Hardy v Coates Hire Operations Pty Ltd

[2022] NSWCA 122

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Hardy v Coates Hire Operations Pty Ltd [2022] NSWCA 122

Hearing dates:

17 May 2022

Date of orders:

11 July 2022

Decision date:

11 July 2022

Before:

White JA at [1];
Kirk JA at [3];
Basten AJA at [4]

Decision:

(1)   Dismiss the appeal from the judgment and orders in the District Court made on 20 July 2021 and entered on 24 August 2021.

(2)   Order that the appellant pay the respondent’s costs in this Court.

Catchwords:

GUARANTEE AND INDEMNITY – contract of guarantee – guarantee given by director of company’s obligations under credit agreement – whether guarantee enforceable

CONTRACTS – unjust contracts – Contracts Review Act 1980 (NSW) – commercial experience of guarantor – director of substantial construction business – guarantee provided in hardcopy and electronic copy – effect of terms – availability of legal advice

CONTRACTS – unjust contracts – Contracts Review Act 1980 (NSW) – guarantor suffered Lewy body dementia – progressive condition – symptoms not observed in relevant period – medical evidence as to “mild” condition after guarantee signed – evidence of business activity after guarantee signed

Legislation Cited:

Contracts Review Act 1980 (NSW), ss 7, 9

Cases Cited:

Hanna v Raoul [2018] NSWCA 201

Category:

Principal judgment

Parties:

Robert Hardy (Appellant)
Coates Hire Operations Pty Ltd (Respondent)

Representation:

Counsel:
Ms E Elbourne / Ms C Brain (Appellant)
Mr A d’Arville / Mr R Size (Respondent)

Solicitors:
Levitt Robinson (Appellant)
Coates Hire Operations (Respondent)

File Number(s):

2021/269154

 Decision under appeal 

Court or tribunal:

District Court

Jurisdiction:

Civil

Date of Decision:

24 August 2021

Before:

Gibb DCJ

File Number(s):

2019/83346

Judgment

1. WHITE JA: I agree with the reasons for judgment of Basten AJA and with the orders his Honour proposes.

2. It is unnecessary to consider what the position would be if the appellant had established that when he signed the guarantee he suffered from the cognitive deficits for which he contended. It was not suggested that the respondent had notice that he suffered such deficits when he gave the guarantee. As the appellant was the managing director of the company, and the trustee of his family trust was a shareholder of the company, it is far from clear that it would be just that the respondent, rather than the appellant, bear the risk of the company’s insolvency, even if he suffered the cognitive deficits asserted.

3. KIRK JA: I agree with Basten AJA.

4. BASTEN AJA: In September 2015 Robert L Hardy and his brother Danny J Hardy incorporated a company known as Hardy Bros Mining & Civil Construction Pty Ltd (“the company”). The appellant, Robert Hardy, appears to have had experience in the mining construction industry, but, in early 2016, sought to expand the business into civil construction work, due to a downturn in the mining business. In May 2016 the company entered into an agreement with the respondent, Coates Hire Operations Pty Ltd, by which the respondent provided commercial credit to allow the company to hire equipment from time to time as business required. Robert and Danny Hardy, as directors of the company, guaranteed the company’s obligations under the credit agreement.

The proceedings

5. On 1 September 2018 the company defaulted in its payments to the respondent. On 15 March 2019 the respondent commenced proceedings against the company in the District Court with respect to an outstanding amount of $224,701.10. The same amount was sought from each of Robert Hardy and Danny Hardy as guarantors.

6. On 11 April 2019, prior to the hearing in the District Court, the company went into liquidation. The respondent discontinued its claims against the company. At the start of the trial, a consent judgment was entered against the third defendant (Danny Hardy); accordingly, the trial proceeded only with respect to the second defendant, being the present appellant, Robert Hardy.

