Axis Bank Limited v Gujarat NRE India Pty Ltd

Submissions

1. The plaintiff submits the defendant is liable in contract to it for the unpaid debt, including the principal amount and unpaid interest which it says should be calculated at the time of judgment. As noted above the defendant does not dispute the contract was executed but raises a number of defences.

The claim for misleading and deceptive conduct - s 12DA of the ASIC Act

1. The defendant submits that in failing to draw its attention to any term of the Facility Agreement that differed from that set out in the Original Sanction Letter (Third and Fourth Term Sheets) as varied by the Modified Sanction Letter (Fifth Term Sheet) the plaintiff, positively represented to the defendant that the terms of the Facility Agreement conformed with the terms of the sanction letters.
2. Further that in failing to advise the defendant that the plaintiff required an unqualified, unconditional and irrevocable guarantee from the defendant the plaintiff, positively represented to it that the Facility Agreement did not contain any such guarantee and that the guarantee from the defendant in the Facility Agreement was qualified in the way set out in the Modified Sanction Letter, namely that it was only to be obtained and be enforceable if "required for [the] perfection of security on pledge of shares… based on the advice of legal counsel."
3. In addition to the various term sheets and sanction letters themselves the defendant submits that the plaintiff's lawyer, Ms Milburn, and officers of the plaintiff positively represented in numerous of the emails set out above that the Facility Agreement had been drafted in accordance with the sanction letters.
4. The defendant submits that the plaintiff having made those representations omitted to mention they were false. It also submits that an unconditional and irrevocable guarantee was never necessary to perfect any contemplated security arrangement, nor was legal advice ever obtained by the plaintiff to that effect.
5. It submits that in the circumstances it was misleading and deceptive (and likely to lead the defendant into error) to present the Facility Agreement (as the plaintiff did) as purportedly congruent with the terms of the Modified Sanction Letter/Fifth Term Sheet.
6. The defendant says this is not a case where an examination needs to be undertaken as to whether a "reasonable expectation" existed (Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at [23] (Miller); see further below) but submits that even if it was the outcome would be the same because the plaintiff's conduct gave rise to such a "reasonable expectation". In particular the defendant points to the fact that the Facility Agreement is a substantial document (spanning some 100 pages) which contains a large number of clauses and obligations, the operation of which are diffused over various clauses and schedules; that it was not legally represented; the urgent need for the documentation to be finalised quickly; and the trust between the parties.
7. The defendant submits the representations constituted Mr Jagatramka's belief as to the terms of the Facility Agreement and he (being the relevant mind for the purposes of the defendant: Elitegold Ltd v Australia Fair Shopping Centres Pty Ltd (unreported, Federal Court of Australia, 28 October 1994, Hill J)) relied upon them at the time he executed the agreement as a director of the defendant and urged the other directors to resolve to approve the defendant's entry into it.
8. It submits Mr Jagatramka was not indifferent to whether the guarantee was qualified or unqualified. Rather it submits the contemporaneous evidence shows Mr Kannan (and Mr Jagatramka to a lesser extent but who had trusted Mr Kannan with the task) engaged with the terms of the Facility Agreement and pushed for certain matters. Mr Jagatramka testified that, had an unconditional and irrevocable guarantee been required, it would have been necessary to arrange for the defendant to receive support from other members of the Gujarat Group because of its lack of net assets and so as not to "mak[e] the company insolvent on day one" (T.144/8).
9. The defendant submits the representations were made in trade and commerce and in connection with the supply and/or acquisition of financial services.
10. The defendant submits that the plaintiff's conduct therefore contravened s 12DA of the ASIC Act, entitling it to relief preventing the plaintiff from enforcing the guarantee or damages in the same amount as the sum sued for by the plaintiff in these proceedings.
11. It submits it will suffer detriment if the plaintiff is permitted to sue on the guarantee because it will be liable for an obligation it is otherwise not presently liable to pay and that damage is causally linked to its reliance on the plaintiff's misleading and deceptive conduct because, but for that conduct, the defendant would not have given an unqualified guarantee.

The claim of statutory unconscionability - s 12CB of the ASIC Act

1. The defendant submits that the manner in which the plaintiff obtained the unqualified, unconditional and irrevocable guarantee from it constitutes unconscionable conduct contrary to s 12CB of the ASIC Act, in particular for the following reasons.
2. First the defendant submits the existence of the guarantee and its lack of qualification is the product of misleading and deceptive conduct.
3. Secondly the defendant submits it only became a proposed party to the Facility Agreement 24 hours prior to when the agreement was executed and that when it became a proposed security provider it was represented and agreed that the guarantee was to be qualified.
4. Thirdly the defendant submits the inclusion of the unconditional, unqualified and irrevocable guarantee was the product of a mistake and drafting oversight that originated from the plaintiff. It submits the mutual intention of the parties was that the guarantee would be qualified and the plaintiff now seeks (opportunistically) to depart from that mutual intention. It submits it is entitled to seek statutory relief to prevent the plaintiff from enforcing the guarantee without also seeking some other remedy such as rectification.
5. Fourthly the defendant submits the Facility Agreement was executed in a time-pressured environment with the monies the subject of the facility needed urgently to relieve financial obligations owed by WLC to its senior lenders.
6. Fifthly the defendant submits it was not represented by lawyers during the negotiation of the Facility Agreement.
7. Sixthly the defendant submits Mr Jagatramka and Mr Kannan reposed significant trust in the plaintiff arising from their prior dealings with it.
8. Further the defendant points to a disparity of bargaining power between it and the plaintiff (s 12CC(1)(a)), although it says "the issue is not so much as (sic) bargaining power, but rather, size, sophistication and resources". It also says that as a result of the plaintiff's conduct it has been forced to comply with conditions not necessary for the protection of the legitimate interests of the plaintiff (s 12CC(1)(b)) because an unqualified guarantee was not necessary to secure the $10m loan (nor any security arrangement concerning the charging of WLC shares).
9. It submits the fact it and the Gujarat Group were successful and experienced borrowers does not preclude a finding of unconscionability (Ipstar Australia Pty Ltd v APS Satellite Pty Ltd (2018) 356 ALR 440 (Ipstar)).

The claim of estoppel

1. The defendant submits that the plaintiff is estopped from denying that the guarantee was qualified in the way represented in the sanction letters for the reasons already set out above.

Variation

1. The defendant alleges that the Facility Agreement was varied on or around early August 2013 by way of the Final Sanction Letter which was attached to Rati Pugalia's email 5 July 2013 to Mr Sharma, Akshaya Panda, Mr Kannan and other officers of the plaintiff and executed by Mr Jagatramka on behalf of GNL, GNCL, the defendant and himself, and returned to the plaintiff on 7 August 2013.
2. The defendant submits the objective evidence demonstrates that the plaintiff sought and obtained GNL, GNCL, the defendant and Mr Jagatramka's formal acceptance of the terms and conditions set out in the Final Sanction Letter. It submits adequate consideration passed in that the Final Sanction Letter also contained other amendments and warranties/representations of potential value to the plaintiff.

Further submissions

1. The defendant also made submissions concerning the credibility of its witnesses, Mr Jagatramka and Mr Kannan. It explains Mrs Jagatramka's absence as being due to her no longer being a director of the defendant, residing in India and having refused to provide the defendant with an affidavit in these proceedings. It says that Sharma is also no longer a director of the defendant. He provided two affidavits to the plaintiff in these proceedings (which ultimately were not read). The defendant submits that in any event the documentary evidence supports the contention that he understood that the guarantee was qualified.
2. However the defendant submits that the plaintiff's failure to call Ms Milburn or any of its officers who were involved in the negotiation or execution of the facility agreement permit the Court to draw Jones v Dunkel inferences against the plaintiff.
3. In response to what it describes as the plaintiff's contention that it is estopped from resiling from its representation that it was authorised to enter into and would be bound by the terms of the Facility Agreement (see below), the defendant submits the estoppel cannot succeed because there is no evidence of detrimental reliance, the plaintiff's own records reveal that it shared the mistaken belief as to the qualified nature of the guarantee, and the defendant in these proceedings is not asserting it was not authorised to enter into the Facility Agreement but rather asserts the guarantee was qualified in the manner set out in the Modified Sanction Letter.
4. Further in response to the plaintiff's assertion that it failed to take reasonable care, the defendant submits the contention is untrue. Mr Kannan was delegated the task of overseeing the documentation process. He was suitably experienced and engaged in the drafting process. Notwithstanding those efforts he simply failed to ensure the relevant qualification was included, although the defendant submits that error must be viewed in context. The plaintiff, a trusted counterparty, had repeatedly assured the defendant the guarantee was conditional and, even with its greater resources, legal representation and experience, the plaintiff did not identify the same omission.
5. In any event, the defendant submits s 12GF(1B) (see plaintiff's submission below) is no answer to the claim for statutory unconscionability, and in undertaking any evaluation of how much damages payable to the defendant should be reduced, the Court would come to the conclusion that the predominant cause of loss was the plaintiff's misleading and deceptive conduct.
6. Finally the defendant submits that if the Court was to reject each of its defences the sum of any indebtedness to the plaintiff must be adjusted to take account of the shares in WLC that the defendant pledged as security and which have been forfeited to the plaintiff.

