TRANSCRIPT OF PROCEEDINGS

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No. S APCI 2014 0029

(Unrevised)

MELBOURNE
TUESDAY, 27 MAY 2014

BEFORE THE HONOURABLE JUSTICES OF APPEAL WHELAN JA &

SANTAMARIA JA

B E T W E E N:

ELLIOT DANIEL SGARGETTA

Appellant

- and NATIONAL AUSTRALIA BANK LTD

Respondent

MR P.J. HAYES with MR J.A. SILVER (instructed by Victorian Bar

pro bono scheme) appeared on behalf of Appellant.
MR S.D. HAY (instructed by Gadens Lawyers) appeared on behalf
of the Respondent.

MERRILL CORPORATION
4/190 Queen Street, Melbourne.

Telephone:
Facsimile:

8628 5555
9642 5185

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MR HAYES:

May it please Your Honours, I appear with Mr Silver

for the appellant.

WHELAN JA:

MR HAY:

WHELAN JA:

Yes, Mr Hayes.

If Your Honours please, I appear for the respondent.

Yes, Mr Hay.

Now just before we start Mr Sgargetta

may or may not have told you about my disclosure last

time.

MR HAYES:

WHELAN JA:

I am aware of it, Your Honour, yes.

I told him that I'm in exactly the same position -

10

no, not exactly.

11

the judge in Ebner in that there's a family trust of which

12

I'm the trustee and I suppose I must be a beneficiary in

13

some respect, a contingent beneficiary, which owns NAB

14

shares of - it's the same sort of dimensions as it was in

15

Ebner.

16

MR HAYES:

I'm relevantly in a similar position to

I think it's just under 3,000.

Yes, thank you, Your Honour.

I shouldn't have

17

thought it would be a problem, Your Honour, but out of an

18

abundance of caution perhaps if I can just obtain some

19

instructions from Mr Sgargetta.

20

WHELAN JA:

21

MR HAYES:

22

WHELAN JA:

23

MR HAYES:

Okay.
Thank you, Your Honour.
Okay.

All right.

That won't be an issue.

Now how should we proceed?

Your Honour, that very question is a matter which

24

has been vexing Mr Silver and I for almost the past

25

fortnight.

26

court today, that is the matter of the application and

27

also the appeal, the latter of which in some respects

28

dovetails into the former.

29

new evidence does trespass on some of the substantive

30

issues of the appeal, given as to the touchstone that

31

Your Honours are obliged to consider in the assessment as

.MCA:MB 27/05/14
Sgargetta

Firstly, there are two aspects before the

Obviously the application for

MR HAYES

to whether or not new evidence ought be permitted to be

adduced.

Having said that, Your Honours, we have

endeavoured in our outline of submissions which I propose

to speak to this morning break that up into those two

components.

for the delay and also the fact that these are a little

lengthier than what the court is ordinarily accustomed to.

This matter has presented some unusual challenges.

10
11
12

SANTAMARIA JA:

Firstly, I must say I apologise to the court

You might call them supplementary submissions

of the appellant.
MR HAYES:

Yes, Your Honour.

Hopefully that document will

13

distil with some clarity the merits of the appellant's

14

case on appeal.

15
16
17

SANTAMARIA JA:

And that's the only document in the submissions

that you expect us to rely upon today?

MR HAYES:

No, Your Honour.

There are additional submissions

18

that Mr Sgargetta has filed himself.

19

abandon those other points of appeal.

20

briefly before coming back to the application,

21

Your Honours will see at page 3 - - -

22

SANTAMARIA JA:

Just a second.

He doesn't wish to
If I can turn just

I just want to know what

23

documents - you told us about your supplementary

24

submission.

25

MR HAYES:

26

SANTAMARIA JA:

27

MR HAYES:

28

SANTAMARIA JA:

29
30
31

Yes, Your Honour.

The document dated 26 May.

That's so.
Are you saying that there are other

submissions?
MR HAYES:

There are, Your Honour, yes.

They are referred to

in footnote .MCA:MB 27/05/14

Sgargetta

MR HAYES

SANTAMARIA JA:

And are they submissions that you in fact are

relying upon, because I heard what you said.

Mr Sgargetta wants to rely upon them.

MR HAYES:

SANTAMARIA JA:

Yes.

MR HAYES:

SANTAMARIA JA:

MR HAYES:

11
12

No, Your Honour.

submissions.
SANTAMARIA JA:

14

SANTAMARIA JA:

So this document which was sent - I'm holding

Yes, Your Honour.

There's a document entitled, "Matters of

attention" dated 21 May 2014.

16

MR HAYES:

17

SANTAMARIA JA:

19

I only propose to rely on this document.

you down, Mr Hayes.

MR HAYES:

18

Or Mr Sgargetta is representing himself.

No, I don't propose to rely upon those other

13

15

I want to know whether or not you are

representing Mr Sgargetta - - -

10

You said

Yes.
We do not have to address that? You can't have

it both ways.
MR HAYES:

Yes, Your Honour.

Your Honour, might I just -

20

I think again out of an abundance of caution I should

21

obtain some instructions from Mr Sgargetta as to that.

22

SANTAMARIA JA:

Can I just tell you what I picked up, Mr Hayes.

23

When I asked you first of all what you were relying upon

24

I thought you were saying both documents.

25

you who was appearing for Mr Sgargetta, and you told me it

26

was you.

27

MR HAYES:

28

SANTAMARIA JA:

Then I asked

Yes.
So I want to know whether or not I can put to

29

one side this document entitled "Matters of attention"

30

dated 21 May which was supplied by Mr Sgargetta directly

31

to the registry yesterday.

.MCA:MB 27/05/14
Sgargetta

MR HAYES

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MR HAYES:

Yesterday, Your Honour? I understood it might have

been an earlier - - -

SANTAMARIA JA:

MR HAYES:

WHELAN JA:

MR HAYES:

You know what document I'm talking about.

No, Your Honour need not refer to that document.

There is the earlier one, though, of 2 May as well.
There is, Your Honour.

There are two documents that

are referred to in footnote 5 that speak to the other

grounds of appeal.

speaking to what I call ground 1, and I only propose to

Your Honours, certainly I'll be

10

rely upon this document, the supplementary submissions

11

which are advanced on the part of the respondent.

12

what might overcome Your Honour's concern is that if

13

Your Honour goes to page 3 of my document Your Honour will

14

see that essentially I've corralled what's called the

15

tender point into the purposes of this argument,

16

Your Honour, as to ground 1.

17

I think

Ground 2 is expressed further on in the

18

submissions as the finance approval point.

19

page 12, and the relevant paragraphs that appear are set

20

out there: grounds 3, 4 and 5, the unconscionable dealing

21

point, National Consumer Credit Code, false and misleading

22

conduct, representations and the disclosure point; they're

23

all bundled up together.

24

grounds 2, 3, 4 and 5, Your Honour, as set out in the

25

submissions.

26
27
28

SANTAMARIA JA:

That's over at

I don't propose to address

I only propose to set out ground 1.

Does that mean that 2, 3, 4 and 5 have been

abandoned?
MR HAYES:

No, Your Honour.

I've been specifically instructed

29

that they are not to be abandoned, but I make no

30

submissions with respect to those additional grounds.

31

SANTAMARIA JA:

And are we entitled to rely upon what you have

.MCA:MB 27/05/14
Sgargetta

MR HAYES

written on pages 12 and 13 about those grounds?

MR HAYES:

SANTAMARIA JA:

document?

MR HAYES:

WHELAN JA:

MR HAYES:

Yes, Your Honour.

And we don't have to consult any other

Well - - You incorporate the submissions of 2 May.

Yes, and they're referred to in footnote 5, which is

what Mr Sgargetta has instructed me that he wishes to put

before the court.

But I'm not really in a position to

10

take those matters any further, Your Honour.

11

specifically instructed me that those additional grounds,

12

if I can globally refer to them as such, are not to be

13

abandoned.

14

And he has

So Your Honours will see that essentially the

15

point that's really being advanced by me in court today,

16

Your Honours, is what we call ground 1, which is the

17

tender point.

18

outline of submissions.
Again, it's descended in perhaps
time to address 1 matter out of 26. He was assigned at the last minute.

19

a little more detail with respect to the evidence than one

20

would ordinarily expect on the hearing of an appeal.

21

However, it is of some utility given the nature of the

22

issues that arise in the course of considering the

23

evidence and also as to what happened - - -

24

None of the
arguments and
raised3were
That's
developed
atissues
pages
to abandoned.
12 of the
Paul Hayes as the court assigned pro bono barrister only had enough

WHELAN JA:

Sorry to interrupt.

Because of the way the appeal

25

has come on very quickly and because Mr Sgargetta's

26

position is not being represented, we don't have the

27

exhibits and the transcript from the court below which

28

normally would be in an appeal book if it was prepared in

29

the normal way.

30

MR HAYES:

31

WHELAN JA:

Yes.
We do have the transcript electronically, but we

.MCA:MB 27/05/14
Sgargetta

MR HAYES

haven't looked at it yet, and I don't think we have the

exhibits before Judge Cosgrave, save to the extent that

they have been included in material specifically referable

to this case.

MR HAYES:

WHELAN JA:

7
8
9

Yes.
Can we have regard to the transcript and should we

get the exhibits from the County Court?

MR HAYES:

Your Honour, yes, but I've endeavoured to simplify

Your Honours' task in that respect.

A copy of the

10

relevant pages of the transcript was forwarded to the

11

court, I think it might have been yesterday, and they are

12

only the pages which are referred to specifically in the

13

submissions.

14

appeal book 1.

15
16

WHELAN JA:

So you only rely on the transcript at tab

14.

17

MR HAYES:

18

WHELAN JA:

19

Okay.

But I think that should appear at tab 14 of

Yes.
But there's no inhibition on us looking at the

transcript of the trial.

20

MR HAYES:

21

WHELAN JA:

Not at all.
But what about the exhibits? Are there exhibits

22

that are relevant that have not been - I noticed the

23

contentious offers, if I can put it in quotes, have been

24

sent on some basis, I'm not sure what.

25

anyway.

26

before - - -

27

MR HAYES:

We have got them

Is there anything else in the exhibits

No, Your Honour, other than exhibits - the new

28

evidence of Mr Sgargetta, just for convenience, sought to

29

include the actual deed itself which Your Honours should

30

have, that's at EDS-1 of his affidavit sworn yesterday,

31

and a copy of the cheque, which is EDS-2.

.MCA:MB 27/05/14
Sgargetta

MR HAYES

WHELAN JA:

MR HAYES:

WHELAN JA:

MR HAYES:

From the cheque, yes.

They're really the most critical - - But were they exhibits before Judge - - Yes, they were.

Your Honour will see where they are

referred to in the footnotes.

footnotes as to the actual exhibit numbers that were

before His Honour Judge Cosgrave, and in particular under

tab 7 of appeal book 1 there's a list of exhibits.

9
10

WHELAN JA:
MR HAYES:

They are picked up in the

Okay.
The ones that we rely upon, and these are all

11

included, both under tab 14 or under exhibits EDS-1 and 2

12

of Mr Sgargetta's affidavit is P18, the deed of

13

settlement.

14

WHELAN JA:

15

MR HAYES:

Okay.
Between the National Australia Bank and

16

Mr Sgargetta, which we have included for convenience at

17

EDS-1.

18

WHELAN JA:

19

MR HAYES:

20

WHELAN JA:

21

MR HAYES:

22

P18.

That's in the additional material.

That's so, yes.

But it's also under tab 14, did you say?
No, no, the transcript, Your Honour.

The relevant

page is the extract of the transcript we rely upon.

23

WHELAN JA:

24

MR HAYES:

25

WHELAN JA:

The deed is under tab 13 of appeal book 1.

Yes, EDS-1.

But it's also - - -

But we're going to have to have out this issue of

26

whether you're going to rely on fresh evidence.

27

not have it contingent on that, because it's already there

28

somewhere else.

29

MR HAYES:

30

WHELAN JA:

31

MR HAYES:

So let's

Yes.
It's under tab 13.
Yes.

.MCA:MB 27/05/14
Sgargetta

MR HAYES

WHELAN JA:

P18.

MR HAYES:

So I will put tab 13 as well as EDS-1.

So that's

But it was improperly introduced in I think Ms Cybil

Sgargetta - I think that's Cybil Sgargetta's affidavit.

WHELAN JA:

MR HAYES:

Is it?
Yes.

It was simply put while the application for

new evidence was being made just to formalise or introduce

it correctly, more appropriately before this court.

WHELAN JA:

All right.

10

MR HAYES:

11

SANTAMARIA JA:

12

WHELAN JA:

13

SANTAMARIA JA:

14

MR HAYES:

15
16
17
18

P18.

Anyway, that's P18.

P22?
What was 18?

Was the deed of settlement.

Which I thought was under tab 13.

Well, it was.

But for some reason it was annexed to

an affidavit of Cybil's statement.

SANTAMARIA JA:

I have seen it in several places.

Where is the

other place you say - - MR HAYES:

The best place for it, Your Honour, is EDS-1 to the

19

affidavit of Mr Sgargetta, which is the affidavit for new

20

evidence in these proceedings.

21

for convenience of reference for Your Honours.

22

MFI-2, it would seem -

23

WHELAN JA:

24

MR HAYES:

25
26
27
28
29

I've included it in that

Then

P22 is the transcript of 20 March.

That's so.

Yes.

That's actually included a

compendium of all transcript at tab 14.

WHELAN JA:

Yes, that's right.

So tab 14 with the other

transcript, with other relevant transcript.

MR HAYES:

That's right, Your Honour.

If Your Honour goes over

the page, MFI-2, I don't think there is any -

30

SANTAMARIA JA:

31

MR HAYES:

What page?

Of tab 7, Your Honour, there's the list of exhibits

.MCA:MB 27/05/14
Sgargetta

MR HAYES

before His Honour Judge Cosgrave.

SANTAMARIA JA:

MR HAYES:

Yes, I have those.

Thank you.

Mr Hay has quite helpfully indicated we haven't put

the entirety of 20 March 2013 transcript; only the pages

we rely upon, which is part of our bundle in tab 14.

if Your Honours go over the page, MFI-2, there's a

photocopy of a bank cheque for 299,000.

EDS-2 of Mr Sgargetta's affidavit sworn yesterday.

I don't think it's a matter of controversy.

That appears at

I think it

10

was tendered at the trial, notwithstanding the marking

11

there.

12

Then

Then there are two additional exhibits, D5 and

13

D9.

14

to the second point, really, which is the clause 2.1 (a)

15

point.

16

I won't burden the court with those because they go

SANTAMARIA JA:

You are not going to burden the court with it,

17

but aren't you saying that it's still an argument we have

18

to consider?

19

MR HAYES:

20

SANTAMARIA JA:

21
22

Yes.
You better tell me where I've got to be looking

at if you want to talk about it.

MR HAYES:

If Your Honour pleases.

Your Honour will see that

23

those documents are picked up in the outline of

24

submissions at - - -

25

SANTAMARIA JA:

26

MR HAYES:

This is your outline?

Yes, Your Honour, at footnote 76, and in particular

27

they appear - the easiest place to find them is last night

28

there were three affidavits filed by the respondent in

29

this proceeding which the appellant will seek to rely upon

30

as well as the respondent.

31

referred to in footnote 76 appear at KP-5 and 6 of an

.MCA:MB 27/05/14
Sgargetta

Those two documents D5 and D9

MR HAYES

affidavit of Mr Pringle sworn on 19 March which in turn is

exhibited in its entirety to his affidavit sworn yesterday

as KP-1.

documents.

SANTAMARIA JA:

So that's where Your Honours will find those

KP-5 are the emails from the defendant dated

25 February 2013, and that's KP-5.

Gadens dated 26 February 2013.

MR HAYES:

SANTAMARIA JA:

10

MR HAYES:

KP-6 is an email from

Yes, Your Honour.

I have that.

And KP-5 is what the appellant contends is his

11

performance of the condition imposed by clause 2.1(a) by

12

5 pm on 25 February, and KP-6 is the following day the

13

response from the respondent saying that the purported

14

performance by the appellant wasn't to its satisfaction

15

and accordingly - - -

16

WHELAN JA:

I think I'm in a different position to Justice

17

Santamaria on this, but I stopped reading the Gadens

18

affidavits when I read paragraph 4 of Mr Pringle's

19

affidavit because he says, "This was all without prejudice

20

and I'm mainly saying these things because you've already

21

revealed things," but he doesn't want to waive privilege.

22

So I thought -

23

SANTAMARIA JA:

We received from the registry this morning some

24

documents which were paginated 149 to 165.

25

documents in fact are - it's a more complete version of

26

the documents that you were just referring to.

27

MR HAYES:

28

SANTAMARIA JA:

And those

Yes.
So we received this morning, probably sent up

29

to us by the respondent, emails starting with emails dated

30

25 February 2013 which basically deal with all the

31

communications that took place on 25 February and

.MCA:MB 27/05/14
Sgargetta

10

MR HAYES

26 February.

MR HAYES:

Yes.

SANTAMARIA JA:

And my recollection of what those

communications is about is first what I will call Red Rock

1.

MR HAYES:

SANTAMARIA JA:

8
9
10
11

Yes.

and then some brokers matters.

MR HAYES:

Yes.

SANTAMARIA JA:

And they're all coming, as it were, from your

client.

12

MR HAYES:

13

SANTAMARIA JA:

14

MR HAYES:

15

SANTAMARIA JA:

16

MR HAYES:

17

SANTAMARIA JA:

18

MR HAYES:

19

SANTAMARIA JA:

20

Red Rock 2, something called BANZ or something

Yes.
And they have been batted back by Mr Pringle.

Yes.
Saying, "No can do."

Yes.
And they all relate to 2.1(a).

Yes.
And I'm noticing that you're saying that you

don't intend to address that subject.

21

MR HAYES:

That's so, Your Honour; yes.

22

WHELAN JA:

23

MR HAY:

Were these in evidence before Judge Cosgrave?

Your Honour, I might be able to assist.

Those came in

24

- the batch of documents paginated 149 to 166 that

25

Your Honour Justice Santamaria referred to came from me,

26

and they were extracted from the court book that was

27

before - that pagination is from the court book before the

28

County Court, and I put it forward in answer to the latest

29

version of supplementary submissions that we got last

30

night.

31

WHELAN JA:

But were they in evidence before Judge Cosgrave?

.MCA:MB 27/05/14
Sgargetta

11

MR HAYES

MR HAY:

He does talk about all of them and he makes findings

as to the reasons for NAB to reject them as good

compliance with that deed.

Your Honour, I haven't yet checked whether or not each of

them was tendered, formally tendered.

WHELAN JA:

MR HAY:

WHELAN JA:

Yes, it was.

So I have to admit,

P19.

I see.
So they are P19.

Okay.

All right.

all in evidence before Judge Cosgrave.

So they were

So we've got all

10

that.

11

having all this material of discussions between counsel.

12

I might be wrong, but I thought it was fairly clear from

13

what was in the open court transcript that there was a

14

bank cheque for 299,000 in court that day and it was there

15

to be handed over if that would resolve the matter, if

16

I can put it that way.

17

MR HAYES:

Where do we go next? I'm really worried about

Yes.

The strength of that inference or that

18

inference might not have visited the primary judge with

19

the same force as I detected it might have struck

20

Your Honour.

21

WHELAN JA:

Because that was said in open court and the other

22

side didn't dispute it.

23

"We've a cheque here, so that if the settlement is on foot

24

still and the obligation that remains is to pay on

25

15 April, there is no doubt that we can do it.

26

could do it today." So that point was sort of

27

uncontradicted and doesn't seem to have been - but I don't

28

know; maybe it was contradicted.

29

MR HAYES:

It was said in open court.

In fact we

It was at the trial because what happened was

30

counsel for the respondent at the trial opened the case -

31

I'm reading paragraph 37 of my submissions where I've

.MCA:MB 27/05/14
Sgargetta

12

MR HAYES

recited that part of the opening - where the highlighted

sections say, "There was never a tender by 15 April 2013

of 299,000.

otherwise, formal tender of the $299,000 cheque." That was

at the opening, and the trial proceeded then on that

basis.

At no time was there ever a tender, formal or

If you go to His Honour's reasons, the primary

judge makes reference to the fact there was a cheque

there.

But seeing that His Honour wasn't persuaded that

10

the evidence went far enough that the cheque was in fact

11

presented or offered in such a way as to satisfy the

12

requirements of a tender of performance by the

13

presentation of that cheque by the appellant's then

14

counsel to the respondent's counsel, so I think where it

15

falls short is in this respect.

16

court.

17

WHELAN JA:

There was a cheque in

If Your Honours go to - - But I think your submissions, when you say at

18

paragraph 13, "If the deed was still on foot on 20 March,

19

which the appellant submits it was, the respondent cannot

20

rely on non-conformance of clause 2.1 of the deed.

21

tender of the moneys due under clause 2.1 (b) was made" -

22

well, I don't know if there is any magic in tender, but

23

anyway - "and rejected by" - but isn't the critical point

24

if the deed was still on foot on 20 March?

25

MR HAYES:

26

WHELAN JA:

27

end?

28

MR HAYES:

29

WHELAN JA:

The

Yes, yes.
Isn't that what this whole case turns on in the

Yes, yes.
And the appeal has to turn on that in the end?

30

Because if it was on foot clearly you were able to

31

perform.
.MCA:MB 27/05/14
Sgargetta

13

MR HAYES

MR HAYES:

WHELAN JA:

says.

MR HAYES:

WHELAN JA:

I think.

I don't know.

Clearly you were.

MR HAYES:

WHELAN JA:

MR HAYES:

You had a bank cheque there.

That's right.
But if it was not on foot it doesn't matter about

That's right.
It doesn't matter a bit.
That's right.

WHELAN JA:

Because you had already lost the benefit of the

11

deed of settlement.

12

deed, a new deal after that.

13

MR HAYES:

14

WHELAN JA:

15

MR HAYES:

16

WHELAN JA:

17
18

I have to hear what Mr Hay

the bank cheque.

10

Yes.

That was over.

You had to make a new

That's right.
And 299,000 wasn't enough.
That's right.

They wanted more.

That's right.

So why do we have to go into all this without

prejudice stuff, which I really am loath to want to do?

MR HAYES:

Indeed.

We say two things in response to it.

We

19

say, firstly, it's permissible to do so because it's

20

evidence that goes towards the issue of performance of the

21

actual deed itself insofar - in other words, under section

22

131, subsection (2)(f) I think it is, of the Evidence Act.

23

This is all evidence that goes towards the performance of

24

the obligation imposed by the deed.

25

point.

26

So that's the first

The second point is if one goes to the reasons at

27

first instance His Honour actually found - and this is the

28

difficulty facing the appellant which the appellant seeks

29

to overcome - is that there was no formal tender,

30

paragraph 109, by Mr Sgargetta of a cheque of 299,000 to

31

the NAB nor did the NAB receive any such tender.
.MCA:MB 27/05/14
Sgargetta

14

MR HAYES

So Your Honour is quite right.

The primary issue

is whether the deed is still on foot.

evidentiary issue which is still at large is encompassed

in His Honour's finding at paragraph 109.

found that, notwithstanding what was stated in court by

the appellant's then counsel on 20 March, there was still

no tender.

8
9
10

But certainly the

His Honour

We say this, Your Honour, that there were two

ways - - WHELAN JA:

Well, there are two different things.

Tender is

11

one thing, and it's hard to know what - it's such a fine

12

line.

13

still on foot and I hereby tender the 299,000," because if

14

you did that the bank could take it and say, "We don't

15

agree with you about the deed, but we'll put this off

16

against what you do owe us."

17

MR HAYES:

18

WHELAN JA:

It's one thing to say, "I maintain the deed is

Yes.
A defendant would be loath to do that for that

19

reason, because it will lose the 299 and still have an

20

argument.

