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SUPREME COURT OF QUEENSLAND

CITATION: ANZ Banking Group Ltd v Rodgers & Anor [2004] QCA 186

PARTIES: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED ACN 005 357 522 (plaintiff/respondent) v STEPHEN ALEXANDER RODGERS AND ROSLYN RODGERS (defendants/appellants)

FILE NO/S: Appeal No 9193 of 2003 / SC No 7655 of 2002

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal

ORIGINATING COURT: Supreme Court at Brisbane

DELIVERED ON: 28 May 2004

DELIVERED AT: Brisbane

HEARING DATE: 28 April 2004

JUDGES: de Jersey CJ, McMurdo P and Williams JA / Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS: 1.Appeal dismissed / 2.The appellants are to pay the respondent’s costs of and incidental to the appeal to be assessed

CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – INTERFERENCE WITH JUDGE’S FINDINGS OF FACT – FUNCTIONS OF THE APPELLATE COURT – WHERE FINDINGS BASED ON CREDIBILITY OF WITNESSES – GENERALLY – where the respondent bank, as mortgagee, successfully claimed an order for possesion of the appellants’ land – whether the trial judge erred in finding that the appellants signed their guarantees, a mortgage and mortgage debenture on 5 October 2001 – whether the trial judge erred in finding that there was no collateral agreement – whether the trial judge erred in failing to find that the appellants were led to believe that the respondent would accept $50,000 in order to remedy their company’s arrears / Devries v Australian National Railways Commission (1993) 177 CLR 472, cited / Fox v Percy (2003) 77 ALJR 989, cited / Water Board v Moustakas (1988) 180 CLR 491, cited

COUNSEL: L J Nevison for the appellant / I R Perkins for the respondent

SOLICITORS: Shand Taylor Lawyers for the appellant / Minter Ellison for the respondent

1. de JERSEY CJ: The respondent bank, as mortgagee, successfully claimed an order for possession of the appellants’ land. The mortgage secured the indebtedness of Rodgers Family Investments Pty Ltd (“the company”) to the respondent. That debt was also secured by deeds of guarantee and indemnity dated 5 October 2001, provided by the appellants to the respondent. The company failed to meet a demand of 8 May 2002 for the payment of a sum of $449,319 owing under three loan facilities. That led to claims against the appellants as guarantors, and judgment against them, respectively, in the amount of $394,121.10.

The respondent’s case

2. The respondent’s case at the trial was that the appellants’ execution of the guarantees and other documents was preceded by their accepting an offer contained in a letter dated 5 October 2001, which they signed in the presence of the respondent’s officer Cameron Blair. The resultant agreement provided that the respondent would furnish the company with financial accommodation amounting to $419,000, on condition the appellants provided the guarantees and mortgage, and the company a mortgage debenture. There was no issue about this, and it formed the basis of an alternative claim, should the court find the respondent not able to rely on the guarantees and mortgage.

3. But on the respondent’s case, on the same occasion on 5 October 2001 at the respondent’s Bolsover Street branch, the appellants also signed the guarantees, the mortgage, the company’s debenture, and various other supporting documentation.

The appellants’ case

4. The appellants represented themselves at the trial. A review of the transcript shows the appellants were afforded appropriate accommodation. The appellants’ amended defence and counter claim was an extensive document, which the learned Judge summarized in paras 9 to 13 of his reasons for judgment. Relevantly to the disposition of this appeal, they made two substantial contentions, each of which the trial Judge rejected. The grounds of appeal focus upon them.

5. The first of the appellants’ major contentions at the trial was that the guarantees and mortgage on which the respondent relied were not signed by the appellants, but “in the hand” of another or others. This plainly amounted to an allegation of forgery, which the respondent met (in part) with evidence from a forensic document examiner, Mr Marheine. His evidence was that the signatures were authentic, that Mrs Rodgers’ signatures – including one which she accepted was hers – were made by the same person, as was the case with Mr Rodgers’ signatures, and that while Mrs Rodgers’ signature could readily be copied, Mr Rodgers’ could not: the appellants’ position was that both signatures were forged. Accepting the evidence of Mr Marheine, and taking account of a number of other considerations as well, the learned Judge held that the signatures on the documents were those of the appellants. He found that the appellants signed the documents on 5 October 2001, at Rockhampton, in the presence of Mr Blair.

