Jarrett v Westpac Banking Corp

Substantive merits 21 The direct attack on Westpac based on unconscionable conduct, either in equity or under the Trade Practices Act 1974 (Cth) or the Contracts Review Act 1980 (NSW) cannot succeed. Her Honour made findings of fact that Mrs Jarrett knew what she was doing, agreed with her husband to do so and did not communicate at any time to Westpac officers any health difficulties she was experiencing. These findings were clearly open on the evidence. 22 The remainder of the Jarrett case seeks to fix Westpac with responsibility for alleged wrongful conduct of AGC. The lynch pin of this part of the case is the proposition that Mr Rodd was at all material times the servant or agent of Westpac and acting within the scope of his employment. 23 The uncontested evidence of Mr Rodd was that he became part of the organisational structure of AGC. Although a wholly owned subsidiary of Westpac, AGC had a separate existence both as a matter of law and in commercial reality. The fact that Mr Rodd was seconded to Westpac does not alter the situation. Effectively Mr Rodd's salary was paid by AGC, that company reimbursing Westpac who continued to pay him. He was subject to the control of superior officers at AGC, not Westpac. Counsel for the appellants did not refer us to any authority which might establish liability for an employer in the position of Westpac in the present case. To put it colloquially, Westpac lent Mr Rodd to AGC and are not liable for the day to day operations of the latter company.

Orders 24 The appeal should be dismissed with costs, including reserved costs.

I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.

Introduction 25 Like Heerey J, I also have had the advantage of reading in draft the reasons for judgment of Mansfield J. I am grateful to him for his summary of the evidence and procedural history of this matter. I agree generally with his conclusion that the appeal should be allowed and I agree with the reasons which led to that conclusion. However, I join in taking that course for reasons which go beyond the ground upon which Mansfield J based his conclusion. I acknowledge, with respect, the force of the reasons expressed by Heerey J. But on balance, I have decided that this appeal should have a different outcome to the one which he proposes. I shall state my reasons as briefly as possible. 26 First, I respectfully agree with the reasoning expressed in paragraph 88 of Mansfield J's reasons. It seems to me that they encapsulate his Honour's reasons for allowing the appeal. But quite apart from that matter, when I read all the materials that were put before us, I formed the view that a substantial wrong had occurred, although I was unable to point to any other exercise of her Honour's discretion which, taken individually, could be fairly criticised. Due to the cumulative effect of a series of events for which, in my view, the appellants were not sufficiently responsible, I think that what occurred amounted to a substantial miscarriage of justice. In those circumstances, it would be in accordance with the principles explained by the High Court of Australia in House v The King (1936) 55 CLR 499 at 505 for this Court to interfere. The cumulative circumstances to which I have just referred start with the order made by Dunford J on 22 March 1996. It is apparent from the notes of his Honour's reasons [AB 300-301] that notwithstanding the efforts of Westpac's counsel to persuade him to the contrary, his Honour concluded that a resolution of this matter (i.e. the present proceedings) would involve a consideration of Endormer's position, its financial arrangements with AGC, the way those financial arrangements were administered by AGC, the representations allegedly made by Mr Peter Rodd and his relationship with Westpac at the relevant time. Dunford J expressed the opinion that these proceedings were related to the proceedings then pending in this Court. At that stage, those proceedings were the Endormer proceedings. On the same date, 22 March 1996, the Paterson claim was transferred from the Supreme Court to this Court. Obviously Dunford J considered that the one Court should hear all three proceedings. I respectfully agree with the assessment which his Honour made. Davies J held a similar view because, as Mansfield J has pointed out, on 10 May 1996 Davies J ordered that all three sets of proceedings be heard together, with the evidence in any one proceeding to be evidence in all proceedings. It is true that Davies J's orders were expressed in terms of "unless the trial judge otherwise orders". But in my opinion, from that time onwards each of the parties to these three sets of proceedings was entitled to expect (in the sense of having a reasonable expectation to that effect) that the three proceedings would be heard and determined together, with all of the evidence being taken only once, unless there was some material change in circumstances amounting to good and sufficient reason to order otherwise. As Mansfield J has explained in the early part of his reasons, the real issue in the Jarrettclaim and in the Patersonclaim arose under the respective cross-claims against Westpac in those proceedings. The cross-claims were built upon matters already raised in the Endormer claim. When all three matters were before her Honour on 11 and 12 May 1998, being the third occasion in just under a fortnight when the question of adjournment of some or all of the proceedings had been raised (11 and 12 May would have been respectively the sixth and seventh days of the scheduled hearing of the three matters), the Endormer claim was adjourned, regardless of what was to happen to the JarrettandPatersonclaims. That occurred, so it seems, because AGC had not given complete discovery and its counsel had acknowledged that the Endormer proceedings could not be completed in the time remaining available for the hearing. What took place thereafter is set out in the reasons for judgment of Mansfield J. The part of the Paterson proceedings which concerned Mrs Paterson was, like the Endormer proceedings, adjourned and became separate. Mrs Paterson was apparently able to obtain an adjournment on the basis of the prospect of legal aid being granted. The hopes, at that stage expressed