Savage v Soloman
[2021] FedCFamC2G 278
•18 November 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Savage v Soloman [2021] FedCFamC2G 278
File number(s): CAG 62 of 2018 Judgment of: JUDGE RILEY Date of judgment: 18 November 2021 Catchwords: BANKRUPTCY – Application to review a sequestration order made by a registrar – hearing de novo – going behind the judgment on which the bankruptcy notice was based – whether there is in truth and reality a debt. Legislation: Bankruptcy Act 1966, s.52 Cases cited: Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] ALR 334; (1938) 12 ALJR 100; [1938] HCA 34
Browne v Dunn (1893) 6 R 67
Gawne v Gawne [1979] 2 NSWLR 449
New South Wales Police Force v Winter[2011] NSWCA 330, (2011) 10 DDCR 69
Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132; (2017) 345 ALR 534; (2017) 91 ALJR 803; (2017) 122 ACSR 115; [2017] HCA 28
Re Application of Sutherland and Arnautovic [2014] NSWSC 821
Savage v Soloman [2019] NSWDC 223
Soloman v Savage [2018] NSWCA 249Division Division 2 General Federal Law Number of paragraphs: 114 Date of hearing: 5 October 2021 Place: Melbourne Counsel for the applicant: Brodie Buckland Solicitor for the applicant: Kennedy & Cooke Lawyers Counsel for the respondent: Damien Allen Solicitor for the respondent: Morgan Ardino & Co Solicitors ORDERS
CAG 62 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: ROBIN BARRY SAVAGE
ApplicantAND: PHILLIP AZIZ SOLOMAN
Respondent
ORDER MADE BY:
JUDGE RILEY
DATE OF ORDER:
18 November 2021
THE COURT DECLARES THAT:
1.By a written agreement dated 9 August 2012, the respondent borrowed $60,000 from the applicant for three months at an interest rate of 3% per month.
2.The $60,000 plus interest remains due and owing.
Note: The form of the order is subject to the entry in the court’s records.
Note:This copy of the court’s reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)
REASONS FOR JUDGMENT
JUDGE RILEY:
INTRODUCTION
This is an application to review a sequestration order made by a registrar on 26 March 2020. The matter was filed in Canberra, but, due to pressure of work in that registry, was eventually referred to me for hearing on 5 October 2021 in Melbourne. The hearing was conducted by Microsoft Teams.
The hearing before me was a hearing de novo of the creditor’s petition. All of the usual requirements for the granting of a creditor’s petition needed to be satisfied. Most particularly, the creditor needed to satisfy the court that there was in truth and reality a debt due to the petitioner: Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132.
Section 52 of the Bankruptcy Act 1966 relevantly provides that:
(1) At the hearing of a creditor’s petition, the Court shall require proof of:
(a)the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);
(b)service of the petition; and
(c)the fact that the debt or debts on which the petitioning creditor relies is or are still owing;
and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.
…
(2)If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:
(a) that he or she is able to pay his or her debts; or
(b)that for other sufficient cause a sequestration order ought not to be made;
it may dismiss the petition.
…
The petitioning creditor, Mr Savage, is an elderly, retired man. He previously had a plant nursery and worked in the communications industry. The debtor, Mr Soloman, has been a mortgage broker and is now a licenced real estate agent. Before he obtained his real estate agent’s licence, he worked under the supervision of a real estate agent. Prior to and around the time of the financial dealing that is the subject of this proceeding, Mr Savage had obtained a number of financial products through Mr Soloman.
BACKGROUND
The matter has a long and complicated background.
The creditor’s petition was filed on 15 August 2018. On 26 July 2019, a registrar extended the creditor’s petition with the result that it was due to expire on 14 August 2020. The hearing of the creditor’s petition was adjourned by the registrar seven times.
The creditor’s petition was based on Mr Soloman’s non-compliance with a bankruptcy notice issued on 22 May 2018. The bankruptcy notice was based on a judgment of the District Court of New South Wales at Bega made on 27 November 2017 for $173,400, consisting of a debt of $60,000 and interest of $113,400.
Mr Savage lives in Bega. He commenced his District Court proceeding on 3 May 2016.
Mr Savage said that the debt arose from a written loan agreement, whereby the petitioning creditor lent the debtor $60,000 on 9 August 2012 for a period of three months at an interest rate of 3%, or $1,800, per month. That works out to be an interest rate of 36% per annum.
Mr Soloman filed an amended defence in which he said that the $60,000 had not been lent, interest was not $1,800 per month, the term was not three months, and the agreement was not binding. Mr Soloman also said in his defence that he had a cross-claim of $300,000, which is the amount he would have received if the “deal” had been completed. However, the defence said that the cross claim had been struck out, because it was out of time, but Mr Soloman intended to file another proceeding in relation to it. There is no evidence that such a proceeding has been filed.
The matter was listed in the District Court at Bega for final hearing on Monday 27 November 2017. Mr Soloman maintained that he had retained a solicitor and a barrister for the three day hearing.
On Sunday 26 November 2017, Mr Soloman, by his solicitor, filed and served a notice of motion and affidavit in support seeking that the final hearing be vacated and that the proceedings be transferred to Sydney. The affidavit said that Mr Soloman, in the afternoon of Friday 24 November 2017, received a threatening and anonymous text message, warning him not to come to Bega. It was expressed in racist terms.
The matter was called on at 10am on 27 November 2017, but there was no appearance for Mr Soloman. It was stood down until 11am, but, again, there was no appearance for Mr Soloman. It was stood down again until 12.30pm, after the plane from Sydney was expected to arrive. Again, there was no appearance for Mr Soloman
At that time, the judge dismissed Mr Soloman’s notice of motion for want of prosecution. The judge said he had read the affidavits of Mr Savage in support of his claim, and, on the basis of them, gave judgment for Mr Savage in the sum of $60,000 plus interest.
On 3 December 2017, Mr Soloman filed a notice of motion seeking to have the orders made on 27 November 2017 set aside as a default judgment. It was not a default judgment. Mr Soloman discontinued that application in January 2018.
On 22 December 2017, Mr Soloman filed and served a notice of intention to appeal.
On 14 February 2018, Mr Savage obtained an examination order in respect of the debtor. The examination was to occur on 3 April 2018 but was adjourned.
On 21 March 2018, Mr Soloman filed a notice of appeal from the District Court’s judgment made on 27 November 2017. The notice of appeal was one month out of time. The petitioning creditor did not oppose an extension of time being granted and the New South Wales Court of Appeal granted it. Mr Soloman’s basic ground of appeal was that he was denied procedural fairness by the District Court. The appeal was heard on 18 October 2018. Mr Soloman was represented by counsel.
On 1 November 2018, the Court of Appeal dismissed Mr Soloman’s appeal with costs: Soloman v Savage [2018] NSWCA 249. Basically, the Court of Appeal considered that procedural fairness required that a party be given an opportunity to be heard, not that he be given an actual hearing. The Court of Appeal considered that Mr Soloman had been given an opportunity to be heard but he did not avail himself of it. In particular, the Court of Appeal noted that there was no evidence that Mr Soloman’s solicitor and barrister were intimidated by the threatening text messages sent to Mr Soloman, and no explanation for no one appearing for Mr Soloman on the day to at least ask for an adjournment.
