Commonwealth Bank of Australia v Spira

PARTIES : Commonwealth Bank of Australia - Plaintiff/Cross-defendant John Spira - Defendant/Cross-claimant JUDGMENT OF : Gzell J

COUNSEL : Mr M Walton SC/ Mr R S Hollo for the Plaintiff Mr R B S MacFarlan QC/ Mr P Durack for the Defendant SOLICITORS : L E Taylor Solicitor for the plaintiff Middletons Lawyer for the defendant CATCHWORDS : TRADE PRACTICES - Consumer Protection - No Misleading or Deceptive Conduct - Meaning of Unconscionable Conduct - Whether it extends beyond Special Disability - Special Disability limited to Incapacity to form Judgment on Best Interests - CONTRACT - Construction and Interpretation of Contracts - Implied term of Good Faith in Commercial Contracts - Implication by Law - Whether Term of Good Faith can be excluded - Pre-contractual documents and Masters v Cameron LEGISLATION CITED : Trade Practices Act 1974 (Cth) Australian Securities and Investments Commission Act 2001 (Cth) Jones v Dunkel (1958-1959) 101 CLR 298 Pappas v Saulac Pty Ltd (1983) 50 ALR 231 at 234-235 General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164 at 178 Burger King Corporation v Hungry Jacks Pty Ltd [2001] NSWCA 187 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 142 CLR 337 at 345-346 Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468 at 486-487 Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 256 Liverpool City council v Irwin [1977] AC 239 at 254 Miller v Hancock [1893] 2 QB 177 at 181 Mainland Holdings v Szady [2002] NSWSC 699 at par 64 Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 at 192-193 Hughes Bros Pty Ltd v Trustees of Roman Catholic Church (Archdiocese of Sydney) (1993) 31 NSWLR 91 Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 Saxby Bridge Mortages Pty Ltd v Saxby Bridge Pty Ltd [2000] NSWSC 433 Asia Television Ltd v Yau's Entertainment Pty Ltd (2000) 48 IPR 283 Szymonowski & Co v Beck & Co [1923] 1 KB 457 at 466 Duncombe v Porter (1953) 90 CLR 295 at 306, 311 GH Myers & Co v Brent Cross Services Co [1934] 1 KB 46 at 55 CASES CITED : Young & Marten Ltd v McManus Childs Ltd [1969] 1 AC 454 Gloucestershire County Council v Richardson [1969] 1 AC 480 at 494-495, 506, 510 Helicopter Sales (Australia) Pty Ltd v Rotor-Work Pty Ltd (1994) 132 CLR 1 at 17 Paragon Finance plc v Nash [2002] 1 WLR 685 at 699-700 Overlook v Foxtel [2002] NSWSC 965 at par 210 Far Horizons Pty Ltd v McDonalds Australia Ltd [2000] VSC 310 at par 120 Garry Rogers Motors Aust Pty Ltd v Subaru (Aust) Pty Ltd [1999] FCA 903 at par 34 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 450 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 434 Commonwealth Bank of Australia v Renstel Nominees Pty Ltd [2001] VSC 167 at par 96 Howtrac Rentals Pty Ltd v Thiess Contractors (NZ) Ltd VSC 145 Masters v Cameron (1954) 91 CLR 353 at 360 Louth v Diprose (1992) 175 CLR 621 at 637 Blomley v Ryan (1956) 99 CLR 362 at 405 Commonwealth Bank of Australia Ltd v Amadio (1982-1983) 151 CLR 447 at 461,474 Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (No 2) (1999) 96 FCR 491 at 502-504 CG Berbatis Holdings Pty Ltd v Australian Competition and Consumer Commission (2001) 185 ALR 555 at 569 Australian Competition and Consumer Commission v Samton Holdings Pty Ltd (2000) 189 ALR 76 at 91-93 GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd (2001) 191 ALR 342 at 389 DECISION : Judgment for the plaintiff. Cross-claims dismissed.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50066/01 COMMONWEALTH BANK OF AUSTRALIA LTD V SPIRA AND OTHERS JUDGMENT 1 The plaintiff, Commonwealth Bank of Australia ("CBA"), lent moneys to the second defendant, Diamond Press Australia Pty Ltd ("DPA"). Its obligations were secured by the other defendants. Each of the corporate defendants was placed in voluntary administration and subsequently in liquidation. Those events of default enabled CBA to call up all the loan funds. As at 13 September 2002 the statements of account of DPA in the books of CBA showed an amount due by DPA of $52,396,390.32. A certificate under the securities certifying to this amount and to interest accruing at the daily rate of $19,307.71 was in evidence. That evidence was not challenged. I find that the former amount was due and payable to CBA by each of the defendants on 13 September 2002 and that interest in the latter amount accrues daily. 2 By their cross-claims, the defendants raised allegations of misrepresentation, misleading and deceptive conduct, unconscionable conduct, breach of an implied term to act in good faith, fairly and reasonably and breach of contract in failing to provide agreed funds. CBA asserted that the defendants were estopped from asserting such claims and, in the alternative, it was entitled to set-off any damages against the indebtedness to it of the defendants. 3 In the early 1970s the first defendant, John Spira, bought a 50% interest in a printing business that had a turnover of about $75,000. For the year ended 30 June 1998 sales revenue had grown to approximately $67.8 million. Sales revenue for 2000 was projected at $112 million. The business was conducted by the corporate defendants as the Diamond Press Group ("DPG"). It operated from premises in Sydney and Melbourne. 4 DPG had banked with CBA for many years in the past. In August 1998, its banker was Colonial State Bank ("Colonial"). John Flynn, who had dealt with Mr Spira when DPG was a customer of CBA, gave Ian William Pike, the head of risk management for the institutional banking arm of CBA and Mark Leigh McCoy, chief manager of risk management, a very positive report on DPG. Mr Spira was conducting an informal tender for the banking business of DPG. He had discussions with National Australia Bank and with the Hongkong and Shanghai Banking Corporation ("HSBC"). He intended to have shares in portion of DPG listed on the stock exchange. After an initial contact with CBA, Michael Skettos, the financial manager of DPG, wrote to CBA on 14 August 1998 stating that $65 million in credit lines was held with Colonial and that credit lines sought from CBA post-float were $48 million of revolving facilities, $12 million of forward cover for foreign exchange and $1 million in bank guarantees. 5 On 25 August 1998, Mr Spira and Mr Skettos met with Mr McCoy, Mr Flynn and Tim Dennis, a relationship executive within the corporate banking group of CBA. Mr Spira informed them that DPG was to be partially floated, an underwriting agreement had been signed with Bridges Financial Services Pty Ltd ("Bridges") and a prospectus was expected to be lodged in early September. Mr Spira said that details of any offer of finance by CBA would need to be included in that prospectus. 6 A further meeting took place on 28 August 1998 between Mr Spira, Mr Skettos, Mr Dennis and Mr McCoy. Prior to that meeting, Mr McCoy had received and studied a DPG business plan dated May 1998. It showed an anticipated growth of about 10% per annum and an intention that DPG would increase its market share aggressively. Mr Spira said: "you've seen the business plan, this business is expanding. I'm looking for a bank that can help me grow this business". Mr Dennis said: "we're sure you will find Commonwealth Bank will have a flexible approach". Mr Dennis asked how likely it was that the float would go ahead. Mr Spira replied: "probably about 90%". 7 There is a conflict in the evidence as to what else was said on behalf of CBA at this meeting. Mr Spira said that he discussed the importance to DPG of having access to sufficient working capital to fund growth. Mr McCoy said that discussion of growth plans was predominantly focused on DPG's intentions to make acquisitions. An expression of interest in funding future acquisitions was sought from CBA. 8 Mr Spira said he made it clear that if DPG made acquisitions, CBA would have to make changes to the terms of its facility. For example, a change of the financial covenants might be needed to accommodate a new acquisition. In cross-examination, Mr Spira denied that he was told that if there were to be any further borrowings they would have to be the subject of a separate application. 9 Mr Spira's attention was drawn to his first affidavit in which he said that Mr Dennis responded to a hypothetical proposition that if DPG bought a company, it be put in the facility that CBA would support DPG and make any necessary changes to the facility. According to Mr Spira's affidavit, Mr Dennis's response was: "without knowing the details we can't really put it in, it's too uncertain, each case is different. Rest assured that you will have our support". The affidavit went on to say that Mr Spira informed the meeting that he did not want to be coming back all the time asking for changes of covenants and other terms of the facility to which he said Mr Dennis responded: "you'll have to put a firm proposal to us at the time". 10 When the inconsistency was drawn to Mr Spira's attention, he suggested that there was a distinction between an acquisition and borrowings. He denied that there was any inconsistency in his testimony. I was not impressed by this portion of Mr Spira's evidence. He did not appear to me to be giving a truthful answer. He fastened on the difference in wording and constructed an explanation. In doing so he displayed an opportunism that tended to pervade his evidence. 11 In cross-examination, Mr McCoy agreed that the strong growth expected in DPG meant that it would need additional working capital. Mr McCoy understood Mr Spira's statement that he was looking for a bank that could help him "grow" his business to mean that if DPG had a proposal to acquire another company, CBA would consider providing funding to contribute to that acquisition. So far as working capital requirements were concerned, Mr McCoy thought the facilities being sought were adequate to meet working capital requirements under the expected growth forecasts. Mr McCoy said that either at this meeting or in a subsequent telephone conversation prior to CBA making an offer of facilities, he said to Mr Spira or to Mr Skettos words to the effect: "we are prepared to talk about further funding to Diamond Press for future acquisitions after the float is completed". 12 There are features of Mr Spira's evidence that I have difficulty in accepting. In his first affidavit he said he had a telephone conversation with Mr Dennis before the meeting of 28 August 1998 in which he informed Mr Dennis that he had received a very attractive offer from HSBC. Mr McCoy made a statement, subsequently, in which he said that he and Mr Dennis became aware of the HSBC offer at the meeting on 28 August 1998. Mr Spira then swore a second affidavit in which he altered his testimony. He said he had two telephone conversations with Mr Dennis. In the first conversation, Mr Dennis simply said: "I think we should meet to talk about your banking". As a result of that conversation the meeting of 25 August 1998 took place. He had not mentioned such a meeting in his first affidavit, but Mr McCoy had in his statement. Mr Spira said in his second affidavit that the remainder of what he had said in his earlier affidavit occurred during the second telephone conversation which was subsequent to the meeting of 25 August 1998 but prior to a facsimile from DPG to Mr Flynn of 26 August 1998 forwarding portion of the HSBC offer. That facsimile, however, did not identify the financier as HSBC. Mr McCoy saw the facsimile at the meeting on 28 August 1998 and guessed it was HSBC because of a reference to Midland Bank Plc which he knew to be a subsidiary of a HSBC. Subsequently, in cross-examination, Mr Spira said the second conversation took place at the meeting of 28 August 1998. 13 This reconstruction of events was typical of the testimony of Mr Spira. I formed a dim view of his veracity. In his first affidavit he relied heavily on the content of CBA file notes of meetings and telephone discussions, called call reports. And he changed his testimony in his second and third affidavits in light of his further analysis of these call reports. He was aware that Mr Dennis had refused to give evidence on behalf of CBA and attributed to him conversations that were not recorded in Mr Dennis's contemporaneous call reports. I found Mr Spira to be an opportunist with scant regard for the truth, who was prepared to alter his testimony if it supported his case to do so. 14 In his affidavits, Mr Spira painted the picture that CBA was anxious to acquire the banking business of DPG. As the evidence unfolded, however, it became clear that DPG needed to sever its relationship with Colonial. Its facilities had a limit of $56.9 million of which $56.2 million had been drawn. 15 In cross-examination, Mr Spira professed to have no recollection of the make-up of the facilities nor for what they were. Colonial had transferred the DPG account to its asset management group in April 1998 following cash flow problems that had forced DPG to draw cheques in excess of its approved limits. Colonial had insisted upon an immediate investigating accountant's report to cover all financial aspects of DPG. In approving an increase in the overdraft facility to $18.5 million on 9 July of 1998, Colonial insisted that in the event that a float or other form of capital restructure had not been achieved by 31 December 1998, $9.3 million would become due and payable. 16 Mr Spira was concerned that the fact that the account was thus managed would cause the underwriters to take a negative view about the situation. He did not accept an explanation from Colonial that the asset management group was designed for intensive management of accounts that were high profile and not necessarily for accounts in difficulty. His request for the account to be transferred back to business financial services was unsuccessful. 17 Notwithstanding that in early August 1998, Colonial regarded the DPG account as a profitable and worthwhile one for the bank, by mid-August 1998 the relationship with Colonial had all but broken down. The account manager stated: "We have continued to express the Bank's concerns about the overtrading activities of the group and have indicated our requirements that following the float we would expect to see a significant reduction in the Bank's exposures. The Mandate letter previously referred to sets out an expectation that existing debt would reduce by $16.6 million from the float proceeds and we have indicated to directors that we would expect reductions of at least that amount. We have also expressed the view that, of the $8 million to be returned to the existing proprietors, the Bank may wish to see some of those funds reinvested in some form in the business."

