National Australia Bank Limited v Whitehorse Truck Centres Pty Ltd
[2003] VSC 143
•23 May 2003
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 8092 of 2000
| NATIONAL AUSTRALIA BANK LIMITED | Plaintiff |
| v | |
| WHITEHORSE TRUCK CENTRES PTY LTD | Defendant |
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JUDGE: | Mandie J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 30 April, 1 - 2 May 2003 | |
DATE OF JUDGMENT: | 23 May 2003 | |
CASE MAY BE CITED AS: | National Australia Bank Limited v Whitehorse Truck Centres Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2003] VSC 143 | |
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Banks and Banking – lease finance provided by bank – whether bank approved refund by dealer of discounts and allowances to customer
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Schlicht | Russell Kennedy |
| For the Defendant | Mr D Collins SC with Mr P Connor | Corrs Chambers Westgarth |
HIS HONOUR:
The plaintiff, National Australia Bank Limited (“the NAB” or “the plaintiff”), claims the sum of $316,068 from the defendant, Whitehorse Truck Centres Pty Ltd (“Whitehorse Trucks” or “the defendant”) in the following circumstances.
The NAB purchased six trucks (“the vehicles”) from Whitehorse Trucks for the purpose of leasing them to a new customer, Ordon Pty Ltd (“Ordon”). The total purchase price pursuant to the invoices from Whitehorse Trucks to the NAB was $1,047,298, and that sum was duly paid by the NAB to Whitehorse Trucks on 23 December 1997. However, on the same date, Whitehorse Trucks drew a cheque, payable to Ordon, for the amount now claimed in this proceeding ($316,068), and handed it to Ordon’s representative, one Frank Main (“Mr Main”). The NAB claims that it is entitled to this amount pursuant to its contract with Whitehorse Trucks or alternatively, as damages for common law deceit, or for negligence or as a result of misleading and deceptive conduct in contravention of s.52 of the Trade Practices Act 1974 (Cth).
The contractual cause of action is based upon an alleged implied term that any refund and/or rebate entitlements arising out of the purchase of the vehicles would be paid to the NAB. The other causes of action are in essence based upon an alleged misrepresentation concerning the purchase price of the vehicles, in that the “true purchase price” of the vehicles was $741,230 and not the amount of the invoices, $1,047,298. The difference between these two amounts is the sum claimed.
The factual defence of Whitehorse Trucks, which the parties agreed was the vital issue to be decided in the proceeding, was that the Business Banking Manager of the NAB at its Mornington Branch, one Graham Madders (“Mr Madders”), had orally approved payment to Ordon by Whitehorse Trucks of a substantial amount representing allowances, rebates and the like. Counsel for the plaintiff conceded that, if the defendant proved this oral approval by Mr Madders, as alleged, the NAB’s claim would fail.
Mr Madders had been employed by the NAB since February 1978 and had worked at the Mornington Branch since February 1996. Prior to his position at the Mornington Branch, Mr Madders had had a number of positions with the NAB, including Bank Manager at the Croydon Branch for about 3 years and Business Banking Manager at a branch in St Kilda Road, Melbourne.
In early to mid-December 1997, a client or “contact” known to Mr Madders introduced Mr Main and his wife, Pamela Main (“Mrs Main”) to Mr Madders. Mr Madders learned that Mrs Main was a director of Ordon; that Mr Main, although not a director, was also heavily involved in the operations of Ordon; and that Ordon had recently procured a substantial contract from Visy Board Pty Ltd in Western Australia to provide transport services to that well-known and substantial company. Mr Madders learned that Ordon wished to acquire a number of trucks and vehicles for the purpose of this contract for a price in excess of $1M and desired to obtain lease finance to complete the transaction.
Mr and Mrs Main supplied Mr Madders with various documents in support of their application for lease finance, and Mr Madders had one or more meetings with them at the Mornington Branch of the NAB in or about mid-December 1997.
