Perpetual Trustees Victoria Ltd v Belcastro

Judgment Introduction 1There are a number of parties to this proceeding and it is convenient to briefly identify them before addressing the substantiative matters. Perpetual Trustees Victoria Limited, as the sole plaintiff brings a claim against Mr and Mrs Belcastro, the first and second defendants respectively. Mrs Belcastro, as the sole cross-claimant, claims against Perpetual as first cross-defendant, Mawson Securities Pty Ltd (Mawson) as second cross-defendant, Mr Ted O'Shannessy as third cross-defendant and Lorraine Astley as fourth cross-defendant. Mr and Mrs Belcastro are the proprietors of Great Western Fencing & Gates Pty Ltd (GWF). They engaged Mr O'Shannessy, a financial adviser, for the purposes of obtaining finance. Mr O'Shannessy approached a mortgage broker, Homeloans Ltd, which provided information regarding loans offered by a wholesale finance company, Challenger Mortgage Management Pty Ltd, (formerly known as Interstar Wholesale Finance Pty Ltd and Interstar Securities (Australia) Pty Ltd). The loans offered by Challenger, including that ultimately offered to and entered into by the Belcastros, were funded by Perpetual, which holds legal title to the mortgages securing the loan. As I understand it Mrs Belcastro does not proceed with her claims against Mawson and Ms Astley. Earlier pleadings 2Perpetual took action, following default, against the Belcastros for possession of land, relying on a mortgage which secured compliance by them of a loan agreement pursuant to which Perpetual effectively advanced moneys to them. The statement of claim alleged that the Belcastros failed to pay an instalment of some $7,400, which resulted in the issue of a default notice on 1 August 2008 requiring payment by 7 September 2008, which the Belcastros did not honour. On 6 March 2009 an amended defence was filed by Mrs Belcastro. That defence in substance admitted that she entered into the mortgage that was registered over the property but denied that moneys were ever advanced to her under any loan agreement or advanced at her direction to any other party under the loan agreement. In addition, she alleged that, if any advances were secured by the mortgage (which was not admitted) those funds were used by a company in which Mr Belcastro and other third parties were involved, so that she obtained no benefit from the mortgage or any advance. Lastly, she alleged that her involvement in the mortgage was procured by the Mr Belcastro's undue influence over her and, in substance, that Perpetual should have been aware that she was ignorant of the terms and nature of the mortgage and had received no legal or independent advice in respect of it, making it unconscionable for Perpetual to assert its rights, if any, under the mortgagee or associated security agreement which was unjust within the meaning of s 7 of the Contracts Review Act 1980 and or s 70 of the Consumer Credit Code . 3On 16 December 2008 Mr Belcastro filed a defence which, in effect, simply denied liability without giving any details. On 6 February 2009 the Mr Belcastro filed a defence to Perpetual's claim alleging that the mortgage was arranged by a Mr O'Shannessy who, it was said, was a broker for Perpetual and thus its agent, that Mr Belcastro received no independent legal or commercial advice and was not advised to seek it, that it was Perpetual's duty to ensure that he did obtain such advice and it failed to properly assess the capacity of Mr Belcastro to service the loan. He sought orders that the application for possession be dismissed and the mortgage set aside. On 5 June 2009 Johnson J struck out this defence. His situation is not presently relevant. 4On 19 June 2009 Mrs Belcastro filed an amended first cross-claim which named Mr O'Shannessy as a third cross-defendant was. On 4 November 2009 Perpetual filed its defence to the amended first cross-claim and, on 4 December 2009, Mr O'Shannessy filed his defence to it. On 4 May 2010 Perpetual filed an amended statement of claim and, on 5 July 2010, Mr Belcastro filed her further amended defence to that document. Perpetual filed an amended defence to the amended cross-claim on 4 May 2010. On 10 August 2010 the case was set down for hearing to commence on 29 November 2010 but, in the meantime, the matter came before Schmidt J for directions on 19 October and 2 November 2010. On the latter occasion Mr McQuillan, counsel for Mr Belcastro and cross-claimant, sought leave to file and serve a second further amended defence. Subject to two conditions relating to what the defence should include, leave was granted. It was a condition of the grant of leave that there was no allegation made by Mrs Belcastro that, in receiving relevant material in respect of the loan transaction from Mr Belcastro, Mr O'Shannessy was acting as Perpetual's agent so that it was not alleged that his knowledge was Perpetual's knowledge. 5Following the calling of limited evidence on the loan making procedures of Challenger and further submissions, Mrs Belcastro, now seeks to amend her cross-claim in accordance with a pleading entitled "Second further amended first cross-claim". The significant amendments are opposed by Perpetual and Mr O'Shannessy. Mrs Belcastro's defence 6Before I move to the cross-claim it is convenient first of all to deal with the defence. Mrs Belcastro admits that she and Mr Belcastro provided the mortgage as security for the provision of finance under a loan agreement of 29 May 2003 between Perpetual and them. Mrs Belcastro alleges that on or about 13 May 2003 she notified Homeloans and Mr O'Shannessy, as agents for the Challenger/ Perpetual, that she and Mr Belcastro wished to take advice from their solicitor before entering into any loan agreement and before giving security by way of mortgage over their home. It is alleged that they directed Homeloans and Mr O'Shannessy, as agents for the Perpetual, to furnish details of their loan application to their solicitor, a Mr Wilson. They then signed the mortgage in blank and forwarded it to be held in escrow pending the provision of the details of the loan application to Mr Wilson and his being informed of the result of the application. It is alleged that Perpetual agreed that the mortgage document would not be completed until Mr and Mrs Belcastro had given instructions that it should do so. It is alleged that, contrary to the condition upon which the mortgage was provided, Perpetual through its solicitor, completed the mortgage on 29 May 2003 without further notice and, without their instructions or authority. It is alleged that it was a further condition, agreed between the Belcastros on the one hand and Perpetual on the other that the mortgage would not be completed until Perpetual paid the loan moneys in accordance with a direction in writing given by the Belcastros or their legal representative, in the absence of which direction, the funds were to be automatically credited to the Belcastros' loan account. It is alleged that no direction was given either in writing or at all as to the payment of the loan moneys but that, instead of crediting the funds to their loan account, Perpetual deposited the money into an account in the name of GWF. It followed that the completion of the mortgage was a breach of the agreement as to the disbursement of the loan money. 