Palenzuela v Palaje [2008] NSWCA 349 (12 December 2008)

Last Updated: 15 December 2008

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Palenzuela v Palaje [2008] NSWCA 349


FILE NUMBER(S):
40152/08

HEARING DATE(S):
2 December 2008

JUDGMENT DATE:
12 December 2008

PARTIES:
Nelia David Palenzuela
Maria Concepcion Palaje
Emily Palaje
Antonio Mauceri


JUDGMENT OF:
Giles JA Tobias JA Gyles AJA

LOWER COURT JURISDICTION:
Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S):
SC 1226/07

LOWER COURT JUDICIAL OFFICER:
Barrett J

LOWER COURT DATE OF DECISION:
30 May 2008

LOWER COURT MEDIUM NEUTRAL CITATION:
Palenzuela v Palaje [2008] NSWSC 527

COUNSEL:
A: M W Sneddon
R: T Atkin

SOLICITORS:
A: McLaughlin & Riordan, Sydney
R: S M Boyle & Co, Cronulla

CATCHWORDS:
APPEAL AND NEW TRIAL – Failure to assess significance of certain documentary evidence – Whether document could be regarded as written confirmation of contractual commitment – CONTRACTS – Whether contract of guarantee formed on facts

LEGISLATION CITED:
Suitors’ Fund Act 1951 (NSW)

CATEGORY:
Principal judgment

CASES CITED:
Elliott v Kodak Australasia Pty Ltd [2001] FCA 1804; (2001) 129 IR 251
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Manly Council v Byrne [2004] NSWCA 123
Palenzuela v Palaje [2008] NSWSC 527
State Rail Authority v Earthline Constructions Pty Ltd (In liq) [1999] HCA 3; (1999) 73 ALJR 306; (1999) 160 ALR 588

TEXTS CITED:


DECISION:
(i) Appeal allowed.
(ii) Set aside the orders made by Barrett J on 30 May 2008.
(iii) Order that there be a new trial of the proceedings.
(iv) Order that the respondent pay the appellant’s costs of the appeal but to have a certificate under the Suitors' Fund Act 1951 if otherwise qualified.
(v) Order that the costs of the first trial abide the result of the second trial.



JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40152/08

GILES JA

TOBIAS JA

GYLES AJA

Friday 12 December 2008

NELIA DAVID PALENZUELA v MARIA CONCEPCION PALAJE & ANOR

Judgment

1 GILES JA: I agree with Tobias JA.

2 TOBIAS JA: By her Amended Statement of Claim filed on 11 February 2008, the appellant alleged that on or about 10 August 2004, the first respondent promised to guarantee the repayment to the appellant of all money owed to her by the first respondent’s daughter, the second respondent. The relevant consideration moving from the appellant to the first respondent was her lending a further sum of $100,000 to the second respondent at the request of the first respondent, notwithstanding that some $75,000 was already outstanding. The appellant further alleged that that guarantee was charged against three properties in which it was alleged the second respondent had an interest and which were referred to in the proceedings as the Pyrmont property, the Kurnell property and the Kensington property.

3 The proceedings were heard by Barrett J who, on 30 May 2008 rejected the appellant’s claims and dismissed the proceedings with costs: Palenzuela v Palaje [2008] NSWSC 527. The appellant appeals to this Court from that decision.

4 For the purpose of reciting the facts and the submissions and without meaning any disrespect to the parties, it is convenient, as it was for the primary judge, to refer to the appellant as Nelia, the first respondent as Maria and her daughter, the second respondent, as Emily.

The background facts

5 The parties were of Filipino origin although they have been in Australia for many years. Maria is Emily’s mother; Nelia’s mother and Maria’s late husband were cousins. Nelia and Maria have known each for about 50 years. Their relationship is such that Nelia refers to Maria as “Tiang” (which is equivalent to “Aunty”). Nelia and Emily are approximately the same age.

6 For reasons not presently relevant, Emily sought a number of loans from Nelia. The first was in early December 2003 when Nelia lent Emily $1,000 in order to pay off a debt. In mid-December 2003, at Emily’s request, Nelia lent her the further sum of $34,000 to assist in purchasing stock for a business that Emily was conducting at the time at Rozelle. Emily agreed to pay interest on that loan at the rate of 8% per annum. In early April 2004 Emily sought and was granted a further loan from Nelia in the sum of $40,000 to pay for further stock. Maria was aware of each of the loans and in respect of the last of them, was present when Emily requested Nelia to lend her the relevant sum.

