Gattellaro & Anor v Westpac Banking Corporation S92/2001 [2003] HCATrans 581 (14 February 2003)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S92 of 2001

B e t w e e n -

YOLANDA GATTELLARO

First Applicant

ROCCO GATTELLARO

Second Applicant

and

WESTPAC BANKING CORPORATION

Respondent

Application for special leave to appeal

GUMMOW J

CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 14 FEBRUARY 2003, AT 3.23 PM

Copyright in the High Court of Australia

MR G.J. McVAY: If your Honours please, I appear with my learned friend, MR D.M. LOEWENSTEIN, for the first applicant. (instructed by Spencer Whitby & Co)

MR J. G. AZZI: Your Honours, a late change. Mr Azzi for the second applicant. (instructed by Spencer Whitby & Co)

MR J.W.J. STEVENSON: If your Honours please, I appear for the respondent. (instructed by Henry Davis York)

GUMMOW J: So the first applicant is Mrs Gattellaro, and the second applicant is Mr Gattellaro, is that right?

MR McVAY: Wife and husband. Your Honours, this case raises the issue - - -

GUMMOW J: Will the submissions differ between the two of you?

MR McVAY: What I say has equal application.

GUMMOW J: To both.

MR McVAY: To both.

GUMMOW J: Thank you.

MR McVAY: Your Honours, the case raises the issue of the scope of judicial notice, in the context - - -

CALLINAN J: Mr McVay, could I ask you this. Assume you are right in what you say about the guarantee - that is what you are going to address us on, is it not?

MR McVAY: Yes.

CALLINAN J: That there was no basis upon which a finding could properly be made either as to the existence of an executed guarantee or as to its contents. Is that your submission?

MR McVAY: Second one, yes. First one, no.

CALLINAN J: Right. What was the evidence for the first? That there was a diary note?

MR McVAY: Yes.

CALLINAN J: Was there any other evidence?

MR McVAY: No.

CALLINAN J: Was there any evidence, by either of the applicants, that that diary note did not reflect the true position that the guarantee had not been signed?

MR McVAY: No.

CALLINAN J: No evidence to the contrary of that. So your application turns purely on the form of the guarantee, is that right?

MR McVAY: Yes, and on the fact, judicially noted, that the form of the guarantee is a standard form.

CALLINAN J: I understand that. I meant to comprehend that. Say you were to succeed in persuading us about that, what effect would that have on the matter generally?

MR McVAY: It would mean, your Honours, and I think my friend agrees, that the case would have to go back to the Court of Appeal, because the Court of Appeal did not decide the defences based on the Contracts Review Act. It held that because there was a guarantee, and the guarantee was picked up by a 1977 mortgage, which was not in dispute, there was no point in deciding the Contract Reviews Act point.

CALLINAN J: Was that because those transactions and those documents preceded the Contracts Review Act? Is that right?

MR McVAY: Yes, well, the mortgage which was challenged under the Contracts Review Act was dated June 1986. Their Honours found that because of the existence of this guarantee, an earlier mortgage in 1977 picked it up, so therefore it did not matter whether - - -

CALLINAN J: You did not challenge in fact that there was a 1977 guarantee?

MR McVAY: No. 1977 mortgage.

CALLINAN J: I am sorry. Perhaps I misunderstood you. I thought you accepted that the diary note - what was the date of the diary note?

MR McVAY: November 1985.

CALLINAN J: Right. So the diary note records that a guarantee was signed?

MR McVAY: Can I take your Honour to it?

CALLINAN J: Yes.

GUMMOW J: Have you the text of it?

MR McVAY: Yes, it is in the little bundle of documents. There are only a few of them. If your Honours would go please to page 7, page 8, bottom right-hand corner, in manuscript. Your Honour Justice Callinan is right. The guarantee itself could not be produced, but its existence was inferred from these two diary notes I am taking you to. Your Honours, note that, first of all, it is an internal bank memo - top right-hand corner. Underneath that, "59 Goulburn Street" was the branch. On the left-hand side, about point 2, "Falgat Constructions Pty Ltd". That was the - - -

CALLINAN J: Well, it is halfway down:

Mr Gattellaro has signed D & I Guarantee to support Company advances. Mrs Gattellaro is to sign this week.

Was there any evidence, by diary note or otherwise, that Mrs Gattellaro had signed?

MR McVAY: The trial judge found - and it is not disputed here or in the court below - that Mrs Gattellaro did not sign.

CALLINAN J: Did not sign. So the only question then is as to the form of a guarantee signed by Mr Gattellaro.

MR McVAY: Precisely.

