Supreme Court New South Wales Medium Neutral Citation: Chen v Cui [2015] NSWSC 1480 Hearing dates: 23 September 2015 Date of orders: 12 October 2015 Decision date: 12 October 2015 Jurisdiction: Common Law Before: Fagan J Decision: (1) The summons is dismissed. (2) The Plaintiff is to pay the Defendant's costs. Catchwords: APPEAL – whether Magistrate erred by failing to consider alternative claims to set off debt which were not disclosed in submissions – whether equitable set-off and/or statutory right to set-off available – Civil Procedure Act 2005 (NSW), s 21(2) CONTRACT – oral agreement – claim for debt – whether a separate agreement allowed for debts to be set off RESTITUTION – unjust enrichment – whether money paid was at the request of respondent – equitable set-off Legislation Cited: Civil Procedure Act 2005 (NSW) Local Court Act 2007 (NSW) Cases Cited: Australian Mutual Provident Society v Specialist Funding Consultants Pty Ltd (1991) 24 NSWLR 326 AWA Ltd v Exicom Australia Pty Ltd (1990) 19 NSWLR 705 Banque Commerciale SA v Akhil Holdings Ltd (1990) 169 CLR 279 Gould v The Mount Oxide Mines Ltd (1916) 22 CLR 490 Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 Category: Principal judgment Parties: Aimee Xiaoping Chen (Plaintiff) Zhijing Cui (Defendant) Representation: Counsel: Mr A Norrie (Plaintiff) Mr M Condon SC and Mr N Ford (Defendant) Solicitors: Jurisbridge Legal (Plaintiff) Juris Cor Legal (Defendant) File Number(s): 2015/00120750 Publication restriction: None Decision under appeal Court or tribunal: Local Court of New South Wales Jurisdiction: Civil Date of Decision: 27 March 2015 Before: Bradd LCM File Number(s): 2014/37059 Judgment 1. This is an appeal by Aimee Chen from a decision of the Local Court in its civil jurisdiction, General Division. I will refer to Ms Chen hereafter as "the Appellant", in order to avoid confusion with her position as defendant in the Local Court. The plaintiff in the Local Court was Mr Zhijing Cui (to whom I will refer as "the Respondent"). He claimed $50,000 which he alleged was the balance owing to him from the Appellant under an oral loan agreement of 19 April 2013. The original advance had been $100,000 and the first $50,000 had been repaid in May 2013. The Appellant's defence was that she was entitled to set-off against the loan balance an amount of $53,319.11 which she had outlaid on behalf of the Respondent in connection with the establishment of a restaurant business in South East Queensland. The basis upon which the Appellant claimed the right to set off in the Local Court is decisive of this appeal. 2. On 27 March 2015 the learned Magistrate rejected the Appellant's defence and gave judgment for the Respondent in the amount of $50,000 plus interest and costs, for reasons which his Honour published that day. The Appellant now complains that his Honour erred in law in two respects as follows: "1. …contrary to section 21(1) of the Civil Procedure Act 2005 (NSW), his Honour failed to have any regard to whether there were any debts owed by [the Respondent] to [the Appellant]. 2. …his Honour failed to treat [the Respondent's] response to [the Appellant's] email dated 28 August 2013 as evidence of an admission that [the Respondent] had agreed to deduct the remaining $50,000 from the loan after [the Appellant] had repaid $50,000." 1. The appeal is brought as of right under s 39, Local Court Act 2007 (NSW) asserting errors of law only. No application has been made for leave to appeal upon any question of mixed law and fact and no appeal ground of that nature has been formulated. The restaurant venture of the Respondent and Wei Chen 1. The following summary of the facts of the case is in part taken from the learned Magistrate's reasons and in part from the evidence in the Local Court. I am not able to rely solely upon findings by the Magistrate because most of his Honour's reasons consist of recitation of conflicting evidence and opposing submissions without explicit resolution of factual controversies. That is understandable having regard to the way the parties confined the issues by their manner of conducting the case. 2. In 2012 and 2013 the Appellant conducted in the Eastern States of Australia a tour business catering to international visitors. She had a close relationship with Wei Chen (also known as Ray), which had subsisted over many years. They had a son and they behaved towards each other in a manner that caused the Respondent to believe that they were married, although apparently they were not. In late 2012 the Appellant was living on the Gold Coast and Wei Chen was living in Melbourne. 3. The Respondent was born in China and does not speak English. In his affidavits he nominated a residential address in central Sydney. In 2012 and 2013 he was apparently spending at least a substantial part of each year living in Australia. 4. From about 2010 the Appellant, Wei Chen, the Respondent and the Respondent's wife (Ms Xiaowei Chen) were acquainted with each other and friendly. In late 2012 the Appellant became aware that two commercial units in the Aqua Building at 300 Marine Parade, Labrador (near Southport) in Queensland were offered for sale by a mortgagee. The units were suitable for the operation of a restaurant and the Appellant considered them "a very good buy". 