7Mrs Belcastro denied Perpetual's allegation in its statement of claim that moneys were advanced to her and denies failure to pay any amount owing. She also denies that she is liable to pay any instalments or that Perpetual is entitled to possession of the land. The succeeding paragraphs in the defence deal with particular allegations made by Perpetual which do not call for present comment except as to the following. Mrs Belcastro admitted that the loan sought from Perpetual was for the purpose of investing in GWF and/or was a loan for investment or for business purposes. So far as the application for loan was concerned, it was a "Retro" loan, the documentation for which she signed, as did Mr Belcastro, and that it was given to Mr O'Shannessy but only for the purpose of his obtaining the financial statements of GWF which showed that it was able to meet the repayment obligations to Perpetual. (Although it is not specifically alleged, I understand that it is Mrs Belcastro's case that Mr O'Shannessy did not obtain financial statements which showed that GWF was able to meet the repayment obligations.) Furthermore, Mrs Belcastro alleges that she was induced to sign the loan application documents by the undue influence of Mr Belcastro. She said that when she sought to obtain legal advice as to the loan, Mr Belcastro refused to agree to this course and required her to sign the document "with undue haste". It is alleged that Mrs Belcastro trusted her husband and "was unable to make any worthwhile judgment in and about entering into the subject transaction". It was alleged, and does not seem to be at all events controversial, that Perpetual used Homeloans as an "originator and servicer" for the purposes of Homeloans submitting to Perpetual applications for the provision of loan finance. Homeloans and Challenger had entered into a loan origination and management agreement which set out, amongst other things, certain requirements of Challenger with which Homeloans was to comply when dealing with applications for finance. The defence also alleges that Mr O'Shannessy acted as the agent of Challenger and/or Homeloans in procuring loan applications from Mr and Mrs Belcastro for submission to Homeloans and/or Challenger. The particulars relied upon to prove this relationship are that Mr O'Shannessy was a mortgage broker who satisfied accreditation criteria imposed by the lender including attendance at training sessions, that he "had on hand Homeloans printed forms, including loan application form" and was "subject to directions from the [Challenger] and/or Homeloans". This allegation of agency was, as it seems to me, explicitly eschewed by Mrs Belcastro in the proceedings before Schmidt J of 19 October 2010 to which I have referred. At all events, the particulars of agency relied on, to my mind, are inadequate to establish any agency with the possible exception of the last, a matter which depends upon the precise character of the directions referred to and the way in which Mr O'Shannessy was subject to them. 8The defence goes on to allege that Mr O'Shannessy was on notice of material facts and circumstances whilst acting as agent for Challenger and or Homeloans. These matters were that Mr and Mrs Belcastro had provided to him their current financial statements and taxation returns at the time the application for loan was made, that Mr Belcastro was not self-employed but was employed by GWF, that the financial information showed that he and Mrs Belcastro were PAYG co-applicants within the meaning of Perpetual's guidelines manual, that they could not afford to make the required repayments under the loan agreement, that all the documentation about the loan was to be sent to their solicitors and, lastly, that GWF (implicitly not Mr and Mrs Belcastro) was to make the repayments required under the loan agreement. 9Challenger and Homeloans were, as agents for Perpetual, alleged to be on notice of the following alleged material facts: the loan application form submitted to Homeloans and received by Challenger was "irregular" as it did not contain page 3 (relating to financial information) as completed by Mr and Mrs Belcastro, that no details of the property offered as security were provided, that the Loan Purpose Check List signed by the Belcastros was for a line of credit in respect to which the borrowers were nominated as other than natural persons, that the signed application form was materially altered without the knowledge or consent of Mr and Mrs Belcastro, that their financial statements were provided to Mr O'Shannessy to be forwarded to Homeloans and Challenger, that their solicitor was nominated to act for them in the transaction, that Mr and Mrs Belcastro were able to provide financial statements and/or taxation returns at the time of the loan application. The significance, as I understand it, of the last matter is that where this was able to be done, the particular loan was not, according to the guidelines manual, appropriate. Other failures to comply with the requirements of the guidelines manual as to the particular loan are alleged. These failures, together with the mode of dealing with the loan application, the loan agreement and mortgage, and disbursement of the loan moneys otherwise than in accordance with the direction, is alleged to make Perpetual's reliance on the loan agreement and the mortgage unconscionable. 10Mrs Belcastro also alleges that, at the time she executed the loan agreement and the mortgage there was material inequality in bargaining power between her and Perpetual, the provisions of the documents had not been the subject of negotiation, she had not been previously provided with a copy of the loan agreement or mortgage and was completely unaware of the terms of the registered memorandum which was incorporated by reference into the mortgage, that it was not reasonably practicable for her to negotiate for the alteration or omission of any of the provisions of the documents which imposed conditions which were "unreasonably difficult to comply with, and were not reasonably necessary for the protection of the [Perpetual's] legitimate interests, including the condition of monthly repayments" which Mr and Mrs Belcastro were unable to afford. It was also alleged that Mrs Belcasrto did not obtain any independent legal or other expert advice and Perpetual had not afforded her a proper opportunity to obtain it. It is alleged that Perpetual did not satisfy itself that the Belcastros were able to meet their obligations under the loan agreement and the mortgage but was content to lend the principal sum because it had obtained adequate security to cover the principal and possible loss of interest together with mortgage insurance. It is submitted that therefore the loan agreement and mortgage were unjust. Mrs Belcastro also alleges that she was "in a position of special disadvantage" at the relevant time, of which Perpetual knew or ought to have known comprising, essentially, her ignorance of the transaction and her limited educational qualifications. 11Mrs Belcastro alleges in addition, in relation to unconscionability, that Perpetual was aware by virtue of the documentation submitted by Mr Belcastro and her to Mr O'Shannessy, Homeloans and Challenger that neither could afford the repayments or, alternatively, Perpetual did not receive sufficient information that would have enabled it to determine whether or not they could afford the repayments, as required by its guidelines manual. By virtue of the lending policy set out in the guidelines manual, Perpetual advanced the funds without verification of the ability of the Belcastros to repay it. It is alleged that this was not only unconscionable but also "the said conduct of the [Perpetual] and its failure either by itself, [Challenger], Homeloans and/or [Mr O'Shannessy] to strictly adhere to its lending policy was contrary to prudent lending practice" by virtue of its departure from the requirements of the guidelines manual. I note that those allegations are inevitably embarrassing because nowhere is any fact alleged which required Homeloans or Mr O'Shannessy to adhere to any lending policy or to act in compliance with "prudent lending practice". 