7. By way of an amended defence filed on 20 July 2021, on the second day of the trial, the appellant, who by then was represented by a tutor (his wife, Lynette Hardy), defended the proceedings on three grounds, of which two, non est factum and lack of mental capacity to enter into the guarantee, were abandoned during the hearing. The third ground was that it would be unjust to enforce the guarantee, relying upon ss 7 and 9 of the Contracts Review Act 1980 (NSW). The particular factors relied upon were that:

1. there was a material inequality of bargaining power between the parties;

2. it was not reasonably practicable for the appellant to negotiate for the alteration of, or to reject any provisions, of the contract;

3. the appellant was not reasonably able to protect his interests, because of poor physical and mental health;

4. the appellant did not have the opportunity to obtain legal advice in relation to the guarantee; and

5. the provisions of the contract and their legal and practical effects were not accurately explained to him and he did not understand them.

8. On 24 August 2021, the trial judge, SJ Gibb DCJ, gave judgment in favour of the respondent against the appellant for the amount claimed, together with interest. She rejected the defences raised under the Contracts Review Act.

9. On 19 November 2021, the appellant filed a notice of appeal challenging the dismissal of his statutory defences. The grounds of the appeal fell into two broad but interrelated categories. First, there were complaints about the physical form of the guarantee, the language used in the guarantee and the difficulty in understanding the legal and practical effects of that language: ground 1, particulars 1, 3, 4 and 5. Secondly, it was alleged that the trial judge erred in failing to accept that the appellant was not reasonably able to protect his interests because of his physical and mental capacity at the time of executing the guarantee in May 2016: ground 1, particular 2. The appellant’s impairments were further particularised in ground 2, which alleged that the trial judge erred in rejecting medical evidence to the effect that he suffered from (i) poor concentration, (ii) poor memory, (iii) difficulty in processing information, and (iv) depression. Each was said to constitute a relevant impairment and each was said to be present in May 2016.

Evidence at trial

10. The evidence before the trial judge fell into two categories. First, there was evidence (lacking, as the trial judge found, in material respects) concerning the events and circumstances at the time of signing the guarantee; secondly, there was the expert medical evidence as to the appellant’s level of physical and mental impairment in May 2016. (The objective analysis of the language and complexity of the agreement was a separate issue.)

Evidence of contemporaneous conduct

11. As to the first category, there was no evidence at all from the appellant, he being in an advanced stage of Lewy body dementia. However, his wife and tutor, Ms Lynette Hardy, did not give evidence either, although she should have been well-placed to describe his conduct and capabilities in May 2016. Three other persons who were with him in May 2016 did give evidence. One was Mr Peter Schmidt, a project manager with the company, who witnessed the signatures on the guarantee. It will be necessary to refer in some further detail to the evidence of Mr Schmidt, which was, arguably, that most favourable to the appellant.

12. The respondent called an operations manager, Mr Andrew Cheney, who attended a meeting with the appellant on 31 May 2016, about three weeks after the signing of the guarantee, to discuss the equipment the respondent could provide and at what prices. In an affidavit sworn on 20 August 2020, Mr Cheney described his recollection of the negotiations at that meeting as having been conducted by the appellant, for the company, and that he appeared to be “a sharp businessman”, did not appear to be “confused” about the discussions, nor to have difficulty in making decisions. ^[1]

    1. Affidavit of Andrew Cheney, 20 May 2020, par 13.

13. The respondent also called Mr Danny Hardy, who was the co-director with the appellant and had also signed the guarantee. He agreed in cross-examination that he and his brother had “barely spoken … over the last few years”. ^[2] He ceased to be a director of the company on 25 September 2018. His affidavit stated that the appellant managed the day-to-day business and affairs of the company. He said he “did not keep tabs on what Robert was doing each and every day, but my impression was that he contacted me if something was particularly significant or urgent and needed to be dealt with.” ^[3] However, over the period during which they had rare telephone conversations, and did not meet in person, he found that when he spoke to him, “Robert did not appear to me to be showing any signs of confusion, forgetfulness or otherwise lacking mental capacity”, and that he did not perceive “any inability on his part to manage the day-to-day business and affairs of [the company].” ^[4]

    2. DC Tcpt 21/07/21, p 73(5).

    3. Affidavit of Danny John Hardy, 29 October 2020, par 25(f).

    4. Ibid, par 27.

14. Although not conclusive in itself, the lay evidence of contemporaneous behaviour did not establish a mental impairment in May 2016.