CALLINAN J: Well, why would it not be a natural inference that if he signed a guarantee there was likely to be a guarantee in respect of the company advances? Because that is the issue, is it not? Whether he did sign a guarantee that guaranteed the loans to the company.

MR McVAY: Yes, that is Mr Gattellaro. But Mrs Gattellaro, for whom I appear - she has been caught up this way. The 1977 mortgage, which is the first document in the bundle, has that usual clause in it, that the mortgagors will pay any amount which they subsequently guarantee, which the Bank might lend to a third party.

CALLINAN J: Jointly and severally?

MR McVAY: Jointly and severally. So because Mr Gattellaro was found to have signed a guarantee, even though Mrs Gattellaro did not, because of that wording in the mortgage - jointly and severally liable - she has been liable for that.

CALLINAN J: I see. So then there would still be an issue, and that will be: if you succeed, there will be the Contracts Review Act.

MR McVAY: Precisely.

GUMMOW J: Now, who signed this mortgage? Both of them?

MR McVAY: Yes, the 1977 mortgage. If I could just - because no one can read it, your Honour - - -

GUMMOW J: Well, it is written out on page 5, is it not, the relevant clause?

MR McVAY: Yes it is. I can tell your Honours, it simply says that the mortgagors promise, jointly and severally - - -

GUMMOW J: The mortgagor is defined later on as including both of them, I guess.

MR McVAY: It is. Can I take your Honours to the relevant part of the typescript?

GUMMOW J: Yes, thank you.

MR McVAY: I do not need to take you to it all. The first line:

"That the Mortgagor -

who are both of them -

will pay to the Bank on demand -

Now, you can stop there, your Honours, and come down to three lines from the bottom -

in respect of any loans advances payments or credits which are or may hereafter be made or given either to the Mortgagor (alone or jointly as aforesaid) and/or to the Debtor (alone or jointly as aforesaid) or to any other person -

top of page 2 -

or persons for the accommodation or at the request or by the authority of the Mortgagor -

Now, what follows is important - - -

GUMMOW J: So it is a first and third party mortgage.

MR McVAY: It is, precisely. The next words are important:

or the repayment of which the Mortgagor and/or the Debtor may have guaranteed or may hereafter guarantee -

so that picks it up.

GUMMOW J: Yes, I see.

MR McVAY: The trial judge found that Mr Gattellaro signed a guarantee, so that is picked up by this mortgage, but Mrs Gattellaro did not.

CALLINAN J: But because she is a party and signatory to this, she is - - -

MR McVAY: So because her husband was bound, because she is jointly and severally liable, her interest in the matrimonial home is security for the Bank debt.

CALLINAN J: So she had to guarantee the guarantor.

MR McVAY: Exactly.

GUMMOW J: Yes, that is right.

MR McVAY: What I am going to say to your Honours is that what happened in the Court of Appeal was quite a bizarre - - -

GUMMOW J: So in a way, your client is really being sued - is this how it should be looked at - under this clause we are looking at now?

MR McVAY: Precisely. That is where her liability arises, precisely. Not because she signed a guarantee, but because her husband did, so found, and because of the joint and several nature of her liability.

GUMMOW J: Yes, because there was this anterior guarantee on her part, about being joined in this mortgage clause.

MR McVAY: Well, not a guarantee, but an anterior covenant.

GUMMOW J: Yes, anterior covenant.

MR McVAY: Sorry, I do not mean to be pedantic, but - - -

GUMMOW J: Yes, I understand.

CALLINAN J: What evidence did the Bank tender as to the form of a guarantee?

MR McVAY: Without contradiction, none. Absolutely none.

CALLINAN J: Well, where did the court get - - -

MR McVAY: If you go to the last document, which is page 9, that was a guarantee, your Honours, signed by somebody else - not the applicants.

GUMMOW J: So they were the relevant debtor, were they not?

MR McVAY: Yes, the applicants were the relevant debtor at the time, of course, but this is a - - -

GUMMOW J: The relevant guarantor - I am looking at the instrument at page 9.

MR McVAY: That is right. The guarantor was someone called Rocco Falcomata, who happened to be my client's brother. But the importance of this document is that this was in evidence but not for the purpose of demonstrating to the court that this was a standard form of guarantee. No evidence was heard about that. The majority took judicial notice that this guarantee was - - -

CALLINAN J: When you say "the court", do you mean the Court of Appeal?

MR McVAY: The Court of Appeal and the trial judge.

CALLINAN J: And the trial judge.

MR McVAY: Yes. Without any suggestion by the Bank that it was a standard form of guarantee, they took judicial notice that first of all, the Bank did have a standard form of guarantee, and secondly, that this was it.

CALLINAN J: It would have been so easy for the Bank to prove these matters.