6. The second major contention by the appellants was that the parties entered into an oral collateral agreement, through Mr Blair for the respondent, and Mr Rodgers. It was to the effect that the respondent would lend up to $450,000 to the company, some of which the company would provide to another company owned by the appellants, Wodda.Com Limited, for use as working capital. When Wodda became “cash flow positive”, which was expected in about six months time, the level of the borrowings the company required would be established and securities provided for that amount. In the meantime, the guarantees, the mortgage, and the debenture need not be provided, and the company would at its option be able to exceed the $450,000 limit, by an unspecified amount, if it required more money. The learned Judge found that the parties entered into no such collateral agreement.

First ground of appeal: signing of securities

7. The grounds of appeal relating to the Judge’s rejection of the allegation of forgery are expressed as follows:

“The Trial Judge erred in finding that the appellants signed their guarantees, a mortgage and mortgage debenture (“the Documents”) on 5 October 2001.

The Trial Judge ought to have found that:

(a)the female appellant did not execute the Documents or alternatively if she did, she did so on or about 22 January 2002 under the mistaken belief that they were documents associated with the provision of loan facilities by the respondent to Web Publishing Pty Ltd and the granting of securities by Web Publishing Pty Ltd to the respondent;

(b)the male appellant did not execute his guarantee or a mortgage or alternatively if he did, he did so on or about 22 January 2002 under the mistaken belief that they were documents associated with the provision of loan facilities by the respondent to Web Publishing Pty Ltd and the granting of securities by Web Publishing Pty Ltd to the respondent.”

(On 22 January 2002 the appellants signed security documents associated with their son’s company, Web Publishing Australia Pty Ltd.)

8. The learned Judge’s findings which relate to these grounds of appeal turned substantially on his conclusions as to the credibility of witnesses. He found that Mrs Rodgers’ evidence was unreliable, and in some aspects, fanciful. Pointing out that Mr Rodgers had a much lesser role in dealing with the respondent, and that his evidence was correspondingly limited, His Honour observed that it nevertheless lacked objectivity, being based on perceptions strongly influenced by Mrs Rodgers. His Honour considered the evidence of the respondent’s officers, including Mr Blair and Mr Nagel, was likely to be much more reliable than that of Mrs Rodgers.

9. In rejecting the allegation of forgery, the learned Judge was influenced by a number of other considerations, in addition to his acceptance of the evidence of Mr Marheine, some of which were: that when officers of the respondent’s “portfolio management department” raised, with the appellants, the prospect of enforcement action under the securities, in the context of the company’s default, the appellants did not respond by denying their execution of the documents, or by raising the alleged collateral agreement; that it was not put to the respondent’s officers, when they gave evidence at the trial, that they had forged the signatures, and there was no reason why any other person would have been interested in committing such a forgery; and that in separate proceedings, in which the company challenged a receiver’s sale, Mrs Rodgers exhibited to her affidavit a copy of the mortgage debenture, and accepted that she signed it on 5 October 2001: the Judge rejected her attempt to explain this away as being implausible and not worthy of credit.

10. Because of the importance in this case of the trial Judge’s views about the credibility of witnesses, it would be necessary, for the appellants to succeed, to demonstrate that the Judge failed to use, or palpably misused, his advantage in having seen and heard the witnesses, or that he acted on evidence inconsistent with facts incontrovertibly established by the evidence, or which was glaringly improbable: Fox v Percy (2003) 77 ALJR 989, 994-5; Devries v Australian National Railways Commission (1993) 177 CLR 472, 479, 482-3.

A forgery case?

11. The appellants contend that the learned Judge misunderstood their case, which was never that the bank officers forged their signatures; that his views on credibility were strongly affected by his rejection of the allegation of forgery; and that the trial therefore miscarried, such that the Judge’s conclusions on the credibility of the evidence of the appellants should not stand. Developing this submission, Counsel for the appellants pointed to the respondent’s Counsel’s statement in his opening that the appellants’ “central allegation” was that their apparent signatures on the security documents were in fact forgeries, followed a short time later by Mrs Rodgers’ statement to the Judge: “We would never have thought the bank forged documents…”. The appellants did not, it is said, plead a case of forgery or put allegations of forgery to the respondent’s witnesses.