12It is further alleged that Mr O'Shannessy acted unconscionably as the agent of Perpetual by not forwarding onto Homeloans and/or Challenger the Belcastro's financial statements, or information that they were able to provide such statements and taxation returns and were PAYG tax payers, in failing to obtain the financial statements of GWF and to advise the Belcastros that he had not done so, that he had materially altered the loan application without the Belcastro's consent, had sent the loan application which was neither signed nor consented to by the Belcastros and had acted on the directions and instructions of an employee of GWF in respect of the loan application without their knowledge and consent. It appears to be alleged that by virtue of his agency, Perpetual was aware that the Belcastros did not meet its requirements or satisfy the requirements of the guidelines manual but nevertheless made the loan. Mrs Belcastro's proposed second further amended first cross-claim 13As is not uncommon, Mrs Belcastro, repeats the allegations made in her defence, adding that at the time that she entered into the mortgage she was suffering a special disability in addition to particulars referred to in enumerated paragraphs in the defence. However, as I read the document, a number of those paragraphs do not concern any issue of special disability and it may be that they refer to paragraphs in another document. At all events, Mrs Belcastro says, in addition, that she was inexperienced in dealing with matters of this type at the time she entered into the mortgage, that she had limited formal education, having completed school to year 10 level and was working as a cleaner at the time. The cross-claim then goes on to allege that Mr O'Shannessy acted on her behalf to obtain finance for her and Mr Belcastro. It is alleged that Mr O'Shannessy was appointed "to obtain finance in the amount of $200,000 on terms acceptable" to the Belcastros. So drawn, this could not have been a condition in the contract since it is obvious that the terms acceptable to the Belcastros might have been, of themselves, impossible to induce a financier to provide finance. It is further alleged that it was an implied term of the appointment or otherwise the duty of Mr O'Shannessy "to take all reasonable and proper steps and to exercise all due diligence to obtain the said finance in accordance with the instructions of [Mr and/or Mrs Belcastro]". The particulars of this allegation are that the Belcastros provided financial statements including profit and loss statements and assessment notices to be forwarded as part of the loan application to Perpetual and/or Homeloans. It is difficult to see how these particulars relate to the allegation. The cross-claim then goes on to allege that Mr O'Shannessy obtained from the plaintiff "an offer to loan ... the sum of $200,000" to the Belcastros but that, in breach of the appointment and of his duty, he failed and/or refused to provide the financial statements to Perpetual and/or Homeloans. It is alleged that on or about 29 May 2003 the Belcastros accepted the offer and entered into the loan agreement in ignorance of the failure by Mr O'Shannessy to provide the financial statements as required. Moving to the disposal of the loan funds, it is alleged that it was an implied term of the appointment of Mr O'Shannessy that the loan moneys were to be paid to the account of the Belcastros and not to the account of GWF and that, in breach of this condition, the moneys were paid to GWF. It is also alleged that as a consequence of the failure of Mr O'Shannessy to provide the financial statements of the Belcastros, the loan was procured for them on terms and conditions with which they were unable to comply. 14So far as the loan proceeds are concerned, Mrs Belcastro denies that she or Mr Belcastro authorised them to be paid to GWF and, if Mr O'Shannessy gave a direction in respect of the proceeds that they were to be sent to GWF, it was outside the scope of his authority. 15In respect of representations, it is alleged that Mr O'Shannessy forwarded a loan application which was signed by the Belcastros but without a completed page 3 of seven pages, (wrongly) advised Homeloans and/or Perpetual that they did not have financial statements or any financial records, did not advise the Belcastros that the application was being submitted without page 3 of seven or of the type of loan. Furthermore, it is alleged Mr O'Shannessey deliberately removed the completed page 3 from the application without the authority of the Belcastros and submitted the loan application without informing either Homeloans or Perpetual of the Belcastros' advice to Mr O'Shannessy on 13 May 2003 that they could not make repayments personally. Nor did Mr O'Shannessy inform Perpetual and/or Homeloans that the Belcastros had provided to Mr O'Shannessy their financial statements which were available to be provided to Homeloans and Perpetual. It is alleged that Mr O'Shannessy concealed from Homeloans and Perpetual both the Belcastro's financial statements and the completed page 3 of the loan application and represented further that they did not have financial statements available. The representations were alleged to be false in that there was no authorisation as to the disbursement of the loan proceeds to GWF and Perpetual was misled into believing that Mrs Belcastro had authorised the loan proceeds to be paid to GWF, that these representations were made by Mr O'Shannessy when acting in trade or commerce and were relied on by Perpetual with the consequence that he had breached s 42 of the Fair Trading Act 1987 . It is also alleged that, as agent for Mrs Belcastro, Mr O'Shannessy had the duty to act in the best interests of Mrs Belcastro, only within the terms of her authority and to exercise all reasonable care in and about the execution of his duties. By directing Perpetual to pay the loan proceeds to GWF and failing to confirm with Mrs Belcastro that she consented to this course Mr O'Shannessy was in breach of his duty to Mrs Belcastro. 16The cross-claim claims that by reason of the representations and GWF's failure to pay the loan repayments after August 2003 Mrs Belcastro suffered loss and damage. 17It is alleged that the Ms Astley entered into a direction to pay, relied on by Perpetual in its decision to disperse the loan moneys to GWF, the details of GWF as the recipient of the proceeds and forwarded that document to Mawson, thereby representing to Perpetual that Mrs Belcastro had consented to the loan proceeds going to GWF. It is alleged that in doing this Ms Astley was acting in trade and commerce and the representation was false in that Mrs Belcastro had never given her consent to such an arrangement. It is alleged that, accordingly, Ms Astley breached s 42 of the Fair Trading Act . 