The Court of Appeal referred to the evidence in support of the petitioning creditor’s claim, but could not be said to have dismissed the appeal on the merits. The appeal only concerned the procedural fairness issue, not whether there was in truth and reality a debt.
On 29 March 2018, Mr Soloman filed an application in the District Court seeking to set aside the judgment against him on the basis that the order was made in his absence. That application was heard in the District Court on 16 May 2019. Mr Soloman was represented.
On 4 June 2019, the District Court dismissed the application with costs: Savage v Soloman [2019] NSWDC 223. The District Court:
(a)accepted that it had power to set aside the judgment, as Mr Soloman had not appeared;
(b)accepted that Mr Soloman’s defence raised a triable issue but said he did not have a strong or overwhelming defence;
(c)noted that the orders were regularly obtained, and an appeal in respect of them had been dismissed;
(d)considered that the fact that the original orders had stood for 18 months weighed against setting them aside; and
(e)considered that Mr Soloman’s failure to explain why counsel did not attend the hearing on 27 November 2017 weighed heavily against setting aside the orders.
Balancing those matters, the District Court considered that Mr Soloman’s application to set aside the District Court’s order made on 27 November 2017 should be dismissed. Clearly, the District Court did not consider fully whether there was in truth and reality a debt.
On 2 September 2019, Mr Soloman applied for leave to appeal against the District Court’s order made on 4 June 2019. The parties agreed for the matter to be dealt with on the papers. Mr Soloman appeared in person. The Court of Appeal dismissed the application, saying that the District Court had not made any error of principle in its exercise of its discretion. The Court of Appeal touched upon the merits of the underlying matter, and was somewhat critical of changes in Mr Soloman’s proposed defence. However, the Court of Appeal did not consider whether there was in truth and reality a debt.
GOING BEHIND THE JUDGMENT
Mr Soloman accepted that he had not complied with the bankruptcy notice. However, he asked this court to go behind the judgment.
When the matter came before me for hearing, it was quickly determined, with little resistance from Mr Savage, that it was appropriate in this case to go behind the judgment. That was notwithstanding that the judgment was regular and had been subject to judicial consideration on three occasions. It was appropriate to go behind the judgment because no judge had ever determined the matter on its merits, and because the debtor raised a triable issue.
Consequently, the hearing before me on 5 October 2021 concerned the question of whether there was in truth and reality a debt owing by Mr Soloman to Mr Savage.
MATERIAL RELIED UPON
There was a vast amount of material filed in this proceeding. However, at the hearing before me on 5 October 2021, the parties helpfully identified the documents that they actually relied upon and they became exhibits as follows:
(a)exhibit 1: Mr Savage’s statement of claim dated 3 May 2016 and filed in the District Court;
(b)exhibit 2: Mr Savage’s affidavit sworn or affirmed on 19 October 2020 and filed in this proceeding;
(c)exhibit 3: Mr Savage’s affidavit sworn on 29 December 2020 and filed in this proceeding;
(d)exhibit 4: Mr Savage’s case outline dated 30 September 2021 and filed in this proceeding;
(e)exhibit 5: Mr Soloman’s affidavit sworn on 10 December 2020 and filed in this proceeding;
(f)exhibit 6: Mr Soloman’s affidavit sworn on 5 March 2019 and filed in the District Court;
(g)exhibit 7: Mr Soloman’s affidavit sworn on 20 March 2019 and filed in the District Court; and
(h)exhibit 8: Mr Soloman’s affidavit sworn on 25 February 2020 and filed in this proceeding.
In addition, Mr Soloman relied on his written submissions filed in this court and dated:
(a)10 December 2020;
(b)7 January 2021;
(c)20 April 2021; and
(d)29 September 2021.
Mr Savage also relied on affidavits of search and debt.
THE STATEMENT OF CLAIM
In his statement of claim filed in the District Court and dated 3 May 2016, Mr Savage said:
1.The Plaintiff and Defendant are both natural persons able to sue and be sued in their own names.
2.By agreement in writing dated 9 August 2012 (“The loan agreement”) the Plaintiff agreed to loan the sum of $60,000 (“the principal sum”) to the Defendant for a period of 3 months from 9 August 2012.
3.It was an expressed term of the loan agreement that the Defendant would pay to the plaintiff interest payments of $1,800 each month commencing 9 August 2012.
4.It was an expressed term of the loan agreement that the Defendant would pay to the plaintiff the principal sum on 9 November 2012.
5.On 9 August 2012 the Plaintiff advanced to the Defendant the sum of $60,000 by way of personal cheque in accordance with the loan agreement;
6.In breach of the loan agreement the Defendant has failed to pay to the Plaintiff interest of $1800 on the 9th of each month;
7.In breach of the loan agreement the Defendant failed to pay to the Plaintiff the principal sum on 9 November 2012;
8.The plaintiff claims damages for breach of the loan agreement:
a) $60,000;
b) $79,200 (Interest as of 9 April 2016)
THE DEFENCE
Mr Soloman has had various defences over the years. However, for the purposes of this proceeding, his counsel verbally articulated his defence as follows1:
(a)Mr Savage entrusted Mr Soloman with $60,000 to invest on Mr Savage’s behalf with a property developer;
(b)the terms of the agreement that Mr Savage relied upon were not the actual terms of the agreement;
(c)there was no formal agreement;
(d)Mr Savage merely entrusted Mr Soloman with $60,000 to invest;
(e)the investment went bad;
(f)it was then agreed that Mr Soloman would make good Mr Savage’s loss by offsetting the $60,000 against monies that Mr Savage owed, or would owe, to Mr Soloman;
(g)by 31 July 2014, Mr Soloman had repaid Mr Savage the $60,000; and
(h)in fact, by that date, Mr Savage was indebted to Mr Soloman.
: Transcript, pages 13 to 15
THE PRE-EXISTING COMMERCIAL RELATIONSHIP
It was common ground that, prior to the signing of the loan agreement, Mr Savage and Mr Soloman had a pre-existing commercial relationship. Mr Savage conceded in cross-examination that:
(a)his brother introduced him to Mr Soloman in 2008;
(b)in 2008, he asked Mr Soloman to give him a loan, as he was developing his land at Nethercote where he had previously operated a nursery;
(c)in 2009 or 2010, he asked Mr Soloman for an extra loan; and
(d)in 2011, he asked Mr Soloman to refinance the loan.
THE LOAN AGREEMENT
It was common ground that the parties signed the written loan agreement dated 9 August 2012. It said as follows:
Deed Agreement
Short Term Loan
Borrower information:
Name: Phillip Soloman …
Lender information:
Name: Robin Barry Savage …
Loan information
Loan amount: $60,000AU Loan period: Three months start from 09/08/2012
Interest rate: 3% per month Payment schedule: on 09th of each month
1.Promise to Pay. For value received, Phillip Soloman (Borrower) promises to pay on the interest [sic] 09th of each month to Mr. Savage (Lender) $1800.00 and interest at the yearly rate of 36% on the unpaid balance as specified below.
