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. The appellants appealed on the grounds that it was open to the trial judge to make further findings of fact, that the trial judge erred in holding that there was no evidence to support the jury's finding that the respondent induced them to believe they were signing a limited guarantee only and that relief should have been granted under the Contracts Review Act. Held: (i) It was not part of his Honour's function to engage in the fact finding task suggested by the appellants. The july, having answered questions put to it and there being no consent by the respondent to the trial judge's making findings of facts, it was not open to him to do so. (ii) There was evidence that the respondent induced the appellants to believe they were signing a limited guarantee only, but even if the guarantee were amended so as to provide that the total moneys payable by the appellants should not exceed $230,000 and interest, the amount claimed by the respondent was less than the limit, so that the amendment would be of no consequence. Meagher JA I agree with Sheller JA. Handley JA I agree with Sheller JA. Sheller JA BACKGROUND 2 UNREPORTED JUDGMENTS On 24 June 1983 the appellants, Selby Arthur Mitchell and Margaret Mary Mitchell, together with Charles Herbert McKay and Bronwyn Dale McKay, entered into a written guarantee with the respondent, Westpac Banking Corporation, whereby they jointly and severally guaranteed to the respondent the payment when demanded in writing from them of all moneys advanced or paid by the respondent to, or for the accommodation of, or on behalf of CH McKay Investments Pty Ltd thereinafter called "the Debtor". In common with most such bank guarantees the "all moneys" clause was comprehensive. The moneys and interest intended to be secured by the guarantee were referred to as "the moneys hereby secured". CL8 of the guarantee, which was initialled by each of the guarantors at the time of execution, provided that the guarantee was to be security for the whole of "she moneys hereby secured" Part of the printed form of the clause, which was in the following terms, was ruled out: ".... but nevertheless the total moneys payable hereunder by the Guarantor shall not exceed the amount of together with a sum equal to one year's interest on the said amount at the rate aforesaid (the aggregate of which amount and sum is hereinafter called 'the stated sum') and the costs charges and expenses of obtaining or attempting to obtain payment from the Guarantor referred to in the lass preceding clause and interest on the stated sum at the rate aforesaid from the date when demand shall have been made hereunder by the Bank upon the Guarantor until payment of the total amount payable hereunder by the Guarantor AND it is expressly agreed and declared that nothing in this clause shall in any way give rise to or support any inference that the Bank is hereafter to be affected in any way in its dealings with the Debtor by the amount of the stated sum and it is further expressly agreed and declared that the amount and extent of the advances or accommodation which the Bank may hereafter from time to time grant to the Debtor need not bear any relationship to the amount of the stated sum It was agreed that the ruling out of this part of the clause resulted in the guarantors' commitment being unlimited. The appellants did not dispute that their liability under the guarantee was secured by a mortgage executed by them in favour of the respondent on 21 April 1981 over certain land known as 420 Box Road, Kareela of which they were registered proprietors. The appellant Mr Mitchell had been a manager of the Commercial Bank of Australia (CBA) which had been taken over by the respondent. The appellant Mrs Mitchell was his wife. By May 1983 the appellants and Mr McKay were shareholders in the Debtor. The Debtor was run by Mr McKay who had been formerly a bank associate of Mr Mitchell and a manager of the CBA. On 31 May 1982, in order to secure the Debtor's debt to CBA, the appellants and the McKays gave a guarantee to CBA limited to $150,000 and interest. After the respondent took over CBA the appellants and the McKays gave a guarantee to it limited to $195,000 and interest. As at 20 May 1983 the Debtor's borrowings from the respondent exceeded the approved limit of $195,000 by about $34,000. In round figures the debt consisted of a fully drawn overdraft account of $138,000 due to be rolled over at the end of September 1983, a $47,000 bill line due to be rolled over on 4 July 1983 and a current account overdraft of $44,000. The respondent was concerned that it did not have sufficient security for the Debtor's outstanding indebtedness to it. It was against this background that the guarantee of 24 June 1983 was executed. URJ MITCHELL and ANOR v WESTPAC BANKING CORPORATION (Sheller JA) 3 On 25 January 1985 the respondent made demand under the guarantee upon the appellant Mr Mitchell in the sum of $226,325.29. The