Bank of Queensland v Edwards [2017] QSC 191

BANKING AND FINANCE - BANKS - LIABILITIES OF BANKS - FRAUD, UNDUE INFLUENCE AND UNCONSCIONABLE CONDUCT - CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS - where the defendants entered into loan contracts with the plaintiff secured by a registered mortgage - where the defendants fell into arrears in repayment of the loans and defaulted - where the defendants provided the plaintiff with certain disclosure concerning their ability to repay the loans - whether the plaintiff breached the Code of Banking Practice (2004) in failing to act as a reasonable, diligent and prudent banker in assessing the defendants' ability to repay the loans and thereby breached its contracts with the defendants - whether the plaintiff engaged in unconscionable conduct in advancing the sums under the loan contracts to the defendants - whether the plaintiff engaged in misleading and deceptive conduct in advancing the sums under the loan contracts to the defendants - whether the loan contracts are unjust within the meaning of the National Credit Code (2009) (Cth)

EQUITY - GENERAL PRINCIPLES - UNDUE INFLUENCE AND DURESS - PRESUMPTION OF UNDUE INFLUENCE FROM RELATIONSHIP OF PARTIES - SPOUSES - where the first defendant was the wife of the second defendant - where the defendants were joint debtors under the loan contracts - where the first defendant was the registered owner of the property subject to the plaintiff's mortgage - where the plaintiff's mortgage secured the sums advanced under the loan contracts - whether the first defendant was in a position of special disadvantage as in Yerkey v Jones when she signed the loan contracts - whether the first defendant was a volunteer

Australian Securities and Investments Commission Act 2001 (Cth)

Property Law Act 1974 (Qld)

Agripay Pty Ltd v Byrne [2011] QCA 85; [2011] 2 Qd R 501

Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 214 CLR 51

Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 3) [2012] FCA 43

Australian Societies Group Financial Services (NSW) Ltd v Bogan (1989) ASC 55-938

Bank of Queensland v Schultz [2014] QSC 305

Banque Commerciale SA, en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279

Barker v GE Mortgages Solutions Limited [2013] QCA 137

Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362

Bodapati & Anor v Westpac Banking Corporation & Anor [2015] QCA 7

Bylander International Consortium (Aust) Pty Ltd v Multilink Investments Pty Ltd [2001] NSWCA 53

Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447

Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389

Commonwealth Bank of Australia v Doggett & Ors [2014] VSC 423

Garcia v National Australia Bank [1998] HCA 48; (1998) 194 CLR 395

Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298

Mavaddat v HSBC Bank Ltd [No 2] [2016] WASCA 94

Papale & Ors v Wilmar Sugar Australia Ltd [2017] QSC 72

PSAL Ltd v Kellas-Sharpe & Ors [2012] QSC 31

Re Adelphi Hotel (Brighton) Ltd [1953] 1 WLR 955

Stacks Managed Investments v Tolteca Pty Ltd [2015] QSC 276

State Bank of NSW Ltd v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587

Taree Pty Ltd & Ors v Bob Jane Corporation Pty Ltd & Anor [2008] VSC 228

West v AGC (Advances) Ltd (1986) 5 NSWLR 610

Westpac Banking Corporation v Haynes [2017] SASC 23

Yerkey v Jones [1939] HCA 3; (1939) 63 CLR 649

[1] In November 2009, the plaintiff advanced a total of $680,000 to the defendants, pursuant to two loan contracts each dated 24 October 2009. One loan contract was described as a home loan for $300,000[1] and the other was described as a line of credit for $380,000[2] (together, the "loan contracts").

[2] These loans were secured by a registered mortgage[3] over the property at 46 Radbourne Road, Tanawha, ("the Property"). The first defendant, Mrs Edwards, is the sole registered proprietor of the Property. This has been the home of the defendants and their children.

[3] The money borrowed from the plaintiff was partly used to pay out the defendants' existing indebtedness to Westpac, which held a mortgage over the Property. At that time, Westpac was owed $454,248.42.[4] This debt was discharged by applying the whole of the home loan and part of the line of credit from the plaintiff. The mortgage to Westpac was released, and the mortgage to the plaintiff was registered. The balance then available to the defendants under the line of credit was $224,750.56.[5]

[4] The defendants then defaulted on their loan commitments to the plaintiff. Eventually, in January 2013 the plaintiff gave the defendants formal notices under s 84 of the Property Law Act 1974 (Qld) and s 88 of the National Credit Code (2009) (Cth). These notices advised that the defendants were in arrears and demanded payment of outstanding amounts under the mortgage and the loan contracts. The notices stated that unless the default was remedied on or before 22 February 2013, the plaintiff would exercise its rights and remedies under the loan contracts and the mortgage.

[5] It was not in issue that the defendants failed to pay the amounts demanded in the notices.[6]

[12] The defendants asserted by counterclaim that the plaintiff engaged in unconscionable conduct within the meaning of sections 12CA, and 12CB of the Australian Securities and Investments Commission Act 2001 (Cth).

[13] The material facts relied on by the defendants (so far as they could be gleaned from the pleading) were set out in the following paragraphs of the Further Amended Counterclaim:

"34.1 The Plaintiff by it managers Gary Raymond Brennan and Janet Brennan or any other employee did not make reasonable enquiries of the First and Second Defendants about their requirements and objectives in relation to the First Loan Contract and the Second Loan Contract and the First Mortgage;

34.2 The Plaintiff ... did not make reasonable enquiries about the financial situation of the First and Second Defendants about their requirements and objectives in relation to the First Loan Contract and Second Loan Contract and the First Mortgage;

34.3 The Plaintiff ... did not make reasonable enquiries about the financial situation of the First and Second Defendants ...;

34.6 The Plaintiff ... was not willing to negotiate with the First Defendant and the Second Defendant the terms and conditions of each of the First and Second Loan Contract and the First Mortgage;

34.7 The Plaintiff ... did not assess whether the each of the to the [sic] First Loan Contract and the Second Loan Contract and the First Mortgage were suitable ... having regard to ... the inability of the First and Second Defendants to comply with financial obligations ... [or] the inability of the First and Second Defendants to service any debt or any other financial obligation created by the [loan contracts and mortgage].

34.8 The Plaintiff ... did not assess in relation to the First Defendant whether the Mortgage:

1. Was liable to expose the First Defendant to the loss of the asset represented by of the First Defendant, namely the Land;

1. Was understood by the First Defendant in nature relation to the risk, obligations and terms relating to of the First Mortgage.

1. Did not provide the First Defendant with any opportunity to obtain independent legal advice concerning the risks the First Defendant was assuming by granting the Mortgage over the Land in support of the obligations assumed by the First and Second Defendants pursuant to the First Loan Contract and the Second Loan Contract and the Mortgage;
2. Did not provide the First Defendant with any opportunity to obtain independent financial advice concerning the risks ...
3. Did not explain to the First Defendant the contents and nature of the First Loan Contract and the Second Loan Contract and the Mortgage;
4. Did not ascertain from the First Defendant whether she understood the contents and the nature of the [loan contracts and mortgage];
5. Did not ascertain from the First Defendant whether she understood the risks that she was assuming by reason of the [loan contracts and mortgage];
6. Did not inform the First Defendant as the sole proprietor of the Land the subject of the Mortgage that she was providing collateral security for the benefit of the husband the Second Defendant who was not providing any security to the Plaintiff in respect of the [loan contracts];
7. Did not inform the First Defendant ... that she was providing collateral security for the benefit of her husband ... who was not providing any security ... in respect of the [loan contracts] to which the Plaintiff could have recourse while enforcing the [loan contracts] and so spread the loss between the Defendants;
8. Did not ascertain from the First Defendant ... whether she freely and voluntarily was providing the Mortgage to the Plaintiff in respect of obligations to be assumed by the Defendants pursuant to [the loan contracts].

37.7 Had the Plaintiff ... made reasonable inquiries or required the Second Defendant to demonstrate what the Second Defendant current cash flow was, the Plaintiff, would have ascertained that the Second Defendant had, or the Second Defendant's company's [sic] had excessive liabilities, didn't have enough value or didn't have enough income to service. The Plaintiff would not loaned [sic] any money to the First or Second Defendant."

[14] The defendants also counterclaimed for damages for breach of contract by the plaintiff, which were said to have resulted from a failure by the plaintiff to comply with obligations under clause 25.1 of the Code of Banking Practice (2004).[9]

[15] The defendants' ultimate argument was to the effect that if the plaintiff had not advanced the money to them under the loan contracts, they would have sold the Property for $850,000, paid what they owed to Westpac and then used the remaining equity in the Property to acquire another property.[10] They claimed that the plaintiff was, or should have been, aware that the defendants were not capable of servicing the plaintiff's loans and that a reasonable, diligent and prudent banker, on the basis of information available at the time, would not have advanced the loans to the defendants.

[16] With that summary of the common arguments advanced on behalf of the defendants, principally by Mr Edwards, I turn now to consider the evidence, which consisted of a bundle of documents agreed between the parties, oral testimony of the defendants and a witness, Mr Gary Brennan, and various documents tendered during the course of examination and cross-examination of the witnesses.

[17] After completing Year 12 at school, Mr Edwards commenced a three year golf apprenticeship. He subsequently undertook studies, obtaining a Diploma of Christian Studies and a real estate licence.[11]

[18] Mr Edwards is, and was at all relevant times, the owner and director of a real estate sales and a real estate franchising businesses. These businesses were and are conducted under the following entities, of which Mr Edwards was the sole secretary and director, with Mr and Mrs Edwards shareholders as trustees for their own family trust: Only One Realty Pty Ltd, Only One Franchising Pty Ltd, and Erndale Pty Ltd (collectively "the Edwards Group").

