CATCHWORDS TRADE PRACTICES - mortgage by way of guarantee - duty of mortgagee bank - applicant mortgagor wife of solicitor co-mortgagor - not setting documented transactions aside lightly. Trade Practices Act 1974 ss.52 Margaret Anne Anderson v. Westpac Banking Corporation Qid G85 of 1986 PINCUS J. BRISBANE. 31 MARCH 1987 ti a) FEDERAL COUR AUSTRALIA" PRINCIPA| REGISTRY > IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G85 of 1986 GENERAL DIVISTON ) BETWEEN: MARGARET ANNE ANDERSON . Applicant AND: WESTPAC BANKING CORPORATION First Respondent AND: JOHN KENNETH PROVAN Second Respondent AND: VIDEO MAGIC PITY. LIMITED Third Respondent AND: JAMES OUTRAM ANDERSON Fourth Respondent AND: ALISTATR NOEL CLARK Fifth Respondent AND: RAYMOND ANTHONY SMYTH Sixth Respondent AND: ALISTAIR NOEL CLARK Cross Claimant AND: JAMES OUTRAM ANDERSON Cross Respondent MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 31 MARCH 1987 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The applicant's claims against all of the respondents be dismissed; 2. There be judgment for the lst respondent: (i) on its claim against the applicant and against the 3rd, 4th, 5th and 6th respondents in the sum of one hundred and three thousand, four hundred and eighty-two dollars and eighty-six cents ($103,482.86); and we (il) against the applicant and the 4th respondent for delivery of the land the subject of Bill of Mortgage Registered Number C453857 within 28 days of the date hereof; all questions as to the,costs of the lst and 2nd respondents be reserved; the applicant and the 4th respondent pay the costs of the 5th respondent of and incidental to the proceedings, limited to four days' hearing and excluding any costs relating to the 5th respondent's cross-claim against the 4th respondent; the applicant and 4th respondent pay the costs of the 6th respondent of and incidental to the proceedings, if any; all costs be taxed if not agreed; any party, and in particular the lst and 2nd respondents as to their costs, may have the matter relisted to apply for further necessary orders on seven (7) days' notice to the other parties concerned; as to the costs of the 5th respondent relating to 6 October 1986, which were reserved, there be no order in respect of those costs; except as hereinbefore determined, all questions as between the applicant and the 4th, Sth and 6th respondents or any of them relating to matters in issue in these proceedings be adjourned for hearing on a date to be fixed. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G85 of 1986 GENERAL DIVISION ) BETWEEN: MARGARET ANNE ANDERSON Applicant AND: WESTPAC BANKING CORPORATION First Respondent AND: JOHN KENNETH PROVAN Second Respondent AND: VIDEOMAGIC PTY. LIMITED Third Respondent AND: JAMES OUTRAM ANDERSON Fourth Respondent AND: ALISTAIR NOEL CLARK Fifth Respondent AND: RAYMOND ANTHONY SMYTH Sixth Respondent AND: ALISTAIR NOEL CLARK Cross Claimant AND: JAMES OUTRAM ANDERSON Cross Respondent PINCUS J. 31 MARCH 1987 REASONS FOR JUDGMENT This is an application, based substantially on s.52 of the Trade Practices Act 1974, relating to a bill of mortgage in the nature of a guarantee executed by the applicant on 31 March 1983. The principal debtor is the third respondent (Videomagic Pty. Ltd.). The fourth respondent is the applicant's husband and a co-signatory of the mortgage in question. The fifth and sixth respondents are co-guarantors of the debt which the mortgage secures. The first respondent, Westpac Banking Corporation ("the bank"), has cross-claimed against all the other respondents except the second, seeking payment of the debt due by Videomagic and, against the applicant and fourth respondent, possession of the land the subject of the mortgage. All the respondents except Videomagic have filed defences to the applicant's claim. In addition, the fifth respondent (Clark) has made a cross-claim against the fourth respondent (Anderson). It was finally formulated only during the hearing. Although at one stage it appeared to me not unfair to determine Clark's claim against Anderson in the same hearing as the other claims referred to above, I was persuaded by Anderson, after Clark's claim against him had been partly heard, that he needed time to prepare his defence to that claim, and it has been adjourned. In her statement of claim, the applicant set up that she had been induced to sign the mortgage in question by representations that it was limited to a sum of $20,000. She claimed in her pleading that these representations were made by the bank's branch manager, the second respondent (Provan), as well as by Anderson, Clark and Smyth (the sixth respondent). She also said that some months after execution of the mortgage, Provan told her that no further moneys could be advanced to Videomagic by