New South Wales Supreme Court CITATION : Standard Chartered Bank Australia v Alec Dean [1999] NSWSC 1042 CURRENT JURISDICTION : Equity Division Commercial List FILE NUMBER(S) : 50019/99 HEARING DATE(S) : 11.10.99, 12.10.99 JUDGMENT DATE : 22 October 1999 PARTIES : Standard Chartered Bank Australia Ltd & Nuchem Australia Pty Limited (Receivers and Managers Appointed) v Alec Dean & Osman Ahmed JUDGMENT OF : Hunter J COUNSEL : Applicant: Mr M R Aldridge Respondent: Mr D Ryan SOLICITORS : Applicant: Hunt Partners Respondent: Mallesons Stephen Jaques CATCHWORDS : Practice and Procedure - summary judgment - application to set aside - want of credible evidence in support of application - application dismissed. ACTS CITED : Evidence Act 1995 DECISION : Application for setting aside summary judgment and stay refused. Application dismissed with costs. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST HUNTER J Friday 22 October 1999 50019/99 STANDARD CHARTERED BANK AUSTRALIA LTD & ANOR v ALEC DEAN & ANOR REASONS FOR JUDGMENT 1 This is an application by Alec Dean (the applicant) to set aside a summary judgment of Rolfe J of 20 May 1999 (the summary judgment) in these proceedings (the principal proceedings) and in the event that the summary judgment is set aside, seeking a stay of the principal proceedings, in effect, pending the determination of proceedings in the Supreme Court of the State of New York (the US proceedings). The plaintiffs in the principal proceedings are also the plaintiffs in the US proceedings. 2 The summary judgment was in favour of the first plaintiff, Standard Chartered Bank Australia Ltd (the bank) in the sum of A$5,910,797.68. Rolfe J declined to give judgment in favour of the second plaintiff, the receivers and managers (the receivers) of Nuchem Australia Pty Ltd (Nuchem Australia), on the basis that the bank had not called "upon it to meet that liability having elected to join it as a plaintiff in [the principal] proceedings". 3 Counsel for both parties have expressly accepted that the summary judgment was limited to the applicant's liability under a deed of guarantee and indemnity of 11 September 1997 (the guarantee), given by him to the bank in respect of Nuchem Australia's indebtedness to the bank, and that Rolfe J accepted the evidence of the bank establishing three acts of default by Nuchem Australia under a facility agreement of 9 September 1997 between it and the bank (the facility) and an equitable charge of 19 September 1997 (the charge) over the assets and undertaking of Nuchem Australia in favour of the bank. Those acts of default were particularised in paragraph 29 of the bank's contentions in its amended summons in the principal proceedings (the contentions) as follows: "Events of Default and Appointment of Receivers and Managers 29. Between April 1998 and 10 August 1998, events of default occurred pursuant to the Finance Facility and pursuant to the Charge, as follows: (a) at a date not presently known to the first plaintiff but subsequent to the execution of the Finance Facility, there was a change in the directors of the second plaintiff which was not consented to by the first plaintiff . Particulars Herbert Ralph Moll resigned as a Director of the second plaintiff . (b) the second plaintiff failed to comply with its undertaking to give promptly to the first plaintiff information and supporting evidence in connection with the second plaintiff's business and financial condition as requested by the first plaintiff. Particulars The second plaintiff failed to comply with requests made by or on behalf of the first plaintiff from 5 August to 13 August 1998. (c) a material adverse change in the financial performance of a condition of the second plaintiff occurred; Particulars A net deficiency of assets of the second plaintiff as at 31 March 1998 was estimated to be in the sum of AUD $ 686,000.00 compared to net assets in the balance sheet provided by the second plaintiff to the first plaintiff of AUD$273,000.00 . For the ten months prior to April 1998 the second plaintiff made a net loss of AUD$ 1.55 million resulting in a net deficiency of assets of AUD $ 781,494.00 as at 30 April 1998. Telecommunications cable owned by the second plaintiff and listed by it at a value of AUD $ 4,737,539.00 was, on 30 June 1998, valued at an estimated AUD$12,000.00 ." 4 In the principal proceedings the bank contended, inter alia, that the applicant, who was the first defendant in the principal proceedings, had fraudulently procured the issuing of a letter of credit (the letter of credit) in the sum of $4,000,000, pursuant to the facility, to facilitate the purchase of cable to satisfy purchase orders (the purchase orders) said to have been placed with Nuchem Australia by Telekom Malaysia, Optus Vision, and Delta 3 Corporation, whereas no such purchase orders had been issued. 5 Although evidence was adduced before Rolfe J in the principal proceedings which if, accepted, was relevant to the issue of fraud raised by the bank, Rolfe J limited his judgment to the applicant's liability under the guarantee. 6 The US proceedings were brought by the bank and the receivers against the applicant and Marvin Billet (Billet) by summons dated 21 January 1999 seeking damages "of not less than $1,000,000.00" on several causes of action, including one of fraud in the alleged conversion by the applicant of marketable securities, said to be the property of Nuchem Australia and subject to the charge. By his verified answer and counterclaim of 12 June 1999, those allegations of fraud and related allegations were denied by the applicant who claimed ownership of the subject securities and alleged that they had never been the subject of the charge. 7 In his counterclaim the applicant sought damages of "not less than the sum of $100 million (US)" for wrongful appointment of the receivers; for interference with Nuchem Australia's business opportunities; for sale of its assets "at distressed prices," and for "malicious publication of false, misleading and inaccurate information regarding Nuchem [Australia's and the applicant's] finances, credit and business capabilities," which resulted in the loss of certain business transactions. These business transactions were described by the applicant in his counterclaim as follows: "38. In or about April 1998, under the SCB credit facilities, Nuchem Australia purchased telecommunications cable in the United Kingdom. Said Cable, together with existing inventory, had a resale value in the Asian market in excess of $15 Million (Australia). 39. In or about April 1998, Nuchem entered into negotiations for the purchase of real property in the United Kingdom for the sum of £17 million with a down payment of £660,000. Financing for said purchase had been arranged. 40. At the same time, Nuchem was in negotiations with two entities for the sale of said UK property for the sum of £27 million, yielding a profit in the amount of 10 million Pounds Sterling. 41. Commencing in or about October 1997, Nuchem Australia and Nuchem Telecommunications developed a business plan, culminating in a tender submitted in December 1997, for the construction and installation of telecommunications networks in Malaysia and Indonesia. 42. In connection with said tender, Nuchem Australia expended in excess of $700,000 (US) for engineering studies, among other expenses, to complete the tender. 43. The anticipated revenue from this venture was in excess of $450 million (US), with profits generated to Nuchem totalling $45 million (US). 44. In or about August or September, 1997 Nuchem Australia purchased the assets of Camcom, an Australian company, including its patent rights and interests to certain videoconferencing technologies, for the sum of $1.5 million (US). 45. As of April, 1998, Nuchem Australia was in negotiations with an Indian company for the sale of Camcom's patents and technologies in an amount in excess of $2 million (US). 