5. At that time the Appellant controlled a company named Three C (Aust) Pty Ltd. On 20 December 2012 she caused the company to exchange contracts for the purchase of the two units at a combined price of $650,000 plus GST. No deposit was paid at the time of exchange. On 16 January 2013 the Appellant paid $32,500 to solicitors engaged by her and instructed them to transfer this sum to the vendor as a 5% deposit. At the same time she instructed her solicitors to deliver a deed of rescission of the contract under which Three C (Aust) Pty Ltd was purchaser and have it replaced with a contract in the name of Wei Chen as purchaser. 6. The Respondent deposed in an affidavit affirmed 1 September 2014 that he was first approached about participating in the purchase of the two commercial units at around the end of February 2013, by Wei Chen. His evidence in that respect is consistent with the date of an agreement for a business partnership or joint venture, entered into between the Respondent and Wei Chen, described at [10] below. It is also consistent with the evidence of date stamps in the Respondent's passport, which showed that he was out of Australia from 7 November 2012 until 5 February 2013. The Appellant's evidence that the Respondent had become a party to the purchase of the units in December 2012 or January 2013 was unsatisfactory, improbable and unreliable. The learned Magistrate made no definitive finding about it and nor do I. 7. On 8 March 2013 the Respondent and Wei Chen signed an agreement which contained the following terms: "Clause 1: Two parties jointly made the payments for purchasing the two properties [at Labrador] which are regarded to be one buy. Each party has paid 50% of the total price, so as to equally share the ownership of the properties, 50% for each. Clause 2: The total purchasing price for the above-mentioned properties are A$650,000 of which CHEN Wei in advance paid A$30,000. CUI Zhijing shall pay off the amount in one go that he/she should pay. Any other incidental costs of purchase shall be shared by the two parties as well. Clause 3: Because so far in the properties' purchase contract the name of the purchaser is CHEN Wei, after CUI Zhijing has paid off all the amount that he/she should pay for purchasing the properties, CHEN Wei must guarantee to add the name of CUI Zhijing into all the relevant official documents as one of the property owners in relation to purchasing of the properties within three months. Clause 4: In case CHEN Wei cannot successfully complete the loan procedures with the bank for the time being CUI Zhijing shall agree to lend the money to CHEN Wei in order to finalise all the procedures of purchasing the properties while CHEN Wei must within four months pay the borrowed money back to CUI Zhijing without paying any interest. [This clause included further provision for interest and penalty interest if repayment was delayed]. Clause 5: The two parties shall equally share all kinds of the fees for the properties as well as the benefits and interest generated from the properties, for example, renting the properties out, after they are purchased. In the case either party fails to pay the abovementioned shared fees for the properties in time, he/she must be responsible, by paying the other party the compensation, for the losses the other party has suffered resulting from such losses." 1. The purchase of the two units, which may be regarded as one property, was completed on 18 March 2013. The total amount payable at settlement (in addition to the deposit), including GST, adjustment for rates and the like, was $692,433. The Respondent gave evidence in the Local Court that Wei Chen was not in funds to contribute his half share of this sum. The Respondent paid the whole amount, giving rise to a debt owing from Wei Chen to the Respondent of $345,121. Wei Chen never repaid this amount and the Respondent eventually commenced proceedings against him in the Supreme Court of Queensland to recover it. In those proceedings judgment against Wei Chen was entered by consent on 5 June 2014 for an amount of $364,263 which included interest. The loan by the Respondent to the Appellant 1. It is common ground that on 19 April 2013 an oral agreement was made that the Respondent would advance to the Appellant the sum of $100,000 for a week, interest free. The loan amount was duly transferred to the Appellant's bank account. She did not repay it by 26 April 2013. On 2, 7 and 24 May 2013 she paid three instalments totalling $50,000. No further payment was made thereafter. The Respondent gave evidence that he made oral demands for the balance of $50,000, commencing on 24 May 2013. This was disputed by the Appellant and the Magistrate did not make any finding to resolve whether such demands had been made. 2. On 5 August 2013 the Respondent requested repayment of the balance by way of email to the