Transcript Elliot Sgargetta Gadens National Australia Bank

TRANSCRIPT OF PROCEEDINGS
SUPREME COURT OF VICTORIA No. S APCI 2014 0029

COURT OF APPEAL (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 Telephone: 8628 5555

4/190 Queen Street, Melbourne. Facsimile: 9642 5185
1 MR HAYES: May it please Your Honours, I appear with Mr Silver
2 for the appellant.
3 WHELAN JA: Yes, Mr Hayes.
4 MR HAY: If Your Honours please, I appear for the respondent.
5 WHELAN JA: Yes, Mr Hay. Now just before we start Mr Sgargetta
6 may or may not have told you about my disclosure last
7 time.
8 MR HAYES: I am aware of it, Your Honour, yes.
9 WHELAN JA: I told him that I'm in exactly the same position -
10 no, not exactly. I'm relevantly in a similar position to
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. I think it's just under 3,000.
16 MR HAYES: 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: Okay.
21 MR HAYES: Thank you, Your Honour. That won't be an issue.
22 WHELAN JA: Okay. All right. Now how should we proceed?
23 MR HAYES: Your Honour, that very question is a matter which
24 has been vexing Mr Silver and I for almost the past
25 fortnight. Firstly, there are two aspects before the
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. Obviously the application for
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 1 MR HAYES

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1 to whether or not new evidence ought be permitted to be
2 adduced.
3 Having said that, Your Honours, we have
4 endeavoured in our outline of submissions which I propose
5 to speak to this morning break that up into those two
6 components. Firstly, I must say I apologise to the court
7 for the delay and also the fact that these are a little
8 lengthier than what the court is ordinarily accustomed to.
9 This matter has presented some unusual challenges.
10 SANTAMARIA JA: You might call them supplementary submissions
11 of the appellant.
12 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 SANTAMARIA JA: And that's the only document in the submissions
16 that you expect us to rely upon today?
17 MR HAYES: No, Your Honour. There are additional submissions
18 that Mr Sgargetta has filed himself. He doesn't wish to
19 abandon those other points of appeal. If I can turn just
20 briefly before coming back to the application,
21 Your Honours will see at page 3 - - -
22 SANTAMARIA JA: Just a second. I just want to know what
23 documents - you told us about your supplementary
24 submission.
25 MR HAYES: Yes, Your Honour.
26 SANTAMARIA JA: The document dated 26 May.
27 MR HAYES: That's so.
28 SANTAMARIA JA: Are you saying that there are other
29 submissions?
30 MR HAYES: There are, Your Honour, yes. They are referred to
31 in footnote -

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1 SANTAMARIA JA: And are they submissions that you in fact are
2 relying upon, because I heard what you said. You said
3 Mr Sgargetta wants to rely upon them.
4 MR HAYES: Yes.
5 SANTAMARIA JA: I want to know whether or not you are
6 representing Mr Sgargetta - - -
7 MR HAYES: No, Your Honour.
8 SANTAMARIA JA: Or Mr Sgargetta is representing himself.
9 MR HAYES: No, I don't propose to rely upon those other
10 submissions. I only propose to rely on this document.
11 SANTAMARIA JA: So this document which was sent - I'm holding
12 you down, Mr Hayes.
14 SANTAMARIA JA: There's a document entitled, "Matters of
15 attention" dated 21 May 2014.
16 MR HAYES: Yes.
17 SANTAMARIA JA: We do not have to address that? You can't have
18 it both ways.
19 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. Then I asked
25 you who was appearing for Mr Sgargetta, and you told me it
26 was you.
27 MR HAYES: Yes.
28 SANTAMARIA JA: 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.

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1 MR HAYES: Yesterday, Your Honour? I understood it might have
2 been an earlier - - -
3 SANTAMARIA JA: You know what document I'm talking about.
4 MR HAYES: No, Your Honour need not refer to that document.
5 WHELAN JA: There is the earlier one, though, of 2 May as well.
6 MR HAYES: There is, Your Honour. There are two documents that
7 are referred to in footnote 5 that speak to the other
8 grounds of appeal. Your Honours, certainly I'll be
9 speaking to what I call ground 1, and I only propose to
10 rely upon this document, the supplementary submissions
11 which are advanced on the part of the respondent. I think
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 Ground 2 is expressed further on in the
18 submissions as the finance approval point. That's over at
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. I don't propose to address
24 grounds 2, 3, 4 and 5, Your Honour, as set out in the
25 submissions. I only propose to set out ground 1.
26 SANTAMARIA JA: Does that mean that 2, 3, 4 and 5 have been
27 abandoned?
28 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

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1 written on pages 12 and 13 about those grounds?
3 SANTAMARIA JA: And we don't have to consult any other
4 document?
5 MR HAYES: Well - - -
6 WHELAN JA: You incorporate the submissions of 2 May.
7 MR HAYES: Yes, and they're referred to in footnote 5, which is
8 what Mr Sgargetta has instructed me that he wishes to put
9 before the court. But I'm not really in a position to
10 take those matters any further, Your Honour. And he has
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 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. That's developed
None of the atissues
arguments and pagesraised3were
to abandoned.
12 of the
Paul Hayes as the court assigned pro bono barrister only had enough
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 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: Yes.
31 WHELAN JA: We do have the transcript electronically, but we

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1 haven't looked at it yet, and I don't think we have the
2 exhibits before Judge Cosgrave, save to the extent that
3 they have been included in material specifically referable
4 to this case.
5 MR HAYES: Yes.
6 WHELAN JA: Can we have regard to the transcript and should we
7 get the exhibits from the County Court?
8 MR HAYES: Your Honour, yes, but I've endeavoured to simplify
9 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. But I think that should appear at tab 14 of
14 appeal book 1.
15 WHELAN JA: Okay. So you only rely on the transcript at tab
16 14.
17 MR HAYES: Yes.
18 WHELAN JA: But there's no inhibition on us looking at the
19 transcript of the trial.
20 MR HAYES: Not at all.
21 WHELAN JA: 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. We have got them
25 anyway. Is there anything else in the exhibits
26 before - - -
27 MR HAYES: 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.

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1 WHELAN JA: From the cheque, yes.
2 MR HAYES: They're really the most critical - - -
3 WHELAN JA: But were they exhibits before Judge - - -
4 MR HAYES: Yes, they were. Your Honour will see where they are
5 referred to in the footnotes. They are picked up in the
6 footnotes as to the actual exhibit numbers that were
7 before His Honour Judge Cosgrave, and in particular under
8 tab 7 of appeal book 1 there's a list of exhibits.
9 WHELAN JA: Okay.
10 MR HAYES: 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: Okay.
15 MR HAYES: Between the National Australia Bank and
16 Mr Sgargetta, which we have included for convenience at
17 EDS-1.
18 WHELAN JA: P18. That's in the additional material.
19 MR HAYES: That's so, yes.
20 WHELAN JA: But it's also under tab 14, did you say?
21 MR HAYES: No, no, the transcript, Your Honour. The relevant
22 page is the extract of the transcript we rely upon.
23 WHELAN JA: The deed is under tab 13 of appeal book 1.
24 MR HAYES: Yes, EDS-1. But it's also - - -
25 WHELAN JA: But we're going to have to have out this issue of
26 whether you're going to rely on fresh evidence. So let's
27 not have it contingent on that, because it's already there
28 somewhere else.
29 MR HAYES: Yes.
30 WHELAN JA: It's under tab 13.
31 MR HAYES: Yes.

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1 WHELAN JA: So I will put tab 13 as well as EDS-1. So that's
2 P18.
3 MR HAYES: But it was improperly introduced in I think Ms Cybil
4 Sgargetta - I think that's Cybil Sgargetta's affidavit.
5 WHELAN JA: Is it?
6 MR HAYES: Yes. It was simply put while the application for
7 new evidence was being made just to formalise or introduce
8 it correctly, more appropriately before this court.
9 WHELAN JA: All right. Anyway, that's P18.
10 MR HAYES: P18. P22?
11 SANTAMARIA JA: What was 18?
12 WHELAN JA: Was the deed of settlement.
13 SANTAMARIA JA: Which I thought was under tab 13.
14 MR HAYES: Well, it was. But for some reason it was annexed to
15 an affidavit of Cybil's statement.
16 SANTAMARIA JA: I have seen it in several places. Where is the
17 other place you say - - -
18 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. I've included it in that
21 for convenience of reference for Your Honours. Then
22 MFI-2, it would seem -
23 WHELAN JA: P22 is the transcript of 20 March.
24 MR HAYES: That's so. Yes. That's actually included a
25 compendium of all transcript at tab 14.
26 WHELAN JA: Yes, that's right. So tab 14 with the other
27 transcript, with other relevant transcript.
28 MR HAYES: That's right, Your Honour. If Your Honour goes over
29 the page, MFI-2, I don't think there is any -
30 SANTAMARIA JA: What page?
31 MR HAYES: Of tab 7, Your Honour, there's the list of exhibits

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1 before His Honour Judge Cosgrave.
2 SANTAMARIA JA: Yes, I have those. Thank you.
3 MR HAYES: Mr Hay has quite helpfully indicated we haven't put
4 the entirety of 20 March 2013 transcript; only the pages
5 we rely upon, which is part of our bundle in tab 14. Then
6 if Your Honours go over the page, MFI-2, there's a
7 photocopy of a bank cheque for 299,000. That appears at
8 EDS-2 of Mr Sgargetta's affidavit sworn yesterday.
9 I don't think it's a matter of controversy. I think it
10 was tendered at the trial, notwithstanding the marking
11 there.
12 Then there are two additional exhibits, D5 and
13 D9. I won't burden the court with those because they go
14 to the second point, really, which is the clause 2.1 (a)
15 point.
16 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: Yes.
20 SANTAMARIA JA: You better tell me where I've got to be looking
21 at if you want to talk about it.
22 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: This is your outline?
26 MR HAYES: 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. Those two documents D5 and D9
31 referred to in footnote 76 appear at KP-5 and 6 of an

Sgargetta
1 affidavit of Mr Pringle sworn on 19 March which in turn is
2 exhibited in its entirety to his affidavit sworn yesterday
3 as KP-1. So that's where Your Honours will find those
4 documents.
5 SANTAMARIA JA: KP-5 are the emails from the defendant dated
6 25 February 2013, and that's KP-5. KP-6 is an email from
7 Gadens dated 26 February 2013.
9 SANTAMARIA JA: I have that.
10 MR HAYES: 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. And those
25 documents in fact are - it's a more complete version of
26 the documents that you were just referring to.
27 MR HAYES: Yes.
28 SANTAMARIA JA: 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

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1 26 February.
2 MR HAYES: Yes.
3 SANTAMARIA JA: And my recollection of what those
4 communications is about is first what I will call Red Rock
5 1.
6 MR HAYES: Yes.
7 SANTAMARIA JA: Red Rock 2, something called BANZ or something
8 and then some brokers matters.
9 MR HAYES: Yes.
10 SANTAMARIA JA: And they're all coming, as it were, from your
11 client.
12 MR HAYES: Yes.
13 SANTAMARIA JA: And they have been batted back by Mr Pringle.
14 MR HAYES: Yes.
15 SANTAMARIA JA: Saying, "No can do."
16 MR HAYES: Yes.
17 SANTAMARIA JA: And they all relate to 2.1(a).
18 MR HAYES: Yes.
19 SANTAMARIA JA: And I'm noticing that you're saying that you
20 don't intend to address that subject.
21 MR HAYES: That's so, Your Honour; yes.
22 WHELAN JA: Were these in evidence before Judge Cosgrave?
23 MR HAY: 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?

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1 MR HAY: He does talk about all of them and he makes findings
2 as to the reasons for NAB to reject them as good
3 compliance with that deed. So I have to admit,
4 Your Honour, I haven't yet checked whether or not each of
5 them was tendered, formally tendered.
6 WHELAN JA: Yes, it was. P19.
7 MR HAY: I see.
8 WHELAN JA: So they are P19. Okay. All right. So they were
9 all in evidence before Judge Cosgrave. So we've got all
10 that. Where do we go next? I'm really worried about
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: 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. It was said in open court.
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. In fact we
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 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

Sgargetta
1 recited that part of the opening - where the highlighted
2 sections say, "There was never a tender by 15 April 2013
3 of 299,000. At no time was there ever a tender, formal or
4 otherwise, formal tender of the $299,000 cheque." That was
5 at the opening, and the trial proceeded then on that
6 basis.
7 If you go to His Honour's reasons, the primary
8 judge makes reference to the fact there was a cheque
9 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. There was a cheque in
16 court. If Your Honours go to - - -
17 WHELAN JA: 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. The
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: Yes, yes.
26 WHELAN JA: Isn't that what this whole case turns on in the
27 end?
28 MR HAYES: Yes, yes.
29 WHELAN JA: 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.

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1 MR HAYES: Yes.
2 WHELAN JA: I think. I don't know. I have to hear what Mr Hay
3 says. Clearly you were. You had a bank cheque there.
4 MR HAYES: That's right.
5 WHELAN JA: But if it was not on foot it doesn't matter about
6 the bank cheque.
8 WHELAN JA: It doesn't matter a bit.
10 WHELAN JA: Because you had already lost the benefit of the
11 deed of settlement. That was over. You had to make a new
12 deed, a new deal after that.
14 WHELAN JA: And 299,000 wasn't enough. They wanted more.
15 MR HAYES: That's right. That's right.
16 WHELAN JA: So why do we have to go into all this without
17 prejudice stuff, which I really am loath to want to do?
18 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. So that's the first
25 point.
26 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.

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1 So Your Honour is quite right. The primary issue
2 is whether the deed is still on foot. But certainly the
3 evidentiary issue which is still at large is encompassed
4 in His Honour's finding at paragraph 109. His Honour
5 found that, notwithstanding what was stated in court by
6 the appellant's then counsel on 20 March, there was still
7 no tender.
8 We say this, Your Honour, that there were two
9 ways - - -
10 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. It's one thing to say, "I maintain the deed is
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: Yes.
18 WHELAN JA: A defendant would be loath to do that for that
19 reason, because it will lose the 299 and still have an
20 argument. That's one thing that might have happened. The
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. How do we know which of those two is what
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: Yes.
30 WHELAN JA: Before I stopped reading the without prejudice
31 material it seemed to be where we were heading.

