RELIANCE CAPITAL PTY LTD -v- CARATTI [No 11] [2025] WASC 454 (29 October 2025)

Banking and finance - Whether plaintiff lender breached loan agreement in refusing or failing to advance further sums to borrowers pursuant to drawdown arrangements - Whether written request made by borrowers - Contractual discretion to withhold payment of further advances - Effect of garnishee notice served on lender by the Australian Taxation Office - Whether borrower has established counterclaim for damages based on the alleged delay in advancing funds - Causation and issues of proof

Corporations - Statutory unconscionable conduct claims made against plaintiff lender in several respects pursuant to s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) - Requirements to be established for statutory unconscionability - Whether claims made out

Estoppel - Whether representation made by plaintiff as to method of enforcement of guarantees - Defendants alleged that plaintiff represented it would exhaust its rights against the secured assets before seeking to recover under the guarantees - Whether estoppel demonstrated

Evidence - Rulings as to admissibility - Admission of documentary material pursuant to s 79C(2a) of the Evidence Act 1906 (WA)

Guarantees - Extension of principal loan agreement - Whether guarantor consented to extension of the loan agreement - Application of principles in Ankar Pty Ltd v Westminster Finance (Australia) Limited [1987] HCA 15; (1987) 162 CLR 549

Guarantees - Nature of obligations contained within guarantee instruments - Whether amounts claimed by plaintiff lender properly established - Whether prior demands required as element of the claims on guarantees - Whether costs and expenses properly claimed

Interest - Whether interest may be claimed by plaintiff lender at contractual rates on judgment sum or at statutory rates - Consideration of authorities - Application of Civil Judgments Enforcement Act 2004 (WA)

Mortgages - Claims that plaintiff acted in breach of duty and unconscionably whilst mortgagee in possession - Plaintiff acted as mortgagee in possession for some four years - No exercise of power of sale - Threshold issue as to whether claim for breach of duty may validly be made in absence of exercise of power of sale - Whether breach of duty on the facts - Whether conduct unconscionable contrary to statute

Australian Securities and Investments Commission Act 2001 (Cth), S 12CA, s 12CB, s 12CC, s12GM

Civil Judgments Enforcement Act 2004 (WA), s 8

Corporations Act 2001 (Cth), s 420A, s 1041H

Evidence Act 1906 (WA), s 79C, s 79D

Planning and Development Act 2005 (WA), s 159

Rules of the Supreme Court 1971 (WA), O 4A, O 20 r 6, O 21 r 5, O 26 r 8, O 59 r 9

Supreme Court Act 1935 (WA), s 32

Taxation Administration Act 1953 (Cth), s 260-5 of Schedule 1

Transfer of Land Act 1893 (WA), s 53

Plaintiff's claims in CIV 3136 of 2019 and CIV 2283 of 2021 upheld.

Relief set out in Part VIII of the reasons.

PART I - OVERVIEW OF THE PROCEEDINGS A. Summary

1. The claims in these actions arise out of financing arrangements into which the parties entered between 2013 and 2016, associated with residential property developments in the Perth area.
2. The financing arrangements involved the advancement of substantial sums of money to the borrowers (which included the second defendant) through loan facilities, which were accompanied by forms of security from the borrowers and from others, including personal guarantees. The loan facilities included relatively high rates of interest. The plaintiff lender asserts that the funds advanced under these loan facilities were not repaid, and sues the defendants through two actions in this court to recover the loss.
3. The two actions were heard at a single trial between 31 January and 8 April 2024, over the course of some 19 days. The trial was conducted in two phases, with the first phase heard in January and February 2024, and the second in March and April 2024, following a four week break. This two-phased approach to the trial was caused in no small part by the late evidentiary objections and pleading amendments agitated by the defendants.
4. The decision of the court in both actions was reserved on 8 April 2024, with a further interlocutory hearing held on 31 July 2024 to consider the plaintiff's post-trial pleading amendment applications.
5. The evidence in each action was ordered to stand as evidence in the other action, given the commonality between them.
6. The plaintiff in both actions is Reliance Capital Pty Ltd trading as Reliance Finance and Mortgage Services (Reliance Capital). The plaintiff is a financing company based in Perth, which provides lending services to a wide range of borrowers. The plaintiff was formerly known as Walthamstow Pty Ltd. I will refer to the plaintiff throughout these reasons as Reliance Capital unless the context requires otherwise.
7. Mr Steve Alick Masel is a director of the plaintiff company. Mr Masel was 69 years of age at the time of the trial. He is the driving force behind the plaintiff. Both his brother (Mr Tony Masel) and his son (Mr Jonathon Masel) also work in the business.
8. The defendants in both actions are Mr Allen Caratti and Ms Tina Bazzo. Mr Caratti and Ms Bazzo are property developers. They have been in a de facto relationship since the early 1990s. They were thus in that relationship during the period in which these financing arrangements were entered into, and during the course of the dispute.
9. Mr Caratti's age at the time of trial was not specified, although he appeared to be in his late 60s. Ms Bazzo was 57 years of age.
10. The financing arrangements which are the subject of these actions are not the first transactions between these parties. It is uncontentious that Mr Masel and Mr Caratti have had a long business association with each other, stretching back to around 1999/2000. Mr Masel, through Reliance Capital, provided finance to Mr Caratti and his business interests on numerous occasions over this period.

1. The first of the actions, being CIV 3136 of 2019, concerns a financing arrangement for a property development situated in the suburb of Anketell to the south of Perth, specifically at 82 Treeby Road in Anketell.[1] I will refer to this action as the Anketell Proceeding and to the financing arrangement as the Anketell Financing Arrangement.
2. The principal sum advanced to the borrowing entity under the Anketell Financing Arrangement was approximately $2.4m. The borrowing entity is now in liquidation.
3. A material aspect of the sequence of events which underlie the Anketell Proceeding is that the plaintiff entered into possession of the relevant mortgaged property as mortgagee in possession. The plaintiff remained in possession for around four years before returning the property to the registered proprietor, the second defendant.
4. In the Anketell Proceeding, the plaintiff seeks monetary relief against both defendants pursuant to the written guarantees which were entered into by the defendants as part of the Anketell Financing Arrangement, and which formed part of the security arrangements put in place for the benefit of the plaintiff.
5. There was another financier involved in the transaction which underpins the Anketell Proceeding, namely Angas Securities Limited,[2] which was the original financier for the Anketell property development.
6. The role of Angas Securities was short lived in this regard. Angas Securities transferred and assigned the right, title and interest in the relevant securities to Reliance Capital in February 2016.
7. Angas Securities also provided finance to the defendants and their entities in respect of other property developments which are not the central subject of these actions. As with the Anketell Financing Arrangement, the other loan arrangements were also refinanced by the defendants, through assignments to the plaintiff, in around 2014. I will address these other arrangements when considering the evidence.
8. The Anketell Financing Arrangement was entered into by Gucce Holdings Pty Ltd as the borrower, in its own right and as trustee. That company was at all relevant times owned and controlled by Mr Caratti. The company has since changed its name to GH1 Pty Ltd. I will refer to that entity in these reasons as GH1.
9. The second defendant, Ms Bazzo, appointed administrators to GH1 on 4 April 2017. This occurred in the wake of legal proceedings against the company brought by the Deputy Commissioner of Taxation in respect of taxation liabilities. Liquidators were subsequently appointed. GH1 has been in liquidation since 22 May 2017.

1. The second of the actions, being CIV 2283 of 2021, concerns a financing arrangement for a property development situated in the suburb of Hocking to the north of Perth. The various lots in the development were marketed as the 'Tuxedo Rise Estate'. I will refer to this action as the Hocking Proceeding and to the financing arrangement as the Hocking Financing Arrangement. The principal sum advanced under this financing arrangement was approximately $5.7m.
2. The Hocking Financing Arrangement was entered into by Keris Pty Ltd as the borrower, as trustee for the Bradley Street Trust. Ms Bazzo was also a named borrower in that transaction in her capacity as trustee for the Gucce Holdings Trust.
3. Keris was at all relevant times owned and controlled by Mr Caratti.
4. In the Hocking Proceeding, the plaintiff seeks monetary relief against the first defendant pursuant to the written guarantee which was entered into by that defendant as part of the Hocking Financing Arrangement. The plaintiff also seeks relief against the second defendant as a principal borrower under the loan facility.

(4) Other entities controlled by Mr Caratti or Ms Bazzo

1. There are three other companies which are involved, directly or indirectly, in the transactions in the Anketell Proceeding. The companies are Herdsman Technology Pty Ltd, Byford Land Company Pty Ltd and Byford River Pty Ltd. Their precise roles will be explained in due course.
2. Mr Caratti was the sole director and shareholder of Herdsman Technology and Byford Land Company, at all relevant times. Ms Bazzo was the sole director and shareholder of Byford River, at all relevant times.
3. In the Hocking Proceeding, the entity Yanchep Investments Pty Ltd assumes a particular role, which will be explained in due course. Mr Caratti was the sole director and shareholder of that entity at all relevant times.

1. All of the claims in both actions are denied by the defendants. Numerous layers of defence have been pleaded by the defendants, including contractual, equitable and statutory defences, together with a counterclaim in the Hocking Proceeding. As I will explain, several of the initially pleaded defences fell away as the trial approached, and at trial.
2. In the Anketell Proceeding, the defendants assert that they relied on a representation made by the plaintiff that it would exhaust its rights against the secured assets before seeking to recover any shortfall under the guarantees. The defendants also challenge the conduct of the plaintiff whilst it was in possession of the Treeby Road property, and criticise the manner in which the plaintiff applied the proceeds from the sale of certain lots.
3. In the Hocking Proceeding, the defendants challenge the plaintiff's delay or failure to advance certain funds under the loan facility, and point to the extension of the loan agreement without their consent, among other defences and claims.
4. The plaintiff has said that the claims it brings to the court for resolution, being claims under detailed contractual instruments, should be simple and straightforward.[3] The plaintiff recognises that this has not proven to be the case, and rests the cause of the undue complexity of the proceedings, and the trial itself, on the 'multifarious, convoluted array' of defences pleaded by the defendants.[4]
5. There is much force in the plaintiff's submission. The defendants have been prepared to defend the claims 'trench by trench', disputing a very wide range of factual issues in both actions, which contributed to the length of the trial and of these reasons. Nonetheless, it should be observed that, as will be apparent in any event from the numerous interlocutory disputes in the actions and the course of the trial, both sets of parties fought this litigation in an aggressive manner.
6. A summary of the conclusions I have reached in the two actions is set out in Part VIII of these reasons.

1. On 16 March 2023, trial directions were made by the court to programme these actions to a single trial in November 2023.[5] Within my reasons for ordering that the actions be heard together, I explained my assessment of the degree of commonality between the actions.[6]
2. As matters transpired, it was necessary for the originally listed trial to be vacated and re-listed to commence in late January 2024.[7]
3. The adjournment of the trial followed late applications for leave to amend pleadings and to serve witness statements. In my reasons at the time, I summarised the developments which led to the need to vacate the trial as follows:[8]

... in recent weeks there has been a flurry of activity from both the plaintiff and the defendants which has involved the extremely late filing of lay evidence by the defendants, late amendments to the defendants' pleadings, late amendments to the plaintiff's pleadings, late filing of further lay evidence by the plaintiff, the possibility of further expert evidence being required, and the possibility of further discovery being sought. To compound this, the solicitors for the plaintiff have changed twice in the last month or so.

1. A chronology of the numerous hearings in the lead up to trial can be seen in the reasons of the court published on 5 January 2024 as Walthamstow Pty Ltd v Caratti [No 4].[9]
2. The degree of commonality between the actions, and the force of the court's decision to have them heard at a single trial, diminished over time. I say this for two particular reasons. First, the issues arising on the pleadings in the Anketell Proceeding and the Hocking Proceeding changed somewhat following the court's decision in March 2023, and in the lead up to trial, through various pleading amendments.
3. Second, and importantly, the original orders made by the court on 16 March 2023 extended to a third action involving these parties, namely CIV 3016 of 2019. That action concerned the financing arrangements for a property development in the suburb of Piara Waters to the south east of Perth. The existence of three actions containing overlapping factual and legal issues was an important factor in the decision to have the single trial. However, the third action did not ultimately proceed to trial.
4. The court raised these changing circumstances with the parties on 20 October 2023. The court expressly enquired whether the course of events since March 2023 had been such that it was no longer appropriate for the two actions to be heard together at one trial.[10]
5. Although the basis for the court's orders on 16 March 2023 lost its strength over time, it did not wholly evaporate in my view. Significantly, no application was made by any of the parties to revisit or vary the orders directing that the actions be heard at a single trial.[11]

1. The parties filed detailed opening and closing submissions for the purposes of the trial.
2. In the Anketell Proceeding, prior to the trial, the plaintiff relied on an amended outline of opening submissions dated 17 January 2024 and a reply outline dated 26 January 2024. By way of closing, the plaintiff filed an amended outline of closing submissions dated 27 March 2024, including an Annexure A. A further set of submissions dated 13 April 2024 was also relied upon by the plaintiff, however I have had regard to the version as redacted by the defendants, following a dispute in this regard.
3. In the Anketell Proceeding, prior to the trial, the defendants relied on an amended outline of opening submissions dated 19 January 2024. By way of closing, the defendants filed an outline of closing submissions dated 25 March 2024 a document entitled points in reply in closing dated 8 April 2024, and a document entitled updated notations on Annexure A dated 9 April 2024.
4. In the Hocking Proceeding, prior to the trial, the plaintiff relied on an amended outline of opening submissions dated 17 January 2024 and a reply outline dated 26 January 2024. By way of closing, the plaintiff filed an outline of closing submissions dated 27 March 2024 and supplementary submissions regarding the garnishee notice dated 3 April 2024. As with the Anketell Proceeding, a further set of submissions dated 13 April 2024 was relied upon by the plaintiff and I have had regard to the version as redacted by the defendants.
5. In the Hocking Proceeding, prior to the trial, the defendants relied on an amended outline of opening submissions dated 19 January 2024. By way of closing submissions, the defendants filed an outline of closing submissions dated 25 March 2024, and a document entitled points in reply in closing dated 8 April 2024.
6. Subsequent to the court reserving its decision following trial, the court invited submissions from the parties on a potentially relevant decision of the Court of Appeal, which was delivered on 23 April 2024, namely Caratti v Zhou.[12] Supplementary submissions were filed by the parties on 30 April 2024 in relation to that decision.

1. The pleadings in both actions were far from static. The frequency of the amendments increased in the lead up to the trial, continued during the trial and, indeed, persisted following the conclusion of the trial.
2. It will therefore be necessary within the reasons to clarify the pleaded cases for the plaintiff and the defendants, upon which I have determined the claims and defences. In doing so, some of the procedural history of the actions will need to be recounted, although that history is more fully explicated in the court's interlocutory reasons published in January and February 2024.[13]
3. On 3 May 2024, almost a month after the trial had concluded, the plaintiff filed pleading amendment applications in both actions. The plaintiff sought leave to file a fresh pleading in the Anketell Proceeding, being a surrejoinder in the form of the minute of proposed surrejoinder dated 3 May 2024, no surrejoinder having previously been filed by the plaintiff. The plaintiff also sought leave to file an amended pleading in the Hocking Proceeding. These applications were strongly opposed by the defendants.
4. The amendment applications were heard on 31 July 2024. The court's determination in relation to the applications is addressed in Part II and Part V of these reasons.

1. Several evidentiary issues arose during the first phase of the trial of the actions, which were the subject of rulings by the court, followed by written reasons which were published to the parties. I have summarised below the issues which were the subject of the rulings and incorporated into these reasons as Attachment A the reasons which were provided to the parties on 14 February 2024.
2. The first issue concerned the objection raised by the defendants to the terms of [80] of the supplementary witness statement of Mr Masel dated 19 October 2023 in the Hocking Proceeding, which was amended by Mr Masel at the commencement of his evidence. The court ruled on 14 February 2024 that the objection should be disallowed.
3. The second issue concerned the objections raised by the defendants to the plaintiff's proposed tender of several documents which were additional to the original trial bundle which was prepared and provided to the court prior to the commencement of the trial.
4. The third issue concerned the objections raised by the plaintiff to the defendants' proposed tender of several documents which form part of the original trial bundle.
5. The fourth issue concerned whether the parties should have leave to apply to have Mr Masel recalled to give further evidence in chief or to be the subject of cross-examination (and any appropriate re‑examination).

1. In Part II of these reasons, I will outline the claims pleaded by the plaintiff in the Anketell Proceeding, and the defences and other issues pleaded by the defendants in opposition to those claims. I will briefly explain the material pleading amendments which were granted or refused, both in the lead up to the trial and at the trial of the action. I will also explain how I propose to address the further pleading amendment application made by the plaintiff after the trial was reserved.
2. In Part III of these reasons, I will address the evidence in the Anketell Proceeding (and the evidence which is common to both actions), and record my findings as to the reliability and credibility of the witnesses who testified. I will in this section set out the factual findings which are necessary to be made in the Anketell Proceeding (and those common to both actions) in order to dispose of the claims and the defences raised in that action.
3. In Part IV of these reasons, I will explain my reasoning for disposing of the claims and defences in the Anketell Proceeding, and set out the additional finding necessary to dispose of the issues.
4. In Part V, Part VI and Part VII of these reasons, I will separately address the pleadings, evidence, and disposition of the claims in the Hocking Proceeding.

PART II - ANKETELL PROCEEDING: THE PLEADINGS A. Introduction

1. In this section of the reasons I will identify the pleadings in the lead up to trial, the defences which were abandoned by the defendants, the new defences and issues raised, and then address the application filed by the plaintiff following the trial to file a surrejoinder. Finally, I will summarise the issues which require determination following the trial.

1. The plaintiff filed the writ in this action on 17 November 2019. The action was managed within the General Division and admitted to the CMC List in January 2023.
2. The plaintiff proceeded to trial on the basis of the allegations detailed in the amended statement of claim dated 15 September 2023 (Anketell ASOC). The defendants filed their fourth amended defence on 17 September 2023 (Anketell 4AD).
3. Following some interlocutory disputation, but ultimately by consent, the plaintiff was granted leave to file a substituted reply pleading on 20 October 2023.[14]
4. On 24 November 2023, the court granted the defendants leave to file a rejoinder, which was filed on 27 November 2023 (Anketell Rejoinder).[15]
5. The plaintiff then filed an amended version of its reply pleading without leave. The pleading was described as the third amended substituted reply dated 6 December 2023.[16] The amended pleading in effect sought to withdraw an admission concerning the Waverley Estate issue, as explained in the court's reasons published as Walthamstow Pty Ltd v Caratti [No 5].[17]
6. Ultimately the plaintiff accepted that leave was in fact required and the pleading issue was addressed on 22 December 2023 with orders being made, nunc pro tunc, on that date to permit the plaintiff to file the pleading.[18] Upon analysis, I characterised the plaintiff's amendments as being, in essence, more in the nature of a clarification than a substantial volte face on the part of the plaintiff.[19] I will refer to the plaintiff's third amended substituted reply dated 6 December 2023 as the Anketell 3ASR.[20]
7. In their opening submissions for trial, the defendants foreshadowed amendments to their pleadings which I will now briefly describe.

1. I should first mention the aspects of the defence which were abandoned by the defendants. These matters were summarised in the court's reasons published as Walthamstow Pty Ltd v Caratti [No 6].[21]
2. The defendants:

(a) abandoned the allegation that the pleaded enforcement representation, referred to in the pleadings as the 'Enforcement Representation', also constituted an enforceable agreement at law;[22]

(b) abandoned the allegation that the plaintiff's conduct in issuing certain demands, in light of the alleged enforcement representation, was misleading or deceptive contrary to s 12DA of the Australian and Securities Investments Commission Act 2001 (Cth) (ASIC Act) and s 1041H of the Corporations Act 2001 (Cth) (CA);[23] and

(c) abandoned the allegation that a settlement agreement had been reached by the parties in May 2022.[24]

1. Although the defendants abandoned aspects of the enforcement representation allegations, they nonetheless maintained at trial the principal allegation, said to operate as a promissory estoppel, that a representation had been made by Mr Masel to the effect that the plaintiff would exhaust its rights against the assets secured by the facilities before seeking to recover any shortfall from the defendants under the guarantees. That allegation is primarily pleaded at [21.4] of the Anketell 4AD.
2. Further, the defendants maintained the allegation that the conduct of the plaintiff in issuing certain demands, in light of the enforcement representation, constituted unconscionable conduct for the purposes of s 12CB of the ASIC Act, as pleaded at [32.4] and [37.3] of the Anketell 4AD.

1. The defendants also sought to raise several new issues, as explained in the interlocutory reasons to which I have just referred.[25] It is necessary to mention them only briefly.
2. The defendants sought to introduce an allegation that no further extension of the principal loan agreement beyond a certain date (being 31 October 2015) had been pleaded or was in fact effected. The defendants proposed to contend at trial on this basis that the defendants, as guarantors, had no liability, alternatively no liability incurred beyond that date.
3. I refused leave for this amendment as explained in the interlocutory reasons dated 5 February 2024.[26] The defendant sought to re-open the issue only days later, albeit in a modified manner, which I also refused.[27]
4. The defendants sought to introduce allegations that the plaintiff's demands dated 20 September 2018 and 31 May 2019 were invalid. I refused leave for these amendments as explained in the interlocutory reasons dated 5 February 2024.[28]
5. The defendants also sought to introduce further allegations concerning the plaintiff's conduct whilst mortgagee in possession, which focused on the alleged lapsing of approval from the Western Australian Planning Commission (WAPC) and the terms of a particular information memorandum. The defendants' primary allegations against the plaintiff in this regard, as to its conduct as mortgage in possession, had initially been introduced in November 2022. I granted leave for the further amendments which were sought to be made to [35.8A] and [35.10] of the defence, as explained in the interlocutory reasons dated 5 February 2024, but refused leave insofar as the defendants sought to open up the lapsing of the WAPC approval.[29]
6. A further amended defence was filed by the defendants on 6 February 2024 (Anketell Amended Defence).
7. The foregoing did not bring an end to the defendants' attempts to amend their defence at trial.
8. On 14 February 2024, during the course of the trial, the defendants mounted a fresh application to amend their defence in the Anketell Proceeding. The amendment was set out in the defendants' Minute of Proposed Re-Amended Defence dated 14 February 2024, which sought to introduce a new paragraph [40]. The proposed amendment essentially revisited the matters discussed at [73] and [74] above, which had been the subject of the court's reasons published on 5 an[30]13 February 2024.30 I published reasons on 14 March [31]24 for refusing leave.31

1. After I had reserved my decision on 8 April 2024, the plaintiff sought leave to file a surrejoinder to the defendants' rejoinder dated 27 November 2023 (Anketell Proposed Surrejoinder).
2. The court received an email from the plaintiffs' solicitors by which the two applications were filed, by way of a minute of proposed orders, a supporting affidavit, and proposed minute of a fresh or an amended pleading in each action. The plaintiff relied upon the affidavits of Samuel Neil Howieson affirmed on 3 May 2024 in each action. Those affidavits were ultimately relied upon by the plaintiffs at the hearing on 31 July 2024, without objection.
3. No surrejoinder had previously been filed by the plaintiff.
4. The Anketell Proposed Surrejoinder is in the following terms:
   1. As to paragraphs 5 of the Defendants' Rejoinder dated 27 November 2023 the plaintiff was not obliged by clause 5.4 of the Loan Agreement to apply the relevant proceeds in reduction of the Loan in circumstances where:

1.1 the loan to Byford River Pty Ltd contained an identical clause 5.4 to clause 5.4 of the Loan Agreement; and

1.2 in any event, the proceeds were not received from Herdsman in discharge of mortgage N263245.

1. Save to the extent that the Rejoinder otherwise contains admissions, the plaintiff denies each and every allegation therein.
2. These amendment applications were opposed by the defendants.
3. On Saturday, 4 May 2024, the court replied to the parties to indicate that a hearing date for the applications would be addressed on the following Monday.
4. On Sunday, 5 May 2024, the defendants' solicitors responded to the court and the plaintiff, objecting to the late applications and seeking a case management direction pursuant to O 4A r 2(2)(f) of the Rules of the Supreme Court 1971 (WA) (RSC) that each application 'not be heard'. The defendants noted that the applications had been filed without prior conferral pursuant to O 59 r 9 RSC, although subsequent to that point the defendants did not agitate any opposition to the applications on conferral grounds.
5. So, at least initially, the defendants sought to persuade the court that the applications for leave should not be heard by the court, at all. It would not have been a proper exercise of the court's discretion, in my view, to simply reject the applications for leave without further hearing the plaintiff, and the defendants, on the questions raised. It was necessary to hear from the parties.
6. Accordingly, the matters were listed by the court for hearing on 31 July 2024, with directions made to allow both parties to file written submissions. The court received submissions from the plaintiff filed in each action dated 27 May 2024, and submissions from the defendants filed in each action dated 25 July 2024. No responsive affidavit material was filed or relied upon by the defendants in either action.

1. The court has power to grant leave to amend the pleadings at any time, including after the conclusion of a trial, when a decision has been reserved, and after the delivery of the court's reasons for decision: see O 21 r 5(2) RSC.
2. In the exercise of this power, there have been occasions where this court, and other courts relying upon similar provisions, have granted leave to permit pleadings to be amended late in the piece, including after the decision itself has been delivered.[32]
3. Naturally, applications for leave to amend a party's pleadings following a contested trial will typically give rise to difficult and nuanced questions for the court's determination. Such applications will require the court to carefully balance the competing interests of the parties, to assess the relative prejudice arising, and to examine applicable case management considerations and the manner in which the court's resources are being drawn upon.
4. The determination of the plaintiff's applications in these actions is relatively challenging. There are four primary reasons I say this. First, there has already been a high degree of intensive case management of these actions over the period which commenced in August 2023. Second, the issues raised in the present applications intersect and overlap with some of the issues already addressed by the court in the course of the interlocutory disputes which have previously arisen in these matters. Third, the actions themselves may fairly be described as examples of 'issue-rich' civil litigation in which the parties have adopted a vigorous adversarial approach. Fourth, the court is dealing with separate applications for leave in two actions which were heard together at a combined trial.
5. Further, and fundamentally, the issues sought to be raised by the plaintiff's amendments were the subject of submissions and discussions at points during the trial process. It might therefore be thought as surprising that applications for leave to amend the pleadings would be filed some four weeks following the conclusion of the evidence in the trial, rather than at some earlier point in time.
6. It should be observed that the plaintiff also requires leave pursuant to O 20 r 6 RSC to file the surrejoinder pleading in the Anketell Proceeding, being a pleading subsequent to a reply or a defence to counterclaim. The question of leave under that rule is coterminous with the consideration of leave under O 21 r 5(2) RSC, in my view.
7. The parties were not in disagreement as to the principles to be applied in determining applications such as the present, where leave is sought to amend pleadings after a decision has been reserved. Both parties made reference to Hill J's decision in Mirabela Nickel and to the authorities helpfully traversed by her Honour.[33]
8. There are, of course, discretionary factors which require close attention where an application for leave to amend a pleading is brought late in the proceedings, including after the decision at trial has been reserved. Those discretionary factors must be seen in the context of the modern principles of case management and having regard to the proper function of pleadings in civil litigation.

1. The plaintiff's primary position is that the issue the subject of the proposed amendment is already live between the parties on the pleadings and through the submissions filed prior to and during the course of the trial. The plaintiff submits, accordingly, that a surrejoinder is not required to permit it to rely upon cl 5.4 of the Byford River Agreement, and that it can permissibly dispute the defendants' proposed construction of cl 5.4 of the Anketell Loan Agreement on the pleadings as they stand.[34]
2. Nonetheless, presumably out of an abundance of caution, the plaintiff seeks to file and serve the surrejoinder in the event that the court takes a different view.
3. The plaintiff's contention that the filing of the surrejoinder is not strictly required has force, and fairly reflects the course of the proceedings and the terms of the pleadings which were on foot prior to trial. Two points should be made in this regard.
4. First, the plaintiff had pleaded the existence of the Byford River Agreement at [29] of its reply, being Anketell 3ASR. The plaintiff had pleaded that the funds in question were not applied to the Anketell Loan Agreement because the loan to Byford River was secured by an 'earlier, higher-ranking mortgage', which had been given to secure a loan to Byford River.
5. Second, the defendants pleaded in response to the above matters, in the Anketell Rejoinder, that cl 5.4 of the Anketell Loan Agreement required that the net proceeds from the sale of the Waverley Estate lots be applied to the Anketell Loan Agreement.[35] The plaintiffs impliedly joined issue with this allegation by reason of O 20 r 15(2)(a) RSC.
6. In these circumstances, the operation of cl 5.4 of the Byford River Agreement was already an issue on the pleadings. However, even if I am wrong about that, and although the application to file the surrejoinder is extremely late, I would nonetheless have granted the application. The application ought be granted for the following discretionary reasons.
7. First, the amendment does not raise a fresh issue of which the defendants were previously unaware. The issue was the subject of submissions filed by the plaintiff prior to the commencement of the trial,[36] and is referred to in the plaintiff's reply, namely Anketell 3ASR. The plaintiff had submitted in writing that cl 5.4 of the Anketell Loan Agreement did not operate in the manner in which the defendants had contended (i.e. obligating the plaintiff to apply funds from the Waverley Estate sales to the loan to GH1 in preference to the loan to Byford River). That submission was advanced having regard to the identical clause in the Byford River Agreement.
8. Second, the proposed amendment is not extensive and the issue is narrow in compass given the clauses in the two loan agreements are identical.
9. Third, the defendants did not raise their opposition to the plaintiff relying upon cl 5.4 of the Byford River Agreement until the cross‑examination of Ms Bazzo late in the trial, that is on 15 March 2024. At that point, there was a detailed debate as to the manner in which the Byford River Agreement was relevant to the proceedings, and the issue of relevance was held over.[37] Prior to that time, the plaintiff can reasonably be understood to have considered the issue as being 'live' in the proceeding.
10. Fourth, there is no further evidence needed in order to allow the point to be agitated by the plaintiff, other than to formally admit Exhibit 238 into evidence, which was marked for identification during trial and the question of its tender was reserved.[38] The relevant material is otherwise already in evidence.
11. Fifth, if leave is denied and the issue is found not to be live between the parties, then cl 5.4 of the Anketell Loan Agreement, upon which the defendants rely, may be construed in an artificial vacuum that would not reflect the objective intentions of the parties when they entered into the loan. I accept there would be a risk of an erroneous construction resulting. That could be to the significant prejudice of the plaintiff as the proceeds of the relevant Waverley Estate properties in dispute are in the order of $1.8 m.
12. Sixth, in contrast, there is no material prejudice to the defendants arising from a grant of leave in respect of the proposed surrejoinder, given the issue was previously raised in submissions and there is no further evidence which they might adduce to respond to it.

1. The Anketell ASOC pleads a straightforward and relatively simple case against the defendants. As will be explained, many of the essential facts are the subject of admissions on the pleadings or agreed facts which have been filed, such that the existence and terms of the financing documentation is not in dispute between the parties.
2. The plaintiff pleads that a loan facility was established in November 2013 between Angas Securities and GH1, by which the initial sum of $2,012,000 was advanced to the borrower. I will refer to this as the Anketell Loan Agreement. That loan, which had a term of 12 months, was secured by a first registered mortgage over property in Anketell owned by GH1[39] and by a general security agreement.[40] I will refer to these instruments as the Anketell Mortgage and the Anketell Security Agreement.
3. Within the Anketell Loan Agreement, the defendants guaranteed payment of the monies secured under the loan agreement and the mortgage.[41] The plaintiff pleads, among other provisions within the loan agreement, that the defendants as guarantors agreed to keep the lender indemnified from and against all and any loss damage cost charge or expense incurred by the lender in connection with or in consequence of or arising out of any event of default and agreed to pay all monies due to the lender by reason of the indemnity on demand.[42]
4. The plaintiff pleads that, on 10 December 2014, the loan was extended for a further term of 12 months through until 31 October 2015, which involved a further advance by the plaintiff of $400,000.[43] I will refer to the agreement by which this was effected as the Anketell Variation and Extension Agreement.
5. The plaintiff then pleads the assignment and transfer of the securities by Angas Securities to the plaintiff, alleged to have occurred on 29 February 2016.[44] GH1 and the defendants are pleaded to have consented to this assignment.[45] I will refer to the assignment instrument as the Anketell Assignment Deed.
6. It is pleaded that the plaintiff paid the sum of $2,683,020.33 to Angas Securities as consideration for the assignment and transfer of the securities,[46] with the plaintiff agreeing to charge interest at a lower rate of 15.75% and a higher rate of 18.75% on the assigned loan.[47]
7. A further guarantee instrument is pleaded to have also been executed at the time of the assignment, being a deed of guarantee dated 29 February 2016, to which the plaintiff, Ms Bazzo, Herdsman Technology and Byford Land Company were parties. I will refer to this as the 2016 Anketell Deed of Guarantee. The plaintiff pleads that, among other provisions within that instrument, the plaintiff was entitled to demand and receive payment from the guarantors when any payment was due and was not required to proceed against GH1 or exhaust any remedies it may have against GH1 before doing so.[48]
8. The following two diagrams (Diagrams A and B) provide an overview of the instruments which are the subject of the Anketell Proceeding:

1. By its pleading, the plaintiff also alleged that the defendants acknowledged that the amount owed by GH1 to the plaintiff as at 29 February 2016 was the total sum of $2,683,020.33, which comprised the principal sum of $2,412,000 and arrears of interest and costs in the sum of $271,020.33.[49]
2. The plaintiff then pleads that the borrower, GH1, failed to make interest payments on the due dates as required under the Anketell Loan Agreement, and the plaintiff caused a notice of default to be served on Ms Bazzo as guarantor on 20 September 2018.[50] None of the monies demanded were paid by Ms Bazzo or any of the guarantors, and the plaintiff pleads it entered into possession of the property on 9 October 2018.[51]
3. On 31 May 2019, the plaintiff pleads that the default notice was served on Mr Caratti and the amount outstanding under the loan was demanded.[52]
4. On the basis the defendants had not paid the monies demanded, the plaintiff sues them for payment of the principal and interest, alleging that the amount outstanding as at 11 December 2019 was $5,063,082.21, being the amount particularised in Annexure A to the Anketell ASOC.
5. The substantive relief claimed is as follows:[53]
   1. Payment of the principal sum of $2,412,000.00.
   2. Interest on the principal sum and arrears of interest and costs from 5 December 2013 to 29 February 2016 in the sum of $271,020.33 pursuant to clause 4 of the Loan Agreement dated 18 November 2013, Deed of Assignment of loan dated 29 February 2016 and Schedule to the Deed of Guarantee dated 29 February 2016.
   3. Interest on the capitalised sum of $2,683,020.33 and arrears of interest calculated at the rate of 18.75% on a daily basis capitalised monthly pursuant to clause 4 of the Loan Agreement dated 18 November 2013 from 1 March 2016 to judgment.
   4. Interest on the judgment sum pursuant to clause 4 of the Loan Agreement at the rate of 18.75% per annum or pursuant section 32 Supreme Court Act 1935.
   5. Costs on a solicitor/client basis, alternatively on a party/party basis.

1. Having regard to the amendments made to the pleadings, the following matters were relied upon by the defendants at trial to resist the plaintiff's claims and will require determination by this court.
2. First, the defendants dispute whether the plaintiff has demonstrated the essential elements of the causes of action pleaded against the defendants and whether the plaintiff has established to the requisite standard the quantum which it claims. The manner in which the plaintiff has claimed interest, and sought to prove that aspect of the claim, is also the subject of dispute. The defendants maintain that the plaintiff had failed to demonstrate the amount claimed in the Anketell Proceeding and point to substantive and evidentiary difficulties in the plaintiff's case in this regard.[54]
3. Second, the defendants plead a representation was made by the plaintiff that it would exhaust its rights against the assets secured by the loan facilities before seeking to recover any shortfall from the defendants. On the basis of this representation, the plaintiff is said to be estopped from enforcing its claims against the defendants until it has first exhausted its claims and remedies against the secured property.[55]
4. The representation is pleaded in conjunction with the defendants' plea that they consented to the assignment of the Anketell Loan Agreement to the plaintiff. Absent that consent, the defendants plead that their guarantees would have been discharged because the extension of the loan agreement beyond its expiry date of 31 October 2015 would otherwise have increased their potential liability as guarantors.[56]
5. Third, and allied to the above plea, the defendants contend that by demanding payment before exhausting its claims and remedies against the secured property, the conduct of the plaintiff was unconscionable for the purposes of s 12CB of the ASIC Act. The defendants plead they are entitled to relief under s 12GM of the ASIC Act to confirm the plaintiff cannot demand payment from the defendants without first exhausting its claims and remedies against the secured property.[57]
6. Fourth, the defendants challenge the conduct of the plaintiff in taking possession of the secured property as mortgagee in possession, and its conduct whilst in possession. The defendants allege that in exercising the power of sale of the secured property as mortgagee in possession, the plaintiff breached the duties owed to the defendants, which conduct has caused the defendants to suffer loss and damage.[58]
7. Further or alternatively to the preceding paragraph, the defendants allege that in exercising the power of sale of the secured property as mortgagee in possession, the plaintiff acted unconscionably contrary to s 12CB of the ASIC Act, which conduct has caused the defendants to suffer loss and damage.[59]
8. Fifth, the defendants challenge the manner in which the plaintiff collected the proceeds of settlement of certain other properties and only applied some of those proceeds in reduction of the amounts owing under the loan agreement.[60] The other properties in question were the lots at the Waverley Estate, another property development which was controlled by the defendants and was the subject of financing arrangements with the plaintiff. The effect of this conduct was, according to the defendants, to expose the defendants to a greater liability under the guarantee.

1. Having regard to the pleaded cases of the parties and the primary contentions agitated at trial, the following issues fall for determination by the court in the Anketell Proceeding.
2. First, whether the plaintiff has discharged its onus on the balance of probabilities to establish the essential elements of the claim against Mr Caratti pursuant to the guarantee contained within the Anketell Loan Agreement, including the demands alleged to have been served on Mr Caratti and the validity of the assignment of the Anketell Loan Agreement to the plaintiff by Angas Securities. In this regard, it is necessary to consider whether the plaintiff has discharged its onus on the balance of probabilities to establish the quantum of the claim against Mr Caratti in respect of the guarantee. I have addressed this issue at [334] to [460] of these reasons.
3. Second, whether the plaintiff has discharged its onus on the balance of probabilities to establish the essential elements of the claim against Ms Bazzo pursuant to the guarantee contained within the 2016 Anketell Deed of Guarantee, including the demands alleged to have been served on Ms Bazzo and the quantum of the claim. I have addressed this issue at [461] to [472] of these reasons.
4. Third, whether the defendants have discharged their onus on the balance of probabilities to establish that the enforcement representation was made by Mr Masel and that the legal effect of that representation was to estop the plaintiff from pursuing the claims on the guarantees in the circumstances.[61] The plaintiff denies the representation was made, relies upon the terms of the executed instruments, and asserts the second defendant has expressly agreed, by the terms of the 2016 Anketell Deed of Guarantee itself, that she did not rely on any such representation.[62] I have addressed this issue at [473] to [551] of these reasons.
5. Fourth, whether the defendants have discharged their onus on the balance of probabilities to establish that the enforcement representation was made by Mr Masel and that the conduct of the plaintiff in pursuing its claims on the guarantees was unconscionable in the circumstances within the meaning of s 12CB of the ASIC Act.[63] I have addressed this issue at [552] to [599] of these reasons.
6. Fifth, whether the defendants have discharged their onus on the balance of probabilities to establish that the plaintiff owed them certain duties whilst acting as mortgagee in possession and relevantly breached those duties. The defendants have pleaded and must also prove that the breach caused the defendants to suffer loss and damage, being their exposure to liability for interest to the plaintiff which accumulated between 5 October 2018 to 15 September 2022, and the interest that has and continues to accumulate from 16 September 2022.[64] I have addressed this issue at [600] to [771] of these reasons.
7. Sixth, and related to the fifth point, whether the defendants have discharged their onus on the balance of probabilities to establish that the plaintiff's conduct whilst acting as mortgagee in possession was unconscionable for the purposes of s 12CB of the ASIC Act. The defendants have pleaded and must also prove, that this conduct caused the defendants to suffer loss and damage being their exposure to liability for interest to the plaintiff which accumulated between 5 October 2018 to 15 September 2022, and the interest that has and continues to accumulate from 16 September 2022.[65] I have also addressed this issue at [600] to [771] of these reasons, together with the fifth issue referred to above.
8. Seventh, whether the defendants have discharged their onus on the balance of probabilities to establish that the plaintiff failed to apply the proceeds of settlement of the lots at the Waverley Estate in reduction of the amounts owed by GH1 under the Anketell Loan Agreement. The defendants contend the guarantees have been rendered unenforceable by reason of the alleged breach of contract and the alleged unconscionable conduct involved in the misapplication of the funds,[66] and alternatively contend the amount claimed by the plaintiff must be reduced in the circumstances.[67] Whether these consequences flow from the conduct must therefore also be considered. I have addressed this issue at [772] to [848] of these reasons.

PART III - ANKETELL PROCEEDING: EVIDENCE AND FINDINGS A. Introduction

1. In this section of the reasons, I will summarise the evidence to the extent that is necessary and set out the findings of the court for the purposes of the Anketell Proceeding.
2. First, I have recorded my assessment as to the reliability and credibility of the witnesses who gave evidence at trial. This assessment is necessarily relevant to the evidence in both actions. Second, I have set out my factual findings in respect of matters which relate to the relationship between the parties and the financing transactions in both proceedings. Third, I have set out the specific findings required in the Anketell Proceeding.

1. Mr Masel was the sole witness called by the plaintiff to give evidence at trial. Mr Masel gave evidence over the course of three days, on 6, 7 and 8 February 2024. His evidence in chief was primarily given in the form of several written witness statements.[68]
2. In the Anketell Proceeding, Mr Masel's evidence in chief was contained in his amended witness statement dated 25 October 2023 and his amended supplementary witness statement dated 25 October 2023.[69] In the Hocking Proceeding, Mr Masel's evidence in chief was contained in the witness statement dated 22 May 2023 and the supplementary witness statement dated 19 October 2023.[70]
3. In respect of matters which were contentious, the plaintiff filed witness outlines which gave notice of the substance of Mr Masel's evidence on those issues, which were then the subject of viva voce evidence in chief by Mr Masel.
4. Mr Masel was cross-examined extensively by counsel for the defendants. His credibility and reliability is the subject of spirited submissions from the defendants' representatives. As explained below, I reject these challenges to Mr Masel's credibility and to his reliability.
5. Mr Masel gave his evidence at trial in a confident, calm and clear manner. It was plain to the court that Mr Masel has had considerable experience in the business of lending, including in relation to the provision of finance to property developers. I formed the impression that Mr Masel was a careful and prudent businessman who took steps in dealing with his business affairs to document matters which were material or important to him.
6. Further, and relatedly, it was evident that Mr Masel approached the business of lending funds to property developers and others in a manner which was particularly cognisant of the risks involved in such arrangements.
7. While the process of lending funds for property developments carries an inherent commercial risk for the lender, as Mr Masel recognised in his evidence, it was evident to the court that he was particularly conscious of the importance of structuring the finance arrangements and his security position to mitigate or manage these risks.
8. Mr Masel has some hearing difficulties and on occasions it was necessary for him to ask counsel for the defendants to repeat a particular question or to look directly at him when speaking, to assist Mr Masel's hearing. While this process lengthened his evidence somewhat, it was not a process that reflected on Mr Masel in any adverse way. Rather, it reflected, in my view, the importance which Mr Masel placed on ensuring his evidence was correct and that he properly understood the question directed to him.
9. Overall, on the basis of my observations during the trial, I found Mr Masel to be a generally credible and reliable witness who gave his evidence in a careful and considered manner, and without any prevarication or dissembling. On the subject of disputed conversations, as I will explain in more detail later in these reasons, it is apparent that Mr Masel maintained a strong and clear memory of those discussions. Mr Masel's evidence in chief was not disturbed in any significant respects through the process of cross-examination.
10. Overall, as further explained below, where there was an inconsistency between the oral evidence and recollections of Mr Masel, on the one hand, and Mr Caratti or Ms Bazzo on the other, on issues of substance, I would prefer the evidence of Mr Masel.

1. Mr Caratti and Ms Bazzo were both called to give evidence at trial and, as with Mr Masel, were both cross-examined extensively by counsel for the opposing party.
2. Neither Mr Caratti or Ms Bazzo may be described as naïve or unsophisticated in any sense. They are far from neophytes in the world of commercial and residential property development, as I will explain further in due course.
3. Mr Caratti's evidence in chief was primarily given in the form of several written witness statements.[71]
4. In the Anketell Proceeding, Mr Caratti's evidence in chief was contained in his witness statement dated 27 September 2023.[72] In the Hocking Proceeding, Mr Caratti's evidence in chief was contained in the witness statement dated 27 September 2023.[73]
5. As with Mr Masel, in respect of matters which were contentious, the defendants filed a witness outline which gave notice of the substance of Mr Caratti's evidence on those issues, which were then the subject of viva voce evidence in chief.
6. Mr Caratti's credibility and reliability is challenged by the plaintiff. Those challenges have considerable force, in my respectful view, and accord with my own impression during his evidence that Mr Caratti was not an impressive witness. I have reached this view for the following reasons.
7. First, there were instances in the evidence where I found Mr Caratti to be more inclined when testifying to resort to speeches in support of his own cause than to give accurate and specific answers to the questions. A similar observation can be made concerning the evidence of Ms Bazzo. For example, when challenged in cross‑examination as to his contention that Mr Masel had been 'sitting back waiting for interest to accrue' while in possession of the Anketell Property, given that various emails had been sent to Mr Caratti by Mr Masel, Mr Caratti insisted that Mr Masel had simply sat on the property for four years and did nothing with it.[74] That answer was self‑serving and not responsive to counsel's question.
8. Second, and allied to the example just given, Mr Caratti's evidence as to the criticisms of Mr Masel while in possession of the Anketell Property lacked any substance and yet he maintained those criticisms throughout his evidence.
9. At one point, it was drawn to Mr Caratti's attention that a particular conversation was described in his witness statement as having occurred more than a year before Mr Masel took possession of the property, to which Mr Caratti responded that the date in the witness statement must be wrong.[75] Indeed, Mr Caratti then insisted that other dates in his statement must be wrong. In context, it is more likely that Mr Caratti was wrong about the discussion, and the dates in the statement were correct, yet Mr Caratti maintained his position in evidence. This reflected poorly on Mr Caratti, in my view.
10. Further, Mr Caratti was dismissive of evidence drawn to his attention as to the steps taken by Mr Masel and the plaintiff during the period of possession, which rationally undermined his criticism of Mr Masel.[76] Mr Caratti's evidence in this regard demonstrated a strongly held, but baseless, animosity towards Mr Masel. That animosity towards Mr Masel had a real tendency to permeate much of Mr Caratti's evidence and the manner in which he gave it.
11. Third, Mr Caratti was not prepared in his evidence to accept certain uncontentious matters, in circumstances which indicated Mr Caratti was more prepared to assert his case than give accurate evidence. I do not accept these were occasions where Mr Caratti was simply being cautious in his evidence. Rather, Mr Caratti was more inclined to amplify his defence in the proceedings. I will refer to some examples, which were highlighted by the plaintiff in closing submissions, which provide illustrations of the point just made.
12. At ts 1954, counsel for the plaintiff cross-examined Mr Caratti as to the terms of the loan agreement:

FRENCH, MR: So interest under this agreement, interest is payable on a monthly basis, isn't it?---

CARATTI, MR: Not if it's capitalised.

FRENCH, MR: But I'm asking about the agreement?---

CARATTI, MR: That's not how I read it, so I just - - -

FRENCH, MR: You read it differently?---

CARATTI, MR: I can't agree with you on that.

FRENCH, MR: Okay. Well, can you tell me what part of this agreement makes you read it as allowing for capitalisation of interest?---

CARATTI, MR: Well - - -

FRENCH, MR: Just take me to the part of the agreement where you read it differently?---

CARATTI, MR: There's a higher and there's a lower rate there, and - and it worked on the basis that these things were paid at the back end. That's how it worked.

1. At ts 1956, following an objection by counsel for the defendant which I ruled against, Mr Caratti continued in his evidence:

FRENCH, MR: Can you point - this agreement doesn't provide for the payment of interest upon the sale of lots anywhere, does it?---

CARATTI, MR: That's how it operated.

FRENCH, MR: But I'm asking about the agreement. I'm not asking about how it operated. Just this agreement. This agreement did not provide for the payment of interest upon the sale of lots?---

CARATTI, MR: I can't agree with that. I would have to read every line of it then. I would have to sit there and read every line of it. I'm not going to agree with you if I don't believe that.

FRENCH, MR: But I - well, but I just took you to 3.2 which is one sentence.

The borrower shall pay the interest every month.

Why can't you agree with me with that?---

CARATTI, MR: Because it never operated that way.

FRENCH, MR: But I'm not asking about how it operated. I'm just asking about the agreement.

1. Fourth, the manner in which Mr Caratti gave evidence in chief as to a crucial aspect of the Anketell Proceeding, namely whether the enforcement representation was in fact made by Mr Masel, lacked specificity, was inconsistent with the pleaded case, and was wholly unpersuasive.
2. The interchange with counsel which is extracted at [509] of the reasons reveals Mr Caratti's testimony, in his evidence in chief, that there was one conversation with Mr Masel on the issue, when the pleaded case refers to two distinct conversations - the first being by telephone and the second being a meeting at the offices of the defendant.
3. When cross-examined about the issue, Mr Caratti initially referred to a subsequent agreement with Mr Masel as to the manner the plaintiff would enforce the loan, which he accepted must be wrong given his case was based on an earlier agreement or representation. Overall, Mr Caratti's insistence in his evidence in chief and under cross‑examination, that he relied upon the oral agreement he made with Mr Masel, rather than document that in some way, despite having made other changes to the instruments before execution, fundamentally lacked credibility.
4. Fifth, Mr Caratti gave evidence which undermined the veracity and comprehensiveness of his own witness statement, stating on occasions that many things were not in his statement[77] and that it had been prepared by lawyers.
5. For example, when challenged about the absence of anything in his witness statement concerning his communications with Mr David Ward, as to the offer from Wantree Holdings, Mr Caratti deferred to his lawyers. I refer to the following interchange:[78]

FRENCH, MR: So those kind of communications are relevant, aren't they?-

CARATTI, MR: Well, I only - I only do what lawyers want. The lawyers usually run these things most of the time. I don't run these cases.

1. Mr Caratti was cross-examined about the language used in an affidavit of discovery, and adopted a similar approach:[79]

FRENCH, MR: Yes. So when you said - I will rephrase the question. So when you said you do not recall when you "parted company" with the electronic version of the document, what did you mean by that?-

CARATTI, MR: Well, that was prepared by a lawyer, but I know at the time I was using a Blackberry, and I have used different devices at different times. So I - I'm computer illiterate. I don't have a computer. I just use a - a Blackberry or an iPhone. So when people have got to retrieve things, other people have to do it.

1. Sixth, Mr Caratti's ability to recall matters was quite poor. He accepted at one point he had a terrible memory.[80] He also testified that he had difficulties recalling the affidavit he had sworn in December 2023 (being Folio 180), only months before the trial, being the affidavit in which he swore as to the whereabouts of the electronic copy of an important document.[81] This document was the subject of the exchange with counsel referred to in the preceding paragraph.
2. Seventh, Mr Caratti was at times inclined to distance himself from the terms of the important documents he signed, explaining in his evidence at one point that he didn't pay much attention to a particular document - 'I just sign these things and they come in a bundle and we sign them.'[82] In this instance, Mr Caratti was being cross-examined in relation to the guarantor's acknowledgement document (Exhibit 38) relating to the loan in the Hocking Proceeding. On any view, that was an important document. It reflects poorly on Mr Caratti that he did not pay much attention to a document of this nature.
3. Eighth, Mr Caratti's responses to questions from counsel as to the process of discovery were reflective of an attitude that he placed inadequate importance on his discovery obligations. The exchange at ts 1978 regarding the discovery of the electronic copy of Exhibit 93 (being a document relied on by Mr Caratti in support of his estoppel representation claim) was brief but revealing:

FRENCH, MR: Okay. So you haven't been able to obtain that document, have you?

CARATTI, MR: I didn't even look for it. Someone else looks for these documents.

FRENCH, MR: You didn't even look for it?

CARATTI, MR: No.

FRENCH, MR: But it's your document?

CARATTI, MR: I wouldn't have a clue how to retrieve it from a - from a computer. Other people do that for me.

FRENCH, MR: Okay. Who did you ask to look for it?

CARATTI, MR: I go to the office staff, or I go to Tina, but I - I don't retrieve any documents or go looking for anything.

FRENCH, MR: But your affidavit doesn't say, "I asked someone to look for it, and they couldn't find it". You say, "I don't recall when I parted company with"?

CARATTI, MR: Well, I don't recall because I don't go looking for these things. Once - once they're in the computer, I wouldn't know - I wouldn't know how to do a search.

FRENCH, MR: But there was a court order requiring you to give a discovery affidavit?

CARATTI, MR: Mmm.

FRENCH, MR: So if you're going to entail someone to assist you, then you should be able to say exactly who, and how that happened?

CARATTI, MR: Yes, well, someone else does it all, because I don't go discovering anything.

FRENCH, MR: Well, who?

CARATTI, MR: I don't go looking - I don't go looking for documents. I've got office staff that go looking for this stuff.

1. It is accepted that the physical process of searching for documents, in order to discharge a discovery obligation, can be delegated to others within a business on occasions. In the case of large scale discovery processes, that is relatively usual. Even in such cases, the integrity of the process itself remains important and the person swearing a discovery affidavit must be sure the matters to which they depose are accurate.
2. In this instance, the affidavit was ordered to be provided by a specific order, made on 24 November 2023,[83] focused on two particular documents only (including the document which became Exhibit 93). It was a targeted order, requiring Mr Caratti to swear an affidavit stating whether 'the electronic version of the letter including original metadata that is document 8 of the defendants' discovery' is or has at any time 'been in his possession, custody or power, and if not then in his possession, custody or power, when he parted' with that document and what has become of it.
3. Within the affidavit sworn by Mr Caratti, he deposed that the electronic copy of the letter (Exhibit 93) 'was in my possession at the time it was drafted' and 'I do not recall when I parted company with the electronic version of document 8'. The exchange between counsel and Mr Caratti on this issue, as extracted above, left me with the distinct impression Mr Caratti had given inadequate attention to compliance with the order and to his discovery obligations in respect of this document - notably a document upon which he placed considerable reliance in support of his defence in the Anketell Proceeding.
4. Similarly, an order was made by the court to require Mr Caratti to swear an affidavit to address the discovery of another document, relevant to the Hocking Proceeding, being document 237 (which became Exhibit 76). I have addressed my concerns in relation to this document when considering the claims in the Hocking Proceeding.
5. For all of these reasons, I formed the opinion that Mr Caratti was an unsatisfactory and unreliable witness. I would not be prepared to accept his evidence on disputed matters unless it was supported by surrounding facts and contemporaneous documentary material. I intend to treat his evidence on disputed matters with caution in these circumstances.
6. I should add, in this regard, that there were occasions during the cross-examination in which the formulation of the questions put to Mr Caratti (and also to Ms Bazzo) may have created some element of confusion on their part. The defendants referred to there being a 'pervading uncertainty' at times as to which particular issue was being addressed in cross-examination. That may be stating the position too highly, in my view. In any event, this has required the evidence they gave to be carefully examined as a result, to ensure any deficiencies in their evidence are not merely the product of the manner in which they were cross-examined. Ultimately, the impression I formed was that neither Mr Caratti nor Ms Bazzo were able to give objective and candid evidence on the contentious matters, which also impacted the reliability of their evidence as to events which occurred many years ago.

1. Ms Bazzo gave evidence at trial within confined time periods in accordance with the trial regime sought by the defendants and ordered by the court, limited to approximately two hours at a time. Pursuant to that regime, Ms Bazzo gave brief evidence on 14 February 2024, and then more extensive evidence on 15 and 18 March 2024.
2. Ms Bazzo's evidence in chief was primarily given in the form of several written witness statements.[84]
3. In the Anketell Proceeding, Ms Bazzo's evidence in chief was contained in three witness statements dated 26 September 2023, 27 September 2023 and 14 March 2024.[85] In the Hocking Proceeding, Ms Bazzo's evidence in chief was contained in her witness statement dated 26 September 2023.[86]
4. The defendants sought to adduce certain evidence from Ms Bazzo as expert opinion evidence, which I have addressed in Part IV of these reasons when dealing with the claim concerning the period during which the plaintiff was mortgagee in possession. I do not accept that her evidence may be admitted on this basis, as later explained.
5. Ms Bazzo's evidence in both actions was less wide-ranging than the evidence of Mr Caratti. Through the course of cross‑examination, I formed the view that Ms Bazzo's evidence was unreliable and unconvincing in certain respects. Ms Bazzo was not, at all times, doing her best to assist the court in her evidence on contentious issues. I will address Ms Bazzo's evidence when dealing with the specific issues on which she testified.

1. The first point to observe here is that, in addition to the admissions arising on the pleadings, a number of factual matters were expressly agreed by the parties for the purposes of the trial of the two actions. The agreed facts are contained in three statements of agreed facts which were filed before trial.
2. In the Anketell Proceeding, the agreed facts are contained in the statement of agreed facts dated 10 October 2023, which is Folio 142 and Exhibit D1 (Anketell Agreed Facts).
3. In the Hocking Proceeding, the agreed facts are contained in two documents. There is the statement of agreed facts dated 10 October 2023, which is Folio 93 and Exhibit D2 (Hocking Agreed Facts 1). Then there is the statement of agreed facts on the counterclaim, which is Folio 94 and Exhibit D3 (Hocking Agreed Facts 2).
4. There remained, in both actions, a number of important factual matters which were in dispute between the parties, and in respect of which it has been necessary for the court to make specific factual findings.
5. In order to make such findings, and to find that a particular fact has been proven, it is necessary for the court to feel an actual persuasion of the occurrence or existence of that fact before it can be found. The approach outlined to fact finding by Emmett J (as his Honour then was) in Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2)[87] is apposite in this regard:

When proof of any fact is required, the Court must feel an actual persuasion of the occurrence or existence of that fact before it can be found. Mere mechanical comparison of probabilities, independent of any belief in reality, cannot justify the finding of a fact. Actual persuasion is achieved where the affirmative of an allegation is made out to the reasonable satisfaction of the Court. However, reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, and the gravity of the consequences flowing from a particular finding are considerations that must affect whether the fact has been proved to the reasonable satisfaction of the Court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences (see Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 361-2).

1. In my assessment of the disputed factual matters in the actions, I have been particularly conscious that the trial of these actions, in January through to April 2024, occurred many years after the events in question, and in particular after a significant time had elapsed since the alleged conversations which took place between Mr Masel and Mr Caratti. For example, in the Anketell Proceeding, Mr Caratti relied upon a conversation with Mr Masel said to have taken place in late 2015. That was some nine years prior to the trial of the actions.
2. In undertaking the assessment of evidence in these matters which relies upon the recollection of events which occurred so many years ago, I have considered it appropriate to place significant weight on the contemporaneous documents and objective conduct, and upon inferences which can properly be drawn from that evidence. In this regard, I respectfully adopt the approach which found favour with Martin CJ in Fazio v Fazio[88] in similar circumstances. His Honour explained the approach as follows:[89]

Given the inherent doubts which must attend oral recollections of events which occurred many years ago, in most instances decades earlier, and the partiality of most of the witnesses, I have placed significant weight upon contemporaneous documentary evidence and upon the inferences properly drawn from that evidence. Where it is possible to establish objective facts from that evidence, I have then assessed the oral testimony in light of the inherent probabilities of a particular version of events, in the context of the established objective facts.

1. To a similar effect are the statements of Smith J in Siah v Wong,[90] in which her Honour was dealing with an oppression case where the critical events occurred many years before the trial of the proceeding. Her Honour opined as follows:[91]

[33] The most reliable indication of people's knowledge of transactions and events is not their recollection of what was said by them and others several years ago, it is what they did and how they conducted themselves at the relevant time.

[34] Contemporaneous, or near contemporaneous, documents provide more valuable and revealing information than what may be flawed attempts at recollection of those facts by witnesses, in particular, those with an interest in the outcome of the litigation. (citations and footnotes omitted)

1. Smith J in Siah v Wong referred to with approval the observations of Hallen J in Evans v Braddock.[92] That matter concerned events which occurred years before the trial but also involved the giving of evidence about statements allegedly made by a person who was deceased at the time of the trial. Hallen J explored the fact finding process in some detail in his reasons, the terms of which I need not repeat here, but which I respectfully adopt.
2. The final point to emphasise at this stage is that the parties each invited the court to draw particular inferences as part of the fact finding process. For example, submissions were advanced by the parties as to the inferences which should be drawn by the court from the absence of various other participants, who were otherwise available to testify but did not. These participants included the lawyers involved in drafting some of the instruments, the valuers, the real estate agents, and other personnel within Reliance Capital.
3. Where appropriate, I will identify the inferences I have drawn as part of the fact finding process.