notice of demand suggests that at the same time demands were made on the appellant Mrs Mitchell and the other co- guarantors. The demand was not met. As a result there was default under the mortgage. On 8 March 1985 demands were made under the mortgage and guarantee on the appellants each for the sum of $230,223.96. Again the demands were not met. On 18 September 1985 the respondent commenced proceedings for possession by statement of claim. The appellants filed a defence which was amended from time to time. Relevant to this appeal were two issues. To understand the first it is necessary to say more about the nature of the arrangement negotiated between the Debtor, the respondent and the guarantors prior to the execution of the guarantee. These negotiations took place in part at least on 20 May 1983 at a meeting at which the appellant Mr Mitchell and two bank officers Messrs Roach and Ogle were present. The Debtor wished to reduce the amount of interest it was paying on its borrowings from the respondent. A method of doing this was apparently to convert the overdraft facilities in whole or in part into a bill facility which carried a lower rate of interest. The appellants alleged that at the meeting the respondent by its officers represented that the conversion would be allowed by the respondent to take place progressively over a period up to 30 September 1983. Bills would be drawn for agreed amounts at intervals. This progressive conversion was intended to reduce the interest payable on the overdraft without compelling the payment of the charges (interest) on the bills all at the one time. The benefit to the Debtor of this arrangement is not clear but for the purpose of this appeal it can be accepted that from the Debtor's point of view the proposed method of conversion, which the appellants say was represented by the respondent, was better than continuing with the overdraft facilities unreduced, or than converting the entire overdraft debt to a bill facility on one date. The benefit was to be largely if not entirely the provision of greater cash liquidity to the Debtor. In fact, on 6 July 1983 the Debtor executed six bills of exchange to a total face value of $173,000 all due on 4 August 1983. The $173,000 replaced the so called core debt of $229,000 less the pre existing bill facility of $47,000, which presumably was rolled over, and the overdraft limit on the current account. The second issue concerned a representation, also alleged to have been by the respondent's representatives at the meeting of 20 May 1983, that the guarantee would be limited to the amount of the facility then being made available to the Debtor, namely $230,000 plus interest. To effect this, no part of CL8 of the guarantee document should have been ruled out and the amount of $230,000 should have been inserted in the blank space. As executed, the guarantee was not so limited. The appellants claimed that they were induced by these representations to enter into the guarantee. Indeed they went further and claimed in their defence that the respondent was guilty of fraud. For the purpose of this appeal for reasons which will become apparent it is unnecessary to examine how the appellants pleaded or particularised fraud. The appellants sought relief, inter alia, under the Contracts Review Act 1980. For present purposes it is unnecessary to investigate how, against what the appellants said had been represented to them, they came to initial CL8 with part ruled out or how the Debtor came to execute the six bills of exchange on 6 July 1983. THE TRIAL 4 UNREPORTED JUDGMENTS The trial commenced on 29 August 1988 before McInerney J and a jury of four. It proceeded until Monday 5 September 1988. On that date Mr Roach, who was called on behalf of the respondent, gave evidence that, during a telephone call with Mr McKay on 7 June 1983, Mr McKay had said "we are going to have problems in meeting the interest if they all rolled at once " Mr Roach said in evidence "And to ease the burden I agreed to roll over progressively" On 6 September 1988 McInerney J granted the appellants leave further to amend their defence. Paragraph 5 was amended to read as follows: "Tn answer to the whole of the Statement of Claim, (the defendants) say (a) The defendants delivered the deed of guarantee of 24 June 1983 under the influence of the plaintiff s fraud PARTICULARS From about May 1982 the defendants were working in and interested in a business known as 'Gymea Building Supplies' which business was owned and operated by the principal debtor. The principal debtor had borrowed money from the Commercial Bank of Australia Ltd on various overdraft accounts As at 20 May 1983, the principal debtor had an approved borrowing limit of $195,000.00 and the Bank was holding, as security, inter alia, a joint and several guarantees (sic) from the defendants and Mr and Mrs McKay (the principal debtor's directors) limited to $195,000.00, she approved borrowing limit. As at 20 May 1983 the principal