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1 MR HAYES: We say this generally, Your Honour. We say that the
2 starting point is that the respondent considered that
3 there be no performance by the appellant or no appropriate
4 performance by the appellant of clause 2.1(a).
5 WHELAN JA: Yes, that is the first point.
6 MR HAYES: That's right. But, notwithstanding that, there is
7 no provision in the deed to terminate in the event of any
8 breach or repudiation on the part of the appellant, nor
9 was there any actual termination of the deed. What then
10 followed was there was a number of discussions about.
11 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: Yes.
20 WHELAN JA: And that's what they did.
21 MR HAYES: Yes.
22 WHELAN JA: They said, "You haven't complied with 2.1(a) and we
23 are proceeding."
24 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 WHELAN JA: I don't know what you mean. Clause 3 says what's
28 to happen and that's what they did.
29 MR HAYES: Well, if Your Honour goes to 2.2, we can address it
30 this way. Clause 2.2 says that - - -
31 WHELAN JA: If 2.1 is complied with.

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1 MR HAYES: Yes.
2 WHELAN JA: So it's exactly - I mean, as you said, I was
3 flattered to see, but it is exactly like the Irani
4 situation.
5 MR HAYES: Yes.
6 WHELAN JA: They're saying, "We'll stay our hand. We won't
7 seek the 400 and something we say is owed for so long as
8 you do these things."
9 MR HAYES: Yes.
10 WHELAN JA: They maintain you didn't do them, so they say,
11 "We're not staying our hand anymore. We're going on for
12 our 400 and whatever it is." You say you did do them,
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."
17 WHELAN JA: 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: Yes, I know.
25 MR HAYES: If one steps back - - -
26 WHELAN JA: 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: Yes.
30 WHELAN JA: But, leaving aside who's right or who's wrong about
31 2.1(a), isn't that the only issue in the end?

Sgargetta
1 MR HAYES: Well, that and the issue of tender.
2 WHELAN JA: But why does tender even come into it? If you
3 haven't complied with 2.1(a), they are entitled to proceed
4 under 3 to recover the whole amount they say is owing.
5 What's tender got to do with it?
6 MR HAYES: Well, no, they're entitled to proceed to summary
7 judgment which is what they did on 20 March. But whatever
8 happened, Your Honour, summary judgment wasn't ordered and
9 the matter went to trial.
10 WHELAN JA: Yes.
11 MR HAYES: 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: It's proceeding generally.
17 MR HAYES: 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: But that's the construction point.
25 WHELAN JA: 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: Yes.
29 WHELAN JA: It was said in open court. Nobody contradicted it.
30 Why would we conclude otherwise? It mightn't have been a
31 formal tender. I don't know why that was an issue, I must

Sgargetta
1 say. I don't really see why it was relevant, at the
2 moment, whether it was a formal tender or not a formal
3 tender. Why would that change anything? I don't really
4 follow that, except for the fact that NAB's counsel seemed
5 to think it was significant in the opening.
6 MR HAYES: Yes, and then what happened was in the evidence of
7 Ms Thomas, Mr Sgargetta when cross-examining Ms Thomas
8 sought to agitate the issue as to the fact that there had
9 been a tender of payment of the 299,000 before 15 April
10 when the parties were at court on 20 March. So what
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: But "presented" doesn't answer the question.
18 That's the problem. If we embark on an enquiry about what
19 happened that day there's two things which are very
20 closely related but which are quite different. One is
21 saying, "I am trying to give you 299,000 and you take this
22 money. I'm not saying it resolves the whole thing. I'm
23 saying that's what I owe you and I'm going to pay you
24 that." That's one thing. Tender. Another thing is,
25 "I want to settle this whole matter. Here is 299,000 to
26 settle it. I pay nothing more. That's the end of it."
27 Different thing. Both involve presentation of the cheque.
29 WHELAN JA: Quite different things. Now, the second one is
30 just an offer. It does demonstrate, though, that you had
31 the capacity and willingness to perform if the deed was

Sgargetta
1 still on foot.
2 MR HAYES: Yes.
3 WHELAN JA: It's just an offer, isn't it? I mean, it's not a
4 tender.
5 MR HAYES: It depends how Your Honour construes that evidence.
6 WHELAN JA: I know.
7 MR HAYES: Which is how one goes to the actual evidence - - -
8 WHELAN JA: And we have to go into all this without prejudice
9 communications to - - -
10 MR HAYES: Because it goes to the performance of the deed.
11 WHELAN JA: 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. Please take it."
14 MR HAYES: Yes.
15 WHELAN JA: Why doesn't someone do that?
16 MR HAYES: That's a fair question.
17 WHELAN JA: Between counsel is not the way to do it.
18 MR HAYES: No. Well, it's not what happened here.
19 WHELAN JA: But if you want to make an offer, between counsel
20 is the way to do it.
21 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. But Mr Sgargetta was initially
24 self-represented. He then had counsel assisting him on
25 the day. There weren't solicitors retained.
26 WHELAN JA: 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. All right. Look,
29 I think we better specifically address the further
30 evidence point and decide about that and then move on to
31 the appeal.

Sgargetta
1 MR HAYES: Yes.
2 WHELAN JA: On which ever way we decide about that.
3 MR HAYES: Yes. And certainly with respect to the 2.1(a)
4 point, Your Honour, certainly we do propose to address
5 that part of it which merges on those matters that I have
6 already addressed Justice Whelan upon, Your Honour, the
7 point that merges into the tender point, we certainly
8 propose to address it in that respect and I have dealt
9 with it - - -
10 SANTAMARIA JA: I have to say, Mr Hayes, I don't know what you
11 were making at the moment. What's on my mind are the
12 following propositions. 2.1(a) is provided for in the
13 deed.
14 MR HAYES: Yes.
15 SANTAMARIA JA: It imposes obligations upon the appellant.
16 MR HAYES: Yes.
17 SANTAMARIA JA: I want to know whether or not those obligations
18 were performed. If those obligations were not 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). They are the sort of things on
25 my mind.
26 MR HAYES: Yes.
27 SANTAMARIA JA: You don't have to answer them now, but that's
28 what I'm worried about.
29 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.

Sgargetta
1 MR HAYES: Yes.
2 WHELAN JA: Can I just clarify, Mr Hay, you filed a whole lot
3 of material now about the without prejudice - or what you
4 say were the without prejudice communications.
5 MR HAY: Yes, Your Honour.
6 WHELAN JA: Are we supposed to look at that or not look at it
7 or what?
8 MR HAY: We're in a difficult position ourselves, Your Honour,
9 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. That being so,
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 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. The other matters about
22 credibility et cetera are of less moment.
23 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. So I know that you're basically
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 22 MR HAY

Sgargetta
1 the interest since the date. So we wanted 316" or
2 something.
3 MR HAY: Yes. It really goes, without revealing the substance
4 of - - -
5 WHELAN JA: I know that already.
6 MR HAY: No, it goes to the basis on which - it's really the
7 question that Your Honour has been putting to my friend.
8 It goes to the basis on which it was referred to, whether
9 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. It is for that reason I understand it places
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 SANTAMARIA JA: Three points. First, they don't satisfy the
16 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. One of them is
30 to - my friend has referred to subparagraph (f) about
31 performance of an obligation.
.MCA:MB 27/05/14 23 MR HAY

Sgargetta
1 SANTAMARIA JA: Section?
2 MR HAY: Section 131 of the Evidence Act, and in particular,
3 Your Honour, it's subsections (c) - - -
4 SANTAMARIA JA: What is it about 131?
5 MR HAY: 131 is exclusion of evidence of settlement
6 negotiations, and then it says, "Evidence is not to be
7 adduced of" and it gives the definition of "without
8 prejudice communication". Then this is the carve-out.
9 Subsection (2) says, "Subsection (1) does not apply if (c)
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). There's (g) as well, "Evidence that has
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." So it
23 really goes to that third point that Your Honour has
24 identified.
25 WHELAN JA: Let's hear what Mr Hayes says about why we should
26 admit the evidence and we'll go from there. First of all,
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. I deal with that in paragraphs 8
30 and 9 of the supplementary submissions. Particularly,
31 Your Honour, it's an affidavit of Elliot Daniel Sgargetta

Sgargetta
1 and an affidavit of Daniel Cole.
2 WHELAN JA: All right. Then you say you want to rely on the
3 respondent's evidence as well.
4 MR HAYES: Yes.
5 SANTAMARIA JA: Am I right in thinking that what Mr Sgargetta
6 gave evidence of was what he observed Cole to be doing?
7 MR HAYES: That's right. No, what he observed Shirrefs to be
8 doing, or Cole and Shirrefs.
9 SANTAMARIA JA: What Cole and Shirrefs were doing.
10 MR HAYES: Yes.
11 SANTAMARIA JA: But Cole himself is saying what happened?
12 MR HAYES: That's right. That came after Mr Sgargetta's
13 affidavit.
14 SANTAMARIA JA: What do you need of Sgargetta given that you've
15 got Cole?
16 MR HAYES: 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 SANTAMARIA JA: Just answer my question. Just leave Mr Segal
21 to one side.
22 MR HAYES: Yes.
23 SANTAMARIA JA: When you put in Mr Cole what (indistinct)
24 Mr Sgargetta?
25 MR HAYES: Your Honour, we don't. We don't need - Mr Cole's
26 evidence takes the point.
27 SANTAMARIA JA: Mr Cole's is what you need?
28 MR HAYES: Yes.
29 SANTAMARIA JA: 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 - - -

Sgargetta
1 MR HAYES: Yes.
2 SANTAMARIA JA: I might have distracted you, Mr Hayes.
3 MR HAYES: He says this, Your Honour, in paragraph 5. He says
4 that his father brings the cheque to court and his
5 evidence is he instructed Messrs Cole and Shirrefs to hand
6 over the cheque that day. So that's how Mr Cole gets the
7 cheque. Mr Cole, Your Honour, quite rightly says in
8 paragraph 3 that he was handed a cheque, but doesn't go
9 further as to saying that it should be handed to the
10 respondent. So it just goes a little bit further,
11 Your Honour, for the sake of completeness.
12 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: In Cole?
16 MR HAYES: 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: So Mr Cole - okay, and he produces the cheque.
22 MR HAYES: Yes.
23 WHELAN JA: 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. At 109 His Honour found there was no tender of
29 the cheque. So that's the error in the judgment that
30 we're endeavouring to work backwards from to address on
31 the evidence.

Sgargetta
1 What was said in open court, I've summarised
2 that, Your Honours, in the submissions at paragraph 25
3 where I've just excluded what Mr Shirrefs - or excised
4 what Mr Shirrefs said to the court. "Production of
5 299,000 on or before 5 o'clock on 15 April this year would
6 amount to performance." So this is what Mr Shirrefs is
7 saying to His Honour Judge Anderson on 20 March. "In that
8 respect, curiously we have a bank cheque today of 299,000.
9 So that's the position."
10 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. So when he was giving
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 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. In particular His Honour
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. He said Mr "Sgargetta
26 gave evidence that a cheque was produced in court, and
27 that Mr Segal rejected the tender of the cheque." I think
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. But what's material - - -
31 WHELAN JA: Sorry, where did he say that again?

Sgargetta
1 MR HAYES: At paragraph 105 Your Honour will see - - -
2 WHELAN JA: Yes, but what did Mr Sgargetta say in his evidence?
3 MR HAYES: In his evidence, I've summarised his evidence at
4 paragraph 24. What he said, I think this fairly sums it
5 up, at T146 of the transcript, is that, "There was a
6 summary judgment heard and in that hearing we presented
7 the NAB and Mr Segal with a bank cheque, a bank cheque for
8 299,000 in that hearing, and that this was done in open
9 court and the cheque was rejected." That's a fair summary
10 of what he says in his evidence-in-chief.
11 WHELAN JA: Sorry, I couldn't find your submission while you
12 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 MR HAYES: Yes. I will take Your Honour to the full passage at
18 page -
19 SANTAMARIA JA: Whereabouts is this document?
20 MR HAYES: Tab 14, Your Honour, at page - - -
21 WHELAN JA: I don't think those pages are there, unless - - -
22 MR HAYES: It might be appeal book 1, Your Honour.
23 WHELAN JA: The cross-examination is there, but I don't think
24 the evidence-in-chief is there.
25 MR HAYES: Is 146 not there?
26 WHELAN JA: No. Oh, sorry, yes, it is. It was on the back.
27 Sorry. Okay.
28 MR HAYES: It seems we have an environmentally-friendly
29 two-sided transcript.
30 WHELAN JA: Yes, that's all right. "In that hearing we
31 presented the NAB and Mr Segal with the cheque, a bank

Sgargetta
1 cheque."
2 MR HAYES: That's right. And then it was put by His Honour,
3 "That was done in open court, was it?" "Open court, and
4 I'm ordering" - and then His Honour, "While the judge is
5 sitting up here and the proceedings are going on?" "Yes.
6 I've ordered the transcripts today from His Honour Judge
7 Anderson's associate to get a copy of it just" - and then
8 further on at line 27, "And you say a cheque was presented
9 in open court for 299,000?" "Yes. And obviously" - "Was
10 it accepted or rejected?" "It was rejected." So that's
11 essentially the evidence of that.
12 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. So
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 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. But he
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 Then he addresses that part of the transcript
28 when Mr - - -
29 SANTAMARIA JA: That means 2.1(b), does it, not 21(b)?
30 MR HAYES: Yes, 2.1(b). I'm sorry, Your Honour. Then at
31 paragraph (c) what was said by Mr Shirrefs was actually