Medical evidence

15. The medical evidence derived from three sources. First, and of limited significance, was a referral by the appellant’s general practitioner to a consultant neurologist, Dr Simon Hawke. The referral on 11 August 2016 described a “very obvious tremor involving [the appellant’s] left wrist” which indicated that he had Parkinson’s disease. The appellant had given a “probable history of 6 months [during which] he had noted the tremor in his left hand.” It was common ground that he had a history of forgetfulness.

16. Secondly, the principal witness for the appellant was Dr Hawke, a consultant neurologist in Orange. Dr Hawke first saw the appellant in August 2016 and became his treating neurologist. He provided a number of reports which formed the main basis of the appellant’s case of mental and physical impairment. Dr Hawke also gave evidence at the trial.

17. Thirdly, the appellant was referred by the respondent to Dr Paul Spira, a consultant neurologist in Bondi Junction. Dr Spira had a single video-link consultation with the appellant and his wife on 4 May 2021. There was no doubt that by that date the appellant suffered from significant cognitive impairment and, although he knew the day of the week, he did not know the month. A medical history obtained by Dr Spira depended on the answers given by Ms Lynette Hardy, and documentary sources obtained from the solicitors. Dr Spira also gave oral evidence at the trial.

Reasoning of trial judge

18. The amended defence was not precise as to the factual basis of the grounds sought to be raised under the Contracts Review Act. The pleading, in par 5, was said to be “[i]n the alternative to par 3 of this defence”. However, par 3 made no allegations against the appellant; it is likely par 5 was meant to be in the alternative to par 4, which alleged non est factum and lack of mental capacity to enter the guarantee. Paragraph 5 then asserted reliance on ss 7 and 9 of the Contracts Review Act, setting out, as noted above, five grounds relating to either “the contract” or, in the case of par (d), “the alleged guarantee”. There was no application for relief with respect to the terms of the guarantee. Nevertheless, by reference to the submissions at trial, the judge accepted that the appellant sought “an order that the Court declare unjust the entire guarantee and refuse to enforce all of its provisions”. ^[5]

    5. Judgment at p 25.8.

19. The judge then referred to a submission by the solicitor for the appellant relying upon inequality of bargaining power, referring to Hanna v Raoul ^[6] in this Court. The reference in Hanna v Raoul relied upon was apposite: it referred to a finding (not dispositive in the circumstances) that a particular contract was “unjust”. However, the primary judge set out a lengthy passage from Hanna v Raoul, most of which related to lack of mental capacity to enter into an agreement and the principles relating to unconscientious transactions, as well as the relevant passages relating to the Contracts Review Act.

    6. [2018] NSWCA 201 at [137].

20. The judge then turned to the analysis of the evidence, accepting that in August 2016 the appellant suffered from a “mild memory impairment” which she accepted was “equally so in May 2016”. ^[7] Otherwise, he was described as “alert and rational”. The judge further concluded: ^[8]

“He was working, as a director of [the company], and remained so [during] 2016, 2017 and early 2018. In March 2017, he was questioning his general practitioner about his medication… and planning [an] overseas holiday, although he was showing signs of depression…. By October 2017 he was ‘stressed… usually every day he works’ …, and he reduced his work to 3 days a week by August 2018 …. That is consistent with the various document[s] tendered [by him], which reveal that Mr Danny Hardy… executed some documents as managing director [in] 2018 – although he described Mr Matt Hardy as the general manager.”

7. Judgment at p 27.

8. Judgment at p 27.

21. The judge noted a pattern of deterioration from late 2017 and through 2018, to the extent that he was unable to work by June 2019. However, he “failed to satisfy [the trial judge] on the civil standard as to any relevant mental or intellectual impairment in May 2016”. ^[9]

    9. Judgment at p 28.

22. The judge then turned to a question as to the material inequality of bargaining power, noting that the appellant led “no relevant evidence” in relation to that ground. While it was possible to derive some picture of the size of the company’s business from evidence tendered by Coates Hire, the judge was not satisfied that the ground was made out. Nor was she satisfied that it was not reasonably practicable for the appellant to negotiate with Coates Hire. Again, the judge found there was no relevant evidence led by him in respect to this issue.