The documents provided to Mr Madders included the following documents, and I note some of the information contained in them. There was a copy income tax return of Mr Main for the year ended 30 June 1996 showing a loss of $24,061 and a copy income tax return of Mr Main for the year ended 30 June 1997 showing a salary from Linfox Transport Aust. Pty Ltd of $36,009 and a taxable income of $30,714. There was a balance sheet of Ordon as at 30 June 1997 showing a deficiency in working capital of $114,605.24 and net assets of $2,244.76. There was a further balance sheet of Ordon as at 30 November 1997 showing current assets of $251,194.59 and current liabilities of $785,563.96, resulting in a working capital deficiency of $534,369.37. The current assets included “cash on hand” of $150,000 and the current liabilities included numerous loans, an overdraft of $101,542.62 and a loan to “Shareholder No. 1” of $349,471.63. The fixed assets of Ordon were shown as a hotel (which Mr Madders was told had been recently purchased, but was going to be resold) and a property worth $154,924 (which Mr Madders was told was a residential property). The resulting net assets of Ordon as at 30 November 1997 were shown as $23,873.63. A profit and loss statement of the same date showed a net profit from a cartage business of $21,626.87. Needless to say, when Mr Madders performed the usual financial analysis of Ordon’s figures, on behalf of the NAB, the resulting liquidity ratios were very substantially below what the Bank would normally have regarded as appropriate to support an application for finance but, as Mr Madders testified, he placed a great deal of faith in Ordon’s contract with a “blue chip client” (Visy Board).
Further, in cross-examination, Mr Madders said that the information upon which he based his recommendation for finance was not only based upon the meeting with the customer but also upon information obtained from a next-door neighbour who worked for Linfox Transport and who “confirmed the role that Frank Main did have with Linfox Transport, he confirmed the rationale or the reasoning that he left Linfox Transport and that he had negotiated a contract with Visy Board in Western Australia”.
There was also provided to Mr Madders a draft unexecuted agreement issued 17 October 1997 between Ordon and Visy Board Pty Ltd relating to the proposed appointment of Ordon to provide “Logistics Services” to Visy Board. There was a personal resume of Mr Main which showed that he had been employed by Linfox Transport Group from January to October 1997 to take control of its warehouse division. The resume provided details of managerial experience in a number of areas, some connected with transport, and experience operating his own transport company from 1975 to 1979. There was also a detailed business plan in relation to the services to be provided to Visy Board. A chart forming part of the plan showed Mr Main as Managing Director, although in fact he was not a director of Ordon. The plan indicated a commencement date for the services to Visy Board of 2 January 1998 and referred to eight vehicles, including the six the subject of the proposed transaction with Whitehorse Trucks.
Mr Madders was provided with a copy of an executed New Motor Vehicle Agreement For Sale dated 20 November 1997 in relation to four of the vehicles at a price of $134,250 each, showing under the heading “Details of Finance” that the Credit Provider was “to be advised”. He was also provided with an executed Retail Order Form (New and Used Products) for the other two vehicles at a price of $255,149 each. Neither of these documents showed the existence or amount of any deposit, allowance, discount or rebate.
At some stage shortly prior to the granting of finance, Mr Madders was supplied with a copy of a letter from Visy Board to Ordon dated 19 December 1997 confirming that “a contract exists between our two companies”. The letter briefly outlined some aspects of the contract, stated that the start time was 5 January 1998 and that the “signing and exchange of the actual contract can be executed when you arrive here in early January”.
In his evidence, Mr Madders’ recollection of the details of what occurred leading up to the granting of the lease finance was not particularly good. He said that he could remember telephone conversations with Mr Legge (the salesman from Whitehorse Trucks) but could not be specific as to the dates. He identified one conversation with Mr Legge in which he had told Legge that finance had been approved and that he asked Legge for the invoices. He said that he had no more than two or three conversations with Mr Legge.