12. There are however many indications to the contrary. In their amended defence, for example, the appellants allege the securities were “prepared, executed and altered by the [respondent] without the authority of (the Appellants)”. At the trial, Mrs Rodgers informed the Judge she was attempting to prove the documents were forgeries (record p 267). In an affidavit sworn on 17 August 2003, Mrs Rodgers swore that the documents were not signed by the appellants on 5 October 2001, 22 January 2002 or at any other time. In another affidavit, sworn on 29 August 2003 which was the last working day before the commencement of the trial, Mr Rodgers swore that the relevant signatures were “signed by a hand other than that of [the appellants]”. At the trial, Mr Rodgers gave evidence that the signatures purporting to be his were not. Mrs Rodgers gave evidence that she did not think those presented as hers were in fact hers. The appellants cross-examined Mr Marheine, the forensic document examiner, apparently seeking to undermine his evidence that the signatures were authentic, and in the course of that Mrs Rodgers put to Mr Marheine that it would be easy to forge her signature. Mrs Rodgers informed the Judge that she did not put to the respondent’s officers, during cross-examination, an allegation of forgery, because she did not know the identity of the forger (record p 267). Plainly the contention that the signatures were forged was central to the appellants’ approach and the appellants cannot now reasonably suggest the trial Judge was unduly attentive to the resolution of that issue, or complain that the finding as to credibility was in any degree consequently tainted or irregular.

Signing on 22 January 2002

13. On the other hand, the respondent submitted that this ground of appeal, insofar as it included a contention the Judge should have found that any execution by the appellants occurred on 22 January 2002, under misapprehension as to the nature of the documents being signed, cannot be sanctioned, because inconsistent with the course taken at the trial. At the trial, the appellants’ position was simply that the signatures were not theirs. The trial was conducted, in other words – or in one word, on the basis of forgery. Counsel for the respondent points out that Mrs Rodgers swore that the documents were not signed in front of the respondent’s officer Mr Nagel (who was involved in the meeting on 22 January 2002), and informed the trial Judge that the appellants were not suggesting Mr Nagel had the security documents relating to the company with him at the meeting on 22 January 2002. The prospect the documents were signed on that later occasion was not put to Mr Blair or Mr Sleaford (an assistant manager), the relevant witnesses for the respondent, and Mr and Mrs Rodgers were not cross-examined about it. Mrs Rodgers did however ask Mr Nagel whether a document of the instant variety could, without the knowledge of the appellants, have been included among the documents they signed on 22 January in relation to their son’s company, and Mr Nagel responded “no”. For the respondent, it was submitted this point cannot be pursued now on appeal, because evidence could possibly have been led below in relation to it, had it then been distinctly raised (Water Board v Moustakas (1988) 180 CLR 491, 497).

14. Counsel for the appellants responded in these terms:

“The fact is that the Appellants continue to say, as they have maintained at all times, that they did not sign the Documents on 5 October 2001, they are unaware when they did sign the Documents (if in fact they did sign the Documents), on the basis of the evidence led by the Respondent at trial, it is possible that the Documents were signed by them on 22 January 2002 and it follows that that contention is not new and is consistent with the Appellants’ case at trial.”

15. The “evidence led by the respondent at trial” did not raise the possibility these security documents may have been signed on 22 January 2002. The only evidence on the point was Mr Nagel’s rejection of the possibility, when raised with him by Mrs Rodgers. Further, Mrs Rodgers herself specifically disavowed any such possibility, as emerges from this passage from the transcript, recording an exchange during the cross-examination of Mr Nagel:

“His Honour:Are you suggesting to Mr Nagel that he had with him at the meeting on the 22nd [January 2002], the guarantees, the mortgage and related documents in relation to RFI [the company]?

Mrs Rodgers:I’m not suggesting that Mr Nagel had those documents at the meeting in front of us.

His Honour:And you not suggesting that they were signed on that occasion?

Mrs Rodgers:And I’m not suggesting that they were signed.”

See also record pp 276 line 12, 253 line 15.