1. I turn next to summarise the factual findings which are common to both actions, concerning the nature of the businesses conducted by the plaintiff and by the defendants, and the lending relationship between the parties. I have also summarised my findings in relation to the role of Angas Securities.

1. Mr Masel has had a long history of being directly involved in the lending business, commencing in around 1976. Over that period of time, Mr Masel has had the sole authority within the Reliance Capital business to approve loans.
2. Mr Masel explained in his evidence the process by which Reliance Capital would consider, approve and establish commercial loans, the types of loans which would be made and the risks involved with those loans. I accept his evidence in this regard, which I have outlined below.
3. In general terms, Reliance Capital would loan funds in two scenarios, both being to commercial borrowers. In both scenarios, Mr Masel testified that the usual practice of the business was to take security for the financing arrangement over property in the metropolitan area.
4. In the first scenario, which represents the majority of the financing arrangements entered into by Reliance Capital, funds would be loaned on the basis of security against residential or commercial buildings, or land which has been developed and has individual titles. Mr Masel referred to these as the 'Standard Loans'.
5. The second type of loan, which he described as 'Development Loans', represented a small proportion of the financing arrangements of Reliance Capital. These arrangements involved loans for development projects for building on land which is already the subject of an individual title, or building on land that is yet to be serviced and sub‑divided to create individual titles of smaller blocks.
6. Reliance Capital adopted a loan process which was designed to be simple and quick, with no formal application required to be completed by a prospective borrower, although Mr Masel would need the details of the borrower's security and lending history. In this regard, Reliance Capital sought to distinguish itself from banks and other private lending institutions. Mr Masel marketed his business on the basis that it could provide funds more quickly and with less administrative processes than other lenders.
7. When assessing whether to grant a 'Standard Loan' to a prospective borrower, Mr Masel explained that he would primarily be concerned with the amount of the security being offered in support of the loan. If the security was sufficient, Mr Masel would look favourably at lending the funds. As for the form or type of the security in that scenario, Mr Masel would 'always seek a first ranking mortgage over the property' and would typically require personal guarantees from the directors of the borrower.
8. Mr Masel would examine the 'Loan to Value Ratio' or LVR when considering the quantum of funds to lend to a prospective borrower. The LVR is the loan amount divided by the estimate value of the secured property. Mr Masel explained that he would generally loan a particular amount if the LVR was 66% or lower based on the value he ascribed to the property.
9. As to the process of valuing properties, Mr Masel indicated that he did not always rely on third party property valuations, but would personally estimate the value based on information from the borrower, from his own enquiries with real estate agents and online property services, as well as from his own experience.
10. In relation to 'Development Loans', Mr Masel expressed a more conservative attitude to his lending practices. He explained that he may only lend up to about 50% of the value of the property in that scenario. Mr Masel explained that one basis for the higher risk in this scenario was the possibility that things might go wrong during the project, which were outside the lender's control, which could delay or halt a project. He also pointed to the possibility of solvency issues with a developer or with other key contractors on the project as another basis for the higher risk of such projects.
11. If the risks on such developments eventuated, Mr Masel explained that there could be delays in the sub-division of the land in question or with individual titles being issued. Mr Masel also referred to his experience that, where a borrower defaults on a 'Development Loan' and the development is not complete, there could be significant difficulties in Reliance Capital realising the security and it may be difficult to find a buyer for a partially completed development.
12. Given the higher risks associated with such projects, Mr Masel explained that he had always insisted on personal guarantees as part of the security arrangements for financing to be approved for 'Development Loans'. These guarantees, Mr Masel testified, would permit Reliance Capital to immediately call on them if the borrower defaulted on the loan, and so enable Reliance Capital to be repaid without having to enforce against the security.
13. Mr Masel testified that he had never agreed to delay recover of monies due under a 'Development Loan' as against a guarantor until after the realisation of other securities which were in place. Mr Masel further testified that he had never agreed to such a delay against a guarantor even in the case of 'Standard Loans'.
14. As to the setting of interest rates, Mr Masel explained that he set the rates with an eye to what other similar lenders are charging at the time for loans against similar security. He also ensured that loans issued by Reliance Capital had a lower rate and a higher rate.
15. As to the lower interest rate, Mr Masel would include such a rate to provide a discount and to incentivise the timely payment of interest by the borrower. He explained that interest was typically payable monthly in arrears, starting from the one month after the commencement date of the loan, and the principal was typically repayable at the maturity of the loan term, which was usually a two year period. Mr Masel sometimes described these types of loans as 'interest only' loans.
16. Mr Masel explained that, if a borrower repaid a loan early, then Reliance Capital would not receive the interest that it would have been paid over the entire course of the anticipated loan period. Accordingly, he would ensure that all loans provided by Reliance Capital would contain a non-refundable and upfront interest charge of generally 2%, to ensure Reliance Capital received some compensation for its work in considering, approving and establishing the loan, and in assuming the risk of granting the loan.

(2) The property development business of Mr Caratti and Ms Bazzo

1. I find that Mr Caratti has been involved in the business of property developments in this State since the late 1990s. In the course of that business, Mr Caratti dealt with many lenders, including the plaintiff.
2. Mr Caratti and Ms Bazzo worked together over this period to undertake a number of residential subdivisions. As Mr Caratti explained in his evidence, this involved them both locating properties which would have subdivision potential, then arranging finance to undertake the purchase of the properties, and thereafter to facilitate the subdivision process.
3. In general terms, Mr Caratti's role in the above process was to manage the construction of the subdivisions and Ms Bazzo's role was to manage the sale of the lots once they had been subdivided.
4. As explained by Mr Caratti, and it is not controversial, the property development process, in the past two decades, has been impacted by a number of macro-economic and global factors. These have included the property price cycles, the global financial crisis, the COVID‑19 pandemic, and the more recent shortages and cost increases associated with building materials and labour.
5. As a result of these matters, and the long timeframes associated with the development processes, Mr Caratti emphasised the importance of maintaining good working relationships with the people who provide goods and services for the purposes of the business, including those people who provide finance for purchasing or development costs.

(3) Lending relationship between the plaintiff and the defendants

1. Mr Masel and Mr Caratti first met the late 1990s or the early 2000s.
2. Since that time, Reliance Capital has had a history of lending money to businesses with which Mr Caratti is associated. These are, in broad terms, entities of which Mr Caratti or Ms Bazzo were directors or shareholders, or had decision making control in relation thereto. These entities have all been involved in the business of property development.
3. Indeed, at the time of the trial of these actions, Reliance Capital was involved in financing arrangements with several other entities associated with Mr Caratti, and held security over real property in which Mr Caratti or those entities held an interest.
4. Mr Masel and Mr Caratti identified the following entities as being some of those to whom Reliance Capital had loaned money over time, being entities associated with Mr Caratti:

(a) Mammoth Investments Pty Ltd;

(b) Hocking Land Development Company Pty Ltd;

(c) 119 Nicholson Road Pty Ltd;

(d) Mortimer Land Company Pty Ltd;

(e) Daleside Holdings Pty Ltd;

(f) Gucce Holdings Pty Ltd (which is now GH1 Pty Ltd);

(g) Appley Holdings Pty Ltd;

(h) Whitby Land Company Pty Ltd;

(i) Goldtune Investments Pty Ltd; and

(j) Keris Pty Ltd.

1. Mr Masel explained that, prior to the disputes which are the subject of the present actions, Reliance Capital had a 'good lending relationship' with Mr Caratti and his businesses, with 'dozens and dozens' of loans in place, for amounts in the range from $2,000,000 to $10,000,000.
2. All of the transactions involving Reliance Capital and the entities associated with Mr Caratti involved dealings and communications between Mr Masel and Mr Caratti, but typically not with Ms Bazzo. Mr Masel only had limited dealings with Ms Bazzo, when she was required to sign documentation.
3. Mr Masel explained that he had provided 'Development Loans' to Mr Caratti and his entities to assist him to develop and sub-divide properties as part of Mr Caratti's property development business. In these scenarios, Mr Masel explained that he had always required Mr Caratti or his entities to provide Reliance Capital with a first ranking mortgage security over the subject property and sometimes would require additional security as well.
4. Consistent with his practice for 'Development Loans' generally, Mr Masel testified that he would always require Mr Caratti to provide a personal guarantee which was readily and immediately enforceable should the borrower company default on the loan, to allow Mr Masel to call on the guarantee. Mr Masel understood that Mr Caratti had considerable personal wealth and resources from which he could recover when enforcing the guarantee.
5. Mr Masel considered that personal guarantees were necessary when lending money to entities associated with Mr Caratti for several reasons. Mr Masel considered such entities to be 'higher risk borrowers' relative to other borrowers with whom he transacted, and took the view he would be loaning the funds to Mr Caratti's entities for 'Development Loans', which carry the higher risks I have already mentioned.
6. In the course of his lending history with Mr Caratti and his entities, Mr Masel testified that the borrower entities would rarely pay interest on the due date under the loan arrangements. However, Mr Masel rarely caused Reliance Capital to issue default notices to the borrower as a result of these failures. He explained this on three bases, which I accept.
7. First, between 2000 and 2014, the borrower entities in question paid the principal back with the interest, albeit sometimes after the due date had expired.
8. Second, Mr Masel considered there was sufficient equity in the security which had been given in respect of those loans, which were also backed by personal guarantees.
9. Third, there could be difficulties associated with commencing formal recovery proceedings against a borrower entity, or seeking to enforce the securities or exercise rights of sale over property developments. Mr Masel adopted the position that even if the entities associated with Mr Caratti defaulted on interest payments, he regarded it as easier and better for the commercial relationship to extend additional time for the borrower to pay Reliance Capital.

(4) Refinancing of loans originally made by Angas Securities

1. In around 2014, the defendants had in place several financing arrangements with Angas Securities for the purposes of their property development business.
2. These financing arrangements were as follows.
3. First, Byford River had a loan arrangement in place with Angas Securities in respect of a development of certain property in Byford, situated on South Western Highway and Larsen Road.
4. Second, the Byford Land Company had a loan arrangement in place with Angas Securities in respect of a development of certain property in Southern River, situated on Holmes Street.
5. Third, Ms Bazzo had a loan arrangement in place with Angas Securities in respect of a development of three lots in Hocking, which are the subject of the Hocking Proceeding, the facts of which are addressed in Part VI below.
6. Fourth, Herdsman Technology had a loan arrangement in place with Angas Securities in respect of a development of certain property in Beckenham, situated on Brookland Street and referred to as the Waverley Estate.
7. Fifth, GH1 had a loan arrangement in place with Angas Securities in respect of the Anketell development, which is the subject of the Anketell Proceeding. This had been in place since November 2013, the facts of which are addressed under heading E below.
8. For reasons attributable to the business of Angas Securities, it was necessary for Angas Securities to either sell or reduce some of its loan book, which included the financing arrangements with the defendants and their entities.
9. This put in motion a process in which the loan arrangements between Angas Securities and each of Herdsman Technology, the Byford Land Company and Byford River, were assigned to the plaintiff. These assignments occurred on 23 April 2015, 30 June 2015, 25 November 2015 respectively. I find that it was Mr Caratti who approached Mr Masel to request that the plaintiff take the assignment of these loans.
10. The process by which the loan made by Angas Securities to GH1 was then assigned to the plaintiff, in February 2016, is also addressed under Heading E below.

E. Factual findings specific to the Anketell Proceeding

1. In this section of the reasons, I will set out my further factual findings for the purposes of the Anketell Proceeding, particularly in respect of the factual matters which have been agreed or which are non‑contentious.
2. The course of events commences in November 2013 when the Anketell Financing Arrangement was entered into, then addresses the events leading to the assignment of the loan facility and securities to the plaintiff in February 2016, and then explains the events occurring from that point through until around 2022.
3. As to the contentious factual matters, I will specifically address those later in the reasons when dealing with the pleaded claims and defences.

1. The original Anketell Financing Arrangement was entered into in November 2013 between Angas Securities, GH1, and both Mr Caratti and Ms Bazzo.
2. GH1 was the borrower company in the transaction and Mr Caratti and Ms Bazzo acted as guarantors. The underlying purpose of the transaction was to provide GH1 with finance to facilitate the Anketell development, being a residential subdivision in the suburb of Anketell.
3. The original financing arrangements are found in three instruments, the express terms of which are not in dispute. These financing arrangements are diagrammatically shown in Diagram A as referred to earlier in these reasons. The three instruments, which are respectively the loan agreement (Exhibit 17), the mortgage (Exhibit 18), and the general security agreement (Exhibit 19), are described below, together with their material terms.

1. The Anketell Loan Agreement dated 18 November 2013, bearing the logo of Angas Securities, was entered into between:[93]

(a) Angas Securities as the lender;

(b) Gucce Holdings (as GH1 was then known) as the borrower, both in its own right and as trustee for the Gucce Family Trust;

(c) Mr Caratti as a guarantor; and

(d) Ms Bazzo as a guarantor.

1. This instrument includes the guarantee terms to which both Mr Caratti and Ms Bazzo agreed, in cl 12. The loan agreement was for the sum of $2,012,000.[94] The term of the loan was for 12 months with the monies to be repaid on 31 October 2014.[95]
2. The Anketell Loan Agreement was executed by Ms Bazzo as the sole director and company secretary for Gucce Holdings. In addition, Ms Bazzo separately executed the agreement in her capacity as a guarantor, as did Mr Caratti. Ms Bazzo and Mr Caratti also signed the agreement adjacent to the 'Guarantor Acknowledgment' in cl 13. The agreement was not formally executed by Angas Securities, but nothing turns on this.
3. The instrument is a sophisticated and detailed commercial document. It is some 23 pages in length, containing 38 separate clauses and a schedule which identifies the parties, the loan amount, the term of the loan, the monthly instalment amounts, the interest rates, the primary security, the identity of the guarantors, the collateral security, and certain other matters. Several of the sub-clauses within cl 15 of the Anketell Loan Agreement were amended by hand prior to execution, with certain language deleted and additional language included.[96] The amendments were initialled by the parties.
4. The first paragraph of the Anketell Loan Agreement, which is not described as a recital but appears to have that purpose, provides as follows:

The Lender as defined in the Schedule has agreed to lend and the Borrower as defined in the Schedule has agreed to borrow certain funds being the Loan Amount as defined in the Schedule upon the terms and conditions of this Loan Agreement. The Guarantor (if applicable) has agreed to guarantee the Loan Amount on the terms of this Loan Agreement.

1. Pursuant to the Anketell Loan Agreement, the borrower agreed to pay the 'Monies Hereby Secured' in full to the plaintiff upon expiration of the term of the loan, being the a period of 12 months.[97] Clause 2 states:
   1. TERM OF LOAN

The Borrower agrees to pay the Moneys Hereby Secured in full to the Lender upon the expiration of the Term.

1. The term 'Monies Hereby Secured' was defined to mean 'the Loan Amount together with all monies which are or become owing or payable to the Lender by the Borrower either alone or in conjunction with some other entity on any account whatsoever and includes interest on all such monies (including capitalised interest)'.[98]
2. The payment of interest was addressed in cl 4 of the Anketell Loan Agreement. By cl 4.1, GH1 agreed to pay interest calculated on the 'Monies Hereby Secured'. The following additional express clauses should be mentioned:

(a) interest was calculated on the outstanding balance of the 'Moneys Hereby Secured' each month and payable monthly in advance (cl 4.2 and cl 4.3);

(b) any interest calculated at the higher rate that was unpaid together with costs or expenses may at the option of the lender be capitalised on the last day of each month and added to the 'Monies Hereby Secured' and bear further interest at the higher rate from the first day of the next month (cl 4.7); and

(c) if the whole of the 'Monies Hereby Secured' were not repaid on or before expiry of the term of the loan, interest shall be calculated to the last day of the month in which payment is made plus interest on the 'Monies Hereby Secured' for one month at the higher rate (cl 4.8).

1. The express terms of cl 4 of the Anketell Loan Agreement are as follows:
   1. CALCULATION AND PAYMENT OF INTEREST

4.1. The Borrower agrees to pay to the Lender Interest calculated on the Moneys Hereby Secured at the Higher Interest Rate per annum PROVIDED THAT the Higher Interest Rate may be adjusted by the Lender in accordance with Clause 4.6.

4.2. Interest shall be calculated and adjusted on the maximum balance of the Moneys Hereby Secured that is outstanding each month during the Term.

4.3. The Borrower shall pay interest monthly in advance to the Lender. Interest payments are due and payable on the first business day of each calendar month during the continuance of this Loan Agreement. Interest is calculated and payable monthly so any principal balance outstanding on or after the first day of any calendar month will attract Interest for the full month.

4.4. The first interest instalments shall be deducted from the loan proceeds and calculated on a pro rata basis:-

4.4.1. from the Commencement Date to the end of that month; and

4.4.2. may include the next full month's interest payment and such ensuing months as may be requested by the Lender and agreed to in writing by the Borrower.

4.5. The Borrower may pay and the Lender will accept interest calculated at the Lower Interest Rate PROVIDED THAT:-

4.5.1. interest instalments are tendered promptly on the date due;

4.5.2. all other obligations of the Borrower, the Guarantor and the Mortgagor are then being met pursuant to this Loan Agreement and the Securities;

4.5.3. all of the Lender's requirements set out in the Transaction Documents are being met;

4.5.4. the Term has not been extended pursuant to clause 6.1.2 of this Loan Agreement; and

4.5.5. the Lower Interest Rate may be adjusted by the Lender in accordance with Clause 4.6.

4.6 The Lender may Increase the rate of either the Higher Rate Interest or the Lower Rate Interest or both such rates by delivering a notice of such decision to the Borrower provided that the Lender shall not increase either rate by more than 3.00% in any one notice. The Lender may, but is not obliged to, give reasons in the notice for the increase.

4.7 Any interest calculated at the Higher Rate remaining unpaid together with any costs or expenses incurred by the Lender may at the option of the Lender be capitalised on the last day of each month and be added to the Moneys Hereby Secured and shall then bear further interest accordingly at the Higher Rate from the first day of the next month.

4.8 If the whole of the Moneys Hereby Secured shall not be repaid to the Lender on or before the expiry of the Term then the Borrower shall be liable to pay to the Lender interest calculated to the last day of the month in which the payment is made plus interest on the Moneys Hereby Secured for one (1) month at the Higher Rate.

1. The Anketell Loan Agreement incorporated clauses addressing the payment arrangements (cl 5), the extension of the agreement (cl 6), and liability for costs and expenses (cl 7). The terms of cl 5.4 are particularly relevant to the defence raised by the defendants concerning the Waverley Estate issue, which I will address in due course. The express terms of cl 6 and cl 7 of the agreement are relevantly as follows:
   1. EXTENSION OF THE LOAN AGREEMENT

6.1. If the Moneys Hereby Secured are not paid in full to the Lender on or before the due date for payment then the Term may be extended at any time:-

6.1.1 by mutual agreement of the Lender and the Borrower; or

6.1.2 at the absolute discretion of the Lender for a further period or periods (not exceeding in aggregate a total of 12 months) as the Lender may notify in writing to the Borrower.

6.2. If the Term is extended then the Borrower must pay an Extension Fee to the Lender and unless otherwise agreed interest at the Higher Rate.

6.3. The Extension Fee shall be charged to the Borrower's account immediately upon the Term being extended and shall form part of the Moneys Hereby Secured.

6.4. An Extension Fee may be charged more than once. It will be due each time that the Term is extended.

7 .1 The Borrower will pay to the Lender on demand all stamp duty and all costs and charges and expenses (including GST) incurred by the Lender in the collection of the Loan Agreement and interest or otherwise incurred by the Lender in the exercise or attempted exercise or purported exercise of all or any of the powers, authorities or discretions in this loan Agreement or the Letter of Offer or the Securities or to give effect to the provisions of the same.

7.2 The Borrower will also pay on demand all costs, charges and expenses otherwise incurred by the Lender by reason of any demand made or proceedings commenced or threatened to be commenced by any person under the provisions of the Family Law Act 1975 (Cth.) which affects or which may affect the Securities or any of the personal undertakings and covenants on the part of the Borrower to be performed.

7.3 The liability for costs under Clause 7.1 and 7.2 shall include the Lender's costs on a solicitor and own client basis. These costs shall be included in the Moneys Hereby Secured and shall thereafter carry interest In the manner specified in Clause 4.7 of this Loan Agreement.

1. Clause 8 of the Anketell Loan Agreement is headed 'Securities' and provides that GH1 and each guarantor 'undertakes a personal liability to pay the Moneys Hereby Secured pursuant to the Transaction Documents', being additional to any liability under any 'Securities' taken in respect of the loan.[99] The term 'Securities' is defined to mean the 'Primary Security' and the 'Collateral Security' (which are identified in the Schedule to the agreement as the Anketell Mortgage and the Anketell GSA respectively), and 'any other mortgages guarantees indemnities charges or undertakings provided to the Lender to support this Loan Agreement'.[100]
2. Clause 8 states as follows:
   1. SECURITIES

8.1. The Borrower and each Guarantor undertakes a personal liability to pay the Moneys Hereby Secured pursuant to the Transaction Documents. This is additional to any liability under any Securities taken in respect of the loan.

8.2. The Lender may take action for the enforcement of any of the Securities. The Lender may in its discretion sue for and take any other proceedings against the Borrower or any Guarantor personally for the recovery of any amount due and payable at any time.

8.3. The payment of all moneys payable by the Borrower and each Guarantor under the Transaction Documents and the performance and observance of all the Borrower's and each Guarantor's obligations under the Transaction Documents shall be secured by the Securities.

8.4. The terms and conditions of the Securities shall be incorporated and form part of this Loan Agreement.

8.5. In the event of default the Lender is not obliged to enforce any of the Securities and may in its discretion sue for and take any other proceedings against the Borrower personally for the recovery of any amount due and payable at any time without prejudice to the Lender's rights to enforce any of the Securities at any time.

1. Several cross-representations are then identified in cl 10 of the Anketell Loan Agreement, as follows:
   1. REPRESENTATIONS OF THE BORROWER AND GUARANTOR

The Borrower and the Guarantor each represent to the Lender that:-

10.1. It has relied on its own skill and judgment in determining to enter into this Loan Agreement and accepting the financial and legal terms proposed by the Lender.

10.2. It has not relied on any statements, representations or warranties by the Lender.

10.3. All of the information provided by the Borrower and the Guarantor was correct as at the date made and is not misleading to the best of its knowledge and belief.

10.4. All documents (including certified copies) submitted to the Lender by the Borrower and the Guarantor were genuine.

10.5. (with respect solely to the Borrower) it is registered or required to be registered for GST purposes and will notify the Lender immediately if it ceases to be registered or required to be registered for GST purposes.

1. The express terms of the Anketell Loan Agreement included a guarantee in favour of the plaintiff. The first and second defendants were the guarantors both jointly and severally under the Anketell Loan Agreement (cl 1.1). The defendants agreed to the following terms:[101]

(a) the defendants guaranteed payment of the 'Monies Hereby Secured' under the Anketell Loan Agreement and Anketell Mortgage (cl 12.1);

(b) the defendants agreed that if the 'Monies Hereby Secured' were not paid by the borrower on time, that they must pay the 'Monies Hereby Secured', when due and payable (cl 12.1); and

(c) the defendants agreed to pay the lender on demand all expenses incurred in enforcing its rights against any guarantor, amounts payable under any indemnity provided by the guarantor, and amounts due to the lender under any other provision of the Anketell Loan Agreement and Anketell Mortgage (cl 12.2.1, cl 12.2.2 and cl 12.2.3).

1. In addition to payment obligations, the Anketell Loan Agreement also included terms to the following effect:[102]

(a) where the guarantor has provided a mortgage, the lender was entitled to resort to the mortgage at any time (cl 12.3.1);

(b) the lender may rely on the guarantee contained in clause 12 of the Loan Agreement separately from or in conjunction with any other securities, rights and remedies the lender (cl 12.4);

(c) the lender's rights under the guarantee did not merge in any other securities, security interests, rights, or remedies (cl 12.4); and

(d) the defendants as guarantors agreed to keep the lender indemnified from and against all and any loss damage cost charge or expense incurred by the lender in connection with or in consequence of or arising out of any event of default and agreed to pay all monies due to the lender by reason of the indemnity on demand (cl 14.1).

1. Although summarised above, it is necessary to set out the express terms of the Anketell Loan Agreement, to the extent relevant, in cl 12, cl 13 and cl 14:
   1. GUARANTEE

Each Guarantor acknowledges:

12.1. Each Guarantor guarantees that the Borrower will pay to the lender the Moneys Hereby Secured under the Transaction Documents to which it is a party on time. The Guarantor agrees that if the Borrower does not, the Guarantor must pay the Moneys Hereby Secured, when due and payable.

12.2. Each Guarantor also agrees to pay the Lender on demand:

12.2.1. all expenses the Lender incurs in enforcing its rights against any Guarantor;

12.2.2. the amounts payable under any indemnity provided by the Guarantor in any Transaction Document to which it is a party; and

12.2.3. amounts due to the Lender under any other provision of each Transaction Document to which it is a party imposing liability on the Guarantor.

12.3. Where the Guarantor has provided a mortgage, charge or other Security or Security Interest to cover the Guarantor's liability under any Transaction Document, the Lender is entitled to:

12.3.1. subject to the terms of that mortgage, charge or other Securities, resort to the mortgage, charge or other Security or Security Interest at any time; and

12.3.2. keep any mortgage, charge or other Security or Security Interest for a reasonable time after all the amounts payable under the Transaction Documents have been finally paid in full and for as long after that as the lender thinks necessary for the Lender to be satisfied that the Guarantor is unlikely to have any liability to the lender under any Transaction Document.

12.4. The guarantee provided by the Guarantor in this clause 12 is in addition to all other Securities, Security Interests, rights and remedies the Lender has at any time and the Lender may rely on it separately from or in conjunction with any of them as the Lender sees fit and the Lender's rights under the guarantee will not merge in any such other Securities, Security Interests rights or remedies.

12.5. The Guarantor's obligations are not affected by anything that would otherwise affect them, including:

12.5.1. death, mental or physical disability, legal incapacity, or insolvency of the Borrower, any other Guarantor or any other person; or

12.5.2. any action of the lender including any release, variation, failure to perfect or register, or other dealing with any Securities or the fact that the lender does anything which may affect the obligations of any Transaction Party or any other person (including any concession, action or inaction).

12.6. The guarantee provided by the Guarantor continues to cover the Guarantor's liabilities (whenever incurred) after any death, disability or insolvency of the Guarantor.

12.7. Where any payment made to the Lender is found to be void or voidable or a preference for any reason, such payment does not discharge any amounts that the Borrower owes to the Lender, and the Guarantor continues to be liable for such amounts.

12.8. This guarantee is a continuing security and is not discharged by any partial payment or settlement of accounts.

12.9. During any period in which the Guarantor or the Borrower has any liability to the Lender for any reason, a Guarantor must not without the Lender's prior written consent:

12.9.1. recover any amount in competition with the Lender against the Borrower or another Guarantor under any Securities, in the event of an insolvency, under any right of contribution or indemnity, or in any other way; or

12.9.2. claim any benefit in any security provided by any other Guarantor; or

12.9.3. take over any of the Lender's rights as a creditor; or

12.9.4. require the Lender to resort to any security at any time.

12.10. The Guarantor waives in favour of the Lender any rights the Guarantor has against the Lender or any other Guarantor or any other person (other than the Borrower) which would in any way reduce the amount which the Lender can recover from the Guarantor or any other such person.

12.11. Nothing in clauses 12.9 or 12.10 is to be construed as defeating or is intended to defeat an existing or anticipated order by the Family Court of Australia.

Each Guarantor acknowledges that:

13.1. the Lender has entered into the Transaction Documents at its request and each Guarantor gives the guarantee and agrees to the other provisions in return for the Lender entering into the Transaction Documents;

13.2 the obligations of each Guarantor are set out throughout the Transaction Documents (including the indemnity in clause 14) and are not limited to the provisions of these clauses 12 and 13;

13.3. the Lender has recommended that each Guarantor obtain independent legal advice, consider obtaining independent financial advice and make its own enquiries about the creditworthiness and financial position of each Transaction Party;

13.4. if the Borrower does not pay any amount payable by it under any Transaction Document, then each Guarantor must pay that amount;

13.5. where there is more than one Guarantor the Guarantors are liable both together and separately on their own; and

13.6. any Guarantor is liable to the Lender even if any other Guarantor or other person does not become or ceases to be liable for amounts due by the Borrower to the Lender for any reason.

Each Guarantor jointly and each of them severally covenants and agrees with the Lender to indemnify and keep indemnified the Lender from and against all and any loss damage cost charge or expense or other liability whatsoever and howsoever incurred by the Lender in connection with or in consequence of or arising out of any Event of Default or any breach or default or attempted breach or default by the Borrower of any of the obligations of the Borrower under any of the Transaction Documents and the Guarantor will pay all monies due to the Lender by reason of this indemnity on demand.

1. There are additional clauses in the Anketell Loan Agreement which should be mentioned, being cl 15, cl 20, cl 21, cl 29 and cl 34, which provide as follows:
   1. EVENTS OF DEFAULT

Each of the following constitutes an event of default for the purposes of this Loan Agreement and each Transaction Document:-

15.1 The Borrower fails to pay when due any monies payable under this Loan Agreement or any other Transaction Document at the times and in the instalments specified and does not rectify such failure within 14 days of (sic) recieving a written demand requiring it to do so.[103]

15.2 The Borrower or any Guarantor defaults in the performance or observance of any of their obligations under any transaction document and does not remedy that default within 14 days of (sic) recieving a written demand requiring it to do so.[104]

...

20.1. This Loan Agreement together with the Letter of Offer contain the entire agreement between the parties with respect to this subject matter any other prior agreement covenant or understanding between the parties. No further or other terms or agreements are deemed to arise between the parties by way of collateral or other agreements whether by reason of any promise, representation, warranty or undertaking given or made by either party to the other on or prior to the execution of this Loan Agreement other than the Letter of Offer. The existence of any such collateral or other agreement is negatived by this Loan Agreement.

20.2. Any provisions which may be implied In this Loan Agreement are expressly excluded. They will not be implied except to the extent that such provisions cannot be excluded under law.

20.3. Any special or other conditions set out in the Letter of Offer shall be incorporated into this Loan Agreement. Should any inconsistency occur then the terms of the letter of Offer shall prevail.

No amendment of this Loan Agreement or the Letter of Offer shall bind the parties unless made in writing and expressed to be supplemental to or in substitution for the whole or a part of this Loan Agreement.

Should the Lender become liable or accountable to make any payment whatsoever to the Borrower or the Guarantor then such liability shall not entitle the Borrower or the Guarantor to withhold any payment due to the Lender under this Loan Agreement and shall not be the subject of any defence, set-off or counter-claim by the Borrower or the Guarantor in respect of this Loan Agreement.

The Borrower shall pay all the costs of and incidental to the preparation of this Loan Agreement or to give effect to the provisions of this Loan Agreement (including all legal costs on solicitor/own client basis).

1. The second instrument executed on 18 November 2013 as part of the finance arrangements with Angas Securities was a mortgage instrument over the property at 82 Treeby Road, Anketell. This is the Anketell Mortgage.[105] The mortgage was entered into between Angas Securities as mortgagee and the second defendant, Ms Bazzo, as mortgagor.
2. The property at 82 Treeby Road (the Anketell Property) is more fully described as Lot 35 on Diagram 32446 being the whole of the land described in Certificate of Title 1719 Folio 747.[106]
3. This first registered mortgage secured the above loan made by Angas Securities to GH1. The operative terms of the Anketell Mortgage relevantly provide as follows:
   1. CONSIDERATION AND MORTGAGE

1.1 You, the mortgagor, acknowledge giving this mortgage and undertaking obligations and giving rights under this mortgage for valuable consideration received from the Mortgagee.

1.2 For the purpose of securing to the Mortgagee the payment of the amount owing, you mortgage to the Mortgagee all your estate and interest described in this mortgage in the land described in this mortgage, together with each structure, fixture or improvement on it or fixed to it, subject to the encumbrances described in the mortgage.

1. The Anketell Mortgage was accompanied by a standard verification of identity letter from the solicitors acting for GH1 and Ms Bazzo, being Torrens Legal. The letter is dated 2 December 2013.[107]

1. The third instrument executed on 18 November 2013 as part of the finance arrangements with Angas Securities was the Anketell Security Agreement.[108] The document bears the logo of Angas Securities.
2. The instrument was executed by Ms Bazzo as the sole director and company secretary of Gucce Holdings (as GH1 was then known).
3. As with the Anketell Loan Agreement, the instrument is a sophisticated and detailed commercial document. The Anketell Security Agreement is 39 pages in length, containing a schedule and some 69 operative clauses (including an opening clause described as 'Background'). Clause 1.1 of the Anketell Security Agreement provides as follows:

1.1 This Deed is issued in consideration of Angas Securities Limited ACN 091 942 728 ('the Secured Party') at the request of the party specified in the First Schedule ('the Grantor'): -

1.1.1 forbearing to sue in respect of advances, financial accommodation or facilities made, granted or afforded in the past;

1.1.2 making, granting or affording advances, financial accommodation or facilities; or

1.1.3 agreeing to make, grant or afford advances, financial accommodation or facilities in the future;

upon such terms and conditions and in such manner as the Secured Party may from time to time specify or require subject (inter alia) to the condition that the Grantor issues this Deed to the Secured Party by way of security upon and subject to the terms and conditions of this Deed.

1. Within the First Schedule to the Anketell Security Agreement, the term 'Secured Property' was defined to mean 'All present and future acquired property of the Grantor'.
2. Pursuant to cl 5 of the Anketell Security Agreement, subject to any present or future written agreement between GH1 and Angas Securities, Angas Securities:

...may advance financial accommodation comprised in the Monies Secured in such amounts at such times and in such manner as the Secured Party may think fit provided always that the Secured Party is not at any time obliged to make any such advance if at he time such advance is called for an Event of Default has occurred and subsists.

1. On 10 December 2014, a fourth instrument entitled 'Variation and Extension of Loan Agreement' was executed by Ms Bazzo as the sole director and company secretary of GH1, and by Mr Caratti and Ms Bazzo as guarantors.[109] The agreement was not executed by the lender. This is the Anketell Variation and Extension Agreement, as earlier described in these reasons.
2. The agreement to extend the loan was the subject of an agreed fact between the parties.[110] The instrument itself is a short document, consisting of a schedule and five short clauses. The document bears the logo of Angas Securities.
3. By the terms of the Anketell Variation and Extension Agreement, Angas Securities agreed to extend the loan to GH1 for a further term of one year, until 31 October 2015. The extension agreement included a further advance to GH1 of the sum of $400,000.[111] Within the schedule, the guarantors are identified as Mr Caratti and Ms Bazzo, the primary security is referred to as the first registered mortgage over the 'Residential Subdivision site at 82 (lot 35) Treeby Road Anketell', and the collateral security is described as the 'General Security Agreement over Gucce Holdings Pty Ltd'.
4. The operative terms of the Anketell Variation and Extension Agreement state as follows:
   1. the Borrower agrees that save as varied by this Agreement; the terms of the Loan Agreement (together with all associated transaction documents including the Letter of Offer and the Securities) remain unchanged;
   2. the Borrower declares that, save as expressly notified to the Lender in writing, the information given to the Lender prior to entering into the Loan Agreement is still correct and not misleading in any material particular; and
   3. the Borrower consents to the Lender giving to the Guarantor (if any) a copy of this Agreement together with any notice the Lender has served on the Borrower and a copy of the Borrower's statement of account with the Lender.
   4. the Guarantor (if any) acknowledges:

4.1 that the terms of the guarantee remain in full force and effect and that where there is more than one guarantor the failure to obtain the consent of any one or more guarantors to this Agreement shall not in any way prejudice the operation of the guarantee;

4.2 that under the terms of the Loan Agreement, the Lender also has the right to unilaterally extend the Term of Loan and that the exercise by the Lender of its right to unilaterally extend the Term of Loan form time to time shall not in any way prejudice the operation of the guarantee.

1. the Borrower acknowledges that the Term of the Loan will not be extended until each of the Fees specified in the Schedule has been paid to the Lender.
2. Angas Securities thus advanced to GH1 the total sum of $2,412,000 under the Anketell Loan Agreement and the Anketell Variation and Extension Agreement. This is an agreed fact in the action.[112]

(6) Events leading to the assignment to Reliance Capital

1. I next turn to the events in late 2015 and early 2016 through which Reliance Capital became involved in this financing arrangement. As earlier noted, during 2015, three other finance arrangements between Angas Securities and the defendants were assigned to the plaintiff. The assignment of the Anketell Loan Agreement was to become the fourth such assignment.
2. It is an agreed fact that, between November 2015 and February 2016, Mr Masel discussed the proposed assignment of the Anketell Loan Agreement with Mr Caratti.[113] It is also an agreed fact that an assignment deed was later executed on 29 February 2016.[114] There is a dispute as to the precise course of events in between, however, and the substance of the conversations between the parties.
3. I find that the course of events unfolded as set out below, and I will address the disputed conversations later in these reasons.

Mr Caratti approached Mr Masel in October 2015

1. During October 2015, I find that it was Mr Caratti who contacted Mr Masel in order to enquire whether Reliance Capital would agree to take an assignment of the Anketell Loan Agreement from Angas Securities. Mr Caratti informed Mr Masel at the time that GH1 was in default in payment of interest amounts under the Anketell Loan Agreement to Angas Securities, and he indicated to Mr Masel that Angas Securities was putting pressure on Mr Caratti to remedy this default.
2. Mr Caratti further informed Mr Masel at the time that he needed to pay out Angas Securities to 'get rid of the pressure it was putting on him'. As earlier explained, Angas Securities was looking at the time to sell or reduce its loan book.
3. Mr Caratti also informed Mr Masel that the Australian Taxation Office (the ATO) already had a second registered mortgage over the Anketell Mortgaged Property and it would accordingly be necessary for Reliance Capital to take an assignment of the pre-existing first ranking mortgage in favour of Angas Securities, rather than register its own mortgage.
4. I accept that, given the circumstances, Mr Masel had some reservations in agreeing to the assignment of the facility and securities, but I find that Mr Masel was comforted by the presence of the guarantee in the Anketell Loan Agreement given by both defendants in favour of the borrower.

Reliance Capital issues the letter dated 27 November 2015

1. On 27 November 2015, a letter was sent by the plaintiff to GH1 and Ms Bazzo, headed 'Mortgage - 82 Treeby Road Anketell'.[115] The letter was signed by Mr Masel and included signature blocks for both Ms Bazzo and Mr Caratti to sign at the bottom of the second page of the letter, beneath the wording 'We wish to except [sic] above finance terms and request you proceed to documentation'.
2. The full terms of the letter are set out below:

We wish to confirm we have approved a loan to take transfer of the existing loan you have with Angus [sic] Securities over the above property on the following conditions.

Notwithstanding we are taking over the existing terms and conditions of the Angus [sic] loan we have agreed on the following -

1. The amount will be the amount required to payout Angus [sic] on the day of transfer (expected to be about $2,450,000)
2. Interest - The angus [sic] loan has recently matured and as such the High Rate of 21.5% would apply. Instead we will agree to charge you interest calculated as follows

Lower Rate - 15.75%

Higher Rate -18.75%

1. In addition to the existing security, guarantees and additional security will be required as follows
   1. A mortgage (subsequent to our existing mortgage) over Tina Bazzo's property at Tuxedo Estate Hocking being

1. A mortgage (subsequent to our existing mortgages) over Herdsman Technology Pty Ltd property at Waverley Estate Beckenham, being all the remaining titles that this office has current mortgages over - Approximately 20 titles.
2. A mortgage (subsequent to our existing mortgages) over Byford Land Company Pty Ltd property at lot 3 Holmes Street Southern River being C/T 1654/444.

1. This approval is subject to our solicitor being satisfied that all the above terms can be incorporated into documentation that will not affect our security standing and priority deed considering the existing second mortgage over Treeby Road, and that there are no impediments on the various titles that would prevent lodgement of any required documentation.

Should you be agreeable to our loan on the above basis please sign below and return and we will then instruct our solicitors to commence documentation.

1. As is evident from the above, the letter conveyed a proposal to GH1 and to Ms Bazzo by which the plaintiff would take over the loan advanced by Angas Securities on certain terms. Those terms included the provision of 'guarantees and additional security'.[116] The additional securities are described in items 3(i), (ii) and (iii) in the letter as being mortgages over three properties at the Tuxedo Rise Estate in Hocking (owned by Ms Bazzo), a mortgage over several titles at the Waverley Estate in Beckenham held by Herdsman Technology, and a mortgage over land in Southern River held by the Byford Land Company.
2. The letter also proposed that interest on the assigned loan would be charged at two rates, with a lower rate of 15.75% and a higher rate of 18.75%.[117]

Reliance Capital issues the letter dated 9 December 2015

1. The letter dated 27 November 2015 was, in effect, superseded by a later letter, sent by the plaintiff on 9 December 2015.
2. I find that the plaintiff sent a letter dated 9 December 2015 to GH1 Pty Ltd and to Ms Bazzo which was headed 'Mortgage - 82 Treeby Road Anketell'.[118] The letter includes a modification to the earlier letter. Indeed, in the opening paragraph, the letter states that it takes the place of 'our earlier 27/11/2015 approval letter as have added in the Release of Security Clause'.
3. The letter was signed by Mr Masel and again included signature blocks for both Ms Bazzo and Mr Caratti to sign at the bottom of the second page of the letter 'For and on behalf of the Borrowers', beneath the wording 'We wish to except [sic] above finance terms and request you proceed to documentation'.
4. It is not necessary to set out full terms of the letter. The only differences relative to the earlier letter are the addition of the first paragraph and the addition of the 'Release of Security' clause which was inserted after item 3(iii) in the letter, both of which are set out below:

This letter takes the place of our earlier 27/11/2015 approval letter as we have added in the Release of Security Clause.

...

Release of Security - We agree that the additional security mentioned in i) and iii) above will be released once the existing contracts of sale are settled over Byford River Pty Ltd's land at 777 and 783 South Western Hwy Byford and 3 Larsen Road Byford. These properties are being sold for $4.lM and the settlement will release equity in security ii) above to make it alone adequate to support the subject loan over 82 Treeby Road Anketell.

1. The letter dated 9 December 2015 was signed by both Mr Caratti and Ms Bazzo, with a date of 23 February 2016.
2. The terms of the proposal in the letter dated 9 December 2015 embodied the basis on which the parties proceeded to finalise the documentation to give effect to the assignment. The 'additional securities' find express mention in the schedule to the deed of guarantee which was executed on 29 February 2016, and which is described below.
3. There are disputed conversations which are alleged to have occurred between Mr Masel and Mr Caratti prior to the Anketell Assignment Deed being executed, which I will address in due course.

1. On 29 February 2016, in consideration of the payment of the sum of $2,683,020.33 by the plaintiff, Angas Securities agreed to assign to the plaintiff all its right, title and interest in the Anketell Loan Agreement, the Anketell Variation and Extension Agreement, the Anketell Mortgage and the Anketell Security Agreement (which I will collectively refer to as the Anketell Securities).
2. The agreement to assign and transfer the Anketell Securities to the plaintiff was contained in a deed of assignment executed by Angas Securities, the plaintiff, GH1, Mr Caratti and Ms Bazzo on 29 February 2016, which I have referred to above as the Anketell Assignment Deed.[119] The deed is an 8 page document, including brief recitals and 13 operative clauses. The instrument was executed by a director and company secretary for Angas Securities, by a director and company secretary for the plaintiff, by Ms Bazzo as the sole director and company secretary for GH1, and by both Mr Caratti and Ms Bazzo in their personal capacities.
3. It is an agreed fact that GH1 and the defendants as guarantors consented to the assignment of the Anketell Securities and agreed to be bound for the due payment and performance of its obligations and liabilities referred to in the Anketell Securities.[120]
4. On 29 February 2016, the Anketell Mortgage was transferred to the plaintiff. The transfer was registered pursuant to the Transfer of Land Act 1893 (WA) (TLA) on 29 February 2016, being document N263219.[121]

1. To add to the suite of securities, a further guarantee instrument was executed on 29 February 2016.
2. On that date, the plaintiff entered into a deed of guarantee with Ms Bazzo, Herdsman Technology and the Byford Land Company, all as guarantors, and also with the borrower, GH1. Mr Caratti was not a signatory or party to this instrument, which I have referred to as the 2016 Anketell Deed of Guarantee.[122]
3. The 2016 Anketell Deed of Guarantee was prepared by Taylor Smart, the solicitors for the plaintiff. The instrument consists of two recitals, nine operative clauses, and a schedule. The instrument was executed by Mr Masel and Mr Tony Masel for the plaintiff, by Mr Caratti as the sole director and company secretary for Herdsman Technology, by Ms Bazzo in her own capacity, and also by Ms Bazzo as the sole director and company secretary for the Byford Land Company and GH1.
4. The recitals to the 2016 Anketell Deed of Guarantee state that:[123]

(A) The Beneficiary has at the request of the Guarantor made available loan facilities to the Debtor pursuant to a loan agreement (as amended, extended and assigned) as described in Item 1 of the Schedule ('the Agreement').

(B) In order to better secure the obligations of the Debtor the Guarantor has agreed to extend this Guarantee to the Beneficiary in support of the Debtor's liabilities and obligations under the Agreement.

1. By the 2016 Anketell Deed of Guarantee, the guarantors, which included Ms Bazzo, jointly and severally guaranteed:

(a) the due and punctual payment of all monies owed or payable by GH1 Pty Ltd to the plaintiff under the Securities and the Assignment Deed (cl 2.1.1, Schedule to the 2016 Anketell Deed of Guarantee);

(b) payment of such monies immediately on demand should GH1 Pty Ltd default in the payment of such monies (clause 2.1.1);

(c) the due and punctual performance by GH1 Pty Ltd of its obligations under the Anketell Securities and the Anketell Assignment Deed (cl 2.1.2); and

(d) to indemnify and keep indemnified the plaintiff against all losses, damages, costs, and expenses which may be incurred by reason of the default of GH1 Pty Ltd (cl 2.1.2).[124]

1. The guarantors were required to pay the plaintiff on demand all costs and expenses (including legal fees and expenses) incurred in the enforcement of the obligations under the 2016 Anketell Deed of Guarantee (cl 5.2).[125]
2. The guarantors acknowledged that the amount owed by GH1 to the plaintiff as at 29 February 2016 was the total sum of $2,683,020.33 which comprised the principal sum of $2,412,000.00 and arrears of interest and costs in the sum of $271,020.33 (clause 9.1, item 3 of the schedule to the 2016 Anketell Deed of Guarantee).[126]
3. The express terms of the instrument included the following:
   1. Guarantee

2.1 The Guarantor hereby jointly and severally unconditionally guarantees to the Beneficiary:

2.1.1 the due and punctual payment by the Debtor of all monies now or hereafter owing or payable or to become owing or payable to the Beneficiary by the Debtor pursuant to or relating to the Agreement to the intent that should the Debtor default in the due and punctual payment of such monies, or any part thereof, the Guarantor shall pay such monies immediately on demand, and to the person or persons to whom such monies ought to be paid; and

2.1.2 the due and punctual observance and performance by the Debtor of all its other liabilities, obligations, and agreements (whether contingent, prospective or actual) to the Beneficiary pursuant to or relating to the Agreement, to the intent that should the Debtor make default or fail in the performance or observance of any of its said liabilities, obligations, and agreements the Guarantor shall indemnify and keep indemnified the Beneficiary against all losses, damages, costs and expenses which may be incurred, suffered or sustained by the Beneficiary by reason of such default or failure on the part of the Debtor and shall pay to the Beneficiary on demand all such losses, damages, costs and expenses which the Beneficiary may incur, suffer or sustain as a result thereof, whenever and as often as such default or failure shall occur,

(all of which monies, liabilities, obligations and agreements specified in this Clause 2.1 are hereinafter referred to as 'the Debtor's Obligations').

2.2 This Guarantee is a continuing guarantee and shall be irrevocable and remain in full force and effect until the whole of the Debtor's Obligations have been paid or satisfied.

2.3 Any condition or agreement on the part or in favour of two or more persons shall be deemed to bind them or be in favour of them both jointly and each of them severally, and the Beneficiary may at any time and from time to time proceed against either, or both or any or all of the Guarantor in respect of the Debtor's Obligations as the Beneficiary may choose in its absolute discretion, and the Beneficiary shall not be obliged to make any claim against all the Guarantors.

2.4 For the purposes of securing the Guarantor's obligations pursuant to this guarantee:-

2.4.1 Herdsman Technology shall grant a third registered mortgage to the Beneficiary over the properties described in Item 2(a) of the Schedule;

2.4.2 Bazzo shall grant a second registered mortgage to the Beneficiary over the properties described in Item 2(b) of the Schedule; and

2.4.3 Byford Land Company shall grant a third registered mortgage to the Beneficiary over the property described in Item 2(c) of the Schedule.

2.5 The Guarantor warrants that it has received full and adequate consideration for the granting of this guarantee through the payment of a fee from the Debtor to the Guarantor in the amount of $50,000.00 (inclusive of GST (if any)) the receipt of which is acknowledged by the Guarantor through its execution of this document.

3.1 Notwithstanding anything herein to the contrary and without prejudice to the rights or remedies of the Beneficiary against the Debtor as principal debtor, as between the Guarantor on the one hand and the Beneficiary on the other, the Guarantor's guarantee of the Debtor's Obligations pursuant to Clause 2 hereof (called 'the Guarantor's Obligations') shall be principal obligations and the Beneficiary shall not be required to proceed against the Debtor or exhaust any remedies it may have against the Debtor but shall be entitled to demand and receive payment from the Guarantor when any payment is due under this Guarantee.

3.2 Notwithstanding anything herein to the contrary, the Guarantor's Obligations shall be absolute and unconditional in any and all circumstances and the liability of the Guarantor under this Guarantee shall not be abrogated, prejudiced, affected or discharged by any one or more of the following:-

4.1 Notwithstanding anything in this Guarantee, if the whole or any part of the Debtor's Obligations are or may be irrecoverable from the Debtor by the Beneficiary for any reason whatsoever including by reason of:

4.1.1 any legal limitation, disability or incapacity of or affecting the Debtor personally or in the capacity in which he is purporting to act;

4.1.2 any of the transactions relating to the Debtor's Obligations being void ab initio or having been subsequently avoided (whether or not any of the matters or facts relating thereto have been or ought to have been within the knowledge of the Beneficiary); or

4.1.3 any other fact, matter or thing, whereby the whole or any part of the Debtor's Obligations are not recoverable from the Guarantor as surety, THEN, and in any such case, the Guarantor as a separate and additional liability under this instrument hereby indemnifies and shall keep indemnified the Beneficiary in respect of the amount of monies (whether contingent, prospective or actual) which, if the Debtor's Obligations had not been irrecoverable as aforesaid, would be due to the Beneficiary by the Debtor and the Guarantor agrees with the Beneficiary to pay to the Beneficiary on demand an amount equal to such monies and the terms of this Guarantee shall mutatis mutandis apply as far as possible to this indemnity.

6.1 Except as may be disclosed in writing to the Beneficiary at or prior to the date hereof each Guarantor separately makes the following representations and warranties for the benefit of the Beneficiary:

6.1.1 each corporate Guarantor has corporate power to enter into this Guarantee and has taken all necessary action to authorise the execution, delivery and performance hereof;

6.1.2 this Guarantee constitutes legally valid and binding obligations on the Guarantor enforceable in accordance with its terms;

6.1.3 the execution, delivery and performance of this Guarantee by the Guarantor will not violate, in any respect, any provision of:

(i) any law or regulation or any order or decree of any governmental authority, agency or court of the Commonwealth of Australia or any of its States or Territories; or

(ii) any security, agreement, contract, undertaking or other instrument to which the Guarantor is a party or which is binding upon it, and does not and will not result in the creation or imposition of any encumbrance of any of its assets pursuant to the provisions of any such security, agreement, contract, undertaking or other instrument;

6.1.4 all authorisations, approvals, consents, licences, filings, registrations, notarisations and other requirements of any governmental, judicial or public body, authority, bureau or agency in the Commonwealth of Australia or any of its States or Territories now obtainable and required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee have been obtained or effected and are in full force and effect;

6.1.5 the last accounts of the Guarantor have been prepared in accordance with generally accepted Australian accounting principles and practices consistently applied and fairly represent the financial condition of the Guarantor as at the date to which they relate and the results of its operations for the accounting period ended on such date;

6.1.6 to the best of its knowledge the Guarantor is not in default under any security, agreement, contract, undertaking or instrument to which it is a party or by which it may be bound, such default being material in the context of this Guarantee, and no event has occurred and is continuing which with the giving of notice, lapse of time or other conditions would constitute such a default under or in respect of any such security, agreement, contract, undertaking or instrument; and

6.1.7 no litigation, arbitration or administrative proceedings are presently current or pending or, to the knowledge of the Guarantor, threatened which would or might have a material adverse effect on the Guarantor or on the ability of the Guarantor to perform its obligations under this Guarantee.

6.2 The Guarantor has not taken, and will not take, security from the Debtor for the Guarantor's Obligations.

6.3 It is agreed that the Guarantor does not execute this Guarantee as a result of, by reason of, or in reliance upon, any promise, representation, statement or information of any kind or nature whatsoever given, or offered to it, by or on behalf of the Beneficiary whether in answer to any enquiry by or on behalf of the Guarantor or not, and the Beneficiary except as provided in this Guarantee, was not prior to its execution by the Guarantor, and is not thereafter, under any duty to disclose to the Guarantor or to do or execute any matter or thing relating to the affairs of the Debtor, or its transactions with the Beneficiary.

7.1 No failure or delay of the Beneficiary to exercise any right given to it hereunder, or to insist on strict compliance by the Debtor and/or the Guarantor of any obligation hereunder, and no custom or practice of the parties at variance with the terms hereunder, shall constitute a waiver or variation of the Beneficiary's rights to demand exact compliance with the terms hereof. Waiver by the Beneficiary of any particular default by the Debtor and/or the Guarantor shall not affect or prejudice the Beneficiary's rights in respect of any subsequent default of the same or of a different nature. Any delay or omission of the Beneficiary to exercise any right arising from such default shall not affect or prejudice the Beneficiary's rights as to such default, or any subsequent default, or the continuance of any default.

7.2 The Guarantor hereby waives in favour of the Beneficiary all rights whatsoever against the Beneficiary, the Debtor and any other corporation, person, estate and assets so far as necessary to give effect to anything contained in this Guarantee.

7.3 This Guarantee shall only be deemed to be amended or varied if amended or varied by an instrument in writing signed by the parties to this Guarantee.

9.1 The Guarantor acknowledges that as at the date of execution of this Deed of Guarantee and Indemnity the current amount owing by the Debtor to the Beneficiary is the amount set out in Item 3 of the Schedule.

9.2 Herdsman Technology acknowledges that the Beneficiary intends to release the security referred to in Clauses 2.4.2 and 2.4.3 once settlement for the sale of 777 and 783 South Western Highway, Byford and 3 Larsen Road, Byford is completed with all sale proceeds (less any reasonable costs of sale) being paid to the Beneficiary.

1. The 2016 Anketell Deed of Guarantee included a schedule, the terms of which are extracted below:

(a) Loan Agreement dated 18 November 2013 entered into between Angas Securities Limited (ACN 091 942 728) as lender, the Debtor as borrower (then known as Gucce Holdings Pty Ltd) and Tina Michelle Bazzo and Allen Bruce Caratti as joint and several guarantors whereby Angas Securities Limited advanced $2,012,000.00 to the Debtor.

(b) Mortgage dated 18 November 2013 entered into between Angas Securities Limited (ACN 091 942 728) as mortgagee and Bazzo as mortgagor being Mortgage M485767.

(c) Variation and Extension of Loan Agreement dated 10 December 2014 extending the loan referred to in (a) above for a further 12 months and advancing a further $400,000.00 to the Debtor.

(d) Deed of Assignment of Securities dated on or around the date of this Deed of Guarantee and Indemnity whereby all of the right tile and interest held by Angas Securities Limited (ACN 091 942 728) in the documents referred to in sub clauses (a) ‑ (c) above (and all associated collateral security) was assigned to the Beneficiary.

1. As at the end of February 2016, I find that the plaintiff had taken the assignment of the loan facility from Angas Securities, through the execution of the Anketell Assignment Deed, and had established a further series of guarantees to secure payment of the loan by the borrower, being GH1.
2. The further guarantees are found in the 2016 Anketell Deed of Guarantee, being guarantees from Herdsman Technology, from the Byford Land Company, and from Ms Bazzo herself. Although not expressly addressed in the instruments, the guarantee from Ms Bazzo within the 2016 Anketell Deed of Guarantee in effect replaced the guarantee she had given to Angas Securities in the original Anketell Loan Agreement. Ms Bazzo is sued on the guarantee in the 2016 Anketell Deed of Guarantee. Mr Caratti is sued on the guarantee in the original Anketell Loan Agreement.

1. The above three guarantees were secured by mortgages, which had been foreshadowed in the letter from the plaintiff dated 9 December 2015. Mr Masel had indicated that he required additional mortgages to be put in place in favour of the plaintiff in order to comfort him before taking the assignment of the loan from Angas Securities. The mortgages were then expressly identified in cl 2.4 of the 2016 Anketell Deed of Guarantee. The mortgages were:

(a) the third registered mortgage granted by Herdsman Technology in favour of the plaintiff, over properties at the Waverley Estate in Beckenham;

(b) the second registered mortgage granted by Ms Bazzo in favour of the plaintiff, over the properties at the Tuxedo Rise Estate in Hocking; and

(c) the third registered mortgage granted by the Byford Land Company in favour of the plaintiff, over the property in Holmes Street in Southern River.

1. The further financing arrangements executed in February 2016, pertaining to the Anketell development, are summarised in Diagram B as referred to earlier in these reasons.

1. On 24 October 2017, a letter was issued by the plaintiff to Ms Bazzo, GHT (WA) Pty Ltd and the Byford Land Company in relation to the Anketell Loan Agreement and the Anketell Mortgage.[128] The letter was signed by Mr Masel and was countersigned by Ms Bazzo in her personal capacity and on behalf of the two entities just mentioned, GHT (WA) Pty Ltd and the Byford Land Company. Those signatures appear below the words 'We hereby agreed and accept the above mentioned terms'.
2. The letter states:

We are advised by Allen Caratti and Darryl Kipping that GHT (WA) Pty Ltd is entitled to be the registered proprietor of the above land pursuant to a change of trustee for the beneficial owner.

As the loan is due to mature on 31/10/17 and we understand an extension is required we have arranged to extend the loan for a further 2 year period to expire on the 31/10/19 and being on the basis of the balance of terms and conditions remaining unaltered.

Should you wish to accept this extension we ask that all parties sign below and return your acceptance to this office.

GHT (WA) Pty Ltd will be signing under its entitlement to become the registered proprietor of 82 Treeby rd (sic).

Tina Bazzo will be signing as guarantor, having provided the property at Tuxedo Estate Hocking as security. This will remain as security.

Byford Land Company Pty Ltd will be signing as guarantor, having provided the property at Lot 3 Holmes st (sic) Southern River as security. This will remain as security.

There will be no costs for extending the loan.

1. The parties agreed as a fact that, on 12 May 2015, the defendants obtained a valuation of the Anketell Property from 'Independent Valuers of Western Australia', who valued the Anketell Property at $6,500,000, exclusive of GST.[129]
2. It is also an agreed fact that, on 12 January 2018, the defendants obtained a valuation of the Anketell Property from CBRE Valuations Pty Ltd, who valued the property at $5,600,000 exclusive of GST.[130]
3. Further, it is an agreed fact that, on 19 May 2022, the defendants obtained a valuation of the Anketell Property from Mr Graeme MacEwan. Mr MacEwan valued the property at $6,500,000, exclusive of GST.[131]
4. While the fact of these valuations was agreed, it was not agreed that the valuations represented the true value of the property at the relevant times and I make no finding in this regard.[132] No expert valuation evidence was called to support the valuations, although expert reports had been filed on behalf of the defendants prior to trial in accordance with leave granted by the court.[133]

(12) Entering into possession of the Anketell Property

1. It is an agreed fact that, on 9 October 2018, the plaintiff as mortgagee entered into possession of the Anketell Property.
2. Further, it is an agreed fact that, by notice issued on 15 September 2022, the plaintiff informed the first defendant that the plaintiff had removed itself as mortgagee in possession of the Anketell Property and returned possession of the property to the second defendant.[134] The return of the property occurred after the action had been commenced.
3. Relevant to the period during which the plaintiff was in possession of the Anketell Property, there are several contentious and non‑contentious factual matters which need to be addressed. I will address these matters when considering the claims advanced by the defendants, later in these reasons.

