Supreme Court New South Wales Medium Neutral Citation: Huseyin Aksu v Mukadder Ilhan & Ors [2011] NSWSC 970 Hearing dates: 03.04.11, 04.04.11 Decision date: 30 August 2011 Before: Nicholas J Decision: Par 43 Catchwords: CONTRACT - whether binding oral agreement for loan established - turns on facts - no question of general principle Cases Cited: Briginshaw v Briginshaw (1938) 60 CLR 336 Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572 M & E M Hull Pty Ltd v Thompson [2001] NSWCA 359 Watson v Foxman (1995) 49 NSWLR 315 Category: Principal judgment Parties: Huseyin Aksu - plaintiff Mukadder Ilhan- first defendant Huseyin Ilhan - second defendant Nermin Kaylon - third defendant Turker Kaylor - fourth defendant Representation: Counsel: B Dennis - solicitor - plaintiff In person - first defendant In person - second defendant In person - third defendant In person - fourth defendant Solicitors: B Dennis - plaintiff In person - defendants File Number(s): 08/280111 Judgment 1The plaintiff claims from the defendants payment of the sum of $72,635.11, and interest, being the balance of monies payable under a loan agreement made in about September 1993. It was alleged that pursuant to an oral agreement between the plaintiff and Miss Mary Avsar (Mary) as agent for the four defendants, the plaintiff agreed to borrow the sum of $120,000 to be secured by way of mortgage over his property at ## Street, West End, Queensland, and to on-lend that sum to the defendants to assist them in establishing a take away food shop in Queensland (the shop). It was alleged that it was agreed that the balance of the loan was to be repaid in 12 months, and in the interim the defendants would make periodical payments due under the plaintiff's mortgage to the mortgagee. 2The defendants denied liability under the alleged, or any, agreement with the plaintiff, and denied that Mary was their agent for the purpose of arranging a loan. 3The plaintiff is about 73 years of age. His native language is Turkish, and he required the assistance of an interpreter. He was represented by his solicitor, Mr Bruce Dennis. 4The first defendant is, and at all material times was, the wife of the second defendant. The third defendant is, and at all material times was, the wife of the fourth defendant. The first and third defendants and Mary are sisters. The defendants were unrepresented. 5The following matters were either undisputed or established on the evidence. 6In about January 1994, on Mary's recommendation, the plaintiff applied to Advance Bank Australia Ltd (the bank) through Finance Planning Pty Ltd, brokers, for a loan of the sum of $120,000. On 14 September 1994 the amount was provided, secured by mortgage to the bank over the plaintiff's property in Queensland. In accordance with the plaintiff's directions, the amount of $1,113 was paid for legal fees, and the amount of $4,500 was paid to Finance Planning Pty Ltd. The balance in the amount of $114,387 was paid by cheque to Mary. Mary then endorsed the cheque in favour of the first defendant who deposited it in her personal bank account with St George Bank. The first defendant used part of the funds for the purchase of the shop in Queensland. 7Between 1994 and about 18 October 2005 the first defendant regularly made payments to the plaintiff's bank account which were applied by the plaintiff towards the monthly repayments which he was required to make in respect of his loan from the bank. These payments, in the total sum of $28,475, ceased on about 18 October 2005. 8Mary was a bankrupt between 9 July 1996 and 24 July 1999. 9I turn now to the evidence in the case. 10The plaintiff's evidence was contained in his affidavit of 22 September 2009. It included: "8. On or about September, 1993 Mualla Avsar and the First, Second, Third and Fourth Defendants attended my place of business once again to ask for the loan. My place of business is located at ### #### Street, Auburn in which I was operating a video store. Mualla Avsar introduced the others to me and we all sat down for a conference. Mualla Avsar said to me the words to the effect: 'Mukadder and Nermin are both my sisters. Mr Huseyin Ilhan is Mukadder's husband and Turker is Nermin's husband. They are planning to open a take away business in Queensland. They are here to ask for a loan of about $120,000.00. I mentioned it to you the last time we saw you. They were too embarrassed to ask you themselves, that's why I came with them.' 9. I asked the First, Second, Third and Fourth Defendants words to the effect: 'Do you want the loan do you, what type of business are you thinking of.' 10. The second Defendant said to me the words to the following effect: 'Yes. We are going to open a kabab [sic] shop in Queensland. Basically a take away shop selling mainly doner kebabs, fish and chips and so on.' 11. The Fourth Defendant said to me the words to the following effect: 'All four of us will be working in the shop. The women will be working as customer attendants and Huseyin and myself will be responsible for the cutting of the kebabs and other food preparation etc. We want the loan only for about 12 months. We will pay the whole loan to you within 12 months.' 