Supreme Court New South Wales Medium Neutral Citation: Toufic Laba Sarkis v Mahmoud Moussa [2011] NSWSC 1172 Hearing dates: 08/07/2011 Decision date: 30 September 2011 Jurisdiction: Common Law Before: Latham J Decision: Amended Summons dismissed with costs Catchwords: APPEAL - general principles - no appeal on question of fact - trial judge found that there was an oral contract on the balance of probabilities - sufficient evidence to support finding that there was an intention to create legal relations - sufficient evidence to justify award of damages Legislation Cited: Local Court Act 2007 Cases Cited: Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126 Poricanin v Australian Consolidated Industries Ltd [1979] 2 NSWLR 419Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Mahoney v Industrial Registrar of NSW (1986) 8 NSWLR 1 Haines v Leves (1987) 8 NSWLR 442 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Gangemi Holdings Pty Ltd v Salter [1999] NSWSC 1004 Carr v Neill [1999] NSWSC 1263 State Rail Authority v Smith [2000] NSWSC 334 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Ermogenous v Greek Orthodox Community of SA Inc (2001) 209 CLR 95 Australian Broadcasting Corporation v XIV Commonwealth Games Ltd (1988) 18 NSWLR 540 Balfour v Balfour [1919] 2 KB 571 Coward v Motor Insurers Bureau [1963] 1 QB 259 Buckpitt v Oates [1968] 1 All ER 1145 Jones v Padavatton [1968] EWCA Civ 4 [1969] 2 All ER 616 Tadrous v Tadrous [2010] NSW SC 1388; Teen Ranch Pty Ltd v Brown (1995) 87 IR 308 Wakeling v Ripley (1951) 51 SR (NSW) 183 Southlink Holdings Pty Ltd v Morerand Pty Ltd [2010] VSC 214 Category: Principal judgment Parties: Toufic Laba Sarkis - Plaintiff Mahmoud Moussa - Defendant Representation: Counsel: Peter E King - Plaintiff M Rollinson - Defendant Solicitors: George Khoury & Co - Plaintiff Benjamin & Khoury - Defendant File Number(s): 2010/00292546 Judgment 1By an Amended Summons filed on 21 April 2011, the plaintiff, Mr Sarkis, seeks leave to appeal against the judgment and orders of 9 August 2010 in the Local Court pursuant to s 40(1) of the Local Court Act 2007 (the Act). 2The claim by the defendant, Mr Moussa, in the Local Court was brought against the plaintiff in December 2008. It alleged the existence of an oral agreement between them, made in January 2004, to import furniture from Lebanon, which was to be sourced by the defendant and sold through the plaintiff's showrooms. A third man, Mr Staytie, was said to be a part of this arrangement, in so far as he was to meet with and assist the defendant with the enterprise in Lebanon. 3The plaintiff disputed that there was any contract in existence and that the full extent of any agreement between the parties consisted of an offer by the plaintiff to the defendant to display the furniture purchased by the defendant in Lebanon in the plaintiff's show room. The plaintiff acknowledged that some furniture was displayed by him at Concord and that this furniture was later sold by the defendant. 4The Magistrate found in favour of the defendant and entered judgement in the sum of $53,136.50 plus interest. 5The grounds as filed have not all been pressed. The appeal falls to be determined on the following grounds :- (1)That the Magistrate erred in law by finding that there was an enforceable contract between the plaintiff and the defendant when there was no evidence of same. (2)That the Magistrate erred in law in inferring the existence of a contract. (3)That the Magistrate erred in fact and in law in holding that there was part performance of the agreement and that there was valuable consideration. (4)That the Magistrate erred in failing to hold that if there was any agreement it was with the company, Interiors 4 U Pty Ltd ABN 53096761885 and not with the defendant. (5)That the Magistrate erred in law by assessing damages against the defendant when there was no evidence of same in whole or in part. 6Before passing to a consideration of the grounds of the appeal, it is helpful to revisit the basis of the jurisdiction in this Court. There is no appeal on questions of fact. A wrong finding of fact, even a perverse finding of fact that is against the weight of the evidence, does not elevate such an error into an error of law. In Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126, Jordan CJ summarised the relevant principles thus (at 138) : - (3) A finding of fact by a tribunal of fact cannot be disturbed if the facts inferred by the tribunal, upon which the finding is based, are capable of supporting its finding, and there is evidence capable of supporting its inferences. (4) Such a finding can be disturbed only (a) if there is no evidence to support its inferences, or (b) if the facts inferred by it and supported by evidence are incapable of justifying the finding of fact based upon those inferences, or, (c) if it has misdirected itself in law. 7See also Poricanin v Australian Consolidated Industries Ltd [1979] 2 NSWLR 419; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139; Mahoney v Industrial Registrar of NSW (1986) 8 NSWLR 1; Haines v Leves (1987) 8 NSWLR 442; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; Gangemi Holdings Pty Ltd v Salter [1999] NSWSC 1004; Carr v Neill [1999] NSWSC 1263; State Rail Authority v Smith [2000] NSWSC 334. 