Sgargetta
1 put to him by Mr Segal in pursuit of the point that
2 Mr Segal was endeavouring to develop, that there was no
3 bank cheque tendered or presented or offered in court,
4 which is what would seem was Mr Sgargetta's erroneous
5 assumption as to what actually happened on 20 May and what
6 actually was said by Mr Shirrefs in court. One possibly
7 explanation is perhaps he conflated the two. But what did
8 happen in court is what Mr Shirrefs put to the court and
9 really what would have amounted to a tender actually
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. I don't know if it's without
15 prejudice, but offers anyway, negotiations.
16 MR HAYES: He does. 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. The primary judge
20 was entertaining it. So it put Mr Segal in a difficult
21 position on a number of fronts.
22 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

Sgargetta
1 without prejudice discussion and Mr Segal would be right
2 on insisting that the communications be excluded from the
3 hearing.
4 Although what you have is what Mr Shirrefs has
5 said which points to what his understanding was of the
6 situation at the time, not that that will assist
7 Your Honours on the construction point, but says that the
8 production of 299,000 on or before 5 o'clock on 15 April
9 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: Is this in the transcript of 20 March?
21 MR HAYES: Yes, Your Honour . It probably goes against me. It
22 probably assists Mr Hay's case as to the construction
23 issue as to whether the deed was still capable of
24 performance. But Mr Segal at line 15 - - -
25 WHELAN JA: What page is this?
26 MR HAYES: Page 3, Your Honour.
27 SANTAMARIA JA: Page 3?
28 MR HAYES: Of the 20 March transcript.
29 WHELAN JA: It's the first page under tab 14.
30 MR HAYES: Yes. After that passage of Mr Shirrefs, at line 9,
31 he goes on to say, "Mr Segal, you say there's not an

Sgargetta
1 arguable defence in this case?" And he says, "Yes, we do."
2 So while Mr Shirrefs albeit predicated on the severability
3 of clause 2.1(a) irrespective of whether it's subordinate
4 to 2.1(b) or alternatively void for uncertainty, and we
5 don't take the uncertainty point or the mere (indistinct)
6 point, I won't trouble Your Honours with that, we simply
7 say that if the deed was still capable of performance then
8 that speaks of Mr Shirrefs understanding. But then
9 Mr Segal, his understanding which goes to the
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: Can you say what you're saying about it again?
14 MR HAYES: 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." That's what could be gleaned from that. And
20 it goes towards characterising - - -
21 SANTAMARIA JA: I might have this wrong, but are you saying
22 that there is Shirrefs making a tender in open court?
23 MR HAYES: He doesn't seem to go that far, Your Honour, no, in
24 court. He doesn't seem to go that far as to what he
25 actually says in court. What he says, he says, "They have
26 got a bank cheque here today," but he doesn't say what
27 they propose to do with it.
28 WHELAN JA: He's trying to demonstrate that if the deed is
29 still on foot there's no doubt it will be performed.
30 MR HAYES: He's certainly doing that. He's certainly doing
31 that, Your Honour.

Sgargetta
1 WHELAN JA: But Mr Cole says - I interpret him as saying he
2 offered the cheque in settlement of the matter.
4 WHELAN JA: Is that a correct interpretation?
5 MR HAYES: That's his evidence. That's what he says.
6 WHELAN JA: Again, whether that affects anything depends on
7 whether the deed's on foot or not.
9 WHELAN JA: If it was, then he's demonstrating again your
10 willingness to perform.
12 WHELAN JA: If it wasn't, well, it doesn't matter because
13 299,000 won't meet the case.
15 WHELAN JA: So it still comes back to: is 2.1(a) - has it been
16 performed or not? No, that's not correct. Was the deed
17 still on foot or not?
18 MR HAYES: That's the better question, yes, Your Honour. And
19 we say it is because - - -
20 WHELAN JA: So why do we need this fresh evidence, because it
21 doesn't change anything? I know Judge Cosgrave said there
22 was no tender. What do the cases say about tender? What
23 amounts to a formal tender? Is offering someone a sum of
24 money in settlement a tender?
25 MR HAYES: It's about the offer to perform, Your Honour. Does
26 Your Honour have a copy of our - mine are labelled. We
27 have copies of authorities we can hand up to Your Honours.
28 WHELAN JA: I probably have a copy, I think.
29 MR HAYES: All right. If I can take Your Honour firstly -
30 SANTAMARIA JA: I have two folders authorities. I've got the
31 original combined folder of authorities which have Meehan

Sgargetta
1 v Jones and cases related to that.
2 MR HAYES: Yes.
3 SANTAMARIA JA: And then this morning you sent an email to
4 which were attached firstly the Evidence Act section 131,
5 then the authorities Sunland, Waterfront, Emer, Young,
6 City Motors, Startup, Davey, Hollyburton, Osborne, SWD and
7 (indistinct) and then some miscellaneous material.
8 MR HAYES: Yes.
9 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 MR HAYES: Supplementary list, Your Honour. In particular
13 could I take Your Honours to tab 4 of our bundle.
14 SANTAMARIA JA: Young v Queensland Trustees.
15 MR HAYES: Yes, Your Honour. In particular at 567 and 568. It
16 talks about the general proposition that how the common
17 law - - -
18 SANTAMARIA JA: My pagination has been - - -
19 MR HAYES: I'm so sorry, Your Honour.
20 SANTAMARIA JA: Whose judgment are you talking about?
21 MR HAYES: I'm talking about the judgment of Dixon CJ and
22 Justice McTiernan and Taylor at 567 to 568. The passage
23 commences at about point 9, Your Honour, on that page.
24 SANTAMARIA JA: What are the words? There's a line across the
25 top of the page.
26 MR HAYES: The line across the top is 99 CLR of Australia 567.
27 SANTAMARIA JA: No, I've lost my pagination. Give me the words
28 that run across the top line.
29 MR HAYES: I see. I'm sorry, Your Honour. "The common law
30 does not and never did conceive".
31 WHELAN JA: That's the passage you want to rely on?

Sgargetta
1 MR HAYES: Yes.
2 WHELAN JA: The top line is "annos after demand, or that no
3 demand".
4 MR HAYES: I'm sorry.
5 WHELAN JA: Justice Santamaria has a copy, but the top has been
6 - because this was all done in a bit of a hurry.
7 MR HAYES: I'm so sorry, Your Honour. I was at cross-purposes.
8 WHELAN JA: So we go to, "The common law does not" - - -
9 MR HAYES: "... 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

Sgargetta
1 curiam of the money tendered. If the defendant can
2 maintain this plea, although he will not thereby bar the
3 debt (for that would be inconsistent with the uncore prist
4 and profert in curiam), yet he will answer the action, in
5 the sense that he will recover judgment for his costs'" -
6 - -
7 SANTAMARIA JA: What is a profert in curiam? It looks to me
8 like an offer in court.
9 MR HAYES: Yes. My Latin perhaps might not be as strong as
10 Your Honour's. Certainly the suffix would speak as to
11 something occurring in court.
12 SANTAMARIA JA: You are reading the passage to us.
13 MR HAYES: 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: What did the judge say about this issue?
29 MR HAYES: I won't take Your Honours - - -
30 WHELAN JA: Sorry, go on.
31 MR HAYES: I refer to the other passages, Your Honours,

Sgargetta
1 particularly Justice Kitto, and it's referred to in the
2 footnotes, in that Justice Kitto in City Motors (1933) Pty
3 Ltd and Southern Aerial - - -
4 SANTAMARIA JA: What tab is this?
5 MR HAYES: Tab 5, Your Honour. In particular I'm reading from
6 485.
7 SANTAMARIA JA: Can you tell me the lines on the top of the
8 page?
9 MR HAYES: Yes, "company must have recovered unliquidated
10 damages".
11 WHELAN JA: Sorry, where was this again?
12 MR HAYES: 485, Your Honour. And the top line of 485 is
13 "company must have recovered unliquidated damages". I'm
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 His Honour refers to Startup v MacDonald, which
27 I refer to in the authorities, in particular what was said
28 by Baron Rolfe. "Not, of course, that the debt is thereby
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

Sgargetta
1 party making the tender had to do to make the delivery or
2 payment is considered 'equal to performance'".
3 So that's what we rely upon there. In other
4 words, the offer or the tender, it's all very well to take
5 the cheque to court, but if you actually offer it assuming
6 the deed is on foot then that would be akin to equal to
7 performance. Accordingly, to reject the tender of the
8 cheque would be to prevent the appellant from performing
9 his obligations under the deed and would also preclude 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: This is paginated. What page is it?
22 MR HAYES: Yes, Your Honour. 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

Sgargetta
1 tender. But the law considers a party who has entered into
2 a contract to deliver goods or pay money to another, as
3 having, substantially, performed it" - this is the
4 important bit I'm reading from now, Your Honours - "if he
5 has tendered the goods or money to the party to whom the
6 delivery or payment was to be made, provided only that the
7 tender has been made under such circumstances that the
8 party to whom it has been made, has had a reasonable
9 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. So we say
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: Sorry, just stop for one sec while I write down
30 what you've been saying. So what you want to say - now
31 correct me - if the deed was still on foot, the offer made

Sgargetta
1 on 20 March as deposed to by Mr Cole amounted to
2 performance in accordance with what's said in City Motors,
3 Young and Startup.
4 MR HAYES: Was an act which was equal to performance.
5 WHELAN JA: Yes.
6 MR HAYES: To use the words of Baron Rolfe in Startup.
7 WHELAN JA: The transcript of 20 March in relation to what
8 happened in open court and the evidence of Mr Sgargetta in
9 the trial does not make this clear. It does not make it
10 clear that that's what happened.
12 WHELAN JA: 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

Sgargetta
1 the bank respond if moneys were presented,' and I believe
2 that there was then a bank cheque actually presented to
3 yourself. That's my recall of the events."
4 So what you have is the highest the evidence gets
5 is you have Ms Thomas relating what was said to her by
6 Mr Segal, and her understanding is he actually got a bank
7 cheque. But then in the reasons His Honour doesn't quite
8 descend to that degree of detail in considering
9 Ms Thomas's evidence. 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. She
13 subsequently became aware of a cheque being brought to
14 court that day."
15 If I can just pause there. "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." Now, His Honour is
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. But what His Honour hasn't
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

Sgargetta
1 cheque simply being brought to court that day. That's as
2 high as the evidence gets.
3 If Your Honours are against us on the new
4 evidence application then we'd seek to rely upon that
5 passage of evidence as being informative as to what the
6 state of affairs was as to the tender and that His Honour
7 hadn't fully addressed that important passage of her
8 evidence and weighed it accordingly to find - and looking
9 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. I won't trespass, given
18 Your Honours - - -
19 WHELAN JA: 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: Yes.
23 WHELAN JA: In full settlement of the matter.
24 MR HAYES: Yes, and that could mean one of two things.
25 WHELAN JA: Given that it's all premised on the deed still
26 being on foot.
27 MR HAYES: Yes.
28 WHELAN JA: It kind of doesn't matter, because if you're wrong
29 about that you lose.
30 MR HAYES: Yes.
31 WHELAN JA: If you're right about it, well, the only thing

Sgargetta
1 that's owing is 299,000.
2 MR HAYES: We win.
3 WHELAN JA: So you win.
5 WHELAN JA: Maybe Mr Hay agrees that we can proceed on that
6 basis. Mr Hay, is there any - could we just proceed on
7 that basis, that the cheque was not only there but was
8 offered, or is that going into - - -
9 MR HAY: The difficulty is the basis on which the offer was
10 made, Your Honour.
11 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. So it would only be a
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: Can I just test that proposition for a moment,
19 Your Honour. The 299 could have been tendered as payment
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. Take 299. Here it is today."
24 SANTAMARIA JA: Can I just stop you there?
26 SANTAMARIA JA: I just want to make sure I'm understanding what
27 you're saying.
28 MR HAY: Yes.
29 SANTAMARIA JA: It's ambiguous, you say.
30 MR HAY: Yes.
31 SANTAMARIA JA: The 299 could have been in performance of
.MCA:MB 27/05/14 43 MR HAY

Sgargetta
1 2.1(b).
2 MR HAY: Yes.
3 SANTAMARIA JA: Or it could be, "The deed's gone. Here's 299."
4 MR HAY: That's right. And, without the circumstances,
5 Your Honours are unable to say which one it was. Of
6 course that's critical because from the respondent's
7 perspective - and to maybe put Your Honour Justice
8 Whelan's observations slightly differently from the
9 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. If the deed was
12 operative, then it was. If it wasn't, it could receive
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: 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. If in fact the deed is not still on
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: 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 44 MR HAY

Sgargetta
1 SANTAMARIA JA: (b).
2 MR HAY: (b), sorry, Your Honour.
3 SANTAMARIA JA: It was performance.
4 MR HAY: It was performance, that's right. But, without more,
5 it's not clear at all about whether or not it was just a
6 fresh offer matched in the same amount. We still have a
7 trial to go forward. There's going to be all the expense
8 and difficulty incurred. Indeed that day was - 20 March
9 was meant to be the trial date, but then it got pushed off
10 until August. So there were other, the ordinary reasons
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 SANTAMARIA JA: So let's proceed on the hypothesis that the
17 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. That's only open to the
22 interpretation as performance of 2.1(b). That's the only
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. With more evidence before the court, that's so.
27 Can I say this, Your Honour. It's one of several lines of
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 45 MR HAY

Sgargetta
1 That's why we get into this difficulty about whether or
2 not it happened in open court or whether or not it
3 happened in a without prejudice context.
4 The judge in the reasons below noted that
5 Mr Sgargetta's counsel had not been called as a witness,
6 and even on the present case as Your Honour has identified
7 it's really the evidence of the barrister that is relevant
8 to this. To the extent that the deed was still live and
9 on the state of the evidence as it was below, then we say
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: Where does His Honour say that?
15 MR HAY: Paragraph 100.
16 SANTAMARIA JA: I will just pause with you. We're all acting
17 on the hypothesis that the deed is still on foot.
18 MR HAY: Yes.
19 SANTAMARIA JA: Okay. (Indistinct). So the bank is pressing
20 for money. Mr Sgargetta is able to say, "I've performed."
21 MR HAY: Yes, I understand.
22 SANTAMARIA JA: And you are saying the onus is upon him to say
23 it is performed.
24 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." And then it goes on, and
29 relevantly at paragraph 108 - - -
30 SANTAMARIA JA: It starts before then, doesn't it? 98, "During
31 the hearing, Sgargetta asserted that he had made
.MCA:MB 27/05/14 46 MR HAY

