Sarina v Mackay

1. [1]

   GLEESON JA: I agree with Leeming JA.

2. [2]

   LEEMING JA: Mr Clinton Sarina appeals, or alternatively seeks leave to appeal, from the judgment of an Associate Judge sitting in the Common Law Division dismissing his summons seeking to appeal from two judgments in the Local Court in favour of Mr Stewart Mackay. For the reasons which follow, although Mr Sarina has an appeal as of right, it should be dismissed.

Factual background

1. [3]

   Mr Mackay is a builder and a director of Robvic Pty Ltd, which had purchased a property in Gosford with a view to developing it. Mr Sarina is a financial consultant and director of Property Asset Consulting Services Pty Ltd (PACS).

2. [4]

   Mr Mackay’s statement of claim was straightforward. It alleged that pursuant to a written agreement of loan, the sum of $71,000 had been advanced by payments of $25,000 on 17 March 2017 and $46,000 on 30 March 2017, which advances had not been repaid.

3. [5]

   The Associate Judge recorded that Mr Sarina’s defence to Mr Mackay’s claim made a very serious allegation:

4. [6]

   Mr Sarina’s cross-claim alleged an oral loan agreement for amounts totalling $162,949.94 made between 25 September 2015 and 8 August 2017. Mr Sarina contended that the transfers of $25,000 on 17 March 2017 and $46,000 on 30 March 2017 were in fact repayments of that indebtedness. Alternatively, his cross-claim alleged that:

5. [7]

   Either way, Mr Sarina’s cross-claim was confined to a claim for $91,949.94 plus fees plus interest, within the $100,000 jurisdictional limit of the Local Court: Local Court Act 2007 (NSW), s 29(1)(a).

6. [8]

   Mr Mackay contended that the payments made by Mr Sarina were payments towards the Gosford property development, which were paid “to and on behalf of” Robvic.

7. [9]

   At trial, the loan agreement was in evidence. It was accepted that it had been signed by Mr Sarina at the Blues Point Hotel. Some clauses were deleted (these included clauses relating to winding up, power of attorney, general severability and survival of covenants and caveatable interest). The deletions were initialled by Mr Sarina.

8. [10]

   Following a two day hearing in the Local Court, Magistrate Michael Barko gave reasons on 4 October 2019 for a judgment in favour of Mr Stewart Mackay in the sum of $66,000 plus interest and the dismissal of Mr Sarina’s cross-claim.

9. [11]

   Both parties were cross-examined. The Magistrate’s findings were based on his Honour’s assessment of their credibility. His Honour commenced this section of his reasons with the following passage:

10. [12]

    His Honour identified errors in the evidence of Mr Mackay during cross-examination, and that he became defensive when it emerged that he must have been mistaken about some dates. He produced few documents supportive of his claims that the payments made by Mr Sarina were in fact payments on a property development in Gosford. Robvic was, by the time of the trial, being wound up, but neither side had obtained documents from its liquidator.

11. [13]

    His Honour also identified deficiencies in Mr Sarina’s evidence. He commenced his account thus:

12. [14]

    The Magistrate formed the view that “one of the parties is obviously consciously lying to support his own position”: at [52]. His Honour found that the party who was lying was Mr Sarina. The Magistrate reached the following conclusion concerning Mr Sarina’s claim that Mr Mackay’s loan agreement was a forgery:

13. [15]

    The Magistrate’s reasons for that conclusion were extensive and nuanced. As will be seen, they also contain some errors. In light of the submissions made in this Court, the reasoning warrants reproduction in full:

14. [16]

    On that basis his Honour dismissed the cross-claim, finding that “all of the monies that were transferred by Mr Sarina to or on behalf of Mr Mackay were not by way of personal loans to Mr Mackay but rather advances made to Robvic, either directly or indirectly, for the purposes of furthering the Gosford Property project”: at [57]. His Honour also found in favour of Mr Mackay on his statement of claim, rejecting various issues concerning construction, the absence of consideration and estoppel which had been raised by Mr Sarina and which need not be summarised for present purposes.

15. [17]

    Judgment was entered in favour of Mr Mackay on his statement of claim for $66,000 (he having accepted that Mr Sarina had repaid $5,000). The cross-claim was dismissed.

