McKessar v John Durham Pascoe as trustee for Samson Street Superannuation Fund - [2021] WASCA 87

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT :   THE COURT OF APPEAL (WA)
CITATION:   MCKESSAR -v- JOHN DURHAM PASCOE as trustee for SAMSON STREET SUPERANNUATION FUND [2021] WASCA 87
CORAM:   MITCHELL JA
BEECH JA
VAUGHAN JA

HEARD:   4 MAY 2021
DELIVERED          :   19 MAY 2021
FILE NO/S:   CACV 16 of 2020
BETWEEN:   PAMELA MCKESSAR
Appellant
AND
JOHN DURHAM PASCOE as trustee for SAMSON STREET SUPERANNUATION FUND
First Respondent
BLADE BAY PTY LTD
Second Respondent

FILE NO/S: CACV 20 of 2020
BETWEEN: PAMELA MCKESSAR
Appellant
AND
JOHN DURHAM PASCOE as trustee for PHBB MURRAY STREET SUPERANNUATION FUND
First Respondent
BLADE BAY PTY LTD
Second Respondent

ON APPEAL FROM:
For File No:   CACV 16 of 2020
Jurisdiction              :   DISTRICT COURT OF WESTERN AUSTRALIA
Coram:   STEWART DCJ
File Number            :   CIV 1219 of 2017
For File No:   CACV 20 of 2020
Jurisdiction              :   DISTRICT COURT OF WESTERN AUSTRALIA
Coram:   STEWART DCJ
File Number            :   CIV 1220 of 2017

Catchwords:

Appeals - Whether appellable error by the primary judge in making credibility‑based findings of fact - Turns on own facts

Legislation:

Nil

Result:

CACV 16 of 2020
Appeal dismissed

CACV 20 of 2020
Appeal dismissed

Representation:

CACV 16 of 2020

Counsel:

Appellant	:	In person
First Respondent	:	M J Rogers
Second Respondent	:	No appearance

Solicitors:

Appellant	:	In person
First Respondent	:	Michael Rogers & Associates
Second Respondent	:	No appearance

CACV 20 of 2020

Counsel:

Appellant	:	In person
First Respondent	:	M J Rogers
Second Respondent	:	No appearance

Solicitors:

Appellant	:	In person
First Respondent	:	Michael Rogers & Associates
Second Respondent	:	No appearance

Case(s) referred to in decision(s):

Elpis Maritime Co Ltd v Marti Chartering Co Inc [1992] 1 AC 21
Fogg v State of Western Australia [2011] WASCA 11
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
Lee v Lee [2019] HCA 28; (2019) 266 CLR 129
Pascoe v Pamela McKessar [2019] WASC 229
Robinson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679
Smart v Power [2019] WASCA 106

JUDGMENT OF THE COURT:

Introduction

The appellant, Ms Pamela McKessar, appeals against judgments entered against her in two actions following a trial in the District Court. The actions were brought by the first respondent in each appeal, Mr John Pascoe, in his capacity as trustee of a superannuation fund, to recover loans said to have been made by Mr Pascoe in his capacity as trustee of the relevant fund. In one action, CIV 1219 of 2017, he sued on behalf of the Samson Street Superannuation Fund. In the other action, CIV 1220 of 2017, he sued on behalf of the PHBB Murray Street Superannuation Fund.
In each action, the first defendant was a company, Bladebay Pty Ltd (Bladebay) and Ms McKessar was the second defendant. In each action, Ms McKessar was sued as the guarantor of debts said to be owed by Bladebay, as the borrower, to the plaintiff. Bladebay is the second respondent in each of the appeals. It has not played an active role in them.
At trial, neither defendant was legally represented. Ms McKessar represented herself and was given leave to speak on behalf of Bladebay in defending the action. She gave evidence on behalf of both defendants.
Bladebay defended the actions on the basis that monies were advanced under an arrangement that did not give rise to a right, on behalf of the plaintiff lender, to demand repayment. The judge rejected that defence, finding that each plaintiff had entered a loan agreement with Bladebay. That finding is not directly challenged on appeal.[1]
[1] Ground 11 may be taken to challenge it, as explained later in these reasons.
Ms McKessar now challenges the judge's findings in each action that she guaranteed Bladebay's loan and that she mortgaged property in her name to secure her obligations as guarantor. Each action is the subject of an appeal. She advances 13 grounds, in identical terms, in each appeal. In substance, all of the 13 grounds challenge findings of fact made by the judge that were influenced, to a substantial degree, by the judge's view of the credibility of the witnesses at the trial. Challenges to findings of that nature face a high hurdle on appeal.
For the reasons that follow, Ms McKessar has not been successful in overcoming that high hurdle. None of the grounds of appeal has been made out. Consequently, we would dismiss the appeal.

The primary issues at trial

The statement of claim in each action pleaded that:
(1)the plaintiff lent money to Ms McKessar on various dates between 2007 and 2009;
(2)in March 2009 it was agreed between the plaintiff and Ms McKessar on behalf of Bladebay that Bladebay would take over the loans that had been made to Ms McKessar and that the plaintiff would lend further funds to Bladebay on terms and conditions including the payment of interest at 12.5% per annum;
(3)the parties agreed that Ms McKessar would personally guarantee repayments of loans made by the plaintiff to Bladebay.
The defendants' defence raised a number of issues, some of which were the subject of concessions made at trial.
At the trial, Bladebay, by Ms McKessar, conceded that the monies it received were received as a loan. It further conceded that the amounts claimed in each proceeding were correct.[2] Further, it conceded that with the exception of $2,050 to Sampson Street Superannuation Fund and an amount of $7,500 to each of the superannuation funds, Bladebay had not repaid the loans.[3]
[2] ts 410.
[3] ts 410.
Bladebay's case at trial was that the superannuation funds had no present entitlement to repayment of the monies owed by it.[4]
[4] ts 410.
Ms McKessar denied that debts were assigned to Bladebay and said that she had not given personal guarantees. She denied that she was in any way liable for the monies advanced to Bladebay. Her evidence was that the company was established so that Ms McKessar would not be personally liable. Ms McKessar said that the effect of her discussions with Mr Pascoe was that funds provided to Bladebay were what she called an 'equity loan', by which the advances would be repayable at the discretion of Bladebay.[5] Ms McKessar referred to this as the 'Bladebay arrangement'.
[5] ts 411.
The judge summarised the issues for determination which, relevantly, were as follows:[6]
(1)What were the terms of the agreement for the loans to Bladebay?
(2)Did Bladebay breach the terms of the loan agreement?
(3)Did Ms McKessar guarantee the obligations of Bladebay?
(4)What final orders are appropriate?
[6] ts 411.