the bank without the applicant's signature. In fact, the mortgage signed is not limited to $20,000, but unlimited, and there would have been no truth in any suggestion that no further moneys could be advanced by Videomagic without the applicant's signature. The applicant says that she should have a declaration declaring the mortgage to be void, or in the alternative, limiting it to a security for $20,000. Reference is made below to the respondents' pleaded attitudes towards the applicant's claim, but at this stage it should be noted that her husband, in his defence, puts in issue the allegations of misleading statements - not only those made against him, but those made against the other respondents. However, at the trial he supported her case. Anderson filed a cross claim against Clark and Smyth, the guarantors, asking for a declaration of entitlement to have each contribute one third of the debt due to the first respondent. That claim will also be adjourned, so the whole question of the liability inter se of those who are debtors to the bank will have to be determined, if necessary, later; that deferment, as it seems to me, is a necessary consequence of the adjournment of Clark's claim against Anderson referred to above. My approach to the applicant's claim has been influenced by a view that a court should not lightly interfere with transactions recorded in writing on the basis of claimed recollections of conversations accompanying them, years after the documents recording the transactions came into existence. To do so would tend to damage the community's confidence in the efficacy of the process of recording transactions in writing. Here, there is a special additional factor, namely that the applicant is the wife of a solicitor who also signed the mortgage which is attacked and advised her in relation to it. As I have said, the mortgage was, on its face, not limited as to amount and was in particular not limited to $20,000, as the applicant says it should have been. The evidence was that the bank does not, as a matter of practice, ordinarily take "third party mortgages" limited in amount. It was said in effect that, where a mortgage is being executed by a person who is in substance a guarantor, to support a principal debt (such a mortgage being called a "third party mortgage"), an agreement to limit the guarantor's liability is given effect to by inserting the limit in a form of guarantee executed, not by inserting it in the mortgage. If there 15 no limit intended, no guarantee 1s executed. The practice mentioned may be thought likely to lead to confusion; however that may be, it 1s important here, for it reduces the significance of the mortgage's having been unlimited. The mortgage would have been unlimited on the face of 1t whether or not a limit had been agreed. It 1s not the absence of a limit in the mortgage, but the non-execution of a limited guarantee, which is significant, if one has regard to the bank's practice. One last preliminary observation: the evidence disclosed that it is not the bank's practice to require that any explanation (brief or elaborate) of the effect of what they are committing themselves to be made to guarantors. According to the evidence, it is the practice, however, to require an explanation of documents executed by "dependent relatives", a class in which the applicant was thought to fall. Although there was a note on the mortgage that the matter had been explained to the applicant, there was no acceptable evidence of any satisfactory explanation. The case took six days, partly due to the multiplicity of parties (three of whom represented themselves). There was considerable analysis of the events surrounding the crucial conversation, which took place on 31 March 1983. However, the essential fact relating to the events of 31 March 1983 are not very complex. Anderson, Clark and Smyth were interested in Videomagic's business and, largely through Anderson, were attempting to obtain a loan or loans in connection with 1t. Shortly prior to 31 March 1983, Anderson discussed with Provan the possibility of Videomagic's obtaining a loan of a sum just under $100,000; the interest rate chargeable increased 1f the loan went to $100,000 or more. The figure suggested was $98,000 and on 21 March 1983 an application for a loan of that sum was submitted. That was approved on 24 March. On 29 March 1983, Anderson called to see Provan and said that, at that stage, he wanted a $20,000 working account limit until the 30 June 1983. Provan's note of that conversation makes little sense, but suggests that the question of advancing the oe whole $98,000, which had been approved, was not dropped, but merely deferred, and I so find. On 31 March 1983, the disputed transaction was put into effect by signing documents. Both