(13) Demands and notices issued by the plaintiff

1. The plaintiff asserts that, on 20 September 2018, a default notice was issued to Ms Bazzo by the plaintiff's solicitors.[135] The plaintiff also asserts that, on 31 May 2019, it served a letter of demand on Mr Caratti accompanied by the earlier default notice, and thereby demanded payment from Mr Caratti of the amount outstanding under the Anketell Loan Agreement pursuant to the guarantee.[136] These matters are contentious. I will address these assertions below.
2. On 17 December 2019, the writ in the Anketell Proceeding was filed in this court by the plaintiff.

PART IV - ANKETELL PROCEEDING: DISPOSITION A. Relevant principles

1. The plaintiff's claims in the Anketell Proceeding against the defendants are based on the express contractual guarantees to which the defendants agreed as part of the initial financing arrangements with Angas Securities, and then later with the plaintiff.
2. The guarantees are found in commercial instruments. The commercial instruments are detailed documents and have a level of sophistication about them. The instruments are intended to document financing arrangements by which large sums of money were loaned by Angas Securities, and then the plaintiff, to entities owned and controlled by the defendants, for use in a profit making venture, namely residential property development.
3. The plaintiff's rights against the defendants, as guarantors, will depend on the terms of the guarantees and the nature of the obligation, performance of which has been guaranteed.[137] This will turn on the proper construction of the instruments. The same points may be made in respect of the instruments forming the Hocking Financing Arrangement.
4. The proper construction of a commercial contract is to be determined objectively having regard to its text, context and purpose or objects. The provisions of the contract are to be understood objectively by reference to what a reasonable businessperson would have understood them to mean. The hypothetical reasonable businessperson must be placed in the position of the parties. The court considers from that perspective the circumstances surrounding the contract and the commercial purpose or objects sought to be achieved by it.[138]
5. A commercial contract is to be construed so as to avoid it making commercial nonsense or working commercial inconvenience.[139]
6. It is accepted that the surrounding circumstances known to the parties may be used in construing a commercial contract. However, the subjective intentions of the parties may not be used in construing the contract.[140]
7. Further, commercial contracts must be construed as a whole. The words of a clause in the contract are to be given the most appropriate meaning which they can legitimately bear. A court must have regard to all of the provisions of the contract with a view to achieving harmony among them. If more than one construction of a clause is open having regard to the text, context and purpose or objects of the contract as a whole, the court will prefer a construction that will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust.[141]
8. Where contracts of guarantee are involved, further principles have application and must be considered.
9. In particular, a doubt in the construction of a provision in a contract of guarantee should be resolved in favour of the surety by reason of the strictissimi juris principle. A doubt may relevantly arise not only from the uncertain meaning of a particular expression, but also from its apparent width of possible application.[142]
10. Thematically, in both actions, the defendants emphasise the protection which is afforded to a surety under a contract of guarantee, highlighting the following statement of the High Court in Ankar:[143]

At law, as in equity, the traditional view is that the liability of the surety is strictissimi juris and that ambiguous contractual provisions should be construed in favour of the surety. The doctrine of strictissimi juris provides a counterpoise to the law's preference for a construction that reads a provision otherwise than as a condition. A doubt as to the status of a provision in a guarantee should therefore be resolved in favour of the surety.

1. The defendants cited the observations of Kirby J, in dissent, in Gattellaro v Westpac Banking Corporation[144] in further support of this general proposition. His Honour there referred to the surety as a 'favoured debtor'.
2. Returning to Ankar, it should be noted that case was concerned with circumstances in which a creditor's breach of contract of guarantee discharged the guarantor from liability under the contract. The plurality addressed the manner in which the obligations within the contract, between the creditor and the guarantor, were affected by the special character of a contract of suretyship. The plurality addressed, in the course of their reasons, the variation rule applicable to sureties, in the following terms:[145]

According to the English cases, the principle applies so as to discharge the surety when conduct on the part of the creditor has the effect of altering the surety's rights, unless the alteration is unsubstantial and not prejudicial to the surety. The rule does not permit the courts to inquire into the effect of the alteration. The consequence is that, to hold the surety to its bargain, the creditor must show that the nature of the alteration can be beneficial to the surety only or that by its nature it cannot in any circumstances increase the surety's risk, e.g., a reduction in the debtor's debt or in the interest payable by the surety. The mere possibility of detriment is enough to bring about the discharge of the surety.

The foundation of the rule is that the creditor, by varying the principal contract or extending time, has altered the surety's rights without consulting it though the surety has an interest in the principal contract, and that the creditor cannot be permitted to do ... Thus the liability of the surety was seen to be strictissimi juris and the suretyship contract was construed strictly in his favour. (citations omitted)

B. First issue: the plaintiff's claim against Mr Caratti

1. The plaintiff's claim against Mr Caratti is brought pursuant to the contractual guarantee contained within the Anketell Loan Agreement. The components of the claim are as follows:

(a) a liability to pay the outstanding principal which forms the amount loaned to GH1, together with interest which had accrued at the time of the assignment of the loan from Angas Securities to the plaintiff in February 2016;

(b) the monthly interest which has accrued under the Anketell Loan Agreement since 1 March 2016, at the higher rate of interest of 18.75%;

(c) various costs and expenses charged by the plaintiff to the loan to GH1 under the Anketell Loan Agreement; and

(d) interest on the judgment sum pursuant to the higher rate of 18.75% under the Anketell Loan Agreement, or at the statutory rate of interest under s 32 of the Supreme Court Act 1935 (WA).

1. The plaintiff has pleaded the quantum of its claim by reference to the amounts detailed in Annexure A to the Anketell ASOC. The amounts specified in Annexure A are summarised in the table below, which recognises the reduction for the amounts received from the Herdsman Technology settlement in September 2017:

Initial advance paid by the plaintiff to Angus Securities on 29 February 2016

Monthly interest due from 1 March 2016 to 1 December 2019, with further interest accruing thereafter

Various costs and expenses including Landgate fees, bank fees, legal fees and valuation fees incurred between 29 February 2016 and 31 May 2019

Less funds received from the Herdsman Technology Settlement on 1 September 2017

Less funds received from the Herdsman Technology Settlement on 8 September 2017

1. A substantial range of arguments were raised by the defendants by way of challenge to their asserted legal liability for the components of the plaintiff's claim, and the quantum calculated by the plaintiff.
2. I have addressed the individual components of the claim against Mr Caratti in this section of the reasons, and have addressed the claim against Ms Bazzo in the following section, both analyses being subject to a consideration in due course of the pleaded substantive defences.
3. Some of these arguments are common to the claim against Mr Caratti and the claim against Ms Bazzo, while others require separate consideration of the contractual provisions, bearing in mind that Ms Bazzo has been sued pursuant to the provisions of the 2016 Anketell Deed of Guarantee.
4. Before turning to the first component of the claim against Mr Caratti, it is necessary to address the arguments raised in relation to Annexure A of the Anketell ASOC, and the plaintiff's reliance on the loan account statement which was tendered in evidence.

1. The amounts claimed in Annexure A to the pleading do not prove themselves, as the defendants correctly submitted. It is necessary that the amounts claimed be established on the evidence.
2. That proof is largely to be found in the detailed evidence of Mr Masel by which he explained how the plaintiff's loan account statement, which is Exhibit 198, was prepared and maintained.[146] I ruled against the objections to the tender of Exhibit 198 during the trial.[147]
3. I accept Mr Masel's evidence in this regard. I specifically accept his evidence explaining the process by which he, together with the support of his son who worked in the business, and his administrative assistant, would record information with respect to individual loans.
4. The process explained by Mr Masel included the recording of advances made to a borrower, recording of the costs relating to the loans, and the recording of payments received from a borrower. On a regular basis, Mr Masel would cause to be issued to borrowers a letter confirming the balance of the individual loans and the funds which had been received.
5. Mr Masel frankly acknowledged in his evidence that he did not have a high degree of proficiency in using computers and associated software in the course of his business. However, the role of his far less antediluvian son from 2010 onwards (and his administrative assistant prior to that) provided him with the necessary support to record information in an electronic manner. Mr Masel would make handwritten changes where necessary on hard copies of the documents, which his son would record in the electronic copies to establish a running loan account.
6. The following evidence of Mr Masel explains the process, which has equal application to the loan account statement in the Hocking Proceeding:
   1. In around 2010, my son, Jonathon started assisting me with managing Walthamstow loans.
   2. I did not (and still do not) use a computer but as Jonathon was proficient with computers he proposed we keep a running account on each file of payments, receipts and balances in respect of each loan and Walthamstow commenced doing so.
   3. I typically instructed Jonathon to create a loan statement which included at the top the amount of money that Walthamstow had advanced to the borrower which was described as an "Advance" and this amount was recorded as a debit in a separate column.
   4. When Walthamstow incurred a cost relating to the loan (for example Landgate fees or legal costs) or received payment from the borrower, I would make a handwritten annotation to the current typed statement to reflect the cost incurred or payment received.
   5. Each time Walthamstow received a payment (other than interest) from a borrower (in the case of Mr Caratti and Ms Bazzo, this was usually an amount from the sale of part of the security property), but not each time a cost was incurred, I would give the loan statement with the handwritten annotation(s) to Jonathon and request that he update the electronic statement on the computer and print it out.
   6. I would then check it against my handwritten annotation(s) to ensure that the printed version was accurate.
   7. If I was so satisfied I would ask Jonathon to send the printed version to the borrower together with a cover letter confirming any funds received and the balance of the loan. Jonathon prepared and I signed the cover letters before they were sent out or given to the borrower.
   8. An unsigned blue copy of the cover letter was prepared and retained in the same way as described in paragraphs 3 to 7 of this statement. Sometimes Jonathon also retained a copy of the loan statement that was sent with the letter but this was not always done.
   9. I instructed Jonathon to keep a current copy of the loan statement on each file. This loan statement would reflect the last letter and statement that had been sent to the borrower together with any handwritten annotations of costs incurred.
   10. I did not ask Jonathon to keep prior versions of the loan statement on the file and these were not retained. I did not ask him to do so because the current copy contained all of the prior transactions and thus I did not believe it was necessary to keep earlier versions of the statement. In addition, if a borrower requested a statement at any time I would cause a copy of the current statement be sent to the borrower.
7. Mr Masel's evidence in this regard was not disturbed in any material respect in cross-examination.[148] I do not accept the defendants' submission that his evidence was vague or generic.[149]
8. Mr Masel thus maintained a personal involvement in the recording process of information concerning individual loans. He explained in cross-examination that he 'kept control of all the records of the Caratti accounts'.[150] Given the process explained by Mr Masel, I consider the information recorded in the loan statements maintained by the plaintiff has a high degree of accuracy and reliability. The absence of Mr Masel's son as a witness was emphasised by the defendants. Given the personal involvement Mr Masel had in the process of recording information for loans, I did not consider the failure by the plaintiff to call Mr Masel's son as requiring that I draw any adverse inference.
9. As to the weight to be given to the entries in the plaintiff's loan account statement (Exhibit 198), in addition to Mr Masel's evidence to which I have referred above, the court should have regard to all the circumstances from which any inference can reasonably be drawn as to the accuracy or otherwise of the document: Evidence Act 1906 (WA), s 79D(1). Having regard to the terms of that statutory provision and the circumstances revealed on the evidence, I refer to the following matters:

(a) The information in the loan account statement was recorded by Mr Masel in a contemporaneous, or nearly contemporaneous manner, to the incurring of the costs, receipt of payments, and the calculation of interest. This tends to support the weight to be attributed to the document.

(b) There is no evidence that Mr Masel had any incentive to conceal or misrepresent the information contained therein. Indeed, the statement accurately records the amounts received to the credit of the borrower, being the payments from the Herdman Technology settlement. The defendants accept the accuracy of the statement in this regard.

(c) The nature of each of the items recorded in the loan account statement is consistent with the nature of the loan arrangement between the parties, and the timing of the items reflects the other evidence before the court. For example, the loan account statement records fees paid to Landgate, fees paid to the bank, a property report fee, and legal fees, in February 2016 when the loan was assigned to the plaintiff. The costs and expenses bear a rational connection to the loan agreement and the events which occurred. These matters support the weight to be attributed to the document.

1. In my view, the veracity of the loan statement which is Exhibit 198 has been demonstrated by the plaintiff. I reach the same view as to the loan statement in the Hocking Proceeding, to which I will later refer. I will now address the defendants' contentions as to the individual amounts claimed by the plaintiff.

1. The initial amount of $2,683,020.33 represents the amount paid to Angas Securities upon the assignment of the loan under the Anketell Loan Agreement to the plaintiff.
2. The plaintiff's claim, and the arguments raised by way of defence, require the plaintiff to demonstrate a contractual liability on the part of Mr Caratti under the guarantee in the Anketell Loan Agreement to pay the initial amount paid upon the transfer of the loan. This requires a consideration of the scope of the contractual provisions in the instrument, whether a default on the part of the borrower has been established, whether a demand for payment was required and, if so, whether service of a demand has been established, and then the quantum of the claim.
3. As to the existence of any requirement on the part of the plaintiff to serve demands on Mr Caratti to establish the cause of action, I note the plaintiff pleads that certain demands were made. Further, in the course of considering the defendants' proposed pleading amendments, I concluded that the defendants had not raised any question in the Anketell Proceeding as to the validity of the demands pleaded by the plaintiff.[151] It remains necessary to consider whether the plaintiff was contractually required to make a demand for payment to Mr Caratti as an element of the cause of action, in respect of the individual amounts claimed by the plaintiff, and if so, whether a proper demand was served.

1. The claim against Mr Caratti is based on the express guarantee contained within cl 12 of the Anketell Loan Agreement. The pleaded claim is summarised at [109] to [121] of these reasons.
2. There is no question that the Anketell Loan Agreement and the Anketell Variation and Extension Agreement were executed by the parties. Mr Caratti signed both instruments in his capacity as a guarantor. Similarly, there is no question that the Anketell Assignment Deed was executed by the parties, and Mr Caratti signed as a guarantor.
3. Subject to consideration of the enforcement representation allegation, which I will address below, the plaintiff has demonstrated that Mr Caratti was bound by the terms of the Anketell Loan Agreement, the Anketell Variation and Extension Agreement, and the Anketell Assignment Deed.
4. The effect of these instruments is that Mr Caratti consented to the assignment of the original loan (and its incorporated guarantee) to the plaintiff, together with the Anketell Mortgage and Anketell Security Agreement,[152] and remained bound to the plaintiff 'for the due payment and performance of the obligations and liabilities'[153] contained therein.
5. The express consent given by Mr Caratti to the assignment of the loan from Angas Securities to the plaintiff, which consent is not only found in the express terms of the Anketell Assignment Deed but also in the defendants' pleading, subject of course to the enforcement representation issue, meets any contention that the guarantee given by the defendants was discharged in some way by the extension of the Anketell Loan Agreement beyond 31 October 2015. This point is identified at [21.1] of the Anketell 4AD, but it goes nowhere unless the express consent of the defendants is found to be vitiated in some way by the enforcement representation.
6. The plaintiff has thus demonstrated, subject to the enforcement representation, that Mr Caratti remained subject to the guarantee to which he agreed, which is expressed in cl 12.1 of the Anketell Loan Agreement. That guarantee is expressly acknowledged by the terms of cl 13 of that instrument, which includes an acknowledgement that, if the borrower does not pay any amount payable by it under 'any Transaction Document, then 'each Guarantor must pay that amount'.[154]
7. What is the extent of Mr Caratti's liability, then? The extent of his liability primarily turns on the scope of cl 8.1, cl 12.1, and cl 12.2 of the Anketell Loan Agreement. I have set out the terms of these provisions earlier in Part III of these reasons.
8. Pursuant to cl 8.1, GH1 and Mr Caratti as guarantor undertook 'a personal liability to pay the Moneys Hereby Secured pursuant to the Transaction Documents'.
9. Pursuant to cl 12.1, Mr Caratti guaranteed that GH1 would pay to the plaintiff, on time, the 'Moneys Hereby Secured' under the 'Transaction Documents' and, failing such payment, Mr Caratti agreed to pay the outstanding monies. This guarantee is expressly stated to be additional to all other 'Securities', 'Security Interests', and rights and remedies of the plaintiff.[155]
10. Some definitions should be clarified at this point. The term 'Moneys Hereby Secured' is defined in the Anketell Loan Agreement to mean the 'Loan Amount together with all moneys which are or become owing or payable' to the lender by the borrower, 'either alone or in conjunction with some other entity on any account whatsoever and includes interest on all such moneys (including capitalised interest)'.[156]
11. The 'Loan Amount' is defined as the sum advanced by the lender to the borrower as defined in the Schedule to the Anketell Loan Agreement, being $2,012.000.[157]
12. The term 'Transaction Documents' is defined to include the Anketell Loan Agreement, together with any document creating the 'Securities', and 'any agreement or instrument agreed by the Transaction Parties and the Lender to be a Transaction Document'.[158] Further, the term 'Securities' is defined to mean, in effect, the first registered mortgage granted by Ms Bazzo over the Anketell Property by way of the Anketell Mortgage, the Anketell Security Agreement, and 'any other mortgages guarantees indemnities charges or undertakings provided to the Lender to support this Loan Agreement'.[159]
13. It follows from these contractual provisions that Mr Caratti has been shown to have a contractual liability to pay the outstanding principal forming the amount loaned to GH1, which constitutes part of the 'Moneys Hereby Secured' under the above instruments.

1. It is evident from the above provisions that the plaintiff must demonstrate a default on the part of the borrower. This aspect of the claim is well established having regard to Mr Masel's evidence.[160] I find on the evidence that GH1 defaulted on payment of the interest payments as required under the Anketell Loan Agreement.

1. It is necessary to consider whether a demand from the plaintiff was required for the purposes of the claim against Mr Caratti under cl 12 of the Anketell Loan Agreement. Whether a guarantor's liability requires that a demand first be made ultimately turns on the construction of the contractual instruments in question.[161]
2. The terms of the Anketell Loan Agreement do not describe the guarantors as the 'principal debtor'. Such language might obviate the necessity for a prior demand to be made.[162] Rather, the obligation of a guarantor under the Anketell Loan Agreement is to pay a collateral sum. Typically, no cause of action arises until a demand is made in that regard. This principle is explained in Phillips & O'Donovan, The Modern Contract of Guarantee (2004, 4th ed) [10.1710] and in the authorities discussed by Edelman J in Netglory Pty Ltd v Caratti.[163]
3. In the present case, the plaintiff has pleaded that a demand was served on Mr Caratti, but submitted that no demand was strictly required, relying on the terms of cl 12.1 of the Anketell Loan Agreement.[164]
4. In the present case, cl 12.1 of the Anketell Loan Agreement guaranteed the borrower would pay the plaintiff the 'Moneys Hereby Secured' on time, and the guarantor agreed that if the borrower did not pay, then the guarantor must pay the 'Moneys Hereby Secured, when due and payable' (emphasis added).
5. The defendants submitted that a proper demand served on each defendant and non-compliance with that demand is an element of the cause of action, and submit that the plaintiff has not proved that a demand or notice of default was served on Mr Caratti.[165] The defendants placed reliance on cl 12.2, cl 15.1 and cl 15.2 of the Anketell Loan Agreement in this regard. The defendants ventilated a number of arguments concerning the requirement for demands as conditions of the plaintiff's claims.[166]
6. By cl 12.2 of the Anketell Loan Agreement, the guarantor also agreed to pay the plaintiff the moneys identified (including expenses, amounts under the indemnity and amounts due to the plaintiff) 'on demand' (emphasis added). Further, both cl 15.1 and cl 15.2 provide that the borrower and guarantor do not default in the performance or observance of their obligations until they fail to remedy the default within 14 days of receiving a 'written demand'.
7. There are other provisions within the Anketell Loan Agreement which expressly require that amounts be demanded. I refer to cl 7.1 and cl 7.2, which relate to costs and expenses, which oblige the borrower to pay amounts 'on demand'.
8. As a matter of construction, and recognising that a surety contract should be strictly construed in favour of the surety, I consider a reasonable business person would have understood that liability on the part of the guarantor under cl 12.1 did not depend on the making of a demand by the plaintiff. In my view, there is a distinction drawn within the agreement between those amounts which must be demanded, and others which do not require a demand. Clause 12.1 does not require that a demand be issued, but is engaged when the borrower has failed to make payment of the 'Moneys Hereby Secured' when 'due and payable'. In contrast, the terms of cl 12.2 provide that, where that clause is to be engaged, a demand must be made by the plaintiff lender.
9. The terms of cl 15.1 and cl 15.2 do not require a different conclusion. Those provisions are directed at the delineation of the events of default under the Anketell Loan Agreement, which if established has consequences for the borrower under cl 16, including termination. I do not regard cl 15.1 or cl 15.2 as controlling or conditioning the liability of the guarantors to pay the 'Moneys Hereby Secured' under cl 12.1.
10. The terms of the Anketell Loan Agreement objectively demonstrate, in my view, that no demand is required in the case of cl 12.1 of the agreement.
11. I therefore consider that a written demand was not required as an element of the plaintiff's cause of action against Mr Caratti under the guarantee in the Anketell Loan Agreement. In the event I am wrong about this conclusion, I will proceed to consider the pleaded demand and the evidence as to whether a demand was served on Mr Caratti.

1. The plaintiff expressly pleaded that it served a written demand on Mr Caratti on 31 May 2019 and opened the case at trial on this basis.[167] This demand, which is Exhibit 179, was in the form of a letter from the plaintiff's solicitors.
2. The demand was said by the plaintiff to have attached an earlier default notice which had been served on Ms Bazzo on 20 September 2018.[168] The default notice is a formal document headed 'Default Notice' (which is Exhibit 167). The plaintiff submitted that the default notice attached a schedule which detailed the interest amounts due. This schedule was separately tendered in evidence as Exhibit 230.

1. There was considerable controversy at trial as to whether the plaintiff had demonstrated that the pleaded demand was served on Mr Caratti. Before I address the service question, some explication of the terms of the demand and the associated default notice is first required. There is also evidence of a further written demand said to have been issued to the directors of Byford Land on 31 May 2019.
2. The default notice addressed to Ms Bazzo in September 2018 (Exhibit 167) provided that GH1 was in default under the Anketell Loan Agreement in that it had failed to pay interest on the principal sum, and attached a schedule which detailed the interest amounts due (Exhibit 230). The schedule attached to the default notice described:

(a) the initial advance payment on the transfer of the loan from Angas Securities, being $2,683,020.33;

(b) various expenses and legal fees which were claimed by the plaintiff;

(c) specific monthly interest amounts which were due; and

(d) two amounts stated as being 'Received from Herdsman Technology settlement', included as reductions to the loan amount.

1. The default notice demanded that Ms Bazzo (identified as the 'Mortgagee' within the notice) repay the principal sum and the interest arrears within 3 days of the date of service. The amount demanded in the default notice was '$3,929,287.320', which contains an obvious typographical error (being the final '0' in the figure). This error is readily understood when the schedule is examined.
2. The schedule expressly identified the balance due as at 20 September 2018 (being the date of the default notice) as '$3,929,287.32'. This amount includes interest of 19 days from the previous due date for interest of 1 September 2018.
3. The default notice also stated that interest was accruing at a daily rate of $1,998.96.
4. By the terms of the letter dated 31 May 2019 (Exhibit 179), Mr Caratti was informed that the amount currently owing (stated as being at 1 June 2019) totalled $4,494,398.10. The letter stated:

Your obligations to pay the indebted amount under the guarantee are triggered by the Borrower not paying the amount payable by the due date (see clause 13.4).

Pursuant to the enclosed Default Notice, the Borrower has defaulted in the repayment of the principal sum and interest and as a result you are liable to pay the amount owing pursuant to the Guarantee.

In order to avoid further legal action, we request that you attend to the payment of the amount demanded in this letter within 7 days.

Your urgent attention to this matter is required.

1. The plaintiff contended that a written demand in similar terms was issued to the directors of Byford Land, which included Ms Bazzo.[169] This further demand letter is dated 31 May 2019 (Exhibit 231). This letter referred to the guarantee given under the 2016 Anketell Deed of Guarantee and stated, in part:

Your obligations under the guarantee are primary obligations, and our client is under no requirement to exhaust all enforcement options against the primary debtor.

We put you on notice that our client intends to enforce your guarantee obligations notwithstanding ongoing enforcement procedures pursuant to our client's mortgage against the principal debtor.

In order to avoid further legal action, we request that you attend to the payment of the amount demanded in this letter within 7 days.

Your urgent attention to this matter is required.

1. Mr Masel gave evidence that, on 31 May 2019, he instructed his solicitors to issue the letter of demand addressed to Mr Caratti (being Exhibit 179). I accept the evidence of Mr Masel in this regard. As I have earlier found, Mr Masel presented as a prudent and experienced lender who approached his business affairs in a systematic manner. It is highly likely in the circumstances, with the mounting value of the debt and the inability to attract a buyer for the Anketell Property, he instructed his lawyers to take the step of issuing the demand letter.
2. Mr Caratti did not give evidence that he did not receive the written demand. Any such evidence would have been surprising given the pleaded defence in which the defendants admitted that a 'purported demand was issued dated 31 May 2019'.[170] In my respectful view, a pleading in those terms would have been inapposite had it been intended that the defendants would deny at trial that the documents were issued to them, as opposed to disputing their validity. The distinction emphasised by the defendants between issuing and service of the demand is semantical.
3. Further, no objection was taken by the defendants prior to trial, in accordance with the trial directions, to dispute that the written demand had been sent on or about the date it bears.[171]
4. In these circumstances, the vigour with which the defendants contested in closing submissions that Exhibit 179 had not been received by Mr Caratti was somewhat unexpected.
5. These points apply equally to the service of the default notice on Ms Bazzo on or around 20 September 2018, noting that the defendants admitted in their defence that a 'purported demand was issued dated 20 September 2018'.[172] It is notable that Ms Bazzo likewise did not give evidence that she did not receive the default notice.
6. The likelihood that Mr Masel's solicitors issued the demand letter to Mr Caratti on or about 31 May 2019 is enhanced when it is appreciated that Ms Bazzo received the letter addressed to her which was issued on the same date. Specifically, it is evident from a letter sent by Ms Bazzo to the plaintiff's solicitors dated 7 June 2019 that she received the demand letter dated 31 May 2019.[173] Ms Bazzo states in that letter that she received the letter (and the attached default notice) on 4 June 2019.
7. I therefore conclude that the plaintiff issued a default notice to Ms Bazzo on 20 September 2018 (Exhibit 167), which attached a detailed schedule (Exhibit 230), and a copy of that default notice and schedule were later sent under cover of a demand letter, on 31 May 2019, to both Ms Bazzo and Mr Caratti (Exhibits 179 and 231). I reject the defendants' submissions to the contrary.

1. Proof of the quantum of this component of the claim does not directly depend on the veracity of the plaintiff's loan account statement. This is because the initial amount, representing the amount paid to Angas Securities upon the assignment to the plaintiff, being $2,683,020.33, is established by reference to the acknowledgements contained in the 2016 Anketell Deed of Guarantee and the Anketell Assignment Deed.
2. Within the 2016 Anketell Deed of Guarantee, the amount was acknowledged by the parties as being owed, and comprised of $2,412,000 being the initial loan amount and the further advance made in December 2014, and the amount of $271,020.33 being interest and costs which had accrued.[174]
3. Both Ms Bazzo and Mr Caratti signed the 2016 Anketell Deed of Guarantee. Ms Bazzo signed for herself and the two guarantor companies, and Mr Caratti signing for Herdsman Technology.
4. As to the Anketell Assignment Deed, that instrument recorded the agreement of the parties thereto, including Mr Caratti and Ms Bazzo, that the 'Consideration' referred to therein 'represents the current outstanding amount under the Securities'.[175] The term 'Consideration' is defined to mean 'the amount due by the Borrower to the Assigner pursuant to the Securities as at the Completion Date as stated in the Transfer of Mortgage document referred to in Clause 4.2(b)'.[176] This amount was $2,683,020.33.

1. I therefore conclude that the plaintiff has demonstrated a contractual liability on the part of Mr Caratti to pay the initial amount which was paid to Angas Securities by the plaintiff upon assignment of the loan under the Anketell Loan Agreement. Subject to any defences, the plaintiff has established an entitlement under the guarantee given by Mr Caratti to the claims in the prayer for relief at pars 1 and 2 of the Anketell ASOC, in the sum of $2,683,020.33.

1. By prayer for relief at par 3 of the Anketell ASOC, the plaintiff claims interest which has accrued under the Anketell Loan Agreement, from 1 March 2016 to judgment. The plaintiff claims interest against the guarantor, Mr Caratti, pursuant to cl 12.1 of the Anketell Loan Agreement by which Mr Caratti guaranteed payment by the borrower of the 'Moneys Hereby Secured'. As seen above, this term includes the interest on the 'Loan Amount', including capitalised interest.
2. The interest claim is based on the 'Higher Rate Interest' payable under that loan agreement, pursuant to cl 4 of the Anketell Loan Agreement. The amount claimed by the plaintiff is the amount the parties agreed by way of adjustment when the loan was assigned.
3. The initial 'Higher Rate Interest' initially specified in the Anketell Loan Agreement was 21.5% p.a.[177] This rate was payable by GH1 in accordance with cl 4.1, cl 4.2 and cl 4.3 of the Anketell Loan Agreement. The defined 'Lower Rate Interest', initially 13.5% p.a., would be payable where there was compliance with cl 4.5, which included the requirement that GH1 pay the 'interest instalments promptly on the due date'.
4. The 'Higher Rate Interest' and the 'Lower Rate Interest' were modified by the parties when the loan was assigned to the plaintiff. This is evident from the letter sent by the plaintiff to GH1 and Ms Bazzo dated 9 December 2015, which was later countersigned by both Ms Bazzo and Mr Caratti.
5. By the terms of the letter dated 9 December 2015, the 'Higher Rate Interest' was reduced to 18.75% p.a., and the 'Lower Rate Interest' was increased to 15.75% p.a. The rate of 18.75% is relied upon by the plaintiff in calculating its claim for interest.
6. Several arguments were raised by the defendants in closing as to the plaintiff's claim for accrued interest. I will address these arguments in sequence.
7. First, the defendants submit that a claim for interest under cl 4 of the Anketell Loan Agreement, which imposes an interest liability on the borrower, is subject to the express demand provision in cl 15.1. Accordingly, it is submitted that unless and until a demand is made of the borrower, the debt is not due and payable.[178] I have concluded earlier in these reasons that a demand was not required pursuant to the Anketell Loan Agreement in respect of a claim on the guarantee under cl 12.1 for the 'Moneys Hereby Secured'. This will include the claim for accrued interest. In my view, therefore, it is not necessary for the plaintiff to demonstrate an earlier written demand.
8. In any event, I am satisfied that a demand was served on the borrower on 20 September 2018 (being Exhibit 167) and on Mr Caratti on 31 May 2019, both of which included a demand for the payment of interest which had accrued and interest which was continuing to accrue. The demands do not expressly specify that the rate of 18.75% was being applied by the plaintiff in this regard, but that would be evident from the amounts of interest claimed.
9. Further, even if a demand was required by the provisions of the Anketell Loan Agreement, it would not follow from this that the interest debt was not due and payable until that time. The payment of interest was due and payable in accordance with the Anketell Loan Agreement on a monthly basis, pursuant to cl 4.2 thereof. I reject the defendants' submission to the contrary.
10. Second, the defendants submit that a liability for interest on the part of a guarantor could only arise after expiry of the 14 day period referred to in cl 15.2 of the Anketell Loan Agreement. It is therefore submitted that any interest at the higher rate could only be claimed from 14 days after the date of service of the demand, with interest at the lower rate accruing on the outstanding moneys prior thereto.[179] I do not accept this submission. It ignores the terms and operation of cl 12.1 of the Anketell Loan Agreement, by which Mr Caratti guaranteed the obligations of the borrower and provides that if the borrower does not comply, the guarantor must pay the 'Moneys Hereby Secured' when due and payable. The term 'Moneys Hereby Secured' means the 'Loan Amount together with all moneys which are or become due and payable' and 'includes interest on all such moneys (including capitalised interest)'.[180]
11. Third, the defendants contended that any claim for a contractual rate of interest, whether higher or lower, could not be maintained against a guarantor beyond one month after the expiry of the 'Term' of the Anketell Loan Agreement, alternatively after expiry of the demand period pursuant to cl 15.2.[181] The 'Term' of the Anketell Loan Agreement originally expired on 31 October 2014, and was extended to 31 October 2015. The defendants place reliance on cl 4.2 which refers to interest being calculated on the balance of the 'Moneys Hereby Secured' which is outstanding 'each month during the Term'. The defendants also refer to cl 4.3 which refers to interest payments being due and payable 'during the continuance of this Loan Agreement'.
12. The defendants thus submit that the plaintiff's contractual claim to interest has a temporal limitation, confined to one month after the 'Term' of the Anketell Loan Agreement expired.
13. In support of this submission, the defendants referred to the decision of the Full Court in Hardie v Shadbolt.[182] In that decision, Roberts-Smith J, with whom Templeman and Miller JJ agreed, considered the basis on which interest was claimed, in the context of a contractual claim, where the agreement in question made no express provision for payment of interest after the termination date of that agreement.
14. His Honour referred to the line of authority commencing with Cook v Fowler.[183] His Honour then stated:[184]

The line of authority... clearly establishes the principle that where a loan agreement does not expressly provide for interest to be payable after the date for repayment of a loan, interest is recoverable only as damages for breach of contract and not on the basis of any implied term that the contractual interest rate will continue to apply beyond the date fixed for repayment.

1. His Honour concluded, on the strength of the above authority and those decisions which had followed it, that on a proper construction of the agreement in question, it provided for the making of a loan with repayment of the principal, together with a specified amount of interest, on the termination date, but said 'nothing about what the situation was to be if repayment was not made on the termination date'.[185]
2. Accordingly, his Honour found that the failure to make payments of principal and the contractual interest on the termination date was a breach of contract, for which the appropriate remedy was damages.
3. The defendants say the foregoing presents the plaintiff with something of a pleading problem, as no claim for damages has been pleaded.
4. The resolution to this issue is found, in my view, in cl 4.8 of the Anketell Loan Agreement, which states:

4.8 If the whole of the Moneys Hereby Secured shall not be repaid to the Lender on or before the expiry of the Term then the Borrower shall be liable to pay to the Lender interest calculated to the last day of the month in which the payment is made plus interest on the Moneys Hereby Secured for one (1) month at the Higher Rate.

1. The terms of this clause render the borrower liable for interest until payment of the outstanding amount is paid. The borrower's liability for interest does not conclude at the expiration of the 'Term'. The guarantors' liability to pay the accrued interest component will similarly extend beyond the 'Term' of the agreement. I therefore reject the defendants' argument in this respect.
2. It follows, in my view, that the plaintiff has demonstrated a liability on the part of Mr Caratti to pay the accrued interest component of the claim, pursuant to the guarantee in cl 12.1 of the Anketell Loan Agreement. The quantification of the interest claim is set out in the plaintiff's loan account statement, the veracity of which I accept in this regard, calculated at the rate of 18.75% p.a.

1. By the prayer for relief at par 4 of the Anketell ASOC, the plaintiff claims interest on any judgment sum pursuant to the higher rate of 18.75% under cl 4 of the Anketell Loan Agreement, or at the statutory rate of interest under s 32 of the Supreme Court Act 1935 (WA).
2. The defendants submit that the statutory rate should apply, not the contractual rate of interest.[186] The defendants rely in this regard on the decision of Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 7],[187] and the following statement of EM Heenan J in that decision:

So it is said that, owing to the merger of a cause of action in the judgment, interest in respect of a period after judgment can only be recovered under the judgment, as the judgment operates as a bar to a separate claim ... unless the agreement sued upon specifically provides that a higher rate of interest than the statutory rate is to be paid as well before as after any judgment... For an example of a mortgage providing for payment of interest at a high rate creating a liability to pay which survived any judgment, see Mercantile Credits Ltd v McDowell [1980] 2 NSWLR 101. That case is also an example of the mortgagee/judgment creditor applying for an order that the judgment carry interest at the higher rate rather than at the statutory rate after it had recovered judgment against the guarantor where there was a special power for the court to do so - rather similar to that now existing under s 8(1) of the Civil Judgments Enforcement Act - and where that power was so exercised

1. It is not in dispute that the Anketell Loan Agreement does not expressly provide that the contractual rates of interest stipulated therein should prevail after the entry of judgment. If the principle described in Clambake is applied to its full extent, it would follow that the plaintiff's contractual right to interest would merge in the judgment, leaving the plaintiff to a claim for post-judgment interest at the statutory rate.
2. There is a potential caveat to the foregoing, arising by virtue of the terms of s 8(1)(b) of the Civil Judgments Enforcement Act 2004 (WA) (the CJEA). This provision was mentioned by EM Heenan J in the above extract from his Honour's reasons.
3. The terms of s 8(1)(b) allow for interest to be paid on a judgment sum at a 'rate set by the court in the judgment or by an order made after the judgment is given'. The provision vests the court with a discretion as to the rate at which interest is to be awarded. In Westpac Banking Corp v Bell Group Ltd (in liq),[188] Wheeler JA had cause to consider this provision, observing that:

As a matter of principle, at least a principal aim of post-judgment interest is to compensate the judgment creditor for delay. That is, it is intended by the award of interest, in effect, to put the judgment creditor in the position he or she would have been in had the judgment been paid promptly. The focus of the inquiry, then, in my view, should be the amount of interest which the judgment creditor would have been able to earn, rather than the amount which the funds actually earned in the hands of some person other than the judgment creditor.

1. This approach reflects the compensatory character of an award of post-judgment interest.[189]
2. However, there is question whether the discretion in s 8(1) of the CJEA is limited to a circumstance in which an entitlement in law or equity to a higher rate of interest has been demonstrated, or whether the discretion falls to be broadly exercised by reference to the compensatory character of such an award. I did not hear full argument on this question, and it does not appear to have been finally determined on the authorities. In these circumstances, I would be reluctant to express a concluded view on the issue.
3. I will therefore assume, without deciding, that the discretion is to be exercised on the broader basis just described. On this assumed basis, I would not exercise the discretion to award a higher rate of interest to the plaintiff above the statutory rate. I say this because of the absence of any evidence which demonstrates the amount of interest the plaintiff would be able to earn in the circumstances, and also given the relatively high rates of interest provided for in the Anketell Loan Agreement.
4. The defendants' submission on this issue should therefore, in effect, be accepted and so the statutory rate of interest should be awarded on any judgment sum, rather than the contractual sum as claimed. This conclusion apples equally to the claims in the Hocking Proceeding.[190]

1. The plaintiff's claim includes several components for costs and expenses. Each of these amounts must be proven in fact, and be demonstrated as payable by the borrower under the Anketell Loan Agreement.
2. The amounts claimed are identified in the table below.

Taylor Smart Legal Fees for the 29 February 2016 extension letter

1. A number of arguments were raised by the defendants to challenge Mr Caratti's liability to pay the above costs and expenses. The defendants contend that a demand for payment of the amounts was required under the Anketell Loan Agreement, that only expenses incurred in enforcing rights against the guarantor are claimable, and that the plaintiff has failed to prove the amounts were incurred.

1. Clause 12.2 of the Anketell Loan Agreement provides that each guarantor agrees to pay the plaintiff 'on demand...all expenses the Lender incurs in enforcing its rights against any Guarantor' (cl 12.2.1, emphasis added). Further, the clause requires the guarantor to pay on demand the 'amounts payable under any indemnity' (cl 12.2.2) and the amounts due to the plaintiff 'under any other provision of each Transaction Document to which it is a party imposing liability' (cl 12.2.3).
2. To the extent to which the claim for costs and expenses is made under cl 12.2.1, the defendants submit that a demand is first required, before the action is instituted.
3. In my view, the defendants' submission should be accepted in respect of expenses claimed which have been incurred in enforcing rights against a guarantor. However, none of the items claimed by the plaintiff were incurred in enforcing rights against Mr Caratti or Ms Bazzo.
4. Further, the plaintiff points to other provisions within the Anketell Loan Agreement which it says establish a liability on the part of Mr Caratti for costs and expenses incurred in respect of the loan. The plaintiff acknowledged that the path of this aspect of the claim required a 'more involved route' through the instruments.[191]
5. Mr Caratti's liability to pay costs and expenses is said by the plaintiff to also arise through the obligation in cl 8.1 of the Anketell Loan Agreement, to which he agreed, to pay the 'Moneys Hereby Secured under the Transaction Documents'. This extends to the Anketell Mortgage given the definition of 'Transaction Documents'. Further, the plaintiff then directs attention to the terms of cl 3.2 of the memorandum of common provisions which are incorporated into the Anketell Mortgage.[192]
6. Clause 3.2(c) of the memorandum of common provisions states:[193]

You must pay all the mortgagee's costs and expenses (including the stamp duty, bank fees and government charges) relating to the mortgage. You must also pay the mortgagee on demand all costs and expenses including any stamp duty, all bank fees and government charges and taxes of any kind relating to the mortgage. It includes any internal costs of the mortgagee in relation to the mortgage. You must also pay to the mortgagee on demand any costs or liabilities of the mortgagee arising in relation to the mortgage, the property, or any related agreement, including the reasonable costs of the mortgagee exercising its right under the mortgage or recovering the secured money or dealing with the property.

1. This provision is expressed in rather broad terms.
2. By those terms, and given cl 8.1 of the Anketell Loan Agreement, it is submitted that Mr Caratti is liable to pay the plaintiff's costs, expenses and liabilities relating to the Anketell Mortgage and any related agreement. This last term ('any related agreement') extends, in the context of this financing arrangement, to the Anketell Loan Agreement, the Anketell Assignment Deed and the 2016 Anketell Deed of Guarantee.
3. It follows, in my view, that other than claims for expenses incurred in enforcing rights against a guarantor, the Anketell Loan Agreement does not first require that a demand be issued.[194] I note in this regard the defendants did not rely on cl 7.1 and cl 7.2 in support of their arguments, and those provisions have a narrow operation in any event.

1. The evidence of Mr Masel, as to his practice of recording costs and expenses during the course of managing a loan and thus establishing a running loan account, to which I have earlier referred, provides evidentiary support for the various claims for costs and expenses referred to above.
2. It may also reasonably be inferred, and I do, from the nature of the costs and expenses and the dates on which they were recorded, that these are amounts which with the requisite connection to the loan agreement. The amounts claimed are for Landgate fees, bank fees, legal fees, settlement costs, valuation fees, and rates, are all the types of fees which can be inferred are associated with the management of a commercial loan secured by a mortgage and other forms of security.
3. However, it is necessary, I think, to also examine the costs and expenses on a more granular level, given the submissions advanced by the defendants.

Costs and expenses incurred on 29 February 2016

1. There are five individual costs and expenses which are claimed by the plaintiff as having arisen on 29 February 2016. That was the date on which the loan was assigned by Angas Securities to the plaintiff, and various instruments were executed by the parties. That assignment occurred at the request of the defendants.
2. The amounts are contemporaneously recorded in the letter from the plaintiff to GH1 sent on 29 February 2016.[195] That letter was countersigned by Ms Bazzo and Mr Caratti (on behalf of Herdsman Technology) and returned to the plaintiff.
3. I can also readily infer that these types of fees, payable to Landgate, for bank fees, for a property report, and for legal fees, are all properly attributable to the process whereby the loan under the Anketell Loan Agreement was assigned by Angas Securities to the plaintiff. In addition, a copy of the property report from Rowe Group was tendered in evidence, as Exhibit 91. The report, which is dated 18 November 2015, is comprehensive and runs to 17 pages. The final page is a tax invoice, in the amount of $3,479.85, being the amount claimed by the plaintiff for the report. The invoice contains a handwritten annotation that it was paid on 14 December 2015.

1. The plaintiff also claims legal fees said to have been incurred on various dates during the currency of the loan. These amounts are identified below, together with the evidence I consider supports the claim:

(a) There is a claim for $479.61 incurred on 1 April 2016, in respect of the fees paid to Taylor Smart Legal for the extension letter dated 29 February 2016. The extension letter is in evidence (Exhibit D4). The letter was sent by the plaintiff on its letterhead. It was apparent from Mr Masel's evidence that he employed solicitors on occasions to prepare correspondence for him.[196] It can be inferred from the nature of this letter that legal assistance was required.

(b) There is a claim for $1,442.10 incurred on 10 November 2016 for legal costs referable to a default notice. No copy of such a notice was produced in evidence. The claim rests on the plaintiff's loan account statement, the accuracy of which I have accepted.

(c) There is a claim for $1,844 incurred on 1 October 2018 for legal fees referable to a default notice. This amount was claimed in respect of the default notice dated 20 September 2018, which is Exhibit 167. I have found that this notice was issued. I can infer that legal costs were incurred in respect of the preparation and dispatch of this notice. The amount of the costs stated in the default notice itself, being $627, does not limit the amount which may be claimed by the plaintiff, and I do not regard the discrepancy as significant.

(d) There is a claim for $2,445.30 incurred on 21 December 2018 for legal fees incurred by the plaintiff. These costs are referrable to the conduct of the plaintiff in taking possession of the Anketell Property, which it did in September 2018. I can infer that legal costs were incurred in respect of the process of entering possession and exercising rights under the Anketell Loan Agreement.

(e) There is a claim for $689.70 incurred on 31 May 2019 for legal fees incurred by the plaintiff. This amount was claimed in respect of the demand letter dated 31 May 2019 sent to Mr Caratti, which is Exhibit 179. I have found that this notice was issued. I can infer that legal costs were incurred in respect of the preparation and dispatch of this notice.

1. Each of the legal fees claimed is attributable to a step taken by the plaintiff in managing or enforcing the loan under the Anketell Loan Agreement. I find the amounts were paid by the plaintiff and are properly attributable to the Anketell Loan Agreement.

1. The plaintiff claims fees said to be attributable to the settlement of the Herdman Technology loan on 1 and 8 September 2017. It is not disputed that this settlement process occurred. I can reasonably infer the amounts were paid by the plaintiff and are properly attributable to the Anketell Loan Agreement.

1. The plaintiff claims fees for the valuation prepared by Hemsley Paterson on 26 November 2018. The amount claimed is $3,850. Mr Masel gave evidence that he had obtained such a valuation, in the amount of $3.94m, which is contained in the report which is Exhibit 174.[197] I find the amount was paid by the plaintiff and is properly attributable to the Anketell Loan Agreement.

1. The plaintiff claims various fees for marketing, signage placement and plumbing costs. These costs were incurred whilst the plaintiff was in possession of the Anketell Property.[198] Mr Masel gave evidence that the marketing and signage costs were incurred during this period.[199] I can also infer that plumbing expenses of a modest amount were incurred during this period. I find the various amounts were paid by the plaintiff and are properly attributable to the Anketell Loan Agreement.

1. Finally, there is a significant amount claimed, being $103,895.43, for the rates paid to the City of Kwinana. This amount is recorded in the loan account statement as having been incurred by the plaintiff on 20 November 2019.
2. The evidence included a copy of the notice issued by the City of Kwinana in respect of the Anketell Property, which was sent to the plaintiff on 9 August 2019.[200] The notice was sent during the period the plaintiff was in possession of the property. The notice issued by the City of Kwinana states that the rates had been outstanding for some 3 years and put the plaintiff on notice that unless the amount was paid the City of Kwinana would proceed to sell the property to recover the amount.
3. Mr Masel forwarded a copy of the notice to both Mr Caratti and Ms Bazzo by email on 5 September 2019.[201]
4. Mr Caratti accepted in his evidence these rates were paid in respect of the Anketell Property, and were paid by Mr Masel.[202]
5. I find the amount for these rates was paid by the plaintiff. I also find that the amount is properly attributable to the Anketell Loan Agreement. It would be hard to suggest otherwise given the owner of the property is obliged to pay the rates and had the rates not been paid, the local council threatened to forcibly sell the property. I further find that both Ms Caratti and Ms Bazzo were informed that the rates had been levied.
6. Accordingly, I consider each of the amounts for costs and expenses claimed by the plaintiff were incurred by the plaintiff and are amounts for which the borrower was liable under the Anketell Loan Agreement. It follows that Mr Caratti's liability as guarantor extends to payment of these amounts.

1. As noted above, two amounts were recorded by the plaintiff as having been received from the Herdsman Technology settlement in September 2017, and represented reductions to the loan amount owing.
2. I find that the two amounts from that particular settlement are the only amounts which the plaintiff received under the Anketell Loan Agreement. I will further address the issues surrounding the settlement later in these reasons.

(8) Caratti v Zhou [2024] WASCA 39

1. I do not consider it necessary for the purposes of the Anketell Proceeding, given the findings and conclusions I have reached, to examine the issue addressed by Mitchell J in George 218 Pty Ltd v Bank of Queensland Ltd at [262] therein, which was subsequently addressed by the Court of Appeal in Caratti v Zhou.
2. Mitchell J considered whether the strictness with which courts construe contracts of guarantee applies to notices of demand for payment of a guaranteed debt, where the making of a demand is a condition for the existence of the collateral liability under the guarantee. The Court of Appeal in Caratti v Zhou cited and approved Mitchell J's analysis (at [43] - [44]).

C. Second issue: the plaintiff's claim against Ms Bazzo

(1) Claim under the 2016 Anketell Deed of Guarantee

1. The claim against Ms Bazzo is not made under the original Anketell Loan Agreement (as is the case with Mr Caratti), but rather under the subsequent 2016 Anketell Deed of Guarantee.[203] On occasions during the trial, this later guarantee was described as the 'free standing' or 'hanging' guarantee.
2. By cl 2.1 of the 2016 Anketell Deed of Guarantee, Ms Bazzo agreed to unconditionally guarantee to the plaintiff the 'due and punctual payment' by GH1 of 'all monies now or hereafter owing or payable or to become owing or payable' to the plaintiff by GH1 pursuant to or relating to the Anketell Loan Agreement. Further, Ms Bazzo agreed to unconditionally guarantee to the plaintiff that if GH1 defaulted, she would pay those monies immediately on demand.
3. By cl 3.1, Ms Bazzo agreed that the guarantee of GH1's obligations under cl 2 were 'principal obligations and the [plaintiff] shall not be required to proceed against [GH1] or exhaust any remedies it may have against [GH1] but shall be entitled to demand and receive payment from the [Ms Bazzo] when any payment is due under this Guarantee.
4. Further, by cl 9.1, Ms Bazzo agreed that the amount owing to the plaintiff under the Anketell Loan Agreement, as at 29 February 2016, was $2,683,020.33, represented by a principal sum of $2,412,000 together with arrears of interest and costs in the sum of $271,020.33.[204]
5. The extent of the guarantor's obligation in cl 2.1 of the 2016 Anketell Deed of Guarantee is similar to the obligation in cl 12.1 of the Anketell Loan Agreement. By cl 2.1, Ms Bazzo guaranteed the payment to the plaintiff of the principal due by GH1 under the Anketell Loan Agreement, together with interest accruing thereon. By cl 2.1.2, Ms Bazzo agreed to indemnify the plaintiff 'against all losses, damages, costs and expenses which may be incurred, suffered or sustained' by the plaintiff by reason of 'such default or failure' on the part of GH1 and shall pay to the plaintiff on demand 'all such losses, damages, costs and expenses'.
6. It follows from these contractual provisions that Ms Bazzo has been shown to have a contractual liability to pay the outstanding principal forming the amount loaned to GH1, together with interest accruing on that amount, all of which form part of the 'monies now or hereafter owing or payable or to become owing or payable' to the plaintiff by GH1 pursuant to or relating to the Anketell Loan Agreement. Further, Ms Bazzo is liable to indemnify the plaintiff in respect of the costs and expenses incurred, as set out in cl 2.1.2.
7. Subject to a consideration of the requirement for a demand to be served on Ms Bazzo, the foregoing (together with the earlier analysis regarding the claim against Mr Caratti), but subject to any defences, is sufficient to explain the legal liability on the part of Ms Bazzo as guarantor (jointly and severally with the other guarantors) which has been demonstrated by the plaintiff in respect of:

(a) the initial amount paid on transfer when the loan was assigned by Angas Securities, which is claimed in the prayer for relief at pars 1 and 2 of the Anketell ASOC, in the sum of $2,683,020.33;

(b) the accrued interest under the Anketell Loan Agreement which is claimed against Ms Bazzo in the prayer for relief at par 3 of the Anketell ASOC, from 1 March 2016 to judgment; and

(c) the costs and expenses which are claimed as particularised by the plaintiff in Annexure A to the Anketell ASOC.

1. The conclusion I have earlier reached in respect of the plaintiff's claim against Mr Caratti in the prayer for relief at par 4 of the Anketell ASOC for interest on any judgment sum pursuant to the higher rate of 18.75% under cl 4 of the Anketell Loan Agreement, applies equally to the claim in this regard against Ms Bazzo.

1. As to the requirement for a demand to be made of Ms Bazzo, in order to establish the cause of action against her, the defendants maintained that such a demand was required. I have earlier addressed the principles applicable to this issue, when dealing with the claim against Mr Caratti. The terms of the 2016 Anketell Deed of Guarantee, not the terms of the Anketell Loan Agreement, will determine whether a demand was required as an element of the claim against Ms Bazzo.
2. Turning to the terms of the 2016 Anketell Deed of Guarantee, I recognise that cl 3.1 of the 2016 Anketell Deed of Guarantee describes the guarantor's obligations thereunder as 'principal obligations', which might be regarded as a matter of principle as obviating the typical requirement for a demand. However, this must give way, as a matter of construction, to the express language in cl 2.1.1, cl 2.1.2 and cl 3.1 which refer to a requirement for a 'demand'. In my view, a reasonable businessperson would understand the instrument to require that the guarantors' liability was predicated on a demand having first been issued. Similar language was employed in the guarantee instrument in Netglory Pty Ltd v Caratti which persuaded Edelman J to reach the same conclusion.[205] The language within the later executed guarantee instrument, the 2016 Anketell Deed of Guarantee, is to be contrasted with the language in the original guarantee contained in the Anketell Loan Agreement.
3. As to service of demands upon Ms Bazzo, the findings in this regard in relation to Mr Caratti apply equally to the claims against Ms Bazzo under the 2016 Anketell Deed of Guarantee.
4. I find that a demand was issued to Ms Bazzo on or about 31 May 2019 (Exhibit 231), which attached a copy of the default notice and schedule dated 20 September 2018 (Exhibits 167 and 230). I am accordingly satisfied the plaintiff has demonstrated that demands for the amounts claimed were made by the plaintiff prior to the action being instituted.

D. Third issue: the enforcement representation as an estoppel

1. The enforcement representation is pleaded by the defendants to have been made by Mr Masel at a meeting at the Wickham Street offices of Mr Caratti in January 2016. The representation is pleaded in conjunction with the defendants' contention that they consented to the assignment of the Anketell Loan Agreement and the guarantee contained therein on the basis of the representation. This allegation formed a critical part of the defendants' case in opposing the relief sought in the Anketell Proceeding.
2. At its core, the allegation is that Mr Masel verbally represented that, if the defendants consented to the assignment of the guarantee to the plaintiff, the plaintiff would, in effect, exhaust its rights against the assets secured by the facilities before seeking to recover any shortfall from the defendants through the guarantees. The personal guarantees given by Mr Caratti and Ms Bazzo would operate as something of a 'last resort security'.
3. The defendants maintained at trial the allegations that the enforcement representation was in fact made, that it operated to estop the plaintiff from taking recovery steps in breach of the representation, and that the plaintiff's conduct in seeking to enforce the guarantees amounted to unconscionable conduct contrary to s 12CB of the ASIC Act. I will address the promissory estoppel allegation in this section, and separately address the unconscionability allegation.
4. The allegations in the Anketell ASOC should first be noted, to put the allegations in the defence in context. The relevant pleas in the Anketell ASOC are as follows:

1. On 29 February 2016, in consideration of the payment of the sum of $2,683,020.33, Angas Securities agreed to assign all its right, title and interest in the Loan Agreement, the Variation and Extension Agreement, the Mortgage and the Collateral security agreement (collectively, "the Securities") to the plaintiff.

The agreement to assign the Securities was contained in a deed of assignment duly executed by the parties including the defendants as guarantors on 29 February 2016 ("Assignment Deed").

1. GH1 Pty Ltd and the defendants as guarantors consented to the assignment of the Securities and agreed:

(a) To be bound for the due payment and performance of its obligations and liabilities referred to in the Securities; and

(b) That the outstanding amount under the Securities was the sum of $2,683,020.33 as at 29 February 2016 (clause 8 Assignment Deed).

1. The Anketell Amended Defence pleads, in response, as follows:
   1. The Defendants admit paragraph 21 of the statement of claim and say further that:

21.1 Extension of the term of the Loan Agreement, beyond its expiry on 31 October 2015, increased the potential liability under the guarantee pleaded in paragraph 11 of the statement of claim, with the consequence that the guarantee was discharged, unless the Defendants consented to the assignment of the loan to the Plaintiff;

21.2 in January 2016, the First Defendant met with Steven Masel, a director of the Plaintiff, to discuss the proposed assignment of the Loan Agreement by Angas Securities Limited (ACN 091 942 728) (Angas Securities) to the Plaintiff;

21.3 during the meeting, the First Defendant expressed concern about the assignment of the Loan Agreement, and expressly stated he and the Second Defendant (acting herein for the Second Defendant as well) did not consent to the assignment of the guarantee under the Loan Agreement;

21.4 in response to which, Mr Masel said words to the effect that if the Defendants consented to the assignment of the guarantee, the Plaintiff would, in effect, exhaust its rights against the assets secured by the facilities (being 82 Treeby Road, Anketell in the State of Western Australia, more properly described as Lot 35 on Diagram 32446 being the whole of the land described as Certificate of Title 1718 Folio 747) (the Secured Property) before seeking to recover any shortfall from the Defendants (Enforcement Representation);

21.5 [abandoned]

21.6 Further or in the alternative to paragraph 21.5 above, Defendants at all material times relied on the Enforcement Representation in consenting to the assignment of the Loan Agreement including the guarantee there under, as reflected in EX 101, and would suffer material financial detriment if the Plaintiff were allowed to depart from or act contrary to the Enforcement Representation. In the premises, the Plaintiff is estopped from departing or acting contrary to the same, as further pleaded in paragraphs 28 and 37.1 below.

1. The Defendants admit paragraph 22a of the statement of claim, deny paragraph 22b of the statement of claim and repeat paragraph 21 above.
2. The defendant particularised the allegation by way of separate particulars, asserting that the enforcement representation was made at the offices of the defendant in Wickham Street, East Perth, which was attended by Mr Caratti and Mr Masel.[206]
3. The plea is repeated at [28] of the Anketell Amended Defence, which is a response to the plaintiff's plea at [28] of the Anketell ASOC that the plaintiff was 'entitled to demand and receive payment from the guarantors when any payment was due and was not required to proceed against GH1 Pty Ltd or exhaust any remedies it may have against GH1 Pty Ltd before doing so (clause 3.1 Deed of Guarantee)'. The plea at [28] of the Anketell Amended Defence is as follows:
   1. The Defendants deny paragraph 28 of the statement of claim, repeat paragraph 21 above and say further that:

28.1 in reliance upon the Enforcement Representation and acting in furtherance of the Enforcement Agreement, the Defendants consented to the assignment of the guarantees in or about February 2016 and the Second Defendant signed the Deed of Guarantee;

28.2 the Defendants would suffer detriment if the Plaintiff were permitted to resile from the Enforcement Representation; and

28.3 by reason of the matters pleaded above in paragraphs 21 and 24.1, the Plaintiff is estopped from acting in a manner inconsistent with the Enforcement Representation and is thereby estopped from enforcing the guarantees, and should also not be permitted in law from doing so as it is acting in breach of the Enforcement Agreement, until it has exhausted its claims and remedies against the Secured Property.

1. There are further pleas to the same effect at [32.1] and [37.1] of the Anketell Amended Defence.
2. The essence of the pleaded representation, as it appears in [21.4] of the Anketell Amended Defence above, is that the plaintiff would, in effect, exhaust its rights against the assets secured by the facilities before seeking to recover any shortfall from the defendants pursuant to the guarantees. The assets in question represent the Anketell Property, being the property situated at 82 Treeby Road, Anketell.
3. As appears from the pleadings, and identified earlier in these reasons, the defendants had initially asserted that the representation made by Mr Masel, and accepted by Mr Caratti, also constituted an enforceable agreement between them. That allegation was abandoned on the eve of trial. As I will explain below, the characterisation of the representation as 'an agreement' remains relevant to the analysis.

