Clarkson v State Bank of New South Wales Ltd

PARTIES : John Robert Clarkson - Plaintiff State Bank of New South Wales Limited - Defendant

COUNSEL : Plaintiff in person Mr M.T. McCulloch SC/Mr D.F. Villa - Defendant

SOLICITORS : Plaintiff in person Mr J.K. O'Sullivan - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

5488/01 JOHN ROBERT CLARKSON v STATE BANK OF NEW SOUTH WALES LIMITED JUDGMENT Introduction 1 In these proceedings the plaintiff, John Robert Clarkson, by an amended statement of claim filed on 13 December 2002, seeks various relief against the defendant, State Bank of New South Wales Limited ("The Bank") in respect of a series of dealings between the parties beginning in early 1990. Mr Clarkson bases his claims on the following series of allegations:

(a) that at some time in March or April 1991 the Bank made representations to him that an overdrawn cheque account in his name would be "frozen" for a sufficient period of time to allow him to complete a subdivision of his residential property and to realise the proceeds of sale thereof for repayment of his debts; no interest or charges would be debited to that account for that period; and upon the payment of the principal amount owing on that account, the Bank would negotiate an agreed sum of money to be paid to the Bank by Mr Clarkson by way of compensation for lost interest and charges (collectively, the "1991 Representations");

(b) that in April 1994 the Bank represented to him that it would delay legal proceedings for the recovery of outstanding debt until 31 December 1994, and that it would advance to him, against the proceeds of sale, the sum of $18,750 to assist in the completion of the subdivision of Mr Clarkson's property (the "1994 Representations";

(c) that the Bank caused a delay in the completion of the subdivision from August 1992 to October 1992 by changing the number of lots into which Mr Clarkson was to subdivide his property from three to two;

(d) that the Bank caused a second delay from August 1994 to September 1995 by ceasing to providing funding for the subdivision; and

(e) that the Bank caused a third delay from September 1995 until September 1996 by misplacing the title deeds to Mr Clarkson's property, thereby preventing registration of the linen plan for the subdivision. 2 On the basis of those allegations, Mr Clarkson makes the following claims:

1. That a promissory estoppel arose which made it unconscionable for the Bank to resile from the 1991 Representations upon which Mr Clarkson had relied to his detriment by: (a) taking no steps to refinance his debts to the Bank on more favourable terms; and (b) making arrangements to subdivide and sell his property in order to pay those debts.
2. That the Bank engaged in unconscionable conduct by: (a) resiling from the 1991 Representations; (b) charging interest and fees during the three separate periods of delay; and (c) failing to provide funding according to the 1994 Representations, in consequence of which Mr Clarkson suffered damage in the form of costs and interest accruing during a period of 55 weeks.
3. That the 1991 Representations and the 1994 Representations gave rise to binding contractual obligations which the Bank breached by: (a) failing to deal with the loan according to the 1991 Representations; and (b) failing to provide funding according to the 1994 Representations.
4. That the Bank acted negligently by: (a) failing to act with due care and diligence in causing the second and third periods of delay; and (b) failing to act in good faith, which included a duty to act in the interests of Mr Clarkson in obtaining a fair market price for the property, in consequence of which Mr Clarkson suffered damage in the form of lost potential profits from that sale. 3 Mr Clarkson appeared in person upon the hearing of the proceedings. The evidence put before me consisted for the most part of a collection of correspondence spanning some 16 years. That history is of some complexity. The provision of the bill facility 4 Mr Clarkson is 77 years of age. He had been a customer of the Bank for some 38 years prior to the events giving rise to these proceedings and by his account that relationship was a harmonious one. The present dispute has its roots in the Bank's provision of a commercial bill facility ("the bill facility") to Mr Clarkson, at his request, on 21 February 1990 in the amount of $130,000. The purpose of the bill facility was to assist Mr Clarkson in the purchase of an investment property at 103 Newman St, Gailes, Brisbane; to repay an existing overdraft of $35,000 to the Bank; and to provide "working capital", presumably for activities related to the investment property. The total term of the bill facility as it appeared on the documents signed by Mr Clarkson on 12 February 1990 was 365 days from the date of settlement. 5 The facility was secured by a first mortgage over Mr Clarkson's residential property at 101 Caravan Head Road, Oyster Bay ("the Oyster Bay property"), in favour of the Bank. The mortgage was registered on 6 April 1990, although there is evidence that it existed in unregistered form as far back as 1981. 6 Subsequent to the making of the bill facility agreement but before the commencement of the bill facility on 21 February 1990, Mr Clarkson informed the Bank of his intention to subdivide the Oyster Bay property into two lots, with the object of selling one of the lots ("Lot 431"), investing part of the proceeds of sale, and reducing his debts to the Bank, while continuing to reside on the remaining lot ("Lot 430"). 7 The nature of the bill facility was such that, although it was for a term of 365 days, bills were rolled over periodically within the fixed term. As part of this procedure, Mr Clarkson was required to sign and return commercial bills. At Mr Clarkson's request, the Bank rolled the facility over in this fashion a number of times until 20 February 1991, which marked the end of the 365 day term. The last bill rollover had been on 22 November 1990 for a term of 90 days. Mr Clarkson was notified of this by letter of 23 November 1990 from Mr Bob Evans, the then manager of the Miranda branch of the Bank. The relevant paragraph of that letter reads as follows: "The Bill Facility will be for 90 days and is due for expiry and repayment on the 20 February 1991. We will contact you one (1) month before expiry to arrange for rollover or possible retirement of the Bill." 8 Mr Clarkson deposed that the Bank did not contact him in or around January 1991 as indicated in the letter. Rather, Mr Clarkson says, in early February 1991 he wrote to the Bank himself requesting further rollover of the facility. He said that he signed and returned two commercial bills as was usual. Mr Clarkson further says that the Bank did not subsequently notify him whether the facility had in fact been rolled over. The Bank, for its part, says that there is no record of Mr Clarkson having sought a further rollover beyond the expiry date. 9 Some time between late February and early April 1991, the Bank transferred to Mr Clarkson's cheque account the debt from the bill facility. As a result, the cheque account went into overdraft and the Bank began to charge interest on the debit balance. An overdraft facility had already been established on that account on 19 November 1990 but Mr Clarkson says that to his knowledge the limit on that facility was not to exceed $15,000. The 1991 Representations 10 Mr Clarkson became aware of the substantial debit balance of his cheque account during a visit to the Miranda branch in either March or April 1991. He says he was surprised and upset and asked to speak to Mr Evans. Mr Clarkson's recollection of that conversation is as follows: "CLARKSON: Bob, I am upset that the bank has debited the bank bill from my account. This is unsatisfactory as this will involve me in more costs. EVANS: Not necessarily, John. Your account is considered non-performing and therefore its balance is frozen and will not attract interest or charges. When you have completed the subdivision, the bank will negotiate an amount to compensate them for the lost interest and charges during the time it takes to finish the subdivision." 11 The Bank denies that these representations were made. 12 On many subsequent occasions, Mr Clarkson would refer back to the representations as being promissory in nature in a way that, in his submission, created enforceable legal obligations on the part of the Bank. I shall return in due course to the question of the making and effect of the alleged representations. Subsequent events 13 Mr Clarkson wrote to the Bank on 11 March 1991 outlining his financial situation and future plans. In that letter he stated that he intended to repay his debts to the Bank by selling his share of the Queensland property and continuing his plans for subdivision of the Oyster Bay property. A valuer appointed by the Bank, Mr Ian Bolewski, inspected the Oyster Bay property on 1 July 1991. His investigations revealed that Sutherland Shire Council were close to approving the subdivision subject to a number of conditions, including the construction of a driveway over Lot 431 to service Lot 430, boundary adjustment to fit in with proposed road developments, conformity with the local Development Control Plan and the dedication of some of the waterfrontage of Lot 430 for use as a public reserve. Mr Bolewski informed the Bank that, provided that Mr Clarkson was capable of meeting those requirements, it would be likely that Lot 431 would be marketable in September of that year. He placed the "as is" value of the property at $250,000 and the separate values of the proposed Lots 430 and 431 at $130,000 and $150,000 respectively.