The claim for misleading and deceptive conduct - s 12DA of the ASIC Act

1. The plaintiff submits that the simple answer to the defendant's case is that the law does not relieve persons, let alone highly sophisticated and experienced commercial enterprises, from contractual obligations voluntarily assumed (Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [39], [42]-[44]).
2. The plaintiff submits that as pleaded the conduct said to constitute the alleged representations concerns alleged failures to disclose pertinent facts, which raises two questions. First whether it had a duty to draw the defendant's attention to inconsistencies between the Facility Agreement and Modified Sanction Letter or advise the defendant specifically that it required an unqualified, unconditional and irrevocable guarantee. Secondly if such a duty arose whether the failure to disclose gave rise to either of the representations pleaded.
3. The plaintiff submits that it had no such duty in the circumstances, which included that the Gujarat Group was a highly sophisticated organisation; it had substantial experience negotiating term loans and its lack of legal representation was a choice; the negotiations were of a purely commercial nature; Mr Kannan approached the negotiations with vigour and attention to detail and sent many emails proposing amendments to the Facility Agreement, which suggested the defendant was looking after its own interests; and the Modified Sanction letter contained numerous qualifying terms that made it plain it was indicative only and the plaintiff had the right to include other conditions it considered necessary.
4. The plaintiff further submits there is no evidence that would establish that a failure to disclose on its part was the result of anything other than inadvertence (see Miller at [14]), and even if that was not the case, it had no duty to "volunteer information in order to avoid the consequences of the careless disregard, for its own interests, of another party of equal bargaining power and competence" (Miller at [22]).
5. In relation to the second question the plaintiff submits neither of the representations ought to be found because the Modified Sanction letter included highly qualified terms which directed attention to the actual terms of the Facility Agreement. It submits that it laid before the defendant a true and complete copy of the Facility Agreement which the defendant executed. It also submits that the evidence led by Mr Jagatramka and Mr Kannan of the alleged representation does not accord with the pleaded representations and in any event does not arise from a fair reading of the sanction letters. It says the guarantee was either necessary or it was not, and if it was, the sanction letter indicates an unqualified guarantee clause would be included in the Facility Agreement.
6. The plaintiff also denies the alleged misleading and deceptive conduct induced the defendant to enter the Facility Agreement. It submits it cannot be faulted for the failure of Mr Jagatramka and Mr Kannan to read the complete copy of the Facility Agreement which it provided to them, or obtain legal advice. The plaintiff submits the defendant represented that it had read and approved the Facility Agreement when it provided the Board Resolution and Verification.
7. The plaintiff also submits Mr Kanna cannot be found to have relied upon the Modified Sanction Letter of 20 June 2013 as there is no evidence that it was forwarded to him (by Mr Jagatramka) and by 5 July 2013 when the sanction letter was sent to the Gujarat Group the Facility Agreement had already been executed. Mr Kannan conceded during cross-examination that he had no recollection of believing at the time the Facility Agreement was executed that it contained the qualification to the guarantee and the plaintiff submits that is fatal to the defendant's misleading or deceptive conduct, estoppel and unconscionable conduct defences.
8. It says Mr Jagatramka's evidence that he would not have executed the Facility Agreement until the qualification to the guarantee was inserted does not withstand scrutiny.
9. However in the event the Court is persuaded that the defendant was misled the plaintiff invites the Court to exercise its power under s 12GF(1B) of the ASIC Act to reduce to nil or some nominal amount any damages that may be otherwise awarded to the defendant, having regard to the extent the defendant's failure to take reasonable care contributed to any loss it may have suffered.

The claim of statutory unconscionability - s 12CB of the ASIC Act

1. In response to the grounds advanced by the defendant in respect of its unconscionability defence (as summarised above) the plaintiff submits the first ground based on its alleged misleading and deceptive conduct must fail for the same reasons as stated above. It also notes that the defendant does not assert the plaintiff had knowledge of the disconformity.
2. In relation to its alleged unconscionable departure from the parties' mutual intention the plaintiff submits the defendant has not proved there was a mutual intention to the high standard required in a rectification case which the plaintiff says should be applied here because the defendant is seeking to uphold a bargain contrary to the terms of the parties' written agreement. It submits the contemporaneous documents show both parties fully understood the terms of the Facility Agreement at the time it was executed.
3. The plaintiff submits the negotiation occurred over 14 days and Mr Kannan commented upon and provided drafts of the Facility Agreement on six occasions. It submits that to the extent there was time-pressure that was a product of the defendant's own making and the plaintiff insisted the Gujarat Group carefully review the documents.
4. It submits this was not a case where one person was acting under the influence or another or vulnerable due to some disparity in bargaining power; each side was ably represented and gave ground along the way. Further it was the convention of the Gujarat Group not to engage lawyers. The defendant was part of that large corporate group and represented by an experienced management team. Mr Kannan was a banker and regarded himself as equipped with the necessary skills. There was no evidence of disadvantage arising from English being a second language. The plaintiff submits there is no evidence it conducted itself other than as an ordinary arm's length commercial party.
5. The plaintiff submits the defendant would have entered the Facility Agreement irrespective of whether Mr Jagatramka had been aware of the unconditional guarantee it contained. The Gujarat Group it says was desperate for money and the defendant had no material assets at the time (although it does now, being the fruits of its judgment against WLC).

The claim of estoppel

1. The plaintiff relies upon its submissions on misleading and deceptive conduct in relation to the defence based on estoppel.

Variation

1. The plaintiff submits the evidence in support of this contention is thin and does not bespeak in objective terms of any intention on the part of the parties to vary the terms of the Facility Agreement.
2. The plaintiff further submits there is no evidence of consideration passing between the parties to support the alleged variation which would deprive the plaintiff of the benefit of the unqualified guarantee for which it had bargained.
3. The plaintiff further submits that the sanction letter when read as a whole expressly contemplates entry into the Facility Agreement which means it must pre-date the Facility Agreement.
4. It submits the sanction letters led to the documenting of other agreements such as the Specific Security Deed (Shares), the Charge Over Bank Account and the CHESS Tripartite Deed and that the defendant's argument must mean that each transaction document was varied which "borders on the absurd".
5. The plaintiff submits the communications in July 2013 were a mundane attempt by the plaintiff to finalise the administrative arrangements relating to the transaction.

Further submissions

1. The plaintiff also advanced submissions on the credibility of the various witnesses. It says that no adverse inferences should be drawn against it for failing to call witnesses to give evidences as to its belief at the time the Facility Agreement was executed because the defendant brought no rectification case nor alleged any oral agreement or that any oral representations were made to Mr Jagatramka or Mr Kannan and has not advanced evidence to show any employee knew of the defendant's alleged vulnerability.

A party is bound by an executed contract

1. It is trite law that a party is bound by the terms of a written contract that he or she executes whether or not he or she has read the document (Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [42]-[44]). However as the Court stated in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at [35]: Where parties enter into a written agreement, the court will generally hold them to the obligations which they have assumed by that agreement. At least, it will do so unless relief is afforded by the operation of statute or some other legal or equitable principle applicable to the case.

