ATTWELLS v HARRIS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY JA, PRIESTLEY JA and HANDLEY JA 21 November 1990, 22 November 1990 [1990] NSWCA 13 COUNSEL: APPEAL from District Court — claim for amount due by defendant to plaintiff — conflict of evidence — trial judge finds for plaintiff — defendant appeals on ground that trial judge erred in fact finding — nothing in evidence to show judge was mistaken in accepting plaintiff as truthful — appeal dismissed. Priestley JA The plaintiff began proceedings in the District Court in 1984 alleging that the defendant had borrowed $45,000 from him in September 1979, repayable on demand, interest at $500 a month, and that despite requests for repayment the defendant had not repaid the amount lent. The plaintiff claimed $45,000 plus unpaid interest. The defendant's defence was a denial that the plaintiff had lent him $45,000, or any amount, as claimed by the plaintiff. The proceedings came to trial in April 1988 and resulted in judgment for the plaintiff for $77,900. The defendant appealed. The facts of the case were complicated. The plaintiff had lent money to the father and brother of the defendant at different times and the evidence showed a mingling of the affairs of the three Attwells which was difficult to disentangle. As well as being complicated, the evidence was very detailed. Counsel however were able to distil the evidence down to its relevantly important parts, and I shall follow that example in what follows. The salient features of the plaintiff's evidence were that in September 1979 the defendant asked him whether he would lend him $45, 000 to be used in buying a hotel; the plaintiff agreed, and asked the defendant what he proposed the interest should be; the defendant suggested $500 a month and the plaintiff agreed; the plaintiff tendered a book of cheque butts which contained two which he said were the butts of cheques he had handed to the defendant; one was for $20,000, the other $25, 000; the notation on the first was "D Attwells 45G", and on the second "balance of 45G" (the admission of these butts in evidence was objected to (the objection was overruled) but it was not suggested that the notations were fabrications); cheques corresponding with the butts were shown by the plaintiff's statement of account to have been duly debited against him; the plaintiff also tendered in evidence a Building Society pass book (admitted over objection), the first entry in which was a deposit of $500 on 26 October 1979; subsequent entries were at monthly intervals, also of $00; the pass book bore the plaintiffs name; he said he began the account as a means of recording the defendant's interest payments separately from amounts being paid by the defendant's father and brother; sometimes he was given one cheque by the defendant, or his brother, for interest on their separate debts to him and credited part to the Building Society account; the plaintiff said he had wanted a security document in regard to the loan and tendered an unregistered mortgage and caveat that had been lodged concerning it, which he said were security for the loan; this mortgage was given by the defendant and Mr JC Malone as registered proprietors of an hotel property; the memorandum of transfer of the hotel to them was in evidence, showing the 2 UNREPORTED JUDGMENTS consideration was $110,000, and dated 7 July 1980; the mortgage and caveat were dated in mid May 1981; the mortgage acknowledged receipt by the defendant and Mr Malone of $48,000; it was signed by the mortgagors, and by a solicitor for the mortgagee plaintiff; the plaintiff could not explain the figure of $48,000; (neither could anyone else at the trial); at the request of the mortgagors the mortgage was discharged, and another security substituted; this was a deed charging a racehorse with repayment of $45,000; the four persons in whose name the racehorse as registered, of whom the defendant, who said he was the beneficial owner of the horse, was one, all signed the deed, acknowledging that they had borrowed $45,000 from the plaintiff. It was common ground, although for different reasons, that no part of the alleged principal amount of $45,000 (apart from a small amount the plaintiff asserted and the defendant denied) had been paid by the defendant to the plaintiff. In cross-examination the plaintiff was shown yet another security, which turned out to be earlier than the two put in evidence by the plaintiff; it was dated 1 November 1979. It was a mortgage given by the defendant and his wife over their home, signed by them, and by a solicitor for the plaintiff on his behalf as mortgagee, securing an amount of $48,200 and containing the following covenant: "Fourthly - It is expressly agreed by and between the parties hereto that this mortgage is given in consideration of the mortgage for bearing action against Gordon Attwells and Gregary Attwells and that the sum secured under this mortgage shall be the amounts due by the said Gordon Attwells and Gregory Attwells to the hereinbefore mentioned Arthur Peter Harris." The plaintiff said he had not seen the document before, and that if his solicitor in preparing it had followed instructions the amount secured would have been $45,000, and the covenant I have set out should not have been included. He agreed that the mortgage of the hotel was a replacement for the one of the house, and that the deed charging the racehorse was a replacement for the mortgage of the hotel. He denied however that the covenant in the hotel mortgage reflected the real arrangement between himself and the defendant, and denied that he had never lent $45,000 to the defendant, as principal debtor, as alleged. Counsel for the defendant put the defendant's case fully to the plaintiff in cross-examination; it was that the first security document was given by the defendant after he and the plaintiff agreed that the defendant would give security for debts of his father and brother in consideration of a reduction of and forbearance to sue for those debts; that the plaintiff had never lent $45,000 to the defendant as principal debtor, and that the amounts paid to the plaintiff from October 1979 on were all paid in respect of amounts owing by his father and brother. The plaintiff agreed that he had had some discussion with the defendant about the possibility, in regard to the debts of the father and brother, that "we can just lump the lot together, " but denied that had been done, and otherwise denied the defendant's case as it was put to him. He agreed he could not explain the amounts in the first two securities, or the covenant in the second one except on the basis his solicitor had made a mistake. In the defendant's case, he, his father and his brother all gave evidence in support of the case that had been put to the plaintiff in cross-examination. The trial judge, Jones DCJ, said