debtor's borrowings exceeded the limit by about $34,000.00 with the result that the Bank was unsecured for its total debt. On 20 May 1983 the defendant Mr Mitchell and Mr McKay attended a meeting at the Bank's premises at 273 George Street. The defendants rely upon the evidence set forth in the affidavit of Charles Herbert McKay sworn 27 June 1986 as providing particulars of the events at the said meeting. When the Bank officers stated to the defendants that: (aa) The $8,000.00 just deposited would not be credited to the overdraft debt but would be made available as part of the funds for trading. (bb) That the bills of exchange would be drawn down progressively until 30 September 1986. (cc) That Interest charges would be postponed until 30 September 1986. (dd) That the Bank would make available a come and go overdraft facility of $10,000 00, they did fraudulently having no intention to provide those things but so as to induce the defendants to provide, as they did, an unlimited guarantee. On 4 July 1983 the Bank, having obtained the guarantee and bills of exchange, or bill orders, signed in blank, drew down the full amount of the principal debtor's indebtedness to the bank, leaving it unable to continue to trade. (ee) In the alternative, to 5 (a), the defendants say that on or about 7 June 1983, the plaintiffs representative Mr Roach did fraudulently represent to Mr McKay that it was his then intention to grant to the Company a progressive draw down of bills, knowing and intending the defendants to act upon the said representative (sic) and in order to induce them to provide fresh guarantees. PARTICULARS The defendants rely upon the evidence of Mr Roach given the 6 (sic) September 1988 " (ii) In the further alternative to (aa) and (dd) inclusive, the defendants say that on or around 7 June 1983 the plaintiff through Mr Roach did agree that in consideration of the defendants granting to the bank fresh guarantees intended by them to be limited to the then debt of the Co, the plaintiff did agree so provide so the Co the benefit of a progressive draw down of bills. URJ MITCHELL and ANOR v WESTPAC BANKING CORPORATION (Sheller JA) 5 (jj) Contrary to its representation or promise as aforesaid pleaded, and having beforehand provided the delivery to it of EX 18, and unlawfully in breach of the representation proviso or commitment earlier given, the plaintiff did on or about 4 July 1983 convert the then existing fully drawn advance on one bill for a limited tenure of 29 days only ". QUESTIONS PUT TO THE JURY The parties agreed that questions should be left to the jury to answer. S90 of the Supreme Court Act under the heading "Special Verdict" provides: "Tt shall be the duty of a jury so answer any question of fact that may be left to the jury by the presiding Judge at the trial." On Monday 12 September 1988 counsel addressed and on 14 September 1988 McInerney J summed up. Thirty one questions were asked of the jury. The first three which the jury answered in the affirmative were as follows: "1. Was there a verbal agreement between Mr Mitchell and Commercial Bank of Australia Ltd, at 60 Margaret Street, Sydney on or about 21 April 1981, wherein Mr Mitchell on behalf of himself and Mrs Mitchell agreed with the Bank that if the Bank agreed to provide and/or to continue to provide advances or facilities to Sovita Pty Ltd, he and Mrs Mitchell would provide a mortgage to the Bank in the CBA 's usual terms? 2. Did the defendants, either through Mr McKay or through Mr Mitchell, prior to this this, either by word said or by their conduct, cause or induce the Bank to believe that the Mortgage, Exhibit 1, secured the defendants' obligations under the then current guarantee? 3. When Mr Mitchell signed the guarantee, did he believe that the Bank intended to convert the hard core debts of the company, of the order of $220,000 or $230,000 to a bill facility, with the conversion to sake place progressively up to 30 September 1983 by the drawing down over that time of a series of bills, resulting in an interest advantage or saving to the company?" These answers clarify what was not clear in the pleading, namely the connection between the mortgage and the guarantee. Question 4 was as follows: "4. Did Mr Mitchell hold the belief you have found in your answer to question 3 as a result of any words said by any of the Bank's representatives on 20 May 1983?" The question set the context of the remaining questions by referring to the meeting between the appellant Mr Mitchell and representatives of the respondent on 20 May 1983. The jury answered the question in the negative. This required it to go to question 6: "6. Did Mr Roach fail to introduce a progressive drawdown fraudulently, knowing the defendants were acting in the belief that they would have the progressive drawdown?" The jury answered this question in the negative. It is unnecessary to refer to questions 7, 8 and 9. Questions 10 and 11, which the jury answered in the affirmative, were as follows:, "10. Would Mr Mitchell have signed the Westpac guarantee had that statement not been made at the meeting? 