COMANOS v WESTPAC BANKING CORPORATION SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL SHELLER JA 10 May 1993 [1993] NSWCA 69 Sheller JA. The applicants, George Comanos and Jennifer Mary Comanos, on 29 March 1993 filed a notice of appeal against decisions in favour of the opponent, Westpac Banking Corporation, given by Palmer AJ on 5 December 1991 and Cole J on 26 March 1993. The applicants at the same time filed a notice of motion seeking a stay of Cole J's judgment pending the disposition of the appeal. This application was opposed substantially on the basis that there was no real prospect that the appeal would succeed. When the matter came on for hearing on 3 May 1993, Mr Stephenson, who appears for the opponent, submitted that if a stay were to be granted, it should be on the basis that the applicants pay what was said to be an amount of admitted personal indebtedness to the bank, some $98,000. The question as to whether this personal indebtedness was still owing or had been discharged out of proceeds of sale by the bank of a house property was raised by Mr Comanos who sought to cross examine a deponent of an affidavit filed on behalf of theopponent, asserting that the amount of some $98,000 was due on this account. In order to give Mr Comanos the opportunity to cross examine this bank officer, the matter was adjourned to today. Today a further affidavit was filed by Mr Layt. This affidavit was read and Mr Layt was cross examined. Mr Stephenson, for the bank, fairly referred me to a number of matters which throw at least some doubt on the extent of the personal indebtedness under this particular account to the bank. Accordingly, I indicated that if I was otherwise prepared to grant a stay, I would not be prepared to impose the condition which had been suggested by Mr Stephenson. On that basis, Mr Comanos agreed not to pursue the cross examination of another bank officer, Mr Chand. The opponent sued Mr and Mrs Comanos under a guarantee dated 8 February 1985 in respect of the liability of the company George Comanos and Associates Pty Limited of which Mr and Mrs Comanos were directors and shareholders. The proceedings came on for hearing before Palmer AJ and in those proceedings the applicants admitted the execution of the guarantee and that various sums were, from time to time, advanced by the bank to the company. The amount claimed in the proceedings was the shortfall after the sale of the property which was at Northbridge, and which had been mortgaged by the applicants to the bank in support of the indebtedness of the applicants to the bank. After the guarantee was executed, the first advance made to the company was made on 12 February 1985. Most of the defences raised by the applicants to the claim made by the bank related to the circumstances in which the guarantee was executed. Palmer AJ found that Mr Comanos was a person highly experienced in financial dealings and financial affairs generally. 2 UNREPORTED JUDGMENTS In their pleadings, which consisted of a defence and cross claim, the applicants relied upon a number of particular defences. One was that there was no consideration for the guarantee and hence it was void. Other defences were based on s 9 (2) of the Contracts Review Act. These matters were all dealt with by Palmer AJ. I have carefully read and considered the reasons his Honour advanced for rejecting these defences. Having done so, I do not regard the applicants as having any real prospect of succeeding in their appeal from his Honour's decision on these matters. The applicants sought to amend their defence to rely on three further grounds. The first of these amendments was allowed but the defence failed. The third amendment, which sought to raise estoppel as a defence, was refused on the basis that it was bound to fail. Like the earlier defences, these two matters are raised again in the notice of appeal, or in an amended form of the notice of appeal now proposed by the applicants. I do not regard his Honour's conclusions in respect of these two matters as giving rise to any real prospect of success on the appeal. The applicants also sought to amend their pleading by adding a claim based on s 5 (2) of the Trade Practices Act. In his judgment, Palmer AJ said that it was clear beyond argument that that claim was now statute barred, more than three years having elapsed from the time at which the cause of action arose. Accordingly, he said: 'It would be futile to grant leave by adding such defence and cross claim.' Mr Comanos has referred to the recent decision of the High Court in Wardley Australia Limited v Western Australia (1992) 66 ALJR 839. I am satisfied that in the light of