On or about 20 and 21 December 1997, Mr Madders completed a lengthy written application for a line of credit, which outlined Ordon’s proposed business and the purpose of the finance sought, and which indicated that lease finance for Ordon from the Bank for a further $1M was anticipated in January 1998. The proposal put up by Mr Madders was for lease finance of approximately $1.2M (some vehicles to be purchased from another source were also included) and an overdraft of $100,000 to provide working capital pending receipt of income from Visy Board. The document referred to the financial information provided by Ordon and noted that the current liabilities included $296,000 in loans “which have now been cleared” (although the evidence for the clearing of the loans was apparently non-existent and based simply on what was said by Mr and Mrs Main to Mr Madders). Mr Madders’ document concluded by saying that the proposed finance represented “a major leasing deal for the Mornington Business Banking Centre” and that security would consist of a first registered mortgage debenture over Orden’s assets and undertaking (with an existing debenture to the Commonwealth Bank of Australia to be discharged) together with a guarantee from Mrs Main for $100,000.
Mr Madders’ proposal was approved by the NAB’s Regional Business Manager on 23 December 1997. On the morning of that day, Mr Legge personally delivered to Mr Madders six invoices from Whitehorse Trucks giving particulars of the vehicles and showing the prices to which I have already referred. The lease was then prepared on that same morning and it was executed shortly thereafter. A bank cheque was drawn by the NAB in favour of Whitehorse Trucks for the sum of $1,047,298.
As I have indicated, Mr Legge was the salesman who concluded the original deal with Mr Main. Neither Mr Legge nor Mr Main were called as witnesses, but it is to be inferred from what subsequently happened that it had been arranged between them that Ordon would receive a cheque back from Whitehorse Trucks for certain amounts which turned out to total $316,068 which, as I have said, is the amount claimed in this proceeding. It was subsequently ascertained by a receiver (after Ordon’s business had failed) that this sum was comprised of discounts (totalling $171,068), concessions (totalling $95,168), accessories not provided (totalling $39,832) and a refund of deposits paid by Ordon (totalling $10,000).
In the afternoon of 23 December 1997, Mr Main arrived at the premises of Whitehorse Trucks with the bank cheque payable to Whitehorse Trucks in the sum of $1,047,298 which he had obtained from the NAB. In order to obtain delivery of the six vehicles, he was to hand the cheque over to the payee, but he required in exchange a cheque from Whitehorse Trucks payable to Ordon in the said sum of $316,068.
The procedure adopted by Whitehorse Trucks in relation to cheques was that a cheque requisition form was filled out, usually by the person who required the cheque, and approved by somebody in authority. Once the cheque requisition was approved, a cheque was drawn and it would be presented to two directors or a director and the secretary, as the necessary authorised signatories.
At some stage on 23 December 1997, whether before or after Mr Main had arrived is not clear, a cheque requisition was prepared by an employee of Whitehorse Trucks requisitioning a cheque for the said sum of $316,068 stating as the reason for the cheque “refund of overpayments”. The requisition was signed by Mr Legge and approved by the then sales director, Mr Hamilton, who also signed it. A box on the cheque requisition form listed the six vehicles by registration number, and the amount of the refund in respect of each vehicle. There were five lines in the box which the evidence shows were blank at that time. It appears that a cheque was prepared in response to the approved requisition and drawn on Whitehorse Trucks’ account at HongkongBank of Australia Limited. The cheque was signed by Ms Josie Madigan (“Ms Madigan”), who was a director, one of the authorised signatories and the office manager for Whitehorse Trucks. It was then necessary to obtain the signature of a second authorised signatory to the cheque. The precise sequence of events thereafter was the subject of evidence from three witnesses who were called by the defendant: Messrs McKnight, Emeny and Hamilton.
In December 1997, Graham Ralph McKnight (“Mr McKnight”) was a director and minor shareholder of Whitehorse Trucks and employed by that company as Used Truck Sales Manager. He retired in July 1999. He was one of the authorised signatories for the account of Whitehorse Trucks with the HongkongBank.