11. Would Mrs Mitchell have signed the Westpac guarantee had that statement not been made at the meeting?" The statement referred to was that the debt to the respondent would be converted progressively by drawing bills over the period up to 30 September 1983. I need not refer to question 12. Questions 13, 14 and 15 were as follows: "13. When Mr Mitchell signed Exhibit 2, did he believe that he was signing an unlimited guarantee of the company's debts to the Bank? 6 UNREPORTED JUDGMENTS 14. If not, did you find that at the time of signing Exhibit 2 Mr Mitchell believed that he was assuming a liability which was less than an unlimited guarantee? 15. If "Yes" to question 14, do you find that it was due to any words or conduct of the Bank that Mr Mitchell came to hold the belief you have found in answer to question 14?" Exhibit 2 was the guarantee of 24 June 1983. Question 13 was answered no and questions 14 and 15 yes. Of the remaining questions I need to set out the following with the answers given to them. "18. Did any Bank officer prior to the execution by Mr Mitchell of Exhibit 2 explain to him any differences between the Westpac guarantee and the CBA guarantee, Exhibit 3?" - No "20. As at 24/6/83 did the Mitchells receive any benefit or advantage from the transaction in May 1983 which re arranged and regularised the company's facilities with the Bank, either directly or by reason of the Bank's granting such re arrangement and regularisation of such facilities?" - No "21. As at 7/7/83, did the Mitchells receive any benefit or advantage from the transaction in May 1983 which rearranged and regularised the company's facilities with the Bank, either directly or by reason of the Bank's granting such re arrangement and regularisation of such facilities? " - Yes "22. Do you find that Mr Mitchell gave Exhibit 2 believing that the Bank had the upper hand and he had no option but to sign?" - Yes "23. If so, was that belief caused by words or conduct by the Bank. " Yes "24, When Mr Mitchell signed the Westpac guarantee on about 24/6/83, did he believe that the guarantee as it stood placed a limit on the amount he might be called on to pay as guarantor?" - Yes "25. Do you find that when Mrs Mitchell signed Exhibit 2 she believed or understood that she was signing a contract of guarantee for the debts to the Bank of the company?" - Yes "26. If the answer to question 25 is 'Yes' do you find that when Mrs Mitchell signed Exhibit 2 she believed or understood that she was agreeing to be liable without limitation for the debts to the Bank of the company?""- No "27. Did any representative of the Bank at any time prior to her signing Exhibit 2, inform or advise Mrs Mitchell as to the nature and intent of the legal obligations she would assume if she signed it? - No "28. If Mrs Mitchell had understood that by signing Exhibit 2 she would be liable without limitation for the debts to the Bank of the company, would she have signed it?" - No "31. When Mrs Mitchell signed the Westpac guarantee, on or about 24/6/83, did she believe that the guarantee as it stood placed a limit on the amount she might be called on to pay as guarantor? " - Yes The jury was discharged on 15 September 1988 and his Honour gave directions for written submissions. JUDGMENT OF TRIAL JUDGE On 20 October 1989 McInerney J having heard further oral argument delivered reasons for judgment but deferred making formal orders to enable the parties to make further submissions. On 11 May 1990 he ordered the appellants to give the respondent possession of the mortgaged land at Kareela.. His Honour said that despite the number of defences raised the substantial matter litigated before the jury was the question of whether or not the respondent had made fraudulent or innocent misrepresentations to the appellants which induced them to enter into an URJ MITCHELL and ANOR v WESTPAC BANKING CORPORATION (Sheller JA) 7 unlimited guarantee to the respondent to secure moneys owed by the Debtor. The essential matters in dispute can usefully be stated by quoting from his Honour's reasons for judgment: "The defendants' case, as opened by Mr Motbey to the jury, was that in May 1983 the bank knew that the company, CH McKay Investments Pty Ltd, was in a very marginal financial situation and could fail and the bank, only having a limited guarantee of $195,000 from the defendants, the bank officers, therefore, had a motive to secure an unlimited guarantee. The bank was desirous, it was said, of regulating the situation and a meeting was held in May at the Head Office of the bank to see what could be done about the situation Present was the then State Manager of the bank, a Mr Ogle, now deceased, Messrs Mitchell and McKay, and a Mr Roach, the latter was the senior bank manager who at the time had control of the account. At this time the Commercial Banking Co of Australia had been taken over by