Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Guijar v Australia and New Zealand Banking Group Limited; Australia and New Zealand Banking Group Limited v Guijar [2012] NSWCA 10
• Hearing dates: 1 November 2011
• Decision date: 14 February 2012
• Before: Campbell JA at [1]; Handley AJA at [97]; Sackville AJA at [98]

Decision

(1) The application of Mr Guijar for leave to appeal from the decision in the Supreme Court given on 3 March 2011 is dismissed.

(2) The application of the Bank for leave to appeal from the decision in the Supreme Court given on 3 March 2011 is granted.

(3) Order the Bank to file a Notice of Appeal in the form of the draft contained in its White Book, within 14 days.

(4) Allow the appeal of the Bank from the decision in the Supreme Court given on 3 March 2011.

(5) Set aside the orders made in Supreme Court in this matter on 3 March 2011.

(6) In lieu thereof order that the appeal from the decision of his Honour Magistrate Maloney dated 30 September 2009 be dismissed, with costs.

(7) Order Mr Guijar to pay one-half of the total costs of the Bank of the two applications for leave to appeal and of the Bank's appeal.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: BANKING - whether oral contracts formed between bank and customer - bank placing money in term deposit rather than paying off principal of loan - whether bank employee had actual or ostensible authority - appropriate measure of damages; APPEAL - new trial - new trial not ordered where respondent was entitled as a matter of law to succeed on the evidence led at first trial; APPEAL - error of law - duty to give reasons - whether adequate reasons for findings - where failure to deal with issue, whether evidence such as to warrant remitting the matter for re-trial; APPEAL - costs - where appeal successful on basis of argument first raised in oral submission but arguments in written submissions rejected; INFERIOR COURT - Local Courts - appeal to Supreme Court - power to remit under s 41(1)(c) Local Courts Act - not exercised where error of law shown, but retrial would be futile
• Legislation Cited: Local Court Act 2007; Real Property Act 1900; Supreme Court Act 1970; Uniform Civil Procedure Rules 2005
• Cases Cited: Bowden v Metham (NSWCA, 12 March 1992, unreported); Deane v The City Bank of Sydney (1904) 2 CLR 198; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471; Guijar v ANZ Banking Group [2011] NSWSC 111; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247
• Category: Principal judgment
• Parties: Arturo Guijar (Applicant/Respondent); Australia and New Zealand Banking Group Limited (Respondent/Applicant)
• Representation: Counsel; A Rogers (representing Mr Guijar); J Simpkins SC (representing ANZ Banking Group); Solicitors; Di Lizio & Associates (representing Mr Guijar); Gadens Lawyers (representing ANZ Banking Group)
• File Number(s): 2009/296795

Decision under appeal

• Citation: Guijar v ANZ Banking Group [2011] NSWSC 111
• Date of Decision: 2011-03-03 00:00:00
• Before: Harrison AsJ
• File Number(s): 2009/296795

Judgment

1 CAMPBELL JA :

Nature of the Case

2 On 3 March 2011 the primary judge delivered judgment on an appeal brought to the Supreme Court from a decision in the Local Court: Guijar v ANZ Banking Group [2011] NSWSC 111. Both parties to these proceedings seek leave to appeal from her Honour's decision. In those circumstances, it is necessary to refer to the parties by name, rather than by reference to the roles they play in the proceedings in this court.

3 One of the applications for leave to appeal is brought by Mr Arturo Guijar. The other is brought by Australia and New Zealand Banking Group Limited (" the Bank ").

4 In the Local Court proceedings, Mr Guijar sued the Bank for damages of the order of $33,500 that he alleged he had sustained as a result of the Bank breaching two agreements with him, each of which related to a loan that he obtained from the Bank. He put his case in the alternative as one of the Bank making misrepresentations to him concerning the loan, but that aspect of the case is no longer pursued.

The Right of Appeal from the Local Court

5 The Magistrate's decision in the present case was given in the General Division of the Local Court. Section 39(1) Local Court Act 2007 provides:

"A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law."

6 Section 41(1) Local Court Act provides, so far as is relevant:

"The Supreme Court may determine an appeal made under section 39(1) or 40:

(a) by varying the terms of the judgment or order, or

(b) by setting aside the judgment or order, or

(c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions, or

(d) by dismissing the appeal."

Uncontroversial Facts

7 There are some uncontroversial facts. Mr Guijar was an investor in real estate. As at August 2003, the property he owned included:

• Two shops in Pitt Street, Sydney;
• A unit in Stanley Street, East Sydney;
• Some property in Spain;
• Land at Alexandra, in Victoria;
• A home unit in which he lived.

8 In August 2003 he approached the Bank with a proposal to borrow $320,000 to assist with the purchase of another property at King Street, Newtown. The Bank made that loan in October 2003, on the security of a first mortgage over the King Street, Newtown property (" the Newtown property ". That loan was for a five-year term, with principal and interest payments to be made at the rate that would be appropriate if the term of the loan had been 15 years.

9 In July 2002 Mr Guijar had entered into a contract to purchase for $485,000 a strata title property that was then under construction in Mountain Street, Ultimo (" the Ultimo property "). The contract required him to settle three weeks after receiving notice from the vendor that the property was completed.

10 The vendor of the Ultimo property served such a notice on 27 January 2004. At that time, Mr Guijar had made no arrangements for finance of the 90% of the purchase price that remained outstanding, after payment of the deposit. He approached the Bank for a loan of $485,000.

11 By a letter dated 5 March 2004, but possibly prepared and signed later in March 2004, the Bank made an offer, relating to both the loan that had already been advanced to purchase the Newtown property, and the loan that was proposed concerning the Ultimo property. No change was proposed concerning the terms of the Newtown loan. The Ultimo loan was offered, in the amount of $485,000, for a maximum term of six months, with repayments being interest only for six months. The security required was a first mortgage over the Newtown property (which was already held), a first mortgage over the Ultimo property, and a formal letter of charge over term deposit funds of $51,000. The obvious point of making mention of the Newtown property in this letter, even though the conditions of the loan relating to it were not changed, was that the Bank wanted the securities over the Newtown property and the Ultimo property to be cross-collateralised. Conditions of the loan were stated to be:

• ANZ Home Loan of $79,000-00 to be reduced to $50,000-00 upon the sale of Pitt Street properties;
• New Lease over property at King Street, Newtown to be provided by 31st July 2004;
• Lease Agreement over property at Ultimo to be tabled by 30th April 2004;
• Selling contracts with agents for properties at [XX] and [YY] Pitt Street and [ZZ] Stanley Street, East Sydney to be provided;
• If not sold by 6 months the property is to be taken to auction and customer undertake to meet market and sell.

Mr Guijar signed that letter.

12 Mr Toese Faapito was employed as a Relationship Manager by the Bank. At relevant times, he was located at the SME-Banking Fairfield Business Centre of the Bank. He had dealt with Mr Guijar concerning the loan for the purchase of the Newtown property.