When asked whether she signed the documents on 5 October 2001, Mrs Rodgers denied doing so, in terms which extended to her not having done so at any time. She said: “I would have had to been provided with a heap of documents and I would recall that…it’s not possible to have happened on the 5th of the 10th, put it that way, and any other time that I – because I just – I don’t – I’ve never been given a heap of documents to sign by the ANZ.”

16. In fact, the learned Judge did mention the matter in his reasons for judgment:

“A casual inspection of the documents would have revealed that this (ie that the documents were signed on 22 January 2002 when Mr Nagle [sic] called on Mr and Mrs Rodgers) could not have been the case. Many of the documents bore Mr Blair’s signatures and had been tidied up by Mr Sleaford. No signature on any of the documents had been witnessed by Mr Nagel. Moreover, it is quite inconsistent with the defendants own case that the mortgage, mortgage debenture and guarantees were signed on 22 January 2002.

[The evidence established that both Mr Blair and Mr Sleaford had left the relevant branch of the bank well before 22 January 2002.]”

17. In summary, the case was conducted on the basis, not that the documents could have been signed by the appellants mistakenly on 22 January, but that their signatures were simply forgeries. But so far as there was a passing mention of the former scenario, it was excluded by the only evidence on the point, abandoned by Mrs Rodgers anyway, and considered improbable by the trial Judge, for compelling reasons.

Other criticisms

18. The appellants criticized the reasons for judgment and the approach of the trial Judge in numerous respects. I mention some only of these criticisms below, prefacing my observations by saying that none of them raises any doubt of substance as to the correctness and sustainability of the judgment: that applies to all of the appellants’ criticisms, not just those to which I expressly refer below. I mention the following to illustrate the points taken, most of which may fairly be characterized as argumentative.

19. The appellants assert that initialling on the documents, presented as that of Mr Rodgers, was not his, and that the Judge erroneously failed in his reasons to deal with that assertion. The relevant finding was that what purported to be Mr Rodgers’ signatures, were genuine. The initialling was not directly in issue at the trial, and was not examined by Mr Marheine for the reason that he had no specimen upon which to base a comparison.

20. The appellants criticized the respondent for not producing the file or any diary note relating to the appellants’ son’s company, notwithstanding the Judge’s indication that he would be interested to see such documents, in context of the question whether the instant securities may have been included among the documents executed on 22 January 2002. I refer to what I have said already about this subject. The Judge made no order for such production, and there is no suggestion the respondent did not discharge fully its obligations as to disclosure of documents. It was in those circumstances up to the respondent what if any of that file, or any diary note, it produced.

21. The appellants query the assistant manager Mr Sleaford’s non-completion of a “compliance check list”. The reason, however, was not that the presently relevant steps had not been taken, but that Mr Sleaford could not expressly confirm they had been taken because the file was with Mr Blair and he had not checked it.

22. The appellants advance Ms Matta’s “assumption” that the security documents had been signed on 22 January 2002 “because there were documents that must have needed to have been signed”. There was no evidence that she made that assumption.

23. The appellants contend that the guarantees relating to the company, in unsigned form, were at the Bolsover Street branch in January 2002. The evidence of unregistered documents found in Mr Blair’s office did not however identify them, or relate them to these particular transactions, or cover the question whether or not they had been signed.

24. The appellants criticized the respondent for not having called as a witness the district manager Mr Waraker. But it was not established Mr Waraker could have given relevant evidence.

25. As another example of the appellants’ criticisms, they assert that “if [the relevant securities] had all been signed and in registered form previously, they would have been sent to [the respondent’s] State Securities”. But though on the respondent’s case they had been signed, it was common ground not all of the documents were otherwise in registrable form prior to Ms Matta dealing with them in January 2002. This illustrative criticism was essentially nitpicking, or not precisely reflective of the facts. The judgment cannot be thrown into doubt by that sort of criticism.

Second ground of appeal: collateral agreement

29. The second ground of appeal concerns His Honour’s rejection of the appellants’ allegations as to a collateral agreement. The ground of appeal is expressed as follows:

“The Trial Judge erred in finding that no collateral agreement had been entered into about the provision of securities to the respondent in respect of the proposed loan to Rodgers Family Investments Pty Ltd (‘RFI’).