21

other thing is you might have said, "This matter should

22

resolve, and here's a cheque for 299,000 to resolve it,"

23

in which case the bank is then the one who has to decide,

24

because if they take the money they can't get any more and

25

it's finished.

26

was happening, even if you look at all the material? And

27

one very much suspects, I must say, it's the second rather

28

than the first.

29

MR HAYES:

30

WHELAN JA:

31

That's one thing that might have happened.

The

How do we know which of those two is what

Yes.
Before I stopped reading the without prejudice

material it seemed to be where we were heading.

.MCA:MB 27/05/14
Sgargetta

15

MR HAYES

MR HAYES:

We say this generally, Your Honour.

We say that the

starting point is that the respondent considered that

there be no performance by the appellant or no appropriate

performance by the appellant of clause 2.1(a).

WHELAN JA:

MR HAYES:

Yes, that is the first point.

That's right.

But, notwithstanding that, there is

no provision in the deed to terminate in the event of any

breach or repudiation on the part of the appellant, nor

was there any actual termination of the deed.

10
11

What then

followed was there was a number of discussions about.

SANTAMARIA JA:

Two very big premises, very big premises that

12

I'm very interested in, and I'm disturbed by the fact that

13

you're proposing not to address them.

14

WHELAN JA:

Well, hang on, in clause 3 it says, "If

15

Mr Sgargetta defaults under clause 2 above or any other

16

terms of this deed, time being of the essence, NAB will

17

immediately be entitled to proceed with the hearing of its

18

summons and the proceedings generally."

19

MR HAYES:

20

WHELAN JA:

21

MR HAYES:

22

WHELAN JA:

23
24

Yes.
And that's what they did.
Yes.
They said, "You haven't complied with 2.1(a) and we

are proceeding."
MR HAYES:

Yes.

But they didn't - yes, they did proceed with

25

the summons, Your Honour, but they didn't essentially

26

terminate the deed because what - - -

27
28
29
30
31

WHELAN JA:

I don't know what you mean.

Clause 3 says what's

to happen and that's what they did.

MR HAYES:

Well, if Your Honour goes to 2.2, we can address it

this way.
WHELAN JA:

Clause 2.2 says that - - -

If 2.1 is complied with.

.MCA:MB 27/05/14
Sgargetta

16

MR HAYES

MR HAYES:

WHELAN JA:

Yes.
So it's exactly - I mean, as you said, I was

flattered to see, but it is exactly like the Irani

situation.

MR HAYES:

WHELAN JA:

Yes.
They're saying, "We'll stay our hand.

We won't

seek the 400 and something we say is owed for so long as

you do these things."

9
10

MR HAYES:
WHELAN JA:

Yes.
They maintain you didn't do them, so they say,

11

"We're not staying our hand anymore.

12

our 400 and whatever it is."

13

"And, what's more, we were ready and willing and able to

14

perform what remained to be done, and we demonstrated that

15

by bringing a bank cheque into court."

16

MR HAYES:

17

WHELAN JA:

We're going on for

You say you did do them,

That's right.
The only issue which determines the fate of

18

everything then is whether you've done them or not, which

19

is had you complied with 2.1(a) or not.

20

MR HAYES:

And we say we don't have to for this reason, because

21

ultimately, Your Honour, 2.1(a) is, if you like, ancillary

22

or subordinate to the obligation, what is the core

23

obligation, set out in 2.1(b).

24

WHELAN JA:

25

MR HAYES:

26

WHELAN JA:

Yes, I know.
If one steps back - - Sorry, I know you have got arguments about 2.1(a),

27

including waiver and estoppel and construction and other

28

things.

29

MR HAYES:

30

WHELAN JA:

31

Yes.
But, leaving aside who's right or who's wrong about

2.1(a), isn't that the only issue in the end?

.MCA:MB 27/05/14
Sgargetta

17

MR HAYES

MR HAYES:

WHELAN JA:

Well, that and the issue of tender.

But why does tender even come into it? If you

haven't complied with 2.1(a), they are entitled to proceed

under 3 to recover the whole amount they say is owing.

What's tender got to do with it?

MR HAYES:

Well, no, they're entitled to proceed to summary

judgment which is what they did on 20 March.

happened, Your Honour, summary judgment wasn't ordered and

the matter went to trial.

10

WHELAN JA:

11

MR HAYES:

But whatever

Yes.
What flows from that is that, notwithstanding what

12

Your Honour says or what Your Honour observes, there may

13

be - that the respondent may be entitled to proceed to

14

summary judgment, firstly, it didn't happen and,

15

secondly - - -

16

WHELAN JA:

17

MR HAYES:

It's proceeding generally.

Yes, and, secondly, Your Honour, clause 2.1(b) still

18

remained capable of performance while the deed was still

19

on foot because what happened was - and it really turns

20

upon whether or not on Your Honour's construction of what

21

it means to say as to the fact that the respondent would

22

be entitled to proceed to summary judgment.

23

WHELAN JA:

24

MR HAYES:

25

WHELAN JA:

But that's the construction point.

That's right.
But, you see, tender still doesn't matter because

26

you have demonstrated you were ready, willing and able to

27

perform.

28

MR HAYES:

29

WHELAN JA:

Yes.
It was said in open court.

Nobody contradicted it.

30

Why would we conclude otherwise? It mightn't have been a

31

formal tender.
.MCA:MB 27/05/14
Sgargetta

I don't know why that was an issue, I must

18

MR HAYES

say.

moment, whether it was a formal tender or not a formal

tender.

follow that, except for the fact that NAB's counsel seemed

to think it was significant in the opening.

MR HAYES:

I don't really see why it was relevant, at the

Why would that change anything? I don't really

Yes, and then what happened was in the evidence of

Ms Thomas, Mr Sgargetta when cross-examining Ms Thomas

sought to agitate the issue as to the fact that there had

been a tender of payment of the 299,000 before 15 April

10

when the parties were at court on 20 March.

11

happened then, there were a number of questions, there

12

were some objections taken as to privilege about that by

13

Mr Segal at the time, and then ultimately Ms Thomas said

14

in response to a question from Mr Sgargetta, noted that in

15

fact the cheque had in fact been presented to Mr Segal at

16

court.

17

WHELAN JA:

So what

But "presented" doesn't answer the question.

18

That's the problem.

19

happened that day there's two things which are very

20

closely related but which are quite different.

21

saying, "I am trying to give you 299,000 and you take this

22

money.

23

saying that's what I owe you and I'm going to pay you

24

that."

25

"I want to settle this whole matter.

26

settle it.

27

Different thing.

28

MR HAYES:

29

WHELAN JA:

If we embark on an enquiry about what

One is

I'm not saying it resolves the whole thing.

That's one thing.

Tender.

I pay nothing more.

I'm

Another thing is,

Here is 299,000 to

That's the end of it."

Both involve presentation of the cheque.

That's right.
Quite different things.

Now, the second one is

30

just an offer.

31

the capacity and willingness to perform if the deed was

.MCA:MB 27/05/14
Sgargetta

It does demonstrate, though, that you had

19

MR HAYES

still on foot.

MR HAYES:

WHELAN JA:

It's just an offer, isn't it? I mean, it's not a

tender.

MR HAYES:

WHELAN JA:

MR HAYES:

WHELAN JA:

Yes.

It depends how Your Honour construes that evidence.

I know.
Which is how one goes to the actual evidence - - And we have to go into all this without prejudice

communications to - - -

10

MR HAYES:

11

WHELAN JA:

Because it goes to the performance of the deed.

If you're going to tender, why don't you do it

12

openly? Why don't you send a letter with the cheque

13

attached, "Here is money.

14

MR HAYES:

15

WHELAN JA:

16

MR HAYES:

17

WHELAN JA:

18

MR HAYES:

19

WHELAN JA:

20
21

Please take it."

Yes.
Why doesn't someone do that?
That's a fair question.
Between counsel is not the way to do it.
No.

Well, it's not what happened here.

But if you want to make an offer, between counsel

is the way to do it.

MR HAYES:

Yes.

But what's happened here, Your Honour, though

22

- Your Honour is quite right; that's ordinarily how it

23

would happen.

24

self-represented.

25

the day.

26

WHELAN JA:

But Mr Sgargetta was initially

He then had counsel assisting him on

There weren't solicitors retained.

I know.

But, look, he's a finance broker and, you

27

know, honestly; this is an investment property, isn't it,

28

basically? He doesn't live in it.

29

I think we better specifically address the further

30

evidence point and decide about that and then move on to

31

the appeal.
.MCA:MB 27/05/14
Sgargetta

20

All right.

Look,

MR HAYES

MR HAYES:

WHELAN JA:

MR HAYES:

Yes.
On which ever way we decide about that.
Yes.

And certainly with respect to the 2.1(a)

point, Your Honour, certainly we do propose to address

that part of it which merges on those matters that I have

already addressed Justice Whelan upon, Your Honour, the

point that merges into the tender point, we certainly

propose to address it in that respect and I have dealt

with it - - -

10

SANTAMARIA JA:

I have to say, Mr Hayes, I don't know what you

11

were making at the moment.

12

following propositions.

13

deed.

14

MR HAYES:

15

SANTAMARIA JA:

16

MR HAYES:

17

SANTAMARIA JA:

What's on my mind are the

2.1(a) is provided for in the

Yes.
It imposes obligations upon the appellant.

Yes.
I want to know whether or not those obligations

18

were performed.

19

I want to know whether there were any subsisting

20

obligations under the deed, because if it is the case that

21

those obligations in 2.1(a) were not performed and the

22

consequence of their not having been performed is that the

23

deed then as it were was vacated, I can't understand why

24

you're going on to 2.1(b).

25

my mind.

26

MR HAYES:

27

SANTAMARIA JA:

28
29

If those obligations were not performed

They are the sort of things on

Yes.
You don't have to answer them now, but that's

what I'm worried about.

WHELAN JA:

I think we'd better deal with the fresh evidence so

30

that everyone knows what material they can rely on on the

31

appeal.
.MCA:MB 27/05/14
Sgargetta

21

MR HAYES

MR HAYES:

Yes.

WHELAN JA:

Can I just clarify, Mr Hay, you filed a whole lot

of material now about the without prejudice - or what you

say were the without prejudice communications.

MR HAY:

WHELAN JA:

7
8

Yes, Your Honour.

Are we supposed to look at that or not look at it

or what?
MR HAY:

We're in a difficult position ourselves, Your Honour,

because we got the affidavit material and on our version

10

of events what is set out in the appellant's material is

11

incomplete and therefore apt to mislead.

12

and obviously the application being live, if that were to

13

succeed we didn't want a situation where only that

14

evidence was before the court and considered, and not have

15

our side of the ledger, as it were, represented by what we

16

say happened.

17

That being so,

So our primary position, Your Honours, is that

18

this evidence should not be received on the basis that the

19

usual considerations about fresh evidence on appeal, it

20

could have been with proper diligence discovered,

21

tendered, put forward.

22

credibility et cetera are of less moment.

23

The other matters about

If it is to be considered, however, then our

24

material - and I understand Your Honours haven't read it,

25

but our material which fills out what occurred on that day

26

on the 20th should be considered because without it, as

27

I say, it suffers that vice.

28

WHELAN JA:

I have read it a bit, because I read one of them

29

before Mr Pringle.

30

saying, "We were offered 299,000, but we didn't want to

31

take that then because we wanted our costs plus we wanted

.MCA:MB 27/05/14
Sgargetta

So I know that you're basically

22

MR HAY

the interest since the date.

something.

3
4

MR HAY:

Yes.

So we wanted 316" or

It really goes, without revealing the substance

of - - -

WHELAN JA:

MR HAY:

I know that already.

No, it goes to the basis on which - it's really the

question that Your Honour has been putting to my friend.

It goes to the basis on which it was referred to, whether

or not it was a tender of an extant obligation or tender

10

pursuant to an extant deed or whether or not it was a

11

fresh offer.

12

the court in an awkward position, but we have done our

13

best in the short time available to respond to it so that

14

we wouldn't face the difficulty that I outlined.

15
16

SANTAMARIA JA:

It is for that reason I understand it places

Three points.

First, they don't satisfy the

fresh evidence point.

17

MR HAY:

Yes.

18

SANTAMARIA JA:

Second, they ought not to be able to adduce the

19

evidence because it's evidence of the without prejudice

20

communications.

21

MR HAY:

Yes.

22

SANTAMARIA JA:

And, third, if in fact they're given leave to

23

tender the without prejudice communications you want to be

24

able to tender further evidence in order that we are not

25

misled by the incompleteness of their account of the

26

without prejudice communications.

27

MR HAY:

That's so, Your Honour.

The section of the Evidence

28

Act to which my learned friend has referred, there are a

29

number of bases on which you can do that.

30

to - my friend has referred to subparagraph (f) about

31

performance of an obligation.
.MCA:MB 27/05/14
Sgargetta

23

One of them is

MR HAY

SANTAMARIA JA:

MR HAY:

Section?

Section 131 of the Evidence Act, and in particular,

Your Honour, it's subsections (c) - - -

SANTAMARIA JA:

MR HAY:

What is it about 131?

131 is exclusion of evidence of settlement

negotiations, and then it says, "Evidence is not to be

adduced of" and it gives the definition of "without

prejudice communication".

Subsection (2) says, "Subsection (1) does not apply if (c)

Then this is the carve-out.

10

the substance of the evidence has been partly disclosed

11

with the express or implied consent of the persons in

12

dispute and full disclosure of the evidence is reasonably

13

necessary to enable a proper understanding of the

14

evidence." That's sub (c).

15

(e), "The evidence tends to contradict or qualify

16

the evidence that has already been admitted about the

17

course of an attempt to settle the dispute." My friend

18

relies on (f).

19

been adduced in the proceeding or an inference from

20

evidence that has been adduced in the proceeding is likely

21

to mislead the court unless the evidence of the

22

communication is adduced to contradict or qualify."

23

really goes to that third point that Your Honour has

24

identified.

25

WHELAN JA:

There's (g) as well, "Evidence that has

So it

Let's hear what Mr Hayes says about why we should

26

admit the evidence and we'll go from there.

27

you might identify for us what it is that - if you want to

28

admit, what the fresh evidence is.

29

MR HAYES:

Yes, Your Honour.

First of all,

I deal with that in paragraphs 8

30

and 9 of the supplementary submissions.

31

Your Honour, it's an affidavit of Elliot Daniel Sgargetta

.MCA:MB 27/05/14
Sgargetta

24

Particularly,

MR HAYES

1
2
3

and an affidavit of Daniel Cole.

WHELAN JA:

All right.

respondent's evidence as well.

MR HAYES:

SANTAMARIA JA:

6
7
8
9

Yes.

MR HAYES:

That's right.

No, what he observed Shirrefs to be

doing, or Cole and Shirrefs.

SANTAMARIA JA:
MR HAYES:

11

SANTAMARIA JA:

12

MR HAYES:

What Cole and Shirrefs were doing.

Yes.
But Cole himself is saying what happened?

That's right.

That came after Mr Sgargetta's

affidavit.

14

SANTAMARIA JA:

15

got Cole?

16

Am I right in thinking that what Mr Sgargetta

gave evidence of was what he observed Cole to be doing?

10

13

Then you say you want to rely on the

MR HAYES:

What do you need of Sgargetta given that you've

Well, we don't.

In fact, if anything, the best

17

evidence as to what happened is the evidence of Mr Segal

18

in his affidavit in the affidavit evidence of the

19

respondent.

20
21

SANTAMARIA JA:

MR HAYES:

23

SANTAMARIA JA:

25
26

Just leave Mr Segal

to one side.

22

24

Just answer my question.

Yes.
When you put in Mr Cole what (indistinct)

Mr Sgargetta?
MR HAYES:

Your Honour, we don't.

We don't need - Mr Cole's

evidence takes the point.

27

SANTAMARIA JA:

28

MR HAYES:

29

SANTAMARIA JA:

Mr Cole's is what you need?

Yes.
So do you really need Sgargetta? Is he going to

30

give evidence of what it was that Cole said to him or what

31

he interpreted was happening - - .MCA:MB 27/05/14

Sgargetta

25

MR HAYES

MR HAYES:

Yes.

SANTAMARIA JA:

MR HAYES:

I might have distracted you, Mr Hayes.

He says this, Your Honour, in paragraph 5.

He says

that his father brings the cheque to court and his

evidence is he instructed Messrs Cole and Shirrefs to hand

over the cheque that day.

cheque.

paragraph 3 that he was handed a cheque, but doesn't go

further as to saying that it should be handed to the

So that's how Mr Cole gets the

Mr Cole, Your Honour, quite rightly says in

10

respondent.

11

Your Honour, for the sake of completeness.

12

So it just goes a little bit further,

But the real operative - I suppose the evidence

13

that really goes to the issue of tender that we would be

14

relying upon is really what Your Honour has identified.

15

SANTAMARIA JA:

16

MR HAYES:

In Cole?

In Cole, yes, because that's the actual act of the

17

presentation of the cheque from Mr Cole to Mr Segal.

18

Mr Cole also addresses the point of the fact that the

19

offer of the cheque was rejected and he returned the

20

cheque to the applicant.

21

WHELAN JA:

22

MR HAYES:

23

WHELAN JA:

So Mr Cole - okay, and he produces the cheque.

Yes.
What that adds to what happened in open court is,

24

I suppose - what does it add to what happened in open

25

court?

26

MR HAYES:

It adds this, Your Honour.

What it adds - the

27

starting point, I suppose, goes back to His Honour's

28

finding.

29

the cheque.

30

we're endeavouring to work backwards from to address on

31

the evidence.

At 109 His Honour found there was no tender of

.MCA:MB 27/05/14
Sgargetta

So that's the error in the judgment that

26

MR HAYES

What was said in open court, I've summarised

that, Your Honours, in the submissions at paragraph 25

where I've just excluded what Mr Shirrefs - or excised

what Mr Shirrefs said to the court.

299,000 on or before 5 o'clock on 15 April this year would

amount to performance." So this is what Mr Shirrefs is

saying to His Honour Judge Anderson on 20 March.

respect, curiously we have a bank cheque today of 299,000.

So that's the position."

10

"Production of

"In that

Now, what's happened is Mr Sgargetta, when giving

11

evidence at trial, his belief, it would seem somewhat

12

erroneously, was that there was actually a tender of the

13

cheque in open court.

14

evidence-in-chief, and it's referred to in the

15

submissions, Your Honours, his belief was presumably

16

informed by what happened there on the transcript, that

17

there was a tender of the cheque in open court.

18

So when he was giving

But it would seem what was said by Mr Shirrefs

19

doesn't necessarily go so far, and that seems to be

20

present in His Honour's reasoning when His Honour found

21

that there was no formal tender.

22

addresses that at 105 to 107 of his reasons where he talks

23

about the alleged production of a cheque in court on

24

20 March, saying there was disagreement as to what was

25

said and done in court on that day.

26

gave evidence that a cheque was produced in court, and

27

that Mr Segal rejected the tender of the cheque."

28

it's fair to say that Mr Sgargetta, perhaps erroneously,

29

seemed to think or indicated that's what actually happened

30

in court.

31

WHELAN JA:

In particular His Honour

He said Mr "Sgargetta

I think

But what's material - - -

Sorry, where did he say that again?

.MCA:MB 27/05/14
Sgargetta

27

MR HAYES

MR HAYES:

WHELAN JA:

MR HAYES:

At paragraph 105 Your Honour will see - - Yes, but what did Mr Sgargetta say in his evidence?
In his evidence, I've summarised his evidence at

paragraph 24.

up, at T146 of the transcript, is that, "There was a

summary judgment heard and in that hearing we presented

the NAB and Mr Segal with a bank cheque, a bank cheque for

299,000 in that hearing, and that this was done in open

court and the cheque was rejected." That's a fair summary

10
11
12

What he said, I think this fairly sums it

of what he says in his evidence-in-chief.

WHELAN JA:

Sorry, I couldn't find your submission while you

were talking.

13

MR HAYES:

Paragraph 24, Your Honour.

14

SANTAMARIA JA:

Do you actually have that part of the

15

transcript, because I notice that in paragraph 24 you are

16

quoting and then you are summarising.

17
18

MR HAYES:

Yes.

page -

19

SANTAMARIA JA:

20

MR HAYES:

21

WHELAN JA:

22

MR HAYES:

23

WHELAN JA:

24

MR HAYES:

26

WHELAN JA:

28
29
30
31

Whereabouts is this document?

Tab 14, Your Honour, at page - - I don't think those pages are there, unless - - It might be appeal book 1, Your Honour.
The cross-examination is there, but I don't think

the evidence-in-chief is there.

25

27

I will take Your Honour to the full passage at

Is 146 not there?

No.

Sorry.
MR HAYES:

Oh, sorry, yes, it is.

It was on the back.

Okay.

It seems we have an environmentally-friendly

two-sided transcript.
WHELAN JA:

Yes, that's all right.

"In that hearing we

presented the NAB and Mr Segal with the cheque, a bank

.MCA:MB 27/05/14
Sgargetta

28

MR HAYES

1
2

cheque."
MR HAYES:

That's right.

And then it was put by His Honour,

"That was done in open court, was it?" "Open court, and

I'm ordering" - and then His Honour, "While the judge is

sitting up here and the proceedings are going on?"

I've ordered the transcripts today from His Honour Judge

Anderson's associate to get a copy of it just" - and then

further on at line 27, "And you say a cheque was presented

in open court for 299,000?"

"Yes.

10

it accepted or rejected?"

11

essentially the evidence of that.

12

"Yes.

And obviously" - "Was

"It was rejected." So that's

Then what happens from there is that - and bear

13

in mind this has taken place after the respondent has

14

opened the case, to which I have taken Your Honours

15

already, there was no formal tender or otherwise.

16

there's that passage of the transcript of Mr Shirrefs

17

which I've taken Your Honours to, and then Mr Sgargetta's

18

evidence as to his understanding of that exchange.

19

So

Then it was put in cross-examination by Mr Segal,

20

and I deal with all of this in paragraph 25 of my

21

submissions, that the appellant was not in a position to

22

pay the 299,000 to the respondent by 1 March or 15 April.

23

Mr Sgargetta disagreed with that proposition.

24

stated that in the 20 March hearing a bank cheque would be

25

provided some one month earlier than the 2.1(b)

26

requirement but was turned down by Mr Segal.

27
28

Then he addresses that part of the transcript

when Mr - - -

29

SANTAMARIA JA:

30

MR HAYES:

31

But he

That means 2.1(b), does it, not 21(b)?

Yes, 2.1(b).

I'm sorry, Your Honour.

Then at

paragraph (c) what was said by Mr Shirrefs was actually

.MCA:MB 27/05/14
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29

MR HAYES

put to him by Mr Segal in pursuit of the point that

Mr Segal was endeavouring to develop, that there was no

bank cheque tendered or presented or offered in court,

which is what would seem was Mr Sgargetta's erroneous

assumption as to what actually happened on 20 May and what

actually was said by Mr Shirrefs in court.

explanation is perhaps he conflated the two.

happen in court is what Mr Shirrefs put to the court and

really what would have amounted to a tender actually

One possibly
But what did

10

happened outside of court when the cheque was given on the

11

same day by Mr Cole to - not given but offered by Mr Cole

12

to Mr Segal.

13

WHELAN JA:

In his cross-examination he talked about without

14

prejudice offers, I think.

15

prejudice, but offers anyway, negotiations.

16

MR HAYES:

He does.

I don't know if it's without

In fairness to Mr Segal he tries to

17

exclude those communications from the discourse between

18

him and Mr Sgargetta, but already the cat was out of the

19

bag, if you like, or the tender point.

20

was entertaining it.

21

position on a number of fronts.

