Commonwealth Bank of Australia v Anna Maria Crowe

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

10136/03 COMMONWEALTH BANK OF AUSTRALIA v ANNA MARIA CROWE & 1 Ors

JUDGMENT 1 HIS HONOUR: In these proceedings the plaintiff the Commonwealth Bank of Australia sued two defendants Anna Maria Crowe ("Mrs Crowe") and Darren Neil Crowe ("Mr Crowe"), Mrs Crowe's estranged husband. 2 The Commonwealth Bank of Australia sued Mrs Crowe and Mr Crowe, as being the successor to the State Bank of New South Wales Limited by virtue of s 22 of the Financial Sector (Transfers of Business) Act 1999 (Commonwealth). In the proceedings there was no dispute that the Commonwealth Bank of Australia was the successor to the State Bank of New South Wales and in this judgment I will use the expression "the Bank" to refer to either the State Bank of New South Wales or to the Commonwealth Bank of Australia. 3 In the proceedings the Bank claimed judgment for possession of the land in Certificate of Title Folio identifier No. 4/91/758476 known as 84 Noorilla Street, Griffith ("the property" or "the house property") and judgment for an amount alleged to be owing to the Bank by Mr and Mrs Crowe. The claim for possession of the property was based on default having been made under a registered mortgage dated 6 July 1993 granted by Mrs Crowe to the Bank over the property of which she was the sole owner ("the mortgage"). 4 A defence and a cross-claim were filed on behalf of Mrs Crowe. At the hearing there was no dispute that Mrs Crowe had granted the mortgage over the property, that there had been default under the mortgage and that the Bank had taken the appropriate procedural steps so as to be entitled to possession of the property. The issues which were argued at the hearing were issues which were raised by Mrs Crowe's cross-claim, namely whether she could successfully resist the Bank's claims (1) under the principles stated in Yerkey v Jones (1938-1939) 63 CLR 649 (2) under the principles stated in Commercial Bank of Australia Limited v Amadio (1982-1983) 151 CLR 447 ("Amadio") relating to unconscionable transactions or (3) under the provisions of the Contracts Review Act. Claims under the Trade Practices Act or the Fair Trading Act which were pleaded in the cross-claim were not pressed at the hearing. 5 The second defendant Mr Crowe did not defend the proceedings. Cross-claims by Mrs Crowe against Mr Crowe, a company called Darkcm Pty Limited ("Darkcm") and another company called RKCM Harvesters Pty Limited, which was a company associated with Mr Crowe, were not defended. 6 The evidence adduced in the proceedings consisted of affidavits, oral evidence and documentary exhibits. 7 The affidavits that were read were affidavits by a bank officer Mr Lee, who gave formal evidence in support of the Bank's claims, which was not disputed; by Mrs Crowe in support of her cross-claims; by three solicitors who witnessed the execution of documents by Mrs Crowe (and whose affidavits were filed on behalf of the Bank), namely Mr Lancaster who witnessed the execution of the mortgage on 6 July 1993, Mr Del Gigante who witnessed the execution of documents on 7 October 1994 and Mr Davidge who witnessed the execution of documents on 31 May 2000; and by Mrs Crowe in reply to the affidavits filed on behalf of the Bank. 8 Oral evidence was given at the hearing by Mrs Crowe, Mr Lancaster, Mr Del Gigante and Mr Davidge. 9 The principal documentary evidence was a large bundle described as the Bank's "tender bundle", which contained copies of the Bank's records relating to Mr Crowe, Mrs Crowe and Darkcm. The documentary evidence also included a transcript of proceedings in the District Court on 18 October 1999, when Mr Crowe was sentenced for a criminal offence.

OUTLINE OF UNDISPUTED FACTS 10 Before examining the evidence in detail, it is convenient to set out a concise outline of facts about which there was no dispute. 11 Mrs Crowe was born in 1956. Mr Crowe was much younger, having been born in 1969. 12 Mr Crowe was Mrs Crowe's second husband, her first marriage having ended in divorce. Mrs Crowe had two children by her first marriage. 13 Before her first marriage Mrs Crowe became the owner of the house property. She acquired the property with money saved out of her own earnings and with money given to her by her father. 14 Mrs Crowe and Mr Crowe were married in 1990. There were two children of the marriage, born in 1992 and 1994. After Mr and Mrs Crowe were married they went to live on his parent's farm, where Mr Crowe worked in farming activities. The house property was leased to a tenant. 15 In January 1993 Mr and Mrs Crowe borrowed $18,000 from the Bank to assist in the purchase of a Ford Maverick motor vehicle. The loan by the Bank to Mr and Mrs Crowe was secured by a bill of sale over the Ford Maverick motor vehicle. 16 In July 1993 Mr and Mrs Crowe borrowed $35,000 from the Bank for the purpose of purchasing and fitting out a truck. At the time of this loan the amount of $18,000 under the loan made in January 1993 was still outstanding. On 6 July 1993 Mrs Crowe granted the mortgage over the property to the Bank to secure all monies which were then or which would thereafter become owing by her to the Bank. 17 In May 1994 the loan of $18,000 made in January 1993 was repaid. 18 On 21 June 1994 the company Darkcm was registered, with Mr and Mrs Crowe as its only directors and shareholders. 19 By a proposal dated 27 July 1994 Darkcm made an application to the Bank for finance for farming operations it proposed to carry on. 20 In August 1994 the Bank granted Mr and Mrs Crowe a financial facility, consisting of a loan of $33,391 (which was in fact the balance outstanding of the loan of $35,000 made in July 1993) and an overdraft with a limit of $30,000. This financial facility was granted as a temporary measure, while the Bank was considering the proposal made on behalf of Darkcm that the Bank grant a financial facility to it. 21 By letter of 1 September 1994 the Bank offered a financial facility to Darkcm, consisting of a loan of $33,391 (the balance outstanding of the loan of $35,000 made in July 1993) and an overdraft with a limit of $110,000. This offer was accepted by Darkcm. To secure repayment of this facility Mr and Mrs Crowe on 7 October 1994 executed a joint and several guarantee of all liabilities of Darkcm to the Bank and a trader's bill of sale. Among the assets which would be subject to the bill of sale were approximately half a dozen specific vehicles. By virtue of the mortgage of 6 July 1993 being an "all monies" mortgage, money which became due under this facility became part of the monies secured by the mortgage. 22 Pursuant to a facility agreement signed on 14 March 1996 the limit of the overdraft was reduced on 30 April 1996 to $90,000. 23 Pursuant to a facility agreement signed on 26 August 1996 the limit of the overdraft was increased to $100,000. 24 In June 1999 the Bank accepted a proposal made on behalf of Mr and Mrs Crowe and Darkcm that in consideration of an immediate payment of $30,000 and further payments of $3,700 each on 30 September 1999 and 31 December 1999 the Bank would not take legal action for recovery of the property, would charge a reduced rate of interest and would restructure the residual debt into a new facility. 25 A payment of more than $30,000 was made and a payment of more than $3,700 was made on 30 September 1999. 26 By a letter of 11 April 2000 the Bank offered a financial facility being a term loan of $145,000 to re-finance the existing term loan and overdraft. This offer was accepted on 31 May 2000. On 31 May 2000 Mrs Crowe executed a further guarantee to the Bank guaranteeing the indebtedness to the Bank of Darkcm.

Mrs Crowe's Affidavit 27 In her affidavit Mrs Crowe said that she was born on 26 October 1956 and that she had always lived in Griffith. Her parents were of Italian origin and she did not learn to speak English until she went to school. She found it difficult to learn at school and left school after gaining the School Certificate. After leaving school she worked in a hamburger shop. 28 In 1979 she married her first husband, whose name was Kevin Hill, by whom she had two children. She separated from her first husband in 1985 and was later divorced. 29 Before her first marriage she had bought the house property with money she had saved herself and with money given to her by her father. 30 In about 1988 she met Darren Crowe and they were married in 1990. After they were married she moved to his family's farm outside Griffith and leased the house property in Griffith. There were two children by her marriage to Mr Crowe, who were born in 1992 and 1994. 31 In par 13 of her affidavit Mrs Crowe said that she had a conversation with her husband to the following effect:- "He said: 'I've had another big fight with dad and he won't give me any money. I want to set up my own contracting business but I haven't got the funds to buy a truck. The bank will loan me some money if there is some real estate to back up the loan. I'd like you to put up your house in town for the bank so that they will lend me the money. You will need to go and see the bank about it as soon as you can'. I said: 'What do you mean put the house up?' He said: 'Don't worry, nothing will happen to it. If anything happens the bank will sell the truck so you don't have to worry about the house'". 32 In par 14 of her affidavit Mrs Crowe said that she and Mr Crowe had gone to the Bank. A bank officer gave Mr Crowe a document headed "mortgage". The bank officer said "take this to a solicitor and get him to witness your signatures". Mr Crowe said "I'll take her to my solicitor who is Bill Lancaster". 33 Mr and Mrs Crowe went to see Mr Lancaster. Mr Lancaster had previously acted for Mrs Crowe in family law matters arising out of her first marriage. 34 In par 16 of her affidavit Mrs Crowe said that there was a conversation in Mr Lancaster's office to the following effect:- "Darren said: I want Anna to put up her house so I can get a loan to buy a truck to set up a business. The bank said she should come and see you. She doesn't want anything to happen to the house because of the kids'. Lancaster: 'You don't have to worry about the house because if for some reason Darren didn't repay the loan, the bank can take the truck and that would look after the loan'". 35 At the conference with Mr Lancaster Mrs Crowe signed the mortgage. She thought that nothing could happen to the property, because, if the loan was not repaid, the truck which was being acquired would be sold. If she had thought that there was any risk that the Bank could sell the house, she would not have signed the mortgage. 36 In par 19 of her affidavit Mrs Crowe said that, before any documents were signed (before Mr Lancaster), Mr Crowe said to her:- "He said: 'I'm setting up a company to run the business. You will have to be secretary. You won't have to do anything except sign some documents when I ask you to'". 37 In par 20 of her affidavit Mrs Crowe said that in about October 1994 she had a conversation with Mr Crowe in which he said:- "Darren: 'I want to borrow some more money to buy more machinery to run the farms. If the business expands it will make money. You will have to sign some more documents so the Bank will lend more money. I'll take you in to see my solicitor. You just shut up and let me do the talking'". 38 In par 21 of her affidavit she said that her husband had said to her in the presence of Mr Del Gigante words to the following effect:- "Darren: 'Don't worry about signing this, it's just standard paper work so that the bank can lend some more money to the company to buy more machinery. If anything goes wrong, they will sell up the machinery so you don't have to worry about the house'". 39 Par 21 of her affidavit continued:- "I believed Darren when he said this and signed the documents because he said that. At no time did the solicitor say to me that there was any chance that I could lose my house. I also remember that because Darren had told me to 'shut up' I said very little. I also had two small children with me at the time". 40 In her affidavit Mrs Crowe said that, so far as Darkcm was concerned, she had had nothing to do with the running of the company's business. Her husband did whatever he wanted and she found out later what had been done. She had never received any money. 41 In her affidavit Mrs Crowe said that she had signed further documents relating to the overdraft in about March 1996 and in about August 1996. On both occasions she had signed the documents believing, as her husband assured her, that her house was not at risk, because if Darkcm could not repay its loans, the Bank would sell the farm machinery and the proceeds of sale of the farm machinery would cover the debt. 42 Mrs Crowe said in her affidavit that from time to time her husband assured her that the business was going well. 43 By 1999 Mrs Crowe was having "extreme marriage difficulties", her husband was being physically violent to her and she was afraid of him. They separated on a date which she said in her affidavit was 31 May 1999. After separating from her husband she moved back into the house property in Griffith, with her children. 44 In about April 2000 Mr Crowe asked her to sign more documents. Mrs Crowe had a meeting with a bank officer, who told her that she would have to sign more documents in the presence of a solicitor. Her husband arranged for her to see a solicitor Mr Davidge. Par 30 of her affidavit continued:- "I said: 'I'm here to sign some documents for the bank. Darren wants me to sign them and I don't feel I have any choice'. I kept saying to David Davidge: 'What choices do I have?' Mr Davidge simply shrugged his shoulders and I signed the document and he witnessed it". 45 In par 31 of her affidavit Mrs Crowe said that on about six occasions in 1999 and 2000 she had a conversation with her husband in which he said that he was transferring machinery to his mother and wanted Mrs Crowe to sign some document. Mrs Crowe asserted that at no time had the Bank or her husband told her that the bill of sale was going to be released. 46 In June 1999 she signed a letter from the Bank at the insistence of her husband, without reading the letter. 47 In her affidavit Mrs Crowe gave evidence about the making of a written agreement between herself, her husband and the company RKCM Harvesters Pty Limited in which RKCM Harvesters Pty Limited agreed to meet payments due under the mortgage of the house property.