14 The Bank informed Mr Clarkson by a letter of 22 August 1991 that call up action would commence on 31 August 1991 unless the subdivision plan were approved and it could be shown that the land was ready for sale by that date. On 6 September 1991 the Bank requested a further update from Mr Clarkson as to his progress on the subdivision. 15 On 10 September 1991, Mr Clarkson received a letter of demand from Willis & Bowring, solicitors, informing him that the Bank had instructed them to act on its behalf in relation to Mr Clarkson's outstanding debts. These were in the amounts of $162,240.32 overdrawn on the cheque account, and $22,943.31 overdrawn on a term loan account that Mr Clarkson had established some time earlier. Mr Clarkson deposed that this statement "alarmed" him because it was not consistent with his understanding of the 1991 Representations. He says he ascribed this at that time to an error on the part of either the Bank or Willis & Bowring. 16 On 20 September 1991, Mr Clarkson replied to the Bank's request for details, advising that the subdivision work would be completed and marketing of Lot 431 would commence after 5 October 1991 at a sale price of $150,000. On 23 September 1991, the Council granted approval to Mr Clarkson's subdivision plan, but that approval was subject to some 37 detailed conditions in addition to those previously canvassed by Mr Bolewski. 17 On 14 October 1991, the firm of Bruce A Swane & Co, solicitors, acting for the Bank, served on Mr Clarkson a notice pursuant to s.57(2) of the Real Property Act 1900 ("the first s.57(2) notice") demanding the repayment of the balance of Mr Clarkson's debt owing on his overdrawn cheque account within 1 month, in default of which the Bank proposed to exercise its power of sale over the Oyster Bay property. This again alarmed Mr Clarkson, who says he assumed again that there was an error on the part of the Bank. Nonetheless, he deposed that he was "very concerned that the Bank would sell the property anyway" and, acting on that apprehension, approached Mr Kevin Thurecht of the Bank's Business Banking Centre at Ashfield in order to discuss the refinancing of the loan. Mr Clarkson's recollection of that initial conversation is as follows: "CLARKSON: Why am I receiving this letter from Bruce Swane & Co on behalf of the Bank, threatening legal action? THURECHT: The legal action is just a precautionary manoeuvre to speed the process if the Bank finds it necessary to take further action. CLARKSON: I've got enough assets left to borrow a bank bill for $165,000.00. Then I can repay you what you say I owe at the moment, and then I can repay most of this bank bill from the subdivision. THURECHT: Well, if you put the request in writing, we'll look at it." 18 Mr Clarkson wrote to Mr Thurecht on 13 November 1991 proposing that he apply for a $165,000 bill facility for a term of 90 days, with a possible extension of 90 days. He also stated in that letter that he believed that he was originally entitled to extend his previous bill facility and that he had informed the Bank of his desire to do so but that the Bank had "unilaterally" decided otherwise. He further indicated that he regarded the legal action taken by the Bank to be unnecessary and unreasonable. There was no response to this letter by the Bank and the bill facility was not provided. 19 Mr Clarkson then continued with his plans for subdivision, but these apparently met with substantial difficulty and delay. Correspondence in evidence shows that Mr Clarkson was engaged in ongoing negotiations with the Council in an attempt to vary the conditions of the subdivision approval throughout early 1992. The Bank's file notes of conversations with Mr Clarkson reveal that at 27 April 1992 the pouring of concrete for the driveway had still not been completed. This prevented him from being able to show the property to prospective buyers. In addition, the file notes reveal that Mr Clarkson had successfully sold his one third interest in the Queensland property for $36,000, but that those funds had been used to repay various other creditors. 20 Mr Clarkson then received on 21 April 1992 a letter from the Bank's Account Manager, Mr Laurence Pye, asking Mr Clarkson to pay the arrears outstanding on his accounts, pursuant to a telephone conversation that had taken place earlier between the two. However, the first paragraph of that letter reads: "Further to our recent telephone conversation I note your account No 25098100 is still overdrawn $48-99. Your early adjustment is requested." 21 The account number of 25098100 was the same as that which appeared on the first s.57(2) notice earlier served on Mr Clarkson, in respect of which it was claimed that the amount owing on that account was $162,240.32. Mr Clarkson deposed that he understood this discrepancy to "reconfirm" the 1991 Representations. 22 On 20 May 1992 the Bank was informed by Mr Clarkson that the Council had refused his application to alter the conditions of subdivision approval. He said in that letter that he was endeavouring to proceed with an application under State Environmental Planning Policy No. 25. 23 The next significant piece of correspondence is a further letter from Mr Pye. It read in part as follows: "We feel it is necessary for us to meet and discuss future intentions regarding servicing/repayment of your debts with the Bank. Due to the protracted length of time it is taking to obtain council approval to your subdivision plan the debt has increased to approximately $208,000 in all and a sale of part of the property following subdivision at say $140,000 net would leave a residual debt of at least $78,000. This would require at least $1,000 per month to repay over 15 years at current interest rates. At the moment you are paying only $275 toward the term loan interest." 24 Mr Clarkson responded on 25 June 1992 expressing surprise at the figure of $208,000. He said that on his understanding his debt would no longer be accruing interest pursuant to the 1991 Representations. The change in the subdivision 25 It appears that Mr Clarkson then met with Mr Pye, Mr Bolewski, and Mr Chris Nott at the Oyster Bay property for about an hour. This occurred on either 7 August 1992, according to Mr Clarkson, or 29 July 1992 according to a note which appears to bear the signature of Mr Pye. At this meeting Mr Bolewski is alleged to have said the following words to Mr Clarkson: "Instead of subdividing in 2 or 3 goes, you should subdivide the property to its maximum potential in 1 go, which should give you 3 or 4 lots." 26 Mr Clarkson deposes that he then replied in words to the effect: "I will agree with that strategy and will now cease work on the current subdivision, find out whether 3 or 4 lots is best and prepare a plan for subdivision for council." 27 Mr Clarkson says that he then stopped work on his initial subdivision plan and began working towards the 3 or 4 lot plan. The questions of whether the Bank, through its agent Mr Bolewski, actually gave the advice alleged and whether that advice was expressed in some sort of imperative fashion form another point of factual difference between the parties. 28 Mr Clarkson says that he proceeded in this fashion until 6 October 1992 when he received a telephone call from Mr John Noble, an employee of the Bank. In a series of conversations between 6 October and 8 October 1992 Mr Noble informed Mr Clarkson that the Bank would not be prepared to wait indefinitely for subdivision of the property and that its preferred position was for Mr Clarkson to continue with the original two-lot subdivision. Mr Clarkson says that he was again surprised and confused by this course of action, but that he resumed work on the first subdivision plan in accordance with this request. He also deposes, however, that he concurrently undertook work on plans for a further subdivision of Lot 430 to produce two more lots, Lot 432 (upon which the existing dwelling would stand) and Lot 433. Deferral of legal action 29 On 13 May 1993, Mr Clarkson received from the Bank a second notice pursuant to s.57(2) of the Real Property Act ("the second s.57(2) notice"), claiming repayment of a debt of $238,269.32, that being the then aggregate of the balances of the cheque account and the term loan account. The notice also claimed continuing daily interest at the rate of $76.86 on the cheque account and $9.43 on the term loan. As before, the notice stated that the Bank would be entitled to sell and dispose of the Oyster Bay property if the outstanding sum had not been paid within 1 month of the receipt of the notice. Mr Clarkson says that upon receipt of the notice, he telephoned the Special Loans Unit of the Bank and spoke to a Ms Maree Cole, the then Account Manager in charge of Mr Clarkson's accounts, and her supervisor. His account of that conversation is as follows: "CLARKSON: I don't understand why the Bank is continuing to threaten me. I am making reasonable progress on the subdivision. COLE: The Special Loan Unit's purpose is to arrive at a loan settlement that both you and the Bank will be happy with. CLARKSON: That's good but could I speak to your supervisor to get confirmation of that? SUPERVISOR: Yes, Maree has told me you are unhappy with what we are doing but be assured that you will be happy with the final results." 30 Mr Clarkson says that he understood this to mean that the Bank would look after his interests by allowing him to continue with his plan for a three-lot subdivision, and that the proceeds of sale of those two lots upon which Mr Clarkson's residence did not stand (which would have been Lots 431 and 433) would fully satisfy the Bank's claims. He says this was the only outcome that he could visualise which would "please" both the Bank and himself. It was not the subject of any explicit agreement. 31 This seems not to have been the understanding of the Bank. On 16 June 1993, Ms Cole sent a letter to Mr Clarkson stating that the Bank intended to exercise its power of sale and requesting vacant possession of the Oyster Bay property within 14 days. Mr Clarkson replied on 18 June. He said that he was "unpleasantly surprised" and stated that he believed that the Bank was aware of the current state of progress of the subdivision application from his communications. That state of progress was such that Mr Clarkson's surveyor was yet to submit final plans for the subdivision to Council (that meeting being scheduled for 22 June 1993) but that nevertheless subdivision was "nearing completion" and was "imminent". He further said that his intention was to finalise the two-lot subdivision, with one of the lots being put up for sale within two months and the second shortly thereafter. The letter makes no mention of the three-lot subdivision proposal. In a fax transmission of 8 July, Mr Clarkson advised the Bank that Council intended to expedite the release of the linen plan for the subdivision as soon as a further drawing was received from the surveyor. He again said that the front lot would be ready "within weeks". 