the surrounding conversation and the identity of the documents then produced are matters in dispute, and the resolution of that dispute requires an analysis, undertaken below, of the evidence of persons present on that occasion. It 1s convenient, however, to pass on to subsequent events at this stage. I am satisfied that on 22 June 1983 Provan told Anderson, in effect, that the whole sum approved had to be drawn by 30 June 1983 if required, and that on 28 June Anderson told Provan that it had been decided to borrow only $95,000. Documents to give effect to that were executed on 29 June 1983. What happened, as a practical matter, was that $75,000 was placed on deposit with Partnership Pacific Limited and drawn on from time to time. The amount in the Partnership Pacific Limited account did not reduce continuously; on some occasions 1t was replenished. In the end the business of Videomagic was unsuccessful. A dispute as to liability for its debt arose between the bank, on the one hand, and Anderson and the applicant on the other. It is, however, important, and damaging to the applicant's case, that the nature of the issue as initially put forward on behalf of the applicant differs from that raised in these proceedings. On 2 September 1985, Anderson and the applicant wrote a letter to Provan saying the applicant had been assured that "although a bank security was executed for a sum of $98,000, the amount of drawings against the security would be limited so that there could be no increase beyond $20,000 without her knowledge and authority". The contention presently put forward is simpler: that the security was represented to be limited to $20,000. The applicant's case divides the suggestion made in the letter into two elements: firstly, she says that the security was represented to be limited to $20,000 and secondly, she says that in June 1983 Provan orally represented that the Videomagic debt could not be increased without her signature. I am satisfied that the applicant was aware of the content of the letter of 2 September 1985 when she signed it. I come now to the applicant's allegations that misleading statements were made. Some time before the critical events of 31 March 1983, Anderson and the applicant had marital difficulties; they separated in April 1983. It seems likely, as the applicant suggested, that communication between them was unsatisfactory at the relevant time, and I think that circumstance has contributed to the occurrence of this dispute. The applicant made an affidavit in June 1983 in Family Court proceedings including the following: "My husband does explain certain aspects of borrowing to me, but he constantly changes the amount and the purpose of the loans. As a consequence, I am usually quite confused as to the amount the mortgages are for, and the security we are providing. MR. PROVAN usually just asked me if JIM ANDERSON had explained it to me." Not surprisingly, counsel for the bank relied strongly on this passage. According to the applicant's evidence, at the end of 1982 or the beginning of 1983, there was a dinner at her home at which Clark and Smyth were present, as well as her husband and herself. It was stated that there was a need for "money to buy more stock for the shops", but only $20,000. She said that she agreed to give a mortgage in respect of the property in issue in the case, namely a then uncompleted house, for $20,000. According to the applicant, when she went to the bank on 31 March she said, in effect, that she was signing a mortgage "against my better judgment but only on the basis that 1t was for $20,000". Provan agreed and "they all agreed that it was for $20,000 ..." When pressed as to what Provan said, the applicant replied: "I cannot give you word for word, but it was my understanding that he agreed with my husband and Mr. Smyth and Mr. Clark that 1t was for $20,000." She also said that she brought up the amount of the mortgage and - +». my husband assured me in the bank manager's office that it was $20,000 and the other three agreed - I. cannot remember whether it was all by nodding the heads or by saying, yes, it is only for $20,000. I cannot remember, but they certainly gave me the impression that they were all agreeing." The applicant was cross-examined by counsel for Clark, who suggested that she was not told by Clark that the mortgage was limited to $20,000. She replied: "I do not remember exactly what was said. I said to you yesterday my feeling about the whole thing was that everybody in the room was in agreement that it was $20,000; there were noddings of heads and just the feeling that for me that $20,000 was it." Iam satisfied that the applicant expressed at some stage her unwillingness to join in a mortgage of the house property in a sum greater than $20,000 and would have no difficulty in concluding that she did not appreciate that, by executing the mortgage, she made herself liable for Videomagic's debt and made the property mortgaged available in respect of that debt, without limit. That does not necessary involve the proposition, however, that Provan, Clark or Smyth misled her with respect to the effect of the transactions of 31 March. Anderson's version of the events in question seemed to me implausible. He agreed that Provan had sought bank approval for an amount somewhat less than $100,000, but said that he told Provan about a week before 31 March that he and his wife were not prepared to risk more than $20,000. He claimed that on 31 March Provan said the mortgage which Anderson and his wife were about to sign would cover the loan of $20,000 and that the applicant said that she was signing the mortgage under protest, but had agreed to mortgage her home for $20,000. Anderson swore that, before June 1983, Provan suggested that the accommodation to the company should be increased from $20,000 to $95,000. If that version of 10. events were true, then there would, no doubt, have been a question of security for the extra $75,000, as it is claimed to have been agreed that the mortgage was limited to $20,000. As to that, Anderson said, in effect, that there was no additional security, apparently because any "drawdown" of the $75,000 "would be offset by stock to at least an equivalent value or more". This is difficult to reconcile with Provan's record of these events (exhibit 17), which I am satisfied is genuine and not fabricated. Further, 1t seems to me improbable that, if the bank had required security over real property in respect of the $20,000 limit arranged in March, it would have advanced a further $75,000 simply on the basis of personal liability, supposedly relying upon the $75,000 being covered by Videomagic's stock ~ over which it had no security. It is necessary to say more generally, with respect to Anderson's evidence, that he was an unsatisfactory witness, who appeared to me inclined to concoct events and conversations. Anderson has also written amore recent letter; on 20 March 1987 he filed an affidavit exhibiting a letter he had written to the Chief State Manager of the bank expressing discontent with his treatment at the hands of the bank. Some detailed comment on that letter is warranted. It asserts that Clark and Smyth "... elected to hold their one-third shares personally" ~ i.e. in a trust created to run the Videomagic business; in his evidence, Anderson said that ill. mo units were issued to either of them. He also said that he talked to Provan about Videomagic's "perceived budgetary needs" and that "What was needed then ... was a trading limit facility of $20,000". On any version of the matter, that is a misleading statement; it is clear that substantially larger accommodation was sought, as indeed the letter itself suggests; shortly after the passage just quoted, there was discussion of a facility of $100,000. Insofar as the letter suggests that the initial approach to Provan was on the basis of a facility of $20,000 only, it is in my opinion false and designed to bolster the suggestion that the mortgage was limited to that figure. The letter went on to say that Anderson told Provan he would "agree to provide backing to the company in the same proportion as my family interest in it, viz. one-third". One thing which seems clear enough about the case is that Provan never agreed - 1t would have been an unusual arrangement - to limit the bank's recourse to the guarantor to one-third of the company's debt. Of course, had it done so, there would have been not one, but two limitations in the mortgage, on the case put forward by Anderson: firstly, that the mortgage was in any event limited to $20,000 and secondly, that it could not exceed one-third of the company's debt. I cannot believe that, if Anderson thought the mortgage was to contain such limitations, he would not have checked (it would have taken only a moment) to ensure that they were present. 12. Next, the letter says (p.4 para.