New South Wales Supreme Court CITATION : Sharpe v McCulloch, Hilton Lorne [2007] NSWSC 1468 HEARING DATE(S) : 11 December 2007 JUDGMENT DATE : 14 December 2007 JURISDICTION : Common Law JUDGMENT OF : Associate Justice Harrison DECISION : (1) The appeal is dismissed; (2) The decision of Magistrate Lulham dated 22 January 2007 is affirmed; (3) The summons filed 19 February 2007 is dismissed; (4) The plaintiff is to pay the defendant's costs as agreed or assessed. CATCHWORDS : APPEAL - Local Court - breach of contract LEGISLATION CITED : Local Courts Act 1982 Allen v Kerr & Anor [1995] Aust Torts Reports 81-354 Azzopardi v Tasman UEB Industries Ltd Carr v Neill [1999] NSWSC 1263 CASES CITED : Devries v Australian National Railways Commission (1993) 177 CLR 472 Jung v Son [1998] NSWSC 698 RL & D Investments Pty Ltd v Bisby (2002) 37 MVR 479; {2002} NSWSC 1082 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588 Swain v Waverley Municipal Council (2005) 220 CLR 517 PARTIES : Dominic Sharpe (Plaintiff) Hilton Lorne McCulloch (Defendant) FILE NUMBER(S) : SC 10904/07 COUNSEL : Mr M Boulton (Defendant) SOLICITORS : Mr D Sharpe (Plaintiff in person) Solari Legal (Defendant) LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 3603/06 LOWER COURT JUDICIAL OFFICER : Lulham LCM LOWER COURT DATE OF DECISION : 22 January 2007 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ASSOCIATE JUSTICE HARRISON FRIDAY, 14 DECEMBER 2007 10904/2007 - DOMINIC SHARPE v HILTON LORNE McCULLOCH JUDGMENT (Appeal decision of Local Court - breach of contract) 1 HER HONOUR: By summons filed 19 February 2007, the plaintiff seeks to appeal the decision of his Honour Magistrate Lulham made in Local Court Downing Centre on 22 January 2007. 2 The plaintiff is Dominic Sharpe who was the defendant in the Local Court. The defendant is Hilton Lorne McCulloch who was the plaintiff in the Local Court. For convenience in this judgment I shall refer to the parties by name. 3 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the plaintiff. Section 73 of the Local Courts Act 1982 permits a party who is dissatisfied with a judgment as being erroneous on a point of law to appeal to this Court. The onus lies on the plaintiff to demonstrate that there has been an error of law. What is a question of law (as opposed to a question of fact) was considered, inter alia, in Allen v Kerr & Anor [1995] Aust Torts Reports 81-354; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156; Carr v Neill [1999] NSWSC 1263 and R L & D Investments Pty Ltd v Bisby (2002) 37 MVR 479; [2002] NSWSC 1082. The judicial officer cannot act on evidence inconsistent with facts incontrovertibly established by the evidence - see Devries v Australian National Railways Commission (1993) 177 CLR 472 per Brennan, Gaudron and McHugh JJ at 479 and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588. 4 In Swain v Waverley Municipal Council (2005) 220 CLR 517, the Chief Justice at [2] reiterated that in the common law system of civil justice, the issues between the parties are determined by the trial process. The system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal. 5 Section 75 of the Local Courts Act provides that the Court may determine an appeal either (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal. Grounds of Appeal 6 Mr Sharpe appeals from the whole of Magistrate Lulham decision made on 22 January 2007 on the following grounds. "(1) The plaintiff admitted that he was trespassing at the time of the document being signed under duress. (2) Failure by the Judge to see that a telephone call was made to the Police at the time of the unauthorised trespass asking for assistance. (3) Conflicting evidence from Eva and Lorne about how he was locked in the building and that this could of not happened as there is a fire exit which could have been used. (4) An article which is signed under duress can't be considered to be a legal document. (5) Failure by the Judge to see that over six thousand dollars was withdrawn from my bank account without permission." Local Court proceedings 7 On 20 April 2006 Mr McCulloch filed a statement of claim seeking $36,000. It pleaded that Mr Sharpe had agreed to purchase a budget accommodation business from Mr McCulloch for the sum of $40,000. Repayments were to be made in weekly instalments in the sum of $1000 for 40 weeks. Mr McCulloch alleged that only $4000 had been paid. On 1 December 2006 Mr Sharpe filed a defence which denied that he owed money to Mr McCulloch. Mr Sharpe pleaded that there was a verbal agreement with Mr McCulloch that he would pay $50,000 for everything in the business. According to Mr Sharpe, he paid the $50,000 and Mr McCulloch owed him $19,689.94 in rent. At paragraph [14] of his defence Mr Sharpe says that Mr McCulloch made unauthorised transfers from the bank account of the budget accommodation business to his own bank account and that he would like this money to be refunded. No cross claim filed. 8 On 22 January 2007 the Magistrate made orders that there be judgment in favour of Mr McCulloch in the sum of $36,300. 9 On 22 January 2007 both parties appeared before the Magistrate. They were both unrepresented. This case was run concurrently with Mrs McCulloch's claim against Mr Sharpe. 10 The critical events occurred on 19 August 2005. Mr Sharpe in his statement at [4]-[9] says: "4. On 19th August 2005 I received a phone call from hotel receptionist around 7pm that a crazy man was trespassing on the property known as … and entering the guests' personal bedrooms and pulling the bunkbeds apart and taking the beds out of the building. 