46. As of June, 1998, Nuchem Australia was in the final stages of negotiating a contract to provide telecommunications equipment and engineering assistance for he (sic) upgrading of Iranian telecommunications facilities. The venture had total anticipated revenues of $250 million (US) and Nuchem's anticipated profit was $60 million (US). 47. As of April, 1998, Nuchem was in negotiations with three Indian telecommunication companies to perform services as systems integrators and to supply telecommunication equipment. To that end Nuchem hired three engineering consultants and expended approximately $50,000.00 (US) in developing the tender. Nuchem's anticipated profit, over a five year period, was $60 million (US). 48. Continuing from 1993 to 1998, Nuchem Australia was the exclusive agent for the distribution and sale of chemical products for Helm AG, a German chemical trading entity. As of August 1998, Nuchem had arrangements with Helm AG which generated sales of $11 million (Australian) annually, of which approximately 5 to10% was profit." 8 Of the events immediately preceding the appointment of the receivers on 25 August 1998 the applicant further asserted in his counterclaim as follows: "49. In or about July, 1998, Nuchem, at the insistence of SCB, submitted to an audit of its books and records by SCB's auditors, Deloitte Touche Tohmatsu ("Deloitte"). 50. In or about August 1998, numerous meetings were held with Glen Smith and Darren Wilson, representing SCB and Dean, among others, at SCB offices in Sydney, Australia as a result of which it was agreed, inter alia , that Nuchem would continue to trade and be supported by SCB and Nuchem have three months from that date to provide purchase orders to cover the $876,000 (US) letter of credit. 51. Between July and early August, 1998, additional letters of credit, totaling approximately $250,000 (US) were extended to Nuchem Australia. 52. SCB did not require further or additional collateral from Nuchem , NMUK, NSA or Dean with respect to any of the letters of credit at that time. 53. Upon information and belief, on or about August 25,1998, Nuchem Australia was placed under receivership at the request of SCB. 54. There was no further communication between SCB and Dean from the date of the last meeting referred to above and the time that SCB requested that Nuchem Australia be placed in receivership. … 57. The receivership was without cause or justification." 9 The hearing of the principal proceedings proceeded in the absence of the applicant. In this application the applicant has given evidence in chief in the form of three affidavits sworn respectively, 17 September 1999 (the applicant's first affidavit), 30 September 1999 (the applicant's second affidavit), and 8 October 1999 (the applicant's third affidavit), upon the basis of which it is submitted that he has "a real and arguable" defence to the causes of action under the guarantee. In these affidavits the applicant also gave reasons for his failure to enter an appearance in the principal proceedings, for failing to take any part in those proceedings and for the delay in bringing this application. 10 No attempt was made to provide evidence upon which it could be found that the applicant had "a real and arguable" defence to the case of fraud. The only reference in the applicant's affidavit to the purchase orders is to be found in paragraph 6 of the applicant's first affidavit in which he stated that he "[did] not know who prepared or signed the application [for the letter of credit] or who would have provided allegedly fraudulent purchase orders in support of it". In the applicant's third affidavit he addressed the allegations in paragraph 15(b) of the contentions, but the contents of that affidavit do not directly address the allegation of fraud or related causes of action particularised in the contentions (the fraud case). 11 It has not been submitted on behalf of the bank that the applicant should not be allowed in to defend without credible evidence of a reasonable defence to the bank's fraud case and no evidence was adduced in the bank's evidence in chief in the application to advance the fraud case against the applicant. The bank sought to establish such a case in cross examination of the applicant, but in the exercise of discretion I took the view that cross examination on those issues should be limited to matters going to the credit of the applicant. Without defining the limit imposed upon that cross examination, I was of the view that it would be inappropriate, in the absence of a positive case of fraud in the bank's case, to be asked to make a finding of fraud on this application. 12 As it happened cross examination along that line ceased with the applicant declining to answer a question on the ground that it might incriminate him. By agreement of the parties I was not required to ascertain whether there were reasonable grounds for this objection under s.128 of the Evidence Act 1995. The transcript in relation to that matter, which appears at pages 36 and 37, is inaccurately recorded. What follows is a corrected record. "Q. Accepting that Barclays Bank discounts the letter of credit issued by Standard Chartered, won't you accept that the $3.7 million dollars odd deposited into Nuchem Multi Media account last year was the discounted sum provided for the sale of cable by Nuchem Multi Media to Nuchem that we have been talking about? A. Your Honour, I would prefer not to answer this question because this question may incriminate me. HIS HONOUR: Very well. RYAN: Section 128, your Honour. We would not be forcing Mr Dean to answer the question. HIS HONOUR: All I am looking at the section for is to achieve that result. I have no intention of requiring Mr Dean to provide the answer. RYAN: Discretion under sub-section 5 that the Court may require, but obviously no compulsion on the Court so to do. HIS HONOUR: I think the simplest course: Are the parties content with a general ruling in the exercise of discretion that I decline to require Mr Dean to answer the question. ALDRIDGE: Yes. RYAN: Yes, your Honour. I do not know whether it is acceptable to cut short a number of questions. HIS HONOUR: It is to be noted that the witness has declined to answer the question on the ground that it might incriminate him. There are procedures provided for that under s.128 of the Evidence Act. Both parties are content with a general ruling that in the exercise of my discretion I will not require the witness to answer the question. RYAN: I had intended to ask Mr Dean further questions about receipt by him of particular sums of money from the funds we have been talking about. HIS HONOUR: I think that would be covered by the last question also." (T 36.45 - 37.31) 13 If the issue of there being an arguable defence to the fraud case had been squarely before me and had the applicant not been required under s.128 of the Evidence Act 1995 to answer that question, I think it may have been open to me to draw an inference adverse to the applicant from his claim of privilege, notwithstanding the general line of authority precluding the court from drawing such an inference (see for example the article of Mr Justice Young, "Taking the Fifth" (1991) 65 ALJ 412). However that is not the case here and no inference adverse to the applicant should be, nor is it drawn, from his claim of privilege. 14 The passage quoted above is set out to underline the limits imposed upon counsel for the bank in cross examination. Although no attempt was made by the applicant to evidence an arguable defence to the fraud case, nor was the point taken that such a case should have been made by the applicant, on reflection, had I reached a different conclusion in these reasons, I would have required the parties to further address me on that question before proceeding to judgment. 