Misleading and deceptive conduct pursuant to s 12DA

1. Section 12DA(1) of the ASIC Act relevantly states: (1) A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive.
2. The test for determining whether conduct is misleading or deceptive or likely to mislead or deceive under s 12DA is the same as that under s 18 of the Australian Consumer Law (previously s 52 of the Trade Practices Act 1974 (Cth)) (see, e.g., GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd (2001) 117 FCR 23 at [100]).
3. In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 (Parkdale v Puxu) at 198 Gibbs CJ said: The words of s. 52 require the Court to consider the nature of the conduct of the corporation against which proceedings are brought and to decide whether that conduct was, within the meaning of that section, misleading or deceptive or likely to mislead or deceive. Those words are on any view tautologous. One meaning which the words "mislead" and "deceive" share in common is "to lead into error". If the word "deceptive" in s. 52 stood alone, it would be a question whether it was used in a bad sense, with a connotation of craft or overreaching, but "misleading" carries no such flavour, and the use of that word appears to render "deceptive" redundant. The words "likely to mislead or deceive", which were inserted by amendment in 1977, add little to the section; at most they make it clear that it is unnecessary to prove that the conduct in question actually deceived or misled anyone. (emphasis added)
4. In determining whether the conduct in question is likely to "lead into error" it must be viewed as a whole; "it would be wrong to select some words or act, which, alone, would be likely to mislead if those words or acts, when viewed in their context, were not capable of misleading" (Parkdale v Puxu at 199 (Gibbs CJ)). The determination proceeds by reference to what "a reasonable person in the position of the [representee], taking into account what they knew, would make of the [representor]'s behaviour" (Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [50]).
5. Silence or a failure to provide information is to be assessed as a circumstance like any other (Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 32 (Black CJ)). However as Black CJ went on to say (also at [32]): … To say this is not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or likely to mislead or deceive. To speak of 'mere silence' or of a duty to disclose can divert attention from that primary question. Although 'mere silence' is a convenient way of describing some fact situations, there is in truth no such thing as 'mere silence' because the significance of silence always falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation in the circumstances of the case, that if particular matters exist they will be disclosed." (emphasis added)
6. See also Gummow J (with whom Black CJ and Cooper J agreed) at [41], approving French J's dictum in Kimberley NZI Finance Ltd v Torero Pty Ltd [1989] ATPR (Digest) 53,193 at 53,195. This approach has been approved in numerous subsequent decisions (see, e.g., Westpac Banking Corporation v Lee [2013] NSWCA 375 at [152] (Gleeson JA, Barrett and Emmett JJA agreeing); Miller at [17]-[19] (French CJ and Kiefel J)).
7. The surrounding circumstances which bear upon whether a finding that there was a reasonable expectation to disclose ought to be made may include: 1. The state of knowledge of the person to whom the conduct is directed (Miller at [20]); 2. The existence of common assumptions and practices established between the parties or prevailing in the particular profession, trade or industry in which they carry on business (Miller at [20]); 3. What matters of fact each party knew about the other as a result of the nature of their dealings and the conversations between them, or which each may be taken to have known (Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592 at [37]; 4. The defendant's knowledge of the undisclosed fact (Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 at [66]); 5. The sophistication and experience of the parties in their respective field (Miller at [91]); 6. The relationship between the parties, for instance the existence of a common law or equitable duty to disclose (e.g. a fiduciary duty) (Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193 at [230]).
8. Silence or omission has been found to amount to misleading and deceptive conduct in circumstances where for example positive conduct has given rise to an impression that is in truth contradicted or materially qualified by undisclosed facts (see Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193). Similarly, in circumstances where a true statement has been rendered false by a subsequent change in circumstances (see Winter Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97 at 113).
9. The parties referred to conflicting authority on the question of whether a failure to act or disclose must be other than inadvertent. The defendant submits that it is not necessary for the party alleged to have engaged in misleading or deceptive conduct to have been aware of the undisclosed fact nor that their silence was intentional, citing Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193 at [228]; Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 467 (FC); Fabcot Pty Ltd v Port Macquarie-Hastings Council [2011] NSWCA 167 at [209(ii)]; Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 40; CCP Australian Airships Ltd v Primus Telecommunications Pty Ltd (2005) ATPR 42-042 at [34].
10. The plaintiff takes the opposite view, relying upon Miller at [14] where French CJ and Kiefel J stated: In determining whether there has been a contravention of s 52 of the Trade Practices Act, it is necessary to determine "whether in the light of all relevant circumstances constituted by acts, omissions, statements or silence, there has been conduct which is or is likely to be misleading or deceptive". The term "conduct" is to be understood according to its definition in s 4(2)(a) and (b) of the Trade Practices Act, which includes a reference to "refusing to do any act". That, in turn, includes a reference to "refraining (otherwise than inadvertently) from doing that act" [Trade Practices Act, s 4(2)(c)(i)]. (citations omitted)
11. The ASIC Act contains provisions similar to ss 4(2)(a)-(c) of the Trade Practices Act (see ss 12BA(2)(a)-(c) of the ASIC Act).
12. In any event as French CJ and Kiefel J stated in Miller at [22]: … as a general proposition, s 52 does not require a party to commercial negotiations to volunteer information which will be of assistance to the decision-making of the other party. A fortiori it does not impose on a party an obligation to volunteer information in order to avoid the consequences of the careless disregard, for its own interests, of another party of equal bargaining power and competence. Yet that appears to have been, in practical effect, the character of the obligation said to have rested upon Miller in this case.
13. An examination as to whether a "reasonable expectation" existed is unnecessary in the case of a false representation, where the undisclosed fact is the falsity of the representation: Miller at [23]. In such circumstances the misleading and deceptive conduct flows from the falsity of the representation, assuming it leads or is capable of leading the representee into error (Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 at [63]; approved in Miller at [15]-[16]).
14. It is also the case that there must be a causal connection between the representor's conduct and the representee's alleged error or misconception (see ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 at 651; Campbell v Backoffice Investments Pty Ltd 238 CLR 304 at [26]; Sutton v A J Thompson Pty Ltd (in liq) [1987] ATPR 40-789 at 46,607).
15. In Argy v Blunts & Lane Cove Real Estate Pty Limited (1990) 26 FCR 112 at 135-136 Hill J adopted the statement of principle from Gould v Vaggelas (1985) 157 CLR 215 at 236 where Wilson J set out the principles to be applied in determining whether a party was induced to enter a contract in reliance upon misleading conduct: 1. Notwithstanding that a representation is both false and fraudulent, if the representee does not rely upon it he has no case. 2. If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation. 3. The inference may be rebutted, for example, by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation. 4. The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract.
16. At 138 Hill J stated: A case may perhaps be imagined where an applicant is so negligent in protecting his own interests that there will be a finding of fact that the representation complained of was not in the circumstances a real inducement to his entering into a contract. In such a case the element of causation between misrepresentation and damage will have been severed by the intervention of the negligence of the applicant. However, in my view, the present cannot be said to be that case.
17. See also ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 at 651-652.

