Dawson & Anor v Westpac Banking Corporation

[1991] HCATrans 90

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No Sl18 of 1990

B e t w e e n -

JOHN WILLIAM DAWSON and PREMIUM TYRE SERVICE PTY LIMITED

Appellants

and

WESTPAC BANKING CORPORATION

Respondent

MASON CJ
DEANE J

DAWSON J

TOOHEY J

McHUGH J

Dawson(2) 1 11/4/91

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 11 APRIL 1991, AT 12.45 PM

Copyright in the High Court of Australia

MR G.K. DOWNES, QC: If the Court pleases, in this matter I

appear with my learned friend, MR G.P.F. RUNDLE,

for the appellants. (instructed by Lane & Lane)

MR R.B.S. MacFARLAN, QC:  May it please the Court, I appear

with my learned friend, MR S.R. DONALDSON, for the

respondent. (instructed by Henry Davis York)

MASON CJ:	Mr Downes.
MR DOWNES:	Your Honour, can I begin by handing up our

outline of submissions.

MASON CJ:  Thank you. Where do we find set out the

inconsistency in the findings of fact made on a

comparison between those findings made by the

primary judge and those made by the Court of

Appeal?

MR DOWNES: Well, Your Honours, the inconsistencies are

between those matters which appear in the notice of
appeal and are not repeated but are identified by

page numbers in paragraph 10, and those matters

that are identified in paragraph 13, and there is

one critical matter, if I can put it that way. Both the judgments proceed on the basis that a

critical question for determination is whether

there was a transaction between the company,

Premium, and Westpac, and to determine whether

there was such a transaction or not required some

analysis of the intentions of the relevant actors.

Mr Justice Bryson found there was no such

transaction, based upon his assessment of the

witnesses and the documents. Mr Justice Mahoney

found there was such a transaction, based really

upon his assessment only of documents and, in

particular, of one document which the trial judge

had found to be discredited or, at any event, found

to have been a document which was not in existence

until some substantial time after the mortgage was

entered into and, further, that there was no

intention that there should be a transaction with

the company that I have described in paragraph 1 of

our written submissions as earthmoving, a

transaction guaranteeing that company's account

until substantially after the mortgage was entered

into.

TOOHEY J:  When you use the expression "transaction",

Mr Downes, are you using it as a finding of fact or

as a conclusion of mixed law and fact, or what?

MR DOWNES:  I think I am really using it to avoid answering

the question that is before the Court, Your Honour,

as a kind of neutral phrase. The question is

whether there was a valid mortgage as· between

Dawson(2) 2 11/4/91

Premium and Westpac to support debts of

earthmoving, although the only name that appears in

the mortgage is the name ATWA Trading Pty Limited.

The question is whether there was such a mortgage

or not, and that is the ultimate question, of
course, in the whole proceeding. That question was

answered, of course, in the negative, on the basis

I have been outlining, by the trial judge, and he

was over-ruled, of course, in the Court of Appeal.

MASON CJ:  Mr Downes, how long do counsel expect that this

case will take?

MR DOWNES:  Your Honour, Your Honours would be aware, to

begin with, that the grant of leave is a limited

grant of leave.

MASON CJ:	Yes, we are aware of that.
MR DOWNES:	I have to confess I think I am in the Court's

hands to some extent as to the extent to which

matters in the judgments which are very lengthy, as

Your Honours would appreciate, are gone into but I

should have thought that my submissions would take

between an hour and two hours.

MASON CJ:	And, Mr MacFarlan, how long do you anticipate that - - -?
MR MACFARLAN:	One and a half hours, Your Honour.

MASON CJ: Very well, Mr Downes, we will adjourn now until

2 o'clock.

AT 12.52 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.00 PM: 

MASON CJ: Yes, Mr Downes?

MR DOWNES:  Your Honours, the mortgage the subject of these

proceedings was exhibit "E" and is reproduced at

page 351 in volume II of the appeal books.

Your Honours will see it is a Bank third party

mortgage. Premium Tyre Service, on page 351, is

described as the mortgagor and ATWA Trading

Pty Ltd, a company duly incorporated, et cetera

et cetera, is described as the debtor and Westpac

is described as the Bank. The document was

executed on, and the executions appear at page 361

Dawson(2) 11/4/91

by Premium Tyre Service Pty Ltd with Mr and

Mrs Smith signing as secretary and director and by

the seal of what, on the face of it, would appear

to be the seal of a company called ATWA Trading Pty

Ltd, was affixed by Mr Smith as secretary and a

Mr Grant, who gave evidence in the proceedings, as

director.

Now, as Your Honours will have seen, there are

two long judgments in these proceedings: the

judgment of Mr Justice Bryson and the judgment of

Mr Justice Mahoney, and those judgments range over

a number of issues and the issues, although when
one analyses it are similar or identical,

nevertheless the structure of the two judgments

does not follow a similar pattern and, I thought,

unless Your Honours thought nothing would be gained

by this that I would just indicate to Your Honours

in, so to speak, points and page references without

taking Your Honours to the judgments for this

purpose, what were the structure as we would see

them of the two judgments.

His Honour, Mr Justice Bryson began at

page 810 by saying, in effect, that the case could

be simply disposed of. ATWA was not a company that

existed, therefore there was no debtor, therefore there were no liabilities; that was an end to the

case. But His Honour then went on for another 73,

I think, pages, dealing with issues which the parties had raised and he dealt with those under a

number of headings, and the first of those was

under the heading, "Execution on the part of

Premium", and he said that, at page 818, the indoor

management rule did not avail the Bank because of

the circumstances of the case. His Honour's

decision, of course, preceded Your Honours'
decision in Northside Developments, and we would

respectfully submit he was plainly right - that is

Mr Justice Bryson - in that conclusion.

He then found, having so to speak anticipated

the matter by finding the indoor management rule did not apply - at 821 he held that there was no

authority for the execution of the document by

Premium. At 821 he then posed a question, "Is the

execution saved by section 51A of the Conveyancing

Act?", and he partially answered that by saying

that Section 51A was attracted - he said that at

page 823 - in the sense that this was a case in

which he did not hold that the Bank failed to act

bona fide.

Well then, having addressed execution of the

document by Premium, he proceeded to the question

of its execution by ATWA and he said at 825 that it

was not executed by ATWA because there was no such

Dawson(2) 4 11/4/91

company and a seal, purporting to be a seal of a

company called ATWA, was no seal at all, and he

said, in those circumstances, before the Bank could

succeed - he said this at page 825 - it would be

necessary to show that all of the parties

approached the document with the same common

intention and, secondly, that all of the parties

acted on the basis that there was no need for the

document to be executed under seal by the company

which was, in truth, the borrower purporting to be

ATWA.

So to this point he has decided that it was

not authorized, but section 51A operates so far as

premium is concerned. He then goes to look at

ATWA. There was no execution by ATWA, and it can

only be saved as a document, he says, if all the

parties had the same common intention.

He then addressed that issue and he addressed

it by inquiring what was the intention of each of

the supposed parties. The first of those supposed

parties was Premium, but he did it not by a heading

referring to that, but by a heading which is Change

in Earth Moving's name at page 827. He held that

there was no intention on the part of Earth Moving

that Earth Moving should be a borrower carrying on

business as ATWA.

He then went on to deal with -

DEANE J:	Can you say that again, Mr Downes?
MR DOWNES:	Yes. The passage is at page 835. Perhaps I

should go to it. It starts at the bottom of

page 834 at line 25:

These documents and circumstances make it

to a marked degree improbable that PTSEMD -

which is Earthmoving -

had, in the belief of Mr Smith and also that

it had in any way adopted the name ATWA by

6 April 1983, and also that it was treating
itself as so named in the course of its

business, and also that it had in any way

adopted a common seal bearing that name.

These documents are important for my

general -

I do not think I need to read further than that.

His ultimate conclusion on this particular topic is

at page 836, again starting at line 24:

The understanding and intentions of PTS

as to who was the party whose obligations it

Dawson(2) 5 11/4/91

was supporting by the mortgage are not

significant unless they coincide with those of

the Bank ..... The only individual whose

intentions and beliefs seem to be significant

and available to be identified with those of

PTS for this purpose is Mr Smith himself.

Now he then goes on, and Your Honours will see the

next heading, to deal with the intentions of what he describes as the persons claiming to represent

ATWA, and as to those he comes to the conclusion at

page 845 - largely this relates to that Mr Grant -

his conclusion is that he cannot come to any

inconclusion on that matter. At page 845 he deals

with the Bank's intentions and at page 865 he

concludes that the Bank thought it was dealing with

an existing company bearing the name ATWA and not

another company using that name. Then he deals

with some other arguments that were raised in the

heading before him at page 866; an argument

relating to the commercial construction of the

document; an argument which in a sense said that commercial canons of construction require one to

find somebody to answer the question or identify

some company to be ATWA for the purposes of the

construction of the document, and he rejected that

argument at page 872.

He then dealt with an estoppel argument raised

by my learned friends at page 873 and said of that

it really was not dealt with in the evidence in the

sense that nobody came along and gave evidence that

they had acted on the faith of anything and said,

in any event, the Bank by August 19 was well aware of the defect and being so aware could not rely on

any estoppel argument, having regard to the fact

that the moneys now owing were all borrowed after

that date.

There was then an argument about the

construction of clause 41 raised by my learned

friend. Clause 41 of the mortgage says that it

shall be effective although not signed by all the

parties. His Honour rejected that argument at

page 878, and then at page 878 dealt with other

claims against the Bank. There are a number of claims dealt with there between 878 and 880. I

will not take Your Honours to those.	And finally,
he dealt with claims against the Smiths.	He held

there was a case against the Smiths on the part of

my client but that there may be no damages having

regard to the fact that he had decided that the

Smiths were successful in the case against Westpac

and he left that matter for further consideration.

I am sorry, Dawsons were successful against

Westpac.

Dawson(2) 6 11/4/91

Well now, Your Honours, the structure of the

judgment of Mr Justice Mahoney is to identify at

900 that important issues are one, that the

mortgage was not authorized and, secondly, that the

debtor did not exist at the time of the mortgage.

At 904 he held that it was true that the mortgage

was not authorized in the sense that Premium did not authorize the affixing of its seal to it. He then said that in those circumstances the question

arose whether section 51A provided a defence and he

dealt with that by saying that the basis upon which

section 51A might not operate is if the underlying

transaction was invalid. So, he then set about
identifying whether there was a valid underlying

existing transaction.

He concluded, wrongly, we would respectfully

submit, and this is a critical part of our

argument, that the transaction was between - the

parties to it were Earth Moving - - -

TOOHEY J:  Where do we find this, Mr Downes?

MR DOWNES:  - - - which called itself ATWA. Your Honours,

at page - it covers a number of pages that I am

going to take Your Honours to in due course, but

around about 916 and following is the reasoning

which leads him to that result. That is to be

contrasted with the findings of Mr Justice Bryson

at 827 to 837. So, the critical comparative pages,

if I can put it that way, are 827-837 in the

judgment of Mr Justice Bryson, and 916-918 in the

judgment of Mr Justice Mahoney.

So, he then concluded that, in effect, the

transaction was valid unless vitiated by mistake

and so he then went to consider what mistake had

taken place, if any, and he found at page 922 that

there was a mistake, it was a mistake on the part

of the Bank and it was confined to this, namely,

whether ATWA was a new company or an old company

with a changed name.

He said at 924 that that kind of mistake did not prevent the seal of ATWA being the seal of

Earth Moving and if that was all there was at 925 - at 925 he began considering whether there was a

lack of good faith. He said at 928 that the

transaction was a kind which was within Mr Smith's

authority; that the only issue then as to good

faith, in consequence, related to the propriety of

the affixing of the seal and that did not deprive

the Bank of a claim to good faith within

section 51A.

He then considered good faith so far as ATWA

was concerned and found in favour of the Bank on

Dawson(2) 7 11/4/91

that. He then considered a claim that if the Bank

had acted in good faith at the time of the

transaction, did it subsequently fail to act in

good faith and at 834 he rejected that.

He then dealt at 934 with an argument that the

agreement was not for the benefit of Premium and he

positively found, overruling the trial judge, that

it was for the benefit of Premium and at 937 he

dealt with the estoppel argument and at 938 said it

was not necessary to decide it. Now, Your Honours,

that is the structure in terms of the way the

judgments deal with the issues that the judges saw

as arising in the proceedings.