2. Instalments.
oBorrower will pay payments of $1800.00 each at monthly/yearly $21800.00 [sic] intervals on the 09th day of the month.
o Borrower will pay one lump payment on 09/11/2021 date.
o
3.Application of Payments. Payments will be applied first to interest and then to principal.
4.Prepayment. Borrower may prepay all or any part of the principal without penalty.
7. Security
X This is an unsecured note.
oBorrower agrees that until the principal and interest owed under this promissory note are paid in full, this note will be secured by a security agreement and Uniform Commercial Code Financing statement giving Lender a security interest in the equipment, fixtures, inventory and accounts receivable of the business known as ______.
8.Collection Costs. If Lender prevails in a lawsuit to collect on this note, Borrower will pay Lender’s costs and lawyer’s fees in an amount the court finds to be reasonable.
The undersigned an all other parties to this note, whether as endorsers, guarantors or sureties agree to remain fully bound until this note shall be fully paid and waive demand, presentment and protest and all notices hereto and further agree to remain bound notwithstanding any extension, modification, waiver, or other indulgence or discharge or release of any obligor hereunder or exchange, substitution, or release or any collateral granted as security for this note. No modification or indulgence by any holder hereof shall be binding unless in writing and any indulgence on any one occasion shall not be an indulgence for any other or future occasion. Any modification or change in terms hereunder granted by any holder hereof shall be valid and binding upon each of the undersigned notwithstanding the acknowledgement of any of the undersigned and each of the undersigned does hereby irrevocable grant to each of the others a power of attorney to enter into any such modification on their behalf. The rights of any holder hereof shall be cumulative and not necessarily successive. This note shall take effect as a sealed instrument and shall be construed, governed and enforced in accordance with laws of the State of NSW.
MR SOLOMAN’S WRITTEN EXPLANATIONS OF THE LOAN AGREEMENT
Mr Soloman said in his affidavit sworn on 16 February 2017 and filed in the District Court proceedings (which is annexure A to exhibit 2) that:
(a)he had used a template that he had on his computer, but it was not the case that he was the borrower and Mr Savage was the lender;
(b)Mr Savage had attended his office in Sydney on or about 6 August 2012, and said he had $60,000 in his account that was affecting his aged pension;
(c)Mr Savage asked Mr Soloman to invest the money for Mr Savage “anywhere”; and
(d)they put the date of 9 August 2012 on the agreement because Mr Soloman wanted a few days to obtain legal advice.
In his affidavit sworn on 5 March 2019, and relied on in this proceeding (exhibit 6), Mr Soloman said that:
6.The money that was owed by myself and claimed by the Plaintiff in these proceedings [in the District Court] was paid back to the Plaintiff prior to these proceedings being commenced. …
7.The plaintiff has received the money he was owed under our agreement … The agreement signed by myself and the plaintiff was solely for the intended purpose that the monies presented were to be utilised as an investment ONLY…
In this affidavit, Mr Soloman accepted that he had owed Mr Savage the $60,000 he claimed in the District Court proceedings. In the affidavit, Mr Soloman did not claim that the money was to be used as an investment on Mr Savage’s behalf.
Mr Soloman repeated the same claims in his affidavit sworn on 20 March 2019, and relied on in this proceeding (exhibit 7).
Mr Soloman said in his affidavit sworn on 25 February 2020 that:
7.Moreover, I had instructed El Khoury [Mr Soloman’s then solicitor] that it was my belief at that time that the monies which the Applicant was claiming against me were not truly his monies because they had been obtained by fraud from the NAB Bank as they were part of an original loan for $980,000.00 which I had packaged on behalf of the Applicant myself. At that time, I was working as a Loan Referrer for the NAB (as well as a number of other Lenders). I had become aware after having obtained this particular loan on behalf of the Applicant that the Applicant himself had signed a loan application which disclosed misleading and deceptive information as to his true occupation and income status. The Applicant had fraudulently disclosed in his loan application that he was “a Project Manager” earning approximately $80,000.00 gross, whereas in fact, he was only an Age Pensioner and that the Age Pension was his sole source of income. When I mentioned this to Mr El Khoury, he said to me words to the effect of “Don’t worry about this now. We will have to deal with this later on when the case is finished.” As a result of this, Mr El Khoury made no mention of this fact whatsoever in the defence and other pleadings filed on my behalf. Had this issue been canvassed by way of an affidavit by me in support of my defence in those proceedings, it is my belief that the outcome would have been in my favour as if the Applicant had falsely disclosed the truth about his status as a Pensioner and that his only source of income was the pension, then the NAB would not have approved his loan as he had no capacity to maintain regular repayments i.e. he had no capacity to service the loan.
…
12.In passing, it is also of some significance that at the time the alleged debt of $60,000.00 was in fact created, the intention at that time had been that the said monies amounting to $60,000.00 given to me by the Applicant/Creditor were to be invested with a third party at a profitable interest rate for the benefit of the Applicant/Creditor. I was to choose this third party from my own database of developers and at the time the monies were given to me, I had not yet chosen this person or company.
Temporary Loan Agreement
13.In order to give comfort to the Applicant/Creditor, Mr Savage, I had access to a standard loan agreement which I used as a precedent and I showed Mr Savage and I said to him words to the effect of “I will sign this loan agreement myself to show that I have received the monies. It will be held by me as a temporary agreement and it will only come into effect once I have chosen a particular third party who will borrow the monies and then you can sign the agreement and we can date it and the agreement will then come into effect.” Accordingly, the agreement was signed by me only and not dated and, as far as I was concerned, the agreement did not come into effect until the monies were in fact placed with the third party.
14.Ultimately, I placed these monies ($60,000.00) with a developer well known to me as Milan Samardzic. However, Mr Samardzic’s project development failed and the monies were lost. As a result of this, I had agreed with the Applicant/Creditor that I would make up his loss of $60,000.00 by setting them off against the monies which he owed me by way of brokerage commissions/fees as well as other monies which I had paid on his behalf. I made this offer on a voluntary basis because I felt responsible for having chosen Mr Samarzdic as the third party developer and not because I was contractually liable to pay the money to Mr Savage.
15.The Applicant agreed to this arrangement and there were exchanges of emails and words to this effect which have already been outlined in some detail in my two affidavits sworn on the 20th of March 2019 and 22nd of April 2019. I rely upon both of these affidavits in full as if the same had been fully set out in this, my affidavit.
As mentioned above, in his affidavit sworn on 20 March 2019 (exhibit 7), Mr Soloman referred to the money he owed Mr Savage, and otherwise said he had subsequently repaid that money.
Similarly, in his affidavit sworn on 22 April 2019, which is annexure D to Mr Savage’s affidavit sworn on 29 December 2020 (exhibit 3), Mr Soloman referred to the money he owed Mr Savage and said he had repaid it.
In his affidavit sworn on 10 December 2020, and relied on in this proceeding (exhibit 5), Mr Soloman said that, pursuant to the loan agreement, Mr Savage was to provide him with $60,000, which Mr Soloman was to invest with third parties. Mr Soloman’s affidavit did not say that the investment was to be on Mr Savage’s behalf. The natural reading of Mr Soloman’s statement in his affidavit sworn on 10 December 2020 was that the $60,000 was for Mr Soloman to invest on his own behalf.
