Westpac Banking Corporation v Tyler [1998] VSC 179

1. INTEREST AND COSTS AS AGREED BETWEEN THE PARTIES IN DEFAULT OF AGREEMENT TO BE TAXED.

2. NO APPLICATION FOR TAXATION OF COSTS IS TO BE LISTED UNTIL SEVEN DAYS OF FILING/SERVING OF BILL OF COSTS IN TAXABLE FORM.""

11. Westpac Banking Corporation (Westpac) appeals from the above decision to this Court. The order giving directions in the matter pursuant to Rule 58.09 identified the following questions of law for determination:

(a) in failing to act upon the uncontroverted evidence of Michael Butler that CBA Savings Account 2343 had not existed in the books of the appellant since 24 June 1983 and thus that the account had been closed before that time;

(b) by failing to give any or any adequate reasons for not following the uncontroverted evidence of Michael Butler;

(c) in awarding the respondent unspecified interest in circumstances where the respondent had adduced no evidence or no sufficient evidence as to the interest rate applicable to the savings account from time to time."

19. The affidavit filed for the appellant records His Worship's findings as follows:

"This case raises some unusual aspects. The passage of time has not made them any easier. Mr Tyler is the executor of his late mother's estate by letters of administration granted 16 November 1988.

In recent times three passbooks were located in the deceased's effects. One passbook in the name of the Plaintiff and two passbooks in the name of the deceased.

Mr Tyler took the passbooks to Westpac. They were lost. Fortunately copies were taken and I am satisfied that the Court has the full banking aspect of the passbooks.

Mr Butler, an experienced bank officer, has painstakingly researched each account but in respect of one account has been unable to locate any records in respect of it.

I am satisfied that the production of a bank issued passbook raises a prima facie case that the customer has an account standing with the bank. This prima facie situation call on the defendant bank to displace it: either by inferential or circumstantial evidence or by direct evidence. "

The learned Magistrate then considered the case in respect of the accounts numbered 64034885 and 91 3636. In each instance he was satisfied that the defendant had adduced sufficient evidence to defeat the prima facie case which he found to arise from production of the issued passbooks. As to account numbered 2343, he commented as follows:

"In respect of account 2343 the records of the Bank are not conclusive. No evidence was given by a CBA employee. I am not critical of this fact providing that the evidence that was given was from a person familiar with the account keeping practices of that Bank.

Mr Butler has assumed that the balance of account 2343 became the opening deposit of investment account 91 3636 on 9 October 1974. There is a 21 month gap between the last entry in account 2434 and the opening of 91 3636. On the evidence that the account carries interest of 3.75% it is highly improbable that the balance of account 2434 became the opening deposit of investment account 91 3636. There must have been other transactions. The question is what other transactions.

Mr Butler's evidence is merely speculative. It is not of sufficient value to upset the prima facie value of the passbook. The basic situation is that account number 2343 shows that the plaintiff has a balance of $7,933.62. The Defendant is unable to say what has happened to it. Assumptions can be made. However, the plaintiff has satisfied me that there should be an order for $7,933.62 plus interest plus costs to be taxed in default of agreement. There is to be no taxation unless 7 days notice is given together with a bill in taxable form."

Following the above statement of reasons, counsel for Westpac sought clarification from his Worship in respect of his findings as to whether the account balance had been transferred to the Treasury as unclaimed money. He responded as follows:

"In relation to the question of unclaimed moneys, I find that the full procedures were undertaken by the Bank to determine whether or not the money was transferred to Treasury. I am satisfied on the evidence that there was no such transfer to Treasury. The Defendant points to this as concluding that the funds had been removed from the account. It is possible that the money was removed. The records are not in existence. The Bank records failed to show where the moneys went."

Counsel for Westpac also sought clarification about the method of calculating interest. The learned magistrate said it would be difficult to determine what interest was payable on the account since 1973 but that the appellant could no doubt "calculate it at the touch of a button". Counsel for Westpac submitted that the plaintiff had failed to produce any evidence as to the interest payable on the account from time to time. The learned magistrate responded that the amount of interest was to be sorted out between the parties.