The account manager also said: "There is no doubt that the Bank has been losing confidence in the directors ability to control the debt within the parameters being set by the Bank and that we indicated that unless firmer controls were implemented it would be difficult to see a continuing relationship with the company. Mr Spira indicated that he too saw the relationship with CST breaking down and stated that this is the reason he commenced discussion with three other Bank's ( sic) with a view to refinancing elsewhere." 18 Mr Spira said he could not recall the matters referred to in the letter of 9 July 1998. Notwithstanding that this document was not discovered and Mr Spira had not had the opportunity to study it before his cross-examination, I do not accept his lack of recollection of these matters. The fact that Mr Spira was silent about his problems with Colonial in his evidence in chief and his asserted non-recollection of these matters in cross-examination reflects badly on his credit. I find it inconceivable that he had forgotten events so pressing in relation to his plans for DPG and contemporaneous with discussions he had with CBA that he asserted he recollected in detail. Mr Spira agreed he was concerned about the stigma that might attach to the transfer of the DPG account in the context of the proposed float. His feigned lack of recollection of the position with Colonial is inconsistent with that concern. 19 Mr Spira subsequently said that these matters were qualified by the last paragraph in the letter. It stated that Colonial was prepared to discuss any of the matters with DPG and gave an assurance that it would work as closely as possible with DPG to achieve the results it was seeking. When it was put to Mr Spira that at no stage did he negotiate any withdrawal by Colonial of the requirements in its letter, he agreed that it had not been discussed. I found this prevarication on Mr Spira's part to be indicative of his attitude to giving evidence. 20 The evidence of Mr McCoy was not without blemish. In his statement he denied that at the meeting of 28 August 1998, Mr Spira said he had plans for the installation of a second M3000 printing press in Melbourne that was already on order. In cross-examination, he was taken to the DPG May business plan. It stated that a second Heidelberg M3000 printing press was on order. Mr McCoy was a deliberate witness. He paused for lengthy periods while he considered his answers. Of this apparent inconsistency he said he did not recall Mr Spira making mention of the second M3000 printing press at the meeting. It was put to him that he could not deny that there was a reference to the matter at the meeting. Mr McCoy said that the only discussions he recalled with respect to the M3000 were much later around the time that led up to the discussion about the Heidelberg transaction. He was asked again whether he could deny that the conversation took place. After a long pause he answered: "yes, I think so". I have no doubt that in that pause Mr McCoy was testing his recollection, following which he believed he was able to deny the conversation. I have no doubt that Mr McCoy believed that no such conversation took place. He impressed me as a witness making every effort to give honest answers to the questions put to him. 21 Mr McCoy said he thought Mr Dennis's statement: "we're sure you will find Commonwealth Bank will have a flexible approach" was said at the first discussion with DPG. His attention was directed to his statement in which he said this statement was made at the meeting of 28 August 1998. Mr McCoy was asked which was wrong, his evidence in the witness box or his statement. After a long pause Mr McCoy said it must have been at the meeting on 28 August 1998 and his current recollection was obviously flawed. Again, I do not doubt Mr McCoy's veracity. His long pauses were his attempt to recollect the events and were not a sign of dissembling on his part. 22 Mr McCoy is no longer an officer of CBA. In September 2001 he became director of operations, global industry groups with Westpac institutional bank, a position he still holds. I regard him as an independent professional witness who was at pains to ensure that his evidence was as accurate as his recollection allowed. Where there is a conflict between the evidence of Mr McCoy and that of Mr Spira, I prefer that of Mr McCoy. 23 The suggestion that at the meeting of 28 August 1998, Mr McCoy or Mr Dennis said that CBA would provide a facility that would increase with the working capital needs of DPG, is inherently improbable. No bank officer is likely to approve a facility giving carte blanche to a borrower to draw down further amounts. The statement that a proposal for additional finance would need to be made at the time, acknowledged in Mr Spira's first affidavit, is far more likely to have been the situation. 24 Mr Skettos was not called as a witness and the lack of testimony from him was not explained. My preference for the evidence of Mr McCoy over that of Mr Spira is fortified by the inference open to me that Mr Skettos's evidence would not have assisted the cross-claimants (Jones v Dunkel (1958-1959) 101 CLR 298). 25 Mr McCoy and Mr Dennis prepared a credit submission for $105 million. Approximately $95 million was to refinance the Colonial facilities and various hire purchase financiers and approximately $10 million was for the acquisition under lease of a Heidelberg M600 printing press. DPG already had a $3 million lease facility with CBA. The submission was prepared on a float and a no-float basis. Under the latter the total commitment of CBA was $108 million. This reduced to $90 million under the float scenario. 26 Mr Pike approved the submission. His understanding was that the float would proceed unless there was some market disruption. He thought this important because it would provide DPG with equity funding and access to capital markets to finance any growth ambitions. It would also reduce the DPG level of indebtedness that he regarded as relatively high compared to the security available to CBA. 27 Mr Pike gave his evidence in a restrained and professional manner. That evidence accorded with that of Mr McCoy. I have no reason to question the veracity of Mr Pike and I accept his evidence. 28 On 2 September 1998, CBA wrote to DPG offering a $105 million increase on its existing assets finance facility to re-finance its existing facilities with Colonial and other equipment financiers and to provide for future equipment finance requirements ("Facility Offer"). It stated that CBA was prepared to discuss additional funding to provide for future acquisitions following completion of the partial float. The approval was the subject to CBA's usual terms and conditions, the terms and conditions set out in an attachment and any separate agreements or documentation executed in connection with the facilities. 29 The attachment repeated the purpose of the borrowing to re-finance existing facilities and finance capital expenditure of approximately of $10 million. The attachment also stated that the Facility Offer was subject to documents satisfactory to CBA being agreed and signed within a reasonable period after acceptance and that, until such documentation was signed, CBA was under no obligation to provide accommodation under the facility. 30 In the cross-examination of Mr Spira, the following exchange took place: "Q: What I am putting to you is it was never represented to you by anybody on behalf of the bank before you entered into your facility agreements in September 1998 that in the event that the float did not proceed the bank would be prepared to provide additional facility. A: That is not correct either. Q: When do you say that representation was made? A: When the offer letter was delivered to us at the beginning of September. Q: Is that the complete answer to that question? A: Yes." 31 Contrary to Mr Spira's assertion, the Facility Offer limited CBA's preparedness to discuss further finance to the completion of the float and no evidence of any oral representations to Mr Spira to the contrary accompanying the delivery of the letter was led from him. 32 Following acceptance by Mr Spira of the Facility Offer, the parties executed an agreement on 23 September 1998 ("Facility Agreement"). It contained an accommodation limit of $108 million made up of an overdraft facility of $2 million, a bill discount facility of $68 million, a contingent liability facility of $1 million and an asset finance facility of $37 million. The bill discount facility was for a period of five years expiring on 30 September 2003. If shares in DPG were listed on the stock exchange, the bill facility was to reduce to $50 million. Annual reviews of the other facilities were to take place following which CBA was entitled to give notice that any un-drawn portion of a facility was terminated or reduced. 33 Various fees and charges were payable to CBA under the facilities. With respect to the bill discount facility, in addition to the difference between market price and face value on discounting the bills, DPA was to pay a facility fee of 0.3% per annum on the bill discount facility limit and a usage fee of 0.5% per annum on the face value of each bill discounted or accepted by CBA. If shares in DPG were not listed on the stock exchange by 31 March 1999, CBA was entitled to vary the rates of interest, fees and/or margins applicable to any of the facilities. 34 Under the Facility Agreement, DPA undertook that certain financial ratios would be met except with the prior written consent of CBA. The ratio that earnings before interest and taxes ("EBIT") bore to interest expense was not to fall below to 0.5:1. EBIT was to be calculated on 30 June and 31 December each year on the consolidated accounts of DPG for the preceding 12 months. Another ratio required the aggregate of shareholders' funds not to fall below 35% of total tangible assets. If the shares in DPG were listed on the stock exchange, that ratio was not to be less than 37.5%. Total tangible assets were to be calculated from the latest audited consolidated balance sheet. 35 The Facility Agreement was defined to include each of its appendices. The appendix with respect to the asset finance facility provided that DPG must execute the acknowledgments and other documents required under a master hire agreement before each utilisation of the facility. The master hire agreement provided that if DPG wished to hire goods from CBA it had to sign an acknowledgment and, if CBA signed the acknowledgement, CBA would be deemed to have hired and DPG would be deemed to have taken on hire, the goods described in an invoice attached to the form of acknowledgment. 36 There was no provision in the Facility Agreement limiting the bill discount facility to the re-financing of the Colonial debt, the debts to finance providers of equipment or the acquisition under lease of equipment. 37 The cross-claimants alleged that prior to the execution of the Facility Agreement and associated documentation including the securities given by the cross-claimants CBA, in trade or commence, made the following representations ("First Representations"): "(a) That the Bank would take a flexible approach to doing business with DPG; (b) That the Bank would allow a facility that is guaranteed to grow with the DPG; (c) That, if reasonably appropriate in the circumstances, the Bank would not enforce strict legal terms of the various contracts to be entered into, if to do so would act unfairly or prejudicially to Spira or DPG having regard to the circumstances that occasioned any breach; (d) That the Bank would consider additional capital expenditure financing for acquisition of other assets or businesses on a case by case basis; (e) That the terms of the Facility Agreement would be adapted to meet the needs of DPG over the term of the facility. (f) That the Facility Agreement would provide sufficient working capital for DPG as described in the business plan. (g) That it was not essential to the continued support of DPG by the Bank over the term of the proposed facility that the shares of DPG or DPM should become listed on the Australian Stock Exchange. (h) Any delay or failure of DPH to list its shares for sale on the Australian Stock Exchange would not be a breach of any agreements or facilities with the Bank. (i) That the Bank would act in a fair and reasonable manner in relation to the facility and securities. (j) That, in the event that DPH did not float its shares on the Australian Stock Exchange by 31 March 1999, DPG and the Bank would negotiate the terms of the Facility Agreement in relation to interest rates and fees in order to reflect any additional risk to the Bank arising from the failure to float. (k) That the Bank had read and understood the financial and cash flow implications of the business plan provided to it by the DPG. (l) That the Bank would look after DPG during the term of the facilities." It was alleged that the First Representations were oral, partly expressed and partly implied and were made during conversations in or around August 1998 by Mr Dennis and Mr McCoy. 38 The representation in par (a) is made out as is the representation in par (d). While not in exact terms, the content of the representation in par (l) is also made out. Mr Dennis did say: "rest assured that you will have our support." 39 The evidence did not establish the alleged representation in par (b). While Mr Spira said: "I am looking for a bank that can help me grow this business", I find that CBA did not assert that its accommodation was guaranteed to grow with DPG. The evidence was to the contrary: separate applications would have to be made for additional funding. For similar reasons there was no representation as alleged in par (e). There was no basis in fact from which the representations might be implied. 40 I find that the alleged representation in par (c) was not made. Mr McCoy said later in his evidence that he regarded any breach of covenant as a serious matter because of the consequences that might follow it. I do not accept that he or Mr Dennis made any such representation before the Facility Agreement was executed, nor do I imply such a representation. 41 I accept the evidence of Mr McCoy that he believed the facilities sought by DPG were adequate to meet the working capital requirements for the growth it was expecting to achieve. I accept that the alleged representation in par (f) was not made. I find no basis in fact from which an implication ought to be made. 42 So far as the listing issue is concerned, Mr McCoy and Mr Dennis understood that there might not be a float, but the expectation of everyone concerned, including Mr Spira, was that a float would take place. The evidence does not establish, however, that representations were made by Mr McCoy or Mr Dennis that it was not essential to the continued support of DPG by CBA that there should be a float or that any delay or failure to float would not be a breach of any agreements or facilities with CBA. Nor is it likely that those officers made such representations in the light of everyone's expectation that the float would occur. The Facility Agreement was not conditional upon a float. But that, again, does not suggest that representations were made to that effect by CBA. I find that the alleged representations in par (g) and par (h) have not been made out and I find no basis for their implication. 