New South Wales Supreme Court CITATION : McIntosh & Anor v ARAF Capital Funding [2003] NSWSC 843 HEARING DATE(S) : 9 September 2003 JUDGMENT DATE : 12 September 2003 JURISDICTION: Common Law Division JUDGMENT OF : Master Malpass DECISION : The Summons is dismissed. The plaintiffs are to pay the costs of the Summons. The Exhibits may be returned. CATCHWORDS : Appeal - intention to create immediate binding agreement - authority - no error of law. LEGISLATION CITED : N/A CASES CITED : Masters v Cameron (1954) 91 CLR 353. Rex Bernard McIntosh (First Plaintiff) PARTIES : Timothy William McIntosh (Second Plaintiff) v ARAF Capital Funding Pty Ltd (formerly Australian Rural and Agricultural Finance Pty Ltd) (Defendant) FILE NUMBER(S) : SC 10381 of 2003 COUNSEL : Ms D Hogan-Doran (Plaintiffs) Mr D Pritchard (Defendant) SOLICITORS : Kemp Strang (Plaintiffs) Garland Hawthorn Brahe (Defendant) LOWER COURT Local Court JURISDICTION : LOWER COURT 923 of 2002 Local Court Downing Centre Sydney FILE NUMBER(S) : LOWER COURT S Emmett (LCM) JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Master Malpass Friday 12 September 2003 10381 of 2003 Rex Bernard McIntosh & Anor v ARAF Capital Funding Pty Ltd (formerly Australian Rural and Agricultural Finance Pty Ltd) JUDGMENT 1 MASTER: In 1978, Mr Rex McIntosh (Rex) purchased a property in Queensland ("Lurline"). In 1995, his son, Mr Timothy McIntosh (Tim) commenced to manage "Lurline". 2 On 16 November 1999, a written Power of Attorney was executed. Pursuant to that document, Rex appointed Tim to be his attorney (inter alia to do on my behalf anything that I may lawfully authorise an attorney to do). 3 Upon dispute arising with his bankers, Rex took steps to either refinance the existing bank debt or sell "Lurline". He approached Mr Mettam (a finance broker). His intervention brought about contact with the defendant. 4 On 18 March 2000, Rex paid the sum of $6,000 to Mr Mettam. On 10 April 2000, Tim signed a document which is headed "Mandate To Act" (the Mandate) as attorney for Rex. The defendant has been described as a mortgage broker and financial adviser. The Mandate authorised the defendant to arrange for refinancing for a prescribed brokerage fee. The defendant was given a copy of the Power of Attorney. 5 Refinancing arrangements were made. Rex decided to put the property up for auction. It was then sold. 6 The defendant claimed an entitlement to brokerage fees in the sum of $30,000. Proceedings were commenced in the Local Court and default judgment obtained against both Rex and Tim for the sum of $30,000. 7 It was in this context, that discussions were had to finally resolve the dispute. 8 The plaintiff advised of an intention to apply to have the default judgment set aside. On 16 August 2000, a conference was had between Mr Mettam and Tim. It was followed by telephone conversations between Mr Ross (who is described as a principal of the defendant) and Tim (who was in the presence of Mr Mettam). It is said by the defendant that during this conversation an agreement was reached to resolve the dispute by payment of the sum of $20,000 (being $10,000 now and $2,500 by way of four instalments over two years). The agreement contemplated the subsequent execution of a written contract. 9 On 17 August 2000, Tim paid a sum of $10,000 to the defendant. There was a subsequent confirmatory telephone conversation. Tim informed Mr Mettam that the dispute had been resolved. Steps were taken towards the execution of a deed. In September 2000, Rex advised the defendant that it was his intention to have the judgment set aside, sue for damages and get back the $10,000. On 21 November 2000, the default judgment was set aside by consent. 10 The parties went to a hearing on the defendant's claim. It was heard by Emmett LCM. The trial took about 3½ days. The defendant's case was put in the alternative (there were three alternatives). The learned Magistrate found in favour of the defendant. She made a determination on one only of the defendant's alternative claims (founded on an alleged oral agreement). She did not determine either of the other two alternative claims. She entered judgment in favour of the defendant in the sum of $10,000 plus interest and costs. 11 On 19 February 2003, the plaintiffs filed a Summons in this Court. It propounds an appeal from the decision of the learned Magistrate. On 19 February 2003, the plaintiffs also filed a Statement of Grounds in Support of Summons. It identifies 10 grounds of appeal. 12 The appeal was heard on 9 September 2003. Only grounds 1, 2 and 3 as set forth in the Statement of Grounds were argued (these were said to be related and concerned the findings as to the alleged oral agreement). The other grounds were abandoned. 13 It is common ground that an appeal only lies where there has been error in point of law. The plaintiff bears the onus of satisfying the court that there is such error which justifies the disturbing of the decision of the learned Magistrate. 