MR McVAY: Of course, your Honour, but my friend will not in any way gainsay that the Bank did not even attempt to do so.

CALLINAN J: Did you have any notice that this - or was there a submission made at the end of the trial or the end of the hearing that this document was a reasonable basis upon which the court could and should act?

MR McVAY: I do not think so. I think it was put by my friend, who was in the trial and before the Court of Appeal, that the judges could draw inferences from this later guarantee. But I do not think my friend put - - -

GUMMOW J: Yes, I was going to ask you that. Now, the instrument that Justice Callinan and I have been looking at, 21 May 1986 - - -

MR McVAY: Exactly.

GUMMOW J: - - - and there was an inference that this was the form of guarantee in use at what date?

MR McVAY: November 1985.

GUMMOW J: I see.

CALLINAN J: There is also an inference that this is the only form of guarantee that the Bank has. Was that not the effect of the holding, that it must have been this form of guarantee?

MR McVAY: It was not put on an inferential basis, though, your Honour. It was put on the basis that the majority took judicial notice, firstly, that the Bank used a standard form of guarantee - - -

CALLINAN J: Well, I can take judicial notice on that basis that banks do not use a standard form of guarantee.

MR McVAY: That is what Justice Priestley said, and I will take you to it shortly - in dissent.

CALLINAN J: Not that I want to do that, but one's experience in these matters tells one something quite different. It shows the danger of relying upon judicial notice.

MR McVAY: Precisely, your Honour. The only reason why the first applicant has a judgment against her for over $980,000 - which was back in August 2000, so it would be much bigger now - is because Justice Giles - and Justice Handley, who supported him - took judicial notice that a bank such as Westpac used standard forms of guarantee.

CALLINAN J: That cannot be right, and I know it is not right. I do not know about Westpac, but about banks generally.

MR McVAY: Can I take you to what Justice Giles said about it, and Justice Handley simply agreed without adding more. If your Honours would go to page 68 of the application book - - -

CALLINAN J: We have recently said in a couple of cases that matters in issue - that the court is very careful to look at the capacity of a party to prove them, and that capacity affects the way in which a court should draw inferences or not draw inferences in relation to matters.

MR McVAY: Precisely. One would have thought that the Westpac Bank was well and truly capable of proving whether they had a standard form or not, and whether it was in use in November 1985. If I can take your Honours to page 68 of the application book, which is Justice Giles' judgment. It will only be very brief.

GUMMOW J: It is line 37, is it not?

MR McVAY: It is:

Judicial notice can be taken of the fact that institutions such as Westpac used a standard form of guarantee.

GUMMOW J: A standard form.

CALLINAN J: For what purpose was that guarantee put into evidence?

MR McVAY: I do not think there was any particular purpose. I am not aware of any particular purpose. It certainly was not as evidence that there was a standard form of guarantee, of which judicial notice could be taken. If I might make this observation and this submission about what Justice Giles had to say, your Honours. First of all, he dismissed in two lines - or analysed in two lines - this whole concept of judicial notice. It is a - with no disrespect to his Honour - very jejune way to analyse what could be reasonably a complex sort of issue.

GUMMOW J: There is nothing in the new Evidence Act about this in New South Wales?

MR McVAY: There is. I am taking you to it now.

GUMMOW J: Thank you.

MR McVAY: If I can say this, your Honours. The decision of the majority equates the question as to whether a bank uses a standard form of guarantee with a factual certainty, such as, as all the textbooks tell us, "Christmas Day falls on 25 December every year" and "Sydney is a city in the State of New South Wales". It gives that question that sort of factual certainty, which, of course, is almost bizarre, with no disrespect. It also, under the Evidence Act section 144 - and your Honours have it - it also equates that question, that is, whether banks use a standard form of guarantee with "common knowledge". Your Honours have 144?

GUMMOW J: Yes.

MR McVAY: It is Part 4.2, headed "Judicial notice":

144. Matters of common knowledge

(1) Proof is not required about knowledge -

and if I can just pause with "knowledge". It does not say "speculation" or "opinion" - it is "knowledge", which imports some concept of certainty -

that is not reasonably open to question and is - - -

CALLINAN J: "And is". It is conjunctive.

MR McVAY: Yes, joining it - exactly. And is:

(a) common knowledge in the locality in which the proceeding is being held or generally.

CALLINAN J: Say a judge from Sydney is sitting in Lismore. Would you not still need evidence to prove what was common knowledge in the locality?

MR McVAY: Of course.

CALLINAN J: How could a judge from Sydney know what was common knowledge in Lismore? I am a judge from Brisbane, initially.

MR McVAY: Of course. I would not say that your Honour should not find that Christmas Day is on 25 December, but I would certainly say that your Honour cannot find that the bank in Lismore has a standard form of guarantee the same as the bank in Sydney.