The appeal to the Supreme Court

1. [18]

   An appeal lies from a judgment of the Local Court pursuant to ss 39 and 40 of the Local Court Act 2007 (NSW). Section 39 confers an appeal as of right “but only on a question of law”. Section 40 confers an appeal on a ground that involves a question of mixed law and fact, but only by leave of the Supreme Court. The Supreme Court constituted by an Associate Judge has jurisdiction to hear and determine civil appeals from the Local Court: Supreme Court Rules 1970 (NSW), Pt 60 r 1A(1)(c) read with Schedule D, cl 5B.

2. [19]

   The appeal was heard by the Associate Judge on 16 February 2021 and dismissed, with costs, by judgment delivered on 22 March 2021: Sarina v Mackay [2021] NSWSC 269. Mr Sarina’s appeal identified four grounds. All were dismissed. No issue is taken with the dismissal of the first, second or third grounds. Only the fourth is presently relevant. That ground was formulated as follows:

3. [20]

   It will be convenient to defer summarising her Honour’s reasons until I have explained how Mr Sarina’s further appeal lies to this Court, the nature of that appeal, and the way it narrowed during the hearing.

The further appeal to this Court

1. [21]

   The judgment and orders of the Associate Judge have effect as a judgment and order of the Court: Supreme Court Act 1970 (NSW), s 118(4). The right of appeal to this Court created by s 101 of the Supreme Court Act is subject to s 104, which provides that “[s]ubject to the rules, an appeal shall not lie to the Court of Appeal from any decision, judgment, order, opinion, direction or determination of the Court in a Division constituted by an associate Judge ...”. The qualification “subject to the rules” is important, because Part 60 r 17(a1) of the Supreme Court Rules provides for an appeal to the Court of Appeal in accordance with, relevantly, s 101 of the Supreme Court Act. That right of appeal is subject to a requirement of leave in any case to which, relevantly, s 101(2) applies. This was explained in Sleiman v Gadalla Pty Ltd [2021] NSWCA 236 at [25]-[28].

2. [22]

   It follows that (a) the prohibition in s 104 is displaced, (b) s 101 applies, and (c) there is a right of appeal to this Court, subject to the qualifications in s 101(2).

3. [23]

   There having been a final hearing of Mr Sarina’s summons before the Associate Judge, the only paragraph of s 101(2) potentially applicable is s 101(2)(r) which imposes a requirement of leave in an appeal:

4. [24]

   Notwithstanding some statements in Mr Sarina’s written submissions which suggested the contrary, it was made clear in oral address that he challenged not only the judgment of the Local Court dismissing his cross-claim, but also the judgment of the Local Court on Mr Mackay’s claim. That had also been the position before the Associate Judge, where Mr Sarina’s summons (which had not been reproduced in the appeal books) had sought orders setting aside the judgment of the Local Court (prayer 3) and judgment in favour of Mr Sarina with respect to his Defence and Cross-Claim (prayer 4). That is to say, rather than being a judgment debtor in the amount of $66,000 plus interest and fees, the outcome sought by Mr Sarina was that he would be a judgment creditor in the amount of some $91,949 plus interest and fees. In determining whether the $100,000 threshold is exceeded, regard is had to the combined effect of both claims: Gaynor v Attorney General for New South Wales (2020) 102 NSWLR 123; [2020] NSWCA 48 at [13]-[20] esp at [19].

5. [25]

   In this Court (and perhaps before the Associate Judge; the position is not clear) Mr Sarina accepted that judgment could not be given in his favour even if his appeal were successful, but that a retrial would be necessary. That does not detract from the reasoning above to the effect that the appeal involves a matter at issue amounting to $100,000 or more.

6. [26]

   It may seem a little peculiar that in an appeal from the Local Court which is subject to a $100,000 jurisdictional limit, the amount in issue can exceed $100,000 for the purposes of s 101(2)(r), but that is the present case. Both the plaintiff/cross-defendant and the defendant/cross-claimant sought judgments in their favour in excess of $50,000. The defendant/cross-claimant failed in his defence and failed on his cross-claim. He was entitled to exercise his rights of appeal under ss 39 and 40 of the Local Court Act to challenge both judgments and replace them with judgments in his favour. The dismissal of that appeal is one which involves a matter at issue amounting to in excess of $100,000.

7. [27]

   For those reasons, Mr Sarina’s appeal lies as of right. The summons seeking leave to appeal in identical terms is superfluous and should be dismissed.

The narrowing of issues on appeal

1. [28]

   Both the draft notice of appeal accompanying the summons seeking leave to appeal to this Court originally filed by Mr Sarina, and the notice of appeal filed subsequently identified the same six proposed grounds. Grounds 4, 5 and 6 were abandoned towards the outset of Mr Sarina’s submissions.