18By further or alternative claim, Mrs Belcastro alleges that on or about 13 May 2003 she and Mr Belcastro requested the advice and professional assistance of Mawson and/or Mr O'Shannessy, within or related to their professional expertise, concerning the obtaining of finance upon the security of the Belcastro's home for investment in GWF and that for this purpose Mawson and/or Mr O'Shannessy was or were to obtain the financial statements of GWF in order to advise the Belcastros whether or not to enter into this transaction and whether or not GWF was in a position to make the repayments that would be required under any proposed loan. It is then alleged that Mawson and/or Mr O'Shannessy represented to the Belcastros that arrangements had been made to obtain from Ms Astley the financial statements of GWF for the purpose of determining whether the company was in a position or had the capacity to make the repayments and advise the Belcastros accordingly. It is alleged that in a conversation between Mr O'Shannessy and the Belcastros on 13 May 2003 in which they informed Mr O'Shannessy that they could not afford personally to make repayments under the mortgage, Mr O'Shannessy indicated that "he was sorting the financials out for GWF with [Ms Astley], as he had been informed by [Ms Astley] as well as [Mr Belcastro] that GWF were (sic) to make the repayments". It is alleged that Mawson and/or Mr O'Shannessy also undertook to obtain the Belcastro's financial information from their accountant for the purpose of advising them as to whether or not they should obtain a loan for the stated purpose and, if so, to advise as to what, if any, loan was available and whether it was appropriate and suitable for that purpose. This undertaking, it is alleged, occurred in a conversation between Mr O'Shannessy and the Belcastros on 13 May 2003. The particular adds the allegation that Mr O'Shannessy informed the Belcastros that he needed the financial statements for the additional purpose of preparing a letter to Homeloans advising whether or not the Belcastros "were a good loan risk". This last allegation appears to be similar to the additional separate allegation that Mawson and/or Mr O'Shannessy represented to the Belcastros that the financial information obtained from their accountant would assist him to prepare a submission to Homeloans in support of any application for loan and that Mr O'Shannessy would assess the financial information to determine whether the Belcastros were a good loan risk and for the submission on such a risk to Homeloans. It was also represented that any proposed loan would be referred by Mr O'Shannessy to the Belcastro's solicitors for legal advice before it was entered into. 19The cross-claim then alleges that Mawson and/or Mr O'Shannessy advised the Belcastros that they needed "a low doc or no doc loan", that Homeloans had a loan or facility which fitted or suited their needs, that they should borrow against their home to obtain the funds to invest in GWF although they believed that they could not afford to make the repayments required under the loan, that the application form that he had completed should be signed by them, that the complete form was to be submitted unaltered to Homeloans, that the "retro declaration of purpose and financial position form" should be signed by them for submitting to the plaintiff together with the "loan purpose checklist form" and that the funds were to be paid to the account of the Belcastros and not to the account of GWF. It is alleged then that Mr O'Shannessy knew or ought reasonably to have known that the Belcastros were relying on him to exercise due care, skill and diligence in relation to the representations, that they were likely to act upon them and that if the representation or any one of them proved to be untrue they might suffer loss and damage. It is then alleged that the advice was then inaccurate and the representations were false and/or misleading in that Mr O'Shannessy did not obtain the financial statements of GWF for the purpose of advising whether it had the capacity to make repayments, did not advise the Belcastros that GWF was in fact not in a position or had the capacity to make the repayments. Furthermore, he did not advise the Belcastros that a no doc or low doc loan was not available nor did he make any assessment on the financial information provided by the Belcastros as to whether they were a good loan risk and he did not refer the proposed loan to the Belcastro's solicitors before they entered into it. In fact, Homeloans did not have a loan or facility which fitted or suited the Belcastro's needs and GWF was unlikely to be in a position or to have the capacity to make the repayments due under the proposed loan. The Belcastros were therefore likely to loose their home in the event that GWF did not make the repayments. It is said also that the application form completed by Mr O'Shannessy and signed by the Belcastros was submitted to Homeloans in an incomplete and materially altered form but Mr O'Shannessy did not advise the Belcastros of the incomplete details or the material alterations. To be eligible for a retro loan through Homeloans the Belcastros needed to demonstrate that both of them were self-employed and not obliged to make PAYG instalments. Mr O'Shannessy failed to inform the Belcastros that the involvement of one or other of them in the transaction ceased once the loan was approved by Homeloans. Furthermore, he caused or permitted the loan funds to be the subject of a direction or authority that the funds were to be paid to the account of GWF rather than to the Belcastros. 20It is alleged that the advice given by Mr O'Shannessy and the representations made by him were given negligently and that, relying upon the advice and the representations, the Belcastros provided information to Mr O'Shannessy for the purpose of completing a loan application form to Homeloans which they signed, entered into a loan agreement with Perpetual secured by mortgage over their home, for which purpose they signed a mortgage. 21I have set out the allegations contained in the defence and cross-claim in narrative form to enable the thrust of Mrs Belcastro's case to be more clearly appreciated. The submission of Mr O'Shannessy 22It is clear that the causes of action pleaded in the second further amended cross-claim against Mr O'Shannessy are made in both tort and contract. It is apparent that Mrs Belcastro contends that, between 13 and 19 May 2003, she and her husband entered into a contract with Mr O'Shannessy to perform the services which I have enumerated. It is also alleged that Mr O'Shannessy's contractual obligations created a duty of care owed by him to the Belcastros. The breaches of contract and of the duty of care in summary are that he failed to investigate the financial position of GWF and advise the Belcastros on it, failed to advise them on whether the loan was a good risk from their point of view, provided the competed loan application form to Homeloans in a significantly amended form and failed to ensure that the loan funds were paid to the Belcastros and not to GWF. 23It is submitted on behalf of Mr O'Shannessy, first of all, that the causes of action are statute barred and, the amendments being futile, ought not to be permitted. Section 14(1) of the Limitation Act 1969 states: (1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims: (a) a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed, (b) a cause of action founded on tort, including a cause of action for damages for breach of statutory duty, (c) a cause of action to enforce a recognizance, (d) a cause of action to recover money recoverable by virtue of an enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture. 24The limitation period provided by this provision is not liable to extension since ( vide ss 55 and 56) there is no allegation of fraud or deceit propounded in the pleading. Mr O'Shannessy was joined to the proceedings on 5 June 2009. The Uniform Civil Procedure Rules 2005 provide - 6.28 If the court orders that a person be joined as a party, the date of commencement of the proceedings, in relation to that person, is taken to be the date on which the order is made or such later date as the court may specify in the order. It follows that the date upon which Mrs Belcastro commenced proceedings against Mr O'Shannessy is 5 June 2009. 