GUMMOW J: But what is the answer to Mr Stevenson's point - which takes us back to the 1977 instrument - that, in the end, it does not matter, because your client was sufficiently attached by the 1977 document?

MR McVAY: If it is found that it is wrong to use judicial notice to take cognisance that there was a guarantee, then it follows that there was no guarantee which the 1977 mortgage picked up. In other words, the Bank has not proved that there was a guarantee which had in it - if your Honours would go to that specimen guarantee on page 9, paragraph 20 - now, bearing in mind that Mr Gattellaro was found to have signed but Mrs Gattellaro was not:

THAT this instrument shall bind each of the signatories hereto to the extent aforesaid notwithstanding that one or more of the persons named herein as the Guarantor or the Debtor may never execute the same or that the execution of this instrument by any one or more of such persons -

is "void or voidable". So, under the common law, as your Honours know, if a guarantee was to be given by two guarantors and one did not sign, then it is not binding on the other.

CALLINAN J: I was just thinking of section 144(2):

The judge may acquire knowledge of that kind in any way the judge thinks fit.

What does the judge do? Ring up the local bank manager? Send a roving commission out? Employ a private detective?

MR McVAY: Well, that just shows the absurdity, with respect, your Honour - - -

CALLINAN J: This Act has been the subject of difficult cases before the High Court more times in my five years on the Court than any other Act.

MR McVAY: It is such an important Act, and used every day.

CALLINAN J: It is certainly an Act that is not working very well.

GUMMOW J: It is a piece of law reform in need of law reform, as Sir Owen Dixon said once.

MR McVAY: Yes, your Honours.

GUMMOW J: I was looking at page 5. Why, tracking through the language of page 5, which is the mortgage they both signed in 1977, would not your client be caught, because the moneys were at least advanced to her husband?

MR McVAY: No, with respect, your Honour, because that question has never been asked before in these proceedings.

GUMMOW J: I thought Mr Stevenson was asking it in his submissions but maybe I am misstating him as a reason for not granting special leave, you see.

MR McVAY: My friend does not now say that there is no utility. My friend informed me, and graciously so, during the week that he will not be submitting to your Honour now, although it is in his written submissions - - -

GUMMOW J: I see.

MR McVAY: - - - that there is no utility in allowing the appeal. I am grateful to him, but he does not withdraw that.

GUMMOW J: Yes, thank you.

MR McVAY: So your Honour does not need to be concerned about that.

GUMMOW J: Now, is there anything you have to say specifically about the position of the husband? We have been dealing with the wife, at the moment.

MR McVAY: Well, Mr Azzi, of course, appears for the husband, but if I can say this: if this Court holds that it was wrong for the majority to take judicial notice that there was a guarantee, and in a particular form, then I would submit that it cannot be found that on that clause 20 I took you to - and it is clear as a bell from the diary note that both guarantors were to sign it - my submission is that I rely on the common law rule that where it is clear that there were to be two guarantors to sign a guarantee and one did not, the one who signed is not bound. And Justice - - -

GUMMOW J: That will send shock waves through financial institutions, if you - - -

MR McVAY: Possibly, with respect. I can bring cases along that say it. I have one here.

GUMMOW J: All right.

MR McVAY: That is why paragraph 20 is in the guarantee, of course.

GUMMOW J: Yes, of course.

MR McVAY: That is why it is there. But the Bank could not produce it, and nor did they bring forward any evidence to say that that clause had been in the last hundred editions of the guarantee. One would have expected them in litigation, where they have the onus of proof, to bring it forward. But that is the husband, of course. That does not apply to the wife. The basic point is that if it is alleged that someone is liable on a guarantee, well, you have to prove all the elements of it, and I would be entitled to cross-examine and test it. It was never done. The judges in the Court of Appeal said, "Well, that does not matter. I will just take judicial notice of it" - and, of course, the Bank won.

GUMMOW J: Now, what is the position about this house at the moment? Some orders have been made and stayed?

MR McVAY: Yes, it is a stay. They are still living in it. There is a stay, that is right.

GUMMOW J: It would not need a court order, would it?

MR McVAY: No, it does not.

GUMMOW J: I see.

MR McVAY: The Bank are gentlemanly about it.

CALLINAN J: Is 144 relied on by the Court of Appeal? Whereabouts - - -

MR McVAY: No, did not mention it, your Honour.

CALLINAN J: We notice that is another aspect of the Evidence Act. Hardly anyone refers to it - - -

GUMMOW J: Yes, that is right.

CALLINAN J: - - - in the judgments.