8It is apparent from the way in which grounds 1, 2 and 5 have been drafted that they assert that there was an absence of evidence of a contract between the plaintiff and the defendant, and an absence of evidence of damages ; on their face, they raise an error of law. The extent to which any of the grounds raise questions of law, or mixed fact and law, is strongly contested by the defendant. Despite the reference in the plaintiff's written submissions to s 39 of the Act, both the Summons filed on 2 September 2010 and the Amended Summons refer only to s 40 and seek an order granting leave. However, the submissions filed in support of the appeal appear to do no more than cavil with the findings of fact. 9As the following reasons demonstrate, I have come to the view that there was ample evidence from which the Magistrate was entitled to find or infer that there was an agreement in the terms alleged by Mr Moussa. There was also evidence of Mr Moussa's losses under the agreement that went to the issue of damages. 10Ground 3 falls away because, although the principle of part performance did not strictly apply, the Magistrate's references to it are capable of being construed in an altogether different context, namely, they were in answer to submissions by Mr Sarkis' representative that he had not done anything in the nature of partial performance of the contract. In any event, those references are irrelevant in the light of the other evidence relied upon to found the existence of the agreement. The finding that there was valuable consideration was open on the evidence of Mr Moussa. Ground 4 simply alleges an error of fact and is beyond jurisdiction. Grounds 1 and 2 11These two grounds may be conveniently dealt with together. The evidence before the Local Court included the following. 12Mr Moussa first met Mr Sarkis in June 2003 at Mr Moussa's business premises. Both men were in the business of furniture sales. Mr Sarkis was interested in purchasing the furniture from one of Mr Moussa's showrooms. The two men later had a conversation about arranging for Mr Moussa's wife's cousin, Ahmed Staytieh, to be put in contact with Mr Sarkis in order to bring him to Australia to spray paint Mr Sarkis' furniture. 13Mr Sarkis contacted Staytieh and lodged a visa application for him, which was approved. Mr Moussa paid for a return air ticket for Staytieh and Mr Sarkis paid a $15,000 bond required by the Department of Immigration. Mr. Staytieh commenced work at Mr Sarkis' Strathfield showroom. 14In January 2004 Mr Sarkis spoke with Mr Moussa at the former's factory where Mr Sarkis stated it would be cheaper to import furniture from Lebanon. Mr Sarkis suggested going "50/50" with Mr Moussa on "all costs and expenses". Mr Sarkis also stated that he and Mr Moussa would "share in the profits equally". 15Mr Sarkis also suggested that Staytieh could travel to Lebanon with Mr Moussa to assist him. On their return, Staytieh would apply to live permanently in Australia and they could sell the furniture from Mr Sarkis' showroom in Strathfield. Mr Moussa suggested each put $50,000 towards two shipping containers of furniture. Mr Sarkis said "okay, let's do that". Mr Sarkis said that he did not have the money but that his brother in Lebanon would pay Mr Moussa when he arrived in Lebanon to source the furniture. Mr Sarkis also agreed to pay half the interest on money that Mr Moussa intended to borrow against his home. 16In April 2004, Mr Moussa borrowed approximately $93,750 against his home. As at June 2009, he had incurred more than $36,000 in interest repayments. 