TYREE vy CHALLENGE FINANCE LTD SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL PRIESTLEY JA, HANDLEY JA and Cripps JA 10 February 1993 [1993] NSWCA 275 GUARANTEE — question of fact — no question of principle. Priestley JA. I will ask Handley JA to give his reasons for the conclusion we have arrived at. Handley JA. This is an appeal by Christopher William Tyree from a judgment entered by Rolfe J in the Commercial Division on 10 April last year following a hearing. The respondent to the appeal, Challenge Finance Ltd, previously Trade Credits Ltd, sued the appellant in the Supreme Court under a guarantee signed by him on 20 November 1986 which in due course covered five equipment leases entered into by Tytel Ltd as lessee with Trade Credits as lessor, between 20 November 1986 and 7 August 1987. Originally, as appears from the findings of Rolfe J, Rogers CJ of the Commercial Division ordered summary judgment in favour of Challenge Finance and pursuant to his Honour's order, judgment was signed for $196,840.89 on 16 September 1991. Subsequently, the appellant applied to the Commercial Division to havethis judgment set aside based on facts which were deposed to by him on affidavit. The appellant's point was that the guarantee which he signed in favour of Trade Credits Ltd was required to be signed as a matter of form only, it being understood between that company and the appellant that it would only be enforceable in the event that the appellant improperly diverted assets from Tytel Ltd to himself or some nominee or dummy. On this application by Mr Tyree, Rolfe J set aside the default judgment, as he described it, and ordered an expeditious hearing on the only issue which was raised before him in answer to the claim under the guarantee, namely, the one that I have referred to a moment ago. As Rolfe J indicated, the only question raised for his determination at the hearing was whether there was an understanding between Trade Credits Ltd and Mr Tyree of the nature I have previously mentioned. At the hearing Mr Tyree agreed that the conversation or conversations that he relied upon to establish the existence of the arrangement or understanding were held with Mr John Douglas Perry, an officer of Trade Credits Ltd. Both Mr Perry and the appellant gave evidence before Rolfe J and both were cross-examined. The appellant was appearing for himself and needless to say was in a position of some difficulty as a result. In addition to giving evidence himself the appellant called a Mr Grimwood who also swore an affidavit in the proceedings. He was a former officer of Tytel Ltd and he had signed a certificate attached to the guarantee that he had explained its contents to Mr Tyree who appeared to understand the explanation and that this had occurred prior to Mr Tyree signing the guarantee. 2 UNREPORTED JUDGMENTS The Judge rejected some of the affidavit evidence that Mr Grimwood had given in his affidavit but cross-examination of Mr Grimwood by counsel for the company opened up the question of what conversation had taken place between Mr Grimwood and Mr Tyree at the time the guarantee was signed. This allowed Mr Grimwood to give oral evidence on the topic although the Judge had previously rejected his affidavit evidence on this matter. Mr Grimwood when asked about this matter said that he had told Mr Tyree that it was common for finance companies to request guarantees from owners of a proprietary company for moneys which would be loaned to the company and that he, Mr Tyree, had no choice but to sign the document. Mr Grimwood never suggested that he told Mr Tyree the guarantee was signed for any limited purpose or would not be enforceable according to its terms. The trial Judge was, therefore, confronted with a conflict of evidence between Mr Perry and Mr Tyree, both of whom had been called as witnesses before him and had been cross-examined. In these circumstances a Judge must do his or her best to work out where the truth lies. It is not unimportant, however, in such a case to bear in mind who has the onus of proof. In this case the onus lay with Mr Tyree because he had signed the guarantee which said nothing about the condition or arrangement or understanding on which he now relies. Accordingly, any factual issues which had to be established in order to found any such collateral condition, arrangement, or understanding would have to be proved by Mr Tyree and he had to tip the scales of justice in his favour. Unfortunately for him, the trial Judge was not satisfied with Mr Tyree's evidence for reasons he gave and, indeed, he preferred the evidence to the contrary by Mr Perry. This Court has not seenMr Perry give evidence or be cross-examined and although Mr Tyree has appeared in person to argue the appeal, we have not seen Mr Tyree give evidence and be cross-examined. The trial Judge, therefore, was in a position of special advantage compared with this Court in trying to work out as best he could where the truth lay between the two conflicting accounts. It is well established that this Court which only sees the evidence on paper cannot reverse or set aside findings of fact made by trial judges based on credibility where those judges have seen and heard the witnesses except in very special and limited circumstances which do not apply in this case. In these circumstances, I have reached the clear conclusion that the challenge by Mr Tyree to the credibility based findings of fact of the trial Judge cannot succeed and the appeal must be dismissed with costs. Priestley JA. I agree. Cripps JA. I agree. Priestley JA. The order of the Court is, therefore, that the appeal is dismissed with costs. Appeal dismissed with costs. Counsel for the appellant: IV PERSON Solicitors for the appellant: JV PERSON Counsel for the respondent: J K CHIPPINDALL Solicitors for the respondent: KEMP: STRANG and CHIPPINDALL