7 Soon after the April 2004 request for the loan of $40,000, Nelia prepared a form of promissory note. The “borrowers” were identified as Emily and her partner (the third respondent, who took no part in the proceedings) and the “lender” was identified as Nelia. The “principal” amount was stated to be $70,000 to be repaid within 15 days after the execution of the note, no later than 27 April 2004. The note provided for the payment of interest at 8.5% per annum. Emily signed the promissory note and Maria witnessed her signature. It is dated 13 April 2004. It was not suggested that Maria guaranteed the repayment of any of these loans at the time they were made.

8 In late July or early August 2004 Emily again approached Nelia and requested a further loan of $100,000. According to Nelia, Emily had informed her (and Maria had confirmed) that they were refinancing the Kurnell property (in which both Maria and Emily had an interest) to raise the funds to repay Nelia the amount owed to her by Emily. Emily also explained that she needed the $100,000 to clear a loan on the Pyrmont property of which she was the sole owner, as otherwise a “liquidator” would take the property. According to Nelia, Maria explained that although the refinancing of the Kurnell property had been approved, the money would not be available in time to avert the “liquidator” proceedings.

9 It was common ground that Nelia informed Emily and Maria that she wished to discuss this further loan with her solicitor, Mr Acar, who carried on practice at Blacktown. According to Mr Acar’s unchallenged evidence, in about late July 2004 the three women attended upon him. When the proposal for Nelia to lend Emily a further $100,000 was raised he said to Nelia, in the presence of Maria and Emily, words to the following effect:

“Do not lend the lady any more money without obtaining a guarantee supported by a mortgage”. (Emphasis added)

Although Maria denied in her affidavit the italicised portion of this statement, in cross-examination she conceded that it was correct.

10 After the parties left Mr Acar’s office, it appears that Emily pressed upon Nelia the urgency of obtaining the loan. Accordingly, the parties proceeded on foot to the Blacktown branch of the Commonwealth Bank where the loan of $100,000 was effected. This occurred on 11 August 2004.

11 The critical factual issue in the case related to the conversation that took place on the way to the Bank. Nelia’s version of that conversation is set out in full by the primary judge at [18] of his judgment. If accepted at face value, that account was capable of supporting Nelia’s case that Maria personally guaranteed the repayment by Emily of the proposed loan of $100,000 as well as earlier loans of $75,000 and gave security for her guarantee over her (Maria’s) property.

12 Maria’s evidence was to the contrary of that of Nelia. She denied that during the conversations, which occurred between the time the parties left Mr Acar’s office and arrived at the Bank, there was any reference to a guarantee. Rather, Maria’s evidence was to the effect that Nelia informed her that although Mr Acar had advised against it, she was not going to listen to what he had said and that she was going to lend the money to Emily in any event.

13 Nelia prepared a second promissory note after the loan was made on 11 August 2004 but which was backdated to 4 August 2004. It provided that Nelia was the “lender” and that Emily was the “borrower”. The principal sum stated was $175,000 together with interest at the rate of 8% per month. Repayment of the loan was to be finalised by 30 October 2004. Emily signed the promissory note and one of Nelia’s daughters witnessed her signature. It made no reference to Maria’s alleged guarantee.

14 However, on or about 24 August 2004 Mr Acar, Nelia’s solicitor, prepared a caveat to be lodged upon the title of the Kurnell property in which Nelia claimed an equitable interest pursuant to the agreement allegedly entered into between herself and Maria. The caveat identified both Maria and Emily as registered proprietors of that property. Only Emily signed the caveat as registered proprietor to indicate her consent to its lodgement. However it was not lodged.

15 Emily did not repay the loan to Nelia by 30 October 2004. A number of emails passed between Nelia and Emily in April 2005 in which Nelia pressed Emily for repayment but the only payment made by Emily was $1,000 on 2 May 2005.

16 At about that time Nelia expressed concern to Maria about Emily’s failure to repay the debt. A conversation allegedly took place between them, which the primary judge set out in full at [24] of his judgment. According to Nelia’s version, she reminded Maria that she had personally guaranteed that she would pay the monies Emily owed to her. Having informed Maria that she was getting nowhere with Emily, she indicated that she wished Maria to sign a statement saying that she had guaranteed the debt in order to give her peace of mind. Maria allegedly agreed to do so. However, Maria’s version was that Nelia only asked her to sign a statement to say she was present when she had lent the money to Emily, which she agreed to do.