34. I am satisfied that the learned Magistrate had accepted, on the basis of the evidence of the witness Butler, that the savings account was one that accrued interest and that the learned magistrate was merely attempting to relieve himself of the labour of doing any calculations. There was evidence that in 1973 the rate of interest payable on the account was 3.75%. I note that counsel for the appellant conceded that the order made carried with it an implied reservation of liberty to apply and that in the event that the parties could not agree on the appropriate rate of interest, it would have been open to either to return to the learned magistrate to seek a ruling on the matter. As to the absence of evidence he also conceded that it would be open to the respondent Tyler to seek leave to re-open his case to call further evidence. He expressed no view as to the likely outcome of such an application.

The appeal - Question of law (a): failing to act on Butler's evidence

38. The relevant evidence of Michael Butler, a Bank witness, was as follows.

1. He joined the Bank of New South Wales in 1975 and had worked continuously with that Bank and then Westpac as a batch clerk, ledger examiner, teller, senior teller, accountant, branch manager and commercial lender and, as from 1993, as a member of the Investigations Group. Currently he is Manager of Fraud Operations.

2. He became involved in the investigation of the present matter approximately 12 months ago.

3. He had made enquiries of the Unclaimed Moneys Department of Westpac and been advised that none of the three accounts had been transferred to Unclaimed Moneys. He gave evidence of procedures within the Bank for transferring balances in dormant bank accounts to Treasury under the obligations imposed by the Banking Act. Some of the evidence provided included a document signed by the Unclaimed Moneys Office of Westpac indicating that on information supplied to that person unclaimed moneys would have been transferred on 15 March 1991.

4. CBA and Bank of New South Wales merged on 1 October 1982. All CBA accounts had to be transferred on to the Bank of New South Wales system and this required a change to all CBA account numbers. So far as account number 2343 is concerned, if it had been transferred on to the appellant's computer system on 1 October 1982. It would have been recorded as account number 102343.

5. He had searched current records and could not locate any of the three accounts. He had searched archived records. The earliest record went back to 1982. He searched through approximately 1,000 microfiche from 1982 to 1995. The investment accounts were located but a record of the CBA savings account was not found in the microfiche that were searched.

6. The earliest legible microfiche was dated 24 June 1983. The microfiche and a reproduction of it was produced in evidence as exhibit 5. Inter alia it records details of accounts numbered from 101739 to 102634. That list does not include a reference to 102343. The accounts are listed according to their numbers. The numbers nearest to 102343 recorded for accounts are account number 102330 and 102347.

7. He gave evidence of further bank records which recorded the closing of account 903488 and the balance of $34.11 being withdrawn and account number 913636 being closed and the balance of $2,641.96 being withdrawn on 16 October 1984.

8. Mr Butler gave evidence that he had not found an entry recording the deceased's savings account in any of the exhibits or microfiche. He gave evidence as to where details might have appeared in the microfiche for account number 102343 if it had been in existence in 1983 or 1984. He said from that he concluded that it had been closed prior to June 1983.

9. He gave evidence about the practice of Westpac in allowing customers to close accounts and make withdrawals without the use of a passbook. He advanced as a possible explanation as to what occurred that the deceased had been encouraged to transfer the money in her savings account to one of the investment accounts suggesting that the account that had been opened on 9 October 1974 with an amount of $8,000 taken from funds that had been kept in the savings account.

50. I note that in cross examination, Mr Butler conceded that he had never worked for the CBA and could only give evidence of the general banking practice since he commenced working for the Bank of New South Wales in 1975. I note also that in the case of each of the photocopies of the entries in the passbooks, withdrawals appear but there is no notation to record the fact that the accounts had been closed. Bearing in mind that in the case of two of the accounts there is evidence from Westpac's records that the accounts were closed, it is possible that the savings account numbered 2343 was closed without any entry being made in the savings account deposit book.