(iii)) that Anderson had been told that Provan got a certain commission associated with the transaction; Anderson admitted that that was false. On the same page, Anderson makes the further assertion that neither the applicant nor he "has ever repudiated liability to the bank for one-third of the total debt of Videomagic Pty. Limited". In fact, as he knew, the applicant repudiated liability in respect of any sum exceeding $20,000; one-third of the total debt was a figure greater than that. A number of other points were made by counsel, attacking Anderson's credit. I can understand that the situation 1s one of great stress for him; even on his own account of the matter, he acted with carelessness in placing what 1s apparently a oor the principal asset of his family in jeopardy, by not taking the simple step of glancing at the printed provisions of the mortgage. But I have to say that I must generally reject the evidence of Anderson; no doubt some of what he has to say is substantially correct, but on the critical issues I have come to the conclusion that his evidence has no weight. Before coming to the evidence of other witnesses on the central question, it is desirable to make further reference to exhibits. The mortgage signed by the applicant and Anderson is in a standard printed form and contains, on the first page, the names and addresses of the mortgagors, the description of the land and the name and description of the principal debtor. There is no typed material on any of the other operative pages of the mortgage 13. except the last, where the names of the mortgagors are typed in. There is provision for execution by the company, and a typed note certifying that the nature and effect of the mortgage and obligations were fully explained to the applicant. As I have mentioned above, the fact that there was no limit in the mortgage was not in itself, if one has regard to the bank's practice, a significant matter, for the limit would have been recorded in an accompanying form of guarantee. Nevertheless, if there was a limit agreed, at least one of the mortgagors might have been expected to take the very slight trouble necessary to look for it. Clark and Smyth executed a form of guarantee which, again, had very little typed information on it - only the names and designations of the guarantors, and of the principal debtor, with (at the end) provisions for attestation. It would, again, have been simple enough to ascertain that there was no limit pranted. Clause 8 1s so framed as' to permit insertion of a limit, but the whole clause was crossed out and initialled by the parties. In his defence to the applicant's claim, Clark in effect sided with the bank, putting in issue not only the allegations that he misrepresented the transaction, but the allegations that the bank did so. Smyth did not plead to many of the relevant allegations, but his pleading gave no support to the applicant's case. When these two then came to give evidence, their versions differed somewhat. Clark said that after unsuccessful approaches to the A.N.Z. Bank and the Commonwealth Bank and other contacts unnecessary to mention in detail, he went with Anderson 14. to Westpac to see Provan and was told that the bank was prepared to look at a proposal for a loan of $98,000 to Videomagic, on the security of the property which ultimately was mortgaged by the document in issue in this case. He said, as I understood him, that although the mortgage was signed for $98,000, he and Smyth were not undertaking any personal liability. Smyth, on the other hand, said that on 31 March he understood that he was to be liable for $98,000, and that "the first mention I ever heard of $20,000 was at that meeting" - i.e. the meeting of 31 March. He explained that the $20,000 was to be - "... put into some sort of cheque account. That was, we were borrowing 98, but that the $20,000 was going to go into a working account and the other money was going to be put somewhere else, locked up or something." Both of these gentlemen denied that they had said anything to mislead the applicant as to the nature of the transaction, and I am satisfied of the truth of their evidence in that respect. It must go against the applicant that none of the pleadings of persons present at the crucial conversation on 31 March supported her allegation - not even those of her husband. It is true that Anderson came out at the trial on her side, but for the reason I have given, I do not accept him. It is not necessary to make any finding as to whether Anderson misled the applicant. Iam satisfied that neither Provan, Clark nor Smyth did so and am satisfied that they did not participate in or acquiesce in her being misled. It would have been necessary to arrange something in the nature of a conspiracy 15. to deceive her into thinking that the liability would be limited to $20,000, since the documents were to be, and were, executed in the course of a discussion in the bank between all the persons concerned. The applicant, from my assessment of her manner of giving evidence, appeared genuinely to believe that she had been misled, and I am satisfied that she did not want to mortgage the house for more than $20,000. In my opinion, the reason that she did so was principally because she had been inthe habit of relying on her husband for explanations of transactions of this sort, and did not trouble herself with ascertaining the details of the transaction to which the mortgage