MITCHELL and ANOR v WESTPAC BANKING CORPORATION [1994] NSWCA 363

MITCHELL and ANOR v WESTPAC BANKING CORPORATION

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MEAGHER, HANDLEY and SHELLER JJA 13, and 14 December 1993, 10 February 1994

[1994] NSWCA 363

The respondent commenced proceedings for possession of land mortgaged to it by the appellants as security for an unlimited guarantee for the repayment of loans owed by a Debtor. The appellants had not met the respondent's demands for payment under the mortgage and guarantee. In their defence the appellants said they were induced, fraudulently or innocently, to guarantee repayment of the loans by representations, alleged to have been made by bank officers at a meeting on 20 May 1983, that an agreed conversion of the Debtor's outstanding borrowings from overdraft facilities to a bill facility would be progressive and that the guarantee would be limited to $230,000, the approved limit of the loans, and interest. In fact the conversion to a bill facility took place not progressively but on one day. The appellants claimed that enforcement of the guarantee should be refused under the Contracts Review Act 1980.

The proceedings were heard by a judge and jury. With the consent of the parties questions were left to the jury to answer. The jury gave answers negativing fraud and inducement of the appellants' belief that the conversion would be progressive by anything said at the meeting but affirming that the words and conduct of the respondent led the appellants to believe that the guarantee was limited.

In submissions made to the trial judge the appellants claimed that the trial judge was empowered by s88 to s90 of the Supreme Court Act and should make additional findings of fact not inconsistent with the answers given by the jury to the questions put to it. On the basis of these further findings it was submitted that the Court should exercise its discretion under the Contracts Review Act. The trial judge held that it was not open to him to make further findings of fact but also that there was no evidence upon which the jury could find that the respondent induced the appellants to believe they were signing a limited guarantee only. Relief under the Contracts Review Act was refused.