Your Honours, the mortgage document was

executed on 16 March 1983 and Your Honours have

seen the document. It was not, as we say in

paragraph 2 of our written submissions, authorized

by Premium. Its execution, we say, in those

circumstances amounted to forgery and its

procurement, that is its procurement from Premium

by Smith, was a fraud.

TOOHEY J:  Mr Downes, what is troubling me at the moment

about some of the statements you have made is that

it is difficult at times to know whether these are

findings of fact that are being referred to or

conclusions of law or, in some cases, maybe a mix

of both. But when you say in paragraph 2 that the

mortgage was not authorized by Premium, do you mean

that no one associated with Premium had anything to

do with the execution of the mortgage or that it

was not authorized in the sense that actions were
taken by officers of Premium which they had no

authority to take or are you saying something else?

MR DOWNES:  Your Honours, perhaps in a moment I will go to

the paragraphs, but to answer -

TOOHEY J: Before you answer that, could I just tell you the

reason for my concern. It lies in the scope of the

grant of special leave which, essentially, is to

permit an attack to be made upon those findings of

fact by the Court of Appeal which departed from

findings of fact by the trial judge.

MR DOWNES:	Yes.
· TOOHEY J:	Some of the areas into which you have taken this,

quite clearly raise questions of law and maybe you

are not asking us to deal with those. But it may be important for us to understand, quite clearly,

what are findings of fact that are under attack and

what are confusions of law that may be under

attack?

Dawson(2)	11/4/91
MR DOWNES:	I take Your Honour's point. Could I just say

this. As perhaps Your Honours know, of course

there were other grounds on which we sought special

leave and those grounds squarely raised, for

example, section 51A and we would say, for example,

what role does section 51A have when the document

relied upon was procured by fraud? The Court of

Appeal seems to have asked and answered that

question without acting on it. A second issue

which arises is what role section 51A has to play when one of the executing parties to the document

is in the position of this ATWA company, one that

does not exist. There are then issues relating to

what role the law of mistake has to play in this

case and one of the matters that we sought to raise

in connection with the application for special

leave, was a question as to the, so to speak,

dividing line between mistake and questions

relating to the identity of parties.

Now, as Your Honour knows, those matters were

left aside and, as we would see it, at the end of the day it is still open to us, because they were not the subject of a determination by the court

hearing the application for special leave, it would

be open to us to agitate those matters afresh and

at the end of the submissions that we will be

putting to Your Honours in the matter today, we

would be asking Your Honours to give consideration,

depending upon the result Your Honours arrive at,

as to whether we ought to be given special leave to

argue at some future point of time those other

matters. If we succeed, we would respectfully

submit, on the matter associated with fact, to

which Your Honour Mr Justice Toohey refers to, then

those matters will not arise because we would

respectfully submit that Your Honours will take the

same approach that Your Honours took in

Jones v Hyde, in saying that nothing is gained by

sending this back. The judges' findings were

clearly not open to reversal by the Court of Appeal

and if those findings of facts stand, they
determine the case.	Now, Your Honour, I will -

TOOHEY J: Well, in the light of that answer, can I take you

to paragraph 2 of the submission into my original

question. When you say the mortgage was not

authorized by Premium, what are you saying?

MR DOWNES:	Let me tell Your Honour what the facts are. facts were that Mr Dawson was held to be, both	The
below and in the Court of Appeal, a director of

this company - a director of Premium. There is no

issue about that. There was no meeting of

directors of Premium to authorize Premium to enter

into the transaction or to authorize the seal of

Premium to be affixed to any mortgage. Mr Dawson

Dawson(2) 9 11/4/91

was not aware of the proposal and gave evidence

that if he had been made aware of it he would have

gone straight to his solicitor, as I think as he

said, "As I did as soon as I found out about it

some years later". Now in those circumstances,

both courts held, and I take Your Honours quickly

to the relevant passages, that it was not

authorized. At page 821 line 16 His Honour

Mr Justice Bryson said - I will perhaps read from line 12:

Although Mr Smith chose some occasions on

which to act as if Mr Dawson were not a

director - - -

DAWSON J: But there is no difference between

Justice Mahoney and - - -

MR DOWNES:  No, not on this issue, Your Honour.

DAWSON J: Well why are we dwelling on it?

MR DOWNES:  Because His Honour Mr Justice Toohey asked me

what I meant when I said it was not authorized,

Your Honour, and what I meant was, as I have just

indicated and what appears here at lines 12 to 20

on page 821 and page 904 line 3, which is the

relevant passage in the Court of Appeal judgment.

DAWSON J:  What I would be assisted by is what are the clear

findings of fact made by the trial judge which were
not accepted, or where there is a finding to the

contrary by the Court of Appeal? They must be able

to be reduced to a very few.

MR DOWNES: Well, they are reduced with one addition, I

think, to the matters that I referred to prior to

lunch as in paragraphs 10 and 13 of our written

submissions. But before I came to that I was

proposing, Your Honours, to lay what seems to me to
be the necessary groundwork for the ultimate

submission, namely, to show that these findings of

fact were based upon matters of credit and the

trial judge's assessment of the witnesses. I was

going to begin by taking Your Honours to the major

passages in the judgment of Mr Justice Bryson

relating to credit, and unless Your Honours

indicate that you do not - - -

DAWSON J: Cannot you just tell us what the crucial facts

were? Did the trial judge find that a meeting was held and the Court of Appeal held that it was not?

Or did the trial judge hold that someone was not

credible, whereas the Court of Appeal held it was?

Can you not isolate a few crucial ones for us?

Dawson(2) 10 11/4/91

MR DOWNES: Well, yes, that is exactly what I hope I have

done, but perhaps I will come to what I have put in

paragraph 10 and if it is necessary to go back and

make the groundwork in the sense of showing that
these are based on matters of assessment of

demeanour and the like, then I will do so. But it

would be convenient then, if Your Honours could go

to the notice of appeal because that sets out the

particular matters on which we rely, and that is at

page 944 in volume III of the appeal book.

McHUGH J:  I think what Mr Justice Dawson is, in effect,

putting to you is that it would be a lot easier to

follow if, in effect, you had a document with in

column A the various findings of Mr Justice Bryson,

and in column B opposite each of those findings

what, if anything, the Court of Appeal did. But it

is not easy to follow the argument at the moment,

or at least I am finding it difficult to follow and

see just what the connection is between the various

findings.

MR DOWNES:  I am sorry about that, Your Honours. Perhaps we

can produce such a document, if the Court does not

conclude the hearing today, overnight.

MASON CJ: But then your address would have concluded, at

least hopefully, Mr Downes.

MR DOWNES:  Yes.

MASON CJ: But you would put out in that document, would you

not,(a) to (g) of ground 5?

MR DOWNES:	What would be there would be (a) to (g) on page 944, plus (a) to (c) on 944 and 945, and (a)
to (g) in paragraph 13.

McHUGH J: Just take 13(a) for example, in your written

submissions.	Now, where is the comparable finding
of Mr Justice Bryson in respect of that?

MR DOWNES:  Mr Justice Bryson found at (e):

that Earthmoving had not adopted the name

A.T.W.A. Trading Pty Limited as at

6 April 1983 - - -

McHUGH J:  I do not see any necessary inconsistency between

those two findings.

MR DOWNES: Perhaps if I take Your Honours to the material Your Honours will see that there is undoubtedly a

necessary inconsistency.

In effect, what Mr Justice Bryson said was

that as at the date of the execution of the

Dawson(2) 11 11/4/91

document in March of 1983, I think it was, but on

16 March, that as at that point of time no decision

had been made to the effect that Earth Moving would

become the customer of the Bank with respect to the
business that ultimately we can describe as the

business of ATWA Trading Pty Limited.

Mr Justice Mahoney found, overruling that, that

that decision had taken place and a critical matter

in this respect, so far as Mr Justice Mahoney was

concerned, was a document which purported to give
notification of a change of name of the company,

Earth Moving.

DAWSON J: Just let us stop there. Is the crucial

difference that the trial judge found that there

had been no decision that ATWA would become a

borrower in the relevant transaction and

Justice Mahoney found there was a decision that it

would?

MR DOWNES:  Well the problem is, who is ATWA, Your Honour?

No decision that Earth Moving - - -

DAWSON J: Earthmoving.

MR DOWNES:  - - - using the name ATWA would·become a

borrower.

DAWSON J:	Yes.
MR DOWNES:	And the Court of Appeal said it would - it did.

DAWSON J: Well, that would conflict, yes.

McHUGH J: That was a finding at 835 you referred to us

earlier, there was no intention on Earth Moving to

be a borrower carrying on business as ATWA?

MR DOWNES:  Yes. No determination to that effect and the

Court of Appeal said, looking at a particular

document, not taking account of the evidence - the

oral evidence that had influenced the trial judge -

that such a decision had been made. Perhaps I can

conveniently take Your Honours to those critical

passages that I referred to earlier. In the

judgment of Mr Justice Mahoney - - -

DAWSON J:  It might be helpful - because, if you could just

tell us in your own words, not by reference to

passages, what are the crucial facts at which the

two were at variance. One we have isolated now:

one was a finding, you say, on the part of the

trial judge, that there was no intention that Earth

Moving should become, by whatever name, a borrower, in the sense that the mortgage is borrowed, and on

the other hand, there was a finding on the part of

Dawson(2) 12 11/4/91

the Court of Appeal that it would.	Now, are there
other facts like that?

MR DOWNES: Well, Your Honour, I cannot do more - I am

sorry - than say, "They are the findings which are

on pages 944 and 945." We say that every one of

those was reversed by the Court of Appeal, but not

always by necessarily saying so .. For example,

Mr Justice Mahoney did not say, looking at S(a)

that company registers can be accepted in this

case. The real problem underlying these two

judgments is that they really are ships that pass

in the night, and for the reason, we would

respectfully submit, that Mr Justice Mahoney made

the error of not doing that which he ought to have

done, and which this Court has said in the past,
judges reviewing findings of trial judges ought to
do, namely to look at the findings of the trial

judge and consider whether they are findings which

are justified in all the circumstances.

So one has Mr Justice Bryson saying, "There

are no company registers that I can accept in this

case", and what does Mr Justice Mahoney do?	He
simply draws conclusions based on company
documents.	He does not say, "I disagree with", or

"I reject that finding on the part of

Mr Justice Mahoney". And so it is for that reason

that we can not do - I mean the matter that

Your Honours raise with me points up what we would
respectfully submit is the very error which

underlines what occurred in the Court of Appeal

because we cannot say, "Here is the finding of

Mr Justice Bryson and here is the page in the

judgment of the Court of Appeal where it is dealt

with and overruled" .

But what I can do, and would seek to do with

Your Honours' leave, is to take Your Honours to a

few pages in the two judgments where the judges

respectively are dealing with the same area, and

take Your Honours to what is said and found by

Mr Justice Mahoney, and to what is said and found

by Mr Justice Bryson, but just before I do that, to

take Your Honours, point by point, to these

matters. There was no company register that could

be accepted. We say there is no doubt that

Mr Justice Mahoney acted in acceptance of the

documents. Premium Tyre Service changed its name

to ATWA Trading Pty Limited, but the change took

effect only on 27 July 1983.

Now, His Honour Mr Justice Mahoney held that there was a meeting of directors at which it was

resolved, prior to the execution of a mortgage,

that this change took place. Perhaps the closest I

can go to that is finding (a) touches upon that

Dawson(2) 13 11/4/91

matter and (e). Your Honours see this was

determined by Smith and those acting for Earth

Moving prior to 16 March 1983.	Now, the third one
( C)	is:

that by 19 August 1983 the respondent knew

that the mortgage could not have been executed

by Earthmoving before its name change.

Obviously, that cannot stand if the other finding

cannot stand:

t.hat on 2 May 1983 Earthmoving lodged with the

Corporate Affairs Commission a Notice of

Particulars of Charge, signed by Mr Smith

stating that on 6 April Earthmoving, by that
name, had created a charge in favour of A.G.C.

(Advances) Limited.

So, Your Honours see that what was found by

Mr Justice Bryson was that at a point of time after

Earth Moving had been found to have changed its

name by the Court of Appeal, it lodged notice of

particulars of charge in the name Earth Moving, not

in the name ATWA, with the Corporate Affairs

Commission, something of course wholly consistent

and His Honour reviews this and looks at the
documents with it having changed its name. His

Honour found at (e):

that Earthmoving had not adopted the name

A.T.W.A. Trading Pty Limited as at

6 April 1983.

Of course, that is another one that falls with the

findings of Mr Justice Mahoney -

that the respondent intended that the second

named appellant and the Bank should enter into

legal relations with a newly formed company

named A.T.W.A. Trading Pty Limited.