related. Further, a contributing factor may have been the execution of a document (exhibit 8) on 31 March 1983 noting the existence of "the amount of my/our advance limit", namely $20,000. Mrs. Anderson may well have been acting under the misapprehension that the reference to the limit was to the limit of the entire liabilty to the bank, rather than to the overdraft limit which the bank was establishing at that stage. I have said that in substance the applicant's position was that of guarantor: Permanent Trustee Co. of N.S.W., Ltd. v. Hinks (1934) 34 S.R.N.S.W. 130 at p.138. I also note that the obligation to a prospective guarantor may extend, not merely to refrain from misrepresentation, but to positive disclosure: Goodwin v. National Bank of Australasia Ltd. (1968) 117 C.L.R. 173 at p.175. However, I do not see that any such duty arose here. The bank had been given to understand that not only the immediate overdraft limit of $20,000, but the prospective fully drawn advance of $98,000, were to be secured by guarantees and by a 16. mortgage on the property in question. Although the applicant expressed some unhappiness, as I find, about mortgaging her home, IT am not satisfied that anything occurred which gave rise to a positive duty on the bank to explain in detail what the transaction was all about. In coming to that conclusion I am, as I have said, influenced by the fact that the two prospective mortgagors were a solicitor and his wife. Mr. Keane, senior counsel for the bank, relied on the remarks of Walton J. in Bank of Baroda v. Panessar [1987] 2 W.L.R. 208 at p.212: "Mr. Howells did then press on me that in all the circumstances of the case the bank owed a duty to the wives of explanation of what was, undoubtedly, avery serious undertaking by the wives. But it does not seem to me that this is so in the slightest. There ais here no relationship of any description between the bank and the wives. The wives were not customers of the bank; the bank never at any stage took 1t upon itself to offer any advice to the wives as to the course that they should adopt; 1t never pressed the wives to. sign the guarantees, in any way whatsoever. It seems to me that following on the recent case in the House of Lords of National Westminster Bank Plc. v. Morgan £1985] A.C. 686 there 1s no ground for saying that the bank, in any way whatsoever, owed any duty to the wives." Although that passage was concerned with particular facts, in large part it seems to me equally applicable here. It would hea strong thing to hold that, except in very special circumstances, where a solicitor involves his wife as a guarantor in a transaction in which he is interested, the bank has a duty to explain to the wife the legal effect of the transaction into which she is to enter. 17. Mr. Keane, senior counsel for the bank, urged upon me that I should accept Provan's evidence. I thought him in general an impressive witness, but am not satisfied that he was able, at this stage, to give any accurate account of the details of the conversations which occurred some four years ago. While I accept that he said nothing to encourage the thought that the applicant's liabilities were limited to $20,000 and that he was unaware that she had any notion that her liability was so limited, I think there was a considerable amount of reconstruction in his account of conversations. But the onus is on the applicant to satisfy me that the circumstances were such as to enable her to escape or reduce the liability arising on the face of the mortgage. In that she has failed. Lesser Issues As mentioned above, the applicant alleged in her pleading that rights accrued to her from events in June 1983, as well as those in March. The allegation was that on or prior to 21 June 1983, on advice from her then solicitors, she telephoned Provan and was told that no further moneys could be advanced to Videomagic by the bank without the applicant's signature. The applicant gave two slightly different versions of this, one to the effect that Provan said he could not lend any money over the house in Woodwind Valley Road (that being the subject of the mortgage in question and these proceedings) without her signature, and the 18. other to the effect that the bank could not lend any more money at all to Videomagic without the applicant's signature. Iam satisfied that some communication took place in June 1983 between the applicant and/or her then solicitors on the one hand, and Provan on the other, because the solicitors were concerned about the applicant's liability under the mortgage, but I have not been able to reach any firm conclusion as to what the communication was. The first version given by the applicant, mentioned above, seems unlikely as, according to the applicant's case, she thought the