Mr Lancaster's Affidavit 48 Mr Lancaster said in his affidavit that over a period between 1985 and 1992 he had acted for Mrs Crowe in family law proceedings in the Local Court concerning custody, access and child maintenance between Mrs Crowe and her first husband. 49 In 1991 he made wills for Mrs Crowe and Mrs Crowe. Mr Lancaster could not recall having previously acted as a solicitor for Mr Crowe. 50 While acting for Mrs Crowe in the family law proceedings, Mrs Crowe had said to Mr Lancaster words to the effect that she did not want her first husband to succeed in any claim against her house and that she intended to keep the house for the benefit of her children. In her affidavit in reply Mrs Crowe agreed that she had said words to that effect. 51 On 8 June 1993 Mrs Crowe telephoned Mr Lancaster and they had a conversation to the following effect:- "Mrs Crowe: 'Darren [referring to Mr Crowe] wants to borrow money to buy a truck and has asked me to put up my home as security for the loan'. I said: 'I do not think you should do that. I know that you wanted to keep your home for the benefit of your children. If Darren [referring to Mr Crowe] does not pay the loan, the bank will be able to foreclose and sell your home to pay out the loan'. Mrs Crowe: 'But we have a baby now and he is the only father that my children know. Kevin [referring to Mr Hill] is so mean with them. Darren needs the truck to get ahead and it will be the children who will benefit in the end. I don't think I have much option'". 52 Mr Lancaster made a file note of the conversation, which was in the following terms:- "Anna Crowe telephoned. She is seeing the State Bank with her husband. He is to borrow money to buy a truck. She to put up her home as security". 53 In her affidavit in reply Mrs Crowe said that she could not remember Mr Lancaster saying that she should not put up her home as security for a loan. 54 Later in June 1993 a bank officer and Mrs Crowe contacted Mr Lancaster's office, advising that Mrs Crowe had authorised the Bank to collect the certificate of title for the property from Mr Lancaster's office. 55 On 5 July 1993 Mr and Mrs Crowe had a conference with Mr Lancaster. Mr Lancaster was shown a letter of offer from the Bank of 24 June 1993, which had already been signed by Mr and Mrs Crowe. There was a conversation to the following effect:- "Mr and Mrs Crowe: 'We intend to extend our business to buy an extra truck and need to borrow $35,000 from the Bank as set out in that letter of acceptance [referring to the Letter of Offer shown to me]' Mr Crowe: 'Anna [referring to Mrs Crowe] will own the business equally either in partnership or through a company or trust and we would like to know the benefits of each'". 56 Mr Lancaster then discussed the differences between partnerships, companies and trusts. 57 Mr Lancaster made a file note of the conference, which was in the following terms:- "Attended Mr and Mrs Crowe. They extending his business to buy extra truck, etc. borrowing $35,000 from State Bank. Discussed setting up partnership -ats- Company/trust. Perused Banks letter of acceptance. Scale Item: 20 Minutes" 58 In her affidavit in reply Mrs Crowe did not deny that these matters were raised between Mr Lancaster and her husband but said that she did not understand them. 59 On 6 July 1993 Mr Lancaster had a further conference with Mr and Mrs Crowe. In par 12 of his affidavit Mr Lancaster said that there was a conversation to the following effect:- "I said: 'Anna [speaking to Mrs Crowe], you realise that the Bank can foreclose and sell your house if payments are not made or if you sell the house that you will have to pay out the loan before you receive any of the sale proceeds?' Mrs Crowe: 'Yes, we've talked about that but Darren needs the money to buy the truck and this is the only way we can get it'. Mr Crowe: 'Don't worry I will make sure the payments are made'. I said: 'But it may be out of your hands, you may get hurt so you can't work, or you may be sued by somebody and end up going bankrupt, anything can go wrong. You might prang the truck or it could be stolen. If something like that happens Anna could lose the house'. Mrs Crowe: 'We are married now and Darren knows that the house is to be kept for the children. He's not borrowing the money for himself it is for the children and my benefit too. I have decided to go ahead with the mortgage'". 60 At the conference Mr Lancaster explained the documents including the mortgage, various documents including the mortgage were signed and Mr Lancaster signed a certificate of witness. Part of the certificate was as follows:- "(a) The document(s) was /were signed and dated before me. (b) I identified the parties before the document(s) was /were signed. (c) I asked the parties whether the document(s) was /were being signed voluntarily and the answer was 'yes'. (d) I asked the parties whether he/she (they) understood the nature and effect of the document(s) and the answer was 'yes'. (e) I asked the parties whether he/she (they) had:- (i) compared his/her (their) obligations and responsibilities to the Bank with those of any other person named in the document(s); and (ii) considered the consequences to him/her (them) should there be any default in those obligations and responsibilities: and the answer was 'yes'. Schedule of Documents - Mortgage - Memorandum No.X208233 - Application to Record Change of Name - Authority to Complete and Comply with Requisitions". 61 Mr Lancaster made a file note recording that he had "attended Mr and Mrs Crowe on signing mortgages etc", the attendance lasting ten minutes. 62 In his affidavit Mr Lancaster denied that he had said the words attributed to him in par 16 of Mrs Crowe's affidavit "you don't have to worry about the house because if for some reason Darren didn't repay the loan, the Bank can take the truck and that would look after the loan".

Mr Del Gigante's Affidavit 63 Mr Del Gigante said in his affidavit that he had not been able to locate any documents relating to the matter. He said that, to the best of his recollection, at the conference on 7 October 1994 he had summarised and explained the documents referred to in the schedule to his affidavit, which included the Bank's letter of offer of 1 September 1994, and that he had witnessed the execution of the documents including the guarantee and the bill of sale. Mr Del Gigante furnished a certificate of witness to the Bank, which was in a standard form and in which all answers to the questions he had asked were recorded as being "yes". 64 In his affidavit Mr Del Gigante denied that the words attributed to Mr Crowe in par 21 of Mrs Crowe's affidavit had been said in Mr Del Gigante's presence. In her affidavit in reply Mrs Crowe said that what she had asserted in her first affidavit that her husband had said might have been said before they went into Mr Del Gigante's office. She said that all she could remember Mr Del Gigante saying to her was "have you read it? (referring to papers Mr Del Gigante had in front of him)". 65 To the best of Mr Gigante's recollection, he had advised Mrs Crowe that she could lose her house if Darkcm did not repay the Bank.

Mr Davidge's Affidavit 66 Mr Davidge said in his affidavit that on 31 May 2000 he had had a conference with Mr and Mrs Crowe, during which he explained the nature and effect of documents including the letter of offer from the Bank of 11 April 2000, the guarantees to be entered into by Mr and Mrs Crowe and the certificate to be given by him as a solicitor. 67 Mr Davidge said that he could recall having been retained and having had the conference but had no recollection of what had been said at the conference. He said that it would have been his usual practice, when retained to explain loan and security documents, to have described each document and its effect. He said that he was certain that when he explained the letter of offer he would have said words to the following effect:- "This Letter of Offer is in relation to a loan to your company, Darkcm, in the amount of $145,000. In order to accept the Offer, the Bank will require both of you to provide it with a guarantee that you will personally pay the Bank the money owed by the company if the company fails to pay. The Offer also says that the loan will be secured by a mortgage over your [referring to Mrs Crowe] property at 84 Noorilla Street, Griffith. If the company fails to repay the loan, the Bank may sell your house in order to cover all debts owed to it by the company, including interest". 68 Mr Davidge said that when explaining the guarantee documents he would definitely have said words to the following effect:- "If you sign this Guarantee, you will be personally responsible for the debt, plus any interest and costs. If the debt is not repaid by the company, you can lose everything that you own". 69 Mr Davidge said that he was certain that, if asked by a client "what choices do I have?", he would not simply have shrugged his shoulders and would have answered the question by discussing the options open to the client.

Mrs Crowe's Oral Evidence 70 Mrs Crowe was cross-examined at some length. 71 In cross-examination Mrs Crowe accepted that her husband had done work for a company called Fodder King Pty Limited between about 1995 and 1998 and that by 1998 he was owed money by Fodder King. He became extremely upset that he was not being paid by Fodder King and he assaulted Mr McCardell, a representative of Fodder King. For committing this assault he was sentenced to periodic detention and having to serve this sentence had affected her husband's ability to work. 72 In cross-examination Mrs Crowe agreed that Darkcm had leased land from Frances de Rosa but de Rosa had evicted Darkcm from the land at a time when there was an advanced rice crop and barley crop on the land. Legal proceedings had been brought by Darkcm against de Rosa and eventually some money had been recovered. 73 In 1993 a firm Landaco Spreaders had provided a spreading machine to Mr Crowe but the machine had not worked properly. 74 As at 28 June 1995 Darkcm had debts outstanding to it of $93,500, including a debt from a firm named Pure Foods of $10,000. 75 Mrs Crowe agreed that the reason why Darkcm was having financial difficulties was that its debtors were not paying Darkcm promptly. She also agreed that the reason why Mr Crowe could not fulfil his promise to pay the Bank was "that people had let him down in not paying their bills". 76 Mrs Crowe said in her evidence that she had not understood what a mortgage was at the time she granted the mortgage and in one part of her oral evidence she claimed still not to understand what a mortgage is. 77 She accepted that by the time of the agreement of December 2000 with Mr Crowe and RKCM Harvesters Pty Limited she understood enough about a mortgage to know that there was a risk that the Bank could sell her property under the mortgage she had given. In cross-examination she gave the following evidence:- "Q. You knew that irrespective of you not knowing what a mortgage is as a legal term, you always knew from 1993 onwards that whatever else a mortgage means, it means that the bank, if it is not paid money, could sell the house. You knew that didn't you, didn't you? A. Yes but not, I thought the machinery would go first". 78 Mrs Crowe said that she had trusted and relied on her husband. She had believed that nothing would happen to her house because she believed that her husband would keep up the payments. She accepted that "because you believed your husband… would make payments in accordance with the arrangements with the Bank, you were prepared to run the risk of giving a mortgage". The following questions and answers occurred in cross-examination:- "Q. But your position was you trusted your husband and you thought that he wouldn't let you down? A. Yes. Q. And that you were prepared to rely upon him, and if he thought it was a good idea, as far as you were concerned, it was also a good idea? A. Yes". 79 The following questions and answers occurred in cross-examination:- "Q. …You were at all times, relying on the fact that your husband was going to do the right thing? A. Yes. Q. And irrespective of what any solicitor or the bank told you at that time, it's what your husband said to you and promised to you in making your decision that mattered? A. Yes?" 80 Mrs Crowe was cross-examined about the allegation made in her affidavit that by 1999 her husband had become physically violent to her. She said that her husband "pushed her around" when she was pregnant in 1992 but after that he had "calmed down" a bit. He had not been physically violent to her as early as 1994 or 1995 but by 1998 he had been violent to her. She had given evidence for her husband when he was sentenced on 18 October 1999 and when asked in these proceedings whether her husband had ever been violent to her she had replied "No". She conceded in cross-examination that that piece of her evidence had been a lie. 81 Mrs Crowe said in cross-examination that if her husband told her to sign a document she would sign it, because she trusted him and, if she did not sign the document, "he would just go off". She said that she had entered into the transactions in 1994 and 2000, because "I didn't have any choice. Darren would just go off at me… if I didn't do it, I'd just cop it after. He'd go off at me". 82 She was embarrassed by her husband's acts of violence towards her and kept his acts of violence to herself. 83 She was unclear about precisely when she had started living apart from her husband. She was still living on the farm at the time Mr Crowe was sentenced. 84 Mrs Crowe denied that in July 1993 she knew that she was becoming liable to pay the Bank about $48,000 (the advance of $35,000 plus the balance outstanding of the loan made in January 1993). However, when asked "you knew in 1993 that, if you were the borrower of funds from a bank, then you were liable to repay them, didn't you?" She replied "Yes". 85 Mrs Crowe confirmed that Mr Lancaster had been her solicitor in family law proceedings and said that she had seen him "dozens of times" before July 1993. 86 The following questions and answers occurred in relation to the telephone call on 8 June 1993:- "Q. To the best of your recollection can you remember what he actually said to you during the course of that telephone call? I realise it is a long time ago? A. Something like that Darren wants to buy a truck and wants me to put the house up so he could get some money because no one else could help him. Q. Do you recall what Mr Lancaster said to you in response to that comment? A. Something like did I want to leave the house for the kids and am I sure I want to do it, you know. Q. And did you say anything to him in response to that comment? A. Something like there is no other way Darren could get any money. He wants to get ahead, he wants us to get a truck and do some work and try and make things better for us". 87 Mrs Crowe agreed that she had decided to go ahead with the proposed transaction, prior to seeing Mr Lancaster. 88 In her oral evidence Mrs Crowe agreed that she had said both of the things attributed to her by Mr Lancaster in par 12 of his affidavit. 89 Mrs Crowe agreed that she had become one of the directors of Darkcm but said that she had had no choice. She accepted that Mr Anderson, an accountant, had given advice that it would be appropriate to conduct activities through a company. She accepted that, to the extent that Darkcm made any profits, it would be good for her as a shareholder of Darkcm. 90 As to any role Mrs Crowe played in the affairs of Darkcm and the extent to which her husband consulted her, she said that "the wages got paid once a week and anything else never got discussed". She discussed business matters with a third party such as the Bank, only "if he (her husband) forced me… to make a telephone call". If she answered a telephone call from the Bank "I never knew anything. I always say they'd have to ring Darren on his mobile or I'll get him to ring back". She did not know how much was coming in and her husband did all the bills. 91 Bank memos of 5 April 1995 and 28 June 1995 were put to Mrs Crowe and it was suggested that as at 28 June 1995 she knew quite a bit about how the business was faring. She replied "I don't know". Mrs Crowe said, with respect to a letter of 9 August 1994 from the Bank addressed to her husband and herself, "I wouldn't have read it… not very good at reading… I can read it but I don't know what the words mean". 92 Mrs Crowe said that all she could remember Mr Del Gigante saying was "have you read it?" to which she replied "Yes". She had not in fact read the letter from the Bank of 1 September 1994 offering the facility, because she trusted her husband. She had taken her two children, then aged two and five months, to the meeting with Mr Del Gigante. She had hardly spoken at the meeting. Her husband had done all the talking. However, Mr Del Gigante might have asked the questions set out in his certificate. 93 Mrs Crowe said that she was scared when she went to the conference with Mr Davidge. She then thought that there was a real risk that her house might be lost. 94 Mrs Crowe said that she had not known what a bill of sale was but "when they came out to have a look at the machinery, I was told that it was to do with the Bank and them selling the machinery". The only meeting she could recall at the Bank at which the equipment (the vehicles) was discussed was a meeting at which a bank officer asked what had happened to "the ute" (a Diahatsu 4 wheel drive). She denied that the Ford Maverick had "died a natural death" and that a Mercedes Benz garbage truck had been sold. 95 In re-examination Mrs Crowe said that she had given false evidence in her husband's proceedings on sentence because "I was scared of him, he would have got me after". 96 Mrs Crowe said in re-examination that in 1994 Mr Crowe still had the Ford Maverick, which had cost about $50,000. 97 In re-examination she was asked "right through up until the end of 2000 what risk did you think there was to your house?" and she replied "I never believed I had a risk, because he always promised he would cover it with the machinery or work and pay for it".

