Jonson K.M. v Westpac Banking Corporation

[1994] FCA 1073

IN THE FEDERAL COURT OF AUSTRALIA )

BANKRUPTCY DISTRICT OF THE STATE ) No. NP 1468 of 1994

OF NEW SOUTH WALES 1

Re: KEITH MICHAEL JONSON

Debtor

2 2 MAR 1995 EX parte: WESTPAC BANKING CORPORATION

Creditor

AUSTRALIA PRINCIPAL

I

REASONS FOR JUDGMENT

EINFELD J SYDNEY 2 DECEMBER 1994

A petition for a sequestration order has been presented by the creditor (Westpac) against the debtor (Jonson) based upon Jonson's failure to comply with a 14 day bankruptcy notice seeking payment of $3,101,688.70 pursuant to a judgment of Justice Giles in the Commercial Division of the Supreme Court of New South Wales. The decision of his Honour, given on 17 June 1993 after a hearing of evidence for 7 days and submissions for

2 days, has been appealed to the Court of Appeal. The appeal is

not expected to be heard until some time in 1996, and Jonson has sought an adjournment of the petition to await the appeal result. Westpac opposes the adjournment, submitting that Jonson's

' prospects of success in the appeal are too insubstantial. The

petition will expire at the latest on 20 May 1995.

In the hearing in the Supreme Court, Westpac claimed under a joint and several guarantee signed by Jonson and one Peters as CO-directors of Vapozi Pty Limited to secure that company's

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borrowings from the bank. According to the judgment, the claim

- turned on whether the guarantee was explained to and signed by Jonson on 8 or 9 December 1988 as asserted by Westpac's Mr Lazevski, or unwittingly and. by a trick on 14 March 1989 as stated by Jonson. His Honour accepted Lazevski's evidence over Jonson's which he said "should be viewed with considerable caution". He found that the objective probabilities rendered the

b

truth of Jonson's account unlikely, and made a detailed examination of these objective facts, including of contemporaneous bank documents and a letter from his solicitor by whom Jonson alleged but the Judge rejected he was overborne. Because both Lazevski and Jonson were cross examined at considerable length, Justice Giles had an inestimably more powerful opportunity to assess their respective credibilities than anyone else. The possibility that his Honour's findings in this regard could be overturned must be regarded as quite remote: Abalos v Australian Postal Commission [l9901 171 CLR 167 per

McHugh J at 178-9; Ellis v Wallsend District Hos~ital [l9891 17

NSWLR 553 at 561 per Kirby P; Galea v Galea [l9901 19 NSWLR 263; Devries v Australian National Railwavs Commission [l9931 112 ALR

641 at 645.

From my reading of Justice Giles' judgment, it is clear that

although his Honour did not expressly refer to the demeanour of

the two conflicting witnesses, and did justify his conclusions	1
on the credibility question partly by reference to objective or external criteria, he plainly relied on intrinsic and apparent credibility tests in determining on his preference for the

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evidence of one over the other. This case is thus not an appropriate vehicle for the application of the principles to emerge from such cases as Warren v Coombes [l9791 142 CLR 531, Brunskill v Sovereian Marine & General Insurance [l9851 59 ALJR 842, Chambers v Joblinq [l9861 7 NSWLR 1, Tavlor v Johnson [l9831 153 CLR 422, Jovanovic v Rossi [l9851 58 ALR 519, and many others which describe the circumstances where an appeal court is in no worse a position than the trial Judge to draw conclusions of fact.

Jonson's opposition to the petition is grounded in a request that the Court "go behind" the judgment and find that the debt does not exist. Specifically he alleges that Justice Giles erred in finding that Jonson signed the guarantee in December 1988. The notice of appeal raises this among many other grounds, virtually all of which challenge his Honour's findings of fact. They are too lengthy to set out in full so I shall deal with them in summary. The first ground attacks the preference for Lazevski's evidence on the grounds that it conflicted or was inconsistent with other evidence, whether of Lazevskihimself or other persons or documents or with other findings of his Honour. As far as I can tell, this ground has virtually no chance of success. The second ground, which attacks the finding that the guarantee was signed on 8 December 1988, is in the same category because it asks the Court of Appeal in effect to conduct a retrial of this issue itself. Similarly ground 9 asks the Court of Appeal to prefer the applicent's evidence to the adverse inferences drawn by his Honour. Grounds 3, 4 and 5 are quite tendentious; they

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are not really grounds of appeal at all. Ground 6 alleges a series of assertions of miscarriage of the trial. There is a claim for breach of natural justice despite the fact that no such claim was made at trial by senior counsel for the applicant. There is another credibility claim which like those made in other grounds has no likelihood of success on appeal. There is a claim of wrongful rejection of evidence. Nothing in Jonson's submissions to this Court suggests that this claim has substance or that if it did, it would have affected the result of the trial. Another claim under this heading concerning a witness not called is plainly wrong on the face of Justice Giles' judgment. A further set of claims in ground 10 of a miscarriage of the trial is similarly misconceived. Grounds 7 and 8 state that certain facts found by his Honour were "inherently improbable". On my reading of the matter, these grounds have no substance and are unlikely to find favour with the Court of Appeal.

After the appeal was lodged, Justice Sheller in the Court of Appeal refused to grant a stay of execution of Justice Giles' judgment pendingthe appeal. The onlymatter of substance raised by the applicant's senior counsel was that Jonson may be made bankrupt if the stay was refused. His Honour refused a stay, finding on the evidence presented to him that the debtor may have already moved to dispose of his assets so as to defeat recovery. However, I should and do not treat that decision as anything other than one Judge's view of the facts and matters placed before him. My task is somewhat different.

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Jonson's argument in summary was that Justice Giles' judgment was substantiallybased on inferences drawn by his Honour from facts, rather than on the facts themselves, and that the inferences arose from what his Honour called "the objective probabilities" as to which the Court of Appeal is in as good a position as the trial Judge. Jonson says that the Court of Appeal will arguably review these findings in his favour. I consider that proposition somewhat of an exercise in semantics. The debtor's submission in support of this argument amounted to a re-presentation of what was presumably put to his Honour in final address. It sought to compare the conclusions his Honour drew from the facts with the facts which the debtor said should have persuaded his Honour that execution of the guarantee on 8 December 1988 was "glaringly improbable": Devries at 648. The debtor said that to win the adjournment he seeks, all he needs to show is that such a position is arguable.

Except in a very obvious case, it is in many ways invidious to ask this Court to try to second guess the Court of Appeal, especially when I am dealing with what is essentially a procedural matter. However, Adamo~oulos v Olvm~ic Airways S.A.

[l9901 95 ALR 525 and Ahern v DeDutv Commissioner of Taxation

[l9871 76 ALR 137 require that I do so, at least as to

arguability and as part of the material to be considered. I accept that this matter is of importance to the debtor because if he is made bankrupt, it will be for his trustee to determine the future of the appeal. It is, however, inconceivable that in the presence of advice that the appeal is arguable, the trustee

I

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would not proceed especially as it is the judgment debt itself that is at stake. Obviously if the appeal succeeds, an annulment will in all likelihood be granted. My opinion is that the appeal is at best weak and has minimal prospects of success. As no other matters are advanced to support the proposed adjournment, the application fails and must be dismissed.

I certify that t h ~ s and the

greced~ng pages

Reasons for Jud

Just~ce E~nfe

Dated: 1 ~ ~ \qCZy b d