The Trial Judge ought to have concluded that there was an agreement to the effect that the respondent would loan a maximum amount of $450,000.00 to RFI which RFI would provide in whole or in part to Wodda.com Limited for use as working capital, that when Wodda.com Limited became ‘cash flow positive’, the level of the borrowings RFI required would be established and finalised and the personal guarantees, a mortgage and mortgage debenture would then be provided.”

30. It is convenient to set out the learned Judge’s findings on this subject:

“Also implausible is the evidence of Mrs Rodgers as to the collateral agreement alleged by her about the provision of securities to the plaintiff in respect of the proposed loan to the company. The substance of the alleged agreement is that the plaintiff would lend a maximum amount of $450,000 to the company which the company would provide in whole or in part to Wodda.com Ltd for use as working capital. When Wodda.com Limited became ‘cash flow positive’, which was expected to be in about six months time, the level of the borrowings the company required would be established and securities would be provided for that amount. In the meantime, the company would, at its option, be able to exceed the $450,000 limit, by an unspecified amount, if it required more money.

At the time of this alleged bargain the company was not a customer of the plaintiff. On Mrs Rodgers’ own admission she had made it known to Mr Blair that the company’s bank, the National Australia Bank, was refusing to extend the company’s credit limit with the result that the company was having to pay excess fees which were sometimes as high as $3,000 a month.

Needless to say, Mr Blair rejected the suggestion that he had entered into any such agreement. To have done so, would have exceeded his banking authority and involved him in conduct so reckless as to threaten his career prospects. Although Mr Blair’s attention to detail in relation to this matter left much to be desired, I did not get the impression that he was completely lacking in caution, obviously incompetent, or likely to wilfully exceed his authority as the defendants’ account of events would suggest.

Tellingly, the allegation of an agreement or arrangement along the lines of that now alleged first emerged in Mrs Rodgers’ affidavit sworn on 16 August 2002 in proceeding 352 of 2002. That was despite the extensive dealings between the defendants and bank officers, demands by the plaintiff that the company’s accounts be regularised, the appointment of the investigative accountant and the appointment of a receiver and manager. If the defendants had been of the understanding throughout this stressful period that they had not executed any securities and that the alleged agreement existed, they would have been quick to point these things out to the plaintiff. Mrs Rodgers did not impress me as a person who was likely to submit meekly to an infringement of her legal rights, particularly in a way which gravely impacted on the economic well being of herself, her husband and the company.”

31. The appellants strongly criticized His Honour’s approach, especially insofar as it depended on his view that the appellants were contending the company could exceed the $450,000 limit “by an unspecified amount, if it required more money”. The appellants contend that was never part of their case: such a provision would, on their characterization, have been “extraordinary”, and that being so, the trial should be seen to have miscarried because of the Judge’s misapprehension, similarly to the position advanced in relation to the first ground of appeal.

32. It is fair to note at once that the Judge’s rejection of the appellants’ claim as to a collateral agreement did not depend only on this point. That the allegation was raised so late in the piece was, he said, a “telling” consideration. In my view, that was a powerful consideration against there having been such a collateral agreement. That aside, the Judge’s perception of this aspect of the collateral agreement for which the appellants were contending, did in any event find sufficient basis in the following matters: Mrs Rodgers’ sworn affidavit material (record p 699), to the effect that the loan conditions were to be waived until the total loan facility was finalized, a view she repeated in her opening (record p 280); the presentation of the appellants’ case as a situation for “flexibility” (in the sense that limits could be exceeded) until Wodda.com became “cash flow positive”, when the final level of the facility would be determined (record p 281); the circumstance that during the relevant period, “limits” were in fact exceeded, Mrs Rodgers swearing that up to $477,000 was paid (record p 711); and the appellants’ further and better particulars, asserting that the company would not be in default in this period if it failed to make payments otherwise due to the respondent.

33. Also in relation to this ground, the appellants challenged the Judge’s view that Mr Blair would not have been likely to engage in such “reckless” dealings. Again, the Judge must be taken to have been aware of the points of criticism raised by the appellants, and they did not compel a contrary conclusion. (He specifically mentioned that “Mr Blair’s attention to detail … left much to be desired”.)