13 Ms Hope Kainz, an employee of the Bank at its Liverpool branch, met with Mr Guijar in early February 2004. She completed a form dated 4 February 2004, for sending to Mr Faapito, as the Relationship Manager. She stated in that form that Mr Guijar would like to apply for a bridging home loan to buy a commercial property. She explained:

"Mr Guijar is looking for a 3 or 6 months term bridging loan and the security he is offering is part equity of his commercial property in Newtown, he has a property in Melbourne he is about to sell to help clear this bridging loan. He is expecting $180K for its sale and he is being offered $160K. He is also expecting overseas remittance of about $120K from the sale of his property in Spain. His other option to clear this bridging loan is the sale of his 2 shops in Pitt St Sydney. He has an offer of $370K and waiting for the real estate agent to return from holidays."

14 The note recorded that Mr Guijar said "that he will see you today" .

15 On 3 March 2004 Mr Faapito prepared an internal bank diary note relating to a proposal that Mr Guijar borrow $485,000 to purchase the Ultimo property. That note recorded that the Pitt Street shops were to be sold to clear the bridging loan of $485,000 within six months. It also recorded that the Stanley Street property was now on the market. A debt to St George Bank was to be cleared from the proceeds. However, the price at which the Stanley Street property was on the market exceeded the amount of St George Bank's debt by $70,000. The sale proceeds of the Pitt Street shops would also reduce the home loan to $50,000. The diary note set out the income and expenses of Mr Guijar, and noted that the expenses exceeded the income. It listed several justifications for making the loan notwithstanding the shortfall. One of them was that the $485,000 loan:

"... is for term of 6 months only. Interest is being provided up front and debt will be cleared from sale of the Pitt Street properties."

16 The Magistrate in the present case found that settlement of the loan occurred on 5 March 2004. That finding was confirmed by the primary judge, and is not challenged in the present applications for leave to appeal.

17 Around this time, Mr Guijar received an amount of € 75,000 resulting from the sale of his Spanish property. That amount came to be converted to Australian Dollars and paid to the Bank. From the proceeds of conversion, the Bank placed $51,000 into a term deposit, for a period of six months from 5 March 20 04, on terms whereby interest from the term deposit was to be credited to the term deposit account.

18 The Ultimo loan was not paid on its maturity date of 5 September 2004.

19 Mr Mee Ling is a solicitor who acted for Mr Guijar concerning the purchase of the Ultimo property, and concerning some subsequent dealings with it. He did not act concerning the mortgage that was given for the purchase of that property. On 22 September 2004, Mr Mee Ling wrote to the Bank for the attention of Mr George Louca (who by this time had replaced Mr Faapito as the Relationship Manager for Mr Guijar's account) requesting a further loan. By that date, a contract for sale of one of the Pitt Street shops had been entered, but it seems the purchaser could not complete, and there was no deposit paid that could be forfeited. A contract had been entered for the sale of the other Pitt Street shop, but problems had developed with the purchaser about whether certain work was needed, and who should pay for it. No contract for sale of the Stanley Street property had been entered. Further, by that time, Mr Guijar had committed himself to buy another property in Parramatta Road, Petersham for $472,000 plus GST, settlement of which was due on 11 October 2004. A statement of Mr Guijar's personal financial position showed that his monthly expenses exceeded his monthly income.

20 By letter dated 28 September 2004, signed by Mr Louca (as Relationship Manager) on behalf of the Bank, to Mr Guijar, the Bank offered an extension of facilities to 31 March 2005. It reserved its rights concerning the breaches of the original lending conditions that had by that time occurred. The conditions of the extension were:

• Customer to formally undertake to take properties ([XX] and [YY] Pitt St Sydney) to auction, with confirmation by auction listing being tabled to the Bank by 30/10/2004.

• Pitt St properties are to meet the market and sell to clear bridging loan of $485,000.00 by 31/03/2005.

• ANZ [home] Loan [account number] to be reduced to $50,000.00 upon sale of Pitt St properties.

After some resistance, Mr Guijar signed that letter.

21 The Bank sent a formal letter of offer to Mr Guijar dated 7 October 2004. It related to the extension of the $485,000 loan for five months, on an interest only basis. The security continued to be first mortgages over the King Street, Newtown property and the Ultimo property, and a formal letter of charge over the term deposit funds.

22 Conditions of the letter included ones identical in substance to those listed at [20] above.

23 After some resistance, Mr Guijar signed that letter on 28 October 2004.

24 When the term deposit matured it was renewed for a term ending on 5 February 2005. On 5 February 2005 it was renewed for a further month.

25 By February 2005, the Petersham property had been purchased. The purchase had been financed by a friend of Mr Guijar borrowing the money, and on-lending it to Mr Guijar.

26 Mr Louca made a diary note on 7 March 2005 of what he had been informed that day by Mr Guijar. It referred to the $485,000 loan as the "ABL" . It recorded:

• [One of the] Pitt St [shops] is due to settle this Friday 11/03/2005, with proceeds ($430k) from sale to be used to payout out above ABL in conjunction with TD funds of $53k.

• Arturo requested whether the ANZ Bank would consider a further extension on the ABL, which I declined. The reason being is that he would like to use the funds to payout his friends loan (...), which he obtained to finance the Petersham property. I advised Arturo that the ABL is due to expire on the 11/04/05 and we would not be in a position to consider any further extension and that funds should be used to payout our loan, which he agreed.

• [The other] Pitt St [shop] is on the market for sale at $450k, and Arturo has advised the market is very slow and has not received any offers.

27 Another diary note of Mr Louca of 18 March 2005 records that Mr Guijar told him that day:

• His solicitor was to issue purchaser with a notice to complete, for failing to settle on the 11/03/05.

• Purchaser does not wish to proceed with the purchase of [the Pitt St shop] and will forfeit their 5% deposit ($450, @ 5% = $22,500).

It records that Mr Louca spoke to Mr Guijar's solicitor, who confirmed he had not received any instructions to place the other Pitt Street shop for auction, and that he was about to serve a notice to complete concerning the Pitt Street property that had been sold.

28 On 24 March 2005 Mr Louca wrote to Mr Guijar stating that the loan was due to be paid out by 31 March 2005. The letter stated that the conditions in the letter of offer concerning sale of the Pitt Street shops and application of the proceeds of sale had not been met. The letter requested that the failure be remedied immediately. It stated that if the loan was not paid out by 31 March 2005 it would be a default and the Bank might then exercise any of its rights.

29 The loan was not paid out by 31 March 2005.

30 On 1 April 2005 Mr Louca (describing himself, as usual, as "Relationship Manager" ) wrote to Mr Guijar:

"Re: Change of Manager

We refer to our letter dated 24 th March 2005 advising that in accordance with our Letter of Offer dated 7 th October 2004, your ANZ Business Loan Account Number [XXXX-XXXXX] was due to be paid out by 31 st March 2005.