15 The evidence in chief of the applicant was that he was absent from Australia pursuing "business opportunities" for Nuchem Australia and related corporations between August 1998 and until 13 September 1999, during which time his "business commitments did not permit [him] to return to Australia". The evidence concerning events immediately preceding his departure is not entirely clear, nor, I think, consistent with the assertions of the applicant in his verified answer and counterclaim in the US proceedings. 16 In the applicant's second affidavit he evidenced the fact that Deloitte Touche Tohmatsu (the investigating accountants), who had been appointed to investigate and report to the bank on the affairs of Nuchem Australia, by their letter to him of 10 August 1998, had submitted their draft report for the applicant's comments. The applicant's reply was required by the afternoon of 11 August 1998. 17 The applicant said that he was unable to respond to the draft report before it was forwarded to the bank by the investigating accountants and that on 19 August 1998 he received a letter of demand from the bank and notice of termination of its obligations under the facility. The bank's letter also sought information relating to a valuation of cable said to belong to Nuchem Australia. The applicant said that he caused this information to be forwarded to the bank on 21 August 1998 by "the external accountant of Nuchem Australia, Mr Herbert Moll (Moll), of Bert Cameron, Accountants" in responding to the bank's letter of demand of 19 August 1998 (Moll's 21 August letter). 18 During cross examination the applicant stated that he left Australia, approximately, on the 20th or 21st August 1998 and that a few days later he "received a telephone call" informing him that the receivers had been appointed to Nuchem Australia. It seems an extraordinary step to leave Australia at that time, even more extraordinary to remain absent from Australia for over 12 months engaged on business activities of Nuchem Australia: made even more extraordinary when placed in the context of a claim for over "$100 million (US)" for lost business opportunities and for preventing the applicant from pursuing "existing and potential business opportunities". 19 Especially is that so when, on his own evidence in cross examination, he had attended a meeting with the investigating accountants at which he had been accused of the most serious fraud. His evidence on this subject matter was as follows: "Q. Prior to you leaving Australia in August 1998, there came a time, didn't there, when you declined to discuss matters any further with the representatives of Deloittes? A. I declined to have discussions with representatives of Deloittes and Standard Chartered bank until the day I left Australia. Q. You declined, didn't you, to tell the representatives of Deloittes who it was at Optus that you had been negotiating with for the sale of cable. Do you remember that? A. No, I did not decline. Deloittes wanted to talk to senior members of Optus, who I felt we know Optus. We were dealing with them for several years. I did not want at this point - as in Optus had just changed there Optus Vision to Optus Communication, just trying to create a new relationship. I did not want anyone else to talk to them on my behalf. Q. For that reason, you declined to give them the information as to who was at Optus with whom you had been negotiating? A. Whether I gave them information or not, they are free to find out who the purchasing managers were. Q. I also suggested to you you declined to discuss with them any negotiations you might have had with Telekom Malaysia ? A. I did not decline anything regarding Telekom Malaysia, you Honour. Telekom Malaysia did not arise. It was about Optus Vision and Telstra. HIS HONOUR: Q. When was this? A. During August 1998. Q. 98? A. Yes. RYAN: Q. Didn't you take the view that you did not want to talk to the representatives of Deloittes prior to leaving Australia because you thought they were going to close down the business of the company? A. No, it wasn't. They wrote a fax, your Honour. In my absence I was in Fiji seeing Telecom mall. They wrote a fax. It did not put attention to anyone. They just wrote a fax to Nuchem to the point that this company should be shut down. When I came back from Fiji when I saw that fax, of course I was annoyed because all the staff in the company had also seen that fax. It was very, very damaging to Nuchem to get a fax from auditors who were supposed to do a routine audit for the bank. They sent a fax to the company, not to any director or something to that extent that this company should be shut down. Eventually, I was annoyed. Q. When you got that fax from Mr Campbell of Deloittes, you were shocked and you made the decision that you would not deal with Deloittes any longer? A. That is not true, your Honour. I complained to the bank and, at the request of the bank, I made arrangements to go and meet Mr Campbell. Myself and Mr Derry we visited Mr Campbell in the office. This is not true I did not want to deal with. Q. You told the examining Magistrate in May of this year in Switzerland, "Mr Campbell of Deloittes told me they were going to close down my company, I was shocked. I wasn't ready to deal with them any longer. I went back to my office. I wrote to the bank that I refused to meet Deloittes again. I would only assume my responsibility with the bank." Do you remember giving that evidence ? A. I remember that, but let me add the rest of it, you Honour. When I went to meet Deloittes in their office myself and Mr Rafic Derry, as soon as Mr Campbell came in, after exchange of business cards, Mr Campbell's comments were, "I know what you have done. You have bought the cables from United Kingdom, supplied the cable Malaysia, sold the cable in Malaysia, and you have pocketed the money." With those kind of remarks I said, "Okay, if that is your opinion I don't want to be here." And I left from his office. Q. And you knew that he wanted your version of events when he said these things to you? A. Well, if somebody I meet, as soon as you go to the office and the opening comment is like that. I do not think it is very inviting to sit there and say, okay this is a mistake. I did not have time and I did not want to be abused and accused. I mean, Deloittes is who? Q. You did not defend your reputation? A. I don't remember I was in a Court of law. There was a position made by a person who I took time to visit and discuss things with. He accused me like that just in the first five minutes. I did not see a reason to be there any more. I came and I immediately called the bank and told the bank the same thing. I don't want to discuss matters with these people. I know I am dealing with you people. I answer to your questions." (T 38.41 - 40.21) 20 I think that the evidence is also clear that, on leaving Australia, the applicant instructed Mr Martin Hirst (Hirst), a solicitor with Gadens Lawyers (Gadens), to assist Moll in his dealings with the bank over the affairs of Nuchem Australia. In giving those instructions it seems reasonably clear that he left no forwarding address and provided only a post office box number in Blacktown, which was that of a former employee, Mohammed Iqbal (Iqbal), as his point of contact in Australia. 21 Gadens was not the only firm of solicitors with whom the applicant had contact in Australia. The applicant also gave instructions from time to time to Christopher Henaghan (Henaghan), a partner in the firm of Henaghan McLean, in relation to the affairs of the Dean Family Trust for whom Henaghan acted. The firm had as a consultant, Gail McLean (McLean), who was the sister of the applicant. It is clear from Henaghan's evidence that the applicant had not provided him with a forwarding address between August 1998 and September 1999 and, presumably, that was the case with McLean. 22 Both in the principal proceedings and the United States proceedings the service of initiating process was by substituted service. It was in that way that Henaghan and Gadens received the bank's summons in the principal proceedings. 