Appellant. Three and a half months later, when he had still not received the remaining $50,000 or any part of it, the Respondent instructed a solicitor to make demand. The solicitor's letter of demand was issued on 23 November 2013 by email. The response from the Appellant, also by email, was that the Respondent owed her $53,319.11. The Appellant offered an exchange of payments, which would be net $3,319.11 in her favour. The Appellant's pleaded defence in the Local Court 1. By paragraph 4 of her Defence filed in the Local Court the Appellant pleaded as follows: "4. … The Defendant says that between April 2013 and October 2013, the Defendant had made various payments on behalf of and/or under the request of the Plaintiff in the total sum of $53,319.11. As a result, the Defendant does not owe the Plaintiff any money and had overpaid the Plaintiff $3,319.11. Particulars A document named Aqua Rates and Payment Summary dated 11 October 2013 which was signed and acknowledged by Ms Xiaowei Chen, who is the wife of the Plaintiff." 1. The Appellant gave affidavit evidence in the proceedings that she had outlaid expenditure upon the establishment of the restaurant business which the Respondent and Wei Chen intended to conduct at the Labrador property, purchased in early 2013. The amount of the offsetting debt pleaded in paragraph 4 of the Defence had been calculated by the Appellant on a schedule which she created in October 2013. This listed a series of payments she claimed to have made commencing with the deposit for the Labrador property on 17 January 2013 and including expenditures, between April and October 2013, upon the fees of a liquor licensing consultant, licence fees payable to the Queensland Government, strata levies in respect of the property, stamp duty, accountant's fees, insurance, travel expenses and remuneration to herself and her staff for work relating to loan applications. The total of all these amounts came to $129,338.22. On her schedule the Appellant apportioned several of the amounts equally between the Respondent and Wei Chen; some were ascribed either 75% or 100% to the Respondent and some were not attributed to either party. The result was an apportionment of $53,319.11 to the Respondent and $39,419.11 to Wei Chen. 2. Paragraph 4 of the Defence quoted at [14] alleged some parts of what the Appellant would have to have proved in the Local Court in order to establish a claim for restitution of the $53,319.11, for the purpose of setting that off against the admitted $50,000 debt owed to the Respondent. An adequate pleading of such a restitutionary claim would have to have alleged definitively that the payments had been made by the Appellant at the request of the Respondent, not that they had been made "on behalf of and/or at the request of" the Respondent: Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 per Gleeson CJ at [49] and [53], per Gummow, Hayne, Crennan and Kiefel JJ at [79], [80], [86], [89] and [90]. 3. The High Court's decision in that case also establishes that a restitutionary claim will not lie for money paid at the request of the defendant where a contractual relationship explains the payment and regulates the rights of the parties with respect to it: per Gleeson CJ at [47], [48] and in the joint judgment at [79]. Given the context of the joint venture or partnership between the Respondent and Wei Chen pursuant to the agreement referred to at [10] above, the Appellant would have to have rebutted the inference that her payments amounted to her financing Wei Chen's obligations under that agreement. 4. Although inadequate to the purpose, paragraph 4 of the Defence appears to have been intended to put forward a defence that (a) the Appellant was entitled to restitution of the sums she had paid for the Respondent's benefit, independently of any enforceable agreement between the two of them and (b) she was entitled to set off the amount of this restitutionary claim to extinguish completely the outstanding balance of her loan from the Respondent. The right to set off, by way of defence rather than counter claim, could have been founded upon the general principles identified in AWA Ltd v Exicom Australia Pty Ltd (1990) 19 NSWLR 705 and Australian Mutual Provident Society v Specialist Funding Consultants Pty Ltd (1991) 24 NSWLR 326 at 328. Alternatively, s 21(1), Civil Procedure Act 2005 (NSW) could have been invoked: "21 Defendant's right to set-off (1) If there are mutual debts between a plaintiff and a defendant in any proceedings, the defendant may, by way of defence, set off against the plaintiff's claim any debt that is owed by the plaintiff to the defendant and that was due and payable at the time the defence of set-off was filed, whether or not the mutual debts are different in nature." The Appellant's affidavit 1. Not only did paragraph 4 of the Defence fall short of pleading adequately a restitutionary offsetting claim, the Appellant's only affidavit, affirmed 31 July 2014, contained no evidence of the essential prerequisite of restitution. Namely, that the Respondent had requested her to make for his benefit the several payments which she included on the October 2013 schedule. With respect to the earliest item, the 5% deposit on the purchase of the two commercial units, the Appellant deposed that she had made this payment "on behalf of Cui and Wei". This would not have been correct if, at the time when she made the payment, Mr Cui had not yet been introduced to the transaction (see [9] above). Critically, the Appellant did not in her affidavit assert that the Respondent had requested her to pay the deposit. If that had been asserted it would probably have been contradicted by the chronology of the Respondent's overseas travel and the commencement of his involvement in the purchase. 