MR SAVAGE’S ORAL EVIDENCE ABOUT THE LOAN AGREEMENT
Mr Savage conceded in cross-examination that, in August 2012, he had $60,000 in surplus cash. Mr Savage strenuously denied approaching Mr Soloman and saying:
Phillip, can you lend this money out for me so I can earn some profit.
On the contrary, Mr Savage said in cross-examination that he did not offer the $60,000 to Mr Soloman, but Mr Soloman asked him for it, as Mr Soloman was familiar with Mr Savage’s financial circumstances. Mr Savage said in cross-examination that:
(a)Mr Soloman said that he would be able to get 18% interest for Mr Savage;
(b)Mr Savage understood that Mr Soloman was going to lend the money to someone else;
(c)Mr Soloman did not say that he would lend the $60,000 out on Mr Savage’s behalf;
(d)Mr Soloman did not say that the loan agreement was just a document to tide them over until they formalised the arrangement properly;
(e)Mr Soloman did not call Mr Savage about a week later and say that a property developer called Milan wanted to borrow the $60,000 at 3% per month over 12 months; and
(f)Mr Soloman did not tell Mr Savage about six months later that Milan had gone bankrupt.
Notwithstanding that evidence, Mr Savage also agreed in cross-examination that Mr Soloman lent out the $60,000 on Mr Savage’s behalf. However, that answer seems to me to have been the result of confusion on Mr Savage’s part. I do not believe that it was what he meant.
MR SOLOMAN’S ORAL EVIDENCE ABOUT THE LOAN AGREEMENT
Mr Soloman said in cross-examination that:
(a)he did not have a written agency agreement whereby he agreed that to be Mr Savage’s agent for the investment of the $60,000;
(b)he did not have a written agreement that he would only have to repay Mr Savage the $60,000 if an investment came good; and
(c)the “deed of agreement short term loan” agreement was a temporary arrangement which he and Mr Savage did not rely upon.
FINDINGS ON THE LOAN AGREEMENT
I found Mr Savage to be a much more credible witness than Mr Soloman. For example, as discussed below, Mr Soloman changed his evidence during the course of cross-examination about whether he had paid $14,500 on behalf of Mr Savage by weekly instalments or in a lump sum.
Also, over the years, Mr Soloman has substantially changed his defence to Mr Savage’s claim for the $60,000. Earlier, Mr Soloman said that the judgment Mr Savage relied upon was vitiated by fraud. However, in his submissions filed on 11 December 2020, Mr Soloman formally abandoned that argument. Mr Soloman, through his counsel, said at the commencement of the hearing before me that there was never any loan agreement as such, but he voluntarily agreed to repay $60,000 to Mr Savage. However, in earlier affidavits, Mr Soloman appears to have acknowledged that there was a loan. Indeed, in paragraph 11 of his written submissions dated 10 December 2020, which were signed by Mr Golledge SC and Mr Parrish, Soloman argued that there was no debt because the loan had been repaid. It was not argued in those submissions that the loan agreement was temporary, or was really an investment agreement, or was anything other than a straightforward loan agreement.
While it is common for litigants to amend their defences, substantial reversals and the late raising of entirely new points do invite some doubt about the genuineness of the defence overall.
It is very difficult to accept that the written loan agreement dated 9 August 2012 was not intended to be exactly what it said it said it was. It is a formal and very clear loan agreement. There is nothing in it to suggest that it was intended to be a temporary agreement pending the execution of an entirely different investment agreement.
Moreover, and very significantly, Mr Soloman did not claim that the entirely different investment agreement he postulated was ever drafted or signed. Despite there being many emails in evidence, there is no email from Mr Soloman to Mr Savage saying anything like:
Please find attached a draft of our investment agreement. If you are happy with it, please sign it and return it to me as soon as possible. If not, please contact me to discuss.
If Mr Soloman had indeed wanted to merely provide a written acknowledgement of his receipt of $60,000 from Mr Savage for the purposes of an investment by Mr Savage, Mr Soloman could easily have just provided a receipt saying:
6 August 2012
Received by me today from Robin Savage the sum of $60,000 to be invested by me on Mr Savage’s behalf on terms to be agreed.
Phillip Soloman
It is also very difficult to accept that Mr Soloman, who has been bankrupted over the debt of $60,000, plus interest, would have voluntarily decided to repay the $60,000 to Mr Savage if he had no legal obligation to do so. And yet, that is what Mr Soloman claims.
All in all, I do not accept that:
(a)the loan agreement was a temporary agreement;
(b)the loan agreement was really an agreement for Mr Soloman to invest money on Mr Savage’s behalf; or
(c)the loan agreement was not intended to operate entirely according to its terms.
That is, I consider that the loan agreement was a perfectly straightforward loan agreement whereby Mr Savage lent Mr Soloman $60,000 for three months at an interest rate of 3% per month, or 36% per annum. Mr Soloman, who was represented by experienced counsel, did not argue that the loan agreement was unfair or unconscionable or was for some other reason void or invalid. I therefore proceed on the basis that the loan agreement was valid and binding.
THE ALLEGED REPAYMENTS
Notwithstanding that Mr Soloman said that he had not borrowed the $60,000 from Mr Savage, he claimed that he had repaid it, on a purely voluntary basis, because the investment that he had organised for Mr Savage had gone bad.
In his written submissions filed on 11 December 2020, Mr Soloman said that he had repaid the $60,000:
(a)because, during the period 1 November 2012 to 1 August 2014, “credits accrued in Mr Soloman’s favour against Mr Savage” in the sum of $61,600, which the parties agreed were to be set off against the $60,000;
(b)during the period 13 September [year unstated] to 31 July 2014, Mr Soloman paid, or caused to be paid, $38,222 to Mr Savage; and
(c)Mr Savage waived any right to interest.
THE EMAIL DATED 31 JULY 2014
Central to Mr Soloman’s case was an email dated 31 July 2014 which he said was sent by Mr Savage to him. It was in the following terms:
Subject: investment doc
From: Robin Savage ([email protected])
Date: Thursday. 31 July 2014, 15:40
Phillip
1) Attached is statements of my banking and payments you have made, a number of payments your cheques were dishonoured.
My calculations shows I owe you $38,222.
2) I know I had agreed for Mhmed’s payment to come out of the land but if you take the house payment $14,400 from the investment money this
would come to $52622 which I owe you.
You would be able to claim this on your tax as paying rent for your employee. This will reduce the amount owing to me from the investment money
you have. This would benefit both of us as partners.
Robin
Attachments
· investment doc.pdf (820.14 KB)
· investment.pdf (646.95 KB)
MR SOLOMAN’S INTERPRETATION OF THE 31 JULY 2014 EMAIL
Mr Soloman said in his affidavit sworn on 16 February 2017 and filed in the District Court (annexure A to exhibit 3) that he understood the email dated 31 July 2014 to mean that Mr Savage owed Mr Soloman $52,622, with the result that Mr Soloman only owed Mr Savage about $8,000 out of the $60,000 loan. In his affidavit sworn on 16 February 2017, Mr Soloman did not mention a sum of $31,500 that he later claimed he had repaid to Mr Savage. However, in cross-examination, he said that the $31,500 was part of the $52,622.