53. Counsel for the appellant Westpac acknowledged that the concession had been made below that the copies of the entries in the savings account deposit books were accorded prima facie evidentiary status by reason of the operation of the "Books of Account" provisions in the evidence Act (ss. 58A-58J). That concession is repeated on this appeal.

56. It is put that Michael Butler gave evidence that the CBA saving account 2343 did not exist in the books of the appellant as and from 24 June 1983 and that, therefore, the account had been closed before that time. It is further put that this evidence was not controverted. It has also been put in written submissions for the appellant that the evidence of the bank records made it inherently probable that the savings account had been closed and repayment made prior to 1983. It is put that it was not reasonably open to the learned magistrate to infer that the savings account survived for a period of some 25 years in those circumstances.

59. Mr. Butler's evidence comprised evidence as to his investigations and what they revealed and evidence of his opinion as to the fate of the account. As to the former, the summary of the evidence makes it clear that there was nothing in the available records of the bank that demonstrated that the account continued to exist in the bank's books. That evidence was uncontroverted. As to the evidence of opinion, it is also true that Mr Butler gave evidence that he concluded from the absence of any records that the account had been closed prior to June 1983. I note, however, that he admitted that he could not discount the possibility that the funds in the savings account had been misappropriated by officers of the bank. I note also that there were microfiche records from 1982 but it was not until those commencing as and from 24 June 1983 that those records were legible. The evidence of Mr Butler that the account had, on the basis of the record, been closed prior to 24 June 1983 was in substance an opinion expressed by him based upon the evidence that was before the magistrate and inferences drawn from that evidence. The learned magistrate himself had to determine whether that was the proper conclusion. There were competing inferences.

1. The account had not been recorded through error at the bank.

2. The account had been closed by the account holder and that had not been recorded.

3. Monies had been stolen and the person stealing the money had closed the account.

4. The monies had been transferred to the Commonwealth as unclaimed funds but no record had been kept by the Bank.

The problem facing Westpac before the learned magistrate was not that of persuading the magistrate to accept the evidence of Mr Butler as to the state of the account but to persuade the learned magistrate that the inference should be drawn that the account had been lawfully closed in the absence of any bank records that it had been closed.

67. Examining the learned magistrate's reasons I am satisfied that he acted upon the uncontroverted evidence of Michael Butler that account 2343 did not exist in the books of the appellant as and from 24 June 1983. The question remaining to be considered, however, is whether it was reasonably open to the learned magistrate to act upon the prima facie evidence revealed by the photo copy of the deposit book. To succeed on this appeal on the first question of law, the appellant must persuade me that it was not. Counsel for the appellant has accepted that to establish an error of law it is necessary for the appellant to demonstrate that no reasonable magistrate could have found that the accounts still existed on the evidence that was before the learned magistrate (Roads Corporation v. Dacakis [1995] VicRp 70; [1995] 2 VR 508, 517-518; Young v. Paddle Brothers Pty Ltd [1956] VicLawRp 6; [1956] VLR 38, 41;

70. I have referred to the alternative hypotheses that are open on the basis of the absence of any record of the account in the banks books after 24 June 1983. Mr Butler himself advanced another explanation namely the use of monies to open another investment account. The learned magistrate regarded that evidence as "merely speculative" and it was plainly open to him to form that view. I note also that in his reasons the learned magistrate commented that "no evidence was given by a CBA employee". He went on to say as noted above:

"I am not critical of this fact providing that the evidence that was given was from a person familiar with the account keeping purposes of that bank"

Mr Butler was not on the evidence a person familiar with the account keeping practices of the CBA bank he having worked for the Bank of New South Wales and then Westpac and the records with which he was dealing being records that dated from the time of the merger of the two banks. I think it proper, therefore, to conclude that his Worship was troubled by the fact that he was being asked to draw inferences about the records of a different bank without the benefit of any evidence from a CBA employee as to the practices of the CBA bank prior to the merger. I am satisfied that it was open to the learned magistrate to take that consideration into account.