2. [29]

   Grounds 1 and 2 maintained that:

3. [30]

   Mr Young came close to abandoning these grounds, if he did not indeed do so.

4. [31]

   The Associate Judge summarised, in some detail, Mr Sarina’s submissions in support of the fourth ground (at [79]-[92]) and Mr Mackay’s submissions opposing it (at [93]-[94]). Ultimately, Mr Young conceded that the Associate Judge was correct to summarise what had been said on behalf of Mr Sarina at [95]:

5. [32]

   Further, Mr Young also confirmed that he could not be heard to say that ground 4 before the Associate Judge had been advanced as a pure question of law, namely, that there was no evidence to support that finding. (Neither the transcript nor Mr Sarina’s written submissions (if any) were provided to this Court.)

6. [33]

   It follows that neither ground 1 nor ground 2 can be maintained. To be clear, it may be noted that this does not turn on the way the hearing was conducted before the Associate Judge. In a case such as the present, which was light on documents and essentially turned upon the testimony of the parties, there was evidence – testimonial evidence – supportive of each side’s claims. The fact that parts of it may have been uncorroborated did not elevate Mr Sarina’s complaint into one involving a question of law alone for the purposes of s 39 of the Local Court Act because there was no evidence to support the judgment. Thus, although Mr Sarina had an appeal as of right to this Court, leave was required to appeal to the Supreme Court.

7. [34]

   Thus it became clear that the appeal to this Court was confined to a single ground, namely, ground 3 which was in the following terms:

8. [35]

   Mr Young did not dispute the test applied by her Honour, namely, that leave would only be granted if the appeal raised an issue of principle or a question of public importance or an injustice which is more than merely arguable. Still further, Mr Young accepted that the appeal raised no issue of principle or question of public importance. Clearly, that concession was properly made. Accordingly, the only question was whether there was appellable error in the conclusion reached by the Associate Judge that this was not a case involving an injustice which was more than merely arguable such as to warrant a grant of leave.

The reasons of the Associate Judge for refusing leave on ground 4

1. [36]

   I return then to the reasons given by the Associate Judge for refusing leave on ground 4. Her Honour expressly noted that there were some factual errors in the findings made by the Magistrate. One concerned two payments mentioned in [57(f)] which had predated the consultancy agreement between Robvic and PACS. A more serious one, upon which Mr Sarina placed great weight, was the finding at [57(o)], commencing with the words “Quite extraordinarily” which concededly was wrong insofar as it placed Mr Crawley at the meeting of 30 March 2017.

2. [37]

   However, her Honour then identified a deal of supportive evidence which had been set out by the Magistrate. These matters were summarised at [100]. Her Honour then said at [101] and [102]:

3. [38]

   Her Honour then concluded at [103]:

4. [39]

   Most of Mr Sarina’s submissions at the hearing in this Court were directed to what were said to be errors on the part of the Magistrate. But it is to be recalled that the appeal to this Court is from the decision of the Associate Judge, and her Honour was only called upon to determine whether there should be a grant of leave. Her Honour acknowledged that the Magistrate had made errors, but further observed that there were a number of matters which sustained the Magistrate’s conclusion. That reasoning was appropriate in assessing whether this was a case where there was an injustice which was more than merely arguable. At one stage Mr Sarina complained that her Honour’s conclusion to the contrary was unsupported by reasons. However, as is explicit at the commencement of [103], her conclusion was supported by the reasoning which preceded it, the essence of which has been reproduced above.

5. [40]

   The Associate Judge correctly identified some factual errors in a decision of the Local Court with extensive reasoning over a large number of areas of detail. Her Honour concluded that those errors did not detract from the Magistrate’s conclusion that it was Mr Sarina who was lying about the payments, and not Mr Mackay. I do not see any error in her Honour’s forming the view that this was not a case for leave. Her Honour with respect correctly noted that the requirement of leave for an appeal from the Local Court on a matter extending to questions of fact was important having regard to the limited amounts involved, in order to prevent costs rising out of proportion to the matters in dispute. This was a clear case for the refusal of leave.

Orders

1. [41]

   For those reasons I propose the following orders:

   1. (1)

      Notice of appeal filed 19 October 2021 dismissed.

   2. (2)

      Summons seeking leave to appeal filed 22 June 2021 dismissed.

   3. (3)

      Mr Sarina to pay Mr Mackay’s costs of the proceedings in this Court.

2. [42]

   SACKAR J: I agree with the reasons of Leeming JA and the orders he proposes.