through counsel for Mr and Mrs Jarrett, of retaining a barrister with appropriate competence in commercial litigation who would take ten days to get to grips with the matter, did not eventuate. My assessment is that Mr Jarrett had virtually no hope of properly presenting his (and his wife's) cross-claim, intertwined as it was with the Endormer claim, without legal representation. There has been no finding that he was at fault in failing to secure legal representation between 11 May 1998 and 25 May 1998. At the hearing of the appeal, counsel for the respondent placed some stress on the separate legal personality of Westpac and AGC. This was in the context of discussion of AGC's alleged default in the matter of discovery. AGC is and was at all material times a wholly-owned subsidiary of Westpac. The litigation involves allegations against one of Westpac's officers of conduct engaged in by him whilst under secondment to AGC. All three sets of proceedings were supposed to be heard together. In those circumstances, although the two entities were separately represented, I think that too much was sought to be made out of the separate legal personalities. Furthermore, the estimate made by Westpac's solicitor, in her affidavit of 12 May 1998, that five days of hearing would be the maximum required to hear the Jarrett and Paterson claims if the Jarretts and the Patersons were not represented was, in my opinion, an unrealistic estimate. The unrepresented parties would have had to select out of the Endormer proceedings those portions which related exclusively to the Jarrett and Paterson claims, lead their evidence-in-chief and cross-examine Westpac's witnesses. As it turned out, Mr Jarrett's time between 12 May and 25 May 1999 was very considerably occupied by attempting to obtain legal representation. My assessment is that if he had had the whole of that time properly to prepare the cross-claim, the proceedings would have taken much more than five days. As matters turned out, the hearing took five days, but my impression is that it would have taken far longer had Mr Jarrett properly presented the case. 27 It is this accumulation of circumstances which, in my view, worked a substantial wrong against the appellants. The wrong would not have happened if the Jarrett claim had been adjourned in the same way as had the Endormer claim and the claim against Mrs Paterson. I do not think that there was sufficient prejudice to Westpac to preclude the taking of that course. Westpac did not prosecute its strike-out motion (which was originally listed before Dunford J) and there was no substantial evidence of prejudice. True, the financial obligations of Mr and Mrs Jarrett to Westpac increased as they fell further into default under the mortgage. But we were not taken to any evidence that their house had not increased commensurately in value, or that they were otherwise unable to satisfy the debt. I would allow the appeal on the natural justice ground alone. In those circumstances it is not strictly necessary to consider the other appeal points. However, my assessment of the need to send this matter back for a re-hearing owes something to my concerns in relation to the manner in which the subject matter of ground 2(a) of the Notice of Appeal was dealt with at first instance. That matter is the possibility that Mr Rodd may have been relevantly engaging in conduct on behalf of Westpac as well as on behalf of AGC. To the extent that the appellants' claims were made under the Trade Practices Act, they were entitled to the assistance of s 84, and in particular s 84(2), of that Act in relation to sheeting home Mr Rodd's conduct to Westpac. The authorities strongly suggest that s 84(2) discloses a legislative intention to extend the liability of corporations for the actions of others. Furthermore, the phrase "on behalf of" extends to many possible relationships: The Queen v Toohey; Ex parte Attorney-General (N.T.) (1980) 145 CLR 374 at 386. Something may be done on behalf of one person, but that need not prevent it from also being done on behalf of another: Federal Commissioner of Taxation v Commonwealth Bank of Australia (1992) 105 ALR 294 at 299. Her Honour's reasons make no reference to this section. I infer that this was because she was not taken to it. Her Honour's reasons in relation to the matter whether Mr Rodd was to be taken as engaging in conduct on behalf of Westpac were as follows: "All of these allegations depend on the cross claimants demonstrating that Mr Rodd, in his dealings with the Jarretts was acting on behalf of Westpac. The following facts are not disputed - Mr Rodd was an employee of Westpac who had been seconded to AGC for a period and who had dealings with the business affairs of Endormer Pty Limited - a company directed by Mr Jarrett and his partner Mr Paterson. There is in evidence two documents one, seconding Mr Rodd to AGC and the other describing Westpac's secondment policy. Neither document was challenged by the cross claimants. Mr Jarrett gave evidence that he regarded Mr Rodd as a "Westpac man" and it is not contested that his role, on secondment was to change the "credit culture" of AGC. Further, Mr Rodd had little experience in motor vehicle financing before being seconded to AGC. I am, however, satisfied and find that whilst seconded to AGC he worked at all times in the interest of and on behalf of AGC, not Westpac. The consequence is that the cross claims which depend on Mr Rodd acting as an agent of Westpac to induce the cross claimants to transfer their home loan fail." 28 Nothing in what I have just written should be taken as reflecting any kind of concluded view. It does reflect my concern that the issues in this matter were not properly ventilated. They were not properly ventilated because what I have described as the reasonable expectation of the parties that all three matters would be heard together and that evidence in one would be evidence in all of them, did not come to fruition. That occurred in circumstances where there had not been, in my opinion, sufficient to deflect the three proceedings from that course. For those reasons I join with Mansfield J in allowing the appeal. I agree with the orders proposed. I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment of Justice Carr.

