Portellos v Gerblich - [2011] SASC 219

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
PORTELLOS v GERBLICH & ANOR
[2011] SASC 219
Judgment of The Honourable Justice Kelly
9 December 2011
MAGISTRATES - APPEALS AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - OFFER AND ACCEPTANCE - AGREEMENTS CONTEMPLATING EXECUTION OF FORMAL DOCUMENT - WHETHER CONCLUDED CONTRACT
Appeal against findings of a Magistrate – Magistrate held oral contract between appellant and first respondent for purchase of a motor vehicle – appellant appealed on the grounds that the Magistrate erred in finding any contract existed between the parties and in finding that the first respondent had paid $21,000 towards the purchase of the motor vehicle – appellant alleged other errors of fact made by the Magistrate - whether the Magistrate assessed the totality of the evidence – whether the Magistrate misused certain documentary evidence – whether conclusion correct.
Held: appeal dismissed – Magistrate correctly assessed all the evidence before the court and gave due weight and consideration to all of the evidence – no errors of fact or law to justify appellate intervention – a contract existed between the appellant and first respondent to purchase the motor vehicle and the first respondent paid $21,000 to the appellant for the purchase of the vehicle.

PORTELLOS v GERBLICH & ANOR
[2011] SASC 219
Magistrates Appeal: Civil
KELLY J.
Introduction