Sgargetta
1 attempts ... to tender a cheque".
2 MR HAY: Yes.
3 SANTAMARIA JA: So, in other words, the defence of tender was -
4 it wasn't pleaded, was it?
5 MR HAY: It was not.
6 SANTAMARIA JA: No, but it seems to have been allowed to run.
7 MR HAY: I think that's a fair characterisation, Your Honour.
8 SANTAMARIA JA: His Honour says, "This issue's before me."
9 MR HAY: Yes. 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: So these are the particulars of tender.
15 MR HAY: Yes. 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. Then paragraph 100 is the observation,
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.
22 I'll concede, Your Honours, from paragraphs 101
23 through to 104 there are difficulties with the evidence
24 there. It's fairly obvious, I think, that Ms Thomas's
25 evidence was not of very significant weight. It was
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 But, in any event, there is reference to the full
31 transcript at 106, with the extract at the top of page 33.
.MCA:MB 27/05/14 47 MR HAY

Sgargetta
1 Then 107 is really where - taking that together with the
2 absence of evidence from Mr Shirrefs, His Honour Judge
3 Cosgrave says, "When viewed in its entirety and in
4 context, it seems to me that Sgargetta's evidence about
5 the alleged tender of the cheque on 20 March 2013 is
6 inconsistent with, and not supported by, the transcript."
7 Then 108, "I do not doubt the sincerity of
8 Sgargetta's belief that he tendered a cheque to the NAB.
9 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. The document is dated
21 20 March, that is the amended defence and counterclaim
22 settled by Messrs Shirrefs and Cole. It was not in fact
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. So had that been
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. Have I answered Your Honour Justice Whelan's
29 question?
30 WHELAN JA: Not really. I was hoping we mightn't have to
31 decide it, but it sounds like we do. So, Mr Hayes,
.MCA:MB 27/05/14 48 MR HAY

Sgargetta
1 addressing the requirements of that fresh evidence then,
2 are we only concerned with Mr Cole's affidavit? What does
3 Mr Sgargetta's affidavit add?
4 MR HAYES: Not terribly much.
5 WHELAN JA: You tell us what it adds.
6 MR HAYES: All it adds is - it adds this at paragraph 5, "My
7 father and I requested Mr Cole and Mr Shirrefs to hand
8 over the bank cheque to the NAB that day which they
9 acknowledged they would do."
10 WHELAN JA: How can the NAB be affected by that? It's something
11 that's happening in the room with - - -
12 MR HAYES: Yes, I hear Your Honour. I won't read any aspect of
13 Mr Sgargetta's affidavit. The evidence is at its best in
14 the affidavit of Mr Cole, Your Honour.
15 WHELAN JA: Okay. So it's just Mr Cole.
16 MR HAYES: Yes. And in particular, unusually, Your Honour,
17 we'd also seek to rely upon the evidence of - - -
18 WHELAN JA: I know. But we won't get to that unless Mr Cole's
19 evidence gets in.
20 MR HAYES: Of course.
21 WHELAN JA: So let's deal with that. So why should it be
22 admitted now on the appeal?
23 MR HAYES: For this reason, Your Honour. We say, and these
24 grounds are addressed - - -
25 WHELAN JA: Just remind me. I know you have it here.
26 MR HAYES: Paragraph 10 of my supplementary submissions. We
27 say this, Your Honour. What you have here, and this
28 doesn't take it very far, but the appellant was
29 self-represented. But then what happened was it was the
30 way in which the point emerged is that it emerged in the
31 course of the hearing. So what happens is on 20 March a

Sgargetta
1 number of things happen. On 20 March there's the defence
2 and amended defence and counterclaim. He was represented
3 by Mr Shirrefs and Mr Cole on that day. The defence is
4 dated that day. My friend Mr Hay makes the point that it
5 was filed two days later.
6 What then happened after that was that in the
7 course of - the point really fell while Mr Sgargetta was
8 cross-examining Ms Thomas. At 68 of the transcript, this
9 is how it really emerges, 68.8 - - -
10 WHELAN JA: 68 of the transcript?
12 SANTAMARIA JA: The transcript is under tab?
13 MR HAYES: Tab 14, Your Honour, of appeal book 1. Line 8. It
14 really starts over the page. At 67 he is asking Ms Thomas
15 about the presentation or the presentation of the cheque,
16 I'll put it in those terms, on 20 March. At lines 12, 13,
17 "I don't think I've ever physically held the cheque, held
18 this cheque." Then line 17, "We're just talking about
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." Then Mr Segal starts to take an
22 objection.
23 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: Sorry, where are you reading from?
29 MR HAYES: 68.8, Your Honour.
30 WHELAN JA: Yes.
31 MR HAYES: This is where the point really warmed up. Then

Sgargetta
1 Mr Segal says at line 15, "And what a bank would
2 understand as a formal tender," and it's completely
3 evident by the pleading that is the amended defence and
4 counterclaim. And then what happens is -
5 SANTAMARIA JA: Mr Segal says, "It does not plead tender."
6 MR HAYES: That's right. "It pleads limitation."
7 SANTAMARIA JA: Can I just read it out. "It does not plead
8 tender."
10 SANTAMARIA JA: "So, without saying there was going to be
11 evidence, there was tender on that day. I don't know the
12 basis upon which it was said there was tender. But if
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: Yes.
18 SANTAMARIA JA: "I won't shut Sgargetta out from raising the
19 issue."
21 WHELAN JA: Then I think the judge started talking. You see
22 Mr Sgargetta says, "80 per cent of it okay?" Then I think
23 the judge starts talking. I don't think Mr Sgargetta
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." I don't think Mr Sgargetta said that.
27 "But I'm letting you raise them anyway. So basically just
28 proceeding for the time being on this point."
29 MR HAYES: I think that's His Honour.
30 WHELAN JA: Yes, I think that's the judge.
31 MR HAYES: So that's really our point. He's endeavouring to

Sgargetta
1 ask questions to Ms Thomas about it, objection is taken,
2 and this comes back to the characterisation of the
3 performance point, Mr Segal's view of the world as opposed
4 to Mr Sgargetta's. He takes the without prejudice
5 objection and, notwithstanding the fact that the tender
6 point isn't pleaded, His Honour grants the appellant an
7 indulgence to proceed with it, and accordingly he does.
8 It's not only dealt with in the cross-examination of
9 Ms Thomas; it's dealt with in re-examination.
10 Mr Sgargetta himself gives evidence about it, and he's
11 cross-examined about it. Then His Honour deals with it in
12 his reasons. So it's a rather unorthodox way to find its
13 way into the reasons, but that's really how the point
14 emerged.
15 SANTAMARIA JA: Where is the cross-examination of Sgargetta?
16 MR HAYES: The cross-examination, I summarise it,
17 Your Honour - - -
18 SANTAMARIA JA: No, no, I want the transcript.
19 MR HAYES: 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: 71 to 79 is the cross-examination of Thomas.
23 MR HAYES: I'm sorry, Your Honour.
24 WHELAN JA: It is 237; around about there anyway.
25 MR HAYES: My apologies, Your Honour. I'm indebted to Justice
26 Whelan. It's 223 through until about 237 is the relevant
27 passage.
28 WHELAN JA: 233, did you say?
29 MR HAYES: Yes, Your Honour. Sorry, 223 is really where it -
30 I'm sorry, Your Honour, 222 is really where it commences.
31 WHELAN JA: 222?

Sgargetta
1 MR HAYES: Yes, 222.25. At 222 Mr Segal is dealing with
2 exhibit P18, which is - - -
3 WHELAN JA: The deed of settlement, I think.
4 MR HAYES: Yes, Your Honour, it's the deed of settlement. So
5 he shows him the deed of settlement. It says, "Critical
6 terms. And so the terms were that, although payment of
7 $229,000 couldn't be done before either the summary
8 judgment hearing or the trial" - so he predicates the
9 question on that proposition when Mr Sgargetta will say,
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." Putting all of that
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 SANTAMARIA JA: But it then goes on, "You couldn't pay the
26 settlement sum before 1 March, could you?"
27 MR HAYES: He says, "No" - - -
28 SANTAMARIA JA: Mr Sgargetta says, "No, I can't agree with
29 that."
30 MR HAYES: That's right. "So you could have had the settlement
31 sum by 1 March?" "Would have? Yes. Could have? Yes.

Sgargetta
1 But there's nothing concrete that you're actually making
2 suggestions of there, Mr Segal, so I can't give it a yes
3 or no answer." "So were you in a position to pay the
4 settlement sum by 1 March?" Mr Sgargetta, "The deed says
5 15 April. So I'm not sure why 1 March is being dangled."
6 You're making statements of leading assurance et cetera."
7 Then it goes on to line 14 - - -
8 SANTAMARIA JA: It's not really helpful at all, is it? He's
9 just being smart at this stage. He's being asked whether
10 he could have paid on that date. He's not really
11 answering the question.
12 MR HAYES: 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. But it might be a somewhat
15 glib matter, really, in dealing with it.
16 SANTAMARIA JA: It's there before him to answer, and where does
17 he answer it?
18 MR HAYES: If I can retreat from that a little, Your Honour.
19 SANTAMARIA JA: Keep going through the transcript and show me
20 whereabouts he answers Segal's question.
22 SANTAMARIA JA: There it is there on page 234.
23 MR HAYES: And 235 as well, Your Honour.
24 SANTAMARIA JA: Stay on 234.
26 SANTAMARIA JA: 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. The milestone
31 2.1(b) is 15 April."

Sgargetta
1 MR HAYES: Yes, that's right.
2 SANTAMARIA JA: Sgargetta must by that date do that.
4 SANTAMARIA JA: "I make the statement that in the 20 March
5 hearing a bank cheque was provided some one month earlier
6 than the 2.1(b) requirement and was turned down by
7 yourself."
8 MR HAYES: Yes.
9 SANTAMARIA JA: So isn't that the evidence?
10 MR HAYES: 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. Then at 232, at line 12, "You
13 gave evidence yesterday about a cheque being brought to
14 court on 20 March; do you remember that?---Yes." "What
15 you said was that there was an exchange between Judge
16 Anderson and myself; do you remember that?---Yes." "You
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?' You said, 'It was rejected, yes.' And what
20 happens next? Mr Anderson asked why Mr Segal said he's
21 just simply under instruction not to take it. That was
22 your evidence about what happened on 20 March. As it
23 says, you've stated 'yes'. But then that's not what
24 happened on 20 March, was it?"
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. In that
30 respect curiously we have a bank cheque today for 299,000.
31 So that's the position, Your Honour.' That's what

Sgargetta
1 Mr Shirrefs said; do you recall that?---Yeah, I recall -
2 what I recall is, yeah, as stated yesterday a bank cheque
3 of 299."
4 Then Mr Segal, "And there was no tender of any
5 cheque for 299,000 at all?---Mr Segal, you had the money
6 there and you decided to" - and then Mr Segal jumps in,
7 "Referring to what you told Your Honour yesterday was the
8 evidence you gave in court about the exchange that
9 happened in court on 20 March?---Exactly." So there's that
10 passage.
11 Then it makes reference to Mr Segal and the
12 arguable defence. That's then put to him at 234. This is
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. "Are you
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 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. What
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. It's picked up at 235.8 where the
27 judge suggests to him - or line 2, he says, "You gave
28 evidence yesterday about certain matters referring to
29 20 March."
30 Then at line 8 Mr Segal is saying, "Yesterday you
31 gave evidence that in open court a 229,000 cheque was

Sgargetta
1 offered to him, and he said he would not accept it on the
2 basis of the instructions he received from his client.
3 He's saying that's not right. Do you disagree with what
4 he's saying today?" Mr Sgargetta, "Yes, I disagree.
5 I believe it was further on." That's important. "Like
6 I said, this is quite a lot of information here. You
7 disagree, fine." He then disagrees.
8 Mr Segal says, "And that it will be said at no
9 time by 15 April or otherwise have you paid NAB the sum of
10 299,000 in cleared funds." He says, "I've tried to." So
11 he's obviously mindful, if you look at that passage of
12 evidence, as to what happened on 20 March. "In my opinion
13 you can't get more clearer than a bank cheque from another
14 major bank." "I think your evidence was that the only
15 attempt you made was on 20 March?" "No, that's not true."
16 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. He
24 disagrees with that. "So you say you attempted to pay the
25 sum of 229 in cleared funds to the bank?" He says, "Yes,
26 I do." Then he says, "Over and over."
27 What then happens is over at 236 there's
28 objection. At 236, line 1, he said, "You handed a cheque
29 to the bank. Can you tell me when and where and who you
30 did that to?" He says, "It says that it needs to be
31 provided to Gadens. You're representing Gadens, Mr Segal,

Sgargetta
1 so the deed says hand it to Gadens." "Who did you hand
2 the cheque to at Gadens?---I was sort pinning it to your
3 shirt, Mr Gadens. I don't know where you can." So
4 plainly he's mindful there again of what's happening on
5 the 20th.
6 WHELAN JA: It's a pity he didn't say what happened rather than
7 being a smart aleck, but anyway.
8 MR HAYES: Well, if you look at his evidence and you come back
9 to his evidence, Your Honour, he doesn't know. He's
10 sitting in an interview room.
11 WHELAN JA: That's true.
12 MR HAYES: 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: It goes on.
18 WHELAN JA: I know, I know. It's just the attitude
19 that - anyway. I'm not criticising him for it.
20 Litigation gets everybody frustrated, even barristers
21 sometimes. Anyway. Just when you read it later on - - -
22 MR HAYES: Of course, Your Honour. Your Honours are well
23 acquainted with - - -
24 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: He does.
28 SANTAMARIA JA: (Indistinct) clearly communications between
29 counsel.
30 MR HAYES: That's right. But that would only be, Your Honour,
31 if there was some new arrangement. That evidence really