Mr Justice Mahoney found that they did not have

that view because he, ultimately, found that the

Bank had made a mistake that he considered was not

a substantial mistake and that mistake that

His Honour Mr Justice Mahoney found was simply a

mistake as to whether ATWA was a new company or a
company already in existence which was going to

adopt the name. Now, that is inconsistent with

this finding of the trial judge.

(g) that the respondent did not consider

A.T.W.A. Trading Pty Limited was a name being

used in March 1983 to refer to a company with

another name which was to change to A.T.W.A.

Trading Pty Limited, nor did it consider that

Dawson(2) 14 11/4/91

A.T.W.A. Trading Pty Limited was the name for

a company, the identity of which was still to

be determined.

Again, that is a finding which Mr Justice Mahoney

overruled. Then there are what we have called

ultimate findings. There was no debtor whose debts

the mortgage could support. Well, of course,

His Honour Mr Justice Mahoney had found to the

contrary of that:

that it was the intention of the respondent
tnat by entering into the mortgage it would

enter into legal relations with and obtain securities to support the obligations of a

company named A.T.W.A. Trading Pty Limited

which in the belief and intention of the

respondent existed and had that name on

16 March 1983; but in fact there was no such

company.

And finally:

that it was not the fact that the parties to

the mortgage had.a common intention to refer
by the name A.T.W.A. Trading Pty Limited to

Earthmoving or any other particular entity which existed.

That again is a finding which Mr Justice Mahoney reversed.

MASON CJ: At the time of the execution of this mortgage, was there an account with Westpac in the name of

ATWA Trading?

MR DOWNES:	Yes.
MASON CJ:	Now, whose moneys were in that account or who was

the proprietor of that account?

MR DOWNES:  The best answer, we would respectfully submit to

that, was the company I have described as Tire

Warehouse Australia.

MASON CJ:  Now, was there any finding, either at first

instance or in the Court of Appeal, as to the

proprietorship of that account?

MR DOWNES:  Not in those terms, I think not, Your Honour. I

think that the way in which it was dealt with has

been, in the case of the trial judge, to negate the

proprietorship of Earth Moving, I think is the best

way to put it.

MASON CJ:  Was it the intention of Westpac to secure the

repayment of the indebtedness in that account?

Dawson(2) 15 11/4/91

MR DOWNES: Inter alia, yes, Your Honour.

MASON CJ:  Can you refer us to any finding that deals with

that?

MR DOWNES:  Yes, well can I take Your Honours to the

judgment of Mr Justice Bryson, and the passages in the judgment of Mr Justice Mahoney begin at page

relevant passage in the judgment of

916 and His Honour says:

I am satisfied that Mr Smith and those

acting for Earthmoving determined that

Earthmoving should be the company to enter

into the transaction before 16 March 1983.

Now, can I just pause there to say to Your Honours

that we would respectfully submit that that

sentence and many sentences in this judgment read

as if they are the findings of a trial judge, not

the findings of a judge reviewing the findings of a

trial judge.

The significant evidence in this regard is, in

my opinion, that relating to the change of

name of Earthmoving to ATWA. As I have said,

the documents in evidence show that on

4 March 1983 a special resolution was passed

at a general meeting of Earthmoving to change

its name to ATWA.

Now, as Your Honours will see in a moment, the

trial judge positively found that no such meeting

took place.

And the documentation relating to the

execution of the mortgage suggests that it was

the company that was Earthmoving and became

ATWA which was intended to be the party to the

mortgage.

Your Honours will see how heavily His Honour

Mr Justice Mahoney is here relying on documents,

whereas the trial judge below had relied upon the

evidence of witnesses and his assessment of the

credit of those witnesses, and in particular had

said, in some passages that I was going to take

Your Honours to, that he would not act on documents

that were the documents of this company. Where a

document had been signed by Mr Smith, it was a

document he would not act upon. Now what

His Honour Mr Justice Mahoney is doing is acting

upon documents and without reviewing the basis upon

which the trial judge had declined to act on those

documents.

Dawson(2) 16 11/4/91

DEANE J:  Mr Downes, to bring you to what Justice Dawson and

Justice McHugh were asking you about, would it be

correct that if those findings of Justice Mahoney

can stand in light of the trial judge's finding as

to credibility, that for practical purposes that

would be the end of what we are currently engaged

on? The other side of it is, if those findings
cannot stand, they take away a critical part of the

substratum of the Court of Appeal's decision.

MR DOWNES:  We would submit the latter, but not the former.

DEANE J: Well, I cannot quite follow how, if those findings

stand, there are factual matters which would allow

Justice Bryson's judgment to stand.

MR DOWNES: Well can I say two things, Your Honour. The

first point is that there are other findings. If
all of the findings stand, then, subject to the

issues which we do not at present have leave to

raise here - - -

DEANE J:	I was not referring to those.
MR DOWNES:	I understand that - I think Your Honour is

correct - but it depends on all of the findings

standing.

DEANE J: Well, give or take a little bit on the side, would

it be correct that that paragraph on page 916 is

the essence of what this part of the case is about?

MR DOWNES:  Yes, Your Honour.

DEANE J: Plus the Banks knew that it was dealing with an

existing company under that name, whereas on

His Honour's finding the other side treated that

name as applying to another company which was going

to change its name to it, which to some extent

seems to flow from what His Honour says there.

MR DOWNES:  Your Honour, there were two issues that

were - - -

DEANE J:  I am not trying to put you into a corner. I am

just trying to reach the - - -

MR DOWNES:  But there were two issues which this material is

addressing which were dealt with by both the trial

judge and by Mr Justice Mahoney, and they were:

(1) What was the intention of the parties going to

whether there was a valid transaction or not? And

(2) what was the belief of the parties going to

questions of mistake as to by then something which

you would regard as a transaction?

Dawson(2) 17 11/4/91

This material addresses both of those things,

and there was a critical difference between the two

divisions of the court on both those matters. And

when one gets to the question of belief, of course,

it requires one to look at each of the parties.

One needs to look at Premium. One needs to look at

whoever are the candidates to be ATWA, and one

needs to look at the Bank.

DEANE J: Yes, I can see all that, but I was being possibly

a bit obscure. But if Justice Mahoney was

justified in those findings, my impression is that

Justice Bryson's judgment could not stand, and that

being so, the basis of your attack on other factual

findings to a large extent disappears.

On the other hand, if Justice Mahoney is not

justified in those findings at an appellate level,

then my impression is that part of the substratum

of that judgment necessarily disappears, and it was

that that led me to suggest to you that that is the

paragraph that one way or the other that this

aspect of the matter might turn on.

MR DOWNES: Undoubtedly, Your Honour, it is a central

paragraph. There is no question about that but,

with respect, one needs to look at some of the

material that goes with it to determine the issue

which arises. For example, Mr Justice Mahoney says

on one view you could say, "Well, this is a

critical paragraph because it says a similar

thing". Over the page at 917 in line 2:

But what is in question here is whether, on 4

March 1983, a g.eneral meeting of the members

of Earthmoving resolved that the company's

name be changed to ATWA Trading Pty Limited.

So he addresses the same matter, so to speak, in

different paragraphs of his judgment, and I am not

sure that one can say necessarily of one point

more critical than the other. But I do not want to	where he deals with it that that is the one that is	depart from what Your Honour puts to me that that
paragraph is critical, and we respectfully submit
that if it does not stand, then neither can the
judgment of the Court of Appeal. And by the same
token there is no point in the matter going back to
the Court of Appeal because such a finding
inevitably leads to the appeal ultimately being
dismissed from the - - -

DEANE J: That was the next matter I wanted to ask you

about. It is this: there are two ways that

Justice Mahoney's findings can be attacked. One is

on the methodology; that is, as an appellate court

he has not gone through the process of taking the

Dawson(2) 18 11/4/91

trial judge's findings, examining them and on

acceptable grounds disagreeing with them.

MR DOWNES:	Yes.
DEANE J:	The second ground is that looked at on the

evidence and putting methodology aside, the

evidence did not warrant a reversal of the trial

judge's findings.

MR DOWNES:  The first is the methodology point, the second

point is to say that this is a case which depended

upon findings based on credit and therefore unless

picking up cases like Brunskill v Sovereign Marine,

Warren v Coombes and number of recent cases in this

Court, unless one can say of the judge that he has

misused his advantage, there are different phrases

in the cases on that topic, unless he has misused

his advantage, that his conclusions must stand and

this is such a case, we would respectfully submit.

DEANE J: But that brings us through to this and that is:

assume you succeed on methodology, what do you then

ask us to do, to do what no doubt the appellant

asked the Court of Appeal to do in the first place

and that is to review the findings properly on the

evidence or to send it back?

MR DOWNES:  No, to review the findings, because we say that

when Your Honours have read pages 827 to 837

Your Honours will perhaps look at some other pages

as well, but those pages will cause Your Honours to

say, "This case is clear" as Your Honours in Jones

v Hyde said, "There is no point in sending it back;

we will dismiss the .appeal to the Court of Appeal".

DEANE J:  Thank you, I understand the way you put it.

DAWSON J: But if it is not clear to us, we should send it

back?

MR DOWNES:  Yes, Your Honour. Your Honour will recollect

there was some debate about this between

Your Honour and I on the special leave application.
Naturally, circumstances may occur in which

Your Honours think that the appropriate course is

to send the matter back.

DAWSON J: Yes.

MR DOWNES: Well, now, could I, at the risk of wearying

Your Honours, take Your Honours to a little more in

this judgment of Mr Justice Mahoney's on this

point.

Dawson(2) 19 11/4/91

McHUGH J: Just stopping, before you take us to that. You

have taken us to 916 and you have that opening

sentence at line 4:

I am satisfied that Mr Smith and those

acting for Earthmoving determined that

Earthmoving should be the company to enter

into the transaction before 16 March 1983.

MR DOWNES:	Yes.
McHUGH J:	Now, is what you say, that is in conflict with

what appears at the bottom of 835 over to 836 where

the trial judge said:

Mr Smith did not intend that PTS and the Bank

should enter by the mortgage into legal

relation with PTSEMD.

That is Earth Moving, is it not?

MR DOWNES: That is Earth Moving, yes, Your Honour. That is

one of the passages, yes, Your Honour.

McHUGH J:  And then His Honour goes on, in effect, to say

that at line 10 that this:

was no more than a project for the future.

MR DOWNES:	Yes.
McHUGH J:	Now, is there any other passages in His Honour's

judgment which conflicts with that part on 916

between lines 4 and 14. You referred us to the

fact that Mr Justice Mahoney said that there was a

meeting on 4 March. Now, where is the trial

judge's finding that there was no such meeting?

MR DOWNES:  Your Honours, it is this material in these

pages - Your Honours appreciate that no one

purported to give any oral evidence of such a

meeting. That was one of the criticisms which

His Honour made of the way the case was conducted

for the defendants. What there was was a document

and His Honour rejected the document as -

DAWSON J: Well, that is the conflict, is it not. He says

from lines about five to 10 that, ..... there is is a

a document but it does not show anything on the
balance of probabilities. Justice Mahoney

obviously finds on the balance of probabilities it

did. We are talking about the same occasion, are

we not?

MR DOWNES:  Yes, but of course this is a document of which he has said, and at the top of 835 line 3:

Dawson(2) 20 11/4/91

His documents are usually dubious, and his oral evidence and his demeanour while giving

it are also bases for this view.

DAWSON J: True, and in relation to this particular document

which Justice Mahoney says is critical,

Justice Bryson says, "I do not accept it shows anything", Justice Mahoney says, "It does".

MR DOWNES:	Yes.
DAWSON J:	The reason why he says it does not show anything

is because of his view of the credit of Mr Smith.

MR DOWNES: Exactly.

DAWSON J: Well, that is the point.

MR DOWNES:	And that, with respect, is the point with respect to that particular finding.
DAWSON J:	So that you just cannot compare the

interpretation of the document by the two?

MR DOWNES:  No.

DAWSON J: Well, that is the point.