[19] Since 2005, Mr Edwards has operated as a real estate agent on the Sunshine Coast, particularly in the Sippy Downs area.

[20] By 2008, Mr Edwards had established a real estate franchising system and had sold a number of those franchises around the Sunshine Coast area.

[21] Mr Edwards is clearly a businessman of some experience in the fields of real estate and property development. He aspired to building a large real estate franchising business. He developed a practice of purchasing homes, renovating them, and then selling for a profit, at which point he would refinance his borrowings with his creditors.[12] He had a good deal of experience in dealing with banks and in borrowing money from banks. Mr Edwards said in evidence that his personality and business style is "one of risk reward" [sic].[13]

[22] Mr Edwards, however, was a far from credible witness. Much of his evidence was confused or misleading. Mr Edwards often gave evasive and self-serving responses to questions in cross-examination. Both in his conduct of the trial and in the course of his sworn evidence before me, he would say whatever he could to advance the defendants' case rather than give a truthful and accurate account of the facts. As a consequence, his case shifted considerably throughout the course of the proceeding. So, to give a simple example, despite initially claiming that he was not indebted to the plaintiff, Mr Edwards conceded on the sixth day of the trial that he owed the plaintiff the amount that was paid to Westpac to discharge the Westpac mortgage over the Property.[14] Moreover, it emerged that part of Mr Edwards' case was that he lied to the plaintiff about his financial circumstances when he applied for the loans, and that the plaintiff is at fault for not making further investigations concerning his credit card liability. Mr Edwards himself conceded during the trial that his credibility as a witness was 'not strong', and that he often said the first thing that came into his head when answering questions.

[27] In 2006, the defendants paid $337,500 for a property at 47 Albany Street, Sippy Downs. This property was subject to a first registered mortgage by Westpac in the amount of $328,000. The first defendant was the sole registered owner of this property.[20]

[28] In 2009, the defendants purchased the Property for a sum of $555,000, with the first defendant again solely registered as owner.[21]

[29] In order to facilitate this purchase, the defendants obtained approval from Westpac to substitute 47 Albany Street with the Property as security and increase their existing home loan by $62,305. This took the defendants' overall indebtedness to Westpac at the time of their purchase of the Property to a total of $455,100. Mr Edwards gave evidence that equity in 47 Albany Street supplemented the Westpac loans and was used to complete the purchase of the Property.[22]

[30] The Westpac mortgage (number 712697665) over the Property was registered on 1 September 2009.

[31] In summary, at the time the defendants sought to obtain finance from the plaintiff, the defendants had the following existing debts with Westpac, totalling $454,248.42:[23]

1. account number 150191, a premium option home loan in both the defendants' names;
2. account number 343843, an equity access loan in both the defendants' names;
3. account number 324888, an equity access loan in both the defendants' names'; and
4. account number 840622, a home loan.

[32] Mr Edwards was cross-examined about the information he provided to Westpac through a broker, Mr David Hinde, in April and May 2009 for the purpose of applying for these loans. Mr Edwards said that when he arranged finance with Westpac and other financial institutions at this time, he was not asked by them to provide serviceability information. He said that he would be given blank documents to sign at the start of the loan application process, and that the lending institution, or its broker, would later fill in certain information concerning serviceability.

[33] Mr Edwards refused to accept that the Westpac loans were assessed on serviceability information which he provided to the bank's broker, and said instead that it was prepared on the basis the he would service the loan through a line of credit lent to him by the bank.[24]

[34] When cross-examined about his dealings with Westpac, Mr Edwards gave the following evidence:

"All right. What I'm saying to you is that, do you now recall that when you signed that document on the 2nd of April 2009, that the handwritten writing above it, which says "2 April 2009", and the amount four hundred and - or the figures "$450,000", were not on that page?---That's correct.

You specifically recall that, do you?---The reason is, is normally when I---

Do you specifically recall that? Don't tell me your reason why. Do you specifically recall that?---No, I don't specifically recall that."[25]

[35] This evidence, which amounted to an assertion that Westpac did not ask him relevant information about serviceability and provided him with blank documents, was resonant with numerous attempts by Mr Edwards throughout the proceeding to criticize the lending practices of credit providers. I find that Mr Edwards did in fact understand that the Westpac loans were calculated according to serviceability assessments based off his income and expenses. I also find this part of Mr Edwards' evidence to be further indicative of his lack of credit and candour. In particular, Mr Edwards' subsequent concession that he could not in fact recall whether Westpac provided their loan offer to him as a blank document is a telling example of his tendency to invent answers to questions in order to substantiate his case.

[36] Mr Edwards said he only made a single deposit of $1,500 on 3 April 2009, which is recorded as credited to the Westpac Equity Loan.[26]

[37] Mr Edwards said that his practice was to always borrow close to the limit of the value of whatever property was the subject of security, and that he had tried to keep the "Loan to Value Ratio" ('LVR') of the defendants' loans at around 80% in order to keep his borrowings as "low doc" ('low documentation') loans.

[38] Mr Edwards gave evidence that he approached the plaintiff for refinancing at about the time when, or shortly after, renovations on the Property were completed. He said that he sought finance in the form of a home loan and a line of credit, to be secured by a mortgage over the Property. He stated that he "went for my normal LOC [line of credit] and was able to achieve with 80% LVR a valuation of $850,000 and LOC to $680,000".[27]

[39] Mr Edwards said that he arranged the loan contracts and mortgage with the managers of the plaintiff's Chancellor Park branch in Sippy Downs, Gary and Janet Brennan. He knew Mr and Mrs Brennan from attending the same church in 2001 to 2003. He and Mr Brennan became friends sometime after he started to operate his real estate business in 2005. They would refer clients to each other and occasionally they socialized together.

[40] Mr Edwards said that he, Mr Brennan and Mrs Brennan decided sometime in 2007 to form a partnership with each other and with his solicitor to invest in three blocks of land in Nambour.

[41] Mr Edwards described it as an equal partnership between the Brennans and a company, Only One Holdings Pty Ltd, of which Mr Edwards and his solicitor were the directors and shareholders. He described the intention of the partnership being to construct homes on the vacant blocks, which would then be sold for a profit.

[42] Mr Edwards stated that due to difficulties in the real estate market shortly after the partnership was arranged, it became apparent that the investments might lead to a loss and leave Mr and Mrs Brennan personally liable. Mr Edwards said that his solicitor resigned his directorship of Only One Holdings Pty Ltd in December 2008 and that he subsequently continued by himself in partnership with the Brennans.

[43] Mr Edwards said that it was during discussions in late 2009 concerning this partnership that Mr Brennan encouraged him to bring his loans across from Westpac to the plaintiff.

"MR FISHER: ... All right. Okay. And - and at that time you knew you had a Westpac loan that was for about 454,000; you accept that?---[indistinct] I'd have to have these numbers up, because I'm- - -

All right. Sorry, you - sorry, let's - - -?---Actually, no, it could be almost maxed out. It is maxed out.

All right. Okay?---So that is 455, yeah. All the credit's - - -

Sorry, all the credit's been chewed up?---Yep, it's in arrears. I'm out, so I've got nothing left."

Okay. So if I can put it this way: the get out of jail card was, really, switching everything from Westpac to the Bank of Queensland, wasn't it?---Yes."[29]

[45] Mr Edwards said that he had a "quick discussion" with Mr Brennan about obtaining such a loan from the plaintiff. He said that Mr Brennan told him to use his old tax returns (being returns for the 2008 financial year).[30]

[46] Mr Edwards' evidence on the subsequent events is set out in his first witness statement:

"57) Gary and I discussed our Only One Holdings pty ltd loans and talked again about moving the home loan over to BOQ. Gary and the staff had encouraged me quite a few times. I agreed and Gary offered to help fill out the paperwork like the brokers used to. I was just after some extra to cover house payments until sales picked up.

1. Gary asked me some questions in his office and then asked me to take home the application form and get Jennine and myself to sign it. He said he would fill out the rest and asked me to get my tax returns from Jayne sent over. At no time did he ask me for a current budget or copies of any credit cards statements.
2. I remember viewing my veda report at a later time. I explained to Gary that I had used personal credit cards in my companies and lent the money to the company. Gary did not request to see any statements or ask how many credit cards I had.