12. My former wife then said to me the words to the effect: 'Huseyin, look these people are 6 families living in a single house. They are poor people. You will be doing them a good deed if you help them set up their business. They only want the loan for 12 months.' 13. I then said to the First, Second, Third and Fourth Defendants words to the following effect: 'All right then. In this case I will give you the loan for 12 months only. I will borrow the money from Advance Bank. I will use by [sic] Brisbane property as security. I am sure the bank will provide the loan.' 14. On Mualla Avsar's recommendation I made a loan application on or about January, 1994 for the loan of $120,000.00 through the brokers Finance Planning Pty Ltd to the Advance Bank. Mualla Avsar was working for this firm at the time. I also know that this organization was paid a commission of $4,500.00 from the total proceeds of $120,000." 11He said that at about the end of 1995 he had a conversation with the defendants about repayment of the loan, during which the fourth defendant told him they would continue to make repayments at the rate of about $1,000 per month, and would pay the whole loan off. He said that on learning the defendants had left the shop in 1997 and had returned to Sydney, he requested them to repay the loan. Although it was not repaid, monthly payments continued. He said that, following cessation of payments, he had a conversation in November 2005 with the first and second defendants at his house in Auburn, during which they told him they would not make any further payments. He said that in about early December 2005 he had a conversation with the third and fourth defendants during which the third defendant offered to pay about $400 per month and said, inter alia, "maybe you should not have given us the money in the first place". 12The plaintiff relied on the statement of 13 January 2006 prepared by Mary at his request which, translated from Turkish, states: "My name is Mery (Mualla) Avsar. Mr Huseyin Aksu had refinanced and withdrawn $120,000 from Advance Bank by showing his property at ## #### Street, Westend, QLD as the security in 1994, and he made a cheque on my name and presented it to me. I received the cheque in the office of Kokatus in Parramatta, who was a solicitor. I signed the back of the cheque and gave it to my sister Mukadder Ilhan. My sisters Mukadder Ilhan and Nermin Kalyon had taken this money for the purpose of opening up a kebab shop in Brisbane. The cheque was deposited into the account of Mukadder Ilhan at the Commonwealth Bank. They have been making the monthly repayments up until 2005; but they have stopped making the repayments since then. I hereby state that the situation is as above." 13The plaintiff was questioned to a limited extent by each of the first, second and third defendants, but no effective challenge was made to his evidence. 14For the plaintiff, his former wife, Mrs Emine Aksu gave the evidence contained in her affidavit of 23 September 2009. It included: "12. On or about the end of September 1993 Mualla Avsar, the First Defendant and Second Defendant and the Third and Fourth Defendants came to our place of business. Mualla Avsar introduced her sisters and their husbands to my former husband and we all sat for a conference. 13. Mualla Avsar, addressing both my former husband and I said words to the effect: 'Mukadder and Nermin are both my sisters. Mr Huseyin is Mukadder's husband and Turker in [sic] Nermin's husband I have explained to your wife earlier and I am sure that she has told you that my sisters and their husband [sic] are planning to open a take away business in Southport Queensland. They want to request a loan from you. They were too embarrassed to ask you themselves so I came with them.' 14. My former husband then asked them why they wanted the loan. The Second Defendant then replied: 'We are going to open a kebab shop in Queensland. It will be a take away shop selling mainly doner kebabs and fish and chips.' The Fourth Defendant also said words to the effect: 'All four of us will be working in the shop. The women will be working serving customers and Huseyin and myself will be cutting the kebabs and other food preparation. We only want the loan for about 12 months. We will pay the whole amount to you within 12 months.' 15. In this meeting the First Defendant also said to both my former husband and I words to the effect: 'Like my husband and Turker told you we want the money to open the business in Queensland. We are borrowing the money to do something for our future. We are living together at my mothers [sic] home together with six families. We have to do something. If something goes wrong I promise I will pay every cent to you my self. There will be no harm from us to you regarding this loan. We will pay it off within 12 months.' ... 