75. The period of time involved and the inferences to be drawn from the lack of records were all matters to be weighed by the learned magistrate. The learned magistrate summed up his position in the words quoted above:

"the basic situation is that account number 2434 shows that the plaintiff has a balance of $7,933.62. The defendant is unable to say what has happened to it. Assumptions can be made. However, the plaintiff will satisfy me that there should be an order for $7,933.62 plus interest plus costs to be taxed in default of agreement."

In my view it was reasonably open to the learned magistrate to reach such a conclusion. He was in effect stating that, there being competing inferences, the defendant was unable to overcome the prima facie evidentiary effect of the entries in the passbook.

80. I am satisfied that this conclusion is not inconsistent with his conclusion as to the other two accounts. In the cases of those accounts, there was clear evidence before him that the bank's records revealed the formal closure of those accounts and the dates and circumstances of those closures. It is true that there was not evidence before the learned magistrate that those withdrawals were made by the deceased. The fact that the withdrawals were formally recorded by the bank in its records, however, raises the inference that that was what occurred. Further, the same provisions of the Evidence Act entitle the bank to rely upon those provisions as prima facie evidence that the accounts were subsequently closed. It may be said that in that situation with prima facie conclusions arising from the banks records pointing in competing directions, the party with the onus of proof, the plaintiff, had to fail in the absence of other evidence which would have indicated that the apparent closures were not accompanied by a withdrawal by the deceased.

83. A tribunal of fact might come to a different conclusion on the evidence in this case. It cannot be demonstrated, however, that it was not open to the learned magistrate to reach the conclusion that he did.

87. The second question posed was whether the learned magistrate erred in law by

"failing to give any adequate reasons for not following the uncontroverted evidence of Michael Butler".

91. The question posed proceeds on what I regard as a false premise - that is that the learned magistrate did not follow the uncontroverted evidence of Michael Butler. He did follow the evidence that was uncontroverted in the sense that he accepted that the records did not reveal any details about account 2343. What he did not accept was Mr Butler's opinions about the closure of the account. The learned magistrate, in his reasons, dealt with that issue including Mr Butler's suggestion that perhaps the monies had been used to open an investment account. He gave his reasons for rejecting that hypothesis. He indicated that he was proceeding on the basis that the defendant was unable to say what had happened and that while assumptions could be made there was insufficient evidence to rebut the prima facie case posed against Westpac by the passbook. On proper analysis, it seems to me that the learned magistrate gave adequate reasons (see Sun Alliance Insurance Ltd v. Massoud [1989] VicRp 2; [1989] VR 8, at 18, 19).

95. The question as posed assumes that the learned magistrate awarded "unspecified interest" in circumstances where the respondent had adduced no evidence or insufficient evidence about the interest rate applicable.

98. On the evidence, it is clear that the account carried with it a right to interest in that there was evidence that it did so in the initial stages at the rate of 3.75%. The interest entitlement over the entire period, however, has not been the subject of evidence. In my view what the learned magistrate did, however, was to record his decision that the plaintiff, Michael Tyler, was entitled to interest but to leave undecided the amount of the interest to which he was entitled. He was no doubt assuming that having formally found an entitlement to interest, the parties would be able to calculate the amount and he said as much. He was also no doubt assuming that if they could not reach agreement, either party could return to him to have the matter dealt with the issue not having been finalised and there being implied, in the order made, liberty to apply even though liberty to apply was not expressly reserved.

101. I have come to the conclusion, therefore, that no error of law has been shown so far as the interest issue is concerned. What the evidence reveals, however, is that that aspect of the learned magistrate's decision has yet to be finalised. In the absence of agreement between the parties it would seem to me that the matter would have to turn to the learned magistrate for final decision by him.

104. In that regard, I note that evidence was placed before me that on the day following the handing down of the decision, the solicitors for the plaintiff submitted a calculation of interest to the solicitors for Westpac. There has been no response to that overture.

108. For the above reasons I am satisfied that no error of law has been demonstrated. The disposition of the matter will depend upon what the parties wish to be done in relation to the question of interest. Prior to reserving my decision I invited counsel for the appellant Westpac to invite his client to consider its position should the appeal be otherwise unsuccessful. I will hear further submissions from counsel on the point.