MR DOWNES:  The whole point that we seek to make is that

what Mr Justice Bryson did was to engage in a very
long and detailed analysis of the credit of the

witnesses, to form a view as a result of that as to

what he thought of their documents, and then

putting all of that together to come to some

conclusions. What Mr Justice Mahoney did, with

respect, was to look at the documents and, really,

to act as if credit was not an issue. As we have

pointed out in our submissions in paragraph 14,

Mr Justice Bryson is only three times directly

referred to. On the first occasion the reference

is neutral; the second merely recognizes what

Mr Justice Mahoney describes as reservations on the

part of the trial judge as to Mr Mathieson's

evidence. We would respectfully submit that

understates His Honour's views of Mr Mathieson's

evidence substantially and on the third occasion he

draws inferences on the assumption that equal

weight is to be given to the oral evidence of

Mr Dawson and Mr Smith.

Your Honours, can I go back to page 916, and

at line 15, where His Honour Mr Justice Mahoney

continues:

Mr White submitted that this decision was

not made until after 16 March 1983. His

submission suggested, at least in· one form,

Dawson(2) 21 11/4/91

that the documents in evidence in this regard

cannot be relied upon and that they were

prepared subsequently ..... and "backdated".

The proper conclusion, it was suggested, is

that the selection of Earthmoving ..... was not

made, or made effectively until after the

mortgage was executed.

I do not think that this submission should be accepted.

Now, again, could we respectfully submit here that

this is an unusual way for an appellate court to be

approaching a contrary finding of a trial judge.

What His Honour says is:

I do not think that this submission should be

accepted -

His Honour again approaching the matter as if he

were acting as a trial judge himself -

Mr White has cast doubt upon some of the formal documents in the form of minutes and

otherwise prepared in respect of these

companies. It is possible that some of them

were prepared following the events noted in

and backdated. It may be that some of the

meetings or events referred to in them as

having taken place did not take place.	But
what is in question here is whether, on

4 March 1983, a general meeting of the members

of Earthmoving resolved that the company's

name be changed ..... As I have said there is

before the court a form of "notice of

resolution" to the National Companies and

Securities Commission stating that at such a

general meeting ..... such a resolution was

passed. The notice bears date 14 March 1983.

It bears a formal stamp indicating that it was

presented to the Commission on 16 March 1983 - Now that is a matter I think I will need to take

Your Honours to some further evidence about -

And there is in evidence a receipt given by

the Commission dated 18 March 1983 which,
Mr White has accepted, relates to the notice

of resolution to which I have referred - I think I will need to take Your Honour to that in

due course -

There is also in evidence correspondence

between firms of accountants supporting the

inference that, in March 1983, ~teps were

being taken by the firm which prepared the

Dawson(2) 22 11/4/91

notice of resolution in respect of "the change

of name -

and then another finding of His Honour's of a first

instance, we would respectfully submit, kind -

I am satisfied -

His Honour says -

that the notice of resolution was prepared on

or about 14 March 1983 and was lodged

on 16 March 1983. That does not, of course,

establish beyond question that the general

meeting ..... was ..... held. If the meeting was

not held and yet minutes were prepared and the

Notice of Resolution was prepared to suggest

that it was, then those concerned would have

been guilty of a criminal offence.

Suggestions were made against the accountants

then concerned with the affairs of ATWA. But,

in my opinion, the evidence before the court
does not establish that the meeting was not

held. In all the circumstances - - -

DEANE J: Mr Downes, I am sorry, I have got lost.

Justice Bryson said that that document was unlikely to have had any existence in reality by

16 March 1983.

MR DOWNES:  Yes.

DEANE J: Justice Mahoney said that the document had a

formal stamp that was presented to the Commission

on 16 March 1983. There was a receipt - - -

MR DOWNES:  I think perhaps this is one of the few documents

in the exhibits that I need to take Your Honours

to - - -

DEANE J: Well, somebody has obviously gone wrong somewhere.

MR DOWNES: Well, if I take Your Honours to it, I think

Your Honours will see. Can I ask Your Honour to go

to exhibit L, which is the document at page 421,

and to exhibits 27 and 29, which are at 701

and 704? Now, Your Honours will see that the

document at 421, on its face, shows that it was

lodged with the Corporate Affairs Commission on

27 July 1983 - that is the bottom right-hand

corner, about line 25. There is a box at the top,

about line 5, which contains in it, I can tell

Your Honours, in what is obviously a rubber stamp,

the word "Presented", and there is the date

16 March 1983 there appearing.

Dawson(2) 23 11/4/91

Your Honours recollect that no-one has given

any evidence about the meeting or how this document

came into existence. It is a document signed by

Mr Smith. Your Honours see it is one of these

documents that, because it is signed by Mr Smith,

Mr Justice Bryson has said he will not accept.

Right, now the next thing to ask Your Honours.

Now what is involved, in what the Court of Appeal

did, is some detective work which had no source in

the evidence whatsoever, and the detective work

goes like this. I would ask Your Honour to note

that it says under its heading, that it is

"Companies Form 24" and there is a number on it
which says, "004246". It is bit hard to read, but

I can tell Your Honours that is what it says. It

is about line 3 to the right of the word

"Presented" and against "Doc No". It looks as
though it has got the amount $55 in pencil or

something written over it.

Next I now need to take Your Honours to page

701 and that, Your Honours, will see is the same

document. The one Your Honours have just seen is

the one that came from the microfiche at the

Corporate Affairs Commission. Now Your Honours see

the document, or a copy of it, at a different point

of time. It does not have "Lodged with the

Commission" stamped in there. It does not have the

document number. It still has this "Presented"

rubber stamp and 16 March 1983. Now, Your Honours,

then you go to 29 and I add again, Your Honours,

there was no evidence by anyone, whether from the

Corporate Affairs Commission or Mr Smith or any of

the people who were involved with this document, as

to any of these matters.

If Your Honours look at the cash register

imprint on page 704 at about what would be line 4

or something in the numbering, Your Honours will

see "004246". Do Your Honours see that number?

MASON CJ: Yes.
MR DOWNES:	Now, that is the same, if that is right, as the

document number on exhibit L. Now all of this

flies in the face of the very plain statement on

exhibit L that it was lodged on 27 July 1983, but

the detective work argument, if I can put it that

way, goes to this: it says the number "004246" i.s

the same as the document number on exhibit L,

therefore exhibit 29 is a receipt issued, with

respect to the lodging of that document.

Your Honours will note, if one is engaging in this

detective work exercise, that one has $61 there and

what appears like $55 on exhibit L, but the

argument is that the inference is that exhibit L

Dawson(2) 24 11/4/91

was lodged with the Corporate Affairs Commission,

not on 27 July 1983, but on 18 March 1983.

DEANE J:  But His Honour says, page 917, that Mr White - who

is Mr White?

MR DOWNES:  Mr White is my instructing solicitor.

Your Honour, I think, perhaps knows Mr White of

Lane & Lane, Mr Phillip White, who appeared in this

case, Your Honour, both before Mr Justice Bryson

and in the Court of Appeal.

DEANE J:  Well~ Mr Justice Mahoney says, Mr White has

accepted that the receipt relates to the notice

of resolution. Is that wrong?

MR DOWNES: Well, it was a very narrow concession. I think

my learned friend has copies of two pages of the

transcript.	My learned friend showed me just
before Your Honours sat in this case.	We have now

looked at further pages in the transcript and may

wish to give Your Honours some further pages on it,

but I do not know whether Your Honours would find

it convenient to actually have that transcript.

DEANE J:  No, I have taken you too far out of your course,

Mr Downes, you - - -

MR DOWNES:  No, I think Your Honours may be assisted by

having these two pages and we will add something to

it. I think, Your Honours, this matter is

something which my learned friend is going to

advert to, so I do not think I am wasting time by

referring to it now. He did advert to it in the

leave application and I expect that he will in this

appeal.

Now, Your Honours will see that there are at least two limitations on the concession that was

made by Mr White in the Court of Appeal. First of

all the concession was a concession about these

numbers and, secondly, he says that his concession

is limited to it being presented, rather than

lodged.

It seems plain enough that even if it was

presented, it did not actually get into the

Corporate Affairs Commission's system until July.

So, those are the two aspects to raise.

The third thing I would wish to raise is that that was a statement made by the person

representing my client in the Court of Appeal for

the purpose of the appeal there. I accept that

Your Honours could hold me to it in whatever form

Your Honours ultimately find it to be in in this

appeal but I would respectfully submit that in this

Dawson(2) 25 11/4/91

appeal what Your Honours ought to do is to act on

what Your Honours, on all the material, consider to

be the position. It is not as though this was a

concession made at the trial which in any way

affected the course of evidence.

Your Honours will see that when Mr White was

putting his submissions there were some cryptic

interventions from the bench, particularly from

Mr Justice Meagher, putting in pretty firm terms

what he considered the - I think he said "crystal

clear" somewhere - inference was. But what we

would respectfully submit is that whatever one gets from it - I mean, the most really one gets from the

concession is that the two numbers are the same,

but faced with the analysis of these facts by the

trial judge that really, we would respectfully

submit, adds nothing to the matter.

TOOHEY J:  Mr Downes, was there any evidence or was there

agreement as to whether this notation presented

wash a Securities Commission's notation?

MR DOWNES:  No, Your Honour. There was no evidence, as I

understand it, about this document or these

documents at all.

DEANE J: But, Mr Downes, could I just interrupt you once

more and then I will desist? Page 836, which we

have been looking at, if that receipt does relate

to that document containing the resolution, if you

look at line 7 in Justice Bryson's judgment - - -

MR DOWNES: Is this page 836, line 7?

DEANE J: Page 836. Is not that receipt really destructive

of His Honour's judgment?

MR DOWNES: With respect, no, Your Honour.

DEANE J: Because, you see, His Honour says:

It is possible though unlikely that Mr Smith

may have had in mind taking steps in relation

to -

that. Now, change that to, "We now know there was

a document lodged on 13 April", the next sentence

is, "If he had that in mind it was a project."

Well now, that fits in very well, as I read Justice

Mahoney's judgment.

MR DOWNES: Yes. But, Your Honour, can I just ask

Your Honours to - one of the errors, we would

respectfully submit, Mr Justice Mahoney makes is

to, so to speak, select as the person of whom he is

going to make inquiries as to intention and belief,

Dawson(2) 26 11/4/91

Earth Moving, and then make his inquiries.	Of
course, that really involves an approach of
hindsight.	The first question, of course, one

asks, because what one has is a document with

"ATWA" on it and a whole lot of competitors for the

title of ATWA, one of which is Tire Warehouse, for

example, so to really select the candidate that you

want it to be and then ask the question of it, we

would respectfully submit, makes the mistake a

mistake in the first place. But it is wholly

consistent with what happened - and this is really

what Mr Justice Bryson was saying in his judgment -

that no decision had been made as to what was going

to happen at this point of time.

To have a document in existence which gets to

the door of the Corporate Affairs Commission and is
taken away again does not really help one in any

way to resolve that issue. It shows that this was

one of the competitors. But Your Honours will not

have forgotten that I told Your Honours that there

was evidence that after this date there was lodged
with the Corporate Affairs Division, by Earth

Moving, supported by a declaration of Mr Smith, a

charge and that charge to AGC was given by Earth

Moving in the name "Earth Moving" and was lodged

with the name "Earth Moving".

So the company is behaving both privately in

its dealings with AGC and publicly in the lodging

of documents with the Corporate Affairs Commission

in a way which is wholly inconsistent with its

having adopted the name ATWA.

Now, Your Honours recollect that we have no

evidence of Mr Smith saying, "We had a meeting on

the 13th" or whatever date it might be, "and we

resolved at that meeting to change the name." What

one has is an attempt to try and show that by a

document, and that document to the extent to which

on any view it tends to support the proposition

other documents which support a contrary view.	that there was such a document, there are many
There are documents to which Mr Justice Bryson
makes references in those pages 827 to 837, in
which the candidate is Tire Warehouse (Australia) Pty Limited. It is referred to.

There seems in the background of all of this

to have been a dispute which involved a man named

Matich who was associated with the company, Tire

Warehouse, and that dispute was resolved by

Mr Matich being removed in March 1983. But it was

25 March 1983, after the -

Now, all of these are the very matters which,

associated with his findings of credit,

Dawson(2) 27 11/4/91

Mr Justice Bryson had regard to in coming to the

conclusion to which he came, and we would
respectfully submit that for Mr Justice Mahoney to focus on one document, engage in some fact finding of a detective work kind relating to that document,

and to overrule the findings based on a wealth of

documents made by Mr Justice Bryson was firstly to

err, and secondly to reverse a finding which is

plainly supportable.