43 Nor has the alleged representation in par (j) been established. The Facility Agreement provided that if shares in DPG were not listed on the stock exchange by 31 March 1999, CBA was entitled to vary the rates of interest, fees and/or margins applicable to any of the facilities. There was no obligation to negotiate with DPG and there was no evidence of a representation to that effect. Nor should I imply the making of such a representation. 44 Paragraph (i) was not established. There was no evidence of a representation by Mr McCoy or Mr Dennis or a basis for an implication of a representation that CBA would act in a fair and reasonable manner in relation to the Facility Agreement and to the securities. I deal later in these reasons with the question whether a term to that effect should be implied into the Facility Agreement. 45 Nor was there any evidence or ground for implication that those officers made any representation about DPG's May business plan and its cash flow implications. Paragraph (k) was not made out. 46 The cross-claimants alleged a further representation ("Second Representation") by Mr Dennis or Mr McCoy, partly orally expressed and partly implied, prior to the execution of the Facility Agreement that CBA's offer, if accepted, would result in a facility that accorded with the DPG request for finance. I reject the allegation that any such representation arose. Mr Spira and Mr Skettos sought financial accommodation from CBA. CBA considered the matter and made an offer in the Facility Offer. That offer was not accompanied by any suggestion that it replicated the request for finance by DPG. It was an offer CBA was prepared to make in the circumstances. It was accepted by DPG. It constituted a relatively large commercial transaction. DPG had the advantage of the financial advice of Mr Skettos and other persons within DPG and the legal advice of DPG's solicitor, Douglas James Hamilton. 47 The cross-claimants also alleged that by the Facility Offer, CBA represented that it was prepared to advance up to $108 million to DPG over a five year term except to the extent that leases involved the repayment of principal during that term ("Third Representation"). I find that, on the proper construction of the Facility Offer, no such representation was made. The letter clearly stated that the facilities were for the re-finance of existing facilities provided by Colonial and other equipment financiers and to provide for future equipment finance requirements. The attachment repeated this purpose. 48 The cross-claimants alleged that CBA failed to disclose the following matters prior to the execution of the Facility Agreement ("Nondisclosures"): "(a) That in the absence of a significant equity raising by DPG early in the currency of the proposed or offered facility, the Bank would wish to significantly reduce the amount of its effective lending and would not wish to increase its effective lending either at all or except under significantly different terms as to repayment of debt, interest rates and costs. (b) That so far as elements of the overall facility sum were designated as to proposed use of funds, and the funds so allocated were not utilised for that purpose, the Bank would not advance those funds for any other purpose that was an approved purpose within the terms of the Bank's Offer. (c) The facilities would only be permitted to be drawn to the extent necessary to repay existing previous debt and not to apply to any draw-down for working capital or capital expenditure from the facility apart from that refinance. (d) That it was the policy of the Bank not to honour customer's cheques unless there were cleared funds in respect of deposits to the account of the customer at the time of presentation of the cheque irrespective of the commercial circumstances and in particular irrespective of whether the customer held trade indemnity insurance in respect of the uncleared deposits." 49 As to the suggestion that in the absence of a float, CBA wished to reduce the amount of its lending, there is no evidence that this was CBA's position. On the contrary, the Facility Agreement provided for the continuation of the bill discount facility at $68 million for the five year term in the absence of a float. Furthermore, if that had been the position of CBA and it failed to disclose that position, it is doubtful that any reliance would have been material because the financial information provided by Mr Skettos on 31 August 1998 projected substantial decreases in financial accommodation by 30 June 2001 under the no-float scenario. 50 As to the suggestion that CBA did not wish to increase its lending except under significantly different terms as to repayment, interest rates and costs, the evidence did not make out that proposition. The Facility Offer stated that CBA was prepared to discuss additional funding after the float. Mr McCoy had said that CBA would be prepared to consider further advances even in the absence of a float. There was no evidence that any future funding would be otherwise than in accordance with the then conditions of CBA and at interest rates then appropriate to the particular application. Again, even if there was such a nondisclosure, its causativeness would be questionable because, at the stage the Facility Agreement was executed, the expectation of everyone was that the float would occur. The cross-claimants have failed to establish the nondisclosure in par (a). 51 There was no nondisclosure in terms of par (b). On the contrary, the Facility Agreement made it plain that facilities other than the bill discount facility were subject to annual review under which any un-drawn portion could be terminated or reduced. The Facility Offer confined the purpose of all the facilities to re-financing existing facilities of Colonial and others save for the $10 million to be utilised in the acquisition of the Heidelberg printing press. Far from there being a nondisclosure, the evidence established a clear disclosure in terms of par (b). The same applies to the alleged nondisclosure in par (c). Neither of those matters has been established by the cross-claimants. 52 The Facility Agreement provided that CBA was not obliged to provide accommodation under the overdraft facility if, immediately following the provision of that accommodation, the outstanding accommodation of that facility would exceed the facility accommodation limit for that facility. Again, far from CBA being silent on the matter, its entitlement not to honour a cheque was spelt out in the Facility Agreement. There was no evidence that DPG sought special treatment in this regard. Mr Hamilton requested amendments to the Facility Agreement but did not raise this issue and there was no evidence with respect to trade indemnity insurance. Paragraph (d) was not established. Again, if there had been such a nondisclosure, the question of its significance would arise. The requirement is common banking practice and there was no credible suggestion that in the absence of a statement of that practice, DPG would have refrained from accepting the Facility Offer or refrained from executing the Facility Agreement. 53 On 28 September 1998, Mr Skettos telephoned Mr McCoy and informed him that $14 million of the asset finance facility would not be utilised because DPG had decided not to re-finance some of its lease and hire purchase agreements because break costs were prohibitive. Mr Skettos said that a further $3 million within the asset finance facility would not be utilised and DPG would prefer to have the bill discount facility increased by that amount. Mr McCoy approved the variations. Mr Pike was not involved. 54 A deed ("First Variation") was executed on 30 September 1998. Total facilities were reduced to $94 million, the overdraft facility and the contingent liability facility remaining at $2 million and $1 million respectively. The asset finance facility was reduced to $20 million and the bill discount facility was increased to $71 million to be reduced to $53 million in the event of a float. 55 A meeting took place on 6 October 1998 attended by Mr Spira and Mr Skettos. Mr Dennis, Mr McCoy and Keith McCaffery from CBA were present. Mr Spira informed the meeting that he had an indicative offer for DPG from Blue Star Group Ltd ("Blue Star") at $100 million and that the accountants to the float said DPG was worth between $80 million and $100 million. He indicated that if he proceeded with the float, it would only raise $70 million to $85 million. Mr Dennis said that CBA might be prepared to provide more funds for acquisitions even if there were no float. Mr Spira said he would keep the float running for the time being. 56 There is a conflict in the evidence as to what else transpired at the meeting. Mr Spira said that one of the CBA representatives said: "we agree, it looks like the float under-values your shareholding". He could not identify who it was who said those words but he said that the other two nodded their heads. Mr McCoy denied making the statement and it does not appear in Mr Dennis's call report. I reject the evidence. In my view it is another example of Mr Spira embellishing his recollection of events. 57 At the end of the meeting, Mr McCoy formed the view that the considerable enthusiasm that Mr Spira had expressed previously for floating was not present and he left the discussion thinking there was a relatively low probability that he would proceed with it. Within a day or two of the meeting, Mr McCoy reported what had transpired to Mr Pike. 58 Mr McCoy, Mr Dennis and Michael Workman visited DPG on 7 October 1998. Mr Walkman gave an overview of major off-shore economic issues and their potential impact on the Australian economy generally and the Australian equity markets specifically. The view expressed to Mr Spira was that the Australian equity markets might well deteriorate over the next six to 12 months. 59 About this time, Mr Spira decided not to continue with the float. He made no mention of this intention at the meeting of 7 October 1998. Mr Spira wrote to Bridges on 13 October 1998 confirming a mutual intention to terminate the underwriting agreement with effect from 7 October 1998. 60 On 16 October 1998, Mr McCoy and Mr Dennis flew to Melbourne to visit the DPG factory. Mr Spira said at that meeting he had decided not to proceed with the proposed float. CBA had done some research on a listed company, McPhersons. A reverse takeover of McPhersons was suggested to Mr Spira. There was no suggestion on the part of Mr Dennis or Mr McCoy that the decision not to float would have repercussions so far as CBA was concerned. 61 The cross-claimants alleged that by reason of the decision conveyed to Mr Dennis and Mr McCoy on 16 October 1998 that Mr Spira had decided not to continue with the proposed float and CBA's apparent support of DPG's position, CBA represented that it was unconcerned about the decision not to float and that decision was acceptable to CBA ("Fourth Representation"). It is alleged that Mr Spira relied upon the Fourth Representation and discontinued float plans whereby DPG lost the opportunity to float or to commence seeking equity capital in October 1998. 62 There was no representation at the meeting by Mr Dennis or Mr McCoy that the decision was acceptable to CBA. It is alleged that the representation may be inferred by the absence of comment at the meeting. The officers of CBA were presented with a fait accompli. CBA had no right to compel Mr Spira or DPG to float. In those circumstances, the absence of comment cannot, in my view, constitute a representation by silence. I reject the assertion that there was a Fourth Representation. 63 Even if there was a Fourth Representation, there is no evidence of lost opportunity to float in October 1998. Mr Spira's reluctance in February 1999 and thereafter to float suggests that a loss of opportunity to do so earlier is of no consequence. Furthermore, Mr Spira decided not to float in October 1998 because, in the volatile share market of the time, a float would under-value his interest based on the Blue Star indicative offer and the accountant's view of the value of DPG. In that climate, there was no opportunity, acceptable to Mr Spira, he deliberately forwent following the meeting of 16 October 1998. 64 At the end of November 1998, DPG went over its overdraft limit and drew down $2 million under the bill discount facility to rectify this situation. In early December 1998, DPG attempted to draw against the $3 million transferred to the bill discount facility under the First Variation. Permission to do so was refused on the basis that the bill discount facility was limited to re-financing Colonial and other facilities and to acquire equipment under lease and was not available for working capital needs. There was nothing in the First Variation or in the Facility Agreement which limited the use to which funds drawn down under the bill discount facility could be put. 65 Following the First Variation, DPG had requested a replacement summary to that contained in the Facility Offer. It was provided on 27 November 1998. It provided that the purpose was to re-finance facilities of approximately $84 million previously provided by Colonial and various equipment finance providers and to finance capital expenditure of approximately $10 million. 66 Mr Dennis believed the bill discount facility was limited to re-financing the existing loans. In cross-examination, Mr McCoy was clearly surprised when it was demonstrated to him that the Facility Agreement was silent on this question. Mr Pike was of the view that the facilities had been made available to DPG on the basis on which he approved them ie that the bill discount facility was to pay out existing loans. 67 Following DPG's denial of access to the additional $3 million under the bill discount facility, Mr Spira said DPG severely stretched its trade creditors to maintain cash flow, occasionally suffering excesses on its overdraft facility. Had the $3 million been made available to DPG, its need for additional working capital may have arisen at a later time. However, it would not have cured DPG's problems. Its request for an additional $8 million on 18 December 1998 which rose to $13 million in January 1999 demonstrated that $3 million was insufficient for DPG's needs 68 In addition to the $2 million to rectify the overdraft facility, DPG had utilised a further $2 million drawn down under the bill discount facility on 31 September 1998 for working capital purposes. Despite these injections, Mr Spira sought a further $8 million for working capital at a meeting on 18 December 1998. He also informed CBA that balance sheet projections for the periods ending 31 December 1998 and 30 June 1999 suggested that interest cover and gearing covenants might be breached, albeit marginally. The accounts in question were not audited. 69 According to Mr Spira, Mr Dennis said: "don't worry about it, we'll get the covenants amended for you". There is no record to this effect in Mr Dennis's call report of that meeting. His note is that the breaches of covenant needed to be flagged to risk management for appropriate action. I think it highly unlikely that Mr Dennis made the alleged comment. It was not up to him to amend the Facility Agreement. The matter was ultimately addressed in a credit submission prepared by Mr Dennis and Mr McCoy and ultimately approved by Mr Pike. 70 The cross-claimants alleged that CBA made the following representations at the meeting of 18 December 1998 ("Fifth Representations"): (a) That the breaches were not serious in the view of CBA;

