment, counsel for PSAL Ltd tendered a document entitled 'Settlement Instruction' which became exhibit C14. 27 Mr Mueller called Leonard James Dundon who said that he was retired. He had driven Mr Mueller to Gallilee Solicitors and accompanied him when he was handed a large brown envelope. He heard a lady tell Mr Mueller that he could take the documents downstairs where there was a Justice of the Peace. That officer was not in. He and Mr Mueller were directed across the road to the offices of the Aboriginal Legal Service. He said that when Mr Mueller returned to the vehicle he no longer had the large brown envelope. Mr Dundon was not cross-examined. Mr Mueller closed his case. 28 The magistrate, having heard submissions from the bar table, gave judgment and delivered extempore reasons. 29 Having regard to the material and evidence before the learned magistrate, I find that Mr Mueller was, in or about July 2009, the owner of 12 William Street, Midland in the State of Western Australia. He became aware that the owner of the adjoining property at 10 William Street was desirous of selling. In about late July 2009 he contacted finance brokers, Foundation Finance, to enquire about obtaining a short-term loan to facilitate purchase of the adjoining property. A Kim Stuart of Foundation Finance suggested an application to PSAL Ltd. Mr Mueller completed a finance application dated 31 August 2009 and forwarded it to Foundation Finance. A copy of that application, is annexed to the affidavit of Peter Gray Flanders sworn 29 June 2010 and annexed with the letter 'A'. Mr Mueller advised, within that application, that his solicitor was 'to be selected'. The application included the following: I/we agree to pay all necessary expenses, including legal costs incurred by PSAL Ltd in obtaining this loan … . 30 PSAL Ltd responded with a document entitled 'Formal Letter of Offer for Mortgage Loan' dated 1 September 2009 in which Mr Mueller would be the borrower and Balani Pty Ltd would be the lender. The conditions of the offer included: You must pay all of our costs and disbursements concerning this loan transaction, these include the loan application/processing fee. You are responsible for and must pay all expenses which we incur in connection with this transaction, including the valuation fees and legal fees, even if the transaction is not settled, and regardless of whether it is you or us who withdraws from the transaction. Also you must pay the legal fees, registration fees and other costs which we incur or are payable relating to the management of the loan, repayment of the loan and discharge of the security. All fees once due are non-refundable. 31 On or about 1 September 2009 Mr Mueller signed the letter of offer, indicating his acceptance of it and returned it to PSAL Ltd by facsimile transmission. On or about 2 September 2009 Mr Mueller collected a bundle of security documents from Gallilee Solicitors. Within about an hour he had executed those documents in the presence of a Justice of the Peace and returned them to that firm. Those documents included a form entitled 'Certificate of Independent Legal Advice – Borrower'. It does appear that when Mr Mueller returned the security documents to Gallilee Solicitors, that form had not been completed for the simple reason that he had not, at that stage, consulted a solicitor as to the documents or the proposed loan. He did not do so until sometime after he was provided with the second set of security documents. 32 On or about 4 September 2009 new security documents were collected by Mr Mueller from Melanie Vance, then known as Melanie Harper. Mr Mueller was to engage a solicitor for the purpose of obtaining legal advice as to the contents of the documents. On or about 9 September 2009 Mr Mueller consulted a solicitor who advised him against proceeding with the loan. In re-examination Mr Mueller said: So it was rejected by Balani Pty Ltd and then I went to see a solicitor and it was a very confusing time for me because I wanted the place next door and the solicitor said 'Be very careful with this contract because your loan valuation is 60% and they still want your car as well as security' and I was torn between listening to my solicitor and wanting the place. 33 It is the case that Mr Mueller was very keen to buy the property next door to his existing business and required funds for that purpose. In consequence of the advice given by the solicitor Mr Mueller did not execute the second set of security documents and did not return them to Gallilee Solicitors. 34 The claim by PSAL Ltd against Mr Mueller is for $13,023.43 being the costs and expenses of the claimant incurred in the transaction. On 2 June 2010 Mr Mueller filed a statement of defence to the claim. As to the factual basis of his defence he said: 'The defendant negotiated a caveat loan via a broker with the claimant. Negotiations were never completed as the claimant withdrew the loan offer'. As to the legal basis of his defence Mr Mueller submitted that he received legal advice not to submit the loan documents. He submitted further that facsimile copies and other copies are not 'legal documents', that the claimant had not followed the law and that the claimant's actions were unlawful. 