17Mr Moussa flew to Tripoli later that month. He visited Mr Sarkis's brother, who claimed to know nothing about the money owed by Mr Sarkis. He thought Mr Moussa was in Lebanon to pick up sandstone samples. Mr Moussa then phoned Mr Sarkis who promised to pay him his share of the $100,000 when he got back. 18Mr Moussa spent 10 weeks buying furniture in Lebanon through contacts he met through Staytieh, at a cost of approximately $34,000. He returned to Australia on his own. 19Mr Sarkis called Mr Moussa and said that freight services would cost $11,500 but he had no money to pay for it and any cheque that he presented would bounce. Mr Moussa reluctantly transferred that amount into Mr Sarkis' account. Mr Sarkis said that he would reimburse Mr Moussa for everything when the furniture was sold. 20Mr Sarkis had another conversation with Mr Moussa in or around July 2004 where Mr Sarkis told Mr Moussa that Mr Sarkis's showroom had been destroyed by fire. Mr Sarkis asked Mr Moussa to continue renting showroom space for the imported furnture, and said that he would pay half the rent. Mr Moussa continued the lease at 25/340 Hoxton Park Rd Liverpool and stored the furniture there from August 2004 to June 2006. 21In or around August 2005, in response to Mr Moussa's complaints about the outstanding debt, Mr Sarkis asked Mr Moussa whether he knew any brokers who could arrange a loan so that Mr Sarkis could pay Mr Moussa the money he owed him. Mr Moussa was present at a meeting between Mr Sarkis and his broker, Daniel Lord, when Mr Sarkis told Mr Lord of the debt he owed to Mr Moussa ($60,000). 22In or around November 2005, Mr Moussa complained again to Mr Sarkis about the money he was owed. Mr Sarkis told Mr Moussa that he would put him on the title of a unit in St Peters that he was buying, in order to secure the debt. Nothing was done to carry out this undertaking. 23In June 2006, the furniture was moved to Concord and another showroom in Cleveland St Surry Hills when Mr Moussa could no longer afford the rent at the Hoxton Park Road Premises. 24In or around August 2006 Mr Sarkis borrowed $520,000 against his property. Mr Moussa had another conversation with Mr Sarkis where Mr Sarkis said he had the money and could pay Mr Moussa. 25In or around November 2006 Mr Sarkis handed Mr Moussa a bank cheque for $15,000. Mr Moussa demanded all his money. Mr Sarkis said that he would pay the rest of the money later. 26In or around September 2007 Mr Moussa discovered that a lounge suite was missing. Mr Moussa confronted Mr Sarkis, who said that it must have been stolen. Mr Moussa said that he would go to the police and Mr Sarkis asked him not to. Mr Sarkis said that he would get the lounge suite returned within a couple of days. 27The various transactions referred to above and the expenditure by Mr Moussa towards the purchase, importation and storage of the furniture were supported by documentary evidence. The evidence of Mr Moussa's wife was also consistent with his evidence. 28Mr Sarkis sent a letter to Mr Moussa dated 28 October 2007, in which he claimed that he had "encouraged" Mr Moussa to buy furniture and import it from Lebanon so that it could be sold from Mr Sarkis' showroom. The letter also stated :- I had every intention to continue a commitment between both of us because while you were in Lebanon you built a strong relationship with .. the owner of Modern Upholstery Factory in Lebanon, and both you and I could see a good benefit for everyone. .................................................................................. Even though I suffer extreme financial hardship having to repay over $500,000 mortgage on my property at Concord, I still feel morally inclined to assist you whenever my financial circumstances allow me. 29Mr Moussa was cross examined to the effect that Mr Sarkis did not say that they would contribute 50/50 on all costs and expenses and that there was no agreement. Mr Moussa refuted that suggestion. Mr Moussa explained that he had accepted Mr Sarkis at his word and that they had shaken hands on the deal. 30Mr Sarkis maintained that any monies he paid to Mr Moussa did not relate to any agreement to import furniture. The reference in the letter of 28 October to assisting Mr Moussa when Mr Sarkis' financial circumstances allowed was explained as a form of financial reference for Mr Moussa who was under pressure from his bank. 31In short, the Magistrate was simply confronted with opposing accounts of the nature of the discussions between the two men. In finding an oral contract on the balance of probabilities, her Honour obviously accepted the evidence of Mr Moussa over that of Mr Sarkis. Issues about the extent of the involvement of Mr Staytieh in the arrangements and the references to Mr Sarkis' Company, Interiors 4 You, in the various invoices were matters of fact that the Magistrate was entitled to resolve. This is therefore an appeal that seeks to argue no more than that the findings of fact were " demonstrably unsound" : Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139, at 155-6. 