2. With respect to the other payments on the Appellant's October 2013 schedule, in the last sentence of paragraph 15 of the Respondent's affidavit she deposed: "Cui and Wei asked me to make various payments in relation to the restaurant on their behalf and they promised to reimburse me later". This was obviously objectionable in form. The affidavit gave no account of the terms in which Mr Cui and Wei Chen had spoken to the Appellant, which she interpreted as them asking her to make payment and promising to reimburse her. Evidence in this form, even if it had been received, would have been insufficiently specific to support restitution. It did not identify what payments were the subject of such requests and promises nor when the requests or promises were made. Unsurprisingly the sentence of paragraph 15 quoted above was objected to. The Respondent's counsel did not argue against its rejection. 3. Instead of the Appellant deposing to a series of requests from the Respondent that payments be made for his benefit, such as might have supported a restitutionary claim, the Appellant's affidavit set out a case entirely different from that which had been half pleaded in paragraph 4 of her Defence. Namely that a meeting took place on 11 October 2013, after all of the payments had been made, attended by herself, the Respondent, the Respondent's wife and a mutual friend, Mr Barry Ngai. The Appellant deposed that at this meeting the Respondent had orally "agreed to reimburse me the sum of $53,319.11". She also deposed that Wei Chen on this occasion "agreed to reimburse me of his percentage of contribution being $39,409.11 in accordance with the [October 2013 schedule]" and that Wei Chen had subsequently "paid me accordingly". 4. Significantly, in submitting to rejection of the last sentence of paragraph 15 of her affidavit (see [20] above) the Respondent's counsel said: "The agreement is a matter of evidence, your Honour". By this he indicated that he was concerned with the part objected to only so far as it might have touched upon the issue of whether an express oral agreement for reimbursement and set-off had been made on 11 October 2013, not as proof of antecedent requests from the Respondent for expenditure, such as would have been necessary to a restitutionary claim. He did not seek leave to adduce oral evidence in admissible form from the Appellant concerning requests from the Respondent to the Appellant for the latter to pay expenses. Respondent's affidavits 1. The Respondent denied having agreed to pay to the Appellant the sum attributed to him on the October 2013 schedule, in an affidavit in reply affirmed 1 September 2014. The Respondent's wife affirmed an affidavit on the same date, giving an account of the meeting on 11 October 2013 inconsistent with the Appellant's deposition as to an express oral agreement that her outlays be set off against the loan balance. Opening addresses 1. When the hearing of the case commenced before the Magistrate on 30 September 2014 it thus appeared from the affidavits that the only defence raised by the Appellant was the alleged express oral agreement of 11 October 2013, to the effect that a portion of the money she had expended towards the restaurant business, namely $53,319.11, was repayable to her by the Respondent and could be set-off against the debt he claimed. Not only did this confinement of the issue appear from the papers but it was stated in opening by counsel for the Respondent (the plaintiff in the Local Court) in the following terms: "The main defence which is raised against my client is a claim that he and the defendant's friend or husband a Mr [Wei] Chen, entered into an agreement with the defendant whereby she was allowed to offset some monies she had paid towards the cost of a restaurant in Queensland at Labrador which was run by the two men, the plaintiff and Mr [Wei] Chen… that offsetting claim is disputed, my client says it doesn't exist and in any event you haven't proved the amounts which are in dispute. That in essence is the nature of the dispute. …." 