Prior to 23 December 1997, Mr McKnight had no direct involvement in the Ordon transaction but he knew that a transaction was being organised and that vehicles were being processed. William John Emeny (“Mr Emeny”) was the Managing Director of Whitehorse Trucks in 1997 and was another one of the authorised signatories for its bank account. Mr Emeny also had no direct involvement in the Ordon transaction but knew that some business was being done with that company.
According to Mr Emeny, the cheque (together with the cheque requisition) was presented to him for the second cheque signature by Ms Madigan. Mr Emeny said to Ms Madigan that he was not prepared to sign the cheque without further details, which he subsequently obtained from Mr Legge, who told him that there was a financier involved (the NAB) and that the cheque was “a refund of factory allowances and special discounts etc”. Mr Emeny said that he told Mr Legge that to hand those sorts of funds back they would need to get the financier’s approval and that “somehow I involved Graham McKnight who was another director of the company and we had a discussion and I told him that I was not prepared to allow a cheque to be signed off until such time as we spoke to [the financier] and got their approval to release it“.
Mr McKnight believed that the cheque was presented to him for the second signature by Mr Legge although he was “not totally certain”. Mr McKnight testified that he said that he was not prepared to sign the cheque until he had done some research, and that he first went and had a discussion with Mr Emeny, the substance of the discussion being that there was a fair amount of money going back to a customer and that he (McKnight) felt they should check that the Bank knew about it. Mr McKnight then recollected that the cheque had first been presented to Mr Emeny and this accords with Emeny’s own evidence. Mr McKnight recalled that Mr Emeny had said to him that he (Emeny) did not particularly want to sign a cheque, and that it would be better if McKnight did so, as he had more involvement in both new and used trucks [This recollection is slightly different to that of Mr Emeny, who emphasised his own concerns that the Bank should know about the amount going back to the customer rather than simply stating that he wanted someone else to sign the cheque].
Mr McKnight said that he understood from the cheque requisition that it was a return of money to a customer for overpayment for a fairly large number of trucks in one lot. Mr McKnight said that he spoke to the Company Secretary, Mark Davis, and “obtained from him a contact to ring to discuss the cheque”. I am satisfied on the evidence that the “contact” which Mr McKnight obtained from Mr Davis was the name of a person at Corrs Chambers Westgarth (“Corrs”) who acted as solicitors for Whitehorse Trucks. On the other hand, the evidence shows that the telephone number for Mr Madders was obtained by Mr McKnight from Mr Main who “had a letterhead from the Bank with that phone number on it”.
Mr McKnight said that he made two phone calls about the cheque, one to Corrs and one to the NAB at Mornington “to endeavour to find out that it was in order to swap cheques with the customer”. Mr McKnight said that he could not be certain in what order those phone calls were made. However it is clear from records obtained from Telstra, which were not disputed by the parties, that two possibly relevant telephone calls were made by some person or persons from Whitehorse Trucks on 23 December 1997. The first telephone call was made from Whitehorse Trucks to Corrs at 4:21:08pm and this call lasted 5 minutes and 52 seconds, concluding at 4:27:00pm. It was the only telephone call made to Corrs from Whitehorse Trucks on that day. The second telephone call was made from Whitehorse Trucks at 4:35:55pm, approximately 9 minutes after the conclusion of the first call, and it was made to the NAB at Mornington to Mr Madders’ own telephone number at that branch. This call lasted 2 minutes and 26 seconds.
Mr McKnight said that he made the telephone call to the NAB from a general office, from which a number of other offices opened off, and that Messrs Emeny and Hamilton were with him when he made the call. He said that he dialled the phone number that he had been given, and asked whether the person who answered the phone was the Manager and was Mr Madders, and the person answering said that he was. Mr McKnight said that he told Mr Madders that “Mr Ordon” (ie, Mr Main) was there to take delivery of trucks and that he had a large settlement cheque in his hand and that he had requested that Whitehorse Trucks swap cheques with him. He asked Mr Madders whether he had knowledge that there was a large amount of money going back to Ordon in the transaction and that Madders assured him that he was familiar with the deal and that it was in order to swap cheques. Mr McKnight testified that Mr Madders “gave approval to proceed with the swapping of cheques and delivery of the trucks”. Mr McKnight said that he immediately wrote in the box on the cheque requisition form the words which appear under the details of the amounts making up the cheque, namely:
“GRAHAM MADDERS (MANAGER) NAB MORNINGTON CONFIRM KNOWLEDGE THAT CONSIDERABLE VARYING AMOUNTS OF DISCOUNT + REBATES ARE BEING PAID TO ORDON PTY LTD.”