17 Nelia then prepared a typewritten document. As it is significant to the outcome of the appeal, I set it out in full, faithful to the original:

“I, Maria C Palaje, being of sane and sound mind do hereby declare that -

I am the mother of Emily Palaje;

On 13 April 2004, together with my daughter, Emily Palaje, we approached Nelia Palenzuela to seek her financial help;

On several occasions Emily and I had to drive to Quakers Hill where Nelia lives. At times Nelia even invite us to sleep over. Nelia had always been very kind to my family. She even helped me redeem my pawned jeweleries by lending me $3,000.00. During this time, my daughter Emily was having financial problems meeting our mortgage in our property at 126 Prince Charles Pde, Kurnell where I live, and the repayment on her investment property at Pyrmont.

I know that Nelia will not refuse me any help. So that together with Emily, we induced her to go her bank and took out a total of $175,000.00 to lend to Emily; The first instance was on 13 April 2004, wherein Emily borrowed $75,000.00 from Nelia and the second instance was on 19 August 2004 when Emily borrowed $100,000.00. In both instances I was privy to the transaction.

I am fully aware that Nelia agreed to lend Emily the money, because she trust and respect me and because I made a personal guarantee against whatever assets I have (personal or real), to back up the loan being sought for. I did convinced Nelia to lend the money and assured her not to worry, because Emily will return all monies owing to her within two weeks from the day my daughter, Emily receive the money.

Emily and I are aware that the money Nelia took out from her bank is in fact her line of credit over her residence at 51 Torrance Crescent, Quakers Hill;

Nelia expressed her concern that she has no means to pay back the money being taken out from her line of credit over her property, if Emily cannot pay on time, but I have given her my word that Emily will pay it back on time;

To ensure and to erase any doubts and give her peace of mind, Emily and I suggested to her to place a CAVEAT on our property at Kurnell as security.

I hereby declare this statement and the guaranty therein to be true and correct, and shall be binding upon and inure to the benefits of the parties and their heirs.”

18 On 15 May 2005 Nelia caught up with Maria at the Sydney Casino. Nelia gave evidence that, in the presence of her friend, Alice Posada (Ms Posada), she handed Maria two copies of the document to which she referred as the “Statement” and requested Maria to read it, to ensure that she was happy with it and then to sign it. The conversation according to Nelia that then took place is fully extracted by the primary judge at [28] of his judgment. In essence, Nelia’s evidence was that Maria, having adjusted her reading glasses, read the document and signed it. Ms Posada was requested to witness Maria’s signature. A copy of the signed document was then handed to Maria, the other being retained by Nelia. A further conversation then took place which included the following statement of Nelia to Maria:

“It’s been so long Tiang. You know that I would never have given such a large sum of money to Emily without your intervention and guarantees. Your presence and assurances to me during the times that Emily was borrowing the money from me, was enough inducement for me to trust Emily and I 100% trusted your word”.

19 Although Ms Posada corroborated Nelia’s evidence, albeit denied by Maria, that she read the statement for two or three minutes, she did not refer to and therefore did not corroborate, the statement by Nelia to Maria which I have extracted above.

20 At [33] of his judgment the primary judge set out a substantial part of Maria’s cross-examination. Suffice it to say that Maria maintained her position that she had not guaranteed Emily’s indebtedness to the appellant at any time and, in particular, in the conversation that occurred between the time the parties left Mr Acar’s office and the time the loan was made at the Commonwealth Bank.

21 At [34] his Honour set out the following cross-examination of Nelia:

“Q. Is it the case then at the time, that is in August 2004, you didn’t see that Mrs Palaje was entering into a legal obligation with you to pay, to guarantee Emily’s debt?

A. I don’t know. I didn’t think of any legal implications at that time because for me it was enough that Maria was there, she was telling me not to worry, ‘You can lend to Emily the money and she will pay you’. She was giving me assurances all the time and guaranteeing me that Emily is going to pay the money.

Q. Yes, well, you say the word ‘guaranteeing’, but can I suggest to you that you are reconstructing a conversation or events that occurred in August 2004 much later, that is, you are saying ‘Maria guaranteed me the loan’?