Mr Lancaster's Oral Evidence 98 In cross-examination Mr Lancaster said that his affidavit was partly based on what had been his usual practice in such matters but that he had some actual recollection of what had been said at the conferences with Mr and Mrs Crowe. 99 Mr Lancaster agreed that he had been giving legal advice and was not purporting to give financial advice. 100 At the conferences Mr Crowe had said that there was no risk to the house, because there would be equipment available to pay any debt. Mr Crowe had said that, if he had an accident in the truck, the truck was insured and the Bank could be repaid out of the insurance monies. 101 Mr Lancaster had not seen Mrs Crowe separately from her husband on 6 July 1993. At the time, and even in hindsight, he did not think that there was any conflict of interest between Mr Crowe and Mrs Crowe. There was nothing he would have said to Mrs Crowe privately which he would not have said in front of her husband. 102 It was clear to Mr Lancaster that Mr Crowe was the driving force and that he would be operating the truck and the business. However, Mr Crowe had said that it was going to be a joint enterprise and he had asked about partnerships, companies and trusts. 103 Mr Lancaster could not remember raising with Mrs Crowe that the mortgage was an "all monies" mortgage. 104 In re-examination Mr Lancaster said that he had been "personally quite shocked" when Mrs Crowe telephoned him on 8 June 1993. He knew how passionate Mrs Crowe had been about keeping her house. On 8 June 1993 he said words to the effect, "Anna look, you realise that if it's not paid, you could lose the house". He remembered being a bit impatient at the end, "because she didn't take my advice about it".

Mr Del Gigante's Oral Evidence 105 In cross-examination Mr Del Gigante said that, although he had had to try and recollect what had happened without the assistance of any file notes, he had given the matter quite a deal of reflection, after he had been asked to make an affidavit, and he did have some actual recollection of the conference on 7 October 1994. He had seen Mr and Mrs Crowe together. He thought that it was not necessary to see Mrs Crowe separately, because both Mr and Mrs Crowe had a financial interest in the transaction.

Mr Davidge's Oral Evidence 106 In his oral evidence Mr Davidge said that he had acted for Mr Crowe in a number of civil and criminal matters, including a civil claims matter against de Rosa, Mr Crowe's criminal proceedings and litigation by Darkcm. He had acted for Mr Crowe in family law and domestic violence matters in the Local Court involving Mrs Crowe. 107 Although he had no specific recollection, Mr Davidge favoured a suggestion made by Mrs Crowe in her affidavit in reply that on 31 May 2000 he had seen her separately. As at 31 May 2000 Mr Davidge knew that Mr Crowe and Mrs Crowe were estranged. In seeing Mrs Crowe he regarded her as his client. 108 Mr Davidge did not think that he would have shrugged his shoulders and not given Mrs Crowe some sort of suggestion of an alternative. 109 Mrs Crowe in her affidavit in reply said that she could distinctly remember the following conversation:- "I said: 'What choices do I have?' and Mr Davidge shrugging his shoulders. Davidge said: 'You don't have to sign'. I said: 'What, and leave things as they are?' He then shrugged his shoulders again".