Westpac. The purpose of this meeting, as far as Messrs McKay and Mitchell were concerned, as they stated in evidence, was to obtain additional finance from the bank to secure the company's position and enable it to trade out of its difficulties. It was the defendants' case, therefore, that at this meeting the bank's representatives undertook a re arrangement of this account and on the basis of certain representations by the bank representatives Mr and Mrs Mitchell signed a fresh guarantee, Ex 2. It was alleged that the bank, in the circumstances, had made fraudulent representations to the defendants inducing them to sign. The defences are set out in the various Defences filed in these proceedings and, until an Amended Defence was filed on 6/9/88 during the hearing, it had always been alleged the fraudulent misrepresentations took place as the meeting on 20/5/83. The misrepresentations were that $8,000 deposited to the credit of the company that day would not be credited to the overdraft debt but would be made available as part of the trading funds and that the overdraft account be converted to bills which would be drawn down progressively until 30/9/86 (sic) to overcome immediate payment of the total amount of interest. In addition, the bank would make available a 'come and go' overdraft facility of $10,000 in addition to the amount already loaned. It was alleged the bank, having obtained the unlimited guarantee, failed to honour those obligations, drew the full amount of the bills immediately, and did not honour its undertaking in respect to the $8,000. The defendants, therefore, claimed that they executed this guarantee under the fraudulent or at least innocent misrepresentations of the representatives of the plaintiff bank. The real argument was about the alleged agreement by the bank to draw down the bills progressively. The defendants conceded default under the terms of the mortgage and, therefore, it was for the defendants to establish their defences and they had the running of the case. After the defendants' case had concluded, Mr Roach gave evidence on behalf of the plaintiff bank, and after his evidence the defendants sought leave so amend their Defence and leave was granted. As a result of this evidence of a telephone conversation between himself and Mr McKay on 7/6/83, Mr Roach in chief stated that when discussing the account with Mr McKay he informed Mr McKay the bank would give a progressive drawdown of the bills. At all times he denied any such representation was made as the meeting in May 1983 by Mr Ogle or any other bank representative. The amended pleading alleged reliance on the conversation with Mr McKay in June 1983 in the alternative to a representation in the meeting in May " 8 UNREPORTED JUDGMENTS The appellants made written submissions on the basis that the jury's answers to the thirty one questions were not an end to the fact finding process. McInerney J was asked to make further findings of fact, not inconsistent with the jury's findings of fact on the questions answered, in order, it was said, to give efficacy to the jury's replies. His Honour then said: "In support of his submission, Mr Motbey referred to s88 of the Supreme Court Act which requires an issue of fraud so be tried by a jury alone Mr Motbey submitted that it was for that reason that by posing a number of questions for the jury additional to the questions of fraud pursuant to s90 of the said Act as in this case operated effectively under s89 (2) of the said Act to reserve for the consideration and determination of the trial judge all those outstanding questions of fact not concerned with the issue of fraud and not covered by the jury's findings, or, as he puts it alternatively, the agreed application to s90 amounts to a sub silentio application of s89 (2) (a). I want to state quite clearly, unless there is any misunderstanding, no such application was ever made or foreshadowed to me under s89 (2), nor was any hint given that that was the position as far as the Act is concerned. Indeed, as is appears from the questions, a great number of them relate to issues other than the questions of fraud." The respondent did not consent to the course described in s89 (2). His Honour said that there was no prolonged examination of documents or other reasons why he should dispense with the jury. At no time prior to the written submissions being received by his Honour had it been put to him that he would be required to make further findings of fact. He referred to Otis Elevators Pty Ltd v Zitis (1986) 5 NSWLR 171 at 195, Edmond Weil Incorporated v Russell 56 CLR 34 at 46 and McDonnell and East Ltd v McGregor 56 CLR 50 at 56 and said: "T can only conclude that the defendants, being dissatisfied with the answers, now require me to make additional findings of fact. It was for the defendants to obtain answers to the questions they regarded as relevant Miss Needham (the respondent's counsel) submits that a proper interpretation of s88 is that all issues of fact