Transpacific Standardbred Agency Pty Ltd v National Australia Bank Ltd
[1996] FCA 1068
•9 Oct 1996
IN THE FEDERAL COURT OF AUSTRALIA )
VICTORIA DISTRICT REGISTRY ) No VG 123 of 1996
GENERAL DIVISION )
BETWEEN:TRANSPACIFIC STANDARDBRED AGENCY PTY LTD (ACN 005 351 762)
Appellant
AND:NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937)
Respondent
COURT:Ryan, Sundberg and Merkel JJ
DATE:9 October 1996
PLACE:Melbourne
MINUTES OF ORDER
The Court orders that:
The appeal be dismissed with costs, including the costs of the application for a stay referred to in the order of Jenkinson J of 15 December 1995.
The stay granted by the order of Jenkinson J of 15 December 1995 be lifted and the appellant be released with effect from the making of this order from the undertakings recorded in that order.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
VICTORIA DISTRICT REGISTRY ) No VG 123 of 1995
GENERAL DIVISION )
BETWEEN:TRANSPACIFIC STANDARDBRED AGENCY PTY LTD (ACN 005 351 762)
Appellant
AND:NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937)
Respondent
COURT:Ryan, Sundberg and Merkel JJ
DATE:9 October 1996
PLACE:Melbourne
EX TEMPORE REASONS FOR JUDGMENT
RYAN J:
For the reasons explained by Sundberg J, I agree that the appeal should be dismissed. I also agree with the other orders that he has proposed.
I certify that this page is a true copy of the ex tempore reasons for judgment of the Honourable Justice Ryan
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Associate
4 December 1996
IN THE FEDERAL COURT OF AUSTRALIA )
VICTORIA DISTRICT REGISTRY ) No VG 123 of 1995
GENERAL DIVISION )
BETWEEN:TRANSPACIFIC STANDARDBRED AGENCY PTY LTD (ACN 005 351 762)
Appellant
AND:NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937)
Respondent
COURT:Ryan, Sundberg and Merkel JJ
DATE:9 October 1996
PLACE:Melbourne
EX TEMPORE REASONS FOR JUDGMENT
SUNDBERG J:
The appellant claimed the respondent had engaged in misleading and deceptive conduct in connection with a loan sought by the appellant from the respondent in order to fund modifications to its fishing vessel, the "Sovereign". In substance it was alleged that the manager of the respondent's Nerooma branch, Kevin Carter, had represented that the funds requested would be available, and that in reliance thereon the appellant entered into a contract for the modification of the vessel, and suffered loss when the respondent subsequently refused to provide the funds. The respondent cross-claimed for repayment of other money it had lent the appellant (approximately $800,000 plus interest), and for possession of the vessel under a mortgage.
The appellant's case was based on the content of meetings and telephone conversations between late 1989 and August 1990. At those meetings and in those conversations the appellant was represented by Garry Ewen, one of its directors, and the respondent was represented by Mr Carter. At some of the meetings Mr Ewen was accompanied by Colleen Clarke, another director of the appellant.
The first meeting was in December 1989. Mr Ewen's account was that he asked Mr Carter whether he saw any problem with the respondent lending $250,000 to $350,000 to pay for the modifications should the appellant need a loan, and that Mr Carter said "That'd be OK". Mr Carter did not recall any enquiry about the prospects of a loan, but said that if he had made any response he would have made a file note about it, which he did not do.
The next meeting was on 1 March 1990, and on this occasion Mrs Clarke was present. Mr Ewen said he asked for an assurance that the respondent would support the applicant with a loan in the future should it be needed and that Mr Carter said "go ahead and spend the money". Mrs Clarke's evidence was that Mr Carter said there would be no problems with the loan. Mr Carter made a file note of the conversation. It recorded that Mr Ewen asked whether the respondent would "look at the finance", and that he, Mr Carter, said finance would depend on the appellant's income and potential income position, and that financial statements for 1989 and interim figures up to December 1990 would be required. It also recorded Mr Ewen as saying that if the respondent wanted his term deposit funds as security for the loan, he would probably fund the modifications himself. Mr Ewen denied having said this.
A file note made by Mr Carter records a telephone conversation with Mr Ewen on 14 May in which the latter said he intended to fund the modifications from his term deposit ($208,000)
and income from fishing. The note records that Mr Ewen said his accountant, Peter Sutton, would shortly be starting work on the financial statements the respondent required. In his evidence Mr Ewen agreed that he might in May have discussed with Mr Carter the possibility of funding the modifications from the term deposit and with income from fishing.