17. I know that the First Defendant, Second and Third Defendants were given a cheque in the amount of $120,000.00 on or about the end of September 1994. I also know that their take away shop opened on or about the first week of November 1994. I visited them on or about end of November 1994. During my trip to Queensland I stayed in the house of the First and Second Defendants for three days. I saw all of the Defendants working in the shop. The First and Third Defendants were serving customers and the Second and Fourth Defendants were occupied with the cutting of kebabs and other preparatory work." 15She said that on occasions in October and November 2005 she had conversations with the first defendant in which she questioned the first defendant about repaying the loan. The first defendant replied that she would not pay any more, and had paid enough. 16Mrs Aksu was cross-examined to a limited extent by the first and third defendants, but not by the second defendant. No effective challenge was made to her evidence. 17The defendants called Mary. Her evidence, in essence, was that she handed over the funds borrowed from the plaintiff to the first defendant in payment of the sum of $80,000 which she owed to the first defendant, and also to assist the first defendant in opening the shop. She said that she gave the first defendant monies to be deposited in the plaintiff's bank account, and stopped the payments because she did not have enough money to continue, and also because her family had stopped helping her. 18Under cross-examination she agreed that she told the plaintiff that the reason for the loan was to assist "the families" in opening the shop. The evidence included: T p 35, l 21 - l 36: "Q. And then payments were made. Now, these payments were made on the whole by your sister paying into the bank. A. Yeah. Q. That's right, isn't it? A. Yeah, yeah. Q. And again, in the discussions between yourself and your sister as to anything internally, that was not communicated to Mr Aksu, was it? Any discussions between you and your sister as to what the money was for between you and your sister, you never made - - A. It's not really necessary to because I was paying for the loan. It wasn't necessary. I was responsible for it. I was paying for it, you know. There was no drama, you know. He was nice enough to give us the money, give me the money especially, and I never turned him back. I just kept paying. I paid for such a long time. I never denied anything. I was always responsible for it ..." T p 36, l 11 - l 33: "Q. Now, Mr Aksu complained that he wasn't being paid at a point in time by the Ilhans in relation to payments that they were making when they were running the business. Isn't that right? A. What I don't understand here, Mr Aksu used to come to me every day in my house. Always open door for him. And he used to call me - I was responsible. He was never to say my family was responsible before. He goes, "You put me into this." I said, "Mr Aksu, I'm paying for it. I haven't got any money to pay the lump sum." Do you know what I mean? And I was paying. We were all paying. The family was paying, to help me. Eight years I think it was, eight years we paid for it. And it just kept getting bigger and bigger. I couldn't understand why. The interest? Q. I think it's fair to say that you gave evidence in the court in Parramatta where you said, "The $120,000 was borrowed from Mr Aksu's property in Queensland towards the business that my sisters were getting in Queensland." That's what you said, isn't it? A. But it's true. Mr Aksu did give me the $120,000. I'm not going to lie for that. Q. No. A. Yeah, I am responsible for that. It doesn't matter what it is. I am responsible for that and I've been paying for it ..." T p 39, l 43 - l 49 and T p 40, l 1 - l 5: "Q. ... Now, what was it that you said to Mr Aksu, as best that you can remember, when you asked him for the money? A. Okay. Q. What did you say to him? A. I said we want to - I want to open a shop, you know, like business takeaway. Q. Did you say anything else to him as to the purpose of the loan? A. I said I want to open a shop as a family business in Gold Coast. Q. As a family business? A. Yeah." 19Mary said that the money was for the first and second defendants as the owners of the shop business. Furthermore, she accepted that the statement of 13 January 2006 was a truthful account of the circumstances in which the plaintiff lent her the money. 20Mary was not questioned about the plaintiff's version of the meeting and conversation in September 1993 as set out in par 10 above or about Mrs Aksu's version as set out in par 14 above. The thrust of her evidence, taken overall, was that she borrowed the money from the plaintiff for herself, and not on behalf of, or as agent for, any or all of the four defendants, and that liability for repayment was hers alone. Her evidence that the money was borrowed to repay her debt to her sister, the first defendant, and that it would be used to fund the shop was not inconsistent with her statement of 13 January 2006. In my opinion, her evidence was not undermined in cross-examination, and she was not shown to be an implausible witness. 