It is noted that you have breached our original lending terms and conditions by not satisfying the Bank requirements as outlined in our letter of offer dated 7 th October 2004.

Please be advised that the management of your Banking facilities has been transferred to our Portfolio Management department which are located at 15/20 Martin Place Sydney NSW and you will be advised of your new manager in due course."

31 On 21 April 2005 Ms Christine Ngai, a bank officer who described herself as "Acting Manager" wrote to Mr Guijar. The letterhead showed that the letter was written from the Business Banking Portfolio Management, part of the Bank, whose address was at level 15, 20 Martin Place, Sydney. The letter stated:

"Further to our telephone discussions today, we write to confirm that control of your accounts has been transferred to Portfolio Management Debt Recovery section of the Bank (by George Louca), due to the reason outlined in his letters of 24 March 2005 and 01 April 2005 (copies attached).

The primary function of the department is one of recovering debts, which the Bank classifies as being of concern or as having a doubtful nature. This is achieved either through refinance or sale of security.

This department as such, is not a Business Centre and accordingly, does not provide services for restructuring loans nor rearrangement to existing facilities.

In accordance with George Louca's letters, the Bank now wishes to finalise its banking relationship with you. Please find enclosed a termination notice in respect of your accounts. Termination takes effect at the end of the notice period when you must immediately pay to the Bank the outstanding monies under the facilities.

You informed today that you intend to clear loan account number [XXXX-XXXX6] and [XXXX-XXXX4] as well as reduce loan account number [XXXX-XXXX9] from a sale proceeds. In addition, you requested us to release the money on Term Deposit account number [XXXX-XXXX5] (ANZ security) for reduction payment into loan account number [XXXX-XXXX9].

As discussed, the Term Deposit funds will not be released until all debts are cleared or until such time that evidence on the clearance of all debt in full is provided. In this, it would be appreciated if you would please forward us a written proposal detailing how and when the residual debt on account number [XXXX-XXXX9] is to be cleared.

In the event that this information is not provided by 20 May 2005 , or the information provided is not to the Bank's satisfaction, the Bank will without further notice to you , place the matter with its solicitors to issue further legal notices. Please note that all costs associated with the enforcement action are claimable by the Bank and will be charged to your account(s)."

The evidence before the Magistrate did not establish whether Mr Guijar had had the telephone discussions referred to in the first paragraph of this letter, or received the letter itself, before he had an important conversation with Mr Louca on 21 April 2005.

32 By 10 June 2005, the Bank had placed the matter in the hands of its solicitors, Gadens. Gadens wrote to Mr Guijar on 10 June 2005, notifying him that the balance of the term deposit (by then $54,081.74) had been applied in reduction of the debt on the Ultimo loan. It demanded the balance, and served a notice under s 57(2)(b) Real Property Act 1900 .

33 Ultimately, Mr Guijar was able to discharge his debts to the Bank, at least in part by obtaining refinancing.

The Allegations in the Local Court

34 Though several causes of action were alleged in the Local Court proceedings, only two are relevant to the present applications. The first alleges that the Bank breached an oral contract made on 3 February 2004 between Mr Guijar and Mr Faapito. The second is that the Bank breached an oral contract made on 21 April 2005 between Mr Guijar and Mr Louca.

Evidence Re The February 2004 Agreement

35 Mr Guijar's pleading alleged that on or about 3 February 2004 there was an oral agreement between Mr Guijar and Mr Faapito that the Bank would advance to Mr Guijar $485,000 to complete the purchase of the Ultimo property "in consideration of the Plaintiff agreeing to pay bank fees and interest" . It contended that it was a term of that oral loan contract "that when certain funds soon to be available to the Plaintiff, bein g a sum of €75,000, were cleared and available to the Plaintiff, those funds could be applied by the Plaintiff in reduction of the sum of $485,000." The alleged breach was that on 5 March 2004 the €75,000 were paid into an account that Mr Guijar maintaine d with the Bank, that the Bank without authority deducted from that amount the sum of $51,000, and instead of applying those deducted monies in reduction of the principal sum, held them as security for interest which might fall due on the principal sum.

36 Mr Guijar's evidence concerning the entry of this contract is that on or about 3 February 2004, after an assistant bank manager called "Hope" at the Liverpool branch told him to go and see Mr Faapito at Fairfield, he saw Mr Faapito at the Fairfield Business Centre of the Bank. Mr Guijar's evidence was that the following conversation occurred:

"I said:- 'I need a loan of $485,000 to finance the purchase of a commercial property in Mountain Street, Broadway. I am buying it for $485,000 plus GST. Settlement is due on the 17 th of February, 2004. There is plenty of equity in [AA] King Street, Newtown to cover the loan. I expect to be able to let Mountain Street out for $500 or $600 per week.'

He said:- 'Let's go through the figures.'

He asked me various questions about my properties and loans which I answered. Words to the following effect were then exchanged:-

He said:- 'I can't give you the same sort of loan as before.'

I said:- 'Why?'

He said:- 'Because you can't afford to repay.'

I said:- 'But I have about $100,000 coming from Spain. I want to put that in the loan.'

He said:- 'No. I'll give you a six month loan and you will have to sell off the Pitt Street properties.'

I said:- 'Alright. When the money comes in I'll pay the $100,000 off this loan.'

He then said words to the following effect, producing a piece of paper and handing it to me-

'Sign this paper here.'

He indicated a place on the paper. Words to the following effect were exchanged:-

I said:- 'What is this?'

He said:- 'It is for the loan.'

The last page of the document behind tab 3 of Mr Hancock's Exhibit 1 looks like that piece of paper, except that the paper I signed did not have my name printed on it. I signed at the place he indicated, the same place where my signature can be seen on that said page. At no time was I told this was connected with term deposits, set-offs, or appropriations. No term deposit was discussed at this time. No-one else but Mr Faapito was present in the room with me when I signed this page. My recollection is that the page I signed was a single sheet of paper.

He said:- 'Alright. I will contact you when I need you again.'"

37 The document behind tab 3 of Mr Hancock's Exhibit 1 is a standard form document entitled "Standard Authority to Appropriate and Set-Off ANZ Term Deposits" . The final page of that document contained provision for signatures. The first page of that document, as exhibited to Mr Hancock's affidavit, bears a date 12 March 2004, in handwriting that appears different to that of Mr Guijar.

38 Without objection, Mr Faapito gave evidence that the business finance that Mr Guijar was seeking from the Bank was outside his authority to approve. He was not cross-examined concerning that statement.

39 In cross-examination, Mr Faapito rejected, repeatedly and emphatically, the suggestion that was put to him several times that Mr Guijar told him that he wished to use the money from Spain to reduce his indebtedness to the Bank.