25It is undisputed that the loan documents were executed by the Belcastros on or about 26 May 2003, that the loan was advanced on 29 May 2003 to GWF, not to the Belcastros and, by 30 May 2003, GWF had dispersed $150,000 of the loan funds. 26In respect of the claim in contract, time runs from the date of breach. Here, it is submitted by Ms Horvath on behalf of Mr O'Shannessy, the breach alleged by Mrs Belcastro occurred at the latest on 29 May 2003, when the loan funds were advanced to GWF contrary to the alleged authority or direction. Having regard to the other allegations made by Mrs Belcastro as to the character of the loan, the financial advice, informing of the solicitor and so on, it is certainly arguable that the contract was, in respect of the shortcomings alleged in these respects, breached on 26 May 2003 which was the date upon which the Belcastros entered into the loan documents and the date upon which they were submitted for approval. However, for the purposes of this argument it is not necessary to consider those breaches since, in my view, it is certain that, on the case propounded by Mrs Belcastro the latest breach occurred on the date of the advance. The possibility that Mrs Belcastro may have retrieved the money from GWF before it was spent seems to me to be immaterial since the alleged breach occurred by virtue of the advance to GWF itself. But, as Ms Horvath points out, this of little materiality since the great majority of the loan funds were dispersed by 30 May 2003. 27In my view, the argument that the alleged breaches of contract are out of time is strong indeed. Nevertheless, there are good reasons for not determining a limitation question in an interlocutory proceeding before the substantive hearing of the proceedings. In Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 Mason CJ, Dawson, Gaudron and McHugh JJ said at 533 - We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question. 28That observation, focussing as it did on the issue of ascertaining the damage sustained by the plaintiff, did not involve a determination of the date upon which a breach of contract occurred, as was pointed out by Davies J in Palindrome Holdings Pty Ltd v Wass [2009] NSWSC 797 - [90] ... [Regard] must be had to the circumstances in which the statement [in Wardley ] was made. Limitations questions 'of the kind under consideration in Wardley may well be inappropriate for interlocutory determination. The case not only involved an application for leave to amend the statement of claim, but involved questions of when damage first occurred, questions which it was likely would involve issues of fact that could only be properly determined at a trial. So, the warning itself made reference to the fact that in many cases 'insufficient is known of the damage sustained by the plaintiff'. That is not the issue in the present case. And, for the reasons I have given, any further factual evidence will go only to the existence of the guarantee and not its terms. 29As I have pointed out, Mrs Belcastro also propounds a case relying on misrepresentations and negligence against Mr O'Shannessy. It is contended by Ms Horvath that, in substance, the issues raised by that case are now sufficiently clear to enable, indeed, require, a determination that this case is also out of time. It is important, in considering this submission, to separate out the various claims of negligent conduct and misrepresentation. Those claims which depend upon the existence of a duty to inform the Belcastros and, in particular, Mrs Belcastro of the financial viability of GWF in respect of repayments and her own ability to service the proposed loan must have crystallised into damage as at the date upon which the loan application is approved or, at the latest, when the loan moneys were advanced. It is upon this date, that is to say settlement of the financing arrangements, that Mrs Belcastro's liability under the loan agreement and the mortgage was created. These obligations were not contingent liabilities as that consideration was discussed in Wardley . 30Mr McQuillan submits that Mrs Belcastro adds allegations by way of amendment to the cross-claim concerning the failure by Mr O'Shannessy to provide the financial information to Homeloans and/ or Perpetual and also that she relied upon him for advice as to the capacity of GWF to make the payments required under the loan agreement and mortgage as well as whether or not there was a loan suitable for her purpose and one which was available having regard to her circumstances. So far as timing is concerned, Mr McQuillan points out that the evidence of Mrs Belcastro is that she did not discover that Mr O'Shannessy had forwarded an incomplete "application for loan form", the missing page 3 having material particulars of income, assets and liabilities until about March 2010 and had not provided Perpetual with her and her husband's financial documentation. It is submitted that, at the earliest, Mrs Belcastro's loss did not become ascertained until GWF, which had paid the required instalments on 27 June, 29 August and 25 November 2003, stopped doing so. The proposed cross-claim does not, however, allege anything more than that the company "refused to pay the loan amounts thereafter" and, from August 2003, Mr and Mrs Belcastro made various payments under the loan arrangements. It appears from Mrs Belcastro's affidavit that the due instalments were paid to the plaintiff by direct debit from a joint account in her and her husband's name, the first instalment being paid on 27 June 2003. On the same date a cheque was deposited into the same joint account, drawn by GWF, for $2,000. On 29 August and 25 November 2003 deposits each of $2,000 were made to the joint account by GWF. No further payments were received from GWF although the Belcastros continued to pay the instalments out of their joint account until some time in early 2008. There is no allegation that GWF was at any material time unable to make the repayments and it is difficult to see how the alleged negligence and/or misrepresentation about GWF's financial position is material. I note, in this respect, that the dates in the cross-claim are inconsistent with the dates deposed to by Mrs Belcastro as to which instalments were paid by GWF. Be that as it may, it is submitted that no loss was ascertained until, at the earliest, 25 November 2003 and hence the limitation period should run from that date. It is not alleged that GWF was under any obligation to Mr or Mrs Belcastro to make the repayments, let alone to the plaintiff. The case seems to be that the Belcastros were unable to make any repayments except in so far as they could procure GWF to do so either directly to Perpetual or indirectly through them. This is one of a number of examples of the apparent gaps in the formulation of Ms Belcastro's case in the cross-claim. General complaints about conduct of various kinds whose contribution to her loss is left vague certainly do not comply with the requirements of the rules of pleading. 