Sancorp Pty Ltd v Westpac Banking Corporation

Re: SANCORP PTY LIMITED; PETER JOHNSON and GAIL JOHNSON
And: WESTPAC BANKING CORPORATION
No. NG 240 of 1987
Fed No. 187
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Foster J.(1)

CATCHWORDS

Trade Practices - misleading and deceptive conduct - banker/customer relationship - whether representations relating to support for loan application to Commonwealth Development Bank - content of representations.

Trade Practices Act 1974, s 52.

HEARING

SYDNEY

#DATE 9:5:1990

Solicitors for the Applicants
until 23 December 1986: Christopher J. Kearney

Counsel for the Applicants
until 16 December 1988: N. Carney.

J. A. McCarthy.

Instructed by: McBride Harle and Company

Appearing for the Applicants
from 16 December 1988: P. Johnson.

(Second Applicant)

Counsel for the Respondent: B. Walker
Instructed by: Westgarth Middletons

ORDER

1. The application be dismissed.

2. The applicants pay the respondent's costs of the proceedings.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

In these proceedings the second and third applicants, who are husband and wife, are the owners of the first applicant, a company acquired by them, in circumstances to which I shall make reference later, for the purpose of conducting a horse stud and training business in premises at Silverdale in New South Wales. The applicants sue the respondent Westpac Banking Corporation ("Westpac") to recover damages in respect of certain representations allegedly made by Mr John Woods, a bank manager in its employ.

The representations are said to have been made in the years 1984 and 1985 and allegedly relate to assistance to be afforded to the applicants by Westpac in the development of the applicants' business. The formulation of these misrepresent- ations has undergone changes in the pleadings. There are some differences between the representations as set out in the original statement of claim filed on 3 June 1987 and the amended statement of claim filed on 30 October 1987, in respect of which the proceedings have been conducted. In the ultimate, the applicants appear to rely for the establishment of their causes of action upon the following representations:-

1) that the respondent would submit and support an application by the applicants to the Commonwealth Development Bank for a loan of $350,000;

2) that the respondent itself would lend to the applicants the sum of $350,000 in the event of the application to the Commonwealth Development Bank being unsuccessful; 3) that the respondent would provide the applicants with a security guarantee of up to $20,000 for Avihay Limited. (This company was a "shelf" company acquired late in 1984 to enable the applicants to conduct as part of their business the syndication of shares in horses); 4) that on Friday 3 January 1985 that the respondent would submit and support a loan application to the Commonwealth Development Bank on behalf of the applicant on forms handed to the second applicant on that day.

The case has presented considerable difficulties. By consent, it was originally commenced before me on the basis that an initial decision would be sought only on the making or otherwise of the representations relied upon. This was in the expectation that the litigation of this question could be disposed of with reasonable speed and that its resolution would, in all probability, lead to the parties disposing of other issues by agreement. This approach, however, proved unfruitful.
The amount of material relating to the making or otherwise of the representations was extensive, including numerous bank diary notes and items of correspondence between the applicants, Westpac and third parties. There was almost total disagreement between the second applicant, Mr Johnson, who was the main witness on behalf of the applicants, and Mr Woods on all matters bearing upon the alleged representations. This resulted in extensive cross-examination. Moreover, it became clear that the splitting of issues in the case in the way originally embarked upon was likely to be quite unsatisfactory. It became obvious that unless the issues of reliance and causation of damage were also litigated as preliminary issues, a large amount of court time could be expended without the achievement of a finding which could be determinative of the question of liability. Ultimately the parties agreed that those issues should also be before the court, leaving quantification of loss, in the event of the applicants being successful, as the only outstanding issue.
For a substantial part of the proceedings, the applicants were without legal representation, the case being conducted on their behalf by the second applicant. A considerable amount of time was wasted in attempts to impugn certain diary entries made by Mr Woods on the basis that they had been made out of date sequence with a view to misrepresenting conversations between himself and the second applicant after problems had arisen. The court was prevailed upon by the second applicant to permit certain documents to be submitted to a handwriting expert. The result of so doing was the withdrawal of these allegations. It is also regrettable that certain significant documents, to which reference will be made later, were the subject of late discovery by the respondent. Had they been discovered at the appropriate time, there would undoubtedly have been some significant differences in the cross-examination of Mr Woods.
To a very large extent the decision of this case is dependent upon the evaluation of the evidence of Mr Johnson and Mr Woods. Neither can be described as having been particularly satisfactory witnesses. Mr Johnson clearly has a background in the insurance assessing industry, in which the giving of evidence in court is often a requirement. He appeared to me to be an experienced witness, quite capable of committing the detail of his testimony to memory and presenting it in a manner calculated to produce a positive response on the part of a tribunal of fact. It was impossible to avoid the impression that a great deal of his evidence in chief was carefully rehearsed and equally carefully presented. He clearly had the capacity, innate or learned or both, to give effective testimony. He also had a very clear interest in the outcome of the proceedings. On the other hand, Mr Woods, who is no longer an employee of Westpac, gave the strong impression that he was seeking to hold himself aloof from involvement in the litigation. He evinced an attitude that the allegations made against him were so baseless as barely to require the effort of refutation. He was a somewhat irritating witness who, in a long and difficult case, left an abiding impression that, had he been prepared to concentrate his mind and his recollection, he could have produced more detailed evidence for the assistance of the court.
Moreover, he displayed a disquieting degree of egotism. More than once, he went out of his way to impress upon the court his superior qualities and aptitudes as a bank manager. He spoke in a convincing way of his achievements in the administration of the new Westpac branch at Lawson of which he was the first manager. He claimed a strict adherence to the bank's rules as to the making of diary notes of interviews with customers, and the consequent reliability of those notes. He claimed that he was unusually efficient in his first managerial post and that his efficiency received commendation from his superiors. As it ultimately appeared, when the relevant Westpac documents referred to above were produced, his superiors were less than enthusiastic about his performance. The first routine report made on his administration of the branch, to which reference will be made later, cast doubt not only on his claims as to his managerial skills at that time but also on the precision and promptness of the records that he kept. This material was introduced into the case after Mr Woods had been released as a witness. Accordingly he could not be questioned in relation to it, and the court is left in the situation of having to evaluate the evidence without the assistance of any answers he might have given.
On the other hand, there can be no doubt about the deficiencies of the second applicant as a witness and as to problems inherent in his testimony. Apart from matters already mentioned, which require caution in acceptance of his testimony, there are clear indications of his willingness to deal lightly with the truth both in and out of court when to do so was to his advantage. I shall have occasion to refer to examples of this in the course of giving these reasons.
I turn to a review of the facts and, where appropriate, a discussion of competing versions in the evidence.
In October 1981 the second and third applicants purchased a block of land: Lot 2 Silverdale Road, Silverdale. It had an area of approximately twenty acres and was partly developed, having on it a dam and an orchard. It was purchased with considerable financial assistance from Mrs Johnson's father, Mr Ian Hocking, who advanced money on the security of a first mortgage over it. The second and third applicants intended from the outset further to develop the property into a horse stud and training facility.
The second applicant was, at that stage, working in a partnership as an insurance loss assessor. I am satisfied that he intended to use income gained from this business to assist in the development of the horse stud. It does not appear that the second and third applicants had any capital available for the project. Apart from the money borrowed to acquire the real estate, they were obviously in need of further funds for the development of the property, construction of necessary sheds, stables, yards and the like and also the acquisition of suitable livestock. No precise plan appears from the evidence; it seems clear that the second applicant intended to use what money he could make available from his share in the income of the assessing business for the purchase of materials, and to perform, to a large extent, the necessary building work by utilising his own labour. Between October 1981 and April 1983 he effected a number of improvements to the land. He built five stables, yards and new fences. There is no reason to doubt that he had a very definite ambition to establish a horse stud and training business and that he had the necessary basic abilities to do so.
The property adjoined Lot 1 Silverdale Road. This property belonged to a Mrs Hinton who was not putting it to any use. The second applicant entered into an agreement with this lady for the immediate lease and ultimate purchase of the property in March to June 1984. He obviously had a long range plan of incorporating Lot 1 into the stud business. It appears that he had the intention of building a training track on the property to be used in conjunction with the buildings being erected on Lot 2. He agreed on an eventual purchase price of $100,000. It is clear that this price could not be paid without recourse to further extensive borrowings.
It seems quite clear that Mr Johnson had preliminary discussions with his accountant, Mr Chambers, as to the eventual financing of the project. Mr Chambers had advised that an approach should be made to the Primary Industry Bank of Australia Limited ("the Primary Industry Bank"), and had made some preliminary inquiries in this regard. Although the evidence is fairly scant, it appears that that particular bank would at least contemplate the lending of necessary capital to projects such as that envisaged by the second applicant. Such loans would, however, only be made available in the event that a potential borrower was unable to obtain such a loan through his own trading bank. Although no firm program had been laid down, it is tolerably clear that the second applicant had in mind that, all things being equal, he might be in a position to seek such a loan in the period March to June 1984. He would need a loan to enable the acquisition of the adjoining Lot 1, complete necessary capital works and provide some working capital.
It appears that after moving to Silverdale in 1981 Mr and Mrs Johnson opened a joint personal account at the Penrith branch of the respondent. In October/November 1981 an account was opened in the name of the company owning the assessing business, Omega Assessing and Investigations Pty Limited. In November 1982 a further account was opened for the purpose of the horse stud business; it was named the Zarlee Stud account. It is clear that these accounts were not conducted in a particularly satisfactory manner. They were frequently overdrawn in small amounts. Fairly frequent requests that they be brought into order were made in letters from the branch assistant managers and accountants. Requests for small overdrafts were not uncommonly refused because of the state of the accounts.
In August 1983 there was a dispute between Mr Johnson and his partner in the assessing business. This led to the immediate termination of the business relationship. Mr Johnson repeatedly asserted in his evidence that he had outstanding claims against his previous partner for monies owing upon the termination of the business. These claims were very frequently referred to in statements made by him to the respondent over the next two years when attempts were made by him to obtain increased financial assistance. The immediate result of the dispute was, however, that the bank account in the name of Omega Assessing and Investigations Pty Limited was closed and the business ceased to be a source of income. It appears that Mr Johnson made the decision then, or shortly thereafter, that he would endeavour to set himself up in a new business as a loss assessor. He subsequently did so under the name of Peter Johnson and Associates. In the meantime, he sought financial assistance from the respondent in relation to the continued development of the stud property.
It was at this time that he made his first substantial contact with Mr John Woods, who was then the assistant manager of the respondent's Penrith branch. According to Mr Johnson it was the commencement of a close, friendly banker-customer relationship marked by great personal interest and enthusiasm on the part of Mr Woods for the applicants' horse stud project. Mr Woods, in his evidence, presented an entirely different view of the relationship. He portrayed himself as being , in effect, pestered over a long period of time by Mr Johnson, yielding on occasions to requests for further accommodation but, for the most part, returning cheques because of the unsatisfactory state of the accounts and because of Mr Johnson's repeated failure to keep promises to bank funds to bring the accounts into acceptable limits. Indeed, one might be pardoned for thinking that each man, in his evidence, was referring to a relationship with someone totally different. It has been necessary for the court to undertake the extremely difficult task of evaluating the evidence of these two men in circumstances where it is almost totally in conflict. In this evaluation, the impressions made by them in the giving of their evidence in the witness box, over protracted periods of time, has played a most significant part.
The two men are at odds in their evidence even as to the early stages of their banker-customer relationship. When the dispute arose in the assessing business and income ceased from that source, Mr Johnson made an appointment to see Mr Woods to explain the problem and seek assistance. The meeting took place on 5 September 1983 at the Westpac branch in Penrith. It is convenient to refer, in the first place, to the evidence given by Mr Johnson as to the course of events up to March 1984. He said that he received a very sympathetic hearing from Mr Woods as to his difficulties. He told him of his financial embarrassment resulting from the ending of the assessing business and its effect upon the financing of his horse stud project. He indicated that he needed overdraft facilities to buy material currently needed for construction projects at the premises. The cost of the materials would be $20,000. He would provide his own labour.
It was agreed that this sum would be provided on the security of a second mortgage over Lot 2 Silverdale Road. Mr Woods indicated that he would have to carry out a valuation of the property and that he would require a letter from Mr Johnson's father-in-law confirming that there would be no objection to the registration of a second mortgage. Mr Johnson said that he further explained to Mr Woods that he had the intention of purchasing the adjoining property Lot 1 and of including it in the horse stud development. He further indicated that it was his wish to submit an application to the Primary Industry Bank sometime in the March to June period of 1984 in order finally to fund the development. He asked Mr Woods whether he would help in this application and was told that there would be no problem.
Mr Woods inspected the property shortly thereafter, on 9 September 1983. He made an examination of all the improvements that were currently in position, including five stables that Mr Johnson had already constructed. He was also shown the position of Lot 1, leased from Mrs Hinton.
The second mortgage arrangements were put in place, the advances made, and the money used for the purchase of the required materials. In October 1983 Mr Johnson suffered some ill health as a result of which he was required to hire additional labour to finish the work on the property. He had commenced his new assessing business, Peter Johnson and Associates, and work fell behind because of his indisposition. In December 1983 he explained these problems to Mr Woods who was again sympathetic. He was granted a further $5,000 overdraft in relation to the Zarlee Stud account and a further $2,000 in relation to the account of Peter Johnson and Associates. An account in this name had in fact been opened on October 31 with an initial deposit of $20. The further loans were to be repaid by 15 December 1983. Mr Woods's diary note indicates that Mr Johnson had advised that he was expecting to receive an amount of $31031.75, presumably in the near future. There was also indication given that the assessing business was becoming "extremely busy". In the late December and January period, Mr Johnson had conversations with bank officers other than Mr Woods, which conversations are the subject of diary notes to which I shall make reference shortly. Mr Johnson saw Mr Woods again on 2 February, 1984. He was, by then, in need of further assistance. Mr Woods inspected the property again on 10 February, 1984 to view the work that had been done.
Mr Johnson says that Mr Woods commented most favourably on the extent of the development and the quality of the workmanship. He further says that he spent some time with Mr Woods in pointing out the features of the adjoining Lot 1. An examination of that area was made by the use of Mr Johnson's car. He drove Mr Woods to a vantage point from which it was possible to see the two properties and he also took him into the adjoining property so that he could explain his ideas for its development. There was discussion as to the value of the lands, Mr Woods agreeing that it was worth considerably more than Mr Johnson was able to purchase it for. There was discussion as to the submission of the application to the Primary Industry Bank in the next month or two. Mr Woods advised that it would be better to make an application to the Commonwealth Development Bank which would be a more suitable institution. He said that such an application should be made at the end of 1984 or early 1985 and that the bank would help in the meantime with "increased overdraft facilities". He further said that he would support the application to the Commonwealth Development Bank. Mr Johnson said that he accepted this advice.