THE BANK'S TENDER BUNDLE (Exhibit C) 110 I have considered all of the voluminous documents in the Bank's tender bundle Exhibit C. The following is a summary of parts of the contents of some of the documents or facts evidenced by some part of the documents. 111 On 5 January 1993 Mr and Mrs Crowe made a written application to the Bank for a special purpose term loan. In the application Mr Crowe's date of birth was stated as being 8 March 1969 and Mrs Crow's date of birth was stated as being 26 October 1956. His occupation was described as "farmer/owner" and her occupation as "home duties". The amount of the loan required was stated to be $18,000 and the purpose for which the loan was required was to assist in the acquisition of a Ford Maverick motor vehicle costing $48,800. The security offered in the application was a bill of sale over the vehicle to be acquired. 112 In the application certain financial information was provided. The combined income of the applicants was stated to be $467. per week, made up of Mr Crowe's income being $215 per week, a family allowance of $112 per week and rent (on Mrs Crowe's house property) of $140 per week. Under the heading "weekly expenses" the words "live on parent's property rent free" were written. Proposed repayments were shown as $178 per week. 113 Pursuant to the application a loan of $18,000 was made by the Bank to Mr and Mrs Crowe, which was secured by a bill of sale over the Ford Maverick motor vehicle. 114 A Bank document dated 16 June 1993 recorded that an application was being made by Mr and Mrs Crowe for a loan of $35,000 to assist in the purchase and fitting out of a truck for a contracting business. 115 On 22 June 1993 the Bank instructed a valuer to confirm the adequacy of Mrs Crowe's house property as a security for a loan of $35,000. "by cursory external inspection only". The valuer later reported that the house property was a satisfactory security for a liability of $35,000. 116 By a letter dated 24 June 1993 to Mr and Mrs Crowe the Bank offered a facility being a term loan of $35,000 to "assist purchase and fit out used truck for contracting operations". The security proposed was "that the facility and all other obligations now and in the future of the borrower to the Bank shall be secured by the following security:- "Proposed 1st third party mortgage over house and land, 84 Noorilla Street, Griffith, registered proprietor: Anna Maria Crowe". 117 The Bank's letter offering the facility was signed by Mr Crowe as a customer and Mrs Crowe as a customer and as a provider of the security. 118 On 6 July 1993 Mrs Crowe signed the mortgage of her house property to the Bank and her signature was witnessed by Mr Lancaster. Mrs Crowe also signed memorandum X208233 filed with the Registrar of Land Titles, which set out standard provisions for mortgages to the Bank. The mortgage secured the payment of the monies thereby secured as that term was defined in the memorandum, and by the definition in the memorandum the monies thereby secured included all monies then owing or payable or thereafter to become owing or payable to the mortgagee by the mortgagor or the customer. 119 On 17 May 1994 the loan of $18,000 which had been made in January 1993 was fully repaid. 120 On 21 June 1994 the company Darkcm Pty Limited ("Darkcm") was registered, its directors being Mr Crowe and Mrs Crowe and its shareholders being Mr Crowe and Mrs Crowe, each holding one share. 121 Soon after its registration Darkcm as lessee entered into a lease from Frances De Rosa of land at Yenda and certain farming equipment, for a term of five years from 1 July 1994. 122 On 21 July 1994 an officer of the Bank received a telephone call from Mr Crowe. The record of the telephone conversation was as follows;- "Darren Crowe phoned and advised that he would be looking for finance of $130,000.ODL to run his farming program. Apparently Darren will be leasing his parent's farm plus another 1200 acres of irrigation. This will give Darren approximately 1700 acres of irrigation plus 280 acres of dry area. Darren's accountant is preparing cash flows and details of cropping program and Darren will call in to discuss the proposal next Wednesday 27/7/94". 123 A document entitled "Funding Proposal for Darkcm Pty Ltd 27 July 1994" was lodged with the Bank. In the Proposal the purpose of the loan which was being sought was stated to be to enable the commencement of a farming operation involving the leasing of three rice farms and the purchase of a breeding pair of ostriches. Under the heading "History of Directors" in the Proposal it was stated that Mr Crowe had been operating his own rural contracting business since 1989, that he had extensive experience in rice farming having worked in the area all his life and having been heavily involved in the operation of his parents' property for many years and that he owned 50 per cent of the business of Griffith Waste Removals. The Proposal stated that he had married Mrs Crowe in 1990. In the Proposal the "key personnel" were described as being Mr and Mrs Crowe. 124 In the Proposal the finance required was stated to be a term loan of $100,000 and an overdraft facility of $80,000. 125 Included in the Proposal was a schedule of assets and liabilities, showing assets totally $344,000 and liabilities totalling $66,000. Most of the assets shown were cars, trucks or tractors. Also included in the Proposal were projected cash flows for each month from August 1994 to July 1997. 126 Annexed to the Proposal were financial statements for the partnership of Mr and Mrs Crowe "for the period ended 31 March 1994" prepared by Andersons Accountants. The profit and loss account showed a net profit for the period of $23,068. The financial statements included a disclaimer by the accountants in which the accountants said that they had not audited the accounting records of the partnership and did not express any opinion whether the accounts were true or fair. 127 On 28 July 1994 the manager of the Bank's Griffith BBO (Business Banking Office) sent a memorandum to the Bank's district valuer, Mr Connolly, saying "as this is a new venture, BBO feels it is prudent that a report on economics be completed to assess accountant's estimates and the customers' servicing ability". 128 In a Bank document of 8 August 1994 under the heading "Servicing Capacity Summary" the cash flow estimates made in the Proposal are summarised as being for 1994-95 a loss of $14,167, in 1995-96 a profit of $43,016 and in 1996-97 a profit of $146,653. Under the heading "Risk and Mitigants" the risks were stated to be "borrowing to rural sector (variable conditions/prices)" and the mitigants as being "first class security held to cover existing facility + temporary ODL. Satisfactory banking history to date". 129 By letter dated 9 August 1994 the Bank offered to Mr and Mrs Crowe a banking facility for a period of two months, consisting of a overdraft of $30,000 and a term loan of $33,391.36. The sum of $33,391.36. was the balance outstanding of the loan made in July 1993. The security for the facility offered was to be the mortgage over the house property. The banking facility offered by this letter of 9 August 1994 was offered as a temporary facility, while Darkcm's Funding Proposal was being considered by the Bank. 130 The funding Proposal made by Darkcm was considered in a rural valuation report made by Mr Connolly, who was a registered valuer. 131 In the report the house property was valued at $120,000 and the vehicles were valued at $193,000. Mr Connolly noted that the maximum loan to security ratio for the house property would be 80 per cent and the maximum loan to security ratio for the vehicles would be 25 per cent. 132 Under the heading "Adequacy Working Capital" Mr Connolly said inter alia:- "The cash flows contained in this report vary significantly to the ones submitted by his accountant. The ostriches have been excluded…. Purchase of ostriches would only aggravate their shortfall of working capital for the first twelve months. The cash flow for the first twelve months indicates that the ODL of $110,000 would be exceeded by up to $40,000…." 133 Under the heading "General Remarks" Mr Connolly said inter alia:- "The Crowes' financial history has been limited to contract farming and the management of their parent's property. They have no financial history of management of a project of this size. The success of this Proposal is largely dependent on Darren Crowe's ability to generate income from hay and contracting… The Crowes are presented with very good opportunity to earn income of the two properties over the next five years. Their success is largely dependent upon their ability to generate income and contain expenses. Given the potential for the debt to increase significantly, it is suggested that the account be monitored quarterly to keep greater control over their spending and to help them develop better financial skills". 134 Under the heading "Summary of Proposal" Mr Connolly said:- "Strengths: Two properties are leased for five years at a concessional rent. They have the use of extensive farming plant. There is potential to obtain higher prices for the hay. Personal factor appears strong. Weaknesses: Dependence on second class security. Dependence on lucerne, which can be badly affected in a wet summer. Maximum cash flow is not obtained until the second year and beyond. There is potential for the debt to increase significantly if not properly managed. High overheads, particularly wages Overall the Proposal (that is, the amended proposal excluding the ostriches) is considered strong enough to support". 135 Mr Connolly recommended that an overdraft limit of $110,000 be approved. 136 In a Bank document of 29 August 1994 the valuer's report and recommendation was discussed in detail. In this Bank document the proposed guarantee from Mr and Mrs Crowe and the existing mortgage over Mrs Crowe's house property were described as 'first class security" and the proposed bill of sale over the vehicles was described as "second class security". The document included the following passages:- "As proposed facilities represented a new venture for customers, both valuer and BBO agreed would have great difficulty in recommending approval to full application due to likely shortfall in working capital and security. Customers were advised accordingly and agreed with valuer's recommendation to apply for overdraft facility purely to assist customers to cropping and livestock program on the leased properties". 137 By a letter dated 1 September 1994 the Bank offered a banking facility to Darkcm of a gross amount of $143,391, consisting of an overdraft of $110,000 in the name of Darkcm and an existing loan of $33,391 in the names of Mr and Mrs Crowe, the security to be a guarantee by Mr and Mrs Crowe, the existing mortgage over Mrs Crowe's house property and a bill of sale over the vehicles. 138 On 1 September 1994 Mr and Mrs Crowe had a meeting at the Bank with a bank officer to discuss the facility which had just been offered. The client contact sheet recording the meeting contains a number of references to what "Mr Crowe" or "Darren" said at the meeting. 139 On 7 September 1994 the Bank wrote to Mr Del Gigante solicitor, enclosing documents to be executed by Mr and Mrs Crowe and Darkcm. The letter included the following paragraph:- "Customers have requested these documents to be forwarded to yourself for an independent explanation of documents and to witness customers execute same". 140 On the Bank's copy of the letter of 7 September 1994 there are subsequent handwritten notations, indicating that the Bank telephoned the solicitor on a number of occasions. The solicitor explained that he had not yet received certain leases which were also to be executed by Mr and Mrs Crowe and wanted to have all documents executed at the same time. 141 On 9 September 1994 Mr Bill George "Credit Administrator Southern" of the Bank sent a memorandum to the manager BBO Griffith. In view of the importance attached to this memorandum in submissions made by counsel, I will set out the memorandum in full:- "In completing a post approval review of your decision of 31/8/94, I note the following:- Applicants are leasing country with 5 years negotiated on 2 of the properties. Funding is by way of O/D with no amortisation structure in place to ensure debts are liquidated within the term of the leases. Cash flow shows the debt still substantially drawn by 7/96. Can it be repaid before lease expiry? While approval is subject to no excesses, valuers cash flow and comments clearly indicate these are likely, in large amounts. Amount approved is within BVS but not in accord with cash flow. Paper rationalising cash flow in terms of Rice Board orders is written after the approval. This should have been addressed before approval and cash flow reworked, which should still be done if you are to monitor effectively. Further, if there is realistic potential for other income to minimise deficit/excesses then why not bring this into the cash flow? Decision is based on projections only, which for the first 12 months show a deficit of $106,476. Customers simply cannot service in the short term. Male applicant is only 25 and paper suggests his financial skills are weak. There is no financial history to suggest customers can manage a venture of this size. There is no room to move on security with substantial reliance on 2nd class assets which may or may not achieve valuers estimates. We have basically leant to BVS. Outside debts exist for a motor bike, truck & chisel plough. Paper suggests concessional rental in return for maintenance of properties but there are no repairs and maintenance in cash flow. Part of purpose is to pay creditors. Who? How much? Paper is silent on issues such as:- How were existing assets acquired? Where do borrowers live - rent? I do not believe this is a loan that should have been approved. Two other officers within Business Credit have reviewed the file and agree with me. The loan may prove to be sound and we obviously hope it does. However, the above comments highlight deficiencies, the sum total of which suggest we are now committed to a higher level of risk than the Bank would normally seek. I note the business has come via Andersons, a valued referral source of your office. If this is the standard of their referrals, I strongly urge you to take a firm stand in managing them. We should only accept business that meets our standards and if the referral source is professional, they will understand. With regard to your decision, the Bank is committed but I require:- a. RR40. b. Cash flow to be recast to reflect Rice Board orders and then to be monitored as proposed, subject to immediate review to Business Credit should unfavourable variances of 10% or more occur. c. No excess. d. This memorandum to be placed on the history file. I note approval was prior to two recent adverse post approval reviews. I strongly recommend that you now take more care in exercising your delegation". 142 The account officer and the manager BBO Griffith replied to Mr George's memorandum in an office minute of 27 September 1994 in the following terms:- "Business Credit raised various questions in relation to ODL(1) facility of $110,000 recently approved at BBO. Points raised and clarification are as follows: 1) Application does not allow for amortisation of ODL debt during lease period: BBO is to carry out quarterly monitorings of facility, to ensure customers adhere to budget as best as possible plus achieve maximum annual limit reductions as possible. 2) Reworking of Budget to accommodate additional income and board orders. Valuer's income estimates is the minimum customers can expect in the first 12 months of trading. - Valuer believed customers should easily achieve stated volume of baling. Customer since advised has already been contracted to bale over 20,000 bales (as estimated in budget) and expects bale at least a further 10,000 to 15,000 bales during upcoming season. - Valuer's budget allowed for sowing of two rice crops in the first year as customers were under the impression one property was not available. However customer has advised third property is now available for sowing this year, thus adding significantly to budgeted yield and income. BBO reworked budget, as requested. Budget allows for increased baling and rice activities. Expenses (such as Fertilizer, Seed and Sprays) have been removed from expenditure as these are to be paid out of 1st pool payment via Rice Board Order, therefore 1st payment now reflects 'net' payment expected based on valuer's price and yield estimates. 3) Cannot service in the short term: As per two above estimated trading loss for first 12 months did not allow for increased baling and rice activity now expected. Customers will have own hay to sell in year 2, whereas due to timing of leasing miss out on this income in the first year. 4) Age of Customer: Agreed, customer is relatively young for role he is taking on, however has been doing similar work for his parents (and himself) for the past 10 years and has always met commitments when due. 5) Security Mix/BVS: Agreed. BBO believes security held/offered to be sufficient to repay proposed borrowings in the event of a forced sale. Valuer believed borrowings should not exceed BVS in light of second class security being involved. 6) Outside Debts -4WD Motor Bike, financed by CDB over a term of 4 years, repayable by monthly P+1 instalments of $112.50 -Volvo Truck, customer advised this debt has now been repaid. - Chisel Plough, purchased second hand from customer's fertilizer supplier (Incitec), to be repaid over a two year period i.e: no formal loan agreement entered into, customer hoping to repay debt in coming 12 months (if income permits). 7) Valuer's cash flow does allow for R&M of $18,000 across coming 12 months, all plant available for operation is considered to be in very good condition and is well maintained by customer. Cost of materials for any improvements to be carried out on properties are to be paid for by Lessors. Labour costs to be borne by customer i.e: customer currently employs three people, who would carry out repair works as part of their normal duties. 8) Purpose: 'Pay Creditors'. Submission poorly worded, to read: 'To assist fund farming programme and assist meet future creditor payments anticipated'. 9) Existing Assets: Portion of plant obtained in partnership with parents over a number of years, plus customer purchasing second hand plant and overhauling same. All plant listed in Bill of Sale details is owned by customers following years of work for parents. 10) Living arrangements: Customers occupy dwelling on parents' farm. Parents have separated, father living in Griffith and mother in other dwelling located on farm. Customers do not pay any rent for these premises. 11) Quality of Referral: Comment noted, Accountant willing to assist Bank at all times in processing of this proposal. BBO and valuer believe customer has the technical ability and determination to generate sufficient income to service and reduce debt in given lease period and feel customers are worthy of support in this instance". 143 On 7 October 1994 Mr and Mrs Crowe at a conference with Mr Del Gigante executed, amongst other documents, the guarantee in favour of the Bank guaranteeing payment of all monies then or thereafter to become payable to the Bank by Darkcm and the traders bill of sale (which would operate as a security over the vehicles) securing payment of inter alia money due under the guarantee. Mr and Mrs Crowe also signed the letter offering the facility. Mr Del Gigante forwarded the executed documents to the Bank with a covering letter of 13 October 1994. 144 On 18 October 1994 a bank officer made a note recording that, with respect to the vehicles covered by the bill of sale, he had telephoned Mrs Crowe "and asked her for ins (insurance) pol (policy) - said will follow up". 145 On 25 October 1994 the bill of sale was registered. 146 In a facility summary dated 25 November 1994 the Bank's business banking office noted that the monitoring result of the facility to 31 October 1994 had been "satisfactory". However, in a facility summary dated 16 March 1995 the business banking office said that it considered the "quarterly monitoring result to 31/1/95" to be unsatisfactory. 147 A client contact sheet recording telephone conversations on 5 April 1995 was in the following terms:- "BBO contacted Mrs Crowe today regarding $1,500 excess of limit. Mrs Crowe stated has $41,000 (gross) in rice payments to be received 'this week', but Rice Board orders would be deducted from this payment. Customer was unsure how much in Board payments is due. BBO forwarded AOOA to Business Credit to carry account to $115,000 until 14/4/95 pending receipt of payment. Darren Crowe rang this afternoon to advise they owe $43,000 in Rice Board payments & therefore will not be receiving anything from first delivery. Darren stated rice harvest is in full swing and will be delivering a substantial amount of rice over the next two weeks prior to Board's next payment 'cut off' date of 18/4/95. Darren stated will be paid on 19/4/95 for deliveries made during next two weeks and should easily adjust account on that date". 148 A client contact sheet dated 28 June 1995 recording telephone conversations, in which the client contacted was identified as Mrs Crowe, was in the following terms:- "On 23/6/95, following discussion with customer, BBO gained approval from Business Credit to carry account at a MDB of $115,000 to 7/7/95 pending receipt of outstanding income. Mrs Crowe then stated cheques for wages would be drawn. However a $7,000 cheque for fuel has now been presented to overdraw account to $120,000 being $10,000 over limit and $5,000 over above arrangement. BBO contacted customers to advise cheque could not be paid unless proceeds are received today. Customers became very upset stating they have the following income outstanding: Rice: $45,000 approx Pumpkins: $35,000 approx Pure Foods: $10,000 approx Contracting: $ 3,500 approx $93,500 Customers stated $10,000 from Pure Foods and $10,000 from Pumpkins are due in over next two to three weeks. Customers stated have various accounts to pay, BBO advised customers not to draw any further cheques until account is adjusted". 149 The financial statements of Darkcm for the year ended 30 June 1995 prepared by Andersons accountants from books and records of Darkcm which had not been audited showed a loss for the period of approximately $104,000. 150 In a facility summary prepared 11 July 1995 the following passage occurred:- Budget allows for $16,000 in vegetable income for period, customer banked $4,071. during period and have stated are owed over $12,000. for delivery of vegetables to Griffith company Pure Foods. It is known that Pure Foods is presently experiencing some financial difficulties. It is unclear at this stage when full payment to growers will/can be made". 151 In a facility summary prepared 7 November 1995 the following passage appeared:- "This review has been delayed by several months while we were awaiting production of customers 1995 financial accounts. These are now to hand but to eliminate this being repeated next year we are looking to push the timing of the review back to 30/11 annually. Customers have requested that we allow their existing facilities to continue at the present level until after the harvest of their 1995 winter crops. At that time (31/1/96) they wish to reduce the limit to $90,000 - a reduction of $20,000. This limit reduction will see us much better placed from a security perspective as this will place our exposure within the valuation of our first class security, with the second class security then becoming a comfort 'pad'". 152 On 9 November 1995 the account manager in the Business Banking Office Griffith was instructed to ensure "security document is correct to secure plant and equipment… and determine which entity owns the assets". 153 On 24 November 1995 there was a meeting at the Bank. A Bank officer's note of the meeting was as follows:- "Darren and Anna Crowe called in 24/11/95 They have leased an additional 1500 acres and will not be able to meet the $20,000 limit reduction I gave them a cash flow to update and Darren will get back to us Also have sold Diahatsu ute + bought Land Cruiser. Will fax details of L/Cruiser for a new B/sale". 154 In a facility summary prepared 21 February 1996 the following item appeared:- "Late last year customers sold their aged Diahatsu ute for $5,000 and purchased a second hand Toyota 4WD. They have been reminded that the Bank should have been accounted to for the sale proceeds and have offered the replacement vehicle as security. We feel that the cost of this exercise and the small impact that the transaction had on our overall security makes the exercise uncommercial. Accordingly we recommend that the sale of the vehicle be noted". 155 On 14 March 1996 Mr and Mrs Crowe entered into a facility agreement with the Bank for the overdraft limit of $110,000 to be extended but subject to certain terms, including a term that the facility be reduced by at least $20,000 by 30 April 1996. On 2 May 1996 the Bank informed Darkcm by letter that the overdraft facility had been reduced to $90,000. 156 The financial statements for Darlcm for the year ended 30 June 1996 prepared by Andersons accountants from books and records of Darkcm which had not been audited showed a loss for the period of $66,257. 157 On 23 August 1996 Mr and Mrs Crowe entered into a facility agreement with the Bank for an increased overdraft limit of $100,000. 158 In September 1996 an application by Darkcm to the Bank for further financial accommodation to finance the acquisition of a specific piece of equipment was refused by the Bank. 159 In a Bank record of 6 March 1997 the following item appeared:- A limit reduction of $20k was due on 0/D facility 31/12/96 However as customer has had problems with party from whom they lease property on which they carry out cropping, customers have been unable to make the reduction. A major portion of cereal crop proceeds have been withheld due to the dispute". 160 Financial statements of Darkcm for the year ended 30 June 1997 prepared by Andersons accountants from books and records of Darkcm which had not been audited showed a loss for the period of $4,168. 161 On 17 February 1999 the Bank wrote to Mr and Mrs Crowe seeking confirmation that the assets subject to the bill of sale remained in their possession and were adequately insured. A follow up letter was written by the Bank of 8 April 1999. 162 On 2 June 1999 a bank officer who had been the account manager for the accounts of Darkcm and Mr and Mrs Crowe wrote a memorandum to another bank officer which included the following passage:- "From memory the biggest problem will be Crowe's ability to service any residual debt as he never really gave us anything to prove servicing and the monies he is getting is from settlement is a one off. Last discussion with Crowe was for either minimal residual or none as he seemed to recognise that his long term ability to repay wasn't strong. He was to make some payments to the account during the case however I don't think he did". 163 The references to "the case" and "settlement" were references to the legal proceedings brought against de Rosa. 164 In a Bank document headed "Agenda Items Darkcm/Crowe 3/6/99" it was stated, with respect to the vehicles included in the bill of sale, that one vehicle the Ford Maverick was "dead", two of the vehicles had been sold for a total price of $5,000, two had been acquired by Mr Crowe's brother with the Bank itself financing the acquisition and one, the Diahatsu, had been released in 1996. 165 In a Bank document of 7 June 1999 the Bank's then exposure was stated to be $156,000 with the security being the mortgage and the bill of sale. It was noted that the assets subject to the bill of sale had all been disposed of, some with the Bank's knowledge and some without. This document continued:- "Until about 18 months ago this was a sound relationship. It fell off the rails when a share farming agreement went into dispute and the land owner froze the crop proceeds. This eventually made its way to court with customers successfully defending their position. The proceeds of this case are those offered in reduction of the Bank's exposure". 166 This document sets out a proposal made by Mr and Mrs Crowe in the following terms:- "Customers pay $30,000 off the bank's current exposure, in return the bank reduces its current interest rate to Reference Rate minus 1% (currently 7.5%), customers agree to pay a minimum of $3,700 by the end of September 1999, followed by a further minimum of $3,7000 by the end of December 1999, the Banks agrees not to exercise its rights as mortgagee during the above period should payments be met, in exchange for fulfilling the above, the bank to restructure the residual debt @ 31 January 2000 into a new facility with a commitment not exceeding $15,000 per annum (if prevailing interest rates permit". 167 In considering this proposal the Bank noted:- "Bill of sale vehicles and equipment have been either sold, given to relatives or are no longer operating… the bill of sale will expire 21/10/99 (registered 21/10/94) and with no value ascribed it is recommended that this security be released". 168 A recommendation was made by bank officers that the Bank accept the proposal. Part of the Bank document was in the following terms:- "We would appear to have 3 options being: 1. Accept proposal, with upside that we will be $30,000 better, and only detriment being that we lose 3 months if the first payment due 30/9/99 is not met (although in reality, we will still be better off if we pursue legal action at that time). 2. Refuse proposal, and taking immediate legal action to cover the bank's position. However, BM drove past security property late last week and whilst not a valuer, proffered that at best, value may have increased from $130,000, as per the last valuation on file, to $140,000. 3. Refuse proposal in the hope that a better offer may be achieved. This option is not favoured by the writer. It is recommended that we accept option 1, with our security position becoming immediately much improved, whilst at the same time, providing the borrower with the opportunity to get back on track with payments over the next 6 months". 169 The Bank informed Darkcm by a letter dated 17 June 1999 that it had agreed to accept the proposal, subject to the security over the bill of sale being released and subject to certain other conditions which did not affect the substance of the offer. 170 A Bank record of 25 June 1999 (9.06am) recorded:- "Apparently Darren hadn't communicated with Anna as he has the letter in his possession. You said to call in at 9.30am to pay the money and return the letter of acceptance". 171 A Bank document later the same morning recorded:- "I have today received a cheque from Darren and Anna Crowe for an amount of $32,000 (versus the promised payment of $30,000). They have signed and accepted the Bank's offer dated 17 June 1999. Please note that customers have requested that all future correspondence be mailed under separate cover to each borrower at the following addresses…" 172 An amount in excess of $3,700 was paid on 30 September 1999. A document dated 31 December 1999 prepared by the business manager Commercial Business Riverina Area recorded:- "Darren just called. He agreed to pay the instalment due however wishes to ensure that the balance of the agreement is in order. Can you please prepare the required facility agreements for the 'new' facility - Darren will hand over the cheque for the payment due in exchange for same - that way all parties can be assured that there will be no issues raised later to cause distress". 173 On 4 February 2000 the business manager Commercial Business Riverina Area prepared a memorandum. Parts of this memorandum were as follows:- "In regards to the rate I also agree that few tears would be shed if Darren elected to go elsewhere at this stage, but given his debt to equity ratio, and recent local events I would doubt that he would be able to refinance. My objective is more along the lines of finding a structure that can be serviced (albeit over a long term) thus making something for the bank, and at the same time avoiding the necessity to take action under our security. At this stage I feel that we may come close to looking at a loss situation if this became necessary. At all times it has been my objective to avoid the bank taking a loss in this case. Darren is still 'employed' by his mother as a truck driver/harvesting contractor/hay baler (sounds a lot like his previous occupation when self employed!!) I do not have details as to the income being generated by this business and as the accounts are at another bank I cannot ascertain what the conduct of the account is like. Again I feel that Darren will do all that he can to protect the home and will undertake whatever is required to meet the proposed loan commitments. As you know however things can happen to disrupt this but the effort will be made. Should this facility fall into arrears I feel that we should give Anna Crowe time to bring it into order, but failing that I would regard this as the banks final concession serious default=recover action. I agree also that we should undertake some fresh documentation to ensure that (a) all parties are fully aware of what is being proposed & done, (b) as current documentation is relatively aged there may be defects that we wish to correct now while we have the opportunity". 174 On 29 February 2000 a registered valuer instructed by the Bank valued the house property at $135,000. 175 Parts of a Bank document of 8 February 2000 prepared by bank officers were as follows:- "Comment on Servicing: Information conveyed in phone conference 1/2/2000 between the writer and Mr Crowe, who was in the presence of Mr David Traynor Business Manager Griffith Trade Area, included the following. Mr Crowe is said to be in regular employment, however current tax returns are not available. Mr Crowe has indicated that his capacity to service this debt can be seen from payments of $4,011.76 made 30/9/99 and a further payment of at least $3,7000 to be made upon approval of this facility. Darren's employment is as a general transporter of rural produce, such as carting grapes, rice, grain, fruit trees and that, as a result, income is seasonal. His main employer for the last 18 months has been his mother Bruna Crowe (Griffith Waste Removal Service). Mr Crowe lives in a dwelling that is situated on a property owned by Darren's mother. Accordingly, the level of income received by Darren reflects this situation, with Darren only needing to incur minimal personal living expenses. Rental income is no longer being received, with the property being tenanted by Mrs Anna Crowe, who is living apart from her husband. It is for this reason that we have both Darren and Anna execute a new guarantee to strengthen our position. Darren has not been operating an account to display to the bank a level of savings capacity. Accordingly, we have no formal confirmation of the level of income being received. It was implied in the previous approval that if certain payments were made, the Bank would restructure facilities. Servicing uncertain". 176 In another part of the same document it is said:- "Our alternatives are either to sell security property, which I do not favour at present, or have clients seek refinance. Given total debt vis a vis value of property, this would not be achieved. Accordingly, it is proposed that we restructure debts". 177 By a letter of 11 April 2000 to Darkcm Pty Limited the Bank offered a facility of a variable rate term loan of $145,000 to refinance the existing variable rate term loan and the existing business overdraft, to be secured by guarantees from Mr and Mrs Crowe and the existing mortgage over the house property. Repayment was to be made by "bi-annual principal and interest in arrears instalment payments" of an indicative amount of $8,676. per instalment. 178 On 31 May 2000 the letter of offer and the guarantees were signed by Mr and Mrs Crowe in the presence of Mr Davidge solicitor. Mr Davidge completed certificates in the usual form. 179 The terms of the facility offered by the letter of 11 April 2000 and accepted on 31 May 2000 were not complied with.