31Mr McQuillan relies principally on the following passage of the judgment of plurality in Wardley (175 CLR at 527, omitting references) - Economic loss may take a variety of forms and ... the answer to the question when a cause of action for negligence causing economic loss accrues may require consideration of the precise interest infringed by the negligent act or omission. The kind of economic loss which is sustained and the time when it is first sustained depend upon the nature of the interest infringed and, perhaps, the nature of the interference to which it is subjected ... With economic loss, as with other forms of damage, there has to be some actual damage ...prospective loss is not enough. When a plaintiff is induced by a misrepresentation to enter into an agreement which is, or proves to be, to his or her disadvantage, the plaintiff sustains a detriment in a general sense on entry into the agreement. That is because the agreement subjects the plaintiff to obligations and liabilities which exceed the value or worth of the rights and benefits which it confers upon the plaintiff. But, as will appear shortly, detriment in this general sense has not universally been equated with the legal concept of 'loss or damage'. And that is just as well. In many instances the disadvantageous character or effect of the agreement cannot be ascertained until some future date when its impact upon events as they unfold becomes known or apparent and, by then, the relevant limitation period may have expired. To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing damages by reference to established events. In such a situation, there would be an ever present risk of under-compensation or over-compensation, the risk of the former being the greater. ... It has been contended that the principle underlying the English decisions extends to the point that a plaintiff sustains loss on entry into an agreement notwithstanding that the loss to which the plaintiff is subjected by the agreement is the loss upon a contingency. For our part, we doubt that the decisions travel so far. Rather, it seems to us the decisions in cases which involve contingent loss were decisions which turned on the plaintiff sustaining measurable loss at an earlier time, quite apart from the contingent loss which threatened at a later date ... ... At [532] - If, contrary to the view which we have just expressed, the English decisions properly understood support the proposition that where, as a result of the defendant's negligent representation, the plaintiff enters into a contract which exposes him or her to a contingent loss or liability, the plaintiff first suffers loss or damage on entry into the contract, we do not agree with them. In our opinion, in such a case, the plaintiff sustains no actual damage until the contingency is fulfilled and the loss becomes actual; until that happens the loss is prospective and may never be incurred. A deferred liability may stand in a different position but there is no accession here to discuss that matter." 32Mr McQuillan submits, in effect, that no loss would have been suffered by Mrs Belcastro if GWF had continued to pay the instalments due on the loan and that her liability was, therefore, a contingent one. I think that this oversimplifies the situation somewhat given that the mortgage, of course, reduced the property rights of Mrs Belcastro in her home, Perpetual having acquired title in it subject to her equity of redemption. 33In the result, however, assuming that Mrs Belcastro's case was that she was induced to enter into the finance arrangements including the mortgage upon the basis that GWF was both willing and able to make the repayments or was otherwise a source adequate to the purpose, of enabling the obligations under the loan agreement and the mortgage to be fulfilled, I do not think that the matter is so clear that I am able to give "a confident answer to the question" at the present time whether the limitation defence must inevitably succeed. It seems to me, also, that the other heads of alleged negligence or misrepresentation, although distinct matters, are not so separated in point of resultant damage that my conclusion as to the reliance on GWF's financial position issue should be differently decided. In respect of the payment of the loan amount to GWF instead of to the account of the Belcastros in terms, loss or damage cannot be determined, at least with certainty, until the precise relationship between Mrs Belcastro and/or Mr Belcastro and GWF at the time of the payment is known, a matter which is not explicated in the pleading but, as I apprehend it, will be a matter of evidence. 34It follows, therefore, that I do not intend to determine the limitation question in advance of the trial. The question of delay. 35This issue is taken up by both Perpetual and Mr O'Shannessy. 36In Aon Risk Services Australia v The Australian National University (2009) 239 CLR 175, French CJ noted, by reference to the ACT Court Rules that they (and similar rules) - [24] ... confer the discretion to give leave to amend and impose the duty to make amendments for the purpose of deciding the real issues in, and avoiding multiplicity of, proceedings. The discretion is exercised in the context of the common law adversarial system as qualified by changing practice. But that is not a system which today permits disregard of undue delay. Undue delay can undermine confidence in the rule of law. To that extent its avoidance, based upon a proper regard for the interests of the parties, transcends those interests. Another factor which relates to the interests of the parties but transcends them is the waste of public resources and the inefficiency occasioned by the need to revisit interlocutory processes, vacate trial dates, or adjourn trials either because of non-compliance with court timetables or, as in this case, because of a late and deliberate tactical change by one party in the direction of its conduct of the litigation. These are matters which ... are to be regarded as both relevant and mandatory considerations in the exercise of the discretion conferred by rules such as r 5.02." 37As Ms Horvath contends, it is undeniable that during the hearing of this matter in December 2010, Mrs Belcastro sought to fundamentally change the nature of her case against Mr O'Shannessy. She submits that this "deliberate tactical change" in her case requires an explanation for her delay in doing so: Aon per Gummow, Hayne, Crennan, Kiefel and Bell JJ at [106] - [114]. 38Mrs Belcastro has filed an affidavit, sworn 16 December 2010, dealing with the question of delay. Her explanation essentially focuses on the unfolding discovery of relevant facts by her as the proceedings continued and the state of her health, which significantly handicapped her ability to understand her case and provide instructions. So far as the history of obtaining information is concerned, she said that on 27 February 2009 she received for the first time a copy of the direction and authority relating to the disbursement of the loan funds to GWF although, of course, she had known for some years that GWF had received those funds. After an unsuccessful mediation occurred on 21 May 2009, the amended first cross-claim, adding Mr O'Shannessy with others, as a cross-defendant was filed. Perpetual served the first affidavit of Mr Wort in late July 2009 and in early December 2009 Mr O'Shannessy's affidavit was served. Mrs Belcastro did not receive this latter affidavit until at least late February 2010. However, in the meantime, in November 2009 Mrs Belcastro's elderly mother became very ill and was admitted to hospital, entailing Mrs Belcastro's move to Dapto periodically to be near her and provide assistance while she was undergoing treatment. She attended to her mother in Dapto, Wollongong and Shell Harbour hospitals between November 2009 and January 2010. By early March 2010 Mrs Belcastro was suffering from a severe anxiety state and found herself unable to concentrate on anything to do with the proceedings. She had asked for a copy