A. No.

Q. I suggest to you that you didn’t use the word ‘guarantee’?

A. Sorry, I didn’t use the word ‘guaranteeing’. Maria was given me assurances, telling me she will make sure that Emily will pay me.”

22 Immediately prior to that exchange, however, the following evidence occurred in the cross-examination of Nelia:

“Q. When you say the first time, which loan are you talking about?

A. I remember the first time is the $1,000 --

Q. I am asking you though about August 2004 --

A. Yes, but this is a series of loans.

Q. Yes, I understand that --

A. And what I am saying here is the first few loans that was borrowed from me, it was really Emily would approach me and her mother was there and her mother will support Emily with her intervention and she said for me not to worry because she was assuring me already and she was behind repayments and Maria was assuring me not to worry all the time because she said that ‘Don’t worry, but I personally guarantee that I will pay the loan’.

Q. Well, Mrs Palenzuela, you went to the trouble of getting a note signed by Emily at that time after you advanced the moneys, but you didn’t go to the trouble of getting or even asking or even preparing a note for Mrs Palaje to sign?

A. Because I recognise that Maria was only at that time, she was only guarantee, she only guaranteed it for Emily. That she was supporting and she was inviting. She was supporting Emily, the loan of Emily. She was actually inducing me. So I didn’t, out of respect to her, I didn’t want to really to take her into trouble.

Q. Well --

A. And I didn’t.”

The primary judge did not refer to this evidence. It was the first time Nelia had suggested that Maria had guaranteed the three earlier loans totalling $75,000.

23 So far as the events at the casino with respect to the signing of the statement were concerned, Maria’s account in chief is set out at [37] of his Honour’s judgment. In essence, Maria’s version of the conversation was that Nelia had requested her to sign the statement “as a witness that I have given Emily $100,000”. Maria maintained that Nelia needed her signature as she was applying to get a loan from St George Bank. Maria denied that she read the document, asserting that although she had her spectacles with her, she could not read the document without a magnifying glass as her eyesight was not good enough for that purpose because she had cataracts. On the other hand, Ms Posada, whose evidence his Honour set out at [38], deposed that she saw Maria read the documents and, in cross-examination, said that she read them for “maybe three minutes”.

24 In cross-examination Maria denied that Nelia had told her that the purpose of the document was to record what had been said in the conversation on the way to the Commonwealth Bank in August 2004 and maintained that it had been portrayed only as a statement that she was present when the money was lent to Emily. She also maintained that the document was at all times folded in a somewhat elaborate manner (which she demonstrated) so that she could not see its contents.

25 The primary judge did not make any specific finding as to whether Maria read the statement or not. Nor did he make any finding as to whether her eyesight was sufficient for her to do so. His observations with respect to this issue were somewhat equivocal:

“42 Maria does not deny that she signed the document produced to her by Nelia. She does say, however, that her eyesight was poor at the time and that she needed a hand-held magnifying glass to read fine print (she has since had operations for cataracts). She was equivocal in her answers as to whether she could read the particular document while wearing the glasses she had at the time. She first accepted that she could because it was ‘the bigger print’ but afterwards sought to resile from that.”

26 The primary judge then assessed the evidence “as a whole” at [44] to [55]. With respect to the conversation between the time the parties left Mr Acar’s office and the time they arrived at the Commonwealth Bank, his Honour said:

“45 Nelia had just been advised by Mr Acar not to lend more money to Emily without getting a guarantee supported by a mortgage. It is clear that Nelia chose not to act in accordance with Mr Acar’s advice. She would have understood him to be referring to a need for legal documents of guarantee and mortgage. She did not follow that course. The course she in fact took involved either a choice by her to lend only after receiving from Maria oral promises of a contractual kind in or to the effect of those stated in Nelia’s affidavit; or a choice to lend after having received some lesser form of reassurance by her old and trusted friend Maria.”

27 At [46] his Honour considered that of the two choices referred to above, the second was the more likely. He considered that the

“concept of Maria’s ‘guaranteeing ... that Emily is going to pay’ is readily construed as involving an expression by Maria of confidence, perhaps certainty, as to Emily’s future conduct as distinct from any direct promise by Maria as to her own future conduct.”

28 Further, at [59] his Honour found that

“the inference that Maria spoke words such as to give rise to a promise to Nelia to answer for the debts of Emily is but faintly available on the whole of Nelia’s own evidence. I say this having regard particularly to her acknowledgment in cross-examination that, at the time of the conversation on the way to the Commonwealth Bank, she was not thinking of ‘legal implications’, coupled with the several indications that she was concerned to receive reassurance from Maria of Emily’s own capacity to pay.”