34. The second ground of appeal also fails.

Third ground of appeal: payment of $50,000

35. The final ground of appeal is in these terms:

“The Trial Judge erred in failing to find that the appellants were led to believe that the respondent would accept $50,000.00 in order to remedy RFI’s arrears.”

36. His Honour’s rejection of that claim is expressed within a paragraph in his reasons for judgment reflecting the extent to which, reasonably and understandably, the question of the credibility of witnesses bore upon the outcome of the case:

“I do not accept that Mr Blair, on behalf of the plaintiff, ever entered into any agreement or arrangement under which he agreed that the giving of securities for the proposed loan to the company be postponed or that, apart from specific instances of minor and temporary extensions of limits, he ever agreed that the company could exceed facilities’ limits. Nor do I accept that Mr Ashe or anyone else on behalf of the plaintiff agreed that the plaintiff would accept $50,000 or any other sum in order to remedy the company’s default or that Mr Ashe or any other bank officer said words to suggest that notices of default or demand would not be relied upon by the plaintiff.”

The reference to “anyone else on behalf of the plaintiff” would embrace Mr Oakes, who also gave evidence for the respondent denying this allegation, evidence the Judge must be taken to have accepted. No reason has been advanced warranting this court’s disturbing a conclusion of that character, based on an assessment of credibility of witnesses not shown to have miscarried.

Orders

37. I would order:

38. that the appeal be dismissed;

39. that the appellants pay the respondent’s costs of and incidental to the appeal to be assessed.

40. McMURDO P: I agree with the Chief Justice that the appeal should be dismissed for the reasons he gives.

41. The appeal is from the learned Trial Judge's findings of fact that the appellants signed the guarantees, a mortgage and a mortgage debenture ("the security documents") on 5 October 2001; that the parties did not enter into any collateral agreement about the provision of the security documents and that the respondent did not lead the appellants to believe that it would accept $50,000 to remedy the arrears in indebtedness of Rodgers Family Investments Pty Ltd.

42. Mr Blair, at the relevant time a business banking officer at the respondent's Bolsover Street branch, Rockhampton, gave evidence that the appellants signed the security documents in his presence on 5 October 2001 and that he then witnessed their signatures on those documents. Mr Blair's evidence was supported by that of Mr Sleaford, then a manager's assistant to Mr Blair, whose writing appeared on the security documents. Mr Sleaford gave evidence of his usual practice in "tidying up such documents".

43. The appellants denied signing the documents on 5 October 2001. His Honour found the female appellant to be unreliable and fanciful in her evidence because of the emotional stress brought about by her financial misfortune and that the male appellant was strongly influenced by her beliefs and his evidence was lacking in objectivity.

44. His Honour gave sound objective reasons for preferring the evidence of Mr Blair and Mr Sleaford to that of the appellants. It was improbable that bank officers would forge documents. The third diary note of 22 January 2002 suggested that the security documents had been signed that day and was puzzling. Mr Andrew Nagel, then the respondent's branch manager, explained, however, that the third diary note must have been a mistake. Indeed, the appellants conceded below that the diary note mistakenly recorded that the security documents were executed on 22 January 2002; they sought only to rely on it as evidence that the documents had not been executed on 5 October 2001.¹ Mr Nagel conducted the dealings with the appellants on 22 January 2002. Neither his signature nor handwriting appeared on the security documents. Mr Blair's signature and Mr Sleaford's handwriting did, yet both these officers had left the respondent's Bolsover Street, Rockhampton branch before 22 January 2002. These facts support his Honour's conclusion that the security documents were signed on 5 October 2001.

45. The relevant bank officers all denied entering into any collateral agreement with the appellants or leading them to believe that the respondent would accept $50,000 to remedy the company's arrears. The appellants did not in their subsequent correspondence with the respondent make any such claims until the female appellant's affidavit sworn 16 August 2002 in Supreme Court matter No 352 of 2002. There was plausible evidence that the respondent was enthusiastic at the beginning of its developing relationship with the appellants to capture their business from their then bankers, the National Australia Bank. That evidence in no way compelled a conclusion that the respondent's officers would make financially unrealistic proposals to the appellants to achieve this outcome, such as the collateral agreement or the $50,000 offer as to arrears.