32 The Bank subsequently agreed to suspend legal action subject to four conditions, which were set out in a letter of 19 July 1993 from Mr Keith Robinson, Account Officer. These were that the subdivision be completed and one contract of sale exchanged by 30 October 1993; that, in default, Mr Clarkson would give possession of the whole of the property to the Bank; that the Bank approve the sale price prior to exchange of contracts; and that an updated valuation be carried out by the Bank's valuers. The letter requested acknowledgement by signature and return within 14 days. Mr Clarkson did not give such an acknowledgment. He deposes that the 14 day deadline was difficult to comply with because he had not yet (that is, at the time of receipt) contracted with a real estate agent to place the First Lot on the market. However, Mr Clarkson also deposes that he had contracted Mr Trevor Edwards of Sanders (Jannali) First National Pty Ltd, real estate agent, to begin selling the First Lot on or about 28 July 1993, some nine days after the letter from Mr Robinson was sent. That is supported by documentary evidence of an extension to an exclusive agency agreement between Mr Clarkson and Sanders dated 27 November 1994, which states that the agreement had been originally entered into on 28 July 1993. 33 Mr Robinson wrote again to Mr Clarkson on 8 September 1993, noting that the Bank had not received acknowledgement required by the letter of 19 July 1993 and again foreshadowing legal action. Some discussion then apparently took place, resulting in another inspection of the property by Mr Bolewski on 25 October 1993. In his report, Mr Bolewski noted that the driveway had been completed although it had not been inspected or approved by Council. He also noted that Mr Clarkson had begun work on a second access path in anticipation of a further subdivision of the rear lot. The report stated that the previous valuation remained accurate with a possible additional net value of $130,000 should the proposed second subdivision go ahead. It also recommended that the Bank not proceed with its plans to take possession until Council approval for the first subdivision had been given, for fear of a substantial reduction in value occurring. Mr Bolewski recommended that the Bank defer legal action until the beginning of March 1994. The 1994 Representations 34 On 18 November 1993, Mr Clarkson wrote to the Bank requesting that 15% of the net proceeds from the sale of the front lot be made available to him to cover Council fees and the costs of surveying and construction for the second subdivision. The Bank replied on 14 December agreeing to lend the requested sum to Mr Clarkson by way of bank cheques on production of the related invoices, and also agreeing to suspend legal action provided that the front lot was sold by 28 February. Acknowledgement was requested by 7 January. Mr Clarkson did not reply until some time after 11 February. From a series of letters to Ms Cole over the remainder of the month, it is apparent that Mr Clarkson had been attempting to sell Lot 431 for $150,000 and later for $139,500, but had not received any offers above $130,000. 35 Mr Clarkson was eventually successful in securing a buyer. Contracts for the sale of Lot 431 for the sum of $125,000 were exchanged on 8 March 1994. The Bank, not being immediately informed of this, wrote again to Mr Clarkson on 18 March 1994 requesting an update as to the situation. Mr Clarkson met with Ms Cole on 21 April 1994 and informed her of the exchange of contracts. In consequence, the Bank again agreed to suspend legal action until 31 December 1994 on condition that the proceeds of the exchanged contracts were to be applied to Mr Clarkson's existing debt by 30 June 1994. A copy of the letter of 14 December 1993, with handwritten alterations by Mr Clarkson reflecting this arrangement, is in evidence accompanied by a file note by Ms Cole also recording the arrangement. In conversation with Ms Cole, Mr Clarkson also accepted that if Council did not approve his plans for the second subdivision, he would need to "sell the house" (ie. Lot 430) in order to repay his debt to the Bank. 36 It is the Bank's letter of 14 December 1993, altered and signed at the meeting of 21 April 1994 that, according to Mr Clarkson, conveyed the 1994 Representations. There is no dispute that the 1994 Representations were made. The involvement of additional creditors 37 New elements introduce themselves at this point in the form of other creditors of Mr Clarkson. A letter dated 10 May 1994 from the Commonwealth Bank of Australia ("CBA") received by the Special Loans Administration unit of the Bank advised that Mr Clarkson had recently executed a mortgage over the Oyster Bay property in favour of the CBA in order to provide additional security for a pre-existing debt owed by him to the CBA in the sum of $65,804. This loan had originally been secured by a mortgage over a property owned by Mr Clarkson in Queensland, and the funds had apparently been applied towards the first subdivision of the Oyster Bay property. The CBA requested that the Bank produce the certificate of title to the Oyster Bay property in order to enable the CBA to register its mortgage, which, it acknowledged, would rank in priority next after the Bank's existing mortgage. 38 On 4 July 1994, another of Mr Clarkson's creditors, the Power Credit Union ("PCU"), emerged. It informed Mr Clarkson by letter that it intended to commence legal action to recover debts of $29,662.36. When Mr Clarkson did not respond within the stipulated 10-day period, PCU took steps to commence legal action on 22 July 1994. It informed Mr Clarkson on 28 July that it would suspend such action subject to Mr Clarkson granting a third mortgage over the Oyster Bay property. 39 PCU in turn wrote to the Bank on 8 August 1994 advising that Mr Clarkson "wished to borrow" $30,197.50 from PCU (this being in reality the existing debt) and that PCU intended therefore to take mortgage security over the Oyster Bay property. PCU sought confirmation of the Bank's willingness to "consent" to a "Second Mortgage" (in reality the third such mortgage). 40 In consequence of these developments, the Bank informed Mr Clarkson on 26 August 1994 that it would not grant any further assistance to complete the subdivision as "[any] money now granted would rank after the subsequent mortgages". The Bank suggested that the only alternatives to immediate sale of the property "as is" were either that Mr Clarkson seek alternative finance, or else that the CBA be asked to allow the Bank priority sufficient to cover his existing debt plus the balance of funds required. Mr Clarkson responded on 30 August 1994 assuring the Bank that the CBA was aware of the proposed further advance and was prepared to give the Bank priority. On 6 September 1994, the Bank reached agreement with CBA on the matter of the $324,000 priority. The Bank granted formal approval to the proposed subsequent mortgages to CBA and PCU on 26 October 1994. 41 Meanwhile, problems with the subdivision continued. On 31 August 1994, a letter from Mr Clarkson to the Bank revealed that the property still needed extensive works before it would meet with Council approval. Mr Clarkson's revised estimate was that completion would be achieved by the end of 1994. It was further evident that the majority of the 15% loan that had been advanced by the Bank from the projected proceeds of sale of the first lot in order to assist in the completion of the second subdivision had already been expended on the first subdivision. A further inspection report by Mr Bolewski on 27 October 1994 was pessimistic. 42 On 16 December 1994, Mr Clarkson wrote to the Bank advising that he had placed the remaining lot (Lot 430) on the market "as is", but saying that he still hoped to secure Council approval for the second subdivision as, in his estimation, this would realize approximately $100,000 more than the sale of the single lot. 43 On 11 January 1995, Mr Robinson and Mr John Egan, representing the Bank, met with Mr Clarkson who advised that he was to meet with the owners of the properties adjoining the Oyster Bay property in order to discuss a proposal to extend Farrer Place into their properties, which was intended to solve the access problems associated with the approval process. That would have taken, in his estimation, 18 months to complete. Mr Clarkson also stated definitively that he would not grant a mortgage in favour of PCU. 44 After some negotiation between the various financial institutions, the Deeds of Priority in relation to the mortgages with CBA and PCU were forwarded to Mr Clarkson for his signature on 14 February 1995. 45 Mr Clarkson did not sign the Deeds of Priority until 28 July 1995. In the meantime, the CBA had expressed in correspondence to the Bank significant concern as to Mr Clarkson's ability to complete the works required and the consequent effect upon the CBA's debt to security margin as set out in the initial priority agreement. CBA did, however, eventually agree to execute the deeds in their then current form on 22 August 1995. The Bank then provided Mr Clarkson with a cheque for the Water Board's s.173 certificate and a bond in favour of the Council in respect of the works to be completed as a condition of Council approval. 46 Council released the linen plan for the first subdivision in September 1995 and new certificates of title for the subdivided lots were issued on 20 December 1995. However, the final inspection of the works by the Council showed that further rectification on the part of Mr Clarkson was required. 47 On 29 December 1995, the Bank advised Mr Clarkson that it would be necessary to obtain an authority from the solicitors acting for one of Mr Clarkson's neighbours, Mr Colin Gray, in order for the Bank to uplift the new certificate of title from the Land Titles Office. This letter went unanswered by Mr Clarkson, as did follow-up letters of 8 January 1996, 14 February 1996, and 8 March 1996. 48 Complications then arose in relation to the preparation of the documentation necessary to enable settlement of the sale of Lot 431. The registration of the plan of subdivision had caused a partial land swap along the boundary of Mr Clarkson's and Mr Gray's respective properties. This was not perfected by the registration of transfers of land between them. Therefore, the Land Titles Office had issued certificates of title in the names of both Mr Clarkson and Mr Gray. The Bank deemed it necessary to have new mortgages registered in respect of the newly created lots. Mr Clarkson initially refused to sign these documents as he regarded them as an unnecessary expense. However, he eventually did so, providing them to the Bank by way of his solicitors on 27 June 1996. These documents proved to be unregistrable on account of some typographical errors and, more seriously, the presence of a caveat on Lot 431 placed there by PCU. Much ill-will appears to have ensued, particularly on the part of Mr Clarkson but the re-execution of the documents was eventually effected on 15 August 1996. All of the relevant documentation was forwarded to the Land Titles Office on that date. 49 The rectified certificates of title were issued on or about 9 September 1996, and settlement of the sale of Lot 431 eventually occurred on 23 September 1996 with proceeds to the Bank of $103,060.31. Meanwhile, contracts for the sale of the undivided Lot 430 had exchanged on 7 August 1996 for the sum of $235,000. Settlement was delayed on account of a complication in relation to the land tax payable on that property, resulting in a final settlement date of 28 October 1996. The net proceeds to the Bank of that sale were $220,431.55. Total proceeds of the sale of both lots came, therefore, to $323,491.66.