Unconscionability pursuant to s 12CB

1. Section 12CB(1) the ASIC Act relevantly provides: (1) A person must not, in trade or commerce, in connection with: (a) the supply or possible supply of financial services to a person (other than a listed public company);or (b) the acquisition or possible acquisition of financial services from a person (other than a listed public company); engage in conduct that is, in all the circumstances, unconscionable.
2. Section 12CC sets out a number of matters the Court "may" have regard to in determining whether a person has contravened s 12CB in connection with the supply or possible supply of financial services. It has been held that the Court is guided or "aided but not controlled by the factors listed..." (ACCC v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 252 at [37] (Sundberg J); APS Satellite Pty Ltd (formerly known as "Skymesh" Pty Ltd") v Ipstar Australia Pty Ltd [2016] NSWSC 1898 at [127] (Rein J) (Ipstar NSWSC)). However in Miller Gageler J stated that each consideration listed in s 12CC "must be taken into account if and to the extent that it is applicable in all the circumstances" (at [83]).
3. What is clear is that the Court must consider all the circumstances of a case in order to reach a conclusion on unconscionability (Ipstar NSWSC 1898 at [127]).
4. A financier's conduct in relation to the obtainment of a guarantee supporting the advance of money falls within the scope of the supply or acquisition of financial services within the meaning of s 12CB of the ASIC Act (and did in June 2013) (see ss 12BAB(1)(b), 12BAB(7)(b), 12BAA(7)(k) of the ASIC Act and reg 2B(1)(h) of the Australian Securities and Investments Commission Regulations 2001 (Cth); see also National Australia Bank Limited v Smith [2014] NSWSC 1605 at [267] (Slattery J)). Conduct pertaining to the enforcement of such a guarantee is also caught by the section (Commonwealth Bank of Australia v Thompson [2013] NSWSC 149 at [86]-[94] (Harrison AsJ)).
5. The statutory conception of unconscionable conduct is unconfined to conduct that is remedial on that basis by a court exercising jurisdiction in equity (Australian Securities and Investments Commission v Kobelt [2019] HCA 18; 93 ALJR 743 at [83] (Gageler), [144] (Nettle and Gordon JJ) (ASIC v Kobelt)). In ASIC v Kobelt Gageler J concluded that s 12CB "operates to prescribe a normative standard of conduct which the section itself marks out and makes applicable", with the Court's task to "recognise and administer the normative standard of conduct" (see also [122] (Keane J)).
6. However the unwritten law it seems has a part to play in ascribing meaning to the term "unconscionable" as it is used in s 12CB. In ASIC v Kobelt Nettle and Gordon J stated (at [144]): "Unconscionable" is not defined in the ASIC Act and s 12CB is "not limited by" the unwritten law of the States and Territories relating to unconscionable conduct. As will be explained, the nonexhaustive list of factors set out in s 12CC necessarily implies that the statutory conception of unconscionability is more broad-ranging than that of the unwritten law. Nevertheless, the unwritten law has a significant part to play in ascribing meaning to the term "unconscionable" under s 12CB(1).
7. Gageler J stated at [88]-[89]: The Commonwealth Parliament's appropriation in s 12CB of the terminology of courts administering equity in the expression of the normative standard which the section prescribes serves to signify the gravity of the conduct necessary to be found by a court in order to be satisfied of a breach of that standard. "Unconscionability", as has been long and well understood, "is not a slight matter, and behaviour is only unconscionable where there is some real and substantial ground based on conscience for preventing a person from relying on what are, in terms of the general law, that person's legal rights". Parliament's appropriation of that terminology in s 12CB shorn of the constraints of the unwritten law is indicative of an intention that conduct of the requisite gravity need not be found only in a fact-pattern which fits within the equitable paradigm of a stronger party to a transaction exploiting some special disadvantage which operates to impair the ability of a weaker party to form a judgment as to his or her best interests.
8. At [119] Keane J stated that: The legislative choice of "unconscionability" as the key statutory concept, rather than less morally freighted terms such as "unjust", "unfair" or "unreasonable", confirms that the moral obloquy involved in the exploitation or victimisation that is characteristic of unconscionable conduct is also required for a finding of unconscionability under s 12CB. Section 12CB(4)(a) of the ASIC Act does not require a contrary conclusion. The direction in s 12CB(4)(a) means that the application of s 12CB(1) is not limited to conduct that has been held to be "unconscionable" under the general law, but it does not operate to give the term "unconscionable" a meaning different from its ordinary meaning…
9. However Edelman J concluded that the "bar" is lower than that developed in equity (see [295]).
10. Further it has been held that in determining whether conduct meets the threshold of unconscionability the task is not limited to finding "moral obloquy" or a "high level of moral obloquy". For example in Ipstar (a case concerning whether conduct was unconscionable pursuant to s 22 of the Australian Consumer Law) Bathurst CJ explained that: the use of terms such as "moral obloquy" may be of assistance to the extent that they emphasise that what is required is such a departure from accepted community standards as can objectively be seen to be against conscience.
11. This formulation was approved by Kiefel CJ and Bell J in ASIC v Kobelt at [59]. Also in that case Gageler J confirmed that what his Honour meant by the term "high level of moral obloquy" in Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525 at [188] was that the relevant conduct must be "so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience (ASIC v Kobelt at [92]).
12. Kiefel CJ and Bell JJ further stated at [14]: The values that inform the standard of conscience fixed by s 12CB(1) include those identified by Allsop CJ in Paciocco v Australia & New Zealand Banking Group Ltd [(2015) 236 FCR 199; [2015] FCAFC 50 at [296]]: certainty in commercial transactions, honesty, the absence of trickery or sharp practice, fairness when dealing with customers, the faithful performance of bargains and promises freely made, and: the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to respond for their protection, especially from those who would victimise, predate or take advantage.
13. Allsop CJ had gone on to include: recognition that inequality of bargaining power can (but not always) be used in a way that is contrary to fair dealing or conscience; the importance of a reasonable degree of certainty in commercial transactions; the reversibility of enrichments unjustly received; the importance of behaviour in a business and consumer context that exhibits good faith and fair dealing; and the conduct of an equitable and certain judicial system that is not a harbour for idiosyncratic or personal moral judgment and exercise of power and discretion based thereon.
14. Conscious impropriety or dishonesty is not necessarily required (see, e.g., PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446 at [104], [107] and [110] (Sackville AJA, McColl and Leeming JJA agreeing)).
15. However the standard of conduct expected of a person in the commercial context is not that of a fiduciary and a contracting party is not required to subordinate its interests to those of the other party. Inequality of bargaining position alone is insufficient (Ipstar NSWSC at [127]; see also Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at [11], [14]).

Estoppel by representation

1. As Giles JA (Sheller and Heydon JJA agreeing) stated in Byron Shire Council v Vaughan [2002] NSWCA 158 at [37]-[39]: Estoppel by representation is a common law estoppel, arising where one party makes a representation as to existing fact (sometimes said to include the legal complexion of facts) on which the other party founded an assumption and it would be unjust to permit the representor to depart from the assumption: see for example Thompson v Palmer (1933) 49 CLR 507 at 547; Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 657, 674-6; Waltons Stores (Interstate) Ltd v Maher at 398, 413-5… The relevant detriment is that flowing from representee's original change of position, his action or inaction in reliance on the representation. According to the doctrine, the relief must be by holding the representor to the representation because only in that way will the change of position not bring detriment. Equitable estoppel "has its basis in unconscionable conduct, rather than the making good of representations": Waltons Stores (Interstate) Ltd v Maher at 405 (Mason CJ and Wilson J), see also at 416 (Brennan J). It may operate through the making of a representation as to fact, existing or future, and by precluding the representor from departing from the assumption, although it may operate in other ways. The possible common factual basis is one reason for the question whether there can be brought about "a single overarching doctrine" or "a general doctrine of estoppel by conduct", see the citations in the reasons of Handley JA (in Giumelli v Giumelli now at CLR 112-3). But because the relief is equitable relief it is discretionary, and because equity operates to prevent unconscionable (or unconscientious) conduct the relief will not necessarily be by precluding the representor from departing from the assumption, see Verwayen v The Commonwealth (1990) 170 CLR 394 at 412 (Mason CJ), 429 (Brennan J), 445 (Deane J), 454 (Dawson J), 487 (Gaudron J) and 501 (McHugh J).
2. With respect to the requirements of an estoppel premised upon a representation Dixon J (McTiernan J agreeing) stated in Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674-675: The principle upon which estoppel in pais is founded is that the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations. This is, of course, a very general statement. But it is the basis of the rules governing estoppel. Those rules work out the more precise grounds upon which the law holds a party disentitled to depart from an assumption in the assertion of rights against another. One condition appears always to be indispensable. That other must have so acted or abstained from acting upon the footing of the state of affairs assumed that he would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption. In stating this essential condition, particularly where the estoppel flows from representation, it is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment. … Fulfilment of the condition which so far I have discussed is not enough to make it just to preclude a party from setting up a state of facts. The justice of an estoppel is not established by the fact in itself that a state of affairs has been assumed as the basis of action or inaction and that a departure from the assumption would turn the action or inaction into a detrimental change of position. It depends also on the manner in which the assumption has been occasioned or induced. Before anyone can be estopped, he must have played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it.
3. His Honour then cited (at 676) what he had stated in Thompson v Palmer (1933) 49 CLR 507 at 547 in relation to the circumstances in which it will be unjust to permit a departure from an assumption: … He may be requires to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations, such as bailment; or because he has exercised against the other party rights which would exist only if the assumption were correct… ; or because knowing the mistake the other laboured under, he refrained from correcting him when it was his duty to do so; or because his imprudence, where care was required of him, was a proximate cause of the other party's adopting and acting upon the faith of the assumption; or because he directly made representations upon which the other party founded the assumption.
4. It has been held that "mere silence or inaction cannot amount to a representation unless there be a duty to disclose or act" (Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80 at 110). However silence may found an estoppel if the omission to communicate in conjunction with other surrounding circumstances creates an implied representation (see Amaya v Everest Property Holdings Pty Ltd (2010) 15 BPR 28,695 at [156]).
5. In relation to the requirement of reliance Gageler J stated in Sidhu v Van Dyke (2014) 251 CLR 505 at [90]-[91]: … The respondent did not need to establish that the belief to which she was induced by the appellant's representations was the sole or predominant cause of the course of action or inaction she took but, in the language of Rich, Dixon and Evatt JJ in Newbon v City Mutual Life Assurance Society Ltd…, she did need to establish that the belief was a "contributing cause". To establish that the belief to which she was induced by the appellant's representations was a contributing cause to the course of action or inaction which she took, the respondent needed to establish more than that she had the belief and took the belief into account when she acted or refrained from acting. She needed to establish that having the belief and taking the belief into account made a difference to her taking the course of action or inaction: that she would not have so acted or refrained from acting if she did not have the belief. (my emphasis)

Mr Sharan

1. The plaintiff called only one witness. Its case otherwise was entirely documentary.
2. Mr Nilay Nischal Sharan was called for the plaintiff and he affirmed one affidavit of 20 September 2019.
3. He is an officer of the plaintiff.
4. He set out the uncontroversial documentary trail, the dates of advance of funds, demands for repayment and the outstanding balance ([4]-[12] and [17]-[19]).
5. He was asked in examination in chief about his calculation of the current amount outstanding and he indicated it was USD$13.5m (T.73/35-40.
6. He was then asked about certain entries in the records of the plaintiff. He explained that provision was made in the banks' records indicating the bank took the view the likely recovery was nil (T.74/35-45).
7. In cross examination he explained the enquiries he had made about the provision and the entry made (T.75/40-50). He was not personally responsible for the entry (T.76/1-10).
8. His opinion as to the provision was based entirely upon an examination of the underlying documents (T.76/10-20).
9. He has been with the bank since 2007 and had nothing personally to do with the particular transaction (T.77/30-35).
10. He indicated that Mr Panda is still with bank and works in the Mumbai head office. He has not spoken to Mr Panda about the transaction (T.78/1-10).