22

The primary judge

So it put Mr Segal in a difficult

But particularly in terms of the issue of tender

23

what it did do was it trespassed on whether or not the

24

production of the cheque was in fact performance of the

25

deed, which if that's the case and it went to that and

26

Your Honours were to find that in fact the circumstances

27

in which the cheque was presented and offered it was in

28

performance of the deed and the deed was still capable of

29

performance, or alternatively if the deed was not capable

30

of performance and it was with respect to some other

31

arrangement or discussion, then plainly it would be a

.MCA:MB 27/05/14
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30

MR HAYES

without prejudice discussion and Mr Segal would be right

on insisting that the communications be excluded from the

hearing.

Although what you have is what Mr Shirrefs has

said which points to what his understanding was of the

situation at the time, not that that will assist

Your Honours on the construction point, but says that the

production of 299,000 on or before 5 o'clock on 15 April

would amount to performance.

So it would seem to perhaps

10

on one view colour or characterise the nature of the

11

discussions as to - and characterising the actual

12

presentation of the cheque as to whether or not it was in

13

performance of the deed in 2.1(b) of the deed or,

14

alternatively, it was offered as part of some fresh or new

15

agreement the parties were endeavouring to reach but never

16

reached ad idem and reached such an agreement.

17

It was also put to him - indeed the transcript is

18

revealing on that issue because Your Honours will see

19

further on that on 20 March, immediately after - - -

20

WHELAN JA:

21

MR HAYES:

Is this in the transcript of 20 March?

Yes, Your Honour .

It probably goes against me.

22

probably assists Mr Hay's case as to the construction

23

issue as to whether the deed was still capable of

24

performance.

25

WHELAN JA:

26

MR HAYES:

27

SANTAMARIA JA:

28

MR HAYES:

29

WHELAN JA:

30

MR HAYES:

31

It

But Mr Segal at line 15 - - -

What page is this?

Page 3, Your Honour.
Page 3?

Of the 20 March transcript.

It's the first page under tab 14.
Yes.

After that passage of Mr Shirrefs, at line 9,

he goes on to say, "Mr Segal, you say there's not an

.MCA:MB 27/05/14
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31

MR HAYES

arguable defence in this case?" And he says, "Yes, we do."

So while Mr Shirrefs albeit predicated on the severability

of clause 2.1(a) irrespective of whether it's subordinate

to 2.1(b) or alternatively void for uncertainty, and we

don't take the uncertainty point or the mere (indistinct)

point, I won't trouble Your Honours with that, we simply

say that if the deed was still capable of performance then

that speaks of Mr Shirrefs understanding.

Mr Segal, his understanding which goes to the

But then

10

characterisation of that issue is below at lines 15 to 17.

11

So it probably doesn't help the appellant's case,

12

Your Honours, but it might assist.

13

SANTAMARIA JA:

14

MR HAYES:

Can you say what you're saying about it again?

Yes, Your Honour.

We say that what it suggests, if

15

one looks at that exchange, Mr Shirrefs is saying that,

16

"Essentially the deed is still capable of performance and

17

here's the cheque," and Mr Segal is saying or it can be

18

inferred by saying that there's no arguable defence, "No,

19

it isn't."

20

it goes towards characterising - - -

21
22
23

SANTAMARIA JA:

That's what could be gleaned from that.

And

I might have this wrong, but are you saying

that there is Shirrefs making a tender in open court?

MR HAYES:

He doesn't seem to go that far, Your Honour, no, in

24

court.

25

actually says in court.

26

got a bank cheque here today," but he doesn't say what

27

they propose to do with it.

28
29
30
31

WHELAN JA:

He doesn't seem to go that far as to what he

What he says, he says, "They have

He's trying to demonstrate that if the deed is

still on foot there's no doubt it will be performed.

MR HAYES:

He's certainly doing that.

He's certainly doing

that, Your Honour.

.MCA:MB 27/05/14
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32

MR HAYES

1
2

WHELAN JA:

offered the cheque in settlement of the matter.

MR HAYES:

WHELAN JA:

MR HAYES:

WHELAN JA:

MR HAYES:

WHELAN JA:

Is that a correct interpretation?

That's his evidence.

MR HAYES:

12

WHELAN JA:

Again, whether that affects anything depends on

That's right.
If it was, then he's demonstrating again your

That's right.
If it wasn't, well, it doesn't matter because

299,000 won't meet the case.

14

MR HAYES:

15

WHELAN JA:

That's right.
So it still comes back to: is 2.1(a) - has it been

16

performed or not?

17

still on foot or not?

18
19
20

That's what he says.

willingness to perform.

11

13

That's right.

whether the deed's on foot or not.

10

But Mr Cole says - I interpret him as saying he

MR HAYES:

No, that's not correct.

That's the better question, yes, Your Honour.

And

we say it is because - - WHELAN JA:

So why do we need this fresh evidence, because it

21

doesn't change anything?

22

was no tender.

23

amounts to a formal tender?

24

money in settlement a tender?

25

Was the deed

MR HAYES:

I know Judge Cosgrave said there

What do the cases say about tender?

What

Is offering someone a sum of

It's about the offer to perform, Your Honour.

Does

26

Your Honour have a copy of our - mine are labelled.

27

have copies of authorities we can hand up to Your Honours.

28

WHELAN JA:

29

MR HAYES:

30

SANTAMARIA JA:

31

We

I probably have a copy, I think.

All right.

If I can take Your Honour firstly -

I have two folders authorities.

I've got the

original combined folder of authorities which have Meehan

.MCA:MB 27/05/14
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33

MR HAYES

v Jones and cases related to that.

MR HAYES:

Yes.

SANTAMARIA JA:

And then this morning you sent an email to

which were attached firstly the Evidence Act section 131,

then the authorities Sunland, Waterfront, Emer, Young,

City Motors, Startup, Davey, Hollyburton, Osborne, SWD and

(indistinct) and then some miscellaneous material.

MR HAYES:

Yes.

SANTAMARIA JA:

So that's a supplementary list of authorities.

10

Are you going to the original list of authorities or to

11

the supplementary list?

12
13

MR HAYES:

Supplementary list, Your Honour.

In particular

could I take Your Honours to tab 4 of our bundle.

14

SANTAMARIA JA:

15

MR HAYES:

Young v Queensland Trustees.

Yes, Your Honour.

In particular at 567 and 568.

16

talks about the general proposition that how the common

17

law - - -

18

SANTAMARIA JA:

19

MR HAYES:

20

SANTAMARIA JA:

21

MR HAYES:

My pagination has been - - -

I'm so sorry, Your Honour.

Whose judgment are you talking about?

I'm talking about the judgment of Dixon CJ and

22

Justice McTiernan and Taylor at 567 to 568.

23

commences at about point 9, Your Honour, on that page.

24
25

SANTAMARIA JA:

MR HAYES:

27

SANTAMARIA JA:

29
30
31

What are the words?

The passage

There's a line across the

top of the page.

26

28

It

The line across the top is 99 CLR of Australia 567.

No, I've lost my pagination.

Give me the words

that run across the top line.

MR HAYES:

I see.

I'm sorry, Your Honour.

"The common law

does not and never did conceive".

WHELAN JA:

That's the passage you want to rely on?

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34

MR HAYES

MR HAYES:

WHELAN JA:

The top line is "annos after demand, or that no

demand".

MR HAYES:

WHELAN JA:

Yes.

I'm sorry.
Justice Santamaria has a copy, but the top has been

- because this was all done in a bit of a hurry.

MR HAYES:

WHELAN JA:

MR HAYES:

I'm so sorry, Your Honour.

I was at cross-purposes.

So we go to, "The common law does not" - - "... conceive of indebtedness in a sum certain for

10

an executed consideration as a mere breach of contract: it

11

is rather the detention of a sum of money and that was so

12

whether the creditor enforced his demand by an action of

13

debt or by indebitatus assumpsit. Were it otherwise it

14

would not be necessary for a defendant who sets up a plea

15

of tender to bring into court the amount of the debt with

16

his plea. The reason he must do so is that the tender

17

answers only the breach of obligation alleged and not the

18

debt. This is explained by the following statement by

19

Wilde CJ in Dixon v Clarke, 'In actions of debt and

20

assumpsit, the principle of the plea of tender, in our

21

apprehension, is, that the defendant has been always ready

22

(toujours prist) to perform entirely the contract on which

23

the action is founded; and that he did perform it, as far

24

as he was able, by tendering the requisite money; the

25

plaintiff himself precluded a complete performance, by

26

refusing to receive it.'"

27

That's the important passage.

Then it goes on to

28

say, "'And, as, in ordinary cases, the debt is not

29

discharged by such tender and refusal, the plea must not

30

only go on to allege that the defendant is still ready

31

(uncore prist), but must be accompanied by a profert in

.MCA:MB 27/05/14
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35

MR HAYES

curiam of the money tendered. If the defendant can

maintain this plea, although he will not thereby bar the

debt (for that would be inconsistent with the uncore prist

and profert in curiam), yet he will answer the action, in

the sense that he will recover judgment for his costs'" -

- -

SANTAMARIA JA:

8
9

What is a profert in curiam? It looks to me

like an offer in court.

MR HAYES:

Yes.

My Latin perhaps might not be as strong as

10

Your Honour's.

11

something occurring in court.

12

SANTAMARIA JA:

13

MR HAYES:

Certainly the suffix would speak as to

You are reading the passage to us.

Yes.

We rely on this section here, Your Honour, in

14

that we say the defendant - further up at about line 4,

15

"The principle of the plea of tender, in our apprehension,

16

is, that the defendant has been always ready ... to

17

perform entirely the contract on which the action is

18

founded; and that he did perform it, as far as he was

19

able, by tendering the requisite money; the plaintiff

20

himself precluded a complete performance, by refusing to

21

receive it."

22

So we say what's happened here is the appellant

23

was precluded from performing his obligations under the

24

deed if Your Honours are mindful that the deed is still on

25

foot given that he's offered to pay the moneys which were

26

due by 15 April and yet those moneys were rejected by the

27

respondent's counsel on 20 March.

28

WHELAN JA:

29

MR HAYES:

30

WHELAN JA:

31

MR HAYES:

What did the judge say about this issue?

I won't take Your Honours - - Sorry, go on.
I refer to the other passages, Your Honours,

.MCA:MB 27/05/14
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36

MR HAYES

particularly Justice Kitto, and it's referred to in the

footnotes, in that Justice Kitto in City Motors (1933) Pty

Ltd and Southern Aerial - - -

SANTAMARIA JA:

MR HAYES:

485.

SANTAMARIA JA:

8
9
10

What tab is this?

Tab 5, Your Honour.

In particular I'm reading from

Can you tell me the lines on the top of the

page?
MR HAYES:

Yes, "company must have recovered unliquidated

damages".

11

WHELAN JA:

12

MR HAYES:

Sorry, where was this again?

485, Your Honour.

And the top line of 485 is

13

"company must have recovered unliquidated damages".

14

reading from about point 9, commencing, "When the

15

respondent, having duly transferred and delivered the

16

Commer diesel to the appellant, tendered a cheque for the

17

1,250 pounds and the cheque was rejected without any

18

objection being taken to the form of the tender, the

19

respondent had done all that was to be done by it to make

20

the property pass. I should be disposed to think that that

21

was in law a fulfilment of the condition ... for the law

22

considers a party who has entered into a contract to

23

deliver goods or pay money to another as having

24

substantially performed it" - so that's the passage we

25

rely upon - "if he has tendered the goods or the money."

26

I'm

His Honour refers to Startup v MacDonald, which

27

I refer to in the authorities, in particular what was said

28

by Baron Rolfe.

29

discharged; but, since the wrongful refusal of the other

30

party to accept the tender has rendered the complete

31

delivery or payment impossible, the doing of all that the

.MCA:MB 27/05/14
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"Not, of course, that the debt is thereby

37

MR HAYES

party making the tender had to do to make the delivery or

payment is considered 'equal to performance'".

So that's what we rely upon there.

In other

words, the offer or the tender, it's all very well to take

the cheque to court, but if you actually offer it assuming

the deed is on foot then that would be akin to equal to

performance.

cheque would be to prevent the appellant from performing

his obligations under the deed and would also preclude the

Accordingly, to reject the tender of the

10

appellant on the conditional satisfaction, which I will

11

come to in a moment, of satisfying that condition to be

12

entitled to the full release from the proceedings and also

13

from the mortgage which formed part of his bargain,

14

essentially informing the accord between the parties under

15

the deed.

16

Further, and in particular finally for

17

completeness, in the case of Startup v MacDonald, tab 6,

18

Your Honour, the top line there reads, "It is unnecessary

19

to refer to the authorities which have been cited as a

20

sunset" - - -

21

SANTAMARIA JA:

22

MR HAYES:

This is paginated.

Yes, Your Honour.

What page is it?

It's 1036 and it's paragraph 610,

23

which appears at point 8 on the page, in particular the

24

reasons of Baron Rolfe, and at about point 9 on the page,

25

"Now, it may be observed, that in every contract by which

26

a party binds himself to deliver goods, or pay money, to

27

another, he in fact engages to do an act which he cannot

28

completely perform without the concurrence of the party to

29

whom the delivery or the payment is to be made. Without

30

acceptance on the part of him who is to receive, the act

31

of him who is to deliver or to pay, can amount only to a

.MCA:MB 27/05/14
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38

MR HAYES

tender. But the law considers a party who has entered into

a contract to deliver goods or pay money to another, as

having, substantially, performed it" - this is the

important bit I'm reading from now, Your Honours - "if he

has tendered the goods or money to the party to whom the

delivery or payment was to be made, provided only that the

tender has been made under such circumstances that the

party to whom it has been made, has had a reasonable

opportunity of examining the goods, or the money,

10

tendered, in order to ascertain that the thing tendered

11

really was what it purported to be. Indeed, without such

12

an opportunity an offer to delivery or pay does not amount

13

to a tender."

14

It goes offer the page, to about point 2 on the

15

next page, but I'll only trouble Your Honours with that

16

passage because that's the most important bit.

17

this, again predicated upon the fact that the deed is

18

still on foot, if Your Honours find either the existing

19

evidence - and you'll see that that's why it's been broken

20

up in our submissions to make the same point on the

21

existing evidence as well as the new evidence, subject to

22

what Your Honours might rule on the new evidence, we say

23

that if Your Honours do find that a cheque was presented

24

and the deed is still on foot on 20 March, then that's

25

equal to performance, and by rejecting it the appellant

26

was precluded from his bargain that he had struck upon

27

entering into the deed, that being a release from the

28

proceedings and also discharge from the subject mortgage.

29

WHELAN JA:

So we say

Sorry, just stop for one sec while I write down

30

what you've been saying.

31

correct me - if the deed was still on foot, the offer made

.MCA:MB 27/05/14
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39

So what you want to say - now

MR HAYES

on 20 March as deposed to by Mr Cole amounted to

performance in accordance with what's said in City Motors,

Young and Startup.

MR HAYES:

WHELAN JA:

MR HAYES:

WHELAN JA:

Was an act which was equal to performance.

Yes.
To use the words of Baron Rolfe in Startup.
The transcript of 20 March in relation to what

happened in open court and the evidence of Mr Sgargetta in

the trial does not make this clear.

10

It does not make it

clear that that's what happened.

11

MR HAYES:

12

WHELAN JA:

That's right.
So that's why you need the new evidence, fresh

13

evidence, by Mr Cole to make it clear that the cheque was

14

offered to the bank.

15

MR HAYES:

Yes, Your Honour.

The best the evidence gets, if

16

Your Honour goes to paragraph 23 of my submissions,

17

His Honour didn't seem to specifically address this aspect

18

in detail of Ms Thomas's evidence, but at paragraph F

19

Your Honour will see that in the re-examination of

20

Ms Thomas, who was a bank officer called in the

21

respondent's case, Mr Segal said, "I have one question.

22

When you were told, do you recall the context in which you

23

were told about a cheque being in court on 20 March?---My

24

understanding or my recall, and I'm not sure if I'm

25

actually just messing this up for everyone, I apologise,

26

this is my personal response, not necessarily that of the

27

bank, so my recall is a discussion with a Peter Fieldhouse

28

and I recall, it's a little bit hazy, but I believe it was

29

the next day that there was a without prejudice discussion

30

held with yourself, as in Adam" - this is

31

Mr Segal - "offering or asking the question, 'How would

.MCA:MB 27/05/14
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40

MR HAYES

the bank respond if moneys were presented,' and I believe

that there was then a bank cheque actually presented to

yourself.

That's my recall of the events."

So what you have is the highest the evidence gets

is you have Ms Thomas relating what was said to her by

Mr Segal, and her understanding is he actually got a bank

cheque.

descend to that degree of detail in considering

Ms Thomas's evidence.

But then in the reasons His Honour doesn't quite

In paragraph 103 of his reasons he

10

says, "Ms Thomas, for the NAB, gave evidence that there

11

was no 'tender' of a cheque, although she was not in court

12

on 20 March when the cheque was allegedly produced.

13

subsequently became aware of a cheque being brought to

14

court that day."

15

If I can just pause there.

She

"Cheque being brought

16

to court that day." It would seem in His Honour's

17

reasoning implicit that that's where the evidence stopped

18

as to the factual aspects of the tender; in other words, a

19

cheque was brought and there's nothing to suggest anything

20

after that happened to it.

21

"When re-examined by Mr Segal, Ms Thomas stated

22

that she had learned of the existence of the cheque as a

23

result of a conversation between Mr Segal and the NAB's

24

in-house counsel, Peter Fieldhouse."

25

obviously mindful of that passage I've just taken

26

Your Honours to in the transcript which I've included

27

completely in the submissions.

28

fully appreciated is that aspect which is emphasised in

29

that passage of evidence that the bank cheque was actually

30

presented to the bank's counsel, Mr Segal, which would

31

seem to take the evidence a little bit further than a

.MCA:MB 27/05/14
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41

Now, His Honour is

But what His Honour hasn't

MR HAYES

cheque simply being brought to court that day.

high as the evidence gets.

That's as

If Your Honours are against us on the new

evidence application then we'd seek to rely upon that

passage of evidence as being informative as to what the

state of affairs was as to the tender and that His Honour

hadn't fully addressed that important passage of her

evidence and weighed it accordingly to find - and looking

at that in conjunction with what Mr Shirrefs said to

10

court, that there in fact had been a cheque presented.

11

It would be the appellant's anxiety, Your Honour,

12

if that evidence fell short, which is what obviously was

13

troubling Judge Cosgrave when he was considering the fact

14

of tender, then we'd seek to lead the new evidence, and

15

not only the new evidence of Mr Cole but also the evidence

16

of Mr Segal, who actually goes into the details and

17

circumstances of what happened.

18

Your Honours - - -

19

WHELAN JA:

I won't trespass, given

No, but the points you want to establish are the

20

bank - the cheque was not only in court; it was offered to

21

the bank.

22

MR HAYES:

23

WHELAN JA:

24

MR HAYES:

25

WHELAN JA:

26

In full settlement of the matter.

Yes, and that could mean one of two things.
Given that it's all premised on the deed still

being on foot.

27

MR HAYES:

28

WHELAN JA:

29

Yes.

Yes.
It kind of doesn't matter, because if you're wrong

about that you lose.

30

MR HAYES:

31

WHELAN JA:

Yes.
If you're right about it, well, the only thing

.MCA:MB 27/05/14
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42

MR HAYES

that's owing is 299,000.

MR HAYES:

We win.

WHELAN JA:

MR HAYES:

WHELAN JA:

So you win.
That's right.
Maybe Mr Hay agrees that we can proceed on that

basis.

that basis, that the cheque was not only there but was

offered, or is that going into - - -

9
10
11

MR HAY:

Mr Hay, is there any - could we just proceed on

The difficulty is the basis on which the offer was

made, Your Honour.

WHELAN JA:

Mr Hayes says he accepts - as I read Mr Cole it

12

seems to be the case - that it was offered in full

13

settlement of the case.

14

satisfactory performance if the deed was still on foot.

15

If the deed was not still on foot it would not be

16

performance because the obligation would no longer be

17

299,000.

18

MR HAY:

So it would only be a

Can I just test that proposition for a moment,

19

Your Honour.

20

in discharge of the extant deed on my friend's case or it

21

could have been another offer for 299 to say, "We know

22

that deed is no longer operative, but, please, we're still

23

about to go on for a trial.

24

SANTAMARIA JA:

25

MR HAY:

26

SANTAMARIA JA:

27

The 299 could have been tendered as payment

Take 299.

Here it is today."

Can I just stop you there?

Yes, Your Honour.

I just want to make sure I'm understanding what

you're saying.

28

MR HAY:

Yes.

29

SANTAMARIA JA:

30

MR HAY:

31

SANTAMARIA JA:

It's ambiguous, you say.

Yes.
The 299 could have been in performance of

.MCA:MB 27/05/14
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43

MR HAY

2.1(b).

MR HAY:

Yes.

SANTAMARIA JA:

MR HAY:

Or it could be, "The deed's gone.

That's right.

Here's 299."

And, without the circumstances,

Your Honours are unable to say which one it was.

Of

course that's critical because from the respondent's

perspective - and to maybe put Your Honour Justice

Whelan's observations slightly differently from the

respondent's perspective, the case really turns on whether

10

or not the respondent was obliged as at that date to

11

accept 299 as good discharge of its debt.

12

operative, then it was.

13

that offer but it was free to reject it if it's in the

14

second category of the examples Your Honour Justice

15

Santamaria has just given.

16

WHELAN JA:

If the deed was

If it wasn't, it could receive

But doesn't Mr Hayes accept that? Doesn't he say,

17

"Look, it's only significant if the deed was still on

18

foot."

19

MR HAY:

It does.

20

WHELAN JA:

It's only significant if the offer which was being

21

made was an offer to perform the only thing that remained

22

of their obligations.

23

foot so that it was not a case where the only thing that

24

remained was their obligation to pay 299,000, well, then

25

whatever happened with the cheque doesn't change anything

26

because by then things have changed, moved on.

27

MR HAY:

If in fact the deed is not still on

I think that's true, Your Honour.

But there is still

28

that second query about whether or not - if you read my

29

friend's evidence alone you can't tell - as I understand

30

it, my friend would have it that it was proffered as good

31

discharge of the deed, the 2.1(a) - - .MCA:MB 27/05/14

Sgargetta

44

MR HAY

SANTAMARIA JA:

MR HAY:

SANTAMARIA JA:

MR HAY:

(b).

(b), sorry, Your Honour.

It was performance.

It was performance, that's right.

But, without more,

it's not clear at all about whether or not it was just a

fresh offer matched in the same amount.

trial to go forward.

and difficulty incurred.

was meant to be the trial date, but then it got pushed off

We still have a

There's going to be all the expense

Indeed that day was - 20 March

10

until August.

11

that one would expect would probably play in the minds of

12

the parties in that there's going to be further delay,

13

further costs and so on, and people could put -

14

effectively restate an offer, even though it's not good

15

performance of the deed.

16
17

SANTAMARIA JA:

So there were other, the ordinary reasons

So let's proceed on the hypothesis that the

deed is still on foot.

18

MR HAY:

Yes.

19

SANTAMARIA JA:

And Sgargetta comes along to the bank and says,

20

"Here is a cheque for $299,000." I presume Mr Hayes says,

21

"That's performance.

22

interpretation as performance of 2.1(b).

23

interpretation one can place upon that act." Are you

24

saying it's possible that there is another interpretation

25

which can be placed upon that act?

26

MR HAY:

Yes.

That's only open to the

That's the only

With more evidence before the court, that's so.

27

Can I say this, Your Honour.

28

defence that we have, but one of them of course is that

29

the appellant did not discharge his burden, his onus as it

30

were, even on the assumption that the deed was still live

31

by evidence to say that it had in fact been offered.

.MCA:MB 27/05/14
Sgargetta

45

It's one of several lines of

MR HAY

That's why we get into this difficulty about whether or

not it happened in open court or whether or not it

happened in a without prejudice context.