Another file note records a telephone conversation Mr Carter had with Mr Ewen on 25 May. The latter said he was no longer likely to be able to pay for the modifications out of his own funds and would need a loan of $250,000. Mr Carter's response was that no commitment could be given until the financial statements were provided, but that when they had been he would look at a proposition. The note also records Mr Carter as having told Mr Ewen: "the fishing industry was not that good and the prospect of having $1m out against a boat that may be worth $2.5m, in a sound fishing climate [or] $1.5m in a depressed fishing climate was not that inviting". The $1m referred to included $750,000 already advanced to finance the purchase of the vessel which had occurred on 1 September 1988. Mr Ewen agreed that he had a telephone conversation with Mr Carter at about this time, but denied saying he would need a loan of $250,000. He could not recall Mr Carter saying that having $1m out on a vessel worth $1.5m was not an inviting prospect.
Mr Ewen said that in June he and Mrs Clarke had lunch with Mr Carter during which, in response to Mr Ewen's request for a firm commitment as to funding, Mr Carter said "it's there - let me know when you want it". Mrs Clarke's evidence was to the same effect, though she placed the meeting in April rather than June. Mr Carter had no recollection of the lunch.
On 27 June Mr Ewen sent the boat builder who was to carry out the modifications a facsimile message asserting the respondent's "proposal (or acceptance) for payment" of the
instalments of the cost of the work: $50,000 on each of 1 July, 1 August and 1 September, $100,000 on 1 October and the balance on completion. The message stated that the appellant would have to make the $100,000 payment out of its own funds.
Mr Carter made a file note of a telephone conversation he had with Mr Ewen on 10 July in which Mr Ewen asked about the chances of borrowing $300,000. Mr Carter said he would have to see the appellant's 1989 figures first, and the note records: "No commitment given on how the A/A for $300,000 would be accepted". A/A stands for advance application or loan application.
A file note of 24 July records a telephone conversation Mr Carter had with Mr Ewen in which Mr Ewen asked for the respondent's written approval of the loan which the boat builder wanted to sight. Mr Carter's response was that he needed the 1990 figures before the respondent would consider a commitment.
A few days later the appellant entered into a contract for the modifications to be carried out. The cost was $404,000, and it was payable by instalments as the work progressed.
Towards the end of August financial statements for the year ended 30 June 1990 were provided. Those for the preceding year had been provided a month earlier. Mr Sutton gave evidence that during the first part of 1990 Mr Carter had, on at least three or four occasions, requested that financial statements be prepared and delivered to the respondent.
Also at the end of August, according to Mr Ewen, he asked Mr Carter to make available some of the relevant funds. Mr Carter told him he would have to make a written application. According to Mr Ewen, when he remonstrated with Mr Carter, he was told it had to go to
head office, but this was just a formality. Mr Ewen made a formal application which Mr Carter sent, together with the financial statements, to his superiors, who declined to approve the loan on the ground that the 1990 income, if reproduced in 1991, would be insufficient to service the loan.
The trial judge made the following findings:
•On several occasions Mr Carter told Mr Ewen that approval of the loan would not be given until the 1989/1990 financial statements had been considered by the respondent.
•Mr Carter was an honest witness.
•Even ignoring his oath, it was quite improbable that Mr Carter would have made deliberately false file notes.
•Mr Ewen and Mr Carter made arrangements in June as to which of the instalment payments would be funded by the respondent and which by the appellant, if the loan were granted.
•At the time Mr Ewen sent the facsimile message to the boat builder he knew the respondent had not committed itself to the loan.
•Mr Carter's file notes were a substantially accurate record of the conversations they record.
The trial judge said this of Mr Carter:
I have regarded Mr Carter as a witness with a powerful motive to depict his transactions with Mr Ewen as those of a wise and competent bank officer, both to advance his own career and to protect his employer from financial loss in this proceeding. Having scrutinised his evidence, having regard to the searching criticism to which Dr Bleechmore subjected it in final submission, I found it persuasive. The inaccuracies in, and the omissions from, the file notes to which Dr Bleechmore drew attention are not, as I find, indicators of error in the substance of what is recorded concerning Mr Carter's responses to questions about the granting of the loan.
On the basis of these findings, his Honour concluded that Mr Carter had not said anything to Mr Ewen or Mrs Clarke which constituted misleading conduct. In particular his Honour rejected the evidence of Mr Ewen and Mrs Clarke that Mr Carter had said at the March meeting and the June lunch that the funds were available on request. He dismissed the claim, and gave judgment for the respondent on the cross-claim. The appeal is from the first of these orders.
Dr Bleechmore's main submission was based on his Honour's finding that in June 1990 Mr Carter and Mr Ewen discussed which of the instalments under the proposed building contract would be made by the respondent and which by the appellant. It was submitted that his Honour failed to infer from the facsimile message of 27 June and other contemporaneous events that the respondent had promised to provide funds for the modification. It was said that the facsimile message and the execution of the modification agreement rendered it "glaringly improbable" that nothing was said prior to that time that would have entitled Mr Ewen to believe that the respondent had committed itself to providing the funds.