Background facts and critical documents

Mr Pascoe and Ms McKessar are both accountants and met through working in their capacity as accountants.
In about 2007, Mr Pascoe agreed to lend various sums of money to Ms McKessar through his superannuation funds.
In about mid‑2008, there were some discussions between Mr Pascoe and Ms McKessar about changing the arrangement so that the monies were lent to a different entity, namely Bladebay. What was proposed was that the existing debt would be transferred to Bladebay and any future advances be made to Bladebay.
The terms of the agreement were in dispute at trial.
In March 2009, the parties signed four documents. The first, which became exhibit 1, was dated 1 March 2009 and was signed by Mr Pascoe as trustee for the Samson Street Superannuation Fund and by Ms McKessar. The second, exhibit 2 also dated 1 March 2009, was a similar document relating to the PHBB Murray Street Superannuation Fund.
By exhibit 1, Mr Pascoe confirmed that, as at 30 June 2008, Bladebay owed $27,249 to him as trustee for the Samson Street Superannuation Fund. The agreement made provision for interest at 12.5%, compounded annually and payable monthly from 1 February 2010. It also provided for repayments of principal in accordance with a stipulated schedule.
Exhibit 2 is in similar terms, save that it provided that Bladebay owed $152,621 to Mr Pascoe as trustee for the PHBB Murray Street Superannuation Fund.
By exhibit 3 dated 15 March 2009, Mr Pascoe as trustee for the Samson Street Superannuation Fund confirmed that, during the period 1 July 2008 to 31 December 2009, he would lend amounts up to $200,000 to Bladebay on the terms and conditions there set out.
Exhibit 4 was also dated 15 March 2009. By it, Mr Pascoe as trustee for the PHBB Murray Street Superannuation Fund confirmed that he would lend amounts up to $200,000 to Bladebay on the terms and conditions there set out.
At the trial, Ms McKessar suggested that these documents did not reflect the true agreement between the parties. We will say more about her evidence in this regard later in these reasons.
On 22 May 2009, Ms McKessar sent a handwritten facsimile to Mr Pascoe (exhibit 5). The note read as follows:
Hi John. Your limits are as bad as mine. I am hanging in okay and am used to having very little. I guess it is harder for you. If I survive NZ, we will start to move forward ‑ inch by inch. I will also guarantee the Bladebay loans so that is easier for you to collect.
[The] [l]ast lot of painting on Mt Hawthorn is underway ‑ will polish floors when I get back from NZ ‑ then on market early August assuming [two words unclear] enough. (emphasis added)
The note is signed by Ms McKessar.
The parties gave conflicting evidence as to the circumstances leading to the sending of the facsimile. Ms McKessar said in her evidence that Mr Pascoe had fed the words in the note to her to write, which he did because he wanted something for his family. Mr Pascoe's evidence was that the facsimile came after Ms McKessar had offered to guarantee Bladebay's loans, which he accepted.
The plaintiff also tendered three instruments of mortgage (exhibit 7), each dated 10 May 2010 by which Ms McKessar mortgaged three properties in favour of Mr Pascoe to secure amounts totalling $550,000. Each mortgage was, or purported to be, signed by Ms McKessar in the presence of Mr Stewart Milne, who was a mortgage broker.
At trial, there was conflicting evidence as to the execution of the mortgages and the circumstances in which the mortgages came into existence.
As will be seen, the judge resolved the conflicts of oral evidence, including those concerning these critical documents, in favour of Mr Pascoe.

Primary reasons

The primary judge gave oral reasons for decision.[7] Her Honour outlined the background and canvassed a considerable part of the oral evidence.[8]

Credibility findings

[7] ts 409 - 448.

[8] ts 409 - 437.

The primary judge recognised that the resolution of the issues before her turned on the credibility of the witnesses, as well as on the documentary evidence.[9]
[9] ts 437.
The judge found Mr Pascoe to be a credible witness who had given his evidence in a straightforward and convincing fashion. Her Honour found that he was steadfast and unshaken in his evidence as to the critical matters in contest in the trial. The judge considered it unsurprising that he had little or no memory of some details, such as whether he observed Ms McKessar sign the mortgage documents and whether a meeting in a coffee shop in Midland had occurred.[10]
[10] ts 437 - 438.
The judge found that Ms McKessar took advantage of Mr Pascoe's friendship with her, and that he trusted her and accepted what she told him. Among other things, he trusted her to prepare the documents with respect to the loans he made from the superannuation funds and to calculate the interest payable in relation to the loans.[11]
[11] ts 438.
The judge found that Mr Pascoe's evidence in relation to critical matters was supported by the documentary evidence.[12] Her Honour also found Mr Milne to be a convincing witness who was unshaken in cross‑examination.[13]
[12] ts 438.
[13] ts 438.
The judge found that Ms McKessar lacked credibility in relation to the critical matters in issue. Her Honour made unfavourable observations as to Ms McKessar's evidence concerning the Bladebay arrangement. Further, her Honour found that Ms McKessar's evidence in relation to her handwritten document, exhibit 5, was internally inconsistent and that her evidence did not sit easily with the contents of the document. The judge made similar findings as regards Ms McKessar's evidence concerning the mortgage documents, exhibit 7.[14]

The terms of the agreement for the loans to Bladebay

[14] ts 438 - 439.

The judge preferred the evidence of Mr Pascoe to that of Ms McKessar in relation to the terms of the agreement for the loans to Bladebay.[15]
[15] ts 439.
Her Honour found that Ms McKessar's evidence as to what was agreed was implausible in light of the objective evidence. Her evidence did not sit easily with exhibits 1 ‑ 4, the terms of which were prepared by Ms McKessar, and executed in March 2009, which is about a year after the time at which Ms McKessar alleged that the Bladebay arrangement had been agreed.[16]
[16] ts 439.
The judge found that those documents identified the terms of the loan agreement that Mr Pascoe accepted. Her Honour rejected Ms McKessar's evidence that she prepared those documents because Mr Pascoe needed them for his auditor. The judge accepted Mr Pascoe's evidence that there was never any discussion or agreement to the effect that the loans were repayable at Bladebay's discretion.[17] Her Honour considered it unlikely that Ms McKessar, as a sophisticated experienced business person and chartered accountant, would have failed to document the arrangement she alleged.[18]
[17] ts 439 - 440.
[18] ts 439 - 440.
The judge also pointed to par 4 of exhibit 6 in which Ms McKessar wrote:[19]
We had originally agreed that I would start the repayments on 1 January 2010. Given the delay in getting Mount [H]awthorn on the market, can we extend that to 1 April 2010[?]
Her Honour observed that if, as Ms McKessar alleged, the repayments were to be made at Bladebay's discretion, Ms McKessar would not have requested an extension for the start of the repayments of the loan.[20]
[19] ts 440.
[20] ts 440.
The judge also pointed to the terms of Ms McKessar's letter of 26 February 2013 (exhibit 14), addressed to the (future) executors of her estate, which: (i) stated that she borrowed funds through her finance company from Mr Pascoe's two superannuation funds; and (ii) referred to the period for repayment of those loans.
Thus the judge found that the terms of the agreement were as set out in exhibits 1 ‑ 4.[21]

Did Bladebay breach the terms of the loan agreement?

[21] ts 441.

The judge found that Bladebay was in breach of the terms of the loan agreement as it was obliged to repay the loans according to the agreements of 1 March 2009 but failed to do.[22]

Did Ms McKessar guarantee Bladebay's obligations?

[22] ts 442.