Your Honours appreciate that this is dealt

with in the judgment of Mr Justice Bryson. In this

passage I keep referring to he begins to deal with

it on page 828 line 24. He says:

Ex Lis a copy from microfiche records.

Another version of the same document is Ex 27, which bears fewer endorsements.

Perhaps I should go further on page 828 beginning

at line 6:

The name of the company was changed on

27 July 1983. On that date Ex L, a Notice of

Resolution Form 24 was lodged with the

Corporate Affairs Commission and it stated to

the effect that a general meeting of members

held ..... on 4 March 1983 had by special

resolution resolved to change the name of the

company to ATWA Trading Pty Ltd. This notice

of resolution bears date 14 March and was

signed by Mr Smith. It is a very suspicious

document. There is no evidence such as one

would ordinarily expect to see of a minute of

such a resolution, nor is there any

substantial evidence that such a general

meeting took place.	The address given is the
address of PTS' tyre business.	Mr Dawson who

managed the business conducted there knew of

no such meeting. There are unexplained
handwritten inscriptions of the dates 16/3/83

and 18/3/83 and a rubber stamp 17 August 83 on

this document. It was lodged by C.K. Miller,

Son & Partners, Mr Smith's new accountants.

It may have been prepared by H. Charles and

SC Brigden who had acted in his affairs

earlier.

He refers at page 829 at line 18 to exhibit 29.	He
says:

Ex 29 is a copy of a receipt from the

Corporate Affairs Commission on the lodgment

by PTSEMD of a Form 24 notice on

18 March 1983. However, no evidence shows

what were the contents of that Form 24.

Dawson(2) 28 11/4/91

McHUGH J: That is literally true, but you can deduce what

the contents were, can you not, by comparing

exhibits 27 and 29 and exhibit L?

MR DOWNES:  We would respectfully submit no, Your Honour.

That is a speculation. There might be another

explanation for the coincidence of the numbers.

How does one explain the fact that the only time

one sees a "Lodged" stamp on it that the "Lodged"

stamp is 27 July. And how does one explain that -

I admit one is in the realm of speculation - one

sees the figure $55 there.

McHUGH J: Yes. I must say, in fairness to

Mr Justice Bryson, I do not really see that what
Mr Justice Mahoney has said there at those pages,

916 through, destroys His Honour's findings because

Mr Justice Bryson was well aware that that document

was lodged on 18 March, as that appears at several

places in his judgment, and the fact that it was

lodged on 18 March does not provide any evidence at

all that the meeting took place on the 4th or as at

the 16th when the mortgage was signed by - - -

MR DOWNES:  Yes, Your Honour, that is true. I mean, one

cannot escape the fact that the document ultimately

- so to speak, whatever happened on that date was

put aside and not lodged again until late in July

and in the meantime the company had lodged with the

commission a charge which was supported by a

declaration of the correctness of the charge,

including the name.

TOOHEY J: Well, you have used the expression "lodged", or

agreed with Justice-McHugh in using that

expression, but it may be an area where some

precision is necessary. I thought your proposition

was that nothing had been lodged in March.

MR DOWNES:  Yes. I think what Mr White suggested might have

been an	inference open from these figures was that
it was,	so to speak, tendered and rejected, but not
lodged.

TOOHEY J: Well, that is not lodged. That is not the

ordinary understanding of the word "lodged", is it?

MR DOWNES: That it was tendered and rejected?

TOOHEY J:	Yes?
MR DOWNES:	No, and that is why Mr White, in the passage in the transcript in the Court of Appeal that I handed
up to Your Honours before sought to - he said,
"Well, that may lead to" - I think he may have gone
further - "If that leads to the inference that it

Dawson(2) 29 11/4/91

was handed over, it was also handed back and was

not lodged."

One wonders then, if that is the fact, why $61

or any amount was paid with respect to it and it is

very difficult to see why it did not get the lodged

stamp that appears with the date "July" on it, on

it.

TOOHEY J:  Mr Downes, can I just be clear about this:

during the trial, was any witness, other than the

witness who presented from Corporate Affairs, if

there was such a witness - was anyone asked about

exhibit L?

MR DOWNES:  No, Your Honour.

TOOHEY J: Quite literally, nobody was asked any question

about that exhibit?

MR DOWNES: There is - no, that is not quite literally true.

I will give Your Honour the page. There was - - -

TOOHEY J: Well, you need not worry now if you do not have

it.

MR DOWNES:	Page 222, I think.
TOOHEY J:	I take it exhibit L was just produced without

anybody giving evidence?

MR DOWNES:  Yes. What happened, Your Honour, as often

happens nowadays in these cases is a vast array of

documents was tendered at the opening and it was

one of them, and then exhibit 29 was tendered.

TOOHEY J:  I interrupted you. You were going to take us to

page 222.

MR DOWNES:  Yes, 222, Your Honour, it is at line 16:

Q. Would you have a look at exhibit L please.

This is Mr Smith in-chief.

Does that document bear your signature ..... ?

A. Yes, it does.

Q. Approximately when did you sign that

document? A. Approximately March 1983, I

think, approximately.

A. And were you a director of Premium Tyre

Service (Earth Moving Division) Pty Ltd?

A. Yes, I was.

Dawson(2) 30 11/4/91

Q. And were you involved on behalf of that

company or ATWA Trading Pty Ltd as it became

known in communications with Westpac

Bank ..... ? A. Yes, I was.

Q ...... you communicated with Mr Matheson ..... ?

A. Yes, I did.

Well, yes, Your Honours, it goes down to about

line 30.

Q ..... did ATWA obtain finance facilities from

the bank? A. ATWA did, yes.

Q.	Did Tire Warehouse obtain facilities ..... ?
A.	Yes, it did.

That, I think, is the evidence. At the moment, at any event, I think my learned friend does not disagree with that, Your Honour.

TOOHEY J: Yes, thank you.

MR DOWNES:  I am sorry, there is one more, I think,

Your Honours, at page 224 line 24:

Q.	MACFARLAN:	Do you still have Ex Lin
front of you?

Q. Do you see ..... Childs & Brigden?

And there is then some evidence there about the

change of accountants.

Your Honours, can I give Your Honours a

reference. I have mentioned a number of times this

charge that was created on 6 April and lodged on

2 May, and that is exhibit Nat page 423, or more

particularly the document signed by Mr Smith,

relating to the charge is exhibit Nat page 423.

The charge itself is part of exhibit KI think, and

exhibit K is at page 386 and the relevant charge, I	think, begins at page 387. Page 386 is another
document forming part of exhibit K which was the
subject of analysis by His Honour, relating to
changes in directors of Earth Moving, and that
document was lodged - it is difficult to read, but I do not think there is any issue about it - as
late as 31 August 1983.

Your Honours, if you have that page 386

exhibit K, can I tell Your Honours this, that you

will see that this is a document purporting to do

something as from 25 February 1983, as I have said.

It was lodged in August 1983 and what it purports

to do is to show changes in directors and in

particular the resignation of Janice Smith, yet

Dawson(2) 31 11/4/91

Janice Smith was a person who signed, as director,

the charge made in April and that appears from

to the conclusion to which His Honour came.

page 420. Now, all of these are matters which coming

Your Honours, could I just take you to this

passage in the judgment - or those parts of it to

which I have not already taken Your Honours - the

passage in Mr Justice Bryson's judgment, beginning

at page 827, which is headed "Changing PTSEMD's

name". He begins, as Your Honours will see, by

referring there to a minute, exhibit D, which shows

that on 9 October there was a:

reference to "deconsolidation, takeover,

change or wind-up of" various companies,

including PTSEMD.

He says:

It was Mr Smith's evidence that after

8 October 1982 steps were taken to wind

up PTSEMD -

Then he refers to exhibit K to which I have just

taken Your Honours:

According to a return ..... Ex K, there

were several changes on 25 February 1983.

However there is no substantial evidence that the changes spoken of in Ex K actually took

place. In this as in other instances where

statements about events in the affairs of

companies are supported only by the signature

of Mr Smith, I regard the statements in the

document as quite unreliable.

Now that is one of His Honour's findings relating

to credit which flows over to documents.

Under section 238(7) such returns must be

lodged within one month of a change. The

document was lodged on 31 August 1983, more

than six months after the date 25 February

1983 which it bears, and it was lodged by

accountants who were not acting in relation to

Mr Smith's affairs in February 1983.

According to this document Mr Smith was a

continuing director, Mrs Smith resigned -

Then he goes to exhibit L:

The name of the company was changed on 27

July 1983. On that date Ex L, a Notice of

Resolution Form 24 was lodged with the

Corporate Affairs Commission - · ·

Dawson(2) 32 11/4/91

And I have taken Your Honours to that passage, but

could I just note that what His Honour there says

of this document:

It is a very suspicious document.

And he says that it is a document signed by

Mr Smith and he says that immediately after the

remarks he has made on the previous page about

documents signed by Mr Smith.

DEANE J:  Mr Downes, when does the change of name become

effective, when it is lodged or when the resolution

is passed or - - -?

MR DOWNES:  When it is lodged, Your Honour: 27 July, and, in

fact, can I just tell Your Honours this?

Your Honours will see the evidence in a moment, but

Your Honours will recollect that one of

Mr Justice Bryson's findings was that the Bank was

on notice on 19 August of the relevant defect, and

the reason for that was that the Bank received a
letter at that point of time from the accountants

for the company which said that the notice of

change of name had become effective on that date.

McHUGH J:	What is the legal significance of that fact?
MR DOWNES:	Well, that the Bank was put on notice at that

point of time of the defect in its document.

MCHUGH J: Yes.

MR DOWNES:  Mr MacFarlan ran below, as Your Honour may

recollect I mentioned earlier, an estoppel argument

to which that was relevant. But for present

purposes, that is a document passing from the

company's then accountants to the Bank consistent

precisely with the findings made by

Mr Justice Bryson.

TOOHEY J:  You say, "The company's findings", that is right, is it? I only ask you that because there is

reference to Millar and Son as Mr Smith's new

accountants.

MR DOWNES:	Yes, Your Honour.
TOOHEY J:	They could have been both, of course, but - - -

MR DOWNES:  Yes, yes. The letter that I am referring to was

a letter written on behalf of the company with the

then changed name. Going back, Your Honours, to
the judgment - I will not read the passage relating
to exhibit L that I have read before. At the

bottom of the page:

Dawson(2) 33 11/4/91

There are some communications in evidence

between these accountants which give no more

than glimpses of action leading to the change

of name in July 1983. A letter from

Messrs Charles & Brigden to Messrs Miller -

which is exhibit 26 - I could give Your Honours

page numbers for these if Your Honours would find

that of any value - that is at page 700 -

under the heading "Re: A.T.W.A. Trading Pty

Ltd/Tire Warehouse (Australia) Pty Ltd" -

Now Your Honours see this is:

"A.T.W.A. Trading Pty Ltd/Tire Warehouse

not Earth Moving, the other company -

said that Charles & Brigden had no

professional objection to Miller Son &

Partners accepting appointment as accountant

for the above companies and "After

finalization of some current work re the

change of name to A.T.W.A. Trading.

So, if Your Honours go to 700 what Your Honours would see there is a heading at the top of the page which says: "A.T.W.A." and under that "Tire

Warehouse" and which then speaks about, plainly in

terms as if ATWA was the trading name of Tire

Warehouse. Now that is a document of April 1983.

Ex 28 is a copy of a letter of 27 June from

Mr Millar to "The directors of A.T.W.A.

Trading Pty Ltd" referring to the change of

name as a project which was still to be

completed and had been impeded by an earlier

request to the Corporate Affairs Commission

that PTSEMD be "struck-off". In Ex 30,

Messrs Charles & Brigden reported on

4 July 1983 to Millar Son and Partners, on

passing over the matter of the change of name

from PTSEMD to ATWA " ... the secretarial

records of the company are at this stage non-

existent, due to the peculiar nature of the

company's history."

Ex 29 -

he then refers to and I have read that.

Ex Mis a copy from the Corporate Affairs

Commission of a consent not bearing date but apparently executed under the seal of Tire Warehouse (Australia) Pty Ltd to the use of the name A.T.W.A ...... consistent with the

Dawson(2) 34 11/4/91

name's having earlier been reserved by Tire

Warehouse.