60. At no time, was Jennine involved in any discussion of the Loans in issue.

1. Gary contacted me and said the loans were approved and to get Jennine to come to his office to sign and myself.
2. I contacted Jennine and she went to the office to sign and I went later that day from memory.
3. I remember sitting in Janet's office just signing t the stickers a lot of times. After I had finished signing, Gary gave me 2 envelopes with borrowers copy stamped on them. He then reached up on top of his cupboard and gave me two more sealed envelopes and said you can have these too as they are the copies for the loans of Only One Holdings.
4. I returned home and gave them to my receptionist Nola who worked from our home office to file. Jennine never saw them as this stage.
5. No loan documents were ever posted to our home nor was I given any documents to read prior to signing where the stickers were.
6. Gary or Janet did not ask me to check for errors on any loan application documents before lodging. I was not aware of anything written about me or my companies. As you can see, I did not understand what a mortgagor was as I signed as a mortgagor on the mortgage doc for the Westpac loan and I signed as mortgagor also on the BOQ document every where I was requested to sign even though Jennine was the sole owner of the property. I had no right to sign as a mortgagor. The whole process I was treated like I was the owner."[31]

[47] The loan contract documents, and the relevant supporting documents for the loan application to which the plaintiff had access prior to approval of the loans, were before me in evidence:

1. A handwritten "Consumer Lending Application" dated 26 September 2009 and signed by the defendants;[32]
2. A typed document "Consumer Lending Application - Home Loan" dated 29 September 2009;[33]
3. A typed document "Consumer Lending Application - Line of Credit Facility" dated 30 September 2009;[34]
4. Three commercial loan submissions and serviceability worksheets dated 28 September 2009, prepared by Mr and Mrs Brennan;[35]
5. A "Variable Rate Home Loan Privileges Package Home Loan Schedule" in the amount of $300,000 signed by the defendants, witnessed by Gary Raymond Brennan and dated 24 October 2009;[36]
6. A "Home Loan Privileges Package Line of Credit Facility Schedule" with a limit of $380,000 signed by the defendants, witnessed by Gary Raymond Brennan and dated 24 October 2009;[37]
7. A certified copy of mortgage number 712843331 listing the first defendant as mortgagor and the plaintiff as mortgagee, executed by the first defendant on 24 October 2009, by the plaintiff on 4 November 2009 and witnessed by Gary Raymond Brennan;[38]
8. A credit search report from Veda Advantage Information Services ("Veda report") detailing both defendants' credit histories dated 29 September 2009. The second defendant's Veda report indicated that 20 credit enquiries had been made by various entities, and he had three current credit providers and directorships at that date. The report also indicated no payment defaults, bankruptcies, court writs or actions or disqualified directorships in relation to both defendants;[39]
9. A CBRE property valuation conducted for the plaintiff dated 24 September 2009 indicating a market value of $850,000 for the Property;[40]
10. Individual tax returns for the first and second defendants for the 2008 financial year indicating net income of $39,168 for both defendants;

[53] The existence of surplus annual income in the serviceability analysis was such that the defendants' historical earning capacity, based on the information that was provided by them to the plaintiff, was sufficient to establish capability to both service the debt and account for unexpected contingencies.[46]

[54] Both the home loan schedule and the line of credit facility schedule were eight-page documents, which set out the names of the parties, the principal sum, repayments, interest and that a mortgage was to be registered in the plaintiff's favour over the Property to secure the loan. Both documents were signed by Mr and Mrs Edwards. The signing page of each document contained a certification that the defendants accepted that:

• (a) all of the income details given to the plaintiff was accurate and not misleading;
• (b) before signing, they had received and read a copy of the relevant Schedule, General Conditions, information statement and associated security;
• (c) they understood the nature and effect of the contract and the consequences of entering into it;
• (d) they were given the opportunity to seek independent legal advice and that the plaintiff recommended that they did so;
• (e) they understood that the mortgaged Property would be at risk in the event of default.

[55] The following also appeared above the signing clause in each document:

• READ THIS CONTRACT DOCUMENT so that you know exactly what contract you are entering into and what you will have to do under the contract."

• Do not sign this contract document if there is anything you do not understand.

• Once you sign this contract document, you will be bound by it..."

[56] Mr Edwards initially said that he authorised his accountant to provide the plaintiff with his personal tax returns, the first defendant's personal tax returns and the tax returns of, and financial information relating to, the Edwards Group. But then, he later said in evidence that he was not aware of what information his accountant had actually provided the plaintiff with.[47]

[57] In his witness statement for this trial, Mr Edwards said that he held eight credit cards with a combined credit limit of $151,500 at the time he applied for the loans with the plaintiff.[48] This, obviously, was completely inconsistent with the information disclosed on the face of the documents he had signed when applying to the plaintiff for the subject facilities.

[58] Mr Edwards also said that he had the reached the limits on almost all of the cards, which amounted to total credit card indebtedness of approximately $150,000 at the time he applied for finance with the plaintiff.[49]

[59] Mr Edwards confirmed in his evidence that he did not disclose any of this information to the plaintiff.[50]

[60] Mr Edwards said that the only disclosure he made to the plaintiff about his credit cards related to two cards which appear under the "liabilities" heading in the typed submission application forms.

[61] He said that he was asked about two further cards, as a result of two recent credit enquiries on his Veda report. He said that he explained the existence of the extra two cards to Mrs Brennan by saying that they were personal credit cards he was using for his business, Only One Franchising Pty Ltd.

[62] Mr Edwards tendered two documents at trial concerning his credit card indebtedness:

1. A letter from Credit Corp Services Pty Ltd dated 22 November 2012 confirming an assignment to it by the Commonwealth Bank of Australia on 15 October 2010 of a debt in the amount of $4,724.03;[51] and
2. An American Express "Statement of Account" dated 19 October 2009, indicating a Credit limit of $4,400.[52]

[63] Other than these documents, the only evidence about the number of credit cards he held, their limits, and how much he owed on them at the time of the loans came from Mr Edwards himself.

[65] During the trial, Mr Edwards continually pointed to purported errors in the handwritten and typed loan application forms and the Veda report. In particular, Mr Edwards focussed on several apparent misspellings of his name.

[66] Ultimately, nothing turns on these points other than to indicate a degree of lack of attention to detail on the part of Mr and Mrs Brennan and the plaintiff's other officers. So much was recognized by Mr Edwards when he agreed that the Veda report and loan documentation clearly referred to him.[54]

[67] Mr Edwards gave evidence that after the Westpac mortgage was discharged, the remaining $224,750.76 which was made available to the defendants through the line of credit facility was spent in the period between 4 November 2009 and 31 December 2009.[55] The plaintiff also tendered a table which contained a detailed breakdown of the defendants' expenditure in this period.[56]

[68] The expenditure table shows that the money was chiefly paid out to bank accounts associated with Mr Edwards and his companies, to Mrs Edwards and to various credit card accounts.

[69] From the expenditure table and the oral testimony of Mr Edwards, it can be established that some $67,994.00 was paid to bank accounts in the name of Mr Edwards' businesses. Approximately $18,517.88 was taken by way of cash withdrawals by Mr Edwards, payments to Mrs Edwards, transfers to their joint bank accounts and for the payment of various bills. In his testimony, Mr Edwards was unable to recall much of what these business and personal expenses related to. He said that at least $52,000, which was paid to "Only One Holdings Pty Ltd", related to the building projects for the partnership with the Brennans. He also said that at least $7,000 of the money paid into the Edwards Trust Account was used to make an offering to his church, but he was unable to provide any explanation concerning the expenditure of the balance of the funds.

[70] The expenditure table also showed that about $53,000 was used to pay off various credit cards. Mr Edwards said that these payments would only have covered approximately 30% of his credit card debts at the time. He maintained that his credit card liability on all of his personal and corporate cards amounted to about $150,000, which he said was close to the total credit limit of all of his cards combined.

[71] One further notable transaction during this period was a payment of $70,823.13 to "Larsons Cycle Inc". Mr Edwards said that he used this money to buy about ten motorcycles from an American company on behalf of members of a group who would subsequently reimburse him. Part of that purchase included motorcycles for himself and his children. Mr Edwards stated that he got most of the money back from members of this group. However, it appears from the documentation that none of the money Mr Edwards may have received by way of reimbursement for this transaction was ever applied in reduction of the moneys owed to the plaintiff.

"Unfortunately I had a car crash and my working/emotional life went to crap. But as the expert reports state. I was a train wreck waiting to happen with so much debt. Within 2 months had chewed through the entire LOC (217,000) ..."[58]

[75] After finishing school in Year 10, Mrs Edwards undertook a hairdressing apprenticeship. She and Mr Edwards were married when she was 22. They have four children. Mrs Edwards said that she has not worked since her marriage, although she later obtained a real estate certificate to assist her husband's real estate business by helping him to organise open home displays.

[76] Mrs Edwards said that the defendants lived in rented accommodation until 2000, when they decided to buy a house. This was purchased with a loan from Westpac and was registered in the first defendant's name. Mrs Edwards said that the reason for this was that Mr Edwards had told her to put the property in her name as a means of protection in the event that his business ventures went bad. Mrs Edwards also gave evidence that she relied on her husband to make payments on the Westpac mortgage, otherwise she would have been forced to sell the property.[59]

[77] Mrs Edwards said that she became acquainted with Gary and Janet Brennan socially some years before the loans and mortgage were arranged with the plaintiff.

[78] In 2009, when the defendants moved into the Property, she was aware that Gary Brennan and Mr Edwards had established a friendship. Mrs Edwards gave evidence that Mr Brennan's son would, from time to time, assist the defendants with various renovations at the Property. Mrs Edwards also said that in September 2009, around the time the defendants arranged their home loan with the plaintiff, she was aware that Mr Edwards and the Brennans were "going to do some house and land packages up at Nambour"[60] but that she had little further knowledge concerning these business arrangements.

[79] Mrs Edwards said that the second defendant would socialize with Gary Brennan away from the home, but that there was only one occasion when Gary and Janet Brennan entered the house. She described the Brennans entering the house on this occasion while looking "angry ... stressed out ... freaking out". Mrs Edwards stated that she was a part of a conversation with them and Mr Edwards but that she was not addressed. She said that the Mr Brennan was "putting pressure on [the second defendant] because the last house in Nambour - the market had gone really bad, and so I know that the house - they were desperate to sell it, like super desperate".

[91] At the time of these dealings, Mr Gary Brennan was, with his wife, Janet Brennan, the joint manager of the plaintiff's Chancellor Park branch.

[92] Mr Brennan gave evidence before me in answer to a subpoena from Mr Edwards.

[93] Mr Brennan dealt directly with Mr Edwards in arranging the loans. He exercised lending duties and had oversight of the branch. Mr Brennan recommended the defendants' loans for approval to the plaintiff's head office but as a franchisee owner, he did not have lending approval authority from the plaintiff.