The judge accepted Mr Pascoe's evidence[23] that he discussed Ms McKessar's position in relation to the company debts with her in the context of his concern about the property market. Those discussions occurred in a period in which sums of money were continuing to be transferred to Bladebay on a regular basis. The judge found that Ms McKessar wanted the money to continue to be lent to Bladebay.[24]
[23] ts 111 - 112, 220.
[24] ts 424, 443.
The judge accepted Mr Pascoe's evidence[25] that Ms McKessar verbally offered to guarantee Bladebay's debts at a time before he received the facsimile on 22 May 2009 and that he accepted that offer.[26]
[25] ts 111 - 112, 160 - 161.
[26] ts 425, 427 - 428, 443 - 444.
The judge found that this conclusion was supported by the documentary evidence in the form of exhibit 5 ‑ the facsimile of 22 May 2009 ‑ and exhibit 7 ‑ the mortgages.[27]
[27] ts 443, 444, 446.
The judge rejected Ms McKessar's evidence about exhibit 5 ‑ the document she wrote, signed and sent on 22 May 2009. The judge noted that Ms McKessar's evidence was initially that the reference in the facsimile to the guarantee was meant to refer to her personal debts to Mr Pascoe, rather than Bladebay's debt, but that she then retreated from that evidence. Her Honour also noted that Ms McKessar then changed her evidence and said that Mr Pascoe had fed her the words that he wanted. The judge rejected Ms McKessar's evidence that she wrote things that Mr Pascoe was saying to her, finding that, reading the facsimile as a whole, what was set out in it were matters that were within Ms McKessar's knowledge, and not Mr Pascoe's knowledge.[28]
[28] ts 443 - 444.
The judge found that the facsimile, written and signed by Ms McKessar, constituted a written note or memorandum of the guarantee, satisfying s 4 of the Statute of Frauds (1677) (Imp).[29]
[29] ts 445, referring to Elpis Maritime Co Ltd v Marti Chartering Co Inc [1992] 1 AC 21.
Further, the judge found that the guarantee was supported by consideration in the form of the ongoing provision of further loans from the time that the guarantee was given.[30]
[30] ts 445.
The judge rejected Ms McKessar's submission that the language of the facsimile of 22 May 2009 in which she said that 'I will also guarantee the Bladebay loans' meant that the letter said no more than at a later time Ms McKessar would provide a guarantee. The judge found that in the factual circumstances as they existed, Ms McKessar used the word 'will' to express an immediate intention. Her Honour found that the facsimile evidenced Ms McKessar's personal guarantee of the Bladebay loans to Mr Pascoe.[31]
[31] ts 445 ‑ 446.
The judge found that this was further confirmed by the mortgage documents by which Ms McKessar mortgaged property to Mr Pascoe. That supported the conclusion that Ms McKessar had assumed a personal obligation for the Bladebay debts.[32]
[32] ts 446.
The judge rejected Ms McKessar's evidence concerning the mortgage documents and their execution as implausible. Her Honour set out passages of that evidence in which Ms McKessar said she remembered signing them but denied that they were witnessed. The judge accepted the evidence of Mr Milne that he had witnessed Ms McKessar's signature of the mortgages.
The judge also rejected Ms McKessar's submissions that the mortgage documents related only to private borrowings, not to the Bladebay debts. In that regard, her Honour pointed to the consistency between the terms of mortgage instruments and the terms of the Bladebay loan agreements, including the rate of 12.5% interest compounded annually.

Conclusion

Consequently, the judge found that both defendants were liable for the amounts claimed by the plaintiff in each case and entered judgment accordingly.

Grounds of appeal

Ms McKessar advances 13 grounds of appeal in each appeal, in identical terms. The grounds are as follows:
1.The primary court erred in fact by maintaining that John Pascoe, for the First Respondent and his Witness, Stewart Milne were credible witnesses whilst the Appellant was not a credible witness.
2.John Pascoe and Stewart Milne gave conflicting stories as to how the Appellant's signature, and how the witness's [sic] signature came to be on the mortgage documents handwritten by John Pascoe. [Stewart Milne was the witness to the supposed signatures of the Appellant] The primary court erred in fact by ignoring this obvious and glaring discrepancy.
3.The Appellant denied having any knowledge of the mortgage documents maintaining she had no recollection of them, and most definitely knew she had no contact with the witness for a good 2 ‑ 3 years either side of when the documents were supposedly witnessed. The primary court erred in fact by not taking into account the reasons given as to how the Appellant had remembered by association, that she had no such contact.
4.The primary court erred in giving credence to the mortgage documents as supporting the First Respondent's case that they supported a personal guarantee. The weight of the evidence suggested they were created by John Pascoe without the Appellant's knowledge.
5.Appellant had previously applied to the Supreme Court to have the caveats, based upon the mortgage document, removed from the land titles on the basis that they were fraudulent. Her Honour in the Supreme Court, held that the caveats could remain until the District Court case was heard, and that the Respondent had to prove in the District Court that there was debt which then gave the Caveats substance. [CIV 1058 of 2019].
6.The primary court erred by taking into account the mortgage documents upon which the Caveats were based. It was clear from the Supreme Court decision in CIV 1058 of 2019 that the existence of the Caveats should not be taken as evidence that debt existed, and that the Caveats could only remain once debt had been proven in the District Court case, which is the subject of this Appeal.
7.The primary court erred in fact by accepting that First Respondent would not continue making funds available to the Second Respondent [Bladebay Pty Ltd] without a personal guarantee, and therefore, the Appellant had made a personal guarantee. The Appellant had denied making a personal guarantee.
8.The primary court's statement to the effect in No 7 is unreasonable as it completely ignored the fact that by using devious means to give the impression of a personal guarantee, the First Respondent failed to give the Appellant the opportunity to withdraw from the arrangement [the arrangement was a loan from the First Respondent to the Second Respondent] if she did not want to agree to a personal guarantee.
9.The primary court erred against the weight of commercial evidence that persons of [the] Appellant['s] and John Pascoe['s] backgrounds as practising accountants, would rely upon a badly hand‑written note as evidence of a personal guarantee. Merely because a personal guarantee can effectively be given by means other than an [sic] properly executed legal document doesn't mean this is correct in this situation.
10.The primary court erred against the weight of commercial evidence that security on [the] Appellant's property could be put in place when the agreed sum had been paid to the Second Respondent, other than for two smaller amounts. Merely because it can be done legally, does not mean it makes commercial sense for the Appellant to agree to this some two years after the loan arrangement was entered into.
11.The primary court erred in giving little weight to John Pascoe agreeing that he knew the company had limited liability and was quite happy to make that arrangement at the time.
12.John Pascoe originally gave evidence that comments from the auditor of the superannuation fund, were why he decided he needed security and that the First Respondent's audit report needed to be qualified. The primary court erred in fact in two aspects on this matter: firstly, the Respondent's audit report was not qualified as regards the loan to the Second Respondent but only as regards other loans. Secondly, John Pascoe conceded under cross examination that the audit issue had no relevance to him creating the mortgage documents ‑ after a great deal of distraction on the audit issue he eventually conceded that he wanted to change the nature of the loans from unsecured and no personal guarantee to secured with a personal guarantee. It is submitted that the primary court erred by allowing itself to be distracted from what was clearly false evidence as to audit requirements.
13.The primary court erred in the interpretation of the word 'will' in the hand‑written note. The dictionary evidence given by the Appellant in submissions and by the Judge are clear that it means something in the future, albeit it could be the immediate future. There was no evidence given of a personal guarantee having been entered into after that note was written ‑ no email exchange, no faxes, no scribbled note signed by both parties. The weight of the evidence is that no personal guarantee was entered into.