The unsuccessful settlement negotiations 50 On 19 November 1996 Mr Clarkson wrote to the Bank seeking compensation for detriment he claimed to have suffered arising from the March/April 1991 Representations and the various periods of delay experienced throughout the course of the litigation, which he attributed to the Bank. He offered to settle on the following basis:

(a) Mr Clarkson would repay his indebtedness on his accounts as at 10 April 1991, in the amount of $149,976.50;

(b) He would also repay the moneys advanced by the Bank for the completion of the subdivisions, in the amount of $19,370.55;

(c) He would also pay off his term loan account balance at 2 April 1991, which after deductions for certain payments totalled $18,828.68;

(d) He would also pay his credit card balance of $2,893.63;

(e) He would also make an "ex gratia" payment to the Bank of $26,000.00. 51 On Mr Clarkson's calculation, his total indebtedness to the Bank was $191,069.66. It is obvious that no ongoing interest or charges were taken into account in this calculation. The Bank had received $323,491.66 from the sale of the properties and Mr Clarkson therefore proposed that the Bank pay him the difference of $106,422.00. 52 The Bank responded to Mr Clarkson's proposal on 11 March 1997, noting that, according to its calculations, his closing position at 6 March 1997 was still $116,643 in debit, taking into account the interest and charges that it says had accrued in the seven years since the original provision of the loan. The Bank offered to compromise in the following way:

(a) The Bank would reduce the interest it considered remained owing on Mr Clarkson's debt by an amount calculated by calculating interest at 10% per annum over 6 years applied to an average balance on Mr Clarkson's account for that period. That amount was calculated to be $109,800.00.

(b) The Bank would treat the remaining $6,843.00 as a "notional discount" in order to reach a mutually satisfactory resolution. This would result in both parties "walking away" with no further payments to be made in either direction. 53 Mr Clarkson replied on 12 July 1997 rejecting this proposal. These proceedings followed.

The claims in contract 54 In opening his case, Mr Clarkson indicated to the court that he no longer intended to press the claim in breach of contract based on the 1991 Representations. I quote from the transcript at p.2: "PLAINTIFF: The 21 of April [1994], somewhere and I am not quite sure of the legal consequences here but reading through the defendant's submissions about what he thought were [sic] one of the issues, I must concur with the defendant that it doesn't seem that the agreement, it was an agreement but it was not a contract and I think in my statement of claim my legal people may have, because I had legal people at that time, may have used the word contract. But I will concur with the defence that because there was no remuneration involved, in other words I didn't have to pay anything. HIS HONOUR: No consideration. PLAINTIFF: No consideration, yes, it probably does not, well I am pretty sure that the defence are right, it does not qualify as a contract. HIS HONOUR: You are accepting that position now? PLAINTIFF: I accept the position, but it was only part of the issue, they still delayed it but it can't be claimed they broke a contract, they delayed it." 55 The basis on which Mr Clarkson accepted this position is that set out in written submissions of Mr McCulloch SC and Mr Villa of counsel, for the Bank. They pointed out, first, that it would not be possible to construe the 1991 Representations as a contractual offer as, effectively, the only thing that Mr Clarkson would have been required to do under such an offer would be to repay his loan, which he was already required to do under the terms of the bill facility. Second, they submitted that in any event no quantifiable damages could be demonstrated to flow from the breach of such an agreement, as Mr Clarkson would have been required to compensate the Bank in any case for the foregone charges in the interim. I think that could be said to be so only if the terms of that agreement (assuming it had in fact been concluded) revealed that the "negotiated" compensation due the Bank would have been at least equal to what Mr Clarkson would have owed the Bank without such an agreement in place, but as it is, those terms do not exist and remain matters of pure conjecture. I accept that the properly relevant point is simply that, if read as a contractual offer, the 1991 Representations would certainly run foul of the basic rule in Stilk v Myrick (1809) 170 ER 1168, restated by Mason J in Wigan v Edwards (1973) 1 ALR 497, that a promise to perform a pre-existing contractual duty is no consideration. There is, as agreed between the parties, properly no basis for any such claim. 56 As regards the 1994 Representations, the position is the same. There was again no consideration given by Mr Clarkson over and above the performance of his existing obligations. 57 The claims based on contract cannot succeed.