The Decision of the Primary Judge re the February 2004 Agreement

40 One of the grounds of appeal identified in the Second Further Amended Summons in the Supreme Court proceedings, was that the Magistrate erred in that he failed to determine whether monies advanced to Mr Guijar were advanced pursuant to an oral agreement between Mr Guijar and Mr Faapito, and if so, the terms of that agreement. The primary judge rejected that ground. Her Honour's reasons for doing so set out the relevant parts of the Magistrate's reasoning on that topic:

"34 The Magistrate assessed Mr Guijar's credibility by making a finding that he was vague and circuitous and of questionable reliability. So far as the purported oral agreement in February 2004 is concerned the Magistrate stated at [11], [12], [26], [37], [38] and [39]:

'11. In respect to the first question the plaintiff states that in or about February 2004 he went to see the assistant manager of the Liverpool retail branch of the ANZ Bank for the purpose of applying for a loan. On this occasion he spoke to a Ms Hope Kainz. The purpose of him requesting this loan was to finance the purchase of property at 88 Mountain Street Ultimo (The Ultimo property).

12. The plaintiff was later referred to Mr Toese Faapito. The plaintiff was already a customer of the bank. The bank had provided various loan facilities to him between 1984 and 2005. He requested Mr Faapito to advance him the sum of $485,000.00 on the same terms and conditions of a loan that he had obtained in September 2003. He wanted a principal and interest loan structured over a period of 15, 20 or 25 years, as he expressed to Ms Kainz.

...

26. It is interesting to note that he entered into the purchase of the Ultimo property on the 27 July 2002 a fact not made known to the defendant in or about August-October 2003. Following the plaintiff receiving a notice to complete the Ultimo premises that was dated 27 January 2004 the plaintiff attended upon Ms Hope Kainz at the Liverpool branch of the ANZ Bank on 4 February 2004 where a file note evidences that Ms Hope Kainz understood the plaintiff's intentions to be as she records them:-

'Mr Guijar is looking for a 3 to 6 months terms bridging and the security he is offering is part equity of his commercial property in Newtown. He has a property in Melbourne he is about to sell to help clear this bridging loan. He is expecting $180,000.00 for its sale and he is being offered $160,000.00. He is also expecting overseas remittance of about $120,000.00 from the sale of his property in Spain. His other option to clear his bridging loan is the sale of his two shops in Pitt Street Sydney. He has an offer of $370,000.00 and waiting for the real estate agent to return from holidays. Mr Guijar would also like to find out what happens if he will not be able to clear a $185,000.00 from his bridging loan will he be able to make a mortgage loan for a 30 year period.'

...

35 Critically at [37]:

'37. Notwithstanding what Mr Guijar thought was an understanding he had with Ms Hope Kainz or indeed Mr Faapito on receipt of Ms Kainz's memo and record of initial conversation with Mr Guijar, it was open for the defendant to receive an offer from Mr Guijar as to terms of any mortgage or loan agreement, for the bank to consider the same and its own position then offer Mr Guijar terms the bank considered to be in its best interest. This occurs in the ordinary course of commerce between banks and their customers.'

36 Most of Mr Guijar's conversations with ANZ were with Ms Kainz. The Magistrate made a finding that notwithstanding what Mr Guijar thought was an understanding with Ms Hope Kainz or indeed with Mr Faapito, it did not amount to an oral agreement. The conversations with Mr Guijar only amounted to him making an offer to ANZ. Counsel for ANZ highlighted Mr Guijar's reference that he requested Mr Faapito to get a loan of $485,000 and Mr Faapito did not adhere to this request. I agree that there is an internal conflict in Mr Guijar's own evidence. On the latter version, if Mr Faapito did not adhere to the request that cannot constitute an oral agreement between the parties. In my view the Magistrate did consider whether the communications Mr Guijar had with Mr Faapito constituted an agreement. The Magistrate decided that it did not. There is no error of law."

41 Another basis of the appeal to the primary judge was that the Magistrate erred in law in failing to give any reasons, or sufficient reasons, for his decision as to the existence of an oral contract.

42 Her Honour accepted at [53] that failure of a court to give adequate reasons for its findings constitutes an error of law. She set out extensively at [55]-[56] statements of principle of McHugh JA in Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 248 and at 278-9:

"Counsel for ANZ also referred to a passage in Soulemezis v Dudley (Holdings) Pty Limited where McHugh JA stated at 248:

'In a case where a right of appeal is given only in respect of a question of law, different considerations apply from the case where there is a full appeal. An ultimate finding of fact, which is not subject to appeal and which is in no way dependent upon the application of a legal standard, can be treated less elaborately than an issue involving a question of law or mixed fact and law. If no right of appeal is given against findings of fact, a failure to state the basis of even a crucial finding of fact, if it involves no legal standard, will only constitute an error of law if the failure can be characterised as a breach of the principle that justice must be seen to be done. If, for example, the only issue before a court is whether the plaintiff sustained injury by falling over, a simple finding that he fell or sustained injury would be enough, if the decision turned simply on the plaintiff's credibility. But, if, in addition to the issue of credibility, other matters were relied on as going to the probability or improbability of the plaintiff's case, such a simple finding would not be enough.'

McHugh JA also explained one of the purposes served by a judicial decision is that:

'[I]t enables the parties to see the extent to which their arguments have been understood and accepted as well as the basis of the judge's decision.'

and that (at 278-279):

'...[A] judicial decision must be a reasoned decision arrived at by finding the relevant facts and then applying the relevant rules or principles. A decision which is made arbitrarily can not be a judicial decision; for the hallmark of a judicial decision is the quality of rationality...'"

43 She stated at [74] that, "the Magistrate provided adequate reasons in relation to whether there was a binding oral agreement entered into on 3 February 2002 [sic] ."

The Proposed Grounds of Appeal Re the February 2004 Agreement

44 Mr Guijar's application for leave to appeal relates solely to the way in which the primary judge disposed of the appeal concerning the alleged February 2004 agreement. Though the draft Notice of Appeal fails to mention any grounds of appeal, the substance of the proposed grounds is identified in the written submissions of Mr A G Rogers, counsel for Mr Guijar.

45 Mr Rogers submits that the primary judge reached three incorrect conclusions:

(a) That the Magistrate considered whether the communications Mr Guijar had with Mr Faapito constituted an agreement;

(b) That the Magistrate decided that those communications did not constitute an agreement, and

(c) That there was no error of law in the Magistrate reaching that conclusion.