General observations

As already noted, the issues before the primary court required her Honour to resolve a number of conflicts in the evidence. In resolving those conflicts, the judge had the considerable advantage of having seen and heard the witnesses give their evidence.
All of the appellant's grounds of appeal involve challenges to the judge's findings of fact that were based, to a substantial degree, on the judge's impressions as to the credibility and reliability of the witnesses.
Consequently, the grounds of appeal face the considerable hurdles involved in challenging a judge's findings of fact that are based on the court's assessment of the credibility of the witnesses.
In the case of a finding that is based, at least to any substantial degree, on an assessment of the credibility of one or more witnesses, an appellate court will not interfere with the finding unless it is demonstrated to be wrong by reference to incontrovertible facts or uncontested testimony, or because the finding is glaringly improbable or contrary to compelling inferences, or because the trial judge failed to use, or has palpably misused, their advantage as trial judge.[33]
[33] Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 [28] ‑ [29]; Robinson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679 [43]; Smart v Power [2019] WASCA 106 [104].
As the High Court recently said in Lee v Lee:[34]
A court of appeal is bound to conduct a 'real review' of the evidence given at first instance and of the judge's reasons for judgment to determine whether the trial judge has erred in fact or law. Appellate restraint with respect to interference with a trial judge's findings unless they are 'glaringly improbable' or 'contrary to compelling inferences' is as to factual findings which are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence. It includes findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts. Thereafter, 'in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge'. (footnotes omitted)
[34] Lee v Lee [2019] HCA 28; (2019) 266 CLR 129 [55].
While these principles were brought to Ms McKessar's attention at the hearing of the appeal,[35] understandably for a self‑represented litigant, her submissions were not framed by reference to these principles.
[35] Appeal ts 3.
The grounds of appeal can conveniently be grouped by reference to the following general topics. Ground 1 concerns the judge's general findings as to the credibility of witnesses. Grounds 2 ‑ 6 are concerned with the judge's factual findings concerning the mortgages. Grounds 7 ‑ 11 attack the judge's factual findings that Ms McKessar gave a personal guarantee of Bladebay's debts. Ground 12 is concerned with particular evidence given by Mr Pascoe as to why he needed security for the loan. Ground 13 concerns the judge's reliance on, and interpretation of, the facsimile of 22 May 2009. It is convenient to deal with the grounds of appeal by reference to those topics.