29 This is an appeal from a decision of a judge of the Court given on 30 July 1998 making an order for possession of premises at 8 Bataan Street, Kings Park in New South Wales ("the premises") in favour of Westpac Banking Corporation ("Westpac"), and an order that the appellants Glenn Robert Jarrett ("Mr Jarrett") and Deborah Alison Jarrett ("Mrs Jarrett") pay to Westpac $158,973.09. I shall refer to Mr Jarrett and Mrs Jarrett together as "the Jarretts". The effect of the order was also to dismiss the cross-claim of the Jarretts against Westpac. The Jarretts were unrepresented at the hearing. 30 The Jarretts raise two principal issues on the appeal: (1) the learned trial judge erred in refusing to adjourn the hearing when, only just before the trial, the solicitors acting for them up to that point ceased to do so, so that the Jarretts were forced to conduct the hearing in person in circumstances in which they had not had sufficient time to prepare for the hearing, and lacked the expertise to do so in any event; (2) the learned trial judge erred in law and fact in the judgment appealed from in: (a) finding that an officer of Westpac seconded to Australian Guarantee Corporation Ltd ("AGC") was at all material times acting only in the interests of and for the benefit of AGC and not for Westpac; (b) finding that a certain loan agreement, and the supporting securities, were effected through the intervention of Mr Ed Jarrett ("Mr Jarrett senior") and to suit his convenience, and independently of AGC or of any pressure from it; and (c) in the case of Mrs Jarrett, failing to find that the transaction should be set aside by reason of the principles enunciated in Yerkey v Jones (1939) 63 CLR 649 and Garcia v National Australia Bank (1998) 155 ALR 614. 31 In order to appreciate the context in which those issues arise, it is necessary to refer in a little detail to the nature of these proceedings and to two other related proceedings. Background 32 Westpac's claim against the Jarretts was straightforward. On 26 August 1993, Westpac advanced $150,000 to them pursuant to a loan agreement ("the loan agreement"). Repayment of that advance was secured by a mortgage over the premises ("the mortgage"). On 8 September 1994, the Jarretts were in default in payment of interest under the loan agreement. On 13 September 1994, Westpac served on the Jarretts notice of demand for repayment. They did not comply with that notice. Subject to their cross-claim, the result was that the principal and outstanding interest then became payable. On 16 February 1995, Westpac brought these proceedings against the Jarretts in the Supreme Court of New South Wales for possession of the premises, and for judgment for the full amount of principal and interest then owing under the loan agreement. On 22 March 1996, the proceedings were transferred to this Court. I shall call them "the Jarrett claim". 33 The real issue in the Jarrett claim arose under the Jarretts' cross-claim against Westpac. 34 To explain its significance, it is necessary to refer to certain other proceedings. 35 At about the same time as the Jarrett claim was instituted, Westpac brought similar proceedings against David Colin Paterson ("Mr Paterson") and his former wife Jonnie Caroline Paterson ("Ms Paterson") in the Supreme Court of New South Wales. I shall refer to Mr Paterson and Ms Paterson together as "the Patersons", and the proceedings "the Paterson claim". The Paterson claim also involved Westpac seeking to recover possession of a family home under a mortgage that had been entered into at about the same time as the Jarrett loan agreement. The Paterson claim also was transferred to this Court on 22 March 1996. Again the real issue in those proceedings arose under the Paterson's cross-claim against Westpac. 36 The transfers of the Jarrett claim and of the Paterson claim occurred because the allegations in those two proceedings were intertwined with proceedings in this Court. The cross-claims in each of those actions were built upon matters already raised in the proceedings extant in this Court. I shall call those proceedings "the Endormer claim". 37 In the Endormer claim, Endormer Pty Ltd (in liquidation) ("Endormer") and others including Mr Jarrett and Mr Paterson had brought proceedings against AGC and against Peter James Hedge ("Mr Hedge") claiming damages for misleading and deceptive conduct, and damages for negligence, and other relief against AGC and against Mr Hedge. He was appointed by AGC as receiver of the assets of Endormer on 13 April 1994. The statement of claim in the Endormer claim describes the background common to the three proceedings, and the detailed allegations against AGC and Mr Hedge. The following represents a brief summary of those allegations. Mr Jarrett and Mr Paterson had been associated for some years in operating a business known as Sydney City Motor Group. The business involved the sale and servicing of new and used motor vehicles and the sale of spare parts through Endormer, as trustee for the Dreamont Unit Trust, and a complementary business providing finance and insurance facilities to those buying new and used motor vehicles from Endormer through Kwikday Pty Ltd ("Kwikday") trading as Broadway Financial Services. Kwikday was a wholly owned subsidiary of Endormer. Until November 1991 the operations of Endormer and Kwikday ("the business") were financed through funds provided by AGC, secured over the business and the assets of Endormer and Kwikday, but also secured by guarantees provided by Mr Paterson, Mr Jarrett and others. It is sometimes convenient in these reasons to treat the interests of Endormer, Kwikday, Mr Jarrett and Mr Paterson and their family trustee companies together, and when doing so I shall call them "the Endormer interests". In November 1991, Barclays Bank Ltd ("Barclays") became the financier to the business in lieu of AGC. Shortly thereafter, and until June 1992, representatives of AGC dealt with representatives of the business with a view to re-establishing itself as the financier to the business in lieu of Barclays. It is alleged that, in the course of those dealings, representatives of AGC made various representations concerning the services and facilities, and the terms of services and facilities, which AGC could and would make available to the business. As a result of those representations, Endormer and Kwikday took steps to reapply to AGC in February 1992 for finance facilities with a view to AGC again becoming the financier of the business. It is also alleged that in the period between February and June 1992, AGC made further representations concerning the prospects of that reapplication being successful and engaged in conduct to convey that that reapplication would be successful and would be formally approved as a matter of routine. Unbeknown to the Endormer interests, alterations were made to the reapplication by AGC in circumstances also said to constitute misleading conduct and negligence on its part. On 14 June 1992, Barclays terminated its finance facilities to the business, due to the ongoing dealings with AGC and the apparent imminence of AGC again becoming the financier to the business. However, it is alleged, all did not run smoothly. On 3 July 1992, AGC rejected the reapplication for finance. By that time, in practical terms, AGC was the only available financier. The business was forced to accept finance facilities from AGC on other and less favourable terms. In the course of ongoing discussions concerning AGC providing financial facilities for the business, it is alleged that AGC made further representations upon the basis of which the Endormer interests did not pursue other finance options and entered into fresh finance arrangements with AGC. Those representations are also alleged to have been misleading or deceptive. Each of the applicants, including Mr Jarrett and Mr Paterson claim damages as a result. In effect, it is claimed that AGC reacquired the financing of the business from Barclays through a series of representations and promises which, once it had that business again and Barclays had dropped out of the picture, proved to be untrue or which it failed to fulfil. AGC is alleged to have reneged progressively on those arrangements to the detriment of the Endormer interests. 38 There is also a claim that during 1993 and 1994, AGC conducted the account for the business negligently, as a result of which each of the Endormer interests suffered further loss and damage. 39 In addition, there is a claim that a Deed of Charge granted by Endormer to AGC is void and unenforceable against Endormer's liquidator, who was appointed administrator of Endormer on 12 April 1994 and liquidator on 21 April 1994, so that the entry into an agreement for the sale of Endormer's business on 15 April 1994 by Mr Hedge purportedly under that Deed of Charge was wrongful. He is also alleged to have acted wrongfully and negligently in accepting appointment under the Deed of Charge, and in exercising the power of sale under the Deed of Charge. 40 AGC is a wholly owned subsidiary of Westpac. 41 On 15 November 1990, Mr Peter Rodd ("Mr Rodd") then Manager Lending, Credit and Lending of Westpac was seconded to AGC by Westpac to the role of Manager Credit Control. The letter of appointment recorded:

"Peter I am sure you will appreciate the significance of this appointment and understand the type of role you will be required to play in strengthening the ties between both organisations [Westpac and AGC] and the enhancement of the Group credit culture."

42 The detailed terms of the appointment included a policy statement in the following terms: "The aim of a secondment is -

¨ to develop your skills by providing you with an opportunity to acquire new information, skills, insights and contacts whilst undertaking assignments in a new environment.

¨ to exchange management expertise and innovative techniques

whilst you remain on existing conditions of employment." 43 The terms and conditions as outlined to Mr Rodd included that any proposed promotion by AGC during the secondment must be reviewed by Westpac, that the package conditions as existing in Westpac "will continue throughout secondment", and the following:

¨ Annual salary review date (1st January) will apply throughout term of secondment.

¨ Salary will be paid in normal manner and reimbursement sought from A.G.C. Ltd quarterly.

Transfer of any such vehicle in terms of package arrangements with Banks [sic] conditions of service to apply

¨ Arrangements for performance bonus to be decided between Group Credit Policy & Control [Westpac] and A.G.C. Ltd."

44 The letter of appointment, made by the Manager, Personnel and Administration, Westpac, also made clear that 'Staff benefits to continue as with any new borrowings to be approved by' Westpac, and under the heading "Continuity of Service" it was made clear that the term of secondment was to be treated as service with Westpac for the purposes of long service leave, staff benefits entitlements and superannuation fund purposes. Recreation leave, sick leave and long service leave were all to be determined according to Westpac's award conditions, and any employer contributions to superannuation were to be paid by Westpac and reimbursed to Westpac by AGC. 45 Until February 1993, Mr Rodd was not concerned in relation to the account of the business. 46 It is Mr Rodd's actions in relation to AGC's ongoing financial facilities to the business from February 1993 that give rise to the cross-claims against Westpac by the Jarretts and the Patersons in the Jarrett claim and the Paterson claim respectively. Those cross-claims also assert the matters concerning the conduct of AGC in relation to, and in its dealings with, the business from 1991 and to 1992, and the matters concerning the conduct of its financial facilities with the business during 1993 and 1994 as alleged in the Endormer claim. The cross-claims then allege that Westpac aided and abetted AGC in its misleading and deceptive conduct, but particularly so through Mr Rodd because of his secondment to AGC by Westpac. 47 It is alleged, in effect, that from February 1993 Mr Rodd progressively imposed changes in financing arrangements between AGC and the business which adversely affected its trading position, and that in the course of that "firm" management he made various misrepresentations to the Endormer interests resulting in loss. Part of that conduct involving Westpac aiding and abetting AGC's delictual conduct is alleged in the following terms:

"Peter Rodd represented that in order for Endormer to satisfy AGC's security requirements, and for finance restrictions on Endormer to be relaxed Paterson and Jarrett must refinance with the Bank so that -

(i) The Bank would have the greater security of first registered mortgages and Debt and Interest guarantees from Paterson and Jarrett and their wives, to secure the overdraft facility afforded Endormer, in fact, the overdraft facility to be provided to Endormer was dependent upon the transfer of the first registered mortgages to the Bank; and (ii) AGC would be able to obtain the Bank's consent to second registered mortgages over the Kings Park and North Rocks properties on the terms and conditions requested by AGC, which terms and conditions were not acceptable to the former holders of the first registered mortgages. The Bank, through its servant and agent Peter Rodd, improved its security position, and that of its fully owned subsidiary AGC, by the above conduct in the above circumstances."

48 The Jarretts (and the Patersons) assert that the loan agreement and the mortgage would not have been entered into but for

"… the unconscionable and misleading and deceptive conduct of AGC and the involvement of [Westpac] in adopting that conduct."

49 It is also separately alleged that Westpac, through Mr Rodd's conduct, engaged in misleading and deceptive conduct to procure the loan agreement and the mortgage from the Jarretts, that Westpac through Mr Rodd interfered with contractual relations between AGC and the Endormer interests so as to procure the loan agreement and the mortgage, that Westpac through Mr Rodd, procured the loan agreement and the mortgage by economic duress and that the mortgage was unjust and unconscionable so that its terms should be reviewed under the Contracts Review Act 1980 (NSW), or under s 51AA of the Trade Practices Act 1974 (Cth), or that the mortgage is unenforceable because it was procured by undue influence. 50 The relief claimed includes orders setting aside the mortgage, as well as damages and declaratory relief. The course of the proceedings 51 As noted earlier, on 22 March 1996 the Jarrett claim and the Paterson claim were transferred to this Court. The learned judge hearing the transfer application noted that the cross-claims in both those proceedings involved consideration of the position of Endormer and its finance arrangements with AGC, and the way those finance arrangements were administered by AGC, as well as considerations of the representations made by Mr Rodd. His Honour said:

"But I have come to the conclusion that if the present proceedings remain here, a large number of issues to be litigated in the Federal Court would be litigated here. It would be extremely difficult to keep the issues apart. More time would be spent arguing about admissibility and relevance than if all of the evidence was transferred."