46 In my view, the primary judge was correct in concluding that the Magistrate considered whether the communications between Mr Guijar and Mr Faapito constituted an agreement. Early in his judgment, the Magistrate set out the substance of Mr Guijar's pleading on that question. He stated, at [10], that one of the questions to be answered was "Was there an original oral agreement between the plaintiff and the defendant" . He set out, in summary form, the plaintiff's evidence about his conversation with Ms Kainz, and continued:

12. The plaintiff was later referred to Mr Toese Faapito. The plaintiff was already a customer of the bank. The bank had provided various loan facilities to him between 1984 and 2005. he requested Mr Faapito to advance him the sum of $485,000.00 on the same terms and conditions of a loan that he had obtained in September 2003. He wanted a principal and interest loan structured over a period of 15, 20 or 25 years, as he expressed to Ms Kainz.

13. That was his understanding at or about the time of the settlement which either occurred on the 3 or 5 March 2005. Subsequently, he was, in his words, 'induced or otherwise forced' into accepting the terms and conditions of the loan as contained in a letter of offer from the bank to the plaintiff dated 5 March 2005.

14. Without fully stating the plaintiff's intentions and understanding the same are as contained in his original affidavit dated 10 November 2006."

47 Mr Guijar's affidavit dated 10 November 2006 contained the following evidence:

"10. I saw Mr Faapito who prepared loan documentation for the requested loan of $485,000.

11. As I understand it now Mr Faapito issued me with a fresh loan offer for a loan of $317,000 (remaining balance of previously obtained loan on or about 26 September 2003).

12. In the same loan offer document was a separately structured loan of $485,000, however it was for terms of 6 months interest only, at which time it would have to be repaid in full or refinanced. This is something I did not understand at the time it was issued to me.

13. This is not what I had requested Mr Faapito to do at the time;

14. Mr Faapito did not adhere to my request; he did not explain the consequences of such loan and did not at any time whatsoever request me to seek independent legal advise [sic] before signing any offer of loan.

15. I explained to Mr Toese Faapito I was expecting approximately $104,000 from Spain soon. The funds were in fact received on 3 March 2007 and settlement for 88 Mountain Street Ultimo did not occur till 5 March 2004. Annexed hereto and marked with the letter "AA" is a true and correct copy of a tax invoice in relation to that transaction.

[Excluded passage]

17. I had the money transferred from Spain put into the ANZ Bank for that and that purpose only and no other reason. Otherwise I would have directed the funds elsewhere so I could be in control of their disposal.

18. Instead of following my requests the ANZ bank took $51,000 from my money transferred from Spain to lock them in a term deposit account and left me on a loan structure which I now understand to have been an 'bridging' loan. I did not understand that at the time.

19. Annexed hereto and marked wit the letter "B" is a true and correct copy of such loan offer undersigned by Mr Toese Faapito."

48 I have reproduced this evidence after excluding passages that were ruled inadmissible at p 17 ff of the transcript of 24 June 2009. Regrettably, the passages that were excluded were not marked in the White Books prepared for the appeal as having been excluded, as they would be required to be by UCPR 51.29(3) for the Blue Book of an appeal.

49 In addition to the paragraphs quoted in the primary judge's judgment, the Magistrate said at [27]-[31]:

"[Ms Kainz] forwards this plus a pro-forma customer referral to Mr Faapito with the closing words 'please let me know if I could help'.

In summary Mr Faapito says that a proposal was prepared on information given by Mr Guijar and sent to his superiors as it was outside his authority to get approval.

The advice that Mr Faapito received on or about 3 March 2004 was that the loan be approved subject to confirmation of a sale strategy being selling the properties Shop XX and YY Pitt Street Sydney and property at Speed Street Liverpool and that if there be no sale within 6 months the Ultimo property be taken to auction and the customer undertake to meet the market price and sell. Mr Faapito's superiors dated this advice on 5 March 2004.

It appeared to me from oral evidence given by Mr Faapito that he was aware of what written advice was to be forthcoming from his superiors and consequently he did what he could to facilitate settlement on or about 5 March 2004 and I find as a fact that settlement did occur on 5 March.

The letter from the bank dated 9 March the contents amount to what used to be known as an epitome of mortgage wherein $485,000.00 was the loan advance. It was advanced on the 5 March at a certain interest rate for 6 months only. Quite clearly a bridging loan and no other type of loan."

50 The Magistrate noted that Mr Guijar's evidence was that he was forced to sign the letter of acceptance (ie, the 5 March 2004 letter) as "to do otherwise would leave him liable to the vendor of the Ultimo premises rescinding the contract and Mr Guijar losing his deposit monies and liable to a claim for damages" .

51 The Magistrate also noted at [35] that on 13 May 2004 Mr Mee Ling had written to Mr Guijar, going over the history of the transaction, and saying:

" Your finance was not ready in time. Partly this was due to the vendor's [sic] not making the keys of the suite available for your bank's valuer to gain access, but the vendor's [sic] deny this and without a fairly detailed account from the bank we do not think that the point can be effectively pursued. And although a lot of interest was paid, a few days here or there is not worth fighting about. The essential problem is that although before Christmas the vendors notified us - in response to the writer's enquiry - of the estimated time of completion, and although we warned you had not organised your finance. "

The passages in bold appeared in bold in the Magistrate's judgment.

52 The Magistrate also noted, in [39]:

"... Mr Mee Ling's letter of 22 September 2004 contains a litany of woes and seeks that the bank give him either more time or another loan for 6 months. At no time does Mr Mee Ling or Mr Guijar for that matter raise the issue contained in this litigation."

53 Clearly, if there ever had been a promise by Mr Faapito that the Bank would permit Mr Guijar to pay the Spanish money off the Ultimo loan as soon as it was received, and the Bank had failed to do so, September 2004 would have been the time to complain to the Bank about its actions. September 2004 was when the six-month bridging loan was due for repayment. It was a time by which Mr Guijar was in breach of various of the conditions of the loan. When Mr Guijar was seeking an extension of the loan, one would think it would be opportune to point out to the Bank that the fault relating to the administration of the loan was not all on one side. I make these remarks not for the purpose of myself making factual findings, but to spell out what seems to me to be implicit in the observation of the Magistrate that I have just quoted.

54 In my view, in substance, the Magistrate did not accept the version of events that Mr Guijar had put forward in his affidavit of 26 July 2007 concerning his February 2004 conversation with Mr Faapito. That is a decision of fact, concerning which no appeal lies.

55 In any event, even if Mr Faapito's evidence in his affidavit of 26 July 2007 were to be accepted, (against all the improbabilities of a bank binding itself concerning the terms of a loan by an oral agreement that is not reflected in a single contemporaneous document) it would not establish the pleaded contract. As Mr Guijar recounts in para [6] of his affidavit of 26 July 2007, he made a statement of intention to Mr Faapito, "when the money comes in I'll pay the $100,000 off this loan" . On Mr Guijar's account, Mr Faapito made no oral response to this. A statement of intention on the part of Mr Guijar, met by silence from Mr Faapito, does not amount to a contract.