Ground 1: general credibility findings

Ms McKessar submits that the judge having taken the view that Mr Pascoe and Mr Milne were credible witnesses, while Ms McKessar was not, created a bias in the judge's consideration of all the evidence. Ms McKessar relies on her submissions in relation to ground 2 to demonstrate the judge's error in this regard.
We will deal with the merits of many of Ms McKessar's submissions under the rubric of ground 2. It should, however, be observed that there is no merit in Ms McKessar's contention that the judge's view of the credibility of the witnesses 'created a bias' in her Honour's consideration of all the evidence. That submission is based on a misconceived understanding of the judge's reasons. Her Honour's general observations as to credibility are set out, for ease of exposition, before her Honour's detailed consideration of the various aspects of the evidence. This is an entirely orthodox approach. It should not be taken to suggest that the judge first formed views of the credibility of the witnesses and subsequently went on to consider the merits of the evidence. The order in which a judge sets out their reasons cannot be taken as any indication of the order in which the judge gave consideration to relevant matters.[36] Reading the reasons as a whole it is plain that the judge's views as to credibility are themselves the product of a consideration of the whole of the evidence. The process of considering competing evidence and the credibility of various witnesses is an iterative one requiring consideration and reconsideration of a number of aspects of the evidence. It is clear from her Honour's reasons that she proceeded in this manner.
[36] See, by analogy, Fogg v State of Western Australia [2011] WASCA 11 [2].
The judge did not rely solely, or even primarily, on her impressions of the witnesses in coming to her conclusions as to their credibility. In finding that Ms McKessar lacked credibility in relation to the critical matters in dispute, the judge primarily relied upon the inconsistencies in, and other unsatisfactory aspects of, Ms McKessar's evidence as to the core documents to which we have referred, namely exhibits 1 ‑ 7. That approach, focusing on the consistency or otherwise of Ms McKessar's evidence with the documents which she signed, reflects a conventional and proper approach to determining conflicts of evidence 'as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events'.[37]
[37] Fox v Percy [31].
In resolving grounds 2 ‑ 6 and 7 ‑ 10, we will explain why there is no error in the judge's findings concerning the mortgage documents and Ms McKessar's guarantee of Bladebay's debts respectively.
In coming to her adverse conclusion on the credibility of Ms McKessar's evidence generally, the judge also relied upon her finding that Ms McKessar's evidence concerning the Bladebay arrangement was implausible in light of the objective evidence. For the reasons that follow, that finding was well open to the judge.
Mr Pascoe's evidence concerning exhibits 1 ‑ 4 was, in essence, quite simple: Ms McKessar prepared the documents and they reflected the oral agreement reached between Mr Pascoe and Ms McKessar.[38] It was not put to Mr Pascoe in cross‑examination that these documents did not represent the parties' true agreement, or that he had requested Ms McKessar to prepare them in a form that did not reflect the parties' true agreement because his auditors required such documents.
[38] ts 107, 108, 110.
In evidence‑in‑chief, Ms McKessar said as follows as to exhibits 1 ‑ 4:[39]
[F]or me as 2nd defendant I wanted to go through and again point out that the deliberate putting of a fixed amount to a limited liability company the plaintiff deliberately made payments to a sole‑director company knowing they were going out to myself and other trusts and he did so without entering into any formal ‑ formal loan agreement ‑ there was the bit of paper tendered. He made no attempt to - - -
So the bit of paper tendered - - -?---It was exhibit ‑ it was tendered yesterday. I don't ‑ the one that - - -
Well, there was the acknowledgement of the debt?---Yes, that's - - -
Is that what you're talking about?---Yes. But he didn't insist on anything more formal - - -
No. But this is to Blade Bay, the acknowledgement - - --?---The Blade Bay one, yes.
- - - so there are four documents that were tendered yesterday in relation to Blade Bay: exhibit 1, the acknowledgement of debt and terms of loan for Samson Street Superannuation Fund to Blade Bay, and that's dated 1 March 2009. You'll recall exhibit 2, the acknowledgement of the debt and the terms of the loan for the PHB&B, which we now know is PHBB Murray Street Superannuation Fund to Blade Bay, and that's also dated 1 March 2009. And then exhibit 3, which is the loan proposal for Samson Street to Blade Bay, dated 15 March 2009, and exhibit 4 is the loan proposal for PHBB to Blade Bay, which is also dated 15 March 2009. And they were the documents that are the exhibits. Do you want Madam Usher to show you them again?---I know those. I actually created those.
Okay. All right. So what do you want to tell me about those?---I created them so there was some ‑ they're not ‑ they are sort of a document ‑ there was something in writing regarding the agreement to make the 200,000 from each to Blade Bay. And Mr Pascoe as [sic] no time said I want something formal ‑ a formal loan agreement. But he knew that they were going to a sole‑director company and he knew why they were going to a sole‑director company. At no stage did he ever attempt to say ‑ or to discuss with me, because it's correct, he might've done workings in his own right ‑ to discuss with me how I would have the capacity to make repayments. The suggestion that, well, when he retired I inherit his fees, was in fact ‑ to the extent they could be inherited, if their clients agreed ‑ was my idea. And I put it to him that that could be a means of providing capacity to repay. And obviously I was keen to obtain, if he wasn't working, keen to obtain fees that way. And so to make loans of such an extent, such amounts that weren't equity loans, to have not gone and done a proper exercise and discussed with me how and where the cash would come from for Blade Bay, with someone with Mr Pascoe's experience, in my opinion, suggests he was fully aware of the arrangement that was entered into. I would also point out that when I became aware ‑ shortly after ‑ once I got over the shock of being notified of the caveats on the title, within a few months ‑ I'd hoped to discuss it with John but he just suddenly cut off contact with me in 2016 after all these years and I've never really got to the bottom of why ‑ I received the writ ‑ or Blade Bay received the writ ‑ not the writ, the letter, sorry, the letter - - -
The letter of demand?---From WA Property Lawyers. (emphasis added)
[39] ts 245 - 246.
In the course of cross‑examination about exhibits 1 and 2, Ms McKessar said as follows:
(1)She created those documents.[40]
[40] ts 265.
(2)She agreed that exhibits 1 and 2 documented the indebtedness of Bladebay, as at 30 June 2008, to the PHBB Murray Street Superannuation Fund as $152,621 and to the Samson Street Superannuation Fund at $27,249.[41]
[41] ts 265.
(3)Exhibits 1 and 2 detailed the amounts of interest to be charged in relation to the outstanding funds, how interest and principal were to be handled, and the manner in which repayments were to be repaid.[42]
[42] ts 265 - 266.
(4)Ms McKessar agreed that there was nothing in exhibits 1 and 2 that suggested that the loans were repayable at the discretion of the borrower, but added that she 'thought that was obvious from the agreement we entered into'.[43] Notwithstanding that latter observation, she went on to agree that in these documents there was a very firm schedule of repayment.[44]
[43] ts 266.
[44] ts 266.
(5)She did not concede that exhibits 1 and 2 reflected the agreement that she had with Mr Pascoe on behalf of the funds. Her evidence was that those documents did not take into account the agreement regarding the establishment of Bladebay. Ms McKessar said:[45]
[45] ts 266 - 267.
And that's - that reflects the agreement that you had with Mr Pascoe on behalf of the superannuation funds?---Well, as far as the arrangement with John Pascoe was concerned - - -
Is that yes or no, Ms McKessar?---It reflects what John wanted in writing but it doesn't take into account the agreement regarding the establishment of Blade Bay in the first instance. So you're trying to say these stay outside the original agreement to establish Blade Bay.
I'm saying these are the agreement, Ms McKessar?---These were simply - - -
A sham?---Well - - -
Is that what you're saying?---No, not a sham. They were what we thought at the time was likely to happen in the future because John needed something for ‑ he needed some documentation - - -
He needed to - - -?---for the auditor.
He needed to document alone, didn't he?---For the auditors, yes, once it went in - - -
And he asked you [to] document the loan, didn't he?---He asked me to type this up, yes.
Yes, so he asked you to document - - -?---Yep.
- - - the terms of the loan?---No, he just asked for this wording. Yeah, the original - - -
And you ‑ no, listen, and you ‑ you created this document based upon the terms of the agreement reached with Mr Pascoe?---It ‑ it ‑ it didn't have the original reason for setting up Blade Bay in the first place and it ‑ this was done a year after Blade Bay arrangement was set up.
Ms - - -?---And it would have been at his request.
(6)Ms McKessar said she understood that the significance of having signed exhibits 1 and 2 ‑ documents that acknowledge debts and set out obligations to repay ‑ is that it signalled her assent to the terms contained in them. However, she qualified that by saying her assent was 'subject to the original agreement as to why Blade Bay was established'.[46]
[46] ts 267 ‑ 268.
As to exhibits 3 and 4, Ms McKessar confirmed that the documents, which were identical for each of the superannuation funds, signalled an intention to lend up to $200,000 (including the moneys already advanced) for each superannuation fund. She confirmed that she created the documents and that they recorded how the money was to be dealt with, what interest was to be paid and when repayments were to be made. Ms McKessar agreed that Mr Pascoe sought those documents for the auditor so he had a record of the agreement reached between Bladebay and himself as trustee of the funds. She said that by signing the document on behalf of Bladebay she obligated the company to make the repayments on the dates set out in those documents, but again qualified that evidence by saying that the Bladebay arrangement overrode that obligation. Ms McKessar agreed that Mr Pascoe never agreed in writing to the Bladebay arrangement, and that the arrangement was not documented.[47]
[47] ts 268 - 270.
The judge specifically referred to the following passage from the cross‑examination of Ms McKessar:[48]
And you ‑ by doing so you understood that you obligated Blade Bay to make the repayments on the dates set out in that document, or those documents?---I guess that that would be correct. I was always of the opinion that the original agreement which was to do with the establishment of the company for its purpose overrode that. That was - - -
The ‑ the so‑called Blade Bay arrangement which was not documented?---Yes. Well, how could ‑ how could you document something like that? That's just - - -
[48] ts 423 ‑ 424, quoting evidence from ts 269 ‑ 270.
Ms McKessar's evidence did not explain why the Bladebay arrangement could not have been documented. Nor is any reason apparent.
In further cross-examination, Ms McKessar gave evidence suggesting that exhibits 1 and 2 did not relate to the Bladebay loans, but rather related to her personal debts to Mr Pascoe.[49] Counsel put to Ms McKessar that in the letter she wrote on 7 January 2010, exhibit 6, she said 'We originally agreed that I would start the repayments on 1 January 2010', suggesting that that reflected the time at which, under exhibits 1 and 2, interest was payable on the Bladebay loans.[50] The following exchange occurred:[51]
[49] ts 287 - 289.
[50] ts 287 - 288.
[51] ts 288 - 289.
The reason that you talk about 1 January 2010 is because that's when interest was starting to run - - -?---Mm hmm.
- - - on the Blade Bay loans, wasn't it?---Blade Bay started immediately.
From 1 January 2010, interest on the outstanding balance of the new principal was to be paid monthly, first payments are on 1 February 2010?---Okay. So we're now with Blade Bay aren't we?
We are?---Which was - - -
And this is exhibit 1 and 2.
[THE JUDGE]: So we'll give you back exhibits 1 and 2?---1 January - interest to be paid monthly, with the first payment due 1 February.
[MR PASCOE'S COUNSEL]: To you. So this is a - - -?---Yeah.
This is the commencement of some payments?---Interest to be paid are an outstanding balance. My recollection what ‑ what John wanted, cos remember, I typed this up for him, was to be recorded. Interest was to be recorded.
'We had originally agreed that I would start the repayments'. Not start the recording?---But this is ‑ this ‑ this fact is about private debt. This one's about Blade Bay so were not - - -
Do you recall that this document was put to Mr Pascoe, went in through Mr Pascoe?---Yes. And I understood he was talking about ‑ and I can recall her Honour saying the Blade Bay debts ‑ sorry, the private debts are not relevant.
Well - - -?---And - - -
- - - the transcript would say - - -?---And so I didn't - - -
So you're - - -?--- - - - follow it up.
You're saying that this document has no relationship to Blade Bay's debts?---Well, the Blade Bay interest has been recorded. (Indistinct).
Ms McKessar, that's not what I'm asking you. You're saying that this debt, this document, has nothing to do with Blade Bay's debt?---Yeah. Yeah, the - - -
Ms McKessar - - -?---Then there's no - no that's a - - -
Ms McKessar it's a yes or a no?---No. No, that's nothing to do with Blade Bay. That's - that's private.
I see?---I said I enclosed - - -
Ms - - -?--- - - - the payments, but the - - -
You didn't enclose any payment?---If I enclosed it, I would have ‑ there's four pages including the header.
Yeah, you're - - -?---Now - - -
You're - you're enclosing a document - - -?---That - - -
- - - of the payments made by the - - -?---Yeah.
- - - made to me and to Blade Bay?---If I recall, it's like the schedule that ‑ the schedule of payments that went to the judge which had the ‑ the Blade Bay and the private. My recollection, it ‑ it was to that date, the payments to the Blade Bay ‑ to private recorded. And this document's ‑ and I attached that. And then the other matters went on. But these - - -
And that those other matters had nothing to do with Blade Bay?---No, they [are] private.
Only the first paragraph?---Well, that - - -
Okay?---Yeah, that's just ‑ here's ‑ here's the list with the schedule of payments to date. (emphasis added)
In our opinion, it was well open to the primary judge to find, as her Honour did, that Ms McKessar's evidence about these documents and about what she called the Bladebay arrangement was unsatisfactory and detracted from her credibility generally. Among other things, her evidence in these respects: (i) was inconsistent with the terms of the documents; (ii) did not explain the inconsistencies in any plausible fashion; and (iii) was at times internally inconsistent or vague.
For these reasons, ground 1 is not made out.