(b) That breach of financial covenants would not be enforced by any action under the Facility Agreement or contracts; and

(c) That the covenants would be amended so as to ensure that DPG would not be in default of them or of the contracts to the extent the breach reflected the effect of not floating on the balance sheet and accounts of DPG. 71 Even if Mr Dennis made the remark attributed to him that does not amount, in my view, to representations in the terms pleaded. In any event, representations in those terms, if made, were not causative of any loss or damage. The financial covenants were subsequently amended in conjunction with DPG's application for additional funding. Had DPG set about conducting an examination of its audited accounts to establish no breach of the covenant, or had Mr Spira, independently, borrowed funds and injected them into DPG to comply with the covenants as he said he could, no different result would have arisen. 72 The cross-claimants submitted that similar considerations to those applicable to the un-drawn $3 million under the bill discount facility applied to the un-drawn leasing limit of approximately $2.5 million which DPG requested be transferred to the bill discount facility at the end of November 1998. Different considerations, however, arise. The asset finance facility was limited to the cost of hire of goods from CBA. It was not available for transfer to the bill discount facility. Furthermore, annual reviews of this facility were to take place following which CBA was entitled to give notice that any un-drawn portion of the facility was terminated or reduced. 73 DPG lodged its request for additional finance at a meeting on 19 January 1999. The cash forecasts attached to that document showed $13 million of additional drawings under the bill discount facility from January to October 1999. There was no projected immediate draw-down of the $3 million. The cash forecasts sought $2 million in January and $1 million in March 1999. The request asked that $8 million in unused facilities originally approved be re-instated. A schedule was subsequently provided to CBA showing a total of $108 million made up of borrowings of $100 million and $8 million described as an amount previously available from Colonial, originally provided by CBA and inadvertently omitted. 74 According to Mr Spira's first affidavit, he told the meeting that DPG was experiencing strong growth and forward projections showed a need for an additional $13 million under the bill discount facility. In his third affidavit Mr Spira changed his testimony. He said he asked for $8 million "owed" to DPG under the Facility Agreement and it was Mr McCoy who said DPG needed $13 million. In cross-examination, Mr Spira conceded that the statement that there was $8 million in un-used facilities in place with Colonial was untrue and he knew it to be untrue when the schedule was sent to CBA. He said he was of the view that CBA had misled him and it was tit for tat. There was no $8 million "owed" by CBA to DPG. The $108 million included the $3 million already lent by CBA. That Mr Spira resurrected this matter by amending his testimony in his third affidavit tells strongly against his credibility. 75 The request for finance also contained actual results for the six months to 31 December 1998. Mr Spira believed they confirmed the breach of covenants. No breaches of covenant were, however, demonstrated because the Facility Agreement required the EBIT calculations to be made on consolidated 12 monthly accounts and the gearing ratio to be made on the latest audited consolidated balance sheet. Nonetheless, both Mr Spira and the officers of CBA believed that there had been breaches of the financial covenants, albeit minimal, as at 31 December 1998. 76 On 25 January 1999, DPG was advised that five of the six hire agreements with CBA under the asset finance facility were in arrears by one payment. That had occurred as an administrative oversight in the period before the establishment of a direct debit arrangement. Nonetheless, it constituted a breach of the Facility Agreement. 77 On 27 January 1999, Mr McCoy sent a facsimile to DPG reserving CBA's rights with respect to the arrears under the hire transactions and the supposed breaches of financial covenants. The cross-claimants alleged that this facsimile was: (a) Wrong as a matter of fact;

(b) Given in circumstances where CBA was estopped from making the assertions contained in it by reason of the Fifth Representations;

(c) Not a good faith exercise of the power under the Facility Agreement in that CBA did not in fact believe that there was any material breach of covenants, thus was given in breach of the implied term of the Facility Agreement;

(d) Not made in good faith in that, to the knowledge of CBA the financial covenants were inappropriately drawn to measure acceptable performance or circumstances of or by DPG in a no-float situation, and by reason of the capital intensive nature of DPG's business, thus was given in breach of the implied term of the Facility Agreement; and

(e) Given notwithstanding that it was known to CBA before it issued the Facility Offer, that there would or may be such a breach of the financial covenants because of the capital intensive nature of the business and CBA had untaken the business in that knowledge, thus was given in breach of the implied term of the Facility Agreement. 78 The question whether the Facility Agreement contained an implied term that CBA would exercise its powers and discretions in good faith, fairly and reasonably and for the purpose for which they were given is discussed later in these reasons. Paragraph (a) was established. The Facility Agreement required the financial covenants to be determined with respect to 12 monthly accounts and with respect to an audited consolidated balance sheet respectively. 79 Paragraph (b) fails because I have found that the Fifth Representations were not made. Assuming, for present purposes, that there was an implied term of good faith of whatever content, par (c) fails. Mr McCoy was told by Mr Spira that there was as at 31 December 1998 a breach of the financial covenants. The actual accounts for the six-month period supplied by Mr Spira confirmed that statement. There was nothing in the evidence that suggested that Mr McCoy did not believe there had been breaches of the financial covenants. 80 As part of the credit submission for the additional funds sought by DPG, a submission was made to vary the financial covenants from EBIT to earnings before interest, taxes, depreciation and amortisation ("EBITDA") because of the relatively high depreciation charges made by DPG. Those amendments were made. In my view, however, par (d) fails because all the facsimile of 27 January 1999 did was to reserve CBA's rights. It did not seek to enforce any of them. 81 Paragraph (e) also fails. There was no evidence that officers of CBA were aware before the Facility Offer, that financial covenants based on EBIT were inappropriate because of high levels of depreciation raised by DPG. 82 Mr Spira said that on receipt of the facsimile of 27 January 1999 he complained to Mr Dennis by telephone and Mr Dennis said it was standard procedure, not to take any notice and CBA would issue an amended facility with every amendment required by DPG. There is no call report of such a telephone conversation by Mr Dennis. He was a consistent call report creator. He created a call report for a meeting that occurred on that day. The absence of a call report of a telephone conversation is significant. Further, it is unlikely that Mr Dennis would have said that DPG would be granted all that it desired. Because of the view I take of the credibility of Mr Spira and because of the improbability of the promise, I reject his testimony of a telephone conversation with Mr Dennis. 83 At the meeting on 27 January 1999, Mr McCoy said Mr Spira should not worry too much about the facsimile, it was CBA's policy to reserve its rights as soon as possible after being notified of a covenant breach. Mr McCoy said it was very important that no further breaches occurred. Mr McCoy said the request for additional working capital would be addressed in the credit submission being worked upon: the Facility Agreement had been provided primarily for re-financing old facilities and capital expenditure and not for increased working capital. 84 There is a dispute as to whether further assurances were given by Mr McCoy at the meeting. In this regard I accept the evidence of Mr McCoy in preference to that of Mr Spira. 85 The cross-claimants alleged that in a telephone conversation between Mr Spira and Mr Dennis shortly after the receipt of the facsimile of 27 January 1999, CBA made the following representations ("Sixth Representations"): (a) That the facsimile could be ignored;