Sgargetta
1 has to be looked at because it goes to the dual issues.
2 If the deed is on foot, then it's evidence with respect to
3 performance of an obligation under a settlement, which
4 falls within section 131(2)(f). If it isn't, then
5 Mr Segal is right. It's how you characterise what's going
6 on between the parties; in other words, objectively
7 ascertain what are they actually trying to do; what's the
8 obligation that they are seeking to discharge.
9 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. We say to some degree
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. It's really how you
20 characterise - - -
21 WHELAN JA: Just addressing the requirements for the fresh
22 evidence of Mr Cole.
24 WHELAN JA: On the reasonable diligence point you say, "Well,
25 he's self-represented. It was all so confusing as to what
26 the significant thing really was. It just wasn't clear to
27 him that the critical thing he needed to do was prove an
28 offer had been made that day to pay 299,000. He
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

Sgargetta
1 probably uncontroversial in the end, in a sense, in the
2 limited way you want to put it.
3 MR HAYES: That's right, and we do put it in that limited way.
4 WHELAN JA: Then you say it's significant - well, only if
5 you're right about the deed still being on foot.
6 MR HAYES: Indeed. I address this in paragraph 10 of my
7 submissions. It took everyone by surprise, to the point
8 that Mr Segal himself found himself in a difficult
9 position in his re-examination of Ms Thomas, given that he
10 was front and square to the actual presentation of the
11 cheque. Essentially, Mr Segal's potentially a witness to
12 that event as to the issue of tender. So he was caught by
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 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. On 20 March
22 we did give them a cheque."
23 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. He knows that when the trial starts
30 the bank is saying, "There was no formal tender or
31 otherwise of the 299,000." So he's thinking, "As at

Sgargetta
1 20 March I've got to pay this - what this deed is really
2 all about, I've got to pay this 299,000 by 15 April. So
3 I've turned up with my cheque for 299,000 on 20 March, and
4 they're now saying I haven't tried to pay the money under
5 the deed."
6 SANTAMARIA JA: Who could he have called at the time to prove
7 that he had?
8 MR HAYES: Well - - -
9 SANTAMARIA JA: The answer to my question I think is Cole.
10 MR HAYES: Well, yes. Yes, he could have, had he have been
11 aware of that. What he tried to do, he tried to raise it
12 with Mr Segal when there were those glib responses in the
13 earlier passage.
14 WHELAN JA: He thought it had happened in open court too.
15 MR HAYES: Well, he did.
16 WHELAN JA: And he doesn't pore through the transcript like we
17 do.
18 MR HAYES: Indeed. Indeed.
19 WHELAN JA: So his recollection was that it had happened in
20 open court. So I suppose he thought he didn't need to be
21 calling anyone.
22 MR HAYES: Precisely.
23 WHELAN JA: It happened in open court, he thought.
24 MR HAYES: 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: Anyway, so that's why it wasn't led.
30 MR HAYES: And he couldn't call Mr Segal either.
31 WHELAN JA: Well, you wouldn't expect him to, really. But he

Sgargetta
1 could call Mr Cole.
2 MR HAYES: And if Mr Segal had have withdrawn - - -
3 WHELAN JA: Anyway, you'd be loath to do that, though, wouldn't
4 you? You'd be loath to do that, I think. It's
5 significant, but only if the deed's still on foot.
7 WHELAN JA: And it's credible because, well, Mr Cole's said
8 that's what happened. Then you want to rely actually
9 what's said in response yourself.
10 MR HAYES: 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. It would seem that he was
18 labouring under that misapprehension perhaps.
19 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. And the issue of

Sgargetta
1 characterisation really involves two parts: firstly,
2 whether or not through non-performance of clause 2.1(a)
3 the deed was still capable of performance and hence still
4 on foot; and, secondly, whether or not through the
5 parties' intervening actions between 25 February and
6 25 March their conduct could characterise whether or not
7 the deed was still on foot.
8 SANTAMARIA JA: So are you moving away from the fresh evidence
9 point now to trying to argue the deed is still on foot?
10 MR HAYES: If that would assist Your Honour I can go - - -
11 WHELAN JA: No, no, we just want to deal with fresh evidence at
12 the moment. So does that conclude what you want to say
13 about the fresh evidence?
14 MR HAYES: 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. In particular we say
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. We
22 say that the way in which the point developed does amount
23 to unusual. This is unusual, how Mr Sgargetta did find
24 himself in this position.
25 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

Sgargetta
1 Mitchell, which is referred to by the Chief Justice and
2 Justices Osborn and Macaulay in Sunland v Prudentia, where
3 they address the principles, and I think Mr Hay and I are
4 ad idem as to the appropriate test as to what Your Honours
5 need to be mindful of, where they cite Justice Chernov in
6 Foody v Horewood - - -
7 SANTAMARIA JA: Is this one of the authorities that you refer
8 to?
9 MR HAYES: 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. It is also
13 addressed in the case of Emer, and just included there as
14 well. Justices Harper and Emerton adopted a similar
15 approach.
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 - - -

Sgargetta
1 MR HAYES: I don't need any cross-examination at all.
2 WHELAN JA: Okay. We will just hear what Mr Hay says on the
3 fresh evidence point.
4 MR HAY: I can be relatively brief on this point. The point
5 that we take against the admission into evidence can be
6 boiled down to one, which is with reasonable diligence
7 this evidence would have been put forward. The aspect
8 about credibility and so on, we don't take any of those
9 points. 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. There
13 was a big gap between the March date and the August
14 hearing date. He knew that he wanted to contend - it's
15 pretty clear that he wanted to contend that a payment had
16 been made as good discharge of his obligation.
17 SANTAMARIA JA: Where do you get that from? It wasn't in his
18 pleading.
19 MR HAY: Your Honour, I may have to take that back a few
20 notches, Your Honour. He does seem to say in his pleading
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. Carried with that is
25 an implication that it will be performed. If the evidence
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. It's not like it was done by some agent that
29 he had no knowledge of. He should have known about it.
30 He should have known that he wanted to come to the court
31 and say so. In those circumstances, with reasonable
.MCA:MB 27/05/14 65 MR HAY

Sgargetta
1 diligence he could have gathered the requisite deponents.
2 One final point on this front, Your Honour, and
3 that is - - -
4 SANTAMARIA JA: Sorry, you've gone too fast for me there.
5 MR HAY: Sorry, Your Honour.
6 SANTAMARIA JA: You said to us he knew he wanted to contend
7 that there had been tender, and I paused you and I said,
8 "It's not in his pleading."
9 MR HAY: Yes.
10 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. As I said before, Your Honour, I do
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 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 66 MR HAY

Sgargetta
1 Mr Sgargetta was going to come to the court and say, "This
2 deed was live even after 20 March. I had the money.
3 I actually drew a bank cheque." As I understand it, it
4 actually ended up as a discovered document. The $299,000
5 cheque was in the court book. So all of those things
6 together, in my submission, can be a basis, as it were,
7 for an inference being drawn that he knew that the
8 proffering of that cheque and its circumstances was going
9 to be something that he wanted to tell the court.
10 SANTAMARIA JA: Yes, I understand. The trial was when?
11 MR HAY: August 2013, Your Honour.
12 SANTAMARIA JA: 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 MR HAY: Yes, that's how it's put. One final point on this,
25 Your Honour. If Your Honours do let - - -
26 WHELAN JA: No, just before you get to the "if". You say he
27 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 67 MR HAY

Sgargetta
1 MR HAY: I will do my very best to answer Your Honour's
2 question accurately. I think there has been some
3 confusion amongst the participants of the trial and with
4 the benefit of the greater distance we have (indistinct)
5 it. There seems to have been a difficulty thrown up by
6 the use of the word "tender", whether or not that had some
7 formalistic requirement, coupled with the fact of what on
8 our side of the fence we would say the without prejudice
9 dealings outside the open court session on 20 March.
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. It's difficult to
19 predict whether or not that would have occurred.
20 But - - -
21 WHELAN JA: We are in a situation now.
23 WHELAN JA: Is the evidence admissible? Was it admissible in
24 the trial? You say with reasonable diligence he could
25 have called this evidence. Was it admissible?
26 MR HAY: My guess, Your Honour, is it would have been objected
27 to. The court would have then had to go through the - - -
28 WHELAN JA: Are you objecting to it now then?
29 MR HAY: I say that it is without prejudice - well, this is the
30 difficulty. Mr Cole's affidavit is quite short and it
31 only goes to a very specific part of the dealings between
.MCA:MB 27/05/14 68 MR HAY

Sgargetta
1 the parties, and it doesn't give - - -
2 WHELAN JA: You then want to tell the whole story. But let's
3 just deal with Mr Cole.
4 MR HAY: Yes.
5 WHELAN JA: Is his evidence admissible?
6 MR HAY: In my submission, Your Honour, if the court knew all
7 of the circumstances it would not be admissible on the
8 basis that it's without prejudice.
9 WHELAN JA: But we have to look at your material to work that
10 out, you say.
11 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 MR HAY: I agree with that analysis, Your Honour, and confirm
28 that it means - - -
29 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 69 MR HAY

Sgargetta
1 MR HAY: No question, Your Honour.
2 SANTAMARIA JA: That's why you would say that it's a without
3 prejudice communication and not a performance.
4 MR HAY: That's right. I suppose if the issues had been
5 properly joined on the pleadings, whether or not this was
6 alive and capable of performance and had in fact been
7 performed, you may actually get into one of those
8 circumstances where the court has to admit the evidence in
9 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. I'm
15 sorry that I have been so nuanced in that answer, but - -
16 -
17 SANTAMARIA JA: Can I put a hypothetical situation to you?
19 SANTAMARIA JA: Let's assume that there was never a 2.1(a).
20 MR HAY: So no conditional approval.
21 SANTAMARIA JA: There was no provision 2.1(a) in this
22 agreement.
23 MR HAY: Yes.
24 SANTAMARIA JA: And what had to happen was that Mr Sgargetta
25 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 MR HAY: Yes, it does have to be Gadens. In the circumstances
31 that existed in this case, there was a representative of
.MCA:MB 27/05/14 70 MR HAY

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1 Gadens at court.
2 SANTAMARIA JA: You are really taking that point? By giving it
3 to Segal, he failed to give it to Gadens?
4 MR HAY: No, Your Honour. No, I'm suggesting that I think it
5 probably would be good discharge.
6 SANTAMARIA JA: It would be good discharge?
7 MR HAY: Yes, yes.
8 WHELAN JA: Here's what I've written down. I have changed it a
9 bit. 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. It depends on the
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: Either complied with or doesn't exist.
20 MR HAY: Yes.
21 WHELAN JA: Justice Santamaria put to you that it wasn't there
22 at all.
23 MR HAY: Yes.
24 WHELAN JA: But it would be the same if it had been complied
25 with. You say, "Well, look, it depends upon the basis on
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. 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 71 MR HAY

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1 SANTAMARIA JA: It would have been performance of the
2 obligation.
3 MR HAY: Yes.
4 SANTAMARIA JA: That's what I thought you said.
5 MR HAY: Yes. It would have been, Your Honour. I suppose the
6 reason for the complication is the existence of the first
7 clause and whether or not that was conditional. That then
8 renders, in my submission, the circumstances in which it
9 was proffered relevant.
10 WHELAN JA: All right. Do you want to say anything just on the
11 fresh evidence point in addition to what you've already
12 said?
14 WHELAN JA: Okay. We will just stand down for a short time,
15 but don't go away.
16 (Short adjournment.)
17 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. Presumably you want to
22 rely on the other evidence?
23 MR HAY: I do, Your Honour, yes.
24 WHELAN JA: Given that, do you want to say anything about that,
25 Mr Hayes? You want to rely on it too, don't you?
26 MR HAYES: Absolutely.
27 WHELAN JA: 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. They are the three, are they?
.MCA:MB 27/05/14 72 DISCUSSION

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1 MR HAY: They are, Your Honour.
2 WHELAN JA: All right. So we have those four affidavits. Now
3 we can go to the substantive issues.
4 SANTAMARIA JA: I think we are agreed, aren't we, that the
5 communications which were sent up to us by Mr Hay this
6 morning, the communications of 25 and 26 February 2012,
7 they are all in evidence before us, before His Honour and
8 available to us now?
9 MR HAYES: Yes.
10 WHELAN JA: They are P19.
11 MR HAYES: Yes, they are.
12 WHELAN JA: So how did you comply with 2.1(a)?
13 MR HAYES: We say this, Your Honour. Firstly, the primary
14 judge quite rightly outlined the High Court's decision in
15 Meehan v Jones. We don't quibble with the fact the way
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. Essentially what happened was - and the trial
19 judge deals with this comprehensively in his reasons.
20 There was the Red Rock loan proposal, leaving aside - - -
21 SANTAMARIA JA: Are the authorities to the effect - does Meehan
22 v Jones say, "Yes, you can have unilateral assessment by
23 one party of satisfaction. That's all right because the
24 court can always look to see whether what was done was
25 reasonable and whether what was done was honest"?
27 SANTAMARIA JA: 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. This is not one of those cases where the

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1 clause properly read absent the reasonable and honest
2 supervisory caveat of the court, we say it's not one where
3 it's hopelessly incapable of certainty or performance to
4 the point it would render performance arbitrary and
5 therefore not be binding at the hands of the respondent.
6 We say it doesn't go that far.
7 So my friend quite rightly states and His Honour
8 quite rightly informed himself of two aspects. Firstly,
9 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 SANTAMARIA JA: Which you don't impeach. You don't impeach
14 His Honour's findings that it was honest and reasonable.
15 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. We seek not to impeach His Honour's
18 consideration of that evidence.
19 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. It would seem to be 200,000 to 1 million; and,
23 secondly, he seemed - well, three things, really.
24 Secondly, he said - - -
25 SANTAMARIA JA: Where does His Honour say (indistinct).
26 MR HAYES: I will take Your Honour to the reasons.
27 SANTAMARIA JA: I think you start at page 23 of His Honour's
28 judgment.
30 SANTAMARIA JA: Which is where His Honour lays out 2.1(a) and
31 2.1(b).