MR SAVAGE’S EVIDENCE ON THE 31 JULY 2014 EMAIL
Mr Savage said in his affidavit sworn on 22 February 2017, and filed in the District Court (annexure B to exhibit 3), that:
(a)he did not know where the figures mentioned in the email came from and they bore no reference to any records he had retained; and
(b)he did not have any record of having sent the email dated 31 July 2014 to Mr Soloman.
Mr Savage then expressly denied in his affidavit sworn on 22 February 2017 that he had sent that email to Mr Soloman.
In cross-examination, Mr Savage said that:
(a)the first email address on the email dated 31 July 2014 was his and the second email address was Mr Soloman’s;
(b)he had access to his email account, including emails he sent and received in July 2014;
(c)if the cross-examiner had access to his email account, he would be able to see what emails he sent and received in July 2014;
(d)Mr Savage did not recall sending the email;
(e)the cross-examiner would not find that email in his sent emails;
(f)Mr Savage was telling the truth;
(g)his first wife died in 2009 and he married his current wife in 2011;
(h)his current wife now helps him with emails but did not do so in 2014;
(i)he is aware that his email account has a sent folder and he has looked at it;
(j)he would be able to look in the sent folder to see what emails he send in July 2014;
(k)he said that he could not have taken a screen shot of the sent folder to show what emails he sent and received in 2014;
(l)he did not know how to attach a document to an email; and
(m)his current wife did not help him with emails in 2014.
BROWNE V DUNN
It was not put to Mr Soloman that he had fabricated the email dated 31 July 2014 or that he had not received it. Mr Soloman submitted that the court had to accept that the email of 31 July 2014 was genuine because Mr Soloman was not cross-examined on whether he had received it.
However, the rule in Browne v Dunn (1893) 6 R 67 does not require matters to be put to witnesses if adequate notice of them has been given in documents filed before the trial. Campbell JA, with whom Giles JA and Handley AJA agreed, said in New South Wales Police Force v Winter[2011] NSWCA 330, (2011) 10 DDCR 69 at [81] that:
In West v Mead [2003] NSWSC 161 ; (2003) 13 BPR [24,431] at [95]–[99] I collected authorities about the manner in which the rule in Browne v Dunn was affected by exchange of documents between the parties before a hearing commenced:
In Browne v Dunn at 70–71 Lord Herschell LC stated an obligation of procedural fairness which counsel has when cross-examining a witness who counsel intends to submit should not be accepted:
If you intend to impeach a witness you are bound, whilst he is in the box, to give him an opportunity to make any explanation which is open to him; and, as it seems to me, that is not only a rule of professional practice in the conduct of a case, but is essential to fair play and fair dealing with witnesses.
However, Lord Herschell LC said that there was no obligation to raise such a matter in cross-examination where it is:
… perfectly clear that [the witness] has had full notice beforehand that there is an intention to impeach the credibility of the story which he is telling … All I am saying is that it will not do to impeach the credibility of a witness upon a matter on which he has not had any opportunity of giving an explanation by reason of there having been no suggestion whatever in the course of the case that his story is not accepted.
In Allied Pastoral Holdings Pty Ltd v FCT [1983] 1 NSWLR 1 Hunt J made a thorough review of later cases applying Browne v Dunn, and concluded (at 26):
I remain of the opinion that, unless notice has already clearly been given of the cross-examiner’s intention to rely upon such matters, it is necessary to put to an opponent’s witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings.
… Documents exchanged between the parties to litigation before the commencement of the trial are able to give notice that a witness’s account of events will be challenged in particular ways, so that there is no breach of Browne v Dunn if the witness’ account is not challenged in cross-examination. — Marelic v Comcare (1993) 121 ALR 114 at 120 (pre trial exchange of medical reports gives adequate notice), Flower & Hart v White Industries (QLD) Pty Ltd (1999) 163 ALR 744 at [52] (statement of issues, stated case and service of documentary evidence can give adequate notice), Stern v National Australia Bank Ltd (2000) 171 ALR 192 at [44] (adequate notice given by pleadings), Seymour v Australian Broadcasting Commission (1977) 19 NSWLR 219 at 236 per Mahoney JA (adequate notice given by “the nature of the defendant’s case and the particulars given, and otherwise the conduct of it”), In the Marriage of L C & T C (1998) 23 FamLR 75 at [39] (affidavits give adequate notice). Cross On Evidence, 6th Australian edition, paragraph [17460] footnote 12 says:
… the rule in Browne v Dunn did not apply where all parties were on notice of the evidentiary issues, eg by reason of affidavits having been exchanged …
The consequence of these decisions is that the circumstances in which Browne v Dunn will require matter to be put to a witness in cross-examination will depend upon the nature of the pre-trial preparation there has been, and whether that pre-trial preparation has been sufficient to give notice to a witness of the submission ultimately intended to be put to the court. An aspect of this is that Browne v Dunn will require more extensive cross-examination in a case where all the evidence is given orally, than is necessary in a case where the substance of the evidence proposed to be given by each side is notified in advance by affidavit or statement.
Even when there has been an exchange of affidavits or statements, the rule in Browne v Dunn will require a cross-examining counsel to put to a witness the implications which counsel proposes to submit can be drawn from the evidence, if those implications are not obvious from the evidence, or from other pre-trial procedures, or the course of the case …
In the present case, the principal issues in dispute between the parties were well and truly ventilated before trial. It was obvious that Mr Savage denied that he had sent the email dated 31 July 2014 to Mr Soloman, because that is what he said in his affidavit sworn on 22 February 2017. Consequently, it was not necessary for Mr Soloman to be cross examined on whether he had received the email dated 31 July 2014 from Mr Savage.
PROOF OF FORGERIES
Mr Soloman also submitted that the court had to accept that the email dated 31 July 2014 was genuine because Mr Savage bore the burden of proving that it was a forgery and he had not discharged that burden. In this regard, Mr Soloman relied on Re Application of Sutherland and Arnautovic [2014] NSWSC 821, where Kunc J said at paragraphs [63] to [67] that:
63.The question of the standard of proof where an allegation of forgery is made was most recently considered by Martin J in Groves v Groves [2013] QSC 277:
[122] The onus is on Dr Groves to establish that the signatures in question are not hers: Damjanovic v York Agencies Pty Ltd [2003] NSWCA 222. What, then, is the requisite standard? With respect to each of the documents relied upon by the defendants the plaintiff pleads that the signature appearing on the document, which purports to be that of Dr Groves, was not written by Dr Groves. While there is no pleading as to who, on the plaintiff's case, might have written those signatures it is obvious that Dr Groves contends that her signature on those documents was forged. As has been noted above the strong flavour of Dr Groves’ evidence was that the “forger” was Mr Groves. But that was not pleaded and Mr O’Shea QC admitted that there was not a sufficient basis to plead that. Nevertheless, it is an allegation of forgery by some unidentified person or persons. As such, it engages the requirement summarised in Jeans v Cleary [2006] NSWSC 647. In that case, it was alleged that the defendant had forged the plaintiff’s signature on a personal guarantee. I respectfully agree with what Johnson J said when he dealt with the appropriate standard of proof:
“[28] ... the standard of proof to be applied is the civil standard, proof on the balance of probabilities, being qualified having regard to the gravity of the questions to be determined. The test has been said to be whether the issue has been proved to the reasonable satisfaction of the Court, such satisfaction not being produced by inexact proofs, indefinite testimony or indirect inferences: Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 362; Helton v Allen [1940] HCA 20; (1940) 63 CLR 691 at 701; Rejfek vMcElroy [1965] HCA 46; (1965) 112 CLR 517 at 521. The Court should be comfortably satisfied on the balance of probabilities before such a finding is made: Bannister v Walton (1993) 30 NSWLR 699 at 711-712.