Mr Smith signed Ex O a circular "To all

stockists" under the heading

A.T.W.A . ..... dated 28 February 1983 which

stated of Tire Warehouse ..... "We now wish to

inform you that we have changed our company

name and address to A.T.W.A. -

so here is, only days before the relevant change,

this document -

While confidence in statements by Mr Smith must be guarded -

says His Honour - another comment on credit -

this could well be a true expression of what

he thought and intended on that day, on the

following day when an account in the name of

A.T.W.A. Trading Pty Ltd was opened -

Now, Your Honour the Chief Justice asked a question

about that account. Your Honour sees that that was

opened on 1 March, the day following the

28 February letter -

and during the following weeks.

Mr Smith acknowledged -

and the passage is 214 -

that between October 1982 and May 1983 he

would not have signed a document and affixed

the seal of PTSEMD to a document if he had

thought that the company had changed its name,

and that when he signed Ex N -

that is the document Your Honours have seen

relating to the charge at 423 -

he believed the particulars in it were true.

Mr Smith said in evidence -

at 222 and 223 -

after being referred to his signature at two

places in the attestations of the mortgage,

that when he signed it he believed that ATWA

had had a previous name PTSEMD. He said -

223 -

Dawson(2) 35 11/4/91

to the effect that early in 1983 he had a

conversation with Mr Mathieson about ATWA

taking over from Tire Warehouse of which he

said -

perhaps just going down to line 24 -

A.T.W.A. Trading would be the name of the

trading company that would be doing the

importing of the tyres, not Tire Warehouse.

Q. Can you remember whether you referred

to the question of where A.T.W.A. was coming

from or whether it was a company which

presently had another name. Was there any

discussion on that topic that you can recall?

A. Not that I can recall."

He was not in evidence in chief asked

change the Company's name. In cross-examination he said to the effect that

anything about any meeting of members of

it was his understanding as at 16 March 1983

that PTSEMD still existed as a company by that

name - his answer was "I believe so." He also

said to the effect that it was incorrect to

say that he also knew that no company by the

name of A.T.W.A. Trading Pty Ltd existed as at

16 March 1983. He said -

and the relevant page is 243, it is not 216 it is

217, I think -

"Q, When do you say A.T.W.A. Trading Pty Ltd came into existence as a company by that

name? A. I believe around about that time, it

might have been prior .....

Q. Was it your belief at that time that

that company had come into existence by that

name because Premium Tyre Service (Earthmoving

Division) Pty Ltd had changed its name to

A.T.W.A. or for some other reason?

A. It was believed that Earthmoving

Division was going to be changed to A.T.W.A.,

the exact dates I really can't - ".

And then His Honour goes back to exhibit L again -

It was contended that in the light of

Mr Smith's execution of the notice of

resolution relating to change of name

Ex L ..... his intention to refer to ATWA in the

mortgage is beyond doubt. Counsel said that

Ex L put Mr Smith's intentions beyond doubt in

Dawson(2) 36 11/4/91

any respect. I reject this contention, which

was expressed with unfortunately excessive

language. If Mr Smith had given evidence

establishing affirmatively that the facts

stated in Ex L were true, that there had been

a general meeting at the time and place

referred to and that a special resolution had

been passed, and that the date on which he

signed Ex L was 14 March, the first steps

might have been taken towards investigating

and establishing those facts; he would have

exposed himself to cross-examination and other

evidence with respect to them. He did not

give such evidence; it is quite improbable

that there ever was any such meeting or

resolution -

so I think I was not able to give Your Honour

Mr Justice McHugh the reference earlier, but that

obviously is the most pertinent passage in terms of

Mr Justice Mahoney's finding -

and Mr Smith's documents about the affairs of

companies appear in many places to be

unreliable. If Mr Smith had an explanation

for using the name ATWA in dealings with the

Bank on or after 1 March and in particular in

the mortgage on 16 March with the intention to

refer to PTSEMD which he could reconcile with

giving a registered charge and a detailed

certificate relating thereto in the name of

PTSEMD on 6 April after the company had

according to his certificate resolved to

change its name, and if he could add to that

an explanation why the notice of the

resolution was not filed and the steps

necessary to make the change of name effectual

were not carried out till 27 July, he did not

offer them in evidence. I do not believe that

there are any such explanations. There is no

reason to regard it as probable that Ex L

really was signed on 14 March. There is no

evidence either way for or against concluding

that the Form 24 (which would relate to a

change of name) which according to Ex 29 was

lodged by PTSEMD on 18 March 1983 related to a

change of the company's name to A.T.W.A. -

Now, His Honour is, at this point, addressing this

very question. The only thing he has not said here

is that in making this finding "I am conscious of

the fact that there is the figure 4246 on the top

of both documents."

the contents of the Form 24 are quite unknown

and all that is known about it is that the

Dawson(2) 37 11/4/91

Corporate Affairs Commission did not act on

it.

So that is what His Honour regards as critical at

this point, that whatever one says about it it was

not acted upon.

As it was not lodged until 18 March no one is

likely to have believed on 16 March that it

had already been given effect to, whatever

effect it would have.

There is a wealth of detail about the

supposed change of name resolution which could

have been investigated in evidence.

Investigation of the exact time and exact place

well, then His Honour goes on to deal with a number

of matters that could have been and were not dealt

with. At line 17:

The acceptance of the facts contended for was

not assisted, but was greatly injured by

leaving these matters in silence and

proffering only a document from a person who

is an established source of unreliable

documents.

Ex N is a notice dated 6 April 1983,

lodged with the Corporate Affairs

Commission ..... of particulars of a

charge . .... A registration copy ..... is part of

Ex K. A recital shows that the Deed was

supplemental to a Deed of Facility and

Guarantee made on 15 February 1983. The

charge purported to be signed by Mrs Smith as

director and Mr Smith as secretary. The date

of its engrossment 25/3 appears at the foot of

each page.

So His Honour is able to put its engrossment back

to that point of time.

In Ex N Mr Smith certified in the plainest way

and for a most serious purpose that the charge

was created on 6 April 1983. There is an

inconsistency with the statement of

particulars of officers in Ex K which would

suggest that Mrs Smith ceased to be a director

on 25 February 1983. The Bank's counsel

contended that the charge may have been

prepared in the name PTSEMD and the seal may

have been put on it well before 6 April 1983.

This is I suppose possible, although there is

no evidence that it happened. However, it

appears to me to be to a marked degree

Dawson(2) 38 11/4/91

improbable that Mr Smith who certified on

6 April 1983 that the charge was created on

that day then believed that the company had

earlier changed its name and was not named

PTSEMD, or that he then believed that

Mrs Smith had ceased to be a

director ..... Further, it would be a usual
event in the ordinary course of practice on
taking such deeds of charge that the identify

and holding of office of persons purporting to

be directors ..... would be checked on or

shortly before 6 April 1983.

These documents and circumstances make it

to a marked degree improbable that PTSEMD had,

in the belief of Mr Smith and also that it had
in any way adopted the name ATWA by

6 April 1983, and also that it was treating

itself as so named in the course of its

business, and also that it had in any way

adopted a common seal bearing that name.

These documents are important for my general

view of Mr Smith as a very unreliable source

for information in detail relating to the
affairs of companies. His documents are
usually dubious, and his oral evidence and his

demeanour while giving it are also bases for

this view.

Now that, Your Honours, we would respectfully

submit, is a finding and it is one of the ones we

have identified which is reversed by the Court of

Appeal but His Honour goes on in this page and the

next page to make a number of findings.

The statement pu.rportedly made by him to the

effect that there was a special resolution of

members ..... on 4 March does not, on the

balance of probabilities, persuade me that in

fact any decision was taken by members or by

anybody, even by Mr Smith himself, that Earth

Moving's name would be changed to ATWA either	on 4 March or at any time before
16 March 1983. Nor do I have any confidence
in the date 14 March 1983 on which Mr Smith
purportedly signed Ex L. It is probable that
this document was signed as early as
14 March 1983 and it is improbable that there
was any project of changing the name of Earth Moving to ATWA on or before 16 March 1983.
There plainly was a project of using ATWA as
the name of some new entity, but I do not find
that at that time this intention related to
PTSEMD.

Dawson(2) 39 11/4/91

I could not on the evidence find that

Mr Smith had the same intention and belief as

hereinafter I find that Mr Mathieson had that

PTS and the Bank should enter into legal

relations with a newly formed company named intention, and he did not have any intentions

which coincided with those of Mr Mathieson.

The probability is and I find that it was well known to Mr Smith that there was no newly formed company of that name, and that no

company bore that name. Mr Smith did not

intend that PTS and the Bank should enter by

the mortgage into legal relations with PTSEMD.

It is improbable that any project of changing

the name of PTSEMD to ATWA then existed and I
find that no such project then existed; the

building blocks of that project consisting of

a meeting of members on 4 March, a special

resolution on that day and a Form 24 document

dated 14 March 1983 certified by Mr Smith and

setting out such a special resolution are

unlikely to have had any existence in reality

by 16 March. It is possible though unlikely

that Mr Smith may have had in mind taking

steps in relation to PTSEMD so as to acquire

for it the name ATWA; even if he did have

this in mind it was no more than a project for

the future by 16 March. It is possible that

Mr Smith had in mind forming a new company by

the name ATWA, and changing the name of a

shelf company to ATWA could be thought of as

forming a new company; these possibilities

are suggested by Mr Mathieson's reference in

Ex AA and elsewhere to a newly formed company

and the possibility that Mr Smith was the

source of any such ideas. Alternatively, it

is possible that Mr Smith had in mind changing

the name of Tire Warehouse (Australia) Pty Ltd
to ATWA. Which company he and PTS through him

intended should be the party into which PTS

and the Bank entered into legal relations by

the mortgage is in practical terms an unknown

and unknowable subject; that the intention
related to PTSEMD may be excluded, in

litigation which is to be disposed of on the
probabilities.

The understanding and intentions of PTS

as to who was the party whose obligations it

was supporting by the mortgage are not

significant unless they coincide with those of

the Bank. (Perhaps it is also necessary that

they coincide with those of the persons who

purported to represent the non-existing ATWA).

The only individual whose intentions and

beliefs seem to be significant and available

Dawson(2) 11/4/91

to be identified with those of PTS for this

purpose is Mr Smith himself.

Your Honours, I am sorry I have read those findings to Your Honours in detail in the sense of

the time it has taken but this is, at the end of
the day one has to recognize, I think, an appeal in
which the facts are of critical importance.

It is true, as I think some of Your Honours were putting to me, that one could isolate

particular points here and there and say, "That is

the critical matter", and so one can, but the fact

is that one really needs to look at the whole of

the context of the findings that Mr Justice Bryson

made to see that what His Honour Mr Justice Bryson

did was to make findings of the kind that are

characteristic of the task of a trial judge, which

involves considering the weight to be given to oral

evidence, which involves weighing up any doubtful

documents in the light of that evidence. With

great respect, that is exactly what

Mr Justice Bryson did and did in an impeccable way.

What, on the other hand Mr Justice Mahoney

did, was to engage in what we would respectfully

submit was something akin to first instance fact

finding, and without addressing - much more
difficult for a judge on appeal to do it, of

course, because he has not, apart from the problems

about demeanour of witnesses and so forth, there is

a very great advantage that the trial judge has,

that he has actually, over days in many cases,

listened to and examined in detail the oral

evidence and the documents.

Now, can I ask, so to speak rhetorically, this

question:  if with the wealth of material that was

before the trial judge in this case and which was

dealt with by Mr Justice Bryson, where there were attacks on credit of witnesses and so forth, if a

trial judge had written the judgment that

Mr Justice Mahoney wrote, that judgment, we would

respectfully submit, would be open to attack on the

basis that the judge had not addressed the issues that had been raised for him during the course of the hearing.

McHUGH J: Stripped of all its embellishments, this case

comes down to the simply question whether the Court

of Appeal, having regard to the trial judge's

findings, could properly find that the meeting took

place on 4 March 1983. Is there anything more to

this case than that?

MR DOWNES:  Yes, Your Honour, with respect, yes, because merely to say that such a meeting took place does

Dawson(2) 41 11/4/91

not, with respect, again, determine necessarily the

issues in the case. These people could have sat

down and they could have had a meeting.	They might
have changed their minds shortly thereafter.	Given

the weight which the judge gives to the credit of

the relevant witnesses - and could I ask

Your Honour to bear in mind that a Mr Grant that

Your Honours have not yet - - -

McHUGH J:	I know.
MR DOWNES:	He was totally discredited according to

His Honour.

