Aneve v BankWest [2004] NSWSC 640

The Second Plaintiff, Dr Iannuzzi and the Third Plaintiff, his wife, Dr Tsironis, were the sole directors of the First Plaintiff (“Aneve”), which was a family trust company.

By instrument dated 21 January 2002, Aneve guaranteed to the Defendant (“BankWest”) repayment by Barrington Estates Ltd (“Barrington”) of an advance of $1M (“the Guarantee and Indemnity”).

The Guarantee and Indemnity was supported by a Performance Bond, originally dated 4 March 2002 but now replaced by another bond dated 28 January 2003, issued by St George Bank Limited (“St George”) whereunder St George undertook to pay to BankWest upon demand a sum of up to $1M (“the Performance Bond”). The Performance Bond in turn was supported by an instrument dated 28 February 2002 whereby Drs Iannuzzi and Tsironis guaranteed to St George the repayment of all monies payable to it by Aneve (“the St George Guarantee”). The St George Guarantee was supported by securities over four pieces of real estate owned by Dr Iannuzzi, a company controlled by him and Dr Tsironis’ parents (“the Securities”). The Guarantee and Indemnity, the Performance Bond, the St George Guarantee and the Securities were collectively referred as the “Transaction Documents”.

The Plaintiffs alleged that execution of the Transaction Documents was procured by conduct on the part of BankWest which was misleading or deceptive or unconscionable, in contravention of s.52 and s.51AA Trade Practices Act 1974 (Cth) (“TPA”) and an order under s.87 TPA declaring the Guarantee and Indemnity to be void and to have been void ab initio and that BankWest be permanently restrained from making any demand on St George under the Performance Bond.

BankWest, by its Cross Claim, sought a declaration that it was entitled to make demand under the Performance Bond and it sought damages.

The case turned upon issues of credit. Drs Iannuzzi and Tsironis said that certain oral representations were made to them by Mr David Lennon, a director of BankWest, on two occasions in December 2001.

Mr Lennon suffered a severe stroke in May 2002 and he was incapable of giving evidence. The only evidence of the discussion on 22 December 2001 was that given by Dr Iannuzzi. The only evidence of the second discussion on 29 December 2001 was that given by Drs Iannuzzi and Tsironis.

Drs Iannuzzi and Tsironis said that they relied upon the representations made by Mr Lennon in those meetings in deciding that Aneve would enter into the Guarantee and Indemnity. The Plaintiffs said that the representations were false, or misleading or deceptive, and in respect of those representations which are as to future matters, they said that there was no reasonable ground upon which the representations could have been made. In addition, they said that the making of the representations was unconscionable.

BankWest denied that:

– any of the representations were made by Mr Lennon as alleged;

– any representations which were made by Mr Lennon were misleading or deceptive or were made without reasonable grounds;

– any representations made by Mr Lennon were relied upon by Aneve;

– any representations made were causative of loss to Aneve.

In hearing the evidence, the Court found that in the absence of Mr Lennon being able to give evidence, as a highly reputable and professional and senior member of the bank, it was highly unlikely that he made the representations as claimed by the plaintiff, given the potential impact on his career, and reputation. Further, the Court was not able to find Mr Iannzzi was a witness of credit.

The Court must be satisfied on the balance of probabilities that Mr Lennon made one or more of the Representations, bearing in mind that a finding that he did so requires a finding of serious dishonesty on his part. Before making a finding of fact that Mr Lennon made any of the Representations, the Judge must feel “an actual persuasion” that he did so: Briginshaw v Briginshaw (1930) 60 CLR 336, at 361.

 “The judge is not bound always to make a finding one way or the other with regard to the facts averred by the parties. He has open to him the third alternative of saying that the party on whom the burden of proof lies in relation to any averment made by him has failed to discharge that burden. No judge likes to decide cases on burden of proof if he can legitimately avoid having to do so. There are cases, however, in which, owing to the unsatisfactory state of the evidence or otherwise, deciding on the burden of proof is the only just course for him to take.”

The Court may well have been able confidently to make a finding of fact as to whether any of the Representations were made had Mr Lennon’s evidence been available. In the absence of Mr Lennon, the state of the evidence generally was not nearly as satisfactory as it could have been. In those circumstances, the Court made a decision on the basis of whether or not the Plaintiffs had discharged the burden of proof which lied upon them.

The Judge was very far from feeling any actual persuasion that Mr Lennon made any of the Representations. Accordingly, it held that the Plaintiffs had failed to prove that any of the Representations were made and there was judgment for the Defendant on the Plaintiffs’ Statement of Claim.

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