Mr McKnight testified that Mr Madders acknowledged that he knew that a considerable amount of discounts and rebates was being paid back to Ordon.
Mr Emeny testified that he saw Mr McKnight make a telephone call in the board room and heard him ask for Mr Madders, and that he heard McKnight say to the person to whom he was speaking in substance that there was a substantial amount of money to be refunded to Ordon Pty Ltd and that he (McKnight) was seeking the Bank’s approval. Mr Emeny said that the telephone call lasted about 2 or 3 minutes.
John William Hamilton also gave evidence (“Mr Hamilton”). In 1997, he was another director of Whitehorse Trucks, and employed as its Sales Director. He confirmed that he had signed the cheque requisition next to the words “Approved by”, although he could not recall when, but he did recall hearing Mr McKnight ask someone over the telephone whether he agreed to a substantial amount of money being passed over to “Mr Ordon”, a telephone conversation which occurred in the Chief Executive’s Office (of which the board room formed a part).
Mr McKnight also recalled that Mr Emeny had said to him that verbal advice from the Bank might not be sufficient and that Mr McKnight should get confirmation as to whether “we required it in writing or not”. This contrasts with Mr Emeny’s evidence that he told Mr McKnight towards the end of his telephone call with Mr Madders to tell Madders that Whitehorse Trucks wanted written confirmation from the Bank.
Mr McKnight said that Corrs assured him that there was no need to get confirmation in writing and that verbal advice was sufficient. Given that the call to Corrs took place before the call to Mr Madders, it seems unlikely that the question of written confirmation would have been raised with Corrs in this way (if it was raised at all). Mr McKnight said that he made the call to Corrs from his own office without any other person being present, and he could not remember the name of the person to whom he spoke. He said that he had asked for a particular person whose name had been given to him by Mark Davis but that person was not available and another person said to him that “they were filling in for [our] usual contact”. Mr McKnight said that he told the person at Corrs that Whitehorse Trucks were swapping cheques and delivering the goods and the cheque was going back to the customer and “they assured me that it was in order as long as the Bank knew that it was happening”. Mr McKnight said that he did not make a note of this conversation at the time, but later, at Mr Emeny’s suggestion, wrote it down some time later. He wrote on the back of the cheque requisition form that “Peter Jefferson of Corrs advised that provided NAB verbally acknowledge knowledge that cash is being returned to Ordin [sic].” Mr McKnight admitted that the reference to Peter Jefferson was a mistake. The source of the mistake might perhaps be that the name of the solicitor at Corrs who normally advised Whitehorse Trucks was Anita Jeffries,[1] but it is unnecessary to resolve this mystery.
[1]Anita rhymes with Peter, and McKnight, in the course of his oral evidence, confused the names Jeffries and Jefferson.
Mr McKnight finally signed the cheque, the cheques were “exchanged” and the vehicles were delivered to Ordon. Later on, Mr McKnight said that Mr Emeny asked him to put some pressure on Mr Legge to contact the Bank to get written confirmation of Mr Madders’ approval. Such confirmation was never obtained.
In cross-examination, Mr McKnight agreed that he was under “some pressure from the salesman, from the Sales Manager and from the customer” to complete the transaction and that Mr Main was waiting there for his cheque, and holding the cheque for Whitehorse Trucks. When pressed as to details of what occurred on the afternoon of 23 December, Mr McKnight maintained the essence of his account while evincing some difficulty in recalling all of the attendant circumstances. It was put to Mr McKnight by Counsel for the plaintiff that he had telephoned the NAB but was unable to speak to Mr Madders, but Mr McKnight maintained that he did speak to Mr Madders. In other words, it was being suggested to Mr McKnight that although he telephoned the Mornington branch, he had not spoken to Mr Madders. It was not squarely put to Mr McKnight that his notes on the cheque requisition were false or that his evidence concerning his conversation with Mr Madders was false, but this was being suggested to him by this question.