of Mr Wort's affidavit as she had not yet seen it and this was done in late March 2010. Mrs Belcastro deposes that from March until early May 2010 her anxiety state and concerns for her mother's slow recovery prevented her from attending to the proceedings. In late April she received the draft amended statement of claim and draft amended defence which were filed on 4 May 2010. In May and June 2010 Mrs Belcastro attended on her solicitor to prepare an affidavit in reply to the respondent's affidavit. Her affidavit was sworn on 25 June 2010. Mrs Belcastro did not hear from her solicitor until mid-August 2010 when he advised that the proceedings had been set down for hearing commencing 29 November 2010 and he was unable, due to other commitments, to represent her at the trial. On 12 August 2010 he gave notice of his intention of ceasing to act. Although Mrs Belcastro immediately sought help to obtain alternate legal representation this did not happen until late September or early October 2010. Mrs Belcastro says that she experienced recurring health problems during the year or so up to December 2010, which had interfered with her ability properly to attend to the case. It was only in late August 2010 that Mrs Belcastro learnt for the first time that Mr O'Shannessy had not forwarded to Homeloans the financial statements provided to him by her accountant. 39As was pointed out by Schmidt J during the directions hearing of 2 November 2010, the information that is contained in the affidavit of Mrs Belcastro had been known for some time and her Honour naturally asked why were the changes all now coming forward. In substance, Mr McQuillan's explanation was that he had come into the matter with new solicitors, having been instructed late and, in effect, this led to a fresh appraisal of Mrs Belcastro's case and thus a fresh pleading. Mr McQuillan said that he could not explain why these amendments had not been earlier done. He submitted that none of the new allegations were a surprise to Perpetual, all of the basic material relied on by Mrs Belcastro being well known, he claimed, to Perpetual at a much earlier time. In short, he submitted that the new pleading simply changed the legal consequences of the known factual material. Mr McQuillan conceded that the explanation for the delay was the change of legal representation and, perhaps, errors by the previous representatives. Her Honour considered that, in the circumstances, leave to amend ought to be granted. So far as the question of knowledge by Perpetual of what was given to Mr O'Shannessy by the Belcastros, was concerned Mr McQuillan made it clear that the crucial question depended on what was received by Perpetual and the provision of relevant material to Mr O'Shannessy was not, as I have previously mentioned, relied on against it. Mr McQuillan accepted that leave would be granted on the basis of that understanding. Accordingly, leave was granted to Mrs Belcastro to file the second further amended defence upon the condition that, in relation to paragraphs 2 to 7 (concerning reliance on the mortgage, which was registered and therefore indefeasible) to specify on what basis Mrs Belcastro retained a personal equity in the property enabling her to go behind the indefeasibility of the Perpetual's mortgage and the understanding as to Mr O'Shannessy's relationship with Perpetual. 40When the matter came on before me on 29 November 2010 Mrs Belcastro's present solicitor withdrew as the solicitor on the record. Mr McQuillan appeared for her but informed me that he had only come back into the matter two days previously and needed to make an application for some time before the trial commenced. The further amended defence in respect of which leave had been given by Schmidt J had not been filed and Mr McQuillan sought to file that document in Court. 41Ms Horvath summarised the case against her client as essentially the making of two representations, first that Mrs Belcastro had agreed that the loan funds should go to GWF and informing some relevant person of that matter he was doing so at her direction. It appeared that Mr O'Shannessy's case was that once the loan was approved, on 21 May 2003, he had nothing else to do with the transaction. The direction to pay was never in his hands since it was sent out with all the mortgage documents and loan documents from Perpetual's solicitors directly to the Belcastros and he neither met with them nor spoke to them about it. On 30 November 2010 Mr McQuillan informed me that he had shown the proposed amended defence to counsel for the Perpetual, Mr Docker, who agreed that, if the defence was in the form communicated to him, there would be no objection to it. The evidence was then taken of a number of witnesses called by Perpetual whose affidavits were read and who were cross-examined by Mr McQuillan on Mrs Belcastro's behalf. 42Mr McQuillan then informed the Court that it was Mrs Belcastro's case against Mr O'Shannessy that he was the agent of Homeloans in arranging a facility for GWF (as well as, as I understand it, an agent for the Belcastros). This allegation was not pleaded either in the amended defence or in the first amended cross-claim. Mr McQuillan then sought time to, in effect, seek leave to amend the cross-claim. On the third day of the hearing, 1 December 2010, Mr McQuillan indicated that, contrary to the position earlier adopted and pursuant to which Schmidt J had granted leave to amend, he wished to put as part of the case against Mr O'Shannessy that he was Perpetual's agent for certain relevant purposes. Mr McQuillan also informed me that he proposed to seek leave further to amend the defence to raise the implied agency, although he said that this was on the basis of the evidence that had hitherto been disclosed. However, upon further submissions it became clear that the cross-claim as it was then proposed did not identify with sufficient particularity the case sought to be made against Mr O'Shannessy. 43Mr McQuillan sought time overnight to bring in a fresh amended defence and cross-claim. This he did and produced further documents on 2 December 2010. Oral submissions were made and, in the events that transpired, further written submissions were filed in due course. 44So far as the explanation for the delay is concerned, I accept Ms Horvath's submission that, in significant respects, the explanation provided by Mrs Belcastro and from the bar table by Mr McQuillan is not altogether satisfactory. However, when I take into account Mrs Belcastro's ill-health, the unfolding disclosure of information, the changes of legal representation and the difficulties experienced by her legal representatives in identifying the exact nature of the case which, in some respects, is unconventional, I do not consider that, in the absence of demonstrated prejudice, leave to propound the case now sought to be put forward should be refused. 45So far as the allegation of Mr O'Shannessy's agency in respect of the case against Perpetual is concerned, it is clear from what I have set out above that leave was granted upon the understanding that no such agency would be alleged. Even so, I am satisfied that that was Mr McQuillan's genuine position at the time of those submissions and that he has conscientiously re-examined the case and concluded that it is necessary in Mrs Belcastro's interests to make such an allegation. Although it seems to me that on the material so far foreshadowed in respect of this case and as alleged in the proposed first amended defence, it is most unlikely that such an agency can be proved, I am not prepared at this stage to prevent an attempt to do so at trial. 