Mr Johnson then gave evidence that by March 1984 further finance was required for the business. The debt to the bank had increased well beyond agreed limits and was approximately $40,000 over the various accounts. He said that, after discussions with his father-in-law, Mr Ian Hocking, he approached John Woods with a proposal that Mr Hocking would accept a discharge of the first mortgage to be effected by a private arrangement, and that the bank should then become first mortgagee, with an increase in the overdraft level to $55,000. The accounts were to be rearranged to enable the overdraft to be attributed to the Zarlee Stud account only. Mr Woods agreed to this proposition and affirmed orally that it was still his intention to make the subsequent application to the Commonwealth Development Bank.
The first applicant, Sancorp Pty Limited, had been acquired earlier in 1983. It was used as a vehicle for the new arrangements. It traded as both Zarlee Stud and also as Peter Johnson and Associates, becoming the owner of those businesses and the mortgagor of Lot 2. The various requests that formed the basis for these new arrangement were set out in a formal letter from the second and third applicants to Mr Woods, dated 10 April 1984 (exhibit B).
Mr Johnson's version of the rather smooth path to the achievement of these results must be contrasted with the respondent's version as given by Mr Woods and as appears from bank diary notes covering the period. As already indicated, Mr Woods's diary notes in respect of this and subsequent periods play a considerable part in this case. In the period in question not all the diary notes were diary notes of Mr Woods. As part of the applicants' case, an attack has been made on the reliability of Mr Woods's diary notes and indeed, in some instances, as to their authenticity, it being suggested that they were brought into existence after the occurrence of significant events in order to lend credence to Mr Woods's version. In evaluating these quite serious allegations, it is instructive to have regard to the diary notes of other bank officers, of whom such allegations are not and necessarily could not be made.
Mr Woods's diary notes of 5 and 9 September indicate that he was less than enthusiastic in the first instance on the subject of the loan of $20,000. However, after the inspection he was prepared to assist . It is to be noted that Mr Woods's diary note of 9 September refers to clearance of the debt at the conclusion of the nine months period as coming "from sale of Mazda RX 7 and income". The Mazda vehicle was referred to in the diary note of the conversation with Mr Johnson of 5 September 1983 as being one of the business's assets. It was valued at $15,000. It is obvious that, in the case of a short term loan, the source of repayment is a matter of concern to a bank. This is made clear in a number of portions of Mr Woods's evidence. He gave evidence, fairly obviously on the basis only of this diary note, that the sale of the Mazda was indicated as being at least the probable source of repayment of this loan. Mr Johnson's evidence indicates that the vehicle was simply not available for sale, as it was the subject of a lease agreement. It is nevertheless, undoubtedly, listed as an asset in what appears to be no more than a diaried record of the conversation between Mr Johnson and Mr Woods when Mr Johnson approached the bank for assistance on 5 September 1983. In the letter of 10 April (exhibit B) a motor vehicle, otherwise undescribed, is listed as an asset with a value of $18,000. It seems at least likely that, despite its unavailability, the vehicle was put forward by Mr Johnson to be taken into account in determining the availability of the loan. This is consistent with Mr Johnson's tendency to mishandle the truth in his dealing with the respondent, as evidenced by incidents to be referred to later.
It is clear that very shortly after the making of the loan of $20,000, the applicants' accounts exceeded agreed limits, leading to the request for additional finance made to Mr Woods on 5 December. It would appear from the diary note of that day that Mr Johnson indicated that he was expecting to receive funds of $31,031.75 and that he produced "evidence of income". This was said to lead to the approval of the loan application for an additional $7,000 by Mr Woods. Mr Johnson says that he had no such conversation with Mr Woods. This assertion is in general keeping with a number of similar assertions made in respect of Mr Woods' diary notes as time went by.
The next diary note, 23 December 1983, records a conversation with a different bank officer. It reports that Mr Johnson said that "they will be depositing approximately $12,000 in the next week, which will clear a large amount of the debts". Mr Johnson denies saying anything about depositing $12,000.
The next diary note, 6 January 1984, records a conversation with another bank officer. It apparently occurred in the context that a number of Mr Johnson's cheques had been returned "present again" or "return to drawer". The note reads, in part: "Mr Johnson called regarding debts in the accounts. Debts have not cleared as expected. He is owed approximately $29,000 and most of this money could come in any day. He is confident he will be able to deposit at least $7,000 next week". It is clear that the $29,000 referred to included an amount of $15,000 from Omega Assessing and Investigations Pty Limited. It is made very plain in other parts of the evidence that this sum or some similar amount was the amount in litigation between Mr Johnson and his ex-partner. It could certainly not have been described as something that "could come in any day". The note also relates that Mr Johnson is to receive $1,000 per week nett starting at the end of January for the thirty-odd horses he will be looking after in his horse stud. There would appear to have been no basis upon which this statement could have been made at that time. Mr Johnson's response to this particular diary note, not one of Mr Woods, was to say in evidence that he had no recollection of the occasion.
After another period in which cheques were returned, a further meeting is recorded as occurring on 17 January between Mr Johnson and another bank officer, identified as a Mr Napier. By this time, the advance of $7,000 repayable at the end of December had not been repaid and the amount owing had increased to $14,000. Mr Napier, according to the note, pointed out that this amount would have been even higher if he had not been returning Mr Johnson's cheques. Mr Johnson is recorded as having asserted that he was " still owed about $27,000 and this can come in anytime" and that "income from the Stud will begin soon and will make a big difference to his position". Mr Johnson appears to agree that this conversation took place. This would seem to require that he agree that he advised Mr Napier that the $15,000 in litigation with his partner was still likely to be paid in the near future, something which he himself conceded in other parts of his evidence was not at all likely. The note refers to him having asserted that the assistant manager (Mr Woods) had "okayed him going up to the present debt". Mr Johnson appears to assert that this was so. However, it is not clear from his evidence as to when he asserts this arrangement was entered into.
The bank records indicate that more cheques were returned thereafter and that on 2 February a meeting took place between Mr Johnson and Mr Woods at Mr Woods's request. The note indicates that at this meeting Mr Woods agreed to increase the loan limit on the Zarlee Stud account to $15,000 to clear at the end of March, and the limit on Peter Johnson and Associates to $5,000 to clear at the same time. The note records (inter alia) that "he has cheques floating everywhere...income in sight totalling 23290, $8063 is due within one week. To sell the property development completed and to mop up outstanding cheques we have agreed to assist...we propose calling out and re-inspecting the place and seeing what has in fact been done". I am satisfied that the word "sell" is a typographic error for the word "see".
The next note is again one of Mr Woods. It records a visit to the property for a check valuation on 10 February 1984. The additional development is itemised with the comment: "we wonder if it has not been overcapitalised". The ensuing note of 29 February by Mr Woods records a discussion about the unsatisfactory nature of the accounts and says of Mr Johnson: "he knows no excess". On 16 March a further note records a conversation between Mr Woods and Mr Johnson in which Mr Johnson is alleged to have said that he "has 16,100 due in the next four weeks. Wants us to pay any cheques against funds lodged. Pointed out that account is out of order and unless he rectifies that we can't. Over to him".
The two next diary notes, 27 March and 5 April 1984, record conversations between Mr Johnson and another bank officer. The first deals with a request by Mr Johnson to increase the overdraft by $5,000 to pay dishonoured cheques. It records his advice that he expects to receive funds of about $19,500 in the next two to six weeks. It also refers to a statement by him that "his wife has a 1/4 share in a large grazing property, her share worth $250,000". The note shows that the application was declined and that Mr Johnson stated that he could obtain the $5,000 by way of a personal loan through a finance company. The note of 5 April records a conversation between Mr Johnson and the same bank officer dealing with the proposed discharge of his father-in-law's first mortgage over the property on the basis that "his (Johnson's) wife is selling her share of the family grazing property to her father - expected price about $300,000 of which the $100,000 will be used for the mortgage. Remainder expected in say 3-4 months". The subject of the conversation was a request for an increase in overdraft to a total of $50,000, it being stated that "it is proposed that this $50,000 will be also cleared from the above sale funds". It was further noted that the bank would consider an increase to $50,000 when Mr Johnson produced the title on the discharge of the mortgage and that he would call and discuss the matter with John Woods when he had the discharge.
The next note is dated 13 April. It is by another bank officer. It refers to the increased borrowings to the amount of $55,000, the change of account styling and the proposed new first mortgage security from Sancorp Pty Limited after the clearing of the first mortgage to Mr Hocking. It is noted quite precisely that the term of the new mortgage is "to clear in full 31/12/84 from cash flow and funds from Mrs Johnson's sale of interest in Mungindi property. Her interest said to be worth $350,000". The note also contains a statement of assets and liabilities of the applicants which is fairly clearly taken from material in a letter forwarded by Mr Johnson to Mr Woods on 10 April 1984.
That letter deals with Mrs Johnson's interest in the Mungindi property as follows:

"Gail's two-ninths interest in this property is in the process of being disposed of to her father, Ian D. Hocking. A purchase price has as yet not been ascertained and should be between 290,000 and 400,000...the effective purchase price is being discounted to discharge the current first mortgage on our Silverdale property held by Mr Ian D. Hocking. The sale is effective on 31 March 1984 and the first mortgage is being discharged at the moment. Gail is entitled to profits...up to 31 March 1984 when the balance of purchase monies will be paid to Gail at a mutually agreed time".

This latter statement must be contrasted with the statements already quoted from the notes of 27 March, 5 April and 13 April.
Mr Woods's oral evidence as to the period terminating with the granting by the first applicant of the first mortgage to the respondent with an overdraft limit of $55,000 was fairly vague. He did not purport to have the type of recollection of conversational material claimed by Mr Johnson. He relied upon his notes and those of fellow bank officers. He claimed that his notes were totally reliable in that they were accurate and made shortly after the events recorded. He did, however, positively assert that he made no statement to Mr Johnson that he would assist in relation to any application to the Primary Industry Bank or that he advised Mr Johnson to abandon a proposed application to that bank in March to June 1984 in favour of making an application to the Commonwealth Development Bank at the end of 1984 or early 1985, with the respondent, in the interim, providing assistance by way of overdraft. Indeed, he denied making any representation at any time to Mr Johnson to the effect that he should apply to the Commonwealth Development Bank for a loan for the purpose of developing the property at Silverdale. He asserted that he was clearly of the view that the accommodation provided by the respondent through him was in the nature of bridging finance for a period ending on 31 December 1984 at which time funds would become available through Mrs Johnson from the Mungindi property sale, which would be used to repay the loan. In this regard, it is to be noted, of course, that there is no reference in any of the bank records made by any of the bank officers that the loan was to be repaid at the end of its term by the raising of a substitute loan from the Primary Industry Bank or the Commonwealth Development Bank.
I should add that Mr Woods also firmly denied that he at any time was shown Lot 1 by Mr Johnson or that he went with Mr Johnson in a motor vehicle for the purpose of viewing it or for any other purpose. He knew of its existence but did not have any discussion with Mr Johnson about its value or its potential for use in the proposed horse stud.
It is convenient to arrive at findings as to these matters at this point in my reasons.
In this aspect of the case a lot depends on the view I have formed of the respective personalities of the two men. Mr Woods, as I have already said, seemed, at least at the outset, to be rather holding himself aloof from the case. He was no longer employed by the respondent and seemed somewhat unwilling to concentrate his mind and his recollection upon the evidence given by Mr Johnson. He did little else than assert the accuracy of his notes. I formed the view that his notes must be treated with some reserve. I considered that, quite frequently, they did not purport to record accurately things that were said at meetings between Mr Woods and Mr Johnson. They recorded rather his personal views, honestly held, but not necessarily expressed to Mr Johnson. I considered that he was and is a person of kindly disposition who would seek to avoid hurting the feelings of a fellow human being by criticising him to his face; at least when a satisfactory result could be achieved without doing so. I also formed the view, already expressed, that he was fairly egotistical and liked to see himself in the role of a masterful decision maker whereas, in fact, at least at that stage of his banking carrer, he tended frequently to shy away from potentially unpleasant decisions and situations. He also had a very genuine desire to help people if possible and to hope for the best rather than expect the worst. He was, in short, at that stage, the sort of person that could be imposed upon by someone like Mr Johnson.
Mr Johnson was and is a person of strong personality. He has considerable powers of persuasion as evidenced by the way in which he gave his testimony and conducted the applicants' case after they became deprived of legal representation. He has very considerable self-confidence and an ability to impose his point of view on others. He had, in my view, little difficulty in arousing the sympathies of Mr Woods with his description of the difficulties into which he had been thrust by the collapse of his business partnership. I entertain little doubt that once he had Mr Woods as a visitor to the property he would have sought to use that opportunity to show Mr Woods not only the developments he had already achieved but also the areas which he wished to develop. He had the instincts of the salesman and would have utilised the opportunity to the full. I think that he did take Mr Woods in his car to view Lot 1 and that he also took the opportunity of seeking Mr Woods's assistance in relation to his then intended application to the Primary Industry Bank. He thought, accurately in my view, that he had discovered in Mr Woods a truly sympathetic bank manager and that he was determined to utilise this discovery to the full. I also think it likely that Mr Woods would have wished to help and also to display his own capacities as a bank manager. I think it more likely than not that he expressed the view that the Commonwealth Development Bank would be a more suitable institution for the applicants than the Primary Industry Bank. I think he genuinely held the view, at that point of time, that Mr Johnson was an ambitious and capable entrepeneur worthy of his support. Possibly because of the unfortunate way in which things turned out he has come to forget that he had, in fact, some initial enthusiasm for Mr Johnson's projects.
I am fortified in the view that Mr Woods did proffer some opinion about the desirability of the Commonwealth Development Bank as against the Primary Industry Bank for Mr Johnson's purposes by the evidence of Mr Johnson's accountant, Mr Chambers. For reasons that appear on the transcript, Mr Chambers' evidence on this topic is unfortunately in the form of a statement (exhibit AF). It is, however, clearly a considered document. He says in that statement at paragraph 10: "my understanding was that in accordance with my advice, Mr Johnson was to submit an application for finance to P.I.B.A. for the re-finance, purchase and development of Lots 1 and 2 Silverdale Road, Silverdale in early to mid 1984; however, I was told by Mr Johnson that Mr Woods, the assistant manager at Westpac, Penrith had told Mr Johnson to wait until late 1984 or early 1985 and he would submit and support an application to the C.D.B. on Mr Johnson's behalf".
This piece of evidence operates to dispel the suggestion that Mr Johnson's version of this part of the case is one that could probably be described as a recent fabrication. I have come to the conclusion, on a fairly fine balance of probabilities, that I should accept that version, at least in its broad outlines. I consider that something was said by Mr Woods to Mr Johnson, on the occasion of the visits to the Silverdale property, to the effect that he would be better served if he made a later application to the Commonwealth Development Bank, and that this could be the subject of support by Mr Woods. However, it must be emphasised that this finding does not do much to advance the applicants' case. The representation that I thus find to have been made was not a representation of fact; it was one of opinion only and there is nothing, in my view, which indicates to my satisfaction that it was not an opinion genuinely held. Moreover, insofar as it might be said to contain a promise that Mr Woods would render support in the future, there was nothing, in my view, to indicate that the promise was not genuine or, at that stage, made on unreasonable grounds. Mr Johnson had undoubtedly put work into the property and had improved its value and usability as a stud by adding buildings which displayed good workmanship. He, no doubt, demonstrated determination and ability and he had good connections insofar as his father-in-law was a person of obvious substance.
I should add that my acceptance of the making of these representations does not amount to a finding that they received any particular emphasis at the time. I am satisfied on the basis of the diary notes which I have set out at some length that Mr Johnson stated, not only to Mr Woods but also to other bank officers, that monies would be forthcoming in a reasonably short space of time from the sale of Mrs Johnson's interest in the property at Mungindi. I am quite satisfied that the substantial interest in this property was mentioned quite frequently by Mr Johnson not only as a means of establishing his and his wife's substantial financial position and general credit-worthiness, but also to indicate a source of repayment of any loans that the bank might make. I am quite confident that, in conversation, Mr Johnson sought to impress and was fairly loose in his promises, not only at this period but also in all later conversations with bank officers, including Mr Woods. In written communications, such as exhibit B, he was careful to be more guarded in his statements. Evidence in the case satisfies me that he was at this point of time well aware that no monies would be forthcoming to his wife until the expiration of at least three or four years. It is to be noted that he did not say this in the passage quoted from exhibit 10. I consider that this passage is an example of what he later, in cross-examination, acknowledged to be the truth, namely that he adopted the attitude that what the respondent did not know would not hurt it.