1. The defendants bear the onus of establishing that the representation was in fact made, that it was reasonably relied on by each of the defendants, and that the plaintiff's failure to act in accordance with the representation has occasioned each of them detriment in a material sense.
2. In undertaking this analysis, it is pertinent to consider the alleged representation in the context of any contemporaneous contractual provisions to which the parties have agreed. The existence of such contractual provisions may operate as a matter of principle to preclude a finding that the alleged representation had the legal effect for which the representee contends, and may also operate to render it less likely that any representation was made or that there was any inducement or reliance. In the present case, the significance of the subsequent written instruments was heavily emphasised by counsel for the plaintiff.
3. It is rare for the courts to find that an estoppel exists where the parties have reduced their arrangement to legal documentation.[207] Further, it has been said that it is difficult, if not impossible, to extract an estoppel from the course of pre-contractual negotiations.[208] The position is otherwise in relation to post-contractual conduct, as explained by Brereton J in Waterman v Gerling Australia Insurance Company Pty Ltd,[209] which is 'the classic territory of promissory estoppel'.
4. In Australian Co-operative Foods Ltd v Norco Co-operative Ltd,[210] Bryson J explained the difficulties of asserting an estoppel in circumstances where the parties have reduced their bargain to a formal instrument, particularly one in which the contractual arrangement would confer powers directly contradicting the representation or promise. Given his primary finding, his Honour's observations were by way of obiter dicta, but remain persuasive. His Honour held:[211]

[50] On the facts in evidence as I understand them there is no basis for concluding that any estoppel exists which prevents Dairy Farmers from relying on or exercising its various rights conferred by cl 8 to control among other things packaging used by Norco, or in particular from enforcing cl 8.4 by preventing Norco from distributing any packaging material without Dairy Farmers' prior written approval.

[51] Even if there were a factual basis for an estoppel, whether viewed as an estoppel by convention or a promissory estoppel relating to the manner in which rights under cl 8.4 would be exercised, the estoppel could not be enforced because the new licence agreement is as its terms show intended to be a comprehensive written expression of the parties' agreement, so that its provisions cannot be qualified by evidence of the terms of the parties' negotiations. The estoppels here contended for would be inconsistent with the express terms of cl 8.4 in that they would qualify the power which it confers, and they would be directly contrary to the terms of cl 22.

[52] In these respects I follow the views of McLelland J in Johnson Matthey Ltd v A C Rochester Overseas Corporation (1990) 23 NSWLR 190. I regard McLelland's views as well founded on the principle of giving effect to the formal, final and considered expression of the parties' contractual intention; the fact that they chose writing to express that intention shows the relative weight they attributed to earlier arrangements and understandings. The view expressed by McHugh JA (dissenting) in State Rail Authority (NSW) v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170 and acted on by Rolfe J in Whittet v State Bank of New South Wales (1991) 24 NSWLR 146 does not, in my respectful opinion, accord appropriate weight to indications of finality and completeness which the parties give when they adopt formal written expression. The judgment of McLelland J was followed by Miles CJ in Skywest Aviation Pty Ltd v Commonwealth (1995) 126 FLR 61: see at 102-106. I respectfully differ from the view of Rolfe J in Whittet and follow the views expressed by McLelland J in Johnson Matthey. I regard McLelland J's view as well founded in principle and I do not regard the decision of the Court of Appeal in State Rail Authority (NSW) v Heath Outdoor Pty Ltd as having established the views expressed by McHugh JA (at 193). My adherence to this view has been reinforced with the passage of time and accumulation of experience of this and many other forensic endeavours to set up estoppels out of the circumstances or terms of pre-contractual exchanges; the evidence offered is often extensive, discursive and inconclusive and, where it is of any value at all, clearly of less value than the considered written expression. Poorly based and incompletely considered forensic attempts to set up pre-contractual estoppels are unfortunately common, and in most cases they are quite unuseful and very wasteful of resources.

1. I respectfully adopt the above statement, and the approach, of Bryson J.
2. The need to address the inconsistency between an earlier representation and the terms of a subsequent formal instrument was considered by the High Court in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd.[212]
3. In Equuscorp, certain investors alleged they were told that their loans would be limited recourse loans, which would primarily be repaid from income generated by the business and would require investors to make only three payments. However, the loan agreements which were later signed by the investors rendered them personally liable to the lender to repay the principal sum lent, together with interest. A written guarantee was also subsequently signed by the promoters of the scheme, which indemnified the investors against any liability beyond the three payments which the investors alleged represented the limit of their liability.
4. Although the facts of the matter have some additional elements of complexity, it is sufficient to note that the investors were ultimately forced to rely on the oral agreement that the loans were limited recourse. The High Court rejected that argument. The court held:[213]

The oral limited recourse terms alleged by the respondents contradict the terms of the written loan agreement. If there was an earlier, oral, consensus, it was discharged and the parties' agreement recorded in the writing they executed. It is the written loan agreement which governed the relationship between Rural Finance and each respondent.

1. The role of estoppel in the context of pre-contractual representations has attracted differing views, influenced by the nature of the estoppel which is advanced and the particular factual setting of the case. So much can be seen in Campbell JA's analysis in Franklins Pty Ltd v Metcash Trading Ltd.[214]
2. It is not necessary in the present case to conclude that an estoppel arising from antecedent negotiations can never be found in the face of subsequent, written, comprehensive and inconsistent contractual documentation, but this circumstance is at least a relevant factor in the analysis.

1. On my assessment, the defendants' allegation that Mr Masel made the enforcement representation in January 2016 at a meeting at the defendant's offices in East Perth did not survive the trial.
2. I reject the allegation and find that, on the evidence as a whole, Mr Masel did not make the enforcement representation, or some representation approximating that representation. The defendants' submission that the enforcement representation has been established must be rejected.[215]
3. There are several difficulties with the defendants' claim in this regard, from a principle, pleading, and an evidentiary perspective.
4. First, as a matter of principle, the defendants' reliance on an undocumented representation made in the antecedent negotiations prior to the formalisation of written and comprehensive documentation in February 2016, encounters head on the difficulties identified in Australian Co-operative Foods by Bryson J, and by the High Court in Equuscorp.
5. There is no indication within the contractual documentation of a term to the effect of the enforcement representation, which also presents for the defendants a problem of proof. The alleged representation would undoubtedly have been an important one. An experienced businessman such as Mr Caratti is likely to have ensured that the issue was addressed in the formal documentation.
6. Not only was the subject not embodied in the written documentation, but there are provisions within the financing arrangements which are directly inconsistent with the asserted representation. For example, cl 12.4 of the Anketell Loan Agreement (which was assigned to the plaintiff by the Anketell Deed of Assignment), which contains the original guarantee given by both defendants, provides that:[216]

The guarantee provided by the Guarantor in this clause 12 is in addition to all other Securities, Security Interests, rights and remedies the Lender has at any time and the Lender may rely on it separately from or in conjunction with any of them as the Lender sees fit and the Lender's rights under the guarantee will not merge in any such other Securities, Security Interests rights or remedies

1. By way of further example, cl 3.1 of the 2016 Anketell Deed of Guarantee expressly provides that the plaintiff:[217]

...shall not be required to proceed against the Debtor or exhaust any remedies it may have against the Debtor but shall be entitled to demand and receive payment from the Guarantor when any payment is due under this Guarantee

1. There are also express stipulations in the instruments which disavow that the guarantors executed the documents on the basis of any promises or representations. These provisions undermine the defendants' case. I refer in this regard to cl 6.3 of the 2016 Anketell Deed of Guarantee and, perhaps less emphatically, cl 13 of the Anketell Deed of Assignment which re-engages the Anketell Loan Agreement which contains an entire agreement and no representations clause (see cl 20 thereof).
2. The difficulty faced by the defendants is brought into sharp focus when one recalls the initially pleaded, but subsequently abandoned, allegation that the representation constituted 'an agreement'. That characterisation of the representation emphasises the importance in the analysis of the subsequently executed written agreements, which are inconsistent with the representation.
3. The assertion of an estoppel in this case, in rather vague terms, does not accord appropriate weight to the indications of finality and completeness which the parties gave when they entered into the formal written expression of their bargain.[218]
4. Second, Mr Caratti's evidence as to the circumstances in which the representation was made did not conform to the pleaded case. The disconformity was pronounced (and recognised by the defendants in their closing submissions).[219]
5. The case as pleaded and particularised was that there was a representation made by Mr Masel at a meeting in January 2016. In his witness statement recording his evidence in chief,[220] which was supplemented with oral testimony on disputed conversations, Mr Caratti referred to two discussions with Mr Masel.
6. The first appears to have been 'in or around November 2015', following a discussion with a representative of Angas Securities.[221] This conversation may have been 'sometime after 9 November 2015', as is stated in Mr Caratti's witness statement in the Hocking Proceeding.[222] Mr Caratti stated that he had made a file note of that discussion with Mr Masel.[223] On the undated file note headed 'Wednesday', which is Exhibit 205, there is a record of an apparent discussion with Mr Masel, following a brief note of a discussion with the Angas Securities' representative, which includes a reference to the plaintiff wanting 'extra security' and includes the following words:

No guarantee

Wants to keep guarantee Will not chase until all lots have been sold.

1. Mr Caratti then refers in his written evidence to a second discussion with Mr Masel, which took place at a meeting, in January 2016.[224] In his witness statement, Mr Caratti states that he countersigned the letter dated 9 December 2015 and the assignment deed to the plaintiff as a result of the statements which were made by Mr Masel at the meeting in January 2016. It is this second meeting which appears to have been the pleaded occasion on which Mr Masel made the enforcement representation, although the file note which is Exhibit 205, on this sequence of events, was prepared to record an earlier discussion.
2. Mr Caratti gave oral evidence at trial as to the discussion with Mr Masel. That evidence was preceded by objections raised by the plaintiff's counsel to ensure that, on this important issue, the evidence was given in a non-leading manner and consistent with the trial directions which had been made as to the viva voce evidence which was permitted in chief.[225]
3. Mr Caratti gave evidence that he had a conversation with Mr Masel in or around 'December 15 or 16', having been shown Exhibit 97 which is the letter dated 9 December 2015 sent by the plaintiff to Ms Bazzo regarding the proposed financing arrangements for the Anketell development.
4. Mr Caratti's initial viva voce evidence was:[226]

SCHOOMBEE, DR: Could that just be brought up. See that document again [being Exhibit 97], Mr Caratti?---

CARATTI, MR: Yes.

SCHOOMBEE, DR: Did you have any discussion with Mr Masel before signing that document?---

CARATTI, MR: Yes, I do recall having a discussion with Mr Masel about it before signing this.

SCHOOMBEE, DR: Yes. Can you remember more or less when that happened?---

CARATTI, MR: It's around - I think it's around December 15 or 16. That's my recollection.

SCHOOMBEE, DR: Sorry, December 15, or December 16, or - - -?---

CARATTI, MR: Around that period of time. That was when we agreed on this - 82 Treeby.

SCHOOMBEE, DR: Yes. And can you recall what the discussion dealt with?---

CARATTI, MR: It was regarding the extent of security that we had given there, and I said that, "You got more than enough security", because I think there was a discussion before that, and he agreed to take some of that security off, and that's when I said, "Drop the guarantees on this one", and he - - -

SCHOOMBEE, DR: Sorry. Can I just pause for a moment there. I'm quite happy now for the document to be removed from the screen, your Honour.

...

SCHOOMBEE, DR: Yes, "Drop the guarantees". Yes?---

CARATTI, MR: Yes. "You've got enough security there". He says, "No, listen, I will" - that's when we agreed that he would not call upon the guarantees until the property was exhausted. So if there was ever any call on the property, he would sell the property first, and if there was any shortfall, he would look for the guarantees after that.

SCHOOMBEE, DR: Yes. Was that something that he expressed?---

CARATTI, MR: As he agreed to, yes.

SCHOOMBEE, DR: Yes. When you say "agreed to", what do you mean by that?---

CARATTI, MR: That he agreed that he would do that.

SCHOOMBEE, DR: Yes. Did he say something (indistinct)?---

CARATTI, MR: That's what he said, yes. He agreed to do that.

1. The reference to a discussion in 'December 15 or 16' is difficult to understand given the contents of Mr Caratti's witness statements. It may be explicable as a result of Mr Caratti's self-confessed 'terrible memory'. It was an issue explored in some detail in cross‑examination. Ultimately, I understood Mr Caratti to accept in his evidence that the particular conversation took place after he had received the letter from the plaintiff dated 27 November 2015 (which is Exhibit 95) given the 'release of security' issue which was prompted by that letter.
2. Mr Caratti's evidence during cross-examination was as follows:[227]

FRENCH, MR: Yes. So you - so it was a discussion between you and Mr Masel that led to an agreement that there would be this release, or partial release of security, in accordance with that rider next to release of security; is that correct?---

CARATTI, MR: My recollection was the first letter was basis and that's when I've pushed back and asked about dropping the guarantees, because he had so much security on 82 Treeby. And that's where he said to me, "Well, I won't - I won't move that out, but I will - I will not call upon your guarantees till the property sells".

1. There was no greater specificity in Mr Caratti's evidence as to the date on which the discussion occurred, at which the enforcement representation was alleged to have been made. In my view, the departure from the pleadings undermined the force of the asserted representation and highlighted the malleable nature of the defendants' case in this regard.
2. Third, the last point leads into the evidentiary difficulties with the asserted representation. My assessment was that the evidence of Mr Caratti in support of the enforcement representation was vague and overly generalised, in contrast to the firm denial given by Mr Masel and the persuasive explanation he offered against a conclusion that he would have entertained a proposal such as this from Mr Caratti. I preferred the evidence of Mr Masel on this issue. My conclusions on the evidence, on this issue, are set out below.
3. It is significant that, given the sequence of events, if Mr Masel had made such a representation to Mr Caratti following the receipt of the letter dated 27 November 2015, the representation was not then recorded in the letter sent by the plaintiff to the defendants on 9 December 2015. That letter recorded a change in position by the plaintiff, as to the release of security, but says nothing about a limitation on enforcing the guarantees. It might reasonably be expected that, having received the letter dated 9 December 2015 and having appreciated the enforcement representation was not included, Mr Caratti would have objected to the letter. Instead, he signed the letter without any objection in February 2016.
4. Allied to the previous point and proceeding on the basis of the sequence of events I consider most likely to have occurred, it is notable that the 'release of security' issue identified in the letter dated 9 December 2015 was then incorporated into the written documentation which was formalised in February 2016. This can be seen in cl 2.4 of the 2016 Anketell Deed of Guarantee. This strengthens the likelihood, in my view, that the only issue of significance discussed by Mr Masel and Mr Caratti was the 'release of security' issue, which was reflected in the letter dated 9 December 2015 and then incorporated into the later instruments.
5. There is evidence that Mr Caratti and Ms Bazzo had, in the past, made changes in writing to financing documentation, where that was necessary to protect their interests. For example, cl 15 of the Anketell Loan Agreement records a number of handwritten changes made by them before that instrument was executed.[228] It is therefore significant that no handwritten changes were made by the defendants to the documentation prepared in February 2016, to capture the enforcement representation and ensure it was incorporated in some way to the written material.
6. Further, the sequence of events casts significant doubt on the veracity of the file note, which is Exhibit 205. Mr Caratti acknowledged in cross-examination that this file note was prepared by him in October 2015, having sworn to that effect in a previous interlocutory affidavit.[229] However, the words in that file note, which purport to record Mr Masel stating that he 'will not chase' the guarantee 'until all lots have been sold', were said by Mr Masel at a meeting which took place no earlier than November, possibly December on his oral evidence, and in January on his pleaded case. I give no weight in those circumstances to that file note to the extent to which the defendants rely upon it to corroborate Mr Caratti's evidence as to the enforcement representation.
7. The defendants also placed reliance on the letter from Ms Bazzo to Taylor Smart, the plaintiff's lawyers, which was sent on 7 June 2019 in response to the demand dated 31 May 2019 (Exhibit 232). That reliance is misplaced, in my view.[230] That document refers to the default notice having been issued 'where it is inconsistent with an agreement reached between your client and Mr Caratti' (emphasis added). The second paragraph of the letter refers, however, to the agreement as being one to extend the loan until the land was titled, on the basis that additional security had been given. It is thus not apparent how this supports the existence of the enforcement representation said to have been made in 2015 or 2016.
8. During the trial, the defendants sought to buttress the enforcement representation allegation by reference to a document which purports to be letter sent from Mr Caratti to Ms Bazzo dated 20 November 2015 (Exhibit 93). The document appears to have been prepared by Mr Caratti and addressed to Ms Bazzo and the trustee for the Gucce Holdings Trust. Although prepared as a letter, there was some suggestion in the evidence of Mr Caratti that the document was a file note. The document purports to record the enforcement representation.
9. In an affidavit sworn by Mr Caratti early in the proceedings, Mr Caratti deposed that this document was an 'outline of proposal' which he 'provided' to Ms Bazzo and the trustee for the Gucce Holdings Trust.[231]
10. The document, if it is properly characterised as a letter, has a certain air of unreality about it, particularly as it is not disputed that Ms Bazzo worked in the same office as Mr Caratti.
11. The document begins 'Dear Tina', concludes with 'Yours faithfully', and is signed by Mr Caratti. In substance, the letter states:

PROPOSED REFINANCE FROM ANGAS - LOT 35, 82 TREEBY ROAD, ANKETELL

I have discussed with Steve Masel the terms of the proposed refinance of the current loan with Angas Securities Limited to Walthamstow Pty Ltd.

In principle, it was agreed that he would agree to the refinance, on the following terms:

• Interest will capitalise and carry the loan until the issue of titles for the subdivision of Lot 35, 82 Treeby Road, Anketell;
• Existing securities will be assigned including personal guarantees, security over Lot 35, 82 Treeby Road, Anketell and additional security given by way of mortgage over properties that Walthamstow is already involve, being:
  • Lots 9001, 9032 and 9033 at Hocking owned by Gucce Holdings Trust;
  • the titles in the Waverly Estate, Beckehnham [sic] owned by Herdsman Tehcnology [sic] Pty Ltd; and
  • Lot 3, Holmes Street, Southern River owned by Byford Land Company Pty Ltd;
• Steve would not agree to release our personal guarantees, but agreed he had sufficient security and would only use the personal guarantees to collect any shortfall (if any) at the end of the developments.

Please confirm whether the above terms are acceptable. (emphasis added)

1. The letter was the subject of concentrated attacks from the plaintiff's counsel as to its veracity, given the manner in which the document was discovered, the lack of any original version being produced, and the consequent inability of the plaintiff to interrogate the metadata associated with the document. I have explored the issues surrounding the discovery of the metadata of this document earlier in these reasons.
2. Although there was some retreat from these attacks in closing submissions, the attacks were justified, in my view. As explained below, I consider that no weight should be given to this document.
3. The document plainly had a singular importance to the defendants' case in the Anketell Proceeding and one would reasonably expect a closer degree of attention would have been paid by the defendants to the manner in which this document was discovered and how the absence of the original electronic version was explained.
4. However, quite apart from those forensic issues, I formed the view on the evidence of Mr Caratti that it is inherently unlikely that Mr Caratti wrote any such letter to his de facto partner, being a person who worked in the same office as him, for the reason that he has a 'terrible memory'. I do not accept his evidence that this was a common habit of his.
5. The following interchange in Mr Caratti's evidence is relevant in this regard, which followed the evidence of Mr Caratti that he and Ms Bazzo had been de facto partners since the 1990s, they lived together, had worked on property developments together for well over 20 years, and worked from the same office:[232]

FRENCH, MR: Yes. And so you would have frequent conversations about matters relating to the various property developments you work on together?---

CARATTI, MR: Not a lot.

FRENCH, MR: Okay. But she's in the same office and you live together?---

CARATTI, MR: Yes.

FRENCH, MR: You must talk about it?---

CARATTI, MR: Never talk at home about work.

FRENCH, MR: But you worked together - I agree with that. I certainly agree with you on that, but you - you're in the same office at Wickham Street?---

CARATTI, MR: She's at one end, and I sit the other end. We hardly see each other.

FRENCH, MR: Yes. Okay. Now, can I take you to exhibit 93.

...

FRENCH, MR: Yes. So you had that conversation with Steve in October before you send off the - send him the figure. And then, at least over three weeks later, you go and sit down and type Tina a letter?---

CARATTI, MR: What's so unusual about that?

FRENCH, MR: Well, she's just down the hall. You could have walked down the hall and just said, "I spoke to ... Steve"?---

CARATTI, MR: I've got a terrible memory, so I do things and put a file note on the file so it sits there so we all know where we're going. That's a - that's a common habit. When I - when we do a loan document, someone sets it all out, sits it on the front of the file, so when we go looking for it we know what the document says, because (indistinct) scanned it (indistinct) every time.

FRENCH, MR: I've got a terrible memory too. So you're saying you've got a terrible memory, so you probably relied on the file note, exhibit 8 [sic - should be Exhibit 205], because you just said you needed to rely on your note?---

CARATTI, MR: That is what you're saying.

FRENCH, MR: No, that's what you've just told me?---

CARATTI, MR: Yes, I've got a terrible memory. That's the truth.

1. The interchange thereafter, at ts 1976 - 1977, highlighted the additional detail in the letter sent by Mr Caratti to Ms Bazzo, which was not contained in the file note prepared by Mr Caratti in October 2015 (being Exhibit 205).
2. Mr Caratti also clarified that although the document was drafted as a letter to Ms Bazzo, he described it as a 'file note' which he would place on file. This evidence may explain why Ms Bazzo was not directly cross-examined about the document. However, I must say, it is difficult to characterise this document as a file note, given its style and content.
3. In any event, this document is something of an outlier in the documentary material before the court, to the extent it purports to be a near contemporaneous typed, written record prepared by Mr Caratti of a conversation he had with Mr Masel.
4. It might also be asked why Mr Caratti did not consider it more advisable to send a letter of this nature to Mr Masel, rather than to Ms Bazzo or to merely create a file note, in order to document the representation. The former would have been a far more prudent step. This adds to the unusual nature of this particular document.
5. To be clear, I consider it is highly unlikely the letter which is Exhibit 93 was prepared in the manner contended by Mr Caratti, and I place no weight on the document, in these circumstances.
6. I turn next to Mr Masel's evidence. During cross-examination, Mr Masel rejected the suggestion he had made the enforcement representation and, as previously explained, I regard the evidence of Mr Masel to be preferred over that of Mr Caratti. This particular clash in their evidence is also to be resolved in favour of Mr Masel's firm and clear denial, which was not disturbed in cross-examination, given that I accept as credible the evidence of Mr Masel as to his approach to risk when structuring financing arrangements and his evidence that he had never previously put in place a guarantee arrangement which he had then agreed to refrain from enforcing.
7. I accept that Mr Masel was particularly conscious of the importance of structuring the finance arrangements and his security position to mitigate or manage these risks. A request from Mr Caratti to this effect, that is, to agree to only enforce the guarantees if there was any shortfall, would have been a 'red flag' for Mr Masel.
8. The following evidence of Mr Masel, given in chief, explains his approach to guarantees:[233]

FRENCH, MR: ... Do you recall any discussion about limiting any guarantees that you might take under assignment?

MASEL, MR: No. I don't.

FRENCH, MR: Okay. This all happened many years ago. This was 2015 - - -?

MASEL, MR: Yes.

FRENCH, MR: - - - which is coming up to almost nine years ago. How can you be so sure that no such discussion occurred?

MASEL, MR: Well, I can be sure. Guarantees are a - are very, very important part of the security and your documentation. If there had been any discussion on guarantees, I would have remembered. In fact, there's a number of - there's a number of reasons I can - I can explain to you why there is just no chance we would have had a discussion on the guarantee and there's no chance I would have modified the guarantee. If you - if you - had Mr Caratti - if Mr Caratti came to me and asked me to modify the guarantee or, in fact, if anybody would come to me and ask for a guarantee to be modified ...

FRENCH, MR: What do you mean when you say modified, just for the court so we understand?---

MASEL, MR: Modified as in - is to restrict it to having be - having to be called upon at the end - or after the property has been sold so you can't call upon it at any time. That's the modification that you're - that - - -

FRENCH, MR: Well, I'm asking you to tell me?

MASEL, MR: Yes. Well, that's - - -

FRENCH, MR: The question that was originally asked is was there any discussion about limiting the enforcement of guarantee?---

MASEL, MR: No. Okay. So it's - we always insist on a full guarantee that can be called on at any time. It's immediately enforceable and there was no discussion on changing that. And if he had come - if he had asked me to change it the same as anyone else who had come to me with a loan proposal and said we would like to limit the guarantee, ie, make it only useable at the end of the - after you sell the property, that is just - that is just like a red - like a red flag, just waving in front of your eyes like that.

FRENCH, MR: ... Just let me stop you there. You just said it's a red flag?

MASEL, MR: Yes.

FRENCH, MR: Why is that a red flag? Can you explain?

MASEL, MR: Because if somebody wants to limit the guarantee, to restrict the guarantee, that means - if they haven't got the confidence in their own property and their own financial resources to give a full guarantee and they want to modify that guarantee to restrict their risk, there's no way that I would want to take on the risk that they're not prepared to take on.

FRENCH, MR: Okay?

MASEL, MR: That's the red flag. I would be saying, "No. No. No. Whatever reason, I would not get involved in that because you're not prepared to put your full guarantee on."

FRENCH, MR: Okay?

MASEL, MR: No way would I get involved in that.

FRENCH, MR: Okay. And how does that apply to that particular approach you've just described applied to development loan in particular?---

MASEL, MR: Yes. Well, that development loans is another reason that I would never agree to a restricted guarantee because development loans are much riskier than a standard loan. A standard loan is when there's already a building on a property and you know what you're getting for security.

FRENCH, MR: Why is a development loan riskier than a loan where there's a building already on the property?---

MASEL, MR: Because with development loans, you have to create the security. You're creating the project and there's a lot of development works and when you do that, there's a lot of risks that - - -

FRENCH, MR: Sorry. Sorry. You just - just to be clear for the transcript and the court, you said, "when you do that". You're not building anything, are you, though?---

MASEL, MR: No. No. Sorry. When - - -

FRENCH, MR: Can you just clarify?---

MASEL, MR: ‑ ‑ ‑ a development is undertaken by the borrower or the developer, there are a lot of risks that a lender is not aware of because development projects can get into some trouble for all sorts of reasons. Contractors or subcontractors have money problems. They do works that don't comply with the requirements with - with approval conditions. For any number of reasons, they can be held up. They can - they can - they can be delayed and they can even be - be stopped. And if a development loan - a development project stops part of the way through, then how do you recover your money? Because they're very, very hard to sell. When a development loan is - a development is part of the way through and you have to recover your money, what do you do to recover it? Because it's very hard to find a buyer for a partially completed development because the buyer has to take on an enormous amount of risk. He doesn't know how far the development has got fully. He doesn't know what's under the ground. He has to take on a considerable amount of risk and it's very hard to find a buyer and sometimes, you can't find a buyer. Development - half-finished developments sometimes lay idle for years. Now, if you can't sell the property, you have to then revert to collecting your money from the - on the guarantee. Now, if you need to collect your money from the guarantee, you can't - it just doesn't make sense. You can't wait until the project is - the property is sold to collect it. You need the guarantee before the property is sold. That's the whole point of it.

1. Taking all of the matters above into account, I consider it is inherently unlikely that Mr Masel made any statement to Mr Caratti to the effect, or approximating, the estoppel representation. The allegation that such an apparently important statement was made but not thereafter recorded in the written instruments, is highly implausible in my view. I reject the allegation.
2. In these circumstances, it is strictly unnecessary, and somewhat artificial, to address the issues of reliance and detriment. However, I consider the following matters should be noted in respect of these issues.

1. As to the element of reliance, it is ordinarily necessary for the promisee to show not merely that the promise was one factor taken into account in motivating the promisee's action or omission, but that the promisee would not have acted or omitted to act in the absence of the promise.[234]
2. In Sidhu, Gageler J (as his Honour then was) explained the correct approach as follows:

[90] Paraphrasing Dixon J in Thompson v Palmer, the respondent bore the onus of establishing that she believed the appellant's representations and that, on the faith of that belief, she took a course of action or inaction which would turn out to be to her detriment were the appellant to be permitted to depart from those representations. The respondent did not need to establish that the belief to which she was induced by the appellant's representations was the sole or predominant cause of the course of action or inaction she took but, in the language of Rich, Dixon and Evatt JJ in Newbon v City Mutual Life Assurance Society Ltd, she did need to establish that the belief was a "contributing cause".

[91] To establish that the belief to which she was induced by the appellant's representations was a contributing cause to the course of action or inaction which she took, the respondent needed to establish more than that she had the belief and took the belief into account when she acted or refrained from acting. She needed to establish that having the belief and taking the belief into account made a difference to her taking the course of action or inaction: that she would not have so acted or refrained from acting if she did not have the belief.

[92] The need for the respondent to establish such a difference stems from what Dixon J described in Grundt v Great Boulder Pty Gold Mines Ltd as the "indispensable" condition that a party asserting an estoppel "must have so acted or abstained from acting upon the footing of the state of affairs assumed" that the party asserting the estoppel "would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption". That is to say, "the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted". There can be no real detriment if the party asserting the estoppel would have been in the same position in any event.

[93] The question of causation is therefore ordinarily appropriately framed, as it was implicitly framed by the primary judge in the present case, as being: "Despite any other contributing factors, would the party seeking to establish the estoppel have adopted a different course (of either action or refraining from action) to that which [the party] did had the relevant assumption not been induced?" (footnotes and citations omitted)

1. In the present case, the defendant must therefore establish that having the understanding as to the limit on the plaintiff's enforcement action and taking that understanding into account made a difference to them taking the course of entering into these arrangements, and that they would not have so acted or refrained from acting if they did not have that understanding.
2. In my view, even if the representation had been found to have been made, there is no basis to conclude that the defendants reasonably relied on an understanding that the plaintiff would refrain from enforcing the guarantees until it had exhausted enforcement action against the other securities. The following matters explain this conclusion.
3. First, the absence of any written confirmation of the representation passing between Mr Masel and Mr Caratti, and the absence of the issue within the final financing arrangements, weighs against any conclusion that Mr Caratti regarded the matter as one of importance, upon which he was relying in order to enter into the transaction. It would be reasonable to have expected Mr Caratti to raise with Mr Masel the omission by Mr Masel to record the issue in the letter dated 9 December 2015, or to record it in the final transaction documents.
4. Second, if the issue was of some significance to Mr Caratti, I would reasonably expect him to have discussed the issue with Ms Bazzo at the time, and before the financing arrangements were executed. On his own evidence, he did not discuss it with her. Putting to one side Exhibit 93, given my finding that it was most unlikely to have been prepared in the manner Mr Caratti explained, it follows that this apparently important representation was not mentioned by Mr Caratti to his de facto partner (who was about to execute some further important financing documents including a personal guarantee) and did not find voice in the transaction documents. This strikes me as highly implausible, but certainly weighs against any conclusion that Mr Caratti (much less Ms Bazzo, who gave no evidence on the issue) relied upon the statement said to have been made by Mr Masel.
5. Third, I have found on the evidence that it was Mr Caratti who approached Mr Masel to take the assignment of the loan from Angas Securities, not the other way around. Mr Caratti had indicated to Mr Masel that there was 'pressure on him' at the time. Therefore, if there was any momentum to secure the assignment from Angas Securities, it was driven by Mr Caratti rather than Mr Masel. This weighs against a conclusion that Mr Caratti relied upon an individual representation given by Mr Masel in order to agree to the arrangement. It is more likely that Mr Caratti would have been prepared to execute the documents whether or not this asserted representation was made.
6. Fourth, there is no evidence that Mr Caratti or Ms Bazzo structured their personal finances or assets in some way, or took some additional steps in the running of their property development business, on the strength of the representation said to have been made by Mr Masel.
7. Fifth, the plaintiff's submissions, that it would be manifestly unreasonable for the defendants to 'rely upon a pre‑contractual representation not to enforce [a] guarantee contained in a contractual clause that has not yet been signed up to and could easily be modified, in accordance with the past practice of the parties', should be accepted. These is nothing apparent from all of circumstances which provides support for a decision by the defendants (or, perhaps, more correctly, a decision made only by Mr Caratti) to proceed to execute the instruments on the strength of an undocumented verbal representation given by Mr Masel, which was in conflict with the express terms of those instruments. The prior relationship between Mr Caratti and Mr Masel does not suggest otherwise and, indeed, given Mr Masel's cautious approach to managing risk, points against the approach adopted by Mr Caratti.

1. The consequence of the promisee's reliance must be that the promisee will suffer detriment if the promise is not fulfilled, in the sense that the promisee will be left in a worse position, as a consequence of reliance upon the promise, than if the promise had not been made. It is the existence of detriment 'arising from reasonable reliance upon an unfulfilled promise that completes the recognition of the estoppel and moulds the remedial response'.[235]
2. The question of detriment is to be assessed as at the time a party seeks to depart from the assumption or expectation.[236]
3. On the assumption the representation was made, and reasonable reliance is demonstrated, the plaintiff's failure to honour the representation would likely lead to detriment on the part of the defendants. The relevant detriment is the pursuit of the defendants for the full amount of the debt prior to the exhaustion of the securities through the sale of the Anketell Property. I accept that would be a sufficient detriment.

1. The estoppel pleaded by the defendants is fundamentally unpersuasive on several levels, as explained above. The defendants' claim that the plaintiff should be estopped from departing from the pleaded representation, which estoppel is said to preclude enforcement of the guarantees against both defendants, must be dismissed.
2. A final point which did not receive much attention at trial is whether, even if the enforcement representation was established, it may be found on the evidence that the plaintiff in fact discharged the promise. That is, was it sufficient that the plaintiff entered possession of the 'Secured Property' and took steps to sell the property, in a manner which did not breach its equitable duty and was not unconscionable, as I have concluded later in these reasons. Given my earlier findings, it is unnecessary to resolve this issue.

1. In light of the finding that the enforcement representation was not in fact made by Mr Masel, it is strictly unnecessary to consider the further plea based on statutory unconscionability and whether the plaintiff acted unconscionably in enforcing the guarantees against the defendants.
2. However, for completeness, I will nonetheless proceed to consider this aspect of the matter as well. The defendants, of course, bear the onus of demonstrating that statutory unconscionability has been established.

1. The allegations in the Anketell Amended Defence which raise the issue of unconscionable conduct are found in [32.4] ‑ [32.5] and [37.3] ‑ [37.4]. The pleading first states, in response to the demand issued by the plaintiff on 20 September 2018, that:

[32.4] The conduct of the Plaintiff in demanding payment from the Defendants without first exhausting its claims and remedies against the Secured Property, was conduct which was unconscionable for the purposes of section 12CB of the ASIC Act; and

[32.5] The Defendants are entitled to relief under section 12GM of the ASIC Act ... to confirm that the Plaintiff cannot demand payment from the Defendants without first exhausting its claims and remedies against the Secured Property.

1. The pleading next states, in response to the further demand issued by the plaintiff on 31 May 2019, that:

[37.3] The conduct of the Plaintiff in demanding payment from the Defendants without first exhausting its claims and remedies against the Secured Property, was conduct which was unconscionable for the purposes of section 12CB of the ASIC Act; and

[37.4] The Defendants are entitled to relief under section 12GM of the ASIC Act ... to confirm that the Plaintiff cannot demand payment from the Defendants without first exhausting its claims and remedies against the Secured Property.

1. As is evident from the foregoing, the pleading of the unconscionability allegation is rather bare.

1. Part 2 of the ASIC Act contains a suite of consumer protection provisions concerning financial services. Subdivision C of div 2 of that part of the legislation is concerned with 'Unconscionable conduct'. There are two prohibitions therein.
2. The first prohibition is in s 12CA(1) which prohibits a person, in trade or commerce, from engaging in conduct in relation to financial services if the conduct is 'unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories' . The prohibition in s 12CA(1) does not apply to conduct that is prohibited by s 12CB, given the terms of s 12CA(2).
3. The second prohibition, and the one on which the defendants in the present case rely, is found in s 12CB(1). That provision prohibits conduct which 'is, in all the circumstances, unconscionable' in connection with the supply or acquisition, or possible supply or acquisition, of financial services in trade and commerce.
4. Where a contravention of s 12CB is demonstrated, the court is vested with broad powers to grant relief under s 12GM, including compensation orders and the power to vary or invalidate contractual provisions.
5. Statutory unconscionability is not a defined concept. The term 'unconscionable' in s 12CB is not limited to the unwritten law relating to unconscionable conduct: s 12CB(4)(a). Thus, the boundaries of the equitable doctrine, which were stated by the High Court in Kakavas v Crown Melbourne Ltd,[237] among other authorities, do not limit the scope of statutory unconscionability.
6. The statute contains a list of considerations to which the court may have regard for the purposes of s 12CB. Those considerations do not limit the court's enquiry: s 12CC(1) and (2). By way of example, s 12CC(1) identifies the following considerations as relevant:

(a) the relative strengths of the bargaining positions of the parties (s 12CC(1)(a));

(b) whether the person asserting unconscionable conduct was able to understand any documents relating to the financial services (s 12CC(1)(c)); and

(c) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the person asserting unconscionable conduct by the other party in relation to the financial services (s 12CC(1)(d)); and

(d) the extent to which the parties acted in good faith (s 12CC(1)(l)).

1. Further, by the terms of s 12CB(4)(c), the intention of Parliament is expressly stated. Specifically, the intention is that:

...in considering whether conduct to which a contract relates is unconscionable, the court's consideration of the contract may include consideration of:

(i) the terms of the contract; and

(ii) the manner in which and the extent to which the contract is carried out;

and is not limited to consideration of the circumstances relating to formation of the contract.

1. The first point to observe in relation to statutory unconscionability is that whether or not conduct is unconscionable is a decision to be made on the facts, having regard to all relevant circumstances. In Mineralogy Pty Ltd v Sino Iron Pty Ltd,[238] the Court of Appeal of Western Australia observed that:

Moreover, it is well-established that, like a court examining a claim of unconscionable conduct in equity, a court evaluating an allegation of statutory unconscionable conduct must have regard to all the circumstances of the case. Determining whether a party to a transaction has engaged in unconscionable conduct will entail 'a precise examination of the particular facts' and 'every connected circumstance' as well as 'a scrutiny of the exact relations established between the parties'.

1. Further, statutory unconscionability requires an objective evaluation of behaviour including the reasons for such behaviour, and the effect or likely effect of that behaviour.
2. As to the content of the concept of statutory unconscionability, the High Court has explored that issue in recent years, particularly in Australian Securities and Investments Commission v Kobelt[239] and, to a lesser extent, in Stubbings v Jams 2 Pty Ltd.[240] Since the decision in the present matter was reserved, the High Court has further considered the issue, but it is only necessary for present purposes to refer to Kobelt and Stubbings.
3. In essence, a determination under s 12CB requires a consideration of the relevant circumstances and any of the applicable, but non-exhaustive, factors in s 12CC(1), by reference to the ordinary meaning of the term 'unconscionable'. That term was deliberately chosen by the legislature as opposed to terms such as 'unjust', 'unfair' or 'unreasonable'.[241]
4. The conduct proscribed by the section as being 'unconscionable' is conduct that is so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience.[242]
5. The use of this language to describe the concept tends to represent the more appropriate, modern focus, that is to assess whether the conduct is offensive to conscience, being so far outside societal norms of acceptable commercial behaviour, rather than by reference to more arcane language such as a 'high level of moral obloquy'.[243]
6. In Kobelt, Gageler J explained that:[244]

The judgment required of a court exercising jurisdiction in a matter arising under s 12CB is a heavy one. For a court to pronounce conduct unconscionable is for the court to denounce that conduct as offensive to a conscience informed by a sense of what is right and proper according to values which can be recognised by the court to prevail within contemporary Australian society. Those values are not entirely confined to, or entirely removed from, the values which historically informed courts administering equity in the development of the unwritten law of unconscionable conduct. They include respect for the dignity and autonomy and equality of individuals. They include respect for the cultural diversity of communities. (footnotes omitted)

1. In Stubbings, the High Court was concerned with the conduct of a lender vis a vis a guarantor. The factual setting was quite different, however, to the present matter. The lender in Stubbings was in the business of asset‑based lending or pure asset lending. As described by the plurality, this type of lending has the distinguishing feature, which often makes it easier for a borrower to obtain finance, that the loans are made exclusively on the basis of the value of the assets securing the loan 'without regard to the ability of the borrower to repay by instalments under the contract, in the knowledge that adequate security is available in the event of default'. No allegation of this kind is pleaded in the present case.
2. It was apparent the guarantor in Stubbings required competent independent financial advice in respect of a loan which was said to be for business purposes, but in fact it was for a house the guarantor intended to live in, and to refinance the mortgages on two other properties until they were sold.
3. The borrower was a company owned and controlled by the guarantor. The company had no assets and had never traded. The guarantor was unemployed and in a poor financial position (described as 'bleak' by the trial judge), with no capacity to repay the deposit on the property, and with no other assets other than two other properties.
4. A certificate of financial advice was signed by an accountant but it was found to be a precautionary artifice, together with the solicitor's certificate, designed to prevent an inference that the lenders were wilfully blind to the obvious danger of the transaction to the appellant. The certificate of independent financial advice, signed by the accountant, stated that the advice had been given to the borrower entirely independently of the guarantor. It contained no substantive information about the borrower, the guarantor, or the transaction.
5. The trial judge found that the guarantor's indebtedness to the lenders had been procured by unconscionable conduct on the part of their agent, which was attributable to them. This conduct was found to be contrary to equitable principle and contrary to s 12CB of the ASIC Act. The Victorian Court of Appeal overturned the trial judge's decision, concluding that the evidence could not support a finding of unconscionable conduct attributable to the respondents
6. On appeal to the High Court, the lenders argued that there was nothing inherently unconscionable about asset‑based lending insofar as it involved lending on the value of the assets that secure the loan without any reliance upon the borrower's ability to repay the loan from his or her income or other assets. The guarantor conceded that general proposition, but contended that, on the unchallenged findings of fact made by the trial judge, the loans to the company and the guarantee were effected in circumstances which made the enforcement of the respondents' rights against the appellant unconscionable.
7. The High Court upheld the appeal. The appeal turned on the extent of the lender's agent's knowledge of the guarantor's circumstances and whether the agent exploited that disadvantage. The plurality did not consider whether the lender's conduct was unconscionable in terms of s 12CB, and Steward J did not express an opinion as to the application of the provision. Gordon J concluded that the lender's conduct was unconscionable contrary to s 12CB.
8. Each member of the court found the conduct was unconscionable in equity. In this regard, the plurality held:[245]

The appellant's lack of commercial understanding coupled with his inability to repay the loans from his own income or other assets meant that default in repayment, and the consequent loss by the appellant of his equity in his properties by way of interest payments to the respondents, were inevitable as a matter of objective fact. The respondents, through their agent, sufficiently appreciated that reality that the exercise of their rights under the mortgages to turn the appellant's disadvantages to their own profit was unconscionable. Equitable intervention was justified in this case 'not merely to relieve the [appellant] from the consequences of his own foolishness ... [but] to prevent his victimisation'. (footnotes omitted)

1. In the circumstances of that case, the High Court viewed the conduct of the lenders (through their agent) as amounting to an unconscientious taking advantage of the special disadvantage of the guarantor, involving a lack of assistance or explanation where that was necessary.
2. Further, the plurality concluded that:[246]

The inevitable outcome of the transaction was, objectively speaking, that the appellant's equity in his properties would be taken by the respondents by way of interest payments, including at default interest rates. The dangerous nature of the loans, obvious to [the agent] but not to the appellant, was central to the question whether the appellant's special disadvantage had been exploited by the respondents.

1. The defendants submit that statutory unconscionability, unlike the position in equity, does not require proof of a pre-existing disability or vulnerability, nor does it require that the defendants demonstrate a predatory state of mind on the part of the plaintiff.[247] The position in this regard appears unsettled, as explained by Smith J in La Trobe Financial Asset Management Limited v Nikolyn Pty Ltd.[248]
2. I will assume, without deciding, that the defendants need not specifically demonstrate that they had a pre-existing disability or vulnerability, and need not demonstrate a predatory state of mind on the part of the plaintiff. I will proceed on the basis that I should not take the serious step of denouncing conduct as unconscionable unless I am positively satisfied that the conduct is offensive to a conscience informed by a sense of what is right and proper according to values which can be recognised by this court to prevail in Australian society.[249]

(4) Has unconscionable conduct been demonstrated?

1. The first difficulty encountered by the defendants in mounting the statutory unconscionability claim is that the pleaded case is largely bereft of detail. The plaintiff, in its opening submissions, properly criticised the absence of any pleaded factual basis to sustain the conclusion that the asserted conduct of the plaintiff would be unconscionable.[250]
2. It is certainly true that the defendants' pleading makes only a broad reference to the plaintiff's conduct, in seeking to enforce the guarantees prior to exhausting its claims against the secured property, and fails to identify any specific factual basis upon which it is said this conduct is unconscionable. The barren nature of the pleading is a concern. The pleading of such a serious allegation must do more than proceed on assertion, awaiting greater particularisation post-trial.
3. On the pleaded case, then, the defendants seek to persuade the court that the failure by the plaintiff to honour the verbal representation of Mr Masel as to the manner it would enforce the guarantees (assuming that representation was made, contrary to my finding), rises to the height of unconscionability.
4. The case pleaded by the defendants is thus fundamentally focused on a failure to give effect to a pre-contractual promise as to the manner of enforcement of the guarantees. The defendants submitted that 'the mere non-performance of a pre-contractual representation or promise and subsequent enforcement of inconsistent express contractual terms subsequently agreed to by a sophisticated commercial party does not constitute unconscionable conduct',[251] relying on the decision of the Victorian Court of Appeal in Body Bronze International Pty Ltd v Fehcorp.[252]
5. The point was specifically addressed in Body Bronze by Macaulay AJA, with whom Harper and Hansen JJA agreed.[253] I respectfully agree with that analysis. A failure to honour a promise, like a breach of a contractual provision, without more, is unlikely in my view to satisfy the conception of unconscionability contemplated by s 12CB(1).
6. I therefore agree with the plaintiff's submission that the case as pleaded does not rise sufficiently high enough to demonstrate a basis for statutory unconscionability. The pleaded case falls short of that. Additional matters going to the plaintiff's state of mind or conduct are necessary to demonstrate the necessary 'moral taint'. The defendants should be held to the pleaded basis on which statutory unconscionability is alleged.
7. Let me assume, however, that the generalised plea of statutory unconscionability permits the defendants to now rely upon all the circumstances surrounding the making of the representation and the transaction to support the contention that s 12CB(2) has been infringed. I must say, even if the case is regarded as unconstrained by the pleading, it is not easy to understand how the defendants articulate the claim of statutory unconscionability in relation to the representation and the conduct in issuing demands in 2018 and 2019.
8. The submissions made in closing do not assist. The defendants included in their closing submissions general references to the plaintiff's business being 'purely that of an asset lender'.[254] That proposition was not developed, and certainly ought to have been pleaded (or explained) with some greater detail.
9. Taking all of the circumstances into account, the defendants have not demonstrated a basis to discharge the heavy onus that the plaintiff engaged in unconscionable conduct. The evidence adduced at trial and identified by the defendants falls hopelessly short of any conclusion which would justify a finding of unconscionability on the part of the plaintiff in this regard. There is no evidence of commercial unfairness on the part of the plaintiff and no evidence that the sending of the demands in 2018 and 2019 (and presumably then proceeding with this action) amounted to such a 'departure from the norms of acceptable commercial behaviour as to be against conscience or to offend conscience and so be characterised as unconscionable'.
10. None of the factors identified in s 12CB(1) may fairly be said to be engaged in this case. The relative bargaining positions of the parties does not loom as an issue, there is no suggestion the defendants were unable to understand or comprehend the situation they were in or the documents they executed, no evidence of undue influence or pressure is apparent, and no lack of good faith emerges on the evidence.
11. It must be remembered that the defendants' allegation in this regard is that the plaintiff's conduct in enforcing the guarantees, through issuing notices of demand, contrary to a verbal representation, occurred in a context in which the parties did not document the verbal representation but rather, thereafter, executed formal agreements which were inconsistent with that representation. In entering the formal agreements, there is no suggestion that the defendants were being pressured by Mr Masel or that Mr Masel placed unfair demands upon them. As earlier noted, it was Mr Caratti who had approached Mr Masel with a view to the plaintiff taking an assignment of the loan from Angas Securities.
12. It is highly relevant to the analysis of unconscionability that both Mr Caratti and Ms Bazzo are experienced business people. They have a long history of being engaged with property developments and dealing with financiers, particularly Mr Caratti. They were both well able to protect themselves when entering into the arrangements in question in 2016 and when receiving the formal demands from the plaintiff in 2018 and 2019.
13. To the extent to which Mr Caratti was under some pressure at the time from Angas Securities, that did not form a significant part of his evidence in this matter and I did not detect any suggestion from Mr Caratti that this pressure forced him to accept an arrangement with the plaintiff with which he was not comfortable or happy. The decision was fundamentally one made by him and Ms Bazzo, not influenced by Mr Masel.
14. Mr Caratti and Mr Masel had also had a long business relationship before this, stretching back to the late 1990s. This prior working relationship tends to weaken any commercial unfairness asserted by the defendants. It is more likely that this prior association between the parties permitted Mr Caratti to raise any concerns he had with the conduct of Mr Masel and the plaintiff. On the evidence, it can be said that Mr Caratti was no shrinking violet and well able to voice his frank views when necessary.
15. By the time the demands were issued by the plaintiff in September 2018 and May 2019, the plaintiff and the defendants had been managing a commercial relationship governed by the written terms of the financing instruments for some years. Those written terms were directly inconsistent with the pleaded representation, and yet the defendants say the representation provided a foundation for the unconscionable conduct allegation in this case.
16. The overall circumstances do not demonstrate the necessary moral taint, trickery or sharp practice, or conduct that is so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience, which is required to ground a finding of statutory unconscionable conduct.

1. I must therefore reject the defendants' claim that the plaintiff engaged in unconscionable conduct as pleaded in [32.4]-[32.5] and [37.3]-[37.4] of the Anketell Amended Defence.

F. Fifth and sixth issues: the conduct of the plaintiff as mortgagee in possession

1. It is an agreed fact that the plaintiff, as mortgagee, entered into possession of the Anketell Property on 9 October 2018 and remained in possession until 15 September 2022. That is a period of possession of some 47 months.
2. The conduct of the plaintiff during this period forms the basis of the claims pleaded at [35] of the Anketell Amended Defence. There are two claims advanced. The defendants bear the onus of demonstrating both of them.
3. First, the plaintiff is alleged to have breached the duties it owed to the borrower and the defendants in relation to exercising its power of sale for the 'Secured Property', being the Anketell Property, which were:[255]

(a) to exercise the power of sale in good faith, that is, conscionably;

(b) to take reasonable steps to obtain a proper price;

(c) not to fraudulently or wilfully or recklessly sacrifice the interests of the defendants; and

(d) to exercise the power for proper purposes, and in a provident way, with due regard to the rights and interest of the defendants.[256]

1. Second, the plaintiff's failure to genuinely or properly attempt to realise the 'Secured Property' as mortgagee in possession is said to be unconscionable conduct for the purposes of s 12CB(1) of the ASIC Act.[257]
2. In both instances, the plaintiff's conduct is pleaded to have caused the defendants loss and damage, being the defendants' exposure to liability for interest to the plaintiff, which accumulated between 5 October 2018 and 15 September 2022, and the interest that has and continues to accumulate from 16 September 2022.[258]
3. The plaintiff, as mortgagee, undoubtedly had power to sell the mortgaged property. That is a power found within the contractual instruments,[259] but is given separate statutory effect by s 108 of the TLA.
4. The conduct about which the defendants complain includes the appointment of a selling agent by the plaintiff who was allegedly inexperienced, and is said to have failed to take active steps to genuinely market the property. The defendants' complaints also focussed on the plaintiff's treatment of the offer which was made to purchase the property in March 2019. That offer was made by a company called Wantree Holdings Pty Ltd (Wantree Holdings).
5. The defendants plead as follows in the Anketell Amended Defence:

[35.8] in or around November 2018, Churchill Knight issued an Information Memorandum in two versions (EX 0208 and 0209), which advertised the Secured Property respectively for sale at a price of $4,200,000 and then $3,900,000 (herein the jointly [sic] Memorandum). Other than publication and distribution of the Information Memorandum, the Plaintiff and Churchill Knight did not take any active steps to genuinely or properly advertise and market the Secured Property for sale to obtain a proper price for the Secured Property; (the markup shows the amendments introduced during the trial)

[35.10] Between 5 October 2018 to 15 September 2022, the Plaintiff failed to take genuine and/or all reasonable steps to advertise, market and sell the Secured Property, whilst it was mortgagee in possession. The failure to sell included not acting reasonably or conscionably in refusing to accept the only offer to purchase obtained as reflected in EX 0178 dated on or about 28 March 2019, which offer was for $4 million, within the price range of [sic] as per the Memorandum referred to in 35.8 above; (the markup shows the amendments introduced during the trial)

1. The plaintiff denies that it breached any duty it owed, or that its conduct was unconscionable.[260] The plaintiff pleads that the Anketell Property was not connected to sewerage and water services at the time, and connection would have required significant cost. Further, the plaintiff pleads that a reputable selling agent was appointed with appropriate experience and acumen to market the property, and that the agent took appropriate steps to sell the property during the period the plaintiff was in possession. The plaintiff pleads that there was only one informal offer to purchase the property, which was withdrawn, although obviously there was also the offer received from Wantree Holdings.

1. Subject to the terms of the guarantee itself, it must be accepted that a guarantor is entitled to the remedies available under the general law in answer to proceedings seeking to enforce the guarantee. In particular, a guarantor is entitled to insist 'by way of a pro tanto defence on a reduction in the amount due under the guarantee, should the principal creditor breach the duty owed to the principal debtor when realising any assets provided by way of security for the debt': James v Australia and New Zealand Banking Group Ltd.[261]
2. As to the duties of a mortgagee in possession, as earlier noted, the parties agreed that the plaintiff owed a duty in that capacity. The duty is an equitable duty of good faith,[262] which requires that the mortgagee, when exercising the power of sale, not recklessly or wilfully sacrifice the interests of the mortgagor. If the mortgagee does so, he is to be regarded as not having acted in good faith.[263]
3. A mortgagee is not a trustee of the power of sale, which is given to the mortgagee to enable the realisation of the security interest. The mortgagee is not required to place the interests of the mortgagor above his interests in recovering the debt. This means the mortgagee can sell the property at a time of the mortgagee's choice, even though the property might realise a higher price if the sale were postponed.[264]
4. The mortgagee must of course act in good faith, which means conscionably, and cannot sell for a purpose other than that for which the power of sale is conferred.[265] Further, the mortgagee cannot disregard the interests of the mortgagor by simply selling for a price which will cover the amount of the loan. The mortgagee must take reasonable steps to obtain the best price consistently with its right to enforce its security interest. This requires the mortgagee to consider how the property should be advertised and to allow an appropriate time between the advertisement and the sale.[266]
5. In Pendlebury, Griffiths CJ described the duty of the mortgagee in the following terms:[267]

The obligations of a mortgagee who sells the mortgaged property were considered by this Court in the case of Barns v Queensland National Bank, in which the rule laid down by Lord Herschell LC, in the case of Kennedy v De Trafford was stated and applied. The learned Lord Chancellor said, in the course of his speech: 'My Lords, I am myself disposed to think that if a mortgagee in exercising his power of sale exercises it in good faith, without any intention of dealing unfairly by his mortgagor, it would be very difficult indeed, if not impossible, to establish that he had been guilty of any breach of duty towards the mortgagor'. Lindley LJ, in the Court below, says that 'it is not right or proper or legal for him either fraudulently or wilfully or recklessly to sacrifice the property of the mortgagor'. Well, I think that is all covered really by his exercising the power committed to him in good faith. It is very difficult to define exhaustively all that would be included in the words 'good faith', but I think it would be unreasonable to require the mortgagee to do more than exercise his power of sale in that fashion. Of course, if he wilfully and recklessly deals with the property in such a manner that the interests of the mortgagor are sacrificed, I should say that he had not been exercising his power of sale in good faith.

I understand Lord Herschell to mean that the mortgagee must not recklessly or wilfully sacrifice the interests of the mortgagor, and that if he does he is to be regarded as not having acted in good faith. (footnotes and citations omitted)

1. The requirement to take reasonable steps to obtain the best price does not equate the duty to one of mere negligence, as the plaintiff correctly submitted. The position in the English courts is to the contrary, as discussed by Young CJ in Eq in Ultimate Property Group Pty Ltd v Lord.[268] As to the content of the equitable duty, Young CJ in Eq held:[269]

The duty is a duty to act conscionably towards the mortgagor and persons under the mortgagor. The duty is not to be considered in some mechanical way, but the whole of the mortgagee's conduct with respect to the sale is to be considered. The mortgagee may, up to a point, act solely in its own interests, but it must also act conscionably towards the mortgagor and those claiming under the mortgagor.

1. His Honour went on to explain that it is 'a fundamental principle in the textbooks that mere inadequacy in the price obtained and the value will not normally of itself be sufficient for a mortgagor to upset a purported sale'.[270]
2. In Southern Goldfields Ltd v General Credits Ltd,[271] the Full Court considered the scope of the duty of a mortgagee in exercising the power of sale. Franklyn J, with whom Malcolm CJ and Pidgeon J agreed, explained the duty as follows:[272]

In my view the true question to be asked as revealed by the authorities generally is whether the mortgagee so acted in the sale of the property as to bona fide endeavour to obtain the best price reasonably available. In so doing he must of course have regard to whether the fair and proper value can be obtained in all of the circumstances of the case. That however, in my opinion is a different thing to an obligation to have regard to whether its fair value was obtained or not, divorced from the question of whether in selling the property at the price obtained he was acting recklessly.

1. The appeal in Southern Goldfields was upheld. Franklyn J held that the trial judge had concentrated on what was seen to be 'subjectively fair' to the mortgagor having regard to the price obtained, the property having been sold at a loss. His Honour concluded that the trial judge paid insufficient regard to the conduct of the sale, the rights of the mortgagee, and whether in exercising them it had confined its attention to its own interests:[273]

Having concluded, in the light of the valuations, that the price obtained represented a substantial loss he has consequently concluded that in selling, the mortgagee sacrificed the property. In so doing his Honour, in my view, overlooked that the fixing of a reserve price in the absence of fraud or collusion has no relationship to the highest price bid or obtainable other than to set a figure below which bids will be rejected, and cannot of itself lead to a reasonable inference that any better price might have been obtained had a higher reserve price been fixed. The mortgagor's interests as well as the mortgagee's interests in the present case were protected by proper preparation for and conduct of the auction.

1. In my respectful view, Franklyn J's analysis serves as an admonition against backwards reasoning, which would improperly commence by first characterising the outcome of the mortgagee's sale process. To approach the issue in that manner would be to fall into error.
2. An example in which a security holder was found to have breached its duty can be seen in Webster Investments Pty Ltd v Anderson,[274] a case in which Croft J described the steps taken as falling 'far short of the advertising and marketing plan [which would have been] appropriate for the sale' of the property and motel complex which was involved. No selling agent was involved, there was a conscious decision not to advertise the property, no auction or sale signs were erected, and no up to date valuation of the property was obtained, among other deficiencies found by Croft J.[275] The final sale in that case was also privately negotiated between the mortgagee and the ultimate buyer (described as a 'relevantly covert sale'), and it appears the mortgagee was providing finance to that buyer.[276]
3. A further example can be found in Jovanovic v Commonwealth Bank of Australia.[277] The Full Court of the Supreme Court of South Australia upheld the appeal, concluding that the bank had breached its statutory duty under s 420A of the CA because it did not take all reasonable steps to sell the freehold title of the property for not less than its market value. Recognising the difference between the statutory duty and the equitable duty, it is nonetheless instructive to identify the relevant factual circumstances in Jovanovic which were regarded by the Full Court as establishing the breach. Gray J, with whom Mullighan J agreed, referred to the following matters:[278]

(a) the sale process followed was contrary to the usual practice of the bank;

(b) the sale process followed was contrary to the advice of accountants who had been engaged, in that the property did not go to the market, the property did not go to a competitive tender, there was no independent financier, and the sale price was not supported by valuations;

(c) the bank negotiated with only the one possible purchaser;

(d) the bank did not conduct an internal auction;

(e) the sale could only proceed because the bank was prepared to act as a financier to the buyer;

(f) the transaction provided the bank with particular benefits;

(g) the transaction was not an independent arms-length transaction;

(h) the sale was for a consideration of $800,000, which was $110,000 less than the bank's internal revaluation of $910,000 (and there were major uncertainties identified in the internal bank valuation which the bank did nothing to resolve); and

(i) there were doubts over the ownership of the business which were an impediment to sale, and the bank failed to resolve these doubts.