23 It was the evidence of the applicant that he did not become aware of the bringing of the principal proceedings until April 1999. That is a very difficult proposition to accept. I think that the evidence is overwhelming that the applicant left behind him in Australia a demand for payment of several million dollars, the calling up of the facility, amidst allegations of serious fraud and chose quite deliberately to leave no forwarding address or point of contact in Australia or elsewhere where he could be communicated with other than a post office box number belonging to Iqbal. 24 The applicant's association with Iqbal is not without significance. Both prior to and up to the date of the hearing of the application there existed a close personal relationship between the applicant and Iqbal, so it is no particular wonder that Iqbal's post office box number should be selected by the applicant as a trusted repository for communications from Gadens. 25 The evidence of the applicant of his relationship with Iqbal is as follows: "HIS HONOUR: Q. Mr Dean, who is Mohammed Iqbal ? A. He used to work for Nuchem Australia as an accounts clerk. Q. When did you last have any contact with Mr Iqbal? A. I saw Mr Iqbal last week, your Honour. Q. And prior to that? A. I used to call Mr Iqbal sometimes from Malaysia that, I had spoken to Mr Iqbal in late June after I became aware of the judgment. I have borrowed money from Mr Iqbal to pay for some of my children's requirements. Q. And would it be fair to say that you are on close personal relations with him? A. Yes. Q. And have been so for some years? A. I would say since 1996, when Mohammed Iqbal joined Nuchem Australia. Q. And do you say that he did not inform you of the receipt of the summons in February? A. No, your Honour." (T 45.22 - 45.45) 26 It was to that address, it may be inferred, that Gadens forwarded to the applicant on 19 February 1999 certain correspondence between Gadens and the solicitors for the bank together with the summons in the principal proceedings. It may also be inferred that those documents were also forwarded to Henaghan and Moll at that time. Gaden's letter to the applicant concluded with an invitation to contact Hirst if the applicant wished him to do "anything in relation to the summons." 27 There was no direct evidence that that letter was sent, but no objection was taken to its tender on behalf of the bank in circumstances which required a re-opening of the bank's case. It was acknowledged by counsel for the applicant that the letter should have been produced when called upon on the first day of hearing in answer to a notice to produce given by the bank. Apparently, it was overlooked and produced on the second day. When the applicant was recalled to the witness box to answer questions in relation to Gaden's letter, he denied receipt of the letter and of the documents, presumably, enclosed with it. There is no suggestion that the original letter or accompanying documents were returned to Gadens. 28 There is a further difficulty in accepting the evidence of the applicant on this subject. It was the evidence of Henaghan that he had been absent from his office on vacation until late March or early April 1999 and that upon his return he had a conversation with Hirst arising out of the order for substituted service in the principal proceedings. At that time Henaghan had received the amended summons pursuant to the order for substituted service, Henaghan gave the following evidence in relation to documents that he had received: "Q. What did you do with the documents that you had received? A. Earlier documents had been sent back to Mallesons, informing them that we had no instructions to act and I had sent a couple of letters to the Court informing the documents were just left on my file, the substituted ones that came when I was there, when I arrived back in April. Q. I beg your pardon? A. They just remained in my office, the most recent set that were sent, the amended summons. Q. You have never conveyed the content to Mr Dean? A. No, I haven't. Q. Even though you had been in contact with him? A. Only generally, I never had any instructions or a place to forward them to him. Q. Mr Dean didn't request them? A. Not in my conversation, no, not at that time. Q. At any time ? A. Not from me, no. Q. Did you ever advise Mr Dean that he should take no steps in relation to the proceedings? A. I didn't advise Mr Dean. I said it was not necessary whilst negotiations were taking place. Q. Did Mr Dean ever ask you to ensure that any documents you were sent, were not forwarded to him? A. No, he didn't. Q. Did he ever ask you or say anything in words to that effect? A. No, he didn't." (T 17.48 - 18.39) 29 In referring to earlier documents I assume that those are the documents referred to in Gaden's letter to the applicant of 19 February 1999. Two things to observe about that evidence. One is that it confirmed that the applicant had left no forwarding address or point of communication with Henaghan which would enable him to contact the applicant and the second observation is that, the applicant, apparently did not need to know the contents of the bank's summons, bearing in mind that the amended summons particularised the fraud case against the applicant. 30 In those circumstances I have considerable difficulty in accepting the evidence of the applicant that he had no knowledge of the summons in the principal proceedings prior to April 1999 and, then, as a result of a telephone conversation with Henaghan. If that evidence was accepted I would also have to accept that Iqbal had not communicated with the applicant for over a month and that the applicant had not bothered to contact Hirst or Moll in late February, March and early April, as, presumably, had he done so he would have been informed by them of the receipt of the summons. 31 I find the first proposition inherently improbable and as to the latter it seems an extraordinary situation that a person who had left Australia in the circumstances earlier described in these reasons, if seriously concerned with the affairs of Nuchem Australia and his own personal reputation, would have made no contact with Moll or someone responsible for dealing with the bank in relation to Nuchem Australia's affairs. 32 I think that the conduct of the applicant reflected a studied incommunicado absence from Australia, consistent with the failure of the applicant to take any part in the principal proceedings when it became known to him that those proceedings had been taken by the bank. It is the evidence of the applicant, or it is submitted on his behalf, that such a conclusion is inconsistent with the conduct of the applicant in contesting the US proceedings and with his evidence and that of Henaghan, that Billet had given them to understand that the bank would take no further action in the principal proceedings while negotiations for settlement between the bank and Billet, acting on behalf of the applicant, were afoot. 