58 The elements required for success in a promissory estoppel claim are set out in the judgment of Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 as follows: "In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed or expected that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs." 59 I start with the question whether the Bank can be taken to have induced an assumption on the part of Mr Clarkson. Because the Bank denies the making of the 1991 Representations, I must first make a finding on whether they were in fact made. 60 The main evidence in support of the contention that the 1991 Representations were made comes from Mr Clarkson's affidavit evidence about his alleged conversation with Mr Evans and pieces of correspondence written by Mr Clarkson to various Bank representatives. There is also one piece of evidence not written by Mr Clarkson, being the letter from Mr Pye dated 21 April 1992 showing a debit balance of only $48.99 on Mr Clarkson's cheque account, that assists Mr Clarkson's case. Mr Clarkson also alleged that subsequent to the alleged conversation with Mr Evans, he ceased receiving monthly statements on his accounts with the Bank and in his submission that also provides some form of confirmation of the making of the 1991 Representations. 61 Beyond that, there is no evidence suggesting that the 1991 Representations were made. It is obvious that the person who could best corroborate Mr Clarkson's version of events is Mr Evans. Yet Mr Clarkson did not call him as a witness. Ordinarily, there being no evidence that Mr Evans was unavailable, this fact alone would permit the court to infer, in accordance with the rule in Jones v Dunkel (1959) 101 CLR 298, that Mr Evans' evidence would have been unhelpful to Mr Clarkson's case. But there is additional evidence. A file note of Mr Clarkson's introduced into evidence during his cross-examination reveals the substance of Mr Clarkson's efforts to secure Mr Evans' assistance for the purpose of the proceedings. The note records a meeting of 30 October 1998 between Mr Clarkson and Mr Evans at the Hurstville branch of the Bank. It explicitly sets out Mr Clarkson's impression that Mr Evans' testimony would be unhelpful to his case. Of particular significance is that, according to the note, Mr Evans said to Mr Clarkson that he could not remember the 1991 conversation and would in any case not have made the representations as regards non-payment of interest and the freezing of Mr Clarkson's accounts, although he may have discussed the Bank's normal treatment of non-performing loans with him. Indeed it indicates that Mr Evans would, if called, have denied making the 1991 Representations as alleged. To the extent that that evidence goes towards elucidating Mr Clarkson's decision not to call Mr Evans, I am bound to consider it, even though it cannot be evidence of the truth of what is recorded in Mr Clarkson's note. 62 Other factors also tell against the proposition that the 1991 Representations were made. It is, on the face of it, highly remarkable and, in my opinion, most unlikely that the Bank would have made such representations in the first place. It was submitted by the Bank that the notion of a bank treating a loan as non-performing and therefore ceasing to charge interest on the account would be an extraordinary gesture of what can only be described as abnormal generosity. I agree. It would make no commercial or logical sense for the Bank to give up its contractual rights to interest on the loan in exchange for a nebulous negotiated "right" to receive whatever - if any - proceeds of this new arrangement might result, in circumstances where it would not receive any more benefit than it would if it simply adhered to its standard practice. Similarly, it also makes no commercial sense for the Bank to continue charging interest to customers whose accounts are kept in order but to give up charging interest to customers whose accounts are out of order. The freezing of accounts and the suspension of charges, as an internal bookkeeping matter, may well reflect a standard banking practice in cases of non-performing loans. As was pointed out by counsel for the Bank, standard banking practice is such that when a loan is designated as non-performing, the Bank simply ceases to calculate interest on that loan as income for its own internal purposes because that would result in a false picture of the Bank's actual revenue stream: see generally Timms v Commonwealth Bank of Australia [2004] NSWSC 76 at [225] - [226]. 63 If the offer Mr Clarkson says Mr Evans made had been made, it would be natural in all the circumstances to assume that it would have been made in writing. This is significant for both the first and second elements of the estoppel test as formulated by Brennan J. First, it would have constituted a major departure from the existing contractual position and therefore some writing would have been expected, even if only for the Bank's internal purposes. This points towards the objective unlikelihood of its having been made at all. Secondly, if the offer had in fact been made, prudence would have dictated that Mr Clarkson request it to be put into writing so as to defend against the possibility of just such objections as I have canvassed. 64 Mr Clarkson acknowledged these realities in cross-examination in terms that are significant for his case in that they go to the question of whether or not he expected that the Bank would not be free to withdraw from the arrangement. I quote from the transcript at p.30: "Q: Do you accept that any promises which would bind the bank needed to be in writing? A: It would seem prudent, but very little of these things - that's what surprised me. I just didn't know till I read your files, the bank files, all the processes that you go through before a loan is granted. A manager says, right-oh, leave that with me and you get a letter back saying you have got the loan. It goes up the line and along sidewards, up the line again and back down and eventually, yes, you can loan that person the money. Even small amounts payable, but I didn't know at that time. Q: Up until your discussions with Mr Evans in 1991, had there ever been one occasion that you can give evidence of in which the bank had agreed to some kind of facility or loan without that arrangement being reduced to writing? A: No. Q: You understood from your dealings with the bank over many years? A: That's right, it's one of the submissions I am going to make back to the bank, is that they always put everything in writing. That's what worried me. Q: Right. So when you saw Mr Evans, whatever he said to you, you expected that before the bank would be bound by what he said, that the bank and you would agree to it in writing? A: Right, and that is why-- Q: Are you agreeing with me? A: I am agreeing with you and explaining that - " 65 The transcript continues at p.32: "Q: You agree, don't you, that you expected to receive something in writing from the bank to formalise the discussion you had just had? A: I hoped I would, yes. I had great doubts about the wisdom of not doing something, but I thought if I go back and ask him to put it in writing, he may change his mind. Q: Based on your prior dealings with the bank, you expected the bank to formalise any such arrangement in writing? A: They should have. Q: And you, in the days that followed, expected to receive something in the post about that subject matter? A: Yes, so eventually when the first chance I got to write a letter, I stated in the letter what I had been told, giving the bank the chance to refute it if they want to. They didn't." 66 If Mr Clarkson did write such a letter it is not in evidence. The first mention that he makes of the 1991 Representations is in a letter dated 25 June 1992 addressed to Laurence Pye, by which time notices of claim had already been served on Mr Clarkson. It is apparent from the language of that letter and the absence of reference to any prior discussion that that was, in fact, the first time that Mr Clarkson had broached the subject in writing. 67 The transcript continues at p.38: "Q: And your hope was subject to how well your negotiations with the bank went? A: That's right, and I thought to myself they will put in a high powered bloke, I had better try and organise it so that the thing is more normal and there is an umpire or referee that can step in if we can't agree, but as nothing was in writing, I didn't want to put it in writing on the grounds that somebody might say, "Hey, you can't promise him that. We are going to say stop now, you will pay interest from now onwards", and they negotiate some sort of a loan deal, which is what I had expected anyhow. Q: So you accept that while ever [sic] nothing was put in writing, Mr Evans' promise to you wasn't worth anything? A: I didn't think about that then because I thought he had some status, he was a bank manager. Q: Do you accept that now? A: I accept that now. But I had some doubts I must admit when I kept thinking, well that's being disingenuous to Bob Evans to suggest that he is telling me lies in effect. So I didn't, never wanted to mention that because he's a nice bloke."