are to be determined by the jury if there is an issue of fraud involved in a case. The section does not say that, and I am inclined to the view that the only issue to be tried by a jury in such circumstances, as a result of that section, is that issue. " Tam not clear what his Honour meant by this. For my part I have no doubt that s88 requires that the whole proceedings on a common law claim, in which there are issues of fact on a charge of fraud against a party, are to be tried with a jury unless an order is made under subs(2). The language of the section and of s89 makes this plain. However despite what his Honour said he regarded the trial as having been run on the basis that the issues of fact would be determined by the jury and formed the view that it was not open to him, in the manner the case was conducted, to make additional findings of fact. He then went on to interpret the jury's answers. McInerney J rejected the appellants' defence whereunder, in reliance upon the Contracts Review Act, they claimed that enforcement of the guarantee should be refused on the basis that it was in the circumstances an unjust contract. The appellants submitted that the inequality of bargaining power, the lack of independent advice, the false representation about a progressive drawdown, the absence of any benefit or advantage to the appellants, and the absence of any disclosure as to the Debtor's financial position coupled with the misrepresentation about the unlimited nature of the document justified relief URJ MITCHELL and ANOR v WESTPAC BANKING CORPORATION (Sheller JA) 9 under the Act. McInerney J said that in the circumstances of the signing of the document, and in the light of the findings of the jury and the background of the appellants it was not a case for intervention by him "in interpreting the jury's answers so conclude that relief should be granted under" the Act. GROUNDS OF APPEAL The appellants conceded that their claim, in so far as it depended on fraud, failed. On appeal they sought to pursue their claim to relief under the Contracts Review Act. By leave and with the respondent's consent an amended notice of appeal was. filed in Court. The grounds were as follows: "1. That his Honour erred holding that he was without power to make any further findings of fact on any issues raised but not made the subject of specific questions directed to the jury. 2. His Honour erred in failing to find a misrepresentation by the bank officer on the 7th June as pleaded. 3. That his Honour erred in declining to grant relief under the Contracts Review Act on the basis of the jury's finding that bank officer's misrepresentations to Defendants as to the nature and legal effect of the documents they were asked to sign. 4. His Honour erred in holding that there was no evidence to support the jury's finding that the respondent had led the appellants so believe the guarantee was limited " On the findings his Honour made, in my opinion, no ground was shown for saying that his discretion under the Contracts Review Act miscarried. Clearly it did not. The appellants submitted that it was open to his Honour to make findings, not inconsistent with the answers given to the questions by the jury. Counsel for the appellants had submitted to McInerney J that despite the answers given by the jury and in particular the negative answer to question 6, it was open to him to determine whether the appellant Mr Mitchell's belief in a progressive drawdown was induced by the bank and, if so, when and how. His Honour held that he was not able to make findings of fact and went on to say that, even assuming, contrary to his decision, that he was, the appellants were faced with an insuperable problem in respect to how it was that Mr Mitchell came to hold that belief. His Honour referred to four matters. Amongst those was the evidence of Mr Mitchell who denied any knowledge of the telephone conversation between Messrs McKay and Roach. His Honour concluded that there was no evidence that the appellants were induced by anything said in conversation with Mr McKay and Mr Roach relating to a progressive draw down to sign the guarantee. I am not persuaded that there is any reason to doubt the correctness of this factual conclusion. However in my opinion it was not part of his Honour's function to engage in the fact finding task suggested. Pt6 of the Supreme Court Act "Procedure", Division 2 "Trial" provides in s85 (1) that "Subject to s86, s87 and s88, proceedings in any Division shall be tried without a jury, unless the Court otherwise orders " s86 (1) provides that in proceedings on a common law claim, except proceedings to which either of s87 and s88 applies, issues of fact shall, if any party files a requisition for trial with a jury and pays the fee prescribed by the regulations made under s130, be tried with a jury. S87 (1) provides that in any proceedings to which that section applies, which are described in subs(2), the Court may, on the application of any party, and