MR McVAY: The sum total is in those two lines of what Justice Giles - - -

GUMMOW J: You have milked that point, I think, every drop that you can.

MR McVAY: Can I tell you what Justice Priestley said, your Honours.

CALLINAN J: No, we have read - - -

GUMMOW J: We have read that, too.

MR McVAY: We have all seen guarantees with lines crossed out over various parts, and everybody - - -

CALLINAN J: Well, bank security documents are works in progress, invariably.

MR McVAY: Exactly, because every case is different, every loan is different.

GUMMOW J: All right. Thank you, Mr McVay. Yes, Mr Stevenson.

MR STEVENSON: Could I just remind your Honours of the big picture background, because I rather fancy your Honour might think the Bank was suing on the 1977 mortgage. It was not. There was a mortgage of 2 June 1986 and the Contracts Review Act defence by the Gattellaros was - - -

GUMMOW J: Yes, I understand that.

MR STEVENSON: One of the Bank's answers - leaving aside the factual dispute as to the circumstances leading to that - the mortgage being signed was - I should go back a step. The Gattellaros complained that, unbeknownst to them, the effect of the June 1986 mortgage was to visit upon them liability for the debts of the company. One of the Bank's responses was, "Well, that is not unfair, because you already were liable for the debts of the company" because at trial the Bank contended that both Mr and Mrs Gattellaro had signed the November 1985 guarantee and the Bank contended that that guarantee was secured by the 1977 mortgage. It is common ground here that, though Mr Gattellaro signed the November 1985 guarantee, Mrs Gattellaro did not.

My submission is that no judicial notice question arises at all in this case, and, properly analysed, it is a question of what proper inference can be drawn from the evidence before the court, and, in particular, from the Falcomata guarantee, which is the one that Mr McVay took your Honours to a moment ago. The question was: was the guarantee that was signed in November 1985 by Mr Gattellaro as guarantor - evidenced by the diary notes - in the same form as the guarantee he signed, although as debtor, six months later in the course of the same transaction in May 1986?

Although the majority expressed themselves in terms of judicial notice, they did not need to, and when one looks at their reasoning it is quite plain that they did not, in fact, decide the case on the basis of any fact judicially noticed, but on inferences they were prepared to draw - and this is the whole issue, in this aspect of the case - from the form of the Falcomata guarantee. There was some discussion earlier as to why the Falcomata guarantee was in evidence. It was in evidence because its execution, and, in particular, the Gattellaros' signature on it, were facts relevant to the Contracts Review Act defence.

GUMMOW J: I see.

MR STEVENSON: The position, really, is this. There was evidence that Mr Gattellaro - - -

GUMMOW J: And the 1977 mortgage? How did that get in?

MR STEVENSON: To show that if, as the Bank contended, Mr or Mrs Gattellaro had signed the November 1985 guarantee, it was secured by a mortgage, so the fact that the 1986 mortgage also secured the company debts did not make their position thereby any worse, and therefore the contract constituted by the 1986 mortgage was not unjust, for that reason. The reason why it was important to prove the form of the November 1985 guarantee was, as Mr McVay has said, the position we are in now is that Mr Gattellaro signed this as did not and, absent a clause such as clause 20, he would not be bound by the November 1985 guarantee, even though he had signed it, because his co-guarantor had not signed it. So that is why it was relevant.

There was evidence that Mr Gattellaro had signed a guarantee. There was evidence, in my submission, that Westpac had at least one standard form guarantee - and I will take your Honours to that guarantee in a moment. The question was whether the guarantee signed six months earlier by the same person in the same transaction was in the same form. It really is a question of inference. Can I take your Honours to - - -

GUMMOW J: In the same form and without modification to that form.

MR STEVENSON: I will come to that. The two modifications that could be made were these. One, in theory, the November 1985 guarantee could have been limited in some way, but it was common ground that such indications in the Bank's diary notes to that effect were mistaken and that the guarantee that he signed was unlimited. So the only question was, did it contain clause 20?

Can I take your Honours to Mr McVay's bundle. At page 9 is the Falcomata guarantee. You will see that the Gattellaros are named as debtors and they have signed the document, at page 15 of the bundle, at about point 3. It plainly is, on its face, a standard form guarantee. It is a printed document - one sees at page 16 of the document, it is printed by Sands Security Printing. It is a pro forma document.

GUMMOW J: Well, it has an endorsement in the top left-hand corner. What does that say?