[94] Mr Brennan gave evidence that his company, Buzz Bookkeeping Pty Ltd, was the franchisee owner of the Chancellor Park branch at the time. He said that this company received an up-front fee and a trailing commission for both of the loan contracts, although he could not recall the amount his company would have received for the two transactions.[64] He accepted under cross-examination that the more the line of credit loan was drawn down, the greater the amount of trailing commission his company would receive.[65]

[95] At the time of the dealings with the defendants, Mr Brennan had some 30 years banking experience, particularly in consumer lending. By the time of the trial, Mr Brennan no longer operated a Bank of Queensland franchise.[66] He now works as a traffic manager.

[96] Mr Brennan presented as mostly reliable and honest, although it must also be said that his evidence was not completely satisfactory. He was often provoked into argumentative responses to questions put to him by Mr Edwards and during cross-examination by counsel for Mrs Edwards. He often did not focus on the questions asked of him, and at times he gave answers in terms of questions that he wished he had been asked. His recall of the events leading to the signing of the loan contracts were, however, consistent under extensive questioning by Mr Edwards and then under cross-examination. Mr Brennan said that he did not have a specific recollection of what he said to the defendants and what advice he might have given when he met with them to discuss the loan contracts.

[97] As already noted above, by 2009, Mr and Mrs Brennan were acquainted socially with Mr and Mrs Edwards. Of particular note was that prior to the events leading to the approval of the loan contracts, Mr and Mrs Brennan had established a business partnership with Mr Edwards' company, Only One Holdings Pty Ltd, to acquire three properties in Nambour for development and sale.

"Don has developed a successful real estate franchise from concept in 2005 to the present business. Initial development has been on the Sunshine Coast. The business is called 'Only One Real Estate" with the name relating to the % commission charged. The business is Web based and home office based so has required heavy investment in the software architecture. His business is at the point where he can launch it nationally. Don is refinancing his home loans (4 loans total facility of $440,000) from Westpac and the propose $300,000 P & I home loan and $380,000 LOC is an increase of $238,000 which is basically a reimbursement of monies expended a home totally reconstructed on the newly acquired property. Policy exceptions are requested for the use of Westpac Internet Statements and also for the address on the Drivers Licence reason being that clients have only just been able to move into their renovated home at 46 Radbourne Street. There were problems with the Credit Scoring and we have ordered and submit Veda Searches. Also, possibly relating to the school holidays, we have had difficulty in contacting the accountant to obtain the 2008 tax return but these should be forwarded in the morning. Proposal is supported.

New Commercial Servicing worksheet and 2008 business and personal Tax returns faxed today."[70]

[112] The plaintiff's Credit Assessment Manager made the following remarks in reply:

"1. Please fax confirmation of taxation position for both entities to CVU. 2. Date of birth incorrect for female applicant. Application given to MRA Today.

Application reviewed under CVU, I note that application originally sent prior to 15 month cut-off for use of 2008 returns, therefore this is accepted within policy. Valuation accepted as it. Reviewed financials whilst spreadsheet is not totally correct, overall position is evident and accepted. I note that income for Don & Jenine was receive via the Edwards Family trust, as no financials held for this entity I can't review this. With that said though the tax returns for the 2 entities provided do not show any distribution to the Trust, so no apparent doubling up on income ... LOC $380K & HL $300K approved subject to s/ments being received as per policy, address being confirmed via rates notice and confirming with accountant that the income from Edwards Family Trust is not as a direct result of the income received via existing entities."[71]

[113] Mr Brennan then gave evidence concerning the circumstances in which the loan contracts and the mortgage were signed. Mr Brennan said that the loan contracts were signed at the defendants' residence on 24 October 2009, and that on this occasion there were preparations going on for a party:

So Mrs Edwards - in terms of the evidence you have just given, you're saying that, on the 24th of October 2009, you were saying that you were at the Edwards residence?---Yes.

And that Mrs Edwards was preparing, I think, a barbeque or food; is that right?---That's right.

Okay. And so, in the midst of her barbecue preparations, is your evidence that you explained the line of credit to her and the home loan?---That's correct.

It won't surprise you that Mrs Edwards' evidence is that that didn't take place?---Not at all.

Right. Okay. So, in the midst of a social setting, you're saying you explained the documents, these two documents, to Mrs Edwards?---It's not really a social setting if I'm there with documents. I may go to the kitchen - stand at the kitchen table while I explain things and point, but it's certainly not a social occasion.

All right. So, for you - let's use your words - it's, what, business; is that right?---It is, yes.

Okay. It's business for you?---It was a long time before either the party or the barbecue. We just had arranged to come over."[72]

[114] Mr Brennan said that the loan contracts were signed in the defendants' kitchen, with both defendants and Mrs Brennan present. He said that Mrs Edwards was at a cutting board, preparing things in the kitchen:

"Yep. So Jennine would have been beside you, if you were going to take her through those loan contracts?---At most of the time, she was preparing, cutting, as I got everything ready, and then I began the explanation, and she would turn occasionally, yes.

So her attention, if she was cutting and preparing, may have not been fully on what you were saying, if that was the situation?---That was probably her decision, in her defence, yes."[73]

[115] Mr Brennan could not specifically recall any details of the conversation he had with Mrs Edwards, or anything that she said to him.[74]

[116] Mr Brennan said that his general practice was to explain the loan contract with a customer, including the amount borrowed and the nature of any security. Mr Brennan said that it was also his practice to advise every one of his customers that they may seek independent legal and financial advice on loan documents as part of his "standard prattle" at the start of the conversation at each loan interview.[75]

[117] He said that he had no reason to believe he would have departed from his general practice when each of the defendants signed the loan application and contracts.[76]

[118] The defendants' arguments raised three principal factual issues.

• (1) Did Mr Brennan meet with, and explain the loan application and contracts to, Mr and Mrs Edwards?

[119] For the reasons given below, the fact that Mrs Edwards was not a volunteer under the loan contracts means that it is strictly unnecessary for me to make findings as between the versions of events put forward by Mr and Mrs Edwards in their evidence, and Mr Brennan's version as to whether Mr Brennan met with, and explained the loan contracts to, Mrs Edwards. Neither Mr Brennan's nor Mrs Edwards' evidence was particularly helpful on this point. Neither witness denied that, at the very least, they met each other for the purpose of signing the loan contracts, but neither could specifically recall any of the details of the conversations they had.

[120] That being said, and irrespective of whether Mrs Edwards and Mr Brennan met at Mr Brennan's office or at the Edwards' home, I consider it more likely than not that Mr Brennan did explain the purpose and effect of loan contracts to Mrs Edwards, and told her the implications of the Property being put up for security and that she should seek her own independent advice.

[121] I consider the most likely scenario, after considering all of the evidence (and particularly the documentary evidence), to be that Mr Brennan did meet with Mr and Mrs Edwards on at least one occasion at the Property, where he explained the loan applications and went through them with the defendants to obtain necessary further information. For this purpose, I have particular regard to the additions to the handwritten loan application form. Under cross-examination by counsel for the plaintiff, Mr Brennan pointed out certain details pertaining to Mrs Edwards that were not within the Brennans' knowledge at the time (being her birth name and occupation). Mr Brennan said that the handwriting adding these details on the form was not his or Mrs Brennan's. In the absence of any further helpful evidence, these details corroborate the likelihood of Mr Brennan's version.

[122] The first defendant argued that the plaintiff's failure to call Mrs Brennan, who was said by Mr Brennan to have been present at the two meetings, justifies a Jones v Dunkel inference in the defendants' favour to the effect that the meetings did not occur in the way described the evidence of Mr Brennan.

"... I apologise for wasting everybody's time, and - but when we had the meetings, you know, with - to get the loans, back in the day when we just signed, it was a season and the events happened as we have said, and it's your Honour to make the decision of what happened."[81] (emphasis added)

[128] On the other hand, I should also record that it is also notable that Mr Brennan did not make a written record, such as a diary note, as to what advice he gave to, and what information was provided by, the defendants at these meetings, particularly at the first meeting where the handwritten loan application was discussed. Had Mr Brennan done so, it is likely that a great deal of the evidence and submissions on these factual questions at trial, and the costs involved therein, could have been avoided.

• (2) Was Mr Brennan aware that Mr Edwards was in financial difficulty at the time he applied for finance?

[129] Mr Edwards' evidence was that he was told by Mr Brennan to use his old tax returns and to act to quickly as he "had until the end of the month".[82] As already noted, the loan application was approved in reliance on the financial information provided by Mr Edwards, including tax returns provided by his accountant. Mr Brennan, in cross-examination, confirmed that the plaintiff's lending policy at the time required provision of the applicants' "[m]ost recent tax return for the previous financial year, or where not yet complete, not older than 15 months".[83] Mr Edwards also gave evidence that his financial situation in the second half of 2009 was precarious as he was not earning income due to litigation with his franchisees, and that he was maxed out on all his credit cards. Mr Edwards described his position in the following terms:

"MR MARTIN: ... Now, so you say you - what, you would not have gone back to Westpac at any point in time and sought to borrow further money from them in April or September of 2009?---No, I - I think me gig was up.