shall, on the application of all parties, order that the proceedings be tried with a jury. S88 provides that proceedings on a common law claim in which there are issues of fact on a charge of fraud against a party shall be tried with a jury. S89, so far as presently material, provides as follows: 10 UNREPORTED JUDGMENTS "(I) In any proceedings on a common law claim (except proceedings to which s88 applies), the Court may order, despite s85, s86 and s87, that all or any issues of fact be tried without a jury. (2) In any proceedings to which s88 applies, the Court may order, despite that section, that all or any issues of fact be tried without a jury where (a) any prolonged examination of documents or scientific or local investigation is required and cannot conveniently be made with a jury; or (b) all parties consent to the order " In Morosi v Mirror Newspapers Ltd (1977) 2 NSWLR 749 in a joint judgment this Court (Moffitt P and Hope and Reynolds JJA), after quoting s90 of the Supreme Court Act, said at 759: "For the moment we leave s90 aside. It has always been a permissible procedure for the presiding judge to ask the jury to answer questions. Whatever name be given to the function of the jury, in giving answers to such questions, it is the jury whose function it is in the end to bring in their verdict for one party of the other y a jury answers questions and, as a matter of law, a particular verdict flows from those answers, it is the function of the judge to give the jury the appropriate direction of law, which is to find such a verdict, and it is the function of the jury then to find the verdict. It is only on the jury finding a verdict and the judge accepting it, that he can then perform his function of entering or directing the entry of the judgment. At times views have been expressed that a judge may enter the judgment which is appropriate to the jury's answers to questions, but the better view is that this is a departure from the due exercise of the function of judge and jury, and that, when it occurs, it is explained and justified by the requirement that the jury return the verdict, being treated as a formality in the particular case, because there is no objection to the formality being dispensed with Dixon J, as he then was, in McDonnell and East Ltd v McGregor 56 CLR 50 at 56 authoritatively summarised the view, which since has been almost universally accepted as: 'When a jury answers specific questions, the strict course is to obtain under direction a general verdict in accordance with the findings and to enter judgment upon the verdict But the formality of requiring the jury to return a verdict may be dispensed with if there is no objection *. And see Russell v Victorian Railways Commissioners (1948) VLR 118. While the judge is entitled to ask the jury to answer questions, it has always been recognised that a jury is not bound to answer questions put to is, but instead may bring in a general verdict: Cunningham v Ryan (1919) 27 CLR 291 at 297 and 298; Phillips v Ellinson Brothers Pty Ltd (1941) 65 CLR 221; Russell v Victorian Railways Commissioners. A consequence of the Supreme Court Act 1970, s90 is that it is now the duty of a jury to answer questions of fact left to them by the presiding judge. The answer to a relevant question may serve the due determination of contested issues in a jury trial in various ways. A judge may have occasion to ask a jury questions to aid him in his determination of the questions reserved for him in some proceedings, such as in actions for defamation or malicious prosecution. The anomalous nature of the questions reserved for the judge is referred to by Moffitt P in Wright v Australian Broadcasting Commission [1977] 1 NSWLR 697 at 703. Further, the answer to questions may facilitate the more certain determination at first instance of a dispute involving issues of fact and law, and this in turn may facilitate the determination on appeal of any continuing dispute of law. Again, the answer to URJ MITCHELL and ANOR v WESTPAC BANKING CORPORATION (Sheller JA) 11 questions may facilitate the task of the jury in the determination of factual issues of complexity, and in aid of the ultimate determination of the verdict they eventually bring in. " This dictum, which in my opinion correctly expresses the law, decides the point against the appellants. The only way round it was for the appellants to rely, as they did, on some tacit agreement between the parties that they had left to the judge the task of deciding issues of fact not included in the questions put to the jury but in a way not inconsistent with the answers given by the jury. We were referred to the judgment of Tadgell J in Williams v Incorporated Nominal Defendant (1986) VR 169 particularly at 175 to 176. I regard that as a very special case. His Honour concluded that the answer given by the jury to one question put to it was not reasonably open. This answer had led to the jury's not answering another question which would have been