21The first defendant's evidence was contained in her affidavit of 14 February 2010. She deposed that from about mid-1990 she had pressed Mary to repay the sum of $85,000 owed to her but to no avail. She said: "13. On or about August 1994 I had a conversation with ("Mary") and she said words to the effect: " I am going to get a large cheque which you can deposit in your account, you take your $85,000.00 and give me the balance in cash in a number of payments." 14. On or about September 1994 I received a cheque in favour of Mualla Avsar in the sum of approximately $115,000.00. 15. I deposited the cheque in my St George Bank personal bank account and then withdrew a total sum of $30,000.00 over a period of about one week and gave the cash to ("Mary")." 22She said that at about the same time she moved to the Gold Coast to set up the shop, and returned to Sydney with her family in 1999 when it was closed. She said that since her return, Mary regularly gave her money to deposit in the plaintiff's bank account. She specifically denied the words referable to the loan attributed to her by the plaintiff in his affidavit. 23In cross-examination she denied meeting the plaintiff before receiving the money from Mary, and denied any later discussions with him about the loan. Although she accepted that payments were continued until October 2005, she denied the loan was negotiated by Mary for the defendants to enable them to open the shop. In explanation of the payments she said: T p 55, l 35 - l 50: "Q. To avoid going through every piece of paper, Mrs Ilhan, is it the situation that there were a number of additional occasions when you made the payments that are recorded in the documents. You have seen the documents? A. Yes, I have seen it. I had a deposit book which I gave to Mary Avsar with loan number and everything and what I did, the deposit book, I used to write it, the deposit, sign it and send it with the kids whenever they are going to school, to deposit in it. Not every time I went, I did sign because I wanted to do the right thing by Mary because she was paying, and if he denied Q. From what account? A. It was cash money. Q. Where did the cash come from? A. Mary Avsar. $300 every week she used to give me. Times 250, sometimes 4." 24Her denials were not pursued in cross-examination. Nothing emerged from her cross-examination which supported the proposition that she was not a truthful witness, or which provided the basis for rejection of her evidence. 25The second defendant's evidence was contained in his affidavit of 14 February 2010. He said that the funds provided by Mary were in repayment of $85,000 owed to the first defendant and himself, and were used to buy the shop. He denied meeting the plaintiff and asking him to assist with funds to enable opening the shop, and denied that Mary acted as the defendants' agent in seeking funds from the plaintiff. He specifically denied the words referable to the loan attributed to him by the plaintiff. 26In cross-examination he agreed that the money received by his wife from Mary was used to open the shop, but maintained he did not know that Mary had borrowed money from the plaintiff. He said that payments were stopped because Mary did not provide the money. 27His denials were not pursued in cross-examination, and no basis for the rejection of his evidence was established. 28The third defendant's evidence was contained in her affidavit of 14 February 2010. She specifically denied her involvement in the meetings and conversations as referred to in the plaintiff's affidavit. She denied borrowing any money from the plaintiff, or asking Mary to borrow money from him on her behalf. 29In cross-examination she referred to conversations with the plaintiff in which he complained to her that Mary was not paying the loan. She maintained that she was not responsible for the money. 30Her denials were not pursued in cross-examination, and appear to have been accepted. No basis for rejection of her evidence was established. I found her to be a plausible witness. 31The fourth defendant's evidence was contained in his affidavit of 14 February 2010. He denied any borrowing from the plaintiff, and specifically denied involvement in conversations as attributed to him by the plaintiff. He said he had never asked anyone to borrow money on his behalf. 32In cross-examination he maintained his denial of the loan, and of having a share in the business of the shop. He said he worked in the shop in the preparation of food, and denied making any payments under the loan. 33In my assessment, nothing in cross-examination served to undermine his evidence. Determination 34The crucial issue for the court in this case is whether the plaintiff has proved to its reasonable satisfaction that a binding agreement was made in September 1993 between the plaintiff as lender and the defendants as borrowers for the loan of $120,000 for a period of 12 months. The agreement is claimed to be an oral agreement reached during a conversation between the parties at the plaintiff's video store in Auburn. 