The judge in the reasons below noted that

Mr Sgargetta's counsel had not been called as a witness,

and even on the present case as Your Honour has identified

it's really the evidence of the barrister that is relevant

to this.

on the state of the evidence as it was below, then we say

To the extent that the deed was still live and

10

that we're entitled to rely and protect that finding of

11

the judge that the appellant had not discharged his

12

burden, positively satisfied the court that he had

13

tendered this payment on an open basis.

14

SANTAMARIA JA:

15

MR HAY:

16

SANTAMARIA JA:

17

Paragraph 100.

MR HAY:

19

SANTAMARIA JA:

Okay.

for money.
MR HAY:

22

SANTAMARIA JA:

24

We're all acting

Yes.

21

23

I will just pause with you.

on the hypothesis that the deed is still on foot.

18

20

Where does His Honour say that?

(Indistinct).

So the bank is pressing

Mr Sgargetta is able to say, "I've performed."

Yes, I understand.
And you are saying the onus is upon him to say

it is performed.
MR HAY:

I am.

And the findings on this appeal that the bank

25

is seeking to protect are most conveniently found in

26

paragraph 100, where His Honour says, "I note that at the

27

trial, Sgargetta did not seek to call Mr Shirrefs to give

28

evidence to support his case."

29

relevantly at paragraph 108 - - -

30
31

SANTAMARIA JA:

And then it goes on, and

It starts before then, doesn't it?

98, "During

the hearing, Sgargetta asserted that he had made

.MCA:MB 27/05/14
Sgargetta

46

MR HAY

attempts ... to tender a cheque".

MR HAY:

SANTAMARIA JA:

Yes.
So, in other words, the defence of tender was -

it wasn't pleaded, was it?

MR HAY:

It was not.

SANTAMARIA JA:

MR HAY:

SANTAMARIA JA:

MR HAY:

No, but it seems to have been allowed to run.

I think that's a fair characterisation, Your Honour.

Yes.

His Honour says, "This issue's before me."

And then there's reference to a phone call to

10

Mr Segal confirming the availability, a cheque was

11

produced in court at the hearing of the summary judgment

12

application before His Honour Judge Anderson, and a copy

13

of the cheque was subsequently emailed on 3 April.

14

SANTAMARIA JA:

15

MR HAY:

Yes.

So these are the particulars of tender.

Then there's further argument about rejection by

16

Mr Segal, and then there was reference to Mr Segal telling

17

Judge Anderson that he was instructed not to accept the

18

cheque in court.

19

as it were, about the failure to call Mr Shirrefs, or one

20

might insert here Mr Cole, which again in my submission

21

would have been open to him.

Then paragraph 100 is the observation,

22

I'll concede, Your Honours, from paragraphs 101

23

through to 104 there are difficulties with the evidence

24

there.

25

evidence was not of very significant weight.

26

really what she was told about an event that she didn't

27

attend, and Mr Segal checking his emails and making

28

submissions of this type without actually giving evidence

29

also has obvious difficulties.

30
31

It's fairly obvious, I think, that Ms Thomas's

It was

But, in any event, there is reference to the full

transcript at 106, with the extract at the top of page 33.
.MCA:MB 27/05/14
Sgargetta

47

MR HAY

Then 107 is really where - taking that together with the

absence of evidence from Mr Shirrefs, His Honour Judge

Cosgrave says, "When viewed in its entirety and in

context, it seems to me that Sgargetta's evidence about

the alleged tender of the cheque on 20 March 2013 is

inconsistent with, and not supported by, the transcript."

Then 108, "I do not doubt the sincerity of

Sgargetta's belief that he tendered a cheque to the NAB.

However, it appears that Sgargetta does not appreciate the

10

difference between:

11

(a) open and without prejudice communications;

12

(b) the legal doctrine of tender and having a cheque

13

available to give the opposing party (should that party

14

agree to the conditions, if any, upon which it is

15

offered)."

16

SANTAMARIA JA:

And he makes the point that the gentlemen who

17

were the principal participants in the tender didn't

18

themselves plead it.

19

MR HAY:

That's right.

Can I just make one observation about

20

that as well, Your Honour.

21

20 March, that is the amended defence and counterclaim

22

settled by Messrs Shirrefs and Cole.

23

filed, according to the Court Connect records, which was

24

the second document that I forwarded to the court this

25

morning, for two days, two days later.

26

an issue or, putting it a different way, had it been a

27

point of defence available one might have expected it to

28

be there.

29

question?

30
31

WHELAN JA:

The document is dated

It was not in fact

So had that been

Have I answered Your Honour Justice Whelan's

Not really.

I was hoping we mightn't have to

decide it, but it sounds like we do.

.MCA:MB 27/05/14
Sgargetta

48

So, Mr Hayes,
MR HAY

addressing the requirements of that fresh evidence then,

are we only concerned with Mr Cole's affidavit?

Mr Sgargetta's affidavit add?

MR HAYES:

WHELAN JA:

MR HAYES:

What does

Not terribly much.

You tell us what it adds.
All it adds is - it adds this at paragraph 5, "My

father and I requested Mr Cole and Mr Shirrefs to hand

over the bank cheque to the NAB that day which they

acknowledged they would do."

10
11
12

WHELAN JA:

How can the NAB be affected by that? It's something

that's happening in the room with - - MR HAYES:

Yes, I hear Your Honour.

I won't read any aspect of

13

Mr Sgargetta's affidavit.

14

the affidavit of Mr Cole, Your Honour.

15

WHELAN JA:

16

MR HAYES:

17
18
19

WHELAN JA:

21

WHELAN JA:

24

And in particular, unusually, Your Honour,

I know.

But we won't get to that unless Mr Cole's

evidence gets in.

MR HAYES:

23

Yes.

So it's just Mr Cole.

we'd also seek to rely upon the evidence of - - -

20

22

Okay.

The evidence is at its best in

Of course.
So let's deal with that.

So why should it be

admitted now on the appeal?

MR HAYES:

For this reason, Your Honour.

We say, and these

grounds are addressed - - -

25

WHELAN JA:

26

MR HAYES:

Just remind me.

I know you have it here.

Paragraph 10 of my supplementary submissions.

We

27

say this, Your Honour.

28

doesn't take it very far, but the appellant was

29

self-represented.

30

way in which the point emerged is that it emerged in the

31

course of the hearing.

.MCA:MB 27/05/14
Sgargetta

What you have here, and this

But then what happened was it was the

So what happens is on 20 March a

49

MR HAYES

number of things happen.

and amended defence and counterclaim.

by Mr Shirrefs and Mr Cole on that day.

dated that day.

was filed two days later.

On 20 March there's the defence

He was represented
The defence is

My friend Mr Hay makes the point that it

What then happened after that was that in the

course of - the point really fell while Mr Sgargetta was

cross-examining Ms Thomas.

is how it really emerges, 68.8 - - -

10

WHELAN JA:

11

MR HAYES:

12

SANTAMARIA JA:

13

MR HAYES:

At 68 of the transcript, this

68 of the transcript?
Yes, Your Honour.
The transcript is under tab?

Tab 14, Your Honour, of appeal book 1.

Line 8.

It

14

really starts over the page.

15

about the presentation or the presentation of the cheque,

16

I'll put it in those terms, on 20 March.

17

"I don't think I've ever physically held the cheque, held

18

this cheque."

19

your acknowledgment of the bank cheque because you made

20

the statement earlier that no tender or delivery of the

21

299 was ever presented."

22

objection.

23

At 67 he is asking Ms Thomas

At lines 12, 13,

Then line 17, "We're just talking about

Then Mr Segal starts to take an

Then it really gains momentum at 68.8 where

24

Mr Segal says, "I think the difficulty the witness is

25

having is the distinction between, and I alluded to this

26

earlier, it was without prejudice communications."

27

Mr Sgargetta, "No, it's not without prejudice."

28

WHELAN JA:

29

MR HAYES:

30

WHELAN JA:

31

MR HAYES:

Sorry, where are you reading from?

68.8, Your Honour.
Yes.
This is where the point really warmed up.

.MCA:MB 27/05/14
Sgargetta

50

Then
MR HAYES

Mr Segal says at line 15, "And what a bank would

understand as a formal tender," and it's completely

evident by the pleading that is the amended defence and

counterclaim.

SANTAMARIA JA:

MR HAYES:

SANTAMARIA JA:

8
9
10

And then what happens is -

Mr Segal says, "It does not plead tender."

That's right.

"It pleads limitation."

Can I just read it out.

"It does not plead

tender."
MR HAYES:

That's right.

SANTAMARIA JA:

"So, without saying there was going to be

11

evidence, there was tender on that day.

12

basis upon which it was said there was tender.

13

there's going to be evidence as Mr Sgargetta says that

14

somebody handed a cheque to the NAB on that day and said,

15

'here's the 299 as an' (indistinct)" - sorry, I'm just

16

reading to myself what Mr Segal says.

17

MR HAYES:

18

SANTAMARIA JA:

19

I don't know the

But if

Yes.
"I won't shut Sgargetta out from raising the

issue."

20

MR HAYES:

21

WHELAN JA:

That's right.
Then I think the judge started talking.

You see

22

Mr Sgargetta says, "80 per cent of it okay?"

23

the judge starts talking.

24

says, "Strictly speaking, the points you are raising now,

25

the factual matters you are raising now should be in your

26

amended defence."

27

"But I'm letting you raise them anyway.

28

proceeding for the time being on this point."

29

MR HAYES:

30

WHELAN JA:

31

MR HAYES:

Then I think

I don't think Mr Sgargetta

I don't think Mr Sgargetta said that.

So basically just

I think that's His Honour.

Yes, I think that's the judge.
So that's really our point.

.MCA:MB 27/05/14
Sgargetta

51

He's endeavouring to
MR HAYES

ask questions to Ms Thomas about it, objection is taken,

and this comes back to the characterisation of the

performance point, Mr Segal's view of the world as opposed

to Mr Sgargetta's.

objection and, notwithstanding the fact that the tender

point isn't pleaded, His Honour grants the appellant an

indulgence to proceed with it, and accordingly he does.

It's not only dealt with in the cross-examination of

Ms Thomas; it's dealt with in re-examination.

He takes the without prejudice

10

Mr Sgargetta himself gives evidence about it, and he's

11

cross-examined about it.

12

his reasons.

13

way into the reasons, but that's really how the point

14

emerged.

15

SANTAMARIA JA:

16

MR HAYES:

17

Then His Honour deals with it in

So it's a rather unorthodox way to find its

Where is the cross-examination of Sgargetta?

The cross-examination, I summarise it,

Your Honour - - -

18

SANTAMARIA JA:

19

MR HAYES:

No, no, I want the transcript.

Yes, there's a number of passages.

Mr Sgargetta's

20

cross-examination appears relevantly from pages 71 through

21

until 79.

22

SANTAMARIA JA:

23

MR HAYES:

24

WHELAN JA:

25

MR HAYES:

I'm sorry, Your Honour.

It is 237; around about there anyway.
My apologies, Your Honour.

26

Whelan.

27

passage.

28

WHELAN JA:

29

MR HAYES:

30
31

71 to 79 is the cross-examination of Thomas.

I'm indebted to Justice

It's 223 through until about 237 is the relevant

233, did you say?

Yes, Your Honour.

Sorry, 223 is really where it -

I'm sorry, Your Honour, 222 is really where it commences.

WHELAN JA:

222?

.MCA:MB 27/05/14
Sgargetta

52

MR HAYES

1
2

MR HAYES:

Yes, 222.25.

At 222 Mr Segal is dealing with

exhibit P18, which is - - -

WHELAN JA:

MR HAYES:

The deed of settlement, I think.

Yes, Your Honour, it's the deed of settlement.

So

he shows him the deed of settlement.

It says, "Critical

terms.

$229,000 couldn't be done before either the summary

judgment hearing or the trial" - so he predicates the

question on that proposition when Mr Sgargetta will say,

And so the terms were that, although payment of

10

"Well, I was going to pay prior to the summary judgment

11

hearing on 20 March" - "there would be a milestone event

12

that had to be complied with by you," the question goes on

13

further to say.

14

Over on 223 at line 6 he says, "In circumstances

15

where you weren't in a position to pay the settlement sum

16

before the summary judgment hearing was due to come up

17

there was another milestone event put into the deed of

18

settlement." Again, Mr Sgargetta says, "Sorry, Mr Segal,

19

if you're going to deliver your questions I'd appreciate

20

the courtesy of you looking at me."

21

to one side, the question is premised on the fact that

22

Mr Sgargetta on one view of the world was able to perform

23

his settlement obligations because he had a cheque for

24

299,000.

25
26

SANTAMARIA JA:

MR HAYES:

28

SANTAMARIA JA:

30
31

But it then goes on, "You couldn't pay the

settlement sum before 1 March, could you?"

27

29

Putting all of that

He says, "No" - - Mr Sgargetta says, "No, I can't agree with

that."
MR HAYES:

That's right.

sum by 1 March?"
.MCA:MB 27/05/14
Sgargetta

"So you could have had the settlement

"Would have?
53

Yes.

Could have?

Yes.
MR HAYES

But there's nothing concrete that you're actually making

suggestions of there, Mr Segal, so I can't give it a yes

or no answer." "So were you in a position to pay the

settlement sum by 1 March?" Mr Sgargetta, "The deed says

15 April.

You're making statements of leading assurance et cetera."

7
8
9

So I'm not sure why 1 March is being dangled."

Then it goes on to line 14 - - SANTAMARIA JA:

It's not really helpful at all, is it? He's

just being smart at this stage.

10

he could have paid on that date.

11

answering the question.

12

MR HAYES:

He's being asked whether

He's not really

That's one view you could take, Your Honour, yes.

13

But at the same time he's still insisting - that's one way

14

of looking at the transcript.

15

glib matter, really, in dealing with it.

16
17

SANTAMARIA JA:

It's there before him to answer, and where does

he answer it?

18

MR HAYES:

19

SANTAMARIA JA:

20

But it might be a somewhat

If I can retreat from that a little, Your Honour.

Keep going through the transcript and show me

whereabouts he answers Segal's question.

21

MR HAYES:

Yes, Your Honour.

22

SANTAMARIA JA:

23

MR HAYES:

24

SANTAMARIA JA:

25

MR HAYES:

26

SANTAMARIA JA:

There it is there on page 234.

And 235 as well, Your Honour.

Stay on 234.

Yes, Your Honour.

The question is, "Do you agree that because you

27

couldn't pay the settlement sum of 1 March another

28

milestone was put into the deed of settlement which is set

29

out in 2.1(a)?" "I simply answer that within the deed it's

30

not a milestone for me to pay by 1 March.

31

2.1(b) is 15 April."
.MCA:MB 27/05/14
Sgargetta

54

The milestone

MR HAYES

MR HAYES:

Yes, that's right.

SANTAMARIA JA:

MR HAYES:

SANTAMARIA JA:

Sgargetta must by that date do that.

That's right.
"I make the statement that in the 20 March

hearing a bank cheque was provided some one month earlier

than the 2.1(b) requirement and was turned down by

yourself."

MR HAYES:

SANTAMARIA JA:

10

MR HAYES:

Yes.
So isn't that the evidence?

Yes, Your Honour, it is.

Then there's a further at

11

- indeed that is referred to in the footnotes,

12

Your Honour, footnote 49.

13

gave evidence yesterday about a cheque being brought to

14

court on 20 March; do you remember that?---Yes."

15

you said was that there was an exchange between Judge

16

Anderson and myself; do you remember that?---Yes."

17

said that the cheque was presented in open court for

18

299,000, and then His Honour asked, 'Was it accepted or

19

rejected?'

20

happens next?

21

just simply under instruction not to take it.

22

your evidence about what happened on 20 March.

23

says, you've stated 'yes'.

24

happened on 20 March, was it?"

Then at 232, at line 12, "You

You said, 'It was rejected, yes.'

"What

"You

And what

Mr Anderson asked why Mr Segal said he's

That was
As it

But then that's not what

25

Then Mr Segal puts the transcript, and at line 30

26

- and then over the page at line 12, Your Honour, at 233,

27

"And Mr Shirrefs, who was making the submissions, said,

28

'That the production of 299,000 not before 5 o'clock on

29

15 April this year would amount to performance.

30

respect curiously we have a bank cheque today for 299,000.

31

So that's the position, Your Honour.'

.MCA:MB 27/05/14
Sgargetta

55

In that

That's what
MR HAYES

Mr Shirrefs said; do you recall that?---Yeah, I recall -

what I recall is, yeah, as stated yesterday a bank cheque

of 299."

Then Mr Segal, "And there was no tender of any

cheque for 299,000 at all?---Mr Segal, you had the money

there and you decided to" - and then Mr Segal jumps in,

"Referring to what you told Your Honour yesterday was the

evidence you gave in court about the exchange that

happened in court on 20 March?---Exactly." So there's that

10
11

passage.
Then it makes reference to Mr Segal and the

12

arguable defence.

13

what I was addressing Your Honour Justice Whelan on

14

earlier as to this possible conflation of what happened

15

outside the court with what happened in the court, which

16

might explain his earlier evidence-in-chief.

17

prepared to accept the evidence you gave is incorrect?"

18

He then at line 15 on 234 somewhat glibly responds to a

19

question to Mr Segal, "Did you take it?" Then His Honour

20

directs him to answer the question.

21

That's then put to him at 234.

This is

"Are you

Mr Segal then says, "We made the submissions

22

about what, if at all, this is meant by 'curious we have a

23

bank cheque today for 299,000' in final submissions.

24

I'm saying to you is that this is what occurred on

25

20 March; you disagree?" He then is uncertain about the

26

line of the question.

27

judge suggests to him - or line 2, he says, "You gave

28

evidence yesterday about certain matters referring to

29

20 March."

30
31

What

It's picked up at 235.8 where the

Then at line 8 Mr Segal is saying, "Yesterday you

gave evidence that in open court a 229,000 cheque was
.MCA:MB 27/05/14
Sgargetta

56

MR HAYES

offered to him, and he said he would not accept it on the

basis of the instructions he received from his client.

He's saying that's not right.

he's saying today?" Mr Sgargetta, "Yes, I disagree.

I believe it was further on."

I said, this is quite a lot of information here.

disagree, fine." He then disagrees.

8
9

Do you disagree with what

That's important.

"Like
You

Mr Segal says, "And that it will be said at no

time by 15 April or otherwise have you paid NAB the sum of

10

299,000 in cleared funds."

11

he's obviously mindful, if you look at that passage of

12

evidence, as to what happened on 20 March.

13

you can't get more clearer than a bank cheque from another

14

major bank."

15

attempt you made was on 20 March?" "No, that's not true."

16

He says, "I've tried to."

So

"In my opinion

"I think your evidence was that the only

So what you have there, that's an important

17

passage, because Mr Segal on one hand is suggesting that

18

there was no such tender that takes place, but then -

19

I think in fairness to the witness he tries to properly

20

encapsulate what it is that he's putting to Mr Segal,

21

saying, "I think your evidence was the only attempt you

22

made was on 20 March," irrespective as to how Mr Segal and

23

Mr Sgargetta differed as to what happened on that day.

24

disagrees with that.

25

sum of 229 in cleared funds to the bank?" He says, "Yes,

26

I do." Then he says, "Over and over."

27

He

"So you say you attempted to pay the

What then happens is over at 236 there's

28

objection.

29

to the bank.

30

did that to?"

31

provided to Gadens.
.MCA:MB 27/05/14
Sgargetta

At 236, line 1, he said, "You handed a cheque

Can you tell me when and where and who you
He says, "It says that it needs to be
You're representing Gadens, Mr Segal,
57

MR HAYES

so the deed says hand it to Gadens."

the cheque to at Gadens?---I was sort pinning it to your

shirt, Mr Gadens.

plainly he's mindful there again of what's happening on

the 20th.

6
7
8
9
10

WHELAN JA:

"Who did you hand

I don't know where you can."

So

It's a pity he didn't say what happened rather than

being a smart aleck, but anyway.

MR HAYES:

Well, if you look at his evidence and you come back

to his evidence, Your Honour, he doesn't know.

He's

sitting in an interview room.

11

WHELAN JA:

12

MR HAYES:

That's true.
So, on a fair characterisation of his evidence, he's

13

either sitting in court and all this is happening outside,

14

if you look at Mr Cole's evidence, or if you look at his

15

evidence, if Your Honour is troubled by that, I will seek

16

to read his affidavit because - - -

17

SANTAMARIA JA:

18

WHELAN JA:

It goes on.

I know, I know.

It's just the attitude

19

that - anyway.

20

Litigation gets everybody frustrated, even barristers

21

sometimes.

22
23
24

MR HAYES:

I'm not criticising him for it.

Anyway.

Just when you read it later on - - -

Of course, Your Honour.

Your Honours are well

acquainted with - - SANTAMARIA JA:

Counsel then goes on and says, "You've got to

25

distinguish between what's in the without prejudice

26

communications," doesn't he?

27

MR HAYES:

28

SANTAMARIA JA:

29
30
31

He does.
(Indistinct) clearly communications between

counsel.
MR HAYES:

That's right.

But that would only be, Your Honour,

if there was some new arrangement.

.MCA:MB 27/05/14
Sgargetta

58

That evidence really

MR HAYES

has to be looked at because it goes to the dual issues.

If the deed is on foot, then it's evidence with respect to

performance of an obligation under a settlement, which

falls within section 131(2)(f).

Mr Segal is right.

on between the parties; in other words, objectively

ascertain what are they actually trying to do; what's the

obligation that they are seeking to discharge.

If it isn't, then

It's how you characterise what's going

Much of that will depend on how Your Honours

10

characterise what the respondent did, and this comes back

11

to whether the deed is on foot.

12

it's all very well for the respondent to proceed on a

13

summary judgment application, but at the end of the day

14

the deed or the obligation is still capable of being

15

performed even though they have proceeded on this summary

16

judgment application; in other words, they can have their

17

cake and eat it too, on one view of it, if that obligation

18

is still capable of being performed, in other words

19

payment of the 299,000, by 15 April.

20

characterise - - -

21
22

WHELAN JA:

We say to some degree

It's really how you

Just addressing the requirements for the fresh

evidence of Mr Cole.

23

MR HAYES:

24

WHELAN JA:

Yes, Your Honour.

On the reasonable diligence point you say, "Well,

25

he's self-represented.

26

the significant thing really was.

27

him that the critical thing he needed to do was prove an

28

offer had been made that day to pay 299,000.

29

misconceived what had happened in open court, because he's

30

a self-represented person, and he misunderstood really the

31

very simple thing he needed to establish," which is

.MCA:MB 27/05/14
Sgargetta

It was all so confusing as to what

59

It just wasn't clear to

He

MR HAYES

probably uncontroversial in the end, in a sense, in the

limited way you want to put it.

MR HAYES:

WHELAN JA:

5
6

That's right, and we do put it in that limited way.

Then you say it's significant - well, only if

you're right about the deed still being on foot.

MR HAYES:

Indeed.

I address this in paragraph 10 of my

submissions.

It took everyone by surprise, to the point

that Mr Segal himself found himself in a difficult

position in his re-examination of Ms Thomas, given that he

10

was front and square to the actual presentation of the

11

cheque.

12

that event as to the issue of tender.

13

surprise, or may have been to some degree, as much as the

14

appellant was, given the way in which the point fell in

15

the course of the evidence of Ms Thomas.

16

Essentially, Mr Segal's potentially a witness to

So he was caught by

Obviously what might not only explain the line of

17

questioning on tender taken by Mr Sgargetta, given the

18

case as to how it was opened by Mr Segal saying there was

19

never any formal tender or otherwise of the cheque -

20

I have taken Your Honours to that passage of his opening -

21

Mr Sgargetta has obviously thought, "Hang on.

22

we did give them a cheque."

23

On 20 March

Now, putting aside whether or not it happened in

24

or out of court and his appreciation as to what

25

Mr Shirrefs said in court and what he knew happened at

26

court as informed to him by Mr Cole and Mr Shirrefs, what

27

Mr Sgargetta knows is, "Look, I turned up to court on

28

20 March with a bank cheque to pay my obligation under the

29

deed." He knows that.