23. Noting that there was “some focus upon a lack of legal advice” the judge noted that again there was “no evidence whether the [appellant] wanted; sought; obtained; understood or did not understand any legal advice”. ^[10] The judge relied upon a passage in the letter of instruction to Dr Hawke by the appellant’s solicitor which, in full, read:

“The Coates Hire Agreement

11   In early 2016, Hardy Bros underwent a restructure at the behest of NAB’s turnaround division.

12   The transition necessitated the execution of new contracts on behalf of the new entity, including with Coates Hire, an equipment hire company.

13   Advising on the transaction, Robert and Danny’s then lawyer, Carolyn Deigan, advised Robert and Danny not to sign any personal guarantees.

14   Around February 2016, in accordance with Ms Deigan’s advice, Robert and Danny executed a new agreement with Coates Hire, running a line through the personal guarantee page….

15   On 6 May 2016, Robert subsequently resigned the agreement with Coates Hire, on this occasion, signing the personal guarantee page….”

When the judge came to set out her conclusions, she noted that the evidence disclosed a “plain pointer about the availability of legal advice”. ^[11]

10. Judgment at p 31.

11. Judgment at p 34.8.

24. It remains to note the consideration given to the nature of the document. The judge observed that the appellant had “placed some weight upon the quality of the scanned executed document as returned to the plaintiff”. ^[12] She was not persuaded that she could draw an inference as to the quality of the document when signed by the appellant, stating:

“More to the point, the document was issued electronically and was thus able to be made available in whatever size the reader chose. There is no evidence that [the appellant] did not receive the electronic version or that he could not read it either electronically or in hard copy.”

12. Judgment at p 30.7.

25. Referring to its contents, the judge noted: ^[13]

“In parts the guarantee and indemnity is a complex document. It is part of a contract starting with an application for commercial credit … lodged on behalf of the [company], of which the [appellant] was a director. The primary conditions are straightforward, relevantly a guarantee and indemnity (in clauses 3-5; 14-17). There is something of a sting in clause 11 in the acceptance of certification as proof of debt and precluding set-offs. But that is said relatively plainly.

Clauses 6-10, 13 and 21-24 set conditions in respect of security, charges, the Personal Property Securities Act 2009 (Cth) and priority. They are ultimately mechanical and it is difficult to conclude, in the absence of any relevant evidence, that they were more complex than could be understood by the director and managing director of a company that ran multiple construction projects in multiple locations….”

13. Judgment at p 33.7.

26. The judge, at least inferentially, rejected the appellant’s reliance on the nominated paragraphs in s 7 of the Contracts Review Act.

Case on appeal

27. It is convenient to start with the challenge to the judge’s findings in relation to the content and format of the guarantee. The notice of appeal stated that the relevant provisions in the guarantee were those pleaded by the plaintiff in par 18 of the statement of claim. Clause 3 provided that the appellant and his brother “unconditionally and irrevocably” guaranteed the due and punctual payment by the company of all moneys at any time actually or contingently owing to Coates Hire. Those moneys included amounts payable for equipment hired or to be hired by Coates Hire to the company. The terms were comprehensive in their coverage of costs, charges, interest, damages and other liabilities which might arise with respect to the equipment. However, the appellant did not submit that there was anything unusual or unjust in the terms of the guarantee to be given by a director of a company involved in commercial activities with respect to debts incurred by the company. Rather, the submissions in reply focused on two propositions:

“2    … Her Honour failed to assess the difficulties inherent in understanding the guarantee from the position of a person in Mr Hardy’s circumstances, both as to its visual representation and contents, with his existing cognitive defects”. [Emphasis in original.]

“4    … Her Honour found ‘in parts’ the guarantee and indemnity was ‘a complex document’. However, inconsistently with that, her Honour substituted her own opinion as to what someone in Mr Hardy’s ‘position’ could understand… and cherry-picked the ‘primary conditions’ from the guarantee to support her conclusions, contrary to both s 9 of the Act and the authorities, which stipulate that the entire document must be considered and in light of his total circumstances.”