It is convenient now to deal with Mr Madders’ evidence concerning the alleged conversation with Mr McKnight on 23 December 1997, together with certain other aspects of his evidence which might be thought to bear upon the probabilities of that conversation having taken place or not.
Mr Madders testified that neither Mr Main nor anybody else had told him that the purchase price of the trucks was for an amount other than $1,047,298. Mr Madders said that he had no recollection of a telephone conversation with a Mr McKnight on 23 December 1997 or at any time in December 1997. He denied being told by Mr McKnight that there was a refund of a large amount to be paid to Ordon and or that Whitehorse Trucks telephoned him for his approval of such a refund. He said that there was no such conversation. If there had been, he said that the NAB’s documentation would have been totally incorrect, and the amount that the NAB was financing would have been totally incorrect. In cross-examination, Mr Madders maintained that he had no recollection of any such conversation with Mr McKnight and that if it had occurred, he would have remembered it “because it is just so unusual”.
Mr Madders said that he received a telephone call from Mr Main early in the following year asking the Bank to send a letter to Whitehorse Trucks stating, in effect, that, if Ordon traded in equipment to Whitehorse Trucks or had any other dealings with Whitehorse Trucks involving finance institutions, that it was in order for Whitehorse Trucks to pay any resulting amounts into Ordon’s account with the NAB. Mr Madders said that Mr Main did not give any explanation to him as to why he wanted such a letter sent to Whitehorse Trucks.
As a result, Mr Madders prepared, signed and had sent a letter dated 27 February 1998 to Whitehorse Trucks stating that it was the NAB’s understanding that from time to time Ordon might trade in equipment, sell to Whitehorse Trucks direct, negotiate special discounts or rebates, or receive factory bonuses etc. The letter concluded that the NAB had “been requested by Mr Frank Main to advise that the processing of funds in respect of the above may be directed to the following account at this branch…”.
Mr Madders agreed in cross-examination that his said letter contemplated that if some financier other than the NAB entered a transaction with Ordon whereby Ordon was to be entitled to a credit or refund from Whitehorse Trucks, that credit or refund should be paid to the NAB (ie, in order to reduce Ordon’s overdraft with the NAB) and not be paid to the financier involved. It was put to Mr Madders that what he had in contemplation was that Ordon might receive special discounts or rebates or receive factory bonuses in respect of the expected purchase of further vehicles. Mr Madders denied that he had any specific transaction in mind, and professed not to have a good recollection of the reason for the letter, simply reiterating a number of times that he had sent it because Mr Main asked him to send it.
However, it is clear from other evidence that Mr Madders was aware that in 1998 Ordon was seeking to arrange finance with the Commonwealth Bank for the purchase of further trucks. I am satisfied that Mr Madders was contemplating the payment of any refunds connected with such a transaction into Ordon’s account with the NAB instead of payment to the Commonwealth Bank. The significance of this conduct is that it casts doubt upon Mr Madders’ statement that the refund to Ordon in December 1997 was so unusual.
Mr Madders admitted that he had not made any file notes at all in relation to any discussions with representatives of Ordon or of Whitehorse Trucks or with anyone else in relation to this transaction. The absence of any file note of a conversation with Mr McKnight is thus of no assistance to the NAB’s case, whereas it might have been in the case of a bank manager who kept detailed diary notes of the sort which are frequently kept by bank officers handling such matters.