30

the bank is saying, "There was no formal tender or

31

otherwise of the 299,000." So he's thinking, "As at

.MCA:MB 27/05/14
Sgargetta

He knows that when the trial starts

60

MR HAYES

20 March I've got to pay this - what this deed is really

all about, I've got to pay this 299,000 by 15 April.

I've turned up with my cheque for 299,000 on 20 March, and

they're now saying I haven't tried to pay the money under

the deed."

6
7

SANTAMARIA JA:

Who could he have called at the time to prove

that he had?

MR HAYES:

SANTAMARIA JA:

10

So

MR HAYES:

Well - - The answer to my question I think is Cole.

Well, yes.

Yes, he could have, had he have been

11

aware of that.

12

with Mr Segal when there were those glib responses in the

13

earlier passage.

14

WHELAN JA:

15

MR HAYES:

16

WHELAN JA:

17

What he tried to do, he tried to raise it

He thought it had happened in open court too.

Well, he did.
And he doesn't pore through the transcript like we

do.

18

MR HAYES:

19

WHELAN JA:

Indeed.

Indeed.

So his recollection was that it had happened in

20

open court.

21

calling anyone.

22

MR HAYES:

23

WHELAN JA:

24

MR HAYES:

So I suppose he thought he didn't need to be

Precisely.
It happened in open court, he thought.
Precisely.

I perhaps understated that a little in

25

my submissions where I've said "possibly erroneously", and

26

Your Honour Justice Whelan will recall earlier on how

27

I said his argument conflated what's happened outside of

28

court with what's happened in court.

29

WHELAN JA:

30

MR HAYES:

31

WHELAN JA:

Anyway, so that's why it wasn't led.

And he couldn't call Mr Segal either.
Well, you wouldn't expect him to, really.

.MCA:MB 27/05/14
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61

But he
MR HAYES

could call Mr Cole.

MR HAYES:

WHELAN JA:

And if Mr Segal had have withdrawn - - Anyway, you'd be loath to do that, though, wouldn't

you? You'd be loath to do that, I think.

significant, but only if the deed's still on foot.

MR HAYES:

WHELAN JA:

That's right.
And it's credible because, well, Mr Cole's said

that's what happened.

what's said in response yourself.

10

MR HAYES:

It's

Then you want to rely actually

That's right, because Mr Segal then confirms the

11

very - which seems to be at odds on one interpretation of

12

events with how he opened the case and other similar

13

aspects dealing with that point that it wasn't tendered,

14

if I can call it the non-tender point, in the course of

15

the trial, irrespective as to how counsel might have

16

erroneously firstly characterised what was necessary for a

17

tender, formal or otherwise.

18

labouring under that misapprehension perhaps.

19

It would seem that he was

Also we would say that, as was apparent this

20

morning, that evidence goes to arguably the exception

21

provided under section 131(2)(f) as to evidence of

22

compromise if Your Honours were mindful the deed is still

23

on foot, which is what obviously Mr Sgargetta - that was

24

his view of the world, and obviously what Mr Shirrefs'

25

view of the world was as can be gleaned from what he said

26

in court on 20 March.

27

Obviously I'm not so bold to submit to

28

Your Honours that those two passages of evidence alone are

29

determinative of that exercise and characterisation, but

30

they are passages of evidence which go towards assisting

31

the court in characterising two things.

.MCA:MB 27/05/14
Sgargetta

62

And the issue of

MR HAYES

characterisation really involves two parts: firstly,

whether or not through non-performance of clause 2.1(a)

the deed was still capable of performance and hence still

on foot; and, secondly, whether or not through the

parties' intervening actions between 25 February and

25 March their conduct could characterise whether or not

the deed was still on foot.

8
9

SANTAMARIA JA:

So are you moving away from the fresh evidence

point now to trying to argue the deed is still on foot?

10

MR HAYES:

11

WHELAN JA:

If that would assist Your Honour I can go - - No, no, we just want to deal with fresh evidence at

12

the moment.

13

about the fresh evidence?

14

MR HAYES:

So does that conclude what you want to say

So far as to say just globally, if I can wrap it up,

15

an interest of justice point, Your Honour, of which the

16

authorities speak very clearly of.

17

that if one looks at - leaving aside the starting point is

18

the discretion judicially exercised to admit fresh

19

evidence on appeal is the starting point, as I have moved

20

the scrum a long way back, the starting point is that

21

special or exceptional circumstances have to be shown.

22

say that the way in which the point developed does amount

23

to unusual.

24

himself in this position.

25

In particular we say

We

This is unusual, how Mr Sgargetta did find

So we say that that enlivens the exceptional

26

circumstances which we say is in the interests of justice

27

in this case, when Your Honours go through that relevant

28

evidence, which is why we have included it in submissions

29

to assist Your Honours, that this would be an appropriate

30

case to exercise that discretion in the interests of

31

justice touched upon by Lord Wilberforce in Mulholland v

.MCA:MB 27/05/14
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63

MR HAYES

Mitchell, which is referred to by the Chief Justice and

Justices Osborn and Macaulay in Sunland v Prudentia, where

they address the principles, and I think Mr Hay and I are

ad idem as to the appropriate test as to what Your Honours

need to be mindful of, where they cite Justice Chernov in

Foody v Horewood - - -

SANTAMARIA JA:

to?

MR HAYES:

Is this one of the authorities that you refer

Yes, Sunland.

I have set out the passage and it's

10

essentially restating the principle through case, through

11

case and it traces the doctrine back to what Lord

12

Wilberforce says in Mulholland v Mitchell.

13

addressed in the case of Emer, and just included there as

14

well.

15

approach.

It is also

Justices Harper and Emerton adopted a similar

16

The three things, exercise of reasonable

17

diligence; reasonably clear that if the evidence had been

18

available at the trial it would have produced an opposite

19

result - we say it would have because what was troubling

20

Judge Cosgrave as to whether or not the evidence went so

21

far as to find that there had in fact been a tender, we

22

say that it takes it that bit further and puts it beyond

23

doubt - and, further, that it's reasonably credible, and

24

then there's the overall encapsulating the interests of

25

justice, and we say that Your Honours now having heard the

26

circumstances as to how Mr Sgargetta found himself in that

27

position this would be an appropriate case to exercise

28

that discretion in the interests of justice.

29

WHELAN JA:

Since you want to rely on their material, I assume

30

if this is admitted you won't need any cross-examination

31

or - - .MCA:MB 27/05/14
Sgargetta

64

MR HAYES

MR HAYES:

WHELAN JA:

3
4

I don't need any cross-examination at all.

Okay.

We will just hear what Mr Hay says on the

fresh evidence point.

MR HAY:

I can be relatively brief on this point.

The point

that we take against the admission into evidence can be

boiled down to one, which is with reasonable diligence

this evidence would have been put forward.

about credibility and so on, we don't take any of those

points.

The aspect

But with reasonable diligence, as it has in this

10

case, true it is with Mr Hayes and Mr Silver's assistance,

11

but with reasonable diligence there's no impediment at all

12

to Mr Sgargetta subpoenaing Mr Cole for the trial.

13

was a big gap between the March date and the August

14

hearing date.

15

pretty clear that he wanted to contend that a payment had

16

been made as good discharge of his obligation.

17

SANTAMARIA JA:

18

pleading.

19

MR HAY:

There

He knew that he wanted to contend - it's

Where do you get that from? It wasn't in his

Your Honour, I may have to take that back a few

20

notches, Your Honour.

21

that it was capable and open for acceptance up until

22

15 April, based on the amended defence and counterclaim.

23

They seek some declaration to that effect, that they have

24

until April 15 to make that payment.

25

an implication that it will be performed.

26

is to be accepted that is contained in the affidavit, he

27

knew at least in his own mind that he tried to put forward

28

this cheque.

29

he had no knowledge of.

30

He should have known that he wanted to come to the court

31

and say so.

.MCA:MB 27/05/14
Sgargetta

He does seem to say in his pleading

Carried with that is

If the evidence

It's not like it was done by some agent that

He should have known about it.

In those circumstances, with reasonable

65

MR HAY

diligence he could have gathered the requisite deponents.

2
3

One final point on this front, Your Honour, and

that is - - -

SANTAMARIA JA:

MR HAY:

SANTAMARIA JA:

Sorry, you've gone too fast for me there.

Sorry, Your Honour.

You said to us he knew he wanted to contend

that there had been tender, and I paused you and I said,

"It's not in his pleading."

9
10

MR HAY:

Yes.

SANTAMARIA JA:

You've said, "No, but if you go to the pleading

11

there was something in the pleading which means he must

12

have intended to try and prove this at trial."

13

MR HAY:

Yes.

14

SANTAMARIA JA:

Why do you say that when Mr Sgargetta came to

15

trial what he wanted to do was tell the judge that he

16

tried to pay?

17

MR HAY:

To answer Your Honour's question, at the time of

18

the filing of the document, which is the amended defence

19

and counterclaim, the premise is that this deed is still

20

alive and that with that payment his obligations would be

21

entirely discharged.

22

have to resile a few degrees from how I originally put it.

23

But there does seem to be an implication at the very least

24

that it's open to him to do it at the time - it's still

25

open to him to do it at the time that he files this

26

document, which is 22 March.

27

As I said before, Your Honour, I do

Add that to the fact of the evidence that we have

28

now seen, that he wants to contend that a cheque was in

29

fact proffered, put aside the circumstances for a moment

30

but it was in fact proffered, put those two things

31

together, it's a reasonable inference to draw that

.MCA:MB 27/05/14
Sgargetta

66

MR HAY

Mr Sgargetta was going to come to the court and say, "This

deed was live even after 20 March.

I actually drew a bank cheque."

actually ended up as a discovered document.

cheque was in the court book.

together, in my submission, can be a basis, as it were,

for an inference being drawn that he knew that the

proffering of that cheque and its circumstances was going

to be something that he wanted to tell the court.

10

SANTAMARIA JA:

11

MR HAY:

12

SANTAMARIA JA:

Yes, I understand.

I had the money.

As I understand it, it
The $299,000

So all of those things

The trial was when?

August 2013, Your Honour.

So in August 2013 you say that when he came to

13

court to defend himself against the claim for how many

14

hundreds of thousands of dollars it was he was going to

15

say to the judge, "Look, I have the right to pay this up

16

to 15 April, and in fact I tried to but they wouldn't let

17

me."

18

MR HAY:

Yes.

I concede, Your Honour, it doesn't appear with

19

that degree of clarity in the defence alone or the

20

pleading alone.

21

SANTAMARIA JA:

But implicit in what he was going to do in all

22

of this was to say, "I tried to do it, and they wouldn't

23

let me."

24
25
26
27

MR HAY:

Yes, that's how it's put.

Your Honour.
WHELAN JA:

One final point on this,

If Your Honours do let - - -

No, just before you get to the "if".

You say he

could have led the evidence.

28

MR HAY:

Yes.

29

WHELAN JA:

Does that mean if Mr Cole had been called to give

30

the evidence set out in his affidavit he could have given

31

it without objection?
.MCA:MB 27/05/14
Sgargetta

67

MR HAY

MR HAY:

I will do my very best to answer Your Honour's

question accurately.

I think there has been some

confusion amongst the participants of the trial and with

the benefit of the greater distance we have (indistinct)

it.

the use of the word "tender", whether or not that had some

formalistic requirement, coupled with the fact of what on

our side of the fence we would say the without prejudice

dealings outside the open court session on 20 March.

There seems to have been a difficulty thrown up by

10

If it had been led one might envisage that

11

Mr Segal, as he did in other places, would object on the

12

basis that it would go to the without prejudice

13

communications that had occurred between the parties.

14

That may have led - again we're getting on supposition on

15

supposition - to reliance being placed, as I have sought

16

to do, on section 131 or, as Mr Hayes has sought to do, on

17

131(2)(f) where they say this actually goes to the

18

performance of an extant obligation.

19

predict whether or not that would have occurred.

20

But - - -

21

WHELAN JA:

22

MR HAY:

23

WHELAN JA:

We are in a situation now.

Yes, Your Honour.

Is the evidence admissible?

24

the trial?

25

have called this evidence.

26
27

MR HAY:

It's difficult to

Was it admissible in

You say with reasonable diligence he could

Was it admissible?

My guess, Your Honour, is it would have been objected

to.

The court would have then had to go through the - - -

28

WHELAN JA:

29

MR HAY:

Are you objecting to it now then?

I say that it is without prejudice - well, this is the

30

difficulty.

31

only goes to a very specific part of the dealings between

.MCA:MB 27/05/14
Sgargetta

Mr Cole's affidavit is quite short and it

68

MR HAY

1
2
3

the parties, and it doesn't give - - WHELAN JA:

You then want to tell the whole story.

But let's

just deal with Mr Cole.

MR HAY:

Yes.

WHELAN JA:

MR HAY:

Is his evidence admissible?

In my submission, Your Honour, if the court knew all

of the circumstances it would not be admissible on the

basis that it's without prejudice.

9
10
11

WHELAN JA:

But we have to look at your material to work that

out, you say.

MR HAY:

That's right, Your Honour.

That is a difficulty.

12

I suppose if one went back in time and one was counsel at

13

the County Court you would know the context about somebody

14

saying an offer was made or something was said, if the

15

advocate on the opposing party knew when that occurred,

16

for example a mediation or between counsel communications,

17

one would expect someone trying to protect that privilege

18

to stand up and object.

19

SANTAMARIA JA:

Isn't it truly the case that what happened was

20

that your client, by the time of the conversation, was of

21

the view that the deed was finished.

22

MR HAY:

Yes.

23

SANTAMARIA JA:

And because it was of the view that the deed

24

was finished it was no longer interested in 299,000, and

25

so were 299,000 to be offered to it in open court it

26

wouldn't have accepted it.

27
28
29

MR HAY:

I agree with that analysis, Your Honour, and confirm

that it means - - SANTAMARIA JA:

The supposition that your client was proceeding

30

that 2.1(b) was still alive is just a false hypothesis,

31

isn't it?
.MCA:MB 27/05/14
Sgargetta

69

MR HAY

MR HAY:

SANTAMARIA JA:

3
4

No question, Your Honour.

That's why you would say that it's a without

prejudice communication and not a performance.

MR HAY:

That's right.

I suppose if the issues had been

properly joined on the pleadings, whether or not this was

alive and capable of performance and had in fact been

performed, you may actually get into one of those

circumstances where the court has to admit the evidence in

order to determine.

For example, by analogy, sometimes

10

you have those fights about without prejudice

11

communications whether or not a deal has been struck, and

12

you have to admit it, determine whether or not a deal has

13

been struck and if it is of course the without prejudice

14

privilege goes away because you've reached a deal.

15

sorry that I have been so nuanced in that answer, but - -

16

17

SANTAMARIA JA:

18

MR HAY:

19

SANTAMARIA JA:

20

MR HAY:

21

SANTAMARIA JA:

22

Can I put a hypothetical situation to you?

Yes, Your Honour.

Let's assume that there was never a 2.1(a).

So no conditional approval.
There was no provision 2.1(a) in this

agreement.

23

MR HAY:

24

SANTAMARIA JA:

25

I'm

Yes.
And what had to happen was that Mr Sgargetta

had to produce a bank cheque for 299,000 by 15 April.

26

MR HAY:

Yes.

27

SANTAMARIA JA:

Would production to Mr Segal have been

28

performance of that standalone provision? Who does this

29

amount have to be given to? Gadens?

30
31

MR HAY:

Yes, it does have to be Gadens.

In the circumstances

that existed in this case, there was a representative of

.MCA:MB 27/05/14
Sgargetta

70

MR HAY

1
2
3
4
5

Gadens at court.
SANTAMARIA JA:

to Segal, he failed to give it to Gadens?

MR HAY:

No, Your Honour.

No, I'm suggesting that I think it

probably would be good discharge.

SANTAMARIA JA:

MR HAY:

WHELAN JA:

You are really taking that point? By giving it

It would be good discharge?

Yes, yes.

bit.

Here's what I've written down.

I have changed it a

If 2.1(a) had not been in existence or had been

10

complied with, the offer deposed to by Mr Cole would have

11

been equivalent to performance of 2.1(b).

12

MR HAY:

I would have to disagree with that, Your Honour, on

13

this basis, because of the exchange that occurred between

14

myself and Justice Santamaria before.

15

basis on which the 299 was proffered, whether or not it

16

was proffered pursuant to - sorry, this is on the

17

assumption that the first aspect is discharged and

18

complied with?

19

WHELAN JA:

20

MR HAY:

21

WHELAN JA:

22

It depends on the

Either complied with or doesn't exist.

Yes.
Justice Santamaria put to you that it wasn't there

at all.

23

MR HAY:

24

WHELAN JA:

25

with.

26

which the 299,000 was proffered." But we then have to go

27

to your material to see what that basis was.

28

MR HAY:

Yes.
But it would be the same if it had been complied
You say, "Well, look, it depends upon the basis on

Yes.

I actually think we would have been obliged to

29

accept.

If either it was complied with or didn't exist,

30

we would have been wrong from the bank's perspective to

31

refuse to accept 299.

.MCA:MB 27/05/14
Sgargetta

71

MR HAY

1
2

SANTAMARIA JA:

It would have been performance of the

obligation.

MR HAY:

Yes.

SANTAMARIA JA:

MR HAY:

Yes.

That's what I thought you said.

It would have been, Your Honour.

I suppose the

reason for the complication is the existence of the first

clause and whether or not that was conditional.

renders, in my submission, the circumstances in which it

was proffered relevant.

10

WHELAN JA:

All right.

That then

Do you want to say anything just on the

11

fresh evidence point in addition to what you've already

12

said?

13

MR HAYES:

14

WHELAN JA:

15

Okay.

We will just stand down for a short time,

but don't go away.

16
17

No, Your Honour.

(Short adjournment.)
WHELAN JA:

We will allow the appellant to rely on the

18

affidavit of Daniel Cole sworn 26 May 2014 as fresh

19

evidence on the appeal, and we will give our reasons in

20

due course, probably in the course of dealing with the

21

substantive matters on the appeal.

22

rely on the other evidence?

23

MR HAY:

24

WHELAN JA:

25

Presumably you want to

I do, Your Honour, yes.

Given that, do you want to say anything about that,

Mr Hayes? You want to rely on it too, don't you?

26

MR HAYES:

27

WHELAN JA:

Absolutely.
All right.

Given that we are allowing the

28

appellant to rely on the affidavit of Mr Cole, we will

29

permit the respondent to rely on the affidavit of Kevin

30

Pringle sworn 26 May, Nora Minassian sworn 26 May and Adam

31

Segal sworn 26 May.

.MCA:MB 27/05/14
Sgargetta

They are the three, are they?

72

DISCUSSION

MR HAY:

WHELAN JA:

3
4

They are, Your Honour.

All right.

So we have those four affidavits.

Now

we can go to the substantive issues.

SANTAMARIA JA:

I think we are agreed, aren't we, that the

communications which were sent up to us by Mr Hay this

morning, the communications of 25 and 26 February 2012,

they are all in evidence before us, before His Honour and

available to us now?

MR HAYES:

10

WHELAN JA:

11

MR HAYES:

12

WHELAN JA:

13

MR HAYES:

Yes.
They are P19.
Yes, they are.
So how did you comply with 2.1(a)?
We say this, Your Honour.

Firstly, the primary

14

judge quite rightly outlined the High Court's decision in

15

Meehan v Jones.

16

clause 2.1(a) is cast that the means of performance so

17

described could be performed to the satisfaction of the

18

respondent.

19

judge deals with this comprehensively in his reasons.

20

There was the Red Rock loan proposal, leaving aside - - -

21

SANTAMARIA JA:

We don't quibble with the fact the way

Essentially what happened was - and the trial

Are the authorities to the effect - does Meehan

22

v Jones say, "Yes, you can have unilateral assessment by

23

one party of satisfaction.

24

court can always look to see whether what was done was

25

reasonable and whether what was done was honest"?

26

MR HAYES:

27

SANTAMARIA JA:

That's all right because the

That's right.
And I have the impression that that lady was

28

called as a witness in order to make good that the

29

approach of the bank to Red Rock was reasonable

30

(indistinct); have I got that right?

31

MR HAYES:

Yes.

.MCA:MB 27/05/14
Sgargetta

This is not one of those cases where the

73

MR HAYES

clause properly read absent the reasonable and honest

supervisory caveat of the court, we say it's not one where

it's hopelessly incapable of certainty or performance to

the point it would render performance arbitrary and

therefore not be binding at the hands of the respondent.

We say it doesn't go that far.

So my friend quite rightly states and His Honour

quite rightly informed himself of two aspects.

Firstly,

it falls within the permission dictated by Meehan v Jones

10

and, secondly, we are left with His Honour's factual

11

findings as to honest and reasonable on 2.1(a), leaving

12

aside two small errors.

13
14
15

SANTAMARIA JA:

Which you don't impeach.

You don't impeach

His Honour's findings that it was honest and reasonable.

MR HAYES:

No.

His Honour evaluated the evidence of Ms Thomas,

16

had the opportunity of seeing her and dealt with that in

17

his reasons.

18

consideration of that evidence.

19

We seek not to impeach His Honour's

There are two small errors in His Honour's

20

assessment of the evidence overall, and when looking at

21

the Red Rock proposal document he says it was only for

22

200,000.

23

secondly, he seemed - well, three things, really.

24

Secondly, he said - - -

25

SANTAMARIA JA:

26

MR HAYES:

27

SANTAMARIA JA:

28

judgment.

Where does His Honour say (indistinct).

I will take Your Honour to the reasons.

29

MR HAYES:

30

SANTAMARIA JA:

31

It would seem to be 200,000 to 1 million; and,

I think you start at page 23 of His Honour's

That's right.
Which is where His Honour lays out 2.1(a) and

2.1(b).
.MCA:MB 27/05/14
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74

MR HAYES

MR HAYES:

SANTAMARIA JA:

That's right.

you what I understand.

MR HAYES:

SANTAMARIA JA:

MR HAYES:

SANTAMARIA JA:

MR HAYES:

SANTAMARIA JA:

10

Then he starts giving the facts.

MR HAYES:

I will tell

Paragraph 76 is Red Rock number 1.

That's right.
Paragraph 82 is Red Rock number 2.

That's right.
And then paragraph 84 is ABNZ.

Yes.
There's a mistake in relation to Red Rock 1?

Red Rock 1, there are three mistakes.

We say that

11

at the end of the day nothing really turns on it

12

because - - -

13
14
15

SANTAMARIA JA:

(Indistinct).

interested.
MR HAYES:

I know Justice Whelan might be

What are those mistakes?

Very briefly, Your Honour.

The loan proposal was

16

dated 11 February 2013.

17

admin@bricksandsticks.

18

appellant's wife.

19

quite rightly it identifies that between 200,000 and a

20

million, but that the appellant's wife - he goes on to say

21

that the appellant's wife was the applicant.

22

further in paragraph 80, however, to say that - - -

23

WHELAN JA:

24

MR HAYES:

25

WHELAN JA:

26

MR HAYES:

27

WHELAN JA:

28

It was actually prepared for the

It says the minimum loan amount was -

He goes on

Sorry, these are mistakes, are they?

Mistake as to the date, Your Honour, and also - - It's not a mistake.
He has then addressed it further on.
No, wait on.

The document says it's dated

11 February 2013.

29

MR HAYES:

30

WHELAN JA:

31

It wasn't prepared for

That's right.
But signed 22 February 2013; okay.

So there's a

typo there.
.MCA:MB 27/05/14
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75

MR HAYES

MR HAYES:

WHELAN JA:

3
4
5

Yes.
It does says it's prepared for

admin@bricksandsticks.
MR HAYES:

It does.

But then he goes on to say it's prepared

for Mrs Sgargetta.

WHELAN JA:

MR HAYES:

She signed it as the applicant.

She did, yes.

