Jeans v Commonwealth Bank of Australia [2004] HCATrans 548 (10 December 2004)

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Jeans v Commonwealth Bank of Australia [2004] HCATrans 548 (10 December 2004)

Last Updated: 18 January 2005

[2004] HCATrans 548

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S629 of 2003

B e t w e e n -

JOHN ANTHONY JEANS

Applicant

and

COMMONWEALTH BANK OF AUSTRALIA LIMITED

Respondent

Application for special leave to appeal

McHUGH J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 10 DECEMBER 2004, AT 2.40 PM

Copyright in the High Court of Australia

MR J.M. IRELAND, QC: If the Court pleases, I appear for the applicant. (instructed by Robert H. Butler)

MR A.G. BELL, SC: May it please the Court, I appear for the respondent with my learned friend, MR D.A. McLURE. (instructed by J.K. O’Sullivan)

McHUGH J: Yes, Mr Ireland.

MR IRELAND: Your Honour, can I sweep away a couple of preconceptions that may exist. First, this is an application which has to overcome this Court’s indisposition to revisiting discretionary decisions of trial judges. We accept that. I have to convince your Honours that the discretion miscarried, something which the Full Court was not persuaded of.

McHUGH J: You have to do more than that. You have to show us not only error but there is something special about the case that would warrant the grant of special leave. It has been said many times, Mr Ireland, and you know as well as anybody, we do not grant special leave merely because error is revealed.

MR IRELAND: No, your Honour. Can I come to that. The importance of this case is fundamental justice on the facts in that the trial judge’s decision to disallow the applicant early in the trial to amend his defence to raise an issue as to the forgery of the very document upon which the Bank was suing him, being disallowed, led to a situation in which the merits of that proposition were not agitated at the trial and cannot be agitated unless a new trial is ordered. In other words, if the reasons for the discretion miscarrying, as we would advance it, are upheld, then to refuse special leave on the footing that this does not involve a general question would be to impose the worst injustice upon my client who is now subject to a judgment of nearly $5 million upon which the Bank relies in circumstances where a reasonably based assertion of forgery by the Bank manager has never been dealt with on its merits.

CALLINAN J: Mr Ireland, I am sorry to interrupt you. I should have said I have some shares in the Commonwealth Bank, not a large number but I have some shares. I do not know whether that - - -

MR IRELAND: There is no problem, your Honour. Waived. The case here, your Honours, as we put it is that the Bank is taking a position which it maintained at the trial to shut out a merits assessment of the forgery question and, therefore, the injustice that follows unchallengeably beyond today is self-evident.

McHUGH J: You are asking to withdraw an admission and the court accepted, did it not, that you would suffer prejudice if you were denied leave to agitate the issue, but on the other hand, it recognised that there was prejudice to Mr Cleary and the Bank in dealing with an allegation of fraud five years after the event.

MR IRELAND: There was, your Honour.

McHUGH J: The timing of the application together with the unsatisfactory explanation for raising the matter at such a late stage.

MR IRELAND: Your Honour, yes, but could I perhaps come to the heart of what I want to say because I already have to convince you on this ground or not otherwise.

McHUGH J: Yes, certainly.

MR IRELAND: Could I ask you to go to page 16 of the application book commencing at line 23. Your Honours, just by way of background, your Honours remember that Mr Jeans, the applicant in the proceedings, at the trial was in the witness box. It had been admitted on the pleadings and assumed by him until that moment that the Bank guarantee had been signed by him in both of its relevant places as it turns out. Do your Honours have the – I do not think there is in the book the copy of the signatures?

McHUGH J: No.

MR IRELAND: Can I just provide those?

McHUGH J: Yes.

MR IRELAND: Because one does not get the understanding – what I have given you is the first page of the guarantee and the two signatures. The signature which Jeans admitted was his own is on page 13, which is the third page of the bundle beside the company’s common seal. Do your Honours see that?

McHUGH J: Yes. It was admitted that he had signed the document on that day and it was admitted and never contested that the signature on page 13 was his own. The signature which became questioned is on page 12 and the witness was the Bank manager. It followed that if that was a forged signature the Bank manager had committed a fraud by witnessing Mr Jeans’ execution of it. The facts were – on Mr Jeans’ account at least – that he - - -

McHUGH J: But was it common ground that that was Mr Jeans’ signature on page 13?

MR IRELAND: Was his own and was signed on 3 June and that was in circumstances on his case where the documents were left for him at a reception area and he did not see Mr Cleary on that day. When he was cross-examined by my learned friend at the trial, and this is extracted in both of the judgments, his attention being drawn to the signature on page 12, which is the operative signature, it is the qua guarantor signature, the other is simply the principal debtor’s execution, he realised it was not his own signature, something, he had never, he said, scrutinized before. To say that he admitted that he had signed the document on the day really was to say no more than the signature on page 13 was put on that day.

CALLINAN J: Had there been discovery in this document?

MR IRELAND: Yes, your Honour. There is no doubt this document was available to Mr Jeans and his advisers. Indeed, as my friend will point out it was actually exhibited to a third affidavit. So this was a case where there was a complete oversight on our side in any attention being given to the question.

McHUGH J: Well, it was not until the third day of the trial, was it, and over the previous three years he had admitted in the pleadings it was his and in a series of affidavits he had sworn over those previous three years he had said or accepted that it was his signature.

MR IRELAND: Well, that is not quite right. He had accepted that he had signed a guarantee on that day. There was no scrutiny given to the signature until this dramatic moment arose in the cross-examination. Of course, at that point, there was no occasion or opportunity without an adjournment to get any corroborative handwriting evidence. It was something that came like a bolt out of the blue. What happened then, the trial was then adjourned for a day or so and submissions were prepared and some evidence was prepared and, in particular, the legal advisers to that point, the previous legal advisers, counsel and solicitors, swore that this matter had never really been scrutinised and that was not contested.