Grounds 2 - 6: the judge's findings concerning the mortgage documents

Ms McKessar's submissions

Ms McKessar's submissions in support of grounds 2 ‑ 6 are to the following effect:
(1)Ms McKessar has always maintained that she had no knowledge of the mortgage documents before they were notified to her by Landgate in May 2016, and that they were fraudulent.[52]
[52] Appellant's submissions [2.2], [3.1].
(2)Mr Milne was a partial witness in that he is a co‑investor with Mr Pascoe in an accounting practice.[53]
[53] Appellant's submissions [2.3].
(3)There were substantial discrepancies in the evidence of Mr Pascoe and Mr Milne as to the circumstances in which the mortgage documents came to be signed and witnessed. Those discrepancies should have caused the judge to seriously doubt their credibility as witnesses.[54]
[54] Appellant's submissions [2.4]; appeal ts 7.
(4)Mr Pascoe's evidence as to how the mortgage documents came to be in Ms McKessar's possession and who arranged for a witness to sign the documents was vague and unsatisfactory.[55]
(5)Mr Milne, as Ms McKessar's former mortgage broker, knew that she had agreed with a bank as first mortgagee not to place a second mortgage on the properties. His explanation for why he did not point this out to Ms McKessar, namely that he was no longer a mortgage broker, was unsatisfactory. In any event, having been a mortgage broker in the past, he should not have witnessed the documents.[56]
(6)Mr Milne's explanation in cross-examination as to how the mortgage documents came first to Ms McKessar and then to him to witness ‑ namely that they had been brought by Mr Pascoe to one of the regular lunches of the three of them in Woodlands ‑ was contrary to Ms McKessar's evidence that she had never had lunch or dinner with Mr Milne in Woodlands or anywhere.[57]
(7)The weight of the evidence suggested that the mortgage documents were created by Mr Pascoe without Ms McKessar's knowledge.[58]
(8)Ms McKessar points to the decision of Hill J in Pascoe v Pamela McKessar,[59] submitting that her Honour found that:
(a)it would be for Mr Pascoe to prove in the District Court action that there was a debt giving substance to the caveats;
(b)the existence of the caveats could not be taken as evidence that the debts existed.[60]

Disposition

[55] Appellant's submissions [2.5] - [2.7].

[56] Appellant's submissions [2.9].

[57] Appellant's submissions [2.10] - [2.12].

[58] Appellant's submissions [4.1].

[59] Pascoe v Pamela McKessar [2019] WASC 229.

[60] Appellant's submissions [5.1] - [6.1].

The matters to which Ms McKessar points, as outlined in [74] above, fall well short of providing a sufficient basis to interfere with the judge's factual findings concerning the mortgage documents.
The judge accepted the evidence of Mr Milne that he had witnessed Ms McKessar's signature of the mortgages and rejected Ms McKessar's evidence concerning that topic as implausible.[61] It was well open to the primary judge, who had the advantage of seeing and hearing the witnesses give evidence, to come to these conclusions.
[61] ts 446 - 447.
The fact that, in various respects, the judge made findings contrary to Ms McKessar's evidence does not reveal, or of itself even suggest, error in the findings. In the face of conflicting evidence on material matters of fact, the judge was required to resolve the conflicts and make findings of fact. No error is revealed in the manner in which her Honour approached that task, nor in the conclusions which she reached.
The following evidence of Ms McKessar, much of which was referred to by the judge,[62] can readily be seen as unsatisfactory:[63]
The mortgage documents we've discussed. I cannot understand why I would've agreed to those. And that's ‑ so I probably should be then more specific and say I didn't agree to them. With that background, even looking back and saying, well, just assuming I had a complete memory flop‑out for some time, with that background, my insistence upon having a liability company, why would I sign those. And so I deny that I did.
You deny that you signed the documents?---No. Deny that they were witnessed. I can't remember signing them but I am ‑ it does look like my signature and I am a little touch concerned that they might've been slipped in when other things were being signed. But my signature is - - -
So you do say you did execute those documents?---I don't know. I can't understand ‑ all I can say is given the background and the reason I wanted a limited liability company, and the understanding ‑ because it was separated from the private borrowings; it was a deliberate separation ‑ why I would ‑ and I maintain that I didn't. Now with my signature I actually have a carpal tunnel issue and my handwriting, as you can see, is very poor, very poor quality, and it's been like that for years and years. And in the 1990s in the days when you used to write cheques to pay your bills the bank would often ring me and say 'Have you signed this cheque because it doesn't look anything like your signature?' Because I'm simply not able to get the signature that I might sign now and 10 minutes later the same. And so it's a very easy signature ‑ if someone wanted to copy, it's very easy to copy.
You see, the difficulty with that is that you haven't said that to anybody?---Matter of fact Mr Pascoe there could. Well, I don't know how it got there. And everything else is in John's handwriting. You know, I just don't know how it got there. But definitely did not catch up with Mr Milne. I mean, there's a seven-year gap that I saw him ‑ didn't see him.
[62] ts 436 - 437.
[63] ts 239 - 240.
Mr Milne gave evidence that his signature appeared as a witness on each of the mortgages.[64] He said that he was asked to witness the documents by Mr Pascoe.[65] His evidence was that he saw Ms McKessar sign the documents in his presence on approximately 10 May 2010.[66] In cross‑examination, he denied Ms McKessar's suggestion that he had signed the documents at Mr Pascoe's request as a witness without having seen Ms McKessar sign the documents.[67]
[64] ts 225.
[65] ts 225, 229.
[66] ts 225.
[67] ts 231 - 232.
It was well open to the judge, having seen and heard the witnesses, to prefer this evidence of Mr Milne to that given by Ms McKessar. The fact, emphasised by Ms McKessar, that Mr Milne was a co‑investor with Mr Pascoe in an accounting practice does not preclude that conclusion.
Ms McKessar asserts that there were substantial discrepancies in the evidence of Mr Pascoe and Mr Milne as to the circumstances in which the mortgage documents came to be in her possession, and then signed and witnessed. We do not accept that Mr Pascoe's evidence was inconsistent in significant respects with that of Mr Milne. The substance of Mr Pascoe's evidence was that he could not recall the circumstances in which the mortgages were delivered to Ms McKessar and signed, and could not recall the mortgages being witnessed in front of him.[68] The judge referred[69] to the following passages of Mr Pascoe's evidence in this respect:[70]
[68] ts 167, 168, 169, 171.
[69] ts 435.
[70] ts 167 - 170.
I'm putting to you is were they ‑ were they witnessed when you were in attendance?---What, the mortgage documents, you mean?
Yes. Were you in attendance at that time?---Yeah, I - I - I don't ‑ I don't think so, Pam, but I can't swear to it. I ‑ I don't recall them being witnessed - - -
Yes?--- - - - in front of me, but - - -
Now - - - ?--- - - - they may have been. I'm not sure.
…
And you don't recall - - - ?---No.
- - - Stewart [Milne]?---No.
You cannot say that - - - ?---You could well have. You're a quick signer, Pam.
- - - Pam or Stewart - - - ?---You could have easily done them. The fact that I marked on it 'Pam' with a cross suggests that I may not have been there indicating where you were to sign it.
So ‑ so can you tell me how the documents which handwrote - - - ?---Yeah.
- - - got into my possession to actually get a signature that looks like mine?---Well, I ‑ I could either have given them to you or I could have posted them to you, Pam. And ‑ and I put a cross here where you had to sign them, but I don't ‑ I ‑ I don't remember the circumstances. This was a long time ago.
It was open to the judge to conclude, as she evidently did, that the vagueness of Mr Pascoe's evidence as to how the mortgage documents came to be in Ms McKessar's possession reflected nothing more than his lack of recollection of those details, which was understandable given the passage of so many years.
Nothing in the decision of Hill J in Pascoe v Pamela McKessar assists Ms McKessar in this appeal. To the contrary, in her decision to extend Mr Pascoe's caveat over Ms McKessar's property, her Honour emphasised, with respect appropriately, that her decision to do so did not determine the factual issues that were then evident between the parties. Her Honour also emphasised that it would be for Mr Pascoe to prove in the District Court that the debt he claimed in fact existed. That is what occurred ‑ after a trial the judge found, favourably to Mr Pascoe, that his claims were established.
For these reasons, grounds 2 ‑ 6 fail.