I have also come to the conclusion that Mr Woods was at times over-anxious to please and given to making ill-considered spontaneous statements in a general flow of conversation, which he later did not fully recollect. I am satisfied that the remarks as to future support in relation to an application to the Commonwealth Development Bank in lieu of an application to the Primary Industry Bank, although made, did not, at the time, have the significance which Mr Johnson later sought to attribute to them.
I turn to consider the further representation allegedly made at this time by Mr Woods and relied upon by Mr Johnson. This was to the effect that if the Commonwealth Development Bank refused a loan to Mr Johnson of $350,000, that the respondent itself would advance the monies. It is said, by Mr Johnson, that this representation was made in the context of a further application by him for an increase in the existing overdraft arrangements from $55,000 to $70,000. Once again the evidence of the two men is in great conflict.
Mr Johnson says that on 25 May 1984 he had a crucial conversation with Mr Woods. He fixes the date by reference to the fact that, during the same conversation, Mr Woods suggested that he join the Westpac Superannuation Investment Fund. He made an initial payment to the fund and received a dated receipt from Mr Woods. Prior to this occurring, however, he had approached Mr Woods about an increase in the overdraft on the Zarlee Stud account to $70,000. The new mortgage documents, by which the respondent became the first mortgagee, were soon to be signed. Mr Johnson was, according to his evidence, seeking an increase of $15,000 in the overdraft, to be secured by the mortgage. It appears that he wished to purchase additional horses for the stud. According to him, he encountered no difficulty from Mr Woods who said that the additional overdraft would be in order once the new mortgage documents were signed. Mr Johnson says the conversation then turned to the Commonwealth Development Bank application to be made at the end of 1984 or early 1985. He says that he asked Mr Woods for "confirmation of his intention to submit the application". Mr Woods said that it was still his intention to do so and that he would fully support it. He then went on to give details of the intended application. He said it would be for $350,000, being $100,000 to cover the overdraft facility for the Sancorp-Zarlee stud account as at December 1984, it being anticipated that $30,000 in addition to the $70,000 would be required by that time; a further $100,000 would be required to purchase Lot 1 Silverdale Road, another $100,000 to develop that land and finally a further $50,000 for operating costs. It appears that it was claimed by Mr Johnson that these figures resulted from Mr Woods' own thinking about what the applicants' needs would be.
Mr Johnson, however, claims that he was wary about accepting this suggestion. He testified that he said to Mr Woods that "whilst I appreciated everything that he had said, that he could not guarantee this application, the success of this application at that time with the Commonwealth Development Bank". It is then claimed that Mr Woods allayed Mr Johnson's concerns by telling him that he had dealt with the Commonwealth Development Bank previously and that he believed the application, with his support, would be successful. He went on to say that the worst situation he could envisage that the Commonwealth Development Bank might require Westpac to pick up a small portion of the loan. Mr Johnson, however, persisted in expressing doubt. He said to Mr Woods "well you cannot guarantee it". Then Mr Woods said that if the Commonwealth Development Bank did not lend the money that Westpac would itself make the loan. Thereafter the conversation turned to the more mundane question of Mr Johnson's entering the Westpac Superannuation Fund.
Mr Woods denies any conversation to this effect. He says that at this particular time he was engaged almost full time in obtaining members for the Westpac Superannuation Fund. He knew that he was shortly to be appointed as manager of a new branch at Lawson and that his assistant managerial function was being largely performed by another bank officer at Penrith. He did not really have any significant use of an office in the branch. The conversation with Mr Johnson took place at the bank's public counter and related almost entirely to Mr Johnson's joining the superannuation fund. He was prepared to agree that Mr Johnson would have spoken about the stud as this was an almost invariable topic of conversation, but that nothing was said of any significance.
Mr Johnson says that he called on the bank at Penrith on 31 May for the purpose of signing the mortgage documents. He was accompanied by his wife. He had a further conversation with Mr Woods who confirmed that the increase in overdraft would be in order once the mortgage documents were signed.
He says that Mr Woods went on holidays from 5:00pm on Friday 1 June. During the next week Mr Johnson received a letter dated 7 June 1984 from Mr Kerr, the assistant relieving manager at the Penrith branch, advising that the increase of overdraft facilities from $55,000 to $70,000 on the Zarlee Stud account had been declined. The letter went on to say that "the Bank is unwilling to grant any further extensions at the moment until business is in full production and the forecasted results are more evident". Mr Johnson says that on receipt of this letter he rang Mr Woods at his home to complain about it. He says that Mr Woods told him that he (Mr Woods) could not understand what they were doing but that "since he was on annual leave he could not ring the branch and tell the relieving manager or relieving assistant manager how to do his job" and that Mr Johnson "would have to hang on until he returned". Mr Johnson says that in this conversation Mr Woods suggested that he and Mr Johnson should have lunch in the next few days to discuss the situation. Mr Johnson says that the two men had lunch at a Chinese restaurant approximately three doors downs from the bank's branch in High Street Penrith. The letter of 7 June was discussed. Mr Woods said there was nothing he could do about it until he got back and that in the mean time Mr Johnson would have to battle on. Mr Woods was to return to the branch at the beginning of July.
Mr Johnson then asserts that about a week later he received a phone call at his home from Mr Woods in which Mr Woods informed him that he would not in fact be returning to Penrith but that he had been promoted to the position of manager at a new branch of the bank to be opened at Lawson. He suggested that Mr Johnson should transfer all his accounts to the Lawson branch where Mr Woods "could give me every possible assistance". The branch was to open on 2 July. There was to be an opening function commencing at 9:00 to 9:30 a.m. to which Mr Woods invited Mr and Mrs Johnson. The regional manager would be present and the Johnsons could open their new accounts that morning. The Johnsons in fact attended the opening. Certain events occurred at that time to which I shall make reference later. Before doing so, I find it convenient to refer to Mr Woods's evidence as to these alleged events from 31 May and to certain documents.
Mr Woods denies any agreement as to an increase of the overdraft limit beyond $55,000 before the meeting at Lawson on 2 July. He does not appear to have any recollection of the meeting on 31 May, although he does not deny that one took place. The contents of exhibit D satisfy me that there was such a meeting. Exhibit D is a letter dated 1 June 1984 written by Mr Johnson to Mr Woods. It commences with the words "Further to our conversation on Thursday 31 May 1984 concerning the new limits on Zarlee Stud's Account". It then sets out in detail information as to the applicants' then financial position and anticipated income from the assessing business and from the operation of the stud. It is clearly a letter written in support of an application for the increased loan, although the figure of $70,000, as being the increased limit, is not mentioned in it. Mr Johnson gave evidence that the letter was written at Mr Woods's suggestion. Indeed the impression given by Mr Johnson's evidence in relation to this letter and similar letters setting out the current financial position and anticipated income of the various businesses was that they were written at Mr Woods's request so that he might have something on file to justify advances to Mr Johnson's businesses which were already agreed upon. It was virtually suggested that the two men had a conspiratorial understanding: that Mr Woods was not interested in the information in the letter; he was interested only in having the letter.
Although the letter satisfies me that there was a meeting on 31 May, at which it would appear that the mortgage documents were signed and at which there was some discussion as to an increase in the overdraft limit to $70,000, I remain unsatisfied that Mr Woods gave any indication that the extra limit was agreed to or approved. It may be noted that there was a clear issue as to this between the parties which was apparent at an early stage of the case. It is clear that Mrs Johnson was present at this meeting. She was not called to support Mr Johnson's version.
Perhaps more significantly, Mr Woods's documented response to the application for the increased limit, supported by the letter of 1 June 1984 clearly indicates that he was not prepared to approve the new limit. This appears from his diary note of 4 June 1984. This diary note is not above criticism. It commences with the words "called to sign documentation for O/D $55,000. Also requested increase to $70,000". Insofar as this might suggest that the signing and request took place on 4 June, the note is clearly wrong. Both took place on 31 May and were followed by the letter of 1 June (exhibit D). However, I feel that it is quite likely that the diary note was made on 4 June, the date it bears, but records in somewhat ambiguous language the prior events of 31 May. It is, most probably, an example of the not uncommon departure of Mr Woods from the strict rule which he espoused of making immediate diary notes of significant events. It is clear that references in this note to the present and future financial position of Zarlee Stud find their origin in the letter of 1 June. There are two things of considerable significance in the note. Firstly it states "however clearance is still to come from Mungindi. We are not keen and feel he now has to prove himself". This is in accordance with diary notes already referred to, some of which were not brought into existence by Mr Woods. I am satisfied that Mr Woods and the other bank officers with whom Mr Johnson had been dealing had in mind, as a result of conversations with Mr Johnson, that in the short term the amounts being advanced for the development of Zarlee Stud would be repaid from monies to come to the applicants from the sale of Mrs Johnson's interest in the Mungindi property to her father. This, of course, was not necessarily inconsistent with the long-term development of the property being financed by a loan from a bank. However, I am satisfied that Mr Woods was looking to clearance by the end of the year of the increasing overdraft borrowings from the proceeds of that sale.
The second significant feature of the diary note is that Mr Woods records his decision as "declined" and leaves an instruction to his assistant to write to the applicants advising them of this fact, with an indication that the bank "would like to see venture in full production before any further extensions are granted". It is to be noted that the bank's letter of 7 June, sent by Mr Kerr, was in these terms.
Whatever criticism may be made of Mr Woods's handling of the banker-customer relationship with the applicants, it cannot, in my view, extend to asserting that he was capable of making a firm agreement to increase an overdraft limit from $55,000 to $70,000 on 31 May and then, without further reference to the applicants, instruct a subordinate to decline it on his behalf. That would have been a cruel thing to do, something quite alien to my view of Mr Woods's nature. At most, he may have been encouraging on 31 May. I am quite satisfied that, contrary to Mr Johnson's evidence, he made no firm commitment, but only sought a written application with supporting information.
What of the applicants' assertion as to the telephone calls and the lunch? Mr Woods denied that these events occurred. He also asserted that his move from the Penrith branch to the managership of the new Lawson branch was a matter of some secrecy and would not have been divulged by him to Mr Johnson. He seemed to depart somewhat from this extreme position later in his evidence, when he conceded that he was proud of the promotion and would possibly have spoken of it. I think that Mr Johnson, as I have already indicated, had formed the view that Mr Woods was sympathetic to his project and was generally capable of being persuaded, in a face-to-face situation, to render assistance. Even in the absence of any firm prior commitment to increase the overdraft, Mr Johnson, in the circumstances, would have felt that the letter of refusal had not emanated from any action on the part of Mr Woods and that, consequently, Mr Woods might well be induced to reverse the decision of a relieving manager. I consider that Mr Johnson had formed, as a result of things said in conversation by Mr Woods, the view that Mr Woods could exercise some overriding influence in the bank. I am not persuaded, however, that Mr Johnson truly accepted at any stage that Mr Woods could wield the powers of decision later ascribed to him in the applicants' evidence. It is likely, in my view, that Mr Johnson did contact Mr Woods by telephone at his home upon receipt of the letter of 7 June. I am satisfied that it is just the sort of thing he would have done. I also consider that by this time the two men had developed some rapport, although not to the extent assumed by Mr Johnson.
It seems clear enough that they had had lunch together on a previous occasion in what was described as a French restaurant in Penrith. Mr Woods remembered that occasion, although he did not accept that the Chinese restaurant lunch occurred. I think that Mr Woods was, at that stage, attracted to the applicants' stud project to a degree not reflected in the diary notes and had, so far as was reasonable, a desire to assist in its development. He repeatedly referred, in his evidence, to Mr Johnson by his first name. I feel confident that they were on first name terms in June 1984. I have come to the view, not without some hesitation , that the lunch in fact took place and that Mr Woods, as a result of Mr Johnson's blandishments, was probably forming the view that he might reconsider the decision as to the overdraft increase. I consider, also, that he had had a conversation with Mr Johnson's father-in-law, Mr Hocking, at the time of the discharge of Mr Hocking's mortgage and had been requested by him to assist his daughter and son-in-law as far as possible. Mr Woods said he had had such a conversation. Yet no evidence was called in denial.
I find, not without some hesitation, that Mr Woods did suggest that Mr Johnson transfer the accounts to Lawson where Mr Woods might be able to assist him. I am not satisfied, however, that anything in the nature of a positive promise or guarantee of unconditional assistance was given then or at any other time. Also, I am not satisfied that a definite invitation was issued to the applicants to attend the opening of the bank branch at Lawson, although the time and place was probably mentioned in conversation. I consider that Mr Johnson's attendance at the opening was simply an example of his readiness to take advantage of Mr Woods's sympathetic nature. Moreover, at that point of time, Mr Woods might well have considered that Mr Johnson had worthwhile prospects and was a reasonable candidate for assistance. He had demonstrated an ability and willingness to work hard in the development of his stud project; he had had a financial setback with the breakup of the loss-assessing partnership, but was, according to him, in the process of re-establishing himself in that industry in his own business. A bank diary entry indicates that he was known to be employing a person who was also a customer of the bank and there was, if a reasonably optimistic view were taken, reason to expect that he would earn an increasing income and acquire an ability to repay the overdraft accommodation within the stipulated period. If this were not so, there was always the money to come from the sale of the country property which could be utilised for this purpose. I think it very likely that the view which Mr Woods later formed of Mr Johnson has coloured and distorted his recollection of these earlier events.
I have spent some time in discussing events leading up to the transferring of the banker-customer relationship between the applicants and respondent to the applicant's branch at Lawson, as I consider that light is thereby thrown on the alleged representations on which the applicants rely. I have already indicated my satisfaction that Mr Woods said that he would submit and support an application to the Commonwealth Development Bank and that this was a preferable course to the making by the applicants of their previously intended application to the Primary Industry Bank. I consider that, at the time of the applicants transferring the accounts to Lawson, this was still the position although this representation did not have the prominence in the thinking of the applicants which was later attributed to it. Moreover, it is important to note that no case has ever been made or sought to be made on behalf of the applicants that, had it not been for this representation, they would have proceeded with an application, through their accountants, to the Primary Industry Bank. No such claim was made in evidence and no evidence was called as to the likelihood or otherwise of such an application having been successful if made. I should add that, although I am of the opinion that the representation was made, I am quite satisfied that it was not made in the absolute terms asserted by the applicants. It was not, I am confident, in any way in the form of a guarantee that come-what-may the application would be made by Mr Woods at the appropriate time; that it would be made whatever the applicants' banking history might prove to be in the intervening period. It would have been nonsensical for Mr Woods to have made any such undertaking and, in my view, it would have been equally nonsensical for the applicants to understand him as doing so.
As to the second main representation, namely that if the Commonwealth Development Bank would not provide a loan of $350,000, the respondent bank would do so, I am satisfied that this representation was not made. It, again, was put as being a representation that the bank would make the loan come-what-may. I am satisfied that this would have been an equally nonsensical proposition. Indeed, I regard Mr Johnson as finally and reluctantly accepting that this was so when questioned about it closely in cross-examination. Moreover, the evidence makes it quite clear that an application to the Commonwealth Development Bank for a development loan could be made only in circumstances where the applicant's ordinary bank had rejected a similar application. It follows that it would have been totally illogical for Mr Woods to have represented that Westpac would make the loan after it had been rejected by the Commonwealth Development Bank. However sympathetic he may have been and however generous in his attitude towards the applicants, he would, quite clearly in my view, never have made any such representation.