The appellant, Sotirios Portellos, appeals a judgment of the Magistrates Court that he and a company which he previously controlled (the second respondent, Mikao Pty Ltd) (Mikao) pass unencumbered title and possession of a motor vehicle (the Mercedes) to the first respondent, Simon Gerblich.
The first respondent is an electronics and software engineer who was formerly employed by the appellant to work on research and development. He and the appellant had a number of business interests together in the years preceding the dispute which gave rise to this litigation.
In January 2007 the first respondent was given possession by the appellant of the Mercedes to drive as part of his employment arrangements with the appellant. The appellant drove another vehicle owned by one of his companies referred to throughout the original trial as “Kleio”. In July 2009 the appellant asked the first respondent to swap vehicles. At that time the appellant took possession of the Mercedes and the first respondent drove Kleio.
The original owner of the Mercedes was a company controlled by the appellant, Accordent Pty Ltd (Accordent). Prior to going into liquidation, Accordent purported to transfer ownership of the Mercedes to another company controlled by the appellant. That company was Mikao. At the date of the trial before the Magistrate both Accordent and Mikao were in liquidation. Mikao was the registered owner of the Mercedes.
Both the appellant and the first respondent have been involved in ongoing legal disputes arising out of the breakdown of their business and employment relationship, however the particular issue arising out of this dispute was a relatively narrow one.
The Magistrate had to decide whether there was an oral agreement made between the appellant and the first respondent in September 2009 that the appellant would transfer ownership of the Mercedes to the first respondent for the sum of $21,000.
The appellant denied ever making such an agreement. The central dispute at the trial was therefore whether there was such an agreement as alleged. The Magistrate concluded that there was an oral agreement made between the appellant and the first respondent to transfer the Mercedes to the first respondent for the sum of $21,000. The conclusion reached by the Magistrate was largely determined on the basis of his acceptance of the first respondent’s evidence. This was therefore a matter where the Magistrate’s findings on credibility were particularly important to the outcome.
The Appeal
The notice of appeal sets out five matters in respect of which the Magistrate is said to have erred. First, in finding that the liquidator of Accordent had renounced any interest in the Mercedes; second, in finding that the first respondent paid $21,000 for the purchase of the Mercedes; third, in concluding that there was any agreement by which the appellant would transfer unencumbered ownership of the Mercedes to the first respondent; fourth, in finding that Mikao paid no money towards the transfer of the Mercedes from Accordent to it; and fifth, in using an email on 14 September 2009[1] from the appellant’s wife Dorothea Tomazos to a finance broker as evidence supporting the existence of an oral agreement between the appellant and the first respondent to transfer ownership of the Mercedes.
[1] Exhibit P7.
The overall thrust of the appellant’s submissions on this appeal were that there is simply no evidence which could form the basis for any conclusion that there was an agreement between the appellant and the first respondent for the sale and purchase of the Mercedes.
Function of the Appellate Court
This is an appeal by way of rehearing.
It is the function of this Court to make its own assessment of the evidence, after giving due weight however to the Magistrate’s advantage in seeing and hearing the witnesses, and after giving weight to any findings on credibility which depend largely or in part on demeanour.
Evidence at Trial
The evidence before the Magistrate about the existence of an agreement between the parties came principally from the first respondent. He said that prior to September 2009 there had been some discussion between the appellant and himself that another company in which both he, the appellant and the appellant’s wife all had an interest (The Smart Company) would purchase the Mercedes and Kleio. The first respondent did not want to give any personal guarantee for the transfer of the vehicles to The Smart Company and suggested in an email to the appellant’s wife that he purchase the vehicles.[2]
[2] Exhibit P6.
The first respondent said that thereafter he bought Kleio for the sum of $40,000. He produced an email from the appellant’s wife to the financier through which Kleio was purchased as evidence to support his contention that Kleio was transferred as part of an agreement in relation to both vehicles.[3] In that email Ms Tomazos commented to the broker with reference to both vehicles “Accordent has sold the two existing vehicles to The Smart Company. If it speeds up the approval process to complete the transaction by selling to Simon as one of its directors in the interim, that’s fine.”
[3] Exhibit P7.
In any event according to the first respondent he bought Kleio for $40,000 and the appellant signed the transfer of that vehicle to the first respondent on 18 September 2009.
On that date the first respondent contended that he and the appellant met at a Rundle Street café with a view to the appellant signing over the registration for both Kleio and the Mercedes. However, according to the first respondent the appellant refused to sign the registration papers for the Mercedes until the first respondent agreed to release the sum of $21,000 which he had paid into the trust account of a lawyer associated with litigation being conducted by the appellant and his companies. The first respondent gave evidence that over a period of some days he transferred a total amount of $21,000 into the trust account of the appellant’s lawyer, Johnson Lawyers. At the trial evidence of those three payments on 10, 15 and 18 September 2009 was tendered.[4]
[4] Exhibit P1.
The first respondent’s evidence about the conversation on 18 September 2009 was that the appellant told him that once the monies in the trust account were released for the purposes of the litigation that would “seal the deal”, and the Mercedes would then be the first respondent’s vehicle. The first respondent did not dispute that as part of the deal the appellant would continue to drive the Mercedes. That was his explanation for the failure by him to follow up until nearly a year had elapsed, before endeavouring to obtain possession of the Mercedes.
The appellant did not deny that there was a meeting on 18 September 2009 but categorically denied that at that meeting he had agreed to hand over the ownership and registration of the Mercedes. He denied that an agreement as alleged by the first respondent by which he would transfer ownership of the Mercedes to the first respondent ever existed.
There were a number of difficulties with the evidence given by the appellant about the undisputed evidence of the deposits by the first respondent on 10, 15 and 18 September 2009 into the trust account of his lawyers.
At the trial the appellant said first that the $21,000 was transferred to Mr Johnson’s trust account by way of part purchase of a total amount of $40,000 paid for Kleio. When the evidence of the financing of the Kleio purchase through a finance company for almost the entire amount of $40,000 was put to the appellant he then changed his position and said that the deposits into the trust account must have been for something else. Whilst the appellant could not deny the payment of the $21,000 to the trust account of the lawyer as there was clear documentary evidence of those payments, he was unable to explain why it was that the first respondent would pay $21,000 into a solicitor’s trust account in respect of litigation in respect of which he had no interest.
The Magistrate’s Findings
In accepting the evidence of the first respondent, the Magistrate accepted that the first respondent had no interest in any of the companies involved in the District Court litigation, namely Accordent, Mikao or Kleio Pty Ltd. That finding appears to be uncontroversial. There has been no suggestion by the parties, either before or since, that the first respondent did have any such interest.
In rejecting the evidence of the appellant about the purpose of the transfer of the $21,000, the Magistrate also noted that the evidence clearly pointed to the purchase of Kleio via finance obtained from a financing company. Both those findings were important to the conclusion which the Magistrate reached that the purpose of the payments into the lawyer’s trust account on 10, 15 and 18 September 2009 was for the purchase of the Mercedes, as alleged by the first respondent.
It is apparent from the whole of the evidence that the question to be decided by the Magistrate turned largely on which witness the Magistrate believed. However, there was some documentary evidence which, generally speaking, supported the testimony given by the first respondent. The Magistrate found that that evidence clearly demonstrated an agreement between the first respondent and Accordent, through the agency of the appellant and the appellant’s wife, for the sale and purchase of the two vehicles namely the Mercedes and Kleio, to the first respondent.
In reaching that conclusion, the Magistrate did not, as contended by the appellant, rely only on the evidence of the email from Ms Tomazos to the finance broker[5] to which I have previously referred. That email was only one of a number of documents tendered in the proceedings, which the Magistrate correctly noted generally reconciled with the testimony of the first respondent.
[5] Exhibit P7.
Another document was the statement of affairs outlining the assets and liabilities of Accordent signed by the appellant on 29 June 2010 which did not record any loan from the first respondent to Accordent as might have been expected if the appellant’s evidence about the purpose of the payment of $21,000 was correct.[6] The Magistrate was entitled to take into account the fact that most of the documentary evidence tendered was generally supportive of the first respondent’s case. That evidence which included the email[7] formed part of the circumstantial evidence which pointed to the existence of an agreement between the parties as alleged by the first respondent.
[6] Exhibit P14.
[7] Exhibit P7.
A further complaint that the Magistrate overlooked any interest the liquidator might have had in the Mercedes cannot be sustained. A notice of disclaimer filed by the liquidator on 5 November 2010 in relation to the Mercedes was in evidence before the Magistrate.[8] He did not overlook that notice, in fact he referred to it. Moreover, there was no suggestion that Mikao ever paid any valuable consideration for the transfer of the Mercedes into its name. In these circumstances the Magistrate was entitled to conclude, as he obviously did, that the appellant, as the controlling mind of both companies, had orchestrated the transfer from Accordent to Mikao just prior to Accordent going into liquidation.
[8] Exhibit P12.
The Magistrate correctly concluded that Mikao, since it acted at all times through its sole director, the appellant, could never have acquired good title to the Mercedes from Accordent. In any event, Mikao did not seek to be heard on the hearing of this appeal, and in fact through its solicitor informed the Court prior to the hearing that it would abide the outcome of the appeal. In these circumstances there can be no complaint about the Magistrate’s finding that neither Mikao or Accordent had any claim to ownership of the Mercedes.
In summary, the findings of fact made by the Magistrate logically pointed to the conclusions which he reached, namely that the first respondent did not pay the sum of $21,000 into Johnson Lawyers’ trust account for litigation in respect of which he had absolutely no concern or interest. The documentary evidence did support the contention that there was an agreement to transfer the Mercedes for that figure.
After reviewing the whole of the evidence I have not been able to discern any error of fact or law in the approach or reasoning of the Magistrate which would justify the intervention of this Court. Upon my own independent review of the evidence in this matter I would have reached the same conclusion.
I therefore dismiss the appeal.