33 There is some superficial attraction in the proposition that a deliberate exercise not to take part in the principal proceedings is at odds with the applicant's contesting the US proceedings. However I think that inconsistency is more apparent than real. In the US proceedings the bank had obtained an interlocutory injunction in the nature of a mareva injunction in a succession of orders commencing on 22 January 1999, with further orders in February, March and April of 1999. Amongst other things, that order had the effect of freezing certain assets in Switzerland which in turn involved the applicant in proceedings before an Examining Magistrate at St Gallen in May 1999. The effect of the US proceedings was described by the applicant as follows: "A. As far as I knew, Standard Chartered had started proceedings against me in New York. I had been running short of funds, I also had lawyers in New York who was compiling a case against Oppenheimer Bank. Now, in this period, a very good associate of mine Samasu Taha, all his assets, his company assets were frozen in Switzerland because of the proceedings against me in New York, that means I had to also help him to try to resolve the problem that he was in. I mean, the situation was completely overwhelming. I mean how many places, how many things could I attend to? So the best possible thing for me to do was to get somebody like Marvin Billet who is a very, very experienced person, he is a lawyer, apart from that he is a well known negotiator, to ask him to attend with Standard Chartered and the best possible place was UK, the head office of Standard Chartered, to talk to him and then, and see what can be resolved and after that Marvin told me, "Okay, I have had one or two telephone conversations, but I need to be there." So you know, all the problems that I had, I had to arrange money to give to Marvin Billet so that he could travel to London to meet up with Standard Chartered to negotiate on my behalf." (T 29.12 - 29.35) 34 I think that in light of that evidence it is not particularly surprising that the applicant was moved to defend the US proceedings. It is also difficult to reconcile the bank's strong pursuit of litigation in the US proceedings with the claim of the applicant that he understood that no steps would be taken in the principal proceedings during then current negotiations on his behalf with the bank. 35 It was the applicant's evidence that he could not understand why there should be two lots of proceedings instituted by the bank against him, so that one proceeds on the premise that he viewed the bank's actions against him as stemming out of the same or related circumstances. One asks rhetorically why one set of proceedings should be stayed informally during negotiations while the other was being vigorously prosecuted. 36 I have no reason to doubt that Henaghan was informed by Billet on 25 April 1999, in a telephone conversation as follows: "2. On or about 25 April 1999 I received a telephone call from Mr Marvin Billet, Mr Dean's New York attorney, and we had a conversation to the following effect: Marvin Billet: "I am meeting with Standard Chartered's top people in the U.K. Because of the proceedings in New York and New South Wales and whilst negotiations are taking place between me and Standard Chartered, Standard Chartered are interested in hearing about Mr Dean's case against Walsh Manning and CIBC Oppenheimer to see how they might get the benefit of that action". Myself: "Were you able to explain to the Bank the merits of Mr Dean's action against Walsh Manning and Oppenheimer as well as Mr Dean's counterclaim against the Bank?" Marvin Billet: "Yes, I am discussing that with them. The Bank has informed me that while negotiations are ongoing nothing would happen in respect of the proceedings in New South Wales. We are trying to achieve a settlement and while negotiations are happening nothing will happen." Myself: "Good, if there is any problems, contact us." " It was the evidence of Henaghan that following his conversation with Billet he relayed that information to the applicant. 37 It is Henaghan's evidence that he had a conversation with the applicant when contacted by the latter "in around early April 1999". It is difficult to line that up with Henaghan's evidence that his conversation with Billet occurred "on or about 25 April 1999". The evidence of Henaghan to which I refer is as follows: "Q. Were you surprised when Mr Billet rang you? A. No. Q. And why weren't you surprised when Mr Billet rang you? A. Because I had occasion to speak to Mr Dean in around early April. I had been away for some five or six weeks on leave and in around April there was an order for substituted service and there were some documents at that time and Mr Dean telephoned and contacted me and I said there was now some proceedings, confirmed there were some proceedings in New South Wales and he appeared overwhelmed at that point, because he went on and mentioned a lot of things that were happening in his life at that time with various proceedings around various jurisdictions and he thought that he would, well, he said he would have to do something about it because he couldn't be everywhere at once. HIS HONOUR: Q. Because? A. Because he couldn't be everywhere at once. There were proceedings in America, he mentioned some proceedings in Switzerland that he was involved in, there was some counter claim in the United States, there were proceedings here in Australia and he couldn't be everywhere at once and he thought at that time it was an idea to consolidate these matters with Standard Chartered, so he would contact Mr Billet and I indicated to Mr Dean I would have Mr Billet contact me at some time if there are some negotiations going to take place . … RYAN: Q. In relation to that matter, did you advise Mr Dean when he asked you whether he should be doing anything in relation to the New South Wales proceedings, that if the negotiations didn't proceed, that is the settlement negotiations were finished, that he should take steps in relation to the New South Wales proceedings ? A. No, the extent of my conversation was that there was no need whilst negotiations were taking place. Q. And you didn't think it necessary to advise him that he should take steps in relation to those proceedings, if the negotiations came to an end? A. I mentioned to him that he should ask Mr Billet to try and get something in writing if there was going to be a complete hold on proceedings whilst negotiations were taking place." (T 15.55-16.24…16.50-17.7) 38 That evidence suggests that Henaghan's conversation with the applicant took place after there had been communications from Billet concerning a hold on the principal proceedings while negotiations were afoot with the bank. That fits in with paragraph 10 of the applicant's third affidavit which was as follows: "I crave leave to refer to paragraph 5 of my affidavit dated 17 September 1999. With respect to the conversation referred to in that paragraph between myself and Marvin Billet, I say that the conversation was to the following effect: Myself "I've been told by Chris Henaghan that Standard Chartered Bank have agreed to put a stay on proceedings in New South Wales while negotiations occur between you and the bank." Billet "Yes, negotiations are on foot with the bank and they have informed me that no further legal action will be taken in New South Wales pending those negotiations." 39 The reference in that evidence to paragraph 5 of an earlier affidavit of the applicant is a reference to the following material which appeared in the applicant's first affidavit, namely: "I first became aware of the Supreme Court of New South Wales proceedings in April 1999 from Chris Henaghan, of Henaghan McLean, Solicitors, Victoria. Shortly after that I spoke to my New York attorney, Mr Marvin Billet and he informed me that negotiations were on foot with the Bank, and that the Bank had informed him that it would take no further legal action in New South Wales pending those negotiations. I did nothing further until hearing of judgment in the New South Wales Supreme Court proceedings in late June 1999 from Chris Henaghan." 40 On the reading of that evidence it would only be consistent if there had been a telephone conversation between Henaghan and the applicant in early April 1999 when the applicant was said to have been aware of the principal proceedings: a later telephone conversation in April between Billet and Henaghan, when Henaghan was informed that the principal proceedings would be on hold during negotiations with the bank, followed by a further conversation between Henaghan and the applicant in which Billet's information was passed on to the applicant with the advice from Henaghan that the applicant should "get something in writing if there was to be a complete hold on proceedings while negotiations were taking place." 