HIS HONOUR: Sorry?---I think my gig was up. My - - -

"My gig was up". Tell me what you mean by that?---Well, having a lack of understanding of doing stuff - - -

No, no, what did you mean by the words - - -?---My gig - my gig - - -

- - -"my gig was up"?---My gig. In other words, my lack of understanding of not having to take any responsibility, and just keep borrowing money, and just signing forms. The laws had all - were now - haven't changed, but now everyone was going for more documentation. Westpac, all the big 4 had changed in the GFC, the Consumer Credit Code was the same, but it was the end for us, people who did the low doc loans. You just sign a form and they give you money, that gig is up. The - when they offer money to you and they just give you money with no reason, no serviceability, that gig is gone."[84] (emphasis added)

[130] Mr Brennan was not examined, or cross-examined on the assertion that he had told Mr Edwards to use his old tax returns and to "act quickly". Consistent with the principles in Jones v Dunkel, I find the natural inference to be that Mr Edwards failed to examine Mr Brennan on these conversations out of fear that he would be challenged.[85] I therefore draw the inference that Mr Brennan's evidence on this point would not have assisted Mr Edwards, as is made clear by the following passage from Cross on Evidence:[86]

"Indeed, it has been said that the omission to ask questions of a friendly witness is more significant than the failure to call the witness, and that the presumption that the testimony would not have been favourable to the party's case is stronger than the presumption arising from the failure to call him."

[131] In view of my findings above concerning Mr Edwards' credibility, I do not accept his evidence that Mr Brennan told him to make the loan applications quickly in order to sidestep the application of the plaintiff's lending policy with respect to his tax returns.

[132] There was some limited evidence that Mr Brennan was aware that Mr Edwards was in financial difficulty. In cross-examination, Mr Edwards suggested to Mr Brennan that his recollection was confused, and that rather than Mr Brennan visiting the Edwards residence to discuss and execute the loan contracts, that he was recalling a separate occasion when Mr and Mrs Brennan visited the Edwards residence to discuss their property joint venture partnership:

"Okay. Now, that situation, could that have been the time when you came - because your clarity is pretty clear on this now - would that have been the time when you and Janet visited me in that kitchen and we sat down regarding Only One Holdings and needing to sell---?---No.

---Only One Holdings?---No, because we were there with documents.

---You were there with documents to---?---That's right.

Now, remember that conversation going to that Only One Holdings and sitting down?---Mmm.

And what was the conversation over?---Well, Janet and I had carried all the costs, because you were obviously financially incapacitated."[87]

[133] However, Mr Edwards' own evidence indicates that this conversation actually occurred in 2012:

"Due to my accident in Nov 2009 I was unable to return back to work so Gary and Janet topped up the loans during 2010 and 2011 as I had no income. During 2012 the Brennans came to our home very stressed and put a lot of pressure on me just to sell the 2nd home at whatever price. To release the burden from myself and them Only One Realty finally sold the 2nd property after two fallen contracts for about a $30,000 loss. Only One Realty took no commission fees."[88]

[134] My conclusion, on the evidence I accept, is that Mr Brennan was not aware that Mr Edwards and the Edwards Group were in financial difficulty before, and during, the time when these loans were applied for, and ultimately approved.

[135] I also find that, on the evidence, no information was provided to him which ought to have put Mr Brennan on notice that Mr Edwards or the Edwards Group may have been in financial difficulty at the relevant time.

• (3) Did Mr Edwards have an interest in the Property?

[136] Mr Edwards' case was that he had no legal or other interest in the Property. He said that his wife was the owner, and that this was due to a long-standing arrangement to protect the family home and separate it from Mr Edwards' business assets in the event that Mr Edwards became personally bankrupt.

[137] Mrs Edwards, under cross-examination, conceded that she never received income sufficient enough to make any mortgage repayments and that she was reliant on Mr Edwards to make all mortgage payments.[89]

[138] It was not in issue that the Property was, at all relevant times, mortgaged up to at least 80% of its value, and that the equity in the defendants' former property was used to make up the shortfall between the loan amounts and the purchase price, and enable the defendants' purchase of the Property.

[139] The plaintiff submitted that Mr Edwards' evidence that he did not have an interest in the Property was inconsistent with the personal injuries claim he made in this Court following his motor vehicle accident in November 2009. Mr Edwards' claim, statement of claim and further amended statement of claim were in evidence before me.[90]

[140] In that proceeding, Mr Edwards claimed that due to his injuries he was unable to renovate his personal home for resale. He consequently made a claim for the cost of replacement labour and past economic loss.

[141] Under cross-examination, Mr Edwards disowned the pleading by saying that he did not read or endorse it and that he later sacked his solicitors for drafting the statement of claim, which he said was based on incorrect information. However, the further amended statement of claim in evidence before me, prepared by another firm of solicitors later engaged by Mr Edwards, included and maintained that same claim.

Did the plaintiff breach its contracts with the defendants by failing to comply with the Code of Banking Practice?

[145] The defendants alleged that the plaintiff breached the Code of Banking Practice (2004) ("the Code"). They pleaded that the Code was incorporated into the defendants' loan contracts, and that the plaintiff's alleged breaches of the Code constitute breaches of contract. In that regard, the defendants relied on clause 25.1 of the Code:

25.1 Before we offer or give you a credit facility (or increase an existing credit facility), we will exercise the care and skill of a diligent and prudent banker in selecting and applying our credit assessment methods and in forming our opinion about your ability to repay it."

[146] The defendants alleged that if the plaintiff had not breached clause 25.1 of the Code, the monies under the loan contracts would not have been advanced to the defendants.

[147] There was no dispute that the Code was contractually incorporated into the loan contracts.[92] As such, a contractual warranty existed that the plaintiff would perform its obligations in accordance with the terms of clause 25.1.[93]

[148] Mr Edwards said that if the plaintiff had not advanced the monies under the loan contracts, that he and Mrs Edwards would have sold the Property for the sum of $850,000 (being the amount that the property was valued at by the plaintiff), that they then would have repaid the Westpac debts and used the remaining equity (approximately $395,000) to purchase another property. This argument was repeated in his final submissions:

"10. The Second Defendant would not have gotten another loan if the Plaintiff had refused the loan in accordance with applying the policy on the information that was certified and verified and properly validated. The defendants would have sold the home for the valuation amount $850,000 and bought a property back in Sippy downs with virtually no loan with the profits after paying the Westpac mortgage $454,000."

[149] The correct understanding of a contractual warranty in the terms of clause 25.1 is that a lender warrants to act diligently and prudently in the formation of its opinion concerning the borrower's ability to repay the loan.[94] I accept the plaintiff's submission that Clause 25.1 is not "directed to the plaintiff's opinion whether or not a loan or financial accommodation should actually be made".[95]

[150] A lender which fails to comply with its own internal lending policies will not necessarily fall foul of that contractual warranty. Rather, a failure to comply with a lending policy will only result in a breach of the warranty where the breach of policy corresponds to a failure on the lender's part to apply diligent and prudent "credit assessment methods". This is consistent with the observations of Nicholson J in Westpac Banking Corporation v Haynes as to why even a breach of a lending policy will not necessarily lead to the conclusion that a credit provider breached its clause 25.1 contractual warranty:

"Without meaning in any way to decry the importance of a financial institution's lending policies and guidelines promulgated in order to guide and control the manner by which employees assess and grant routine applications for finance, most such guidelines are just that and may give way, in suitable cases, as assessed by experienced senior bankers."[96]

[151] Dealing first with the defendants' claims that the plaintiff breached its lending policy, and that, as a consequence, the plaintiff breached its clause 25.1 warranty, the defendants argued that it was inappropriate and inconsistent with the plaintiff's lending policy for the plaintiff to incorporate the income and profits of the Edwards Group, as non-borrowing entities, in its serviceability assessments of the defendants.[97] The defendants submitted that this conduct constituted a breach of the contractual warranty pursuant to clause 25.1.[98] The plaintiff objected that this line of argument was impermissible, as it did not form part of the pleaded case.[99] It is clear from the defendants' defence and counterclaim that there is no pleaded case that the plaintiff should have only had regard to the defendants' personal finances in assessing their serviceability. Accordingly, as a matter of procedural fairness, this argument must be rejected.[100]

[152] But even if this argument were to be entertained, it is clear on the evidence that the financial information provided by Mr Edwards to the plaintiff concerned entities of which he and Mrs Edwards were the sole shareholders on behalf of their family trust, of which they were both the principal beneficiaries. Further, the notion that Mr Edwards was seeking to apply for the loan contracts without relying on the wider earnings of his corporate entities, and that the plaintiff was wrong to take this information into account, is not made out on the evidence and is, frankly, contrary to common sense.

[153] The defendants' next argument was that the plaintiff breached its lending policy by failing to investigate and record Mr Edwards' credit card liability, which he said amounted to approximately $150,000 at the time that he applied for the loans.

[154] As discussed above, Mr Edwards disclosed in the loan application stage that he held two credit cards, one with the plaintiff and with the National Australia Bank: a combined limit of $23,500. Mr Edwards' Veda report revealed credit enquiries which indicated the existence of other credit cards. Mrs Brennan asked Mr Edwards if he had other credit cards that he had not told the plaintiff about. Mr Edwards' response was that he had two other credit cards that he used for his businesses. By signing the loan application, Mr Edwards also had represented to the plaintiff that the credit card information that he had disclosed to them in that application form, to his knowledge, true and correct.

"The ultimate issue to which clause 25.1 is directed is the Bank's opinion about the ability to repay. It is to the formation of this opinion that the selection and application of credit assessment methods is relevant. In other words, clause 25.1 is confined to the formation of an opinion concerning serviceability of a proposed loan. It is not directed to the Bank's opinion as to whether or not a loan or financial accommodation should be advanced or to the various other criteria to which a Bank might have regard when deciding whether to, in fact, grant a financial accommodation ...