And at p.102: "HIS HONOUR: … The question in my mind is this: what commercial sense would it make for a bank which had a right to continue charging interest on an account to vary its contract with the customer by giving up its right to charge interest and accepting instead a right to receive whatever, if anything, some new and future arrangement with the customer might produce, why would a bank do that? PLAINTIFF: Well I was surprised and I told Bob Evans that I thought he had been very generous and I grabbed it with both hands. But I wasn't given, the bank weren't giving up their right. The representations said that we would negotiate. HIS HONOUR: What if you negotiated until the cows came home and nothing eventuated? PLAINTIFF: Well I think that had it been put in writing that would have been looked at and dealt with. As it wasn't put in writing, the bank at any time had the right to sort of, not the right, if you look at it from a point of view of a promise, but legally probably had the right to sort of do what they did. They hadn't really given that up, I just thought I was treating them fairly, they were being helpful, some of them, were being as helpful, the branch was being as helpful as they could. They were making sure they got their pound of flesh but they were trying to make sure I got something to eat as well." 68 I am satisfied that, at the time he says the 1991 Representations were made, Mr Clarkson was well aware that any position of the kind he says was represented was, because of the generosity of the terms and their abnormality, as well as the lack of written acknowledgement, unlikely to have represented the official position of the Bank. It is clear that, insofar as he "relied" on what he says he understood Mr Evans as saying, that reliance was not a reasonable one in all the circumstances. Mr Clarkson harboured a fear that Mr Evans, in spite of his authority as a bank manager, would be overruled at a higher level of management and that the Bank would be able to withdraw from the arrangement. Rather than acting to consolidate the reality of the representations, he chose not to agitate the issue. He did not, in short, believe what he says Mr Evans had said to him. 69 As for the letter of 21 April 1992 from Mr Pye, Mr Clarkson says that he understood it to "reconfirm" the 1991 Representations. If that were so, it is, so far as I can see, the only action taken on the part of the Bank that could be construed as any kind of confirmation. But it is highly significant that the letter makes no mention of the arrangement that Mr Clarkson alleges he had made with Mr Evans, either explicit or implied. The likelihood of the letter being an intentional representation decreases further when the letter is read in conjunction with the subsequent letter of 10 June 1992, also from Mr Pye, which accorded in substance with the previous letters of demand from Willis & Bowring and Bruce A Swane & Co and in fact notified of an increase in the total debt owing. This subsequent letter, and indeed all subsequent communication from the Bank to Mr Clarkson, consistently maintained that the Representations had not occurred or that Mr Clarkson had misunderstood the substance of the discussions with Mr Evans. This conduct must, I think, operate to negative any "reconfirmation" of the Representations as Mr Clarkson understood them. 70 I am also conscious of an inconsistency in Mr Clarkson's testimony concerning those initial letters of demand. In his affidavit, he deposed that the letter from Willis & Bowring alarmed him because it was inconsistent with the 1991 Representations. However, Mr Clarkson was asked in the witness box why, if that were the case, he did not, upon receipt, immediately challenge the totals as they appeared on the letters. He said then that it was because the totals "looked right" to him. The inconsistency renders Mr Clarkson's true state of mind at that time impossible to ascertain. It certainly does not tend to indicate that Mr Clarkson had at all material times a firm belief that he was being treated unfairly with respect to the 1991 Representations. 71 In light of all the evidence, I cannot be satisfied on the balance of probabilities that the 1991 Representations were made in the form and with the significance for which Mr Clarkson contends. At most, I think, there may have been some discussion between Mr Clarkson and Mr Evans about the Bank's practices in relation to treating loans as non-accrual for internal purposes. But that could not ground a claim in estoppel. The threshold requirement for such a claim is, as was canvassed by Branson J in Murphy v Overton Investments Pty Ltd [2001] FCA 500 with reference to the trend of authority begun by Waltons Stores v Maher (above) and Commonwealth v Verwayen (1990) 170 CLR 394, that there be a finding of "induced assumption". I do not think that the Bank's conduct reaches that threshold. 72 That being so, I do not need to consider the question whether Mr Clarkson changed his position on the strength of the 1991 Representations. However, I note that on this point Mr McCulloch and Mr Villa submitted that no evidence exists that any alternative finance was available or would have been provided to Mr Clarkson either at the time the 1991 Representations were allegedly made or subsequently. I agree. 73 As for the claim that the subdivision itself was undertaken in consequence of the 1991 Representations, that is plainly not the case. Mr Clarkson had informed the Bank of his intention to subdivide the property within days of his initial application for the bill facility. He did this simply in order to repay that loan. That had been his intention at all material times. He would have incurred expenses in the subdivision and marketing of the Oyster Bay property, whether or not the 1991 Representations were made. It was his inability to complete that process in the time stipulated that gave rise to the circumstances surrounding the alleged 1991 Representations, not the other way around. 74 Insofar as it may be claimed that Mr Clarkson incurred more expenses in that subdivision process than he otherwise would have (and that interpretation is not apparent on the pleadings), then I also do not accept that claim. That outcome would necessitate a finding that Mr Clarkson was induced to assume that he could take a great deal more time to complete the subdivision than he otherwise would have if subject to interest on his loans - indeed, an indefinitely long time. Even if the 1991 Representations had occurred as alleged (and as I have said, I find that they did not), they cannot have carried such a connotation. Alleged unconscionable conduct - the 1991 Representations 75 Mr Clarkson claims that various instances of conduct of the Bank should be viewed as unconscionable in a way that attracts an equitable remedy. The first of these is, again, the Bank's alleged departure from the 1991 Representations. This particular claim was not advanced in either the pleadings or in Mr Clarkson's submissions as being distinct in any way from the claims of estoppel that I have already considered. The unconscionability simply appears to inhere in the alleged fact that the Bank broke an oral promise to Mr Clarkson to behave in a certain way and that Mr Clarkson was relying on that promise. That ground has already been covered and this claim must be rejected. Alleged unconscionable conduct - first period of delay 76 The next claim concerns the first period of delay, that is, the period between August and October 1992. The basis for the claim is that the Bank allegedly "advised and required" Mr Clarkson to undertake a three-lot subdivision in August 1992 and then reverted to an earlier preference for a two-lot subdivision, in consequence of which, Mr Clarkson says, he incurred more interest and fees during the intervening months while he attempted to pursue the Bank's initial preference for the three-lot proposal. This is also said to have delayed his ability to discharge his liabilities to the Bank. In those circumstances, Mr Clarkson says, it is unconscionable for the Bank to have continued charging interest and fees for that period. 77 The conduct that is said to constitute the initial "requirement" by the Bank is that outlined at paragraph [25] above, that is, the recommendation by Mr Bolewski that Mr Clarkson should subdivide his property to its maximum potential "in one go". The actual words that were said are not in dispute. It is the attribution to them of some kind of imperative quality that is in question. 78 The answer emerges from the context in which that statement was made. A letter from Mr Clarkson addressed to Mr Noble and sent on 22 October 1992 contains the following passage: "However following a letter from Mr. Pye indicating some subdivision money would still be owing to the Bank I suggested a meting which was held in August, 1992 at which Mr. Pye, the Bank's Valuer and one other Bank representative attended I outline my plans for subdivision of my property into 4 blocks, 3 of which would be sold for a nett return of between $360,000 and $400,000. As I received no advice to the contrary at this meeting or in the period up to earlier this week I assumed that this was the strategy the Bank wished me to pursue as this would clear the total debt sooner than completing the subdivisions in series. You have now indicated that you want the original single subdivision to proceed as quickly as possible and I shall do as you request. However I must point out that about two months have been lost because of the changes in direction." [Emphasis added.] 79 I also quote from the transcript at p.48: "Q. The valuer didn't provide any advice to you, did he? A. At the meeting he did but it was a discussion, he didn't sort of, no formal advice, we just, I don't even know, it was very informal. They look around, I think Mr Pye hadn't seen the property before, the valuer'd seen so many of the properties he was yawning and I don't know about the other bank fellow who was there. Q. What I want to suggest to you was that at the meeting which you had with Mr Pye which the valuer, whose name I have trouble pronouncing? A. Bolewski. Q. Bolewski was present. The meeting was called by you on site so that you could try and point out to each of them and to Mr Pye in particular what you hoped to do on the land so as to persuade the bank to give you more time to pay? A. That's right. I wanted to point out that there was potential there and I could sort of sub-divide again at least once, I was hoping originally when we went out there I could have got two [more], but things cropped up that made that impossible. Q. And the fact is that the bank did not give you any advice via Mr Pye or the valuer at that meeting that you should undertake one sort of sub-division or another, did it? A. Well, it certainly told me that the way I was doing it at that stage wasn't working. I had to do something and they suggested what about doing all the sub-division at the time, full sub-division. Now that was a suggestion, I don't think they told me to do anything. It was my decision eventually. Q. Thank you. Isn't the fact that at the meeting you outlined your plans for sub-division of the property into four blocks, three of which would be sold for a net return of between 360 and 400,000 dollars? A. Eventually, yeah. Q. And you received no advice to the contrary, that is that that sort of sub-division should not be pursued from anyone else who was present at the meeting, that's the fact, isn't it? A. Yeah, the advice was on timing not on what should be done. Q. That caused you to make an assumption, from the silence of those two persons, that somehow the strategy which you had in mind was the one that the bank wanted you to pursue? A. Well, they wanted me to pursue it immediately, not eventually." 