56 Suppose that, notwithstanding Mr Guijar's uncertainty about it, the document he thereupon signed was the same as the last page of the document behind tab 3 of Mr Hancock's Exhibit 1 ( "Standard Authority to Appropriate and Set-Off ANZ Term Deposits" ). Even if this were the case, the action of Mr Faapito in proffering for signature even part of a document concerning a charge over a term deposit (when at that time Mr Guijar had no money on term deposit with the Bank) was not consistent with Mr Faapito agreeing or accepting that a payment of the $100,000 off the principal of the loan, immediately, would be made. Further, when there is no allegation of any circumstance that would vitiate or lead to an alteration of a contract, a person who signs a document is bound by it: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 at [33].

57 Remarks of Griffith CJ, delivering the judgment of the High Court (Griffith CJ, Barton and O'Connor JJ) in Deane v The City Bank of Sydney (1904) 2 CLR 198 at 210-212 are accurately summed up in the headnote: "A new trial will not be granted where it is clear that a second trial must have the same result as the first."

58 In Bowden v Metham (NSWCA, 12 March 1992, unreported), Handley JA (Priestley JA agreeing) said, at 10:

"It is clear that a new trial will not be ordered if the respondent was entitled, as a matter of law, to succeed on the evidence led at the first trial. See Deane v The City Bank (1904) 2 CLR 198 at 213. Moreover, a new trial should not be ordered where an appellant has 'only a problematical and infinitesimal hope of success in the event of a new trial' see Armstrong v Great Southern Goldmining (1911) 12 CLR 382 at 390 and Balenzuela v de Gail (1959) 101 CLR 226 at 236 per Dixon CJ."

59 The appeal from the primary judge to this Court is an appeal under s 75A Supreme Court Act 1970 . By reason of s 75A(6) this Court has the powers and duties of the court from which the appeal is brought. For the reasons I have given, Mr Guijar's evidence could not establish the contract on which he sues. Thus, on an appeal to this Court from the decision of the primary judge, this Court should not make any order that would result in there being a new trial concerning whether there was a contract, of the type Mr Guijar alleges, entered with the Bank in February 2004.

60 When there is this reason for not ordering a new trial concerning the alleged February 2004 contract, any dispute about whether the Magistrate gave adequate reasons concerning that contract is moot. Leave to appeal should not be granted concerning that alleged contract.

61 There is another reason why leave to appeal should not be granted in a way that permitted any re-opening of the conclusion that the primary judge reached concerning the alleged February 2004 contract. The damages that were claimed in the Local Court were of the order of $33,500. A significant component of those damages were losses that Mr Guijar claims to have sustained as a consequence of being forced to sell properties to pay out the Bank's debt. The terms on which the Ultimo loan was granted included an obligation for Mr Guijar to sell the Pitt Street properties and the Stanley Street property, and that if they were not sold at the end of six months the property was to be taken to auction on the basis that Mr Guijar would meet the market and sell them. Mr Guijar failed to comply with this condition. Therefore, this aspect of his claim for damages was unsustainable. In argument before us, Mr Rogers accepted that proposition.

62 The only damages that could flow from the Bank placing the $51,000 in a term deposit, instead of permitting it to be paid off the principal of the Ultimo loan immediately, arises from the difference between the interest rate paid by the Bank on the term deposit, and the interest rate paid by Mr Guijar on the Ultimo loan. On the basis of the material that was available to us at the time of the hearing, I would have drawn the following inferences. The term deposit earned 5.3% pa interest during the period from 5 March 2004 to 5 September 2004. The interest rate payable on the Ultimo loan was at the rate of 7.5% pa. Thus, the differential is 2.2% pa. As Mr Guijar failed to adhere to his obligation to repay the loan at the end of the six-month period, the damages could not run for any longer than six months. $51,000 at 2.2% for six months is $561.00. Mr Rogers suggested, without elaboration, that that sum might need to be adjusted to take account of the effects of income tax. Without pausing to examine whether that suggestion is right, the amount at stake is too small to warrant granting leave to appeal concerning the alleged February 2004 contract.

63 At the concurrent hearing, the Court sought details of how the figure for the claimed damages had been arrived at. Those details were provided to us after the hearing. The Bank objected to the Court receiving the information, on the ground that the way the damages were made up had not been in issue before the primary judge.

64 In my view, it is appropriate to receive the material, because this Court has its own discretion to exercise about whether to grant leave to appeal.

65 The damages claimed were divided into two components. One component related to the loss said to have been occasioned by breach of the agreement reached in February 2004 and/or misrepresentation made by Mr Faapito in February 2004. The misrepresentation claim has not been pursued in this Court. That component of the damages claimed was made up of interest on $100,000 for the period 5 March 2004 to 10 June 2005, and a loss on sale of one of the Pitt Street shops.

66 The loss on sale of the Pitt Street shop is not recoverable. There is no reason why the appropriate measure of damages should be calculated by reference to a principal sum of $100,000 rather than $51,000. There is no reason why the appropriate damages should be calculated for anything over six months. The claimed damages failed to give credit for the interest that had been received on the term deposit. Thus, this information about the basis on which damages had actually been claimed bore out the correctness of the inferences I would have drawn on the basis of the material that was available to us at the time of the hearing.

The 21 April 2005 Agreement

67 Mr Guijar's Statement of Claim in the Local Court contained the following allegations:

"27. On or about 20 April 2005 the sale of Shop XX was completed.

28. On 21 April 2005 the Plaintiff and the Bank entered into an agreement ("the April Agreement") whereby the Plaintiff and the Bank agreed that

(i) the net proceeds of sale of Shop XX would be paid by the Plaintiff to the Bank to be applied in reduction of the Principal Sum;

(ii) the Deducted Moneys would be applied by the Bank in reduction of the Principal Sum;

(iii) the Bank would re-finance the remaining part of the Principal Sum in the sum of $26,000.

29. In pursuance of his obligations under the April Agreement, the Plaintiff on 21 April 2005 forwarded to the Bank the net proceeds of sale of Shop XX in the sum of $404,184.33.

30 In breach of its obligations under the April Agreement, the Bank:

(i) did not apply the net proceeds of sale of Shop XX in reduction of the Principal Sum;

(ii) did not apply the Deducted Moneys in reduction of the Principal Sum;

(iii) did not re-finance the remaining part of the Principal Sum in the sum of $26,000 or in any sum;

(iv) returned the net proceeds of sale of Shop XX and called up repayment of all moneys owing to the Bank by the Plaintiff;

(v) issued notices to the Plaintiff under section 57(2)(b) of the Real Property Act in relation to [address] Liverpool, [AA] King Street, Newtown and [BB] Mountain Street, Broadway."