Further, the phrase "selecting and applying [its] credit assessment methods" is to be construed or understood in the context of the provision read as a whole. Its content or ambit is informed by the ultimate expectation imposed on the Bank, that of exercising care and skill of a diligent and prudent banker in forming its opinion about the customer's ability to repay the loan.[106]

[163] That the defendants had a less than exemplary history in repaying their debts to Westpac between April and September 2009 is not relevant to this question. It is a matter that the plaintiff had regard to, along with the serviceability assessment, in forming its opinion about the defendants' ability to repay the loans. The submission does not go to whether the method that the plaintiff chose to assess, or the plaintiff's formation of its opinion about, the ability of the defendants to repay the loans was imprudent or reckless.

[164] Counsel for the first defendant made a further submission to the effect that Mr Edwards' income for the 2008 financial year was abnormally high, due to a one-off increase in franchising sales, with the implication being that the plaintiff should have investigated Mr Edwards' financial circumstances further, and that had it done so, it would not have advanced the loan sums to him.[107] I reject this submission. The sale of real estate franchises was a substantial part of Mr Edwards' businesses. There was nothing to indicate, on the material provided to the plaintiff for the loan applications that this income was "abnormal" or that the first defendant's businesses were unlikely to continue to generate this level of income into the future. Furthermore, there was nothing adduced in the evidence suggesting that the plaintiff's lending policy, in requiring an applicant for finance to provide two years' worth of tax returns establishing net income, was deficient or otherwise improper so as to ground a breach of a contractual warranty in the terms of clause 25.1.

[165] I also observe that, unlike other cases in which the terms and effect of a contractual warranty established by clause 25.1 of the Code have been considered,[108] the present defendants did not lead any expert evidence as to what a reasonable, diligent and prudent banker would have done in the circumstances. Counsel for the first defendant made submissions criticizing the plaintiff for not leading such expert evidence. Bearing in mind that the breach of a clause 25.1 warranty was positively pleaded by the defendants in their counterclaim, it was obviously for the defendants to prove this case. Clearly, they failed to do so.

[166] But even if I had concluded that the plaintiff had breached its contractual warranty, there would have been no basis for finding that the defendants had proved a proper claim for damages flowing from such a breach.

"HIS HONOUR: What would you have done if the Bank of Queensland had not lent you a total of $680,000, Mr ---?---We, well, would not - we would have sold the property and move home with the equity, and bought a home in ---

Sorry, would have sold home?---And because no income, we would have purchased in Sippy Downs, around the 400 price range."[109]

[169] The plaintiff submitted that there was a difficulty with this evidence, namely that it did not prove that the plaintiff's conduct was causative of the loss, because it had always been open to the defendants to sell the Property immediately after the loan sums were advanced.[110]

[170] The plaintiff submitted that, rather, the true causative event of any loss suffered by the defendants was Mr Edwards' car accident in November 2009. Under cross-examination, Mr Edwards said that the effects of the accident on his ability to earn income was the reason he did not immediately sell the Property for a profit.[111]

[171] The plaintiff further argued that, even if the plaintiff did breach its contractual warranty, the defendants had failed to prove that a loan would not have been offered.[112]

[172] There was no argument put forward by either defendant as to why the plaintiff's submissions on these points of causation and quantification of damages should not be accepted. Indeed, at the end of the sixth day of the trial before me, the defendants conceded that on their best case, that they would at least be liable to repay $454,000, being the amounts advanced to them in order to pay out the Westpac debts.

[173] In reality, the evidence given by Mr Edwards concerning his credit card liability contradicted his evidence that he would have been in a position to pay off all his creditors and purchase another home with a greatly reduced loan to valuation ratio.

[174] Otherwise, there was simply no evidence led by the defendants to sustain their claims for damages.

[175] Accordingly, the counterclaim for damages for breach of contract fails.

Did the plaintiff act unconscionably in approving the loans?

[176] The defendants pleaded in their counterclaim that the plaintiff engaged in unconscionable conduct, within the meaning of the unwritten law referred to in s 12CA of the Australian Securities and Investments Commission Act 2001 (Cth) (the "ASIC Act"), and within the meaning of s 12CB of the ASIC Act.

[177] In Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd, Gummow and Hayne JJ observed that where:

"... unconscientious advantage has been taken by one party of the disabling condition or circumstances of the other ... equity intervenes not necessarily because the complainant has been deprived of an independent judgment and voluntary will, but because that party has been unable to make a worthwhile judgment as to what was in the best interests of that party."[113]

[178] In Commercial Bank of Australia Limited v Amadio, Mason J said that it is "impossible to describe definitely all the situations in which relief will be granted on the ground of unconscionable conduct."[114] However, previous cases indicate that typical features of disadvantage sufficient to found a claim for unconscionable conduct include "poverty or need of any kind, sickness, age, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary".[115]

[179] Section 12CB of the ASIC Act also prohibits conduct that is in "all the circumstances" unconscionable. Section 12CC of the Act then sets out a non-exhaustive list of factors that are to be taken into account and weighed by the Court as to whether the circumstances demonstrate unconscionable conduct:

• (a) the relative strengths of the bargaining positions of the parties;
• (b) whether the service recipient was required to comply with conditions that were not reasonably necessary for the protection of legitimate interests;
• (c) whether any undue influence or pressure, or unfair tactics were used;
• (d) the amount for which the service recipient could have acquired identical or equivalent financial services from another supplier;
• (e) the requirements of any applicable industry code; and
• (f) failure to disclose intended conduct of the supplier or risks that the supplier should have foreseen would not be apparent to the service recipient.

[180] In addition to the above, there must also be "a high level" of moral obloquy present in the purported conduct in order to establish statutory unconscionability.[116]

[181] For instance, in Bodapati v Westpac Banking Corporation, the following explanation was given in analysing the High Court's decision in Amadio:

"... it must be established that the 'disability was sufficiently evident to the stronger party to make it prima facie unfair or 'unconscientious' that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it'.

In the same case, Mason J considered it a condition of the application of the doctrine that the other party know, or ought to know, of the existence of the disabling condition which seriously affects the ability of the innocent party to make a judgment in that party's own best interests, and of the effect of that condition on the innocent party."[117]

[182] The defendants submitted that the plaintiff knew, or ought to have known, that the home loan and line of credit facility could not be repaid, and that Mr Brennan did not adequately explain what their contractual obligations were when the loan application, loan contracts, and mortgage were signed by them.

[183] But no evidence was adduced to establish that either Mr or Mrs Edwards suffered any kind of special disadvantage in their dealings with the plaintiff.

[184] I accept, in the circumstances of this case, that the respective positions of the plaintiff as a bank and the defendants as borrowers, would have given rise to an inequality of bargaining power. However, as Gleeson CJ stated in Berbatis:

"A person is not in a position of relevant disadvantage, constitutional, situational, or otherwise, simply because of an inequality of bargaining power. Many, perhaps even most, contracts are made between parties of unequal bargaining power, and good conscience does not require parties to contractual negotiations to forfeit their advantages, or neglect their own interests."[118]

[185] Counsel for the first defendant submitted that the defendants' borrowing history with Westpac should have put the plaintiff on notice that they would not be able to afford to repay the home loan and the line of credit facility, and that flowing from this conclusion, the plaintiff acted with sufficient moral obloquy. For the reasons I have given earlier, this submission must be rejected. The financial information provided by Mr Edwards unequivocally supported a conclusion by the bank that the defendants had capacity to service the loans.

[186] The fact that Mr Brennan was involved in a personal business relationship with Mr Edwards at the time of these dealings might have been, in different circumstances, a matter of concern. But it must be recalled that, in this case, Mr Brennan did not approve the loan application. The plaintiff's analysis of the defendants' financial information and their suitability for the loans was done at the plaintiff's head office in Brisbane by another employee of the plaintiff, a credit manager, who was not known to either defendant. In his comments to the credit manager recommending that the loans be approved, Mr Brennan did not mislead the credit manager concerning the defendants' circumstances; Mr Brennan was not privy to further information indicating a lack of capacity on the defendants' part to service the loans (namely, Mr Edwards' credit card liability), because this had effectively been concealed, or at least not disclosed, by Mr Edwards.

[187] For the reasons set out above, the plaintiff's analysis of the defendants' serviceability was appropriate and consistent with the relevant industry code, as is set out in the reasons above.

[188] Mr Edwards was a commercially sophisticated client of the plaintiff who had experience in dealing with borrowed funds. His suggestion that he merely signed whatever was put in front of him by lending institutions without understanding the benefits and obligations he was receiving is simply not credible. Mr Edwards understood the transactions and there was nothing about the plaintiff's conduct on the evidence before me that materially affected his ability to make judgments in his best interests.

[189] Similarly, Mrs Edwards, subject to the matters raised in her specific defence with which I will deal shortly, could not refer to any evidence indicating disadvantage on her part other than relying on the fact that she did not understand "the mechanics and operation of a line of credit Banking facility" and that she did not have the loan application and contracts explained to her. As I have already said, I am satisfied that such an explanation was in fact provided to her by Mr Brennan. But, even if I am wrong about that, it is clear from the evidence that Mrs Edwards was educated, literate and at all times capable of understanding the loan documentation. That she chose not to do so does not mean that she was under any kind of special disadvantage capable of being used by the plaintiff to affect her judgment as to what was in best interests.

[193] As an alternative to the general defence of unconscionability pleaded by the defendants, Mrs Edwards argued that she is entitled to relief under the second limb of the Yerkey v Jones equity,[123] because there was "a failure to explain adequately and accurately the suretyship transaction" which Mr Edwards sought to have her enter for his immediate economic benefit.[124]

[194] As was explained in Garcia v National Australia Bank,[125] it is necessary for Mrs Edwards to establish the following in order to fall within the second limb of Yerkey v Jones:

1. that she did not understand the 'purport and effect' of the document or the nature of the transaction of suretyship;
2. that she was a volunteer in the transactions;
3. that the plaintiff was on notice that she was a surety reposing trust and confidence in Mr Edwards;
4. that the plaintiff failed to take steps to explain the transactions to her; and
5. no independent third party explained the transactions to her so as to discharge the plaintiff's obligation to do so.