Evidence in Proceedings on Sentence 180 A transcript of the hearing on 18 October 1999 in the District Court at Griffith of the proceedings for the sentencing of Mr Crowe for an offence of breaking and entering a dwelling house whilst armed with an offensive weapon and committing a felony therein, namely assault occasioning actual bodily harm, became exhibit D. 181 Mr Crowe gave evidence in the proceedings on sentence. He said that he had left school in 1984 and had then worked full-time on his parent's farm. His parent's marriage broke down. In consequence of the breakdown of the marriage part of the farm was sold to Fodder King Pty Limited, whose managing director was Mr McCardell, the victim of the criminal offence, and part of the farm was leased to Fodder King Pty Limited. Mr Crowe entered into an agreement to manage the farm for Fodder King Pty Limited and up to some time in 1998 did more than $50,000 worth of work for Fodder King Pty Limited of which in 1998 an amount of about $33,000 was outstanding. 182 Mr Crowe said in his evidence that he had entered into a lease from de Rosa. In the third year of the lease he had been evicted from the land on which there was a rice and barley crop. Legal proceedings had been brought against de Rosa and these legal proceedings were finally settled in March 1999 by de Rosa paying $100,000.

COUNSEL'S SUBMISSIONS 183 As stated earlier in the judgment, the issues which were argued at the hearing were issues which were raised by Mrs Crowe's cross-claim, namely whether she could resist the Bank's claims (1) under the principles stated in Yerkey v Jones (2) under the principles stated in Amadio or (3) under the provisions of the Contracts Review Act. 184 As to Yerkey v Jones, I was referred particularly to the judgment of Dixon J in Yerkey v Jones at pp684-686 and to the joint judgment of Gaudron, McHugh, Gummow and Hayne JJ in Garcia v National Australia Bank Limited (1998) 194 CLR 395. In Garcia it was held in the joint judgment that the principles stated in Yerkey v Jones had not been subsumed in the principles stated in Amadio and continue to have an independent operation. In par 31 of the joint judgment in Garcia their Honours said:- "The principles applied in Yerkey v Jones do not depend upon the creditor having, at the time the guarantee is taken, notice of some unconscionable dealing between the husband as borrower and the wife as surety. Yerkey v Jones begins with the recognition that the surety is a volunteer: a person who obtained no financial benefit from the transaction, performance of the obligations of which she agreed to guarantee. It holds, in what we have called the first kind of case, that to enforce that voluntary transaction against her when in fact she did not bring a free will to its execution would be unconscionable. It holds further, in the second kind of case, that to enforce it against her if it later emerges that she did not understand the purport and effect of the transaction of suretyship would be unconscionable (even though she is a willing party to it) if the lender took no steps itself to explain its purport and effect to her or did not reasonably believe that its purport and effect had been explained to her by a competent, independent and disinterested stranger. And what makes it unconscionable to enforce it in the second kind of case is the combination of circumstances that: (a) in fact the surety did not understand the purport and effect of the transaction; (b) the transaction was voluntary (in the sense that the surety obtained no gain from the contract the performance of which was guaranteed); (c) the lender is to be taken to have understood that, as a wife, the surety may repose trust and confidence in her husband in matters of business and therefore to have understood that the husband may not fully and accurately explain the purport and effect of the transaction to his wife; and yet (d) the lender did not itself take steps to explain the transaction to the wife or find out that a stranger had explained it to her". 185 It was submitted by counsel for Mrs Crowe that the present case fell within the second kind of case distinguished by Dixon J in Yerkey v Jones and in par 31 of the joint judgment in Garcia. 186 As to Amadio, I was referred to frequently quoted passages in the judgments of Mason J and Deane J, including:-

(Per Mason J at 462) "…an underlying general principle which may be invoked whenever one party by reason of some condition or circumstance is placed at a special disadvantage vis-à-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word "disadvantage" by the adjective "special" in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party" .

(Per Deane J at 474) "The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them, and (ii) that 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. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable: 'the burthen of shewing the fairness of the transaction is thrown on the person who seeks to obtain the benefit of the contract'…" 187 It was submitted by counsel for Mrs Crowe that at the time she entered into each of the transactions of 6 July 1993 ("the July 1993 transactions"), of 7 October 1994 ("the 1994 transactions") and of 31 May 2000 ("the 2000 transactions") she was under a special disability, that the Bank knew or ought to have known of that special disability, that the Bank had unconscientiously taken advantage of Mrs Crowe's special disability and that the Bank had not shown that the transactions were fair. 188 As to the Contracts Review Act, it was submitted by counsel for Mrs Crowe that each of the transactions Mrs Crowe had entered into in July 1993, 1994 and 2000 was a contract; that each contract had been unjust in the circumstances relating to the contract at the time it was made, within s 9 of the Contracts Review Act; and that the Court should in the exercise of its discretion under s 7 of the Contracts Review Act grant relief. 189 A large number of particular submissions were made by counsel for Mrs Crowe in support of these general submissions. I have taken all of these submissions into account. Without specifically referring to all of these submissions, I note that it was submitted on behalf of Mrs Crowe that the Court should find that:- 190 (i) Mrs Crowe was a woman of little education with only basic language skills in English and with no commercial or business experience, who did not understand the nature of the transactions she entered into. She was the sole owner of the house property over which she gave the mortgage and the house property was her only substantial asset. 191 (ii) Mrs Crowe was a volunteer for the purposes of the principles in Yerkey v Jones. Both before and after the incorporation of Darkcm the farming activities which were carried on were carried on by Mr Crowe in whatever way he saw fit, without any participation by, or consultation with, Mrs Crowe. Although Mrs Crowe was a director of and a shareholder in Darkcm, the business carried on by Darkcm was in reality her husband's business, which was carried on by him in whatever way he saw fit, to the exclusion of Mrs Crowe. 192 (iii) Mrs Crowe did not understand the nature of the transactions she entered into, including the mortgage and the guarantees and the other documents she signed, and, although she signed the various documents in the presence of solicitors and the solicitors furnished certificates that they had explained the documents to Mrs Crowe, the solicitors had failed to properly explain the documents to her. Those solicitors, including Mr Lancaster and particularly Mr Davidge, were her husband's solicitors chosen by him and had not given Mrs Crowe truly independent advice. Mr Lancaster and Mr Del Gigante, notwithstanding the likelihood of a conflict of interest between Mrs Crowe and Mr Crowe, had seen Mrs Crowe and her husband together, rather than seeing Mrs Crowe separately from her husband. 193 The Bank was aware from the certificates furnished by the solicitors that in each case the same solicitor had advised both Mrs Crowe and her husband and had witnessed the signatures of Mrs Crowe and her husband and, hence, the Bank was on notice that such advice as was given by the solicitors to Mrs Crowe might not have been frank and disinterested. 194 Where there was a conflict between the evidence of Mrs Crowe and the evidence of the solicitors, the Court should not prefer the evidence of the solicitors on the grounds that they were disinterested witnesses, because solicitors who witness the execution of documents by borrowers or mortgagors or guarantors and who furnish certificates to the effect that they explained the documents before they were signed have an interest in maintaining that they properly explained the documents. 195 (iv) The transactions and especially the 1994 transactions were improvident, so far as Mr Crowe, Mrs Crowe and Darkcm were concerned. However, Mrs Crowe, because of her lack of education and her lack of experience, was unable to judge for herself whether the transactions were improvident. The Bank, on the other hand, knew that the transactions were improvident and that it was unlikely that repayments of money borrowed could be serviced. Counsel referred to the memorandum from Mr George of 9 September 1994 and the memorandum of 2 June 1999. It should have been apparent to the Bank that Mrs Crowe was unable to judge for herself whether the transactions were improvident. 196 Notwithstanding that the transactions were, to the Bank's knowledge, improvident, the Bank had offered financial facilities, because the Bank would have what the Bank regarded as a first class security in the mortgage by Mrs Crowe. 197 In circumstances where the proposed transactions were improvident with a likelihood of default being made, the Bank knew or ought to have known that the proposed transactions were improvident and knew or ought to have known that Mrs Crowe would be unable, without the benefit of independent financial advice, to judge for herself whether the transactions were improvident, it was incumbent on the Bank to ensure that Mrs Crowe received independent financial advice before entering into the transactions. 198 Any financial advice given by the accountant Mr Anderson, who prepared the Funding Proposal for Darkcm of 27 July 1994, was not given independently of Mr Crowe and was advice about a proposed farming operation which included the purchase of a breeding pair of ostriches. This part of the proposed farming operation had been abandoned and no financial advice had been given about the amended farming operation which was to be funded by the financial facility to be granted by the Bank. 199 (v) At the time she entered into each transaction Mrs Crowe believed that there was no risk to her house, because she believed assurances repeatedly given to her by her husband that he would pay the repayments as they fell due and that, even if he did not make the repayments, the Bank would have recourse to the bill of sale, and not to the mortgage, and the proceeds of enforcing the bill of sale would be sufficient to repay all of the indebtedness. 200 The Bank should have informed Mrs Crowe that there was a risk of default and that, if that risk eventuated, the Bank would seek to recover what was owed to it by enforcing the mortgage in priority to the bill of sale, which the Bank regarded as being only a second class security. 201 (vi) The Bank had not preserved the bill of sale as an alternative security to the mortgage. The Bank had itself financed the disposal by Mr Crowe of some vehicles which were subject to the bill of sale. The Bank had rejected an offer by Mr and Mrs Crowe that another vehicle be substituted for a vehicle which had been disposed of. The Bank had not renewed the bill of sale. 202 Apart from the submissions which I have just summarised, many of which related to all of the transactions, counsel for the cross-claimant made submissions specifically relating to the 2000 transactions, the 1994 transactions or the July 1993 transactions, counsel taking the transactions in reverse chronological order.