Mr Jagatramka

1. Mr Jagatramka was the first witness for the defendant. He affirmed one affidavit in the proceedings dated 12 December 2019. He lists his occupation as Industrialist.
2. Up until 1 January 2018 he was chairman and managing director of GNCL. Prior to that time GNCL was one of the largest metallurgical coke producers in India. As at January 2018 he had held the position of chairman and managing director of GNCL for about 10 years ([3]).
3. As at 2013 GNCL was listed on the Bombay Stock Exchange and on the National Stock Exchange in India. It was the principal trading entity of a group of companies called the Gujarat Group ([4]).
4. On 11 January 2018 GNCL was placed into liquidation ([5]).
5. The Gujarat Group comprised a number of companies including Gujarat NRE Limited (GNL) now called Gujarat NRE Pty Ltd, GNI (the defendant), Gujarat NRE Coking Coal Limited which is now called Wollongong Coal Limited (WLC) but is also referred to as GNCCL, and Wonga Coal Pty Ltd ([6]).
6. Mr Jagatramka was a director of GNL from 23 August 2006 to 28 April 2015, a director of Wonga from 15 February 2007 to 28 April 2018, a director of the defendant from 14 August 2008 to 28 April 2015, and a director of WLC from 12 October 2004 to 14 February 2014 ([7]).
7. As at June 2013 the directors of the defendant were Mr Jagatramka, his wife (Mrs Mona Jagatramka), and a Mr Sanjay Sharma ([9]).
8. At the same time Mr Sharma was also a director of a number of other companies in the Gujarat Group (including GNL, the defendant and Wonga) ([10]).
9. In June 2013 WLC was engaged in mining coking coal from two coal mines in the Illawarra region. It was listed on the Australian Stock Exchange (ASX) but its shares are currently suspended. The running of these operations required significant capital expenditure ([15] and [19]).
10. As at 2013 WLC had with the assistance of other members of the Gujarat Group had borrowed significant sums of money. It had a loan facility with a consortium of banks including the plaintiff for USD$175,000,000. Another consortium loan again involving the plaintiff for USD$50,000,000, another loan from the plaintiff (Hong Kong branch) for USD$100,000,000, and another loan from the plaintiff (Hong Kong branch) for USD$10,000,000 ([22]).
11. In addition WLC had raised significant sums by way of equity issuance in the order of $639,373 ([23]).
12. Mr Jagatramka had had a long engagement with the plaintiff over a ten year period and had a close personal and professional relationship with the plaintiff ([24]-[27]).
13. The operational parent company of the Gujarat group was GNCL and in Australia WLC was the operational parent company of the group ([28]).
14. By reason of his role as executive chairman and managing director of both GNCL and WLC his role included liaising and negotiating with financial institutions to meet the financial needs of the various companies in the group. Although he would negotiate the terms of loan arrangements, he did not involve himself in the process of formally documenting the various loan facilities. He left that task to Mr Kannan, the CFO of GNCL and the group, as he did not have the time to review the documentation himself ([29(a)]).
15. He was also engaged in a whole range of commercial activities for example raising equity capital, entering agreements with third parties for the provision of services, meeting with regulatory authorities and the like ([29(b)-(g)]).
16. He received hundreds of emails daily along with those he received by reason of email distribution. He did not read all the emails he received ([31]-[32]). He relied especially on Mr Kannan to raise any matter of importance that required his attention ([35]).
17. In June 2013 WLC (and the Australian members of the Gujarat group) were experiencing "considerable financial distress". On 31 January 2013 a takeover bid was launched on-market for the shares in WLC. In addition WLC and its subsidiaries were "struggling to pay their creditors". In March 2013 a number of companies in the Gujarat group had received demands for payment ([39(a)-(c)]).
18. He set out other financial difficulties in great detail (at [40]-[45]).
19. Not only was WLC struggling to pay its suppliers it was overdue in meeting its interest payments on facilities it had with the plaintiff (and others) at the time. As at 13 June 2013 the amount outstanding owed to the plaintiff on two secured loans totalled USD$7.679m ([46]).
20. The genesis of the USD$10m loan was the overdue interest on the loans from the plaintiff ([46]-[49]).
21. As a result Mr Jagatramka commenced discussions with Mr Das from the plaintiff about the prospect of borrowing further money to assist WLC with its financial difficulties ([51]).
22. From May to June 2013 Mr Jagatramka had discussions with Mr Das about the proposed USD$10m facility sometimes in company with Mr Kannan ([53]-[54]). Mr Kannan was responsible for overseeing the documentation of the facility ([54]-[55]).
23. He said that although he could not by reason of time constraints review the documentation he did review the "shorter" term sheets and sanction letters and he assumed that the facility would be drafted in accordance with the agreed term sheet and the sanction letters ([60]).
24. He said he was specifically aware of the terms and conditions of what was required at or around 7 June 2013.
25. He also said he remembered an issue about the ability on the part of GNCL to provide a charge over its property prior to the intended drawdown of the facility. Ultimately on 15 June 2013 the requirement for GNCL to give a subservient charge was dropped ([76]).
26. He then dealt with various of the emails and various drafts of documents circulated at the time and his understanding at various points ([77]-[93]).
27. But he did accept that he did not read some of the emails and/or their attachments even though he received them ([82], [84] and [93]).
28. As is clear from [94]-[104] Mr Jagatramka did not have a clear recollection of the events over the days leading up to 18 June 2013 (see in particular [96], [98] and [101]).
29. In the period 18 to 20 June again he received many emails and attachments and although he did not read the attached documents he made an assumption without checking that the facility agreement was in accord with the 13 June 2013 sanction letter ([108]-[112]).
30. He did recall the fact but not the detail of telephone call on the morning of 20 June to the effect that Wonga was to be replaced by the defendant because Wonga was the subject of a charge and could not pledge the required shares ([114]). He recalled reading an email of 20 June revising the terms of the security ([115]). He said he read that document carefully and was comfortable with its terms and as far as he was concerned he was comfortable with it and understood the facility agreement remained unchanged and that it would be drafted in accordance with the letter ([116]-[117]).
31. He said that he understood that the unconditional and irrevocable guarantee was to be obtained from the defendant (instead of Wonga) only if required to perfect the contemplated security involving the pledging of the shares with such a requirement to be based on the advice of legal counsel ([118]).
32. Mr Jagatramka said he telephoned Mr Das from the plaintiff and confirmed he agreed with the "revised terms schedule of security" ([119]).
33. He said he received a further email on 20 June at 8.05pm (AEST) but as with prior documents he did not review the facility agreement but believed it had been amended to reflect the revised schedule ([122]-[123]).
34. He then referred to the board meetings in connection with the loan and stated that he was not involved with the drafting of any of the board documents and does not have any recollection of the meetings ([127]-[131]).
35. He stated that at the time of the 21 June board meetings he believed that the terms of the facility agreement accorded with the terms set out in the sanction letter of 13 June as modified by the schedule of security circulated on 20 June ([132]).