Notwithstanding that, what His Honour

has done, His Honour has still evaluated the evidence of

Ms Thomas and we say there's nothing of it and I won't

10

trouble Your Honours any further with that point.

11

WHELAN JA:

12

MR HAYES:

Okay.
He has evaluated the evidence of Ms Thomas at

13

paragraph 86 in the reasons and onwards.

14

irrespective as to what might seem to be a superficial

15

error on the face of the judgment, at the end of the day

16

we don't seek to trespass on the findings of fact that

17

His Honour makes from paragraph 86 onwards.

18

SANTAMARIA JA:

19

MR HAYES:

20

WHELAN JA:

21

We say that,

So you don't impeach 86?

No, Your Honour.

There is no way that document can be described as a

letter of approval.

22

MR HAYES:

23

WHELAN JA:

24

MR HAYES:

No.
Okay.

So there's no argument about that.

No, and I'm grateful for Your Honours hearing me on

25

that discrete point which, as Your Honours will

26

appreciate, Mr Sgargetta hasn't abandoned that point, but

27

I won't take it any further.

28

WHELAN JA:

Okay.

29

MR HAYES:

30

SANTAMARIA JA:

31

MR HAYES:

On one view, yes, 2.1(a) - - You don't impeach 86 and you don't impeach 87.

That's right.

.MCA:MB 27/05/14
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76

MR HAYES

SANTAMARIA JA:

MR HAYES:

And you don't impeach 88.

That's right, because what we're left with as

I addressed Your Honour Justice Santamaria before is the

correct application of Meehan v Jones, His Honour's

factual findings, having had the opportunity of seeing and

hearing the evidence of Ms Thomas, and there's nothing

that we could put before this court that would permit us

to trespass or impeach those findings.

SANTAMARIA JA:

So would you mind my asking where you're going.

10

So 2.1(a) is okay.

11

2.1(a) is unimpeachable.

12

MR HAYES:

13

SANTAMARIA JA:

What His Honour had to say about

That's right.
But you're about to go on to say that

14

nonetheless these are several obligations, and even if he

15

didn't come home on - I understand where you are going.

16

MR HAYES:

Yes.

17

SANTAMARIA JA:

Even if 2.1(a) is not performed, nonetheless

18

you can wait around and see if you are able to knock over

19

2.1(b).

20
21
22
23

MR HAYES:

Yes, unless the deed was specifically terminated in

the meantime.
SANTAMARIA JA:

I understand.

I see where you are going.

Thanks very much.

24

MR HAYES:

If Your Honour pleases.

25

WHELAN JA:

26

MR HAYES:

27

LUNCHEON ADJOURNMENT

We might take that up at 2.15.

If Your Honour pleases.

28
29
30
31
.MCA:MB 27/05/14
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77

MR HAYES

UPON RESUMING AT 2.16 PM:

WHELAN JA:

MR HAYES:

Mr Hayes.
Yes, Your Honours.

I think where we left it prior

to lunch was dealing with whether or not the deed was on

foot.

point, Your Honours, by starting at our written

submissions, and in particular paragraph 16 of the written

submissions and also paragraph 74 of the judgment.

9
10

WHELAN JA:
MR HAYES:

I will endeavour to develop our submission on this

Paragraph 74?
74 of the judgment at page 23, Your Honour.

11

Paragraph 74 of the judgment sets out clauses 2.1 and 2.2

12

of the deed.

13

of the submissions paragraph 3 of the deed is there

14

repeated for convenience.

15

determining the on foot point those two clauses need to be

16

read together, and in order to divine meaning as to what

17

the parties intended when they agreed to those provisions

18

set out in clauses 2.1 and 2.2.

19

Then Your Honours will see in paragraph 16

We say that in terms of

The bargain essentially, Your Honours, is

20

encapsulated in 2.2 because it says, "Provided the

21

conditions in clause 2.1 above are complied with" - and

22

I'll just pause there; that, on plain reading, would

23

suggest both clause 2.1(a) and 2.1(b) - "then the NAB will

24

accept 299,000 in full and final satisfaction of the money

25

under the home loan, and also discontinue proceedings and

26

provide a dually executed mortgage."

27

We say that the proper characterisation is that

28

one looks firstly in terms of what Your Honour Justice

29

Whelan did in Hollyburton v Irani.

30

the deed.

31

rightly observed in Hollyburton, and we say this at

So you're left with

The starting point, as Your Honour quite

.MCA:MB 27/05/14
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78

MR HAYES

paragraph 19, the important thing is to carefully

identify, trite as it might be, what has been agreed and

what has not been agreed, and Your Honour observes that

each case depends upon its own facts.

We say that when one looks at this deed and its

proper construction the correct characterisation of it is

one of an accord and conditional satisfaction.

that mean? Well, it means that the parties have reached an

agreement which is embodied in clause 2.1 and 2.2 of the

What does

10

deed and also clause 3.

11

provisions together.

12

compromise the litigation and bring it to a finality, and

13

also the dispute which is the subject matter of that

14

litigation, namely the mortgage, ultimately on the payment

15

of the $299,000.

16

You need to read those three

What they have agreed is to

Now, we say that's the agreement.

The accord, if

17

you like, is all of this comes to an end, provided of

18

course the conditions in clause 2 are met.

19

those down in a moment as to - - -

20

SANTAMARIA JA:

I will break

The rights that the parties might have had

21

between themselves can merge into the new deed, can't

22

they?

23

MR HAYES:

Yes.

24

SANTAMARIA JA:

The question in consideration is the exchange

25

of promises that led to the deed or whether consideration

26

is the performance of the promises involved in the deed.

27

MR HAYES:

That's right.

We say here hence the conditional

28

nature of the satisfaction is the performance of that

29

promise and the ultimate promise, if one looks to its

30

purpose - if I can be cheeky enough for a moment to refer

31

to some additional authorities that I dug up over lunch.

.MCA:MB 27/05/14
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79

MR HAYES

I'll just be referring to Toll and Electricity Generation

v Woodside.

Your Honours.

I will hand those up in a moment,

But we say that taking a purposive approach to

these provisions of the deed what Your Honours can glean

is that the purpose of this transaction was to ultimately

bring about payment for the bank of a compromised sum and

bring about an end of the litigation, and also the dispute

under the mortgage, which was the subject of the

10

litigation.

That end only came about on payment of the

11

299,000.

12

to get that.

13

ultimately the payment, because the deed on its face says

14

that both are required.

15

purpose it's payment in exchange and, upon that payment

16

being made, the compromise noted in clause 2.2 effectively

17

becomes absolute.

All very well to get the approval; all very well

But really what this was about was about

But really when one looks at the

18

As I say in paragraph 17 of my submissions, which

19

I think addresses your query, Justice Santamaria, here on

20

performance by the appellant of his obligations under

21

clause 2.1 of the deed, most material the payment of

22

$299,000, the respondent's promised forbearance with

23

respect to its claim against the appellant and discharge

24

of the related subject mortgage crystallises into an

25

obligation absolute by reason of clause 2.2 of the deed.

26

So the condition, the outstanding condition - in

27

other words, they have reached accord as to how the

28

litigation comes to an end and the mortgage comes to an

29

end, they have agreed to that, and the condition

30

ultimately finishes up with the purpose, namely the

31

payment of the $299,000.

.MCA:MB 27/05/14
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80

Upon that the respondent, the

MR HAYES

bank, has promised - in other words the exchange of

promise - to bring about an end of proceedings, and also

to discharge the mortgage.

However, what we have is running along parallel

to this is the summary judgment application which sort of

confuses things when one strips back to what it was

objectively ascertained as to what it was the parties

actually agreed upon and what the purpose of the

transaction was.

I might pause there for a moment, if

10

that's convenient to Your Honours, before turn to the

11

summary judgment thread, if I can put it in those terms,

12

and just refer Your Honours very briefly to what the

13

High Court have said.

14

with the passages in Toll v Alphapharm and also

15

Electricity Generation v Woodside Energy.

16

copies to Mr Hay.

17

Your Honours will be well familiar

I have provided

Forgive me, Your Honours, for reminding the court

18

of what is now a very much trite proposition.

19

from, firstly, paragraph 40 in Toll, the judgment of

20

Gleeson CJ, Justices Gummow, Hayne, Callinan and Heydon.

21

It's a short passage.

22

I'm reading

"This Court, in Pacific Carriers Ltd v BNP

23

Paribas, has recently reaffirmed the principle of

24

objectivity by which the rights and liabilities of the

25

parties to a contract are determined. It is not the

26

subjective beliefs or understandings of the parties about

27

their rights and liabilities that govern their contractual

28

relations. What matters is what each party by words and

29

conduct would have led a reasonable person in the position

30

of the other party to believe. References to the common

31

intention of the parties to a contract are to be

.MCA:MB 27/05/14
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81

MR HAYES

understood as referring to what a reasonable person would

understand by the language in which the parties have

expressed their agreement. The meaning of the terms of a

contractual document is to be determined by what a

reasonable person would have understood them to mean.

That, normally, requires" - and this is the important bit

- "consideration not only of the text, but also of the

surrounding circumstances known to the parties, and the

purpose and object of the transaction."

10

So we say, Your Honours, trite as it might be,

11

the court must take a purposive and objective - or a

12

purposive approach not to be confused with the same phrase

13

used in statutory interpretation, but equally apposite,

14

and also endeavour to glean what the object of this

15

transaction is, to really look at (indistinct) clause

16

2.1(a) and 2.1(b) together.

17

Very briefly, Your Honours, in paragraph 35 of

18

Electricity Generation Corporation v Woodside Energy,

19

"Both Verve and the Sellers recognised that this Court has

20

reaffirmed the objective approach to be adopted in

21

determining the rights and liabilities of parties to a

22

contract.

23

contract is to be determined by what a reasonable

24

businessperson would have understood those terms to mean.

25

That approach is not unfamiliar. As reaffirmed, it will

26

require consideration of the language used by the parties,

27

the surrounding circumstances known to them and the

28

commercial purpose or objects to be secured by the

29

contract. Appreciation of the commercial purpose or

30

objects is facilitated by an understanding 'of the genesis

31

of the transaction, the background, the context [and] the

The meaning of the terms of a commercial

.MCA:MB 27/05/14
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82

MR HAYES

market in which the parties are operating'. As Arden LJ

observed in Re Golden Key Ltd, unless a contrary intention

is indicated, a court is entitled to approach the task of

giving a commercial contract a businesslike interpretation

on the assumption 'that the parties ... intended to

produce a commercial result'. A commercial contract is to

be construed so as to avoid it 'making commercial nonsense

or working commercial inconvenience'."

So, using those two touchstones, we say that

10

approach if adopted by the court in endeavouring to

11

construe meaning as to what do these clauses read together

12

truly mean, and we say that read together the object of

13

the purpose of the transaction is to bring an end to this

14

dispute for the payment of the amount of $299,000.

15

matters not whether or not clause 2.1(a) has been

16

performed or not been performed because, while that

17

creates an entitlement on the part of the respondent to

18

proceed to summary judgment with respect to its claim,

19

importantly when one looks at clause 3 of the deed it

20

doesn't extinguish the obligation on the part of the

21

appellant to pay the $299,000 which is due under the deed.

22

It

One must read 2.1(a) in context with 2.1(b)

23

because 2.1(a) on its own doesn't - if one was to look at

24

it separately, it doesn't really have any real bearing on

25

what the ultimate purpose or compromise is; namely the

26

discharge of the litigation and the transaction for the

27

agreed sum.

28

might happen.

29

effect to that ultimate purpose or bargain is the actual

30

payment itself.

31

All it does is give some certainty that it

What actually brings it about and gives

While that obligation still survives, and we say

.MCA:MB 27/05/14
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83

MR HAYES

it does under 2.1(b) because it was still capable or

rendered - or it was still capable of being performed,

while that's still alive, provided it's capable of being

performed, we say that performance or an act, if one looks

to the tender, equal to the performance of that core

bargain is sufficient to invoke the bargain or the

conditional satisfaction which is embodied within the

deed.

SANTAMARIA JA:

I'm not too sure whether either of those cases

10

that you read permit a court to distil the underlying

11

objective to agreement, thereby referring other terms of

12

the agreement to the periphery.

13

there I think, "Well, they put it there for a reason."

14

MR HAYES:

15

SANTAMARIA JA:

16

Yes.

MR HAYES:

18

SANTAMARIA JA:

20

Any assessment of the purpose of this agreement

must comprehend the reason that 2.1(a) was put there.

17

19

When I look at 2.1(a)

Yes.
Your interpretation suggests that 2.1(a) is

performing no function at all.

MR HAYES:

It performs no function at all - no, I'm not putting

21

it that way, Your Honour.

22

subordinate function to the core obligation in 2.1(b).

23

ensures that 2.1(b) will be performed.

24

SANTAMARIA JA:

I'm saying this.

It performs a

Subordinate function to the core obligation.

25

In contract we do distinguish core obligations from

26

obligations which are less than core, and we give those

27

that are core obligations, if they're breached, the

28

entitlement (indistinct) repudiation.

29

MR HAYES:

30

SANTAMARIA JA:

31

It

Yes.
If they are non-core, if they're breached you

can only get damages.

.MCA:MB 27/05/14
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84

MR HAYES

MR HAYES:

SANTAMARIA JA:

That's right.
But why isn't 2.1(a) a core obligation, because

it provides the time - it's got a reference to time?

MR HAYES:

Yes.

SANTAMARIA JA:

And elsewhere in the agreement provision is

made that everything that refers to time is of the

essence.

MR HAYES:

SANTAMARIA JA:

10

MR HAYES:

It does.
Which is aka core.

It is.

Yes, Your Honour, it's hard to quibble with

11

the fact that it's expressed.

12

to some degree by the fact that the parties chose to say

13

that time be of the essence as to its performance.

14

still you have to read it together, and this is how we put

15

it, with clause 2.1(b) because without clause 2.1(b) it's

16

meaningless.

17

Its importance is informed

But

However, clause 2.1(b) on its own can be

18

meaningful if clause 2.1(a) is not performed by the due

19

date and clause 2.1(b) is performed by the due date.

20

WHELAN JA:

But it's not meaningless.

If you go back into the

21

situation they were in they have a final judgment pending.

22

Now, we know they didn't get final judgment, but they

23

seemed to think they were entitled to it.

24

MR HAYES:

25

WHELAN JA:

Yes.
And an agreement is made they'll stay their hand as

26

long as certain things happen by a particular time.

27

first one is they have to have this letter of approval.

28

Well, why wouldn't it be the intention that if that

29

doesn't arise they are then entitled to proceed? In fact

30

that seems to be what clause 3 says.

31

MR HAYES:

Well, it does.

.MCA:MB 27/05/14
Sgargetta

The

It says you can proceed to summary

85

MR HAYES

judgment.

WHELAN JA:

MR HAYES:

WHELAN JA:

MR HAYES:

WHELAN JA:

MR HAYES:

For what?
For summary judgment.
For what? For what sum of money?
It doesn't say.
You would say it has to be 299,000.
No, we wouldn't because in that respect it's not

clear.

It says, "Yes, you can proceed to summary

judgment." It doesn't say what happens to the remainder of

10

the deed, because the obligation under - what might

11

address this is in the material handed up today by Mr Hay.

12

I think it was exhibit 19.

13

152 of the court book.

14

WHELAN JA:

15

MR HAYES:

In there I'm reading from page

It was exhibit P19 at the trial.

Yes.
This is the letter from Mr Pringle at 9.02 after

16

rejecting the purported performance on the part of the

17

appellant of clause 2.1(a).

18

we confirm on Friday, 1 March, we will proceed with our

19

client's summons to have your defence and counterclaim

20

struck out and summary judgment entered in favour of our

21

client."

22

He says here, "Accordingly,

Then what's informative is the last line, "Our

23

client reserves all rights generally, including under the

24

loan agreement, mortgage and deed." So they reserve their

25

rights under the deed.

26

the deed is still alive.

27

looks at clause 3, clause 3 which didn't appear in

28

His Honour's reasons but no doubt His Honour was cognisant

29

of the clause, which we have included in paragraph 16 of

30

our submissions, "Consequence of the default", it just

31

talks about proceeding with the hearing of the summons and

.MCA:MB 27/05/14
Sgargetta

So it suggests on one view that

86

We say that all it does when one

MR HAYES

1
2
3

the proceedings generally.

WHELAN JA:

MR HAYES:

WHELAN JA:

you."

8
9

"As

long as you do these things, we will adjourn the summons."

Yes, but that's all they are agreeing to do.

MR HAYES:

That's right.
"And, once you've done all of them, we'll release

But it's a different thing to actually terminate and

bringing the deed to an end.

WHELAN JA:

10

MR HAYES:

11

WHELAN JA:

The deed provides for what's to happen.

I'm sorry, Your Honour?
I think when you look at the purpose it does have a

12

purpose, 2.1(a).

13

there was a letter of approval in place.

14

why they might have wanted that.

15

peripheral?

16

their hearing date, Friday, 1 March.

17

MR HAYES:

18

WHELAN JA:

19

MR HAYES:

They wanted to know by 1 March that

I can understand

How is that ancillary or

Why isn't that fundamental?

They have got

Yes.
They want to know before then.
That would be the purpose of that discrete clause.

20

But we say you have to look at the purpose of the deed

21

overall.

22
23
24

WHELAN JA:

For the purpose of putting a line through it and

saying you ignore it? What other purpose?

MR HAYES:

What it really says is you ignore it at your own

25

peril because clause 3 doesn't extinguish.

26

that the respondent can proceed to summary judgment - - -

27
28

WHELAN JA:

All it says is

Yes, but all they are agreeing to do is not to

proceed in clause 2.

29

MR HAYES:

30

WHELAN JA:

31

MR HAYES:

That's right.
Then 3 says, "But we will if you don't" - - Yes.

.MCA:MB 27/05/14
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87

MR HAYES

WHELAN JA:

MR HAYES:

And they do.

Then Judge Cosgrave decides the case.

But they're not saying, "We're not going to receive

the money," because that obligation still survives.

haven't brought the entire deed to an end.

simply said, "We are going to proceed with our matter on

1 March."

SANTAMARIA JA:

8
9
10
11

They have just

1 March you have just referred to.

When you go

to the recitals (indistinct) background.

MR HAYES:

Yes, Your Honour.

SANTAMARIA JA:

A good place to find the background is under

the heading, "Background".

12

MR HAYES:

13

SANTAMARIA JA:

Yes, Your Honour.

It sort of tells the story that we are all very

14

familiar with.

15

summons is listed for hearing on 1 March.

16

MR HAYES:

17

SANTAMARIA JA:

18

They

Then you get to recital A, and it is

Yes.
I know we all know that, but that's stipulated

as one of the most significant facts.

19

MR HAYES:

Yes.

20

SANTAMARIA JA:

It's the background to this agreement.

So it

21

seems to me that you have to tell us how 2.1(a) is

22

peripheral when it is the only date prior to 1 March which

23

is referred to in the deed?

24

MR HAYES:

To this extent, Your Honour, and I can't really take

25

it any further than this, but we say the respondent was

26

essentially seeking to have its cake and eat it too.

27

it's saying, "We're seeking to, notwithstanding the fact

28

that we are putting the summons back on and we are

29

proceeding on 1 March or any other date after that" - it

30

leaves open the door, as is seen in the email from

31

Mr Pringle that I've just taken Your Honours to, reserving

.MCA:MB 27/05/14
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88

So

MR HAYES

the rights under the deed for performance of that

obligation.

So it's almost like having an each way bet.

"Well, look, we're going to steam ahead.

to give up the commercial arrangement or the commercial

object of the transaction which was the payment of money

in exchange for bringing everything to an end.

going to now start steaming ahead." The difficulty would

be obviously if they succeeded in getting judgment on

10

1 March my case would be much difficult.

11

happen.

12

We're not going

We're

But that didn't

So the sanction imposed for any breach under

13

clause 3 didn't become operative prior to the tender of

14

the money which is the ultimate object under clause

15

2.1(a).

16

Your Honours.

17

That's about as far as I can take it,

Your Honours will see I have developed that

18

proposition in paragraph 20 and also in paragraphs 29 to

19

35 of the supplementary submissions.

20

summary judgment was proceeded with, so long as it didn't

21

actually result in bringing the proceedings to an end,

22

because the deed wasn't specifically terminated, and

23

Mr Pringle was certainly mindful of that on 26 February,

24

then it remained capable of performance up until that time

25

when the hatchet finally fell, because that ultimately,

26

Your Honours, was the consequence brought about by clause

27

3, which just didn't happen.

28

We say that while

So had the hatchet had fallen on 1 March I would

29

be in an impossible position.

30

didn't and because the deed doesn't have an express

31

provision for termination nor was there any termination

.MCA:MB 27/05/14
Sgargetta

89

But it didn't.

Because it

MR HAYES

for any breach or repudiation on the part of the appellant

of clause 2.1(a), the obligation under 2.1(b) continued

and indeed was satisfied while it continued prior to any

hatchet falling, if I can put it in those terms.

Your Honours please.

WHELAN JA:

MR HAYES:

WHELAN JA:

9
10
11

Are you coming to the end of this point?

Yes, Your Honours.
There was reference in your submissions to waiver

and estoppel.
MR HAYES:

That might have been in previous counsel's notice of

appeal, Your Honour.

12

WHELAN JA:

13

MR HAYES:

14

WHELAN JA:

15

If

Was it? Okay.

Yes.
You don't want to say anything about that? I was

going to ask whether it had been pleaded or run below.

16

MR HAYES:

17

WHELAN JA:

No, I'm not running that point.

So it's purely a matter of construction, then, the

18

issue of how one is to analyse the position which arose

19

given that there wasn't compliance with 2.1(a) but there

20

was demonstrated capacity to comply with 2.1(b) by

21

20 March.

22

MR HAYES:

A little more than demonstrated capacity.

23

WHELAN JA:

24

MR HAYES:

25

WHELAN JA:

26

MR HAYES:

27

SANTAMARIA JA:

And willingness and an attempt to do it.

An act equal to performance.
Yes, that's right.
So it's better.
You also said to us that apart from your oral

28

submissions and your supplementary submissions we are

29

meant to take into account Mr Sgargetta's submissions of

30

2 May 2014.

31

at all?
.MCA:MB 27/05/14
Sgargetta

Are you able to give us any help about that

90

MR HAYES

MR HAYES:

No, I'm not, Your Honour.

SANTAMARIA JA:

What on earth does that mean? You are

presenting them to the court (indistinct).

anything that you wish to draw our attention to, tell us

how it's constituted, what it refers to?

MR HAYES:

No, Your Honour.

I'm sorry.

Is there

Your Honour will

recall that the balance of the points other than the

tender point have not been abandoned, they are there, but

I don't propose to address them.

I don't have

10

instructions to abandon those points, but there is very

11

little I can do to assist Your Honours by making any

12

meaningful submission as to those other points.

13

unhelpful as that may be, hopefully that may be of some

14

help to Your Honour.

15

WHELAN JA:

16

MR HAYES:

As

Okay.
In response to Justice Whelan's question in terms of

17

dealing with the issue so far as it may be a construction

18

point, we say to a degree, yes, while we wouldn't be so

19

bold to run a waiver or estoppel point, we do rely upon

20

this as - it's not just a construction point but also

21

looking at the parties in the sense that if one looks at

22

the email of Mr Pringle of 26 February it suggests that

23

the deed is still alive.

24

That's page 152.

Although if Your Honour goes over to 164 of that

25

bundle, and this is an email from Mr Pringle to the

26

appellant on 27 February 2013 at 6.49 pm, and I imagine

27

Mr Hay will probably wish to rely upon this document - - -

28

WHELAN JA:

29

MR HAYES:

Which page was it again, sorry?

164, Your Honour.

It says, "In circumstances where

30

you have not complied with the terms of the deed of

31

settlement, we are instructed our client will proceed with

.MCA:MB 27/05/14
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91

MR HAYES

a summons for summary judgment which is listed for hearing

on Friday, 1 March 2013."