52 In this Court, on 10 May 1996, Davies J ordered that the proceedings in the Endormer claim, the Jarrett claim and the Paterson claim be heard together, with the evidence in any one proceeding to be evidence in all proceedings, "unless the trial judge otherwise orders". Following unsuccessful attempts to mediate a resolution of the matters, in late 1997 the three actions were listed to be heard together for four weeks commencing on 4 May 1998. At that time, there were solicitors representing the Endormer interests together, and AGC and Westpac were separately represented. No order had been made for consolidation of the actions. 53 On 1 May 1998, counsel for the Endormer interests orally applied for the three actions to be adjourned, notwithstanding the imminence of the hearing, and for the four weeks set aside for that purpose be vacated. Technically, the application related only to the Endormer claim, as the ground of the application was alleged to be the failure by AGC properly to have complied with an order for discovery. The learned trial judge, who also had the pre-trial management of the three actions, was understandably concerned at the lateness of the application, and the implications of granting it, both to the parties and to other litigants before the Court by the loss of the hearing time. Counsel for Westpac suggested then that the Jarrett claim and the Paterson claim should proceed separately from and ahead of the Endormer claim, at least so far as practicable. Her Honour adjourned the commencement of the trials to 6 May 1998 to enable the additional documents then sought to be provided, and to be examined by those representing Endormer and the Jarretts and the Patersons, with a view to the three actions then proceeding. There would have been a loss of only two days' hearing time. 54 On 4 May 1998, solicitors for the Endormer interests in the three actions ceased to act for them. On 6 May 1998, when the three matters were called on, Mr Jarrett sought to appear in person for himself and the other Endormer interests, including for Mr and Ms Paterson. He again sought that the matter be adjourned. Counsel for each of AGC and Westpac sought to proceed with the hearing. Mr Jarrett asserted that he was simply presently unable to proceed. He sought an adjournment indefinitely whilst he obtained other solicitors. The question arose as to the circumstances in which the solicitors previously acting for the Endormer interests had ceased to act, but was not then decided. The suggestion was that in some way it had been engineered by the Endormer interests, so they should not be able to take advantage of their then lack of legal representation. The learned trial judge was sympathetic to the difficulty with which the Endormer interests were confronted and to the desirability of their being legally represented. The issue of whether the Jarrett claim and the Paterson claim should be separately heard and determined was raised in the course of submissions. Her Honour adjourned the three actions to 11 May 1998 to enable any applications to further adjourn the hearing to be pursued. She made it plain that it would be necessary for the Jarretts and the Patersons to apply by motions in respect of the Jarrett claim and the Paterson claim respectively, supported by affidavit, to have those actions further adjourned, and that those affidavits should deal with the question of how the Endormer interests came to be unrepresented only just before the hearing. The matters raised on that occasion clearly included whether the Jarrett claim and the Paterson claim should proceed even if the Endormer claim was adjourned. 55 On 11 and 12 May 1998, the applications for adjournment of the three actions again came on for argument. Notices of motion in the Jarrett claim and the Paterson claim had been filed. Counsel appeared for the Endormer interests generally, but only for the purposes of the adjournment application. It seems to have been accepted that Ms Paterson had not been involved directly in the giving of those instructions. Counsel had also been retained for the solicitors previously acting for the Endormer interests, as one question which arose was whether those solicitors were in some way to blame for the circumstances in which they ceased to act and whether they should pay the costs of any adjournment, if one were granted. Evidence was adduced on that application, including by affidavit from Mr Jarrett and he was extensively cross-examined. 56 During the course of that hearing, counsel for AGC acknowledged that the Endormer proceedings, even if they were then commenced, could not be completed in the time remaining available for the hearing. As it was the common view that the trial of the Endormer claim should not proceed piecemeal, that is a series of a few days' hearings broken by lengthy gaps, the practicality was that the Endormer claim would be adjourned and AGC's focus then was more on obtaining costs of the adjournment and who should pay them. Ultimately her Honour adjourned those proceedings. 57 The focus became whether the Jarrett claim and the Paterson claim should also be adjourned. That gave rise to two questions: whether the learned trial judge should revisit the order that the three proceedings be heard together and direct that those two proceedings be heard separately from the Endormer claim (it was not submitted that her Honour could not so order), and secondly whether those proceedings if heard separately should be adjourned and if so for how long. At the time, three of the four weeks set aside for the hearing remained available for that purpose. 58 Westpac urged that those two actions be heard separately, and that they should commence promptly. It adduced evidence, that was not directly challenged, that the Jarrett claim and the Paterson claim could be heard in the time remaining available, because the issues raised within them were more limited than those in the Endormer claim. The Court was unable to relist the matters, if adjourned, until 1999. Her Honour was understandably concerned about such a delay. After a prolonged discussion between counsel for the Jarretts and Mr Paterson, and her Honour, counsel acknowledged that the prejudice in having the Jarrett claim and the Paterson claim proceed separately from the Endormer claim was of convenience, cost and time only, that is that the Endormer claim would later reventilate much of the evidence which would be adduced in the Jarrett claim and the Paterson claim. There was also the inconvenience of having two hearings, not just to the parties but to the witnesses who might have to go through the process twice, and possibly of findings being made in one claim which might not be made in the same way on the same issues in the second claim. Counsel also said: "In terms of forensic prejudice I do not submit there is an obvious forensic prejudice that puts the parties in an impossible position. It is not suggested that there is some manner in which they would frame their case that they would not otherwise do so. But there is a question of time, of cost and the convergence of the issues. If the cases are run separately it is possible that they may find that they have to - they cannot even secure the counsel who appeared in the Westpac proceedings for the AGC proceedings. That is always a possibility where there are going to be two separate sets of proceedings. In my submission, if it is accepted that the same evidence applies in both then there is a compelling argument for running them together as a matter of convenience." 59 Her Honour then raised with counsel for the Jarretts and Mr Paterson what period of adjournment would be necessary to enable the Jarretts to retain other legal representation and for counsel to be adequately briefed, including with the extensive material, if the Jarrett claim and the Paterson claim were to be heard separately. Counsel indicated that, if commercial counsel were available, there would be "something like ten days preparation involved in getting ready" for the trial. Counsel stressed that that was subject to the availability of counsel. Mr Jarrett had deposed to having available funds sufficient to engage new legal representation promptly. 60 Her Honour then adjourned the Jarrett claim and the Paterson claim for hearing to 25 May 1998, and adjourned the Endormer proceedings to a date to be fixed. Her Honour said of the Jarrett claim and the Paterson claim:

"If this matter starts on the 25th could I make it perfectly clear that it is starting on the 25th. On the basis of what you have said, with or without legal representation that is the day on which that case will begin. So your clients must understand that it is not contingent on whether someone will pay for legal representation or other matters. In my view the matters must proceed and they will proceed on that day."