1. Counsel for the Appellant, being the defendant in the Local Court, responded by saying: "My learned friend has succinctly put the issues before your Honour". Thus, from the outset of the hearing, the case run by the Appellant/defendant involved a clear implicit abandonment of the restitutionary basis of her claim against the Respondent for $53,319.11 so far as that had been pleaded, albeit inadequately, in paragraph 4 of the Defence. In place of the half pleaded restitutionary claim the Appellant set out to establish as the sole basis of an indebtedness of the Respondent to herself the express oral agreement of 11 October 2013 which was the subject of her affidavit. 2. Further, from the content of the Appellant's affidavit and from her counsel's acceptance of the issues summarised by the Respondent's counsel, there was an equally clear abandonment of any case of equitable set-off or equitable defence in accordance with the authorities cited at [18] or under s 21(1), Civil Procedure Act. Instead the Appellant accepted, by concurring in the Respondent's/plaintiff's opening, that the sole basis of set-off relied upon was the alleged express oral agreement of 11 October 2013. Oral evidence of the Appellant 1. The Appellant's counsel was given leave to adduce additional evidence from her orally in chief on some topics. Nowhere in the examination in chief did counsel attempt to elicit an evidentiary foundation for a restitutionary claim in respect of her outlays, as distinct from a claim that an express oral agreement for reimbursement and set-off had been made on 11 October 2013. The Appellant's counsel asked her what had been said at the meeting of 11 October 2013 with respect to each item of expenditure recorded on the schedule produced that day. Notwithstanding that these questions were directed to what was said on the occasion of the meeting, the Appellant answered, unresponsively, by volunteering the terms of conversations she said had taken place between herself and the Respondent at about the time of the respective payments being made: transcript of 30 September 2014, T41-44. 2. Even this volunteered evidence would have been quite inadequate to support an alternative restitutionary claim because it was not followed up with further evidence to prove that the requests were made on behalf of both the Respondent and Wei Chen, that the Respondent's payments constituted unjust enrichment of the two men in varying proportions from one expenditure to the next – and so on. The failure to make any attempt to adduce evidence on these matters was consistent with the Appellant limiting her case to the express oral agreement. Closing submissions 1. In closing oral submissions the Respondent's counsel said: "The real issue in the case, and indeed the only issue in the case, is whether or not there was some agreement in place whereby the money due from the defendant to the plaintiff was to be met by the defendant's payments to the restaurant in Queensland." 1. Respondent's counsel proceeded to address the learned Magistrate on why the evidence of the Appellant in that regard could not be relied upon and why the contention for such an oral agreement for repayment and set-off should be rejected. 2. In response, the Appellant's counsel said: "Your Honour, just from the outset, I agree with what my learned friend says about what are the key issues in this matter. …I do agree with what my learned friend says, which is whether or not the defendant can prove a set-off the balance of the $50,000, that's what your Honour has to decide." 1. The Appellant's counsel then referred to various aspects of the evidence, including his client's contention (made for the first time orally in chief) that in about mid-July 2013 the Respondent had said to his son: "Don't ask for the $50,000 balance from Aimee anymore because we going to be settle those amount in whatever she's pay for us." 1. The Appellant's counsel relied upon this evidence as proving a further occasion, in addition to that of 11 October 2013, upon which an express agreement had been struck for repayment and set-off. After referring to that, the Appellant's counsel submitted as follows: "It is quite clear in my submission that there have been a string of payments paid by the plaintiff [as transcribed – this is clearly a reference to payments by the Appellant/defendant]. I'll take your Honour to the specific references but the point is that at a later time it appears that there has been some clarification, at a meeting on 11 October, as to what the proportions of these would be, but notwithstanding that the defendant's case that earlier in 2013, that is in about mid-July 2013 that there was an agreement that these payments by the defendant would be offset from the remaining $50,000." 1. Later again the Appellant's counsel submitted the following: "Just returning to the agreement that we say has been reached between the plaintiff and the defendant, firstly there is the mid July 2013 conversation … as well as the evidence that has been given this morning under cross examination [referring to cross examination of the Appellant, in which she had maintained that an oral agreement had been struck for reimbursement and set-off]. We say in my submission that that's the arrangement that has been put in place." Counsel then referred to some documentary evidence which he submitted was corroborative of the alleged agreement. 