5. I arrived at … and found Hilton Lorne McCulloch drunk in the building with his wife Eva McCulloch waiting outside in his van. He was very intoxicated and ranting and raving that he didn't trust me and he was getting his beds out of the building. He was in a very bad and unstable mood and was upsetting the guests in their bedrooms and taking their beds and mattresses away from them. They were frightened and clearly didn't know what was going on. 6. I managed to lock Hilton Lorne McCulloch out of the building around 7.40pm on 19th August 2005. He then went berserk and started pounding on the reinforced glass doors to the hostel. He tried very hard to punch the doors in and cracked the glass in the bottom panel of the left door. At this time I phoned for the police to come to my assistance as I was afraid for my safety at 7.45pm on my mobile phone…." 7. After this he started to calm down and I was able to begin to talk to him on a more reasonable level. 8. He wanted more money for the business and to go back on his original agreement. By this date I had reorganised the hotel to make it work better and signed up for another 5 year lease with the landlord and paid all the associated costs with this venture. There is no more lease renewals with lease so in 5 years the business will be worth nothing. 9. I just wanted him out of the building and I went along with his plan to have a written agreement. I just wrote out what he wanted to humour him and signed it, knowing full well that a document signed under duress is not legally binding." 11 Mr Sharpe gave similar evidence before the Magistrate. At the hearing of this appeal Mr Sharpe elaborated that the document was not a contract because it was not signed by two witnesses. These facts were disputed by Mr McCulloch. His version of events was that prior to 19 August 2005 Mr Sharpe verbally agreed to pay him $75,000 by Christmas 2005 plus the costs of the bunk beds. Earlier in the day of 19 August 2005, Mr McCulloch says that he phoned Mr Sharpe. Mr Sharpe informed Mr McCulloch that he was not going to fulfil his side of the verbal agreement and would not pay the $75,000 (t 7.51). Mr McCulloch then says that he went to the hostel to remove his beds. Mr McCulloch says that it was Mr Sharpe who locked him (Mr McCulloch) inside the building (t 12.31) and he was tyring to get out. Mrs McCulloch, Mr McCulloch's wife also gave evidence which largely supported Mr McCulloch's version of events. Mr McCulloch admitted that he drew cheques for $6000 but contended that this was not included in the sum claimed as owing. 12 The Magistrate in his extempore judgment stated: "Mr Sharpe gave evidence that Mr McCulloch calmed down. There was a dispute also as to how many people were in the premises that night. Mr McCulloch said he only saw two residents and that there were no one in the beds in the rooms he entered. Mr Sharpe said that there were 50 people staying there that night. In any event, Mr Sharpe says that Mr McCulloch calmed down and they had a discussion. Mr Sharpe said that he wrote up an agreement. He said he did so under duress. He said he did not want any further scenes at the backpackers or for the residents to be upset. The form of the agreement was: "I Dominic Sharpe will pay Hilton Lorne McCulloch $40,000 on 24 December 2005 and afterwards $1000 per week for 40 weeks after this date. All chattels and equipment will remain at the … . If a sale of the business takes place then Hilton Lorne McCulloch will receive $20,000. Twenty thousand dollars or at the end of the lease twenty thousand dollars will be paid to Hilton Lorne McCulloch." Now Mr Sharpe said that he signed that, as I said, under duress. … I have considered all the evidence carefully and I have come to the view that the plaintiff has satisfied me on the balance of probabilities that his version of the discussions was correct. The main reason for that finding is the written agreement signed on 19 August. I am not satisfied on the evidence that that document was signed under duress. It was not put by Mr Sharpe and Mr McCulloch as to events at the actual preparation and signing which amounted to, in my view, duress. There was nothing done subsequently by Mr Sharpe, either in writing or in action, which would indicate that the agreement was not binding and that he was not going to be bound by it. I considered Mrs McCulloch a good witness. She, in my view, confirmed largely the version of events as to what occurred on 19 August. She also confirmed in a manner which I thought was convincing that her understanding at around 1 July 2005 was that her husband was to be paid $75,000 plus the money for the beds. On the whole of the evidence I am satisfied that the plaintiff has proved his case." 13 As previously stated, the evidence was largely disputed by the parties. It was open to the Magistrate to make the factual findings he did. It was open for the Magistrate to decide that Mr Sharpe did not sign the agreement under duress. It is not necessary for the Magistrate to resolve every disputed fact. The reasons given by the Magistrate must be sufficient to enable the appellate court to gain a proper basis of the judgment – see Jung v Son [1998] NSWSC 698. In my view the Magistrate has done this. There is no error of law. The appeal is dismissed. The decision of Magistrate Lulham dated 22 January 2007 is affirmed. The summons filed 19 February 2007 is dismissed. 14 Costs are discretionary. Costs normally follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed. The court orders: (1) The appeal is dismissed. (2) The decision of Magistrate Lulham dated 22 January 2007 is affirmed. (3) The summons filed 19 February 2007 is dismissed. (4) The plaintiff is to pay the defendant's costs as agreed or assessed. ********** 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.