Quite apart from these considerations based upon the probabilities of the matter, I formed a very adverse view of this part of Mr Johnson's evidence. I have referred to above, in some detail, the conversation allegedly containing the representation. I formed the view that Mr Johnson's relation of it in his evidence was carefully rehearsed and very suspect. I have given it very careful consideration subsequently against the background of the whole of the case. I reject it totally. I also reject Mr Johnson's evidence that the matter was referred to on subsequent occasions on which Mr Woods confirmed the promise that Westpac would lend the money if the application to the other bank were unsuccessful.
It is necessary to consider the evidence as to subsequent events in order to determine whether a case has been made on the basis of the alleged representation as to the submitting and supporting of the application to the Commonwealth Development Bank. I therefore return to the history of the matter as it appears from the evidence.
Mr and Mrs Johnson in fact appeared at the opening of the new branch at Lawson. Mr Woods gave evidence that this was in the nature of a total surprise to him. I do not think it was a total surprise, although I am satisfied that he had issued, as I have said, no direct invitation to them. It is clear that the Johnsons made known that the purpose of their visit was to arrange the transfer of their accounts to the new branch so that they could stay with Mr Woods as manager. It is equally clear that Mr Woods did not take any steps to reject this application. Instead, the application was accepted by him as was the application for the increased overdraft which had been the subject of refusal only shortly before. I am satisfied that he consulted with the regional manager who was then present and, as a result of this, accepted the applicants as customers and increased the overall overdraft limit to $75,000. This figure was beyond his authority and required a special application to the regional office of the bank. Informal approval was, however, given at the time by the regional manager. Although the acceptance of the accounts and the granting of the overdraft might, in part, be attributable to the euphoria attending the opening of the new branch it must, nevertheless, be indicative of a willingness on the part of Mr Woods to continue the banker-customer relationship with the applicants and to render them assistance if possible. I do not accept Mr Woods's evidence that their presence at the bank at Lawson on 2 July was unexpected and unwanted.
Mr Woods made a fairly substantial diary note in relation to the transfer of the accounts and the increase in overdraft. This was for the purpose of commencing the bank file on the accounts and also to form the basis of the application to the regional office for approval of the increased lending. He made reference to Mrs Johnson's not inconsiderable financial expectations from the Will of her late uncle. He referred to these as being "to the extent of some $400,000 which she should receive before Christmas and which will clear our debt". He referred to the Zarlee Stud in fairly glowing terms, indicating that the Johnsons valued it at about $350,000. He referred to the improvements on the property and to the fact that they had not yet commenced production, having only just finished these improvements. He also referred to a particular horse at the stud as "a very valuable horse". He made mention of the insurance assessing business as one in which Mr Johnson earned between $1,500 and $2,000 per month. It must be assumed that he held these views at the time, despite the reservations which he had previously felt and expressed in his diary note of 1 June. I consider it reasonable to conclude that he had some optimistic expectations that the applicants, with their connection with Mrs Johnson's prosperous father, and her forthcoming inheritance, would be worthwhile customers of his branch.
It is clear that from July 1984 through to January 1985 the branch became a busy one and that Mr Woods, as its first manager, had a heavy workload. Quite obviously, he had many more things to concern himself about than the fluctuating fortunes of the applicants. The strong impression that I gained from his evidence, in contrast with that of Mr Johnson, was that he increasingly found Mr Johnson and his visits something of a nuisance. Whilst he would give to Mr Johnson the appearance of rapt attention to everything that Mr Johnson was saying as to the progress in the development of the stud business and as to his financial needs, he was by no means absorbing all the detail of what he was being told nor did he recall it with great clarity when he came to make his diary notes. I do not accept Mr Woods' assertion that the diary notes during this period were made punctiliously and clearly recorded the salient features of his conversations with Mr Johnson. I have already expressed my views as to his tendency, as I perceive it, to record, on occasions, his feelings about Mr Johnson which he had concealed rather than expressed.
In any event, the bank diary notes were obviously not intended to be a verbatim account of what had occurred. They were also intended to record for bank purposes the views of the manager. As such they could not operate as a fully satisfactory aide-memoire of the actual contents of conversations. I consider that, at least to some extent, Mr Johnson was genuinely surprised at their contents when he first became aware of them. However, I am quite satisfied that he was incorrect in regarding some of them as being concoctions after the event for the purpose of doing harm to the applicants or protecting the bank or Mr Woods from their just claims. I reject the submission that the inadequacies or difficulties of the notes are capable of any such sinister explanation.
I do think, however, that Mr Woods was, in conversation with Mr Johnson, far more encouraging than the notes of those conversations would indicate. In particular I do not think that Mr Woods was truly capable of being rude or even blunt in conversation with Mr Johnson or, probably, any other customer, and that passages in the notes which would indicate that he adopted such an attitude in speech are not accurate. They reflect what he considered Mr Johnson deserved to hear from him but not what he actually said.
It is necessary, of course, when considering the evidence of the two men and the bank diary notes and correspondence to bear in mind what the applicants seek to prove. It became quite clear from Mr Johnson's evidence that he had a misconception of the nature of his case. He saw it in terms of a promise made by Mr Woods to submit and support an application for a loan to the Commonwealth Development Bank on behalf of the applicants which promise was broken by Mr Woods with consequential financial loss being occasioned to the applicants. He saw it, in other words, as being, in effect, a claim for a breach of contract. Such a claim was never pleaded, or opened at the time when he had legal representation. It is certainly difficult to see how it could have been maintained. In fact, the case as pleaded and presented was one for actionable misrepresentation under s 52 of the Trade Practices Act 1974 or at common law, the misrepresentation depending upon the absence on the part of Mr Woods, at the time of the making of the representation, of any intent to submit the application on behalf of the applicants. In effect, the case must be that Mr Woods misled the applicants into believing that he would, at the relevant time, make the application on their behalf when he had no intention of so doing, or in circumstances where no reasonable basis existed for the representation.
It is clear that there is nothing in the evidence to suggest that, at the time the applicants brought their accounts to Lawson, Mr Woods could not reasonably have formed the intention, on adequate grounds, of submitting and supporting an application on their behalf to the Commonwealth Development Bank. The material in his diary note of 2 July, to which I have already made reference, would have provided a ready basis for such an intention. It is clear, accordingly, that no cause of action is established as at that time. Has one been established, on the evidence, at any time subsequent to July 1984? It is necessary, in determining this question, to consider subsequent events as disclosed in the evidence.
The first period for consideration is July to October 1984. It is clear that the applicants' conduct of the new accounts at Lawson was disappointing from the outset. By the end of the first month of operation, the Zarlee Stud account was in debit in the amount of $76,854, nearly $1,700 over the agreed limit, whilst associated accounts, in respect of which no overdraft facility existed, were in debit to an amount in excess of $8,000. The accounts were discussed between Mr Woods and Mr Johnson on 3 August 1984. No doubt the diary note does not record the full discussion between the two men but the burden of it is clear enough. Mr Johnson apologised for the condition of the accounts, stating that he had been expecting considerable funds to come in to enable him to make appropriate deposits to bring the accounts back within limits. For one reason or another these funds had not eventuated. He gave an indication of amounts that he expected to receive in the near future and persons from whom he expected to receive them. He received a request to bring the accounts into order. There was talk about further anticipated funds from the syndication of horses at Zarlee Stud.
Mr Johnson indicated in his evidence that on the occasions when he spoke to Mr Woods in this period he gave Mr Woods full details of what he was doing with the monies that he was drawing. I am satisfied the he provided information as to the purchase of horses and the general development of the stud, his plans for the syndicating of shares in the horses and anticipated earnings from training. I consider that he received what he would have perceived to be a sympathetic hearing. However I have no doubt that notwithstanding this hearing he was, within one month of the transfer of the accounts, being at least gently chided by Mr Woods in the terms recorded by Mr Woods in the diary note of 3 August, viz: "particularly impressed on him to try and keep these in order as we don't want to be embarrassed by having him insisting on transferring his accounts from Penrith to us and then finding them continually out of order".
It is clear that, in the period being considered, the accounts remained continually out of order. Mr Woods did not pay all Mr Johnson's cheques. Many of them were returned "present again" or "refer to drawer". Notwithstanding this, the debits in the various accounts continued to grow. By 12 September 1984, the Zarlee Stud account debt had increased to over $79,000 and the associated accounts were in debit by more than $11,000. The accounts were clearly being conducted well beyond agreed limits. On 11 September 1984, the applicants forwarded a letter to Mr Woods which made reference to conversations on 7 and 11 September in relation to the accounts. There is no bank diary note of these conversations. However there is a note relating to the receipt of the letter. Quite clearly there had been earlier discussions about the increasing level of debt. The letter, the contents of which are reflected in the diary note, refers to an amount of $83,363.50 said to be "outstanding to our company...as at 7 September". It further says that "the majority of these monies will be received and deposited in our respective accounts by 2 October 1984". The letter goes on to indicate that "the horse syndicates will be finalised on Sunday 30 September at our property at a function held by us to enable the syndicate participants to examine the horses and sign the syndication papers and 'part with their money'". The letter concludes with a request that Mr Woods attend the function. Reference was also invited in the letter to Mr Chambers, the company accountant, for confirmation of the figures. The diary note indicates that Mr Woods spoke to Mr Chambers on the telephone and received confirmation of the figures. The note continues to the effect that Mr Chambers was advised that the bank had been very generous with the applicants and that the bulk of the monies had been promised for about a month and that, whilst some deposits had been made, not much headway was occurring.
This note is in temperate terms in comparison with subsequent notes. It reflects increasing concern as to the conduct of the accounts. It supports the impression which I gained from the evidence as to this period that Mr Woods, insofar as he was able to give clear consideration to the applicants in the circumstances of the branch's expanding business and his sharply increasing workload, was maintaining an over-optimistic attitude which was fed by Mr Johnson's enthusiastic utterances when the men talked. I think Mr Woods was somewhat carried away by Mr Johnson's blandishments on these occasions. He was obviously keeping him on too loose a rein and was being over-generous in his approach. He was, in my view, anxious to help the applicants and wished to see their business prosper, not only for the purpose of reducing the bank's debt, but to fulfil his perceived role as a perspicacious and caring bank manager. Indeed, in this period, he took steps to assist Mr Johnson to obtain a training licence at a conveniently situated racetrack. He introduced him to an official of the racing club who, it was thought, might be able to assist. This attempt did not bear fruit, but it evinced the generally helpful attitude being displayed by Mr Woods.
From Mr Johnson's point of view, the offering of help, the allowance of the accounts to creep further into overdraft, and the failure to make serious complaint as opposed to mild castigation was construed as being a policy on the part of Mr Woods positively to allow Mr Johnson to exceed the known limits of the bank. In his evidence Mr Johnson spoke of the bank's overdraft limit as opposed to Mr Woods's overdraft limit. He took the view that every time he managed to exceed the agreed limits he established a new de facto overdraft limit. It seems that he formed the view that, whatever the bank's official policy towards his borrowings might be, he could rely upon Mr Woods having a much more favourable unofficial policy. I am satisfied on a close reading and re-reading of the evidence that this view was based on no more than a friendly and over-lenient attitude on the part of Mr Woods coupled with an over-optimistic view, heavily encouraged by Mr Johnson, as to the prospects of the stud business.
These prospects received a severe blow in September 1984, when it was realised by Mr Johnson and, presumably, Mr Chambers that the proposed horse syndication could not go ahead. The relevant law required that this business be undertaken by a public company with an appropriate dealer's licence. There was no such company or licence. Both had to be arranged and this would take time. I think that it is quite clear that Mr Johnson had expected to make at least a reasonable amount of money from the syndication of shares in the horses which he had been buying as a result of pushing up the overdraft borrowings in the accounts. No doubt he intended to apply at least a reasonable amount of these monies to the reduction of the overdrafts. This intention was thwarted and, in fact, by 8 October 1984 the overdrafts had increased by an amount in excess of $10,000.
On that day Mr Woods's diary note indicates that he spoke to Mr Johnson by telephone. He reminded him of the promises made on 12 September 1984 as to the provision of funds and reduction of the overdraft and pointed out that these funds had not been forthcoming. It appears that the overdrafts had undergone a substantial increase because of the charging of interest. The note refers to a further claim by Mr Johnson that he expected to receive $28,000 within the week. The note refers to debts as having "risen to an untenable position". It concludes: "he knows he is not to cash any more cheques or write any more cheques, we have declined to cash wages and we have told him that we want private account and Peter Johnson and Associates cleared immediately and the Zarlee Stud account brought back into order. He has promised to do this within a week, however, we will see".
Another diary note follows on 11 October. It is the subject of contention and I will set it out in full. After showing a debtor position not markedly better than on 8 October, it states:

"Mr Johnson called. He deposited $1,500 to Zarlee yesterday, and $400 today. Told him that we will continue to return his cheques and that if debts in Peter Johnson and Assoc. and P. J. and G. S. Johnson are not cleared within 14 days we will be recommending legal action to the Bank. He still maintains that he will have some $28,000 within a week and should have a further $75,000 by Christmas. Told him we are not convinced particularly as he now advises us that he is restricted from utilizing the funds he is to receive from the syndication until he receives a license from Corporate Affairs. He has received their verbal approval. On that basis funds he will be receiving will be credited to Inv. A/c 900082 in the name of Avikay Pty Limited (sic) for the present. They will not be drawn against until the necessary license is received. Also told him to get down to the Finance Companys

(sic) he works for and get the $15,000 they supposedly owe him."

Mr Johnson denies that these diary notes accurately record conversations between him and Mr Woods. His primary submission was that they were, in effect, forgeries having been bought into existence well after the events supposedly recorded. I do not understand this submission to have been persisted in. However Mr Johnson denies the conversations whilst Mr Woods relies on the notes for his evidence as to what occurred. I consider that the notes fall into the category to which I have referred earlier. They reflect to a large extent Mr Woods's view rather than what he expressly stated.
I am satisfied, on careful observation of Mr Johnson's demeanour and consideration of his evidence, that he was and remained genuinely surprised at the tone and content of these notes. I am confident that Mr Woods did not deal with him as harshly in these conversations as the notes suggest. I am, however, quite satisfied that Mr Woods was critical of the situation and made it clear that something would have to be done. I do not think that he made the threat of legal action referred to but I am satisfied that he evinced general concern. I doubt that he stated as definitely as appears that no more cheques were to be written. However it is quite apparent that, thereafter, cheques were returned with increasing frequency.
An attack was made on Mr Woods's credit insofar as there is a reference to Avihay Pty Limited in the note of 11 October. The attack was made on the basis that this particular company was not utilised by the applicants until it was provided to them by Mr Chambers in December. Consequently, it was said that the note was concocted much later and given a false date. I am quite satisfied that this attack fails. There is sufficient reason to assume that the name could have been known to Mr Johnson in October although the actual transfer of the company to the applicants did not take place until December. Mr Woods's explanation as to the account 900082 is, in my view, sufficient. I do not deem it necessary to set out the considerations relating to it. They appear in the evidence.
In the upshot, although these diary notes, in my view, indicate a departure on the part of Mr Woods from the standard of diary entries which he claimed to adhere to, they do not have any substantial effect on his general credibility. They do indicate, however, that Mr Woods was developing some considerable reservations about Mr Johnson and his projects. I do not think that the question of the Commonwealth Development Bank application was adverted to at this time. I am confident that, if it had been mentioned, Mr Woods would have expressed a far more qualified view about submission and support of it. It would have been tied in with an admonition to Mr Johnson to get the accounts in order.

Mr Woods's note of this conversation is as follows:

"Telephoned him re progress in clearance of debts. He subsequently called. He has applications before R.I.B.A., and Mennett and Marrickville R.S.L. He is hoping to get R.S.L. money on interest only for 12 months which will enable him to consolidate and put a proposal to purchase the adjoining property and install a taking back. Explained that we really are sick and that we were recommending to the Bank that all accounts be placed on N.F.D. He opened a seperate account Peter Johnson Business account which is to remain strictly in credit and when funds are received from outside finance our debts are to clear. He claims that he has $67,500 to come in the next 1 - 2 weeks from horses and another $60,000 in 4 - 6 weeks. He also has $15,000 to come from assessing. I believe he just pulls figures out of his head. M/A: Please report to R/M placing position before him and recommending accounts be placed on N.F.D."