1. In the Appellant's final submissions there was not advanced any contention along the lines of paragraph 4 of the Defence, that the Respondent had become liable to make restitution to the Appellant in the sum of $53,319.11 (or any other sum) independently of an express agreement for repayment of that amount. Nor was there a submission that any such free-standing restitutionary claim would give rise to an equitable set-off or an equitable defence or a statutory right of set-off under s 21(1), independently of the alleged oral agreement. The Magistrate's reasons 1. At [4] of his reasons for decision the Magistrate said: "The issue is whether Chen Aimee owes Cui $50,000 or whether Cui and Chen Aimee agreed to her repaying the amount by offsetting payments for a restaurant business." 1. After reciting the evidence and submissions, at [38] his Honour prefaced the setting out of his conclusions with the following statement of the issue: "Did the parties agree to vary the terms of the agreement [of 19 April 2013, for the loan of $100,000] so that payments made by Chen Aimee in relation to the restaurant, which were payable by Cui, were to be offset against the amount of $50,000 Chen Aimee owed Cui." 1. In [39], [40] and [42], respectively, the learned Magistrate stated his reasons for not being satisfied that any such agreement for repayment and set-off had been concluded on any of the dates contended for by the Appellant in various passages of her evidence – mid July 2013, August 2013 or 11 October 2013. Ground 1 1. The case was conducted before the Magistrate, throughout, solely on the basis that the Appellant contended for the existence of an express oral agreement for reimbursement and set-off. His Honour's statements of the one issue which had been litigated before him, quoted at [36] and [37], were precisely correct. His Honour's finding that no such agreement had been made was one of pure fact from which no appeal lies to this Court. 2. The Magistrate did not err by failing to consider an alternative basis upon which payments made by the Appellant might have been regarded as debts owing to her from the Respondent capable of being set off in accordance with the authorities referred to at [18] and s 21(1), Civil Procedure Act. Consideration of the alternative basis propounded in this appeal, by reference to paragraph 4 of the Defence, would have required factual inquiries and findings quite different from those concerning the alleged express agreement. The case was not presented by the Appellant to the Magistrate as requiring him to find facts or draw legal conclusions about a restitutionary claim under paragraph 4. Set-off of such a claim under s 21(1) did not arise. 3. Although paragraph 4 of the Defence stood unamended throughout the hearing, it was ignored in the way the Appellant ran her case. By Ground 1 she now complains that the Magistrate failed to consider that paragraph and to decide issues raised by it. This is not open to her. Isaacs and Rich JJ said in Gould v The Mount Oxide Mines Ltd (1916) 22 CLR 490 at 517: "But pleadings are only a means to an end, and if the parties in fighting their legal battles choose to restrict them, or to enlarge them, or to disregard them and meet each other on issues fairly fought out, it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest." 1. In Banque Commerciale SA v Akhil Holdings Ltd (1990) 169 CLR 279, Mason CJ and Gaudron J cited that passage in support of the following statement (at 286-287): "Accordingly, the circumstances in which a case may be decided on a basis different from that disclosed by the pleadings are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities." 1. The error of law asserted in Ground 1 of the Summons is not made out. Ground 2 1. The email from the Appellant to the Respondent dated 28 August 2013, with which Ground 2 is concerned, had attached to it a preliminary schedule of payments entitled "AQUA Rates and Payment Summary". This listed a number of payments which the Appellant at that date alleged she had made towards establishment of the restaurant business in Labrador, totalling $118,925.83. Relevant parts of her email addressed to the Respondent and to Wei Chen were as follows: "Please see attached for Aqua Chinese Restaurant part payment summary, most of payment record are what we paid. But some of them estimate and I will provide the actual figure soon. …Most of what was listed in the table has been paid for already, but of course there are a few estimates (but most have been paid for), and I will give you the actual figure as soon as possible. The amount I have paid was almost 120,000 (of course this includes some figures that await your further confirmation). … … Now I had some temporary difficulties in capital turnover, and am very grateful that you have lent me 100,000 without any conditions and that you have agreed that, after I repaid 50,000, the remaining 50,000 be deducted from the loan. However as you did not fulfil your loan commitment, the 50,000 was not paid back. Please do not accuse this as not keeping promises for such cause and effect! … … Please see the table attached where expenses are itemised, and the amount is believed to be sufficient to offset the balance of 50,000. It is hoped that the remaining amount can be settled at an early date or via other ways of resolution through consultation." 