68 Mr Guijar's evidence in chief about the agreement of 21 April 2005 was:

"18. On 21 st April, 2005 at about 9:30 I went to the Liverpool branch of the ANZ Bank. I saw Hope. I had with me the cheques in annexure "C" to my affidavit of 5 th October 2006. Words to the following effect were exchanged:-

I said:- 'I want to pay off $404,184.33c from my $485,000 loan, using these cheques and pay in the $54,000 term deposit you are holding, leaving about $26,000 outstanding, which I want to add to the King Street loan.'

She said:- 'I'll have [to] call the assistant manager, Christine Ngai.'

She made a number of telephone calls. We had to wait until about 10:00 am for her to get through. She had a conversation. She then said to me:-

'I can't release the term deposit. We can't do this.'

19. On the same day at about 11:00 or 12:00 I went to see Mr George Louca at the SME-Banking Fairfield Business Centre of the ANZ Bank. I gave him the cheques and words to the following effect were exchanged:-

I said:- 'I want to pay this into the $485,000 loan, plus the term deposit, and add the remaining money outstanding to my King Street loan.'

Mr Louca said:- 'All right.'

He got some papers from a drawer. He filled them out and signed them. He then gave them to me to sign. They were firstly, some document about paying out the $485,000 loan, using the cheques I was paying in, the money from the term deposit and debiting $26,000 to the AA King Street Newtown loan (giving the AA King Street loan number), and secondly, a form of release for the term deposit. I signed them and gave them back to Mr Louca. He did not give me any copies. I then left.

20 Half an hour after I left Mr Louca I received a telephone call from him on my mobile phone. Words to the following effect were exchanged:-

He said:- 'Sorry, you must come back to the office.'

I said:- 'Why?'

He said:- 'Because Christina won't let me do this. You must do it yourself. She won't let me release the Term Deposit.'

21. I returned to Mr Louca's office. I saw the cheques and the papers we had signed on Mr Louca's desk. He said words to the effect:-

'I'm sorry, Arthur, I can't do anything. This woman won't let me do it. She won't let me release the term deposit.'

Shortly after I arrived, Mr Louca received a telephone call:-

The caller said:- 'He's there?'

Mr Louca said:- 'Yes, he's here.'

The caller said:- 'I am ringing to make sure you give him the cheques back.'

Mr Louca said:- 'Yes. I am.'

After he hung up, he said:

'That was Christine Ngai.'

Mr Louca gave me the cheques back. He tore up the papers we had signed and put them in his wastepaper bin."

69 Mr Louca accepted the correctness of that evidence, subject to one matter. That matter is that, in Mr Louca's cross-examination he gave an account that would suggest that his dealings with Mr Guijar on 21 April consisted of a single meeting, rather than of two meetings separated by a short space of time. That difference in the evidence is immaterial.

70 Early in his judgment, the Magistrate stated that there were two questions to be answered:

"1) Was there an original oral agreement between the plaintiff and the defendant and

2) Was the plaintiff induced by a false or misleading representation made without reasonable grounds to enter into the written agreement as evidenced by a letter dated 5 March 2004, hereinafter referred to as 'the March 2004 offer'?"

71 Those questions related only to the alleged February 2004 agreement. The Magistrate answered them unfavourably to Mr Guijar, and in consequence dismissed Mr Guijar's proceedings.

72 The closest the Magistrate came to considering whether an agreement had been entered in April 2005 was the following paragraph:

"41. The loan was due to be paid out on 31 March 2005. Thus Mr Guijar had effectively obtained a 12 month bridging loan. On 29 March 2005 Mr Guijar advised that he was to obtain forfeiture of the 5% deposit on XX Pitt Street Sydney. He also asked for a further extension. By this stage none of the bank's conditions (which were now in excess of 12 months of age) had been met and his situation had been compounded by his need to borrow $500,000.00 from a friend to complete the Petersham purchase. The bank refused his request. Eventually he obtained other finance but claims he suffered the loss the subject of this litigation."

73 One of the grounds of appeal identified in the Second Further Amended Summons in the Supreme Court proceedings was:

"The learned Magistrate further erred in law in failing to determine at all the plaintiff's claims under ... the agreement pleaded in paragraphs 27-30 of the Amended Statement of Claim."

74 The primary judge set out evidence concerning the alleged April 2005 agreement. At [73] her Honour noted that the two issues that the Magistrate identified did not include whether or not that conversation amounted to an agreement. She noted that Mr Guijar and Mr Louca agreed on the contents of the conversation that had taken place between them on 21 April 2005. She continued:

"Counsel for Mr Guijar did address this agreement in closing submissions before the Magistrate. It is my view that as there is the absence of any reasons as to why this conversation, which took place in April 2005, did not amount to an agreement. The Magistrate's reasons are inadequate. There is an error on a question of law."

75 It was by reason of the way in which the Magistrate dealt with the allegation concerning the April 2005 agreement that her Honour upheld that appeal, and remitted the matter to the Local Court to be determined according to law. The application for leave to appeal that is made by the Bank seeks to question this aspect of the decision in the court below.

76 The primary judge identified the error of law as a failure to give reasons, while the Second Further Amended Summons had identified a ground of failing to deal with the topic at all. Mr Rogers has been granted leave to file in court a Notice of Contention that seeks to uphold the primary judge's decision on the basis that the Magistrate did not deal with the issue at all.

77 The Bank's written submissions identified three respects in which it contended that the primary judge had erred. One of them related to an alleged misapprehension of the scope of the right of appeal from the Local Court to the Supreme Court. Mr Simpkins abandoned that contention in the course of oral submissions.

78 A second contention was that the primary judge had determined the appeal on a ground that was not included in the grounds of appeal contained in the Second Further Amended Summons. That contention was also abandoned in the course of oral submissions.

79 The third contention was that the Magistrate's reasoning at [41], that I have set out at [72] above, was a sufficient dealing with the issue of whether an agreement had been entered on 21 April 2005. Mr Simpkins submitted that the Magistrate regarded the conversation on that day as nothing more than Mr Guijar making a request, that was refused. He submitted that, in other words, the Magistrate did not regard the conversation as contractual.

80 I do not accept that submission. I see no reason why the Magistrate should not be taken at his word in saying that there were (in his view) two questions involved in the litigation, and that those questions did not include whether an agreement had been entered on 21 April 2005. Para [41] of the Magistrate's judgment does not deal with any conversation in April 2005.

81 Mr Simpkins accepted, correctly, that if the Magistrate had failed to deal with an issue that had been live before him, that would be an error of law. However, he also submitted that even if there was a failure of the Magistrate to deal with the issue, the evidence was not such as to warrant remitting the matter for re-trial.

82 I accept that submission. There is no material discrepancy between the evidence of Mr Guijar and Mr Louca concerning the conversation on 21 April 2005 that would require a trial to resolve. Furthermore, even if one takes Mr Guijar's evidence at its highest, it could not properly lead to a finding that there was an enforceable agreement in the terms he alleges.