(b) That CBA would shortly issue a new letter of offer to DPG to vary the terms of the Facility Agreement including the financial covenants and all issues regarding the alleged breaches of the financial covenants would be resolved. 86 I have found that the alleged telephone conversation did not take place. The Sixth Representations were not made out. Even if they were, they were of little consequence. The facsimile of 27 January 1999 merely reserved CBA's rights. It did not threaten any action. Furthermore, the financial covenants were subsequently amended to overcome the depreciation problem raised by DPG. 87 On 4 February 1999, Mr Spira informed Mr Dennis that he was in discussion with Bridges with a view to formulating another float proposal. On 8 February Mr McCoy and Mr Dennis met with Mr Spira, Mr Skettos and Kelly Campbell. Mr McCoy said that the figures provided by DPG suggested that it needed $16 million rather than $13 million. The figures indicated that DPG wished to incur further capital expenditure. Mr McCoy said that one option to manage its cash requirements was for DPG to stop growing for a year or two. Mr Spira acknowledged that it was an option but said he would prefer to float DPG. 88 The call report of Mr Dennis records that Mr Spira was serious in his intention to float provided market conditions held up and he intended to do so within six months. It was stated that Mr Spira clearly understood DPG could not continue to expand by way of debt financing and that an additional source of equity was required if it was to maintain its current highly competitive position in the industry. 89 In cross-examination, Mr Spira said that it was his intention in February 1999 to proceed with the listing of DPG by the middle of 1999 if it could be coupled with an acquisition of another company. Notwithstanding that the supposed breaches of the financial covenants were minimal, Mr McCoy regarded the issue seriously because of the consequences which attended such a breach and he said so at the meeting. Mr Pike had said to Mr McCoy that Mr Spira had no credibility left because he had not floated DPG. Mr McCoy made a similar statement to Mr Spira at the meeting. 90 On 22 February 1999, Mr McCoy and Mr Dennis lodged a credit submission recommending the waiver of two breaches of financial covenants at 31 December 1998, the amendment of the financial covenants to base interest cover on EBITDA rather than EBIT and to remove inter-company loans with respect to transfers of tax losses within DPG from the gearing calculation. The gearing covenant breaches were arguably due to continued build up of these loans. If they were deducted from total tangible assets, gearing ratios in excess of the prescribed 35% would have been achieved. Limitations were recommended on capital expenditure and a requirement that DPG float raising at least $20 million cash for permanent debt reduction by no later than 31 December 1999. It was recommended that the bill discount facility be increased by $15 million to fund working capital requirements, to be partially off-set by a reduction of the unused $2.5 million in the asset finance facility. It was also recommended that the term of the bill discount facility be reduced by one year. 91 The submission was considered by Mr Ellem, the general manager for New South Wales of the credit institutional banking arm of CBA. He said the covenant breaches as at 31 December 1998 were fairly nominal and the actual results had achieved acceptable levels. He preferred to retain the traditional interest covenants in addition to the proposed EBITDA/interest covenant. He supported the recommendations subject to the retention of the interest cover ratio but its relaxation from 2.5 to 2.1. 92 Mr Pike approved the recommendations further reducing the existing interest cover ratio to 2. He said: "It is disappointing to see breaches of covenants so soon after the Bank re-acquired this connection. Nevertheless, I accept the breaches are modest and the explanation, at least for gearing, reasonable. The business appears robust but management needs to be more disciplined in pursuit of growth which cannot be internally funded. Recommendation is approved subject to inclusion of 2.0 times interest cover (EBIT/I) covenant. This represents the maximum exposure I am prepared to entertain pre-float and, accordingly, management will need to curtail capex, sales or margin contraction etc to ensure DPA operates comfortably within arrangements." 93 Whereas Mr McCoy and Mr Dennis had recommended a condition that DPG float raising at least $20 million by no later than 31 December 1999, Mr Pike noted this might be achieved by requiring a $20 million reduction by 31 December 1999. 94 The cross-claimants submitted that since Mr McCoy regarded the supposed breach of financial covenants as a serious matter and since Mr Pike approved a package presented to him, Mr McCoy's concern must be taken as of critical significance to CBA's decision. I reject that submission. Mr Pike explained in detail his reasons for his decision and he was extensively cross-examined in relation to them. 95 There were six reasons for his decision to insist upon a $20 million reduction of DPG's debt as a term for varying the Facility Agreement. First, there was deterioration in DPG's projected cash flow in the February 1999 credit submission compared to that in the September 1998 credit submission. Secondly, whereas CBA was to have security over all the assets of DPG under the earlier credit submission, that was not the case under the later credit submission because key printing equipment was leased from ABN AMRO and Suncorp. Thirdly, there was a large increase in the overall debt exposure of DPG in an amount of $15 million for extra working capital above the total debt requirements of the group represented to CBA in the September 1998 submission. Fourthly, no additional security was being provided by DPG with respect to the increased indebtedness. Fifthly, in September 1998 it was Mr Pike's understanding that the float would proceed with a consequent reduction of CBA's debt by $18 million from the proceeds of that float unless a market disruption occurred which prevented it. By February 1999 there had been no market disruption but the float had not occurred and there was no positive indication that it would occur within the foreseeable future. Sixthly, Mr Pike regarded the additional $15 million as in the nature of a bridging loan pending either a partial float of DPG or some other form of equity injection by December 1999. 96 In cross-examination, Mr Pike said that fundamental to his decision to require the $20 million reduction was the fact that the application involved a request for additional funding. If it were not for this, he would not have required such a condition. Mr Pike did not regard the supposed breach of financial covenants, taken in isolation, as a matter of substance. On that basis they were quite minor. It was suggested to him that CBA had made a mistake in limiting the use of the bill discount facility to re-financing existing loans and not making it available for working capital needs and he was using that mistake as leverage to obtain a favourable re-arrangement of the banker/customer facilities. He denied this suggestion. I accept his denial. 97 It was suggested to Mr Pike that looking at the matter with hindsight, it was quite unfair in February 1999 for CBA to treat Mr Spira as having done something wrong by not having floated the company. Mr Pike said: "I don't believe we did treat him unfairly at the time. He asked for additional finance and that was provided on the basis that it was repaid in the short term". Mr Pike regarded DPG's under-capitalisation as a fundamental problem. He said it needed equity in order to continue to finance its growth projections. 98 A constant theme in Mr Pike's cross-examination was the proposition that the $20 million reduction obligation was introduced because DPG had not floated. Each time Mr Pike responded that that was only partially correct because DPG requested additional funding. If additional funding had not been sought the reduction obligation would not have been introduced. 99 The cross-claimants criticised Mr Pike's six reasons for his decision. As to the $50 million turnaround, it was submitted that there was no mention of it in Mr Pike's note on the credit submission which one would expect if he had formed that view in light of Mr Ellem's comment of minor discrepancies in the analyses of the two submissions and Mr McCoy's acceptance that only $5 million was needed for additional working capital to 30 June 1999 and $7.5 million to 30 June 2000. Of the reduction in CBA's security position, it was submitted that it was not mentioned in Mr Pike's note, the security rating remained the same in the two submissions and if DPG defaulted, CBA could achieve the same position by paying out the other financiers or by keeping up monthly payments. As to the large increase in overall debt exposure without additional security, it was submitted that there was no mention in Mr Pike's note, that additional draw-down would enhance the assets of DPG as would its expected profit for the year ended 30 June 2000 of over $15 million. As to the failure to float and short-term nature of the additional funding, it was submitted that CBA wanted to force DPG to float or otherwise raise equity and this constituted the real reason for the imposition of the $20 million repayment requirement. 100 I reject these submissions. I accept the evidence of Mr Pike. A short hand written note on the credit submission was clearly not intended to recite his reasoning in arriving at his conclusion. I do not regard any of the criticisms as cause not to accept the testimony of Mr Pike which was exhaustively tested in cross-examination. 101 Mr Dennis wrote to Mr Spira on 24 February 1999 setting out CBA's approval of a waiver of the supposed events of default by breach of the financial covenants, amendment to those covenants, an increase in the bill discount facility from $71 million to $86 million for additional working capital requirements and an amendment of the overdraft facility to a group limit overdraft facility. The approval was subject to CBA's usual terms and conditions, the usual incidents of the banker/client contract and the terms and conditions set out in the First Variation as varied by the letter and any other separate agreements or documentation executed in connection with the facilities provided. The letter stated that the bill discount facility was to be for an overall term of four years with a principal reduction of not less than $20 million by 31 December 1999 from the proceeds of the float of shares in DPG. 102 A meeting took place on that day at which Mr Spira said he proposed to float DPG but he did not want that to be a formal condition of the financing for he would have to disclose it in the prospectus and that would weaken any bargaining position he had with Bridges as to key terms of an underwriting agreement. I find that Mr Spira's concern was not with the requirement to reduce DPG indebtedness by $20 million from a float because that was his intention at the time, but rather that a float not be stated as a condition of the loan. 103 CBA accepted Mr Spira's concern and a revised letter issued on 1 March 1999 requiring a principal reduction of not less than $20 million by 31 December 1999. Mr Spira's signed his acceptance on that day. Although dated 1 March 1999, a facility variation agreement ("Second Variation") was executed by DPG after Mr Spira had had the advantage of advice from Mr Hamilton dated 11 March 1999 which specifically drew his attention to the $20 million reduction requirement and the shortening of the term of the bill discount facility. 104 The Second Variation amended the Facility Agreement as amended by the First Variation by providing for a group overdraft facility of $2 million, a bill discount facility of $86 million reducing to $66 million by 31 December 1999, a contingent liability facility of $1 million and an asset finance facility of $15.25 million, a total of $104.25 million. 105 The cross-claimants submitted that Mr Spira complained about the imposition of the requirement to repay $20 million. No doubt he did, but that does not detract from the proposition that his principal concern at the time was the effect of a condition to float upon prospectus and underwriting considerations. It was submitted that Mr Spira had no alternative but to accept. Again, that may well have been the case, but that does not, of itself, establish that CBA acted unfairly or even unreasonably in imposing the condition on the increased funding. 106 A possible acquisition of Penfolds Printing by DPG was discussed during the first half of 1999. A reverse takeover of that company was considered by DPG as was a direct bid. CBA expressed the view that an acquisition should follow a float. Mr McCoy said that CBA would not provide additional funding for an acquisition prior to a float and if DPG was in breach of the covenants as at 31 December 1999, CBA was likely to appoint a receiver. 107 In June 1999, Mr Spira requested a variation of the facilities to allow for a letter of credit facility to obtain paper from a new supplier. On 28 June 1999, a facility variation agreement was executed ("Third Variation"). It reduced the bill discount facility to $84.5 million and provided a documentary credit facility of $1.5 million. The total facilities remained at $104.25 million. 108 During 1999, bills were drawn on the bill discount facility. There was no shortage of working capital. In early September 1999, the bill discount facility was only drawn to $75 million and Mr Spira indicated that no further draw-downs were likely until Christmas. 109 At a meeting in early September 1999, Mr Spira said it was unlikely that a float would proceed in the foreseeable future. Mr McCoy said that Mr Spira had no credibility in light of his earlier statements about the likelihood of a float. Mr Spira had told CBA on numerous occasions that the float was likely to go ahead. He said if DPG did not float, CBA would have considerable difficulty in relation to DPG's future banking requirements. DPG had the option to terminate the purchase of the second Heidelberg M3000 printing press. It was exercisable in October 1999. Mr Spira wanted to abandon the float and wanted CBA to reduce the December 1999 payment to $10 million to fund a direct bid for Penfolds and to fund the purchase of the second M3000. While saying it was very unlikely that CBA would agree to these proposals, Mr McCoy said he would take the request forward. 110 Shortly after that meeting, Mr Spira informed Mr Dennis that he was pretty sure that DPG would be unable to make the $20 million reduction due on 31 December 1999. 111 In late September 1999, Mr Dennis left CBA. Geoffrey Thomas Lock took over the role of relationship executive to the DPG account on a temporary basis. He and Mr McCoy attended a meeting with Mr Spira and Mr Skettos on 14 October 1999. Mr Spira again mentioned the option with respect to the second M3000 printing press saying he could not go ahead with the purchase unless he had the support of CBA. Mr Spira said he was well advanced in discussions for a sale and lease back of the existing M3000 printing press to Heidelberg. Mr Lock commented that that simply replaced debt with debt. 112 The purchase of the second M3000 printing press involved an outlay of approximately $23 million. As well as the capital cost of the press of approximately $18 million, approximately $5 million had to be spent on the Melbourne factory to accommodate and install it. Mr Spira decided to go ahead with this purchase notwithstanding the obligation to pay $20 million in reduction of bill discount facility by 31 December 1999. 113 During November and December 1999, Mr Spira put forward a number of propositions to meet the $20 million reduction. Mr McCoy submitted a report in light of the inability of DPG to meet that commitment. The submission noted two alternatives put forward by Mr Spira. The first was to transfer 50% of his shareholding in Terraplanet.com/Terraplane Press to DPA in advance of a planned float of Terraplanet by 31 April 2000. The other was for DPA to sell the Sydney premises to Mr Spira's superannuation fund for, say, $16 million coupled with a $4 million reduction in the facility limit. Neither alternative was attractive to CBA. It considered extending the time for repayment of the $20 million to 31 March 2000. 114 Mr Spira came forward with a further proposal that Heidelberg would sell the existing M3000 printing press to a leasing company for $15 million and that DPG would take an operating lease over it. Heidelberg would then lend the $15 million to a Spira company outside DPG which would subscribe for redeemable preferred units in the Spika Trading Unit Trust of which DPA was trustee. Mr Spira sought further amendments to the Facility Agreement as varied. A further submission was prepared by Mr McCoy recommending the re-arrangement of the $20 million reduction by cancelling the $1.5 million documentary credit facility, reducing the bill discount facility by $2 million to $82.5 million, extending the time for payment of the balance of $16.5 million to 1 July 2000 or the earlier receipt of the $15 million proceeds from the planned Heidelberg transaction and $1.5 million proceeds from the planned float of Terraplanet. 115 Mr Pike accepted the recommendation on 16 December 1999 and Mr Spira was informed of the decision the next day. Mr Pike was at that meeting. He said that a float of DPG was not on the horizon and the reason the $20 million reduction obligation was introduced was because the float had not occurred. During the meeting, Mr Lock said that Mr Pike asked what DPG could do if CBA extended the time for repayment of the $16.5 million to 31 December 2000. Mr Spira replied that if the Heidelberg proposal did not proceed he would float DPG by 30 June 2000 raising at least $20 million if market conditions remained as they were. Mr Pike then said CBA would extend the repayment date to 31 December 2000. I accept Mr Lock's evidence of what was said in preference to the evidence of Mr Spira. It is confirmed by a diary note taken that day by Mr McCoy. The extension was confirmed in a revised letter of offer of the same day. 116 A further meeting took place on 22 December 1999 as a result of which a third letter of offer was sent. The cancellation of the $1.5 million documentary credit facility was withdrawn such that a balance of $18 million was to be paid by 31 December 2000. The interest rate under the final offer was 3% to reduce to 2% on receipt of the $15 million principal reduction expected from the Heidelberg transaction. Mr Spira accepted this offer. The bill discount facility was then drawn to $77 million, leaving $5.5 million still available for working capital purposes. 117 Mr Spira said that on a number of occasions he had conversations with Mr Lock in which he said: "did CBA want him to go?" to which Mr Lock responded in the negative. Mr Lock said that on one occasion around 22 December 1999 Mr Spira asked whether he was being told that he had to re-finance the facilities to which Mr Lock responded that CBA expected him to honour the obligations under the revised Facility Agreement and if he did that CBA was willing to continue the relationship. If the obligations were not met, CBA had made it clear that it wanted to be re-financed. 118 In about January 2000, Mr Spira informed Mr Lock that he had sent Mr Skettos overseas to complete the Heidelberg transaction and while he was in the United States Mr Spira had him looking at long term debt alternatives to refinance. Mr Spira said: "do you want me to leave him there or bring him home?" to which Mr Lock responded that he should bring him home. Mr Lock said he said this because Mr Skettos was the one person who had detailed knowledge of the Heidelberg arrangements under negotiation. 119 The cross-claimants alleged that during the period from December 1999 to March 2000, CBA made the following representations ("Seventh Representations"): (a) CBA considered the facility to be regular and acceptable;

(c) It was not necessary for DPG to end its relationship with CBA and find an alternative financier; and