1. Where a breach is demonstrated, the measure of loss will typically be the difference between the sale price obtained by the mortgagee and the price that would have been obtained were it not for the breach.[279]
2. I should mention a point arising from the parties' agreement, in the statement of agreed facts, as to the existence and content of the duty. I have set out above the defendants' allegation that the plaintiff owed a duty to 'take reasonable steps to obtain a proper price', which is pleaded in [35.3.2] of the Anketell Amended Defence. The parties agreed in the Anketell Agreed Facts that the broader duty encompassed this aspect.[280]
3. I do not consider that the agreement of the parties in these terms transforms the broader duty into one in which mere negligence would suffice to establish a breach. To the extent to which the defendants submitted in closing that negligence would be sufficient, I reject that submission. The formulation of the duty to require that the mortgagee 'take reasonable steps to obtain a proper price' is in fact consistent with the accepted formulation of the equitable duty, as explained in the authorities to which I have earlier referred.
4. The defendants also assert a statutory unconscionability claim. I have earlier set out the terms of s 12CB(1) of the ASIC Act and the principles applicable to that provision, and need not repeat them here.

1. Typically, cases that have considered the mortgagee's duty have involved sales of the mortgaged property at an undervalue, or a sale following a deficient process, no doubt because the duty is directed at the exercise of the power of sale itself. The present case is quite different. It challenges the conduct of the mortgagee in failing to sell the Anketell Property, leading to, it is said, a greater exposure to interest on the part of the defendant guarantors.
2. The plaintiff contended in its opening trial submissions that, in these circumstances, there is an immediate threshold difficulty with the claim advanced by the defendant insofar as it rests on the mortgagee's equitable duty, given the absence of any sale and given the nature of the detriment or damage upon which the defendants rely.[281] The plaintiff submits that the borrower or the defendants as guarantors were always able to repay the loan, in which event the interest would have ceased to accrue.
3. Accordingly, unless the defendants succeed on the enforcement representation arguments, the plaintiff submits the defendants cannot succeed on this defence.[282] The plaintiff did not cite authority in support of this threshold point.
4. The formulation of the defendants' claim, that the plaintiff breached its equitable duties in failing to sell the Anketell Property, is somewhat novel. Plainly, this is not a case in which the mortgagee in fact exercised the power of sale of the mortgaged property. The parties are at least agreed on that aspect of the matter. Nor is it a case in which the mortgagee exercised the power, but did so at allegedly the wrong time. It was not exercised at all.
5. The plaintiff's threshold contention invites a consideration of the nature of the equitable duty which is imposed on a mortgagee in possession, and whether that duty carries with it an obligation to exercise the power of sale.[283]
6. It is orthodox principle that a mortgagee does not owe a duty as to when to exercise its rights or powers, such as the power of sale over mortgaged property. That is so even if the timing of the exercise or non-exercise of the right may cause loss or damage to the mortgagor. This principle flows in part from the accepted position, reiterated by Aickin J in Commercial and General Acceptance Ltd v Nixon, that the mortgagee is not a trustee of the power for the mortgagor.[284] The orthodox principle is itself apparent from the decision of the Privy Council in China and South Sea Bank Ltd v George Tan.[285]
7. In China and South Sea Bank, the bank provided a loan to a company, secured by a mortgage over shares. Those shares later became worthless. A surety arrangement was also put in place as additional security for the bank. The surety contended that his liability was extinguished, or at least reduced, because the bank failed to sell the mortgaged shares at a good time.
8. Lord Templeman, delivering the opinion of the Privy Council, rejected the surety's claim as a matter of principle. His Lordship held:[286]

In the present case the security was neither surrendered nor lost nor imperfect nor altered in condition by reason of what was done by the creditor. The creditor had three sources of repayment. The creditor could sue the debtor, sell the mortgage securities or sue the surety. All these remedies could be exercised at any time or times simultaneously or contemporaneously or successively or not at all. If the creditor chose to sue the surety and not pursue any other remedy, the creditor on being paid in full was bound to assign the mortgaged securities to the surety. If the creditor chose to exercise his power of sale over the mortgaged security he must sell for the current market value but the creditor must decide in his own interest if and when he should sell. The creditor does not become a trustee of the mortgaged securities and the power of sale for the surety unless and until the creditor is paid in full and the surety, having paid the whole of the debt is entitled to a transfer of the mortgaged securities to procure recovery of the whole or part of the sum he has paid to the creditor.

The creditor is not obliged to do anything. If the creditor does nothing and the debtor declines into bankruptcy the mortgaged securities become valueless and the surety decamps abroad, the creditor loses his money. If disaster strikes the debtor and the mortgaged securities but the surety remains capable of repaying the debt then the creditor loses nothing. The surety contracts to pay if the debtor does not pay and the surety is bound by his contract. If the surety, perhaps less indolent or less well protected than the creditor, is worried that the mortgaged securities may decline in value then the surety may request the creditor to sell and if the creditor remains idle then the surety may bustle about, pay off the debt, take over the benefit of the securities and sell them. No creditor could carry on the business of lending if he could become liable to a mortgagor and to a surety or to either of them for a decline in value of mortgaged property, unless the creditor was personally responsible for the decline. Applying the rule as specified by Pollock C.B. in Watts v. Shuttleworth, [1860] EngR 417; 5 H. & N. 235, 247, it appears to their Lordships that in the present case the creditor did no act injurious to the surety, did not act inconsistent with the rights of the surety and the creditor did not omit any act which his duty enjoined him to do. The creditor was not under a duty to exercise his power of sale over the mortgaged securities at any particular time or at all.

1. The above principles are consistent with the plaintiff's submission that it is always open, in circumstances such as these, for the borrower or the surety to repay the loan. The borrower and surety have freedom in this regard, to 'bustle about', pay off the debt and take over the benefit of the securities.[287] Ultimately, the recourse of the mortgagor is to redeem the mortgage if it wishes to prevent the mortgagee from exercising, or not exercising, the rights conferred upon it.
2. The principle applied by the Privy Council in China and South Sea Bank has been recognised in a number of Australian authorities.[288] A brief examination of one of those authorities is warranted.
3. In Kingsland, the power of sale of the principal asset was not exercised by the receivers and managers. It was asserted by the defendant guarantors that the power of sale should have been exercised, with the evidence pointing to one particular offer having been received. If that offer had been accepted, the guarantors contended that it would have enabled payment of the whole of the borrower's indebtedness and consequentially the extinction of the guarantor's liability.
4. The guarantors in Kingsland pleaded a cross-claim in response to the bank's enforcement of the guarantees, alleging a breach of the equitable duty owed by the lender.
5. Cole J rejected the guarantors' argument in that case, in the context of an interlocutory summons for judgment brought by the lender. His Honour held as follows:[289]

The principal breach of duty alleged, as appears from statement of defence par 4 and particulars 1, 2, 3 and 6 was a failure to consider offers received and to sell property so as to extinguish the liability of the mortgagor and thus that of the guarantors. That could be a breach of duty by the mortgagee only if the mortgagee had an obligation to exercise the power of sale in circumstances where its exercise would extinguish its debtors and guarantors' liability. The cross-defendants argued, in my view correctly, that there is no obligation upon a mortgagor to exercise a power of sale if it does not wish to do so. If there be no obligation to sell at all, or at any particular time, failure to sell at any point of time could not constitute a breach of duty, or an "act injurious" to either the mortgagor or the guarantor. It has been held by high authority that there is no duty owed by a mortgagee to a guarantor to exercise the power of sale at any point in time. The mortgagee, and thus the receiver, may exercise that power if it so chooses and when it so chooses. If a surety believes he is suffering damage by failure of the mortgagee to exercise the power of sale in that the surety believes that the value of the mortgaged property may decline, his entitlement is to pay out the mortgagee, obtain the security and sell it. (emphasis added)

1. As his Honour later noted, the breach alleged in the case before him was not that a sale had occurred at an undervalue, but rather that there had been no exercise of the power of sale at all. Cole J concluded:[290]

If the mortgagee can decide when he wishes to exercise the power of sale, there can be no liability attaching to him for failure to exercise it at any particular point of time. Nor can failure to assess any offers prior to a decision having been taken to exercise the power of sale constitute a breach of a duty. And nor could failure to assess such offers constitute "wilful default and neglect in the management of the assets and undertakings" because there can be no default if there is no obligation to sell at a given point of time. It follows that [the particulars] do not constitute breach of any duty owed by the mortgagee, or the receiver, to the guarantors.

1. Pausing at this point, it ought be recognised that sureties are a 'favoured debtor' and the courts look upon their interests with a 'jealous eye'.[291] The scope of a guarantor to call upon equity when sued pursuant to the guarantee is accordingly framed in wide language.
2. For example, it is said that equity will permit a guarantor to raise an equitable defence in part or in whole against the claim for its contractual liability under a guarantee, and that the guarantor of a secured debt is entitled to show that his 'liability to the secured creditor has been reduced (or extinguished) as a result of some shortcoming and the realisation or management of the security' by the mortgagee, that is through a flawed selling process.[292]
3. Further, a surety can complain if the creditor 'sacrifices or impairs a security or allows it to be lost or diminished'.[293]
4. However, these wide statements of principle, in the context of a mortgagee taking possession of a security, assume the power of sale has in fact been exercised by the mortgagee. Where that power has been exercised, equity permits the surety to rely upon conduct of the mortgagee in the realisation or management of the security so as to reduce or extinguish his or her liability. These wide statements do not therefore undermine the principle of long standing referred to in China and South Sea Bank, and in the other authorities to which I have referred, which should be applied.
5. It follows that I should accept the threshold point raised by the plaintiff. That is, I accept the plaintiff's contention that the claim for breach of equitable duty is precluded in the circumstances given the absence of any exercise of the power of sale. This conclusion is also consistent with the express stipulation in the Anketell Loan Agreement that the plaintiff was 'not obliged to enforce any of the Securities'.[294]
6. This threshold point does not stand in the way of the broader unconscionable conduct claim mounted by the defendants pursuant to s 12CB of the ASIC Act, at least as a matter of principle. In this regard, it is at least conceptually open to a guarantor to contend that the entire conduct of a mortgagee in possession may be characterised as unconscionable, even where the power of sale is not exercised. The enquiry in this respect should examine 'every connected circumstance', which would include the effect of any failure on the part of the borrower or guarantor to pay the loan, as that would necessarily preclude interest accumulating (where the accumulation of interest is the damage said to have been suffered by the guarantor).
7. I will therefore proceed to assess the merits of the statutory unconscionability claim. Additionally, in the event I am wrong on the threshold point, I will also assess the breach of equitable duty claim on the merits.

(4) Has a breach of duty or unconscionable conduct been demonstrated?

1. It is convenient to address these claims by reference to the individual issues which were identified by the parties as relevant to these contentions during the trial, and then pause at the end of that process to assess the evidence as a whole.
2. The issues which require examination are:

(a) the circumstances and context in which the plaintiff initially entered possession in September 2018;

(b) the steps taken by the plaintiff to market the property;

(c) the credentials of the selling agent engaged by the plaintiff;

(d) the quality of the marketing campaign undertaken by the selling agent;

(e) the offer which was received from Wantree Holdings, and the surrounding circumstances; and

(f) the circumstances in which possession was returned to the owner.

The plaintiff's approach when taking possession

1. First, the circumstances and context in which the plaintiff initially entered possession in September 2018 are, in a general sense, relevant in the present case to the breach of duty and statutory unconscionability claims.
2. On 20 September 2018, in advance of entering possession, Mr Masel gave evidence that he had a phone call with Mr Caratti. The content of this conversation is contentious. Mr Masel was adamant under cross‑examination that Mr Caratti had asked that the plaintiff to 'preserve the property' while in possession and 'sit on it and do nothing because he wanted to ... keep it'.[295]
3. Mr Masel explained the background to this in his witness statement:[296]

On 20 September 2018, I had a phone call with Caratti. I took a file note of that phone call and have refreshed my memory of it. Caratti in effect said that he would service the loan from that time if Walthamstow took possession of the property but did not take any steps to sell it. He said this was to give him an opportunity to resolve a court dispute, the hearing of which was imminent, with the Australian Taxation Office who were the second ranking mortgagee. I told him I would need to get legal advice in respect of this. That same day I contacted my lawyer who informed me that this would be to the disadvantage of the Australian Taxation Office as second ranking mortgagee and therefore if Walthamstow took possession it must take steps to sell the property.

1. The file note made by Mr Masel is in evidence (Exhibit 168). The file note reflects Mr Masel's evidence.
2. Mr Caratti denied the conversation during the course of cross‑examination. The inconsistency between their accounts requires some assessment.
3. In my view, the evidence of Mr Masel on this point is to be preferred, consistently with my earlier conclusion that his evidence is generally to be preferred to that of Mr Caratti on contested issues, but also given the contemporaneous file note made by Mr Masel of these conversations. Additionally, and importantly, Mr Caratti's delays in progressing the offer from Wantree Holdings, which I have referred to below, are also consistent with Mr Masel's evidence that Mr Caratti asked him to 'sit on the property'.
4. Further, Mr Masel's account is consistent with Mr Caratti's evidence that he wanted to develop the property, but could not do so immediately. Mr Caratti indicated in his witness statement that he told Mr Masel in May 2018 that neither Mr Caratti nor Ms Bazzo 'could do anything with the property' at the time. During cross-examination Mr Caratti retreated from this evidence, and his evidence on this issue was difficult to follow. This was not the only occasion Mr Caratti indicated that matters in his witness statement were incorrect. In general terms, this certainly undermined the persuasiveness of his evidence.
5. Mr Caratti maintained in his evidence that the plaintiff took possession of the property to 'head off' the possibility the ATO would appoint a receiver to the property under its second ranking mortgage.[297] This seems to be likely, in all the circumstances. It is also generally consistent with Mr Masel's evidence as to the conversation with Mr Caratti in September 2018 to which I have referred above, which included discussion of the involvement of the ATO. Mr Masel also gave evidence about a discussion he had had with a representative of the ATO to the effect the ATO may take possession of the property as second ranking mortgagee.
6. I therefore accept it is more likely than not that Mr Caratti requested that Mr Masel 'sit on the property', but Mr Masel did not accept this was appropriate, and he took the view that he was obliged to take steps as mortgagee in possession to market the property. Mr Masel's position in this regard is consistent with the steps he then took to appoint a selling agent and to market the property.
7. I also accept the evidence of Mr Masel regarding the conversation he had with Mr Caratti on 1 November 2018, for which he also prepared a handwritten file note (Exhibit 173). During that conversation, Mr Masel informed Mr Caratti that he would put the property on the market after obtaining a valuation. Mr Caratti informed Mr Masel during the discussion that there would likely be a buyer at around $4,000,000.[298]
8. The evidence of Mr Masel as to his discussion with Mr Caratti prior to taking possession, which I accept, demonstrates that Mr Masel was determined to take steps to sell the property. He refused to abide by Mr Caratti's proposal that he should simply maintain possession.
9. Moreover, given Mr Caratti encouraged Mr Masel at the outset not to take steps to sell the mortgaged property, the challenge now made by the defendants to the plaintiff's conduct has a degree of insincerity about it. At the very least, there is a real tension between that finding and the attacks now levelled at Mr Masel and at the plaintiff for its conduct.

Steps taken by the plaintiff to market the property

1. Second, there is evidence of tangible steps taken by the plaintiff to market the property. I find that the primary steps were as follows.
2. On 20 November 2018, the plaintiff appointed Mr Ivor Cohen of Churchill Knight as selling agent to market and sell the property. This is an agreed fact.[299] Churchill Knight is a real estate agent used by the plaintiff in the course of its business.
3. On 23 November 2018, Mr Masel obtained a valuation of the property. The valuation was obtained from Hemsley Paterson, in the amount of $3,940,000.[300]
4. Churchill Knight issued an Information Memorandum which advertised the Anketell Property for sale (Exhibit 208). This Information Memorandum was issued in November 2018, with a sale price of $4,200,000.[301] The Information Memorandum is an 18 page document which provides details of the property and its title, a site description, its location and services, information as to zoning and planning schemes, the development approval letter from the WAPC, and a copy of the certificate of title.
5. Mr Masel then instructed Churchill Knight to advertise the property for sale online on their own website, as well as on two real estate sales websites (realcommercial.com.au and commercialrealestate.com.au).
6. Mr Masel gave evidence that the advertisements were in place from approximately 12 December 2018 until around 18 September 2022, although evidence was identified by the defendants, which I will address below, to indicate that the property was not listed on the first of these websites for the entire period of the plaintiff's possession.
7. Mr Masel also instructed Churchill Knight to place a 'for sale' sign on the site of the property on or around 10 December 2018, which remained in place until around September 2022. That sign disappeared for a short period of time in December 2018, through to January 2019. On becoming aware of this, Mr Masel instructed Mr Cohen to install a replacement sign.
8. On 18 March 2019, Mr Masel received a written offer to purchase the property from Wantree Holdings, in the sum of $4,000,000.[302]
9. On 28 March 2019, Mr Masel sent a counter-offer to Wantree Holdings in which he modified certain terms and conditions. The price was unchanged, being $4,000,000.[303] As will be seen, some of the terms originally proposed by Wantree Holdings were unusual or represented departures from the norm.
10. A brief explanation of the modified terms and conditions is required at this point:

(a) The offer from Wantree Holdings included a condition that the house on the property be 'habitable and rent worthy'. Mr Masel deleted this condition in his counter-offer, replacing it with the term 'As is - with any lease provided during due diligence'.

(b) The offer from Wantree Holdings included a special condition that 'due diligence [is] at buyers absolute discretion 60 days from acceptance'. Mr Masel maintained this special condition in his counter-offer, but reduced the period down to 30 days.

(c) The offer from Wantree Holdings stated that the deposit would be paid within 14 days of due diligence being completed (which itself represented a modification against the standard form which required payment within a time period from 'acceptance'). Mr Masel reduced the time period to 7 days and reinstated the requirement that the time period run from 'acceptance'.

(d) The final modified term was the identification of which person or entity would hold the deposit. The offer from Wantree Holdings stated that the deposit would be held at 'Torrens Legal Trust Account', being the solicitors for Wantree Holdings and also for Mr Caratti. Mr Masel changed this to require that the deposit be held by Churchill Knight in a trust account.

1. The amendments made to the written offer appear in the image below, which represents part of the first page of the offer:[304]

1. Having modified these terms, Mr Masel sent the counter-offer back to Wantree Holdings. Mr Masel gave evidence, and I accept, that he received no response from Wantree Holdings to the counter-offer. The circumstances surrounding the offer are further addressed below.
2. In around February 2022, Mr Masel instructed Churchill Knight to reduce the sale price to $3,900,000 as Churchill Knight had informed him that there was very little interest at the asking price of $4,200,000. Acting on these instructions, Churchill Knight issued a second Information Memorandum which advertised the property for sale (Exhibit 209). This Information Memorandum was issued in February 2022, with a lower sale price of $3,900,000.
3. In March 2022, a prospective purchaser (Mr Hatton of TSS Total Surveying Solutions) expressed interest in the property. The correspondence from this purchaser offered to purchase the Anketell Property for $3,200,000 (Exhibits 189 and 190). The offer was made by a short letter rather than by a formal offer. It was quite embryonic in its terms. The prospective purchaser had not established the necessary trust structures he needed to undertake the transaction. Mr Cohen initially indicated to this purchaser that a price of $3,600,000 might be accepted by the plaintiff, but later revised that to $3,200,000. By April 2022, the expression of interest had been withdrawn and the transaction obviously did not proceed.[305] The circumstances of this offer were not explored in any great depth in the evidence and I do not regard it as being a matter of any particular weight when assessing the claims advanced by the defendants.
4. The active steps taken by the plaintiff to market the Anketell Property include the engagement of the real estate agent Churchill Knight, the steps taken to obtain an independent valuation of the property, and instructing Churchill Knight to issue Information Memoranda with details regarding the property, to generally advertise the property for sale, and to erect 'for sale' signs on the property. These all appear to be typical steps one might take consistent with an intention to sell the land. Further, the plaintiff engaged with the offer which came from Wantree Holdings and made a counter-offer. It is quite apparent that Mr Masel did not ignore this offer and indeed, as explained below, he spent some considerable effort trying to pursue it.
5. Accordingly, there is clear evidence of active steps being taken by the plaintiff and its agent to market the Anketell Property. I will turn now to consider the challenges to the credentials of Churchill Knight, the quality of the marketing campaign, and the plaintiff's treatment of the offer from Wantree Holdings.

The challenge to the credentials of Churchill Knight

1. Third, the defendants' attacked the experience of Churchill Knight as the appointed selling agent. I accept that the selection by a mortgagee of an appropriate selling agent would be relevant to the analysis as to whether the duty has been breached, or the conduct was unconscionable. The selection of an appropriate selling agent would be particularly important where the property is unique or has special characteristics. I am not satisfied that a development site (as opposed to a fully developed site) necessarily falls into these categories. As to the property in question, the evidence did not disclose any characteristics which were unique or special.
2. The evidence demonstrates that Churchill Knight is a real estate firm which was known to Mr Masel, with whom he had worked in the past. His evidence was quite limited on this issue, though, and it was evident that he appointed Mr Cohen as the agent even though he did not have the qualifications and experience of the larger firms.[306] Mr Masel did not confirm with Mr Cohen whether he had pre-existing clients who were in the market to buy a development property such as this.[307]
3. Nonetheless, during cross-examination, Mr Masel defended his selection of Churchill Knight rather than a larger firm:[308]

SCHOOMBEE, DR: And I put it to you that it would not be appropriate to describe Churchill Knight as a specialist firm in respect of the selling of development properties?---

MASEL, MR: Well, we picked the best agent to sell the property. Now - - -

SCHOOMBEE, DR: And that was based solely on Mr Cohen's personality or personal position?---

MASEL, MR: No, I - it was based on track record.

SCHOOMBEE, DR: So you relied on him selling other properties and development properties as well?---

MASEL, MR: For him to sell other - - -

SCHOOMBEE, DR: Yes?---

MASEL, MR: He didn't sell any others for us.

SCHOOMBEE, DR: Right. Well - - -?---

MASEL, MR: He achieved - we sold that property in Welshpool. He got a million dollars more than the valuation figure that we had done for mortgagee purposes. It was an incredible result and the other one he sold was very, very good too and he had someone else working for him that we had appointed to sell mortgagee properties, development sites and it was - it was a - they were obviously the best - you know, you can go to a larger - as far as we were concerned, you can go to a larger firm and be - be one property, and they might have 100 properties to sell, and they may not have interest in selling your property, but he had a - a very - he had an interest because he was a smaller firm. That's sometimes a - a very big benefit.

1. No witness from Churchill Knight was called by the plaintiffs, such as Mr Cohen, and so there was no direct evidence as to the experience and credentials of that firm. As the non-attendance of Mr Cohen as a witness was unexplained, and as one would expect him to be in the camp of the plaintiff, I am prepared to draw the inference sought by the defendants that his evidence would not have assisted the plaintiff.
2. This inference does not work to fill the gaps in the evidence, of course, and it must be remembered that the onus remains on the defendants to make good the claim that the conduct of the plaintiff was in breach of the equitable duty or unconscionable in the statutory sense.
3. In challenging the plaintiff's selection of Churchill Knight, the defendants' primarily relied on the evidence of Ms Bazzo, which they submitted should be accepted as expert opinion evidence, given her experience in this field.
4. Ms Bazzo explained in her evidence that she became a registered real estate salesperson in around 1983, but did not continue to work as a real estate agent and did not renew her licence after 1991. Ms Bazzo has experience in advertising, marketing and public relations agencies, and was an account executive for some three 3 years.
5. It is also evident that Ms Bazzo has had experience working together with Mr Caratti for many years in completing residential land subdivisions,[309] although she described her role as 'more involved in the day to day issues as well as sales and marketing of all of the land subdivisions'.[310]
6. Ms Bazzo also described her experience with being 'involved in property developments in Western Australia since about 2001' and explained that she has 'dealt with lenders in relation to finance for residential developments and land subdivisions', including with the plaintiff.[311]
7. Ms Bazzo testified that she had dealt with at least 30 different commercial property agents since around 2001, including leasing agents, property management agents and selling agents. Ms Bazzo explained that the larger agents have 'very large client databases' which are used for the sales and leasing teams to market their properties. Further, buyers will also approach these agents to assist in locating and securing a specific type of property. Ms Bazzo stated that:[312]

Development land sites fall within the commercial property arena and selecting the best agent to appoint for selling a development site also requires consideration of all relevant factors of the property and the agency's track record for achieving sales of comparative property.

1. Ms Bazzo testified in her witness statement that she did not know the firm Churchill Knight, but was able to obtain some information on the firm from publicly available information on commercial property marketing platforms. According to the material assembled by Ms Bazzo, and as explained in her statement, the firm had been involved with only two land development sales, one in South Guildford in 2018 and one in Hay Street, Perth in 2021. By comparison, Ms Bazzo identified three other commercial agents who had respectively completed 46, 158 and 166 sales of development sites.
2. To support the challenge to the selection of Churchill Knight as the selling agent, extracts from realcommercial.com.au were adduced in evidence by the defendants (Exhibits 199, 200, 201 and 202). These documents purport to show the number of properties sold by various agents, the properties they have for sale on their books, as well as properties leased. Ms Bazzo explained the way in which she collated the printouts from realcommercial.com.au in a supplementary witness statement (Exhibit D12).
3. The material collated by Ms Bazzo shows, on its face, that the volume of properties sold and leased by Churchill Knight was considerably lower than the volume of the other agents Ms Bazzo identified.
4. However, very few, if any, firm conclusions can be drawn from the material assembled by Ms Bazzo in the absence of a rigorous analysis, based on source data as to the sales and performance of the alternative selling agents. For example, one would need to better understand the data behind the sales information identified by Ms Bazzo to ascertain whether the sales were at an undervalue or whether the selling agents achieved appropriate prices for the sales that have been identified by Ms Bazzo. The detail of the individual sales may well shed light on the information which has been produced.
5. On the evidence presented, very little weight can be accorded to this material, in my view.
6. The court is not in a position to undertake this comparative analysis for itself, without proper assistance, which would require far more information as to the activities of these selling agents to enable their performance to be properly compared, including over the relevant period.
7. As I noted above, Ms Bazzo was presented as an expert witness for this purpose. I do not accept that Ms Bazzo can be characterised as having sufficient expertise in this area to offer the court an opinion on the relative strengths and weaknesses of these commercial selling agents. Ms Bazzo has experience in dealing with such agents, and has experience in land subdivisions, but that experience does not sufficiently qualify her to offer the opinion she wished to give. Ms Bazzo has no formal qualifications to support the giving of the opinion, and has not worked as a licensed real estate agent since the early 1990s. Ms Bazzo provided a supplementary witness statement to support her opinions, but one would have expected a detailed report to have been prepared on this issue, containing a detailed analysis of the credentials and performance of the various selling agents, supported by appropriate data from reliable sources.
8. In any event, an expert opinion from Ms Bazzo would need to be treated with real caution given Ms Bazzo is a defendant in this action and has a vested interest in the outcome of the proceedings.
9. Overall, the broad challenge to the experience of Churchill Knight as the appointed selling agent lacked sophistication and independent analysis. Taken at its highest, the evidence raises a concern as to whether Mr Masel undertook a sufficiently detailed process to select the selling agent. I cannot, however, conclude on the strength of the diffuse evidence presented by the defendants that the selection of Churchill Knight demonstrates, on its own, a breach of the equitable duty or equates to statutory unconscionability. The evidence does not reach to that level.
10. The position may be contrasted with the circumstance in Investec Bank (Aust) Ltd v Glodale Pty Ltd,[313] a decision relied upon by the plaintiff. In that case, one of the principal points of challenge was the decision by the mortgagee to appoint an agent in Cairns to sell properties in Port Douglas. The court (Neave and Redlich JJA and Forrest AJA) dismissed the appeal, upholding the approach of the trial judge to the effect that:[314]

...once it was accepted that the Cairns market and the Port Douglas market were separate and distinct, then there was an obligation cast upon the bank and its agents, particularly Mr Sutherland, to give consideration to the engagement of a Port Douglas agent. Indeed, there was nothing to prevent him appointing dual agents if he thought about it, as Mr Quinn suggested. No such consideration was given as it ought to have been, and his Honour was correct in concluding that, in not engaging a Port Douglas agent, reasonable care had not been undertaken by the bank in ensuring that market value was obtained.

1. I do not conclude that the engagement of Churchill Knight was not a reasonable step for the plaintiff to have taken in the circumstances. At best, it may have been an error of judgment by Mr Masel to use this firm to sell this particular property, and it is possible that an alternative selling agent may have had better strategies to market the property and had prospective buyers on its books which could have increased the likelihood of achieving a sale. However, that is not sufficient of itself to make good the defendants' claims, given the principles I have earlier set out.

The challenge to the marketing campaign of Churchill Knight

1. Fourth, I turn to the evidence as to the marketing steps taken by Churchill Knight, which was largely documentary in nature, and also briefly explained in Mr Masel's evidence.
2. As noted above, no representative of Churchill Knight was called at trial to give evidence as to the steps taken by that firm to market the Anketell Property. That said, there are some emails issued by Churchill Knight in the evidence, including one email sent in March 2019 by Mr Cohen to Mr Caratti regarding the potential buyer which Mr Caratti had identified, which states in part as follows:

How are you going with this potential buyer?

I am asking because we had some enquiry and we have sent out our IM to those parties.

We have not yet had an indication of an offer at the $4.2 Asking [sic] price.

We are about to step up our selling campaign to remind everyone who has enquired that this is

1. A Mortgagee Sale
2. The property Must be sold
3. All offers will be considered.

Although the Mortgagee is our client it is our intention to do our best by you also, to minimise any loss made by you & your company.

Accordingly should you be close to having an offer made by your prospect I would encourage you to have us document this offer ASAP.

1. The above email shows the approach which was to be adopted by Churchill Knight in conducting its marketing campaign.
2. What then is the state of the evidence as to the marketing campaign? Certainly the end result was a distinct lack of interest from the market in terms of potential buyers. There was one offer from Wantree Holdings, which is addressed below, and an informal expression of interest from Mr Hatton, which I have mentioned.
3. But there was certainly no rush of buyers to purchase the Anketell Property.
4. The absence of potential buyers is an aspect emphasised by the defendants, said to point to the failure on the part of the plaintiff to properly market the property. It does not follow though from the dearth of interest in the property that the marketing campaign was flawed or causative of the lack of interest. That may be explicable for many other reasons, including the state of the property market at the relevant time. Mr Caratti explained in his evidence that the property market was impacted by various macro-economic and global factors, including the property price cycles, the COVID-19 pandemic, and the more recent shortages and cost increases associated with building materials and labour. The period in which the plaintiff was in possession of the Anketell Property spanned the entirety of the pandemic just mentioned.
5. I have outlined above the Information Memoranda which were prepared and issued by Churchill Knight, the advertising of the property on various internet sites, and the erection by that firm of 'for sale' signs on the property. That is the core evidence as to the steps taken as part of the marketing campaign. The defendants point to several matters which they say assist to demonstrate the breach of duty or unconscionable quality of the marketing campaign, which I will now address.
6. Ms Bazzo gave evidence which criticised the valuation of the land obtained by the plaintiff, indicating that the valuation did not take into account a higher valuation of compensation, which the owner might expect upon resumption of part of the site which had been reserved for a school site. Ms Bazzo explained that the valuation ought to have taken account of the 'highest and best use' value of the land for the purposes of determining the amount of compensation which the owner might receive.[315]
7. I accept Ms Bazzo's evidence in this regard, but it remains unclear what effect this issue would have had on the success of the marketing campaign. The state of the evidence does not enable the court to draw firm conclusions about this. It would be speculation to find that the marketing campaign was defective in a meaningful way based on the contention that Churchill Knight did not explain to buyers the potential value of the development site in this singular respect.
8. Ms Bazzo also gave evidence that services could be connected to the site quite readily, as the adjoining site to the Anketell Property (which is owned by a joint venture involving an entity owned by Mr Caratti) had constructed 'all necessary infrastructure and [a] pump station'.[316] Ms Bazzo estimated the total cost of works for services to both lots was approximately $400,000. Mr Masel gave evidence that connecting services to the Anketell Property would be quite difficult, given the adjacent wetlands area.[317] A review of the Information Memoranda issued by Churchill Knight shows that it provided, in my view, an adequate explanation of the availability of services to the development site.
9. The defendants' also criticised Churchill Knight for a number of defects in the draft contract which was provided by Mr Cohen to Mr Caratti.[318] The defendants' submissions explain the defects as follows:[319]

Mr Cohen's email referred to a GST annexure for full GST payable, but special condition 3 in the offer provides for GST under the margin scheme in clause 8 of the annexure, clause 8 of the annexure does not deal with GST, rather clause 10 which refers to the margin scheme and suggests there will not be a tax invoice, the GST annexure has redacted the margin scheme option, special condition 1 incorporates mortgage M485767, but no copy is attached, the offer does not identify all of the included documents under receipt of documents and Mr Cohen has included his email address as where the buyer consents to notices being served.

1. These issues are, with respect, of little consequence.
2. They are all matters which an interested hypothetical buyer would, in my opinion, further investigate and clarify, including the application of the margin scheme and its effect on the purchase price.
3. The defendants criticisms as to the inconsistency within the draft contact concerning the margin scheme do not advance their cause. I accept there were inconsistencies in the draft contract provided by Mr Cohen. However, as it happens, the document correctly stated, in special condition 3, that the margin scheme was applicable, which would reduce the GST applicable and represents a more favourable opportunity from a buyer's perspective.[320]
4. The defendants also pointed to evidence to show that the Anketell Property was not listed on one of the identified websites for the entire period of the mortgagee's possession. The document showed that the property was listed on realcommercial.com.au for 181 days but was then 'off market' for 1,378 days, from 11 June 2019 to 19 September 2022.[321] Mr Masel was cross-examined about this but was unaware why the property was off market for this period, at least insofar as this particular website was concerned, and could not offer any explanation. Mr Cohen was not called to explain this issue. I consider it appropriate to draw the inference that his evidence would not have assisted the plaintiff in this regard.
5. Nonetheless, for my part, it remains difficult to draw much from the fact the property was 'off market' for this period. I say this because the document identified by the defendants (Exhibit 176) itself shows that the property received 'views', 'engagement', 'save & share' and 'enquiries' over the entire course of the period from December 2018 to September 2022. This includes the period during which the property was said to be 'off market'. These phrases are explained within the document. For example, 'engagement' includes photo views, document downloads, map interactions and streetview views, which are all described within the document as 'indications of a deeper interest in the details of your property'.
6. It should be mentioned that a similar document was produced concerning the performance of the Churchill Knight marketing campaign on the commercialrealestate.com.au website. That document, which is Exhibit 175, shows there were 763 views of the online advertisement of the Anketell Property during the period from December 2018 to September 2022. The document also refers to some 14,269 'impressions' but it is largely unclear from the document whether this represents any measure of substance.
7. Returning to the criticisms of the campaign on the realcommercial.com.au website, the matters I have identified at [713] above encourage me to give little weight to the defendants' criticism in this regard.
8. Finally, the defendants submitted that part of the Information Memoranda was illegible and a page was missing from the WAPC approval document.[322] This submission should be accepted. However, these defects in the Information Memoranda are not substantive in nature, in my view, and do not significantly advance the defendants' claims.
9. The criticisms of the Churchill Knight marketing campaign do not, when taken together, support a finding of breach of equitable duty or that the plaintiff engaged in unconscionable conduct in a statutory sense. The defendants have identified certain errors, deficiencies and defects, but that is not sufficient. None of these matters come close to demonstrating a lack of good faith or unconscionable conduct on the part of the plaintiff.

1. Fifth, I now turn to the offer which was received by the plaintiff from Wantree Holdings, and the counter-offer sent by Mr Masel. The terms of the counter-offer were criticised by the defendants.
2. On my assessment, the counter-offer involved modifications to the original offer which were reasonable, and importantly involved no change in the selling price. The amendments incorporated into the counter-offer by Mr Masel were certainly not susceptible to characterisation as lacking good faith, involving fraud, or being driven by some moral taint or trickery.
3. In particular, the initial due diligence clause was overly broad and allowed the offeror a lengthy period to consider its position. The proposal that the deposit be held by the offeror's own lawyer (who also acted for Mr Caratti), albeit in a trust account, strikes me as unusual. Further, to propose that the payment of the deposit only be made following due diligence undermines the purpose of there being a deposit. Finally, the requirement (included by Wantree Holdings) that the house on the property be habitable and rent worthy is quite strange in the context of a development property and given the quality of the structures on the property.
4. Under cross-examination, Mr Masel explained his reasoning in relation to the amendments to the offer in a measured and sound manner. I accept his evidence in this regard, that his amendments were driven by commercial or practical considerations, or based on his experience in business.[323]
5. In his evidence, Mr Caratti testified that the representative at Wantree Holdings had informed him that the offer it had made was its 'full and final' or 'best offer'.[324] There was also evidence given by Mr Caratti that he informed Mr Masel about this.[325] If the offer was, in truth, the final offer on Wantree Holdings' part, recognising that such a statement may also be a negotiating tactic, and if Mr Masel was informed of this, that would properly inform the assessment to be made of the reasonableness of the counter-offer which was made by Mr Masel, and the reaction thereafter by Wantree Holdings.
6. I consider it is highly unlikely that Mr Caratti passed this information on to Mr Masel. The characterisation of the offer from Wantree Holdings as its best or final offer does not appear in any of the written communications about the offer, a point which Mr Caratti accepted during cross-examination. It is a highly material piece of information that an experienced person such as Mr Caratti would likely have understood to be important to pass on to Mr Masel, in clear terms. Further, the assertion that this information was passed to Mr Masel was not put to him during cross-examination.
7. I therefore do not find that Mr Caratti made such a statement to Mr Masel in relation to the offer from Wantree Holdings. Mr Masel dealt with the offer on the basis that it was the first offer from Wantree Holdings, not that it was their final or best offer.

The asserted delays in dealing with Wantree Holdings

1. Sixth, the defendants asserted there were delays on the part of Mr Masel in his dealing with Wantree Holdings. This assertion is without merit.
2. On the evidence, it is clear that the offer from Wantree Holdings was made to the plaintiff on 18 March 2019. Prior to this offer being made, the plaintiff and the selling agent were in regular contact with Mr Caratti about the foreshadowed offer. See, for example, the emails from Mr Masel sent to Mr Caratti on 19 January 2019, 8 February 2019, 19 February 2019, 21 February 2019 and 22 February 2019.[326]
3. In his email sent on 21 February 2019, having failed to make contact with Mr Caratti, Mr Masel was driven to ask Mr Caratti - 'Are you still alive????'.[327]
4. In Mr Masel's email sent on 22 February 2019, he reminded Mr Caratti that interest on the loan was being incurred every month and it may be worth selling at $3.8m.[328] Mr Masel stated:

Allen, I think you said you had a buyer at around $3.8M and were trying to get them up to $4.0M.

Bare [sic] in mind that interest is ticking at about $65,000 per month so the $200k will only be 3 months interest.

Sounds like it may be worth considering selling it now at $3.8. If you can't get him up.

Also with so little interest from the market, what sounded like a lowball offer some time ago starts to sound more like the actual market value and therefore more attractive to consider at the moment.

At least at $3.8 you are putting a lid on what you will need to top up otherwise it could really blow out if we get some interest at lower numbers.

Sounds like it may be worth considering cutting your losses

I guess you are weighing this up.

What do you reckon

We should discuss.

Steve

1. After some engagement between Mr Caratti and Mr Masel by email in late February 2019, and communications thereafter from Churchill Knight to Mr Caratti, the plaintiff received the offer from Wantree Holdings on 18 March 2019.
2. The plaintiff then made a counter-offer to Wantree Holdings on 28 March 2019. The period between receipt of the offer and making the counter-offer is relatively short, when seen in context. I accept that Mr Masel needed some time to consider his position. The counter-offer was then sent in terms which were reasonable, as I have explained above.
3. If that counter-offer had been accepted by Wantree Holdings, then the plaintiff would have been immediately bound to sell the property. That did not happen. Instead, there was radio silence from Wantree Holdings after the counter-offer was made, and significant delays on the part of Mr Caratti. The delays on the part of Mr Caratti are important because he assumed the role after the counter-offer was made to act as a liaison with Wantree Holdings.
4. In contrast, it is readily apparent on the evidence that Mr Masel (and the selling agent) took reasonable and frequent steps to follow up Mr Caratti in the period after the counter-offer was sent. In my view, the delay was, in truth, due to Mr Caratti, not Mr Masel. The attacks upon Mr Masel, suggesting the delay was his fault, were wholly without merit, in my view. I find that Mr Caratti's delays in the period after the counter-offer was made could not be properly explained by him in his evidence.
5. The challenges to Mr Masel's conduct included an initial submission that he went incommunicado over the period following the making of the counter-offer to Wantree Holdings. The submission was, in effect, that Mr Masel made himself deliberately difficult to be contacted by Mr Caratti and others. This submission produced a reaction from Mr Masel which I accept was genuine. It prompted him to locate further documentation to undermine the attack on his conduct and disprove the incommunicado submission. That discovery was served on the defendants during the trial. A review of the material wholly undermines any contention that Mr Masel was difficult to contact. There are numerous instances of Mr Masel (and Churchill Knight) following up Mr Caratti about the offer from Wantree Holdings.[329]
6. For example, on 10 April 2019, Mr Masel emailed Mr Caratti and stated in his email:[330]

Allen I've left messages 3 days running without response. Are you dead again !!

Steve

1. Upon a review of this further material, counsel for the defendants expressly withdrew the submission referred to above and the challenges to Mr Masel's conduct in this regard. That withdrawal was proper in the circumstances. I accept that counsel initially advanced the submission on Mr Caratti's instructions and upon receipt of the further discovery, he promptly withdrew the submission.[331]
2. This does not detract from the fact that instructions must have been given to counsel by Mr Caratti and Ms Bazzo to challenge Mr Masel's conduct in this manner, and the challenge was ultimately without any foundation and inconsistent with the contemporaneous communications between Mr Masel and Mr Caratti, of which Mr Caratti can reasonably be assumed to have been aware.
3. As already noted, over the next several months, Mr Masel took steps to follow up Mr Caratti including by telephone calls. It is unnecessary to extract the content of the various emails sent by Mr Masel
4. One particular email exchange between Mr Masel and Mr Caratti attracted detailed submissions from both parties. The exchange took place on 15 April 2019, which was about 3 weeks after Mr Masel had sent his counter-offer back to Wantree Holdings. The first email in the exchange, from Mr Masel to Mr Caratti, is as follows:[332]

Allen I've exhausted efforts to try to speak to you after leaving many messages. I'm giving you notice that when you receive demands for payment it's because you don't seem to have any interest in communicating and keeping me informed on progress on loan issues. Therefore I cannot just wait for you, and will need to take appropriate action without referring to you further.

I'm sure it's because you're so busy but you need to up you priority for these loans because many consequences of doing nothing can't be reversed.

Steve

Steve, I have been under the pump

I am sorry for the lack of communication

I have contract on Treeby that I am waiting to go unconditional

Then the buyer is ok to do 36 Treeby

Allen, this is why we need the contract with the buyer - to firm up the terms. The dd covers the situation of the other sale.

We countered the original offer still leaving time for the other settlement to happen. We're waiting for it to be signed and returned.

What's happening with it.

Steve

1. The email from Mr Caratti is vague, at best. The plaintiff submitted that it was a confusing email and that Mr Caratti's evidence on the issue was unconvincing and reflected poorly on him. The defendants submitted that Mr Caratti had adequately explained the reference to the 'contract on Treeby' and '36 Treeby', and the plaintiffs had misunderstood the issue factually. For my part, I found the evidence of Mr Caratti on the issue during cross-examination somewhat confusing,[333] but I accept that Mr Caratti and counsel for the plaintiff may have been at cross-purposes on the issue. I therefore am not prepared to accept the plaintiff's criticisms of Mr Caratti's evidence in this regard.
2. It is open on the evidence to conclude, and I do conclude, that Mr Caratti was referring to his dealing with another property on Treeby Rd which was going unconditional.[334] Another property developer was purchasing that property. Mr Caratti was explaining this to Mr Masel in his email, given the potential interaction between the sale processes, and it appears Mr Masel understood this from the terms of his response.
3. Importantly, the email exchange between Mr Masel and Mr Caratti confirms that Mr Caratti had not been regularly communicating with Mr Masel. I find that, in the third and fourth lines of his email, Mr Caratti was providing Mr Masel with a general update. A more precise response to Mr Masel would have been desirable and it is quite clear that Mr Caratti's delays were frustrating Mr Masel by this point. Whatever the real message Mr Caratti intended to convey by this particular email responses, and whether he was conveying the message that the sale of the Anketell property to Wantree Holdings was moving forward, in an email sent two days later, Mr Caratti informed Mr Masel that 'Treeby is good to go'.[335]
4. This positive statement, that 'Treeby is good to go', was made by Mr Caratti in an email sent to Mr Masel on 17 April 2019, which itself responded to Mr Masel's email on 16 April 2019. In that earlier email, Mr Masel had asked Mr Caratti to respond to his email of 15 April 2019 (which is extracted above at [740]) regarding the offer on the Treeby Road property, being the Anketell Property.
5. In my opinion, the few emails sent by Mr Caratti during this period are somewhat vague, indeed almost enigmatic, while expressing positivity about the Wantree Holdings' offer. After this point in time, that is mid-April 2019, Mr Masel had real difficulty eliciting a substantive response from Mr Caratti about the Wantree Holdings offer.
6. The responsiveness of Mr Caratti did not improve as time went on.
7. In early September 2019, Mr Masel sent an email to Mr Caratti to alert him to the proposal to reduce the asking price for the Anketell Property to under $4.0m (Exhibit P17). In this email, which was sent on 3 September 2019, Mr Masel stated that he presumed the offer from Wantree Holdings had 'long gone'. Mr Masel concluded the email by stating it 'would be useful to get your comments on this [i.e. the proposed reduction in price], although you have not responded to previous communications'.
8. Mr Caratti was cross-examined about this email.[336] Mr Caratti testified that, by this time, the deal with Wantree Holdings was 'gone', and agreed that he did not respond to Mr Masel to this effect. Mr Caratti's evidence on this issue was initially non-responsive, as appears below:[337]

FRENCH, MR: So when you got that email, you knew that he's about to drop the price?

CARATTI, MR: Yes.

FRENCH, MR: And you knew that if the price was dropped, that would be paying off less of the debt, didn't you?

CARATTI, MR: Yes.

FRENCH, MR: Yes. And by now, the debt had been accruing since the counteroffer in March that had been - well, it's not quite six months - a bit less than six months. So we're now talking hundreds of thousands of dollars of interested accrued?

CARATTI, MR: Yes.

FRENCH, MR: Isn't that true? And Steve is contemplating - and you knew that Steve was contemplating lowering the price?

CARATTI, MR: That's what the email says. Yes.

FRENCH, MR: Yes. And you didn't say, "Hey wait", or respond to that email to say, "Hey wait. Let me try - let me try [Wantree] again", or "Let me try and find a buyer", did you?

CARATTI, MR: Well, hadn't he have messed with the first offer, he - we would have probably had a sale.

FRENCH, MR: No. That's not the - - -?

CARATTI, MR: Had he accepted the offer as it was presented, we would have had a sale at 4 million.

FRENCH, MR: That's not the question I asked you. I said, you didn't go back to Steve saying, "Let me go back to Ward again and see what I can do", did you?

CARATTI, MR: No. By that stage, I think it was gone.

FRENCH, MR: Yes?

CARATTI, MR: I think it was - it was - it was history. I think Ward is gone by then.

FRENCH, MR: But you didn't reply and say that to Mr Masel, did you?

CARATTI, MR: No. (emphasis added)

1. Had I formed the view that the counter-offer made by Mr Masel was irrational or incorporated wholly unreasonable terms, or that Mr Masel had been informed the initial offer was the best or final offer, the failure on the part of Mr Caratti and Wantree Holdings to respond might be more explicable. Given my earlier findings, however, the delay on their part is difficult to comprehend if the original offer was indeed a genuine offer to purchase the Anketell Property.
2. I reiterate my earlier observation - the defendants' assertions that there were delays on the part of Mr Masel in his dealing with Wantree Holdings is without merit.

The genuineness of the offer from Wantree Holdings

1. Seventh, the plaintiff raised an issue as to the connection between Mr Caratti and Wantree Holdings, and the genuineness of the offer itself.
2. The evidence concerning Wantree Holdings, and its response to the counter-offer, came only from Mr Caratti - no witness from Wantree Holdings was called. The evidence about this company, such as it was, revealed that its primary representative was Mr David Ward. The evidence also permits a finding to be made that Mr Caratti and Mr Ward had a pre-existing business relationship. In cross‑examination, Mr Caratti accepted that Mr Ward had consulted to Mr Caratti's business over time, and he had 'bought a couple of developments' from Mr Caratti.[338] Mr Caratti testified that Mr Caratti leases his present residential home from Mr Ward. Mr Ward was also a director for a period of time with companies associated with Mr Caratti, including Hocking Land Development Company Pty Ltd.
3. Further, as early noted, Mr Caratti assumed a role as the liaison between the plaintiff and Wantree Holdings. The communications did not pass from the plaintiff directly to Mr Ward. Mr Caratti's explanation as to why he did not put the plaintiff, or the selling agent, in direct contact with Mr Ward, were unconvincing.[339] Mr Caratti accepted that he did not provide Mr Ward's contact details to Churchill Knight.[340]
4. It is relevant to the analysis of the role played by Wantree Holdings that Mr Caratti had, as I have found, encouraged Mr Masel to sit on the property. It is also relevant that Mr Caratti's conduct contributed to the delays in progressing the transaction with Wantree Holdings. There was a distinct lack of urgency on the part of Mr Caratti after the counter-offer was made, consistent with his initial indication to Mr Masel that he should simply sit on the property.
5. Given Mr Ward's connection to Mr Caratti, it is to be expected that the defendants would have called Mr Ward to give evidence in relation to the counter-offer he received from Mr Masel, and to explain the delay which followed. Mr Ward's evidence would likely be relevant to an assessment of the claims advanced by the defendants that the plaintiff breached its equitable duty or engaged in unconscionable conduct. Given his absence at trial, I am prepared to draw the inference adverse to the defendants that Mr Ward's evidence would not have assisted their position in this regard.
6. In these circumstances, it is more likely than not, on my assessment, that the offer from Wantree Holdings was a stalling tactic on Mr Caratti's behalf, and was not intended to be seriously pursued. Had the offer been genuine, one could reasonably expect the offeror to have responded to the counter-offer in some manner and in a reasonable time frame. The evidence leaves room for an inference to be drawn, and which I draw, that even if Mr Masel accepted the original offer from Wantree Holdings, there is a reasonable likelihood the transaction would not have proceeded to a final sale.
7. Given the matters set out in [718] to [756] above, I do not accept that the circumstances surrounding the offer from Wantree Holdings, and in particular the conduct of the plaintiff and its agent in this regard, provide any support for the defendants' claims.

The circumstances in which possession was returned

1. Eighth, and lastly, I turn to the circumstances in which possession was returned. In September 2022, the plaintiff returned possession of the property to Ms Bazzo as the registered proprietor. A formal notice was issued by the plaintiff in this regard, dated 15 September 2022 (Exhibit 195). This notice was issued after the Anketell Proceedings had been commenced in this court.
2. The decision by the plaintiff to return possession to the mortgagor was explained by Mr Masel in his evidence, which I accept. Mr Masel testified that he and Churchill Knight had failed to get 'traction on the property' and that the 'market was pretty ordinary' at the time. Mr Masel had hoped that a buyer might wish to 'landbank' the property, rather than develop the property, but he described it as a 'very hard proposition to sell' the land to a developer. He testified that he considered he had the 'right agents to sell' the property but it was a 'rotten property'. He discussed with Churchill Knight the option of approaching other developers to buy the land, which Mr Cohen did do, but without success.[341]
3. Mr Masel's explanation, in which he emphasises the difficulties he encountered in selling this particular property, was reasonable in the circumstances and accords with the weight of the evidence.

1. I have examined above the various aspects of the defendants' attacks on the conduct of the plaintiff whilst mortgagee in possession. As I have indicated, the individual matters relied upon by the defendants at trial fall well short of making good on the pleaded claims of breach of equitable duty or statutory unconscionability. Demonstrating mere negligence is not sufficient.
2. It is important, though, to step back from the analysis of the individual issues raised, and consider the totality of the evidence as a whole. That is, it is necessary to ask whether all of the matters raised by the defendants, when taken together, demonstrate a breach of the equitable duty, or support a characterisation of the plaintiff's conduct as unconscionable. The analysis should not be merely mechanical.
3. As her Honour Justice Dodds-Streeton emphasised in Florgale Uniforms Pty Ltd v Orders,[342] one of the authorities relied upon by the defendants, in the context of s 420A of the CA:

It necessarily involves the exercise of judgment, taking into account all the relevant variables and circumstances of the particular case. It does not depend on matters of price or revenue alone, or any single factor in isolation.

1. When the evidence as a whole is reviewed, I do not consider it can seriously be contended that the plaintiff exercised the power to enter possession, or approached the exercise of the power of sale, in an unconscionable manner, or for an improper purpose, or so as to fraudulently, wilfully or recklessly sacrifice the interests of the borrower or the defendants. The submission that Mr Masel sat back and did nothing, while interest accumulated, cannot be sustained.
2. Rather, the plaintiff initiated steps to progress the sale of the property through the appointment of an agent. The appointed agent took active steps to sell the property. The criticisms of the credentials of the agent and the steps it took are wholly inadequate to sustain the serious claims pleaded by the defendants. Indeed, the plaintiff was ready and willing to sell the property to Wantree Holdings on terms, including as to price, which I consider were reasonable.
3. Mr Masel then repeatedly followed-up Mr Caratti for over several months from March 2019, seeking to extract a positive response from Mr Caratti in respect of the potential sale to Wantree Holdings. The steps taken by Mr Masel demonstrate his desire and increasing urgency to sell the mortgaged property. During this time, Mr Masel reminded Mr Caratti about the accumulating interest, which was 'ticking' along at a sizeable amount each month. Mr Masel ultimately gave up the Wantree Holdings' counter-offer 'for lost' because Mr Caratti was not responding.[343] The submissions made by the plaintiff in this regard should be accepted.[344]
4. There are some additional, overarching aspects of the case which bear upon a holistic assessment of the merits of the defendants' claims in this regard. First, it is not suggested by the defendants, much less demonstrated, that a sale of the Anketell Property by the plaintiff at a price of $4,000,000, one of the core terms of the sale proposal, would have been at an undervalue. Second, the defendants did not adequately explain why they, or the borrower, did not seek to pay off the debt and press for the return of the security. Third, it must be remembered, and I give weight to, the expertise and experience of Mr Masel, not as a commercial property agent, but as an experienced businessman with many years in the finance business in relation to property developments in Western Australia. I have set out Mr Masel's experience earlier in these reasons. Mr Masel was involved in the sale and marketing process. He did not merely delegate that task to Churchill Knight. Finally, it is relevant to the statutory unconscionability claim that both Mr Caratti and Ms Bazzo themselves had considerable experience in the property development sector, and were well able to protect their interests as was necessary during the sale process, including by paying off the debt to reduce the accumulating interest burden.
5. I will conclude by returning to the specific allegations in the Anketell Amended Defence, noting that the evidence and submissions at trial travelled beyond these allegations. Indeed, the plaintiff had observed in its opening submissions before trial that the defendants' pleaded case was confined in terms.
6. At [35.8] of the Anketell Amended Defence, it is alleged that the plaintiff and its agent 'did not take any active steps to genuinely or properly advertise and market the Secured Property for sale to obtain a proper price for the Secured Property', other than 'the publication and distribution of the Information Memorandum'. That allegation cannot be sustained, as I have explained.
7. At [35.10] of the Anketell Amended Defence, the defendants allege that the plaintiff's failure to accept the offer from Wantree Holdings was not reasonable or was unconscionable.[345] To sustain that assertion, the defendants would need to demonstrate, in general terms, that the amendments to the offer which formed the basis of the plaintiff's counter-offer were so unreasonable as to demonstrate an improper purpose or sharp practice, or matters of that kind. The amendments were not of this nature. Quite the contrary. The amendments were reasonable.
8. None of the individual criticisms advanced by the defendants have been established, and nor do I consider the evidence when taken as a whole supports the claims. The defendants' claims that the plaintiff breached its equitable duty as mortgagee or acted unconscionably contrary to s 12CB(1) of the ASIC Act must therefore be rejected on the merits. Additionally, I accept the plaintiff's submission that the defendants' claim of breach of equitable duty on the part of the plaintiff fails at the threshold level, as explained at [626] to [640] above.

1. Finally, I come to deal with the allegations advanced by the defendants concerning the manner in which the plaintiff dealt with the proceeds of sale of certain lots on the residential subdivision site situated at 39 Brookland Street in Beckenham.[346] This property was owned by Herdsman Technology and marketed as the 'Waverley Estate'. I will refer to the various lots constituting this estate as the Waverley Estate Property.
2. The defendants challenge the manner in which the plaintiff collected and applied the proceeds of settlement of these lots.[347] It is not in dispute that the plaintiff relevantly collected approximately $2.25m in proceeds from the sale of these lots, but only applied $397,544.02 in reduction of the amounts owing under the Anketell Loan Agreement. The balance of the proceeds, approximately $1.8m, was applied to discharge another loan.
3. It was accepted by Mr Masel in evidence that, had the plaintiff applied all of the proceeds in question to the debt owing under the Anketell Loan Agreement, that debt would have been fully satisfied.[348] The effect of the plaintiff's conduct was thus to expose the defendants to a greater liability under the guarantees.
4. Importantly, it is not suggested by the defendants that the plaintiff applied the proceeds to discharge a loan to an unrelated third party, or that the funds were misappropriated in any fraudulent sense. Rather, the complaint is that the plaintiff applied the proceeds to reduce the loan of another entity owned and controlled by Mr Caratti, namely Byford River.
5. The plaintiff denies the claim.[349]
6. The plaintiff describes this as a 'recently contrived defence', pointing to the lack of evidence as to any complaint on the part of Ms Bazzo at the time, and the absence of evidence of Ms Bazzo raising the issue with Mr Caratti once she became aware of it.
7. The plaintiff pleads that the payments in question were applied to discharge an earlier, higher-ranking mortgage over the Waverley Estate Property. I refer to the terms of [29] of the Anketell 3ASR and the particulars supplied to that paragraph. The pleading states as follows:

[29] The plaintiff admits paragraphs 39.1 and save to say that the sale of lot 13 of the Waverley Estate settled on 23 January 2017 admits paragraph 39.2 of the Defence and says that the payments referred to at paragraphs 39.2.1 - 39.2.9 were applied to discharge an earlier, higher-ranking mortgage over the Waverley Estate property given to the plaintiff by Herdsman Technology Pty Ltd (Herdsman Technology) as registered proprietor and mortgagor, in support of a separate loan from the plaintiff to Byford River Pty Ltd (Byford River), which was a company associated with the defendants.

1. The defendants plead, in the Anketell Rejoinder, as follows:[350]

(a) First, the defendants deny that any alleged application by the plaintiff of the relevant proceeds to any 'earlier, higher-ranking mortgage' is relevant in circumstances where there is no contest between securities and the defendants are sued as guarantors.

(b) Second, the defendants plead that the mortgage given by Herdsman Technology to cover the Anketell Loan Agreement (being mortgage N263245 referred to in [24.1.2] of the Anketell Amended Defence) was registered before the mortgages pleaded by the plaintiff. This pleading is inconsistent with a fact admitted in the action by the defendants and inconsistent with the details evident on the certificate of title.[351]

(c) Third, the defendants plead that the alleged interests of the defendants in the companies particularised by the plaintiff do not support the plaintiff's case against the defendants in their capacity as guarantors.

(d) Fourth, the defendants assert that cl 5.4 of the Anketell Loan Agreement expressly provided that all payments made by the borrower to the plaintiff when received by the plaintiff in respect of the loan amount or the securities, had to be applied in reduction of the loan amount under the Anketell Loan Agreement.

(e) Fifth, allied to par (d) above, as the plaintiff collected the relevant proceeds of settlement of the lots at the Waverley Estate Property from Herdsman Technology in discharge of mortgage N263245 given by Herdsman Technology in relation to the loan in the Anketell Loan Agreement, the defendants plead it was obliged by cl 5.4 to apply the relevant proceeds in reduction of the loan, and its failure to do so in respect of the relevant proceeds, constitutes a breach of the Anketell Loan Agreement and the guarantees, rendering the guarantees unenforceable. This allegation (and the following allegation) rest on the defendants' view as to the effect of an admission said to be made in the plaintiff's pleading.