that decision, it is at the least arguable that his Honour's conclusion that the claim was statute barred was wrong. In the course of his judgment, Palmer AJ, referring to one ofthe defences relied upon by the applicants under the Contract Review Act, remarked that Mr Comanos was unable to point to any misrepresentation by Mr Sadler, a bank officer, which induced him to sign the guarantee. It is submitted on behalf of the opponent that even if it be right to say that the claim under the Trade Practices Act was not statute barred, the reasons given by Palmer AJ and the facts as found by him would have led to this defence or claim inevitably failing. Having carefully considered the judgment I agree with this submission. Accordingly, it seems to me that on no basis have the applicants a real prospect of succeeding in the appeal from the judgment of Palmer AJ. His Honour gave judgment for the opponent against both applicants. The quantification of the amount was left to be referred to an independent accountant. Ultimately, the matter came back before Cole J who delivered judgment on 26 March 1993. He referred to the findings of Palmer AJ that two accounts, 260160 and 260144, had been guaranteed by the applicants under the guarantee. The residual indebtedness in respect of those two accounts, his Honour stated to be agreed in the amounts respectively of $473,809 at 1 July 1990 and $70,009.04 on 30 September 1990. A third account related to bills trading by the company. Before Cole J the applicants argued that this account was not covered by the guarantee. It was agreed that as at 30 September 1990, the amount of that account stood at $740,236.85. His Honour held that payment of that account was also guaranteed by the guarantee. At the end, his Honour entered judgment for the opponent in an amount of $375,222.73. The appeal that has been filed by the applicants, as well as raising in its original or proposed amended form the various defencesdealt with by Palmer AJ, raises again the arguments put and dealt with by Cole J for saying that the bills URJ COMANOS v WESTPAC BANKING CORPORATION (Sheller JA) 3 trading account was not covered by the guarantee. Again, having carefully considered Cole J's judgment, I do not regard those arguments as giving the applicants any real prospect of success in the appeal. In an affidavit filed on 14 April 1991 Mr Comanos says that the assets of himself and his wife comprise under $2,000 in the bank, two motor vehicles worth under $9,000 in total, and personal possessions. If a stay is not granted, it seems that the bank will commence bankruptcy proceedings against the applicants. In the course of his submissions, Mr Comanos referred to a conversation deposed to between him and a Mr Ian Purse and Mr Crawford in 1990 in which he sought the withdrawal of the current proceedings. Mr Purse said to Mr Comanos: 'If you persist in refusing to give us possession of the house, we will pursue you to the end.' Mr Comanos said that he discussed this statement with his wife and took it, as well as advice from lawyers, into account in deciding to consent to judgment on possession. Mr Comanos relies upon this as indicating a representation that if he and his wife agreed to judgment in possession, the bank would not prosecute bankruptcy proceedings. I do not regard the conversation so evidenced as giving rise to any such representation. If indeed a trustee in bankruptcy is appointed, it will be a matter for the trustee and the creditors as to whether or not this appeal is proceeded with. Having carefully considered all the material and what has been said by this Court in Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685 bearing in mind particularly that I do not regard the appeal as having any real prospect of success, in my opinion a case wasnot made out for the grant of the stay claimed. Accordingly, this application is refused. Now Mr Stephenson, what costs? STEPHENSON: I ask for the costs of the application. HIS HONOUR: Yes Mr Comanos, do you oppose that? COMANOS: Your Honour, as far as some of the costs related to statements which in the end the bank was not able to support about the amount of money that might have been owing on our personal account and what was outstanding, I really don't think we should bear those particular costs. I think that each party should pay its own costs. HIS HONOUR: There is some force in that Mr Stephenson. Is this of any significance, the costs of this application? STEPHENSON: Probably not. HIS HONOUR: In the circumstances, I make no order as to costs. STEPHENSON: Might the exhibit, the original of that report be returned? HIS HONOUR: Yes. Orders accordingly.