14 The learned Magistrate found that a binding oral agreement had been made between the defendant and the plaintiffs on 16 August 2000. It is common ground, that if this decision be disturbed, the matter should be remitted to the Local Court for rehearing according to law. 15 She had before her evidence given inter alia by the plaintiffs and Mr Ross. There was no conflict between Tim and Mr Ross. There was some conflict between Tim and Rex. The learned Magistrate found that Tim was a reliable and truthful witness and preferred his evidence to that of Rex. 16 Mr Ross gave evidence of inter alia what passed between him and Tim on 16 August 2000. The evidence was as follows:- " I then spoke with Tim McIntosh Tim said to me; 'I'd like to see if we could settle this matter'. I said to Tim, 'Tim, I'd like to reach agreement with you. The debt is $30,000-00'. Tim said to me: 'Can we negotiate on that?' I said, 'Yes, what do you have in mind?' Tim said ' Would you accept $12,000-00 now and the balance over time?' I said to Tim, ' Tim, what about $10,000-00 now and the balance over the next two years, say $2,5000-00 (sic) each six months. Can you handle that?' Tim said 'Yes, I can '. I said to Tim ' Tim, I hope this is not from you. This really must be you and Rex. Please talk to him. I am not looking to put any strain on you or your family. I understand Rex has a surplus from the auction – that's where this should be coming from. ' Tim said, 'Dad's a strange person. I haven't seen him for some time however I do have his mobile number '. I said to Tim, 'Tim, we'll hold any further action. There is a caveat over the Yackandandah property and we are proving our debt in Victoria. We will hold this and do nothing further. Tim, I'll ask our Solicitors Garland's (sic) to prepare a contract so that we are both protected. There will be legals on this. ' Tim said to me, 'Who pays those?' I said to Tim, 'You do, but we'll pay the first $1,500-00 to settle this matter. Tim, will you speak to your Solicitors in Rockhampton and make sure they are happy and tell them Garlands' (sic) will send them the Deed'. " 17 Also, the learned Magistrate had before her an Agreed Statement of Facts, which contained inter alia the following:- " 'On about 16 August 2000, Mr Hugh Ross [of ARAF] had a telephone conversation with Mr Tim McIntosh regarding settlement of the debt due. It was agreed that payment would be made to ARAF of $20,000 in 5 instalments – one initial instalment of $10,000 and 4 instalments of $2,500 over 5 years in full and final satisfaction of the judgment debt. On 17 August 2000, a payment of $10,000 was made to ARAF. No further payments have ever been made.' " 18 The issues between the parties had been framed in terms of what was said in Masters v Cameron (1954) 91 CLR 353 at p 360:- "Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract." 19 The case for the defendant was that the subject contract belonged to the first of the three classes. The case for the plaintiffs was that it belonged to the third of the three classes. 20 The issues ultimately argued in the appeal were relatively narrow. The findings of fact made by the learned Magistrate were not disputed. It is said that there was misdirection in the application of the law to those facts. 21 It was said that in determining the question of intention, the learned Magistrate failed to make an objective assessment of the state of affairs between the parties (that is, she did not look to the language used by the parties to determine their intention). It was said that instead she acted on matters such as subjective considerations and subsequent conduct. 22 These were said to be two matters appearing in the evidence given by Mr Ross that pointed to an absence of intention to be immediately bound. One involved the reference to Rex. The other involved the remark about the solicitors in Rockhampton. 23 The learned Magistrate has delivered a lengthy and detailed judgment (it is in the order of 30 pages). She carefully considered the issues litigated before her. 24 I have closely considered the judgment. I do not accept the contention that the learned Magistrate failed to make an objective assessment of the language used by the parties. Be that as it may, even if a different view were taken on that question, it seems to me that she still reached a decision which was reasonably open on the material. Not only was it so open on the basis of objective assessment, it was powerfully reinforced by admissions made by Tim (including the payment in the sum of $10,000 made on the following day). 25 A challenge was also made to the finding that there was an enforceable agreement whereby both Rex and Tim were jointly and severally liable. The plaintiffs had put in issue the actual or ostensible authority of Tim to bind Rex. In my view, this challenge was also without substance. 26 The negotiations took place in a context where default judgment had been entered against both plaintiffs. There is no dispute that Tim was validly appointed as attorney for Rex. There is no dispute that he was empowered to enter into the agreement on behalf of Rex. Rex was a party liable under the Mandate. A copy of the Power of Attorney had been given by Tim to the defendant. Tim gave evidence that he knew he was doing the deal for himself and his father to rid both of them of the debt. In my view, there was no misdirection and the finding was reasonably open on the material. 27 Accordingly, the appeal fails. The Summons is dismissed. The plaintiffs are to pay the costs of the Summons. The Exhibits may be returned. ********** Last Modified: 09/15/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.