Grounds 7 - 10: Ms McKessar's guarantee of Bladebay's debts

Appellant's submissions

In support of grounds 7 ‑ 10, Ms McKessar submits:
(1)It was circular reasoning for the judge to have found that further loan funds would not be provided without a personal guarantee and consequently Ms McKessar must have agreed to provide a personal guarantee, given that further loan funds were in fact provided.[71]
(2)If that were correct, then the failure to ensure that Ms McKessar knew she was required to give a personal guarantee in order to obtain further funds removed from her the opportunity to consider withdrawing from the 'Bladebay arrangement'.[72]
(3)Both Ms McKessar and Mr Pascoe gave evidence that each of them could readily and inexpensively have obtained a formal personal guarantee document, and yet did not do so. That tends to undermine the finding that any guarantee was given.[73]
(4)In her evidence, Ms McKessar denied giving any guarantee for Bladebay's loans, emphasising that she had deliberately chosen limited liability and carefully maintained the distinction between the private loans for which she was liable, and those for which Bladebay was liable.[74]

Disposition

[71] Appellant's submissions [7.1].

[72] Appellant's submissions [8.1].

[73] Appellant's submissions [9.1]; appeal ts 6.

[74] Appellant's submissions [10.1].

The judge's finding that Ms McKessar guaranteed Bladebay's debts was founded, essentially, on the support for that conclusion in exhibits 5 and 7 and in her Honour's acceptance of Mr Pascoe's evidence in preference to Ms McKessar's evidence.[75]
[75] ts 443 - 444.
The fact, found by the trial judge and, for reasons already given, not successfully challenged on appeal, that Ms McKessar signed the mortgages of itself provides strong support for the judge's conclusion that Ms McKessar had agreed to guarantee Bladebay's debts. The terms of the mortgages substantially mirror the terms of the Bladebay loans and so the mortgages can be taken to have been given to secure repayment of the Bladebay loans. The land the subject of the mortgages is registered in the name of Ms McKessar. Ms McKessar's mortgaging of land in her name in respect of the Bladebay loans counts strongly in favour of the judge's conclusion that Ms McKessar guaranteed Bladebay's debts.
It was well open to the trial judge to reject Ms McKessar's evidence concerning exhibit 5, the facsimile of 22 May 2009. Her evidence in that regard was internally inconsistent and made little sense when evaluated by reference to the language of the facsimile. In her evidence‑in‑chief, Ms McKessar said that the facsimile of 22 May 2009 related to the debt she owed privately, not to Bladebay's debt.[76] She said that Mr Pascoe asked her to 'scribble something down to show my family … that you're quite solid'.[77] When this evidence was raised in cross-examination, the following exchange occurred:[78]
[76] ts 248, 249.
[77] ts 248.
[78] ts 280 - 282.
Okay. Now, let's go onto the next question. You said, in your evidence‑in-chief when you were being asked some questions by her Honour about this document, that this related to the personal - - -?---I understood it was.
…
Is that correct?---It was scribbled out over lunch, and I can remember - - -
No, no, is that correct? Is that what you said earlier?---Yes, it was meant to reply ‑ relate to the personal debt.
So in other words - - -
[THE JUDGE]: Sorry, it was meant to - - -?---For the personal debt, was as you said, was quite high. And the ‑ no repayments had been made.
Okay. Just hold on. So I just didn't hear what you said?---Yes.
So it was meant to apply to the personal debt?---Personal debt. I understood it - - -
[MR PASCOE'S COUNSEL]: Now, you'd already done an acknowledgement of the debts - - -?---Yes.
- - - up to that ‑ up to ‑ to March of 2009?---Correct, yep.
So that was in writing, yes?---Yes, I know. So - - -
And this document doesn't include any particular figures, does it?---No.
So there was never a question that you were personally responsible for your personal loans?---Correct.
So there was no need to guarantee your personal debt, because a guarantee would have been totally superfluous, wouldn't it?---Well, I ‑ I absolutely agree. And you'd need to ask John why he ‑ why he wanted a scribbled handwritten note - - -
And in that context ‑ in that context, 'I will guarantee', whatever loans ‑ ‑ ‑?---Yes.
- - - could only be - - -?---Yeah.
- - - could only be - - -?---Yeah.
- - - in relation to the Blade Bay loans?---But I didn't do - - -
No, yes or no, Ms McKessar?---No. I didn't - - -
Ms McKessar, yes or no?---At no time - - -
[THE JUDGE]: Sorry, it's a yes or no answer?---So what you're saying is the wording suggests - - -
No, no, listen to the question again?---Okay, better do it again, yeah.
[MR PASCOE'S COUNSEL]: In the context of your personal debts being your personal responsibility - - -?---Yes.
- - - anyway, the reference to the guarantee for repayment of loans, in this document, can only be a reference to Blade Bay. Blade Bay's obligations?---No. It ‑ it - - -
So no?---Correct. No. There - - -
What possible purpose could it have in relation to your personal debts?---Keeping John happy. He - - -
Ms McKessar denied that she wrote out in her own words what she wanted to say in the document, saying that Mr Pascoe fed her the words that she wrote.[79] The following exchange ensued:[80]
[79] ts 284.
[80] ts 284 - 285.
And you wrote out, in your own words, what you wanted to say in this document, didn't you?---Well, John would have fed those words to me that he wanted for his family.
So when it says:
Your limits are as bad as mine.
That's John['s] words?---Yeah, that ‑ that ‑ that would be John's words, yep.
I'm hanging out ‑ hanging in okay and I'm used to having very little. I guess it's harder for you if I survive NZ.
?---Yeah.
We will start to move forward inch by inch.
?---That's - - -
That's John's words as well?---That's John's type of language. It's not my type of language.
It was well open to the judge to find, as her Honour did, that references in the facsimile to New Zealand and to renovating her house in Mount Hawthorn were matters known by Ms McKessar, not by Mr Pascoe, indicating that she wrote the facsimile ‑ it was not dictated to her by Mr Pascoe.[81] It was also well open to draw from this evidence the adverse conclusions as to Ms McKessar's credibility generally which her Honour did.[82]
[81] ts 444.
[82] ts 438, 443 - 444.
Having regard to the matters to which we have referred in resolving grounds 1 ‑ 6 above and to [86] ‑ [89] above, there is no proper basis for interfering with the judge's decision to accept Mr Pascoe's evidence[83] and to find that, in response to Mr Pascoe raising concerns with Ms McKessar about the Bladebay loans, she verbally offered to guarantee Bladebay's debts and he accepted that offer.[84]
[83] ts 111 - 112.
[84] ts 425, 427 ‑ 428, 443 ‑ 444.
Ms McKessar submits that the judge engaged in circular reasoning in finding that: (i) further loan funds would not have been provided without a personal guarantee; (ii) further loan funds were provided; and (iii) it therefore followed that the appellant must have agreed to a personal guarantee.[85] The judge did not reason in this syllogistic fashion. The judge's conclusion that the appellant gave a personal guarantee was not a deduction from premises, whether those in (i) and (ii) or otherwise. Rather, it was a conclusion arrived at upon the judge's consideration and evaluation of the whole of the evidence. Far from revealing error, that reflects a correct approach to the task of fact‑finding.
[85] Appellant's submissions [7.1]; appeal ts 8.
Ms McKessar's submission that 'the failure to ensure that the appellant knew' of the requirement took away her opportunity to consider withdrawing from the Bladebay arrangement is premised on acceptance of the version of events she advanced in her evidence. Her case as to the Bladebay arrangement was rejected by the trial judge. As already noted, there is no direct challenge to the judge's finding in that respect. To the extent that finding is challenged by ground 11, the challenge fails for the reasons in [98] below. Moreover, on the judge's findings, Ms McKessar was aware of the requirement for a personal guarantee in order for further funds to be advanced.
While the fact that both Ms McKessar and Mr Pascoe could readily and inexpensively obtain a formal personal guarantee and did not do so was a relevant consideration in the fact‑finding process, it did not compel the conclusion that no guarantee was given. The judge's finding that there was such a guarantee, founded on the support for that conclusion in exhibits 5 and 7 and in her Honour's preference for Mr Pascoe's evidence over Ms McKessar's, was well open and does not reveal error.
Insofar as by ground 13 Ms McKessar challenges the judge's reliance on exhibit 5 because it is expressed in future terms ('I will …'), the challenge fails for the reasons given in relation to ground 13.
For these reasons, grounds 7 ‑ 10 are not made out.