The 2000 Transactions 203 It was submitted that the Bank wished to obtain a new guarantee from Mrs Crowe (and Mr Crowe), in case there was any defect in the existing guarantee which had been given several years earlier, that is, in order to strengthen the Bank's position. 204 In 2000 the Bank had no information about Mr Crowe's current income and therefore no information about his ability to service the facility the Bank was offering and the Bank believed that it was likely that there would be default under the facility. 205 The bill of sale had not been renewed and hence the only security (apart from the guarantees) was the mortgage given by Mrs Crowe. 206 By the year 2000 Mr Crowe had been physically violent to Mrs Crowe and the couple had separated before the facility was offered and accepted and the Bank was on notice that Mr and Mrs Crowe had separated and had separate addresses. 207 Counsel for Mrs Crowe anticipated an argument which would be put by counsel for the cross-defendant, that the 2000 transactions were simply a refinancing of Darkcm's indebtedness to the Bank and Mrs Crowe was no worse off by reason of the transactions having been entered into, than she would have been if the transactions had not been entered into. It was submitted that such an argument could not avail the Bank, in circumstances where the Bank knew that Mrs Crowe had separated from her husband and was vulnerable and the Bank was seeking new documentation in order to strengthen its own position.

The 1994 Transactions 208 It was submitted that the facility offered by the letter of 1 September 1994 was substantial. It was unlikely that Darkcm would be able to make the payments required under the terms of the facility and the Bank believed that it was unlikely that Darkcm would be able to make payments. On the other hand, Mrs Crowe believed the assurances given to her by her husband that the payments would be made or, if they were not made, the Bank would recover the full amount owing to it by enforcing the bill of sale. The Bank did not inform Mrs Crowe that the Bank believed that it was unlikely that Darkcm would be able to repay its indebtedness and that the Bank regarded the mortgage as its principal security and the bill of sale as only a second class security. In all of these circumstances the Bank should have informed Mrs Crowe that she should obtain independent financial advice before accepting the facility which was offered. The only financial advice obtained was from Mr Anderson. Mr Anderson's advice was not given independently of Mr Crowe and did not relate to the farming operation as ultimately approved by the Bank. 209 The documents executed by Mrs Crowe in the presence of Mr Del Gigante included the bill of sale but did not include the mortgage, which had been executed year earlier, and any advice given by Mr Del Gigante would have been concentrated on the security document the execution of which Mr Del Gigante was witnessing, that is the bill of sale, and any such advice would have reinforced Mrs Crowe's belief that, if by any chance the repayments under the facility were not made, her house would not be at risk, because the Bank would enforce the bill of sale and not the mortgage. 210 Counsel for Mrs Crowe anticipated an argument that would be put by counsel for the Bank, that Mrs Crowe would have done what her husband asked, whatever advice she was given by any professional adviser. It was submitted on behalf of Mrs Crowe that, if Mrs Crowe had been made aware of the risk of default, that bank officers were of the opinion that the facility should not have been approved and that the Bank regarded the bill of sale as a secondary, second class security, she would not have entered into the transaction, notwithstanding that her husband asked her to.

The July 1993 Transactions 211 It was submitted by counsel for the cross-claimant that the Bank, having received the financial information about Mr and Mrs Crowe provided in January 1993, should have investigated further Mr Crowe's ability to make repayments under the facility offered in the Bank's letter of 24 June 1993. 212 It was submitted that the Court should accept par 14 of Mrs Crowe's affidavit and find that the Bank had entrusted Mr Crowe with the function of obtaining Mrs Crowe's signature to the mortgage, with the consequence that the Bank was responsible for any misrepresentation made by Mr Crowe as its agent in obtaining Mrs Crowe's signature to the mortgage. Counsel cited Kings North Trust v Bell (1986) 1 WLR 119. 213 At the conference with Mr Lancaster Mr Crowe kept repeating to Mrs Crowe that he would be able to meet the repayments and that, if he did not, the debt would be satisfied in full, otherwise than by recourse to the mortgage. 214 Mr Lancaster did not advise Mrs Crowe that the mortgage was an "all monies" mortgage, so that Mrs Crowe would not have been aware that monies subsequently becoming due would form part of the monies secured by the mortgage. 215 An alternative submission was put that, if the July 1993 transactions were not set aside, Mrs Crowe should be liable for only half of the amount advanced.

Other Cases 216 Counsel for the cross-claimant relied particularly on two decided cases Elkofairi v Permanent Trustee Company Limited [2002] NSWCA 413 and Teachers Health Investments Pty Limited v Wynne (1996) ASC 56-356. 217 In Elkofairi the Court of Appeal held that a married woman who with her husband gave a mortgage to a trustee company over their jointly owned home, the wife's interest in the home being her only asset, was not entitled to relief from her obligations under the mortgage under the principles in Yerkey v Jones but was entitled to relief from her obligations under the mortgage under the principles in Amadio and under the Contracts Review Act. Key paragraphs in the judgment of Beazley JA, who delivered the leading judgment in the Court of Appeal, are pars 53, 56, 59 and 79, which were as follows:- "53 The appellant's educational background, her inability to read or write English or to understand other than the most basic spoken English and her difficult domestic circumstances were such that the appellant was in a special position of disadvantage in the sense explained in Blomley v Ryan . However, none of those matters were known to the respondent. Accordingly, it is necessary to consider whether there were any other features of the transaction which made it unconscientious for the respondent to enter into this transaction with the appellant given the circumstances in which her execution of the contract was procured. . . . . . . . . 56 In my opinion, notwithstanding that the respondent did not have knowledge of the appellant's lack of education and her language and domestic difficulties, her lack of income, in the circumstances of this transaction - that is a large borrowing secured over her only asset, in circumstances where the application form failed to disclose any income for either husband or wife - placed her in a special position of disadvantage. Though the full extent of that special position of disadvantage was not known to the respondent, nonetheless the absence of any relevant financial information was sufficient to put the respondent on notice of the appellant's lack of capacity to meet the repayment obligations under the mortgage. That left as the only source of repayment the selling of her only asset, as again the respondent must be taken to have known. . . . . . . . 59 In my opinion, therefore, it was unconscientious for the respondent to lend a large sum of money to a person with no income with full knowledge that if the repayments under the loan were not met, it could sell that person's only asset. . . . . . . . . 79 This case does not fit neatly into either of the factual scenarios presented in West and in Smith . However, it is characterised by two significant features. First, it was a substantial loan, security for which was the appellant's only asset - her interest in the property. The debt to asset ratio was almost 75%. Secondly, the respondent knew that the appellant had no income nor other assets. None was disclosed on the loan application. The only confirmation the respondent had that the payments under the loan would be met was the series of letters from the accountant, which only related to Mr Elkofairi, and which contained no particulars of Mr Elkofairi's income and included a disclaimer "as to the accuracy of the information" provided. The consequence was, as submitted by the respondent's counsel, that the respondent was content to lend on the value of the security only. In my opinion, these factors taken in consideration with the matters to which I have referred in para 53, are sufficient to make the contract unjust in the circumstances in which it was made: s 9; and sufficient for the Court to exercise its discretion under s 7". 218 It was submitted that the present case was similar to Elkofairi, in that Mrs Crowe was a woman with only a basic knowledge of English and in difficult domestic circumstances, that the house was her only asset, that the Bank was on notice of a lack of capacity to meet the repayment obligations under the mortgage and that it was unconscionable to lend a large sum of money, if there was a known lack of capacity to make repayments, on the basis that the Bank could recover its debt by selling Mrs Crowe's only asset. 219 In Teachers Health Investments Pty Limited v Wynne a husband and a wife mortgaged their jointly owned property to secure a loan made to the husband. The Court of Appeal held that the wife was entitled to relief from her obligations under the mortgage under the principles in Amadio and under the Contracts Review Act. The Court of Appeal held that on such financial information as was supplied in support of the loan application, it was clear that the proposed transaction was perilous from the principal debtor's point of view and improvident from the wife's point of view. The wife was unable to judge for herself the providence of the transaction. It was held that in the circumstances any advice the wife had received was not adequate advice, because it did not include financial advice about the financial circumstances of the principal debtor and the principal debtor's business. 220 It was submitted in the present case that it was not sufficient that Mrs Crowe had received advice from solicitors, which was purely legal advice. It was essential, in order that she should have been able to make an informed decision about whether she should enter into the transactions, that she should have received proper financial advice.

Cross-Defendant's Submissions 221 I can outline counsel for the cross-defendant's submissions fairly succinctly. 222 As regards the claim by Mrs Crowe based on Yerkey v Jones and Garcia, it was submitted by counsel for the cross-defendant, with respect to the combination of circumstances listed in par 31 of the joint judgment in Garcia, that (i) Mrs Crowe had not established that she did not understand the purport and effect of each transaction and, on the contrary, the evidence established that she did understand the purport and effect of each transaction (ii) Mrs Crowe had not established that any transaction was voluntary and, on the contrary, in relation to each transaction she was a co-venturer with Mr Crowe (iii) the Bank reasonably believed from the certificates furnished by the solicitors that the purport and effect of each transaction had been explained to Mrs Crowe by a competent, independent and disinterested stranger. 223 As regards the claim by Mrs Crowe based on the principles in Amadio, it was submitted that:-

(i) There was little evidence of any special disadvantage to which Mrs Crowe was subject, apart from her limited education.

(ii) Any special disability to which Mrs Crowe was subject had been removed by her receiving advice from solicitors.

(iii) If Mrs Crowe was subject to any special disability, the Bank neither knew nor ought reasonably to have known of this special disability.

(iv) Any knowledge of any special disability was overcome by the Bank's belief that Mrs Crowe had received advice from solicitors.

(v) The Bank had not taken unconscionable advantage of any special disability of Mrs Crowe.

(vi) The transactions into which Mrs Crowe had entered were not disadvantageous or improvident or, at the very least, not clearly so. 224 As regards the claim by Mrs Crowe based on the Contracts Review Act, counsel for the cross-defendant stressed that the presence of one or more of the matters set out in subs (2) of s 9 of the Act does not necessarily mean that the Court should find that a contract was unjust and that, even if the Court found that any contract was unjust, the Court would still have to determine, in the exercise of its discretion under s 7 of the Act, whether it should grant any relief. As a general rule, a court will not grant relief under the Contracts Review Act against a party to a contract who was not responsible for the contract being unjust and who had no notice of the matters rendering the contract unjust. 225 It was submitted on behalf of the cross-defendant that Mrs Crowe had received advice, independent of the Bank, from three solicitors and an accountant, that the Bank knew that Mrs Crowe had received such independent advice, that the Bank was entitled to rely on the certificates furnished by the solicitors, without having to conduct some independent investigation of its own into whether the advice given by the solicitors had been adequate and that I should find, on the basis of Mrs Crowe's own evidence, that she would have done as her husband wished, whatever advice had been given to her. 226 It was submitted by counsel for the cross-defendant that, while it was not suggested that Mrs Crowe had not been a dishonest witness in any part of her evidence, she had at times been an unreliable witness and, in particular, she had overstated her inability to understand the general effect of a mortgage and other kinds of legal transactions and had erred in her recollection of some of her meetings with solicitors. 227 It was submitted that in her evidence Mrs Crowe had made a number of admissions which were of assistance to the Bank in defending the cross-claim. She had admitted that in 1993 she knew that, if money was borrowed from a bank, there was a liability to repay the money; she had accepted that she told Mr Lancaster that her husband wanted to "make things better for us" and that she had decided to "put up" her house; that she had made up her mind to give a mortgage over her house, before she saw Mr Lancaster; and she accepted that she knew that, if the Bank sold the vehicles subject to the bill of sale and the proceeds of sale were insufficient, then "they'd (the Bank) want more money" 228 She admitted that on 7 October 1994 she knew that she was signing the letter from the bank offering the financial facility, both on behalf of Darkcm and on behalf of herself, and that if she had read the letter she would have understood that there were two securities, namely the mortgage and the bill of sale. 229 It was submitted that Mrs Crowe clearly understood what a mortgage was and that her house was at risk, when the agreement with RKCM Harvesters Pty Limited was made in December 2000. 230 It was submitted that I should find that Mrs Crowe entered into the transactions, because she trusted her husband, because she accepted the assurances her husband gave her, that because she accepted her husband's assurances she was prepared to take the risk involved in giving a mortgage over her home and in borrowing further money on the security of the mortgage, that it was what her husband said that mattered, irrespective of what the Bank or any solicitor said, that her giving the mortgage over her home as a security was the only way in which her husband could borrow money, that her husband and Darkcm were borrowing money, not just for the sake of her husband, but for Mrs Crowe and her children as well, and that if Mr Crowe thought something was "a good idea", then it was also a good idea so far as Mrs Crowe was concerned. 231 It was submitted that the 1994 transactions were not improvident or, at least, not clearly improvident, as was demonstrated by the support accorded by the Bank's valuer and the bank officers in Griffith, and the reason why the venture had ultimately failed lay in of the actions of Fodder King, de Rosa and Landaco Spreaders, Mr Crowe's sentence of periodic detention and, more generally, the failure of substantial debtors of Darkcm to pay Darkcm the amounts they owed. 232 As regards any intimidation or duress of Mrs Crowe by her husband, Mr Crowe had generally not been physically violent to her until after the 1993 and 1994 transactions had been entered into and when he did become physically violent to her, she had kept his behaviour to herself.