28. The first submission set above (with its internal emphasis on cognitive deficits) directed attention to the circumstances of the appellant at the time he signed the document. That aspect may be put aside, although it may also be accepted that, if the appellant were not at the relevant time suffering from cognitive deficits, the present complaint would be harder to justify. At a more general level, it was not correct to say that the judge failed to consider the matter from the perspective of the appellant. That perspective included his commercial experience, the proposed commercial venture on which the company was embarking and his position as the managing director of the company. This was not a case in which key provisions which might be considered unjust were concealed within the text of a complex document, so that its overall nature and effect were not transparent; rather, there was a significant level of detail, but the overall intention and effect of the document were reasonably transparent. The last clause above the space for dating and executing the agreement was headed “LEGAL ADVICE”, and included an acknowledgement that each guarantor had obtained, or had had the opportunity to obtain, independent legal advice as to the purport, effect and consequences of, and obligations created by, the guarantee. The fact that the appellant and his brother had first signed the contract, and ruled through the personal guarantee, demonstrated that they were aware of its terms in February 2016. It may be inferred that the guarantee was a non-negotiable condition of a business deal, but it was not submitted that that fact demonstrated that the guarantees were unfair or unjust.

28. Where there was no suggestion that particular terms of the guarantee were unfair or unjust or, indeed, unexpected, questions as to the readability of the document were of secondary importance. Nevertheless, although the appellant submitted that the judge’s findings as to the physical form of the guarantee involved speculation on her part, that was not so. There was no dispute that the document was provided electronically; nor was there any basis for an affirmative finding that the appellant did not have a reasonably legible copy of the document before he signed it. Such a finding was a necessary element of his case, as he had to establish the factual bases for a finding of unjustness.

29. It is not entirely clear whether the trial judge placed weight upon the hearsay evidence of the appellant’s solicitor in the letter instructing Dr Hawke as to the fact of the appellant obtaining legal advice prior to executing the guarantee. However, even without that evidence, it would not have been open to infer that a director of a company running a substantial construction business did not have access to such advice as he thought appropriate in entering into contractual relationships.

30. It follows that the appellant’s case turned almost entirely upon establishing that he suffered from cognitive defects at the time of the execution of the guarantee on 6 May 2016.

31. As noted above, there were two categories of evidence relevant to the appellant’s condition at the time he executed the guarantee. These were the lay evidence of contemporaneous observation and the expert medical opinion evidence. It is convenient to deal with the evidence in that order.

32. The appellant accepted that the witness to Mr Hardy’s signature, Mr Schmidt, had no concerns about Mr Hardy’s cognitive function and that no concerns were expressed to him by Mr or Ms Hardy. While, as the appellant submitted, it would not be appropriate to draw a negative inference (namely that Mr Hardy was fit and healthy) from that evidence, it remains the fact that Mr Schmidt’s evidence did not assist the appellant.

33. With respect to his brother and co-director, while making allowance for the fact that Mr Danny Hardy rarely spoke to the appellant and had an acrimonious relationship with him, there was nothing in his evidence to support the appellant’s case.

34. To that absence of affirmative evidence of cognitive deficit, one must add the absence of any evidence from the appellant’s wife as to his condition in May 2016 (or at any other time).

35. So far as the medical evidence is concerned, the appellant complained that the judge’s reasoning had focused on Dr Hawke’s evidence that, at a consultation in August 2016, the appellant was “alert and rational”, and had disregarded other contemporaneous evidence. There is no doubt that the trial judge placed weight upon the observation recorded by Dr Hawke in August 2016. However, it is not correct to say that she did so to the exclusion of other contemporaneous evidence. The judge properly had regard to the surrounding circumstances, including such evidence as there was of the appellant’s activities in 2016, 2017 and 2018. The judge took careful note of Dr Hawke’s reports and the explanations and qualifications he proffered in oral evidence.

36. Two aspects of the medical evidence were common ground. First, it was accepted that the appellant was suffering forgetfulness over a period which commenced two years before August 2016, namely in 2014. Secondly, it was not in doubt that the appellant’s cognitive decline was a progressive condition. The issue was whether it could be retrospectively traced back to May 2016 and, to the extent that it could, whether it constituted a material impairment at that time.

37. The high point of Dr Hawke’s evidence was a statement in a report dated 8 February 2021 (par 6.0) to the following effect:

“It is difficult to comment on Mr Hardy’s neurocognitive capability in retrospect. An understanding of the implications of making a personal guarantee depend not only on the capacity of the individual signing it…. He had developed [Parkinson’s disease]. He had cerebrovascular disease and [obstructive sleep apnoea] and almost certainly had poor concentration. … Mr Hardy’s memory had begun to deteriorate in 2014. In my opinion, it is quite likely that Mr Hardy’s neurological deficits impaired his judgment and his ability to understand complex information in 2016.”