[195] I have found above that I prefer Mr Brennan's version of events, and that it is more likely than not that he explained the loan transactions when he met with Mr and Mrs Edwards on two occasions: the first to discuss the loan application, and the second to discuss the loan contracts themselves. On those findings, I am satisfied that the plaintiff took steps to explain the transactions to Mrs Edwards. Her argument fails at this first hurdle.

[196] If I am wrong about that, and it be the case that Mr Brennan neither met with nor explained the nature of the transactions to Mrs Edwards, I consider that Mrs Edwards could not, in the circumstances of this case, be described as a volunteer to the transactions.

[197] The plurality of the High Court in Garcia v National Australia Bank, noted that a surety's status as a volunteer, being a person who obtains no financial benefit from the transaction, is what gives transactions under the second limb of Yerkey v Jones their unconscionable flavour.[126]

[198] I accept the submission by counsel for the plaintiff that, in order to exclude Mrs Edwards from the volunteer category discussed in Garcia, it would have to show that she gained a benefit from the transactions that was direct and immediate.[127]

[199] The plaintiff submitted that on the evidence, there were three matters which showed Mrs Edwards received such a benefit:[128]

1. that Mrs Edwards received a discharge of the Westpac mortgage over the Property, which she owned and which she and her family used as their residence;
2. that the Westpac indebtedness included approximately $70,000 used to fund renovations on the Property; and
3. that the standard of living of Mrs Edwards, her four children and her husband were entirely dependent on Mr Edwards' income earning activities carried on either personally or through one or more corporate entities, which benefited from funds taken from the line of credit.

[200] The plaintiff also pointed to further evidence indicating Mrs Edwards' receipt of a benefit from the loans: a cash withdrawal of $2,000 made by Mrs Edwards from the loan account,[129] and a $7,000 payment to the defendants' church made by Mr Edwards, which was also drawn from the loan account.[130]

[201] I am satisfied that the evidence shows that Mrs Edwards received a benefit from the loans. The entire balance of the home loan was used to satisfy the defendants' Westpac debts, along with $154,248.42 from the line of credit facility. Further, Mrs Edwards led no evidence to show that she was a not volunteer.

"In Garcia, the plurality referred to a volunteer for these purposes as a person who received 'no financial benefit from the transaction'. They also referred to a transaction being voluntary 'in the sense that the surety obtained no gain from the contract the performance of which was guaranteed'. The concept of a 'partial volunteer' is inconsistent with those statements.

The decisions in Elkofairi and Narain support the proposition that the current state of the law is that the principle in Yerkey only applies to 'conventional guarantee by a wholly volunteer wife'. The need for the wife to be 'wholly' a volunteer is consistent with what was said in Garcia. The benefit obtained must be substantive and substantial, so that 'incidental benefits' of the kind referred to in Bylander may not deprive a wife of the status of 'volunteer'. However, subject to that qualification, the current state of authority supports the proposition that the principle in Yerkey does not apply unless the wife has received no benefit from the impugned transaction."[133] (emphasis added)

[204] Counsel for Mrs Edwards contended that the decision of the New South Wales Court of Appeal in Bylander International Consortium (Aust) Pty Ltd v Multilink Investments Pty Ltd ('Bylander')[134] leaves open the question of whether a 'partial volunteer' is capable of raising a Yerkey v Jones equity.

[205] In Bylander, the wife guaranteed a loan for a company which was controlled her husband. The loan sum was paid into a joint bank account operated by both the husband and wife. The bulk of the loan sums were transferred to a third party by the husband. Handley JA gave the following reasons as to why the wife was nonetheless entitled to raise a Yerkey v Jones defence:

"Mrs Satchi said in her affidavit that the bank account was a joint account in which her husband deposited moneys "for me to pay our living expenses such as food, electricity and clothing" and on the evidence of the bank statements themselves it would appear that payments were made on the home loan of the husband and wife and on a debt to AGC Limited, which may have been for a motor vehicle. Other amounts may also have been disbursed from the balance of the funds wholly or partly for the benefit of Mrs Satchi. However, an amount of just under $7,000 was in the account before the proceeds of the loan were paid into it and it has not been established that the pre-loan funds in the account would not have sufficed to meet all domestic or personal expenses paid out of the account after the loan funds were paid in. In substance the loan funds were used solely for the benefit of the company and the husband and any incidental benefits flowing to the wife from payments out of the joint bank account are not sufficient to distinguish this case from Garcia and the other cases which have followed it."[135]

[206] In the same case, Giles JA said that the wife knew "nothing of the fact that the whole amount borrowed had not been paid on or that she was being benefited. Any benefit ... was unlooked for, accidental, and so far as appears unknown to her."[136]

[207] Counsel for the plaintiff submitted that Bylander is clearly distinguishable from the facts of the present case.[137]

[208] On any view of the evidence it is clear that Mrs Edwards gained more than an "incidental benefit" from the home loan and the line of credit facility. Apart from the discharge of the Westpac debt, which consequently meant the loan sums were used to pay off renovations on the Property, the remainder of the loan sums were spent on the personal and business debt repayments of Mr Edwards. As there is no contest on the facts that Mrs Edwards' sole source of income and maintenance was Mr Edwards' personal and business incomes,[138] the only available inference on the evidence is that Mrs Edwards did gain an immediate and direct benefit from the expenditure of the loan sums.

[209] Consequently, Mrs Edwards cannot be described as a volunteer to the loan contracts. She therefore cannot raise a Yerkey v Jones equity in her favour. Her defence on this ground would fail.

[210] However, even if I am wrong to conclude that Mrs Edwards was not a volunteer to the transactions, I am satisfied that she sufficiently understood the 'purport and effect' of the loan contracts.

[211] Counsel for the first defendant argued that Mrs Edwards was a "commercial neophyte" who had little experience in dealings with banks and that "she didn't know on the evidence that she was doing anything other than getting the Westpac loan switched to [the plaintiff]".[139] It was conceded that she knew that she was putting the Property at risk as security for any amount over $454,000, but that she wasn't aware that she was committing the Property to secure the remaining amounts in line of credit facility, approximately $226,000.

[212] In my assessment, however, Mrs Edwards is an intelligent woman who was clearly capable of reading, interpreting and understanding the loan documents. She gave evidence that she knew from the loan application form (which on her version, consisted of the last four pages given to her by her husband), that it was an application to borrow money. She also gave evidence that she understood that she later was signing the loan contracts in exchange for the loan of a sum of money from the plaintiff and that the Westpac mortgage over the Property was being replaced in the plaintiff's favour to secure that loan. She said that she knew that the Property would be more expensive than her last house.[140] Further, Mrs Edwards had some limited experience in working in real estate, and she had previously entered into loan and mortgage agreements with Westpac concerning the defendants' previous property at Albany Street.

[213] Mrs Edwards had knowledge at the very least, therefore, of the fact that she was signing a contract to borrow a significant sum of money, and that she would be bound by the contract. She was also aware of the general extent of her liability and the consequences of default.[141] She was familiar with mortgages and real estate contracts. This is not a case, as in Agripay Pty Ltd v Byrne,[142] in which the agreement was an unusual and complicated scheme involving high fees, illiquidity, and uncertainty about the term of the loan and the amounts being guaranteed.[143]

Did the plaintiff engage in misleading and deceptive conduct?

[215] The defendants also pleaded that the plaintiff engaged in misleading and deceptive conduct in contravention of s 12DA of the ASIC Act.[144]

[216] The thrust of the defendants' pleaded case in this regard merely repeated their case alleging breaches of the Code by the plaintiff. The defendants say that the plaintiff, through Mr and Mrs Brennan, "did not make reasonable enquiries about the financial situation of the First and Second Defendants about their requirements and objectives" and represented to the defendants that it had complied with the Code in offering the home loan and line of credit facility.[145]

[217] For the reasons given above, no breach of the Code by the plaintiff has been made out on the evidence. The defendants also do not claim or particularize any relief for the alleged misleading and deceptive conduct. Accordingly, this part of the defendants' defence and counterclaim must also fail.

[218] The defendants further pleaded that the loan contracts were unjust within the meaning of s 76 of the National Credit Code 2009 (Cth) (the 'Credit Code').

[219] Counsel for the first defendant submitted that pursuant to s 76(2)(l) of the Credit Code, the loan contracts were "unconscionable, harsh or oppressive" because the plaintiff knew, or could have ascertained by reasonable inquiry, at the time the contracts were entered into that the defendants could not afford the loan contracts without substantial hardship.[146]

[220] This is the same argument as was advanced concerning the defendant's purported lack of serviceability and allegations of breaches of the Banking Code of Practice by the plaintiff. These arguments have been discussed at length, and dismissed, in the reasons above.

[221] In any event, the relevant authorities on the setting aside of unjust contracts indicate that matters going to ability to repay a loan,[147] inequality of bargaining power[148] and a lack of independent advice[149] are, by themselves, insufficient to ground a claim that a contract should be set aside. Counsel for the first defendant submitted that these matters were present in Mrs Edwards' case and in addition, that she was under a special disadvantage due to her lack of commercial experience and her lack of comprehension of the loan documents. This, it was submitted, disclosed sufficient grounds to find that the loan transactions were unjust and to warrant the setting aside of the transactions.