61 When the matter came on for trial, Mr Paterson did not appear. Ultimately, judgment was entered against him after Westpac had adduced its evidence. Ms Paterson appeared by counsel. She sought a further adjournment on the ground that she was seeking a response to her request for Legal Aid, and that despite having conscientiously pursued that matter she had been unable to procure it within time. Evidence was given on that application. Her Honour adjourned the Paterson claim so far as it concerned Ms Paterson to a later date. 62 At the commencement of the trial, Mr Jarrett appeared for himself and his wife. Later, Mrs Jarrett also appeared. Mr Jarrett sought a further adjournment on the ground that he had been unable to engage new solicitors in that period of two weeks. He relied upon an affidavit of 22 May 1998 explaining his efforts to obtain representation. Her Honour, after hearing brief submissions, refused to grant that adjournment. She said:

"The basis on which the matter was adjourned was [on 12 May 1998] made quite clear to you on the occasion and I spent two days listening to the adjournment application. The matter will proceed and I will give you an opportunity, once material is tendered, to look at it and assess it as you see fit. But adjourning the matter generally, I am afraid is not reasonable in the circumstances in which this case has been run."

63 The matter proceeded. 64 Counsel for Westpac opened Westpac's case, and also opened in anticipation of the cross-claim in response to it. He tendered documentary material in support of his case. Mr Jarrett initially indicated that he was simply unable to present any material on the cross-claim, or to consider the material adduced in relation to Westpac's claim. There was extensive discussion between him and the learned trial judge on that topic. She offered him time to consider the documents further and explained the process, including identifying the affidavits which had been filed apparently in support of the cross-claim in anticipation of the matter proceeding as originally listed on 4 May 1998. She then adjourned the matter until the afternoon of 26 May 1998 to give the Jarretts an opportunity to reconsider their position. When the matter came on again, Mr Jarrett indicated that he would proceed. He tendered a number of affidavits. The hearing took about an hour, and was then adjourned to the next day to enable him to arrange for the presentation of those deponents who were required for cross-examination. On 27 May 1998, Mr and Mrs Jarrett were cross-examined on their affidavits. An opportunity was given to Mr Jarrett to consider whether he should call Mr Rodd, as he had initially proposed, and he elected not to do so. The case on the cross-claim was closed. Westpac's case in reply on the cross-claim was then adduced, and its witnesses including Mr Rodd were cross-examined by Mr Jarrett. 65 Her Honour invited counsel for Westpac to make closing submissions first, both on Westpac's claim and in response to the cross-claim. She then adjourned the matter further on that day to enable the Jarretts to prepare any submissions in response. Both Mr and Mrs Jarrett made submissions on 29 May 1998. 66 Judgment was delivered on 30 July 1998. The reasons for decision 67 Her Honour, after referring to the background to the Jarrett claim and the issues arising under the pleadings, described the nature of the evidence and the contentions. Under the heading 'Decision', her Honour correctly identified the real issues as arising under the cross-claim, and in particular: (1) whether Mr Rodd was at material times the agent of Westpac, and if so whether he had engaged in the conduct complained of, and

(2) (a) whether the conduct in which Mr Rodd engaged did constitute misleading and deceptive conduct (or conduct of the various characters attributed to it in the cross-claim) so that the Jarretts, or either of them, were entitled to the relief claimed against Westpac having regard to the circumstances in which the loan agreement and the mortgage were entered into; and

(b) additionally, in respect of Mrs Jarrett because of her vulnerability to the influence of Mr Jarrett due to her then pregnancy and her state of health, whether the loan agreement and the mortgage should be set aside because she had not been independently advised about entering into those transactions.