ASSESSMENT OF THE EVIDENCE AND FINDINGS OF FACT 233 I accept the facts evidenced by the parts of the documents in the Bank's tender bundle which I referred to in my summary of the documents in the Bank's tender bundle. I also accept the evidence given by Mr Crowe when he was sentenced on 18 October 1999. 234 In assessing the evidence of the solicitors I have taken into account the submission by counsel for Mrs Crowe that a solicitor who witnesses the execution of a loan document or a security document and who furnishes a certificate that he explained the document to the borrower or mortgagor before it was signed, is not a disinterested witness, because he has an interest in maintaining in his evidence that he properly explained the document. 235 I have concluded that I should accept both the affidavit and the oral evidence of Mr Lancaster. I will give some reasons for this conclusion. 236 Mr Lancaster made contemporaneous file notes of the telephone conversation of 8 June 1993, the communications about the certificate of title for the property being uplifted by the Bank and the conferences of 5 July 1993 and 6 July 1993. These file notes lend some support to parts of Mr Lancaster's evidence about what was said in the telephone conversation and at the conferences. It would be unrealistic to expect the file notes to contain a complete record of everything that was said. 237 Mr Lancaster asserted that he had some actual recollection of what had been said between himself and Mrs Crowe. I consider it quite likely that Mr Lancaster would have had some actual recollection of what had been said. He had previously acted for Mrs Crowe on many occasions and knew how much she had wanted to keep the house for herself and her children. In these circumstances a proposal that she put up the house as security for a loan to her second husband and what was said about that proposal and in the carrying out of that proposal would be likely to be memorable for Mr Lancaster. 238 In the circumstances I have just outlined, it is inherently probable that, as Mr Lancaster asserted in his evidence, he was concerned by the proposal that Mrs Crowe mortgage her house, advised Mrs Crowe against mortgaging her house and warned her that, if payments due under the mortgage were not made, the Bank could sell her house and she would lose her house. 239 Mrs Crowe, in either her affidavit in reply or in her oral evidence, partly accepted Mr Lancaster's account of the telephone conversation of 8 June 1993 and agreed that at the conference on 6 July 1993 she had said the things attributed to her in par 12 of Mr Lancaster's affidavit. 240 Unlike Mr Lancaster, Mr Del Gigante had not previously acted for Mrs Crowe and there was no special reason why he should have remembered the conference of 7 October 1994. Furthermore, Mr Del Gigante had been unable to locate any contemporaneous documents of his own and had had to rely on copies of documents held by the Bank which the Bank had provided to him. 241 I nevertheless consider that I should accept Mr Del Gigante's evidence (both his affidavit evidence and his oral evidence). I accept Mr Del Gigante's assertion that, having been asked to make an affidavit and having been supplied with copies of documents and having given the matter a deal of reflection, some actual recollection of the conference on 7 October 1994 had been revived in his mind. 242 I consider it inherently likely that Mr Del Gigante did ask the questions and did receive the answers which are recorded in the certificate he furnished to the Bank. Mrs Crowe in her evidence conceded that Mr Del Gigante might have asked the questions set out in his certificate. 243 The Bank's memorandum of 7 October 1994, recording a meeting between a bank officer and Mr and Mrs Crowe on the same day as the documents were signed but after the documents had been signed, commences with the words "Mr and Mrs Crowe called to discuss aspects of their ODL $110,000 following discussion with their solicitor. Customers main concern was with clause in letter of offer stating overdraft was repayable 'on demand' …" 244 The terms of this memorandum suggest that the Bank's letter of offer had indeed been discussed by Mr Del Gigante with Mr and Mrs Crowe. If the letter of offer had been discussed to any extent, then it is probable that the first term and condition on which the facility was being offered would have been discussed, that is that the facility would be secured by, apart from a bill of sale, an "unlimited joint and several guarantee by directors of Darkcm Pty Limited supported by first third party mortgage over house and land 84 Noorilla Street, Griffith registered proprietor Anna Maria Crowe." 245 Mrs Crowe herself did not claim to have much recollection of the meeting with Mr Del Gigante. In her affidavit in reply she accepted that what she had asserted in her affidavit in chief as having been said by her husband in the presence of Mr Del Gigante might have been said before she and her husband went into Mr Del Gigante's office. 246 Mr Davidge had no actual recollection of what had been said at the conference on 31 May 2000. He had acted for Mr Crowe on a number of occasions. I find that on 31 May 2000 he saw Mrs Crowe separately from Mr Crowe. 247 I consider that I should accept that on 31 May 2000 Mr Davidge said to Mrs Crowe the words which in his affidavit he asserted that he was "certain" he had said or that he "definitely" would have said. I accept Mr Davidge's evidence that he did not shrug his shoulders in response to any question from Mrs Crowe. 248 Having regard inter alia to documents in the Bank's tender bundle and the evidence of the solicitors and admissions or concessions made elsewhere in her evidence by Mrs Crowe, I have concluded that I should not accept parts of Mrs Crowe's evidence.

Mrs Crowe's Affidavit 249 I do not accept the assertion in par 14 of Mrs Crowe's affidavit that Mr Crowe said "I'll take her to my solicitor who is Bill Lancaster". Mr Lancaster was Mrs Crowe's solicitor and it was she who contacted Mr Lancaster by telephoning him on 8 June 1993. 250 I do not accept that Mr Lancaster said the words, which Mr Lancaster in his affidavit denied saying, which are attributed to Mr Lancaster in par 16 of Mrs Crowe's affidavit. 251 I do not accept that at the time she signed the mortgage Mrs Crowe thought that nothing could happen to the property, because, if the loan was not repaid, the truck which was being acquired would be sold. Mrs Crowe had been warned by Mr Lancaster that, if she entered into the mortgage and the loan was not repaid, she could lose her house. 252 I do not accept what is alleged by Mrs Crowe in par 19 of her affidavit. The company Darkcm was not registered until the following year. 253 I am not prepared to accept the assertion in par 20 of Mrs Crowe's affidavit that her husband told her to "shut up" and let him do the talking at the meeting to be held with Mr Del Gigante. 254 The words attributed by Mrs Crowe to her husband in par 21 of her affidavit, if said at all, were not said in the presence of Mr Del Gigante. Mr Del Gigante denied that they were said in his presence and Mrs Crowe conceded in her affidavit in reply that they might not have been said in Mr Del Gigante's presence. 255 I do not accept the assertion in par 21 of Mrs Crowe's affidavit that at no time did Mr Del Gigante say that there was any chance that she could lose her house. I accept Mr Del Gigante's evidence that he advised Mrs Crowe that she could lose her house, if Darkcm did not repay the Bank. 256 So far as Darkcm is concerned, I accept that Mr Crowe was "the driving force". However, I find that Mrs Crowe had rather more knowledge of, and participated rather more in, the affairs of Darkcm than she was prepared to accept in her evidence. Documents in the Bank's tender bundle which reveal such greater knowledge and participation include the Bank's client contact sheets of 5 April 1995 and 28 June 1995. 257 It would appear from other evidence that Mrs Crowe separated from her husband at a date after 31 May 1999. 258 Although Mrs Crowe might have asked Mr Davidge a question to the effect "what choices do I have?" I do not accept that Mr Davidge simply shrugged his shoulders. 259 I do not accept the assertion in par 31 of Mrs Crowe's affidavit that on about six occasions in 1999 and 2000 she had had a conversation with her husband in which he said he was transferring "machinery" to his mother. The vehicles in the bill of sale had reached the end of their useful working lives or had been transferred, prior to 1999.

Mrs Crowe's Oral Evidence 260 I do not accept Mrs Crowe's evidence that at the time she granted the mortgage she did not understand what a mortgage was. In another part of her evidence she accepted that "you always knew from 1993 onwards that, whatever else a mortgage means, it means that the Bank, if it is not paid money, could sell the house". By the time she gave evidence at the hearing Mrs Crowe clearly understood what a mortgage was. 261 I do not accept that Mrs Crowe entered into the 1994 transactions because she was afraid of her husband and considered that she no choice but to enter into the transactions. 262 Mrs Crowe's account of the telephone conversation with Mr Lancaster on 8 June 1993 is not dissimilar to Mr Lancaster's account; however, to the extent that there is any inconsistency between the two accounts, I prefer Mr Lancaster's. 263 As previously indicated, I consider that Mrs Crowe participated more in the affairs of Darkcm than she conceded in her evidence. The client contact sheets show that it is not true that she discussed business matters with the Bank, only if her husband forced her to make a telephone call and information recorded in the client contact sheets as having been supplied by her shows that it is not true that "I never knew anything (about Darkcm)" 264 I do not accept that right up until the end of 2000 Mrs Crowe never believed that there was any risk of her losing her house.

DECISION 265 Having assessed the evidence and having made findings of fact, it is necessary to determine whether Mrs Crowe is entitled to any of the relief which she claims. It is necessary to give separate consideration to each of the three transactions or groups of transactions, namely, (1) the July 1993 transactions and in particular the finance facility agreement and the mortgage given by Mrs Crowe to the Bank (2) the 1994 transactions and in particular the finance facility agreement, the guarantee of Darkcm given by Mrs Crowe and her husband and the bill of sale (3) the 2000 transactions and in particular the finance facility agreement and the guarantee of Darkcm given by Mrs Crowe. 266 It is more convenient to take the groups of transactions in chronological order, rather than in the reverse chronological order adopted by counsel for Mrs Crowe in his submissions.

The July 1993 Transactions 267 I accept that Mrs Crowe was a woman of limited education, that she was unable to read legal documents for herself with any facility and that she lacked commercial or business experience and that the Bank was aware or ought to have been aware of these matters. On the other hand, Mrs Crowe had been born in Australia and spoke English quite fluently. She was not in the position of some women, such as the wife in Elkofairi, who have very limited knowledge of English. 268 I do not consider that Mrs Crowe has established that she was a "volunteer", as is required in order that the principle in Yerkey v Jones on which she sought to rely should be applied in her favour. Although the truck which was to be acquired with the money to be borrowed from the Bank would be operated by Mr Crowe, the truck was to be an asset of a business in the nature of a joint enterprise between them, which would be carried on for the benefit, not only of Mr Crowe, but of Mrs Crowe, her children by her first marriage and her young child by Mr Crowe. At the conference with Mr Lancaster on 5 July 1993 Mr Crowe said that he and Mrs Crowe would be equal owners of the business and Mr Lancaster was asked to advise about the legal forms such a joint enterprise could take, such as a partnership or a company or a trust. 269 I have found that Mrs Crowe understood the general nature and effect of a mortgage. The expression which both Mr Lancaster and Mrs Crowe said in their evidence Mrs Crowe had used in the telephone conversation of 8 June 1993, that she wanted to "put up" her house so that Mr Crowe could get a loan from the Bank, indicates that she understood that she would be incurring some risk in relation to the house. I do not accept that she was merely repeating, uncomprehendingly, to Mr Lancaster an expression Mr Crowe had used in speaking to her. 270 In cross-examination Mrs Crowe accepted that from 1993 onwards she had known that, if she borrowed money from a bank, she was liable to repay the money and that, if she gave a mortgage to a bank over her house, the bank, if it was not repaid the money borrowed, could sell the house. Mrs Crowe understood that, if she gave a mortgage, there was a risk of losing her house but she was prepared to take the risk because she trusted her husband's assurances. 271 I find that Mr Lancaster adequately advised Mrs Crowe. Mr Lancaster was her solicitor, having acted for her on many occasions in the past, and was not Mr Crowe's solicitor, and it was she, and not Mr Crowe, who had communicated with Mr Lancaster. 272 I have accepted that Mr Lancaster, knowing how much her house meant to Mrs Crowe, was concerned by the proposal that she should mortgage her house, advised her against mortgaging her house and warned her that, if she mortgaged her house, she might lose it. Mrs Crowe, while understanding Mr Lancaster's advice, declined to take it. 273 Before the conferences with Mr Lancaster on 5 and 6 July 1993 Mrs Crowe had made up her mind to give a mortgage to the Bank and had authorised the Bank to uplift the certificate of title for the property from Mr Lancaster's office. 274 At the conference on 6 July 1993 Mr Lancaster again warned Mrs Crowe that, if she gave a mortgage and repayments were not made, the Bank could sell her house and, when Mr Crowe said that he would ensure that payments were made, Mr Lancaster pointed out that all sorts of contingencies could happen which would result in payments not being made and Mrs Crowe losing her house. 275 At the conference on 6 July 1993 Mr Lancaster explained the mortgage. It is true that the property over which the mortgage was to be given was owned by Mrs Crowe alone and that Mr Lancaster did not see her separately from her husband. However, Mr Lancaster knew Mrs Crowe well, he had spoken to her separately on the telephone on 8 June 1993 and, apart from the fact that the property was owned by her alone, there was nothing to put Mr Lancaster on notice that there could be any conflict of interest between Mrs Crowe and her husband. 276 Mr Lancaster did not advise Mrs Crowe that the mortgage was an "all monies" mortgage. However, this omission on the part of Mr Lancaster would not have affected Mrs Crowe's appreciation that the mortgage would secure repayment of the money which was then being borrowed. 277 I do not consider that it has been shown that the transactions of 6 July 1993 were improvident or that Mr and Mrs Crowe lacked the ability to service the repayments under the facility granted to them. It is true that Mr and Mrs Crowe's financial means, as disclosed in the application made in January 1993, were modest. However, they had certain financial advantages, including that they were residing rent free on Mr Crowe's parent's farm and Mrs Crowe was receiving rent from the tenant of her house. 278 In my opinion, Mrs Crowe is not entitled to any relief with respect to the transactions of 6 July 1993 and in particular the mortgage. 279 So far as the principle in Yerkey v Jones is concerned, Mrs Crowe has not established that she did not understand the purport and effect of the transactions or that the transactions were voluntary or that a competent independent and disinterested stranger had not explained the transactions to her. I am positively satisfied that she did understand the purport and effect of the transactions, that the transactions were not voluntary so far as she was concerned and that the transactions were explained to her by a competent, independent and disinterested stranger. 280 So far as the principle in Amadio is concerned, Mrs Crowe has not established that she was subject to any special disability which had not been removed by her receiving advice or that the Bank knew or ought to have known of any special disability which had not been removed by her receiving advice or that the Bank acted unconscionably in lending the money and taking the mortgage. 281 So far as the Contracts Review Act is concerned, although some of the matters referred to in subs (2) of s 9 were present, I do not consider that I should find that any contract was unjust within s 9 of the Act.