(d) Mr Spira should bring Mr Skettos home. 120 There was no evidence that CBA expressed the view attributed to it in par (a). The evidence suggests to the contrary. Protracted negotiations took place in December as to the terms of the variation offer. A facility variation agreement consequent upon the acceptance of this offer was not signed until 9 March 2000 because DPG sought variations to it. CBA expressed dissatisfaction with the failure of DPG to float. Different versions of the Heidelberg transaction from that described in the latter part of 1999 were being presented to CBA. Instead of a loan to a Spira company outside DPG, it was proposed that Heidelberg would lend the $15 million dollars to the fifth defendant. Details of the Terraplanet float were also changing during this period. DPG had not provided audited accounts for the year ended 30 June 1999. In early February, Mr Spira requested a return to a five year period under the Facility Agreement and the restoration of the original financial covenants. CBA required execution of a facility variation agreement with respect to 22 December 1999 agreement before any further proposal was entertained. Late in February, Mr Spira sought a 10 year interest only commitment from CBA. In early March 2000, Mr Lock informed Mr Spira that the problem with the Heidelberg transaction was that it did not result in any new equity and, with growth forecasts remaining strong, DPG remained under-capitalised whereas the Heidelberg transaction agreed in December 1999 injected $15 million in new equity. Mr Spira indicated that the market was depressed and he was not prepared to go ahead with the float. He said he wanted to terminate the relationship and there were other financiers wanting to do business with DPG. It was agreed that the sale of the imaging business to Terraplanet should be expedited, the facility variation agreement with respect to the December 1999 agreement should be executed and the Heidelberg transaction as described in February 2000 should go ahead. This was not a regular and acceptable facility to CBA. Paragraph (a) of the Seventh Representations was not established. 121 Mr Lock's statement in December 1999 contained two aspects. If DPG honoured its obligations, CBA was willing to continue the relationship. If DPG failed to honour those obligations, CBA wanted to be re-financed. Paragraph (b) and par (c) were not made out. 122 Mr Lock did say that Mr Skettos should come home but in the context that he was the person with detailed knowledge of the Heidelberg transaction. In that context, par (d) does not amount to a representation that there was no necessity for Mr Spira to consider re-financing. 123 On 9 March 2000, the parties executed a facility variation agreement ("Fourth Variation") which reduced the bill discount facility by $2million, reduced the contingent liability facility by $0.3 million and reduced the asset finance facility by $2.5 million, bringing total facilities down to $99.45 million. It provided for a reduction of $18 million on 31 December 2000 with prepayment upon completion of the Heidelberg transaction or the partial float of DPG and the float of Terraplanet. 124 In May 2000, CBA received $2.5 million from the sale of the imaging business to Terraplanet. The Heidelberg transaction changed again. In June 2000 it was concluded and CBA received $15 million in reduction of the debt. 125 In June 2000, CBA rejected a request to provide the asset finance facility beyond 31 December 2000 and, in light of information that the documentary credit facility of $1.5 million was no longer required, it was cancelled, CBA indicating that it would consider requests to draw on that amount in terms of a cash flow budget presented to it to assist DPG while completing its re-finance. In re-examination, Mr Spira said it was waste of time to make any application. DPG did not avail itself of the opportunity. 126 Mr Spira said that working capital shortages expected from July 2000 onwards prevented him from taking out foreign exchange contracts for paper purchases in US dollars from early February 2000 onwards. There is some confusion in the evidence as to what information was made available to Mr Spira as to the availability of foreign exchange trading facilities. While it is true, as CBA submitted, that there were un-committed balances in the bill discount facility when paper orders were made without foreign exchange cover, that does not answer Mr Spira's evidence. 127 DPG did not arrange alternative finance by 31 December 2000. The bill discount facility was retired into a bills matured account to which a higher rate of interest applied. 128 In early March 2001, DPG sought further urgent additional funds of approximately $3 million to enable it to finalise an offer of re-financing by Westpac Banking Corporation ("Westpac"). CBA agreed to this course. Westpac funding was not, however, taken up. Mr Spira had expected to be able to obtain re-finance resulting in a surplus working capital of about $12 million whereas the Westpac proposal produced a surplus of only $3 million to $4 million. In addition, sales figures were down in December 2000 and in the first quarter of 2001. Mr Spira attributed this to a reduction in stocks to ease cash flow demands and DPG's inability to quote a competitive price because of its increased cost of raw materials. 129 In late March 2001, orders for the next quarter were 40% to 50% down on the previous year. On 30 March 2001, voluntary administrators were appointed to DPG and the companies were wound up on 2 July 2001. 130 John Melluish is a chartered accountant and a registered liquidator and a partner in Ferrier Hodgson. The liquidators of DPG were also partners of that firm. Mr Melluish had the day to day conduct of the liquidations. Based on his analysis of the financial accounts of DPG as at 30 June 2000, Mr Melluish expressed the opinion that DPG was not in good shape to weather a downturn in the industry in 2001 because of its debt to equity ratio and because of the magnitude of the subsequent events. He was of the view that the downturn in forward orders for the quarter commencing 1 April 2001 would have had its impact on DPG in June, July and August 2001 by which stage, unless external funds were injected, he was of the view that DPG would have had trouble paying its debts as they fell due. This was not so much a matter of the level of debt as it was a problem of a lack of adequate working capital although, of course, an injection of additional capital would flow through to working capital in many circumstances. 131 From newspaper articles and the like Mr Melluish concluded that the significant fall in projected revenue for the June 2001 quarter was consistent with a fall across the printing industry generally. As printing volume dropped, price competition within the industry increased. Mr Melluish formed the view that in the period commencing I July 2001, DPG, on its projected cash flows, was unable to meet its debts as they fell due and the only way of continuing to trade solvently was if there was a further injection of debt or equity. This was not the position, in Mr Melluish's view, in the quarter commencing 1 January 2001 during which there was no apparent shortage of working capital. 132 The cross-claimants seek declarations that the Representations and Nondisclosures constituted misleading and deceptive conduct on the part of CBA. While the pleading does not say so, presumably reliance is placed upon the Australian Securities and Investments Commission Act 2001 (Cth), s 12DA(1) or the Trade Practices Act 1974 (Cth), s 52(1). 133 If the Fifth Representations were made in December 1998 as to waiver of the supposed breaches of financial covenants and their amendment, they did not constitute misrepresentations and did not constitute misleading or deceptive conduct. Those matters were carried out. Of the other Representations and Nondisclosures, that CBA would take a flexible approach to doing business with DPG, that CBA would consider additional capital expenditure financing for acquisition of other assets or businesses on a case by case basis and that DPG could rest assured that it had the support of CBA, were the only ones I find were made. 134 All of those representations were made prior to the execution of the Facility Agreement. They were either in the nature of puffery or they became irrelevant or of little, if any, significance following the execution of the Facility Agreement and its subsequent variations. 135 In Pappas v Soulac Pty Ltd (1983) 50 ALR 231 at 234-235, Fisher J observed that one should be reluctant to elevate introductory comment in the nature of puffery to the status of potentially misleading conduct (see, also, General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164 at 178). I agree with that observation. Furthermore, the cross-claimants have not established that they suffered any loss or damage as a result of those representations. 136 The cross-claimants have failed to establish any entitlement to damages under the Trade Practice Act 1974 (Cth), s 82(1) or other relief under s 87(1) or under the comparable provisions of the Australian Securities and Investments Commission Act 2001 (Cth), s 12GF(1) and s 12GM(1). 137 The cross-claimants submitted that there was to be implied in the Facility Agreement a term that CBA would exercise its powers and discretions thereunder and under the security documentation in good faith, fairly and reasonably and for the purpose for which they were given. The cross-claimants submitted that such a term is to be implied by law in New South Wales in all commercial contracts. It was submitted that this was decided by the Court of Appeal in Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187. 138 Implication of a contractual term by operation of law is based on more general considerations than those applicable to an implication of a term necessary to give business efficacy to a contract (Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 345-346, Castelmaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468 at 486-487). The latter process has been called ad hoc implication (Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 256). 139 When a court first determines that a term should be implied into a contract of a particular type by operation of law, the process by which that is achieved has been variously described. It has been said that the implied term is one the parties must have intended by necessary implication, as a basis without which the whole transaction would be futile (Miller v Hancock [1893] 2 QB 177 at 181). Lord Wilberforce said that the term should be read into the contract as the nature of the contract itself implicitly requires, no more, no less: "a test, in other words, of necessity." (Liverpool City Council v Irwin [1977] AC 239 at 254). As McHugh and Gummow JJ said in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 450, terms implied by law reflect the concern of the courts that, unless implied, the enjoyment of the rights conferred by the contract could be rendered nugatory, worthless, or, perhaps, seriously undermined. Hence the reference in the authorities to "necessity". 140 In Renard Constructions at 263-264 Priestley JA advocated the implication by law of a term of good faith and fair dealing in the performance of contracts generally. His Honour took the view (at 268) that unconscionability, unfairness and lack of good faith had a great deal in common and that prevailing community expectations are consistent with the implication in all contracts of a duty upon the parties of good faith and fair dealing in their performance. I have said elsewhere (Mainland Holdings Ltd v Szady [2002] NSWSC 699 at par 64) that I agree with his Honour. In Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 at 192-193, Finn J inclined to the view of Priestley JA but implied a term in a class of contract limited to competitive tender process contracts. In Hughes Bros Pty Ltd v Trustees of Roman Catholic Church (Archdiocese of Sydney) (1993) 31 NSWLR 91 the New South Wales Court of Appeal applied Renard Constructions, Kirby P stating at 93 that he was bound by the decision. 141 The issue came before the New South Wales Court of Appeal again in Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349. At 369 Shellar JA with whom the other members of the court agreed said: "The decisions in Renard Constructions and Hughes Bros mean that in New South Wales a duty of good faith, both in performing obligations and exercising rights, may by implication be imposed upon parties as part of a contract…" 142 In Burger King the New South Wales Court of Appeal stated that a review of the authorities since Alcatel indicated that courts in various jurisdictions had, for the most part, proceeded upon an assumption that there might be implied as a legal incident of a commercial contract, terms of good faith and reasonableness (par 159). Far Horizons Pty Ltd v McDonalds [2000] VSC 310, Garry Rogers Motors Aust Pty Ltd v Subaru (Aust) Ltd [1999] FCA 903, Saxby Bridge Mortgages Pty Ltd v Saxby Bridge Pty Ltd [2000] NSWSC 433 and Asia Television Ltd v Yau's Entertainment Pty Ltd (2000) 48 IPR 283 were considered. The court accepted that if terms of good faith and reasonableness are to be implied, they are to be implied as a matter of law (par 164) and went on to say that for a term to be implied in a new type of contract it must be both reasonable and necessary, citing Castlemaine Tooheys and Byrne (par 167). The court went on to consider whether the term should be implied in the particular contract before it (par 168), concluding that it should (par 186) on the basis that wide powers in the contract might otherwise be exercised so as to render enjoyment of rights of the other party to the contract nugatory, worthless or, perhaps, seriously undermined (par 176, par 177) and that for the slightest of breaches, very valuable rights could be brought to an end (par 183). 143 In Overlook v Foxtel [2002] NSWSC 17 at par 62, Barrett J took the view that Burger King decided that a term requiring the exercise of good faith in its performance was a legal incident of every commercial contract. His Honour may well be correct. The Court of Appeal stated an assumption in this form and concluded that it arose in the contract before it. At the least, the Court of Appeal confirmed the decision in Alcatel that such a term might be implied by law in commercial contracts. 144 There is a line of authority referred to in Castlemaine Tooheys at 490-492 that terms implied by law may yet be excluded from contracts within the particular class (Liverpool City Council at 257, Szymonowski & Co v Beck & Co [1923] 1 KB 457 at 466, Duncombe v Porter (1953) 90 CLR 295 at 306, 311, G H Myers & Co v Brent Cross Services Co [1934] 1 KB 46 at 55 approved in Young & Marten Ltd v McManus Childs Ltd [1969] 1 AC 454, Gloucestershire County Council v Richardson [1969] 1 AC 480 at 494-495, 506, 510, Helicopter Sales (Australia) Pty Ltd v Rotor-Work Pty Ltd (1974) 132 CLR 1 at 17). I am bound by some of those decisions. It may be, however, that in light of recent decisions highlighting the difference between implication by law and implication ad hoc, those decisions should be re-visited by an appellate court. 145 The difficulty I have is that in Burger King the court considered it appropriate to investigate the question whether it was appropriate to imply a term of good faith in the particular contract before it. This was a different exercise from determining whether the term was excluded from that contract. It was an exercise one would expect in deciding ad hoc implication. 146 If a term is to be implied in a class of contract as a matter of law, I would have thought that such an inquiry is irrelevant. If general issues of community acceptance justify the implication as a matter of law, there should be no legitimate exclusion of the term from a particular contract within the class. If the court concludes that exceptions are legitimate it should not, in my opinion, imply the term as a matter of law. If an implication is to be made in those circumstances it should be ad hoc. 147 I take the same view with respect to exclusions, while acknowledging that I am bound to hold to the contrary. If as a matter of general policy a term is to be implied by law in all contracts of a particular class, public policy should not, in my view, countenance any exclusion of the term from contracts within the class. While bound by the decision, I respectfully disagree with the observation of Hope JA in Castlemaine Tooheys at 492 that a term implied by law in a class of contract may be excluded by an express provision to that effect and also as being inconsistent with a term or terms of the contract or the matrix of facts in which the transaction took place. 148 If Overtel is correct, a term of good faith in performance of the Facility Agreement is implied. If Burger King requires an investigation as to whether the term should be implied in law in the Facility Agreement, CBA submitted that I should not do so because good faith is addressed in the Facility Agreement and it is an entire contract. 149 As to the former argument, cl 7 of the Facility Agreement provided that if as a result of any change in the law or a governmental requirement, CBA determined that it was illegal, impossible or contrary to the governmental requirement for it to raise funds or provide or maintain accommodation under the Facility Agreement, CBA and DPG would negotiate in good faith with a view to agreeing whether the relevant accommodation might be provided by some alternative means. I do not regard that limited requirement to act in good faith as standing in the way of an implication of a general term of good faith. As Finn J did in Hughes Aircraft at 42, I regard cl 7 as a particular manifestation of the general duty. 150 Secondly, it was submitted that cl 22(b) of the Facility Agreement, which provided that CBA was not obliged to do anything including, without limitation, disclosing anything or giving advice except as might be expressly set out in the Facility Agreement, indicated that the parties regarded the Facility Agreement as an entire contract. Again, I do not see that circumstance as standing in the way of an implication of a term governing the manner in which rights and obligations under the entire contract are to be exercised. A somewhat similar submission was made in Burger King at par 174 which did not find favour with the Court of Appeal. 151 The Facility Agreement contained rights that, if untrammelled in the manner of their exercise, might render nugatory, worthless or seriously undermine the rights of DPA. For example, any failure to observe an obligation under the Facility Agreement constituted an event of default under cl 11(b) enabling CBA to call up all moneys under cl 11.2(b) and cl 5.2 provided that if the float of DPG had not occurred by 31 March 1999, CBA might thereafter give notice to DPA that the rate of interest, fees and/or margins applicable to any accommodation was varied in the manner set out in that notice (cf Paragon Finance plc v Nash [2002] 1 WLR 685 at 699-700). In my opinion it is appropriate to imply a term of good faith in the Facility Agreement as a matter of law. 152 So far as those authorities which condone an exclusion of a term otherwise implied by law are concerned, there was, in my view, no express provision to this effect and no inconsistency in the terms of the Facility Agreement or in the matrix of facts in which the transaction took place to lead to such a result. 153 I was invited to depart from Burger King on the basis that any extension of the type of contract in which an implication as a matter of law should be made should be circumscribed and not extended to commercial contracts generally. I decline to do so. I regard myself as bound by Alcatel at 369 and Burger King at par 167 and par 168 to the view that such implication arises or may arise in commercial contracts. 154 In my view, once it is accepted that a term of good faith may be implied in a contract of a particular type as a matter of law if it is both reasonable and necessary to do so in the sense specified in Byrne, there seems no good reason to confine the types of contract in which the implication may arise or to allow for extension of the categories in limited circumstances only. 155 The Court of Appeal in Burger King did not discuss the content of the implied term of good faith save to comment, apparently favourably, upon the apparent equation of the notions of reasonableness and good faith in Alcatel at 369. The matter was considered by Barrett J in Overlook at par 61 to par 67. His Honour concluded that the implied obligation of good faith underwrites the spirit of the contract and supports the integrity of its character. A party is precluded from cynical resort to the black letter but is not fixed with a duty to subordinate self interest entirely. The duty is not one to prefer the interests of the other contracting party. Rather it is a duty to recognise and to have due regard to the legitimate interests of both parties in the enjoyment of the fruits of the contract as delineated in its terms. The cross-claimants submitted that I should adopt his Honour's delineation of the content of the duty and I am content to do so for the purpose of this case, mentioning only that the content of the implied term of good faith may need further scrutiny to avoid being merely a slogan. 156 The Cross-claimants alleged that the implied obligation of good faith was breached in the following circumstances.