(f) Sixth, further or in the alternative, and regardless of cl 5.4, the defendants plead that the plaintiff collected the relevant proceeds of settlement of lots at the Waverley Estate Property from Herdsman Technology in discharge of mortgage N263245 given by Herdsman Technology in relation to the loan in the Anketell Loan Agreement, which caused the relevant proceeds to be appropriated to the loan by GH1 as the debtor, which appropriation bound the Plaintiff. It follows from this, the defendants contend, that any amount otherwise claimable under the guarantees from the defendants, should be reduced by the relevant proceeds, with corresponding adjustment of any interest payable under the guarantees.

(g) Seventh, and in any event, the defendants contend that the plaintiff engaged in unconscionable conduct in terms of s 12CB of the ASIC Act which rendered the guarantees unenforceable. In support of this plea, the defendant rely on the asserted breach of cl 5.4 of the Anketell Loan Agreement, the lack of notice to the defendants of the intention of the plaintiff to apply the relevant proceeds in this manner, the contention that the plaintiff 'appropriated' the proceeds to the Anketell Loan Agreement, the prejudice caused to the defendants, and the asserted absence of any legitimate commercial interest on the part of the plaintiff to proceed in this manner.

1. As indicated earlier in these reasons, I have granted leave to the plaintiff to file the surrejoinder dated 3 May 2024, which pleads that the agreement for the loan to Byford River contained an identical provision to cl 5.4 of the Anketell Loan Agreement, and that, in any event, the proceeds were not received from Herdsman Technology in discharge of mortgage N263245.

1. I have set out earlier in these reasons the financing arrangements which were entered into in respect of the Anketell Property. I have set out below my findings as to the broader security position which was in place at the relevant time, and the circumstances in which the plaintiff collected and applied the proceeds from the sales of the lots at the Waverley Estate Property.

The three mortgages over the Waverley Estate Property

1. The first registered mortgage (M982315) over the Waverley Estate Property was granted by Herdsman Technology to secure a substantial loan made by the plaintiff to Herdsman Technology in around April 2015. The plaintiff had loaned the sum of $14,340,000 to Herdsman Technology in that instance. I refer to the loan approval letter sent by the plaintiff to Herdsman Technology dated 17 April 2015, together with the first registered mortgage.[352]
2. This mortgage was signed by Mr Caratti on behalf of Herdsman Technology, as its then sole director and sole company secretary. This mortgage in favour of the plaintiff was registered on the title on 29 April 2015 (Exhibit 108).
3. The second registered mortgage (N180266) over the Waverley Estate Property was granted by Herdsman Technology in respect of funds advanced by the plaintiff to Byford River, another entity owned and controlled by Mr Caratti. This mortgage in favour of the plaintiff was registered on the title on 20 November 2015.
4. A third registered mortgage was granted over the Waverley Estate Property by Herdsman Technology to secure the guarantee it gave under the 2016 Anketell Deed of Guarantee. This is mortgage N263245, identified in the letter from the plaintiff to the defendants sent on 9 December 2015 and later expressly identified in cl 2.4.1 of the Anketell Deed of Guarantee as a 'third registered mortgage'. It was registered on 29 February 2016.
5. The two prior mortgages in place in relation to the Waverley Estate Property thus operated as security for other loans made by the plaintiff to entities owned or controlled by Mr Caratti, including Byford River.
6. The defendants have admitted that the mortgages given in respect of the loans by the plaintiff to Herdsman Technology and Byford River were registered earlier in time than the third mortgage in respect of the loan given to GH1 under the Anketell Loan Agreement.[353]
7. These earlier mortgages plainly had priority over the fresh mortgage, a point which was recognised by the parties in the 2016 Anketell Deed of Guarantee. In the 2016 Anketell Deed of Guarantee, cl 2.4.1 expressly refers to the grant by Herdsman Technology of a 'third registered mortgage' to the plaintiff over the properties described in schedule, being the Waverley Estate Property.
8. The parties also recognised the order of priority of the three mortgages in the pre-contractual correspondence signed by Mr Caratti and Ms Bazzo. In the letter from the plaintiff to the defendants dated 9 December 2015, the plaintiff referred to the granting of a mortgage over the Waverley Estate Property, being all the remaining titles that this office has current mortgages over, which would be 'subsequent to our existing mortgages'.

1. Clause 5 of the Anketell Loan Agreement, which is relied upon by the defendants, is headed 'Payment Arrangements'. The clause states:

5.4. All payments made by the Borrower to the lender when received by the Lender shall (subject to any statutory obligations to the contrary) be applied by the Lender:-

5.4.1. in payment of all costs charges expenses and damages (including costs between solicitor and own client) payable by the Borrower pursuant to this loan Agreement or Incurred by the Lender in the performance or attempted performance of this Agreement or the Securities; and then

5.4.2. in payment of interest; and then

5.4.3. in reduction of the Loan Amount.

1. The Waverley Estate Property consisted of numerous lots, which were sold over time and which realised proceeds.
2. Between 23 April 2015 and 5 December 2016, the plaintiff received payments from Herdsman Technology derived from these sales, which the plaintiff applied to the primary loan to Herdsman Technology. By 5 December 2016, the primary loan to Herdsman Technology had been fully repaid. The plaintiff then discharged the first registered mortgage over the Waverley Estate Property.[354]
3. The plaintiff then determined that future proceeds from sales of these lots would be applied to the loan given to Byford River, which was then in default. This intended approach was documented by the plaintiff in its letter sent to Herdsman Technology and to Mr Caratti dated 5 December 2016.
4. In that letter, Mr Masel informed the Mr Caratti that:[355]

The balance of $153,792.78 together with all proceeds received from all further sales will be applied to the Byford River Pty Ltd loan over the property at 777 and 783 South Western Highway Byford and 3 Larsen Road Byford to which the 2nd mortgage specifically relates. This Byford River Pty Ltd loan is in default and to which you are a guarantor.

1. Between 23 December 2016 and 27 February 2017, the plaintiff received further payments from Herdsman Technology, being proceeds in respect of the settlement of additional lots at the Waverley Estate Property.[356] It is not in dispute that these proceeds were applied by the plaintiff to the outstanding loan as between the plaintiff and Byford River, being the loan secured by the second registered mortgage referred to above. It is common ground that the payments were not applied to the loan as between the plaintiff and GH1, under the Anketell Loan Agreement.[357]
2. The plaintiff thus proceeded to apply the further proceeds in the manner it had foreshadowed in the letter dated 5 December 2016. The payments in question were as follows:[358]

1. Mr Masel gave evidence that he caused the payments to be applied to the loan to Byford River because the mortgage given by Byford River was registered earlier in time than the mortgage given by Herdsman Technology in support of the loan to GH1.[359] He referred in his evidence to acting in accordance with the 'Torrens system'. I accept his evidence in this regard.
2. The payments applied by the plaintiff to the Byford River loan were then documented in letters from the plaintiff to Herdsman Technology and to Mr Caratti, which were sent between 23 December 2016 and 27 February 2017 (contained within Exhibit 225).
3. Upon receiving the above funds and applying them to the loan to Byford River, that loan itself was ultimately paid in full by 31 August 2017.[360]
4. After this point, there were two further payments received by the plaintiff from the sale of lots at the Waverley Estate Property. The payments were made on 1 September 2017 in the sum of $200,619.20 and then on 8 September 2017 in the sum of $196,924.82, being $397,544.02 in total, and were both applied by the plaintiff in reduction of the loan to GH1 under the Anketell Loan Agreement.[361]
5. The plaintiff did not receive any further payments in respect of the Anketell Loan Agreement between September 2017 and September 2018.

The defendants' knowledge of the application of the proceeds

1. The defendants maintained at trial they were not informed by the plaintiff that the proceeds were to be applied in the manner outlined above. The plaintiff challenges this contention.
2. Mr Caratti gave only limited evidence on this issue.
3. Ms Bazzo, who was the sole director of Byford River from 2012, gave evidence in chief that she was not aware that proceeds from the Waverley Estate Property settlements were being applied by Mr Masel in reduction of the outstanding loan owed by Byford River. Ms Bazzo testified that she only became aware of this fact much later, in around August 2017.[362]
4. During the course of her cross-examination, Ms Bazzo was directly challenged on her knowledge about these matters. Ms Bazzo reiterated in her evidence that she only became personally aware of the reduction in the loan facility through the application of these proceeds in August 2017.[363] At that juncture, upon becoming so aware, Ms Bazzo accepted there was no evidence of any complaint or objection made by her to Mr Masel about the asserted misapplication of the proceedings to this loan, although she accepted she was 'furious' about what had happened.[364]
5. The lack of any complaint about this issue is revealing, in my respectful view. It is entirely reasonable to expect that Ms Bazzo (or Mr Caratti) would have squarely raised this issue with Mr Masel and sought an explanation. That simply was not done.
6. Ms Bazzo's attention was drawn in cross-examination to the correspondence sent by the plaintiff to Byford River in February 2017. I did not understand Ms Bazzo to deny that such correspondence was sent by the plaintiff, nor that it was received by the company. Indeed, at one point, Ms Bazzo accepted in cross-examination that 'information was provided' to the company.[365] Rather, the gist of her evidence was that she did not personally receive the correspondence and that one could not expect a director 'to have to overview every single document including junk mail that is received for a corporate entity'.[366]
7. It is more likely than not that Ms Bazzo became aware much earlier than August 2017 of the manner in which plaintiff was applying the proceeds from the Waverley Estate Property settlements. I do not find that Ms Bazzo's evidence on this issue is untruthful, rather I consider her recollection is unreliable.
8. I have concerns about the reliability of Ms Bazzo's evidence in this regard in light of the existence of correspondence issued by the plaintiff to Byford River (and also to Herdsman Technology) which on its face alerted the recipients to the steps being taken by the plaintiff, and which is the type of correspondence one might reasonably expect to have been drawn to the attention of the directors of these companies. This correspondence contained, it should be emphasised, important information regarding the liabilities of the companies, particularly Byford River. It was not merely 'day to day' correspondence having no significance.
9. Additionally, as one might reasonably expect, the evidence reveals that representatives of the companies controlled by Mr Caratti were involved in the settlements of the lots at the Waverley Estate Property. Representatives of Herdsman Technology were involved in those settlements. Ms Bazzo gave evidence that some of the settlements were carried out for Herdsman Technology 'by Susan Dickson, some by Torrens Legal and some by staff members from our office'.[367] Ms Bazzo gave evidence that she was not actively involved in these settlements.[368] Even so, it is unlikely that neither Ms Bazzo nor Mr Caratti were wholly unaware of the settlements of the various lots of the Waverley Estate Property, or that they were wholly unaware of the manner in which the proceeds from the sale were in fact applied.
10. My concerns as to the reliability of Ms Bazzo's evidence are also informed by the length of time since the events in question occurred and the possibility that Ms Bazzo received this correspondence, or had it drawn to her attention, but cannot now recall it.
11. To put the foregoing in perspective, the correspondence in question, sent by the plaintiff, informed Byford River that around $1.8m was being applied by the plaintiff in reduction of its loan. The amount of that loan, in around December 2016, was in the order of $4.65m. A reduction of $1.8m represented a substantial lessening of the companies liability - in the region of almost 40%. It is quite difficult to accept that the sole director of Byford River, Ms Bazzo, was wholly unaware of these matters when they occurred, or soon thereafter.
12. That said, I am not able to accept the plaintiff's submission that Ms Bazzo became aware of this issue, at an earlier time than August 2017, by reason of the general ledger or the accounts of Byford River. Those matters were the subject of cross-examination of Ms Bazzo, and Exhibits 236 and 237 were drawn to her attention.[369] The dates on which these documents were in fact prepared was ultimately unclear on the evidence. I would therefore be reluctant to draw inferences as to the timing of Ms Bazzo's knowledge from these documents.
13. Ultimately, given the matters outlined above, I find that Ms Bazzo (and accordingly Mr Caratti with whom Ms Bazzo was in a de facto relationship and with whom she worked together in the same office, and who also had important roles within these businesses) became aware of the application of these proceeds to the reduction of the loan to Byford River, proximate in time to the occasions on which the plaintiff made these payments. The defendants did not take issue at that time with the conduct of the plaintiff, which had been foreshadowed in the letter dated 5 December 2016. Indeed, outside this litigation, there is no evidence the defendants took any issue with the conduct of the plaintiff in this regard. The failure to raise any objection is inconsistent with, but not fatal to, the arguments now advanced to the effect that the parties had agreed an alternative manner in which the proceeds would be applied.

1. The defendants raise a number of issues for consideration. It is appropriate to commence the analysis of these issues by addressing the pleading point as to the manner in which the plaintiff received or collected the proceeds.

1. It may be accepted that a debtor has the primary right to select the account to which a payment shall be appropriated. If the debtor makes no appropriation, the creditor has the right to determine how the funds will be appropriated.[370]
2. If neither of them exercises the right, the court may then look to the evidence to see how the creditor has dealt with the payment, in order to ascertain how he or she did in fact appropriate it.[371]
3. Once an appropriation is made by the creditor, it cannot unilaterally be undone by the plaintiff, as the defendants correctly submitted.[372]
4. The rules as to appropriation of payments were described by Young JA in Dwyer v Craft Printing Pty Ltd as 'merely an outworking of the principles of common law election that a person who is faced with two inconsistent courses must, in due course, choose one, and once that person has communicated his or her choice to the other party, the choice is irreversible'.[373]
5. The defendants sought to demonstrate an appropriation by the plaintiff in this case by reference to an admission said to have been made by the plaintiff on the pleadings. The defendants submitted, in an interlocutory contest prior to the trial of the action, that the plaintiff had, in its reply, admitted the allegation that it received the proceeds in discharge of the mortgage given by Herdsman Technology under the 2016 Anketell Deed of Guarantee. In effect, this was said to be an admission that the plaintiff 'appropriated' the proceeds to the Anketell Loan Agreement. The defendants submitted that this appropriation could not unilaterally be undone by the plaintiff.
6. I rejected this characterisation of the pleadings in an interlocutory decision granting the plaintiff leave to amend its pleadings.[374] In those reasons, I emphasised that the admission on which the defendants relied could not be divorced from the detailed particulars which were included in the pleading. Those particulars further explained the plaintiff's intended position in response to the defendants' plea, including that the plaintiff 'received and applied the net proceeds' to the loan to Byford River. The particulars clarified that the plaintiff did not accept or concede that it received the proceeds from the settlement of the Waverley Estate Property in discharge of the additional pleaded mortgage.
7. The defendants reiterated the above submission in their trial closing submissions. Once again, it must be rejected, for the reasons previously given.
8. Contrary to the defendants' contention, the evidence demonstrates that the plaintiff did make an election at the time the proceeds were received, and I have concluded that it communicated that election to the defendants. This is apparent from the letter sent by Mr Masel dated 5 December 2016 (Exhibit 225), and the subsequent letters sent between 23 December 2016 and 27 February 2017. There can be no doubt that the creditor in this case appropriated the payments to the Byford River loan, in discharge of the mortgage given by Herdsman Technology in November 2015.
9. The rejection of this argument disposes of the defendants' arguments as to the appropriation of the proceeds to the GH1 loan.[375]

1. The defendants placed considerable weight on the operation of cl 5.4 of the Anketell Loan Agreement, the terms of which I have set out above. That provision is in the same terms as the equivalent clause in the loan agreement entered into with Byford River.
2. The clause is engaged where payments are made by the borrower to the plaintiff. That much is evident from the opening words of the chapeau. Once engaged, the clause requires that those payments are to be applied by the lender in a particular order, with priority given to payment of costs, charges and expenses payable by the borrower or incurred by the plaintiff, and then in payment of interest. Lastly, the payments are to be applied in reduction of the loan amount.
3. The provision, in terms, is not engaged where payments are received by the plaintiff from some other party. In the present case, the payments were not received from GH1, but rather from Herdsman technology. Further, the provision does not expressly address the situation of competing priorities between security arrangements.
4. It is notable that the terms of cl 5.4, through the parenthetical phrase therein, expressly recognise the existence of statutory provisions which may operate, and provides that the clause takes effect subject to those provisions. The clause in the Byford River agreement is to the same effect.
5. The statutory regime within which the Anketell Loan Agreement operates includes the TLA. As to this regime, reference should be made to s 53(2), a provision emphasised by the plaintiff in its submissions. That provision states that instruments purporting to affect the same estate or interest have priority as between each other according to the time of registration and not according to the date of the instrument, notwithstanding any actual or constructive notice. The effect of this provision is that the order of priority between mortgages is the order of their registration. It has been held that this provision does not directly have a deeming effect for the purpose of separate contractual provisions between private parties.[376]
6. To what extent, then, is the construction of cl 5.4 effected by the terms and operation of s 53 of the TLA?
7. In my view, once it is accepted that s 53 does not have a deeming effect in respect of contractual provisions, and that the provision is not a statutory obligation which controls the order of application of payments by a borrower in circumstances such as this, it follows that the parenthetical phrase does not directly engage the terms of s 53. That is, s 53 is not a 'statutory obligation to the contrary'.
8. The defendants also raised the terms of cl 9.2 of the 2016 Anketell Deed of Guarantee as being relevant to the application of the proceeds from the settlement of the Waverley Estate Property. This provision was identified by the defendants in their closing submissions, but not in their pleadings, as providing support for their position. I do not consider this clause has relevance to the construction of cl 5.4 of the Anketell Loan Agreement, which was executed much earlier in time and involves different parties.
9. I also accept the plaintiff's submission that cl 9.2 in the guarantee does not have the effect of impugning the application of the proceeds by the plaintiff, and did not preclude the plaintiff applying the proceeds from the further sales of lots at the Waverley Estate Property in reduction of the Byford River loan. By its terms, it does not have any such effect.
10. In closing submissions, it was contended that cl 5.4 of the Anketell Loan Agreement should be construed strictly in favour of the guarantors, having regard to the Ankar principle.[377] I reject the submission that this principle would operate to alter the natural reading of cl 5.4 in the present circumstances.
11. Ultimately, I consider the manner in which the defendants seek to deploy cl 5.4 is misplaced. The clause has a narrower operation than suggested by the defendants. In my view, the clause would not, in terms, be breached where the lender receives funds from a party other than the borrower, and where the borrower applies those funds otherwise than in reduction of the loan amount, but instead applies the funds to another account of a related party.
12. In my view, the defendants' broad construction of cl 5.4 is unlikely to have been objectively intended by reasonable business persons in the context of these parties. The clause does not control the manner of application of proceeds in the context of competing securities.
13. Further, if the defendants' preferred construction of cl 5.4 of the Anketell Loan Agreement were to be accepted, it would create a degree of tension between that clause and the equivalent clause in the Byford River agreement, which is in the same terms. The existence of equivalent clauses in the agreements points against the defendants' construction.
14. I therefore do not consider the terms of cl 5.4 of the Anketell Loan Agreement were breached by the plaintiff by reason of the manner it applied the proceeds received in respect of the settlement of the Waverley Estate Property.

1. The foregoing is sufficient to dispose of the majority of the arguments pressed by the defendants on this issue. There remains an allegation that the plaintiff's conduct was unconscionable. This allegation is without merit. The following matters demonstrate this to be the case.
2. First, as explained above, I am not satisfied the plaintiff's conduct amounted to a breach of the Anketell Loan Agreement, in the manner alleged by the defendants. To the extent to which Mr Caratti gave evidence during cross-examination about an agreement he had with Mr Masel in this regard,[378] as to how the proceeds would be allocated, I do not accept that evidence is either accurate or relevant. No such agreement was pleaded by the defendants, other than the Anketell Loan Agreement instrument.
3. Second, I am satisfied the plaintiff gave written notice to the defendants that it intended to apply the further proceeds to reduce the loan to Byford River. The defendants raised no objection to this course at the time. The parties had also recognised the priority between the mortgages in the pre-contractual correspondence and within the 2016 Anketell Deed of Guarantee.
4. Third, I reject the defendants' characterisation of the pleadings, or of the facts, that the plaintiff collected the proceeds in question in discharge of the later mortgage (and that the borrower thus 'appropriated' the proceeds to the Anketell Loan Agreement).
5. Fourth, I accept that the application of the proceeds to reduce another loan, rather than the loan under the Anketell Loan Agreement, was to the disadvantage of the defendants in their capacity as guarantors under the Anketell Loan Agreement and under the 2016 Anketell Deed of Guarantee. However, any such disadvantage is a function of the various financing arrangements in place and the order of priority of the securities. In any event, it is apparent that the funds were applied by the plaintiff to pay down a loan owed by Byford River, a company owned and controlled by the guarantors.
6. Fifth, the plaintiff had a legitimate commercial interest in applying the proceeds to the reduction of another loan, owed by a related company, which is accepted as having been outstanding at the time. The defendants' submission to the contrary should be rejected. The plaintiff was not obliged to wait until sales contracts in respect of the Byford River properties completed in order to receive further proceeds and reduce the loan, as submitted by the defendants.[379]
7. Sixth, although the manner in which the plaintiff applied the proceeds was not, in my view, dictated by the statutory regime, the fact the plaintiff proceeded to apply the proceeds in a manner consistent with that statutory framework (wherein the order of priority between mortgages is the order of their registration), is relevant to the unconscionability allegation. The fact the conduct of the plaintiff aligns the statutory order of priority weighs heavily against the defendants' allegation that this conduct was commercially unfair or involved some sharp practice.
8. Seventh, there is no element of moral taint or trickery, or conduct offending conscience, discernible from the facts relevant to this aspect of the matter, or more broadly. To the contrary, the plaintiff's conduct in applying these proceeds to pay down another outstanding loan owed by a company owned and controlled by Mr Caratti, having informed the defendants that this would be done, having received no objection, where that loan was secured by a mortgage earlier in time than the 'third registered mortgage' given by Herdsman Technology as part of the 2016 assignment from Angas Securities to the plaintiff, strikes me as entirely unremarkable.

1. The defendants' challenge to the enforcement of the guarantees based on the plaintiff's conduct in applying the proceeds from the sale of lots at the Waverley Estate Property must therefore be rejected, in my view.
2. For completeness, I should note the defendants referred in their opening trial submissions to reliance on the Ankar principle in support of this aspect of their defence, not solely by reference to the proper construction of cl 5.4 of the Anketell Loan Agreement, which I have addressed above.[380] This point was not pleaded.[381] In any event, given the findings I have made, there is no merit in the submission that the plaintiff's conduct altered the guarantors' rights under the Anketell Loan Agreement or under the 2016 Anketell Deed of Guarantee.

PART V - HOCKING PROCEEDING: THE PLEADINGS A. Introduction

1. I turn now to the Hocking Proceeding.
2. This action concerns the financing provided by the plaintiff for the development in Hocking which was advertised and marketed as the 'Tuxedo Rise estate'. It is common ground that the loan facility was provided by the plaintiff for the purposes of facilitating the subdivision of the relevant property into individual titles, to thereafter be sold.[382]
3. The claims in the Hocking Proceeding arise under separate instruments to the Anketell Proceeding, and defences of a different nature are raised by both defendants, as well as a counterclaim which is advanced by Ms Bazzo. That said, the credibility findings I have made in relation to the evidence of Mr Masel, Mr Caratti and Ms Bazzo apply equally to this proceeding, as do the other findings concerning the respective businesses of the parties and the historical relationship between them.
4. In this section of the reasons I will identify the pleadings in the lead up to trial, the defences which were abandoned by the defendants, the new defences and issues raised, and then address the application filed by the plaintiff following the trial to file the fourth amended substituted reply and defence to counterclaim. Finally, I will summarise the issues which I consider require determination following the trial.

1. The plaintiff filed the writ in this action on 26 November 2021. The action was also admitted to the CMC List in January 2023.
2. The pleadings in the Hocking Proceeding were extremely dynamic in the lead up to trial and during trial.
3. Mercifully, the plaintiff's statement of claim dated 15 September 2023 was not amended thereafter and represents the final distillation of the plaintiff's claim (Hocking ASOC).
4. The final pleaded defence and counterclaim of the defendants is found in the pleading dated 6 February 2024 (Hocking ADCC). That pleading captures and records the allegations and defences which were abandoned by the defendants on the eve of trial, which I have summarised under heading C below.
5. The plaintiff's reply and defence to counterclaim pleading had many iterations, but only the following need be noted:

(a) On 6 December 2023, the plaintiff filed a third amended substituted reply and defence to the counterclaim. That was filed following an interlocutory dispute between the parties which was the subject of orders made on 25 October 2023 and reasons published on 30 October 2023.[383] Certain amendments to [6(ab)] and [20] were refused. The court also refused the plaintiff leave to withdraw the admission in [20] of the amended substituted reply and defence to counterclaim dated 15 September 2023 (concerning [39] of the substituted amended defence and counterclaim dated 17 September 2023).[384]

(b) On 22 December 2023, the court granted leave to the plaintiff to file and serve an amended reply in the form of the third amended substituted reply and defence to counterclaim dated 6 December 2023.[385] Certain proposed amendments were refused.[386] The plaintiff filed a third amended substituted reply and defence to counterclaim on 8 January 2024 (Hocking 3ASRD).

(c) On 3 May 2024, after I had reserved my decision following the trial, the plaintiffs sought leave to file the fourth amended substituted reply and defence to counterclaim in the form of the minute of proposed fourth amended substituted reply and defence to counterclaim dated 3 May 2024. As explained below, I have granted the plaintiff leave to rely on that pleading (Hocking 4ASRD).

1. The defendants were given leave on 24 November 2023, to file and serve a rejoinder to the plaintiff's second amended substituted reply and defence (Hocking Rejoinder). The filing of the rejoinder, on 27 November 2023, was not opposed by the plaintiff.[387]

C. Defences and allegations abandoned by the defendants

1. In their opening submissions for trial, the defendants foreshadowed amendments to their pleadings which I will now briefly describe. The amendments are summarised in the court's reasons published as Walthamstow Pty Ltd v Caratti [No 6][388] and also summarised in the defendants' memorandum filed on 27 March 2024.
2. The defendants:

(a) abandoned the allegation that Mr Masel had represented to the defendants that interest on the advance under the loan agreement would be capitalised, referred to in the pleading as the 'Capitalisation Representation';[389]

(b) abandoned the pleas to the effect that the 'Capitalisation Representation' also constituted an agreement between the parties;[390]

(c) abandoned the allegations that the plaintiff's conduct in issuing certain notices and demands, given the alleged 'Capitalisation Representation', was misleading or deceptive contrary to s 12DA of the ASIC Act and s 1041H of the CA;[391]

(d) abandoned the allegations that the plaintiff's conduct in issuing certain notices and demands, given the alleged 'Capitalisation Representation', was unconscionable for the purposes of s 12CB of the ASIC Act;[392] and

(e) abandoned the pleas forming part of the counterclaim which concern the loan procured from Yanchep Investments Pty Ltd;[393] and

(f) abandoned the pleas forming part of the counterclaim concerning the inability to create individual titles which allegedly led to an inability to sell the individual titles for a greater sum than was realised.[394]

1. The plaintiff noted in its closing submissions at trial that the 'Capitalisation Representation' defence, to the effect that the Lower Rate of interest should have been applied, did not need to be addressed, and that point was not developed in the defendants' closing written submissions.[395]

1. The defendants also sought to make various corrections to [49(b)] of the defence, as explained in the above interlocutory reasons, for which leave was given.[396]
2. A significant proposed amendment to the rejoinder was refused, however. The defendants sought to introduce an allegation as to the suspensive effect of the garnishee notice said to have been issued by the ATO on 8 November 2016. I refused leave for this amendment to be incorporated into the defendants' rejoinder, as explained in Walthamstow Pty Ltd v Caratti [No 6].[397]

1. As with the Anketell Proceeding, after I had reserved my decision, the plaintiff sought leave in the Hocking Proceeding to file the fourth amended substituted reply and defence to counterclaim in the form of the minute of proposed fourth amended substituted reply and defence to counterclaim dated 3 May 2024, which I have referred to above as the Hocking 4ASRD.
2. The relevant portion of the Hocking 4ASRD is in the following terms, with the proposed amendment indicated by underlining:[398]

[6] The plaintiff denies paragraph 12.4 of the Defence and says that it did not provide the balance of the Advance as:

(a) the plaintiff did not ever receive a written request from the Borrower for the drawdown of the balance of $295,679.45 left on the Advance as required under the Loan Agreement (clause 26.1);

(aa) in February 2017 the first defendant requested the plaintiff make payment to the City of Wanneroo of $470,783, such amount being in excess of the $295,679.45 remaining on the loan Advance;

(b) even if a written request was made for the release of the balance of the Advance (which is denied) the plaintiff was entitled under the Loan Agreement and under the Bazzo Mortgage to withhold any portion of the Advance requested by the Borrower to be drawn down if the plaintiff was not satisfied with the security available, or with the financial circumstances of the Borrower or the Guarantor or such other matter which the plaintiff in its absolute discretion views as being relevant (clause 26.2 Loan Agreement, clause 22 Bazzo Mortgage);

(bb) the plaintiff was not satisfied with the security supporting the loan available to pay the $470,783;

(c) on 8 November 2016 the plaintiff was issued with a Garnishee Notice pursuant to Section 260-5 of Schedule 1 of the Taxation Administration Act 1953 (Cth) pursuant to which the plaintiff was required to pay any monies payable to the benefit of the second defendant to the Australian Taxation Office (ATO); and Particulars Letter from ATO to the plaintiff dated 8 November 2016 enclosing a Garnishee Notice dated 8 November 2016; and

(d) in or around late 2016 to early 2017, Mr Masel had a telephone conversation with Ross Burns from the ATO in relation to the Garnishee Notice, the effect of which was that Mr Burns advised Mr Masel that the plaintiff was not permitted to release any funds under the Loan Agreement that would be paid to the benefit of the second defendant (including paying any funds directly to the City of Wanneroo, or to any other entity nominated by the first or second defendant to pay to the City of Wanneroo, as Mr Burns maintained that such payments would be to the ultimate benefit of the second defendant).

1. The plaintiff's primary position, similar to that adopted in the Anketell Proceeding, is that the proposed amendment is unnecessary because the plaintiff says it has always relied on the Garnishee Notice to exercise its discretion (pursuant to cl 26.2 of the Agreement), in order to withhold any drawdown requested by the defendants, although it did not explicitly refer to the general discretion contained in that clause in its Reply (whereas it had referred to other parts of cl 26.2).
2. However, the point having been taken by the defendants, the plaintiff submits it is appropriate to seek leave to amend the reply pleading to make plain that the plaintiff relies on the Garnishee Notice as a subjective basis for the exercise of its discretion not to advance the 'Second Drawdown' not only as a 'financial circumstance', but as 'such other matter the plaintiff considers relevant'.
3. In summary, the plaintiff submits that the amendment should be made because it is consistent with how the trial was actually run by all parties, including the defendants. There can be no prejudice to the defendants, the plaintiff submits, 'as they can make no credible case against its exercise based upon how they actually ran their case'.
4. Conversely, the plaintiff submits there could be substantial prejudice to the plaintiff if it were prevented from relying upon the general discretion in cl 26.2 in circumstances where all parties accept that one of the reasons that the plaintiff did not advance the final $295,000 was because the plaintiff received a Garnishee Notice.
5. For their part, the defendants opposed the late amendment, described as an attempt to parachute new amendments into the fabric of the case. It was submitted that the open-ended, residual discretion point was not pleaded, that it lacked evidentiary foundation, and was vague and embarrassing. The delay was considerable, as was the asserted prejudice. The defendants pointed to the potential for further evidence to be required in light of the amendment.

1. I set out the applicable power and principles in Part II of these reasons in the context of the amendment which was proposed in the Anketell Proceeding, and need not repeat them here.

1. I am satisfied the amendment should be allowed.
2. The primary reason for allowing the amendment, despite the lateness of the application, is that the amendment effectively brings the pleading into line with the manner in which the parties ran their respective cases at trial and, accordingly, to the extent there is any prejudice to the defendants, it is ameliorated given the manner the trial was conducted and given the lack of surprise. The plaintiff also made express reference to the discretionary provision in cl 26.2 of the Hocking Loan Agreement in its opening submissions filed prior to trial.
3. Further, given the manner in which the trial was conducted, I do not accept that further evidence is required.
4. On my assessment, the plaintiff has consistently relied on the Garnishee Notice to exercise its discretion under cl 26.2, having regard to the terms of the first reply pleading filed in July 2022. Further, all parties accepted that the receipt of the Garnishee Notice was one (disputed) reason the final funds were not advanced by the plaintiff. Mr Masel was cross-examined during the trial about the Garnishee Notice and his file note on the issue. Ms Bazzo gave evidence on the issue. In substance, the defendants asserted the Garnishee Notice was one of the reasons the plaintiff did not advance the funds in question. Indeed, this formed part of the defendants' closing submissions and address.
5. These aspects of the conduct of the case, when examined in totality, fall within the principles expressed by the Court of Appeal in Gunn v Meiners[399] as justifying the determination of the case on a basis different from the pleaded case. Equally, they justify the amendment of the pleadings to reflect the manner in which the case has been conducted.
6. I will allow the plaintiff's application in the Hocking Proceeding for leave to file the fourth amended substituted reply and defence to counterclaim in that action.

1. As with the Anketell Proceeding, the Hocking ASOC pleads a relatively straightforward case against the defendants.
2. Many of the essential facts are also the subject of admissions on the pleadings or agreed facts which have been filed (being the Hocking Agreed Facts 1 and Hocking Agreed Facts 2), such that the existence and terms of the financing documentation is not in dispute between the parties.
3. The plaintiff's claim is against Mr Caratti as guarantor and against Ms Bazzo as one of the borrowers under a loan agreement which was entered into between the plaintiff and Keris. The initiating loan instrument itself contained the guarantee given by Mr Caratti. It is common ground that the loan facility was provided by the plaintiff for the purposes of facilitating the subdivision of the 'Security Property' into individual titles, which would be sold as a vacant residential land.[400]
4. The plaintiff pleads that, on 31 October 2014, the plaintiff as lender, Ms Bazzo as trustee for the Gucce Holdings Trust as borrower, Keris as trustee for the Bradley Street Trust as borrower, and Mr Caratti as guarantor, entered into a loan agreement (Hocking Loan Agreement).[401]
5. It is pleaded that the Hocking Loan Agreement provided that the plaintiff would advance Ms Bazzo and Keris the sum of $6,000,000, by way of two drawdowns, being $4,500,000 (First Drawdown Amount) and $1,500,000 (Second Drawdown Amount).[402]
6. It is further pleaded that the Hocking Loan Agreement contained clauses to the effect that Mr Caratti as guarantor guaranteed payment of the 'Outstanding Amount' under the Loan Agreement by the borrowers (cl 22.1).[403] It is pleaded that the plaintiff and Mr Caratti entered into a Guarantor's Acknowledgement document at the same time the Hocking Loan Agreement was executed.[404]
7. The plaintiff pleads that the loan to Ms Bazzo and Keris was secured by registered mortgages over various properties, defined in par 6 of the pleading as the 'Mortgaged Properties'.[405] A registered mortgage is pleaded to have been granted by Ms Bazzo over Lot 9001, Lot 9032, Lot 9033, and Lot 9011, and a registered mortgage is pleaded as having been granted by Keris over Lot 9012.[406] I will refer to these mortgages as the Hocking Bazzo Mortgage and the Hocking Keris Mortgage respectively.
8. The following diagram (Diagram C) provides an overview of the instruments which are the subject of the Hocking Proceeding:

1. The plaintiff pleads that it advanced the sum of $5,704,320.55 under the Hocking Loan Agreement.[407] The amount is pleaded to have been advanced in the following tranches:[408]

(a) the sum of $4,500,000 was advanced to Keris on 4 November 2014, being the whole of the First Drawdown Amount; and

(b) the sum of $1,000,000 was advanced to Keris on 23 December 2014 and the sum of $204,320.55 was advanced to Keris on 9 November 2015, together representing part of the Second Drawdown Amount.

1. The Hocking Loan Agreement is pleaded as having a term of 24 months commencing on 4 November 2014, and ending on the 'Repayment Date' as defined therein.[409] The plaintiff pleads that it agreed, on 30 November 2015, to extend the Hocking Loan Agreement for a further 12 months.[410] A further extension of 12 months is then pleaded, through until 4 November 2018.[411]
2. The plaintiff pleads that the properties in question were in fact subdivided and then sold, between November 2014 and July 2021, with the proceeds of sale being allocated towards early repayment of the 'Outstanding Amount' under the Hocking Loan Agreement.[412] Approximately $9.7m was paid to the plaintiff in this regard.[413] In addition to this amount, further sums were paid to the plaintiff between November 2018 and July 2021, at the direction of Ms Caratti in repayment of the Hocking Loan Agreement, in the order of $1.04m.[414]
3. The plaintiff pleads in the Hocking ASOC that, following receipt of the above payments, there was a shortfall of $894,447.81 as at 6 July 2021.[415]
4. The plaintiff pleads that, on 9 November 2021, letters of demand were served on Ms Bazzo as a borrower under the Hocking Loan Agreement, and on Mr Caratti as guarantor under that instrument.[416]
5. The plaintiff's pleaded claim for relief is in the following terms:[417]

1. Payment of the sum of $948,872.91 from the first and second defendants. 2. Interest on the sum of $948,872.91 pursuant to clause 4.5 of the Loan Agreement at the rate of 14.75% per annum compounding monthly from 25 November 2022 until judgment. 3. Interest on the judgment sum pursuant to:

(a) clause 4.5 of the Loan Agreement at the rate of 14.75% per annum compounding monthly until payment; or
>
> (b) alternatively, section 32 Supreme Court Act 1935 (WA).

[pars 4 and 4A seek costs under the Loan Agreement, the Mortgage or the Rules].

1. I have earlier addressed, when dealing with the Anketell Proceeding, the viability of the plaintiff's claim for contractual interest on the judgment sum, as appears at [3(a)] of the prayer for relief.

1. Having regard to the amendments made to the pleadings, the following matters were relied upon by the defendants at trial to resist the plaintiff's claims and will require determination by this court.
2. First, the defendants dispute whether the plaintiff has demonstrated the essential elements of the causes of action pleaded against the defendants and whether the plaintiff has established to the requisite standard the quantum it claims. The manner in which the plaintiff has claimed interest, and sought to prove that aspect of the claim, is also the subject of dispute. The defendants maintain that the plaintiff has failed to demonstrate the amount claimed in the Hocking Proceeding and points to substantive and evidentiary difficulties in the plaintiff's case in this regard.
3. Second, the defendants expressly dispute the validity of the written demands which are relied upon by the plaintiff.[418]
4. Third, the first defendant contends that the guarantee given by him was discharged by reason of an extension of the term of the Hocking Loan Agreement in November 2017.[419] The first defendant thus raises an Ankar defence in connection with the extensions of the loan arrangements.
5. Fourth, the defendants contend the plaintiff breached the loan agreement by refusing to release funds which caused a delay in the issue of titles for the subdivided lots and is precluded from charging interest for that period.[420]
6. Fifth, the defendants advance a counterclaim against the plaintiff for certain amounts by reason of the plaintiff's failure to advance the balance of the second drawdown amount under the Hocking Loan Agreement, which is alleged to be a breach of the loan agreement or unconscionable conduct for the purposes of s 12CB of the ASIC Act, which caused loss and damage or for which the defendants are entitled to relief under s 12GM of the ASIC Act.[421]
7. Sixth, the defendants raise contentions as to the manner in which the non-refundable interest charge and the top up payments were treated by the plaintiff.[422]

1. Having regard to the pleaded cases of the parties, as amended, and the primary contentions agitated at trial, the following issues fall for determination by the court in the Hocking Proceeding (each of which is addressed within Part VII of these reasons).
2. First, whether the plaintiff has discharged its onus on the balance of probabilities to establish the essential elements of the claim against Ms Bazzo pursuant to the Hocking Loan Agreement. In this regard, it is necessary to consider whether the plaintiff has established the quantum of the claim against Ms Bazzo under the loan. I will separately address the discrete issues pleaded by the defendants as to quantum and the validity of the demands.
3. Second, whether the plaintiff's claim against Ms Bazzo has properly credited to the Hocking Loan Agreement the top-up payments made by the borrowers on various occasions.
4. Third, whether the plaintiff's claim against Ms Bazzo has properly accounted for the non-refundable interest charge of $120,000, which was deducted by the plaintiff as part of the First Drawdown Amount.
5. Fourth, whether Ms Bazzo has discharged her onus on the balance of probabilities to demonstrate the breach of the Hocking Loan Agreement by the plaintiff in failing to pay the balance of the remaining funds under that agreement (as part of the Second Drawdown Amount). This issue is connected to the counterclaim advanced by Ms Bazzo.
6. Fifth, whether demands were required to be made by the plaintiff under the Hocking Loan Agreement and whether those demands were valid, and validly served, on Ms Bazzo and Mr Caratti.
7. Sixth, whether Mr Caratti's obligations as a guarantor were validly extended when the Hocking Loan Agreement was extended, or whether his obligations were thereby discharged.
8. Seventh, whether the plaintiff has discharged its onus on the balance of probabilities to establish the essential elements of the claim against Mr Caratti pursuant to the guarantee contained within the Hocking Loan Agreement, including the quantum of the claim against Mr Caratti in respect of the guarantee.
9. Eighth, whether Ms Bazzo has discharged her onus on the balance of probabilities to establish the pleaded contractual counterclaim, which involves several sub-issues including whether there was a valid request for payment, whether any requests exceeded the applicable drawdown amount, whether the plaintiff had a valid basis to refuse to make payment under the Hocking Loan Agreement or by reason of the Garnishee Notice, and whether Ms Bazzo has established loss or damage causally connected to the alleged breach.

PART VI - HOCKING PROCEEDING: EVIDENCE AND FINDINGS A. Introduction

1. In this section of the reasons, I will set out my factual findings for the purposes of the Hocking Proceeding, particularly in respect of the factual matters which have been agreed or which are non-contentious. As to the contentious factual matters, I will specifically address those matters later in the reasons when dealing with the issues requiring determination.

B. Factual findings specific to the Hocking Proceeding

1. The course of events commences in October 2014, when the financing arrangements were entered into.
2. It is agreed that Mr Masel had a conversation with Mr Caratti in October 2014, the effect of which was that Mr Caratti indicated he wanted the plaintiff to fund a property development project in relation to various properties in the suburb of Hocking.[423] I will refer to the properties in question as the Hocking Mortgaged Properties.[424]
3. It is an agreed fact that, on 27 October 2014, the plaintiff sent a letter of offer to Ms Bazzo and to Keris, agreeing to provide a loan facility to Ms Bazzo and Keris for the sum of $6,000,000 (Hocking Letter of Offer).[425] This loan was to be secured by way of a registered mortgage granted by Ms Bazzo over three of the properties (described as the 'Security Property') and by a further registered mortgage granted by Ms Bazzo and Keris respectively over two of the properties (described as the 'Collateral Security Property').[426]
4. In accordance with the Hocking Letter of Offer, the plaintiff was to advance the funds to Ms Bazzo and Keris in two stages, namely:

(a) payment of the first drawdown of $4,500,000 upon registration of mortgages over the 'Security Property'; and

(b) upon practical completion of the subdivision of the 'Security Property'.[427]

1. It is an agreed fact that the loan facility provided by the plaintiff was for the purposes of subdividing the 'Security Property' into individual titles, which would be sold as a residential vacant land.[428]
2. On 27 October 2014, Ms Bazzo and Keris signed and accepted the Hocking Letter of Offer.[429]

1. On 31 October 2014, the following parties entered into the Hocking Loan Agreement, which materially reflected the terms of the Hocking Letter of Offer:[430]

(a) the plaintiff as lender;

(b) Ms Bazzo as the trustee for the Gucce Holdings Trust, as a borrower;

(c) Keris as trustee for the Bradley Street Trust, also as borrower; and

(d) Mr Caratti as a guarantor.

1. As earlier noted, the Hocking Loan Agreement provided that the plaintiff would advance Ms Bazzo and Keris the sum of $6,000,000, by way of two drawdowns, being $4,500,000 and $1,500,000, being the First Drawdown Amount and Second Drawdown Amount.[431]
2. The Hocking Loan Agreement is a 17 page instrument, apparently prepared by Taylor Smart, the solicitors for the plaintiff. It contains four recitals and 26 operative clauses. The instrument was signed by Mr Masel for the plaintiff, Ms Bazzo as the sole director and company secretary for Keris, and by Ms Bazzo and Mr Caratti in their personal capacities. The signatures of Ms Bazzo and Mr Caratti were both witnessed by Mr Darryl Kipping of Torrens Legal, who was the solicitor acting generally for them at the time.
3. It is common ground in the action that the Hocking Loan Agreement included material terms to the following effect:[432]

(a) the plaintiff agreed to advance to the second defendant the 'Advance' of $6,000,000.00 (cl 2);

(b) Ms Bazzo and Keris, as the borrowers, agreed to pay the 'Outstanding Amount' to the plaintiff on the 'Repayment Date' (cl 4.1);

(c) the 'Outstanding Amount' encompassed all moneys payable by the borrowers under the Hocking Loan Agreement, including the aggregate amount of the 'Advance' outstanding at any time, all unpaid interest pursuant to the Hocking Loan Agreement, and all other amounts which are payable, owing but not payable or contingently owing by the borrowers to the plaintiff under the Hocking Loan Agreement (cl 1.1);

(d) the borrowers could make early repayments towards the 'Outstanding Amount' prior to the 'Repayment Date' subject to:

(i) providing 30 days' written notice to the plaintiff of the proposed repayment, and the plaintiff providing written consent to that proposed repayment (cl 4.2(a));

(ii) payment to the plaintiff of an additional amount equal to one month's interest on the portion of the 'Outstanding Amount' being repaid at the 'Higher Rate' of 14.75% per annum (cl 4.2(b)); and

(iii) the proposed repayment being made on an 'Interest Payment Date' (cl 4.2(c));

(e) moneys received by the plaintiff in early repayment of the 'Loan' would be allocated as follows:

(i) payment of the Interest Payment to the plaintiff;

(ii) payment of any other outstanding interest to the plaintiff; and

(iii) payment of the 'Outstanding Amount' to the plaintiff (cl 4.3);

(f) the borrowers agreed to pay the 'Interest Payment' upon early repayment of the 'Loan' where the early repayment was as a result of the sale of a subdivided lot or lots forming part of the 'Property' (cl 4.4(b));

(g) if the borrowers did not repay the 'Outstanding Amount' on the 'Repayment Date', interest would accrue on the 'Outstanding Amount' at the 'Higher Rate' of 14.75% per annum, from the 'Repayment Date' until the actual date of payment compounding monthly (cl 4.5);

(h) the borrowers agreed to pay to the plaintiff interest on the 'Outstanding Amount', pursuant to cl 3.1 and 3.2:

(i) in arrears commencing 4 December 2014 and on the fourth day of each month thereafter; and

(ii) calculated daily at the 'Higher Rate' of 14.75% per annum, or the conditions thereof having been met, at the 'Lower Rate' of 11.75% per annum,

(i) the borrowers agreed to pay on demand all expenses for which the plaintiff may pay or incur liability to pay, including:

(i) in the exercise (or attempted) of any of the powers, rights or remedies vested in the plaintiff (cl 6.1(d));

(ii) in relation to any action or proceeding necessary to be undertaken in any Court by the plaintiff in order to enforce payment of the 'Outstanding Amount' (cl 6.1(e));

(j) the borrowers would be deemed to be in default under the Loan Agreement upon an 'Event of Default', which included a default in the performance of any of its obligations under the Loan Agreement or the 'Collateral Security' (cl 1.1); and

(k) upon an 'Event of Default' the borrowers agreed to pay to the plaintiff the 'Outstanding Amount' upon (see cl 7.1(b));

(i) the plaintiff's declaration that the 'Outstanding Amount' was due and payable; and/or

(ii) the plaintiff's declaration that the 'Outstanding Amount' was due and payable on demand.

1. It is common ground the Hocking Loan Agreement contained clauses to the effect that Mr Caratti as guarantor, guaranteed payment of the 'Outstanding Amount' under the Loan Agreement by the borrowers (cl 22.1), and agreed that if the 'Outstanding Amount' was not paid by the borrowers on time, Mr Caratti would pay the 'Outstanding Amount', within 7 days of receiving a written demand from the plaintiff (cl 22.2).
2. Further, Mr Caratti agreed that the guarantee contained in cl 22 of the Hocking Loan Agreement was enforceable notwithstanding any bill, negotiable or other instrument, security or contract still in circulation or outstanding (cl 22.5), and he agreed that for the purposes of securing the guarantee contained in cl 22, he charged his right, title and interest in any real estate owned by him and consented to the plaintiff registering a caveat over any such real estate (cl 22.6).[433]

1. It is an agreed fact that the loan to Ms Bazzo and Keris was secured by a registered mortgage over the Hocking Mortgaged Properties.[434] The mortgage was granted by Ms Bazzo over Lot 9001, Lot 9032, Lot 9033, and Lot 9011. The mortgage was granted by Keris over Lot 9012.[435] I have referred to these earlier in these reasons as the Hocking Bazzo Mortgage and the Hocking Keris Mortgage.
2. On 31 October 2014, the plaintiff as mortgagee and Keris as mortgagor entered into the Hocking Keris Mortgage to secure payment of the loan amount.[436] This mortgage was in writing dated 31 October 2014 and was registered pursuant to the TLA on 5 December 2013.[437]
3. On 31 October 2014, the plaintiff as mortgagee and the second defendant as mortgagor entered into the Hocking Bazzo Mortgage to secure payment of the loan amount.[438] The mortgage was in writing dated 31 October 2014 and was registered pursuant to the TLA on 5 December 2013.[439]
4. On 4 November 2014, the plaintiff registered these mortgages over the 'Security Property' and the 'Collateral Security Property'.[440]

1. It is an agreed fact that, on 31 October 2014, Mr Caratti as guarantor and the plaintiff as lender executed a 'Guarantor's Acknowledgement' document.[441]
2. The Guarantor's Acknowledgement contained terms to the effect that Mr Caratti acknowledged that he had read and signed the Guarantor's Acknowledgment before executing the Hocking Loan Agreement, and he had been given the opportunity to read all of the terms of the Hocking Loan Agreement. Further, the document recorded that Mr Caratti's attention had been drawn to terms of the Hocking Loan Agreement, and Mr Caratti acknowledged that he understood the nature and effect of the Hocking Loan Agreement and his obligations under that instrument.[442]

(5) Drawdowns pursuant to the Hocking Loan Agreement

1. The amounts which were in fact advanced to the borrowers by the plaintiff are not in real dispute. The point of dispute in the action in this regard centres on the failure or refusal by the plaintiff to advance the final part of the Second Drawdown Amount under the Hocking Loan Agreement.
2. It is an agreed fact that, on 4 November 2014, the Hocking Loan Agreement commenced and the plaintiff advanced the sum of $4,500,000 to Keris pursuant to the Hocking Loan Agreement.[443] This is the First Drawdown Amount.
3. It is also an agreed fact that, on 23 December 2014, the plaintiff advanced the sum of $1,000,000 to Keris pursuant to the Hocking Loan Agreement.[444] This amount represented part of the Second Drawdown Amount. The parties agreed that the plaintiff was 'satisfied of practical competition' of the subdivision of the Security Property in this regard.[445]
4. On 9 November 2015, the plaintiff advanced the sum of $204,320.55 to Keris pursuant to the Hocking Loan Agreement.[446] This is an agreed fact. This amount, which represented a further portion of the Second Drawdown Amount, was paid by the plaintiff to the following entities on direction by the borrowers:[447]

1. So, the sum of $4,500,000 was initially advanced in November 2014, followed by a further advance of $1,000,000 in December 2014, and then a final advance of $204,320.55 in November 2015. The total sum advanced by the plaintiff was accordingly $5,704,320.55.
2. It is an agreed fact that the plaintiff did not advance the balance of the Second Drawdown Amount.[448]
3. I will return to the factual matters concerning the drawdown of the funds when addressing the fourth issue below.

1. It is an agreed fact that, on 30 November 2015, Ms Bazzo and Keris executed a request for an extension of the term of the Hocking Loan Agreement from 4 November 2016 to 4 November 2017 (First Hocking Extension) and paid the plaintiff a fee of $50,000 additional interest in respect of that extension.[449]
2. It is an agreed fact that, on 3 August 2017, the plaintiff agreed to extend the Hocking Loan Agreement for a further term of one year from 4 November 2017 to 4 November 2018, on the basis that the terms of the Hocking Loan Agreement would remain otherwise unaltered (Second Hocking Extension). This agreement was contained in a letter sent by the plaintiff to Ms Bazzo dated 3 August 2017.[450]
3. On 1 November 2018, the plaintiff agreed to extend the Hocking Loan Agreement for a further term of one year from 4 November 2018 to 4 November 2019 on the basis that the terms of the Hocking Loan Agreement would remain otherwise unaltered (Third Hocking Extension). This agreement was contained in a letter sent by the plaintiff to Ms Bazzo dated 1 November 2018.[451]
4. I will return to the factual matters surrounding the extensions when addressing the seventh issue below in Part VII.

(7) Interest charges and various payments to the plaintiff

1. It is an agreed fact that the interest charges under the Hocking Loan Agreement which are claimed by the plaintiff in Annexure A of the Hocking ASOC, for the period between 4 December 2015 and 4 August 2017, are $1,685,930.43.[452]
2. Between 4 November 2014 and 6 July 2021, the Hocking Mortgaged Properties were subdivided and the resulting subdivided lots were sold.[453] This is an agreed fact.
3. Further, the following factual matters were agreed by the parties for the purposes of the action:

(a) from November 2018, the plaintiff agreed to receive additional top-up payments made at settlement of the subdivided lots in the Hocking Mortgaged Properties;[454]

(b) between 4 August 2015 and 6 July 2021, the defendants made or caused to be made payments to the plaintiff from the proceeds of sale of the subdivided lots, in the amount of $9,717,882.74 as contained in Annexure A of the Hocking ASOC;[455] and

(c) between 1 November 2018 and 6 July 2021, the plaintiff received 21 individual payments towards the outstanding amount owed under the Hocking Loan Agreement, at the direction of Mr Caratti, which total $1,043,910.25.[456]

PART VII - HOCKING PROCEEDING: DISPOSITION A. Relevant principles

1. I have earlier set out various principles of law of a substantive nature and as to my approach to the findings of fact, in the context of the Anketell Proceeding. Those principles apply equally to the Hocking Proceeding and I will apply them accordingly, without needing to again restate them here.

B. First issue - plaintiff's claim against Ms Bazzo

1. The plaintiff's claim against Ms Bazzo is brought pursuant to the express contractual provisions in the Hocking Loan Agreement. I accept that Ms Bazzo entered into that agreement as trustee for the Gucce Holdings Trust. That is evident on the face of the instrument.
2. There is no dispute that the Hocking Loan Agreement, as against Ms Bazzo as a borrower, is valid. In particular, there is no dispute, so far as Ms Bazzo is concerned, that the Hocking Loan Agreement was extended on several occasions over its life. Ms Bazzo agreed to and signed the three extensions of the agreement.
3. There is no dispute that the plaintiff advanced the total sum of $5,704,320.55 to Keris and Ms Bazzo under the Hocking Loan Agreement, and that proceeds of the sale of several lots in the property development (and from the Bradley Street development) were applied to the loan.
4. There is also no dispute that interest was accruing on the outstanding amount, pursuant to the terms of the Hocking Loan Agreement.
5. On the plaintiff's calculations, once the repayment of $9,717,882.74 are taken into account, the amount outstanding as at 1 November 2021 remained at $938,336.16, bearing in mind the 'Higher Rate' of interest applicable under the Hocking Loan Agreement of 14.75% p.a.
6. Putting to one side the question as to the validity of the demands issued to Ms Bazzo and the effect of the defendants' contentions as to the application of the top-up payments and the effect of the 'non‑refundable interest charge' which was applied by the plaintiff, the determination of the present issue requires only that I consider whether I am satisfied as to the quantum of the claim and that the necessary default has been established under the Hocking Loan Agreement.
7. As to the quantum claimed by the plaintiff, I have already explained, within the reasons concerning the Anketell Proceeding, my satisfaction with the loan account statement process adopted by the plaintiff and by Mr Masel as part of his business. The loan account statement for the Hocking Loan Agreement is Exhibit 197, which is similar in nature to the loan account statement prepared for the Anketell Loan Agreement, which is Exhibit 198.
8. The reasons I have expressed in relation to Exhibit 198 apply equally to the Hocking Proceeding and the loan account statement prepared and maintained by Mr Masel for the Hocking Loan Agreement, which was explained by Mr Masel in his supplementary witness statement dated 19 October 2023. I am satisfied of the veracity of the loan account statement which is Exhibit 197, including the costs and expenses claimed therein. The submissions to the contrary advanced by the defendants at [42] and [43] of their closing submissions may safely be rejected, in my view.

1. It is necessary to specifically address the contention in [18.1] of the Hocking ADCC as to the 'early repayment' or discharge amounts, which are included in Annexure A to the Hocking ASOC. The defendants' contention is that such amounts are not properly claimable after 4 November 2016, which was the initial 'Repayment Date' under the Hocking Loan Agreement.
2. These amounts are pleaded at [5(d)] of the Hocking ASOC, which relies on the terms and effect of cl 4.2 of the Hocking Loan Agreement. That provision permitted the borrowers to prepay the 'Outstanding Amount' prior to the 'Repayment Date', subject to (as appears from cl 4.2(b)) payment by the borrowers of:

...an additional amount equal to 1 month's interest on the portion of the Outstanding Amount being repaid at the Higher Rate.

1. This clause supports the imposition of the amounts for early repayment or discharge which are claimed by the plaintiff. The extensions of the Hocking Loan Agreement did not alter this, as the extensions were expressed to be on the basis that the existing terms and conditions remained unaltered.
2. The defendants' submission on this issue should be rejected.

1. It is next necessary to examine the defendants' contentions concerning the top-up payments. These payments are pleaded by the plaintiff at [19(a)] to [19(m)] of the Hocking ASOC. The amounts were paid between November 2018 and August 2020. The defendants submit there is an inconsistency between Annexure A to the Hocking ASOC and these particulars.
2. The difference is said by the defendants to amount to around $1.0 million.
3. The top-up payments were, in effect, payments made by the defendants towards the interest arrears on the Hocking Loan Agreement. They were payments made separately by the defendants, relative to amounts received by the plaintiff which were sourced from the settlement proceeds of particular lots of the developments.
4. Mr Masel testified that when he received payments for the settlement of lots together with these top up payments, he caused the loan account statement for the Hocking Loan Agreement to be updated to reflect the amounts received.[457]
5. During cross-examination, Mr Masel was confidently able to explain the process involved. He explained that cheques were given to his solicitors at settlement, which included specific cheques for the top‑up amounts, which may have also been given prior to settlement or after settlement. In either case, the top-up payment and the actual amount the plaintiff received from the settlement of the sale of the lots would be added together, and the total amount would be applied to the loan.
6. Mr Masel explained that he had made a demand of Mr Caratti for payment of the top-up amounts, and testified that Mr Caratti agreed to pay them. It was put to Mr Masel in cross-examination that this was a form of 'extortion', given Mr Masel indicated he would refuse to discharge the mortgages until the amounts were paid, an allegation which Mr Masel rejected. He explained that it was Mr Caratti who had initially come up with the proposal, although I consider the evidence reflects a pragmatic agreement which was ultimately made on this issue by Mr Masel and Mr Caratti, to assuage Mr Masel's concerns about the accumulating level of the interest component.
7. It is wholly unclear how the allegation of 'extortion' advanced the defendants' pleaded claim on this issue. In my view, it was an irrelevant suggestion. It should also be observed that neither Mr Caratti nor Ms Bazzo gave evidence that the top-up payments had not been applied to the Hocking loan.
8. In any event, Mr Masel testified that he had regularly been chasing Mr Caratti for payments to reduce the interest component of the loan. Mr Masel had wanted 'a big chunk of interest because [Mr Caratti] was so far behind'. Mr Masel recalled that Mr Caratti agreed to pay amounts in this regard, to pay 'bits when I can'. Mr Masel proposed that this be done at the time of the settlements.
9. The defendants' submission that the top-up payments were not credited to the loan account was described by the plaintiff as both audacious and erroneous. I must say, it is a submission that was not supported on the evidence, and rested largely on assertion. In essence, the gravamen of the plea was, ultimately, a narrow question as to whether the payments were credited to the loan account of the Hocking Loan Agreement.
10. On my assessment of the bundle of settlement statements and cheques tendered by the plaintiff (Exhibit 220), which contains some 88 pages of source material concerning the settlements and payments received, when read together with the aide-memoire prepared by the plaintiff's counsel and the terms of the Hocking ASOC, I am comfortably satisfied that the disputed payments were all credited to the loan account. It is, with respect, surprising that the point was argued by the defendants.
11. For example, the settlement statement concerning the sale of Lot 18, dated 16 October 2019, includes a reference to the amount of $350,000 being due at settlement (page 50 of Exhibit 220). The statement identifies an amount of $92,352.56, described as 'Additional funds required by Mortgagee'. The total amount of $350,000 has been included in the loan statement (and appears in Annexure A to the Hocking ASOC), although it is not broken down into its constituent parts. The amount is referred to in [19(i)] of the Hocking ASOC, however.
12. The defendants' contention to the contrary must be rejected.
13. A careful review of the loan account statement and Annexure A to the Hocking ASOC, also shows that the later payments, pleaded at [19(n)] to [19(u)] of the Hocking ASOC, are separately identified in the account.