80 The letter and the cross-examination leave the matter in no doubt. Mr Clarkson was not instructed in an imperative way by the Bank to pursue the three-lot subdivision; nor was the Bank's subsequent "silence" an inducement towards that same end. It was, rather, Mr Clarkson's own plan to attempt to maximize his returns from the development of his property. Mr Clarkson was free to do so or not to do so as he chose. Inasmuch as it may be said that the Bank "wanted" Mr Clarkson to take this course, it was only because the Bank recognised the potential benefit of Mr Clarkson's efforts to realize the maximum value of his property and thereby to discharge his debt to the Bank more quickly. The proper characterisation of Mr Bolewski's suggestion is precisely that: it was a suggestion made for the sole purpose of pointing out for Mr Clarkson's own benefit an efficient solution to the situation, at least in theory. The essence of that solution was, as submitted by the Bank, simply that if Mr Clarkson intended to further subdivide his property then he ought to undertake one process that would result in the maximum potential number of lots instead of subdividing progressively. 81 It is also clear that the Bank never exerted any kind of unfair pressure on Mr Clarkson in order to procure or force this "preferred" result over and above what their legitimate right to give notice of the exercise of their power of sale over the property. Whatever pressure Mr Clarkson may have experienced can only have been due to the simple facts that he was indebted to the Bank, that that debt was increasing and that he had no way out except, as he saw it, through subdivision and sale. 82 Mr Clarkson appears to have been under a misapprehension that the Bank was committed in some manner to the particular solution. The true position is that the Bank was committed to recouping whatever it could of the moneys lent to Mr Clarkson in the shortest time reasonably practicable. When it later became obvious that Mr Clarkson was going to take far longer to complete the three-lot subdivision than it would for him to complete the two-lot subdivision, the Bank simply reiterated its preference for the faster option, that is, the completion of the two-lot subdivision. That was not unconscionable, particularly in circumstances where Mr Clarkson adduced no substantial evidence as to why it was necessary for him to completely cease work on the two-lot subdivision for such a length of time and also where the Bank had repeatedly foregone on carrying through on its notices of intention to exercise its power of sale. It follows then that the continued accrual of interest cannot be unconscionable. That claim should be rejected. Alleged unconscionable conduct - second period of delay 83 The next claim is directed towards the second period of delay, that is a 55-week period from August 1994 to September 1995. The delay is alleged to have been caused by the failure by the Bank to advance the moneys required for the completion of the second subdivision that were the subject of an agreement between Mr Clarkson and Ms Cole on behalf of the Bank on 21 April 1994. That agreement is summarized in the letter of 14 December 1993 addressed to Mr Clarkson from Ms Cole. The alleged failure dates from 26 August 1994 when the Bank informed Mr Clarkson by letter that, because it had received notice that the CBA intended to register a second mortgage on the Oyster Bay property, it would not provide any further financial assistance to him until the question of priority was settled. 84 There is a question of interpretation concerning item C of the December 1993 letter, which reads as follows: "15% of net sale proceeds of 1st property will be advanced, for completion of 2nd subdivision, on production of invoices with Bank cheques made payable to the creditor, as per schedule accompanying this." 85 Two points of construction arise in relation to this clause. First, the immediately preceding clause stipulates that the finance was conditional upon the sale of at least one property by 30 June 1994. This is also recorded in a file note of Ms Cole's dated 21 April. The evidence discloses that the sale of the first lot did not occur until 23 September 1996 and therefore the Bank cannot be said, as at August 1994, to have become subject to any enforceable obligation to provide finance from which it then unconscionably resiled. Secondly, the plain words of the clause stipulate that the advance was to consist of 15% of the "net sale proceeds". Absent the sale of the property, there would obviously not have been any actual proceeds from which the Bank would have been able to advance money pursuant to such a construction of the agreement. Mr Clarkson acknowledged this construction in cross-examination (transcript, p.66): "Q. Right. And you thought, therefore, that you could agree with the bank to sell one of the properties by 30 June because you already held an exchanged contract which required settlement by that date; that meant that on settlement on 30 June, the bank could then advance you 15 percent of the net proceeds towards the stage two subdivision? A. Not quite as simple as that but, yes, that's [it] basically." 86 If that is accepted, there is then some confusion evident as to how that arrangement was carried out in practice. It appears from the documentary evidence that a number of cheques were forwarded by the Bank to Mr Clarkson in the period prior to September 1994, totalling approximately $13,571.61 as at 25 August 1994, in order to finance the remaining work. These moneys must have been provided on the understanding that they formed part of an advance calculated by reference to 15% of the projected (rather than actual) sale proceeds (in effect creating a loan ceiling of $19,500, that being 15% of $130,000), but they were not strictly an advance from those (then non-existent) proceeds themselves. In that circumstance the only conclusion is that, as the result of some mutually varied understanding, the Bank was providing funding to Mr Clarkson not strictly on the stated terms. Cessation of funding therefore cannot be taken to be a breach of the agreement of 21 April. 87 I also do not think there can be any criticism of the Bank's conduct with regard to the priority issue. Again, Mr Clarkson acknowledged as much in cross-examination (transcript, p.70): "Q. You understood, didn't you, that the State Bank declined to write those cheques once it became aware of the mortgage to the Commonwealth Bank because it was unsure of its priority with respect to any further advances which it made to you? A. Correct, yes. Q. Do you contend that was an unreasonable position for it to take? A. No. Q. What then is the complaint you make about the second period of delay between August 1994 and September 1995? A. When they told me that I wrote out a very simple priority deed that would have been adequate and said I got the Commonwealth Bank to sign it and give it to the State Bank and said, there's your priority deed. Q. When was that done? A. Right at the very beginning but, you know, off the top of my head I would say about, within a month or two weeks of or so [sic], certainly within a month of this happening, they stopped writing cheques. Q. Where is this document Mr Clarkson, this priority deed? A. It's in the file somewhere because I saw it the other night, I thought I was pretty clever to have written that. Q. Do you accept though that it was not unreasonable for the State Bank to decline to issue cheques by way of further advance until it had the position of its priority cleared up? A. It would be foolish for them to have not done that, of course it was reasonable, what was unreasonable was that they took so long to, because the Commonwealth Bank right from the start I must say that they didn't behave very well when they told me one thing and did another but they did say that they would sign any priority agreement, they knew about the 15 per cent. Q. Do you accept that there needed to be communications between the Commonwealth Bank and the State Bank so that each of those organisations on their own could satisfy themselves that any deed of priority was suitable or do you say they were bound to accept your draft? A. No, no, no, in fact I was not surprised that they didn't accept mine but I thought they would get on with it and do it within a month." 88 The deed as prepared by Mr Clarkson is not in evidence, but it is not difficult to conclude that it would not have been a document sufficient for the purposes of the Bank and CBA. 89 It is apparent that the delay was the result of several factors, which appear in the following chronology constructed from the evidence and set out in submissions made by counsel for the Bank: "The real reason for the delay in this period is explained by the following chronology: (a) during the period from August 1994 to September 1995 the Council had declined to sign the linen plan and release it for registration at the Land Titles Office; (b) the reason the Council declined to release the linen plan was because there were works that Mr Clarkson needed to complete; (c) Mr Clarkson believed was under the apprehension [sic] that if those works had not been completed by 16 March 1995 the Council would release the linen plan but would require a bond to cover the cost of having those works completed; (d) the Council had not in fact undertaken to sign the linen plan by 16 March 1995, or any other date; (e) the Council only received the engineering drawings for approval in the first week of March; (f) the Council did not favour the use of a bond for outstanding work; (g) ultimately, however, on 26 May 1995 the Council agreed to accept a bond in the amount of $9,636 in respect of construction works still to be completed; (h) it was originally proposed that the deposit be released to enable the appropriate bonds to be put in place. This arrangement was amended at the beginning of July 1995 so that the Bank would finance the bonds directly; (i) on 13 June 1995 and subsequently the Bank sought confirmation that the linen plan would be released by the Council once the appropriate financial arrangements had been put in place; (j) as at 25 July 1995, there were still corrections that needed to be effected to the 88B instrument; (k) the request for a cheque for $2,153 to enable the issue of a section 173 certificate by the Water Board was made on 27 July 1995, but could not be acted upon because Mr Clarkson had not signed the Priority Deed; (l) on 10 August 1995 Mr Clarkson requested a cheque for the Water Board and a Bank Guarantee in favour of the Council. These were issued on 30 August 1995; (m) the Priority Deed was executed on 31 August 1995; (n) on or before 25 September 1995 the Council released the linen plan." 90 None of those matters indicates that the Bank was at fault in any way. This must be so particularly in circumstances where, at the time it agreed to allow advances from the sale proceeds to be used for further development, the Bank had not yet been put on notice of the proposed securities to be taken over the property by CBA and by PCU. That notice came from the other financiers, not from Mr Clarkson. He had not seen fit to tell the Bank, as mortgagee, that he had created subsequent mortgages. Nor, I am certain, was he aware of the implications of that from the point of view of concerns about the priority to be enjoyed by a first mortgagee making further advances when on notice of the existence of a subsequent security. It was his action in granting the subsequent mortgages that reduced substantially any willingness the Bank may have had to make further advances to him. 91 The Bank was entitled to take appropriate steps to protect its security position in relation to further advances, and, in addition, to continue to charge interest over the period of delay. It must also be noted that, immediately upon the execution of the Priority Deed by the CBA on 31 August, the Bank immediately released to Mr Clarkson a bank guarantee in favour of the Council and a cheque for fees payable to the Water Board. This confirms that it was awaiting resolution of an obstacle which was of Mr Clarkson's own making. Alleged unconscionable conduct - third period of delay 92 The third period of delay is said to have been from September 1995 to September 1996. Mr Clarkson says that during this period the Bank first misplaced the title deed to the Oyster Bay property, and then negligently or recklessly delayed registration of the plan of subdivision. The relevant claim in unconscionable conduct is, again, directed towards the Bank's charging of interest and fees during this period. 