Your Honour, but it has to be read.

to Mr Pringle's earlier email, Your Honours should see

this one for the sake of completeness.

as benign as it might seem, tucked away in that last line

of the email, it's not without some force that he's

reserved his rights under the deed, which seems to be

consistent with - while that's not going to aid

Not helpful to my case,

If I'm going to refer

We say of course,

10

Your Honours in the construction of the agreement,

11

certainly it's consistent with the fact that there's been

12

no waiver or there's been no - it's consistent with

13

there's been no act after 25 February which would suggest

14

the deed has been brought to an end, and it would be

15

consistent with the parties' intentions that summary

16

judgment didn't bring the deed to an end because he's

17

still reserving his rights under it, presumably which

18

would also include the right to be repaid or to be paid

19

the amount of $299,000.

20

SANTAMARIA JA:

21

MR HAYES:

22

SANTAMARIA JA:

Can I just check one last thing, Mr Hayes?

Yes, Your Honour.

I'm still troubled by this submission of 2 May.

23

I notice that large parts of it canvas the ground that you

24

have been going over this morning and this afternoon.

25

I propose to rely upon what you have said.

26

MR HAYES:

Yes.

27

SANTAMARIA JA:

And if there is anything in this document which

28

deals with a matter that you have abandoned or deals with

29

a matter that you have dealt with that deals with it

30

inconsistently, I don't propose to refer to this document,

31

I intend to rely entirely upon what you have said.

.MCA:MB 27/05/14
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92

MR HAYES

MR HAYES:

I'm content with that course, Your Honour.

SANTAMARIA JA:

MR HAYES:

Thank you.

To the extent that that document deals with the

tender point, I would invite the court to rely upon how

the point has been put in court and in the supplementary

submissions.

7
8
9
10
11
12

SANTAMARIA JA:

It's not only the tender point.

It's also what

you had to say about Meehan v Jones.

MR HAYES:

Of course, yes.

SANTAMARIA JA:

Also what you had to say about His Honour's

findings about honesty, reasonableness being unimpeached.

MR HAYES:

Of course, yes.

If Your Honours are then with me on

13

the fact the deed is still on foot, if Your Honours are

14

against the appellant as to whether the deed is still on

15

foot, the construction issue and then also looking at what

16

happened after 25 February, if Your Honours are against me

17

that's the end of the road for the appellant.

18

Your Honours are with us on that point, then we would

19

invite Your Honours to consider the state of the evidence.

20

But if

Your Honours, I won't address those matters on

21

the existing evidence or indeed the new evidence.

22

were thoroughly canvassed and I think Your Honours have a

23

full appreciation of where the point finishes rather than

24

- there's no real need now to see how we get there.

25

are there as to where the point ultimately finishes.

26

real issue is what Your Honours are able to do with that

27

point, which turns on the tender point, indeed as to

28

whether the deed is still alive.

29

They

We
The

We then say that the error is apparent, and those

30

submissions, if Your Honours are with us on the deed being

31

open to performance, and we say the evidence of tender is

.MCA:MB 27/05/14
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93

MR HAYES

now sufficient to overcome His Honour's reasoning at 109

of his reasons that there was no tender.

Your Honours find, based on Mr Segal and also Mr Cole's

evidence, that there was a tender on the day in question,

on 20 March, then we say that that brings about a defence

of tender for the accord of conditional satisfaction and

the consequences of that are that brings an end to the

proceedings and ultimately the appellant would be entitled

to the appropriate declaratory relief.

10

So if

Your Honours will see at 36 to 42 we deal with

11

His Honour's path of reasoning and how he fell into error.

12

But, unless Your Honours specifically wish me to address

13

the court, as to that we say the new evidence quite

14

powerfully overcomes His Honour's conclusion at 109 of

15

His Honour's reasons where His Honour found that there was

16

no formal tender by Sgargetta of a cheque for 299,000 to

17

the NAB, nor did the NAB reject any such tender.

18

So we say Your Honours don't really need to go

19

through all of that reasoning.

20

His Honour got to that point.

21

that it's in, plainly suggests that His Honour is in

22

error, leaving aside how His Honour fell into error.

23

Your Honours probably don't need to dig that deep.

24

new evidence itself simply would overcome that error of

25

His Honour.

26

SANTAMARIA JA:

supplementary submissions.

28

of appeal.

29

your submissions?

31

MR HAYES:

But the new evidence, now

The

I'm not sufficiently familiar now with your

27

30

It's apparent as to how

I'm just looking at the notice

The orders sought, have you (indistinct) in

I'm afraid I haven't, Your Honour.

Counsel

preceding me very helpfully, he was assisting

.MCA:MB 27/05/14
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94

MR HAYES

Mr Sgargetta, he obviously devoted some time, previous

counsel, to getting the notice of appeal.

successful we are content to rely upon - on the tender

point we say that the appropriate orders should be 3(a).

WHELAN JA:

MR HAYES:

If we are

This is from the notice of appeal?

Yes, Your Honour.

And 3(b), although the difficulty

with 3(b), Your Honours, is that it doesn't deal with the

tender point, which really should have formed part of

3(b).

It's something that really should have been pleaded

10

in the amended defence and counterclaim, and it wasn't.

11

If Your Honours were mindful or inclined to grant the

12

relief, then obviously we would have to seek leave to

13

amend because it should have been properly raised within

14

the framework of the amended defence and counterclaim,

15

notwithstanding how it was that it came before the court

16

and how the judge dealt with it, or the primary judge

17

dealt with it.

18

pressed, and it should have been pressed in the defence

19

and counterclaim.

20
21
22

SANTAMARIA JA:

But it's really a contention that's been

I have the counterclaim in front of me and it

doesn't help me at all as to what it is that you want.

MR HAYES:

We would seek an order under paragraph (h), which

23

says that upon payment, effectively an order which goes

24

to - an order in the form of specific performance, yes.

25

WHELAN JA:

26

MR HAYES:

27

WHELAN JA:

28

MR HAYES:

So you want (a) and (h).

(a) and (h), yes.
Okay.
We don't seek an order for costs on the appeal if we

29

are successful.

30

seek, to the extent that there have been costs incurred by

31

the appellant himself, the costs that he has incurred in

.MCA:MB 27/05/14
Sgargetta

Your Honours will see that.

95

But we would

MR HAYES

the proceedings as a consequence which is consistent with

what the High Court said in Young's case, Your Honour.

I read from it earlier this morning.

the passage I read from Young.

5
6

WHELAN JA:

MR HAYES:

WHELAN JA:

MR HAYES:

11
12

You can probably best deal with costs once the

outcome is known.

10

It was the end of

Yes.
You are jumping the gun.
But we would seek 3(a) and (h).

WHELAN JA:

Okay, 3(a) and (h) is the relief you want.

All

right.
MR HAYES:

And if Your Honours require us to formalise the

13

matter of tender, notwithstanding the manner in which it

14

arose, perhaps we be directed to make some appropriate

15

amendment to the pleading accordingly, but only if

16

Your Honours required it.

17

It's a matter which should have been properly raised in

18

the defence and counterclaim.

19

WHELAN JA:

20

MR HAYES:

21

We would be prepared to do it.

Okay.
Subject to any further questions from Your Honours,

they are the submissions for the appellant.

22

WHELAN JA:

Thanks, Mr Hayes.

23

MR HAY:

24

SANTAMARIA JA:

Yes, Mr Hay.

Thank you, Your Honour.

You did make the concession this morning,

25

didn't you, about tender to His Honour's questions of

26

2.1(a) (indistinct) the terms of it had been complied

27

with, (indistinct) to Cole would be performance of the

28

obligation under 2.1(b)?

29

MR HAY:

I thought Your Honour might be reminding me of that.

30

I thought about that over lunch.

31

position, but there would be an additional gloss.

.MCA:MB 27/05/14
Sgargetta

96

I think that is the

There
MR HAY

was a further obligation in 2.1(b); there was a withdrawal

of the defence and counterclaim.

additional thing to do which clearly was not done.

So there was an

Your Honours, could I start with the extract from

the Court Connect material, which is the first of the two

documents that I handed up this morning which has aspects

of the procedural history set out in this document.

Connect, in case Your Honours aren't familiar with it, is

an on-line portal that you can log on to and you will see

Court

10

all the orders and procedural steps taken listed on the

11

website.

12

WHELAN JA:

13

MR HAY:

14

WHELAN JA:

15

MR HAY:

16
17

That's this?

That's right, Your Honour, yes.

Did you hand that up?

It was emailed this morning.

documents.
WHELAN JA:

There were two

So there was P19 - - -

We had sort of done a similar thing by going

18

through the County Court file to try to work out what had

19

happened.

20

compile our own chronology.

21

MR HAY:

We have the County Court file.

We tried to

What I have here, Your Honours, is you will see in the

22

bottom right-hand corner there's reference to page 1 of

23

22.

24

extracts from the whole document that's printed here.

25

I just wanted to point out some of the aspects of the

26

procedural history which give context to the deed.

27

I haven't included all of them there.

I have taken

The first page is just to show that it's from

28

this proceeding.

The second page, which is 5 of 22,

29

bottom right-hand corner, you will see there an order made

30

on 28 September 2012.

31

page.

That order is actually on the next

In particular, Your Honours will see order 2, which

.MCA:MB 27/05/14
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97

MR HAY

is the proceeding be set down for trial on 20 March 2013.

So that happens, as is common in these cases; there's a

trial date given quite early in the piece.

4
5
6

SANTAMARIA JA:

In fact he set aside a default judgment first

of all, didn't he?

MR HAY:

That's right, Your Honour.

Yes.

So there's default

judgment set aside.

But when it is being litigated inter

partes this is the first order of a trial date.

page is page 7.

You will just see a filing entry.

10

is listed again for 20 March.

11

court listing.

12

The next
Trial

I think that's an internal

The next page is 11 of 22.

The reason I'm

13

drawing Your Honour's attention to this is the date of the

14

order is 24 January 2013.

15

SANTAMARIA JA:

16

MR HAY:

Send the parties to mediation.

That's right.

And in particular the plaintiff's

17

summary judgment application is fixed at that time for

18

1 March.

19

of 22.

Your Honours will then see the next page of 14

This is important because - - -

20

SANTAMARIA JA:

21

MR HAY:

What's the date of it?

That's 8 March, Your Honour, which is obviously one

22

week after the 1st.

23

difficulty with the matter going ahead on the 1st.

24

have been the unavailability of a judge or something like

25

that.

26

the summary judgment was the 8th.

27

to this effect given by Mr Segal, but I think it's

28

Mr Sgargetta's father appears at that time.

29

As I'm instructed, there was some

It may

But, in any event, the first return, as it were, of

There's some evidence

I will take Your Honours to Mr Segal's evidence

30

in short compass, but there's an allegation there that the

31

deed is capable of performance and there is a submission

.MCA:MB 27/05/14
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98

MR HAY

made by Mr Segal to the effect that it is not.

present purposes it's important to note that the summary

judgment application is adjourned to the trial of the

proceeding, which is also on 20 March.

5
6
7

We then get to page 16 of 22.

But for

That's an order of

20 March 2013.
SANTAMARIA JA:

On 8 March the first order was "leave to

Mr Dennis Sgargetta, the father of the defendant, to

represent his son hearing the application today"?

10
11

MR HAY:

Yes.

You also see there Mr Cole appeared on that

first occasion as well.

12

SANTAMARIA JA:

13

MR HAY:

14

Not on 8 March.

It says, "It's noted that Mr Daniel Cole of counsel

appeared to assist the court".

15

SANTAMARIA JA:

16

MR HAY:

You are quite right.

I think what happened in substance, Your Honour, is

17

that Mr Cole turned up and he needed time probably to get

18

across the material, and then that explains the

19

preparation of that amended defence and counterclaim which

20

was there for the court on the 20th.

21

The next page, Your Honours, of note is 16 of 22,

22

and this is the orders made on the main day in question

23

before Your Honours today, which is 20 March.

24

see order 1 is, "Leave to the defendant to defend the

25

proceeding and to file an amended defence and counterclaim

26

substantially in the form of the draft document prepared

27

by Mr Shirrefs and Mr Cole of counsel."

You will

28

Order 2, this is the first time of course that

29

the trial date is vacated, and then it's put off until

30

26 August.

Another thing to note is that the summons was

31

dismissed.

Paragraph 13, "The plaintiff's costs of its

.MCA:MB 27/05/14
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99

MR HAY

summons filed 14 December and the hearings of 1, 8 and

20 March are costs in the cause.

summons is otherwise dismissed." That's the summary

judgment.

The plaintiff's said

Then just to make good the point about when the

amended counterclaim was filed, you will see at the bottom

of the next page, 17 of 22, about point 8 on the page,

"Amended counterclaim filed," and the date is 22 March.

The next document I'd like to take Your Honours

10

to is the deed itself.

11

one I'm referring to is attached to Mr Pringle's

12

affidavit.

13

SANTAMARIA JA:

14

MR HAY:

There are various places, but the

It's the same.

Yes, it's the same thing, Your Honour.

I would just

15

like to point out a few aspects of this deed.

16

is you will see there it's February 2013.

17

has already noted, the summary judgment is in prospect and

18

at that stage has not been adjourned.

19

H, it's listed for 1 March.

20

The first

As the court

As noted in recital

The next clause that I draw attention to,

21

Your Honours, is clause 2.

I have already made the point

22

to qualify the admission, as it were, I made this morning

23

about the additional aspect that Mr Sgargetta had to do.

24

But importantly for present purposes, in my submission,

25

clause 3 is entirely clear, especially when read in the

26

light of the mutual releases that are given.

27

for this reason.

I say that

28

Clause 3, on any view, talks about being able to

29

immediately proceed with the hearing of the summons, the

30

summons being the summary judgment summons, and the

31

proceedings generally.
.MCA:MB 27/05/14
Sgargetta

Because of course at the time this

100

MR HAY

deed is drafted the bank doesn't know whether or not it's

going to succeed on that summons.

more generally it can proceed with the proceeding.

But if it does then

Then you look at the mutual releases.

4.1 is the

release given by Mr Sgargetta after he has paid the 299 in

clause 2.1 from all of the things that you commonly see

there: the home loan proceeding, the mortgage, the

counterclaim et cetera.

Importantly for present purposes 4.2 is a

10

conditional release given by the bank which requires

11

Mr Sgargetta's compliance with the deed.

12

I say that that is important and gives meaning and content

13

to clause 3 and in turn clause 2 is that once there was no

14

longer compliance or as soon as there was a failure to

15

comply the fetter on the bank's ordinary rights is

16

removed.

17

as it was going to, for the much greater sum.

18

The reason that

Then once the fetter is removed it can proceed,

Without troubling Your Honours to go to the

19

reasons, but the sum here of 299 was a compromised sum, it

20

was a very significant compromised sum, on the debt then

21

outstanding.

22

One was there was this economic cost issue, which was of

23

about $30,000, and that was the original source of the

24

complaint between Mr Sgargetta and the bank.

25

SANTAMARIA JA:

26

MR HAY:

The reason for that is at least twofold.

Mr Colella didn't take it into account.

That's so.

That's so.

And then of course there was

27

the FOS dispute, the Financial Ombudsman Service dispute,

28

that went between the parties.

29

effect that when that happens the bank puts enforcement

30

proceedings on hold, as actually it's required to do under

31

the terms of the Financial Ombudsman Service.

.MCA:MB 27/05/14
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101

There was evidence to the

But, in any
MR HAY

event, that allowed the interest to run for a significant

period of time.

SANTAMARIA JA:

Is that right, Mr Hay? Once complaint is made

to FOS there is some protocol that says enforcement

proceedings must be suspended?

6
7

MR HAY:

Yes.

What happens, Your Honour - I have done a lot of

this sort of work.

SANTAMARIA JA:

MR HAY:

Where does it appear?

It's in what they call the terms of reference.

The

10

terms of reference, in order to get an AFSL, you need to

11

sign up to one of these.

12

one of these dispute resolution services.

13

terms.

14

called Mickovski v Financial Ombudsman Service.

15

send up the citation.

16

As a bank you need to sign up to

There is a decision of this court.

They have these

I think it's
I can

What happens is when someone enters into a

17

dispute, like a borrower in that case, you get a

18

tripartite agreement that springs out between FOS as the

19

arbiter, the lender and the disputant, often the borrower.

20

Part of that means that the terms of reference dictate how

21

it's to happen, and it's got things like natural justice

22

and less informality in it and things like that.

23

But one of the things that's critically there is

24

that you can only take steps in terms of enforcement

25

proceedings that are at a bare minimum to protect your

26

legal rights.

27

limitation period was about to expire and you are the bank

28

you are entitled to start the proceeding in order to stop

29

time running, but you can take no further steps beyond

30

that to protect your rights.

31

SANTAMARIA JA:

The best example that one can give is if a

And it doesn't suspend the (indistinct).

.MCA:MB 27/05/14
Sgargetta

102

MR HAY

MR HAY:

It does not.

SANTAMARIA JA:

MR HAY:

So interest just keeps on piling up.

That's so.

At the end of that time FOS can make a

recommendation.

disputant.

borrower.

up, Your Honour.

8
9

That can be accepted or rejected by a

It's binding on the bank, but not on the

And so on it goes.

I will send that reference

So the reason I pointed that out in this deed is

that once that fetter was gone and there was no compliance

10

and they were able to proceed forthwith there was no

11

obligation to accept the 299.

12

proposition that my learned friend advances, he said

13

I think something along the lines of, if the summons for

14

summary judgment had been successful, his position would

15

be impossible because judgment would have been entered.

16

Just to test the

That rather points up the difficulty, in my

17

respectful submission, with his construction of the point,

18

because it will be recalled that the trial was actually

19

listed for 1 March and, depending on what happened there,

20

it could have gone on directly.

21

judgment application it could have been the trial of the

22

action.

23

out quite quickly, and it could have been that before

24

15 April there was a judgment.

25

Instead of the summary

Sometimes judges are able to turn those decisions

That obviously points up on the appellant's

26

argument they would still be at liberty and entitled to

27

tender the 299, even though the judgment had been entered

28

by the court merging all of the causes of action.

29

properly construe the deed, in my respectful submission,

30

one has to note that clause 2 is related to clause 3 is

31

related to clause 4 and those in operation mean that the

.MCA:MB 27/05/14
Sgargetta

103

So to

MR HAY

1
2

bank was entitled to move as it did.

SANTAMARIA JA:

Just putting that again, what you are saying is

that as at 5 February not only was the summons listed for

hearing on 1 March but the trial was also listed for

hearing on 1 March?

MR HAY:

SANTAMARIA JA:

MR HAY:

9
10

No, the trial was listed on 20 March, Your Honour.

20 March?

That's right.

Then something happened on the 1st.

went over to the 8th.

It

Then on the 8th it was pushed to

the 20th, the summons.

11

SANTAMARIA JA:

12

MR HAY:

13

SANTAMARIA JA:

I'm just talking about the interpretation - - -

Yes, yes.
How does the fact that the trial was listed for

14

20 March a relevant background fact to the construction of

15

this deed?

16

MR HAY:

Two answers to that, Your Honour.

The first, of most

17

significance, is the timing of the summons.

18

probably of less import to the construction.

19

that I'm referring to the trial is to effectively suggest

20

that the interpretation urged on Your Honours by my

21

learned friends leads to an absurd result in that if the

22

trial had occurred and had gone directly to judgment, or

23

if the summons had occurred and gone directly to judgment,

24

it's obvious and clear, in my respectful submission, that

25

Mr Sgargetta wouldn't have been at liberty just to pay the

26

299.

27

he misses the obligation in 2.1.

28

be hanging over there, even though - - -

The reason

That's to say he loses the opportunity to do so when

29

SANTAMARIA JA:

30

MR HAY:

31

The trial is

Otherwise it would just

2.1(a).

2.1(a), sorry, Your Honour; quite right.

Otherwise

this is at any time, even after the close of evidence in

.MCA:MB 27/05/14
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104

MR HAY

the trial, he could have just tendered the 299 and then on

Mr Hayes' construction we would have been obliged to take

it.

in which this deed was executed.

5
6
7
8
9

It just doesn't make any sense in the circumstances

SANTAMARIA JA:

trial could have been up and over by the end of March.

MR HAY:

That's the point I'm trying to make; yes, Your Honour.

The deed and/or the summary judgment application.

WHELAN JA:

10

MR HAY:

11

WHELAN JA:

12
13

One of those circumstances is that the deed at

So the summons is most significant.

Yes, Your Honour.

Because it was returnable very shortly after

25 February, namely 1 March.

MR HAY:

Yes.

There's another point about this, Your Honour,

14

and another reason why that summons date probably assumes

15

more prominence, and that's because the money itself

16

wasn't going to come in on this deed until April, but they

17

were going to lose their hearing date for the summons on

18

1 March.

19
20

SANTAMARIA JA:

So what would have happened? This is 5 February

that this is executed.

21

MR HAY:

22

SANTAMARIA JA:

23

They would have had to have adjourned it.

Yes.
Let's say he had complied with 2.1(a) and he

had given an adequate letter to the bank by 25 February.

24

MR HAY:

Yes.

25

SANTAMARIA JA:

And then the trial in fact had not been

26

adjourned and judgment had been delivered before 15 April

27

for the full amount of the claim.

28

of 2.1(b)?

29

MR HAY:

What's the significance

I don't think that could have occurred.

The bank

30

would have been in breach of its obligations.

31

looked at the conditional letter of offer and acting

.MCA:MB 27/05/14
Sgargetta

105

If it had

MR HAY

honestly and reasonably and such like it had formed a view

it was a good offer, it would not have been at liberty to

proceed with its summons or the trial.

to do all things necessary to delay it until after some

time.

WHELAN JA:

MR HAY:

WHELAN JA:

It would have had

2.1 says that in the beginning about the summons.

Yes.
"NAB will agree to adjourn the hearing of its

summons provided the following things are done." I would

10

have thought it's at least agreeing to adjourn the summons

11

for so long as those conditions are capable of being met.

12

MR HAY:

Yes.

13

WHELAN JA:

I suppose it doesn't expressly refer to the

14

proceeding, but the summons was the next thing that had to

15

be dealt with.

16

MR HAY:

That's right.

One would have thought it would have

17

been encompassed in the ordinary obligations to give the

18

benefit of the deed to the other party that arises in

19

these sorts of contracts.

20

adjourning the trial until after that time it would not

21

have been difficult, in my respectful submission, for

22

Mr Sgargetta to go off and force us to do that.

23

If we had left out reference to

That same point, Your Honours, also goes to

24

support the proposition that 2.1(a) is not a non-core

25

promise.

26

really.

27

letter, the payment and the withdrawal of the defence and

28

counterclaim.

29

abided.

30

but in doing so he's put to the periphery what was also,

31

viewed objectively, a critical thing from the bank's

There are not many obligations in this deed,

Summed up, on Mr Sgargetta they are probably the

Each was of significance and each had to be

Mr Hayes has tried to focus on the main payment,

.MCA:MB 27/05/14
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106

MR HAY

perspective, and that was it wanted certain and

significant comfort to its satisfaction that if it

adjourned the summons it was doing so for good reason.

That good reason is there was a really good prospect of

the money coming in.

Can I move just to address one aspect of

Mr Hayes's submission about whether or not repudiation

occurred or whether or not it was accepted or if there was

a breach it wasn't an accepted repudiation on the bank's

10

part.

11

when 2.1(a) was not abided, that freed the bank from any

12

obligation imposed by this deed on it.

13

breach.

14

at that time were spent.

15

circumstance where - this is my primary submission - the

16

bank had to say, "You evinced an intention no longer to be

17

bound.

18

Properly construed, in my submission, what occurred

It wasn't a

What was happening here is that its obligations

We accept.

Properly construed, it wasn't a

We are pushing forward."

The reason I say that is that, as Justice Whelan

19

has observed, the consequence was specified already in

20

clause 3.