39. Dr Hawke was cross-examined with respect to this opinion. He agreed that the primary factor on which he based his opinion was that the appellant suffered from an atypical form of Parkinson’s disease. ^[14]

    14. DC Tcpt, p 126(42).

40. In a report provided on 5 November 2019, Dr Hawke described the appellant’s progressive cognitive decline as significantly impairing his ability to carry out his corporate responsibilities “from 2017 onwards if not before this”. Dr Hawke was cross-examined as to why he had changed the year in his February 2021 report, so that the opinion was expressed by reference to his state of impairment in 2016. His explanation that the date was probably addressing the question posed in seeking his opinion was confirmed in re-examination. He also pointed out the foreshadowing of an earlier date by the phrase “if not before this”. He agreed that it involved a “question of degree” but disagreed with the proposition that it was not much more than “guesswork as to when the incapacity arose”, stating: ^[15]

“I would disagree with that because given his subsequent course and quite clear dementia, I think one could quite easily extrapolate to cognitive inefficiency, certainly at, to 2016, if not before. And I, when I saw him, there was clear evidence of some cognitive inefficiency. And I documented, in fact, that his short-term memory was deficient. That was in August 2016.”

15. DC Tcpt, p 130(45).

41. In a report dated 5 November 2019, prepared for solicitors for the appellant, Dr Hawke concluded not only that by July 2017 the appellant would have had significant difficulties discharging his duties as a company director, but further stated: “[g]iven that when I saw him first in 2016 he had deficiencies in short term memory it is certain that some cognitive deficiency would have been documentable even then had he had neuropsychological testing”.

42. There is no doubt that Dr Hawke was challenged in cross-examination as to that opinion on the basis that it had not been expressed in earlier reports to his general practitioner. The precise effect of the cross-examination was a little unclear, in part due to various interventions. ^[16] The cross-examination concluded with the following exchange: ^[17]

“Q.   But in 2016 when your saw him, you say none of this was obvious. Is that right?

A.   That is correct, yes, but my opinion would be that it was quite likely that there were deficiencies in his ability to understand complex information at that time, given the subsequent course of his illness.

Q.   But that you did not observe that fact?

A.   No.

Q.   No meaning you didn’t observe it or you don’t agree?

A.   No, I didn’t, I did not observe that fact.”

16. DC Tcpt, pp 150-151.

17. DC Tcpt, p 151(30).

43. The trial judge addressed the various reports prepared by Dr Hawke chronologically noting that the opinion as to neurological deficits identified in the report of 8 February 2021 was a “retrospective opinion” and was “inconsistent with that which Professor Hawke said in 2016 and 2017 when he was actually reviewing and treating [the appellant]”. The judge continued: ^[18]

“It is difficult, to the point of impossible, to reconcile Professor Hawke’s contemporaneous observations in August 2016 about the second defendant’s ‘alert and rational’ presentation … with his retrospective opinion offered in 2021.”

18. Judgment at p 13.5.

44. Further, after referring to the first expression of concern as to cognition in a letter dated 10 August 2018, the judge observed that Dr Hawke “was unable to proffer any satisfactory explanation [for] the lack of any express reference to concerns about matters cognitive”. ^[19]

    19. Judgment at p 14.9.

45. The judge’s critical view of Dr Hawke’s evidence appears to be overstated. Dr Hawke expressly agreed, at the end of the cross-examination, that not only did he not record, but did not observe, symptoms of cognitive deficit in 2016 and 2017. On the other hand, the challenge raised by the respondent was not that it was neurologically unsound to reason backwards from a known condition in the present to a pre-existing state of affairs, albeit not contemporaneously diagnosed; rather the thrust of the cross-examination was that such a process was uncertain because the speed of deterioration was uncertain.