[222] This argument differs in no substantial respect from the arguments advanced on Mrs Edwards' behalf that it would be unconscionable to hold her to the transactions. Counsel for the plaintiff submitted that in any event, no specific criticism was directed in the defendants' pleadings or in argument by them to the terms and conditions of the loan contracts or the supporting security. There was no evidence led at trial by either defendant that the terms of the loan contracts were unintelligible or that they did not understand the purpose of the loans. The evidence led by the defendants, particularly the second defendant, was that they in fact completely understood that they were obtaining refinance from the plaintiff and that they would receive a benefit in terms of the discharge of the Westpac mortgage, and the advancement of the balance of the line of credit once this had been done.

[224] There was also a separate argument between the parties as to the plaintiff's entitlement to claim its legal expenses as part of the debt owing by the defendants.

[225] The plaintiff asserted an entitlement to capitalise its legal expenses by adding them to the amounts currently owing under the loan contracts.

[226] The plaintiff submitted that it may do so pursuant to clause 12 of the "Consumer Lending General Conditions" which was incorporated into the loan contracts with the defendants.[150] The clause reads:

12.1 When we ask you must pay us any costs we reasonably incur in enforcing this contract or a security after you are in default (including in preserving and maintaining a security property such as by paying insurance, rates and taxes for the security property and our costs). This applies to expenses we incur before or after taking action under clause 15.4 of this Part A.

12.2 You must pay us these amounts when we ask. We may debit these amounts to your account so that they are included in the balance owing on your account. We do not have to tell you first. The amounts are due and payable on the day they are debited to your account."

[227] The term "costs" is defined in clause 53 of the "Consumer Lending General Conditions" as: "costs includes charges and expenses. It also includes costs, charges and expenses in connection with advisers (in the case of legal advisers, on a full indemnity basis or solicitor and own client basis, whichever is higher)."[151]

[228] Counsel for Mrs Edwards argued that:

"A liability to pay enforcement costs within clause 12.2 arises only when they are asked for or demanded ... [a demand] is a precursor to any entitlement to debit those amounts ... Clause 12.2 is not satisfied by a general claim for costs in a Claim or Statement of Claim. This is because the reference to "amounts" in the First sentence of clause 12.2 contemplates specific enforcement expenses that are quantified and that are not simply described descriptively as "costs" or indeed by any other label.

There is no evidence of any demand for costs in this case that falls within clause 12.2."[152]

[229] On the plain reading of clause 12, this argument must be rejected. The plaintiff now asks for payment of "these amounts". There is no requirement that the plaintiff prove a prior demand, as indicated by the words "we do not have to tell you first". The words "these amounts" clearly refer to "enforcement expenses" as is indicated by the title of the clause. Legal expenses properly fall within this category.[153] Accordingly, the plaintiff's legal fees are appropriately capitalised onto the total amount owing under the loan contracts.

[230] I also note for completeness that the plaintiff claims its costs of and incidental to this proceeding on the indemnity basis. While the ordinary rule is that a mortgage agreement referring to costs will be taken to refer only to costs on a party and party basis, this will give way to "plain and unequivocal language"[154] to the contrary. The definition of "costs" in the general conditions incorporated into the loan schedules clearly is sufficient to found the plaintiff's claim for damages on the indemnity basis.

[231] It was ultimately not in issue before me that the quantum of the debts due as at the first day of the trial (as evidenced by Exhibits 5 and 6) should be calculated as follows:

[232] The plaintiffs have proved that these debts are owing by the defendants, and the defendants have failed to establish any basis for avoiding liability to pay those debts.

[233] Similarly, the plaintiff has, as a consequence of its notices of default, an entitlement to possession of the Property. The defendants have not established any basis for denying that relief to the plaintiff.

[234] For the reasons I have given above, the defendants have not proved any of their counterclaims against the plaintiff.

[235] For the reasons given above, the plaintiff has a contractual entitlement to recover its indemnity costs of this proceeding.

[236] Accordingly, there will be the following orders:

1. judgment for the plaintiff;
2. the defendants' counterclaims are dismissed;
3. the defendants shall pay the plaintiff's indemnity costs of and incidental to this proceeding;
4. I will hear the parties further as to the necessary form of order to give effect to these reasons.

[3] Exhibit 4; registered mortgage number 712843331

[6] Third further amended defence and counterclaim [16.1].

[7] Schedule 1 to the National Consumer Protection Act 2009 (Cth).

[8] [1939] HCA 3; (1939) 63 CLR 649.

[10] Exhibit 33; Second defendant's submissions [9] and [10].

[46] In August 2013, Mr Edwards lodged an online complaint about the plaintiff with the Financial Ombudsman Service ("FOS"). His complaints were, in substance, similar to his complaints against the plaintiff in this proceeding. He was cross-examined before me on the matters he had set out in that complaint form (Exhibit 27). The FOS investigated Mr Edwards' complaint and, in July 2014, delivered a Determination (Exhibit 28) in favour of the plaintiff. The Determination included a statement to the effect that, even if Mr Edwards did not accept the Determination, he was nevertheless required to meet his obligations to the plaintiff, and that, if he did not do so, the plaintiff could continue with its recovery action. Under cross-examination, Mr Edwards confirmed that he did not comply with the FOS Determination because he "didn't agree with it". The FOS Determination with respect to the cognate issues in this proceeding is obviously not binding on me. But it is, to say the least, notable and interesting that, on its analysis, the FOS considered that the plaintiff's lending policy warranted a revision of living expense to $49,495 (being 30% of net income plus $300). When the FOS applied this to the serviceability calculation, it still resulted in surplus income of $19,409 which, in the view of the FOS, indicated sufficient capacity to service the loans.

[77] [1959] HCA 8; (1959) 101 CLR 298.

[78] First defendant's submissions [65].

[85] Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389, 412.

[92] Third further amended defence and counterclaim at [47] and [48]; Reply and answer at [20(a)].

[93] Plaintiff's submissions, [144]; Westpac Banking Corporation v Haynes [2017] SASC 23, [56] per Nicholson J.

[94] Westpac Banking Corporation v Haynes [2017] SASC 23, [66] per Nicholson J.

[96] [2017] SASC 23, [84].

[97] First defendant's submissions, [98] - [108]; Second defendant's submissions, [5] and [6].

[98] First defendant's submissions, [79.

[100] Banque Commerciale SA, en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279, at 286-287 per Mason CJ and Gaudron J.

[104] Plaintiff's submissions [157].

[105] First defendant's submissions [95] - [96].

[106] [2017] SASC 23, [63] - [64].

[107] This was also one of the complains made to the FOS (Exhibit 28). Again, whilst not binding on me, it is interesting to note that the FOS concluded that the plaintiff had acted "in accordance with good industry practice in averaging income" from corporate entities controlled by Mr Edwards and in treating the Edwards Group income from 2008 as recurring. The FOS also concluded that the plaintiff did not collect any information about the defendants "such that it should have alerted a prudent and diligent lender to make further inquiries about [their] income earning capacity".

[108] For example, Westpac Banking Corporation v Haynes [2017] SASC 23 at [84] and [183].

[110] Plaintiff's submissions [159].

[112] Plaintiff's submissions [161].

[113] Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 214 CLR 51, 74.

[114] [1983] HCA 14; (1983) 151 CLR 447, 461.

[115] Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362, 405 per Fullagar J; Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 3) [2012] FCA 43 per Perram J at [183].

[116] Commonwealth Bank of Australia v Doggett & Ors [2014] VSC 423, at [98]; Stacks Managed Investments v Tolteca Pty Ltd [2015] QSC 276 at [80]; Papale & Ors v Wilmar Sugar Australia Ltd [2017] QSC 72 at [125].

[117] [2015] QCA 7 at [74] per Peter Lyons J with Holmes and Gotterson JJA agreeing (omitting footnotes and citations).

[118] Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 214 CLR 51, [11].

[119] First defendant's submissions, page 68.

[120] [2014] QSC 305.

[122] [2012] QSC 31, at [88].

[123] [1939] HCA 3; (1939) 63 CLR 649, 684.

[124] First defendant's submissions, [180]; Third further amended defence and counterclaim [50] - [59].

[125] [1998] HCA 48; (1998) 194 CLR 395, 404-412 per Gaudron, McHugh, Gummow and Hayne JJ.

[126] [1998] HCA 48; (1998) 194 CLR 395, 409 per Gaudron, McHugh, Gummow and Hayne JJ.

[131] First defendant's submissions, [88]; T7-39.

[132] [2016] WASCA 94.

[133] At [51] and [58], citations and footnotes omitted.

[134] [2001] NSWCA 53.

[137] Plaintiff's submissions [103].

[141] State Bank of NSW Ltd v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587, 600 [169].

[142] [2011] QCA 85; [2011] 2 Qd R 501.

[144] Third further amended defence and counterclaim, [42].

[145] Third further amended defence and counterclaim, [45].

[146] First defendant's submissions, [121].

[147] Australian Societies Group Financial Services (NSW) Ltd v Bogan (1989) ASC 55-938, Campbell J.

[148] Barker v GE Mortgages Solutions Limited [2013] QCA 137, per Philippides J at [72] (White JA and Ann Lyons J agreeing).

[149] West v AGC (Advances) Ltd (1986) 5 NSWLR 610, 621 per McHugh JA.

[152] First defendant's submissions [252] and [253].

[153] Taree Pty Ltd & Ors v Bob Jane Corporation Pty Ltd & Anor [2008] VSC 228 per Vickery J at [42].

[154] Re Adelphi Hotel (Brighton) Ltd [1953] 1 WLR 955, 960 per Vaisey J.