mortgage over the house in Woodwind Valley Road was limited to $20,000. It is difficult to accept that she could have been comforted by the thought that money could not be lent within that limit without her signature. Further, it ais hard to understand how the applicant could have believed that the bank was unable to lend moneys up to that §20,000 limit without her signature; such moneys had been advanced before June without any reference to her. There are other difficulties about this aspect of the case from the applicant's point of view, but only one other need be mentioned. The letter of 2 September 1985 discussed above was signed by the applicant and her husband, and initialled by both at a point quite close to the relevant part of the letter; it gives this version: "In or about May 1983, Mrs. Anderson had commenced certain proceedings under the Family Law Act. In 19. the conduct of those proceedings, her solicitors, Messrs. Swanwick, Murray and Roche had occasion to contact the bank to reiterate Mrs. Anderson's insistence that the liability secured against the Woodwind Valley Road house be limited to $20,000 and would not be increased ..." It should be noticed that the allegation in the letter was that the solicitor, not the applicant, had made the approach and there was no suggestion that the bank made any assurance about requiring the applicant's signature on further advances. Provan denied the allegation. I had the impression from the way in which he gave his evidence that he had some recollection of a contact with the applicant or her solicitors about the relevant time, but did not know precisely what it was. But I am, ian any event, not satisfied that the conversation alleged by the applicant took place. Another question raised was whether or not the bank had paid out money from Videomagic's account without having the requisite signatures. It appears to me unnecessary to resolve that question because the quantum of the bank's claim is not in assue. That 18 so, presumably, because Anderson appears to admit that he, at the request of the bank, added his signature to the cheques in question by way of ratifying them. From the documentary evidence, it appears to me likely that some cheques were paid without the requisite signature, but it is also probable that all these payments were ultimately ratified. However that may be, in the end the point appears academic in view of the acceptance of the amount of the bank's claim as correct. 20. Another lesser question which caused considerable debate was whether certain documents were prepared by or at the direction of Provan to record the originally contemplated $98,000 advance. He told what appeared, on the face of it, to be rather an unlikely story about having prepared documents and then destroyed them at the request of Anderson. The matter assumed importance because there was no document admitted to have passed between the parties in existence recording the $98,000 transaction. I do not find it necessary to resolve the question mentioned, because I am quite satisfied that exhibit 32 is genuine; that is the letter dated 31 March 1983 addressed by Provan to Anderson regarding the affairs of Videomagic and commencing: "We are pleased to advise that the bank has approved your application for a $98,000 Fully Drawn Advance to assist with the general expansion of company's operations." Conclusion In the result, the applicant's claim fails against all respondents. The cross claim of the first respondent must succeed. The uncontested schedule (exhibit 42) shows the total debt accrued to 23 March 1987 to be $103,053.90 with interest accruing daily at $53.62, making a total to date of $428.96. The total judgment must therefore be for $103,482.86 and there will also be judgment for possession. As mentioned above, I do not propose to deal with any other claim arising between the debtors, and it will be directed that all other questions in the proceedings be adjourned. In the 21. result, this judgment will dispose of the principal question - i.e. the parties' liability to the bank; if it proves necessary to deal with the cross claim of either the fourth or fifth respondent mentioned above, or with any claims for contribution or indemnity, there will have to be a further hearing, in which the bank will not be involved. To some extent the hearing was lengthened by the abortive cross claim on behalf of the fifth respondent Clark. The first and second respondents must, subject to anything counsel may have to say, have their costs against the applicant, and the fourth respondent. I shall hear counsel on all other questions of costs. 2 certify that this and the ~~ precedinig pages are a true copy of the reasons for judgment herein of His Honour Mr Justice Pincus ee THE Dated 3/ hare ox