MR STEVENSON: It reads, at the bottom, "T8" - the inference I asked the courts below to draw was, that is a document number. Then the numbers "12548", but then, significantly, in brackets, "1/10/84". Clearly, that is a print date, and the inference that I asked those below and I ask your Honours to draw is that what that shows is that there was a standard form in circulation in May 1986 which had been in circulation since 1 October 1984, which was plainly of general application, because, for example, if one looks at the marginal note on page 9, there is a reference there - a little hard to read - to "A.C.T. and Tasmanian branches only". Similarly, on page 14, at about point 5, there is a reference to Credit Acts in various States. So plainly, this was a form which was used not just in New South Wales but throughout Australia.

GUMMOW J: But that Bank led no evidence about any of this.

MR STEVENSON: My submission below and to your Honours is, this is evidence that there was - - -

GUMMOW J: It is not the best evidence.

MR STEVENSON: No. Your Honours, if - - -

GUMMOW J: Not by a long shot.

MR STEVENSON: Of course.

CALLINAN J: The Bank did call a witness, did it not? At least one witness.

MR STEVENSON: Yes.

CALLINAN J: So a bank officer was called, but this was not touched on in his evidence.

MR STEVENSON: This was not touched on. The matter was dealt with - no, it was not touched on. Of course, the obvious point that your Honour has made to my friend and can make to me is the Bank could have proved it better. Well, of course, I must accept that, but - - -

CALLINAN J: It is almost a case for drawing an inference against the Bank. Almost a Joyce v Capel sort of an inference, really.

MR STEVENSON: Can I endeavour to deal with that this way. The Falcomata guarantee was in evidence. On its face, it plainly was a standard form. It was signed by the same parties only 51/2, 6 months later. It provided the basis for the court to hold, as the trial judge did, and as, in my submission, the majority, when properly understood, did or meant to or could have, inferred from that document that there was a standard form. Of course, as your Honour Justice Callinan mentioned earlier, that does not mean to say there are not other standard forms, and it may be - - -

GUMMOW J: Or other standard forms of guarantee.

MR STEVENSON: Sorry, I meant to say that. Other standard forms of guarantee. The question for your Honours, and, indeed, for the Court of Appeal and for the trial judge, was: can it be inferred - as I had urged and do urge - that from the form of the guarantee that was in evidence, being a standard form, that the guarantee signed by the same person six months earlier was in that same standard form?

CALLINAN J: Mr Stevenson, when was the court at the trial first invited to have regard to this as evidence - perhaps not as all of the evidence, but as part of the evidence - to establish that this was the form of guarantee that Mrs Gattellaro - - -

MR STEVENSON: My recollection is, throughout, that the submission I put to the trial judge is the submission I am putting to your Honours.

CALLINAN J: Yes, but was that at the end of the case?

MR STEVENSON: I cannot recall whether it arose in the course of argument during the case, but - - -

GUMMOW J: How many days was the trial, by the way? Do we know that?

MR STEVENSON: We know that from a document here.

GUMMOW J: The judgments should tell us.

MR STEVENSON: Three days.

CALLINAN J: Was this in the Commercial Division?

MR STEVENSON: No, in Common Law.

CALLINAN J: So it was not a situation in which each side gave an outline of its case before any evidence was called?

MR STEVENSON: I cannot recall that. We both put - - -

CALLINAN J: As happens in the Commercial Division.

MR STEVENSON: I think not, and my friend thinks not. We both opposed then. We were certainly both put on written submissions, and I made the submission then and in the Court of Appeal. My memory is that the question of judicial notice just did not arise in the course of any argument. The submission I put was, you should draw an inference from the documents - from the Falcomata document and from their creation in the same transaction.

CALLINAN J: So therefore, really, the court disposed of it in a way that you did not ask the court to dispose of it, because the court certainly does - in the Court of Appeal, anyway - definitely seems to have taken judicial notice of something within the court's own knowledge.

MR STEVENSON: Can I take your Honours to what Justice Giles said about that, because though of course he said "judicial notice" he did not have to. My submission is, he did not need to and should not have. Page 68 of the book at line 37, he says:

However, the evidence -

and that is the evidence of the Falcomata guarantee -

included a guarantee given by a relative of Mr and Mrs Gattellaro in May 1986 in respect of their indebtedness, a Westpac guarantee on a printed form with a print date of 1 October 1984.

His Honour then said what your Honours can see. What his Honour could have said, instead of the sentence commencing "Judicial notice", that evidence shows that at the time Westpac used a standard form, in the sense of at least one - perhaps more, but at least one - standard form of guarantee. His Honour goes on then to say - and this was my friend's submission:

It was submitted that this could not be found to have been Westpac's standard form guarantee, and so the form of guarantee which would have been given in November 1985, in the absence of explicit evidence from Westpac. I think that unrealistic, and conclude -

now, what his Honour means there, "conclude from the evidence of the Falcomata guarantee" - that is what he means, with great respect -

that the guarantee given by Mr Gattellaro in November 1985 was in the same form.