68 On the first matter, her Honour found that at material times Mr Rodd acted for and in the interests of AGC only and not Westpac. She did not therefore have to review the evidence of, or make findings about, his conduct or the background in which that conduct took place because it was not conduct the consequences of which could be visited upon Westpac. 69 On the second matter, her Honour found that the refinancing of the home loan was not affected by the pressure Mr Rodd was applying in respect of the business performance, but were a consequence of Mr Jarrett senior intervening to have his convenience as the guarantor of a facility to Endormer accommodated. She concluded that the transaction was entered into without being affected by unequal bargaining power and without coercion or undue influence. 70 In relation to Mrs Jarrett's position, her Honour found upon the basis of Mrs Jarrett's own evidence that she knew what she was doing, that she agreed with Mr Jarrett to do so, and that she did not communicate to the officers of the Parramatta branch of Westpac, where the transaction was effected, the health difficulties she was experiencing. There was, her Honour found, no obligation on Westpac in the circumstances to provide her with an opportunity to obtain independent legal advice before participating in the refinancing of the home loan. Procedural fairness 71 The Jarretts through counsel contended that the rulings that the Jarrett claim be heard separately from the Endormer claim, and that the Jarrett claim not be adjourned on 25 May 1998 to enable the Jarretts to get legal representation or to have greater time to prepare for the hearing were each wrong in law. 72 As to the ruling that the two proceedings be heard separately, it was submitted that that ruling was contrary to orders earlier made and "was reached without a proper hearing". It was further submitted that it involved an erroneous judgment that the issues in the Endormer claim would have no impact upon the Jarrett claim, and reflected a failure by the learned trial judge to appreciate the complex factual circumstances leading, inter alia, to the loan agreement and the mortgage and upon which it was sought to have set aside the Westpac mortgage. It was further submitted that, by proceeding with the Jarrett claim separately, the remedies available in the Endormer claim were somehow more restricted if those proceedings were successful. 73 Those contentions must be rejected. 74 As noted earlier, the order of Davies J that the three proceedings be heard together was expressly subject to any order of the trial judge. Although it was intended that the three actions would be heard together, it was the circumstance which the Endormer interests presented to the Court, namely the last minute loss of their former legal representation, which led to that order for concurrent trials being reviewed. It was clearly within the power of the learned trial judge to do so. It was not submitted to the learned trial judge that her Honour did not have the power to do so. 75 The option of separately hearing the Jarrett claim and the Paterson claim was identified at an early point. Counsel for the Jarretts was given the opportunity to explain the disadvantages to which the Jarretts might be exposed if the Jarrett claim proceeded separately. Extensive submissions were addressed to that question. As the learned trial judge's observations during the hearing on 11-12 May 1998 demonstrate, her Honour was clearly aware of the overlap of factual allegations in the Endormer claim and in the Jarrett claim and the Paterson claim. They were not co-extensive: there were several areas in dispute in the Endormer claim, such as the allegations against Mr Hedge, which did not touch upon the Jarrett claim. The fact that, to some extent, separate hearings of those two proceedings would involve a duplication of evidence with associated cost and court time, and might involve inconvenience to parties and witnesses, was not lost upon her Honour. There was no suggestion that evidence clearly relevant primarily in the Endormer claim, concerning the dealings of the business with AGC up to Mr Rodd's involvement in February 1993, and said to be of background relevance in the Jarrett claim, could not be adduced in evidence in the Jarrett claim. As the course of the trial shows, no evidence of that nature tendered by the Jarretts was objected to or was not received. Finally, as Westpac was not a party to the Endormer claim, and neither AGC nor Mr Hedge were parties to the Jarrett claim, there could be no question that orders made in one of those proceedings could preclude in some way orders appropriately made against different parties in the Endormer proceedings. 76 There is not shown to be any particular injustice to the Jarretts by reason of the order that the Jarrett claim be heard and determined separately from, and before, the Endormer claim. The fact that the Jarrett claim could not "piggy back" on the evidence in the Endormer claim meant that that evidence might have to be led twice, but her Honour had regard to that in considering all matters relevant to the issue. The exercise of the discretion to order the separate hearing of the Jarrett claim is not shown to have been flawed. 77 The adjournment of the Jarrett claim and the Paterson claim to 25 May 1998 and the decision on 25 May 1998 that the Jarrett claim proceed at that time presented different considerations for her Honour. 78 The decision to grant or refuse an adjournment is a discretionary one, to be exercised in all the circumstances. The principles upon which such appeal may be allowed are well established: House v R (1936) 55 CLR 499 at 504-505, and the court should be slow to interfere with a discretionary judgment on matters of procedure: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177. Ultimately, of course, as State of Queensland v J L Holdings Pty Ltd (1996-1997) 189 CLR 146 has recently reaffirmed, the issue is doing justice between the parties in the particular case and in all the circumstances, including the interests of other litigants whose cases are awaiting trial: Sali v SPC Ltd (1993) 116 ALR 625. 79 The decision on 25 May 1998 to decline to adjourn the Jarrett claim was erroneous, it was submitted, because the Jarretts were unrepresented and had had insufficient opportunity either to procure alternative representation or to prepare themselves adequately to present their own case. 80 The course of the proceedings, and in particular of the hearings on 6 and 11-12 May 1998, indicate that the learned trial judge was aware of the potential disadvantage a litigant in person has in conducting proceedings. Sheppard J in Hunter v Webb (Federal Court, unreported, 19 July 1996) commented upon these difficulties in the following terms:

"[The applicant] was unrepresented and suffered the difficulties unrepresented parties often have in courts. I think it should be clear that judges are very understanding of their difficulties. They realise that, particularly in a matter that is apparently as complex as this, a litigant in person is disadvantaged. The court to a degree endeavours to make up for this, but it cannot redress the balance completely because, if it does so, it will appear to be acting favourably to the litigant in person and adversely to the litigant who is represented. It thus creates an appearance of unfairness and disadvantage for the person who is represented which is to be avoided. So the path the Court has to tread is not an easy one, and it is not unlikely that misapprehensions and misinterpretations of what the court does or does not do from time to time during the course of a case will occur. That is something that judges have to put up with, particularly bearing in mind the increasing numbers of cases which we are now finding coming before the court in which there are unrepresented parties."

81 Similar sentiments were expressed by the Full Court (Northrop, Neaves, Ryan, French and O'Loughlin JJ) in Titan v Babic (1994) 49 FCR 546 at 554-555:

"Where it is apparent that a party who does not have legal representation has misunderstood procedural requirements so that he or she is not in a position to complete the presentation of evidence, an adjournment might be considered in the interests of justice provided that no irreparable substantive or procedural injustice is done to the other party involved. In any such case the granting of an adjournment will be a matter of discretion. … It may be that in some cases a tribunal should, to avoid possible injustice, inquire of an unrepresented person the reason for the failure properly to prepare his or her case. Again, that is a matter of discretion limited by the necessity that the tribunal be, and appear to be, impartial as between the parties."