The 1994 Transactions 282 The findings I have made in considering the transactions of July 1993 concerning Mrs Crowe's level of education, language skills and lack of commercial or business experience apply equally to these transactions. 283 I do not consider that, with respect to the 1994 transactions, Mrs Crowe was a volunteer within the principle in Yerkey v Jones. The accountant Mr Anderson had advised that farming activities should be carried on through a company and the company Darkcm had been registered, with Mrs Crowe as one of the two directors and as an equal shareholder with her husband. It is true that, as between Mr and Mrs Crowe, it was Mr Crowe who would determine what farming activities were carried on and how they were carried on. However, I am satisfied that the business to be carried on by Darkcm was regarded by both Mr Crowe and Mrs Crowe as a joint enterprise to be carried on for the benefit, not only of Mr Crowe, but of Mrs Crowe and her children both by her first husband and by Mr Crowe. To the extent that Darkcm made any profits Mrs Crowe would benefit. 284 I am also satisfied that Mrs Crowe had a greater knowledge of the affairs of Darkcm and was consulted more by her husband about the affairs of Darkcm than she was prepared to concede in her evidence. For example, the client contact sheet of 5 April 1995 shows that Mrs Crowe was aware that a payment was due to be received from the Rice Board and of the gross amount of the payment and that deductions would be made by the Rice Board from the gross amount of the payment, although she did not know what would be the amount of the deductions. The client contact sheet of 28 June 1995 shows that Mrs Crowe was aware of the overdraft limit and was aware that wages would have to be paid and that she requested that the Bank honour cheques for wages, although payment of these cheques would result in the overdraft limit being exceeded. 285 I have already found in considering the 1993 transactions that from 1993 onwards Mrs Crowe understood the general nature and effect of a mortgage. From 1993 onwards she understood that, if she borrowed money from a bank, she would be liable to repay the money and that, if she gave a mortgage to a bank over her house, the bank, if it was not repaid the money borrowed, could sell the house. 286 It is true that Mrs Crowe had entered into the mortgage in 1993 and that in 1993 Mr Lancaster had not advised Mrs Crowe that the mortgage would secure repayment, not merely of the money being borrowed in 1993 but of all monies which might subsequently become payable by Mrs Crowe to the Bank, and that no further mortgage was entered into in 1994. However, I have decided that I should accept Mr Del Gigante's evidence, including his evidence that he advised Mrs Crowe that she could lose her house if Darkcm did not repay to the Bank monies which were advanced under the facility. I have already found that the letter of 1 September 1994 offering the facility, which included as its first term and condition that the facility would be secured by inter alia the mortgage over Mrs Crowe's house, was discussed at the conference with Mr Del Gigante on 7 October 1994 in sufficient depth to prompt Mr and Mrs Crowe later the same day to visit the Bank and raise a concern they had about the terms of the facility. I find that as at 7 October 1994 Mrs Crowe understood the general nature and effect of a mortgage and understood that the mortgage she had given in 1993 would be security for the repayment of amounts to be borrowed under the facility of 7 October 1994. 287 The Bank, having written to Mr Del Gigante on 7 September 1994 and having received Mr Del Gigante's letter of 13 October 1994, was entitled to assume that, as requested by the Bank in its letter, Mr Del Gigante had given Mr and Mrs Crowe an explanation of the documents which had been forwarded with the Bank's letter of 7 September 1994. 288 I have already referred to the argument by counsel for Mrs Crowe that the transactions of 7 October 1994 were improvident and that Darkcm would be unable to service the repayments under the facility; that the Bank knew that the transactions were improvident, as was shown by Mr George's memorandum and by the memorandum of 2 June 1999; the Bank knew or ought to have known that Mrs Crowe was unable to judge for herself whether the transactions were improvident; and that the advice Mrs Crowe received was inadequate to prevent the transactions being unconscionable or unjust, because the advice she received did not include financial advice from an independent financial adviser about the transactions which were actually to be entered into (counsel referred to Teachers Health Investments). It was also submitted that the Bank had acted unconscionably and unjustly in entering into the transactions, notwithstanding that it knew of the likely inability of Darkcm to service repayments, because it knew that amounts which became outstanding to the Bank would be secured by a first class security being the mortgage over Mrs Crowe's home (counsel referred to Elkofairi). 289 I accept that, when the Bank decided to give the facility and when the transactions were entered into, there was a risk that Darkcm would not be able to service repayments under the facility. However, in my opinion, it was by no means clear that Darkcm would be unable to service repayments under the facility and I would not make a finding that the Bank knew or ought to have known that it was likely that Darkcm would be unable to service repayments. In determining whether the transactions were improvident or whether the Bank knew or ought to have known that they were improvident, it is necessary to refer to parts of the evidence. 290 On 17 May 1994 Mr and Mrs Crowe had repaid the loan of $18,000, which had been made to them by the Bank in January 1993. 291 On 21 July 1994 Mr Crowe informed the Bank that he would be leasing 1700 acres of irrigated land and 280 acres of non-irrigated land and that he would be applying for financial accommodation. 292 The Bank received the Funding Proposal dated 27 July 1994 prepared by Mr Anderson, an accountant, seeking a term loan of $100,000 and an overdraft facility of $80,000 to finance a farming operation involving the leasing of three rice farms and the purchase of a breeding pair of ostriches. In the Funding Proposal it was emphasised that Mr Crowe, despite his youth, had had years of experience in rice farming. The Proposal included a schedule of assets and liabilities showing a large surplus of assets and projected cash flows for three years with a high positive cash flow in the third year. 293 Having received the Funding Proposal the Bank instructed its district valuer, who was a registered valuer, to "assess accountant's estimates and customers' servicing ability". 294 The valuer assessed the proposal, considered that the part of the proposed farming operation which would involve the purchase of a breeding pair of ostriches should be abandoned, weighed up the strengths and weaknesses of the amended proposal and concluded that the amended proposal excluding the ostriches was "strong enough for the Bank to support" and recommended that an overdraft limit of $100,000 be approved. 295 The Bank's Griffith Business Banking Office considered the valuer's report and decided to offer a facility consisting of an overdraft of $110,000, as recommended by the valuer, and the existing indebtedness of Mr and Mrs Crowe. 296 Mr George, a credit administrator within the Bank, having completed a post-approval review of the decision to offer the facility, expressed the opinion, giving reasons, that the facility should not have been approved and said that two other officers of the Bank agreed with his opinion. However, the bank officer in charge of Darkcm's account and the manager of the Bank's Business Banking Office at Griffith replied in writing, point by point, to Mr George's memorandum, defending the decision to grant the facility and expressing the opinion that "customer has the technical ability and determination to generate sufficient income to service and reduce debt in given lease period and feel customers are worthy of support in this instance". I am satisfied that this opinion was genuinely held by the bank officers in Griffith and I consider it was an opinion they could reasonably form. 297 The present case is unlike Elkofairi, where the Court of Appeal held that there was a total absence of financial information regarding the capacity to make repayments, with the consequence that the lender was fixed with knowledge that the borrower lacked capacity to meet the repayment obligations under the mortgage, or Teachers Health Investments, where the Court of Appeal held that the transaction which was entered into was "sheer folly". Other differences between the present case and Elkofairi include that the amount of the financial accommodation in the present case was much less than the amount of the financial accommodation in Elkofairi, Mrs Crowe had a better command of English than Mrs Elkofairi and in 1994 Mrs Crowe was not in "difficult domestic circumstances". 298 That Darkcm's business operations ultimately failed does not show that they were doomed to fail from the outset. Substantial causes of Darkcm's failure were supervening events, including the failure of Fodder King to pay amounts owing by it, the sentence of periodic detention imposed on Mr Crowe for assaulting Mr McCardell of Fodder King, the action of the lessor de Rosa in evicting Darkcm from leased land at a time when there was an advanced rice crop and barley crop on the land and the general failure of debtors of Darkcm to pay their debts. 299 Because I do not accept that it was clear that Darkcm would be unable to service repayments under the facility and because I do not accept that the Bank knew or ought to have known that Darkcm would be unable to service repayments, I do not accept that the Bank entered into the transactions, knowing that Darkcm would default but being content to rely on its mortgage, and I do not accept that it was necessary, in order that the advice Mrs Crowe received should have been adequate advice, that Mrs Crowe should have been advised to obtain financial advice. 300 In any event, the Funding Proposal the Bank had received had been prepared with the assistance of an accountant (Mr Anderson). The Bank was entitled to infer from Mr Anderson's participation in the preparation of the Funding Proposal that Mr Anderson had given Mr and Mrs Crowe some financial advice. It is true that the farming operation which was ultimately approved was different from the farming operation which was proposed in the Funding Proposal. However, it differed only in that the proposed purchase of the ostriches, which would have aggravated the short-fall of working capital for the first twelve months, was omitted. 301 I accept the submission made by counsel for the Bank, which was well supported by the evidence, that Mrs Crowe trusted the assurances given to her by her husband and it was what her husband said to her that mattered when she was making a decision, irrespective of what she was told by professional advisers or the Bank. Mrs Crowe believed her husband's assurances that he would make the repayments and that, if he did not make the repayments, the proceeds of enforcing the bill of sale would be sufficient to repay all of the indebtedness but she understood that, if default was made, the Bank would be able to enforce the mortgage. 302 In my opinion, on grounds similar to the grounds I gave in relation to the July 1993 transactions, Mrs Crowe is not entitled to any relief with respect to the 1994 transactions, under either the principle in Yerkey v Jones or the principles in Amadio or under the Contracts Review Act.

The 2000 Transactions 303 Earlier in this judgment I summarised the submissions made by counsel for Mrs Crowe in relation to these transactions. 304 I accept, as submitted by counsel for Mrs Crowe, that in the year 2000 the Bank had no information about Mr Crowe's current financial position and that the Bank regarded it as uncertain whether there was capacity to service the new facility. Apart from the guarantees, the mortgage was the only security for the facility, the bill of sale not having been renewed. The Bank was on notice that Mr and Mrs Crowe had separated and were living apart at different addresses. By the time of these transactions Mr Crowe had been physically violent to Mrs Crowe and she was frightened of him but Mrs Crowe had not revealed that her husband had been physically violent to her and I am not satisfied that the Bank was aware or ought to have been aware of any violence or intimidation exerted by Mr Crowe on Mrs Crowe. 305 These transactions of 31 May 2000 differed from the earlier transactions in that, because she was estranged and separated from her husband, Mrs Crowe no longer trusted in any assurances given by her husband. I also find that by the time of the 31 May 2000 transactions Mrs Crowe had gained more experience in financial matters than she had had at the time of the July 1993 transactions and the 1994 transactions. By the time of the 2000 transactions Mrs Crowe definitely understood the nature of a mortgage and understood that her house was seriously at risk. 306 In order to determine the nature of the facility offered and accepted in 2000 it is necessary to trace the events leading up to the granting of the facility. 307 As at 7 June 1999 the Bank was owed $156,000. About this time legal proceedings brought against de Rosa were successfully concluded with the payment of a sum of money by de Rosa. A proposal was then made to the Bank, the terms of which are set out in the Bank's document of 7 June 1999, one term being that, if a payment of $30,000 was made and then two payments of $3,700 each were made, the Bank would restructure the residual debt into a new facility. 308 When this proposal was made to the Bank, the Bank considered that it had three options, either to accept the proposal or to take immediate action to enforce the mortgage or to refuse the proposal in the hope that a better offer might be forthcoming. The Bank decided to accept the proposal, subject to the bill of sale being released (or not renewed). 309 The release (or non-renewal) of the bill of sale was not detrimental to Darkcm or Mrs Crowe, because all of the vehicles which had been subject to the bill of sale had either been disposed of or had reached the end of their useful working lives. 310 The Bank's decision to accept the proposal was the most favourable outcome for Mrs Crowe. One of the alternatives was for the Bank to take immediate action to enforce the mortgage, which would have been a worse outcome for Mrs Crowe. The other alternative, which depended on an offer being made which was a better offer so far as the Bank was concerned, would also have been a worse outcome for Mrs Crowe and, I am satisfied, was not a realistic possibility. 311 A payment of just over $30,000 was made on 25 June 1999 and a payment of just over $3,700 was made on 30 September 1999. Mr Crowe indicated to the Bank that he would pay the further instalment, in exchange for the new facility, that is the restructuring of the residual debt into a new facility. 312 The Bank considered that it had three options and that it should take the option of restructuring the debt into a new facility. The other options were for the Bank to sell Mrs Crowe's property pursuant to the mortgage, which would have been a worse outcome for Mrs Crowe, or to press Mr and Mrs Crowe to refinance the debt with another financier, which was not a practicable alternative. 313 The Bank by its letter of 11 April 2000 to Darkcm offered a facility of a variable rate term loan to refinance the existing variable rate term loan and the existing business overdraft, to be secured by new guarantees from Mr and Mrs Crowe and the existing mortgage over the house property. 314 I have found that, in accordance with Mr Davidge's evidence, the letter of offer and the guarantee were explained to Mrs Crowe by Mr Davidge, in a conference in which Mr Davidge saw Mrs Crowe separately from her husband. 315 I do not consider that Mrs Crowe was any the worse off for entering into the facility agreement of 31 May 2000 or the guarantee of 31 May 2000. Whether or not Mr Davidge shrugged his shoulders in response to a question asked by Mrs Crowe, Mrs Crowe in fact had little choice but to enter into these transactions. Her assessment that she had little choice indicates that she had a good understanding of the situation she was in. If she did not enter into the transactions, then the Bank would probably take immediate steps to enforce the mortgage. Under the new facility the existing loan and the existing overdraft were refinanced by a loan with at least some chance of its being serviced. 316 It is true that the Bank took the opportunity, as a new facility was being granted, to have Mr and Mrs Crowe execute fresh guarantees to replace the joint and several guarantee given in 1994, which was several years old and which a bank officer thought might contain defects. However, counsel for Mrs Crowe did not identify any defects in the old documentation which were overcome by the new documentation. I do not consider that the circumstances that the Bank knew that Mrs Crowe was separated from her husband or that the Bank was seeking new documentation to strengthen its own position in case there were any defects in the old documentation prevent the 2000 transactions being simply a refinancing of Darkcm's indebtedness, with Mrs Crowe being no worse off. 317 In my opinion, the Bank did not act unconscionably in entering into the financial facility and no contract which formed part of the facility was unjust. In my opinion, Mrs Crowe is not entitled to any relief with respect to the transactions of 31 May 2000, under the principle in Yerkey v Jones or the principles in Amadio or under the Contracts Review Act. 318 I conclude that the plaintiff (the Bank) is entitled to judgment for possession and for the amount due under the mortgage, that the cross-claim by Mrs Crowe against the Bank should be dismissed and that the cross-claims by Mrs Crowe against Mr Crowe, Darkcm and RKCM Harvesters Pty Limited, all of which were undefended, should succeed. I will defer the making of final orders until after this judgment is handed down.

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