MANN v WESTPAC BANKING CORPORATION SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL SAMUELS AP, PRIESTLEY and MEAGHER JJA 8 November 1989, 8 November 1989 [1989] NSWCA 138 GUARANTEE — appeal — application for new trial on ground of fresh evidence — no new question of principle. Council of the City of Wollongong v Cowan (1955) 93 CLR 435 applied. Samuels JA The respondent to this appeal sued the appellants on an instrument dated 3 May 1983, by which the appellants guaranteed payment to the respondent of advances or accommodation granted or to be granted by the respondent to a company called Western Medical Services Pty Ltd (which I will call Western') of which the appellants were in substance the proprietors. Campbell J gave judgment for the respondent in the sum of $119,117.51, including interest, and it is against that order that the appeal is brought. The relevant facts may be shortly stated. The appellants conducted a company called Aircall Communication Pty Ltd (which I will call Communication') which they were anxious to develop and expand, for which purpose they required further capital. In addition the appellants' business was suffering from a cash flow problem which had been alleviated by funds provided by Western's bankers, the Australia and New Zealand Bank, and by Australian Guarantee corporation. Being in need of further cash Mr Mann sought additional accommodation from the respondent, which was provided by Mr Challoner, the assistant manager of the respondent's Parramatta branch, on the security of an unregistered mortgage and a debt and interest guarantee. However, the overdraft limit was exceeded and it is evident that by early 1983 the appellants were in some financial difficulty. Mr Challoner had introduced Mr Mann to a Mr Berry, the executive of a financier called Business Loan and Equity Capital Pty Ltd (which I will call BL and E') and discussions had taken place about the provision by BL and E of venture capital. On 23 March 1983 BL and E made an offer to subscribe $100,000 to Communication. The nature of the offer was set out in a letter and sought acceptance of the offer within twenty one days. It provided that if acceptance was not received within that time, and if another condition, which is not relevant, was not satisfied, the terms might be revised or the offer lapse. The machinery for acceptance was return of one copy of the offer, and there was a pro forma to be completed on the bottom of the document. It is common ground that the appellants executed the guarantee. The circumstances under which they did so, however, raise the central issue in the case. The appellants contended that prior to the execution of the guarantee Mr Challoner on behalf of the respondent falsely represented to the appellants that BL and E had agreed to provide an equity loan of $100,000, that the respondent would extend credit facilities to the appellants to a maximum of $100,000, and that the loan would be extinguished when the funds from BL and E were received. 2 UNREPORTED JUDGMENTS Mr Challoner denied making any of these representations, and Campbell J preferred his evidence to that of the appellants. He concluded that it was more probable than not that he did not make the representations, and regarded his evidence as more impressive than that of either of the appellants. Obviously, therefore, in arriving at his conclusion as to which version of the account he felt able to accept, he relied upon the demeanour of the witnesses, and the assessment he made, having seen them in the witness box, of his capacity to rely upon their accuracy. Furthermore, the learned judge also formed a favourable impression of the evidence of Mr Challoner's assistant manager, Mr Lancuba, who was present when the guarantee was executed and who corroborated Mr Challoner. He therefore rejected the argument that the false representations rendered the guarantee void and rejected a further submission to substantially the same effect based, however, on the Contracts Review Act 1980. In the appeal the appellants dispute the findings of fact made by the learned judge, and also seek a new trial on the ground of the availability of fresh evidence. This remedy involves the stringent requirements made plain in the decision of the High Court in The Council of the City of Wollongong v Cowan (1955) 93 CLR 435. The discovery of new evidence, to use a neutral term, will be ground for a new trial only if, first, it is reasonably clear that if such evidence had been available at the first trial there would have been an opposite result, or if not reasonably clear, it must have been so highly likely as to make it unreasonable to suppose otherwise and, secondly, only if the exercise of reasonable diligence could not have procured such evidence at the first trial. This ground of appeal is supported by an affidavit sworn jointly by the appellants upon which each of them was cross-examined. The fresh evidence is Annexure A to that affidavit, and purports to be a letter dated 25 March, 1983, with which Mr Mann covered his return to BL and E of the copy of that company's offer, thus signifying his acceptance. The importance of the matter is this. Mr Mann asserted in cross-examination at the trial that he had accepted the offer by sending it