36. He stated that he did not read through the facility letter when he executed it and believed that, on the basis of his discussions with Mr Das the terms of the sanction letter of 13 June and the revised schedule of 20 June, its terms were consistent with the sanction letter and the schedule and that the guarantee would only come into force and effect if necessary to perfect the security involving the pledging/charging of shares in WLC based on legal advice ([137]).
37. Had he been aware he would have insisted the position be clarified and amended and would not have executed the facility agreement until the position was clarified ([138]).
38. He then dealt with the utilisation of funds and the subsequent events in July and the final form of the sanction letter ([143]-[148]).
39. Mr Jagatramka said that he was a chartered accountant and he had won a gold medal and came first in his final examination in 1983. He also agreed that he was referred to as a 'visionary of rare distinction' (T.84/10-35).
40. He also agreed that he was a highly experienced and capable businessman (T.86/20-30). His wife was also a director and she was in his view capable of being a director of a publicly listed entity like WCL (T.86/35-45).
41. WLC has entered into loan arrangements in the order of $900m with many different banks (T.88/35-50).
42. Mr Kannan was the CFO of GNCL and the group generally and it was his role to oversee the documentation of loan facilities (T89/5-20).
43. He found it difficult to read some of the attachments on his phone because of the definitions and that is why he had assistance from Mr Kannan (T.90/25-30). It was Mr Kannan's responsibility to oversee the finalisation of the transaction documentation (T.90/45-50).
44. He also agreed that the Gujarat group does not routinely use lawyers in negotiation and preparation of finance documents (T.91/20-25).
45. He understood that the firm Hunt and Hunt were the bank's lawyers and were not acting for the Gujarat parties (T.92/8-10).
46. He accepted that as managing director it was his responsibility to ensure that any financing documents that were to be executed accurately reflected the terms of the agreement (T.92/35-40).
47. Banks always seek a standard form of resolutions which need to be carefully considered and he knew a board resolution would be passed to that effect (T.93/15-30).
48. Mr Kannan had been with the Gujarat group since about 2007 and he had previously worked in the banking industry (T.95/15-30). He also placed a great deal of trust in Mr Kannan to oversee the negotiation and formalisation of finance facilities (T.96/40-45).
49. In this case he was quite interested in how the finalisation of the loan facility was coming along (T.99/45-50). That was because WLC desperately needed funds (T.100/1-10).
50. He agreed that he had said in evidence in 2017 that if funds had not come from Axis WLC would have collapsed by 24 June which, had it happened, would have had a very significant impact on the rest of the Gujarat group (T.101/5-15).
51. It is likely he opened some of the emails that were received (T.102/1-10). But he agreed that he relied heavily relied upon Mr Kannan and Mr Sharma to send him anything important that needed to be brought to his attention (T.103/10-25).
52. It was routine for him to be asked to give a personal guarantee and by that stage he had given personal guarantees to the tune of about $421m (T.104/10-15). He expected that Mr Kannan would read the whole of the finance facility (T.104/25-30).
53. If he had known that Mr Kannan had not read the whole document he would have signed it as long as the agreement was being done with a counterparty like Axis. He also accepted that he would have signed anything they put to him (T.105/15-20).
54. At this point in time WLC had interest outstanding on an existing loan with Axis and the money was basically going to meet the outstanding interest obligation (T.107/25-35).
55. He understood that the bank was going to be responsible for drafting the loan documentation (T.108/48-50). He agreed that Hunt and Hunt were neither acting for nor advising the Gujarat parties (T.110/5-20).
56. At no time did he ever actually read the finance facility. He did not think he could read it fully (T.114/5-15).
57. He asserted that he did not appreciate until the commencement of these proceedings that the guarantee was not qualified in the way it should have been and had he read it in the June of 2013 he would have realised that it was not qualified as it should have been (T.115/20-30).
58. He has signed many documents in relation to many facilities and he has never really been concerned with the detail (T.116/30-35).
59. He believed it was acceptable for Mr Kannan to simply have relied upon the bank and their lawyers to prepare the documentation consistently with the sanction letter (T.117/35-40). He said he was entitled to presume that the bank would prepare the documents in the way they should have been prepared and there was no reason for anyone from Gujarat to read the documents (T.118/25-30).
60. He agreed that if he had at the time read the email from the bank with the draft minutes he would have seen the bank was referring to a guarantee from the defendant (T.122/35-40). He agreed that a resolution was passed at a board meeting on 21 June (T.123/45-50).
61. He was asked directly whether it was truthful to say that the board had carefully considered the documents prior to the resolution and eventually he accepted he and the board relied on the bank (T.126/1-10).
62. Mr Kannan never said to him that he had not had time to review the entire facility agreement (T.128/1-10).
63. At the time the group had significant facilities which involved guarantees and charges and a $10m facility was not significant, or rather, not out of the way or extraordinary (T.133/10-15).
64. He agreed that WCL had creditors who were pressing for repayment and he was giving assurances the money was coming (T.134/5-15). The loan of $10m was he thought a precursor to another loan (T.134/20-25). He agreed that WCL had undertaken an unsuccessful rights issue which put more pressure on them to finalise the loan from Axis (T.134/25-40).
65. He agreed that the monies received from the plaintiff were effectively paid out the same day (T.135/25-30).
66. He was shown an annual report for the defendant. He agreed that for the financial year ended 31 March 2013 the company suffered a loss of $1,996 and it had total equity of $4,418 and the company had no generating assets. It also had a debt that matched out the value of shares which were almost all pledged (T.141/1-9). Basically the company had no assets (T.141/30-35).
67. It was put to him that he would have been perfectly happy for the bank to take a guarantee from a company within the Gujarat group that did not have any assets. He said "no" as that would make the company insolvent on day one (T.144/5-10).
68. He agreed that as at June 2013 WCL was in extreme financial difficulty, in desperate need of the $10m to discharge its interest obligation to the plaintiff and that it would otherwise be in default. If the funds had not been received by 24 June the company would have collapsed and the company needed to attend to the preparation of the documents on an urgent basis. He agreed that the defendant had no assets at the time and the personal guarantee he was providing was quite small when compared with guarantees already supplied by GNCL (T.144/20-50). It was put that on that basis he did not bother reading the finance agreement. His response was that he could not have read all the documents that were required to be signed by him as CEO (T.145/5-10).
69. He agreed that he did not read the finance documents because he placed trust and confidence in the bank (T.145/40-45). He agreed that both resolutions were passed as a matter of formality to satisfy the legal requirements of the lawyers (T.146/30-45).