Mr Madders said that he knew that Mr Main was not a director of Ordon, having been told in the meeting with Mr and Mrs Main that Mr Main was not able to hold a position as a director because when he left Linfox he had made an agreement not to go into a competing business or a similar business. Mr Madders said that he did not think about the possible reaction of Linfox to Mr Main managing a company which was conducting a business in competition with it, while subject to a restraint of trade. Mr Madders said that he did not ask for a guarantee from Mr Main because he was not a director. Mr Madders agreed that the finance had been granted to Ordon and the money paid without the Bank having at that stage obtained the discharge of a previous registered mortgage debenture in favour of the Commonwealth Bank of Australia. It was put to Mr Madders that he was generally prepared to do whatever Mr Main asked him to do, to which question Mr Madders assented, saying “I mean within reason”.
Returning to the evidence called by the defendant, I note that Mr McKnight’s evidence differed from the evidence of Mr Emeny (and that of Mr Hamilton) in one respect which was emphasised by Counsel for the plaintiff. Mr Emeny and Mr Hamilton both said, in effect, that they heard Mr McKnight speak to Mr Madders on the telephone in the Whitehorse Trucks board room (which was adjacent to the office of another of the executives of the company) and not in the general office. I think it is probable that the disputed telephone conversation, if it did occur, occurred in the board room and not in the general office. I found Mr Emeny’s description of the circumstances convincing but I do not regard Mr McKnight’s failure to recall this and other details correctly (assuming Mr Emeny’s account to be more accurate) as detracting from his general reliability.
Having seen Mr Madders give evidence, and having considered the whole of the evidence concerning his conduct in relation to this transaction, I am not persuaded that he would have regarded a telephone call in the terms deposed to by Mr McKnight as so unusual. Mr Madders, as he himself said, was very busy in December 1997 and the conversation (if it took place) lasted only a couple of minutes. Counsel for the defendant characterised Mr Madders’ handling of this lease transaction as “cavalier”. That characterisation was in my view correct given Mr Madders’ somewhat imprudent attitude to the granting of finance and the evidence as to his general laxity in relation to the whole transaction.
However, even if I make an initial assumption that it would have been strange for Mr Madders to have had this conversation and not remember it, I am ultimately satisfied on the balance of probabilities that the conversation did take place in the terms deposed to by Mr McKnight. I thought that Mr McKnight was a truthful witness with a reasonable but understandably imperfect recollection of events which had occurred some five and a half years earlier. Mr McKnight’s evidence was broadly corroborated in material respects by the evidence of Mr Emeny and Mr Hamilton. These witnesses also impressed me as honest witnesses. Clearly a telephone call was made from Whitehorse Trucks to Mr Madders on 23 December 1997 and I have concluded that it is improbable that the testimony of the three witnesses was false and that Mr McKnight’s notes on the cheque requisition form were intentionally false. I am satisfied that the conversation occurred and that Mr Madders on behalf of the NAB orally approved of a substantial payment to Ordon, as alleged by the defendant.
In reaching the foregoing conclusion, I have taken into account that the particulars of the relevant conversation between Mr McKnight and Mr Madders which were sub-joined to paragraph 9 of the Amended Defence are at considerable variance with the evidence given by Mr McKnight. However, I note that this variance was not put in cross-examination to Mr McKnight for his explanation. In the end, as I have said, I accept Mr McKnight’s evidence.
It therefore follows, given the concession by Counsel for the plaintiff, that the plaintiff’s claim must fail.
The defendant submitted in the alternative that, even if the conversation was not proved, the plaintiff had failed to make out any of the causes of action pleaded by it. The cause of action in contract depended upon the existence of an implied term that “any refund and/or rebate entitlements arising out of the purchase of the vehicles would be paid to NAB”. I accept the defendant’s submission that there is no basis, according to the well-accepted tests, for the implication of such a term. In relation to the other causes of action based upon a misrepresentation as to the “true purchase price”, it was submitted by the defendant that the pleaded case was not made out on the evidence. It is indeed arguable that those causes of action were not made out having regard to the particular way in which they were pleaded and opened, but it is unnecessary to so decide.
There will be judgment for the defendant with costs including reserved costs.
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