41 That se quence fits in with the following further evidence of Henaghan: "ALDRIDGE: Q. (By leave) After you had the conversation with Mr Billet as set out in paragraph 25 of your affidavit, did you have a conversation with Mr Dean? A. Yes. Q. Using the best words you can, what did you say to him and what did he say to you? A. I told Mr Dean that Marvin Billet had contacted me and that there were some negotiations going on regarding all matters, with Standard Chartered that had taken place and were still on foot and that to my understanding there would be no further proceedings to take place in New South Wales whilst negotiations were going on. Mr Dean asked me whether then he should be doing anything about the New South Wales proceedings and I told him that there would be no need whilst negotiations were going on." (T 14.1 - 14.16) 42 There is a problem with this sequence of events in the unchallenged evidence of Charlotte Mary Feest (Feest) in her affidavit sworn 29 September 1999. Feest was the solicitor in the group legal department of the bank in London who was personally involved in the negotiations with Billet in April 1999. According to Feest the negotiations consisted of one meeting, one telephone conversation and a letter from the bank to Billet. The meeting took place on 14 April 1999 at the offices of the bank in London and, according to Feest, at no time did the bank offer to put the principal proceedings on hold during those negotiations. On the contrary, it was Feest's evidence that the following conversations took place: "6. At my meeting with Mr Billet on 14 April 1999, Mr Billet made a "without prejudice" proposal on behalf of Dean which Bill Bruce and I agreed to consider. We then had a conversation with Mr Billet in words to the following effect: CF/BB: "The New South Wales proceedings will not be stayed while we are considering your proposal. There is a directions hearing in these proceedings on 16 April 1999." Mr Billet: "Would you be prepared to adjourn the directions hearing pending further developments?" CF/BB: "No. We will not agree to this." … CF: "The Bank is unable to consider or investigate these unparticularised allegations. If Mr Dean has something to say in response to the proceedings commenced against him in Australia, the United States or Switzerland, then he must file an appearance and make his allegations in the appropriate way." Mr Billet: "I understand your position. I have been trying to convince Mr Dean that he should defend the various proceedings against him but I haven't succeeded ."" 43 It is clear that Billet made a without prejudice offer at that meeting which was rejected in a facsimile and letter to Billet from the bank on 23 April 1999. The terms of that letter follow: "Thank you for taking the time and trouble to meet with me in London last week. As discussed, I have forwarded the copy of the proposed proceeding by Alec Dean against, inter alia, CIBC Oppenheimer Corp. and Walsh Manning Securities, LLC, to our US lawyers for their consideration. We have subsequently received their advice that whilst Mr. Dean is not doubt serious in pursuing these proceedings, there is no basis, on the documentation we have seen, to conclude that Mr. Dean has a good case against CIBC Oppenheimer or that the proposed proceedings will produce a recovery of $1.7 to 2 million in the foreseeable future. Accordingly, the Bank is unable to accept, at present, your client's suggestion that it takes an assignment of the proceeds of any judgment in these proceedings. Nor is the Bank prepared to release funds in Mr. Dean's Bear Steams account in order to finance the pursuit of these proceedings. However, Mr. Dean of course remains free to pursue these proceedings, and the Bank reserves all its rights in relation to the proceeds of any judgment given in Mr. Dean's favour. As I indicated to you at our meeting, the Bank is concerned to ascertain the whereabouts of all the funds it advanced to Nuchem Australia Pty Limited and which have subsequently been transferred away by Mr. Dean into his personal accounts and/or to unknown destinations. You may be aware that these facilities include the Letter of Credit for AUS$4 million issued on 26th March 1998, an overdraft facility in the sum of AUS$407,362.56, and US$ Letter of Credit facilities in the sums of $393,320 and $483,000 issued on 6th and 11th March 1998 respectively, beneficiary Nuchem South East Asia Sdn Bhd. The Bank therefore invites Mr. Dean's realistic proposals for repayment of all these facilities. Such proposals should be based on a detailed accounting of the transfers and whereabouts of all sums advanced to Nuchem by the Bank, and on a detailed schedule of Mr. Dean's assets, wherever they may be. I look forward to hearing from you with Mr. Dean's proposals on the basis suggested above. This letter is without prejudice to, and fully reserves, any and all rights of Standard Chartered Bank, Standard Chartered Bank Australia Ltd, and Nuchem Australia Pty Ltd (Receivers and Managers appointed) in this matter." 44 Feest evidenced the fact that since the date of that facsimile the bank had heard nothing further from Billet "either by telephone or by writing". It is difficult to reconcile that evidence with Henaghan's evidence of his conversation with Billet on 25 April 1999. Clearly, the dilemma posed by that inconsistency may have been cured by direct evidence from Billet. 45 There has been no evidence adduced through Billet and no explanation offered by the applicant why Billet was not called in this application. The applicant's problems do not end there, in my view. Even on the applicant's evidence there is no suggestion of any continuing negotiations after mid April 1999, so the question may be posed: what negotiations were afoot such as to justify any stand by the applicant that he need take no part in the principal proceedings? According to Feest, Billet informed the bank that he had been exhorting the applicant to appear in those proceedings. 46 There is direct evidence of the applicant's receipt of the bank's letter of 23 April 1999 in the form of a facsimile from Billet to the applicant of 9 August 1999. The terms of that facsimile follow : "In London meeting was held on April 15th 1999 with Charlotte Feest, Group Legal Adviser for Standard Chartered Bank. Also present telephonicly was Mr. Bill Bruce, Special Assesment (sic) Manager, SCB Singapore. I enclose letter from Ms Feest turning down my proposal for settling this matter. I believe you have a copy of this letter. If there is any other information I can provide please feel free to call me." 47 There has been no explanation offered by the applicant for the belated provision of the bank's letter to him, especially as it came after a time when, to the applicant's knowledge, the bank had gained judgment against him in the principal proceedings. The applicant's evidence was that this letter from the bank had been the subject of earlier discussions at a meeting attended by Billet, the applicant and a New York attorney, Gary Silverman (Silverman). According to the applicant, when he was in New York "in the first half of June" the bank's letter was discussed at such a meeting when Silverman inquired about the state of negotiations with the bank. 48 There is something bizarre about that evidence when one has regard to the contents of the bank's April letter. Even more bizarre is the evidence of the applicant that he had not been made aware of the contents of that letter earlier than June 1999 when it is realised that Billet and the applicant were together in Switzerland in May 1999 endeavouring to extricate funds frozen by the bank in the hands of Samsu Taha. 49 I find it impossible to accept that, during that period, if not earlier, the applicant was made well aware of the fact that there were no continuing negotiations with the bank and of the fact that the bank had rejected Billet's without prejudice offer in the bank's letter of 23 April 1999. 