See also the observations of Sackville J in Morton v Vouris (Federal Court, unreported, 18 September 1996, referring to Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 536 and to Rajski v Scitec Corporation (New South Wales Court of Appeal, unreported, 16 June 1986). 82 The course of the hearing, which is described briefly above, illustrates that the learned trial judge conducted the trial in accordance with those observations. 83 There remains therefore the complaint based upon the Jarretts being refused the adjournment sought on 25 May 1998. Her Honour on that occasion said in response to the application that she was going to proceed with the hearing whether they were represented or not and that she had made that plain on 12 May 1998. 84 It is significant to observe that her Honour did not attribute responsibility for the last minute loss of legal representation to the Jarretts. There was a lot of evidence on that topic. Counsel for Westpac and AGC made submissions about what findings should be made on the question. The former solicitors attended the hearing on 11-12 May 1998, but in the event were not called upon to participate. However, the issue was not decided by her Honour. 85 It is also significant that her Honour from 6 May 1998 expressed the view that the Jarretts (and more generally the Endormer interests) would not be expected to proceed with the hearing without the opportunity to procure other legal representation or to prepare to represent themselves at the hearing. Her Honour had formed the view that the interests of justice required that the Endormer interests should have that opportunity. As to the procuring of other legal representation, her Honour had been told by counsel for the Jarretts that a period of ten days would be sufficient for new solicitors and counsel to be engaged and to prepare for trial provided that solicitors and counsel could be promptly engaged. It was not discussed at any time how long it would take the Jarretts or the Patersons to be in a position adequately to represent themselves if such legal representation could not be obtained at short notice, including getting an understanding of the admittedly very extensive documentary material so as to make sensible decisions about the adducing of evidence and to challenge meaningfully any evidence adduced by Westpac. Despite the absence of any material addressing such issues, her Honour's concluding remarks indicate that - represented, or not - the Jarrett claim was to take place on 25 May 1998. It is not clear why her Honour reached that view, as reasons for that ruling were not discretely given. Her reasons must be discerned from the course of the submissions. In the course of those submissions, her Honour expressed understandable concern at the disadvantage both to AGC and Westpac by any delay, but the desire to proceed "in circumstances where that can be done with fairness to all parties". It was after those views were expressed that her Honour addressed the question whether the Jarrett claim could be heard and completed within the time set aside, and whether there was sufficient time for other legal representation to be engaged and ready for trial if the Jarrett claim and the Paterson claim were heard separately and in the remaining available time. Counsel for Westpac submitted that there was prejudice to Westpac by any delay in hearing its claim: there was no equity in the premises secured by the mortgage, so further interest would accrue and not be recoverable under the security (it seems to have been assumed that the Jarretts had no other resources to meet any judgment); Westpac's costs thrown away by any adjournment would also not be recoverable. He also submitted that it would be more efficient and economic for Westpac to have the Jarrett claim and the Paterson claim heard first and separately from the Endormer claim as it would not have to be present for the longer trial of the Endormer claim as had earlier been contemplated. It was also put that Westpac itself had complied with all directions for the trial, and was ready to proceed. It was acknowledged in response that costs of any adjournment would be payable either by the Endormer interests, or by their former solicitors. 86 In relation to the Paterson claim, on 25 May 1998 Ms Paterson attended by counsel to seek an adjournment. Ultimately that adjournment was granted. Her Honour observed during submissions that, on the evidence on that application, Ms Paterson had not had a real opportunity to prepare her defence. Her Honour adjourned the hearing, with costs against Ms Paterson, but did not separately give reasons for that decision. Whilst it is not appropriate to treat the position of Ms Paterson as identical with the position of the Jarretts, or of Mrs Jarrett, her Honour was prepared to adjourn that action to give Ms Paterson the opportunity to be legally represented and upon the basis that she was herself unable to conduct the Paterson claim meaningfully on her own behalf. That was done, notwithstanding her Honour's ruling on 12 May 1998 that the Jarrett claim and the Paterson claim would commence on 25 May 1998, whether those persons were then legally represented or not. So far as the transcript discloses, the prejudice to Westpac in the case of the Paterson claim (as against Ms Paterson) being adjourned was of the same kind and degree as the prejudice Westpac asserted against the Jarretts. 87 In my judgment, the discretion of the learned trial judge appears to have been exercised without having regard to the evidence adduced by Mr Jarrett by affidavit of 22 May 1998 that his strenuous efforts to procure legal representation after 12 May 1998 had been unsuccessful. Her Honour did not advert to that material, nor make any finding with respect to it, but indicated that she had already decided that the Jarrett claim would continue irrespective of any such material. In addition, her Honour does not appear expressly to have addressed the question whether, in fairness, the Jarretts could in the period of time between 12 and 25 May 1998 have themselves been able to prepare the matter for trial so as adequately to represent their own interests. The course of submissions indicates that that period was identified as the time needed for legal representation to be adequately prepared, including experienced commercial counsel. It may be that her Honour had in mind considerations about the involvement of the Jarretts generally in preparation for trial, or the circumstances in which the solicitors ceased to act for them, or the genuineness of the Jarretts' asserted unpreparedness to represent themselves, or some other considerations. It may be that some feature of Ms Paterson's position as given in evidence was so significant that, in contrast to the Jarretts, her inability to have been prepared for the hearing and to represent herself made her case quite different. It may be that her Honour had formed a tentative view about the Jarrett's prospects of success on their cross-claim. But those matters are speculative only. The ruling made on 12 May 1998 that the hearing of the Jarrett claim and the Paterson claim would commence on 25 May 1998 whether they were legally represented or not, and the further ruling on 25 May 1998 that the Jarrett claim would commence in the face of the renewed adjournment application, in my judgment, were reached without regard to considerations relevant to those issues. Consequently, in my judgment, the discretion to refuse the adjournment on 25 May 1998 miscarried. It should be stressed that the circumstance in which her Honour came to exercise that discretion was one where she had determined that the interests of justice required the Jarretts be given the opportunity, in the face of the belated withdrawal of their legal representation, to procure other representation or to have sufficient time to prepare to represent themselves at the hearing. It should not be taken that the withdrawal of, or change of, legal representation shortly before a hearing will necessarily or even routinely give rise to that situation. Each case will have to be addressed on its individual circumstances, recognising that

"… the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim."

(per Dawson, Gaudron and McHugh JJ in J L Holdings at 154).

Was the judgment erroneous? 88 As I propose to order that the judgment be set aside and the Jarrett claim be reheard, it is neither necessary nor appropriate for these grounds of appeal to be addressed. The findings which are sought to be attacked will have to be addressed in the light of all the evidence at the rehearing, and that evidence may not be the same in all respects. Order 89 I would order that the appeal be allowed. The judgment appealed from should be set aside, and the matter be reheard. 90 The Jarretts have succeeded on this appeal. However, had they procured the adjournment which they sought and were refused, the proceedings would have been adjourned with costs against them. It would have been up to them then whether they sought those costs from their former solicitors. The costs of this appeal, to which the Jarretts would normally be entitled, would put them in a better position than if the order for adjournment had been granted as they sought. It would seem fair therefore that those two considerations should be offset. In those circumstances, in my judgment, there should be no costs of the appeal. The costs of the trial should be at the discretion of the trial judge on the rehearing. I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.

Associate: Dated: 14 April 1999 Counsel for the Appellants: Mr C de Robillard

Solicitor for the Respondent: Allen Allen & Hemsley