D. Third issue - the non-refundable interest charge

1. It is not in dispute that the First Drawdown Amount of $4,500,000 which was advanced by the plaintiff included an amount of $120,000 which was not, in fact, paid to the borrowers, but rather was deducted. The defendants plead this sum represented 'prepaid interest'.[458] In essence, the defendants contend this amount was not included, and should have been included, as a credit to the amounts in Annexure A to the Hocking ASOC. The defendants say the plaintiff's erroneous treatment of the amount has broader implications for its claim against the defendants as well.
2. The issue first requires an examination of cl 16 of the Hocking Loan Agreement, which specifically addresses the payment in question.[459] That clause states as follows:
   1. NON REFUNDABLE INTEREST CHARGE

16.1 In consideration of the Lender agreeing to make the Advance to the Borrower, the Borrower shall (in addition to all other payments payable under this Agreement including interest under Clause 3.2) pay to the Lender a non-refundable interest charge of $120,000.00 on the Commencement Date which may be deducted by the Lender from the First Drawdown Amount.

16.2 Following the Advance being drawn down in full, in the event that the Borrower redraws any amounts, then the Borrower shall (in addition to all other payments payable under this Agreement including interest under Clause 3.2) pay to the Lender a further non-refundable interest charge of 2.0% of the redrawn amount on the date that the amount is drawn down and may be deducted by the Lender from the amount drawn down.

16.3 This interest charge is non-refundable regardless of when the Borrower may repay the Outstanding Amount.

1. It is, with respect, quite plain from the language of cl 16.1 that the amount in question was to be paid to the plaintiff as a non-refundable interest charge on the 'Commencement Date' under the Hocking Loan Agreement, which was 4 November 2014. Further, it was agreed by the parties in the terms of cl 16.1 that the amount may be deducted by the plaintiff from the 'First Drawdown Amount'.
2. That appears to be precisely what occurred.
3. It is an arrangement which was also explained in the Hocking Letter of Offer, which was signed and accepted by Ms Bazzo and by Keris. There is no evidence that Ms Bazzo objected to the arrangement or voiced any dissent about the proposal prior to executing the Hocking Loan Agreement.
4. Further, Ms Bazzo signed an authority which recorded the payment of the total amount of $4.5 million, with the interest charge identified therein (Exhibit P5). The authority signed by Ms Bazzo (on her own behalf and on behalf of Keris) is depicted, in part, below:

1. So, the fact the amount was deducted and not in fact paid to the borrowers would have come as no surprise to the borrowers. It accords with the agreement they had reached.
2. The defendants further submitted that, because the amount of $120,000 was not in fact paid to the borrowers, the plaintiff in effect charged interest on 'interest' before there was any default. Counsel for the defendants submitted that 'any monthly interest accruing thereafter under the Hocking Loan agreement had to be first deduced from or debited against this pre-paid interest, until that sum was exhausted, at which point monthly interest should start to accumulate'. Reliance was placed on Oakland Investments (Aus) Limited v Certain Underwriters at Lloyds[460] in this regard, a decision of Applegarth J in the Supreme Court of Queensland. Counsel also relied on various dictionary definitions to make good the argument, from Stroud's Judicial Dictionary, from the Macquarie Dictionary, and from Hay's 'Words and Phrases Legally Defined' published by LexisNexis. The defendants submitted that the Hocking loan could not have been in default when alleged, because application of the amount of $120,000 would prevent that occurring until that sum had been exhausted.
3. In my view, in resolving this issue, the focus must remain on the contractual language used in the Hocking Loan Agreement, and its proper construction within the context of the instrument, rather than on dictionary definitions or the practice adopted under the loan agreement with Angas Securities (to which counsel also referred).
4. By the terms of cl 16.1, the parties agreed that the borrowers would pay a charge to the lender, described as a 'non-refundable interest charge'. That amount was in addition to 'all other payments payable' under the Hocking Loan Agreement, including interest under cl 3.2. The agreement, by its choice of language, draws a distinction between this charge and the interest amounts payable under cl 3.2. The terms of the agreement deliberately describe the amount as a 'charge' and as being 'non-refundable'.
5. I accept the submission made by the plaintiff that the language of the instrument makes it clear that this 'non-refundable' charge is precisely that, and is not to be characterised as a 'prepayment' of interest, with all the consequences the defendants say flow therefrom. The defendants' characterisation of the amount as a 'prepayment' of interest does not find support in the language of the instrument, nor in the Hocking Letter of Offer which preceded the agreement. Indeed, the offer letter itself describes the amount as being 'in addition to the stated monthly interest payments'.
6. One might also contrast the language under consideration by the court in Oakland Investments, which referred to 'any amount advanced for the payment of interest or as provision for possible future payment of interest whether or not retained by You for that purpose'. That particular amount represented an exclusion to the definition of 'Principal Amount' for the loan in question.[461] The choice of language used in the Hocking Loan Agreement is quite different and I do not consider much assistance can be gained by reference to the reasoning in Oakland Investments in these circumstances.
7. The defendants' contentions on this issue should therefore be rejected.
8. I should add a further point here. The closing submissions filed by the plaintiff addressed a continuing contention on the part of the defendants that the conduct of the plaintiff, in connection with its demands for payment, having regard to the treatment of the top-up payments and the non-refundable interest charge, was unconscionable in a statutory sense.[462] For my part, it was not clear that any such contention survived the abandonment of allegations made by the defendants on the eve of trial. In any event, to extent there was any continuing allegation in this regard, it fails by reason of the findings and conclusions I have reached as part of the second and third issue above, and lacks any other factual basis sufficient to engage the requirements for unconscionability to be established, which I identified earlier in these reasons.

E. Fourth issue - alleged breach of the Hocking Loan Agreement

1. The defendants plead that the plaintiffs did not agree to provide, and did not in fact provide, the balance of the advance under the Hocking Loan Agreement, being the sum of $295,679.45.[463] The defendants plead the plaintiff was obliged to do so. This is pleaded to be a breach of the Hocking Loan Agreement. This breach also forms a central component of the pleaded counterclaim which I will separately address.
2. The requests for payment are identified in Ms Bazzo's counterclaim, at [40] and [43], referring to requests said to have been made on two occasions, being:

(a) October 2015, which relies on disputed communications sent by email by Mr Caratti to Mr Masel; and

(b) August 2016, which relies on a telephone conversation between Ms Bazzo and Mr Masel.

1. It is pleaded that, in a telephone conversation on or about 1 November 2017, between Mr Masel and Mr Torrens, who was a solicitor for Ms Bazzo, that Mr Masel said he would not agree to release any further funds. That followed a discussion between Mr Masel and Mr Burns of the ATO.
2. The defendants contend that, because of the plaintiff's refusal, Ms Bazzo was not able to receive the clearance from the City of Wanneroo until she raised additional funds to make a payment of $489,878.55 which was made on 11 August 2017. The breach is pleaded to have caused a delay on the issue of titles for the subdivided lots on the various mortgaged properties, being from 9 November 2015 until 11 August 2017. The defendants say this also delayed the payments referred to in [18] of the Hocking ASOC (being the proceeds for the sale of the subdivided lots).
3. Further, and in the alternative, the defendants plead that, as a result of the plaintiff's breach of the Hocking Loan Agreement, the plaintiff is precluded from charging interest for the period of the delay, being a delay from 9 November 2015 until 11 August 2017 and any interest charge claimed in respect of that interest. The interest charges claimed in this period are calculated to be $1,685,930.43.
4. The plaintiff accepts it did not provide the balance of the advance under the Hocking Loan Agreement, but the allegation of breach is denied by the plaintiff.[464] There are several layers to the plaintiff's response.
5. First, the plaintiff says it never received a written request from the borrowers for the drawdown of the balance of $295,679.45 which was remaining on the 'Advance', as was required under the Hocking Loan Agreement. The plaintiff refers to cl 26.1 of the agreement. The plaintiff asserts that, in February 2017, Mr Caratti requested that the plaintiff make payment to the City of Wanneroo of $470,783, and such amount was obviously in excess of the $295,679.45 remaining on the 'Advance'.
6. Second, even if a written request was made for the release of the balance of the 'Advance', the plaintiff says it was entitled under the Hocking Loan Agreement (cl 26.2) and under the Hocking Second Mortgage with Ms Bazzo (cl 22) to withhold any portion of the 'Advance' requested by the borrowers if the plaintiff was not satisfied (in its complete discretion) with:

(a) the security available; or

(b) the financial circumstances of the borrowers or the guarantor; or

(c) such other matter which the plaintiff in its absolute discretion views as being relevant.

1. In this regard, the plaintiff pleads it was not satisfied with the security supporting the loan available to pay the $470,783. Further, the plaintiff points to the Garnishee Notice issued to the plaintiff on 8 November 2016 pursuant to s 260-5 of Schedule 1 of the Taxation Administration Act 1953 (Cth) (TAA). Pursuant to that Garnishee Notice, the plaintiff says it was required to pay any monies payable to the benefit of Ms Bazzo to the ATO.
2. Further to this, the plaintiff pleads that, in or around late 2016 to early 2017, Mr Masel had a telephone conversation with Mr Burns from the ATO in relation to the Garnishee Notice, the effect of which was that Mr Burns advised Mr Masel that the plaintiff was not permitted to release any funds under the Hocking Loan Agreement that would be paid to the benefit of Ms Bazzo. This included paying any funds directly to the City of Wanneroo, or to any other entity nominated by the defendants to pay to the City of Wanneroo. Mr Burns maintained that such payments would be to the ultimate benefit of Ms Bazzo.
3. The defendants join issue with these responses, as appears in the Hocking Rejoinder.[465] The defendants contend that the plaintiff was satisfied with the security, contrary to its assertion, and in any event the clause in the Hocking Loan Agreement which permits the plaintiff to be so satisfied is subject to an implied good faith term. The defendants say the plaintiff breached this implied term.
4. The plaintiff's reliance on the Garnishee Notice excited a high degree of opposition from the defendants, it being pleaded that Mr Burns' assertions were wrong in fact and in law, and it also being contended that Mr Burns had no authority to make the assertions he did. The defendants also emphasise that the Garnishee Notice was directed to 'Tina Bazzo', rather than to Ms Bazzo in the capacity she is sued in this action.

(2) Relevant terms of the Hocking Loan Agreement

1. As I have noted above, it is common ground that the plaintiff did not advance the balance of the funds otherwise payable under the Hocking Loan Agreement. The 'Advance' payable pursuant to cl 2.1 was $6.0 million. That amount was to be paid as follows, as required by cl 2.1:

(a) the 'First Drawdown Amount' was required to be paid on the 'First Drawdown Date'; and

(b) the 'Second Drawdown Amount' was required to be paid on the 'Second Drawdown Date', albeit subject to cl 26.2.

1. The 'First Drawdown Amount of $4.5 million was paid, subject to the deduction of $120,000 as explained above. There is no dispute in this regard.
2. The 'Second Drawdown Date' was defined in the Hocking Loan Agreement as being 'the date of practical completion of the subdivision of the Property'. The 'Property' was defined as Lots 9001, 9032 and 9033. The 'Second Drawdown Amount' was defined under the agreement as $1.5 million.
3. It is not in dispute that a further advance of $1.0 million was paid, and then a further amount of $204,320.55. The total sum advanced by the plaintiff was accordingly $5,704,320.55.
4. Clause 26 of the Hocking Loan Agreement deals with the subject of drawdowns under the instrument, in the following terms:
   1. DRAWDOWNS

26.1 All requests for drawdowns from the Borrower pursuant to this Agreement must be in writing and delivered to the Lender no later than 3 Business Days before the date requested for payment by the Borrower.

26.2 The Lender may (at the Lender's complete discretion) withhold any portion of the Advance requested by the Borrower to be drawn down if the Lender is not satisfied with the security available, the financial circumstances of the Borrower or the Guarantor, the progress of the development of the Property or such other matter that the Borrower in its absolute discretion views as being relevant.

26.3 Subject to this Clause 26, amounts of the Advance repaid by the Borrower may be available for redrawing.

1. As noted above, cl 2.1(b) of the Hocking Loan Agreement, which obliged the plaintiff to make the Second Drawdown Amount on the 'Second Drawdown Date' is expressly subject to the terms of cl 26.2.
2. As the plaintiff submitted, there are thus some contractual fetters on the borrowers' right to be provided with the 'Advance', namely:

(a) the requests must be in writing;

(b) the requests must be delivered to the plaintiff in a certain time period; and

(c) the plaintiff is empowered to withhold payment on certain grounds, in its complete discretion, as appears from the text of cl 26.2 and cl 2.1(b).

1. There is pleading point to be made at this juncture concerning the definition of the 'Second Drawdown Date' in the Hocking Loan Agreement, which refers to the 'date of practical completion of the subdivision of the Property'. This issue attracted considerable attention in the lead up to the trial, as well as during the trial, as is evident from the reasons of the court published in October 2023, the reasons published in January 2024,[466] and the reasons for the evidentiary rulings which form part of Attachment A to these reasons (see heading B thereof).
2. In particular, there was a singular focus by the defendants on the admission made by the plaintiff that the plaintiff had been satisfied of practical completion, which is asserted in [39] of the Hocking ADCC and admitted in [19] of the Hocking 4ASRD. Ultimately, I do not conclude that the admission stands in the way of the proper operation of the contractual discretion which is found in cl 26.2 of the Hocking Loan Agreement. The question whether there had been satisfaction of the 'practical completion of the subdivision' on the plaintiff's part is not, in any event, precisely what is contemplated by the definition of the 'Second Drawdown Date', which says nothing as to whether there is satisfaction or not.
3. At one level, it may be asserted that, given the plaintiff paid part of the Second Drawdown Amount, the project must have reached the stage of practical completion, given the definitional device used in the Hocking Loan Agreement. Whether that is so or not, does not deny the plaintiff lender an ability to rely upon the discretionary bases for refusing to advance amounts which the parties agreed to as part of the financing arrangement.
4. This helps to explain why, at trial, I allowed an amendment to be made by Mr Masel to his statement, in the terms below, which should be seen in the context of Mr Masel's earlier evidence as to his personal observations of the Tuxedo Rise project and the lack of progress as between Stages 1 and 2 of the project:

[80] Given I was uncomfortable with Walthamstow's potential exposure on the loan and that the project had not reached a satisfactory level of progress practical completion stage, I would not have caused or allowed Walthamstow to advance the additional funds at that time without sufficient additional security being given.

1. As is evident from this amendment, which I allowed, Mr Masel was proposing to give evidence as to his understanding as to the level of progress of the project, which was relevant to the matters which might be relied upon to justify an invocation of cl 26.2 of the Hocking Loan Agreement. Seen in this way, whether or not 'practical completion' was established, as a matter of fact on the evidence or by way of admission on the pleadings, does not preclude an exercise of the discretion in cl 26.2 to withhold any portion of the 'Advance', including any portion of the 'Second Drawdown Amount'.

1. Mr Masel and Mr Caratti both gave evidence about the circumstances surrounding the remaining amount payable under the Hocking Loan Agreement, and the requests said to have been made by the defendants.
2. The evidence does not disclose a specific request having been made by the defendants, whether in writing or verbally, for the plaintiff to advance the balance of the funds which were payable under the Hocking Loan Agreement, being the sum of $295,679.45. Indeed, the material relied upon by the defendants to demonstrate the request is rather unclear and lacked the commercial precision one might expect in relation to financial arrangements worth millions of dollars, as will be seen.

1. The defendants point to emails said to have been sent to Mr Masel on 2 October 2015 and on 5 October 2015 requesting respectively 'cheques for clearances' and a cheque for 'council clearance'. The emails referred to clearance fees for the City of Wanneroo which were payable. The defendants also refer to a verbal request made by Mr Caratti for $470,000 in February 2017, which the plaintiff says is the first request made for the sum in question by Mr Caratti.
2. A review of the evidence in chronological order is warranted at this point.
3. I will start with the email dated 2 October 2015, sent by Mr Fred Ferrante to Mr Caratti, headed 'Hocking - Clearance Payments' (Exhibits 74 and 76). Mr Ferrante worked within the defendants' business as a project manager. Mr Ferrante indicated in the email that 'the following cheques are needed for the clearance application process', listing five entities and five amounts, as shown below. On one version of the email the amounts have been tallied up in handwriting, totalling $204,320.55.

1. Next, there is an email said by Mr Caratti to have been sent by him to Mr Masel on 2 October 2015 (Exhibit 74). By that email, Mr Caratti forwarded Mr Ferrante's email through to Mr Masel and said:

Hocking is ready for titles I would like to draw these cheques for clearances. Stage 2 works have started and should be finished end of month.

1. There is a further record of the email from Mr Ferrante to Mr Caratti dated 2 October 2015 being forwarded to Mr Masel, which is found in Exhibit 84 (seeking payment of the sum of $204,320.55). That document shows the email being forwarded internally within the defendants' business from Ms Nadia Mittica to Mr Caratti on 6 November 2015, and then forwarded to Mr Masel on 6 November 2015, with a comment from Mr Caratti - 'Steve, can you make payment to these authorities'. It is not disputed that this amount was advanced by the plaintiff. However, it is notable that this email did not seek payment of the further sum payable to the City of Wanneroo of $470,000.
2. Mr Masel accepts he received the above request from Mr Caratti (on 2 October 2015 and also on 6 November 2015) and granted the request. Indeed, it is an agreed fact that the sum of $204,320.55 was advanced by the plaintiff to the borrowers on around 9 November 2015. A letter was sent by the plaintiff to Ms Bazzo and Keris on 9 November 2015 (Exhibits 85 and 86), which in terms states:

Further to your request for a further advance for clearance applications for the Hocking project we approve a $204,320.55 draw with cheques enclosed as follows...

Your loan balance shown on the enclosed statement is now $6,187,640.17.

Please sign and return below as your confirmation of your request and receipt of cheques.

1. The letter was signed by Ms Bazzo, in her own capacity and as a director of Keris.
2. A further email was then sent by Mr Ferrante to Mr Caratti on 5 October 2015 (which forms part of Exhibit 76), forwarding the earlier email sent on 2 October 2015. In this second email, Mr Ferrante noted the 'City of Wanneroo clearance fees payable', being three amounts including $466,551 for the 'Development Infrastructure Contribution'. The substance of the email is depicted below:

1. This is where the factual dispute arises.
2. Mr Caratti says he forwarded that email to Mr Masel on 5 October 2015, stating 'Steve, attached is the cheque needed for council clearance' (Exhibit 76). Within the exhibit as tendered, the email also contains a copy of the City of Wanneroo tax invoice dated 5 October 2015, requiring payment of the sum of $466,551. The invoice has a second page which is headed 'Payment Methods'.
3. An extract from the covering email is shown below, which identifies two attachments having been included (one being a word document and one being a pdf, although it is difficult to reconcile these with the actual attachment included in the documentary exhibit). The document as discovered has been printed by a person within Ms Bazzo's office, although it is unclear when that was done, and shows a staple mark in the left hand corner.

1. Mr Masel testified he never received such an email from Mr Caratti.
2. There is thus a dispute between the parties whether the email purported to have been sent by Mr Caratti to Mr Masel on 5 October 2015 was in fact sent by Mr Caratti, or was received by Mr Masel. This might be thought to be an unusual dispute given the document which is Exhibit 76 appears to be an email, on its face, that was sent on 5 October 2015, with attachments.
3. Ordinarily, a court would, absent opposition, place a considerable degree of weight on such a documentary exhibit as evidencing that an email in those terms was sent from the server used by Mr Caratti's business to the server used by Mr Masel's business, and was thereby available to be read by Mr Masel.
4. However, I am unable on the evidence to be positively satisfied that the email was sent by Mr Caratti, or that it was ever received by Mr Masel. I reach that conclusion for the following reasons.
5. First, this is the only email which the defendants assert was sent to Mr Masel, in this period, to support the relevant request. That is, the email dated 5 October 2015 which is Exhibit 76 is the sole document relied upon to ground the request for the balance of the Second Drawdown Amount. It strikes me as quite unusual that, given the apparent importance to the defendants of receiving the additional funds, in order to pay the statutory clearance fee, the request was not followed up in writing in some manner, particularly when the request for payment of the sum of $204,320.55 was paid by the plaintiff on 9 November 2015.
6. To be clear, there is no written documentary material which shows that the request was followed up, in any way. Later emails from the borrowers do not refer to this particular email (such as Mr Ferrante's email sent on 3 May 2017, which is Exhibit 131). The absence of any written material to support the defendants' contention does have a tendency to increase the likelihood that the initial email dated 5 October 2015 was not in fact sent.
7. Second, I have a difficulty accepting Mr Caratti's evidence that he and his staff were chasing up this email request by ringing the plaintiff's office, rather than calling Mr Masel on his mobile phone. Mr Caratti's evidence that Mr Masel was difficult to 'get a hold of' during this period cannot easily be accepted when, at the same time, Mr Caratti and Mr Masel were in communications in relation to the assignment on the Anketell Loan Agreement. Again, it is significant there is no further written follow up about the issue. Mr Caratti's evidence on these matters was far from persuasive, overly general, and peppered with an inability to recall details which one would expect to be important given the pleaded allegations mounted by the defendants on this issue. Ms Bazzo's evidence was also somewhat generalised in this regard.
8. Third, the evidence demonstrates that Mr Masel readily accepted the request for payment of the sum of $204,320.55 and there is evidence of the written response from the plaintiff which confirms payment of that amount. Had Mr Masel received the email dated 5 October 2015, the course of events and my acceptance of Mr Masel's evidence generally, as earlier explained, renders it likely there would have been a timely response from Mr Masel on the issue or some further documentary material supporting the fact the email was sent or received. The fact is - there is only one email which addresses the point. Further, as earlier noted, the email sent by Mr Caratti to Mr Masel on 6 November 2015 seeking payment of the smaller amount of $204,320.55 makes no mention of the prior email concerning the larger amount payable to the City of Wanneroo. That was, I would expect, a convenient and timely occasion for Mr Caratti to have raised the issue with Mr Masel. It is unusual that he did not do so, given his evidence that he and his staff were chasing Mr Masel.
9. Fourth, Mr Masel gave clear evidence to the effect that he has no recollection of receiving the email which is Exhibit 76. I accept his evidence in this regard. The likelihood that he did not receive the email at all is enhanced by the lack of any reference to the City of Wanneroo payment amount in the calculation which was undertaken by Mr Masel on 20 October 2015 (some 15 days after the email was said to have been sent). The calculation is found in the handwritten document which is Exhibit 78. Instead, the calculation refers to the amount of $204,320.55 on three occasions (albeit rounded by Mr Masel to $200,000). Had Mr Masel been aware of the additional payments required for the City of Wanneroo, it is expected that he would have mentioned this in the document.
10. Fifth, there is a separate handwritten note made by Mr Masel on Exhibit 78, which appears to have been made on 6 November 2015, which refers only to the advance of $200,000, and does not refer to the City of Wanneroo amount.
11. Sixth, had the email dated 5 October 2015 in fact been sent and received by Mr Masel, the amount requested therein would have effectively exceeded the amount available for the borrowers to draw down under the Hocking Loan Agreement, bearing in mind the earlier request for payment of $204,320.55 and recalling that the amount remaining in the 'Advance' under the agreement was $500,000 prior to this.
12. Two points emerge here. First, one might have expected Mr Caratti to mention this in his email. Second, more likely, one would have expected Mr Masel to respond to such an email and note that the amount remaining to 'Advance' to the borrowers would not support payment of a cheque in the amount sought. I took from Mr Masel's evidence that he was well aware of the balance of the funds remaining on the loan. These matters point against the likelihood that the email was in fact sent by Mr Caratti or in fact received by Mr Masel.
13. Seventh, it is notable that Exhibit 76 was not discovered in the proceedings by the defendants until as late as 26 September 2023. The document appears as document 237 in the supplementary list of documents which is attached to an affidavit of Ms Bazzo sworn 26 September 2023 (and filed in the Anketell Proceeding).
14. Eighth, the late discovery of the document led to orders being made in November 2023, before trial, which required Mr Caratti to swear an affidavit regarding Exhibit 76 and the location of the native format version of the document including its original metadata. It is highly significant, in light of the above matters, that the defendants did not produce a copy of the email in its native format, allowing the metadata to be reviewed and analysed. It appeared from the cross‑examination, that Mr Caratti did not personally undertake a search for the document, but left that to Ms Bazzo and passed the responsibility (or blame) for the discovery issue to his solicitors.[467] The affidavit which Mr Caratti swore in purported compliance of the orders I had made, merely deposes that he did not recall when he 'parted company with the electronic version of document 237'.
15. Allied to this, Mr Caratti's evidence was that he only used one email address, being the email at Mammoth Group, so it seems unlikely the search would have demanded significant resources. Mr Caratti accepted he still had access to that email account, in his evidence.
16. Mr Caratti's evidence that he used a Blackberry and 'emails drop off them after a period of time', as an explanation for being unable to find the original email, lacks any credibility and I do not accept it. Given the dispute surrounding the issue and given the orders made by the court in November 2023, it is to be expected that Mr Caratti would have personally undertaken a review of the records of the business to locate the email in question. There was ample time to do so. It was not a task to delegate or to approach in a perfunctory manner, which I consider Mr Caratti has done. All of these matters provide a basis to reasonably infer, as I do, that had the metadata been available, it would not have assisted the contention of the defendants that this email was in fact sent by Mr Caratti.
17. Ninth, I have earlier identified my general concerns with Mr Caratti's evidence and my inability to accept his evidence, where disputed, unless supported by contemporaneous documentation. In this instance, Exhibit 76 is said by the defendants to be a contemporaneous document and I should therefore accept Mr Caratti's evidence in this regard. However, it remains necessary to assess whether any particular contemporaneous document which is relied upon can withstand appropriate scrutiny and be accepted as having the appropriate level of veracity. As I have just explained, I have serious doubts about my ability to find, solely on the basis of this particular exhibit, that it records an email message which was in fact sent on the day stated.
18. In broad terms, the evidence adduced by the defendants in support of the assertion that a request had been made to the plaintiff to drawdown a further amount for payment of the City of Wanneroo clearance fees, being an amount that would in any event have exceeded the 'Advance' limit under the Hocking Loan Agreement, was unsatisfactory and not capable of sustaining the finding of fact for which they contended. The plaintiff's submission is that the more plausible conclusion is that the defendants were aware the amount exceeded the balance under the Hocking Loan Agreement and did not make the request at that point. That submission has considerable merit and should be accepted, in my view.
19. I therefore am unable to find that the request contained in the email dated 5 October 2015 (being Exhibit 76) was in fact sent to the plaintiff. The objective evidence supports the conclusion that Mr Masel did not receive such a request.
20. This leads to a consideration of the events in August 2016.

1. I next turn to the telephone conversation which Ms Bazzo says she had with Mr Masel on 5 August 2016. Ms Bazzo's evidence was to the effect that she telephoned Mr Masel to follow up the invoice received from the City of Wanneroo. Ms Bazzo's evidence on this aspect of the matter was very general, and not supported by any contemporaneous note. It appears the conversation Ms Bazzo recalls then led to Mr Masel requesting a sales update, which prompted Ms Bazzo to send through a sales spreadsheet (Exhibit 119). The spreadsheet contains no mention of the request for payment of the amount to the City of Wanneroo, when one might have expected Ms Bazzo to have expressly included that in the covering email.
2. Mr Masel did not recall a conversation in the terms described by Ms Bazzo. Mr Masel gave evidence that his discussions with Ms Bazzo, to the extent there were any, were largely administrative in nature and infrequent. Mr Masel spoke principally with Mr Caratti. Mr Masel was not challenged to any great degree on the conversation alleged to have taken place with Ms Bazzo.
3. Mr Masel pointed to the handwritten note he made on 5 August 2015 (Exhibit 118). In that note, Mr Masel recorded the calculations he made of the LVR for the loan, calculating the LVR at around 82%. The note makes reference to clearance fees needed in the amount of approximately '450' and a reference to the amount available to draw of approximately '300'. The handwritten note does not reflect an amount of $470,000. Mr Masel explained that he had become aware, although he could not recall how, that the clearance fees were about $450,000 and he then reassessed what he considered to be the likely value of the lots and calculated the LVR for the loan, and did not allow for the additional $450,000 in that calculation.
4. The foregoing matters render it extremely challenging to make any positive finding that Ms Bazzo made a specific request to Mr Masel, during the conversation on 5 August 2016, that the plaintiff ought to pay the balance of the Second Drawdown Amount. At its highest, from the defendants' perspective, I find that Ms Bazzo raised the topic of the clearance fees payable in respect of the development during her call with Mr Masel. That tends to explain how Mr Masel became aware of the issue. However, the purpose of the call was to provide an update to Mr Masel about the sales on the development, which was one of Ms Bazzo's areas of responsibility, as I have earlier outlined. I do not find that Ms Bazzo made a request for the balance of the Second Drawdown Amount to be paid, which was required under the Hocking Loan Agreement. I do not accept that Mr Masel had a copy of the invoice issued by the City of Wanneroo at this time and do not accept that he was aware, at this time, of the specific amount payable for the clearance fees.
5. Even if it was possible to conclude that Ms Bazzo made a specific request for payment of the balance of the Second Drawdown Amount during this phone call, it was plainly not a request in writing as required by the Hocking Loan Agreement.
6. This leads me to the events which occurred in 2017.

1. Mr Masel testified that he received a verbal request from Mr Caratti in February 2017 for an advance to be paid under the Hocking Loan Agreement of $470,783. On Mr Masel's evidence, and consistent with my findings above, this was the first occasion on which Mr Caratti requested further funds from the plaintiff as part of the balance of the funds constituting the Second Drawdown Amount. Even at this stage, the request was not in writing.
2. Mr Masel made a note at the time (Exhibit 125) which he explained in his evidence as follows:

I made a note at the time of my thoughts about the request because I needed to do some due diligence to consider the request, which request would have meant Mr Caratti providing some other security as we only had approximately $295,000 left to draw.

1. The handwritten note refers to 'P/P requested by Allen', explained by Mr Masel as a 'progress payment' requested by Mr Caratti. Mr Masel testified that this call prompted him to check his file in relation to the 'many garnishee orders I had received in relation to Caratti and Bazzo associated entities' and he observed that Ms Bazzo was the subject of the Garnishee Notice which he had received in November 2016. He says he then added to his note in red pen that 'There is .... so cannot advance $'s !!'.
2. I have extracted below the top half of Exhibit 125, which contains the file note prepared by Mr Masel:

1. At the bottom of the file note, forming part of Exhibit 125, the three amounts payable as part of the clearance fees to the City of Wanneroo have been noted by Mr Masel. Those amounts were communicated to Mr Masel when he was spoken to by Mr Caratti in February 2017.
2. Mr Masel gave evidence that he then spoke with Mr Burns at the ATO regarding the Garnishee Notice he had received. He enquired whether the Garnishee Notice was still in effect. The defendants admit that a conversation took place between Mr Masel and Mr Burns.
3. The Garnishee Notice which Mr Masel had received is dated 8 November 2016 (Exhibit 120). It was therefore received before the request for a further drawdown was made in February 2017. The document consists of a covering letter from the ATO, a formal notice signed by the Deputy Commissioner of Taxation, extracts from the legislation, and a garnishee payment notification slip showing how payment could be made to the ATO. The operative terms of the notice refer to an amount owed to the Commonwealth of $930,347 by 'Tina Bazzo'.
4. The Garnishee Notice stated as follows:

Notice

WALTHAMSTOW PTY LTD, YOU are a third party who owes, or may later owe, money ("the available money") to TINA BAZZO ("the debtor"), of (or previously of) [address redacted], who, in terms of section 260-5 of Schedule 1 of the Taxation Administration Act 1953 (TAA) has a debt payable to the Commonwealth of $930,347.00.

In exercise of powers conferred on me as Deputy Commissioner of Taxation by delegation from the Commissioner of Taxation under section 8 of the TAA, YOU, WALTHAMSTOW PTY LTD, ARE REQUIRED TO PAY TO THE COMMISSIONER OF TAXATION the sum of $930,347.00 or, if the available money is less than $930,347.00, the whole of the available money.

If you now owe the available money to the debtor, the payment to the Commissioner of Taxation is to be made IMMEDIATELY. If you do not owe the available money to the debtor but you will later owe it to the debtor, the payment to the Commissioner of Taxation is to be made immediately the money becomes owing to the debtor.

For the purpose of section 260-5 of Schedule 1 of the TAA, a third party is taken to owe money (the available money) to the debtor if the third party:

(a) is an entity by whom the money is due or accruing to the debtor; or

(b) holds the money for or on account of the debtor; or

(c) holds the money on account of some other entity for payment to the debtor; or

(d) has authority from some other entity to pay the money to the debtor.

The third party is so taken to owe the money to the debtor even if:

(e) the money is not due, or is not so held, or payable under the authority, unless a condition is fulfilled; and

(f) the condition has not been fulfilled.

If the debt (or any part of the debt) is paid by the debtor or another entity before a payment is made by you under this notice, I will notify you of that fact and any amount that you are required to pay under this notice will be reduced by the amount so paid.

1. Beneath the notice is a 'Warning', stating that the recipient is legally required to comply with the notice and, should the recipient receive instructions from the debtor or any other party regarding payment which are in contravention of the notice, the recipient is to notify the ATO immediately.
2. The 'Warning' also refers to the severe penalties which may be imposed and the possibility a court may order a person convicted of an offence to pay to the Commissioner an amount not exceeding the amount in the notice.
3. The conversation with Mr Burns led to Mr Masel sending a detailed handwritten letter to Mr Burns on 18 February 2017 (Exhibit 127) which provided information requested by the ATO. In that letter, Mr Masel referred to amounts which 'are currently owing' and 'whether there is any further drawdown capacity'.
4. In respect of the Hocking Loan Agreement, Mr Masel recorded in the letter that the amount owing was $6,841,000 with a further drawdown capacity of $295,679. Mr Masel further stated:

In relation to the loans with further drawdown capacity we advise that he have a request from

1/ [not relevant]

2/ Bazzo for $470,000 (approx.) being $295,000 of existing drawdown capacity and a further $175,000 by way of a new loan. This $470,000 is needed to pay for council clearances for the application of new titles on the estate.

Please also advise your position on this drawdown & additional advance.

Ross, hopefully my above response covers your queries as discussed. Please contact me if I have omitted something in relation to any of your Notices...

1. Having been informed by Mr Burns of the effect of the Garnishee Notice, Mr Masel later spoke with the solicitor for the defendants, Mr Kipping. Mr Masel explained to Mr Kipping that, on his understanding, by reason of the Garnishee Notice, he was unable to make any further payment to the borrowers including Ms Bazzo, or to the City of Wanneroo directly. Any payment to the City of Wanneroo directly, on Mr Masel's understanding, would be to the benefit of Ms Bazzo and was precluded. Rather, if he was going to make the payment he would need to advance the money directly to the ATO in compliance with the Garnishee Notice.
2. Mr Masel's approach to receipt of the notice from the ATO was summed up by him as follows:[468]

MASEL, MR: Well, you - when you get a notice from the tax department you try and comply, and I certainly got legal advice as to how - how I should comply with it. So I can't recall the exact conversation, but yes, I got legal advice, and I responded as best I could to satisfy the notice and the legal advice.

1. Some time later, in early May 2017, Mr Ferrante emailed Mr Masel to advise him that the borrowers had received their clearances from the Water Corporation, from Western Power and the Education Department, and the only outstanding clearance was from the City of Wanneroo (Exhibit 131). The email from Mr Ferrante makes no mention of the asserted previous request from Mr Caratti for payment of the fees for the City of Wanneroo, which I have addressed above.
2. Mr Masel spoke with Mr Caratti around this time. They discussed the clearance fees payable to the City of Wanneroo, being the full amount of around $470,000. I accept that Mr Caratti asked Mr Masel whether the plaintiff would provide these additional funds if Mr Caratti could obtain sufficient additional security, a proposal which Mr Masel was prepared to consider. A handwritten note was made by Mr Masel on Exhibit 131, referring to security situated in Geraldton, which appears likely to be a reference to additional security offered by Mr Caratti. Thereafter, the point was not pursued by Mr Caratti and no further details were provided. In any event, Mr Masel had a further conversation with Mr Burns at the ATO during which Mr Burns informed him that such an alternative arrangement was precluded by the Garnishee Notice.
3. In around June 2017, Mr Masel undertook a fresh LVR calculation on the Hocking Loan Agreement, which is recorded in Exhibit 133. That is a comprehensive handwritten note prepared by Mr Masel, which is dated 2 June 2017. Mr Masel calculated the LVR at about 98%, indicating to him the loan was very high risk at that stage. The LVR he had calculated in August 2016 was around 82% (Exhibit 118). I accept Mr Masel was therefore considering at the time whether to take over the project as mortgagee in possession given the risks.
4. The evidence, on my assessment, demonstrates the following matters:

(a) The first occasion on which Mr Caratti or Ms Bazzo requested payment of the clearance fees for the City of Wanneroo was in February 2017. That occurred verbally. The first written request was in May 2017, from Mr Ferrante. No request was made in October 2015 or August 2016.

(b) No specific request for payment of the balance of the Second Drawdown Amount was ever made by the borrowers or by Mr Caratti. The only request made was for payment of an amount in excess of the balance (which was around $295,000), being for the full amount of the fees payable to the City of Wanneroo (around $470,000).

(c) Mr Masel was prepared to consider making the full payment sought by Mr Caratti of the amount due to the City of Wanneroo, subject to satisfactory security being provided, but he ultimately understood he was not able to make any further payments to Ms Bazzo by reason of the terms of the Garnishee Notice he had received and the comments made by Mr Burns of the ATO. Mr Masel held a clear understanding at the time that the Garnishee Notice preclude payments to Ms Bazzo, to Keris, or to any third party such as the City of Wanneroo for the benefit of Ms Bazzo. The cross-examination of Mr Masel on these matters did not serve to undermine the force of his evidence, in my respectful view.

(d) At the time, that is in February 2017 and thereafter, Mr Masel had formed the view the loan was very high risk and he may need to take over the Hocking development project as mortgagee in possession.

1. The defendants' allegation that the plaintiff breached cl 26.1 of the Hocking Loan Agreement by failing to advance the balance of the Second Drawdown Amount, to the extent that is alleged to have been requested in 2015 and 2016, has not been established. No written or any request was made by the borrowers, or on their behalf, prior to February 2017. Absent a proper request, which was mandatory under the agreement, there can be no breach.
2. To the extent to which the defendants contend that a valid request for payment of the balance of the Second Drawdown Amount was made in February 2017 or thereafter, there are several aspects of the Hocking Loan Agreement and the evidence which must be considered. I will address them in sequence below.
3. First, the plaintiff submits that no specific request for payment of the balance of the Second Drawdown Amount was ever made - the only request made was for payment of an amount far greater than the balance. This is not an attractive argument, in my view. There is no obstacle in the language of the Hocking Loan Agreement for the plaintiff lender to advance the balance remaining if the request exceeds that amount. Indeed, the presence of the discretionary ability to withhold any portion, in cl 26.2, points against the plaintiff's argument. For example, if the defendants had sought payment of $296,000 under the Hocking Loan Agreement, when the balance remaining was only $295,679.45, it would be a rather unusual and uncommercial construction of the agreement to suppose the lender was able to validly ignore the request and refuse to advance the balance. I do not accept that the plaintiff's contention in this regard has merit.
4. Second, the plaintiff submits that, by reason of cl 26.2 of the Hocking Loan Agreement, it was permitted, in its complete discretion, to withhold the payment because it was not satisfied with the security available.[469] While the terms of cl 26.2 refer to 'complete discretion', I consider this is not an unfettered discretion, in the sense that it would not be open to exercise the discretion on arbitrary or capricious grounds. I approach the operation of the provision on that basis.
5. On the evidence, I have found the first request was not made until February 2017. By this point, Mr Masel had assessed the loan as being high risk, with an LVR of 82%, which escalated to 98% by June 2017. Mr Masel's threshold was around 65%. The LVR on the loan, as matters progressed, had become higher than he was comfortable with. I accept the accuracy of Mr Masel's assessment in this regard. I also accept his evidence that he was not, at this point in time, satisfied with the security available. That was a matter he was able to assess at his complete discretion, pursuant to the terms of cl 26.1 of the Hocking Loan Agreement, subject to the limits I have mentioned.
6. Clause 26.2, properly construed, provides the lender with a broad discretion to withhold any portion of the 'Advance' under the agreement. I accept Mr Masel had genuinely reached a point of concern with the agreement at this juncture, and was not prepared to advance further funds without additional security, a point which he discussed with Mr Caratti, but which Mr Caratti did not further pursue. The matters relied upon by the defendants to demonstrate the plaintiff was satisfied with the security available, as pleaded in the Hocking Rejoinder, many of which concern an earlier point in time, are simply not persuasive and do not address or undermine Mr Masel's assessment, undertaken in 2017, as the lender.
7. On this basis, the failure to advance the balance of the Second Drawdown Amount has not been demonstrated by the defendants to amount to a breach of the Hocking Loan Agreement.
8. Third, quite apart from the plaintiff's concerns as to the level of security available, Mr Masel says he was prevented from advancing further funds by reason of the Garnishee Notice and his discussions with Mr Burns of the ATO.
9. I accept Mr Masel's evidence that he genuinely understood the Garnishee Notice precluded him making any advance, even if he had been able to agree some further security arrangement with Mr Caratti. I do not accept the defendants' contention that Mr Masel's reliance on the Garnishee Notice and the statements made by Mr Burns were unreasonable or in any way disingenuous.
10. I consider Mr Masel, acting as a reasonable lender, was entitled to proceed on the basis that the Garnishee Notice in its terms, as explained by Mr Burns, and despite Mr Masel seeking to find a work around to the problem, prevented any further payment by the lender to Ms Bazzo under the Hocking Loan Agreement. I accept that Keris was also a borrower, and Keris was not expressly caught by the Garnishee Notice, but it would be quite risky in my view, for the lender to take upon himself a nuanced approach, in the face of the ATO's position, that it could advance the funds to Keris rather than to Ms Bazzo, and maintain that the Garnishee Notice was not thereby infringed. That would have been an unreasonable approach to expect a lender to take. It would expose the lender to the risk of penalties and financial consequences mentioned within the Garnishee Notice.
11. Similarly, it would be unreasonable to expect the lender to draw a distinction, when considering the terms of cl 26.2, between the capacity of Ms Bazzo as a trustee or in her personal capacity.
12. I take into account, in considering the above matters, that the Garnishee Notice was issued to the lender by the ATO, and was accompanied by serious warnings about any failure to comply on the part of the lender. I have extracted those warnings above in these reasons, and referred to the penalties which are noted in the correspondence from the ATO.
13. I also have regard to the broad conception under the legislation as to when a third party owes money to a debtor, as defined in s 260-5(3) of the TAA.
14. In these circumstances, the submission advanced by the plaintiff at [59] of the opening trial submissions must be accepted. Specifically, in my view, cl 26.2 conferred a broad discretion upon the plaintiff to withhold monies from the borrowers, and I cannot accept that the withholding of monies after receiving the Garnishee Notice from the ATO, underpinned as it was by statute, does not fall within that contractual discretion. It was not necessary for the plaintiff to look behind the Garnishee Notice and behind the statements made by Mr Burns, in order to make its own, independent assessment whether the notice had the effect which it appeared to have on its face.
15. The discretion vested in the plaintiff by cl 26.2 is wide in terms, and its effect. The discretion is, in my view, sufficiently broad to protect a lender from any objective error in assessing the implications of a notice such as the Garnishee Notice which the plaintiff received.
16. It is also of no moment that Mr Burns was not identified on the Garnishee Notice as the contact person for the ATO, as pleaded in the Hocking Rejoinder at [3.3.2]. Whether he was so named or not does not deny him authority to speak on behalf of the ATO, which I am comfortably satisfied on the evidence he was able to do.
17. I reject the defendants' submissions to the contrary concerning the Garnishee Notice within the context of the discretion contained within cl 26.2 of the Hocking Loan Agreement. The plaintiff's reliance on the Garnishee Notice is also not incompatible with the reliance on the contractual discretion. On the contrary, it is a compelling consideration to which a lender may have regard in assessing its position under a provision such as cl 26.2.
18. Fourth, I do not accept that the limits which might apply in the context of termination clauses apply with the same force to a provision such as this. My attention was drawn by counsel for the defendants to the statements in Heydon on Contracts in this regard. Such clauses have a different role and purpose. Further, to the extent to which the defendants submitted the plaintiff was obliged to give notice of its position in response to a drawdown request, there is no warrant for such an obligation in the language of cl 26, nor is that evident from its context and purpose.
19. Fifth, submissions were made by both parties as to whether the Garnishee Notice had the legal effect which Mr Masel understood it had, and which had been the subject of some explanation to Mr Masel by Mr Burns of the ATO. The defendants made submissions as to the operation of s 260-5 of schedule 1 to the TAA, the position of Ms Bazzo as a trustee, and the construction of the Garnishee Notice itself.[470]
20. Without wishing to diminish the labour which has gone in to the preparation of those submissions by counsel and solicitors, I consider it is unnecessary to express any final views on these additional matters given the findings and conclusions I have made above. It is sufficient to note that the challenges made by the defendants regarding the scope of the Garnishee Notice are not sufficiently beyond argument to support a conclusion that Mr Masel's reliance on the Garnishee Notice was, in all the circumstances, unreasonable or fanciful. It must be remembered in this regard, and it is significant in my view, that Mr Masel not only had a copy of the Garnishee Notice before him, issued by the ATO, but he had heard the admonitions from Mr Burns as to how the notice curtailed his ability to proceed under the Hocking Loan Agreement.
21. There is a further reason to be cautious about expressing concluded views on the operation of s 260-5 of schedule 1 to the TAA, and as to the construction and scope of the Garnishee Notice. The further reason is that the scope and operation of these matters has wider significance beyond the interests of the parties to this litigation, and should not be the subject of authoritative judicial pronouncements unless it is necessary to do so, in my respectful view.
22. I therefore consider that the defendants have failed to demonstrate on the balance of probabilities that the plaintiff, by failing to pay the balance of the Second Drawdown Amount, was in breach of the Hocking Loan Agreement. The pleaded defence at [12.4] to [12.9] of the Hocking ADCC has not been established.

F. Fifth issue - the demands made to Ms Bazzo and Mr Caratti

1. The plaintiff has pleaded that several written notices were served on Ms Bazzo, in her capacity as a borrower under the Hocking Loan Agreement. Specifically, it is pleaded that a notice was issued to her on 22 September 2021 (which was sent again on 5 October 2021) and on 9 November 2021 (Hocking ASOC [20] and [23]).
2. It is also pleaded that a demand was served on Mr Caratti on 9 November 2021 (Hocking ASOC [26]).
3. The defendants pleaded in response an admission that the letters to Ms Bazzo dated 22 September 2021 and 9 November 2021 were 'forwarded to her', but asserted that the notices were invalid (Hocking ADCC [20.8], [23.8] and [24.8]).
4. The notice to Mr Caratti is also pleaded as being invalid (Hocking ADCC [27.9]).
5. The contentions concerning the validity of the notice issued to Mr Caratti emerged with particularity late in the day, through the defendants' opening trial submissions. The defendants' pleadings themselves did not, unfortunately, provide much by way of explanation of the challenge which was to be made concerning the demands issued to Mr Caratti, or indeed to Ms Bazzo.
6. The plaintiff submitted that the barren nature of the pleaded allegations did not entitle the defendants to assert positive cases concerning the validity of the demands, to the extent those cases travelled beyond the express terms of the pleading. That is, the plaintiff sought to confine the invalidity pleas to assertions that, by reason of the matters elsewhere pleaded in the defence, the demands were invalid.
7. It is of course troubling that the pleading was so generally phrased by the defendants. It is not to be expected that the plaintiff would be obliged to seek particulars of such a plea to guard against a subsequent broadening of the allegation, when it may reasonably be seen as limited in its terms.
8. In any event, given the narrowness of the issue and the manner in which the trial was conducted, I am prepared to entertain the contention by the defendants that the demands were invalid on the bases set out in the final closing submissions, focusing on the level of detail as to the amounts claimed and the timing of the demand in the case of Mr Caratti.

1. That said, I do not accept it was open to the defendants at trial to challenge the service of the above notices on Ms Bazzo or Mr Caratti. The pleaded case does not support such a challenge, particularly having regard to the admission the notices were forwarded to the defendants.
2. The submissions made by the plaintiff in closing at [80] to [85] in this regard should be accepted.
3. On the evidence, in any event, I find that the demands were in fact issued by the plaintiff to Ms Bazzo on both 22 September 2021 and 9 November 2021 (Exhibits 183 and 186 respectively), and to Mr Caratti on 9 November 2021 (Exhibit 185). There was no evidence from the defendants to the contrary, and it is to be expected the defendants would be in a position to give that evidence.

(3) The shortfall statement sent to Ms Bazzo on 13 July 2021

1. The shortfall statement dated 13 July 2021 attracted considerable attention during trial and in closing submissions. The plaintiff contended that, on 13 July 2021, it had informed the borrowers in writing that there was a shortfall owing under the Hocking Loan Agreement (Exhibit P13). This occurred following the sale of the last of the lots forming part of the Hocking development. The letter attached a statement (which had been updated to 6 July 2021) showing the amount which was due, being $899,447.81. The letter also confirmed that the plaintiff had received an amount of $159,250 from the borrowers, as settlement funds, which were applied by way of reduction of the loan amount, according to the attached statement. The statement runs for two pages, detailing the debits and credits to the loan account, from 9 November 2018 through to 6 July 2021.
2. Service of this letter and the shortfall statement were denied by the defendants.
3. The provenance of the letter and the statement were the subject of criticism during the trial. This was exposed during cross-examination of Ms Bazzo, which initially revealed a degree of uncertainty about the precise attachments to the letter and whether it was received by the borrowers. However, during the course of cross-examination by counsel for the plaintiff (particularly at ts 2015 - 2016), I ultimately understood Ms Bazzo to accept that the letter and the statement had been received by her office, and that the markings on the document were indications that her accountants had reviewed the material.
4. I therefore accept on the evidence that this letter and the attached statement were sent to the borrowers, and would accordingly have been available to Mr Caratti, who worked in the same office.
5. The statement attached to Exhibit P13 runs from November 2018 to July 2021. Of course, the Hocking Loan Agreement commenced much earlier, in November 2014, when the initial advance payment was made. Noticeably, the statement attached to Exhibit P13 does not encompass the payments made or received during the earlier period from November 2014 through to November 2018. I do not regard this as overly significant, given the evidence demonstrates that various loan statements were issued by the plaintiff to the borrowers at earlier points in time, detailing the payments made and received for that earlier period. For example, reference may be made to Exhibits P9, P10 and P11, which were sent by the plaintiff in August 2015, June 2016 and March 2018, each attaching a loan statement.
6. Indeed, the foregoing documentary material provides solid evidence of a practice on the part of the plaintiff to dispatch letters to the borrowers to confirm receipt of settlement funds and, at the same time and in the same correspondence, to provide the borrowers with an updated loan statement.
7. Finally, to complete the picture, I note that the statement which is Exhibit P13 is itself referred to in the letter issued by the plaintiff on 22 September 2021 and also in the demand letter issued on 9 November 2021. Neither of those later items of correspondence elicited a concern from Ms Bazzo at the time that she had not received the earlier statement and that she required a copy of the statement from the plaintiff.

(4) The demand issued to Ms Bazzo on 22 September 2021

1. On 22 September 2021, the plaintiff sent a letter to the borrowers and to Mr Caratti, addressed to their East Perth office, in respect of the Hocking Loan Agreement and the mortgages then in place to secure the funds advanced. The letter referred to the amount owing as $899,447.71 as at 6 July 2021, with interest accruing at 14.75% p.a. from that date. The letter stated:

The sale of the last of the secured property took place in July 2021.

A final statement was provided to you showing the amount still owing of $894,447.81 up to 6/07/2021. Interest continues to accrue on this balance at the rate of 14.75% p.a

This shortfall amount is now due and payable.

Please advise what date you expect to pay this so we can calculate the exact amount due, or alternatively you can pay the above amount initially and we will then give you a final adjustment figure for payment.

We presume you will be paying by cheque which is your usual practice, but if you wish to pay direct into our account we can provide you with our account details.

(5) The demand issued to Ms Bazzo on 9 November 2021

1. Some weeks then elapsed before the second notice was sent, on 9 November 2021. This time, it was in the form of a letter from the plaintiff's solicitors, Taylor Smart. The letter was sent by email, as an attachment. The letter is two pages long. In substance, by the letter the plaintiff demanded immediate payment of the sum of $938,336.16.
2. The amount was not paid, and the proceedings were commenced. The amount in the letter is the amount claimed by the plaintiff in the Hocking Proceeding, together with interest accruing at 14.75% p.a. under the Hocking Loan Agreement.
3. It is necessary to set out the complete terms of the letter, which are below:
   1. We act for Walthamstow Pty Ltd.
   2. On 31 October 2014, you and Keris Pty Ltd as Borrower, our client as Lender, and Allen Caratti as Guarantor, entered into a Loan Agreement ("Agreement"). The purpose of the Agreement was an advance of $6,000,000.00 by our client ("the Advance"), to Keris Pty Ltd and yourself.
   3. Our client has advanced a total amount of $5,704,320.55 under the Agreement, in the following instalment amounts:
      1. $4,500,000.00, on 4 November 2014;
      2. $1,000,000.00, on 23 December 2014; and
      3. $204,320.55, on 9 November 2015.
   4. Pursuant to the Agreement, the outstanding amount of the Advance, plus interest on that amount, was to be repaid by 4 November 2016 ("the Repayment Date").
   5. By letters dated 30 November 2015, 3 August 2017, and 1 November 2018, our client agreed to extend the Repayment Date until 4 November 2019.
   6. Your obligation to repay the monies owing under the Agreement was secured by the following registered Mortgages:
      1. M815932 dated 31 October 2014, in respect of:
         1. Lot 9001 on Deposited Plan 57007;
         2. Lot 9032 on Deposited Plan 63464;
         3. Lot 9033 on Deposited Plan 63464;
         4. Lot 9011 on Deposited Plan 400785; and
      2. M815933 dated 31 October 2014, in respect of Lot 9012 on Deposited Plan 400785.

1. The secured properties the subject of the Mortgages have now been subdivided and sold, with the sale proceeds being applied towards repayment of the monies owing by you under the Agreement.
2. On 6 July 2021, our client issued you with a final statement showing that the amount of $894,447.81 was owing under the Agreement as at that date.
3. On 22 September 2021, our client wrote to you confirming that interest was continuing to accrue on the balance outstanding under the Agreement at a rate of 14.75% per annum.
4. As at 1 November 2021, the amount outstanding totals $938,336.16.
5. Our client now demands immediate payment of $938,336.16 before 5:00pm on Monday, 15 November 2021.
6. Payment of the above amount may be made into our firm's trust account, the details of which are as follows:

1. If we do not receive payment in full by 5:00pm on Monday, 15 November 2021, our client will have no alternative but to commence proceedings in the Supreme Court of Western Australia for recovery of the monies owing under the Agreement.
2. Should our client be required to take such action, our client will rely on this correspondence on the question of costs.
3. Our client otherwise reserves all of its rights.
4. Please contact Emma Lawton, Lawyer, or Saul Davies, Partner, should you wish to discuss this matter further.

(6) The demand issued to Mr Caratti on 9 November 2021

1. A letter in substantially the same terms was sent by Taylor Smart to Mr Caratti on 9 November 2021, demanding payment of $938,336.16 pursuant to the guarantee he had given under the Hocking Loan Agreement. The only difference to the demand issued to Ms Bazzo is found in par 7 of the letter, which reads:

By reason of your personal guarantee you are personally liable for the monies owing under the Agreement.

1. Given the terms of the Hocking Loan Agreement, there was no strict requirement for the plaintiff to serve a written demand on Ms Bazzo as an element of its cause of action. Clause 4.1 of the agreement provides that the borrowers are to pay the lender the 'Outstanding Amount' on the 'Repayment Date'. By reason of the agreed extensions of the Hocking Loan Agreement, the 'Repayment Date' had become 4 November 2019. Where there is no repayment by the due date, interest at the 'Higher Rate' applies, by virtue of cl 4.5, compounding monthly.
2. The defendants' reliance on cl 7.1(b) to ground the requirement for a written demand, is misplaced, in my view. That provision relates to 'Events of Default'.
3. The belated challenge to the validity of the demand issued to Ms Bazzo rested on a contention that the shortfall statement dated 13 July 2021 (Exhibit P13) was never sent to her, or received by her. I have found the statement was sent to her, so the point falls away, in my view.
4. However, even if the statement was not provided to her, it does not follow that Ms Bazzo was unable to reasonably understand the nature and effect of the demands made on 22 September 2021 and 9 November 2021. No persuasive evidence was given by Ms Bazzo to this effect. In essence, Ms Bazzo claimed not to have read the earlier loan statements. It is difficult to advance a contention that a person is unable to understand a demand if they are unwilling to read the documents which had been earlier sent to her by the plaintiff.
5. Ms Bazzo was a sophisticated commercial counterparty to a loan agreement by which millions of dollars had been advanced to her and to Keris. Ms Bazzo was aware of the terms of the Hocking Loan Agreement. Ms Bazzo had the ability to understand the demand letters issued to her. Having regard to the established principles,[471] I am not able to conclude that Ms Bazzo was unable to understand the demands issued by the plaintiff, or that she was unable to undertake a calculation, given the information available to her, to reasonably understand the amount which was being demanded.
6. I reject the challenge to the validity of the demands issued to Ms Bazzo under the Hocking Loan Agreement.
7. I turn to the demand issued to Mr Caratti, who stands in a different position to that of the borrowers. As a guarantor, additional and strict principles come into play. Further, I accept a demand was required as an element of the cause of action against Mr Caratti as a guarantor, by reason of cl 22.2 of the Hocking Loan Agreement.
8. The relevant terms of cl 22.2 are as follows:
   1. GUARANTEE

22.1 The Guarantor guarantees to the Lender the due and punctual payment by the Borrower of the Outstanding Amount.

22.2 If the Borrower defaults in the due and punctual payment of the Outstanding Amount or any part thereof or in the performance of any other of its obligations under this Agreement or the Collateral Security, the Guarantor shall pay to the Lender the Outstanding Amount within 7 days of receiving a written demand for the Outstanding Amount from the Lender.

22.3 The Guarantor shall not be entitled to recover or endorse any sum paid under this guarantee or enforce against the Borrower rights which may accrue to it (whether by set-off, counterclaim, subrogation or otherwise) until the Outstanding Amount has been paid or satisfied.

1. Counsel for the defendants placed reliance on the terms of cl 22.2 which refer to the guarantor paying to the lender 'the Outstanding Amount within seven days of receiving a written demand for the Outstanding Amount from the Lender'. The point made by the defendants is that the demand was sent on Tuesday, 9 November 2021 and demanded payment by 5.00pm on Monday, 15 November 2021. That is a period of six days, not seven, as required by cl 22.2.
2. Does this matter?
3. In my view, it does not. The demand for payment within a six day period, which was in any event not complied with, does not invalidate the demand itself. As a matter of principle, I proceed on the basis, as explained by Mitchell J (as his Honour then was) in George 218 Pty Ltd v Bank of Queensland Ltd,[472] that 'the strictness with which courts construe contracts of guarantee has not been applied to notices of demand for payment of a guaranteed debt, where the making of a demand is a condition for the existence of the collateral liability under the guarantee'. Mitchell J explained the point by reference to examples:

For example, it is established that a notice of demand for payment of a debt is not invalid merely because it demands more than is due and, depending on the circumstances, may be valid even if it does not specify the amount due at all. Absent some special requirement in the relevant contract, a notice of demand will generally be valid if it specifies with sufficient particularity the debt of which payment is demanded, notwithstanding an error or omission in the description which does not materially mislead the recipient of the nature of the debt demanded. In Barns, a failure to refer to one of two mortgages under which a power of sale was exercised did not invalidate the demand. (footnotes omitted)

1. In the present circumstance, once it is accepted that the shortfall statement was received by Mr Caratti, and so Mr Caratti was able to understand the nature of the demand and to calculate the amount which was owing, the single day deficiency in the timing requirements in the demand letter is of no material consequence in my view. It does not operate to invalidate the demand issued to Mr Caratti. Importantly, as well, the proceedings were not issued in this court until 26 November 2021, which is comfortably after the expiry of the seven day period.
2. In general terms, in relation to the demands issued to both Ms Bazzo and Mr Caratti, I consider both defendants were in a fair position, being sophisticated commercial parties, to properly assess the amounts claimed against them in the correspondence issued by the plaintiff and its solicitors, and understand the sums of money they should pay. There is no compelling evidence from either defendant in this case that they were not in a position to assess the demands or to understand the quantum sought, or that the demands were so misleading that they could not understand them.
3. I therefore consider the defendants' challenge to the validity of the demand issued to Mr Caratti has not been sustained.