1. The Respondent's reply to this, also dated 28 August 2013, was in these terms, so far as material: "Chen Wei: I have long suspected that you think we are silly rich suckers; it turns out to be right. It does not matter, Australia is a society ruled by the law. Everything will be figured out. Anyone who has done anything, and whether there is intentional cheating, will be found out. You thought that you would have nothing to fear after you tricked us into signing some blank documents. We shall see you in court. You have listed here all the costs; do you think that you can hoodwink? By the time, your own foot will be hit by the stone you lifted. Even if you succeeded, how much money could you defraud? You would not be so poor that you had to behave like this, do you? Don't you know that it is very difficult to cheat without leaving any clue? …." 1. At [43] of his reasons the Magistrate introduced his conclusion regarding this exchange with a reference to the Respondent's email 5 August 2013 requesting repayment of "the outstanding $50,000 as soon as possible". His Honour then said: "The email of 28/08/2013, from Chen Aimee states: 'that you have agreed that after I repaid 50,000, the remaining 50,000 be deducted from the loan'. For the representation made by Chen Aimee to be correct, Cui would have had to change his mind about the repayment between 05/08/2013 and 28/08/2013. Chen Aimee says that she spoke to Cui in August 2013 about her expenditure in relation to the restaurant and he agreed to pay his portion. The evidence of Chen Aimee is not evidence about an agreement for an offsetting arrangement. Cui's response to the email of 28/08/2013, while not specifically denying an agreement, strongly implies that he does not agree by saying: 'We shall see you in court'." 1. Contrary to the Appellant's submission in support of Ground 2, there was no error of law on the part of the learned Magistrate in not treating the Respondent's reply to the Appellant's email 28 August 2013 "as evidence of an admission that the [Respondent] had agreed to deduct the remaining $50,000 from the loan after the [Appellant] had repaid [the first] $50,000". No such admission flowed as a matter of law from the terms of the Respondent's reply. It was a question of fact for the Magistrate, having regard to the setting in which the Appellant's email had been sent, what meaning she conveyed by it and how it was understood by the Respondent. It was a further question of fact for the Magistrate what meaning the Respondent intended to convey by his reply, having regard to the context of all surrounding circumstances. The Magistrate's conclusion quoted above from [43] of his reasons was well open to him. More to the point, it was a purely factual determination unappellable under the Local Court Act 1970. 2. The Appellant's email was open to the construction that it advanced two contradictory assertions about the remaining $50,000 of the loan. The first was that the Respondent had, by this date, agreed that it "be deducted from the loan". That is, that it be forgiven. The second assertion is that the Appellant had not repaid the remaining $50,000 (and, implicitly, that she was not obliged to) because the Respondent "did not fulfil your loan commitment", in some unspecified respect. 3. If the Respondent's reply to this was said to be an admission, which of the alternatives should one conclude was being admitted? Still further, the Appellant's email expressly stated that the amount of "almost 120,000" included some figures that were estimates of outgoings which had not yet been paid at all. The Appellant's email also said that "some figures await your further confirmation". Neither the Appellant's email of 28 August 2013 nor the attached summary purported to contain any apportionment of either the total or the individual amounts as between the Respondent and Wei Chen. As to this, the Appellant's email concluded by merely asserting that "the amount is believed to be sufficient to offset the balance of 50,000". Given the tentative nature of the Appellant's email with respect to total figures and, in particular, with respect to any figure for which the Appellant might have intended to hold the Respondent liable, the Respondent's reply could not have been understood, as a matter of fact let alone law, as an admission of any proposition sufficiently specific to have had a bearing upon the outcome of the case. 4. Ground 2 is rejected. Disposition of the appeal 1. For these reasons the orders of the Court will be: 1. The summons is dismissed. 2. The Plaintiff is to pay the Defendant's costs. ********** Amendments 12 October 2015 - 12 October - Paragraph [17], change Gleeson J to Gleeson CJ 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: 12 October 2015