29 I pause to observe that even if Nelia was not thinking of “legal implications”, it was also relevant whether Maria had the relevant intention, objectively ascertained, to enter into a contractually binding promise to Nelia.

30 Earlier at [47] the primary judge had observed:

“It seems to me clear that Nelia decided not to follow Mr Acar’s advice and was content to rely on her old and trusted friend for reassurance. The reassurance, however, took the form of statements by Maria that Emily should and could be trusted and could be relied upon to pay. In the context, no great significance can be attached to the word ‘guarantee’: a statement by Maria to the effect, ‘I guarantee that Emily will pay you’ should, I think, be regarded in the context as a statement by Maria of her firm or certain belief that Emily would pay.”

31 It is not clear from the foregoing whether his Honour actually accepted Nelia’s version of the conversation on the way to the Bank at least insofar as it alleged that Maria used the word “guarantee” or some derivative thereof. It should be noted that the conversation took place in part in Filipino and in part in English. That the English word “guarantee” was used can not be assumed, although the statement did use the word “guaranty” which suggests that, if there was reference to a guarantee, the English word was used.

32 Rather, it would appear from the foregoing that his Honour assumed that Maria used the word “guarantee” during the course of that conversation, the issue being the manner in which it was used, if it was. Was Maria promising that if Emily did not pay, Maria would; or was she merely reassuring Nelia that Emily would pay in the sense that she was confident or certain that she would?

33 After referring to a number of other factual matters, the primary judge then made the following finding:

“55 In the result, I am of the opinion that Nelia has failed to show that the events on the day of the visit to the Commonwealth Bank gave rise to a contractual promise given by Maria to Nelia to answer for the indebtedness of Emily. Nelia sought and was given by Maria reassurance that Maria was aware of Emily’s existing indebtedness and the proposed further advance; and that Maria, as Emily’s mother, was confident that Emily would pay. But there was no intention on the part of either Nelia or Maria that there should be a contractual relationship between them.”

34 Up to this point his Honour had not referred to the statement signed by Maria at the Sydney Casino on 15 May 2005. At [56] his Honour observed that

“the document cannot be regarded as written confirmation of any contractual commitment actually assumed by Maria in early August 2004.”

35 The critical parts of the statement were as follows:

“I am fully aware that Nelia agreed to lend Emily the money, because she trust and respect me and because I made a personal guarantee against whatever assets I have (personal or real), to back up the loan being sought for. I did convince Nelia to lend the money and assured her not to worry, because Emily will return all monies owing to her within two weeks from the day my daughter Emily receive the money.

...

Nelia expressed her concern that she has no means to pay back the money being taken out from her line of credit over her property, if Emily cannot pay on time, but I have given her my word that Emily will pay it back on time;

To ensure and to erase any doubts and give her peace of mind, Emily and I suggested to her to place a CAVEAT on our property at Kurnell as security.”

36 At [56] his Honour set out the first sentence of the above extract. He then said:

“57 There has been no suggestion in this case that such a rationale or motivation attended loans to Emily before that of August 2004. The sole assertion Nelia makes is that she was persuaded to advance the final $100,000 by promises made or assurances given to her by Maria.

58 In any event, the document signed by Maria at the casino – whether or not read and understood by her – could not of itself operate as a guarantee because any promise it contains is unsupported by consideration. There was not, at that time, any further advance, forbearance to sue or other act or forbearance of Nelia in return for which such a promise was given. On analysis, however, the document does not appear to be a vehicle by which any promise is given. It is merely a purported record of past events.”

37 It was common ground that the statement did not of itself constitute a guarantee, which would in any event be unenforceable for the reasons set out by his Honour at [58] and which were not the subject of contest. Both parties accepted his Honour’s description of the statement as being “a purported record of past events”.

38 The difficulty, however, is that as such a record it was capable, if its contents had been read and understood by Maria, of constituting an acknowledgement by her as to the circumstances surrounding the agreement of Nelia to lend Emily the further sum of $100,000 in August 2004 including the intention of Maria, objectively ascertained, to contractually bind herself to pay the subject indebtedness in the event that Emily failed to do so. That capability is underlined by the reference to placing a caveat on “our property at Kurnell as security”, indicating a commitment of Maria’s property to repayment of the loans.