N.F.D. is a short reference to "no further drawings", meaning in effect that the account was not to be operated on except for the receipt and crediting of funds. The words "taking back" were accepted as obviously a misprint for "training track" also "R.I.B.A." is clearly intended to be "P.I.B.A." a reference to the Primary Industry Bank. Mr Woods testified to the accuracy of this note. Mr Johnson, in cross-examination agreed that he discussed the Marrickville R.S.L. but only in relation to a loan of $15,000 or $20,000. There was no mention of the accounts being put on N.F.D.. There was a discussion about opening a separate account, the Peter Johnson Business account. Mr Woods suggested it "as he did not know what the relieving manager's attitude would be while he was away that any monies I got, any cheques I got could be put into that account and continue to draw on that because it would save any problems". The reference to the bank's debts being cleared when funds were received from outside finance was, as he understood it, a reference to the clearance of those debts from the proceeds of the intended Commonwealth Development Bank loan. Once again Mr Johnson, in his evidence, appears to support some kind of a conspiracy between himself and Mr Woods, instigated by Mr Woods, to conceal from the incoming relieving manager and, presumably, from Mr Woods's superiors the fact that he was assisting Mr Johnson in a situation where Mr Johnson's accounts were officially out of order but were satisfactory as far as Mr Woods was concerned. It may be remarked that, nowhere in the case, is there any rational reason advanced as to why Mr Woods should take such professional risks to help Mr Johnson, especially in a situation where, as I find, he was aware that the Johnson accounts had been called in question by the examining officer, Mr Taylor, in circumstances where he might reasonably apprehend that he himself would receive some criticism.
However, other matters must be considered in relation to the two version of the events of 3 January 1985. In the first place I should indicate that Mr Woods totally denied Mr Johnson's version and also denied that he handed over or caused the handing over of any Commonwealth Development Bank forms on that occasion. He also gave evidence, which was not denied, that these forms were readily available, particularly from any branch of the Commonwealth Bank. Ms Joanne Denton was called by the bank. She was an impressive witness. She denied that she gave Mr Johnson any Commonwealth Development Bank Forms on 3 January 1985. I am satisfied that she did not. She was not then employed by Westpac at the Lawson branch. She said, however, that at a point of time in 1986 after the receipt by the branch of Mr Johnson's letter (exhibit K) of 19 February 1986, she did in fact hand some Commonwealth Development Bank forms to Mr Johnson who had rung up requesting them. This is denied by Mr Johnson who said that he only ever received the one set of forms from the Lawson branch. It is to be noted, however, that Mr Johnson gave evidence that in 1986 he set about making an application, himself, to the Commonwealth Development Bank but did not reach the stage of actually putting in the forms to that institution.
Ms Tracey Thornton, another employee of the bank at the Lawson branch, who was employed at the relevant time and who knew Mr Johnson and who occupied the position, in January 1985, that Mrs Denton subsequently occupied, gave evidence that she did not hand over any forms to Mr Johnson on that day or any other day. A large number of the employees of Westpac, working at the Lawson branch in January 1985 were called, but it was not suggested to any of them by Mr Johnson that he or she had handed over the forms to him. In evidence in reply, Mr Johnson who reiterated with some fervour his previous evidence that he had in fact received the forms on 3 January 1985, reluctantly accepted the fact that it could not have been Ms Denton who gave them to him, but asserted that it must have been some other employee whom, with the passage of time, he had confused with her. It may be noted also that in exhibit K, an obviously considered letter of complaint sent by Mr Johnson to Mr Woods on 19 February 1986, although reference is made to an application to the Commonwealth Development Bank, no allegation is made that Mr Woods actually provided the application forms with a direction that they were to be completed and returned to him.
Another highly significant matter is that Mr Woods made the recommendation for the placing of all the Johnson accounts on "N.F.D.". It is clear form evidence of the bank's system that this note at the end of the diary note of 3 January 1985 was intended to and did operate as an instruction to the manager's assistant to take those very steps. In the context that Mr Woods was about to go on leave, he obviously contemplated that the steps would be taken in his absence with no possibility of his countermanding them. Any suggestion that this diary note was some later concoction designed, in some fashion, to protect Mr Woods, must be dispelled by the simple fact that it was operated on on the following Monday, 7 January, by Ms Thornton who submitted the recommendation to the relieving manager, Mr Scott. This fact is recorded in a diary note made by her on that day. Mr Scott reported to the regional office the same day with a recommendation that "N.F.D." arrangements be imposed. He made these remarks: "Mr Johnson has not honoured accommodation and promises have been broken numerous times and his verbal advises (sic) appear to be far from accurate. All accounts continue to be conducted in a most unsatisfactory manner. Mr Johnson claims he has obtained $150,000 from Marrickville R.S.L. however we have received no formal notification to date. We continue to return all paper". The latter is a reference to the fact that Mr Johnson's cheques on all accounts were being returned unpaid (Exhibit 14).
An official response to this request was received from the regional manager on 10 January 1985 to the effect that before accounts were placed on N.F.D., the debtor was to be given the opportunity to arrange a firm proposal for clearance of all debts. The debtor was to be contacted and the matter reported to regional office again by 28 February 1985. In the meantime the limit of $75,000 was to be maintained on the account.
It is, to say the least, most difficult to reconcile Mr Johnson's version of his conversation with Mr Woods of 3 January, with the action instituted by Mr Woods in respect of his accounts on that day. It is, perhaps, possible that whilst having the firm intention of dealing with the accounts on a N.F.D. basis, Mr Woods, with characteristic generosity, sought to give Mr Johnson the opportunity of at least temporary survival by allowing him to open the Peter Johnson Business account so that he could make use of funds which he was able to deposit in it rather than those funds being utilised for the payment of the bank's debt, the situation to be reviewed when he returned from holidays.
The matter must be assessed in terms of the rest of the evidence in the case. Again I have formed the impression that the tone of the conversation would have been less harsh than the note suggests. It does not follow, of course, that Mr Woods made no criticism of the current state of the applicants' accounts. It seems highly unlikely that, in view of the criticism that had been made in the examiner's report, of which I am satisfied Mr Woods was aware, he would not have made some fairly definite criticism. It is certainly most difficult to accept that the conversation was simply devoted to putting matters in train for the making of a previously promised application to the Commonwealth Development Bank upon Mr Woods's return from holidays. It is also most difficult to understand why the note should contain references to the other sources of finance, especially with a fairly specific reference to the nature of the finance from the Marrickville R.S.L., unless these topics had been raised in the conversation. The fact that they were raised, if they were, would seem to be most inconsistent with the conversation being one entirely devoted to the making of a different application to a different financial institution.
Throughout the balance of January 1985, Mr Johnson had conversations with Mr Scott, the relieving manager, who had, as already indicated, put in train the necessary bank procedures for placing the applicants' accounts on a N.F.D. status. Mr Scott made what appear to be comprehensive diary notes of these conversations. It cannot be suggested that there was any unusual relationship between Mr Woods and the relieving manager which could lead to Mr Scott being other than accurate in these notes. Nevertheless, as in previous cases, Mr Johnson made allegations in his evidence that portions of these notes were incorrect. I am not able to accept this evidence. There is no need to set it out here. Once again, however, it must reflect upon the general acceptability of Mr Johnson's evidence as to the content of conversations with Mr Woods.
Apart from matters of conflict, the content of the conversations as recorded by Mr Scott undoubtedly raises problems for the applicants. The first note, that of 14 January 1985, records that Mr Scott advised Mr Johnson "of the comments made on examination officer's report plus our own recommendations dated 7/1/85". It goes on to say that Mr Scott also told him "that I had spoken to our Regional Office this morning and they had advised that they could not entertain further lending and would like current debts reduced". On Mr Johnson's version this should have come as a severe shock. He did not, however, make any complaint. He did not assert that he had a firm arrangement with the branch manager that an application to the Commonwealth Development Bank would be made in the near future, which was to be supported by him and which should result in Mr Johnson's company being in a position to settle the bank's debt. In fact the note reads, in relation to Mr Scott's statement, "this Mr Johnson seemed to take remarkably well".
Mr Johnson explained this, in his evidence, on the basis that he had been through all this before. It was similar to the relieving manager at Penrith rejecting the application for the overdraft increase to $70,000 and Mr Woods thereafter granting the increase. He said that, when speaking to Mr Scott, he adopted the attitude that he should endeavour to keep Mr Scott happy whilst Mr Woods was away, in the expectation that Mr Woods, as previously, would rectify the position when he returned. If this were so, it certainly appears from the note that Mr Johnson went to some lengths to, as he put it, "placate" Mr Scott. He told him he would "seek alternative finance $250,000 to assist with purchase of new property and build training track. He will also try for a further 100,000 to repay our debts".
The note continues that Mr Scott "questions him where this finance was coming from and he advised that his father-in-law was treasurer of Marrickville R.S.L. and he would get finance for twelve months at 18%. Security would be that which we currently hold. Should he be only able to obtain $250,000 we would be approached for consent for second mortgage". There was other discussion of a reasonably detailed kind and Mr Scott's record concludes, "on that note that is where matters was left and Mr Johnson departed to seek alternative finance with Marrickville R.S.L.".
Mr Scott's note of the next day, 15 January 1985, records that "Mr Johnson has contacted us again today to advise that he has arranged 180 Bill through ANZ Parramatta which in turn will be taken over by Primary Industry Bank. This he says will take approximately four to five weeks as ANZ will need to value property. Mr Johnson now requires $20,000 as working capital and stated he will get through Marrickville R.S.L. for thirty days". The note also records some efforts made by Mr Scott to assist in the matter of the $20,000 by seeking authority to advance this sum against a letter from the ANZ Bank. Mr Johnson said of this conversation, in evidence, that he was, in effect, misleading Mr Scott; that he had no real intention of seeking a substantial loan through the ANZ as, at all times, he was relying on Mr Woods's previous promise to make application on his behalf to the Commonwealth Development Bank. It must be noted, however, that Mr Johnson did in fact take some positive steps in relation to raising a substantial loan through the ANZ Bank. Mr Chambers, his accountant, in his statement (exhibit AF) says, in paragraph 12, "...Mr Johnson told me that he had spoken with the Relieving Manager of the Bank who had indicated that there may be some problem with Mr Johnson's Accounts and Mr Johnson asked me to make some initial inquiries for a loan of $350,000 with my Bank, the ANZ at Parramatta, which I did". Clearly, then, Mr Johnson was not simply telling Mr Scott something which he thought Mr Scott wished to hear; he was also, in the light of events since 3 January, making efforts to obtain alternative finance. In these circumstances, there must be grave difficulty in accepting that he was in fact relying upon a promise made by Mr Woods, only such a short time before, that he would come-what-may, submit and support an application to the Commonwealth Development Bank for this very same financial accommodation.
It appears from Mr Scott's diary notes that he continued with his efforts to assist in smoothing the way for Mr Johnson to obtain an advance of $25,000 from Marrickville R.S.L. Club on the security of the Zarlee Stud property. I need not set out the details here. I note however that, in Mr Scott's note of 31 January 1985 he recorded that "Mr Johnson states that all debts will be cleared by June/September this year from either sale of scrip or transfer to ANZ". Sale of scrip obviously refers to the sale of syndicated shares in the horses at the stud.
The advance from Marrickville R.S.L. Club apparently occurred, with the result that so far as the bank was concerned, the position, at the time of Mr Woods's return to duty in February 1985, was that Mr Johnson was seeking an advance from the ANZ Bank, from the proceeds of which the bank's debt would be repaid. I shall refer to the evidence as to the conversation that took place between Mr Johnson and Mr Woods on 7 February 1985, after Mr Woods returned, later in these reasons. I note, however, that the final version of the examiner's report together with the internal memo from the regional office, based upon it, would have been in Mr Woods's hand before that conversation took place.
I now turn to aspects of the case which might seem to favour Mr Johnson's claim that he received the representation or promise relied upon from Mr Woods on 3 January.
Mr Johnson gave evidence that he received the application forms, which became exhibits 8 and 8A, on that day and that he took them to Mr Chambers for assistance in their completion and for execution under the company seal, which was retained by Mr Chambers. He received support in this contention from Mr Chambers's statement which, in this respect, reads: "I can recall that in approximately January 1985 Mr Johnson attended my office to discuss with me the completion of a form to the C.D.B. and to have a company seal affixed to it. Mr Johnson told me that a form had been given to him by Mr Woods who was manager of the Lawson branch at that time".
Exhibits 8 and 8A certainly bear the appearance of professional help in their completion. They are also executed under the company seal. They are undated. Reliance is, of course, placed upon them by the applicants as indicating that they were following out Mr Woods's alleged instructions of 3 January.
Reliance is also placed upon the document exhibit Q, a copy of a letter of 9 January 1985 on the letter head of Zarlee Stud, addressed to Mr Woods at the Lawson branch. It commences "I refer to our recent conversations concerning finance for further development of our Stud and enclose a completed application from the Commonwealth Development Bank of Australia as requested. Also enclosed as required is:". There follows a list of documents mainly relating to the companies Sancorp Pty Limited and Avihay Limited. There then follows in tabulated form a number of matters "in support of our application".
Mr Johnson indicated, in evidence, that this document was not in fact sent to Mr Woods but had been prepared in readiness for his return. There seemed no point in forwarding it to the branch after the conversations that had taken place with Mr Scott. It is nevertheless relied upon as an indication that his version of the 3 January conversation with Mr Woods, and Mr Woods's supplying him with the forms on that day, is correct. It is to be noted that this document refers to its enclosing a completed application "from the Commonwealth Development Bank as requested". Whereas it is possible that "from" is a misprint for "for" this seems rather unlikely in a letter which has obviously been carefully prepared. Moreover, if the letter was intended to enclose the very forms that had been provided for completion by Mr Woods, one would have thought that they might have been so described in this introductory sentence. As it stands the letter conveys more strongly a suggestion that Mr Woods had suggested that Mr Johnson obtain some forms from the Commonwealth Development Bank itself. If this were so, of course, it would support Mr Woods's contention, already strongly supported by Ms Denton, that Mr Woods did not hand over any forms on 3 January.
It is also to be noted that this document, assuming that it came into existence on the date it bears, was produced in the same period of time as exhibit 12 and exhibit 11. Exhibit 12 is a letter of 15 January 1985 written and sent to Mr Chambers, relating to an application for finance for development of the stud property through the ANZ Bank at Parramatta and through the Primary Industry Bank. The first paragraph of this reads as follows: "I refer to numerous conversations concerning purchase of 47 acres of land adjoining our property and the development of it for an amount of $250,000, which the ANZ at Parramatta are looking at through the P.I.B.A.. You are aware that the ANZ are in the first instance looking at our proposal of a $250,000, 180 day bill to start work on the property prior to completion of the P.I.B.A. loan. To carry us through until that we require an amount of $20,000 to $25,000 which will of course be paid directly out of the $250,000 as will the $95,000 held by Westpac on the first mortgage". The letter then proceeds to provide material "in support of our application". This material, with certain obvious changes, corresponds closely with the material set out in exhibit Q. Both letters were clearly prepared from the same draft. They are lengthy documents obviously prepared with care and designed to provide information in an assimilable form, likely to create a favourable impression on the reader and assist in furtherance of the application for finance to which they were directed.