McHUGH J: So what was the theory of your case? That your client had - - -

MR IRELAND: Gone to the Bank.

McHUGH J: Gone to the Bank, signed in his capacity as a director, bound the company but the Bank had overlooked getting his signature as a guarantor and then Cleary has added it at a later stage.

MR IRELAND: Later, because the documents went to Cleary and that is common ground.

CALLINAN J: Mr Ireland, was the guarantee stamped, because the copy we have does not appear to have been?

MR IRELAND: I do not think so.

CALLINAN J: I tell you why I ask that. I wonder whether there may have been another document. This may have been a copy or perhaps another document had conceivably been signed – actually signed by your client. Would not a document like this have to be stamped under New South Wales law?

MR IRELAND: I do not think so. We are very, very generous down here with the stamp duty.

CALLINAN J: I would be astonished if it did not.

MR IRELAND: A deed normally would attract a nominal duty. This is a deed. It would not attract an ad valorem - - -

CALLINAN J: It would go in with the mortgage normally, would it not, to be stamped?

MR IRELAND: I do not think so, your Honour. I would not be unswerving about that answer but I am pretty sure that this document was never – no guarantee taken by the Bank was ever stamped. So it remained in the security packet of the Bank - - -

CALLINAN J: Well, it would plainly be an instrument that should be stamped under the Act.

MR IRELAND: It certainly is not now, in New South Wales, I can tell you that. I do not know what the law was then.

CALLINAN J: You might have had a - perhaps it should not have been admitted.

MR IRELAND: Bit late for that.

CALLINAN J: Bit late for that, and you cannot take the objection, or is there a different rule down here?

MR IRELAND: That is right. Can I just now come to the point and it is really at page 16 of the application book. What the judge said was at line 24:

In substance what has happened in this case is that Mr Jeans, while in the witness box, identified an apparent discrepancy between the two signatures on the guarantee. That led him to change his previous evidence that he had executed a personal guarantee. The differences between the two signatures do not of themselves establish (as Mr Ireland acknowledged) that Mr Jeans did not sign the guarantee in both places. If leave is given to withdraw the admissions, it would open up a further factual issue that would presumably depend (like the other major factual issues in the case) on an assessment of the evidence of Mr Jeans and of that of other witnesses, including Mr Cleary. (I should make it clear that I express no view as to Mr Jeans’ evidence at the trial. It is not appropriate that I should do so at a time when the evidence in the case is incomplete.)

Now our short point is this. Properly read the judge is making an observation there that this was really an exercise in opportunism, that there was no genuineness in the factual issue which was sought to be tendered and that was something that was not open to him. It was common ground in the Full Court to do. He had to treat it as a triable issue and what the judge has done here is to unwittingly allow an adverse view he had already formed after a day of cross-examination to impinge upon the legitimacy of the issue which was lately tendered. If that is right, the discretion is vitiated and the Full Court ought to have looked at the matter.

McHUGH J: Well, where do you say that the judge erred again? Where is the specific – I do not see it myself at the moment, Mr Ireland.

MR IRELAND: In 24. What he is observing in that passage, and I accept that it is somewhat opaque - - -

CALLINAN J: You are really asking us to read that as establishing a basis for bias.

MR IRELAND: No, rather an error, in that the judge is suggesting that the strength of the issue is affected by what he takes to be the opportunism of the witness.

McHUGH J: But the judge went on to say that, for instance, Mr Bell was going to amend his pleadings if this issue was raised and then rely on an oral contract and there are all sorts of other issues in it and so, on balance - - -

MR IRELAND: An adjournment was inevitable. That is all that meant. All that meant that was that an adjournment was inevitable if the amendment was allowed and that was common ground.

CALLINAN J: Well, say there had once been another form of guarantee and it had been signed because for five years, or for a long time, your client had been admitting that he had given a guarantee. It may be that there was a guarantee and it may have been on another document that the Bank would then have to try to find.

MR IRELAND: That could not be so, on the facts of this case.

CALLINAN J: Well, I do not know about that. You do not know until you make the exploration.

MR IRELAND: I see what your Honour is putting.

CALLINAN J: I am not saying it is so but - - -

MR IRELAND: I am not suggesting the Bank was entitled to make all those searches and put whatever case it did, but the proposition that the Bank could have succeeded on some alternative case in circumstances where its manager had forged the instrument which it relied on would have run into the brick wall that the Bank was not relying on any earlier promise or any other assurance. It relied on the forgery, on the supposition. So, your Honour, that is really all I can say because I have to run into the problem inevitably of upsetting a discretionary decision and it is the extraordinary circumstances of this case which leave my client bound now, subject to today’s outcome, with a company here bound upon an issue estoppel when there was a genuine question that should never have been shut out, on my submission, from litigation on the merits. Those are my respectful submissions.

McHUGH J: Thank you, Mr Ireland. We need not hear you, Mr Bell.

In this matter the applicant seeks special leave to appeal against a judgment of the Full Court of the Federal Court which heard an appeal from a discretionary judgment of the primary judge who refused to allow the present applicant to withdraw an admission.

Mr Ireland, who appears for the applicant, recognised the very considerable difficulties in setting aside a discretionary judgment in any circumstances. In our view, his valiant attempt to do so by pointing to a sentence in the judgment of the primary judge has not succeeded.

In those circumstances, we are not persuaded that there has been any miscarriage of justice in this case and, accordingly, the application for special leave must be refused with costs.

AT 2.53 PM THE MATTER WAS CONCLUDED