McHUGH J:	I do not know where his evidence finished but his evidence, certainly at one stage in cross-
examination, seemed to suggest that there was no
intention to change the name until 25 March.
MR DOWNES:	25 March, and then he was shown some documents

in re-examination of which 29, I think - no,

perhaps I have wrong there. But he was shown some

documents in re-examination and then he gave some

evidence which, so to speak, might have reversed

the position. He was then cross-examined again and

went back, on one view, to where he had been in the

first round of cross-examination and then he was

re-examined again and went back to where he had

gone, I think, on the previous re-examination and

that caused the judge to say, at page 844, line 26:

The end result then of my consideration of Mr Grant's evidence and of Ex 41 in

relation to it is that it is not possible for

me to come to any view, on the balance of

probabilities, about which company Mr Grant

intended to bind by his participation in the

execution of the mortgage. His oral evidence

is thoroughly discredited by his waverings and his claim to assistance where rationally there

could not have been any. Taking his oral

evidence with his statements in Ex 41, they

seem, on the whole, to lend some small support

to the view that it is unlikely that Mr Smith

and Mr Grant intended to represent PTSEMD in

executing the document.

So, the material, I was going to say this to

Your Honours - perhaps I would trespass too much if

I took Your Honours to it, but the whole of the

judge's judgment from 837 to 845, at the passage

that I just took Your Honour to, is an analysis of

the evidence of Mr Grant and of the matters that I

just adverted to.

Exhibit 41 is a whole set of minutes but

"minutes" in inverted commas. Most of them are

Dawson(2) 42 11/4/91

just undated, unsigned documents and so forth.

Each of the documents in exhibit 41 is dealt with by His Honour, beginning at page 839 at line 18, and exhibit 41 is at page 772 of the transcript.

Your Honours, my attention is particularly

drawn to the document which is dealt with in the

judgment at 841 in line 6:

a minute of a meeting of the directors of

ATWA -

supposedly -

held on 2 March 1983.

Which is at page 774 and which His Honour, we would

respectfully submit, convincingly deals with in the

passage on that page.

Now, Your Honours, the factual issue to which

I have been referring is pertinent to the question of whether there was a valid transaction which
could be saved by section 51A. It is important to

note that, so far as the transaction is concerned,

the first potential problem is the ·fact that

Premium did not authorize the execution of the

mortgage, and the second potential problem is the

problem relating to the non-existence of any

company named "ATWA". In consequence, the

inability of any execution of the document by a

company bearing that name, and the findings of the

trial judge relating to those issues, are the

findings that are referred to on pages 827 to 837,

and when His Honour turns to the other company,

ATWA - well, turns to "that entity" to decide about

it, the findings of His Honour from pages 837 to

345. But there was another issue that was relevant

in both the decision of the trial judge and the
decision on appeal in the Court of Appeal and that

was the question of what was the belief of the

parties, and as to that, all of the parties, as to

what was happening.

Now, a critical step in the judgment of

Mr Justice Mahoney was to find that there was a

valid transaction and he found that by looking at

the material that I have just taken Your Honours
to, but that was only the first step. The second step, which His Honour considered had to be dealt

with, was to then look at the question of mistake,

and he needed to look at the question of mistake to

see what it was that the parties believed were the
parties to the transaction at the time the document

was executed, and for this purpose, of course, the

Bank's intentions were pertinent - the Bank's

beliefs were pertinent - and His Honour begins to

Dawson(2) 43 11/4/91

deal with this issue at page 845 of the judgment

under the heading "The Bank's Intentions". Can I say to Your Honours this, as one inevitably finds

in a judgment covering the same issues, so to

speak, from different views, that there is some

overlapping, so that Mr Grant's evidence, for
example, is also of assistance in considering the

issue of validity or no, and by the same token

there is material, naturally enough, in connection

with the relations with the Bank, which touches

upon the question of whether it was intended by

Mr Smith and others that Earth Moving should, so to speak, trade under the name ATWA prior to the execution of the mortgage.

So, when one comes to His Honour's findings at

page 845 and following, they are primarily

associated with the question of what was the belief or intention of the Bank but, secondarily, they are of relevance to the other issue.

Now, His Honour adopts a similar approach to

the approach that he has adopted before of

analysing all the pertinent documents and

particularly doing so in the light of his views as

to the evidence of the witnesses. And can I ask

Your Honours to note that, for example, there are

some documents that are dealt with on pages 845 and

following which would leave open an inference that

the intended trader at the relevant time was Tire

Warehouse, not Earth Moving.

For example, His Honour says at the very last line of page 846, after referring to a number of

these documents:

the proposed customer under discussion in

always Tire Warehouse. At various points PTS

is mentioned as in some way related to this

business but PTSEMD is not and there was no suggestion that the customer was to be an	existing company the name which was to be	changed.
Then His Honour comes to a document which is

dealt with in some detail by Mr Justice Mahoney and

which I think I need to take Your Honours to, and

he deals with that at page 847 at line 25:

The first sign of a change in the

identity of the customer in the contemplated

transaction to be found anywhere in the Bank's

internal communications in evidence is in

Ex AA, a Memorandum -

that is at page 449, Your Honours

Dawson(2) 44 11/4/91

from Mr Mathieson to the Regional Manager,

Illawarra of 25 March 1983. Once again this

commences by referring to the customer as Tire

Warehouse (Australia) Pty Limited. Its

directors are now named. After referring to a

decision of 10 February 1983 when the Bank

ratified allocation of security to secure

various credits including an eventual Back-to-

Back documentary letter of credit facility of

$1,200,000, Mr Mathieson went on:

" ..... Transfer of commitments in name of Tire

Warehouse (Australia) Pty Limited to a newly

formed company A.T.W.A. Trading Pty Limited".

Now, if Your Honours go to page 449,

Your Honours will see that that is, so to speak -

appears there as a matter of some prominence under

the heading "Matter for consideration" as if it is really the crux of what the document is about, and then underneath that is the heading "Remarks". So

that this document plainly enough, in that opening

passage, refers to a newly formed company, ATWA.

Under "remarks"~

His Honour says -

Mr Mathieson said "Because of continual

unavailability of director Graham Matich, it

was mutually agreed that he relinquish his

position with the company. This vacated

position has been taken over by Brian

Sharrock.

Now, can I pause there, and I think, Your Honours,

I have not taken Your Honours to it, but this is

the matter to which Mr Justice McHugh has adverted

in a question to me a little while ago. The

evidence of Mr Grant, on his initial cross-

examination, conceded, without qualification or

events associated with Mr Matich, did not occur	doubt, that these relevant events, that is, the	until a time late in March 1983, that is, well
after the mortgage was executed.

I am reading at line 15 on page 848:

This vacated position has been taken over

by Brian Sharrock and this is the reason for
changing the Company's trading name.

I should pause there because Your Honours will see

in due course that that is a line or phrase that

Mr Justice Mahoney picks up. Your Honours

recollect that Mr Justice Mahoney made a different

finding about intention or belief of the Bank

Dawson(2) 45 11/4/91

relating to whether it was a new company or a

company that would change its name or not. And

what Mr Justice Mahoney, as Your Honours will see

in due course did, was to pick up that phrase.	He
accepted but placed weight on that phrase, so to
speak, in reduction of the weight that one, we

would respectfully submit, would place on the first

phrase that I referred to, namely, the one

referring to a newly formed company.

Prior to joining the Board of Tire Warehouse,

Mr Sharrock had been negotiating with a

Romanian company to import a 4WD off-road

vehicle. Because the Company will be

diversifying from importing tyres solely it

was decided to form a new company ..... Another

exciting happening for the new company ..... We

have a further two back-to-back documentary

letters of credit to establish for Tire

Warehouse and all further credits will then be

established in the name of A.T.W.A. We are

now seeking a spread of previously approved

commitments between the two companies and we

already hold mortgages over the Dapto property -

I do not think I need to read more of that.	At
line 8:

The references in this document to

mortgages over Dapto property already held are

not clear and it is far from clear that the

reference is to the mortgage Ex E -

that is the mortgage in this case -

because if Mr Mathieson was seeking a transfer

of the commitment to the new company it would
only be when that transfer was approved that

there should be a need for a mortgage to

support it. The terms of Ex AA show that in

Mr Mathieson's understanding on 25 March 1983

the company the credit of which was to be
supported by a mortgage recently granted or to

be granted by PTS over its property at Princes

Highway Dapto was some company which could not

be PTSEMD. It would be inconsistent with his

repeated references to new formation of a

company, newly formed but by 25 March 1983
already formed, that Mr Mathieson should have

had in his mind a company which had been in

existence for some years and had either

recently changed its name ..... or was in the

process of doing so.

Dawson(2) 46 11/4/91

Perhaps I need not read further at this point, but

the point of this material and the material at page

850 is His Honour's again careful reasoning about

what in the circumstances should be the position
with respect to this exhibit AA and how it affected

the question of what was the Bank's belief or

intention.

At the bottom of page 850 line 27, he

concluded:

It is not a practical possibility that on

25 March Mr Mathieson had PTSEMD in mind

as the customer or proposed customer of which

he spoke in Ex AA and it is also highly

improbable that he had had it in contemplation

about a week earlier as the party whose

obligations to the Bank were to be supported

by mortgage Ex E which he then obtained from

PTS.

It was contended that -

I will not read Your Honours the next passage.

His Honour then looks at some further documents.

Perhaps I should take Your Honours to His Honour's

findings relating to the actual account. It is at

page 851 line 20:

The conduct of a current account in

relation to which the name ATWA Trading Pty

Ltd was used by the Bank as the name of its

customer began on 1 March 1983. Ex 16 shows

that on that day a balance of account of

$426.47 was transferred from an account 900447
and credited to a new account ..... Also on

1 March 1983 a refund of stamp duty of $13.90

was credited -

and other matters there. His Honour notes another

document which Your Honours will see the

underlining again refers to the new company seal.

At page 853 line 7:

On 16 March the account was in overdraft

$12,141.03. No document in the nature of an

application or agreement to conduct an account

or an overdraft account which could relate to

these overdrawings is in evidence.

Perhaps four or five lines above Your Honours will

see His Honour notes that Mr Mathieson repeatedly

spoke in his oral evidence of:

ATWA as "the new company."

Dawson(2) 47 11/4/91

He addresses Exhibit AA again in the middle of

page 854. Then some other matters I think I can

pass over, to 856, to His Honour's treatment of

Mr Mathieson's oral evidence.

Mr Mathieson in his oral evidence dealt in a very unsatisfactory way with the question

of who or what he understood to be represented

by the name ATWA in which an account was
opened by the bank on 1 March 1983 -

so, there is a positive finding relating to Mr Mathieson's oral evidence on this issue.

His Honour then analyses a good deal of further

evidence and then at 860 makes another observation,

at line 12, relating to Mr Mathieson:

This evidence was extremely

unsatisfactory because there is nothing in

Ex AA which when put before him would have

assisted him to the conclusion that the time

when he would have known that PTSEMD (if that

was the company he was talking about) was

going to be the vehicle used to establish ATWA

would have been on or before 1 March 1983,

which was in fact the date on which the

account ..... was opened, nor would anything in

Ex AA help him to a conclusion that the fact

that PTSEMD was going to be the vehicle used

to establish ATWA was known to him by

25 March 1983. The terms of Ex AA establish

quite to the contrary that on 25 March 1983 he

thought of ATWA as a newly formed company.

This is plain notwithstanding a confused

reference -

et cetera. Then the finding at 862 and line 12:

None of this evidence persuades me that Mr Mathieson or the Bank thought of A.T.W.A.

Trading Pty Ltd as a name for PTSEMD, or as a

name which was being used to refer to a

company which for the time being had some

other name which it was to change to A.T.W.A.

McHUGH J:  Can I just interrupt you to take you off the

train of your argument? These minutes of ATWA

which appear in exhibit 41 and which seem to

suggest that it held its initial meeting of

directors on 2 March 1983 as set out at page 774

and following, what is the significance? It seems

to indicate that ATWA was an independent company

already in existence at that stage.