46On 2 December 2010, when it became clear that further amendments were needed both to the proposed first amended defence and the proposed second further amended cross-claim, I ordered Mrs Belcastro to file and serve an affidavit as to the delay in amending her pleadings and provide a final version of the proposed pleadings, all by 17 December 2010. As it happens, these documents were ultimately filed and served on 23 December 2010 and the matter came before me on 2 February 2011 and later on 25 March 2011. At the conclusion of the hearing on that date I made orders requiring further and better particulars of representation and directed Mrs Belcastro, in relation to any representation upon which she relies, whether in respect of Perpetual or Mr O'Shannessy to be specifically described. It was to be stated whether it is implied and, if so, the facts, matters or things giving rise to the implication and if it is explicit, the occasion upon which it was made, including details as to when and where the words asserted to constitute the explicit representation were stated. If a mixture of both, the extent to which it is implicit and the extent to which it is explicit, together with the relevant details, if they are not already particularised. This is to be done by cross-reference to the pleadings. I imposed a time limit of 15 April 2011. 47Ms Horvath puts forward the following matters as demonstrating how her client would be prejudiced in dealing with the second further amended cross-claim. To some degree, these issues have been identified prior to a proposed defence to the cross-claim but their substance is sufficiently outlined in Ms Horvath's submissions to enable me to deal with them. First, she points out that Mr O'Shannessy has not led evidence from the relevant person at Homeloans as to why the Belcastro's complete loan application in its unamended form was not submitted to Homeloans. This evidence is not evidence that is within the "control" of Mr O'Shannessy. However, it is clear he must know this information and, of course, is able to obtain corroboration, if it exists, in the conventional way. Secondly, Ms Horvath submits that Mr O'Shannessy would need to consider joining Homeloans to the proceedings as a joint tortfeasor having regard to his case (as I understand it) that Homeloans advised him as to the documents which it required and upon which advice he relied in deciding not to provide everything that he had received from the Belcastros, including that material relating to their finances. Thirdly, in respect of the allegation that he breached a professional duty of care, he will rely on s 5O of the Civil Liability Act 2002 with reference to conduct which is "widely accepted in Australia by peer professional opinion as competent professional practice". If this is so, he would rely on evidence from a professional finance broker as to the material practices in 2003. It is submitted that this was unnecessary as the cross-claim was first pleaded. 48Although an expansion or variation of Mrs Belcastro's case against Mr O'Shannessy naturally has consequences for the scope of his defence, I do not see that matter alone as constituting such a prejudice as to justify refusing the proposed amendments to her cross-claim. I do not see how such a variation can be regarded as imposing an unfair burden on Mr O'Shannessy. The relevant evidence falls within a small compass and is relatively easy, I think, to procure, nor, as it seems to me, will it significantly expand the nature of his case, which will in large part depend upon his own testimony. 49By way of written submission date 21 April 2011 Ms Horvath submits that she had not yet had an opportunity to make submissions in relation to the 19 April 2011 pleading which varies, she claims, significantly from the document foreshadowed on 25 March 2011 when leave was granted. Although there is some force in the argument that the latest iteration of the cross-claim alleges a number of additional representations (though with a degree of repetition), I think they are sufficiently related to the particulars which were the subject of the grant of leave and should not be rejected on the ground that they exceed that grant of leave. I accept that there is still a degree of confusion in the document but that does not to my mind obscure the essential nature of the case presently made and is not embarrassing in the sense that Mr O'Shannessy is unable to plead directly to the allegations made against him. So far as the point that Mr O'Shannessy has not had any opportunity to make submissions in relation to the 19 April 2011 pleading, in my view he did have such an opportunity although it may be that that was only partly availed of by the submission of 21 April 2011. At all events, to my mind, the positions on each side have been clearly articulated over a number of days and I do not think that yet further submissions are likely to usefully elucidate the issues or are necessary in fairness to Mr O'Shannessy. 50Accordingly, I give leave to Mrs Belcastro to file, serve and rely on the second further amended first cross-claim as filed on 19 April 2011. Mrs Belcastro's second further amended defence 51I come now to the second further amended defence. 52Mr Docker, for Perpetual, submits that the amendments which in substance follow from the change of tack following from the hearing before Schmidt J now allege that Mr O'Shannessy is the agent of Homeloans and Homeloans the agent of Perpetual. In the circumstances, and for the reasons I have already given, I propose to permit Mrs Belcastro to raise this allegation. Mr Docker also pointed to the allegation that Perpetual failed to conduct itself in accordance with prudent lending practice in a general sense, a matter which potentially would require it to consider the calling of further evidence. In addition, Perpetual may need to file a cross-claim against Mr O'Shannessy to cover itself against the possibility that he is found to be Perpetual's agent. This also might entail joining Uniplan Consulting Pty Limited, the company through which he operated a mortgage broking business in 2003 under the trading name "Financial Freeway". Perpetual complains also that it has prepared and presented its case already on the basis that the position was as accepted by Mr McQuillan on Mrs Belcastro's behalf. The hearing of 5 September 2010 and the proposed amendments would require it to recall at least two of its witnesses and reconsider its approach to Mr O'Shannessy's evidence, which may include the need to make further inquiries. 53I do not regard the expansion of the evidentiary issues as a significant material prejudice in the circumstances here, it not being suggested that such investigations cannot practicably be undertaken or the witnesses for some reason or other are not available. Of course, the amendments might lead to increased costs of a hearing for all parties but, again, I do not think that should be regarded as decisive in considering Mrs Belcastro's application. In the result, I consider that the justice of the case requires me to allow the amendments which have been proposed although, in some respects, the pleading is not as clear as it might be. However, I am satisfied that the substance of the case which Perpetual needs to meet in vindicating its action is clear enough. 54I propose to set the matter down before me in the near future to enable directions to be made for the purpose of having this matter ready for hearing as soon as possible having regard, of course, not only to the preparation required by the parties but also the exigencies of the Court's timetable.