(a) CBA made the Representations and Nondisclosures and then acted contrary to them. 157 That allegation fails in light of my findings with respect to the Representations and Nondisclosures.

(b) CBA repeatedly pressured DPG to float and from February 1999 onwards asserted that it was a breach of the Facility Agreement not to do so when it was not a breach 158 True it is, that in February 1999 Mr Pike said Mr Spira had lost all credibility because he had failed to float DPG. That was in the context of Mr Pike's understanding when he approved the original credit submission that DPG would be floated unless there was some market disruption. Neither that assertion nor the 22 February 1999 credit submission nor Mr Pike's approval nor the offer of 24 February 1999 constituted an assertion that DPG was in breach of the Facility Agreement. Notwithstanding the repeated proposition put to Mr Pike in cross-examination that the $20 million reduction obligation was introduced because DPG had not floated, Mr Pike's constant response was that was only partially correct because DPG requested additional funding and if additional funding had not been sought, the reduction obligation would not have been introduced. 159 Nor does the evidence establish repeated pressure by CBA on DPG to float. Mr Spira made the assertion from time to time that he intended to float and from time to time changed his mind.

(c) CBA imposed unreasonable terms on variations to the Facility Agreement including application fees, increased interest rates and accelerated repayment of principal. 160 The Second Variation required an early reduction of the bill discount facility and charged application fees and increased interest rates. CBA submitted that the Second Variation constituted an abandonment or abrogation of the Facility Agreement such that the implied term of good faith in the Facility Agreement was spent. Reference was made to DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 434. That was a case, however, where neither party regarded the contract as still on foot and neither intended that it be further performed. That is a very different context from the instant circumstances. The Second Variation contained a specific provision that, except as expressly varied, the terms of the Facility Agreement remained in force. In my view the Facility Agreement was not abrogated, it was varied and as varied, it continued to contain an implied term of good faith. 161 As is pointed out above, the implied obligation of good faith does not require a party to subordinate its interests to those of the other contracting party. In February 1999 CBA had to consider an application for further funding from DPG. It was entitled to consider its legitimate commercial interests even if they were inimical to those of DPG (Commonwealth Bank of Australia v Renstel Nominees Pty Ltd [2001] VSC 167 at par 96). There was no evidence of comparative fees and interest rates charged by other financial institutions in like circumstances. I find that the fees and interest rates charged in the Second Variation and subsequently were neither unfair nor unreasonable.

(d) CBA exercised powers and discretions in order to attempt to force DPG to float when the directors considered it ill-timed to do so. 162 This allegation is not made out on the evidence. The Facility Agreement contained a float and non-float scenario. The officers of CBA were well aware that it was not a condition of the Facility Agreement that DPG float. When it came to considering the February credit application for additional funds, Mr Pike regarded the additional finance as short-term and approved a requirement for the $20 million reduction. Mr Spira was not concerned with the reduction because he intended to float DPG. His concern was that a requirement to do so would impinge badly on his negotiations with Bridges and on the float. CBA was entitled to take this course in its commercial interests. By so doing it was not acting unfairly or unreasonably.

(e) CBA was unreasonable in its demands to alter the securities when the Terraplanet shares were floated. 163 The Terraplanet float was one means put forward by Mr Spira to ameliorate the situation when it became obvious that DPG would not meet the 31 December 1999 obligation to repay the $20 million. It constituted part of the Fourth Variation of 9 March 2000 requiring a reduction of $18 million by 31 December 2000 with pre-payment upon completion of the Heidelberg transaction or the partial float of DPG or the float of Terraplanet. There having being a failure to comply with the terms of the Second Variation, CBA was entitled to have regard to its own position and require increased security under the Fourth Variation and in doing so it was not acting unfairly or unreasonably.

(f) CBA was unreasonable in its dealings with DPG when it entered into equipment leasing facilities for the purchase of printing presses which were necessary for the growth of the business. 164 This allegation was not made out on the evidence. Nor was it addressed in submissions on behalf of the cross-claimants.

(g) CBA unreasonably pressured DPG to obtain additional equity to reduce the facilities under the Facility Agreement. 165 For the reasons set out above with respect to the imposition of the $20 million reduction requirement, I am of the view that this allegation was not made out. Officers of CBA from time to time indicated to Mr Spira that DPG ought to seek additional equity. That, however, did not constitute unreasonable pressure to do so.

(h) CBA unreasonably refused various proposals that would have enabled DPG to refinance its facilities with CBA. 166 In the period leading up to December 1999, DPG was aware that it would be unable to repay the $20 million by 31 December 1999. It put forward a number of proposals. Eventually the float of Terraplanet and the Heidelberg transaction took place. It was not established by the evidence that other avenues were available to DPG that were put forward to CBA and rejected. Indeed, CBA continued to vary the Facility Agreement to accommodate DPG. In November 1999, Mr Spira proposed that land and buildings owned by DPG should be sold to his family trust for $16 million. That involved the raising of funds from some other financier. Mr Spira did not proceed with the transaction.

(i) CBA acted unreasonably in relation to proposals for realisation of the securities. 167 I do not recall any evidence on this topic. In my view the allegation was not established on the evidence.

(j) CBA unreasonably impaired DPG from obtaining forward cover in respect of exchange rate variations. 168 The evidence from Mr Spira was that he did not take out forward cover against exchange rate fluctuations from early February 2000 onwards because of expected working capital shortages from July 2000 onwards. In my view, however, this did not stem from any action on the part of CBA. The denial of access to the $3 million un-drawn on the bill discount facility would not have answered DPG's working capital needs. The Second Variation of 1 March 1999 saw a $15 million increase in the bill discount facility. I have earlier dealt with this issue and return to it later in these reasons. I am of the view that this allegation was not made out.

(k) CBA denied access to approved facilities and required repayment of facilities and imposed excessive interest, costs and charges thereby diminishing DPG's working capital. 169 Apart from denial of access to approved facilities, which is dealt with below, this matter has already been canvassed. In my view the allegation was not established by evidence. 170 The cross-claimants also alleged that in February and March 1999 the following matters constituted a breach of the implied term of good faith in the Facility Agreement. (a) The assertion that DPG was in breach of the Facility Agreement because of breaches of financial covenants and its failure to float. 171 As to the latter, I have found that no such assertion was made. As to the former, the officers of CBA acted upon the representation to that effect by Mr Spira. While breach of the financial covenants had not then been established, because of the absence of 12 monthly consolidated accounts and an audited consolidated balance sheet covering the period, it was, in my view, neither unfair nor unreasonable for CBA to act upon the representation seemingly confirmed by the six monthly unaudited accounts presented to CBA when the representation was made. Furthermore, there was no exercise of any right by CBA in reliance upon the assumed breaches. The assumed breaches were waived. That exercise of a right cannot be unfair or unreasonable. (b) The assertion that Mr Spira had no credibility with CBA because DPG had not floated in the latter part of 1998. 172 Mr McCoy's repetition of Mr Pike's observation was made at the meeting of 8 February 1999. It was Mr Spira's intention at that time to proceed with the listing of DPG by the middle of 1999 if it were coupled with an acquisition of another company. The assertion by Mr McCoy did not of itself constitute unfair or unreasonable behaviour. Nor did CBA exercise any right under the Facility Agreement as a consequence of making the assertion. (c) The assertion that CBA might exercise its rights arising from the supposed breach of financial covenants including declaring all moneys immediately due and payable and appointing receivers to DPG. 173 Again, that assertion, of itself, did not result in unfair or unreasonable conduct. Nor did CBA at that stage exercise its supposed rights consequent upon an event of default.