Mr Kannan

1. The next witness was Mr Kannan. His stated occupation is that of executive. He swore on affidavit of 14 December 2019.
2. He is currently employed in the renewable energy sector in India. He received a Master of Science degree from Bombay University (now known as Mumbai University) in 1981 ([2]).
3. Between August 2007 and January 2016 he was the CFO of Gujarat NRE Coke Ltd (GNCL).
4. At the time GNCL was a company listed both on the Bombay Stock Exchange and the National Stock Exchange of India. It was one of the largest independent producers of metallurgical coke in India ([3]).
5. At the time he worked for GNCL he was based in Kolkata, India.
6. As at June 2013 WLC (previously Gujarat NRE Coking Coal Limited (GNCCL)) was engaged in mining coking (metallurgical) coal from its coal mines in the Illawarra region of New South Wales.
7. The mines were acquired for the purpose of providing a guaranteed supply of high quality coking coal for GNCL which produced coke in India. At the time the mines were in care and maintenance and therefore required considerable capital expenditure in order to re-establish them as commercially viable ([11]).
8. WLC therefore with the assistance of other members of the Gujarat group borrowed significant sums from various banks ([12]-[14]).
9. As at June 2013 Mr Kannan was not only the CFO of GNCL but also for the Gujarat group and was responsible for the overseeing the financial management of all of the companies within that group. Particular activities he was responsible for included overseeing and finalising the documentation of loan facilities. On this aspect of his work he reported to Mr Jagatramka as and when issues arose ([15(a)-(e)]).
10. Historically Mr Kannan had extensive dealings with the plaintiff with regard to the various loan facilities WLC had with it ([20]).
11. As at June 2013 WLC was experiencing considerable financial difficulties. There were overdue creditors, including secured creditors. WLC was seeking to raise an additional USD$50m to address these various matters ([25]-[26]).
12. As a result of a takeover bid (although it ultimately failed) and a heavily undersubscribed rights issue WLC was placed under further pressure ([28]-[29]).
13. On 13 June 2013 the plaintiff informed WLC it was overdue in respect of its secured loans. The genesis of the $10m loan was in the context of the outstanding interest obligations ([31]-[33]).
14. He accepted he was concerned with the documentation of the $10m facility and as a result he had many conversations with Mr Jagatramka and persons from the plaintiff ([34]-[36]).
15. His first involvement with the transaction was in receiving an email of 7 June 2013 from Ms Rati Pugalia of the plaintiff. It was sent to Jill Milburn of Hunt & Hunt Lawyers (who acted on behalf of the plaintiff) and was copied to him (along with others) ([37]).
16. He had been involved in the finalisation and documentation of a number of loan facilities from the plaintiff. He stated that his focus was on updating the representations and warranties made in the facility, checking interest rates, fees and checking the proposed assets to be charged ([42]). He also said he relied on the plaintiff accurately to record the terms of the term sheet in the facility agreement ([43]).
17. By reason of his significant duties with the group he did not he said have time to review the entire facility agreement so he focussed on certain matters ([44]).
18. His statement chronicled each email, of which there are many, that he received and those he circulated.
19. He stated that he knew that the proposed facility contained a guarantee clause ([49]-[52]). He also knew that apart from a corporate guarantee a personal guarantee was also to come from Mr Jagatramka ([49]).
20. As at 13 June he understood that an unconditional and irrevocable guarantee was required from Wonga but that such a guarantee was only to be obtained and to come into effect if necessary to perfect the pledge of shares by Wonga, with such a necessity to be based on the advice of legal counsel ([54]).
21. At all times he trusted and believed that the facility agreement would be drafted and finalised consistently with the terms of the sanction letter ([65]).
22. On 14 June he received various documents from the plaintiff's solicitor with a marked-up "Terms Sheet" that cross referenced the provisions in the sanction letter of 13 June and the facility agreement ([71]). He still believed that the facility agreement would be in accordance with the sanction letter but he did not have time to check all the references ([72]).
23. By 17 June there was urgency in finalising the matters so that funding could immediately be obtained ([80]).
24. He continued to exchange emails with the plaintiff's solicitor concerning versions of the facility agreement with tracked changes and comments and in relation to FIRB notification requirements ([81]-[85]).
25. He stated that as a result of Wonga being the subject of an existing PPSR charge in respect of all of its property there was a need to change the identity of the party to provide the shares to be secured in favour of the plaintiff. This lead to the defendant becoming a party to the facility ([92]).
26. By 19 June he still believed that the terms of the facility agreement were in accordance with the sanction letter of 13 June as modified to remove the requirement for GNCL to give a charge over its property ([101]). He was being pressed by Mr Jagatramka to have the documents executed on 19 June because of the considerable financial difficulties the Gujarat Group and WLC were facing ([102]).
27. Some time was taken on the issue of substituting the defendant for Wonga and numerous emails were exchanged ([109]-[111]). However he believed that the transaction remained the same as outlined in the sanction letter of 13 June ([114]).
28. When he next reviewed the facility agreement he did not review every clause ([118]). He stated that copies of the facility agreement were sent around for execution on 21 June 2013 ([125]-[131]). Mr Kannan stated that at the time he executed the facility agreement he believed that the terms of that agreement were consistent with the 13 June sanction letter ([132]). Namely that the guarantee from the defendant was qualified and only enforceable if necessary to perfect the pledge/charge of the shares by the defendant, with such necessity to be based only on the advice of legal counsel ([133]).
29. He then dealt with the utilisation of the funds ([137]-[139]).
30. In cross examination he stated that he worked as a banker from 1980 to 1998. He joined Gujarat NRE Coke in 2004 as vice president, later became senior vice president and then became CFO in 2007 (T.152/30-45).
31. He accepted that he had very significant experience in the field of project finance and he was quite capable of reviewing and understanding commercial agreements (T.154/10-22).
32. Mr Jagatramka told him not to assume that he had read all emails he received (T.155/15-23). He also agreed that Mr Jagatramka had delegated to him the task of negotiating and finalising the terms of the finance facility with the plaintiff. He replied that he did that for other banks as well (T.155/30-40).
33. It was also part of his responsibility to take charge of the process of documenting the finance facility and bring any matters of importance to Mr Jagatramka's attention (T.155/35-45).
34. He presumed that Mr Jagatramka was not reviewing the finance facility, (T.156/1-10). He understood that Mr Jagatramka was dependent upon him to finalise the documentation and do so carefully (T.156/9-15).
35. He would go through the drafts to see if there was any matter he was interested in (T.156/35-45).
36. He agreed that in 2013 he was responsible for the finances for the whole Gujarat group (T.156/45-50). He was aware that WCL had creditors making demands on overdue payments (T.157/30-35). The $10m loan was for interest (T.157/48-49 - T.158/1).
37. He did most of the documentation without lawyers except for convertible bonds (T.160/15-25).
38. He realised that the solicitors were for the plaintiff and not for the Gujarat parties (T.163/10-15).
39. He knew that the document the solicitor was using was based on a 2011 facility agreement and the email of 12 June indicated he had to identify where the bracketed and highlighted items were (T.165/15-25).
40. He also accepted that the solicitor was not telling him he did not need to read the document (T.166/45-50). He probably looked at the document the day he received it (T.168/1-10).
41. He knew guarantees, both corporate and promoter, were called for (T.169/20-35). They were the kinds of things he was looking for when he started reviewing the agreement (T.170/7-10).
42. He agreed he had read the draft facility agreement of 13 June and in particular cl18 which contained the guarantee (T.173/1-10). And he checked to see if the guarantee was required from the parent company and Mr Jagatramka (T.173/19-25).
43. The question of whether or not a guarantee would be required was something at the forefront of his mind (T.176/40-45).
44. He accepted that that on 13 June the draft facility did not contain the qualification in the sanction letter (T.177/6-18). He would however only focus on tracked changes (T.179/20-25).
45. He was asked if he had an interest in checking clause 18 of the facility agreement to see whether it reflected the qualification in the sanction letter. He did not go through the document because he was more focussed on other areas (T.180/30-45). He was just going through the tracked changes (T.180/40-45).
46. He accepted that he did make changes to the document attached to his email of 14 June (T.181/35-45). He then insisted he made changes to clause 18.2 without reading clause 18.1 (T.183/44-50 - T.184/1-4).
47. The cross examiner upon resumption the next day said that some of the tracked changes he had previously suggested the witness had made were in fact made by the solicitor for the plaintiff (T.193/25-35).
48. He agreed that when he first sent the draft finance agreement back he made no comment on paragraph 18.1 or 18.2 (T.195/25-35).
49. He had seen the sanction letter of 13 June but still made no comments on clause 18.1 or 18.2 (T.196/5-25). He asserted that at the time he did read clause 18 but did not object to it and he could have required the solicitor for the plaintiff to have drafted a clause so as to make the facility agreement consistent with the sanction letter (T.198/20-35).
50. He was referred to his affidavit at [134(c)] in which he said he would have inserted a clause himself and he indicated he would withdraw the paragraph because he was not "100% qualified for putting a new clause" (T.199/15-20).
51. He said he was speaking to the plaintiff's solicitor on the phone "during the whole period right from when the documentation started, off and on" but he agreed that he did not mention that fact in his affidavit (T.199/35-50).
52. He again agreed that he knew on 14 June that clause 18 had no qualification consistent with the sanction letter (T.200/35-45).
53. On 14 June he again sent back tracking changes and at that time he was fully conscious of the fact that the guarantee in the draft was not qualified (T.202/1-5). He then had his attention drawn to [58] of his affidavit in which he had said that the first time he became aware the facility agreement did not contain a clause qualifying the guarantee was in these proceedings and whether in the light of the evidence he had just given he wished withdraw [58]. He said "yes" (T.202/20-50 and T.203/1-4).
54. He agreed that he understood that the plaintiff was not obliged to provide any facility unless the documentation was completed to the satisfaction of the bank (T.204/30-45). He also agreed that the sanction letter did not include all of the terms that were ultimately to be included in the finance documentation; it was "indicative only" (T.205/15-25).
55. He also accepted that he would have needed to review the whole document from beginning to the end (T.205/34-38).
56. Guarantee clauses are "always there" and if he had wanted to look at the agreement he would know exactly where to look (T.206/20-35).
57. He agreed that the second time he sent the facility agreement back he made no changes or comments on clause 18 (T207/18-25 and T.208/5-15).
58. He accepted that on 18 June he sent back the facility agreement for the third time with comments but without commenting or changing clause 18 of the draft (T.210/20-25). He appreciated at this time that the bank was going to require a resolution that the directors had carefully considered the finance document (T.212/10-20).
59. He agreed that for a fourth time he sent the draft facility agreement back without suggesting any changes to clause 18 (T.214/30-45).
60. He agreed that on 20 June the transaction was being finalised in urgent circumstances and the bank wanted certain payments to be paid "before the next week" (T.215/40-50). He insisted that the sanction letter of 13 June "remained in place" (T.216/25-30).
61. Later on 20 June he sent the facility agreement back again having reviewed it and made two comments but not in relation to clause 18.1 (T.224/5-10). That was the fifth time he sent the draft back to the solicitor for the plaintiff (T.225/1-5). As at 20 June he knew there was no qualification to clause 18 (T.226/45-50).
62. Later again on 20 June he for the sixth time sent the draft facility agreement back without seeking any change to clause 18 (T.227/20-30). But he could not remember whether he had checked clause 18 (T.228/10-20).
63. He agreed that between the 20 and 21 June he did not get any email attaching a copy of the facility agreement which included a qualification to clause 18 (T.229/25-35).
64. He was referred to [133] of his affidavit in which he said he believed the qualification would have been incorporated into the facility agreement and that somehow prior to execution clause 18 would be made consistent with the sanction letter (T.231/5-10). It was a matter of importance but pressure of time meant he did not check (T.232/5-20).
65. He suggested that clause 18 might have been discussed with the solicitor for the plaintiff (T.233/25-40). But he agreed that he did not refer to that conversation in his affidavit (T.234/15-20).
66. In re-examination he said that "we" were not agreeable to the original guarantee by Wonga (T.237/5-7). He also said that his first contact with the solicitor for the plaintiff was in 2007 or 2008 and he had dealt with the solicitor on at least three or four occasions (T.237/33-39).