35 I find that on about 1 September 2009 Mr Mueller submitted a detailed urgent loan application dated 31 August 2009 to Foundation Finance. In doing so he agreed to pay all necessary expenses, including legal costs, incurred by PSAL Ltd in obtaining the loan, regardless of whether a loan or other financial accommodation might be provided. In consequence PSAL Ltd arranged a loan, as requested, from Balani Pty Ltd and forwarded a formal letter of offer to Mr Mueller. That offer, accepted by Mr Mueller, obliged him to pay the costs and disbursements of PSAL Ltd and all expenses incurred in connection with the transaction, including the valuation fees and legal fees whether or not funds were advanced and in the event of a party withdrawing from the transaction. There can be no doubt that Mr Mueller accepted the offer, nominating as his solicitors, Heather Watson and Associates of 29 Spring Park Road, Midland. The learned magistrate, in his extempore reasons, found that Mr Mueller gave a 'continual indication' that he wished to proceed with the loan. I agree with that finding. In fact, it is fair to conclude the Mr Mueller regarded the matter as one of urgency. It is the case that the loan did not take place but the reason for that was, firstly, the failure of Mr Mueller to properly comply with the instructions given to him as to execution of the security documentation and, secondly, his own decision not to proceed with the loan in the light of belated legal advice as to the advisability of it. Mr Mueller did not seek legal advice as to the advisability of accepting the document entitled 'Formal Letter of Offer for Mortgage Loan'. 36 The learned magistrate concluded that PSAL Ltd was entitled to a judgment in the sum of $10,738.65 comprising a loan processing fee of $6,533, legal fees of $2,510, a research fee of $850, totalling $9,893 with interest thereon in the sum of $845.65. It is clear that the learned magistrate calculated interest based on a rate of 60% per annum which he calculated to be $16.262465 per day for 52 days. The judgment sum was $10,738.65. So far as I can tell, no challenge is made to the magistrate's quantification of the amount arrived at or his calculation of interest by either party to the appeal. The appellant seeks to overturn the judgment and the respondent seeks to maintain it. 37 In his reasons for judgment Magistrate Bromfield said: Now, pursuant to the terms of the formal offer, there was to be a significant rate of interest of 60 per cent per annum on unpaid fees. The defendant's position, if I can make sense of it, is that he suggests without any formal assistance as to the basis of the suggestion that this liability incurred was a matter that he didn't fully understand and that he required to obtain independent advice before it could be in force. That's simply a position that is untenable. The evidence clearly shows in accordance with the terms of the contract, which I find has been executed by the defendant, that he embarked upon this process, executed the acceptance of this formal letter of offer for a mortgage loan and as a result became liable for the fees which remain unpaid. The invoice dated 16 November includes the legal fees and whilst I don't have the exact date that those fees became payable by the claimant, it is from that invoice, the terms of which were stipulated to be seven days, that I find that the claimant has established an entitlement to interest. 38 I agree with the magistrate's conclusion that this matter reduces to the terms of a contract made between Mr Mueller and PSAL Ltd complete upon his acceptance of the formal letter of offer for a mortgage loan. It is the case that Mr Mueller pursued the matter of raising finance to acquire the next door property as one of urgency. His haste is evident by reason of the fact that he marked the original application for finance as being urgent and further, by reason of the fact that he collected, executed and returned the first set of security documents within a space of about an hour. It seems likely to be the case that Mr Mueller would not have approached a solicitor and sought legal advice as to the terms of the loan and the documentation were it not for the requirement by the lender that he do so or waive the need to do so. The fact that the transaction did not proceed and that funds were never advanced by Balani Pty Ltd is due entirely to Mr Mueller's decision, in the light of legal advice received by him belatedly, to not execute the second set of security documentation. In other words, he decided against proceeding with the loan. In such circumstances he was bound by his agreement with PSAL Ltd to reimburse for the various expenses and charges incurred in processing the loan and production of security documents with interest thereon. 39 There can be no doubt that Mr Mueller found the trial in the Magistrates Court to be a difficult and distressing experience. In grounds 2, 3 and 5 the complaint of the appellant is that he found the trial process intimidating, unsettling, threatening and confusing. In the latter he took exception to being accused, in cross-examination, of lying under oath by the respondent's barrister, complaining that he 'had no legal right to abuse the defendant for not being in possession of the original letter of offer'. 40 There is no substance to the complaint in ground 1 that the magistrate did not properly prepare himself for the trial. 41 A perusal of the remaining grounds of appeal reveals that they are piecemeal complaints about aspects of the trial which do not give rise to appealable error but rather evidence, on the part of Mr Mueller, a general feeling of discontent and unfairness. Given the nature of an appeal to this court and the presentation of the appellant's grounds of appeal along with his argument at the hearing of the appeal I am not persuaded that the decisions made by the learned magistrate are the result of some factual, legal or discretionary error. Rather, the appellant's liability to the respondent is the result of the magistrate's finding of a contractual obligation on the part of Mr Mueller to pay various expenses and charges, along with interest thereon, incurred by the respondent in the wake of Mr Mueller's decision not to proceed with the loan. Having regard to the evidence before him I agree with that finding. The appeal is dismissed.
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