[29] The rationale for this approach was explained in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170 where Mason CJ, Brennan, Deane and Gaudron JJ said at 170-171 (footnotes excluded):
‘The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involved criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary ‘where so serious a matter as fraud is to be found’. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct.’”
64.I respectfully adopt as correct the statement of principles in the preceding paragraph noting only that, for the purposes of these proceedings, the so called “Briginshaw standard” has been supplanted by s 140(2) of the Evidence Act 1995 (NSW):
140 Civil proceedings: standard of proof
(1)In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2)Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence; and
(b) the nature of the subject-matter of the proceeding; and
(c) the gravity of the matters alleged.
65.Three other matters are relevant. First, the onus is on the party alleging a forgery to show that the signature was a forgery. The onus is not on the other party to show that the signature was not a forgery: Damjanovic v York Agencies Pty Ltd [2003] NSWCA 222 at [25] per James J; RP Meagher and Beazley JJA agreeing.
66.Second, I respectfully adopt what fell from Holland J in Sumner v Booth [1974] 2 NSWLR 174 at 178, where his Honour made reference to “... the great dangers in the field of handwriting or in the expression of opinions by handwriting experts in acting upon insufficient samples of genuine signatures, including evidence of the date at which those samples came into existence”.
67.Third, I respectfully adopt what Johnson J said about the approach to expert handwriting evidence in Jeans v Cleary [2006] NSWSC 647:
155The handwriting expert evidence forms one part of the body of evidence, both oral and documentary, upon which I must base my findings of fact. It would be erroneous to treat the expert evidence as being, in some way, decisive on its own in a case such as this: Gawne v Gawne (1979) 2 NSWLR 449 at 453A-B, 455-456. In Gawne v Gawne, Glass JA (Reynolds JA agreeing) said at 453A-B:
“I am satisfied that his Honour fell into error in his evaluation of the evidence before him. In conceding a dominant role to the expert testimony, he misapprehended the weight of the remaining evidence which, in a cogent way, established the probability that the signatures were genuine, and the improbability that they had been forged. If the opinion evidence of the handwriting experts were put to one side, the whole of the lay evidence made out a strong circumstantial case that the documents of the 9th August, 1968, had in fact been executed by F. C. Gawne.”
…
157As the tribunal of fact, I am entitled to make a comparison between handwriting that is disputed and admitted, although I should pay particular attention and regard to expert testimony on the issue: R v Doney (2001) 126 A Crim R 271 at 280 [61] (Ipp AJA, Hidden and Barr JJ agreeing).
I accept that Mr Savage had the burden of proving that he had not sent the email dated 31 July 2014, because his case was essentially that the email had been forged. Having said that, the court is required to take into account all of the evidence in the case, as mentioned in Gawne v Gawne [1979] 2 NSWLR 449, not just expert or other evidence tending to directly prove a forgery.
CONCLUSIONS ON THE EMAIL DATED 31JULY 2014
Mr Soloman noted particularly that Mr Savage had not produced a screen shot of his sent email folder from 31 July 2014. Mr Savage said he did not know how to take a screen shot. However, I do not doubt that, with appropriate assistance, for example, from his solicitor, Mr Savage could have produced a screen shot of his sent email folder from 31 July 2014. Such a screen shot may not have been particularly useful, however. That is because, as I understand it, emails can be deleted, and no longer appear in the list of sent emails.
On the other hand, if Mr Soloman had produced a screen shot of his inbox from 31 July 2014, and the screen shot showed the receipt of the email dated 31 July 2014, that evidence would have tended to substantiate his version of events, whether he bore the burden of proof or not. Mr Soloman did not produce such a screen shot.
In any event, I found Mr Savage to be an honest witness, although he may have been confused at times. I do not consider that he would have knowingly lied to the court. I accept Mr Savage’s evidence that he does not, and did not in 2014, know how to send an attachment to an email, and that his wife was not helping him with emails at that time. That means that he could not have sent the email dated 31 July 2014, because it has attachments to it. I have reached this conclusion on the balance of probabilities, and bearing in mind the Briginshaw standard. That is, I find that Mr Savage has discharged his burden of proof that he did not send the email dated 31 July 2014 to Mr Soloman.
Having made that finding, the conclusion that Mr Soloman forged the email dated 31 July 2014 seems almost inescapable. For the reasons discussed below, I have found Mr Soloman to not be a reliable witness. However, because there may be an innocent explanation for the 31 July 2014 email, and because it is not strictly necessary to make the finding, I refrain from finding that Mr Soloman forged the email dated 31 July 2014.
THE EMAILS DATED 27 SEPTEMBER 2015
It was not disputed that Mr Savage sent Mr Soloman an email on 27 September 2015 at 10.49 in the following terms:
Phillip
Re- registered letter.
After speaking to you yesterday I have been thinking about why you are unwilling to answer my registered letter questions by E-mail
1)I felt the conversation was intimidating. There has been no discussion when or how you intend to start repaying the $60,000.00 investment
after the Westpac loan of $153,500.00 has been finalised. The $60,000.00 investment was for 3 months, this is now 37 months and I have not
received any money at all. Only for my inlaws coming to my assistants by making payments the Banks would have taken my land.
2)All the concerns of making repayments and having the banks writing to me about loans on the 2 cars you bought in my name and
payments not being made has effected my health. This is why I want to have all these debts finalised as soon as possible.
is aware of our business
3)A quick check with my old Bank loans which you have obtained for me over the years including fees which the bank had paid you and other charges
I paid you to raise the loans has come to nearly $100,000.00 this includes the $20,000.00 for a valuation which in the end did not make any difference to the loan ..
4)My family is aware of our business dealings (not including Gay) If my health disallows me from carrying on my own business my Family are to take over
my business affaires with their appointed lawyer. This is why I want to have the above matters finalised as soon as possible.
Robin
It can be seen, in that email, that Mr Savage said that he had not received any repayment in relation to the $60,000 loan.