There was evidence that the matter was discussed in March, and his Honour accepted Mr Carter's evidence that Mr Ewen asked whether the respondent would "look at the finance", and his response that it would depend on the financials. The cautious wording of the
facsimile message - "The Bank's proposal (or acceptance) for payment" - does not require the inference that Mr Carter had in fact committed the respondent. There was every reason why, in his communications with the builder who wanted the security of knowing the respondent was behind Mr Ewen, the latter would tend to put a favourable slant on his dealings with the respondent.
Then Dr Bleechmore attacked Mr Carter's file notes and said that the primary judge had given them excessive weight. Counsel took us carefully through Mr Carter's evidence, pointing out, as he had to the trial judge, inaccuracies in certain of the file notes, and the omission of matter that, he submitted, should have been included in the notes.
Despite these criticisms of Mr Carter's evidence, it has not been shown that the trial judge fell into any error in accepting the substantial accuracy of his notes. The findings that have been summarised were all open to be made on the evidence. The case stood or fell according to the judge's rejection or acceptance of Mr Carter's evidence, based as it was on contemporaneous notes of most of the conversations in question. His Honour found Mr Carter to be a witness of truth, having, as he said, scrutinised his evidence carefully, in view of the fact that there were reasons, other than a concern for the truth, which might have inclined him to give the evidence he did.
The trial judge had the benefit of seeing and hearing Mr Ewen and Mrs Clarke on the one hand and Mr Carter on the other, and he preferred Mr Carter's evidence. We do not have the advantage the judge enjoyed. While the transcript enables us to read what the witnesses said, it is no substitute for seeing and hearing them. It does not enable us to form an impression anywhere near as authentic as that arrived at by a trial judge.
In Devries v Australian National Railway Commission (1993) 177 CLR 472 at 479 Brennan, Gaudron and McHugh JJ said:
More than once in recent years, this Court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against - even strongly against - that finding of fact. If the trial judge's finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge "has failed to use or has palpably misused his advantage" or has acted on evidence which was "inconsistent with fact incontrovertibly established by the evidence" or which was "glaringly improbable".
None of these circumstances has been shown in this case.
It was also submitted that the primary judge's rejection of Mr Ewen's and Mrs Clarke's accounts of their conversations with Mr Carter was against the evidence and the weight of the evidence. Reliance was placed on the fact that independently of his notes Mr Carter had little recollection of the conversations; that the notes were themselves suspect; that Mr Carter was confident the application would be successful; that the facsimile message set out a schedule of payments by instalments; and that Mr Carter had been unable to recall the instalment discussion.
His Honour referred to all of these matters, and notwithstanding them, Mr Carter's evidence survived the careful scrutiny to which he subjected it. Mr Carter's evidence was supported by Mr Sutton's evidence that on at least three or four occasions Mr Carter had asked him to provide the financials. It was also supported by the fact that when, in late August, Mr Carter and Mrs Clarke submitted their application for finance, which they had prepared themselves, it contained no suggestion that Mr Carter had already committed the respondent, or that mere
confirmation of a done deal was sought. Having regard to his Honour's advantages, and this other evidence, his preference for Mr Carter's version of events over that of Mr Ewen and Mrs Clarke was clearly open to him.
Finally, it should be noted that the ground of appeal relating to an alleged misapprehension by the trial judge as to the significance of evidence given in relation to the sale of certain boat units was not pursued.
The appeal should be dismissed.
The stay imposed by order of Jenkinson J on 6 February 1996 should be lifted.
The appellant should be relieved from any further compliance with the undertaking recorded in that order.
I certify that this and the preceding eight pages are a true copy of the reasons for judgment of the Honourable Justice Sundberg
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Associate
4 December 1996
IN THE FEDERAL COURT OF AUSTRALIA )
VICTORIA DISTRICT REGISTRY ) No VG 123 of 1995
GENERAL DIVISION )
BETWEEN:TRANSPACIFIC STANDARDBRED AGENCY PTY LTD (ACN 005 351 762)
Appellant
AND:NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937)
Respondent
COURT:Ryan, Sundberg and Merkel JJ
DATE:9 October 1996
PLACE:Melbourne
EX TEMPORE REASONS FOR JUDGMENT
MERKEL J:
I also agree with the reasons given by Sundberg J for the dismissal of the appeal and the orders that he proposes.
I certify that this page is a true copy of the ex tempore reasons for judgment of the Honourable Justice Merkel
........ ........ ........ ........ ........ ........ ........ ........ .......
Associate
4 December 1996
Counsel for the Appellant: Dr J F Bleechmore
Solicitors for the Appellant: Ellinghaus & Linder
Counsel for the Respondent: R A Finkelstein QC and A J Maryniak
Solicitors for the Respondent: Russell Kennedy
Date of Hearing: 9 October 1996
Place of Hearing: Melbourne
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