Jeans v Commonwealth Bank of Australia Ltd

REASONS FOR JUDGMENT THE COURT: 1 The appellant, Mr Jeans, appeals from the judgment of a Judge of this Court, Sackville J, dismissing his application against the Commonwealth Bank of Australia ('the Bank') in which he sought orders setting aside certain securities obtained by the Bank in 1998 and giving judgment in favour of the Bank in its cross claim against him. 2 The sole ground of appeal is that the learned Primary Judge should have allowed Mr Jeans' motion brought after the hearing of the proceedings had commenced seeking to amend his pleadings and thereby to withdraw an admission made in the pleadings, namely, that the guarantee upon which the Bank relied in its cross claim had not been executed by him. Mr Jeans wished to assert, instead, that the signature which purported to be his signature on it had been forged by an officer of the Bank, Mr Cleary. 3 The proceedings in the Court were the second proceedings brought by Deangrove Pty Ltd (Receivers & Managers Appointed) ('Deangrove') and Mr Jeans. Mr Jeans was the sole shareholder in Deangrove. 4 The first proceeding had been commenced on 13 March 2000 and sought substantially the same relief as was sought in the second proceedings so far as concerned the guarantee. It was dismissed by reason of the applicants' failure to comply with a self executing order requiring them to file pleadings by a certain date. 5 The second proceedings were commenced by leave of the Primary Judge on 26 October 2000. In these proceedings the applicants claimed an order setting aside or varying 'the guarantee given …[by Mr Jeans] in favour of …[the Bank] in respect of facilities granted to …[Deangrove]' under a letter of offer dated 2 March 1998. The letter of offer related to a bill discount facility to be established by the Bank in the sum of $7.55 million to enable Deangrove to finance the acquisition of a site at Holloway's Beach and to undertake development work on that site. 6 The applicants alleged that, in the course of negotiations relating to the proposed facility, the Bank's officers (including Mr Cleary) had made certain misleading and deceptive representations and in reliance upon those representations Mr Jeans had entered into the guarantee. It was also alleged that the Bank had engaged in conduct which was unconscionable in breach of s 51AC of the Trade Practices Act 1974 (Cth). It was claimed that in the circumstances the guarantee said to have been entered into by Mr Jeans was void or otherwise unenforceable. We emphasise that Mr Jeans in his amended statement of claim positively asserted that he had entered into an unlimited guarantee of the obligations of Deangrove to the Bank. 7 The Bank, by its amended cross claim, claimed that a sum exceeding $3.6 million was due and owing to it by Mr Jeans under the guarantee. Mr Jeans' defence to the cross claim admitted the Bank's allegation that he had guaranteed the payment of monies to the Bank. We emphasise this admission. 8 In an affidavit sworn in the first proceeding Mr Jeans said: 'From my Diary I am able to say that I had a meeting with Steve Cleary at 2pm of 4 June 1998 for the purpose of signing documents. I am not able at this time to say what documents were signed however from other searches conducted by me I say that Deangrove Pty Limited and I signed the following documents: (a) Equitable Mortgage (Company) now bearing date 12 June 1998… (b) Mortgage over real estate…dated 12 June 1998… (c) Guarantee by myself of the facility. I do not appear to have a copy of this document at this present time.' 9 In an affidavit sworn on 25 September 2002 in the present proceedings Mr Jeans said: 'On 12 June 1998 I signed:- (i) a contract for sale of land…; (ii) I signed a guarantee for the benefit of the CBA a true copy of which is [exhibited]; (iii) I executed an equitable mortgage on behalf of Deangrove granted to the CBA a true copy of which is exhibited…'. 10 In an affidavit filed on the first day of the hearing Mr Jeans said: 'On 3 June 1998, I had telephone conversations both with Steven Cleary and Peter Hocking [another officer of the CBA]. At 2:00 pm on that day at Mr Cleary's request I went to the Bank's offices in Sydney and was provided with security documents including the guarantee which is the subject of these proceedings. I signed the documents in the reception area where Steven Cleary had left them for me. Mr Cleary was not there and he did not witness my signature on the documents at that time. I had no conversation with Mr Cleary at the time I signed the security documents'. 11 We emphasise that the consistent position up until the first day of the hearing was that Mr Jeans had validly entered into the guarantee of Deangrove's obligations to the Bank. The issue presented by the pleadings at the hearing was whether, as Mr Jeans alleged, the bank had been guilty of misleading and deceptive conduct by the making of false representations or was otherwise guilty of unconscionable conduct. 12 After the case had been opened Mr Jeans presented himself for cross-examination and was cross-examined by senior counsel for the Bank. On the third day of the hearing and in the course of cross-examination Mr Jeans was asked to look at the guarantee which purported to have Mr Jeans' signature in two places. The first was his signature as a party to the guarantee. That signature purported to have been witnessed by Mr Cleary. The second was his signature by way of attestation of the common seal of Deangrove as its sole director and secretary. 13 At the outset of this part of the cross-examination Mr Jeans agreed that he was being shown a copy of the guarantee which he had executed, and accepted that, despite the date which appeared on the document, it had been signed on 3 June 1998. The cross-examination then continued: 'Your signature appears on [page 12] or a copy of it at least?…A signature appears there, yes. It's not the same as my normal signature which is on [page 13]. There is no doubt that it's your signature though, is it?…I can't confirm that right now because it's different from my normal signature. You are not seriously suggesting to his Honour that you didn't sign this guarantee are you?…I signed [page 13]. That's my normal signature. You are asking me if that's my signature on [page 12]. And I'm saying that it is not my normal signature. … Are you suggesting to his Honour that you didn't sign this guarantee in your own personal capacity?…I'm suggesting that the signature there is not my normal signature.' 14 Mr Jeans' evidence was that he had never scrutinised the document and that when counsel drew his attention to the signature that was the first time he had noted that the signature appearing on it as his signature as guarantor differed from his signature in his capacity as director and secretary of Deangrove which appeared on the next page. He said that the signature purporting to be his signature on the guarantee was definitely not his signature and denied that he had personally executed the guarantee. It was this assertion that gave rise to the motion before the learned Primary Judge seeking orders that leave be granted to Mr Jeans to withdraw the admission in the amended defence to the cross claim that he had executed the guarantee and to amend the amended statement of claim to substitute for the claim that he had executed the guarantee a claim that it was a condition of the Bank's offer of finance to Deangrove that Mr Jeans provide an unlimited guarantee. There were other consequential amendments which needed to be made to the pleadings in respect of which leave was also sought. Additionally Mr Jeans sought leave to amend the pleadings to allege that the Bank by Mr Cleary had added a signature to the guarantee purporting to be the signature of Mr Jeans and had done so deliberately and fraudulently. 15 A consequence of the amendments was that if leave was granted there would, for the first time, be tendered as an issue the question whether Mr Jeans had executed the guarantee and, if not, whether his signature had been fraudulently placed on the guarantee by Mr Cleary. 16 As already noted the learned Primary Judge dismissed the motion and declined to give the leave sought. The hearing then continued for some ten days. At the end of the hearing his Honour dismissed Mr Jeans' substantive application finding that it had not been established either that the claimed misrepresentations had been made or that Mr Jeans had relied upon them. Despite a suggestion to the contrary by counsel for the Bank it is clear that his Honour's decision on these ultimate issues was dependent upon findings his Honour made as to the credit of Mr Jeans and of Mr Cleary. It is not necessary to summarise his Honour's judgment on these matters.