Mr Soloman replied on 27 September 2015 at 1.23pm by email saying:
Subject: Re: Re- registered letter
Hi Robin
i have got this e-mail, is not i not willing to answer your question, but i am trying to solve all the problem one by one, for the $60,000 investment we haven't get any returned back as it been advanced to Mr. Millan and his construction company that is bankruptcy already as anther people's money have invested in his company and the money is lost, even with we have giving you $31,500 as been deposited into your account and we trying after paying $153,500.00 to westpac bank to go and sort out the rest from our pocket at lest we giving you your principal of $60,000 back with no loss and we carry on this loss our selves, for that $153,500 that we are paying back to the bank as you know and agreed was part of the deal that we buying your land and constructed, and refinance the entire loan under our company and pay back westpac and pay you the rest of your money after the construction,
what has happened is after we have organized the loan and splitted into two parts $200,000 for you and $153,500 for me to get the plane done and the DA approval,
and we have already started and got our construction loan approved to start preparing the work that is needed for the land. however you Robin have changed your mind to complete our deal in last minute and by this action the settlement of the land fell through, and we carried on more losses that we don’t want you to carry for your health reasons,
that means
we will pay back the $153,500 to westpac and $28,500 to you from in stages as we have agreed.
i hope i have answered all your inquiries that has been sent via registered mail.
P.S
don't forget that we are communicating over the phone every day regarding this issue for the past three months non stop.
Phillip
From Mr Soloman’s email dated 27 September 2015, it can be seen that he was claiming at that point that he had repaid $31,500 and still had $28,500 to repay of the $60,000. Incidentally, that is inconsistent with the email dated 31 July 2014, which purported to show that Mr Soloman had repaid all but $8,000 of the $60,000 by 31 July 2014, about 14 months earlier.
In cross-examination, Mr Soloman maintained that, as at 27 September 2015, he had also repaid the $28,500 to Mr Savage, notwithstanding Mr Soloman’s email to the contrary. This reflects poorly on Mr Soloman’s credibility.
In any event, rather than just considering the emails, it is necessary to look at the underlying payments that Mr Soloman said he had made.
THE $31,500 ALLEGED PAYMENT
In his affidavit sworn on 10 December 2020, and filed in this proceeding, (exhibit 5), Mr Soloman said at paragraph 35 that, on or about 13 September 2013, he caused Mr Mehmet Dur to pay $31,500 to Mr Savage. Mr Soloman said that Mr Dur owed him $31,500, and he directed Mr Dur to pay that sum to Mr Savage, in reduction of the $60,000 debt.
Mr Soloman exhibited to his affidavit a bank statement for Mr Savage’s Bendigo bank account, showing a deposit of $31,500 on 13 September 2013, with the description “Deposit – cash Mehmet Dur”.
Mr Soloman also exhibited to his affidavit an unsigned letter dated 11 November 2013 from him to Mr Dur headed “Loan Mandate and Irrevocable Payment Authority”. The letter contained various terms to the effect that Mr Soloman would obtain a loan for Mr Dur, and Mr Dur would pay Mr Soloman a success fee of $32,000 plus GST. The letter had a space on each page for Mr Dur to sign the letter, indicating his acceptance of the arrangement. The letter was not signed by Mr Dur.
Mr Soloman said in cross-examination that the mandate letter was signed about two months after the deposit into Mr Savage’s account because Mr Soloman did a lot of work for Mr Dur, and they decided to wrap up all their agreements in the mandate letter. Mr Soloman said that Mr Dur only worked in cash, and, for safety reasons, Mr Soloman did not want to accept cash from him.
On the other hand, Mr Savage said that the $31,500 that Mr Dur deposited into his account was the deposit on the purchase by Mr Dur of Mr Savage’s house at 40 Florabunda Road, Nethercote, NSW, 2549. To his affidavit sworn on 29 December 2020 (exhibit 3), Mr Savage annexed an affidavit sworn by Mr Soloman on 16 February 2017 and filed in the District Court. Mr Soloman annexed to that affidavit a contract of sale in respect of that land sale, showing Mr Savage as the vendor and Mr Dur as the purchaser. In the contract, the sale price is stated to be $630,000, and the deposit is stated to be $100,000. The contract is dated 13 September 2013. That was the precise date that Mr Dur deposited $31,500 to Mr Savage’s Bendigo bank account.
I accept Mr Savage’s submission that the $31,500 deposited into Mr Savage’s bank account by Mr Dur on 13 September 2014 was a partial deposit for Mr Savage’s sale to Mr Dur of 40 Florabunda Road, Nethercote, NSW, 2549 on that date. I do not accept that the $31,500 deposit into Mr Savage’s bank account by Mr Dur on 13 September 2013 was pursuant to the unsigned loan mandate letter dated 11 November 2013. I do not accept that the $31,500 deposit by Mr Dur into Mr Savage’s bank account was pursuant to an assignment of a debt Mr Dur owed to Mr Soloman. I do not accept that Mr Soloman had any interest in or claim to the funds that Mr Dur used to pay the $31,500 into Mr Savage’s bank account on 13 September 2013.
Mr Soloman’s claim that the $31,500 deposit in Mr Savage’s bank account was pursuant to an assignment of a debt that Mr Dur owed to Mr Soloman was a false claim. It reflects poorly on Mr Soloman’s credibility.
THE $14,500 RENTAL PAYMENTS
Mr Soloman’s affidavit sworn on 20 March 2019 and filed in the District Court, which is annexure C to Mr Savage’s affidavit sworn on 29 December 2020 (exhibit 3), had attached to it Annexure A. Annexure A is a schedule of alleged payments from Mr Soloman to Mr Savage in reduction of the $60,000 debt. Interestingly, that schedule does not include the payment of $31,500 discussed in the previous section of these reasons for judgment. In any event, one of the items in the schedule of payments is $14,500.
Mr Soloman said that, after Mr Savage sold his house at 40 Florabunda Road Nethercote, NSW, 2549 to Mr Dur, Mr Savage continued to live in it and was liable to pay Mr Dur $500 per week rent. The schedule of payments says that, for the period 10 January 2014 to 1 August 2014:
We have carried the rent and paid on behalf of Mr Savage as he was the occupying tenant in the property at 40 Florabunda Lane Nethercote NSW 2549 South Coast to the new owner of the property. It was a total of 29 weeks of $500.00 per week as Mr.savage confirmed that this payment made by me via email dated 31 of July 2014. (Refer back to Annexa A)
The email of 31 July 2014 is discussed above. It is unclear why it would have referred to $14,400 rather than $14,500. However, as discussed above, I do not accept that it was sent by Mr Savage.
In his affidavit sworn on 22 April 2019, which was annexure D to Mr Savage’s affidavit sworn on 29 December 2020 (exhibit 3), Mr Soloman said that, after 31 July 2014, at Mr Savage’s request, he paid Mr Savage’s rental arrears of $14,500 in cash to Mr Dur, on the basis that $14,500 would be reduced from the $60,000 that Mr Soloman owed Mr Savage. That is, Mr Soloman claimed that Mr Savage’s rent had gone into arrears to the extent of $14,500, and Mr Soloman paid the arrears on Mr Savage’s behalf in a lump sum on a date after 31 July 2014.
However, in his affidavit sworn on 10 December 2020, Mr Soloman said that, between 10 January 2014 and 31 July 2014, he made 29 rental payments of $500, totalling $14,500, on Mr Savage’s behalf. That is, he did not claim to have paid the $14,500 in a lump sum, but said that he had paid the rent in 29 separate payments. Also, he did not claim to have paid the rent after 31 July 2014, but claimed to have paid it between 10 January 2014 and 31 July 2014.