So, in truth, it really is a furphy, though one created by the Court of Appeal, to look at this - - -

CALLINAN J: Well, I am sorry, Mr Stevenson. His Honour, as you rightly point out, really does say "judicial notice".

MR STEVENSON: Of course. My submission is that when one looks at the fact - - -

CALLINAN J: There is almost always a natural justice point involved, or there is very frequently a natural justice point lurking behind judicial notice. There is a reference to it in a judgment in this Court in which Justice McHugh took a somewhat different view from me, Woods v MultiSport, about judicial notice of some statistics. The view, certainly arguable there, that had it been known that judicial notice was going to be taken of these matters, even if they were legislative facts, then the case might have been presented differently.

MR STEVENSON: And your Honour would have in mind section 144(4) of the Evidence Act.

CALLINAN J: And that seems to me - I would not invite us to have a go at that, if I were you.

MR STEVENSON: Can I just offer this submission for your Honours' consideration. The fact that Justice Giles said he judicially noticed, namely:

that institutions like Westpac used a standard form of guarantee -

was a conclusion he could have come to on the evidence, in this sense, that the evidence showed that there was - not necessarily only one - but a standard form of guarantee.

CALLINAN J: Let that be accepted for present purposes. Had there been any notice that he was going to decide it on that basis then there might have been different evidence called.

MR STEVENSON: Well, we are in the Court of Appeal.

CALLINAN J: There might have been different submissions. Well, yes, you are quite right - the Court of Appeal - but who knows? Perhaps there might have even been an application for fresh evidence to be called in the Court of Appeal, and the Court of Appeal can receive fresh evidence.

MR STEVENSON: And the submission could have been offered that "Your Honour, you do not need to take judicial notice of the fact. There is evidence of the fact that there was at least one standard form of guarantee, and the question for your Honours" - and for your Honours - "is whether the guarantee executed six months earlier was in the same form". That really is what this case is all about. It is a question of whether that inference was available, and whether it was, as the Court of Appeal in effect held, and as the trial judge did hold, more probable than not that the form was the same.

Can I just take your Honours briefly to the dissenting judgment. Justice Priestley plainly misapprehended the basis of the majority's reasoning, because, looking at page 59, his Honour said, about line 30 - he ascribed to the majority the stance that they had taken:

judicial notice both of the fact that the Bank used a standard form of guarantee -

yes -

and of what was in it.

No, they have not done that. So his Honour got that wrong, with respect.

CALLINAN J: Does not the second follow, to some extent? It must, must it not?

GUMMOW J: Yes, but a guarantee is not a piece of cheese. A guarantee is a complex of obligations.

MR STEVENSON: Quite. I needed to establish not just that Westpac used a standard form of guarantee - and my submission was that the Falcomata guarantee showed that - I had to satisfy the court as to what was in it. Leaving aside the not calling evidence point, the question is, what inferences can be drawn? Going to Justice - - -

CALLINAN J: Bearing in mind your much greater capacity, one would assume, to prove these matters, and the onus that lay upon you, anyway. You were the moving party.

MR STEVENSON: That is perhaps true, your Honour, and obviously we had the onus to prove what was in the November guarantee, but it really just does come down to a question of what you draw from the evidence that was there rather than - - -

CALLINAN J: It seems to me, it is very risky.

MR STEVENSON: - - - imposing some higher standard on the Bank because of its perceived capacity to adduce evidence in some more effective way than other parties. The other hurdle I had to cross was to show that it was more probable than not that clause 20 in the standard form remained in and was not deleted. My submission about that is that it is overwhelmingly improbable that a bank having obtained the signature of but one guarantor and not the other would be so bold as to delete the one clause in the guarantee that would preserve that party's liability in the event that as happened.

CALLINAN J: Well, this is a bank that lost a document or lost an important security document.

MR STEVENSON: Yes.

CALLINAN J: Why should we infer anything if the Bank is careless enough to lose documents? Why should you not infer that other things might have happened?

MR STEVENSON: Because the inference arises more probable than not from the evidence that was before the trial judge. I accept that there may have been evidence available, but we are not to be penalised for that reason. The question is, what inference can be drawn from such evidence as was there?

CALLINAN J: In the light of your enhanced capacity to prove the matter, that is enhanced by reference to the capacity of the other side.

MR STEVENSON: My respectful submission is that cannot be relevant. What might be relevant is what Jones v Dunkel inference you could draw from the fact that the evidence was not available, and the inference would be no more than that the Bank could not show that the standard form guarantee in evidence was the only standard form.

CALLINAN J: No - that any evidence you could call on the point would not help you.