46. Further, as Dr Hawke noted, his reports were responsive to specific events or enquiries. Thus, in October 2017, he was concerned as to a fall which required the appellant to be taken to hospital, the fall being related to “some right leg weakness”. The question was whether there was a neurological explanation for the physical disability, rather than any cognitive deficit. On the other hand, the judge was on solid ground in noting that the report of 10 August 2018 referred to a “slowly progressive cognitive limitation though it is mild rather than moderate currently”. ^[20]

    20. Judgment at p 17.7.

47. Dr Spira saw the appellant (with his wife) in 2021 at a stage when his dementia was too far progressed to allow him to provide useful information in the course of the consultation. Dr Spira’s opinion was therefore almost entirely dependent upon observations of others, primarily those of Dr Hawke and the general practitioner. With one exception, Dr Spira accepted Dr Hawke’s observations and many of his opinions. In particular, he accepted that the decline in memory loss was a form of cognitive dysfunction, but suggested that it “must have been low grade as it was not mentioned again through 2016 and 2017”. ^[21]

    21. Report, 28 May 2021, p 5, par 2a.

48. Further, he agreed with Dr Hawke’s statement that it was difficult to comment on the appellant’s neurocognitive capability in retrospect. His point of disagreement was the ability to identify a significant level of cognitive impairment in May 2016 in circumstances where there were no recorded symptoms of cognitive disability until 2018. As Dr Spira explained: ^[22]

“For a number of reasons, it is not possible to determine what Mr Hardy’s level of cognitive functioning was in mid-2016 from observations taken at significantly later time points. There is little doubt that Mr Hardy now has an advanced dementia but the degree of variability of the rate of progression of both Parkinson’s disease and Lewy Body Dementia does not allow backward extrapolation for his current state to that he would have had as much as 5 years ago. I have seen individuals deteriorate alarmingly over 12-18 months while others do so particularly slowly and not always in a linear fashion.”

22. Report, p 5, par 4.

49. Dr Spira’s reference to a 5-year period was based on the lapse of time between the event in 2016 and his consultation in 2021. Dr Spira concluded that, although there were memory difficulties dating back to 2014, but no mention of cognitive disorder until August 2018, Mr Hardy “had only a mild cognitive impairment in August 2016 and there was no appreciable change to the point of this being mentioned until 2 years later”.

50. Dr Spira’s cross-examination was directed primarily to establishing that there was a level of cognitive dysfunction in May 2016 on the basis of memory loss and of micrographia, illustrated by the small letters used to sign his name on the guarantee and credit contract. However, Dr Spira accepted all of that, observing that a decline in the efficiency of memory “is a cognitive dysfunction, no-one can deny that”. ^[23]

    23. DC Tcpt, p 159(23).

Conclusions as to medical evidence

51. The judge was impatient with Dr Hawke in the course of his cross-examination, calling him back to the question whenever he sought to explain his opinion by reference to his professional experience. (Dr Spira adopted a similar line of reasoning both in his report and in his evidence.) Where an expert opinion is under challenge, it is usually preferable to allow the expert to explain the basis of his or her opinion without interruption. Reference to other patients will not necessarily indicate a failure to attend to the question, although sometimes that may of course be the case and may require correction.

52. Although the judge dealt harshly with Dr Hawke’s evidence in her reasons, to the extent that he and Dr Spira differed, she was entitled to accept Dr Spira’s evidence. The fact that Dr Hawke, as the treating practitioner, provided letters and reports responding to immediate issues, was not a matter for criticism. It did not demonstrate any necessary inconsistency, nor did the lack of any record of observable symptoms of cognitive deficit until 2018. The point is rather that, as a practical matter, the fact that no issue arose, either in a domestic or commercial context, suggested that in May 2016 the appellant was not grappling with carrying out his functions. It did not demonstrate that he had no cognitive deficit at that time, but it placed a significant impediment in the path of establishing affirmatively that he had a deficit which affected him in a way which rendered it unjust to enforce against him the guarantee he signed at that time. In my view, the trial judge was correct in not being satisfied that a material mental impairment had arisen as at 6 May 2016.

53. It follows that the appeal must be dismissed.

54. The Court should make the following orders:

1. Dismiss the appeal from the judgment and orders in the District Court made on 20 July 2021 and entered on 24 August 2021.

2. Order that the appellant pay the respondent’s costs in this Court.

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Endnotes

Amendments

12 July 2022 - Coversheet - corrected representation

Decision last updated: 12 July 2022