Exhibit 11 is a letter written by Mr Johnson to the regional office of Westpac on 23 January 1985. The evidence indicates that it was written in support of an application to Westpac for permission to secure the loan of $25,000 to be obtained from the Marrickville R.S.L. upon the stud property. It contains the following statement: "the ANZ Parramatta are submitting an application to P.I.B.A. for an amount of $300,000 from which any balance owing to you will be paid by the ANZ when they take over the accounts". This is quite clearly a reference to the application sought to be made through Mr Chambers, the existence of which is referred to in Mr Chambers's statement.
As already indicated, Mr Johnson asserted in evidence that the projected application to the ANZ Bank and P.I.B.A. was simply something he suggested to Mr Scott in order, as it were, to keep things under control until Mr Woods could return and make the promised application to the Commonwealth Development Bank. It is extremely difficult to accept this in light of the detailed material provided to Mr Chambers who obviously accepted it in good faith and acted upon it and also the unqualified statement to the regional office of Westpac set out above. It is far easier to accept that the approach to the ANZ Bank and P.I.B.A. was a serious one and, accordingly, that the projected application to the Commonwealth Development Bank was merely another iron in the fire. Exhibit Q, so regarded, provides some evidence that an application to the Commonwealth Development Bank may well have been suggested by Mr Woods in the context of discussions about possible alternative sources of finance occurring on 18 December and also on 3 January. In itself, it is not capable, in my view, of suggesting anything more.
Is any light thrown on the case by the evidence as to the conversation between the two men occurring on 7 February 1985 when Mr Woods returned from holidays? As previously indicated, I am satisfied that Mr Woods would have read and digested the internal memo from regional office with its criticism of his management leading to his "cycle B' rating. A person with his level of self-esteem would have found this wounding and disturbing. I am satisfied that, when he spoke to Mr Johnson, he would have been in a somewhat emotional state and would have formed the firm intention that his previous generous approach to Johnson's projects and overly lenient attitude to the state of his accounts would have to come to an end. It is perfectly clear that whatever his intentions in the past three or four months, expressed or unexpressed, as to the reining in of credit on Mr Johnson's accounts he had, nevertheless, even though returning many cheques, met a sufficient number of others to enable a slow but steady increase in indebtedness to a quite unacceptable level. It seems clear that he had, on occasions, allowed further overdrawing on the very day when, according to his note, he was insisting that it must stop. Indeed, these matters, were used by the applicants in argument to support the claim that Mr Woods continued to evince the intention to fulfil his promise in relation to the Commonwealth Development Bank. They were clearly capable of leading Mr Johnson to believe that Mr Woods was still prepared to assist him.
Mr Johnson's evidence as to this conversation is recorded in the transcript as follows:

"I rang Mr Woods to indicate to him that I prepared a letter and had done everything he had asked me to do on 3 January and to make am appointment to bring it up to go through it ready for its submission to the Commonwealth Development Bank.

Did you say anything else?---Well, Mr - - - What did Mr Woods then say in relation to that?---Mr Woods indicated that whilst - - - What did he say?---He said that whilst he was on holidays a new regional manager had carried out an inspection of his branch and that my accounts and several other accounts totalling some 20 had been criticized and that he had been instructed by the regional manager that Westpac Lawson were to provide us with no further assistance nor were we to - nor were they to assist in - support us in the application to the Commonwealth Development Bank.

What did you say?---I asked him why - you know what the reason was and he indicated that the regional manager had carried out a thorough inspection of his branch at that time and that the regional manager was not happy with the way Mr Woods was conducting the branch and that he had exceeded all expectations as far as the growth of the bank was concerned and that he was to curtail his activities and I said to Mr Woods that, you know, what was I to do now at that point of time because I had been relying on his promise concerning the application and further that I suspected it may be a problem because of the conversations - earlier conversations - I had with the relieving manager.

What did he say?---He said that he was terribly sorry about it, that if it was up to him he would certainly submit the application and support it as he had agreed to, that this manager, the regional manager, really had it in for me. He indicated that this new manager had been transferred. There was a new regional manager and he had been transferred from - my recollection was - New Guinea or somewhere like that. I cannot be specific but when he said the name it was an island off the north coast of Australia."

In answer to questions as to why he made no written complaint about Mr Woods's failure to go ahead with the application to the Commonwealth Development Bank he said: "I believed at that time that what Mr John Woods had told me was in fact correct, that it was not his decision, it was a regional manager overriding his promise to do it and I obtained the impression from Mr Woods that there was little to be gained by going over his head. I really did not see any point in pursuing the aspect at that time. The superiors of Mr Woods had taken the action and I could see little point in arguing with them about the matter and I thought it would be best to try and find alternative finance".
As a matter of history Mr Johnson clearly made efforts through Mr Chambers to obtain finance through the ANZ Bank and Primary Industry Bank. These efforts came to nothing. He ended up in litigation with Mr Chambers. He later sought, with initial success, to obtain finance from a lending institution in Melbourne, Getty Finance. This also fell through in early 1986, in circumstances where, apparently, that institution became dissatisfied with the accuracy of valuations provided to them by Mr Johnson. Mr Johnson threatened litigation, but nothing came of this. At this point Westpac took proceedings to enforce its security.
Mr Woods's diary note of the conversation of 7 February reads as follows "Mr Johnson telephoned. He wants to draw cheques in anticipation of receipt of $25,000 to be advanced by Marrickville R.S.L.
DECLINED: We will not assist this fellow any more and cheques will continue to be returned".
He specifically denied that Mr Johnson had told him on that day that he had Commonwealth Development Bank applications ready to bring in. He further said that Johnson had never spoken to him about bringing applications to him for the Commonwealth Development Bank. He further said that he could not have supported such an application. He also denied that he told Mr Johnson that he could not go on with supporting him in a Commonwealth Development Bank application because there had been a change in policy at regional manager level and a change of regional manager with a new manager coming in from New Guinea or somewhere similar. He said that, in fact, there had been no such change. He further denied that Mr Johnson told him he had carried out the clearance work on Lot 1, had paid money for it and had obtained the valuations required. He also denied that Mr Johnson told him that he had prepared a letter, filled in the application forms and wanted Mr Woods to fill in the banker's part.
Once again Mr Johnson's evidence is totally inconsistent with Mr Woods's diary note and with Mr Woods's recollection as given in evidence. I am not satisfied that Mr Woods's diary note is in any way a full record of what was said. Mr Johnson's reference to Mr Woods having told him of the criticism of the twenty accounts in the inspection and of the regional manager not being happy with the way Mr Woods was conducting the branch, with the growth of the branch exceeding expectations and the need to curtail activities, all correspond with material in the internal memo and examiner's report. Mr Johnson could not have known of these matters unless Mr Woods had told him in this conversation. I am also of the view that Mr Woods, consistent with the previous pattern of his dealing with Mr Johnson, would not have been blunt or terse with him, nor would he have wished to assume, as between them, the responsibility for cutting Mr Johnson off from any further assistance. I think his reference to superior orders in this regard is most likely to have occurred.
But what of the alleged specific references to the Commonwealth Development Bank application? These are in a somewhat different position. According to Johnson they had been the subject of a very specific promise which had led to the preparation of forms, an elaborate supporting letter, and the doing of work and incurring of expenditure. I find it most difficult to accept that, having regard to the view I have formed, as previously expressed, of Mr Johnson's personality, he would have allowed the matter to conclude with a simple telephone conversation. He would very distinctly have reminded Mr Woods of his promise and sought a meeting with him in which he could put the documents before him and endeavour to persuade him to submit them to the bank or, consistently with the view he had formed of Mr Woods's authority, deal with them himself. His alleged meek acceptance of the situation was, in my view, totally out of character. Moreover he had, in his view, a binding promise from Mr Woods on behalf of Westpac. He had obviously had a not unsympathetic reaction from regional office in relation to assistance with the Marrickville R.S.L. loan, He was quite capable of stating a case cogently in a letter. He could have written a strong letter to Mr Woods's "superiors" asserting the obligation of the bank to stand by Mr Woods's promise in relation to the Commonwealth Development Bank application. He did not do so, because, according to his evidence, he was dissuaded from doing so by this short telephone conversation with Mr Woods. When he eventually wrote something in the nature of a complaint, in exhibit K, on 9 February 1986, no reference was made to any specific promise by Mr Woods to "submit and fully support" an application to the Commonwealth Development Bank.
I ask myself whether on the basis of the evidence which I have discussed, and indeed of the whole of the evidence and submissions before me, I am satisfied that on 3 January 1985 or indeed at any previous time after Mr Johnson had re-established contact with him after the annulment of the bankruptcy, Mr Woods made the unqualified promise sued upon. The answer is, no. The farthest I could possibly go, on all this material, would be a finding that, amongst general conversation about possible alternative sources of finance which might be available to Mr Johnson, there may have been a reference by Mr Woods to the making of a Commonwealth Development Bank application, coupled with a suggestion that Mr Johnson obtain the necessary forms and complete them. I am quite unable to find that there was any associated unqualified promise or representation of submission and support on the part of Mr Woods if, in fact, the suggestion were made. I cannot see the matter of an application to the Commonwealth Development Bank having in the December/January period any greater significance than the applications that were then being made by Mr Johnson, or on his behalf, to Ord Minnett or to the ANZ Bank through the assistance of Mr Chambers. Indeed the valuation of the stud property by Mr McManus (exhibit R), on its face, is as likely to have been obtained for the purpose of the application by Mr Chambers to the ANZ Bank as for submission to the Commonwealth Development Bank by Mr Woods. I should add that, although I am not fully satisfied with the version given by Mr Woods of the conversation on 7 February, I felt not inconsiderable doubt about Mr Johnson's version of the conversation of 3 January. Again, it had all the appearance of careful rehearsal and was delivered in a manner which, to me, did not ring true.
The result is that the applicants have failed to make out their case as pleaded. Accordingly their application must be dismissed. In the written submissions on behalf of the respondent I was asked to hear further argument as to a special cost order in the event that I should find for the respondent. I decline to do so. I consider that the hearing of this case should not be further prolonged. I do not consider that the respondent is beyond criticism in the whole of this sorry affair. Mr Johnson was certainly, in my view, to an extent, encouraged to pursue the course that he did by too lenient an attitude on the part of the respondent to his handling of the various accounts. Accordingly I propose to make only the ordinary order for costs.
Before parting with the case, I should add that, even if the applicants had been successful in persuading me that Mr Woods made the unqualified promise relied upon as to submitting and supporting the application to the Commonwealth Development Bank, they would have had very substantial difficulty in establishing a case on damages. It is not necessary that I make any findings in this regard and I do not do so. However, the material put before me on this aspect of the case obviously raised very considerable doubts as to whether there was even the slightest prospect of such an application succeeding.
I order that the application be dismissed and that the applicants pay the respondent's costs of the proceedings.

[1990] FCA 187

09 MAY 1990