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2 SANTAMARIA JA: Then he starts giving the facts. I will tell
3 you what I understand. Paragraph 76 is Red Rock number 1.
5 SANTAMARIA JA: Paragraph 82 is Red Rock number 2.
7 SANTAMARIA JA: And then paragraph 84 is ABNZ.
8 MR HAYES: Yes.
9 SANTAMARIA JA: There's a mistake in relation to Red Rock 1?
10 MR HAYES: 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 SANTAMARIA JA: (Indistinct). I know Justice Whelan might be
14 interested. What are those mistakes?
15 MR HAYES: Very briefly, Your Honour. The loan proposal was
16 dated 11 February 2013. It wasn't prepared for
17 admin@bricksandsticks. It was actually prepared for the
18 appellant's wife. It says the minimum loan amount was -
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. He goes on
22 further in paragraph 80, however, to say that - - -
23 WHELAN JA: Sorry, these are mistakes, are they?
24 MR HAYES: Mistake as to the date, Your Honour, and also - - -
25 WHELAN JA: It's not a mistake.
26 MR HAYES: He has then addressed it further on.
27 WHELAN JA: No, wait on. The document says it's dated
28 11 February 2013.
30 WHELAN JA: But signed 22 February 2013; okay. So there's a
31 typo there.

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1 MR HAYES: Yes.
2 WHELAN JA: It does says it's prepared for
3 admin@bricksandsticks.
4 MR HAYES: It does. But then he goes on to say it's prepared
5 for Mrs Sgargetta.
6 WHELAN JA: She signed it as the applicant.
7 MR HAYES: She did, yes. Notwithstanding that, what His Honour
8 has done, His Honour has still evaluated the evidence of
9 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: Okay.
12 MR HAYES: He has evaluated the evidence of Ms Thomas at
13 paragraph 86 in the reasons and onwards. We say that,
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: So you don't impeach 86?
20 WHELAN JA: There is no way that document can be described as a
21 letter of approval.
22 MR HAYES: No.
23 WHELAN JA: Okay. So there's no argument about that.
24 MR HAYES: 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: On one view, yes, 2.1(a) - - -
30 SANTAMARIA JA: You don't impeach 86 and you don't impeach 87.

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1 SANTAMARIA JA: And you don't impeach 88.
2 MR HAYES: That's right, because what we're left with as
3 I addressed Your Honour Justice Santamaria before is the
4 correct application of Meehan v Jones, His Honour's
5 factual findings, having had the opportunity of seeing and
6 hearing the evidence of Ms Thomas, and there's nothing
7 that we could put before this court that would permit us
8 to trespass or impeach those findings.
9 SANTAMARIA JA: So would you mind my asking where you're going.
10 So 2.1(a) is okay. What His Honour had to say about
11 2.1(a) is unimpeachable.
13 SANTAMARIA JA: 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 MR HAYES: Yes, unless the deed was specifically terminated in
21 the meantime.
22 SANTAMARIA JA: I understand. I see where you are going.
23 Thanks very much.
24 MR HAYES: If Your Honour pleases.
25 WHELAN JA: We might take that up at 2.15.
26 MR HAYES: If Your Honour pleases.
27 LUNCHEON ADJOURNMENT
28
29
30
31

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1 UPON RESUMING AT 2.16 PM:
2 WHELAN JA: Mr Hayes.
3 MR HAYES: Yes, Your Honours. I think where we left it prior
4 to lunch was dealing with whether or not the deed was on
5 foot. I will endeavour to develop our submission on this
6 point, Your Honours, by starting at our written
7 submissions, and in particular paragraph 16 of the written
8 submissions and also paragraph 74 of the judgment.
9 WHELAN JA: Paragraph 74?
10 MR HAYES: 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. Then Your Honours will see in paragraph 16
13 of the submissions paragraph 3 of the deed is there
14 repeated for convenience. We say that in terms of
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 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. So you're left with
30 the deed. The starting point, as Your Honour quite
31 rightly observed in Hollyburton, and we say this at

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1 paragraph 19, the important thing is to carefully
2 identify, trite as it might be, what has been agreed and
3 what has not been agreed, and Your Honour observes that
4 each case depends upon its own facts.
5 We say that when one looks at this deed and its
6 proper construction the correct characterisation of it is
7 one of an accord and conditional satisfaction. What does
8 that mean? Well, it means that the parties have reached an
9 agreement which is embodied in clause 2.1 and 2.2 of the
10 deed and also clause 3. You need to read those three
11 provisions together. What they have agreed is to
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 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. I will break
19 those down in a moment as to - - -
20 SANTAMARIA JA: 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.

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1 I'll just be referring to Toll and Electricity Generation
2 v Woodside. I will hand those up in a moment,
3 Your Honours.
4 But we say that taking a purposive approach to
5 these provisions of the deed what Your Honours can glean
6 is that the purpose of this transaction was to ultimately
7 bring about payment for the bank of a compromised sum and
8 bring about an end of the litigation, and also the dispute
9 under the mortgage, which was the subject of the
10 litigation. That end only came about on payment of the
11 299,000. All very well to get the approval; all very well
12 to get that. But really what this was about was about
13 ultimately the payment, because the deed on its face says
14 that both are required. But really when one looks at the
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.
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. Upon that the respondent, the

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1 bank, has promised - in other words the exchange of
2 promise - to bring about an end of proceedings, and also
3 to discharge the mortgage.
4 However, what we have is running along parallel
5 to this is the summary judgment application which sort of
6 confuses things when one strips back to what it was
7 objectively ascertained as to what it was the parties
8 actually agreed upon and what the purpose of the
9 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. Your Honours will be well familiar
14 with the passages in Toll v Alphapharm and also
15 Electricity Generation v Woodside Energy. I have provided
16 copies to Mr Hay.
17 Forgive me, Your Honours, for reminding the court
18 of what is now a very much trite proposition. I'm reading
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 "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

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1 understood as referring to what a reasonable person would
2 understand by the language in which the parties have
3 expressed their agreement. The meaning of the terms of a
4 contractual document is to be determined by what a
5 reasonable person would have understood them to mean.
6 That, normally, requires" - and this is the important bit
7 - "consideration not only of the text, but also of the
8 surrounding circumstances known to the parties, and the
9 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. The meaning of the terms of a commercial
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

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1 market in which the parties are operating'. As Arden LJ
2 observed in Re Golden Key Ltd, unless a contrary intention
3 is indicated, a court is entitled to approach the task of
4 giving a commercial contract a businesslike interpretation
5 on the assumption 'that the parties ... intended to
6 produce a commercial result'. A commercial contract is to
7 be construed so as to avoid it 'making commercial nonsense
8 or working commercial inconvenience'."
9 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. It
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 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. All it does is give some certainty that it
28 might happen. What actually brings it about and gives
29 effect to that ultimate purpose or bargain is the actual
30 payment itself.
31 While that obligation still survives, and we say

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1 it does under 2.1(b) because it was still capable or
2 rendered - or it was still capable of being performed,
3 while that's still alive, provided it's capable of being
4 performed, we say that performance or an act, if one looks
5 to the tender, equal to the performance of that core
6 bargain is sufficient to invoke the bargain or the
7 conditional satisfaction which is embodied within the
8 deed.
9 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. When I look at 2.1(a)
13 there I think, "Well, they put it there for a reason."
14 MR HAYES: Yes.
15 SANTAMARIA JA: Any assessment of the purpose of this agreement
16 must comprehend the reason that 2.1(a) was put there.
17 MR HAYES: Yes.
18 SANTAMARIA JA: Your interpretation suggests that 2.1(a) is
19 performing no function at all.
20 MR HAYES: It performs no function at all - no, I'm not putting
21 it that way, Your Honour. I'm saying this. It performs a
22 subordinate function to the core obligation in 2.1(b). It
23 ensures that 2.1(b) will be performed.
24 SANTAMARIA JA: 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: Yes.
30 SANTAMARIA JA: If they are non-core, if they're breached you
31 can only get damages.

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2 SANTAMARIA JA: But why isn't 2.1(a) a core obligation, because
3 it provides the time - it's got a reference to time?
4 MR HAYES: Yes.
5 SANTAMARIA JA: And elsewhere in the agreement provision is
6 made that everything that refers to time is of the
7 essence.
8 MR HAYES: It does.
9 SANTAMARIA JA: Which is aka core.
10 MR HAYES: It is. Yes, Your Honour, it's hard to quibble with
11 the fact that it's expressed. Its importance is informed
12 to some degree by the fact that the parties chose to say
13 that time be of the essence as to its performance. But
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 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: Yes.
25 WHELAN JA: And an agreement is made they'll stay their hand as
26 long as certain things happen by a particular time. The
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. It says you can proceed to summary

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1 judgment.
2 WHELAN JA: For what?
3 MR HAYES: For summary judgment.
4 WHELAN JA: For what? For what sum of money?
5 MR HAYES: It doesn't say.
6 WHELAN JA: You would say it has to be 299,000.
7 MR HAYES: No, we wouldn't because in that respect it's not
8 clear. It says, "Yes, you can proceed to summary
9 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. In there I'm reading from page
13 152 of the court book. It was exhibit P19 at the trial.
14 WHELAN JA: Yes.
15 MR HAYES: 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). He says here, "Accordingly,
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 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. So it suggests on one view that
26 the deed is still alive. We say that all it does when one
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

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1 the proceedings generally.
2 WHELAN JA: Yes, but that's all they are agreeing to do. "As
3 long as you do these things, we will adjourn the summons."
5 WHELAN JA: "And, once you've done all of them, we'll release
6 you."
7 MR HAYES: But it's a different thing to actually terminate and
8 bringing the deed to an end.
9 WHELAN JA: The deed provides for what's to happen.
10 MR HAYES: I'm sorry, Your Honour?
11 WHELAN JA: I think when you look at the purpose it does have a
12 purpose, 2.1(a). They wanted to know by 1 March that
13 there was a letter of approval in place. I can understand
14 why they might have wanted that. How is that ancillary or
15 peripheral? Why isn't that fundamental? They have got
16 their hearing date, Friday, 1 March.
17 MR HAYES: Yes.
18 WHELAN JA: They want to know before then.
19 MR HAYES: 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 WHELAN JA: For the purpose of putting a line through it and
23 saying you ignore it? What other purpose?
24 MR HAYES: What it really says is you ignore it at your own
25 peril because clause 3 doesn't extinguish. All it says is
26 that the respondent can proceed to summary judgment - - -
27 WHELAN JA: Yes, but all they are agreeing to do is not to
28 proceed in clause 2.
30 WHELAN JA: Then 3 says, "But we will if you don't" - - -
31 MR HAYES: Yes.

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1 WHELAN JA: And they do. Then Judge Cosgrave decides the case.
2 MR HAYES: But they're not saying, "We're not going to receive
3 the money," because that obligation still survives. They
4 haven't brought the entire deed to an end. They have just
5 simply said, "We are going to proceed with our matter on
6 1 March."
7 SANTAMARIA JA: 1 March you have just referred to. When you go
8 to the recitals (indistinct) background.
10 SANTAMARIA JA: A good place to find the background is under
11 the heading, "Background".
13 SANTAMARIA JA: It sort of tells the story that we are all very
14 familiar with. Then you get to recital A, and it is
15 summons is listed for hearing on 1 March.
16 MR HAYES: Yes.
17 SANTAMARIA JA: I know we all know that, but that's stipulated
18 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. So
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

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1 the rights under the deed for performance of that
2 obligation.
3 So it's almost like having an each way bet.
4 "Well, look, we're going to steam ahead. We're not going
5 to give up the commercial arrangement or the commercial
6 object of the transaction which was the payment of money
7 in exchange for bringing everything to an end. We're
8 going to now start steaming ahead." The difficulty would
9 be obviously if they succeeded in getting judgment on
10 1 March my case would be much difficult. But that didn't
11 happen.
12 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). That's about as far as I can take it,
16 Your Honours.
17 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. We say that while
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 So had the hatchet had fallen on 1 March I would
29 be in an impossible position. But it didn't. Because it
30 didn't and because the deed doesn't have an express
31 provision for termination nor was there any termination

Sgargetta
1 for any breach or repudiation on the part of the appellant
2 of clause 2.1(a), the obligation under 2.1(b) continued
3 and indeed was satisfied while it continued prior to any
4 hatchet falling, if I can put it in those terms. If
5 Your Honours please.
6 WHELAN JA: Are you coming to the end of this point?
7 MR HAYES: Yes, Your Honours.
8 WHELAN JA: There was reference in your submissions to waiver
9 and estoppel.
10 MR HAYES: That might have been in previous counsel's notice of
11 appeal, Your Honour.
12 WHELAN JA: Was it? Okay.
13 MR HAYES: Yes.
14 WHELAN JA: You don't want to say anything about that? I was
15 going to ask whether it had been pleaded or run below.
16 MR HAYES: No, I'm not running that point.
17 WHELAN JA: 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: And willingness and an attempt to do it.
24 MR HAYES: An act equal to performance.
25 WHELAN JA: Yes, that's right.
26 MR HAYES: So it's better.
27 SANTAMARIA JA: 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. Are you able to give us any help about that
31 at all?

Sgargetta
1 MR HAYES: No, I'm not, Your Honour.
2 SANTAMARIA JA: What on earth does that mean? You are
3 presenting them to the court (indistinct). Is there
4 anything that you wish to draw our attention to, tell us
5 how it's constituted, what it refers to?
6 MR HAYES: No, Your Honour. I'm sorry. Your Honour will
7 recall that the balance of the points other than the
8 tender point have not been abandoned, they are there, but
9 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. As
13 unhelpful as that may be, hopefully that may be of some
14 help to Your Honour.
15 WHELAN JA: Okay.
16 MR HAYES: 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. That's page 152.
24 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: Which page was it again, sorry?
29 MR HAYES: 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

Sgargetta
1 a summons for summary judgment which is listed for hearing
2 on Friday, 1 March 2013." Not helpful to my case,
3 Your Honour, but it has to be read. If I'm going to refer
4 to Mr Pringle's earlier email, Your Honours should see
5 this one for the sake of completeness. We say of course,
6 as benign as it might seem, tucked away in that last line
7 of the email, it's not without some force that he's
8 reserved his rights under the deed, which seems to be
9 consistent with - while that's not going to aid
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: Can I just check one last thing, Mr Hayes?
22 SANTAMARIA JA: 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.