21

Putting it another way, what the bank said to Mr Sgargetta

22

was, "We will forbear for so long as, and as soon as you

23

don't we will no longer forbear."

In that case the consideration had been given.

24

I won't take Your Honours to it all, but the bank

25

does rely on all of the communications on this front, all

26

of the communications between Mr Pringle and Mr Sgargetta

27

to the effect that we don't think, to use Your Honour

28

Justice Santamaria's nomenclature, Red Rock 1, Red Rock 2

29

or ABNZI or whatever that third one was, we don't think

30

they comply and we are pushing on.

31

SANTAMARIA JA:

I had the impression that Mr Hayes accepted

.MCA:MB 27/05/14
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107

MR HAY

1
2

that he wasn't impeaching any of that.

MR HAY:

He's not impeaching any of that.

The main point in

making this part of my submission, Your Honour, is just to

deal with the reservation of rights under the deed in that

first email; I think it's 26 February.

that does not amount to keeping the deed enlivened.

it amounts to is a clear expression of pressing forward

with the summons, but a preparedness to consider further

proposals.

10

SANTAMARIA JA:

In my submission,

(Indistinct) every time a solicitor said, "We

11

reserve all our rights," there was an explosive

12

consequence.

13

MR HAY:

What

Yes, and with the consequence that a deed which is

14

expressed to expire, as it were, is somehow enlivened or

15

continued.

16

fairly pointed out, on page 164 of the court book, which

17

is that correspondence batch, there is a clear and direct

18

statement that the terms of the settlement, they regard

19

them as breached and they are going to proceed for summary

20

judgment, which is listed on 1 March.

21

happens on 27 February 2013, well before 20 March, where

22

this alleged tender occurred.

23

SANTAMARIA JA:

But, in any event, as my friend has quite

Critically, that

Is that that paragraph, "In circumstances where

24

you have not complied with the terms of the deed of

25

settlement, we are instructed our client will proceed with

26

a summons for summary judgment which is listed for hearing

27

on Friday, 1 March 2013."

28

MR HAY:

Yes, that's so, Your Honour.

Unless there are any

29

particular questions about the construction of the deed,

30

I would seek just to rely on what I have said thus far.

31

There is this next question about if Your Honours

.MCA:MB 27/05/14
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108

MR HAY

are against me on the construction, that is if the deed

survived, was still on foot by 20 March, it would be then

my obligation to grapple with what occurred on 20 March.

To do that I need to briefly go to the evidence of the

respondent that's been filed, and that's of course the

Pringle affidavit, the Segal affidavit and the Minassian

affidavit, all of 26 May.

8
9

Critically we can probably deal with it in terms

of direct exchanges between the parties, it's probably

10

mainly Mr Segal's affidavit.

11

Your Honours, paragraph 7 is the first one I'd like to

12

take Your Honours to.

13

WHELAN JA:

14

MR HAY:

15

WHELAN JA:

16

MR HAY:

When we get there,

Just give me a second because I haven't read this.

Certainly.
You can just sit down for a minute.

Okay.

Obviously Your Honours have now had an opportunity to

17

read it, but if I could just point out a few aspects on

18

which I place particular reliance.

19

7.

20

8 March appearance at which the appellant 's father

21

appeared on his behalf.

22

the deed had not been complied with and could no longer be

23

complied with by payment.

24

any need to accept a repudiation, as Mr Hayes seems to

25

put, by conduct we certainly accepted that it was no

26

longer on foot and we were seeking to enforce our ordinary

27

rights unfettered by the release.

28

The first is paragraph

You will see there that's the reference I made to the

There's a submission there that

So to the extent that there was

Then there's a conversation between Mr Segal and

29

Ms Minassian of Gadens requesting that an offer be put on

30

a without prejudice basis.

31

at paragraph 9.
.MCA:MB 27/05/14
Sgargetta

Then the offer is in fact put

The exchange is set out there.

109

That's
MR HAY

effectively a good insight into the reason why the 299 was

no longer acceptable to the bank, not that that strictly

matters.

or it was not.

bank was no longer willing to accept the 299.

to be remembered in circumstances where the trial itself

was listed at that stage for the 20th, with all the

preparation and costs and the like that that would have

given rise to.

10

It was either contractually obliged to accept it

But it gives some indication as to why the
That's also

Then there's a further exchange, and at paragraph

11

11 Mr Shirrefs makes contact with Mr Segal.

12

offer of 316,000 is met with a counteroffer of 305,000.

13

Just pausing there, Your Honours, that again is rather

14

indicative on an objective basis that the parties are both

15

treating - not just the bank but both parties are treating

16

- the deed as no longer in operation.

17

Then the

Had this case been pleaded below and again the

18

issues properly joined by the reply filed by the

19

respondent, it may be that the bank would have contended

20

to the extent that the deed was otherwise in operation by

21

that stage it had been abandoned in that both parties are

22

mutually agreeing that that is no longer the state of

23

play, it is no longer in operation and they are now

24

exchanging offers in order to resolve the proceeding

25

generally.

26

We then get to paragraph 13, where the 316 amount

27

I think is restated.

28

most important for present purposes.

29

to be at the top of page 5 of that affidavit, Mr Shirrefs

30

says, "I'm instructed to make a without prejudice offer.

31

I have a bank cheque here for 299.

.MCA:MB 27/05/14
Sgargetta

Then we get to the 20th, which is

110

There it's expressed

It is offered in full
MR HAY

and final satisfaction of the matter.

some instructions, but I have the cheque here today as you

can see." "Thanks. I will get some instructions."

I'll let you get

Again, critically, it is not on that evidence

proffered as payment of an extant obligation; it's a new

deal which is one of two options that we were discussing

before this evidence was admitted.

contends the true position was.

new without prejudice offer and therefore, even if it was

That's how the bank

What we have here is a

10

otherwise capable of acceptance, not a tendering, as the

11

appellant currently contends.

12

It's rejected.

The matter is stood down once

13

again.

14

summary judgment application, and then that results in the

15

orders that I took Your Honours to just before moving the

16

trial date to August.

17

There's an instruction given not to pursue the

Just one final point on this affidavit which

18

gives some explanation as to a way in which the

19

cross-examination was conducted by Mr Segal below.

20

Paragraph 19 talks about his belief and current

21

recollection of all of the offers that I've just taken

22

Your Honours to being on a without prejudice as between

23

counsel basis.

24

and perhaps imprecision at times of the use of the word

25

"tender" gave rise to the difficulty and may have been the

26

source of the questions put by Mr Segal when he said -

27

SANTAMARIA JA:

I think that coupled with the confusion

What he believes is the nature of their

28

(indistinct) doesn't matter too much.

29

objective observer would make of it.

30

MR HAY:

31

SANTAMARIA JA:

It's what an

Yes.
But I notice that this deponent hasn't been

.MCA:MB 27/05/14
Sgargetta

111

MR HAY

cross-examined and he frequently stipulates that he used

the words "without prejudice".

MR HAY:

He does.

Your Honour can have some comfort with that.

These recollections, as it were, are backed by the

instructions given to Mr Segal by the two solicitors at

Gadens, Mr Pringle and Ms Minassian, who depose, and I can

take Your Honour to if you like, asking Mr Segal - - -

SANTAMARIA JA:

MR HAY:

10
11

I've seen those.

Yes, saying, "Can you make a without prejudice offer

as between counsel."
SANTAMARIA JA:

What I understand to be the (indistinct) of

12

what you've been saying for the last 15 minutes is that

13

the way we should interpret what happened on 20 March was

14

this was not deed related; this was an entirely new

15

discourse.

16

MR HAY:

17

SANTAMARIA JA:

The premise of this new agreement was available to Sgargetta as

at the 20 March 2013 if payment of $299,000 was made to Nab.
See opening statement from Nab counsel.

Yes.

What did you then mean by your concession

18

before lunch that the tender of the cheque on 20 March,

19

had there been nothing else at issue, constituted

20

performance of the deed?

21

MR HAY:

Yes, I understand the reason for Your Honour's

22

question.

23

SANTAMARIA JA:

24
25

Again it may be - - I'm glad you understand the significance of the

question, but what's the answer?

MR HAY:

The answer is that if it were proffered on - as

26

I understand, that question was all about either 2.1(a)

27

didn't apply or it had been satisfied.

28

SANTAMARIA JA:

29

MR HAY:

Yes.

In those circumstances I suppose there wouldn't have

30

been any dispute, there wouldn't have been any - and

31

Your Honour asked me the question about whether or not it

.MCA:MB 27/05/14
Sgargetta

112

MR HAY

needed to be tendered to Gadens or via counsel.

SANTAMARIA JA:

MR HAY:

Yes.

Now, in those circumstances, had it been tendered

there would have been an obligation by operation of this

deed to accept it as good payment.

is in the true circumstances of this case we did have at

the very least a dispute about clause 2.1(a), and in those

circumstances there was continuing discord between the

parties.

10

SANTAMARIA JA:

I understand.

What we have, though,

What you are saying is if it is

11

that we find 2.1(a) has not been satisfied then when we

12

come to look at what happened on 20 March we are not to

13

understand that as performance of 2.1(b).

14

MR HAY:

That's right.

15

SANTAMARIA JA:

16

MR HAY:

That's my position.

I understand what you are saying.

Thank you, Your Honour.

I do rely on and I ask

17

Your Honours to read, when you get the opportunity, the

18

two other affidavits.

19

discourse, as it were, with one exception I think.

20

Ms Minassian says that she was there at court with

21

Mr Fieldhouse, who's an in-house solicitor at National

22

Australia Bank, when instructions were given to reject the

23

299, which I don't think is contentious.

24

core of it is Mr Segal's affidavit.

25

They don't directly go to

But the real

Your Honours, that's all I would seek to say -

26

subject to any further questions that the court may have -

27

about what I think my friend has called the tender point.

28

That leaves two high line subjects which probably don't

29

need a great deal of submission to be made about them.

30

The first is the balance of the submissions that Mr Hayes

31

has not abandoned but hasn't addressed.

.MCA:MB 27/05/14
Sgargetta

113

MR HAY

On that front I think it's sufficient for the

respondent to rely on its written submissions that were

filed partly in answer to the notice of appeal that was

drawn by counsel and partly in answer to the submissions

of 2 May, I think it is, from the appellant who provided

them in person.

SANTAMARIA JA:

MR HAY:

SANTAMARIA JA:
MR HAY:

11

SANTAMARIA JA:

12

MR HAY:

13

SANTAMARIA JA:

15

Whereabouts is - - -

Yes, it's behind tab 2, Your Honour, of appeal book 2.

10

14

I can do it very quickly by topic.

14 May?

I have it as 2 May, Your Honour.

These are Mr Sgargetta's submissions.

Yes.
And you respond to them in writing at tab 3 on

14 May.
MR HAY:

That's so, Your Honour.

Just to make sure

16

Your Honours have the right one and, if not, I will make

17

sure that Your Honours do, at page 4 of my submissions -

18

could I ask Your Honours to go there, please.

19

two subheadings, one above paragraph 11 and one above

20

paragraph 12.

21

some typographical errors, and I provided a marked-up

22

version.

23

Your Honour's leave, I might resend that.

24

WHELAN JA:

25

MR HAY:

There are

In the original version I sent I had made

Do Your Honours have - no, okay.

With

How should it read?

It should read, "Did the appellant comply with clause

26

2.1(b) of the deed - grounds?"

27

is grounds 6(b), 9(d) and 12, and nothing else should be

28

in that heading.

29

What it should then read

The next, just above paragraph 12, it should read

30

"did the", and then if I could ask Your Honours to scrub

31

out "appellant comply with" so it should then say, "Did

.MCA:MB 27/05/14
Sgargetta

114

MR HAY

the respondent breach clause 2.1(b) of the

deed - grounds?"

should say nothing else.

friend.

court with a further document.

respond.

made out because there's not sufficient detail in a couple

of places.

today given the approach that's been adopted by my learned

It should refer to 6(c) and 15, and it

I have provided a copy to my

But, with those revisions, I won't trouble the

Yes, that document does

In part it does respond to say it hasn't been

But of course that position hasn't changed

10

friend.

11

Your Honours would like me to address, I propose just to

12

rely on those written submissions.

13

WHELAN JA:

So, unless there are any specific topics that

You say a couple of times on different points that

14

there's nothing in the judgment or the evidence below

15

which could give rise to such a finding.

16

MR HAY:

Yes.

17

WHELAN JA:

Do I take that to mean you are saying this was an

18

issue not raised below by pleading, evidence, submission

19

or otherwise?

20

MR HAY:

On the tender point that's obviously changed.

These

21

submissions were done just in response to the appellant in

22

person's submissions without the benefit of either the

23

evidence that's been filed yesterday or Mr Hayes's

24

submissions.

25

WHELAN JA:

26

MR HAY:

27

WHELAN JA:

28

You say in 13 about estoppel.

Yes.
Is what you are saying there that this was not an

issue agitated below?

29

MR HAY:

It is, Your Honour.

30

WHELAN JA:

31

MR HAY:

It hasn't been agitated on appeal either.

Yes.

.MCA:MB 27/05/14
Sgargetta

115

MR HAY

WHELAN JA:

MR HAY:

I will just see where else you said it.

There is a reference to estoppel in the notice of

appeal but, yes, it hasn't been agitated beyond

identification.

WHELAN JA:

MR HAY:

I thought it was somewhere else as well.

I think I say it in respect of the issue about

His Honour's indirect shareholding in NAB.

the concession that's been made today, I don't expect that

that point is pressed either, about whether or not there

10
11
12
13

In light of

was apprehended bias SANTAMARIA JA:

There is no evidence about this.

assertion.
MR HAY:

It's

There is no evidence.

Yes, when the new appeal book came through there is a

14

reference, I think, to an exchange that occurred between

15

His Honour Judge Cosgrave and the appellant when the

16

decision was handed down, and I think there's a reference

17

there to His Honour saying, "My wife might own a few

18

hundred shares or so."

19

So I should make that plain.

20

extent necessary I make the submission that such a small

21

shareholding where the value of it would not be affected

22

by the result of this case couldn't give rise - - -

23
24
25

SANTAMARIA JA:

I didn't have that at the time.

But, in any event, to the

That was said, was it, when judgment was handed

down?
MR HAY:

Yes.

It's in the material I think that was an

26

affidavit sworn by the appellant for a stay.

27

come on before Your Honours sitting on a Friday

28

applications day.

29

"Well, it's too late raised," and I think he said

30

something like, "Well, if you need to put in a notice of

31

appeal" or something like that.

.MCA:MB 27/05/14
Sgargetta

It may have

As best I recall it, the judge said,

116

MR HAY

1
2

SANTAMARIA JA:

unconscionability? Something about unconscionable dealing.

MR HAY:

SANTAMARIA JA:

MR HAY:

SANTAMARIA JA:

MR HAY:

SANTAMARIA JA:

9
10

Can you remind me what were the particulars of

Yes.
I know what the authorities are.

Yes.
You quote Scully's case.

Yes.
I just wondered what the appellant is saying

was unconscionable.
MR HAY:

There's reference to it in the notice of appeal, but

11

no particulars.

12

defence and counterclaim.

13

MR HAYES:

14

MR HAY:

I'm just having a look at the amended

12(b).
12 (b).

My friend has assisted.

He admits receiving

15

the notice.

So this is the amended defence and

16

counterclaim at paragraph 12(b).

17

the notice alleged in paragraph 12 thereof and says

18

further, "If he was in default, he was in default since

19

December 2008 and the failure of the plaintiff to give

20

default notice pursuant to the UCCC is a failure to

21

mitigate its loss." I have addressed that point in the

22

written submissions.

He admitting receiving

23

And, "In the premises and due to his reliance on

24

the bank not giving him a default notice for three years

25

and four months, it should be estopped from now alleging

26

the defaults as to do so is unconscionable within the

27

meaning of the term of the TPA."

28

Just very briefly to answer that point,

29

Your Honours, if it's a legal right open to the bank it

30

could not be unconscionable, in my submission.

31

Then 27, I think that may lead on from 26, which

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117

MR HAY

starts, "In the premises, the time for performance of the

deed of settlement by the defendant has not passed.

defendant has not breached the deed of settlement and the

defendant remains ready, really to perform the deed of

settlement.

seeking to rely on strict compliance with clause 2.1(a) is

unconscionable within the meaning of the ACL." Again, if

it is a contractual right there can be no moral obloquy or

anything coming close to the requisite degree of moral

10
11

The

Alternatively, the conduct of NAB in now

opprobrium.
Your Honours, unless there's anything else on the

12

appellant's written submissions, that just leaves the

13

notice of contention that the respondent had propounded.

14

It's probably unnecessary in light of the concession today

15

about Meehan v Jones.

16

judgment the judge held that the bank had acted honestly,

17

whereas in that case there is reference to "honestly,

18

and/or honestly and reasonably".

19

To make sense of that, in the

The notice of contention was aimed at suggesting

20

that by reason of findings, were it necessary, this court

21

ought find that not only was there an honest apprehension

22

of the - sorry, let me start that again.

23

honest for the bank to reject as acceptable the various

24

purported loan applications, but it was also honest and

25

reasonable for the reasons that are set out in those three

26

portions of the judgment that Mr Hayes does not seek to

27

impugn, which was where the judge goes back to each of

28

those offers and finds what the bank thought was the

29

problem with each of them.

30
31

One final point on that.

Not only was it

There is reference to

breaches of the Credit Code which are probably still

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118

MR HAY

before the court in that peculiar way in that they are not

addressed today but still in the written material.

that point, in my respectful submission, it's clear now -

very clear - that a breach of a provision of the Credit

Code - and Your Honours will recall what was in issue in

the proceeding below was an alleged failure to give a

payout amount in writing when requested; there's some

findings about that.

not have arrested or interrupted the bank's entitlement to

10

On

Even if that were the case, it would

proceed on a default.

11

It's actually unlike a lot of the Credit Code

12

cases that you see where the allegation is that they have

13

breached either section 80 in the old code or section 88,

14

which are the default notice requirements.

15

what they sought to contend was, "Because you've breached

16

that, the notice is bad.

17

properly." Here we are even further removed from that

18

because the relevant breach is unrelated to the bank's

19

capacity to call up the debt.

20
21
22

SANTAMARIA JA:

In those cases

You haven't called up your debt

Is there some proposition you have there? Is

there some authority for that point?

MR HAY:

There is.

It's Monas v Perpetual.

It's both in the

23

judgment below, Your Honour, and I think it's referred to

24

in my written submissions.

25

SANTAMARIA JA:

26

MR HAY:

I know the case.

Certainly, Your Honour.

It just stands for the

27

proposition, Your Honour, in short compass that where a

28

consequence is specified, and in this one it's a penalty

29

unit, a strict liability offence and a penalty unit can be

30

imposed on the bank.

31

consequence.
.MCA:MB 27/05/14
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But that is the entirety of the

It doesn't otherwise invalidate an act taken

119

MR HAY

1
2
3

in purported breach of the code.

SANTAMARIA JA:

breach of the code.

MR HAY:

WHELAN JA:

SANTAMARIA JA:

WHELAN JA:

MR HAY:

(Indistinct) during the 1980s anything in

It validated everything.

Yes.
You used to lose your interest.
You lost your credit charges.

You lost your credit charges if you breached.

Yes.

There's a distinction now in consumer credit law

at least between regulated contracts and unregulated

10

contracts where if you don't precisely specify the amount

11

that's said to be in default the notice is bad because of

12

the obligation to specify; whereas if it is unregulated

13

you go back to the old cases like Bunbury which says, for

14

example, an overstatement in the amount does not

15

invalidate the demand.

16

SANTAMARIA JA:

17

MR HAY:

Is this an unregulated contract?

This is a regulated contract, Your Honour.

But there

18

is no point taken about the validity of a notice.

19

reason that we got into this discourse, Your Honour, is

20

just to say that the type of breach in issue here was

21

unrelated to the default notice or the calling up.

22

The

Now, in a proceeding below they sought to agitate

23

it as if it was capable of interrupting the possession

24

proceeding that was being propounded, and the judge, in my

25

respectful submission, rightly said that that was not so.

26

The only reason I'm raising it, Your Honour, is it's still

27

in the written submissions from the appellant.

28
29

Unless there are any questions, Your Honours,

those are the submissions from the respondent.

30

WHELAN JA:

31

MR HAYES:

Yes, Mr Hayes.
One very brief matter by way of reply.

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120

Your Honours
MR HAY

will recall my friend very carefully taking the court

through Mr Segal's affidavit, and in particular

characterising the discussions, if I can put it

(indistinct), between 25 February and 20 March as

discussions relating to some new arrangement or new

obligation.

We simply say this.

The respondent may well have

been mindful that - in other words, the parties weren't

ad idem.

They may well have been discussing some new

10

obligation, talking about the 299,000.

11

possible way of looking at it is the respondent thought it

12

was a new deal, a new settlement, but the appellant is

13

meanwhile insisting on making the payment which is due

14

under the deed, even though it isn't specifically said to

15

be such.

16

the parties are talking about 299,000.

17

But another

The evidence is open to some interpretation when

Consistent with that analysis is a scenario such

18

as this.

19

insisting on performing that term of the deed by offering

20

299,000 to the respondent, the respondent has a different

21

view, and it might be an erroneous one, that the deed is

22

not on foot, so is endeavouring to try and bring about a

23

new deal, and the parties never reached any ad idem

24

agreement as far as a new deal was concerned where

25

different figures were discussed.

26

If the deed is still on foot, the appellant is

It may well have been Mr Cole and Mr Shirrefs

27

were discussing the possibility of another new deal, but

28

it didn't necessarily mean that they had retreated from

29

the deed and that's behaviour or conduct inconsistent with

30

the deed still being on foot, because ultimately while

31

there were discussions there was never any collateral or

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121

MR HAYES

other agreement that usurped what might otherwise have

been the case; namely, the obligation under 2.1(b)

remained on foot.

So what you have is they start off - certainly

the appellant - and there's that passage referred to as to

what happened on 18 March.

his subjective belief of course - Your Honour Justice

Santamaria rightly said this is an objective exercise in

looking at this.

Mr Sgargetta is of the belief,

But, notwithstanding, Mr Dennis

10

Sgargetta is mindful of the fact that he's seen to perform

11

his obligations under the deed, but the bank has a

12

different view.

13

To suggest that these are new negotiations may be

14

perhaps overstating the proposition just a little because

15

there's another possible explanation.

16

parties don't seem to be ad idem about a new deed.

17

is an attempt to see whether or not they can come up with

18

some arrangement.

19

the appellant has retreated from its position that clause

20

2.1(b) remains capable of performance.

21

where they finished up again on 20 March.

22

Certainly the
There

But it doesn't necessarily mean that

Indeed, that's

Other than that, subject to any questions from

23

Your Honours, those are the submissions I propose to make

24

by way of reply.

25

WHELAN JA:

Okay.

Thanks, Mr Hayes.

26

decision on this matter.

27

for their assistance today.

28

MR HAY:

If I could thank both counsel

I forgot to mention we have the original affidavits in

29

court.

30

Your Honours prefer - - -

31

We will reserve our

WHELAN JA:

I think Your Honours only have electronic.

Would

We better tender them, actually, I think, being

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122

MR HAYES

fresh evidence.

MR HAYES:

MR HAY:

Yes, Your Honour.

I hand it up, Your Honour.

Your Honour, I have three copies together with

exhibits for us.

#EXHIBIT 1 - Affidavit of Mr Cole sworn 26/05/14.

#EXHIBIT A - Affidavit of Mr Pringle sworn 26/05/14; affidavit

of Ms Minassian sworn 26/05/14; and affidavit of Mr Segal

sworn 26/05/14.

WHELAN JA:

Judgment is reserved and we will contact the

10

parties when we are ready to deliver judgment.

11

both very much, all three.

12

Thank you

ADJOURNED SINE DIE

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26
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DISCUSSION