MR DOWNES:  Yes. Your Honour, the way this material came

into evidence was that a folder was put to Mr Grant

in re-examination which contained these documents -

Dawson(2) 48 11/4/91

that is what Exhibit 41 is, and he was asked to

look at that and as a result of that he brought

back his date of 25 March. That is how they got

there, Your Honour, but - - -

McHUGH J: Is there any explanation - - -

MR DOWNES:  - - - yes, as His Honour points out again and

again, when he is going through these documents

dealing with the evidence of Mr Grant, the

documents are again just simple further examples of

the unreliability or the lack of documents, which

one cannot place weight upon in connection with

this case, but worse, suggest a proposition

entirely to the contrary.

We would respectfully submit - I mean I am

here not to put to Your Honours yet a third view of

the facts, I am here to defend the findings of the

trial judge, which is one of the reasons why I have

been at pains to base my submissions on his

findings, but the view is open that there were a

range of possibilities open to Mr Smith and his

friends, including Mr Grant, as to what they would

do in the fullness of time, and when, in the

fullness of time they had, by July 1983, decided

that what they were going to do was to use Earth

Moving as the vehicle, they, with respect, sought

to, with that view from hindsight, to maintain the

position that that had been true all along and they

had very good reason to want to do that because of

the problem that had been raised relating to the

validity of the mortgage.

Your Honours, again, if one goes to one of

these documents, it is part of 41 at page 778. It
is the subject, I know, of analysis by the judge,
but the second paragraph:

A new Company has been formed which will be

responsible for the National Distribution of

tyres in a similar manner to the business

known as Tire Warehouse.

And the heading, Your Honours see, is:

A.T.W.A. Trading Pty Limited.

My learned junior is pointing out to me that the date of this document is the very day on which the

resolution is - - -

McHUGH J:  On the other hand, exhibit 30 at page 705 says

that the secretarial records of ATWA are
non-existent, and this was a letter from the

accountants as at 4 July.

Dawson(2) 49 11/4/91

MR DOWNES:  Yes.

McHUGH J: Nevertheless, exhibit 28 which is the letter from

the accountants, Millars, to ATWA would seem to

indicate that there had been efforts over some

period of time to change the name from Earth Moving

to ATWA, and that problems had been run into at the

Corporate Affairs Commission.

MR DOWNES:  Well that, so to speak, possible background fact

is adverted to in the evidence and dealt with by

the trial judge.

McHUGH J: Yes, I know.

MR DOWNES:  I am conscious of the fact that I have gone over

the two hour estimate that I gave as perhaps the

outside estimate to Your Honour the Chief Justice.

MASON CJ:  I am conscious of that too.

MR DOWNES:  I am sure Your Honour is. I am not sure whether

Your Honours propose to adjourn now -

MASON CJ:  No.

MR DOWNES: If Your Honours please. Should I just keep

going till I drop, Your Honours?

MASON CJ:  The fact that I am not stopping you now does not

indicate that you have, as it were, an unlimited

licence to continue forever, Mr Downes.

MR DOWNES:  No, I understand that, Your Honours. page 863 on line 25 are the findings: At

Mr Mathieson's evidence does not

establish that he or the Bank through him on

16 March 1983 thought of or referred to PTSEMD

as the debtor by the name ATWA in the

mortgage.	I find that Mr Mathieson and the
Bank through him did not understand the

references to ATWA in the mortgage to be

references to or to be intended to refer to

PTSEMD.	What the Bank did understand by those
references has not been established.	The

probable position is that Mr Mathieson thought

of ATWA as a newly formed company, and that he

so thought of it by 1 March 1983, when the

account was opened.

Then some more analysis of that, and over the page

to 865:

On 16 March 1983 steps which Mr Mathieson had

initiated appeared to lead the Bank into legal

Dawson(2) 50 11/4/91

relations in the mortgage with that non-

existing person; and the guarantee of PTS

guaranteed nothing. Perhaps the Bank had some

remedies against persons who had purportedly

represented a non-existing company; this is an

obscure subject. But if it has such remedies

they are not my concern in this case.

I find that it was the intention of the

Bank that in entering into the mortgage it

would enter into legal relations with and

obtain security to support the obligations of

a company named A.T.W.A. Trading Pty Ltd which

in the belief and intention of the Bank

existed and had that name on 16 March 1983;

but in fact there was no such company.

Now, His Honour has made there a positive

finding which conflicts with the finding made by
the Court of Appeal. But His Honour then goes on

to make a finding of the negative which is even in

a greater contrast:

It was not the fact that the parties to the

mortgage had a common intention to refer by

the name A.T.W.A. Trading Pty Ltd to PTSEMD or

to any other particular entity which existed.

Now, that is the findings of the trial judge

on that aspect. If I can go back to the judgment of His Honour Mr Justice Mahoney and take up what

His Honour found relating to these matters. Can I

go back to page 917 in line 19 because I think that

is where I ceased reading earlier where His Honour

says:

I am satisfied that the notice of

resolution was prepared on or about

14 March 1983 and was lodged on 16 March 1983.

That does not, of course -

no, I have not read this, Your Honours, and

although it touches on that other matter, I will
read it if I may.

If the meeting was not held and yet minutes were prepared and the Notice of Resolution was prepared to suggest that it was, then those

concerned would have been guilty of a criminal

offence. Suggestions were made against the

accountants ..... But, in my opinion, the

evidence before the court does not establish

that the meeting was not held. In all the

circumstances, the probability is that such a

meeting was held and, in my opinion, it is

proper so to find.

Dawson(2) 51 11/4/91

Well, I think I have made my submissions about what

we would say about that. Then he goes on to this

next matter and at line 19:

Mr White then submitted that, when the

mortgage was executed, the Bank believed that

the company then described as ATWA had

previously been the company Tire Warehouse.

His Honour then begins to address that matter and,

at page 919, goes to the document exhibit AA and

sets out exhibit AA on pages 920 and 921, and then

at page 921:

Submissions have been made by the parties as to the inference which should be drawn from

this document as to what, at the date of

execution of the mortgage, was the belief of

Mr Mathieson and accordingly of the Bank.

Mr Mathieson gave evidence upon the matter at

the trial. His Honour had, I think,

reservations as to the extent to which he

could rely upon Mr Mathieson's evidence as
accurate. For myself, taking proper account

of the difficulty of recollection and having

regard to what was said or not said concerning

the memorandum of 25 March 1982, I would

conclude that there was, at the least,
confusion in Mr Mathieson's mind and a failure

to understand the difference between "a newly

formed company" and a company whose name has

been changed. The memorandum refers to "both

companies" and suggests that Mr Mathieson

believed that there was a company, then having

the name ATWA Trading Pty Limited which was

different from Tire Warehouse. But reference

is made in the memorandum to "changing the

company's trading name". The proper

conclusion is, in my opinion, that

Mr Mathieson thought that the company the

party to the transaction was "a newly formed

company" bearing the ATWA name and that it was

separate from and to be "consistently

monitored" with Tire Warehouse.

If this was his belief then I would infer

that Mr Mathieson believed the new company to

have been in existence at the time when the

mortgage was executed.

Perhaps I do not read the rest of the passage but

at line 16:

If this be so, then the mistake under

which Mr Mathieson and the Bank laboured at

the time of execution of the mortgage was that

they thought the ATWA company which had

Dawson(2) 52 11/4/91

executed it was a newly formed company whereas

it was in fact an existing company Earthmoving

which had resolved that its name be changed.

And then His Honour goes on to deal with the effect of that on the validity of the document.

So, we would respectfully submit that in those

two areas the findings of the trial judge have been

departed from in circumstances which give rise to

error.

I hope, Your Honours, that I have by now

covered each of the matters that appear in

paragraphs 10 and 13 of our written submissions.

MASON CJ: Yes, I think you have.

MR DOWNES:  I am not going to read them again just for the

sake of good order, Your Honours. Can I just go

back now and go through the written submissions

with a view to picking up one or two points that we

there refer to. Your Honours, first of all is the

question of whether the procurement by Smith and

others of the execution by Premium of the mortgage

was a fraud. Now that, Your Honours, is dealt with

at page 821 of the appeal book in the judgment of

Mr Justice Bryson and he says at - - -

MASON CJ:	Why is that important for present purposes?
MR DOWNES:	Because I just want to raise one matter, if I

could with Your Honours, which will only take a

minute or two, literally, associated with the
question of whether if this Court takes an adverse
view of this appeal, the Court ought to consider

extending the grant of leave that we already have,

but I have to confess to Your Honours that it is in

Your Honour's discretion as to whether I am allowed

to raise that matter or not.

MASON CJ: If it is only going to take literally a minute.
MR DOWNES:	Yes, Your Honour.
MR DOWNES:	Yes, Your Honour.  The finding is:

There was in fact no authorisation of the

board of directors consisting of Mr and

Mrs Smith and Mr Dawson for the common seal to

be affixed .... PTS is not, in these

circumstances, bound by the unauthorised use

of its seal.

And at line 12 above:

Dawson(2) 53 11/4/91

Although Mr Smith chose some occasions on

which to act as if Mr Dawson were not a

director, these should be seen as occasions

when PTS and through his interest in it

Mr Dawson were defrauded.

Now, at page 881 His Honour makes a further finding

relating to this issue in connection with the cross

claim, but what His Honour says at 881 in line 15

is:

I do not find that that company, whatever it

was, was the company now named A.T.W.A.

Trading Pty Ltd. In particular I find that

Mr and Mrs Smith acted with intention

fraudulently to conceal from Mr Dawson the

giving of security to the Bank over the land.

Now, at page 903, as to the first of the

passages that I just quoted, which is at page 821,

that passage is set out, Your Honours will see, in
the judgment of Mr Justice Mahoney from about

line 13 to line 30.	From his statement on the next
page:

The Bank submitted that, as between it

and Premium, the mortgage should,

notwithstanding absence of authority -

we would respectfully submit that leads to the

conclusion that Mr Justice Mahoney in the Court of

Appeal was upholding the whole of the finding made by Mr Justice Bryson.

Now, when Their Honours in the Court of Appeal

then sought to address what qualifications might

exist so far as section 51A is concerned, they said

this at page 906 and line 15:

if, for example, the underlying transaction

was induced by fraud or certain kinds of

misrepresentation sufficient to warrant the

transaction being set aside, s 51A would not

prevent the court putting aside a deed

executed to give effect to that transaction.

Now, what Their Honours there seem to be doing

is recognizing that, as a matter of construction of

section 51A, it is certain or at least highly

likely that a transaction tainted by fraud would not saved by it. They seem to have found, a few

pages earlier, that this is such a transaction.

Now, they cannot be talking about fraud against the

person claiming the benefit of the deed. They

cannot be talking about a fraud on, say, Westpac

because that would fall within the good faith

matter. So, with respect, we would respectfully

Dawson(2) 54 11/4/91

submit that if that construction of section 51A is

correct then on any view of this case we ought to

have succeeded below.

We would also would have wished to argue a

question which is not the subject of decision by the authorities, as to what is the effect on the

application of section 51A of the other

circumstance which here arises, namely, the non-

existence of the company stated in the document to

be the borrower.

MASON CJ:  Now,· Mr Downes, how long is the balance of your

argument going to take?

MR DOWNES: Well, Your Honours, with the benefit of an

opportunity overnight, I would think less than half

an hour, Your Honour.

MASON CJ: Well now, there is a problem; we have another

case listed for tomorrow and -

MR DOWNES:  I am sorry, Your Honours, I did not understand

that there was.

MASON CJ: Well, there definitely is and always has been and

it has not been withdrawn from the list.

MR DOWNES:	Yes, Your Honours.
MASON CJ:	Now, Mr MacFarlan, how long do you think you are

going to take?

MR MacFARLAN:  I think I would maintain my previous

estimate, Your Honour, of one and a half hours. It

is possible it would be less but I would really

like to have the opportunity to address for one and

a half hours if needed.

MASON CJ: Yes, well, I think it is essential that the case
that is listed for tomorrow commence before lunch. Now that, I hope, will operate as an inducement to brevity, Mr Downes.

MR DOWNES:  Yes, Your Honour.

MASON CJ: Like execution, it might have the effect of

wonderfully concentrating the mind overnight. But

we will resume at 9.45 am tomorrow. Mr MacFarlan,

in the meantime, could we have the advantage of

your outline of submissions?

Dawson(2)	55	11/4/91
MR MacFARLAN:	Yes, indeed, Your Honour.	I hand up seven

copies of those, Your Honour.

MASON CJ:  Thank you, and we will adjourn until 9.45 am

tomorrow.

AT 4.30 PM THE MATTER WAS ADJOURNED

UNTIL FRIDAY, 12 APRIL 1991.

Dawson(2) 56 11/4/91