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1 MR HAYES: I'm content with that course, Your Honour.
2 SANTAMARIA JA: Thank you.
3 MR HAYES: To the extent that that document deals with the
4 tender point, I would invite the court to rely upon how
5 the point has been put in court and in the supplementary
6 submissions.
7 SANTAMARIA JA: It's not only the tender point. It's also what
8 you had to say about Meehan v Jones.
9 MR HAYES: Of course, yes.
10 SANTAMARIA JA: Also what you had to say about His Honour's
11 findings about honesty, reasonableness being unimpeached.
12 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. But if
18 Your Honours are with us on that point, then we would
19 invite Your Honours to consider the state of the evidence.
20 Your Honours, I won't address those matters on
21 the existing evidence or indeed the new evidence. They
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. We
25 are there as to where the point ultimately finishes. The
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 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

Sgargetta
1 now sufficient to overcome His Honour's reasoning at 109
2 of his reasons that there was no tender. So if
3 Your Honours find, based on Mr Segal and also Mr Cole's
4 evidence, that there was a tender on the day in question,
5 on 20 March, then we say that that brings about a defence
6 of tender for the accord of conditional satisfaction and
7 the consequences of that are that brings an end to the
8 proceedings and ultimately the appellant would be entitled
9 to the appropriate declaratory relief.
10 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. It's apparent as to how
20 His Honour got to that point. But the new evidence, now
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. The
24 new evidence itself simply would overcome that error of
25 His Honour.
26 SANTAMARIA JA: I'm not sufficiently familiar now with your
27 supplementary submissions. I'm just looking at the notice
28 of appeal. The orders sought, have you (indistinct) in
29 your submissions?
30 MR HAYES: I'm afraid I haven't, Your Honour. Counsel
31 preceding me very helpfully, he was assisting

Sgargetta
1 Mr Sgargetta, he obviously devoted some time, previous
2 counsel, to getting the notice of appeal. If we are
3 successful we are content to rely upon - on the tender
4 point we say that the appropriate orders should be 3(a).
5 WHELAN JA: This is from the notice of appeal?
6 MR HAYES: Yes, Your Honour. And 3(b), although the difficulty
7 with 3(b), Your Honours, is that it doesn't deal with the
8 tender point, which really should have formed part of
9 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. But it's really a contention that's been
18 pressed, and it should have been pressed in the defence
19 and counterclaim.
20 SANTAMARIA JA: I have the counterclaim in front of me and it
21 doesn't help me at all as to what it is that you want.
22 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: So you want (a) and (h).
26 MR HAYES: (a) and (h), yes.
27 WHELAN JA: Okay.
28 MR HAYES: We don't seek an order for costs on the appeal if we
29 are successful. Your Honours will see that. But we would
30 seek, to the extent that there have been costs incurred by
31 the appellant himself, the costs that he has incurred in

Sgargetta
1 the proceedings as a consequence which is consistent with
2 what the High Court said in Young's case, Your Honour.
3 I read from it earlier this morning. It was the end of
4 the passage I read from Young.
5 WHELAN JA: You can probably best deal with costs once the
6 outcome is known.
7 MR HAYES: Yes.
8 WHELAN JA: You are jumping the gun.
9 MR HAYES: But we would seek 3(a) and (h).
10 WHELAN JA: Okay, 3(a) and (h) is the relief you want. All
11 right.
12 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. We would be prepared to do it.
17 It's a matter which should have been properly raised in
18 the defence and counterclaim.
19 WHELAN JA: Okay.
20 MR HAYES: Subject to any further questions from Your Honours,
21 they are the submissions for the appellant.
22 WHELAN JA: Thanks, Mr Hayes. Yes, Mr Hay.
23 MR HAY: Thank you, Your Honour.
24 SANTAMARIA JA: 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. I think that is the
31 position, but there would be an additional gloss. There
.MCA:MB 27/05/14 96 MR HAY

Sgargetta
1 was a further obligation in 2.1(b); there was a withdrawal
2 of the defence and counterclaim. So there was an
3 additional thing to do which clearly was not done.
4 Your Honours, could I start with the extract from
5 the Court Connect material, which is the first of the two
6 documents that I handed up this morning which has aspects
7 of the procedural history set out in this document. Court
8 Connect, in case Your Honours aren't familiar with it, is
9 an on-line portal that you can log on to and you will see
10 all the orders and procedural steps taken listed on the
11 website.
12 WHELAN JA: That's this?
13 MR HAY: That's right, Your Honour, yes.
14 WHELAN JA: Did you hand that up?
15 MR HAY: It was emailed this morning. There were two
16 documents. So there was P19 - - -
17 WHELAN JA: 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. We have the County Court file. We tried to
20 compile our own chronology.
21 MR HAY: 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. I haven't included all of them there. I have taken
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 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. That order is actually on the next
31 page. In particular, Your Honours will see order 2, which
.MCA:MB 27/05/14 97 MR HAY

Sgargetta
1 is the proceeding be set down for trial on 20 March 2013.
2 So that happens, as is common in these cases; there's a
3 trial date given quite early in the piece.
4 SANTAMARIA JA: In fact he set aside a default judgment first
5 of all, didn't he?
6 MR HAY: That's right, Your Honour. Yes. So there's default
7 judgment set aside. But when it is being litigated inter
8 partes this is the first order of a trial date. The next
9 page is page 7. You will just see a filing entry. Trial
10 is listed again for 20 March. I think that's an internal
11 court listing.
12 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: Send the parties to mediation.
16 MR HAY: That's right. And in particular the plaintiff's
17 summary judgment application is fixed at that time for
18 1 March. Your Honours will then see the next page of 14
19 of 22. This is important because - - -
20 SANTAMARIA JA: What's the date of it?
21 MR HAY: That's 8 March, Your Honour, which is obviously one
22 week after the 1st. As I'm instructed, there was some
23 difficulty with the matter going ahead on the 1st. It may
24 have been the unavailability of a judge or something like
25 that. But, in any event, the first return, as it were, of
26 the summary judgment was the 8th. There's some evidence
27 to this effect given by Mr Segal, but I think it's
28 Mr Sgargetta's father appears at that time.
29 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 98 MR HAY

Sgargetta
1 made by Mr Segal to the effect that it is not. But for
2 present purposes it's important to note that the summary
3 judgment application is adjourned to the trial of the
4 proceeding, which is also on 20 March.
5 We then get to page 16 of 22. That's an order of
6 20 March 2013.
7 SANTAMARIA JA: On 8 March the first order was "leave to
8 Mr Dennis Sgargetta, the father of the defendant, to
9 represent his son hearing the application today"?
10 MR HAY: Yes. You also see there Mr Cole appeared on that
11 first occasion as well.
12 SANTAMARIA JA: Not on 8 March.
13 MR HAY: It says, "It's noted that Mr Daniel Cole of counsel
14 appeared to assist the court".
15 SANTAMARIA JA: You are quite right.
16 MR HAY: 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. You will
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."
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 99 MR HAY

Sgargetta
1 summons filed 14 December and the hearings of 1, 8 and
2 20 March are costs in the cause. The plaintiff's said
3 summons is otherwise dismissed." That's the summary
4 judgment.
5 Then just to make good the point about when the
6 amended counterclaim was filed, you will see at the bottom
7 of the next page, 17 of 22, about point 8 on the page,
8 "Amended counterclaim filed," and the date is 22 March.
9 The next document I'd like to take Your Honours
10 to is the deed itself. There are various places, but the
11 one I'm referring to is attached to Mr Pringle's
12 affidavit.
13 SANTAMARIA JA: It's the same.
14 MR HAY: Yes, it's the same thing, Your Honour. I would just
15 like to point out a few aspects of this deed. The first
16 is you will see there it's February 2013. As the court
17 has already noted, the summary judgment is in prospect and
18 at that stage has not been adjourned. As noted in recital
19 H, it's listed for 1 March.
20 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. I say that
27 for this reason.
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. Because of course at the time this
.MCA:MB 27/05/14 100 MR HAY

Sgargetta
1 deed is drafted the bank doesn't know whether or not it's
2 going to succeed on that summons. But if it does then
3 more generally it can proceed with the proceeding.
4 Then you look at the mutual releases. 4.1 is the
5 release given by Mr Sgargetta after he has paid the 299 in
6 clause 2.1 from all of the things that you commonly see
7 there: the home loan proceeding, the mortgage, the
8 counterclaim et cetera.
9 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. The reason that
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. Then once the fetter is removed it can proceed,
17 as it was going to, for the much greater sum.
18 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. The reason for that is at least twofold.
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: Mr Colella didn't take it into account.
26 MR HAY: 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. There was evidence to the
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. But, in any
.MCA:MB 27/05/14 101 MR HAY

Sgargetta
1 event, that allowed the interest to run for a significant
2 period of time.
3 SANTAMARIA JA: Is that right, Mr Hay? Once complaint is made
4 to FOS there is some protocol that says enforcement
5 proceedings must be suspended?
6 MR HAY: Yes. What happens, Your Honour - I have done a lot of
7 this sort of work.
8 SANTAMARIA JA: Where does it appear?
9 MR HAY: 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. As a bank you need to sign up to
12 one of these dispute resolution services. They have these
13 terms. There is a decision of this court. I think it's
14 called Mickovski v Financial Ombudsman Service. I can
15 send up the citation.
16 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. The best example that one can give is if a
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: And it doesn't suspend the (indistinct).
.MCA:MB 27/05/14 102 MR HAY

Sgargetta
1 MR HAY: It does not.
2 SANTAMARIA JA: So interest just keeps on piling up.
3 MR HAY: That's so. At the end of that time FOS can make a
4 recommendation. That can be accepted or rejected by a
5 disputant. It's binding on the bank, but not on the
6 borrower. And so on it goes. I will send that reference
7 up, Your Honour.
8 So the reason I pointed that out in this deed is
9 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. Just to test the
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 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. Instead of the summary
21 judgment application it could have been the trial of the
22 action. Sometimes judges are able to turn those decisions
23 out quite quickly, and it could have been that before
24 15 April there was a judgment.
25 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. So to
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 27/05/14 103 MR HAY

Sgargetta
1 bank was entitled to move as it did.
2 SANTAMARIA JA: Just putting that again, what you are saying is
3 that as at 5 February not only was the summons listed for
4 hearing on 1 March but the trial was also listed for
5 hearing on 1 March?
6 MR HAY: No, the trial was listed on 20 March, Your Honour.
7 SANTAMARIA JA: 20 March?
8 MR HAY: That's right. Then something happened on the 1st. It
9 went over to the 8th. Then on the 8th it was pushed to
10 the 20th, the summons.
11 SANTAMARIA JA: I'm just talking about the interpretation - - -
12 MR HAY: Yes, yes.
13 SANTAMARIA JA: 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. The trial is
18 probably of less import to the construction. The reason
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. That's to say he loses the opportunity to do so when
27 he misses the obligation in 2.1. Otherwise it would just
28 be hanging over there, even though - - -
29 SANTAMARIA JA: 2.1(a).
30 MR HAY: 2.1(a), sorry, Your Honour; quite right. Otherwise
31 this is at any time, even after the close of evidence in
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Sgargetta
1 the trial, he could have just tendered the 299 and then on
2 Mr Hayes' construction we would have been obliged to take
3 it. It just doesn't make any sense in the circumstances
4 in which this deed was executed.
5 SANTAMARIA JA: One of those circumstances is that the deed at
6 trial could have been up and over by the end of March.
7 MR HAY: That's the point I'm trying to make; yes, Your Honour.
8 The deed and/or the summary judgment application.
9 WHELAN JA: So the summons is most significant.
11 WHELAN JA: Because it was returnable very shortly after
12 25 February, namely 1 March.
13 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. They would have had to have adjourned it.
19 SANTAMARIA JA: So what would have happened? This is 5 February
20 that this is executed.
21 MR HAY: Yes.
22 SANTAMARIA JA: Let's say he had complied with 2.1(a) and he
23 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. What's the significance
28 of 2.1(b)?
29 MR HAY: I don't think that could have occurred. The bank
30 would have been in breach of its obligations. If it had
31 looked at the conditional letter of offer and acting
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Sgargetta
1 honestly and reasonably and such like it had formed a view
2 it was a good offer, it would not have been at liberty to
3 proceed with its summons or the trial. It would have had
4 to do all things necessary to delay it until after some
5 time.
6 WHELAN JA: 2.1 says that in the beginning about the summons.
7 MR HAY: Yes.
8 WHELAN JA: "NAB will agree to adjourn the hearing of its
9 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. If we had left out reference to
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 That same point, Your Honours, also goes to
24 support the proposition that 2.1(a) is not a non-core
25 promise. There are not many obligations in this deed,
26 really. Summed up, on Mr Sgargetta they are probably the
27 letter, the payment and the withdrawal of the defence and
28 counterclaim. Each was of significance and each had to be
29 abided. Mr Hayes has tried to focus on the main payment,
30 but in doing so he's put to the periphery what was also,
31 viewed objectively, a critical thing from the bank's
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Sgargetta
1 perspective, and that was it wanted certain and
2 significant comfort to its satisfaction that if it
3 adjourned the summons it was doing so for good reason.
4 That good reason is there was a really good prospect of
5 the money coming in.
6 Can I move just to address one aspect of
7 Mr Hayes's submission about whether or not repudiation
8 occurred or whether or not it was accepted or if there was
9 a breach it wasn't an accepted repudiation on the bank's
10 part. Properly construed, in my submission, what occurred
11 when 2.1(a) was not abided, that freed the bank from any
12 obligation imposed by this deed on it. It wasn't a
13 breach. What was happening here is that its obligations
14 at that time were spent. Properly construed, it wasn't a
15 circumstance where - this is my primary submission - the
16 bank had to say, "You evinced an intention no longer to be
17 bound. We accept. We are pushing forward."
18 The reason I say that is that, as Justice Whelan
19 has observed, the consequence was specified already in
20 clause 3. In that case the consideration had been given.
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."
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
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Sgargetta
1 that he wasn't impeaching any of that.
2 MR HAY: He's not impeaching any of that. The main point in
3 making this part of my submission, Your Honour, is just to
4 deal with the reservation of rights under the deed in that
5 first email; I think it's 26 February. In my submission,
6 that does not amount to keeping the deed enlivened. What
7 it amounts to is a clear expression of pressing forward
8 with the summons, but a preparedness to consider further
9 proposals.
10 SANTAMARIA JA: (Indistinct) every time a solicitor said, "We
11 reserve all our rights," there was an explosive
12 consequence.
13 MR HAY: Yes, and with the consequence that a deed which is
14 expressed to expire, as it were, is somehow enlivened or
15 continued. But, in any event, as my friend has quite
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. Critically, that
21 happens on 27 February 2013, well before 20 March, where
22 this alleged tender occurred.
23 SANTAMARIA JA: 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 27/05/14 108 MR HAY