32Mr Sarkis' contended in the court below that, even if findings of fact were made that established to the requisite standard an oral agreement between the parties, Mr Moussa's evidence was insufficient to establish an intention to create legal relations. Counsel relied upon the principles discussed in Ermogenous v Greek Orthodox Community of SA Inc (2001) 209 CLR 95 and Australian Broadcasting Corporation v XIV Commonwealth Games Ltd (1988) 18 NSWLR 540. 33The intention to create contractual relations can be inferred from a combination of factors including "the subject matter of the agreement, the status of the parties to it, their relationship to one another, and other surrounding circumstances. ... The search for the 'intention to create contractual relations' requires an objective assessment of the state of affairs between the parties ... [and] the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules." : Ermogenous at 105. 34It was noted in ABC v XIV Commonwealth Games Ltd at 548 that "as a matter of fact and common sense, other things being equal, the more numerous and significant areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention." That was a case where the negotiations between the parties were incomplete and there were significant features of the agreement that had not been determined. 35The Magistrate had regard in her reasons to the objective circumstances surrounding the agreement reached between the parties. The Magistrate noted that "at the time when the present matters arose, the parties had a history of doing business with each other, none of which was formalised in writing. Apart from their business dealings, the only suggestion of any relationship between the parties indicated that the plaintiff may have sought the benefit of the defendant's professional advice and services in the immigration matter of family visitor. There was no friendship, as such, between them apart from what may be inferred of cordial business relations and ordinary social intercourse." 36Later the Magistrate noted that "the parties were businessmen with long years of success in their respective businesses." A further finding was made that "the parties entered into a straightforward contract - there was nothing complicated about it - on the clear, unambiguous terms and conditions as stated in the plaintiff's evidence." 37These remarks demonstrate a finding that the objective circumstances were sufficient to support an intention to create legal relations. There is no error of law contained within these reasons. 38The majority of cases regarding an intention to create legal relations where the court has made a finding that there was no such intention concern arrangements between friends, family members or volunteers : Balfour v Balfour [1919] 2 KB 571; Coward v Motor Insurers Bureau [1963] 1 QB 259 ; Buckpitt v Oates [1968] 1 All ER 1145 ; Jones v Padavatton [1968] EWCA Civ 4 ; [1969] 2 All ER 616 ; Tadrous v Tadrous [2010] NSW SC 1388; Teen Ranch Pty Ltd v Brown (1995) 87 IR 308. Those cases where friends or relatives have entered into an arrangement which has been held to comprehend an intention to enter legal relations turn primarily upon the objective gravity of a step taken by one of the parties in anticipation of the agreement ( Wakeling v Ripley (1951) 51 SR (NSW) 183) and those where the arrangements were performed within a legal context, including the use of language favouring an intention to be bound ( Southlink Holdings Pty Ltd v Morerand Pty Ltd [2010] VSC 214). The presence of a commercial element and the expectation that the arrangement would reap a profit, as described by Mr Moussa in his evidence, are patently factors that are capable of signalling an intention to enter into legal relations. 39Grounds 1 and 2 have not been made out. Ground 5 40Ground 5 may be briefly dealt with. The particulars of Mr Moussa's expenditure were detailed in annexures to his affidavit in the Local Court. They included his return airfare to Lebanon, his travel and accommodation expenses, the interest and expenses incurred on the funds borrowed against his home, the purchase of furniture in Lebanon, shipping costs and rent for a storage unit as and from August 2004 until June 2006. 41There was clearly a significant body of evidence constituted by these annexures, and by the evidence of Mr Moussa in the course of the hearing itself, that justified an award of damages in the sum calculated as one half share of the out-of-pocket expenses incurred by Mr Moussa. 42Ground 5 also fails. 43The Amended Summons is dismissed with 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: 04 October 2011