50 It was the applicant's evidence that he had not been aware of judgment being entered in the principal proceedings until a conversation with Henaghan in June 1999. Henaghan wrote to the solicitors for the bank on 18 June 1999 in which he sought a copy of the judgment in the principal proceedings and made the following further observations: "We still hold with us all the documents which were served upon us by you. In the event that Mr Dean ever contacts us in relation to this matter we would like to be in a position to bring to his attention service of the various documents and of the Judgment entered against him." 51 I infer that it was after 18 June 1999 that the conversation between Henaghan and the applicant took place in which the applicant was informed of the entry of the summary judgment. Henaghan in his affirmation made no mention of this conversation. In his cross examination he said he gave this information to the applicant in "mid to late June probably." Of that conversation Henaghan gave the further evidence. "His Honour: Q. Could you please describe the conversation that you had with Mr Dean in June this year when you informed him that judgment had been entered? A. Yes. He contacted and when he spoke to me I said to him "There has been a judgment entered in the Supreme Court in New South Wales" and Mr Dean expressed shock and surprise --- Q. Just please, try and remember that he said to you? A. He said, "Why would they do that?" And I responded, "I don't know, there just has been judgment entered." I said to him I only had a copy of the actual extract, I think it is a couple of paragraphs, your Honour and so I couldn't say any more about it. Q. But was that the end of the conversation? A. That was the end of the conversation and he indicated that he was going to have to -- Q. What did he say? A. He said that he would contact Gadens. Q. Was nothing said about the breach of the undertaking by Mr Billet, conveyed by Mr Billet. A. Well, that was the shock that Mr Dean, when he said, "Why would they do that?" And in the context of the conversation, that is whilst negotiations were going on. Q. That is what I am trying to find out. You said he said to you," Why would they do that?" And you said, " I don't know ?" A. Mm. Q. Was nothing else said about the undertaking as conveyed to you by Mr Billet? A. Well, it was the understanding that I had. I never believed there was an actual undertaking, but whilst negotiations were going on, it was common ground that someone wouldn't go ahead and enter judgment. Q. I am just curious why there wasn't a discussion along those lines between yourself and Mr Dean in this June conversation? A. Your Honour, I wasn't in an advisory role in relation to these proceedings and Mr Dean said he would have to discuss that matter with Gadens, because he was trying to put forward a proposal and get that in order to." (T 22.5 - 22.50) 52 The conduct of the applicant from mid-June 1999 is not all that critical standing alone. When placed in the context of his conduct prior to that, I think his post mid-June conduct takes on some significance. The applicant described that conduct in his first affidavit as follows: "I found out from Chris Henaghan in late June 1999 that judgment had occurred in the Supreme Court of New South Wales. Shortly after that I spoke to Martin Hirst, of Gadens, Lawyers, my then New South Wales solicitor, about the judgment and he said to me that he was coming to Malaysia in the next few days and that we would discuss the matter then. I made several attempts subsequently to contact Martin Hirst but Gadens did not know in which hotel Mr Hirst was staying in Malaysia. Shortly after I became concerned and asked Chris Henaghan to find me a new solicitor in New South Wales. Henaghan McLean had acted for me at various times and declined to represent me after Nuchem Australia went into receivership because of a conflict of interest. In addition, Henaghan McLean were situated in Victoria, which was not suitable for the proceedings in this State. From the end of June 1999 until mid July 1999 I was travelling between Malaysia and Indonesia on business. On 19 July 1999 Chris Henaghan advised me that he had approached Hunt Partners, solicitors of Level 11, 139 Macquarie Street, Sydney. On 20 July 1999 I instructed Henaghan McLean to write to Hunt Partners. At that time, my file in this matter was still situated with Gadens Lawyers. On 27 July 1999 Hunt Partners received from Gadens my file. On 5 August 1999 I instructed Hunt Partners to represent me on this matter. I did not see the Amended Summons of the Plaintiffs until receiving it from my then solicitors, Hunt Partners, in early September 1999. My business commitments did not permit me to return to Australia until 13 September 1999, on which date I had my first conference with my Counsel, Mr Murray Aldridge and my solicitors." 53 I find the description of the applicant's conduct prior to 20 July 1999 as quite extraordinary in the context of a judgment debtor for a sum in excess of $5,000,000. At best, I think that conduct can be described as casual and I regard it as consistent with the view I have formed as to what lay behind the applicant's prolonged absence from Australia from August 1998 and his failure to take any part in the principal proceedings prior to an application to set aside the summary judgment. 54 I have been unable to accept the evidence of the applicant as to his reasons for taking no part in the principal proceedings, nor his evidence of ignorance of the proceedings prior to April 1999, nor his evidence that he was unaware of the bank's rejection of Billet's offer of settlement prior to June 1999 and take the view that the departure of the applicant from Australia in August 1998 cannot be disassociated from the steps taken against him by the bank amid the serious allegations raised against him in relation to the bank's investigation of the affairs of Nuchem Australia. 55 I take the view that the prolonged absence of the applicant from Australia, along with his failure to provide any point of contact other than the post office box address of Iqbal and his failure to participate in the principal proceedings were part of a deliberate course of conduct by the applicant which form compelling reasons why this application should fail and why the current bankruptcy proceedings should not be impeded by the setting aside of the summary judgment. It is common ground that bankruptcy proceedings against the applicant are pending in the Federal Court. The applicant's evidence that he has an arguable defence to the bank's case under the guarantee is very much dependent upon an acceptance of his credibility. The parties are agreed that the only relevant terms of the facility and of the charge, neither of which were in evidence before me, were those terms as set out in the written submissions of the applicant's counsel as follows: "Clause 3.2 of [the Facility] which states "The customer undertakes to: (a) give promptly to the bank any other information and supporting evidence that the bank requests from time to time; …." Clause 8.1.(1) of [the charge] which [imposed an obligation upon Nuchem Australia] to: "Give promptly to the [bank] the information and documents which the [bank] requests from time to time in connection with: (i) this deed; or (ii) the business, property or financial condition of [Nuchem Australia] or its Subsidiaries; …" … Clause 12.1(1) of the charge [provided for an event of default] if: "A change occurs in circumstances which is warranted or taken to be warranted under this charge to exist or in the business assets or financial condition of the Chargor, or of the chargor and its subsidiaries taken as a whole, which in any case in the reasonable opinion of the Chargee may have a material adverse effect upon the ability of the chargor to observe its obligations under this Deed or under an arrangement in connection with the Secured Money or on the rights of the Chargee under this Charge or such an agreement;…" Although it is not set out in the submissions it is common ground that a further event of default under the charge was provided for if: a change takes place in the directors of Nuchem Australia without the bank's consent. 