that he accepted the plaintiff as truthful, despite mistakes and vagueness in his evidence. He considered the plaintiff's reaction as he had observed and heard it when in cross-examination the plaintiff URJ ATTWELLS v HARRIS (Priestley JA) 3 had been shown and questioned about the first security, and he considered the defendant's submission about the unexplained non calling of the plaintiff's solicitor to give evidence about the documentation he had prepared. The trial judge accepted that the plaintiff handed over cheques totalling $45,000 to the defendant as a loan on the terms the plaintiff asserted. The trial judge was not impressed by the defendant, his brother or father and gave relevant reasons (evasiveness, demeanour, etc) for having serious doubts as to the defendant's credit; he thought the brother was unsatisfactory in an important respect; and in his view the father was seriously ill, with poor recollection and his evidence was unreliable. In forming these opinions, the trial judge considered the effect of the first two securities, in particular, upon the case. He said they had gravely concerned him, but after analysis of them, he could not see "any rational hypothesis for the inconsistencies". Having accepted the plaintiff's evidence of having made the loan, it followed that the trial judge had to decide the case in the plaintiff's favour, as he did. In the appeal the defendant's counsel correctly acknowledged that, because of the approach this court adopts in dealing with findings of trial judges involving the credibility of witnesses, for the appeal to succeed the defendant needed to show there was evidence before the trial judge, independent of what the witnesses themselves said, which could not reasonably be disregarded and from which it followed that the plaintiff could not have lent the money to the defendant as he said, so that the trial judge must have been mistaken in accepting the plaintiff's oral evidence concerning the loan. In seeking to persuade the court of the foregoing position, counsel for the defendant began his argument with the covenant in the second security. He submitted that this could not stand with the plaintiff's account of things, as the plaintiff himself agreed; the plaintiff could give no explanation of it, the one witness who might explain it, the solicitor who prepared it, was not called, and his absence was not explained. This would be a strong argument if the plaintiff's case depended solely on his oral evidence, and if the defendant's case was a consistent one, both with the documentation, and internally. However, none of these three elements was present. The cheque butts, the bank statement showing the amount claimed by the plaintiff had been debited at the time he claimed the loan was made, the opening of the Building society account and the entries in it, although not decisive of the plaintiff's claim, are consistent with it, and could only be reconciled with the defendant's case if the plaintiff had set out in September and October 1979 to manufacture evidence against the defendant on a large scale. Other matters, external to the plaintiff's oral evidence support his case, and conflict with the defendant's version. I mention two of the clearest. The first is the counterpart of the defendant's strong point. In the same way as the plaintiff could not explain the differences between the claimed loan agreement and the first two securities, the defendant could not explain the appearance of the amount of $45,000 in the third, which provided corroboration of the plaintiff's account, and which was the only one of the three securities the plaintiff signed himself, whereas all three were signed by the defendant. It seems relatively clear that the names of other persons than the defendant shown on all three securities as liable for the amounts shown in them, is not significant in weighing up the respective cases. Whatever may have been their degree of awareness of the fact, the evidence shows that the defendant's wife in the first 4 UNREPORTED JUDGMENTS security, Mr Malone in the second, and Gordon Joyce and Noel Attwells in the third were liable under those documents as guarantors not principal debtors. The other matter is that it appeared from the defendant's evidence that on one occasion he gave the plaintiff a cheque for $2,000, dated 10 August 1981, on the butt of which was written "DA to A Harris" in the defendant own handwriting, and that that cheque was debited against the defendant's loan account in the books of the business on which the cheque was drawn. The trial judge could certainly rely on this evidence as quite inconsistent with the defendant's assertions that all moneys paid to the plaintiff were on account of the debts of his father and brother. Despite the earnest efforts of the defendant's counsel to persuade the court to the contrary, this case does not seem to me to be one where there was reliable evidence before the trial judge which meant that it would be a mistake to accept the plaintiff as truthful. There were difficulties and inconsistencies in the cases of both sides; in my opinion it was open to the trial judge to decide the case as he did; he had the advantage of being able to assess, in a way this court cannot, the credibility of the witnesses as they were confronted with the difficulties of the two cases; and I do not think any mistake has been shown in his approach. In my opinion the appeal should be dismissed with costs. Mahoney JA I agree. The plaintiffs essential case was that the plaintiff said he lent the money to the defendant. The plaintiff described the lending and the learned judge believed him. Ordinarily, the Court would not interfere with such a finding of belief based, as this one was, upon his Honour's observation of the parties at the trial. However, as is well established, the Court may put aside the benefit which the judge had of seeing the witnesses at the trial if, for example, he failed, in arriving at his conclusions, to take into account objective evidence which tends to the contrary of the conclusion he has reached. Voulis v Kozary (1976) 50 ALJR 59 is an illustration of this in recent times. As Priestley JA has pointed out, this is not a case in which there was without more simple or objective evidence tending against his Honour's acceptance of the plaintiff. As his Honour indicated, the suggested objective evidence itself was subject to qualification. I agree with what Priestley JA has said in this regard. I agree with the orders which his Honour proposes. Handley JA I agree with both of the previous judgments. The order of the Court, therefore, is that the appeal will be dismissed with costs. Counsel for the Appellant: TCLARKE Counsel for the Respondent: C HARRIS Solicitors for the Appellant: WILLIAMS PALMER NOSS Solicitors for the Respondent: GREGORY M JOHNSTON and CO