(d) The assertion that a new statement of the terms upon which CBA would be prepared to continue to deal with DPG would be contained in a further offer. 174 That assertion was followed by the letter of 24 February 1999 and it led to the Second Variation. In light of the request for further finance coupled with the supposed breach of financial covenants, there was nothing unfair or unreasonable in the assertion. 175 CBA submitted that the implied term of good faith did not extend to this situation because there was no right in the Facility Agreement for CBA to demand that DPG agree to a variation. In Howtrac Rentals Pty Ltd v Thiess Contractors (NZ) Ltd [2000] VSC 415 there was an agreement between the parties that the defendant sought to vary. It argued that there were implied terms of co-operation and good faith requiring the plaintiff to agree to the variation. At par 426 Gillard J said: "On a proper analysis of the facts here neither party was exercising any obligation and neither party was exercising any right given to it by the contract. What Theiss wanted to do was to vary the plant hire agreement to enable the six trucks to be modified to take a greater volume of material. Clearly it had no right to modify the contract and accordingly what it was seeking was a variation of same. None of the implied terms entitled a party to demand that the other party agree to a variation. Further, the implied terms did not oblige Howtrac to agree to any variation." 176 I agree with his Honour. The obligation of good faith requires a party to exercise rights and obligations under the contract fairly and, it would seem, reasonably. It does not require anything else. In the instant circumstances Mr Spira sought a variation of the Facility Agreement to increase DPG's borrowing. CBA indicated the basis upon which it was prepared to vary the contract. In doing so, it was not exercising any right or obligation under the Facility Agreement. 177 The cross-claimants sought to answer this rationale by their submission that the variation of the Facility Agreement was the consequence of breaches of the Facility Agreement. I have found that, with the exception of the denial of access to the $3 million dollars transferred to the bill discount facility discussed below, there were no breaches of the Facility Agreement. Nor did the denial of access to the $3 million lead to the Second Variation. It was the consequence of DPG's request for further funds and the supposed breaches of the financial covenants. (e) The assertion that CBA did not consider that there was a default under the Facility Agreement entitling it to demand full repayment of all moneys or the enforcement of the securities. 178 There was no evidence that officers of CBA did not believe that the financial covenants had been breached as at 31 December 1999. They acted on the representation to that effect by Mr Spira and were not aware of the requirement of 12 monthly consolidated accounts and an audited consolidated balance sheet. Mr McCoy regarded any breach of financial covenant as significant because of its ramifications. Mr Pike regarded the supposed breaches as minor and placed little significance on them in arriving at his approval of the credit submission. CBA did not act upon the purported act of default. It waived the supposed breaches. I find that no officer of CBA threatened DPG with the consequences of a supposed act of default to induce it to enter into the Second Variation believing that no act of default had occurred. (f) That by the Second Variation, CBA wrongfully imposed conditions on DPG not in good faith to accommodate the fact that DPG had not listed and imposed the requirement to repay $20 million and imposed excessive interest rates and charges. 179 I have already dealt with each of these issues. The Second Variation was brought about by DPG's request for additional funds. I have found that there was no representation that CBA would make additional funds available within the scope of the Facility Agreement. Mr Spira was informed that a separate application would need to be made for additional funds. There was no obligation upon CBA to make additional funds available. It was entitled to consider the new application for funding and to consider its position and risk in setting its terms. There was, in my view, nothing unfair or unreasonable in that course. There was also a need to waive the supposed event of default. That could hardly be regarded as unfair or unreasonable. 180 Furthermore, the Second Variation was executed by DPG after it had the advantage of legal advice from Mr Hamilton. The context is one of a relatively large commercial transaction between a bank and a customer with access to relevant financial and legal advice. (g) That the Second Variation was designed to position CBA for an equity role in DPG's float and designed to rectify breaches of CBA's credit policy. 181 The business development plan attached to the credit submission of 22 February 1999 made mention of positioning CBA for an equity role. Mr McCoy said that this matter did not loom large in his mind. He said that the inclusion of a business development plan was simply to act as a discipline on business development officers of CBA to ensure that they actually completed a plan. The business development plan was not a document to which Mr Pike referred. It was rare for him to look at these documents as part of his credit appraisal. The positioning of CBA for an equity role played no part in his decision to approve the credit submission. 182 CBA had adopted a credit policy. It contained a gearing benchmark of 40%. However, Mr Pike regarded the policy as a guideline that he was entitled to disregard and he did so on occasions including this one. I find that CBA did not determine the terms of the Second Variation so as to rectify any breach of the gearing benchmark.

(h) Insisting on performance of the Second Variation and permitting deferral of full performance only on conditions, including the payment of increased pricing for the continuation of reduced facilities and application fees. 183 DPG was not able to repay $20 million on 31 December 1999. By the Fourth Variation, the bill discount facility was reduced by $2 million and $18 million was required to be paid on 31 December 2000 with prepayment upon completion of the Heidelberg transaction, the float of Terraplanet or the float of DPG. DPG was in default and requested an extension of time to complete the reduction of the bill discount facility. CBA was entitled to re-price the loan. In so doing it did not act unfairly or unreasonably. 184 Furthermore, DPG sought a variation of the Facility Agreement as amended. It had no right to require CBA to agree to any terms. CBA was not exercising any right or obligation under the Facility Agreement as varied in setting the terms of the Fourth Variation. The implied term of good faith did not extend to the making of the variation. Once the Fourth Variation was executed, the implied term of good faith in the Facility Agreement became operative not only in relation to the continuing terms, but also in relation to the new terms. 185 The cross-claimants also alleged that CBA was in breach of the implied term of good faith in the following circumstances:

(a) By declining DPG's request to draw down the $3 million un-drawn on the bill discount facility. 186 In December 1998, DPG attempted to draw against the $3 million that had been transferred to the bill discount facility under the First Variation. Permission was refused on the basis that the bill discount facility was limited to re-financing Colonial and other facilities and providing approximately $10 million for equipment acquisition under lease and was not available for working capital needs. Mr Pike, Mr Dennis and Mr McCoy believed this to be the case. It was the purpose specified in the Facility Offer. It was also specified in the replacement of 27 November 1998 of the summary in the Facility Offer. 187 CBA submitted that the Facility Offer and its replacement contained contractual terms and should be construed as part of the Facility Agreement. I reject that submission. The Facility Offer was subject to satisfactory documentation within a reasonable time and stated that CBA was under no obligation to provide accommodation until such documentation was executed. This is a classic instance of the third category of Masters v Cameron (1954) 91 CLR 353 at 360 where parties make it clear that there is no binding relationship between them unless and until they execute a formal contract. 188 The letter of 27 November 1998 could not affect this situation. It could only speak prospectively. As a replacement of the summary in the Facility Offer, I do not regard it as constituting any variation of the Facility Agreement as amended by the First Variation. Under those contractual terms, there was no limitation on the purpose for which moneys drawn under the bill discount facility could be utilised. 189 It follows, that in December 1998 CBA was obliged to provide DPG with accommodation under bill discount facility and it failed to do.

(b) By applying a previously undisclosed policy of CBA not to permit honouring of cheques unless deposits to the relevant account sufficient to cover the cheque had cleared 190 I reject this submission. I have already pointed out that the Facility Agreement provided that CBA was not obliged to provide accommodation under the overdraft facility if, immediately following the provision of that accommodation, the outstanding accommodation under that facility would exceed the facility accommodation limit. There was no evidence that DPG had sought special treatment in this regard and Mr Hamilton did not request amendments with respect to this requirement. 191 The Australian Securities and Investments Commission Act 2001 (Cth), s 12CA(1) provided that a person must not in trade or commerce engage in conduct in relation to financial services if the conduct is unconscionable within the meaning of the unwritten law from time to time of the States and Territories. To the extent that financial services were not involved, a like obligation arose under the Trade Practices Act 1974 (Cth), s 51AA(1). For the purposes of those provisions, conduct was unconscionable in terms of the unwritten law if a party to a transaction was under a special disability in dealing with the other party to the transaction with the consequence that there was an absence of any reasonable degree of equality between them and the special disability was sufficiently evident to the other party to make it, prima facie, unfair that that other party procure, accept or retain the benefit of the disadvantaged party's assent to an impugned transaction in the circumstances in which he or she procured or accepted it (Louth v Diprose (1992) 175 CLR 621 at 637. See, also, Blomley v Ryan (1956) 99 CLR 362 at 405, Commercial Bank of Australia Ltd v Amadio (1982-1983) 151 CLR 447 at 461, 474, Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (No 2) (1999) 96 FCR 491 at 502-504), CG Berbatis Holdings Pty Ltd v Australian Competition and Consumer Commission (2001) 185 ALR 555 at 569). 192 The cross-claimants alleged that CBA was guilty of unconscionable conduct in the circumstances set out above. I reject that submission. DPG was not, in my view, under any special disability. It had access to financial and legal advice and the circumstance that its bargaining power might have been less than CBA's is not sufficient to constitute a special disability (Amadio at 462). 193 I reject the submission that if DPG had no practical commercial option but to execute the Second Variation that circumstance constituted a special disadvantage. Whether or not there is scope for economic duress under the statutory provisions, that is not a feature of this case. The Facility Agreement was a relatively large commercial transaction negotiated at arm's length between a bank and a corporate group with access to financial and legal expertise. Both it and the Second Variation were executed after Mr Spira had taken advantage of such advice. The Second Variation arose because DPG needed further funds. If it had no commercial option but to execute the Second Variation, that is a plight suffered by many borrowers who over-extend their operations and require further accommodation. That is not a special disadvantage in the Amadio sense. There was no serious affectation of Mr Spira's ability to make a judgment as to the best interests of DPG. Furthermore, Mr Spira was not concerned with the Second Variation as such. His concern was to exclude the $20 million reduction obligation from the documentation because of the impact that would have on the prospectus for the float and his underwriting negotiations with Bridges. 194 Nor was CBA in its dealings with DPG and Mr Spira unconscientious in its dealings. CBA was entitled to have regard to its exposure and risk when DPG sought a variation of the Facility Agreement. In my view it was not opportunistic in its dealings in this regard. Even if it was, there is a distinction between an opportunistic approach to strike a hard bargain and acting unconscionably (CG Berbatis at 571). 195 I have found that CBA was in breach of the Facility Agreement in failing to allow draw-downs under the bill discount facility for working capital purposes to the extent of the $3 million transferred to that facility. That, however, did not amount to unconscionable behaviour on the part of CBA. Each of Mr Pike, Mr Dennis and Mr McCoy believed that the Facility Agreement followed the Facility Offer and restricted the use of moneys drawn under that facility to re-financing and limited leasing purposes. 196 In Australian Competition and Consumer Commission v Samton Holdings Pty Ltd (2002) 189 ALR 76 at 91-93 a Full Court of the Federal Court held that the Trade Practices Act 1974 (Cth), s 51AA(1) was not limited to Amadio special disadvantage situations but extended to other forms of unconscionability giving rise to equitable intervention. The cross-claimants relied on this decision and claimed relief under the statutes for unconscionable departure from representations. 197 In GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd (2001) 191 ALR 342 at 389, however, Gyles J held that the Australian Securities and Investments Commission Act 2001 (Cth), s 12CA was limited to the Amadio special disadvantage situation. This conflict of authority may be resolved by the decision of the High Court in CG Berbatis. The appeal has been heard and the decision has been reserved. In this case I am not called upon to consider the conflict because I have rejected the Representations and Nondisclosures. 198 The cross-claimants have failed in their claims that CBA was in breach of contract, guilty of misleading or deceptive conduct and guilty of unconscionable conduct, save for its refusal of access to the $3 million. That renders it unnecessary for me to consider CBA's estoppel claims. It also renders most of the expert evidence on both sides as to damages unnecessary of my consideration. Paul Mentzalis, chartered accountant, prepared a report in which he expressed the opinion that as at 31 March 2001, DPG suffered losses due to the alleged actions of CBA in the form of direct and consequential loss of profits and deprivation of working capital and other funds. 199 While there was a deprivation of working capital to the extent of $3 million between December 1998 and March 1999, from April 1999 to May 2000, DPG had access to additional facilities that would not otherwise have been available under the Facility Agreement. Mr Mentzalis, therefore, elected to ignore the financial consequences of the working capital variations in the period up to May 2000 and calculated consequential losses for the period from June 2000 to March 2001. There is, therefore, nothing in Mr Mentzalis's evidence from which I can divine any loss sustained by DPG as a result of its denial of access to the $3 million. 200 Had DPG been able to draw on this amount in December 1998, its need for additional working capital may have arisen at a later time. It would not, however, have cured DPG's problems. Its request for an additional $8 million on 18 December 1998 which rose to $13 million in January 1999 demonstrates that $3 million was insufficient for its needs. Furthermore, the cash forecasts lodged by DPG with its request for additional finance at the meeting on 19 January 1999, demonstrated no urgency in the need to access these funds. The cash forecasts sought $2 million in January 1999 and $1 million in March 1999. 201 Had DPG drawn down the $3 million in December 1998, it would have incurred an additional bill discount amount together with additional fees under the bill discount facility. Regard must also be had to the additional facilities made available to DPG under the Second Variation. Because this event overtook the deprivation of working capital, Mr Mentzalis elected to ignore the financial consequences for DPG before June 2000. I agree in that approach. The cross-claimants have failed to prove any damage sustained by the discrete failure on the part of CBA to grant financial accommodation up to $3 million in December 1998. 202 I propose to give judgment for the plaintiff in the amount of $52,396,390.32 together with interest from 13 September 2002 at $19,307.71 per day. I propose to dismiss the cross-claims. I will hear the parties on costs.

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