Sgargetta
1 are against me on the construction, that is if the deed
2 survived, was still on foot by 20 March, it would be then
3 my obligation to grapple with what occurred on 20 March.
4 To do that I need to briefly go to the evidence of the
5 respondent that's been filed, and that's of course the
6 Pringle affidavit, the Segal affidavit and the Minassian
7 affidavit, all of 26 May.
8 Critically we can probably deal with it in terms
9 of direct exchanges between the parties, it's probably
10 mainly Mr Segal's affidavit. When we get there,
11 Your Honours, paragraph 7 is the first one I'd like to
12 take Your Honours to.
13 WHELAN JA: Just give me a second because I haven't read this.
14 MR HAY: Certainly.
15 WHELAN JA: You can just sit down for a minute. Okay.
16 MR HAY: 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. The first is paragraph
19 7. You will see there that's the reference I made to the
20 8 March appearance at which the appellant 's father
21 appeared on his behalf. There's a submission there that
22 the deed had not been complied with and could no longer be
23 complied with by payment. So to the extent that there was
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 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. Then the offer is in fact put
31 at paragraph 9. The exchange is set out there. That's
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Sgargetta
1 effectively a good insight into the reason why the 299 was
2 no longer acceptable to the bank, not that that strictly
3 matters. It was either contractually obliged to accept it
4 or it was not. But it gives some indication as to why the
5 bank was no longer willing to accept the 299. That's also
6 to be remembered in circumstances where the trial itself
7 was listed at that stage for the 20th, with all the
8 preparation and costs and the like that that would have
9 given rise to.
10 Then there's a further exchange, and at paragraph
11 11 Mr Shirrefs makes contact with Mr Segal. Then the
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 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. Then we get to the 20th, which is
28 most important for present purposes. There it's expressed
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. It is offered in full
.MCA:MB 27/05/14 110 MR HAY

Sgargetta
1 and final satisfaction of the matter. I'll let you get
2 some instructions, but I have the cheque here today as you
3 can see." "Thanks. I will get some instructions."
4 Again, critically, it is not on that evidence
5 proffered as payment of an extant obligation; it's a new
6 deal which is one of two options that we were discussing
7 before this evidence was admitted. That's how the bank
8 contends the true position was. What we have here is a
9 new without prejudice offer and therefore, even if it was
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. There's an instruction given not to pursue the
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 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. I think that coupled with the confusion
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: What he believes is the nature of their
28 (indistinct) doesn't matter too much. It's what an
29 objective observer would make of it.
30 MR HAY: Yes.
31 SANTAMARIA JA: But I notice that this deponent hasn't been
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Sgargetta
1 cross-examined and he frequently stipulates that he used
2 the words "without prejudice".
3 MR HAY: He does. Your Honour can have some comfort with that.
4 These recollections, as it were, are backed by the
5 instructions given to Mr Segal by the two solicitors at
6 Gadens, Mr Pringle and Ms Minassian, who depose, and I can
7 take Your Honour to if you like, asking Mr Segal - - -
8 SANTAMARIA JA: I've seen those.
9 MR HAY: Yes, saying, "Can you make a without prejudice offer
10 as between counsel."
11 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. 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.
16 MR HAY: Yes. See opening statement from Nab counsel.
17 SANTAMARIA JA: 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. Again it may be - - -
23 SANTAMARIA JA: I'm glad you understand the significance of the
24 question, but what's the answer?
25 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: Yes.
29 MR HAY: 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
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Sgargetta
1 needed to be tendered to Gadens or via counsel.
2 SANTAMARIA JA: Yes.
3 MR HAY: Now, in those circumstances, had it been tendered
4 there would have been an obligation by operation of this
5 deed to accept it as good payment. What we have, though,
6 is in the true circumstances of this case we did have at
7 the very least a dispute about clause 2.1(a), and in those
8 circumstances there was continuing discord between the
9 parties.
10 SANTAMARIA JA: I understand. 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. That's my position.
15 SANTAMARIA JA: I understand what you are saying.
16 MR HAY: 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. They don't directly go to
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. But the real
24 core of it is Mr Segal's affidavit.
25 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 27/05/14 113 MR HAY

Sgargetta
1 On that front I think it's sufficient for the
2 respondent to rely on its written submissions that were
3 filed partly in answer to the notice of appeal that was
4 drawn by counsel and partly in answer to the submissions
5 of 2 May, I think it is, from the appellant who provided
6 them in person. I can do it very quickly by topic.
7 SANTAMARIA JA: Whereabouts is - - -
8 MR HAY: Yes, it's behind tab 2, Your Honour, of appeal book 2.
9 SANTAMARIA JA: 14 May?
10 MR HAY: I have it as 2 May, Your Honour.
11 SANTAMARIA JA: These are Mr Sgargetta's submissions.
12 MR HAY: Yes.
13 SANTAMARIA JA: And you respond to them in writing at tab 3 on
14 14 May.
15 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. There are
19 two subheadings, one above paragraph 11 and one above
20 paragraph 12. In the original version I sent I had made
21 some typographical errors, and I provided a marked-up
22 version. Do Your Honours have - no, okay. With
23 Your Honour's leave, I might resend that.
24 WHELAN JA: How should it read?
25 MR HAY: It should read, "Did the appellant comply with clause
26 2.1(b) of the deed - grounds?" What it should then read
27 is grounds 6(b), 9(d) and 12, and nothing else should be
28 in that heading.
29 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
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Sgargetta
1 the respondent breach clause 2.1(b) of the
2 deed - grounds?" It should refer to 6(c) and 15, and it
3 should say nothing else. I have provided a copy to my
4 friend. But, with those revisions, I won't trouble the
5 court with a further document. Yes, that document does
6 respond. In part it does respond to say it hasn't been
7 made out because there's not sufficient detail in a couple
8 of places. But of course that position hasn't changed
9 today given the approach that's been adopted by my learned
10 friend. So, unless there are any specific topics that
11 Your Honours would like me to address, I propose just to
12 rely on those written submissions.
13 WHELAN JA: 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: You say in 13 about estoppel.
26 MR HAY: Yes.
27 WHELAN JA: Is what you are saying there that this was not an
28 issue agitated below?
29 MR HAY: It is, Your Honour.
30 WHELAN JA: It hasn't been agitated on appeal either.
31 MR HAY: Yes.
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Sgargetta
1 WHELAN JA: I will just see where else you said it.
2 MR HAY: There is a reference to estoppel in the notice of
3 appeal but, yes, it hasn't been agitated beyond
4 identification.
5 WHELAN JA: I thought it was somewhere else as well.
6 MR HAY: I think I say it in respect of the issue about
7 His Honour's indirect shareholding in NAB. In light of
8 the concession that's been made today, I don't expect that
9 that point is pressed either, about whether or not there
10 was apprehended bias -
11 SANTAMARIA JA: There is no evidence about this. It's
12 assertion. There is no evidence.
13 MR HAY: 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." I didn't have that at the time.
19 So I should make that plain. But, in any event, to the
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 SANTAMARIA JA: That was said, was it, when judgment was handed
24 down?
25 MR HAY: Yes. It's in the material I think that was an
26 affidavit sworn by the appellant for a stay. It may have
27 come on before Your Honours sitting on a Friday
28 applications day. As best I recall it, the judge said,
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 27/05/14 116 MR HAY

Sgargetta
1 SANTAMARIA JA: Can you remind me what were the particulars of
2 unconscionability? Something about unconscionable dealing.
3 MR HAY: Yes.
4 SANTAMARIA JA: I know what the authorities are.
5 MR HAY: Yes.
6 SANTAMARIA JA: You quote Scully's case.
7 MR HAY: Yes.
8 SANTAMARIA JA: I just wondered what the appellant is saying
9 was unconscionable.
10 MR HAY: There's reference to it in the notice of appeal, but
11 no particulars. I'm just having a look at the amended
12 defence and counterclaim.
13 MR HAYES: 12(b).
14 MR HAY: 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). He admitting receiving
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.
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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Sgargetta
1 starts, "In the premises, the time for performance of the
2 deed of settlement by the defendant has not passed. The
3 defendant has not breached the deed of settlement and the
4 defendant remains ready, really to perform the deed of
5 settlement. Alternatively, the conduct of NAB in now
6 seeking to rely on strict compliance with clause 2.1(a) is
7 unconscionable within the meaning of the ACL." Again, if
8 it is a contractual right there can be no moral obloquy or
9 anything coming close to the requisite degree of moral
10 opprobrium.
11 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. To make sense of that, in the
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 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. Not only was it
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 One final point on that. There is reference to
31 breaches of the Credit Code which are probably still
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Sgargetta
1 before the court in that peculiar way in that they are not
2 addressed today but still in the written material. On
3 that point, in my respectful submission, it's clear now -
4 very clear - that a breach of a provision of the Credit
5 Code - and Your Honours will recall what was in issue in
6 the proceeding below was an alleged failure to give a
7 payout amount in writing when requested; there's some
8 findings about that. Even if that were the case, it would
9 not have arrested or interrupted the bank's entitlement to
10 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. In those cases
15 what they sought to contend was, "Because you've breached
16 that, the notice is bad. You haven't called up your debt
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 SANTAMARIA JA: Is there some proposition you have there? Is
21 there some authority for that point?
22 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: I know the case.
26 MR HAY: 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. But that is the entirety of the
31 consequence. It doesn't otherwise invalidate an act taken
.MCA:MB 27/05/14 119 MR HAY

Sgargetta
1 in purported breach of the code.
2 SANTAMARIA JA: (Indistinct) during the 1980s anything in
3 breach of the code. It validated everything.
4 MR HAY: Yes.
5 WHELAN JA: You used to lose your interest.
6 SANTAMARIA JA: You lost your credit charges.
7 WHELAN JA: You lost your credit charges if you breached.
8 MR HAY: Yes. There's a distinction now in consumer credit law
9 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: Is this an unregulated contract?
17 MR HAY: This is a regulated contract, Your Honour. But there
18 is no point taken about the validity of a notice. The
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 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 Unless there are any questions, Your Honours,
29 those are the submissions from the respondent.
30 WHELAN JA: Yes, Mr Hayes.
31 MR HAYES: One very brief matter by way of reply. Your Honours
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Sgargetta
1 will recall my friend very carefully taking the court
2 through Mr Segal's affidavit, and in particular
3 characterising the discussions, if I can put it
4 (indistinct), between 25 February and 20 March as
5 discussions relating to some new arrangement or new
6 obligation.
7 We simply say this. The respondent may well have
8 been mindful that - in other words, the parties weren't
9 ad idem. They may well have been discussing some new
10 obligation, talking about the 299,000. But another
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. The evidence is open to some interpretation when
16 the parties are talking about 299,000.
17 Consistent with that analysis is a scenario such
18 as this. If the deed is still on foot, the appellant is
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 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

Sgargetta
1 other agreement that usurped what might otherwise have
2 been the case; namely, the obligation under 2.1(b)
3 remained on foot.
4 So what you have is they start off - certainly
5 the appellant - and there's that passage referred to as to
6 what happened on 18 March. Mr Sgargetta is of the belief,
7 his subjective belief of course - Your Honour Justice
8 Santamaria rightly said this is an objective exercise in
9 looking at this. 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. Certainly the
16 parties don't seem to be ad idem about a new deed. There
17 is an attempt to see whether or not they can come up with
18 some arrangement. But it doesn't necessarily mean that
19 the appellant has retreated from its position that clause
20 2.1(b) remains capable of performance. Indeed, that's
21 where they finished up again on 20 March.
22 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. We will reserve our
26 decision on this matter. If I could thank both counsel
27 for their assistance today.
28 MR HAY: I forgot to mention we have the original affidavits in
29 court. I think Your Honours only have electronic. Would
30 Your Honours prefer - - -
31 WHELAN JA: We better tender them, actually, I think, being

Sgargetta
1 fresh evidence.
2 MR HAYES: Yes, Your Honour. I hand it up, Your Honour.
3 MR HAY: Your Honour, I have three copies together with
4 exhibits for us.
5 #EXHIBIT 1 - Affidavit of Mr Cole sworn 26/05/14.
6 #EXHIBIT A - Affidavit of Mr Pringle sworn 26/05/14; affidavit
7 of Ms Minassian sworn 26/05/14; and affidavit of Mr Segal
8 sworn 26/05/14.
9 WHELAN JA: Judgment is reserved and we will contact the
10 parties when we are ready to deliver judgment. Thank you
11 both very much, all three.
12 ADJOURNED SINE DIE
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.MCA:MB 27/05/14 123 DISCUSSION

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TRANSCRIPT OF PROCEEDINGS

SUPREME COURT OF VICTORIA No. S APCI 2014 0029

TUESDAY, 27 MAY 2014

BEFORE THE HONOURABLE JUSTICES OF APPEAL WHELAN JA &

ELLIOT DANIEL SGARGETTA Appellant

NATIONAL AUSTRALIA BANK LTD Respondent

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

MR S.D. HAY (instructed by Gadens Lawyers) appeared on behalf

MERRILL CORPORATION Telephone: 8628 5555

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