decisive in favour of either the plaintiff or the defendant. As a matter of practical necessity, his Honour considered he had to decide the matter raised by that unanswered question so that one or other party became entitled to judgment. Whatever may have been the validity of this approach in the particular circumstances of the case, as to which I have some doubt, it is far removed from the circumstances of this case. It was for the defendants to ensure that questions were put to the jury directed to any facts necessary to enable the trial judge on the basis of the answers to exercise his discretion under the Contracts Review Act. An analogous situation was considered by this Court in Morgan v John Fairfax and Sons Ltd (1990) 20 NSWLR 511. The Court was concerned with s23 of the Defamation Act 1974 which provided that the question whether there was a defence of qualified privilege "is to be determined by the Court and not by the jury". The Court held that the judge's authority to determine the question of qualified privilege was subject "to the jury deciding any disputed issues of fact on which the resolution of the ultimate questions might depend"; 517C, 526B, 538G. At 521 Samuels AP said: "The principle is, I venture to say, quite plain, and was indeed acknowledged by the learned trial judge It is that the jury must determine any primary facts in dispute which are necessary to a determination of qualified privilege. If the parties distinctly agree that the learned judge should do so, then no doubt he or she may proceed to find the facts according to that mandate. I do not myself consider it to be a course which should be freely adopted as I have already indicated " Hunt AJA concluded that if the parties failed either to have a question directed to the jury in order to decide the disputed issue of fact or expressly to agree to the judge making that decision for himself the judge had no power to make a finding on that issue. At 545 to 547 his Honour said: "To conclude by inference merely from that failure that the parties had accepted such a course (which is not only contrary to principle but also calculated to produce further dispute) is, in my respectful view, an invitation to miscarry defamation trials I suggest that, unless there is a specific agreement that the judge is to decide such disputed issues (recorded in the transcript before the final addresses commence), such an approach is highly undesirable and should not be adopted in the future For the reasons already given, such an acceptance cannot be inferred in the present case in any event, because counsel had not applied their minds at all to that situation. 12 UNREPORTED JUDGMENTS Once a jury have been discharged, the trial cannot proceed - so far as any remaining issues of fact are concerned - without the consent of all parties either to the jury being dispensed with in relation to those issues or to an order pursuant to s89 (2) (b) of the Supreme Court Act that those remaining issues of fact be tried without a jury. That is the effect of this Court's decision in G and J Shopfittings and Refrigeration Pty Ltd (In Liq) v Lombard Insurance Co (Aust) Ltd (1989) 16 NSWLR 363 at 369." Mahoney JA, in dissent, concluded that in the particular circumstances of that case it was open to the trial judge to make findings of fact enabling the defence of qualified privilege to be dealt with. From what I have said it is apparent that there is powerful authority in this State to support the conclusion that the jury having answered the questions put to it and there being no consent to the trial judge's making findings of fact it was not open to him to do so. This leads to ground 4 in the amended notice of appeal, namely, his Honour's conclusion that there was no evidence that the respondent induced the appellants to believe they were signing a limited guarantee only. This conclusion was mistaken. There was evidence that the appellants were induced by the respondent to believe that the guarantee was limited. This was conceded. But the effect of this would be an order requiring that CL8 of the guarantee be amended to provide that the total moneys payable thereunder by the appellants should not exceed the amount of $230,000 and interest to the extent and as calculated in the printed form of CL8. Since the claim upon which the respondent proceeded was less than the limit so stated and calculated this was of no consequence and is not a basis for granting the appellants relief by refusing to enforce the guarantee. At most the appropriate order would be to restore to full effect the part of CL8 ruled out and insert "$230,000" in the blank space. In the result this would not affect the respondent's entitlement to the order for possession made by McInerney J. In my opinion the appeal should be dismissed with costs. Appeal dismissed with costs. Counsel for the Appellants: SJ Motbey Instructed by: Lyons and Lyons Counsel for the Respondent: JE Thomson, M Anastasi Instructed by: Minter Ellison