off to BL and E. He was not asked about it in chief. Mr Berry, the executive of BL and E, denied that his company had ever received the acceptance and in this he was supported by the minutes of his board. Mr Challoner said that Mr Mann had told him that he would not accept the offer of $100,000 made in March because he, that is, Communication presumably, was seeking a larger sum; and there is no doubt I would say from the whole of the evidence, that negotiations for a larger sum did in fact take place some months later in the year. Campbell J found that it was improbable that Mr Mann had accepted the offer as he alleged. From this finding he drew inferences damaging both to Mr Mann's credit and to the substance of his case, pointing out that the acceptance of the offer would have lent support to the essence of the representations said to have been made by Mr Challoner, namely that the provision of funds by BL and E was close at hand. The affidavit does not deal in any but the sparsest way with the reasons why Annexure A was not available at the trial. In cross-examination Mr Mann said that during the trial efforts were made to look for documents which might be relevant to the dispute. He said that after judgment he was told by his solicitor to search "everywhere". It seems to me, and Mr Mann's evidence is reasonably explicit upon this point, that it was only after judgment that a serious effort was URJ MANN v WESTPAC BANKING CORPORATION (Priestley JA) 3 mounted, and this was designed to turn up any documents which might be used to rebut the adverse inferences about Mr Mann's credit drawn by the learned judge and revealed in the judgment. Annexure A was then found in one of Western's files in storage at its former premises, having apparently been left there by the receiver earlier appointed to the company. Iam not satisfied that if due diligence had been employed it would have failed to discover Annexure A. The appellants' case, as I have said, was, in part, that the provision of funds from BL and E was imminent and would have been greatly assisted by evidence that the company's offer had been accepted, and thus by the tender of_a document such as Annexure A. Hence I consider that such a document was in a category to which the minds of the appellants, and certainly of their legal advisers, would have been directed at the trial. But, as I have said, I think the only attempt made to discover a document or documents of that class was made after judgment, and thus too late. Secondly, I am not at all satisfied that Annexure A, if produced at the trial, would have altered the result, if I may put the criterion succinctly. There was evidence, to which I have referred, rebutting the view that the offer had been accepted as Mr Mann asserted. Moreover, his own conduct after March 1983 was quite inconsistent with the attitude to be expected of a businessman seeking the funds to relieve him of a temporary obligation, namely the guarantee, which he could not cover, but which would be cancelled once the funds were in hand. Thus, I would have expected such a person in that situation to have made inquiries which evidently Mr Mann omitted. Had Annexure A been available and admitted in evidence its effect would have provoked a lively contest no doubt. But its influence could never have been predicted and categorised as the authorities require. Accordingly, I do not think that Annexure A amounts to fresh evidence. Upon that matter the Court has already ruled, and these are the reasons that led us to that conclusion. I add that it is unnecessary to consider the question whether new evidence affecting only credit falls within the fresh evidence rule. That leaves only the challenge to the judge's findings of fact. The argument under the Contracts Review Act was included in the written submissions, but not supported orally, and I think in the circumstances I need only say that it seems to me to have no substance. Miss Cunningham for the appellants has done everything that she could do with this very unpromising material, but as I think she was herself ultimately bound to recognise, this is a classic case of the findings of a primary judge based largely upon his assessment of the credibility of witnesses whom he has seen in the witness box. I do not think, despite Miss Cunningham's persuasive argument, that the learned judge's failure to be more impressed by the structure of, and by some gaps in the bank manager's diary notes, can be regarded as a misuse of the judge's advantage, or I would go further, as of any material significance at all. It is rather the other way in fact, because Campbell J's findings, viewed primarily as the resolution of a conflict between the appellants and Mr Challoner, are supported by other oral evidence, amply supported indeed, by objective considerations of probability, by the conduct of Mr Mann, and by documentary proof. In all the circumstances it is inevitable in my view that the appeal must be dismissed with costs. Priestley JA I agree. UNREPORTED JUDGMENTS Meagher JA I also agree. Appeal dismissed with costs. Counsel for Appellant: Ms E Cunningham Solicitors for Appellant: O'Connor Filewood and Company Counsel for Respondent: B Walker and P Larkin Solicitors for Respondent: Westgarth Baldick