35The evidence of the relevant conversation was contained in the affidavits of the plaintiff and Mrs Aksu sworn 16 years later. There was no contemporaneous document which supported the making of the agreement. The plaintiff's case was contradicted by the defendants and Mary. 36As there was no effective challenge to the evidence of the plaintiff and Mrs Aksu in cross-examination it may be said that, prima facie, there is no basis for a Judge not to accept that evidence ( M & E M Hull Pty Ltd v Thompson [2001] NSWCA 359, par 21). However, on the pleadings and on the evidence, the existence of the loan agreement was always in issue so that the defendants' failure to cross-examine should not be taken as acceptance of the plaintiff's case. In the circumstances, in order to determine whether the plaintiff has discharged the onus of proof it is necessary to consider the totality of the evidence. 37With reference to the degree of cogency which the evidence must reach to discharge the burden in a civil case, in Briginshaw v Briginshaw (1938) 60 CLR 336, pp 361-362 Dixon J said: "The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality ... it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences." 38In Watson v Foxman (1995) 49 NSWLR 315 McLelland CJ in Eq. considered the difficulty of satisfying the standard where an allegation of misleading conduct arose from an oral but unconfirmed conversation. He said (pp 318, 319): "Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court "must feel an actual persuasion of its occurrence or existence". Such satisfaction is "not ... attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding": Helton v Allen (1940) 63 CLR 691 at 712. Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration." His Honour said (p 319) that these considerations were equally applicable to causes of action based on contract. 39In Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572 Hodgson JA (Beazley JA, Davies A-JA agreeing) said: "14. There is a long-standing controversy whether the civil standard of proof requires a numerical probability in excess of 50 per cent (see Davies v Taylor [1974] AC 207 at 219), or belief amounting to reasonable satisfaction (see Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362). My own opinion is that the resolution of the controversy involves recognition that, in deciding facts according to the civil standard of proof, the court is dealing with two questions: not just what are the probabilities on the limited material which the court has, but also whether that limited material is an appropriate basis on which to reach a reasonable decision. I discussed this in some detail in an article published at (1995) 69 ALJ 731 (D H Hodgson, "The Scales of Justice: Probability and Proof in Legal Fact-finding")." 40The immediate task for the court is to evaluate the evidence on the issue as to whether the loan agreement alleged by the plaintiff was made. It is unnecessary to recite the details of the evidence. The plaintiff relies upon spoken words as the foundation of the cause of action, corroborated by Mrs Aksu, but without any contemporaneous document. This evidence was left untested. 41Against the plaintiff's evidence is to be weighed that of the defendants and Mary. The evidence of each defendant was substantially consistent with, and corroborated, that of the others. The extent to which they were cross-examined was, no doubt, a matter of forensic judgment. In my opinion their evidence was left substantially intact, and I gained the impression that they were truthful witnesses. They adhered to their denials of making any loan agreement with the plaintiff. The evidence relating to the circumstances in which Mary paid over to the first defendant the funds advanced to her by the plaintiff was plausible, and I accept it. Furthermore, in my opinion, the facts that the defendants used the funds provided by Mary to the first defendant in the business of the shop, and that payments were made by the first defendant to the plaintiff's bank account in the circumstances described, did not assist in proving the agreement. 42The preponderance of the evidence weighs heavily in the defendants' favour, and against the plaintiff. On the whole, I am unpersuaded that in September 1993, or at any other time, an agreement was made between the plaintiff and the defendants under which he agreed to lend them the sum of $120,000 as claimed. It follows that the plaintiff has failed to prove his case, and his claim must be dismissed. Orders 43It is ordered that: (1)The amended statement of claim be dismissed. (2)The plaintiff pay the defendants' costs. ********** 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. Decision last updated: 30 August 2011