Nitin Daga

1. Nitin Daga affirmed one affidavit of 16 December 2019 and was not cross-examined.
2. Mr Daga is (and has been since 2009) an employee of GNCL. His evidence is of no great moment given that he was not involved in the negotiations with the plaintiff or the drafting of the Facility Agreement ([10]).
3. However he was involved in company secretarial duties in relation to the "Know You Client" portion of the conditions precedent ([11]).
4. He set out the emails he sent and received in relation to the loan facility between 7 and 18 June 2013 ([12]).

Kaitlin Greer

1. Kaitlin Greer affirmed two affidavits, one dated 17 December 2019 and the second dated 12 August 2020. She was not cross examined.
2. In her first affidavit Ms Greer provided details of various communications she had with Mona Jagatramka in which Mona Jagatramka confirmed she was not willing to give evidence in the proceedings.
3. In the second she stated that her search of the Hunt & Hunt Lawyers website showed that Jill Milburn was still a partner at the firm. She gave evidence that this was confirmed during a telephone conversation she had with a receptionist at Hunt & Hunt Lawyers named Julie.

Consideration

1. First I should say something about the plaintiff's case. It is accepted that the relevant parties signed the contractual documents and that subject to the issues raised in defence the signed documents constitute a binding contract.
2. The case both factually and legally focused in effect entirely on the defence and whether in all the circumstances the conduct of the plaintiff was misleading and deceptive or unconscionable such that the defendant should be relieved of any liability under the contract.
3. It is uncontroversial that there emerged an inconsistency between the sanction letter so-called and the terms of the Facility Agreement in one relevant respect, namely the precise circumstances in which a guarantee was to be provided by the defendant. The cause of the inconsistency is unexplained but that given the limited scope of the defence is not in my view relevant.
4. The defendant does not rely upon mistake nor does it seek rectification.
5. The evidence relied upon for the defendant was that of Mr Jagatramka and Mr Kannan. Their affidavits much like their evidence had a certain textual symmetry about them. My overall impression of the defence brought by the defendant is that it is one of a level of contrivance and opportunism.
6. I was not impressed with either's attempt to explain why they had not picked up the inconsistency at the time given their respective roles in the transaction. I found neither of them able in my view having heard them give their evidence to give a plausible explanation for not having done so.
7. I do not accept that at various critical moments they simply did not apply their minds to the documentation because they were just too busy, or the Facility Agreement was too long or that they just assumed that the solicitor for the plaintiff would make the sanction letter and Facility Agreement consistent.
8. I do not accept that either had any conversation with any officer of the plaintiff about the topic of the terms of the relevant guarantee. There is no contemporaneous support for such.
9. The very documentation relied upon, being the sanction letters, made it clear that the Facility Agreement was to be the source of all relevant the contractual terms and I am satisfied that they must have known that. In numerous emails in which Ms Milburn circulated drafts of the Facility Agreement she directed them to the terms of the actual agreement and asked them to review it. And Mr Kannan went to the Facility Agreement on numerous occasions and adjusted it with track changes.
10. The reality of the situation is that the group was in severe financial distress. It was about to collapse with multiple creditors baying for payment. This facility would not really do more than bring the group's interest obligations back into order. It would provide the needed liquidity for the group and it might as Mr Jagatamka volunteered have been a prelude to further lending but it was an immediate commercial necessity which needed urgent attention.
11. There was a pressing need to effect this transaction. Mr Jagatramka was I am satisfied desperate to keep the group afloat whilst Mr Kannan was tasked with trying to keep the group running.
12. Mr Jagatramka is a highly sophisticated and experienced businessman and a chartered accountant who felt able to describe himself with the lofty title of "industrialist". He was no stranger to negotiating deals such as this one which he regarded clearly as vital from a strategic point of view as opposed to the size of the actual facility which he somewhat trivialised in his evidence (see, e.g., T118/2-3: "Let me remind you that the amount was less than 2% of the total borrowings based on me personal guarantee"). He had personally negotiated the group's multi-million dollar facilities with its various bankers which included the plaintiff with Mr Kannan always attending to the documentation.
13. I am satisfied that he did not bother himself with the detail of any documentation in relation to loan facilities big or small. He expected guarantees corporate and personal would routinely be required and he himself gave evidence that he was personally liable under numerous, for amounts exceeding $400m. If he relied upon anyone it was Mr Kannan who accepted that role expressly.
14. Because of his anxiety to have this facility completed urgently I do not consider that for a moment he would have cared one way or the other as to terms of any guarantee that may requested or required. He said his relationship with the bank was such that he would have signed anything (see T.105/20-35, T.106/1-11). I therefore do not consider he relied on the sanction letter to the exclusion of the Facility Agreement which he and his fellow directors executed. If the precise terms of any aspect of the guarantee were of real importance he would I am satisfied have specifically paid close attention to the matter. He did nothing of the sort.
15. The two matters I am satisfied he did consider were the amount to be borrowed to rectify the default, and even that was really dictated by the calculations, and the question of whether Wonga could pledge the shares. Any other detail in the drafting was more of mechanical nature and left entirely to Mr Kannan.
16. As for Mr Kannan he also was a very sophisticated and experienced businessman who for many years had worked as a banker. He accepted that he had negotiated many deals for the group and had attended routinely to the detail of the documentation of those deals.
17. Again I do not accept that he relied on anyone to iron out any inconsistencies in the documentation. He was inextricably involved in the detailed drafting of the Facility Agreement and on no less than six occasions communicated via email with the solicitor for the plaintiff about the many changes to be effected to the document and not once sought to make an issue of any alleged inconsistency of the sort alleged or the terms of clause 18 which contained the guarantee. That was not out of incompetence, inattention or because he was just too busy. It was in my view out of sheer indifference.
18. The decision not to engage lawyers when dealing with the plaintiff was I am satisfied out of self confidence, familiarity with the type of documentation the plaintiff usually required and not out of any reliance upon the basis that the plaintiff or its lawyer would somehow look out for the defendant's interest. Mr Jagatramka and Mr Kannan conceded the obvious, namely that they knew the plaintiff's lawyers were not acting for the defendant.
19. When all of the relevant circumstances are viewed objectively I am unable to find that the inconsistency or the plaintiff's conduct operated so as to be misleading and deceptive in the relevant sense. Given the terms of the sanction letters themselves I would not find that the alleged representations have been made out. Further given what I have said about the sophistication and experience of Mr Jagatramka and Mr Kannan as well as their state of knowledge with respect to the contents of the Facility Agreement, I would not find the circumstances gave rise to a reasonable expectation that the plaintiff would explicitly disclose the inconsistency between the sanction letter and the final form of the Facility Agreement. And in any event I am not satisfied that Mr Jagatramka, Mr Kannan or any other director relied on the plaintiff or any representation said to have been made by it in the sanction letters or otherwise (Argy v Blunts & Lane Cove Real Estate Pty Limited (1990) 26 FCR 112 at 135-136, 138; Sidhu v Van Dyke (2014) 251 CLR 505 at [90]-[91]).
20. For the same reasons I would neither find the defendant's claim of estoppel made out, nor its claim of unconscionable conduct. With respect to the latter claim, again having regard to the relative sophistication of the parties, their numerous rounds of review of the terms of the Facility Agreement itself which Mr Kannan participated in, the terms of the sanction letters, the defendant's indifference, and the fact the defendant was provided with a final true and complete copy of the agreement for execution, I do not consider the plaintiff's conduct then or now, in attempting to enforce the guarantee, "so far outside societal norms of acceptable commercial behaviour" so as to warrant its condemnation as unconscionable pursuant to s 12CB of the ASIC Act.
21. I would also reject the defendant's variation defence for the reasons posited by the plaintiff. It seems to me that the provision of the "Final Sanction Letter" on 5 July 2013 was an attempt by the plaintiff to finalise the administrative arrangements relating to the transaction and did not in my view amount to a variation of the Facility Agreement.
22. I would therefore find that the defendant is bound by the terms of the guarantee in clause 18 of the parties' Facility Agreement and it follows that the plaintiff must succeed in its claim and the defendant's defence and cross-claim must fail. I invite the parties to bring in short minutes of order to reflect these reasons. I would hear the parties further on the question of costs if necessary and also on consequential orders in relation to the discharge or not of the current interlocutory regime.
23. Further the plaintiff sought judgement for the principal outstanding, together with interest that has accrued under the facility to be calculated at the time of judgment. However the defendant submitted that if the Court was to reject each of its defences the sum of any indebtedness must be adjusted to take account of the shares in WLC that the defendant pledged as security and which have been forfeited to the plaintiff. I would also hear the parties further on this point if necessary.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 December 2020