83 The pleaded agreement alleges that the bank " would refinance the remaining part of the Principal Sum in the sum of $26,000 " . An enforceable agreement to refinance capable of producing damages for breach would least need to have certainty concerning the term for which the refinancing was to occur. If there were an agreement to lend, with no agreement as to any specific term, the implication would be that the loan would be repayable on demand. The damages that were claimed in connection with breach of this alleged agreement in the Local Court were a sum of $5,000.29. That sum was made up of loan enforcement costs and expenses, the ANZ legal costs that were payable to Gadens, and establishment fees with the bank that refinanced Mr Guijar's borrowings. None of those expenses would have been avoided if Mr Louca had agreed to refinance the remaining $26,000, but with no agreement as to the term over which such refinance would occur.

84 As well, there is inadequate proof that Mr Louca had authority to commit the bank to lending. He gave an account of his duties and responsibilities, that included " compiling lending submissions for assessment" , but said nothing about himself assessing or authorising loans. He gave affidavit evidence concerning his conversation with Mr Guijar in April 2005 that was not objected to or challenged in cross-examination in which he said: " As I was not the account controller at that time, I telephoned Christine Ngai ... " . The following evidence was elicited in the course of Mr Louca's cross-examination:

"Q. As at April 2005 you remained Mr Guijar's relationship manager, that's so?

A. No.

Q. No? When did you cease to be?

A. I was still at Fairfield Business Centre, but basically the file got transferred to our portfolio management.

Q. When was that? What day?

A. That would've been as per my last diary note dated 29 March 2005.

HIS HONOUR

Q. Does portfolio management mean it's getting a little bit too hot for the local branch to handle?

A. It's basically I - in my terms, or the bank's terms, it's basically an area where they can either retain the client and put in an action plan to - to help the client, or basically if he's in default, my understanding is that, you know, that they seek alternative banking arrangements.

Q. Yes. But it's taken outside of your control.

A. Correct.

Q. Too hot for the branch to handle?

A. Pretty much.

Q. Yes, more senior staff have to--

A. Yes.

Q. --be involved in it.

A. Yes, that's correct.

Q. Yes.

A. We're not the experts in the frontline with these matters, when it's too hot to handle."

85 There was no later attempt to challenge or qualify any of those answers. On the basis of this evidence it could not properly be concluded that Mr Louca had actual authority in April 2005 to bind the Bank to a contract of loan.

86 Further, at no time in the course of Mr Guijar's dealings with Mr Louca had Mr Louca purported to commit the Bank to lend money. Before the conversation between Mr Guijar and Mr Louca occurred on 21 April 2005:

• Mr Louca had told Mr Guijar, on 7 March 2005, that no further extension of the loan was possible ([26] above)
• Mr Louca had written to Mr Guijar on 24 March 2005 saying that the bank might exercise its rights if the loan was not paid out by 31 March 2005 ([28] above)
• By the letter on 1 April 2005 Mr Louca had told Mr Guijar that he would no longer be the manager with control of his account ([30] above)
• Mr Guijar had been to the Liverpool branch of the Bank on 21 April 2005 before he went to see Mr Louca. He had put his proposal to Ms Kainz, been told that Ms Ngai had to be consulted about the proposal, and been told that the proposal was unacceptable ([68] above).

87 In those circumstances there is insufficient basis for a conclusion that Mr Louca had even ostensible authority to bind the Bank orally to a proposal of the type that Mr Guijar put to him.

88 Further, independently of any question of Mr Louca's authority, the evidence that Mr Guijar gives in para 19 of his affidavit is not evidence from which it could properly be concluded that there was a concluded oral agreement. On Mr Guijar's own account, he told Mr Louca what he wanted to do, Mr Louca said "All right" , and some imprecisely defined papers were then signed. That is as consistent with Mr Louca indicating that he understood the proposal, and then presented to Mr Guijar application forms appropriate for submitting the proposal, as it is with Mr Louca then and there binding the bank to the proposal. Thus, even if Mr Guijar's evidence in para 19 were accepted, it is insufficient to establish that it is more likely than not that an agreement was made orally with Mr Louca.

89 For these reasons, even though there was an error of law on the part of the Magistrate in not considering the claim made in paras 27 to 30 of the Statement of Claim, that error is not one that had the effect that there is doubt about whether the Magistrate's order was correct. Thus it is inappropriate to send the matter back for a new trial.

90 Preventing there being a futile new trial provides sufficient justification for granting the Bank's application for leave to appeal. The Bank's appeal should be upheld.

91 The point concerning the inadequacy of the evidence concerning the 21 April 2005 agreement to warrant a new trial was not made in the Bank's written submissions concerning its application for leave to appeal. Mr Simpkins made it at the start of his oral address. Wisely, bearing in mind his client's long-term interest in minimising costs, Mr Rogers did not object to that course.

92 However, of the three grounds on which the Bank originally sought leave to appeal, two were withdrawn, and the other has not prevailed. The ground relating to the judge being mistaken about the correct scope on appeal from the Local Court to the Supreme Court was withdrawn only after Mr Rogers had prepared a detailed written submission that analysed various statutes that created rights of appeal on grounds having some connection with an error of law, but concerning which the nature of the precise connection with an error of law was different under different statutes. These matters provide, in my view, a reason to depart, so far as the costs of the Bank's application for leave to appeal are concerned, from the usual principle that costs follow the event. If separate costs orders were made concerning each of the applications for leave to appeal, it would be appropriate that there be no order for costs in relation to the Bank's application, or the resulting appeal.

93 Mr Guijar's application for leave to appeal has failed. If separate costs orders were made concerning each of the applications for leave to appeal the costs relating to Mr Guijar's application should follow the event.

94 To simplify assessment of costs it is desirable that a single order be made concerning the costs of the two applications for leave to appeal.

95 The effect of the Bank's success on its application for leave to appeal is that the appeal to the Supreme Court should have failed. That failure should have been accompanied by a costs order that followed the event.

Orders

96 I propose the following orders:

(1) The application of Mr Guijar for leave to appeal from the decision in the Supreme Court given on 3 March 2011 is dismissed.

(2) The application of the Bank for leave to appeal from the decision in the Supreme Court given on 3 March 2011 is granted.

(3) Order the Bank to file a Notice of Appeal in the form of the draft contained in its White Book, within 14 days.

(4) Allow the appeal of the Bank from the decision in the Supreme Court given on 3 March 2011.

(5) Set aside the orders made in Supreme Court in this matter on 3 March 2011.

(6) In lieu thereof order that the appeal from the decision of his Honour Magistrate Maloney dated 30 September 2009 be dismissed, with costs.

(7) Order Mr Guijar to pay one-half of the total costs of the Bank of the two applications for leave to appeal and of the Bank's appeal.

97 HANDLEY AJA : I agree with Campbell JA.

98 SACKVILLE AJA : I agree with Campbell JA.

**********

Decision last updated: 14 February 2012