39 It is true, as noted at [34] above, that at [56] of his judgment the primary judge considered that

“the document cannot be regarded as written confirmation of any contractual commitment actually assumed by Maria in early August 2004.”

40 It would appear that his Honour was of that view notwithstanding the first sentence of that part of the statement that I have extracted at [35] above.

41 Further, in my respectful opinion, it was necessary for his Honour to have made a finding as to whether Maria did in fact read and understand its contents. If she did not, then without deciding the question, the primary judge’s findings of fact, and his view that Maria did no more than reassure Nelia that Emily would pay, might be difficult to challenge. On the other hand, if she did, then it was necessary for his Honour to take that fact into account when assessing the affidavit and oral evidence of each of Nelia and Maria. His Honour seems to have put it to one side as being irrelevant to that exercise.

42 It seems to me that having come to the conclusion that Maria was doing no more than “guaranteeing” that Emily would repay her indebtedness to Nelia, his Honour was not prepared to, in effect, reconsider that view in the light of the contents of the statement even upon the assumption that it had been read and understood by Maria. Furthermore, his Honour’s observation that the document could not be regarded as written confirmation of any contractual commitment actually assumed by Maria in early August 2004 fails to take into account, when considering the first sentence of that part of the statement which I have extracted at [35] above and which his Honour also extracted at [56] of his judgment, the last two sentences of the document. The second last sentence was in relation to the placing of a caveat on “our property at Kurnell as security”; and the last sentence stated that the “guaranty therein” was to “be binding upon and inure to the benefits of the parties and their heirs”. To me these seem to be words capable of constituting an acknowledgment that the guarantee earlier referred to in the document was, when made, intended to be legally binding.

43 Of course, it is necessary for the whole of the statement to be considered in the light of the totality of the written and oral evidence of Nelia and Maria. Had his Honour found that Maria had read and understood the contents of the statement, he may, and I emphasise may, have come to a different conclusion from that which he came to at [47] of his judgment: see [30] above.

44 For the foregoing reasons, in my opinion his Honour erred in, first, failing to make a finding as to whether Maria read and understood and thereby acknowledged the contents of the statement; and, second, if he had so found, considering the contents of the statement in the light of the evidence in total. The foregoing is not to suggest that at the end of the day a different conclusion from that determined by the primary judge would necessarily be arrived at. However, in the circumstances, the primary judge was in error in failing to consider the effect of the statement in relation to the competing evidence of Nelia and Maria. If the statement had been read and its contents understood by Maria, it was important evidence with respect to crucial issues to be decided: whether the word “guarantee” was said and whether, if it was said, it was intended to effect a contract of guarantee (see State Rail Authority v Earthline Constructions Pty Ltd (In liq) [1999] HCA 3; (1999) 73 ALJR 306; (1999) 160 ALR 588 at 607 [63]- [64]; and Elliott v Kodak Australasia Pty Ltd [2001] FCA 1804; (2001) 129 IR 251 at 258 [31]). Regrettably, that error can only be rectified by ordering a new trial.

45 For completeness, I refer to the appellant’s submission that his Honour also erred in failing to draw an appropriate inference against Maria in relation to her failure to call Emily to give evidence in her defence, in light of the fact that Maria and Emily were still in touch and so Emily was an available witness within the meaning of the principle established by the High Court in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298; see also Manly Council v Byrne [2004] NSWCA 123 at [45]- [59].

46 His Honour considered that in the light of his findings, the absence of evidence from Emily could not form a basis for drawing an inference that Maria spoke words such as to give rise to a contractually binding promise to Nelia to answer for the debts of Emily.

47 In the circumstances it is inappropriate to make any comment as to the correctness of this submission given my conclusion that there should be a new trial and the question of whether Emily gives evidence or not will no doubt again arise at that time.

Conclusion

48 For the foregoing reasons in my opinion the appeal should be allowed. I would therefore propose the following orders:

(i) Appeal allowed.

(ii) Set aside the orders made by Barrett J on 30 May 2008.

(iii) Order that there be a new trial of the proceedings.

(iv) Order that the respondent pay the appellant’s costs of the appeal but to have a certificate under the Suitors’ Fund Act 1951 (NSW) if otherwise qualified.

(v) Order that the costs of the first trial abide the result of the second trial.

49 GYLES AJA: I agree with Tobias JA.

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LAST UPDATED:
12 December 2008