In oral evidence, after the inconsistency in his evidence had been pointed out to him, Mr Soloman eventually said that he paid the $500 weekly, but not necessarily in the week each rental payment was due.
That meant that Mr Soloman’s affidavit sworn on 22 April 2019 was false when it said that he had paid $14,500 in a lump sum for the arrears of Mr Savage’s rent after 31 July 2014. Obviously, this bears very adversely on Mr Soloman’s credibility.
Mr Soloman also said in oral evidence that he made the rental payment or payments to Mr Dur in cash and he did not obtain a receipt from Mr Dur.
Mr Savage denied that Mr Soloman paid the rent on his behalf.
In view of:
(a)the changes in Mr Soloman’s evidence about the timing of the payment or payments of the $14,500;
(b)there being no receipts from Mr Dur;
(c)Mr Dur not being called to give evidence to substantiate Mr Soloman’s claims; and
(d)my concerns about Mr Soloman’s credibility,
I do not accept that Mr Soloman paid $14,500 for Mr Savage’s rent. Mr Soloman’s claim in this regard was false. It reflects poorly on his credibility.
OTHER ITEMS IN THE SCHEDULE OF PAYMENTS
Mr Soloman claimed in his schedule of payments that Mr Savage owed him:
(a)commissions of 2% for two loans that he had obtained for Mr Savage;
(b)commission of 2% for the sale of 40 Florabunda Lane Nethercote; and
(c)$1,500 and $3000 for loan application fees.
The schedule of payments is as follows:
Date Description Amount 1st of November 2012 Financed Mr Savage’s land and property with NAB Bank with the borrowed amount of $1,038,000 and the agreed commission was 2% of the full borrowed amount (Annexa AI) $20,760.00 10 of May 2013 Finance application made for Mr. Savage with Citi Bank (finance approved amount $550,000) (Annexa AII) $3,000.00 10th of January 2014 The sale of the property at 40 Florabunda Lane Nethercote NSW 2549 South Coast, 2% commission of the total Sale price $615,000.00 (Annexa AIII) $12,300.00 8th August 2014 I have financed Mr Savage with Westpac Bank and the Borrowed amount is $480,000.00 which was a successful application and the commission was 2 percent as agreed. (Annexa AIV) $9,600.00 … [rent] $14,500.00 11th of August 2014 Application fee made to Seekhome loans on behalf of Mr Savage based on his instructions. (Annexa A VI) $1500.00 Total amount: $ 61,166.00AUD
Mr Soloman conceded in cross-examination that he had not produced any documents, such as the unsigned loan mandate that he produced in respect of Mr Dur’s alleged loan, to substantiate that Mr Savage had agreed to pay Mr Soloman a 2% commission for the two loans that Mr Soloman had organised on Mr Savage’s behalf.
Mr Savage denied that he had agreed to pay a 2% commission for either of the loans in the schedule of payments. Mr Savage said in cross-examination that he understood that the relevant bank had paid Mr Soloman’s commission on each of the loans.
As mentioned, I found Mr Savage to be a credible witness, and Mr Soloman not to be a reliable witness. I find Mr Savage’s claim that he understood the relevant banks to be liable for the commission on the loans that they gave him to be plausible. I understand that is an arrangement that banks follow, at least sometimes. In the absence of any documents showing that Mr Savage agreed to pay Mr Soloman a 2% commission for the NAB, Citibank and Westpac loans, I do not accept that Mr Savage did agree to pay such a commission. I do not accept that Mr Savage owes Mr Soloman a 2% commission on each of those loans.
In relation to the commission for the sale of 40 Florabunda Road, Nethercote, NSW, 2549, the contract states that it was “without the intervention of an agent”. There was some uncertainty in the evidence about Mr Soloman’s standing as a real estate agent at the time of the sale, on 13 September 2013. However, ultimately, he claimed that he was a sales assistant who worked under the supervision of a licenced real estate agent at the time of the sale.
If that is true, any commission on the sale would have been payable to the licenced real estate agent, and not to Mr Soloman. Mr Soloman would have been entitled to his salary, and perhaps a small commission from the licenced real estate agent, but not to any commission from Mr Savage.
Generally speaking, the real estate agent’s commission is one of the costs of sale, which is paid from the proceeds of the sale of the real estate as a priority. If there had been a real estate agent in this case, it is very difficult to believe that he would not have received his commission on the day of settlement.
However, there is no reason to believe there was a real estate agent involved in the sale in the present case. The contract unequivocally states there was no real estate agent. Mr Soloman has not produced any documentation to the effect that he was entitled to a commission for the sale.
Indeed, there is a distinct possibility that it would have been illegal for Mr Soloman to have charged a commission for that sale, as he was not a licenced real estate agent at the time.
In any event, in all the circumstances, I am not persuaded that Mr Savage owes Mr Soloman any commission for the sale of 40 Florabunda Road, Nethercote, NSW, 2549.
In relation to the loan application fees, Mr Soloman has not provided any documentation substantiating that these fees were incurred, or were not paid by Mr Savage at the time to the lender, or were not rolled into the loan. I have insufficient evidence to be satisfied that fees these are real debts.
All in all, I am not persuaded that any of the amounts in the schedule of payments are or were owing by Mr Savage to Mr Soloman. That is, I do not accept that any amounts have been paid or credited in reduction of Mr Soloman’s debt of $60,000 to Mr Savage.
THE INTEREST
Mr Soloman said in paragraph 6.b of his affidavit sworn on 22 April 2019 filed in the District Court that, in conversations between him and Mr Savage, Mr Savage had agreed to forgo any interest on the $60,000 once the $60,000 was repaid. As discussed above, I am not satisfied that the $60,000 has been repaid. It follows that the interest remains outstanding.
Moreover, I am not satisfied that there were any discussions between Mr Savage and Mr Soloman to the effect that interest would be forgiven. As mentioned, I found Mr Savage to be a credible witness and Mr Soloman to be an unreliable witness. In those circumstances, and in the absence of any documents supporting Mr Soloman’s claims, I do not accept that Mr Savage agreed to forgive the interest.
THE FURTHER LOAN OF $153,000
Mr Soloman submitted that the court should be satisfied that he had repaid the $60,000 by 31 July 2014 because, after that date, Mr Savage lent him a further $153,000. That argument does not sit well with Mr Soloman asking the court to accept that he kept working for Mr Savage, although Mr Savage had not paid his commissions.
In any event, for the reasons set out above, I do not accept that the $60,000 was repaid. I consider that Mr Savage may have had reasons for lending Mr Soloman a further $153,000, even though the $60,000 had not been repaid. In doing so, Mr Savage would not have been the first person to send good money after bad.
CONCLUSION
For the reasons set out above, I am satisfied that the parties entered into a written agreement for Mr Savage to lend Mr Soloman $60,000 for three months at 3% interest per month.
For the purposes of the trial on 5 October 2021, Mr Savage filed an affidavit of debt. In view of that affidavit, and in view of the discussion above, I am satisfied that the $60,000 has not been repaid in whole or in part.
There will be declarations accordingly. I will hear the parties on the further orders to be made.
I certify that the preceding one hundred and fourteen (114) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Riley. Associate:
Dated: 18 November 2021
2
21
1