56 As to the act of default particularised in paragraph 29(a) of the contentions: the applicant evidenced a company search of Nuchem Australia which recorded that Moll ceased as a company director on 30 September 1997. The applicant's evidence was that he had a conversation on about 30 June 1997 in which Moll informed him that he was "going to resign" his directorship, but offered to continue to work with the applicant until he found a suitable replacement as director. The applicant's evidence was that he left to Moll the matter of lodgment of notification of his resignation as a director with the Australian Securities Commission and that it was not until some time in April 1999 that he became aware of Moll's delay in doing so. Moll was not called to give evidence in relation to that matter. The evidence is quite unsatisfactory and having regard to the views I have expressed as to the credibility of the applicant I would not be prepared to regard that evidence as constituting the basis for an arguable defence against the bank's case based on the subject event of default. 57 As to the default particularised in paragraph 29(b) of the contentions: I do not need to particularise the evidence relating to it, other than to observe that one of the failures to comply with requests made on behalf of the bank was a failure to respond to the investigating accountant's letter of 10 August 1998 which required the applicant's comments "prior to 4.00 pm Tuesday 11 August 1998." I earlier referred to Moll's 21 August letter in which he provided information to the bank and which included some material relating to the report of the investigating accountants to the bank, I would be prepared to find that there is an arguable defence putting in issue the act of default so relied upon by the bank, notwithstanding the applicant's evidence, quoted earlier in these reasons, in which he admitted to a refusal to co-operate with the investigating accountants in the face of their accusations of fraud against him. 58 As to the default particularised in paragraph 29(c) of the contentions: the evidence relating to that act of default is largely contained in the report of the investigating accountant to the bank in August 1998. Without doing too much injustice to the applicant's case on this aspect, it is his evidence that: 1) the accounts upon which the investigating accountants acted were unreliable, notwithstanding that they were accounts provided by Nuchem Australia to the investigating accountants for the purpose of the report to the bank, and 2) that the net asset position of Nuchem Australia, as assessed by the investigating accountants, had failed to take into account certain assets, in particular, the true value of the cable, the property of Nuchem Australia. 59 The applicant valued that cable, variously, up to $(US)15,000,000, if one has regard to his sworn answer and counterclaim in the US proceedings, or in excess of $8,000,000, if one limits consideration to the applicant's evidence of valuations of that cable which he said he caused to be made. No valuer was called and the evidence of the applicant was less than cogent. 60 The applicant challenged the investigating accountant's estimate of $12,000 placed upon Nuchem Australia's cable. In the applicant's first affidavit he gave the following evidence in chief: "11. To the best of my present recollection and without the benefit of the bulk of the financial documents of Nuchem Australia, I recall that at the time of the receivership of Nuchem Australia, Nuchem Australia had approximately the following quantities of cable in stock. Values shown below are obtained by using the values for optical cable obtained from Belden Australia Pty Limited specified above. Cable Fibre Approximate Value AUD$ Size Kilometre Length 144 115km 3,565,000 120 60km 1,560,000 96 10km 210,000 72 10km 160,000 48 240km 2,400,000 24 23km 138,000 Total: 8,033,000 12. The stock specified in the above paragraph includes the optic cable received by Nuchem Australia from Nuchem Multimedia." 61 The reference to the cable of Nuchem Multimedia refers to the cable said to be obtained through the letter of credit. In the applicant's second affidavit he gave evidence of obtaining a valuation of Nuchem Australia's cable in August of 1998 by causing a sample to be provided for valuation to a third party, Pacific Broadband Networks (Pacific), who responded as follows: "Please find herewith our price evaluation of a cable sample which was supplied by Mr Gus Bodini of Belden Australia Pty Ltd. In our opinion the cable sample would be used for broadband applications, typically by companies such as Optus and Telstra. Price Evaluation: 144 fibres $30.00 per metre 120 fibres $22.00-$25.00 per metre 48 fibres $10.00-$15.00 per metre Should you have any questions, please do not hesitate to contact the undersigned." 62 The applicant by extrapolating that value to "cable on hand as at 30 June, 1998 and subject to the letter of credit" assessed the value of Nuchem Australia's cable at $5,636,704. That information was sent to the bank in Moll's 21 August letter. 63 The applicant also gave evidence in his second affidavit of an inspection of some of Nuchem Australia's cable in September 1999 and which he valued in excess of $1,000,000. The applicant evidenced correspondence of the receivers with customs agents in December 1998, May and September 1999 as disclosing the disposal of a quantity of cable for approximately $40,000. The applicant asserts that these transactions are inconsistent with the receiver's August 1998 report to the bank which attributed a value of $12,000 to Nuchem Australia's cable. 64 The applicant has not called a qualified valuer to support his evidence of the true value of the cable of Nuchem Australia. So much of the applicant's case on the application is largely dependent on an acceptance of his credibility. While I think that it is fair to say that the bank, through its solicitor, has not been over generous in assisting the applicant in his efforts to establish the value of Nuchem Australia's cable and while there is evidence that the value of Nuchem Australia's cable exceeded the $12,000 estimated by the investigating accountants in their August 1998 report, I think that the applicant's evidence of the valuation of the cable is less than cogent. His evidence of value I think is at odds with his pursuit of business opportunities on behalf of Nuchem Australia over the last year or more, during which he has been unable to dispose of one metre of Nuchem Australia's cable. So much of his evidence of value which was dependent upon Pacific's valuation of "a cable sample" provided by him, I found less than convincing. 65 It is not spelt out how the applicant's evidence of value impinges on the bank having formed "a reasonable opinion" in 1998 that there had been a change in the circumstances of Nuchem Australia which "may have [had] a material adverse effect upon the ability of [Nuchem Australia] to observe its obligations" under the charge or the facility: a finding implicit in the reasons for summary judgment of Rolfe J. It follows that I am far from satisfied that the applicant has evidence that he has an arguable defence to the bank's cause of action against him under the guarantee, principally due to the substantial dependence of such a case upon the credibility of the applicant in this application. Accordingly, the application is dismissed and the applicant is to pay the bank's costs of the application. 66 I repeat an earlier observation in these reasons that, had I reached a different conclusion, I would have required the parties to further address me on the question whether the applicant should be required to show an arguable defence to the bank's case against him on the fraud case, as it is my present view, on the face of it, the application is defective for failing to address that question. ********** Last Modified: 10/26/1999 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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