93 In response to the assertion that the Bank misplaced the title deed, Mr McCulloch and Mr Villa submitted that the Bank had not, in fact, misplaced it at all, but rather that the Bank had duly produced the deed to the Land Titles Office on 1 September 1995 to enable the registration of the mortgage in favour of the CBA. This is said to explain why, when Willis & Bowring lodged the linen plan with the LTO for registration in October 1995 on behalf of Mr Clarkson, the Bank was not in a position to produce the deed for that purpose, not then being in possession of it. 94 However, the evidence reveals that there was a period of at least one month where the Bank was, in fact, unable to locate the title deed. A letter from Keith Robinson to the NSW Lending Services unit of the CBA dated 1 September 1995 accompanying the Deed of Priority advised that the certificate of title had been forwarded to the Bank's Securities Department for production to the LTO. This had not occurred as at 25 September 1995, as appears from a letter from Willis & Bowring to the Bank dated on that day. However, it should also be noted that at that time Willis & Bowring were still in possession of the linen plan. 95 In reply, a Bank officer acting on behalf of Keith Robinson informed Willis & Bowring on 26 September that he had undertaken a search for the document and could not locate it. Handwritten notation on that letter from various Bank officials reflects an ongoing inquiry that extended until at least 5 October. 96 Mr Robinson then advised Mr Clarkson on 26 October that "it was understood" that the title deed had been produced to the LTO "some time ago" and that it and the linen plan were being held there. Again, handwritten notation on this letter reflects that Mr Clarkson had visited the Asset Realisation Unit's offices to deliver some outstanding documentation. No reference is made in those notes to any continued inability to locate the deed. 97 It is not in dispute that at 20 December 1995 the certificates of title for the newly-created lots were available for collection from the LTO. 98 A final letter of 11 March 1997 from Mr Gary Glover of the Recoveries Unit sets out the terms of the Bank's offer of compromise. Under a section entitled "Various Delays in Acquisition of New Titles" appears the following paragraph: "I acknowledge that the Bank's file indicates the loss of the original Title Deed. This came to notice in September 1995 and was rectified in December 1995. This delay of four months while unfortunate could not have possibly contributed to a delay in sales given the Sutherland Shire Council's report detailing continued outstanding requisitions dated 20 December 1995 resulting in a failed final inspection." 99 This makes unimportant the question of precisely how long the title deed was lost. It is clear that it cannot have been missing for longer than the period between 1 September 1995 and 20 December 1995. It is also clear from the Council report mentioned in Mr Glover's letter, also in evidence, that Mr Clarkson's property would not have been ready for sale by that date in any case. The report lists five matters requiring considerable additional efforts on Mr Clarkson's part before any further inspection and, therefore, any possibility of Council approval could be contemplated. The claim that the Bank's inability to locate the document during this period directly caused or contributed to any eventual delay in sale must then be rejected. 100 Mr Clarkson also appears to claim that because the Bank did not initially submit certain transfer and mortgage documents to the LTO, substantial delays were incurred by the LTO's issuance of certificates of title in "transitional" form, describing incorrect boundaries and in two cases listing both Mr Clarkson and Mr Colin Gray as owners of certain areas of land. Mr Clarkson's assertion is that, because he had informed the Bank on a number of occasions that he had no solicitors acting for him in the subdivision process and because he had a legitimate expectation that the Bank would administer the production of the new title deeds, ultimate responsibility lay with the Bank for that omission. 101 That assertion has no substance. First, it is abundantly clear that Willis & Bowring were acting for Mr Clarkson. Correspondence in evidence, to some of which I have already referred, shows that they had been preparing the documentation necessary for registration of the linen plan and the accompanying s.88B instrument, and had in fact lodged those documents for registration. Second, the responsibility for the documentation of the land boundaries between Mr Clarkson's and Mr Gray's properties cannot conceivably be attributed to the Bank. The land swap was the result of Mr Clarkson's plan of subdivision. That was a course undertaken on his own initiative, not the Bank's, and the responsibility for ensuring that all documentation was in order to give effect to that must lie with him or his agents, that is, Willis & Bowring. 102 Non-activity during the period from December 1995 to March 1996 is unexplained, but as counsel for the Bank pointed out, there is also nothing to suggest that any delay was attributable to any conduct on the part of the Bank. 103 The period from March to June 1996 saw both parties attempting to deal with the consequences of the incorrect title deeds. The process required mutual transfers between Mr Clarkson and Mr Gray. Because some of the land to be transferred was subject to the Bank's existing mortgage, that mortgage needed to be discharged and a new mortgage registered over the newly delineated property. 104 For several months, Mr Clarkson was disposed to reject this course of action. His correspondence with Willis & Bowring and the Bank records in strong terms his belief that the added mortgage was not necessary and that it would be an additional expense directed to what were, in his mind, unrelated complications. His perception of the Bank's conduct was that it was deliberately delaying and confounding his efforts to sell the lots. He therefore resisted cooperating with it. There is also evidence that Mr Clarkson had gone away to the country for a period, and that resultant difficulties in communication and delivery of documents contributed to the overall delay. Another s.57(2)(b) notice served on Mr Clarkson on 19 June 1996 added to the acrimony between the parties. It was not until June 1996 that Mr Clarkson eventually signed the instruments needed to allow the transfers to take place. Willis & Bowring duly forwarded those on to the Bank on 27 June 1996. 105 Subsequent delay occurred as a result of a typographical error in one of the documents. It was necessary for it to be re-executed. There was also a caveat on the title to one of the lots lodged by PCU. Mr Clarkson again indicated his objections to the ongoing inconvenience and engaged the Bank in a dispute as to the costs of the rectification process, which lasted until 15 August 1996 when the amended documents were finally provided. 106 I am satisfied that there was no conduct on the part of the Bank that should be characterised as negligent, reckless or unconscionable. Delays were in the main due to the difficulty that Mr Clarkson himself had in cooperating with the Bank in expediting the process, or else were due to relatively minor accidents. His continued refusals to sign and amend the documentation were the cause of the delay from March to August 1996. In those circumstances the Bank cannot be held responsible for the delay. It follows that it cannot be unconscionable for it to have retained settlement moneys reflecting interest payable during that period. The claims in negligence 107 The negligence claims made by Mr Clarkson must fail for want of any relevant duty of care on the part of the Bank. There can be no doubt that a bank may owe a duty of care to a customer in contexts where activities of the bank undertaken without oversight or involvement of the customer have the capacity to cause harm to the customer unless due care is taken. Cases involving payment by a bank of forged cheques or cheques not according with the customer's mandate are examples that readily come to mind. 108 In the present case, however, Mr Clarkson, although an existing customer, was in active and ongoing negotiation with the Bank. He knew what he wanted. He set out at all times to get what he wanted. The situation cannot possibly be characterised as one in which Mr Clarkson was compliant in all requests and suggestions made by the Bank. Far from it - he had his own definite ideas as to where his interests lay and he did his best to give effect to them. Statements by the Bank to the effect that it wished to find a solution beneficial to both parties did not cast the Bank in some kind of avuncular role towards Mr Clarkson. The Bank was pursuing its interests. He was pursuing his. And he well knew the difference between the two and the reality that the Bank was in no sense bound to be solicitous of his welfare. There was nothing in the course of dealing to justify a belief on Mr Clarkson's part that he was entitled to rely on the bank to assist and advise him. 109 In relation to the alleged delays occasioned by the Bank, there is no basis on which it can be found that the bank owed to Mr Clarkson a duty of care in tort not to allow the delays to occur. Indeed and as I have found, the delays really arose from decisions by Mr Clarkson as to how his interests, as he saw them, would be best served and from his apparent preference to argue rather than co-operate. 110 A separate aspect of the negligence claim involves an apparent assertion that the Bank owed Mr Clarkson a duty to act in his interests in obtaining a fair market price for the property. I must confess that I do not understand the basis on which this claim is put. Mr Clarkson did not elaborate in submissions. It was Mr Clarkson who sold, not the Bank. He sold as he saw fit, given the constraints imposed by the need to register a plan of subdivision which entailed concurrence and actions by the local council, the surveyor, the Registrar-General and the adjoining owner in addition to the Bank. None of them - including the Bank - owed him a duty to take care that the subdivision would be completed in a form and at a time ensuring receipt by Mr Clarkson of a fair market price. That was a matter which he had to look after for himself. 111 No relevant duty of care being shown, Mr Clarkson's claims in negligence fail. Orders

112 Mr Clarkson has not made out any of the claims advanced by him in these proceedings. The order of the court is therefore that the proceedings be dismissed. 113 There is no apparent reason why costs should not follow the event. If the Bank seeks an order for costs, it should so notify my Associate in writing within seven days, together with a copy to Mr Clarkson. Any submissions on costs by Mr Clarkson should reach my Associate within 14 days after service of any such written notification by the Bank. **********

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