Ground 11

In support of ground 11, Ms McKessar submits that it was evident throughout the District Court trial that Mr Pascoe had changed his mind and wanted significant changes to the Bladebay arrangement so as to change from being unsecured and unguaranteed to secured and guaranteed.[86]
[86] Appellant's submissions [11.1].
In substance, this ground appears to challenge the judge's findings of fact, adverse to Ms McKessar, rejecting her evidence as to what she called the Bladebay arrangement. For the reasons in [64] ‑ [72], and bearing in mind the high hurdle for appellate interference with findings of fact that are at least partly based on credibility as outlined in [56] and [57] above, that challenge is not made out.

Ground 12

In support of ground 12, Ms McKessar points to Mr Pascoe's original evidence that the reason he needed security was comments made by the auditor of the superannuation funds. Ms McKessar submits that, as a qualified self‑managed superannuation fund auditor, Mr Pascoe would know that auditors cannot give investment advice and that changing the nature of an existing investment is in substance the giving of investment advice.[87]
[87] Appellant's submissions [12.1].
Further, Ms McKessar submits that Mr Pascoe conceded in cross‑examination that the audit issue was not relevant to his creating of the mortgage documents. Ultimately he conceded that he wanted to change the nature of the loans from unsecured and without a guarantee to being secured and with a personal guarantee.[88]
[88] Appellant's submissions [12.3].
These matters, individually or in combination, do not undermine the judge's findings of fact concerning the guarantee and the mortgage. The point summarised in [99] above appears to amount to an argument as to why Mr Pascoe's evidence could not or should not have been accepted. We do not accept that argument. The judge's findings, made with the advantage of having seen and heard the witnesses giving their evidence, were well open to her Honour. To our minds, there is nothing inherently unlikely about a comment by an auditor as to the desirability of there being security for a loan made by a superannuation company. Much less does it meet the stringent test of glaring improbability referred to in [56] and [57] above. Nothing in Mr Pascoe's concession referred to in [100] above undermined his evidence as to what he discussed and agreed with Ms McKessar concerning the Bladebay loans and her provision of a guarantee of the loans.

Ground 13

Ground 13 contends that:
(1)the primary judge erred in interpreting the word 'will' in exhibit 5, the facsimile of 22 May 2009;
(2)the dictionary definition of 'will' demonstrates that it means something in the future;
(3)there was no evidence of a personal guarantee having been given after the note was written; and
(4)the weight of the evidence is that no personal guarantee was entered into.
As is apparent from the earlier outline of the primary judge's reasons, the judge relied on the facsimile of 22 May 2009 in two different respects. First, the judge relied on the facsimile for the purposes of the fact‑finding process. Her Honour found that what Ms McKessar wrote in the facsimile of 22 May 2009 lent support to the judge's conclusion of fact that, prior to that date, Ms McKessar had orally agreed with Mr Pascoe that she would guarantee Bladebay's loans.[89]
[89] ts 443 - 444, 446.
Secondly, the judge found that the facsimile of 22 May 2009 constituted a sufficient note or memorandum of the earlier guarantee to satisfy s 4 of the Statute of Frauds.[90]
[90] ts 445.
It may be noted that those two uses of the facsimile involved inquiries of fundamentally different characters. The first of those uses ‑ providing for the use of the facsimile as relevant evidentiary material bearing on an intermediate factual finding ‑ directs attention to Ms McKessar's subjective understanding in writing and sending the facsimile. The second use involves an inquiry of an objective character ‑ to identify the proper construction and effect of the facsimile read in its factual context.

Ground 13 and Ms McKessar's submissions in support of it challenge the first of these uses of the facsimile of 22 May 2009 by the primary judge. There is no challenge to the second use ‑ the judge's conclusion that the facsimile was a sufficient note or memorandum of the oral guarantee to satisfy s 4 of the Statute of Frauds.
Ms McKessar's submissions emphasise her evidence about the facsimile of 22 May 2009, including her evidence that in sending the facsimile she did not intend to give a guarantee and did not understand that she was doing so.[91] For the reasons given in [88] ‑ [90] above, it was well open to the judge to reject Ms McKessar's evidence concerning the facsimile of 22 May 2009.
[91] Appellant's submissions [13.1], appeal ts 4 ‑ 6, 7.
For the reasons in [87] above, the fact that Ms McKessar signed the mortgages itself provides support for the judge's conclusion that Ms McKessar agreed to guarantee Bladebay's debts.
The judge found that:
(1)in writing, in the facsimile of 22 May 2009, the words 'I will … guarantee', Ms McKessar used the word 'will' to express an immediate intention to guarantee[92] and understood what she wrote in the document;[93] and
(2)the terms of the facsimile of 22 May 2009, as so understood and intended by Ms McKessar, provided support for the conclusion that, before 22 May 2009, Ms McKessar had orally offered to Mr Pascoe to guarantee Bladebay's debts.[94]
In effect, the judge found that, in making the statement, 'I will … guarantee', Ms McKessar intended to convey that, having orally agreed to give a guarantee, she was henceforth and so in the future, standing as guarantor of Bladebay's debts. Applying the principles in [56] and [57] above, we are not persuaded that appellable error in that finding has been demonstrated. Having carefully reviewed the record of the trial, bearing in mind the judge's advantage in having seen and heard the witnesses, these findings cannot be said to be glaringly improbable or contrary to compelling inferences. Nor has it been demonstrated by reference to incontrovertible facts or uncontested testimony that these findings are wrong. There is no basis to consider that, in making those findings, the judge failed to use, or misused, her advantage as trial judge. In all the circumstances, bearing in mind the trial judge's advantage in seeing and hearing the witnesses give their evidence, and in receiving the evidence as a whole, there is no proper basis for appellate interference with the judge's findings.
[92] ts 446.
[93] ts 444.
[94] ts 443 - 444, 446.
Consequently, ground 13 is not made out.

Conclusion

For the reasons already given, none of the grounds of appeal is established. Consequently, the appeal must be dismissed.
We would hear from the parties as to the costs of the appeal.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RC
Associate to the Honourable Justice Beech
19 MAY 2021