RADEMACHER v KASSAB

[2005] SASC 43

SUPREME COURT OF SOUTH AUSTRALIA

(Magistrates Appeals: Civil)

RADEMACHER v KASSAB

Judgment of The Honourable Justice Anderson

9 February 2005

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS

LIMITATION OF ACTIONS - CONTRACTS, TORTS AND PERSONAL ACTIONS - THE PERIOD OF LIMITATION - WHEN TIME BEGINS TO RUN - PARTICULAR CAUSES OF ACTION

The appellant appeals against the finding of the learned Magistrate that it was a term of the contract between him and the respondents that he need not repay the loan until he had the means to do so – the respondents loaned $35,000 to the appellant – the appellant repaid $5,000 of the loan, but thereafter made no further repayments - the respondents were the plaintiffs in the Magistrates Court where they sued he appellant for breach of the contract to repay the loan – the appellant argued that the action was statute barred as the loan was made in 1992 – the respondents contended that it was a term of the contract that the appellant did not have to repay the loan until he had the ability to do so, and that therefore the cause of action did not arise until the appellant had inherited sufficient money to repay the loan in 2002 – the appellant argued that the statement about repaying the money whenever he could was not a term of the loan agreement, but merely part of pre-contractual statements and was not intended to have any legal effect – the appellant also argued that the words were too vague and uncertain to be enforceable – in the alternative the appellant argued that if the words did constitute a term of the agreement then they were satisfied prior to February 1997, so that the claim was nevertheless out of time – appellant’s own evidence before the Magistrate supports the finding that repayment when he could was a term of the agreement, and that the appellant did not have the ability to repay the loan until 2002 - held: the claim was not statute barred - appeal dismissed.

Re Brookers (Aust) Ltd (In Liq) (1986) 41 SASR 380, discussed.
Roberts v Hong Kong Bank of Australia Ltd (1993) 35 AILR 271; Ogilvie v Adams [1981] VR 1041, considered.

RADEMACHER v KASSAB
[2005] SASC 43

Magistrates Appeal

1. ANDERSON J      This is an appeal from the decision of a Magistrate in a matter involving a claim for the sum of $30,000 resulting from a loan from the respondents to the appellant.

2. The respondents are the sister and brother-in-law of the appellant.  In 1992 they advanced the sum of $35,000 to assist the appellant and enable him to purchase a fishing licence.

3. The money had been originally loaned by the appellant’s brother but the respondents had agreed with the appellant that when they sold their house they would take over from the appellant’s brother as lenders.  The respondents did sell their house, took over the loan, and some payments were then made to them, reducing the original sum from $35,000 to $30,000.

4. The learned Magistrate had to decide what the terms of the agreement were in relation to repayment.  Her Honour heard evidence, and clearly preferred the evidence of the respondents to that of the appellant.  She was quite entitled to do this, and that enabled her Honour to make the necessary findings.

5. After the sum of $5,000 was repaid, no further payment was made.  The Magistrate found that it was a condition of the loan that the appellant would repay the loan whenever he had the money to do so.  The appellant had no capacity to repay the loan until some time in 2002 when he became entitled to an inheritance following the death of his father.

6. The appellant argued that the action was statue barred.  The Magistrate found that the cause of action did not arise until the appellant failed to comply with the conditions of the contract, namely, to commence repayments when he had the ability to do so, which was not until the middle of 2002.

7. It seems as if the learned Magistrate had strong evidence to support the fact that the parties were ad idem as to the terms of the loan, namely, repayment whenever there was money available.  This was conceded by the appellant in his cross-examination.  In Re Brookers (Aust) Ltd (In Liq) (1986) 41 SASR 380, King CJ at 383 dealt with a similar problem as to when the parties intended that the liability to repay would arise. His Honour said:

   “In many cases, of course, liability to repay is governed by the terms of an agreement in writing.  Where there is such an agreement, the question is one of construction of the written agreement: Ogilvie v. Adams.  Where there is no written agreement, the question may be determined by reference to express oral terms which are proved and interpreted in the ordinary way.  Where, however, there are no express terms, an agreement as to the circumstances in which liability to repay arises must be implied from the surrounding circumstances and the conduct and relationship of the parties.  It becomes a question of whether the parties, if they had applied their minds to the issue, would reasonably be expected to have agreed to depart from the general rule of immediate liability to repay and to have agreed that some notice would be a prerequisite of such liability.” (footnotes omitted)

8. A relevant concession made by the appellant in his cross-examination was that he stopped repaying because he couldn’t afford to repay.  He could only afford to repay after the proceeds of his father’s estate were distributed, and at that time he then had the ability to pay back the $30,000.  He failed to do so because, he was at that stage, having a dispute in the nature of a partnership dispute over the proceeds of the sale of a boat.

9. The appellant argues that the statement, about the ability to repay whenever the appellant could, was not a term of the loan agreement entered into in October 1992.  It was argued that the words were merely part of pre-contractual statements and were not intended to have any legal effect.  See Roberts v Hong Kong Bank of Australia Ltd (1993) 35 AILR 271, Ogilvie v Adams [1981] VR 1041 at 1043, and Re Brookers.

10. In addition it was argued that the words in any event were too vague and uncertain to be enforceable.  Finally it was argued that if the words did constitute a term of the agreement then that was satisfied prior to 21 February 1997 which was six years prior to proceedings being commenced on 21 February 2003.

11. Whilst on a first examination the incorporation of the term relating to repayment might seem vague, it was clearly what the parties intended.  The evidence on this aspect, including the appellant’s own concessions, tend to support this.  It was what the parties understood and what the parties meant, and as such I agree with the finding of the learned Magistrate.

12. That then leads, of course, to the fact that a time had to be determined when the appellant could repay, and that, on all the evidence, did not occur until he received the inheritance from his father’s estate.  That is when the cause of action arose because that is when he had the ability to repay.  The action was therefore not statute barred, and again, I agree with the way in which the learned Magistrate has handled this aspect of the matter.  I agree with the reasons of the learned Magistrate in deciding that the action was not statute barred.

13. I therefore dismiss the appeal.