MR STEVENSON: Yes, of course, your Honour, but translating that to this case, it must mean no more than - and I am not saying it is insignificant but no more than that the Bank was not able to show that the T8 pro forma of the Falcomata guarantee was the only one. Your Honours, it is a point that will not get better for being repeated. It is not a judicial notice case; it is an inference case, and the question is whether the inference that the trial judge drew that it was more probable than not that the form was the same and that, in my submission, the majority, in effect, really drew, is a matter that your Honours consider appropriate for intervention.

GUMMOW J: Now, Mr Stevenson, suppose for a minute we were minded to grant leave in respect of Mrs Gattellaro, would you have any submissions about the position then of Mr Gattellaro?

MR STEVENSON: Mr Gattellaro makes no application as I understand it, except to support Mrs Gattellaro's submission. What I had said in the first round of submissions was that there was no utility in granting leave because she had lost on the Contracts Review Act point, anyway. My friend responded to that by saying, well, if we get to that point then we should go back to the Court of Appeal - - -

GUMMOW J: Well, that sounds right.

MR STEVENSON: - - - and have them reconsider. That must be right, because of the manner in which the majority dealt with the matter. They did not deal with that side of the case, only Justice Priestley did.

GUMMOW J: If we granted leave to the first applicant, in terms of the constitution of the appeal, does that mean Mr Gattellaro would be joined as a submitting respondent, I suppose?

MR STEVENSON: I am not quite sure, your Honour. That is the role he has played so far.

GUMMOW J: Yes. He could not be in as an appellant.

MR STEVENSON: No, he cannot.

GUMMOW J: But he should be there for the sake of the record.

MR STEVENSON: And for no other reason, he cannot be heard on this point because it does not touch him.

GUMMOW J: Yes, thank you.

CALLINAN J: Which do you think is your ground of appeal that best captures the points you make?

MR McVAY: 2.1, 74 - - -

GUMMOW J: 2.1.

MR McVAY: 2.1.1, 2.2 - that takes in Mr Gattellaro particularly. With great respect, what Justice Callinan said was quite correct. If this Bank could lose a valuable security document, who knows what the form of the document was that Mr Gattellaro signed? A bank manager could have gone out and typed something up himself, or handwritten something. We have all come across cases where bank managers do that sort of thing.

CALLINAN J: Is there any other ground of appeal that you say - - -

MR McVAY: Well, 2.3, also. That is the natural justice point - down to 2.6 is the natural justice point.

GUMMOW J: Yes. What do you say about the position of the second applicant?

MR McVAY: I started to respond to Justice Callinan about that, your Honour. It cannot be inferred that the second applicant signed what Justice Giles said was a standard form of guarantee. Because it was a security document, because it just could not be produced, one wonders just what format it was in. It could have been something on the back of an envelope. It could have been an A4 paper.

GUMMOW J: We understand that.

MR McVAY: So it would be totally unsafe. The bank manager was not called to say whether or not he had ever - - -

CALLINAN J: We understand that, but is there any - we have not heard directly from the second applicant, but the second applicant presses the application, is that right?

MR McVAY: He is an appellant. His name appears.

GUMMOW J: Of course it appears.

MR McVAY: And he adopts the submissions that I have made.

GUMMOW J: Yes, I know, but is he seeking reversal of any orders made against him, and, if so, what? He cannot just come along and join as a friend and supporter. The question is, are there any orders made against the husband which he seeks special leave and if so how?

MR McVAY: Yes. The appeal be allowed, and that 2.2. - the order, that there be a - - -

CALLINAN J: "Binding on each signatory", and that is your common law. You say that there is a principle that says if one signatory to the guarantee does not sign it, then that invalidates it so far as the person who has signed it is concerned. Is that the point?

MR McVAY: I have an authority for that here if your Honour wants it.

CALLINAN J: Is that the point?

MR McVAY: That is the point, yes. A common law point.

GUMMOW J: All right. Thank you. Do you want to say anything about that, Mr Stevenson? The last point, which seems to rope in the husband as an active appellant, as it were.

MR STEVENSON: Well, it is common ground that the general principle, absent a clause like clause 20, is that if a guarantee is drawn up for two guarantors, and one only signs, then one is not bound, because the only promise he made was to join with the other to guarantee, and if the other does not join, then he is not bound.

GUMMOW J: Yes, all right. Thank you.

There will be a grant of leave in this case to both of the applicants as indicated. The Court notes the information conveyed by counsel as to the arrangements between the parties which obviate the need of any stay orders here. The case will take one day, I assume, gentlemen?

MR McVAY: Yes, your Honour.

MR STEVENSON: Yes, your Honour.

GUMMOW J: Thank you. We will now adjourn.

AT 4.10 PM THE MATTER WAS CONCLUDED