G. Sixth issue - the extension of the Hocking Loan Agreement

1. The sixth issue to consider concerns the impact on Mr Caratti's obligations as guarantor in connection with the various extensions of the Hocking Loan Agreement which were implemented by the plaintiff.
2. I have earlier in these reasons referred to the First Hocking Extension, the Second Hocking Extension and the Third Hocking Extension, which were effected, respectively, in November 2015, August 2017 and November 2018.
3. As explained by the defendants, the plaintiff 'must establish that Mr Caratti was indeed a guarantor at all relevant times covered by its claims'. At [14] of the Hocking ADCC, the defendants plead:

[14.1] Admit the Second Defendant and Keris Pty Ltd executed a request for extension of the term under the Loan Agreement to 4 November 2017 and paid the Plaintiff a fee of $50,000 additional interest in respect of the extension pleaded in paragraph 14 of the statement of claim; and

[14.2] Say further that the extension of the term of the Loan Agreement, increased the potential liability under the guarantee pleaded in paragraph 7 of the statement of claim, with the consequence that the guarantee was discharged on the basis of Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15; 162 CLR 549.

1. The defendants, and Mr Caratti in particular, contend the guarantee was discharged on 30 November 2015 given that Mr Caratti did not consent in writing to the First Hocking Extension.
2. In response, the plaintiff admits the plea in [14.1] of the Hocking ADCC, which is the First Hocking Extension. The plaintiff also pleads the following response to the discharge allegation, namely that:[473]

(a) It was Mr Caratti who first orally requested the first extension in November 2015, during a conversation with Mr Masel, alternatively Mr Caratti acquiesced to this extension. After this point, Mr Caratti is said to have directed that payment be made to the plaintiff towards the 'Outstanding Amount' after the date of the First Hocking Extension, and he formally consented to the Second and Third Hocking Extensions.

(b) The plaintiff pleads that, given the above, Mr Caratti is estopped from claiming that the First Hocking Extension discharged the guarantee contained in the Hocking Loan Agreement.

1. The plaintiff also disputes that the extension altered the terms of the Hocking Loan Agreement, other than the 'Repayment Date'. The plaintiff contends that at all times, throughout the life of the loan (including the negotiation of the Hocking Loan Agreement itself), Mr Caratti dealt with the plaintiff on behalf of the borrowers and was aware, as at the date of the First Hocking Extension and subsequently, of the amounts outstanding under the loan including the accumulated interest in arrears. Further, the plaintiff alleges that Mr Caratti requested the First Hocking Extension on behalf of the borrowers, alternatively acquiesced to it, and was aware at all times of the concomitant effects, upon the guarantee, arising from the First Hocking Extension should the borrowers not pay amounts due, when they were due, under the Hocking Loan Agreement.[474]

1. The repayment date for the funds under the Hocking Loan Agreement was 4 November 2016, as appears from the definition of 'Repayment Date' in cl 1.1. The Hocking Loan Agreement was extended through the First Hocking Extension, from 4 November 2016 to 4 November 2017. It is an agreed fact this was agreed to by the borrowers and they paid the plaintiff a $50,000 fee for the extension.
2. It is also agreed that the Second Hocking Extension and the Third Hocking Extension were effected, through to 4 November 2018 and 4 November 2019, and that the terms of the agreement were not otherwise altered.
3. The three extensions are recorded in writing, in Exhibits 96, 138 and 171. These are each letters from the plaintiff to the borrowers, dated respectively 30 November 2015, 3 August 2017 and 1 November 2018, which were countersigned by Ms Bazzo in her own capacity and a director of Keris. Additionally, Mr Caratti countersigned the second two letters, but did not sign the first (Exhibit 96).
4. The terms of Exhibit 96, which was not signed by Mr Caratti, are as follows:

I refer to our recent discussion and your request to extend the term of this loan to lock in current interest rates.

Notwithstanding that the maturity date is not until the 04/11/2016 we agree to your request of a further 1-year period on the basis of all existing terms and conditions remaining unaltered, including the current interest rates you are paying. This offer is conditional upon you paying a further fixed interest charge of $50,000 as consideration of this extension which would take the loan maturity date out to 04/11/2017.

If. you are agreeable to those terms, please sign and return the copy of this letter acknowledging same and we will debit your account with the $50,000.

1. Mr Masel's evidence as to the verbal discussion with Mr Caratti, in which Mr Masel says Mr Caratti requested the first extension, was quite vague. There is no record of the discussion, although the letter which is Exhibit 96 does begin with the words 'I refer to our recent discussion'. Mr Masel did not recall the precise language used by Mr Caratti. Importantly, Mr Masel did not include a space in the letter which is Exhibit 96 to permit Mr Caratti to countersign the document. That is a rather unusual and striking omission. In contrast, Mr Masel included spaces in the later extension letters for Mr Caratti to sign.
2. Mr Caratti denied making any verbal request for an extension of the Hocking Loan Agreement in or after November 2015. Ms Bazzo testified that she did not discuss the first extension with Mr Caratti and gave evidence that she did not request that extension. That said, I did not find Ms Bazzo's evidence on this issue particularly persuasive. Ms Bazzo did not provide direct answers to questions in cross‑examination in this respect, and volunteered matters which were not responsive. Her evidence was, quite simply, vague.
3. Given the respective roles occupied by Mr Caratti and Ms Bazzo in their business, it is far more likely that, if there was a discussion between one of them and Mr Masel about the extension of the Hocking Loan Agreement, it was Mr Caratti who had that discussion. Certainly, the letter dated 30 November 2015 (Exhibit 96) begins with a reference to a recent discussion. The reference to such a discussion in the letter provides a strong basis to find some discussion occurred. I find it is more likely than not that such a conversation occurred, and it was Mr Caratti who spoke with Mr Masel. It was plainly in the interests of the borrowers to have the agreement extended and it was Mr Caratti who typically dealt with such matters, not Ms Bazzo.
4. Further, I do not accept that the First Hocking Extension was simply implemented by Mr Masel at his own personal initiative. It was a necessary step for the borrowers to take, in order to extend the term of the agreement, and the borrowers were prepared to pay a substantial fee of $50,000 to this end. It was more likely than not that it was Mr Caratti who took the running on this issue, who initiated the discussion with Mr Masel, and initiated the request for an extension.
5. Further, Mr Caratti was well aware the agreement required an extension, and I am in little doubt that he knew of the contents of the letter sent on 30 November 2015, despite his broad denials, and aware that there had been an extension of the agreement. It is highly implausible that the necessary extension of these loan terms, relating to one of Mr Caratti's development loans worth millions of dollars, was a matter in respect of which Mr Caratti paid no interest or had no concern, or took a passive approach.
6. Relatedly, I have real difficulties accepting Mr Caratti's evidence that he never required or needed extensions to the loans with the plaintiff, which he described as a 'grab for more money' by the plaintiff, although it is evident that certain of the extensions did not attract a fee. Under cross-examination on these issues, Mr Caratti attempted to distance himself from these extensions, deny that he 'agreed' to the second and third extensions even though he countersigned the letters, and volunteered information to the cross-examining counsel which was not responsive. I refer to the cross-examination of Mr Caratti at ts 2110 - 2112 in particular, which is difficult to follow and does not allow one to conclude that Mr Caratti was seeking to assist the court to understand what had occurred to the best of his recollection. His answers in this respect were simply confusing.
7. Of course, there is no evidence that Mr Caratti agreed to the extension of the Hocking Loan Agreement in writing. Only Ms Bazzo signed the extension letter.
8. Having regard to these findings, I turn to consider the legal effect of the extensions of the Hocking Loan Agreement in relation to Mr Caratti's continuing obligations as guarantor.

1. The parties were not in agreement as to who bore the onus on this issue. The plaintiff submitted that the onus of establishing the defence rested with the defendants as they had pleaded the defence. The defendants submitted that the plaintiff was require to prove any factual issues involved, in order to establish Mr Caratti was a guarantor at the relevant times covered by the Hocking Loan Agreement.
2. The defendants have asserted, through their pleading, a defence based on the extension of the Hocking Loan Agreement which is said to have engaged the principles in Ankar, and thereby discharged the guarantee. To the extent there are factual matters which are necessary to demonstrate in order to make good this defence, the defendants logically bear the onus on those issues, in my view.
3. One of the important issues which must be demonstrated is the matter of consent on the part of Mr Caratti. Curiously, the defendants did not expressly plead that Mr Caratti did not know about or did not consent to the First Hocking Extension. Putting this pleading deficiency to one side, I consider the defendants bore the onus to prove a lack of consent in order to engage the principle in Ankar.
4. In Ankar, the High Court recognised the principle that a surety's obligation may be discharged in certain circumstances where the creditor's conduct has the effect of altering the surety's rights without the surety's consent, unless the alteration is shown to be insubstantial and not prejudicial to the surety. One example is where there is a variation of the principal loan contract which is the subject of the guarantee.
5. In Nannup Timber Processing Pty Ltd v Minister for Commerce,[475] Kenneth Martin J explained the principle as follows:

[W]here there has been a subsequent alteration to the character of a primary debtor's obligations, which were obligations the subject of a third party's guarantee, the scope of the guarantor's original promise will be strictly construed so as not to cover the altered arrangements reached as between the primary borrower and the lender - unless the guarantor has agreed to extend its obligations in this way.

1. In the present case, the extension of the Hocking Loan Agreement, for a further year, would operate to the prejudice of the guarantor, Mr Caratti. It would further expose him to the accumulating interest amounts under that agreement.
2. In resisting the pleaded defence, it was not contended by the plaintiff that the provisions of the Hocking Loan Agreement precluded the Ankar principle having effect, noting that the principle can be modified or excluded by agreement.
3. The primary question arising in this case is whether Mr Caratti in fact consented to the extension. Put another way, the question is whether there has been a departure from the finance contract which was guaranteed by Mr Caratti, to which he did not consent.[476] I have found that Mr Caratti requested the First Hocking Extension, and consented to it. Undoubtedly, he also agreed to the latter extensions. But critically, having requested the first of the extensions, and consented to it, the Ankar principle does not operate to invalidate the guarantee, and there is no warrant for the intervention of equity.
4. In this regard, it is not critical, when considering the possible intervention of equity in this respect, that the consent be in writing. Obtaining the consent in writing would be, practically speaking, a sound and prudent step for a lender to take. But I do not regard it as fatal that Mr Caratti's consent to the extension was not confirmed in writing. The presence of a writing requirement in the Hocking Loan Agreement does not have application to the defendants' invocation of the Ankar principle. These are separate and distinct issues. Further, as one might expect, when considering whether equity should intervene, the question is one of practical substance rather than mere form.
5. In any event, even if it had been positively demonstrated by Mr Caratti that he did not consent to the First Hocking Extension, in any respect, his ability to persuade the court that his obligations as a guarantor had come to an end would run 'head first' into the subsequent conduct on his part. That subsequent conduct includes his express consent to the Second Hocking Extension and the Third Hocking Extension. He signed the extension letters in relation to these matters. He thereby affirmed the continuation of his guarantee obligations. There is no evidence of conduct on his part after November 2015 which would suggest that he had elected to regard himself as being discharged from performance of the guarantee.
6. This analysis does not require one to examine whether Mr Caratti 'rejoined' the loan agreement following the Second and Third Hocking Extensions, or to consider whether the later extensions have retrospective effect. The defendants made submissions about these issues, seeking to undermine any reliance on the later consent given by Mr Caratti. As the plurality in Ankar held, the guarantor may be discharged from performance in the circumstances indicated, at their option. The High Court stated:

Be this as it may, returning to the earlier discussion of the two provisions in the context of conditions, the special characteristics of the suretyship relationship and the fact that it creates a liability strictissimi juris on the part of the surety are enough, when added to the factors mentioned earlier in this judgment, to justify treating the relevant obligations in the two provisions as conditions, breach of which, at Ankar's option, discharged it from performance of its obligations under the Security Deposit Agreement to the extent to which they related to the sum of $125,000. (emphasis added)

1. These conclusions render it unnecessary to address the further estoppel plea raised by the plaintiff in response to the pleaded defence.
2. In my view, the defence pleaded by the defendants, as to the discharge of Mr Caratti's obligations as a guarantor by reason of the extension of the Hocking Loan Agreement, must be dismissed.

H. Seventh issue - the claim against Mr Caratti under the guarantee

1. The seventh issue to address is whether the plaintiff has discharged its onus on the balance of probabilities to establish the essential elements of the claim against Mr Caratti, pursuant to the guarantee contained within the Hocking Loan Agreement. This includes the quantum of the claim against Mr Caratti in respect of the guarantee.
2. I have already considered, and rejected, the challenge to the validity of the demand served on Mr Caratti, and the challenge to the extensions of the Hocking Loan Agreement. Once that position is reached, and given my earlier findings as to the quantum of the loan owed by the borrowers, and the rejection of the other defences pleaded by Mr Caratti, I consider the claim against him under the guarantee in the Hocking Loan Agreement has been properly demonstrated by the plaintiff, pursuant to the express provisions of the Hocking Loan Agreement.
3. Specifically, Mr Caratti was obliged, pursuant to the guarantee he had given under cl 22 of the Hocking Loan Agreement, as acknowledged by the Guarantor's Acknowledgement he signed on 31 October 2014 (Exhibit 38), to pay the 'Outstanding Amount' under the loan. Mr Caratti guaranteed to the plaintiff the 'due and punctual payment by the Borrower of the Outstanding Amount'. Mr Caratti did not pay the amount required. The plaintiff's claim has accordingly been established.

1. Lastly, it remains to address whether Ms Bazzo has discharged her onus on the balance of probabilities to establish the pleaded contractual counterclaim, pleaded at [32] to [49] of the Hocking ADCC. There are several sub-issues involved in this respect.
2. The counterclaim is for damages or equitable compensation in the amounts of $680,000 (in respect of the matters pleaded at [49(b)] and $315,064.44 (in respect of the matters pleaded at [49(d)]. In essence, Ms Bazzo alleges that the plaintiff did not provide the full amount of the Second Drawdown Amount to enable her to 'pay all statutory clearance fees to enable [her] to obtain titles for the subdivision of the Security Property'. Ms Bazzo pleads that this failure on the plaintiff's part had a consequence for the Hocking development, as follows:

[45] By virtue of the Plaintiff's failure to advance the balance of funds available under the Second Drawdown, the Second Defendant was required to procure additional funds to make payment to the City of Wanneroo for the statutory clearance fees to enable the subdivision and creation of individual titles from the Security Property.

1. By way of particulars, it is alleged that, on 4 August 2017, Ms Bazzo procured a loan advance for the amount of $2,103,915.77 from Yanchep Investments to satisfy payment of the civil construction costs, and the statutory clearance fees (see Exhibit 139). Further, on 14 March 2018, Ms Bazzo alleges she procured a further loan advance for the amount of $236,764.40 from Yanchep Investments to pay to the City of Wanneroo and Water Corporation as statutory clearance fees.
2. On 29 August 2017, portions of the Security Property were then subdivided, with the balance being subdivided in mid-June 2018.
3. Ms Bazzo alleges that the plaintiff's failure to advance the balance of the Second Drawdown Amount constituted a breach of the Hocking Loan Agreement and, further and in the alternative, was conduct which was unconscionable for the purposes of s 12CB of the ASIC Act. The unconscionability allegation in the pleadings is rather sparse, confined to reliance on 'the circumstances where the Plaintiff failed to advance the balance of the Second Drawdown to pay the statutory clearance fees to enable the subdivision of the Security Property by late 2015 or early 2016'.
4. Ms Bazzo contends she was accordingly unable to complete the subdivision and sale of the Security Property, resulting in economic loss and damage, and says she is entitled to relief under s 12GM of the ASIC Act.
5. Ultimately, the pleading of the loss and damage claim was confined to two matters.
6. First, as pleaded in [49(b)], Ms Bazzo pleaded that, as a result of the delays in obtaining the statutory clearance for the subdivision of the Security Property, she was 'unable to create the individual titles from the Security Property and was unable to fulfil the Contracts for Sale by Offer and Acceptance for the titles created from the Security Property', and by August 2017, Ms Bazzo completed the subdivision of the first stage of the Security Property and realised the individual titles for a substantially lesser price because of the delay caused by the Plaintiff. Consequently, the Second Defendant suffered a loss of profits'. I will refer to this aspect of the claim as the Sales Shortfall Claim.
7. Second, as pleaded in [49(d)], Ms Bazzo pleaded that, as a result of the delays in obtaining the statutory clearance for the subdivision of the Security Property, she was 'unable to create the individual titles for the Security Property until after the adjoining landowner, Majicyl Pty Ltd ... had completed subdivision of Lot 9005 on Deposited Plan 72826 being the whole of the land contained in Certificate of Title Volume 2876 Folio 659'. This is pleaded to have resulted in the loss of Ms Bazzo's right for compensation under s 159 of the Planning and Development Act 2005 (WA) (PDA) for 'the portion of the costs of creating the road, known as Parma Link, including a portion of the value of the Second Defendant's land used to create such Parma Link and the cost of construction of Parma Link'. Ms Bazzo pleads that her claim for compensation under s 159 was $315,063.44. I will refer to this aspect of the claim as the Lost Compensation Claim.
8. The counterclaim was denied by the plaintiff.

1. Having regard to the principles applicable to statutory unconscionability claims, which I have earlier set out, I consider the claims advanced by Ms Bazzo, to the extent they rely on the ASIC Act provisions, are deficient. The pleading provides no proper basis for the plea, and the evidence does not rise to any height sufficient to make findings about the conduct of Mr Masel or the plaintiff which would engage these provisions.
2. I will therefore confine the analysis to the contractual breach claim.

1. It is an essential ingredient of the counterclaim that Ms Bazzo must establish that a valid request for the balance of the Second Drawdown Amount was made under the Hocking Loan Agreement. Absent such a demonstrated request, which was refused by the plaintiff in breach of the Hocking Loan Agreement, the claims for loss and damage in respect of both the breach of contract and unconscionability claims must fail.
2. I have addressed this issue above, under the fourth issue.
3. I have concluded that no proper request in writing was made in October 2015 or August 2016, in the terms as pleaded, and the plaintiff was otherwise not in breach by failing to advance the sum in question.
4. It follows, on this basis alone, that the counterclaim should be dismissed.
5. It is strictly unnecessary, therefore, to consider the further sub‑issues which form part of the counterclaim, but it is appropriate that I make some findings in respect of those matters. As a general observation, the plaintiff's submission that the counterclaim was, in part, 'riddled with issues of causation', should be accepted.

1. It was undoubtedly necessary for the borrowers, as the developers of the Hocking development, to apply for clearances from the applicable statutory authorities, which would requires fees to be paid to those authorities. Once the clearances had been obtained, a Deposited Plan for subdivision can be approved by the WAPC. When the WAPC approves the subdivision, the landowner can lodge the application for titles with Landgate and obtain the necessary titles.
2. These are necessary steps in the subdivision process, which were explained by Ms Bazzo in her evidence. It is evident that the defendants lodged the Deposited Plan for the subdivision in November 2015.
3. Ms Bazzo gave evidence as to the delays in the subdivision process, in particular as to the delays in obtaining the final clearance payment to enable the title process to be completed. The final clearance required the payment of fees to the City of Wanneroo, which I have earlier addressed in these reasons.
4. Ms Bazzo gave evidence that she was concerned about buyers for the lots terminating their contracts because of the delays, and testified as to her discussion by telephone with Mr Masel on 5 August 2016. I have earlier outlined the substance of this call. Following the call, Ms Bazzo provided a sales summary to Mr Masel.
5. Ultimately, because the funds were not forthcoming from the plaintiff, Ms Bazzo testified that she arranged for one of her entities, Yanchep Investments, to make the payment to the City of Wanneroo for the clearance fees. That was not done until August 2017. This occurred following attempts by Mr Caratti and Ms Bazzo to follow up the payment with Mr Masel in 2017, which were rebuffed by Mr Masel given, at the very least, the continuing effect of the Garnishee Notice from the ATO.
6. Not until 28 August 2017 were the borrowers able to lodge their Deposited Plan for the subdivision with the WAPC.
7. In order to demonstrate her claim, it was necessary for Ms Bazzo to not only establish a breach of the Hocking Loan Agreement, but establish with appropriate evidence the causal connection between the breach and the economic loss said to have resulted. The evidence in this regard was, with respect, weak. None of the purchasers to the contracts identified in the table subjoined to [49(b)] of the Hocking ADCC were called to testify in this regard. There was thus no direct evidence adduced by Ms Bazzo to support the contention that the purchasers in question did not proceed with their contracts because of the delay in question.[477]
8. I am not satisfied on the evidence that the necessary causal connection has been demonstrated by Ms Bazzo. The deficiencies are multifaceted, in that:

(a) Ms Bazzo has not established that she was in a position to create and complete the sales of the individual titles in July 2015, prior to the point in time at which the drawdown requests were first allegedly made.

(b) Ms Bazzo has not pleaded or established that the borrowers were unable to obtain, from another source and at an earlier time, the funds necessary to pay the clearance fees to the City of Wanneroo. The borrowers are developers of residential land. Ms Bazzo has had years of experience in the area, as has Mr Caratti. It is difficult to comprehend that Ms Bazzo allowed sales to fall away, or be negatively impacted, by the refusal of the plaintiff to advance the requisite funds, without taking steps to secure the funding from another source. Ms Bazzo obtained the funds, ultimately from Yanchep Investments, some time later. It is wholly unclear on the evidence why that did not occur until August 2017 or later, and why an amount necessary to satisfy the statutory clearances could not have been procured by Ms Bazzo well before this time. This represents a significant causal deficiency in the second defendant's claim.

(c) Ms Bazzo has not demonstrated that the shortfalls in the prices obtained, as pleaded at [49(b)] of the Hocking ADCC, were caused by the delay resulting from the plaintiff's failure to advance the requisite funds. That is not a matter to be deduced merely by inference. Indeed, Ms Bazzo testified that the contracts were subject to a two year termination period such that the borrowers had two years from the contract date in order to issue the certificate of title.[478] As the plaintiff correctly submitted, no evidence was adduced to show that a two year period had expired prior to August 2017, when the titles were issued.

1. The Sales Shortfall Claim has not been established, in my view. On the evidence available, I am unable to make an assessment on a provisional basis as to the quantum of the claim.

1. This part of the counterclaim stems from the competing position of Majicyl Pty Ltd, which was able to lodge its Deposited Plan prior to the borrowers, on 22 August 2017. The defendants submitted that, because the other entity lodged its plan earlier in time, the defendants (specifically, Ms Bazzo) lost the compensation claim which would otherwise have been available under s 159 of the PDA.
2. Section 159 provides as follows:

159. Subdivider may recover portion of road costs from later subdivider

(1) Where -

(a) a person (in this section called the later subdivider) has subdivided land in which -

(i) a lot or lots has or have a common boundary with; or

an existing road to which there is access from the subdivided land; and

(b) a person (in this section called the original subdivider) who previously subdivided land that also has a common boundary with that existing road, in connection with that subdivision, contributed to or bore solely the cost of providing or upgrading the existing road; and

(c) the later subdivider did not contribute to that cost,

the original subdivider may, in accordance with this Division, recover from the later subdivider a sum representing one-half of so much of the reasonable cost as was borne by the original subdivider of providing or upgrading the part of the existing road which has a common boundary with the lot or lots, or is joined by a subdivisional road, as referred to in paragraph (a).

CPI means the Table described as the Consumer Price Index (All Groups Index) for Perth published by the Commonwealth Statistician under the Census and Statistics Act 1905 of the Commonwealth, or if the same is not published, such other similar index as the Minister may reasonably determine;

market value of land means the capital sum, determined in accordance with section 155(3)(b)(ii), (iii) and (iv), which an unencumbered estate in fee simple in the land might reasonably be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require;

road has the meaning given by section 4(1) and includes a private road created under Part IVA of the Transfer of Land Act 1893 or as defined in the Land Administration Act 1997 section 3(1).

(3) In this section a reference to the cost of providing a road is a reference to the aggregate of -

(a) the value, as at the date of the subdivision referred to in subsection (1)(b), of the portion of the land provided as a road, being such percentage of the market value of the total area of land comprised in that subdivision as the area of the road bears to that total area as at the date of that subdivision; and

(b) the reasonable cost of designing and carrying out the following works -

(i) the survey of the land provided as a road; and

(ii) the formation, preparation, priming and sealing of the road; and

(iii) the provision of kerbing, drainage and service ducts in connection with the road,

escalated by the percentage by which the CPI last published prior to the date of the subsequent subdivision has increased over the CPI last published prior to the original subdivider subdividing the land referred to in subsection (1)(b).

1. The defendants explained this claim as follows. It was described as 'a loss of the claim for contribution to the costs of construction of Parma Link from the adjoining landowner'. It was submitted that, 'as a result of the delay in payment of the clearance fee, the adjoining deposited plan [of Majicyl Pty Ltd] was approved on 11 August 2017, having been lodged on 28 June 2017 (Ex 144), while [Ms Bazzo's] deposited plan was approved on 29 August 2017, having been lodged on 12 November 2015 (Ex 145)'.
2. Counsel for Ms Bazzo described the operation of the statutory provision as follows - effectively, the regime provides that, where infrastructure is undertaken or upgraded, including a road, at the cost of one developer, but for the benefit of more than one developer, a compensation claim may be made by the original developer or subdivider, as against the later subdivider, for a contribution. I accept this is an accurate summary of the statutory provision, which is remedial in nature.
3. The defendants supported the claim by reference to Exhibit 206, being a schedule of costs, which totals $628,006.31. The document is headed 'Lots 9005 #151 East Road, Hocking - Subdivision Construction Costs for Parma Street'. It contains numerous sub-items of costs, as to land costs, roadworks, stormwater drainage and power costs. An extract of the document appears in Attachment A to these reasons, showing the first two sub-items of costs.
4. The second defendant's counterclaim hinged to a large degree on an acceptance of the reliability of the schedule of costs. It is contended that 50% of the costs in the schedule would have been payable by the adjoining land owner, if the deposited plan had been approved prior to 11 August 2017. I accept this is the effect of s 159(1) of the PDA.
5. During the trial, I ruled, over the plaintiff's objection, that Exhibit 206 was admissible as a documentary record, pursuant to s 79C(2a) of the Evidence Act. I refer to the reasons in support of the evidentiary ruling which are set out in Attachment A, under heading C. However, as I indicated in the ruling, questions of weight would need to be determined at the conclusion of the trial.
6. There are certainly deficiencies in the schedule, which were identified by the plaintiff's counsel during the course of the trial and in closing submissions (at ts 1458). There was very little evidence adduced to explain or support the matters contained in the schedule, and its provenance was ultimately unclear at the conclusion of trial.
7. The primary difficulty which emerges from the document, and the evidence at trial, is that the vast majority of the amount claimed therein is found in the land value, which can be seen in the extract of the document. The land value is $467,780, which is based on an assessment of value of $380 per square meter. That is a valuation question which requires expert opinion. No evidence to sustain that valuation was led by the defendants. I would accord no weight to that component of the claim, therefore. I am not able, on the evidence, to assess an alternative value for the land in question.
8. Accordingly, but for the threshold issue I have mentioned above, which I have decided adversely to Ms Bazzo, I would be prepared to accept the Lost Compensation Claim advanced by Ms Bazzo, albeit at a smaller amount given the evidentiary difficulty with the land value component of the claim. If the land value component of the claim is removed, the total costs are reduced to $160,226.31, meaning the contribution would be 50% of this amount, being $80,113.15.

1. For the foregoing reasons, the second defendant's counterclaim must be dismissed.

PART VIII - CONCLUSIONS

1. The foregoing reasons concern two civil actions which were heard together at trial between late January 2024 and April 2024, with a further hearing on 31 July 2024. The claims advanced by the plaintiff, being Reliance Capital, arose out of financing agreements into which the plaintiff entered with Mr Allen Caratti, with Ms Tina Bazzo, and with companies associated with them.
2. It is not in dispute that Mr Masel, the owner of Reliance Capital, and Mr Caratti have had a long business association with each other. Mr Masel, through Reliance Capital, has provided finance to Mr Caratti and his business interests on numerous occasions over the period since the late 1990s.
3. The financing agreements in question were entered between 2013 and 2016, for the purpose of providing finance for the defendants' residential property developments in the Perth area. The agreements and associated documents are sophisticated commercial instruments, by which funds in the order of millions of dollars were advanced, entered into between sophisticated commercial parties.
4. The development which is the subject of the Anketell Proceeding before this court was situated at 82 Treeby Road in Anketell. The development which is the subject of the Hocking Proceeding before this court was situated in Hocking, and known as the 'Tuxedo Rise Estate'.
5. The plaintiff brought claims against Mr Caratti and Ms Bazzo as guarantors in the Anketell Proceeding, against Mr Caratti as a guarantor in the Hocking Proceeding, and against Ms Bazzo as a borrower in the Hocking Proceeding.
6. Ultimately, for the foregoing reasons, I have reached the view in both actions that the plaintiff has discharged its burden of proving on the balance of probabilities the claims it has pleaded. That is, I have concluded that the funds advanced under the loan facilities in respect of the developments were not repaid to the plaintiff, and that the loan facilities were in default. I have also concluded that none of the substantive defences pleaded by the defendants have been established in either action. Additionally, the counterclaim pleaded in the Hocking Proceeding has not been established by the defendants.
7. In particular, for the foregoing reasons:

(a) I find in the Anketell Proceeding that the plaintiff has established that Mr Caratti and Ms Bazzo, in their capacity as guarantors under the pleaded instruments, are liable to pay the amounts claimed in the proceeding, including interest, costs and expenses, and I find that each of the pleaded defences has not been established and must be rejected.

(b) Further, in the Anketell Proceeding, I have concluded that interest on the judgment sum will be awarded at the statutory rate of interest, not the contractual rate of 18.75% p.a. as claimed by the plaintiff. The same position applies in the Hocking Proceeding given the similar provisions in the financing arrangements.

(c) I find in the Hocking Proceeding that the plaintiff has established the defendants, in their capacity as guarantor in the case of Mr Caratti and in the capacity as borrower in the case of Ms Bazzo, under the pleaded instruments, are liable to pay the amounts claimed in the proceeding, including interest, costs and expenses, and I find that each of the pleaded defences has not been established and must be rejected.

(d) Further, in the Hocking Proceeding, I have concluded that the counterclaim for damages advanced by Ms Bazzo, represented by the Sales Shortfall Claim and the Lost Compensation Claim, has not been established and must be dismissed.

1. The plaintiff is therefore entitled to judgment in both actions.
2. I will hear from counsel as to the precise orders which should be made to reflect these reasons including as to interest and costs, noting that the plaintiff makes claims for costs on a solicitor/client basis pursuant to contractual provisions within the Anketell and Hocking financing arrangements. The construction of the particular contractual provisions upon which the plaintiff relies have not been the subject of argument to date.

Reasons for evidentiary rulings on 13 and 14 February 2024**

1. The reasons in this Attachment A address several interlocutory issues which arose during the first phase of the trial of the two actions.
2. The first issue concerns the objection raised by the defendants to the terms of [80] of the supplementary witness statement of Mr Masel dated 19 October 2023 in the Hocking Proceeding, which was amended by Mr Masel at the commencement of his evidence. This issue is addressed under heading B below. I heard argument on the objection on 13 February 2024,[479] and ruled on 14 February 2024 that the objection should be disallowed.[480]
3. The second issue concerns the objections raised by the defendants to the plaintiff's proposed tender of several documents which were additional to the original trial bundle which was prepared and provided to the court prior to the commencement of the trial. This issue is addressed under heading C below and in Attachment A.1. I heard argument on the objections on 8, 12 and 13 February 2024, and ruled on 14 February 2024 that the balance of the objections should be disallowed.[481]
4. The third issue concerns the objections raised by the plaintiff to the defendants' proposed tender of several documents which form part of the original trial bundle. This issue is addressed under heading D below and in Attachment A.2. The various objections were the subject of argument on 8, 12 and 13 February 2024, and I delivered rulings on 14 February 2024.[482]
5. The fourth issue concerns whether the parties should have leave to apply to have Mr Masel recalled to give further evidence in chief or to be the subject of cross-examination (and any appropriate re‑examination). This issue is addressed under heading E below.

B. Objection to supplementary witness statement of Mr Masel

1. Mr Masel is a director of the plaintiff company and the sole witness for the plaintiff. Mr Masel gave evidence on 6, 7 and 8 February 2024. In his evidence in chief, he sought to amend his supplementary witness statement dated 19 October 2023 in the Hocking Proceeding.[483] The amendment was to remove the words 'practical completion stage' and replace them with 'a satisfactory level of progress', in the following manner:

[80] Given I was uncomfortable with Walthamstow's potential exposure on the loan and that the project had not reached a satisfactory level of progress practical completion stage, I would not have caused or allowed Walthamstow to advance the additional funds at that time without sufficient additional security being given.

1. The amendment elicited an objection which was held over while Mr Masel completed his evidence.[484] The objection has three layers and, as articulated, encapsulates the amendment and the words which follow thereafter as to the action Mr Masel would hypothetically have taken.[485] The defendants submit the evidence:

(a) is not relevant having regard to the pleaded positions of the parties;

(b) is vague; and

(c) involves speculation and surmise.

1. Before I address the objections, it is first necessary to put the evidence contained in [80] of the supplementary statement in context. The broad issue which is the subject of this paragraph is the allegation in the defendants' defence that the plaintiff failed to pay the balance of the advance under the principal Hocking Loan Agreement,[486] which conduct is pleaded by the defendants as being in breach of the Hocking Loan Agreement.[487]
2. In response, the plaintiff denies receiving a specific written request for the amount in question, pleads a reference to a request made by the first defendant in February 2017 to pay certain Council fees in an amount greater than the balance of the amount remaining on the loan, and further pleads that even if a compliant written request was made the plaintiff was nonetheless entitled by virtue of cl 26.2 of the Hocking Loan Agreement to refuse the request.[488]
3. The plaintiff relies upon, at least, the aspect of cl 26.2 which authorises the lender (at its complete discretion) to withhold any portion of the advance if the lender is not satisfied with the security available or with the financial circumstances of the borrower or guarantor. On its face, cl 26.2 appears to be a relatively broad provision. It is picked up specifically in cl 2.1(b) of the Hocking Loan Agreement, a provision which requires the lender to make the second drawdown amount to the borrower, but does so subject to the lender's discretion in cl 26.2.
4. The defendants have responded to these matters by way of rejoinder, asserting that the plaintiff was satisfied with the security pleaded, and refer to various factual matters between October 2014 and February 2017.[489] The defendants further assert, on an alternative basis, that the plaintiff acted capriciously and without a rational basis in determining that the securities were insufficient.[490]

1. Having regard to the pleaded positions of the parties, I was comfortably of the view that the evidence led through Mr Masel, as to the plaintiff's first hand observations of the Tuxedo Rise development over a course of time leading up to late 2016 and early 2017, is directly relevant to a matter in issue in the action. His evidence as to these observations is not the subject of objection, of course.
2. The objection relates to the witness' assessment that the project had not reached a satisfactory level, and that, by reason of that assessment and Mr Masel's concerns as to the plaintiff's exposure on the loan, Mr Masel would not have caused or allowed the plaintiff to advance additional funds without greater security. Mr Masel's evidence is apt to inform whether or not the plaintiff's reliance on cl 26.2 of the Hocking Loan Agreement can ultimately be made good.[491] That is, whether the plaintiff was entitled to rely upon the discretionary contractual basis to withhold a portion of the advance.

1. Further, I was of the view that the proposed evidence is not objectionably vague. The evidence of Mr Masel is connected to his personal observations of the project, and is to be reasonably understood as saying that, having regard to the level of progress of the project at the time, and also having regard to the plaintiff's financial exposure on the loan, he had formed a particular view at the time as to the need for additional security. The cogency of this evidence will fall to be assessed at the conclusion of the trial, once all relevant evidence on the subject has been adduced.

1. As to the objection focused on speculation, I accept that there are instances where evidence of hypothetical conduct is inadmissible. For example, had the claim been one in tort subject to the Civil Liability Act 2002 (WA), the evidence of an officer of the plaintiff as to what he would hypothetically have done had the defendants not been at fault would be inadmissible on the question of causation.[492]
2. But this is not a claim in tort, nor does it include an allegation of negligence. It is a claim for breach of contract asserted against the plaintiff financier, in response to which the financier seeks comfort in the discretion afforded by cl 26.2.
3. In this respect, it is a well-accepted principle that it is open to a party, faced with a contractual claim for breach, to identify and rely upon factual matters in addition to those which were relied upon at the relevant time.[493] The evidence of Mr Masel as to what he would have done is, I understand, advanced in this manner by the plaintiff .
4. Further, no authority was cited by the defendants which requires that the court exclude evidence of the steps or actions a person says he would have taken, in certain future circumstances or scenarios. In my view, the question is fundamentally one of cogency, but taking into account the caution often expressed by courts in relation to the manner in which such hypothetical evidence should be assessed. That caution was relatively recently explained by Quinlan CJ and Vaughan JA in Wilson v Arwon Finance Pty Ltd.[494] Some years earlier, Hodgson J explained the manner in which such hypothetical evidence might properly be led:[495]

In my opinion, evidence of that kind may often be the most direct and understandable way in which a person can express a relevant actual past state of mind, which in turn bears on the probabilities of what that person would have done. The state of mind in question may not have been active or explicit or even fully conscious, because no actual consideration was given to the particular question at the time; but nevertheless what the person would have done in certain circumstances is plainly related to his or her state of mind at the time, comprising a multitude of beliefs and attitudes. It would be impossible directly to describe this state of mind fully and accurately. Very often the best that can be done is for the person to say what he or she would have done, if the relevant events had occurred: that is, in this case, if the defendants had not breached their duty. Such evidence may be far from conclusive, even from a completely honest witness, because it may be the result of unconscious reconstruction affected by the wisdom of hindsight; but in my opinion, it is clearly admissible.

1. Of course, the foregoing does not impact upon the evidence of Mr Masel as to his personal observations, which was the basis for the amendment sought by the plaintiff. Mr Masel is entitled to give evidence as to the level or state of progress of the project, that being an issue I am satisfied is relevant on the pleadings, as explained above.
2. Rather, the speculation objection was more forcefully directed to the hypothetical steps or conduct which form the last three lines of Mr Masel's evidence in [80]. As explained above, I consider the defendants' objection based on the ground of speculation is not made out. Again, the weight to be given to this evidence is a matter for another day.

1. For these reasons, I was satisfied the defendants' objection to [80] of the supplementary statement should be disallowed.

C. Defendants' objections to documentary material

1. At the commencement of the trial the court was informed that the plaintiff sought to include additional documents in the trial bundle, and proposed to tender those documents as part of its case in both actions. The plaintiff first foreshadowed this in its opening reply submissions, filed in each action, on Friday, 26 January 2024. That was the public holiday before the trial commenced.
2. The plaintiff's reply submissions identified the additional documents which the plaintiff wished to tender and, in general terms, included an explanation that the late inclusion was in response to matters raised in the defendants' opening submissions dated 19 January 2024. In some respects, the plaintiff submitted that a new point had been raised by the defendants, and in other respects, the plaintiff appreciated there had been an error in the preparation of the trial bundle itself. I refer generally to the plaintiff's note regarding documentary tender objections dated 2 February 2024 at [7], and the revised document entitled 'Plaintiff's Additional Document Tender' dated 13 February 2024.
3. By way of example:

(a) In its opening reply submissions in the Anketell Proceeding, the plaintiff addressed the defendants' argument in relation to the validity of one of the default notices, and noted that a loan account statement had been provided with the default notice providing a breakdown of the amounts demanded. The plaintiff then foreshadowed that it would tender two documents from the defendants' discovery, being document 282 and 81.[496]

(b) The plaintiff also foreshadowed in the reply submissions in the Anketell Proceeding that it would tender document 187 from the defendants' discovery to address another default notice challenge.[497]

(c) The plaintiff also foreshadowed it would tender documents 191 and 193 from the defendants' discovery to demonstrate that the second defendant in the Anketell Proceeding received similar demands (on behalf of one of the corporate entities, Byford Land Company Pty Ltd) and did not dispute the quantum.[498]

(d) By way of final example, in the Hocking Proceeding, the plaintiff foreshadowed in its opening reply submissions that it would tender document 79 and document 82 from the defendants' discovery to demonstrate that a final statement had been provided to the defendants and an updated loan statement.[499]

1. Following argument on the objections, only a small number of documents remained in contest. The five documents which remained subject to tender by the plaintiff and continuing objection by the defendants are identified in Attachment A.1 to these reasons. The five disputed documents were TB 230, TB 231, TB 232, TB 233, and TB 234.

1. The conclusion I reached was that the objections to the five disputed documents should be disallowed. I will first address the broad bases for the objections, based on issues of delay and prejudice.
2. First, it is apparent that the five disputed documents were each documents referred to in the plaintiff's statements of claim in the actions. The documents have thus always been identified by the plaintiff as relatively central to the claims advanced by the plaintiffs.
3. Second, the defendants issued a notice to produce to the plaintiff pursuant to O 26 r 8(2) of the RSC in order to compel the plaintiff to produce the disputed documents. This was duly done.[500] The documents were then all discovered by the defendants within their affidavit of discovery. Thus, the defendants have been in possession of the documents for some considerable time (in fact, since mid-2020). All of the disputed documents had been discovered well before trial. In these circumstances, the submission that the documents were not formally discovered by the plaintiff in its list of documents is somewhat arid. The documents were undoubtedly produced by the plaintiff pursuant to O 26 r 8(2) RSC.
4. Third, I accepted there was a reasonable explanation for the failure to include the documents in the original trial bundle, as appears from the plaintiff's reply submissions which I have referred to above.
5. I will now turn to the question of admissibility of the documents.

1. As to the documents themselves, I was satisfied each of the disputed documents was properly admissible.
2. The first point to make in this regard is that I accept that each of the disputed documents contain statements or information which are relevant to matters in issue in the proceedings.
3. Further, I accept that each of the disputed documents contain statements which are admissible pursuant to s 79C(2a) of the Evidence Act 1906 (WA) (Evidence Act), being business records either prepared in the ordinary course of the business of the plaintiff, its solicitors (Taylor Smart), or Byford Land Pty Ltd, for the purposes of recording matters relating to their business, or used in the ordinary course of the business for the purpose of recording matters relating to the business.[501]
4. I will explain this further by reference to the content and context of the documents in question, but I will first address the submissions concerning the names ascribed to the documents in the defendants' discovery lists, as there was some debate before me on this issue.
5. I accept that the descriptions given to the documents in the defendants' discovery affidavits do not reflect a conscious decision by the defendants as to the subject matter of the documents or their provenance. Those descriptions, save in one case, are largely products of the manner in which the documents were described by the plaintiff in its pleadings or in its description of the documents when produced. So the descriptions of the documents cannot be used as a form of admission against the defendants. The one exception appears to be document 233, the description of which is 'Copy Final Statement, dated 6 July 2021'. I accept that this description was ascribed to the document by the defendants, not the plaintiff.[502] The decision by the defendants to ascribe that title to the document is of minimal significance though, in my view.
6. I will now address the documents in two categories, reflecting the nature and form of the documents.

1. These documents appear on their face to be an exchange of correspondence between the plaintiff's solicitors and Byford Land Pty Ltd.
2. The letter from Taylor Smart to Byford Land Pty Ltd is dated 31 May 2019 (document 231). Byford Land Pty Ltd is one of the guarantors of the loan to GH1 Pty Ltd which is the subject of the Anketell Proceeding.[503] Ms Bazzo is also alleged to be a guarantor of that loan, as is Mr Caratti.
3. The pleadings include an allegation that a copy of the default notice was served on Mr Caratti on 31 May 2019.[504] The default notice in question is pleaded as having been served on Ms Bazzo as guarantor. some months earlier, on 20 September 2018.[505]
4. The letter which is document 231 is addressed to the directors of Byford Land Pty Ltd, which was Ms Bazzo. As one might expect, it is similar in terms of the letter addressed to Mr Caratti, issued on the same date.
5. The letter to Byford Land Pty Ltd refers to a default notice as being enclosed, but no default notice is attached with the document in the form in which it is sought to be included in the trial book. Document 231 is confined to the letter itself. The document is marked as 'File Copy', indicating it is the copy retained by Taylor Smart.
6. Similarly document 179 does not include the default notice. The plaintiff submits the default notices have somehow become detached from the correspondence when being assembled in the litigation.
7. In response to document 231, Ms Bazzo appears to have signed a letter which is addressed to Taylor Smart, dated 7 June 2019 (document 232). Ms Bazzo's letter refers to the Taylor Smart letter dated 31 May 2019, which indicates she received the letter, as follows:

I received a letter dated 31 May 2019 and received by me on the 4th June 2019. I am concerned that the attached default notice has been issued where it is inconsistent with an agreement reached between your client and Mr Caratti. (emphasis added)

1. By her letter, Ms Bazzo invites the plaintiff's solicitors to withdraw the default notice.
2. The two items of correspondence, exchanged by Taylor Smart and Byford Land Pty Ltd, readily fall within the terms of s 79C(2a), in my view. They are documents prepared by the businesses, in the ordinary course of Taylor Smart's business as solicitors for the plaintiff financier, and in the ordinary course of Byford Land Pty Ltd's business as a property developer / guarantor.

1. These documents purport to be schedules prepared by or on behalf of the plaintiff. I am able to draw inferences in this regard from the terms of the documents and the subject matter thereof.
2. On the face of the documents, they purport to be documents prepared or used by the plaintiff in the ordinary course of its business as a financier, to record matters concerning the two loan agreements which are the subject of these proceedings. Each of the schedules emanated from the plaintiff, were pleaded by the plaintiff in the litigation, and were produced to the defendants in response to the notice to produce. The documents were then discovered by the defendants.
3. The relevant statements contained in the schedules are matters of fact and direct oral evidence of those facts would be admissible. The statements are as to fees and costs charged, receipts received and interest accumulated, all of which are matters of fact.
4. As to document 230, the plaintiff submits this is the schedule which was attached to the default notice issued on 20 September 2018, which is pleaded in [32] of the ASOC in the Anketell Proceeding. The document is headed with the word 'Schedule' and then states:

GH1 Pty Ltd (Treeby Road Anketel [sic]) - Mortgage $2,683,020.33.

1. The schedule contains several entries recording transfers, fees, interest and receipts, over the period from 29 February 2016 to 1 September 2018. I can reasonably infer the document was prepared in the ordinary course of the plaintiff's business to record details concerning the Anketell Loan Agreement which is the subject of the plaintiff's claim in the Anketell Proceeding (concerning the Anketell Development). It is well accepted that a document is used for the purpose of recording matters relating to business records if there is or it is contemplated that there will be some further or ongoing recording of information by or on behalf of the business.[506]
2. As to the metadata produced by the defendants in relation to document 230, that does not, in my view, lessen the force of the foregoing observations. The metadata appears to show that document 230 was authored by a legal secretary at Taylor Smart, and was created on 20 September 2018. That material tends to support, not undermine, the contention that the document which is identified as document 230, and which is described as being the 'Schedule to the Default Notice', is properly to be regarded as the schedule to the 'Default Notice' dated 20 September 2018 (which is Exhibit 167). The concurrence of the dates is important in this regard. I need not reach a finding on this issue at present. I simply note that the metadata is consistent with document 230 being the schedule which is referred to in the default notice dated 20 September 2018.
3. I can reasonably infer that, if the schedule which is document 230 was issued by the plaintiff's solicitors, the metadata associated therewith is likely to identify a representative of the law firm as having created the document.[507] The metadata might also be explicable on the basis that the representative in question was the person who electronically sent the documents to the defendants in response to the notice to produce.[508]
4. Finally, in relation to document 230, I record the submission made by counsel for the plaintiff that the document itself is the subject of an admission on the pleadings.[509] The plaintiff referred to [32], [33] and [36] of the defence in the Anketell Proceeding. To put this in context, [32] of the ASOC pleads that the plaintiff caused a default notice to be served on the second defendant on 20 September 2018 (although the pleading does not refer to a schedule as forming part of the default notice). In response to the pleading and, importantly, after production by the plaintiff of the default notice and the attached schedule,[510] the defendants pleaded (in their first defence filed in August 2020) that:

The Defendants admit that a purported demand was issued dated 20 September 2018, deny it had the effect pleaded, deny they have any liability to pay the amount, repeat paragraphs 21 and 28 above, otherwise deny paragraph 32 of the statement of claim and say further that...[511]

1. There was no indication in the pleading filed in August 2020, or since that time, that the defendants took issue with the plaintiff's position that a default notice was issued on 20 September 2018 and that it contained a schedule, being the document which is document 230. However, in light of my other conclusions, I do not need to form a conclusion that document 230 is the subject of an express admission on the pleadings.
2. As to documents 233 and 234, both employ the heading:

1. As with document 230, the documents contains several entries recording transfers, fees, interest and receipts, over the period from 25 September 2020 to 6 July 2021 (in the case of document 233) and the period from 4 November 2014 to 4 October 2021 (in the case of document 234). I can reasonably infer the documents were prepared in the ordinary course of the plaintiff's business to record details concerning the Hocking Loan Agreement which is the subject of the plaintiff's claim in the Hocking Proceeding (concerning the Hocking Development).
2. I therefore accepted that the disputed documents should be included in the trial bundle and ought be accepted into evidence having been tendered by the plaintiff. The foregoing does not preclude the defendants from maintaining their submissions as to the further factual findings which the court should make having regard to these documents.

D. Plaintiff's objections to documentary material

1. I refer to the objections raised by the plaintiff to the defendants' proposed tender of several documents which form part of the original trial bundle. The various objections were the subject of argument on 12 and 13 February 2024, and I delivered rulings on 14 February 2024 by way of a schedule, which is Attachment A.2 to these reasons.[512]
2. As several of the objections focused on the application of s 79C(2a) of the Evidence Act, it is appropriate to first set out the relevant terms of that provision. Section 79C(2a) states:

(2a) Notwithstanding subsections (1) and (2), in any proceedings where direct oral evidence of a fact or opinion would be admissible, any statement in a document and tending to establish the fact or opinion shall, on production of the document, be admissible as evidence of that fact or opinion if -

(a) the statement is, or directly or indirectly reproduces, or is derived from, a business record; and

(b) the court is satisfied that the business record is a genuine business record.

1. The applicable definitions are set out in s 79B, as follows:

business means any business, occupation, trade or calling and includes the business of any governmental body or instrumentality and of any local government;

business record means a book of account or other document prepared or used in the ordinary course of a business for the purpose of recording any matter relating to the business;

derived means derived, by the use of a computer or otherwise, by calculation, comparison, selection, sorting, consolidation or by accounting, statistical or logical procedures;

document means any record of information and includes, in addition to a document in writing -

(c) any disc, tape, sound track or other device in which sounds or other data (not being visual images) are embodied so as to be capable (with or without the aid of some other device) of being reproduced therefrom; and

(d) any film, negative, disc, tape or other device in which one or more visual images are embodied so as to be capable (with or without the aid of some other device) of being reproduced therefrom;

statement includes any representation of fact or opinion whether made in words or otherwise.

1. I refer to and respectfully endorse the principles applicable to the operation and scope of s 79C(2a) which were summarised by Solomon J in Rhodes v De Castro [No 2] at [21] - [33].

Exhibit 206 - Hocking Subdivision Construction Costs for Parma Lane

1. This single-page document is headed 'Lots 9005 #151 East Road, Hocking - Subdivision Construction Costs for Parma Street'. It contains several sections of various costs, namely land costs, general costs, siteworks and earthworks costs, roadworks costs, stormwater drainage costs, and power and street lights costs.
2. The defendants seek to rely upon the document for the purposes of the Hocking Proceeding, in respect of the counterclaim pleaded in [49(d)] of the Amended Defence and Counterclaim dated 6 February 2024, relating to the costs of construction of the road known as 'Parma Link'. The relevant paragraph was the subject of an amendment during the course of the trial, which I granted by order made on 6 February 2024. The costs claimed by the second defendant are a subset of the construction costs, as was explained by counsel for the defendants.[513]
3. The relevant paragraph of the pleading asserts:

[49] By virtue of the Plaintiff's delay in advancing part of the Second Drawdown to the Second Defendant, and the Plaintiff's failure to advance the balance of the Second Drawdown to the Second Defendant in breach of the Loan Agreement, the Second Defendant was unable to complete the subdivision and sale of the Security Property, resulting in economic loss and damage suffered to the Defendants. Further and in the alternative, the Defendants are entitled to relief under section 12GM of the ASIC Act to an order for the loss and damage suffered by the Defendants.

(d) additionally, as a result of the delays in obtaining the statutory clearance for the subdivision of the Security Property, the Second Defendant was unable to create the individual titles for the Security Property until after the adjoining landowner, Majicyl Pty Ltd (ACN 118 309 265) had completed subdivision of Lot 9005 on Deposited Plan 72826 being the whole of the land contained in Certificate of Title Volume 2876 Folio 659, resulting in the loss of the Second Defendant's right for compensation under section 159 of the Planning and Development Act 2005 (WA) for the portion of the costs of creating the road, known as Parma Link, including a portion of the value of the Second Defendant's land used to create such Parma Link and the cost of construction of Parma Link. The Second Defendants' claim for compensation under section 159 of the Planning and Development Act 2005 (WA) was $315,063.44

1. The plaintiff objected to the document on the basis it infringed the hearsay rule and contained matters of opinion evidence. The defendants accepted the document was hearsay but sought to tender it pursuant to s 79C(2a) of the Evidence Act on the basis that it is a genuine business record.[514]
2. The objection to the document is disallowed. The document may be tendered pursuant to s 79C(2a). In my view:

(a) The relevant statements contained in the schedule of construction costs are matters of fact and direct oral evidence of those facts would be admissible. The costs incurred by or on behalf of the second defendant in respect of the construction of the road known as Parma Link are matters of fact.

(b) Further, it may be inferred that the costs stated in the document are ultimately derived from source documents which record the specific costs for each aspect of the construction.

(c) Further, I was satisfied the document was prepared by a person or entity in the ordinary course of the business of that person or entity for the purpose of recording any matter relating to that business. When viewed as a whole, the document (which was discovered by the defendants) presents on its face as a comprehensive summary of the construction costs for each costs centre, and each item within those costs centres. For example, the first two items in the document record the following detailed matters:

(d) In the circumstances, it is reasonable to infer that a purpose of the preparation of the document was to capture the costs incurred in the construction of the road known as Parma Link, drawn from various other documents and invoices which provide the relevant detail of those costs.

(e) I should observe that the document is undated and does not contain details of its author, although from all the surrounding circumstances of the proceedings, it can reasonably inferred in my view that the document emanates from the records of the Mammoth Group (and is prepared in the ordinary course of that entity's business). Counsel for the plaintiff raised a number of attacks on the document in this respect.[515] Of course, as Solomon J observed in Rhodes v De Castro [No 2], the admission of a statement pursuant to s 79C does not of itself prove conclusively the truth of the statement, and the weight to be accorded to the statement remains an issue for assessment at the conclusion of the trial proceedings.

(f) Finally, I should note that the circumstances are not such as to warrant exercising the discretion in s 79C(6) to reject the admission of the statements in the document even though they fulfil the requirements of admissibility set out within the provision. The circumstances of the case, and of the nature of the document, are such that it is open to the plaintiff to test the veracity of the document through cross-examination of the witnesses proposed to be called by the defendants.

Exhibit 87 - Tuxedo Rise Hocking - Stage 1D price list

1. This single-page document is headed 'Tuxedo Rise Hocking - Stage1D' and 'Price list as at 9 November 2015'. On its face, it purports to record the prices for lots in the development which is central to the claims in the Hocking Proceeding, including contracted prices.
2. The document was the subject of cross-examination of Mr Masel on 8 February 2024, during which the plaintiff's objection to the document was maintained.[516] Mr Masel accepted he could well have received the document on around 9 November 2015, although he could not remember each individual document of this type.
3. The plaintiff's objection to the document was that it infringed the hearsay rule. The defendants sought to tender the price list pursuant to s 79C(2a) of the Evidence Act.[517]
4. The objection to the document is disallowed. The document may be tendered pursuant to s 79C(2a). In my view:

(a) The relevant statements contained in the price list are matters of fact and direct oral evidence of those facts would be admissible. The prices for which the lots were sold, which are said to form part of the counterclaim in CIV 2283, are matters of fact.

(b) Further, it may be inferred that the prices and other information stated in the document are ultimately derived from source documents such as individual contracts.

(c) Further, I was satisfied the document was prepared by a person or entity in the ordinary course of the business of that person or entity for the purpose of recording any matter relating to that business. When viewed as a whole, the document (which was discovered by the defendants) presents on its face as a summary of the listed prices and contract prices for each lot in the development.

(d) The weight to be accorded to the statements in the price list remain a matter for submission. Mr Caratti and Ms Bazzo can be questioned as to the veracity of the document in due course. I see no basis to reject the document pursuant to the discretion in s 79C(6).

Exhibit 119 - Email from Ms Bazzo to Mr Masel attaching sales spreadsheet

1. This document is an email from Ms Bazzo to the email address used by Mr Masel, purportedly sent on 5 August 2016. The email indicates it attaches the latest sales spreadsheet. The email shows that there was an attachment thereto. The second page is similar in nature of Exhibit 87 above, namely a price list for the Tuxedo Rise Hocking development. The price list states it is 'as at 5 July 2016'. The fact the document was provided to the plaintiff in August 2016, relatively proximate to the date of the list, is a relevant feature of the evidence which can assist the Court to draw appropriate inferences as to the genuine nature of the sales spreadsheet and the fact it was created in the course of the defendants' business.
2. The email is properly admitted as a business record. The price list falls within s 79C(2a) of the Evidence Act for the same reasons as Exhibit 87 above. The observations I have made above in relation to questions of weight and veracity in respect of that document apply equally to Exhibit 119.

Exhibit 134 - Email from Mr Ferrante to Mr White re Hocking Titles

1. This document consists of a series of emails from Mr Fred Ferrante of the Mammoth Group to Mr Brett White of Remax Extreme, a real estate agent. The emails passed between these persons (and others) in around May 2017 and June 2017. The subject matter is the Tuxedo Rise development. The substance of the emails purport to concern the delay in the finalisation of titles for the lots forming part of the development.[518]
2. The plaintiff objected to the document on the basis that none of the witnesses who have given or are to give evidence were copied into these emails and the relevance of the document was somewhat obscure (if it was relied upon for a non-hearsay purpose). The defendants assert the document is an internal communication of the defendants to their agent and is contemporaneous with [85] of the witness statement of Ms Bazzo filed in CIV 2283. The emails were said to be dealing with a concern about the delay in contracts with selling agents.
3. The tender of the document infringes the hearsay rule. That explains why the defendants sought to tender the document for a non‑hearsay purpose. That purpose was said to be to identify the contemporaneous communications between the agents and the defendant in respect of sales while they were dealing with the plaintiff in respect of the City of Wanneroo payment fees. As further explained, the defendants say the emails show there were communications between agents, that they were waiting on the Landgate clearance, and they were inquiring in relation to people who were purchasing the blocks, referring to it as a 'blockage'.
4. The view I formed was that the emails appeared to be relied upon for the truth of their contents (and that could be the only basis for tender), and as none of the senders or recipients of the emails were to be called, the contents of the emails was hearsay and should not be admitted. Thus the objection should be upheld. The information within the email appeared to form part of the defendants' counterclaim in the Hocking Proceeding, with the aspect of delay being a relevant feature of the claim, which needed to be proven by the defendants. The mere dispatch or receipt of the document was not a matter of relevance in the proceedings, so the purported limited basis for tender did not assist the defendants, in my view.
5. I therefore ruled the objection should be upheld. Even if the contents of the emails was relevant to any matter in issue, it was effectively and in substance being relied upon for the truth of its contents, and as the document was hearsay and not otherwise admissible, its tender should thus be rejected.

Exhibit 135 - Email from Mr Caratti to Mr Masel attaching price list

1. This document is similar in substance to Exhibit 119. It is an email from Mr Caratti to Mr Masel sent on 25 July 2017 attaching a price list for the Tuxedo Rise development, as at 25 July 2017. The fact the document was provided to the plaintiff on 25 July 2016, proximate to the date of the list, is a relevant feature of the evidence which can assist the Court to draw appropriate inferences as to the genuine nature of the price list and the fact it was created in the course of the defendants' business.
2. The email is properly admitted as a business record. The price list falls within s 79C(2a) of the Evidence Act for the same reasons as Exhibit 87 above.[519] The observations I have made above in relation to questions of weight and veracity in respect of that document apply equally to Exhibit 135.

Exhibit 137 - Emails from Mr Caratti to Mr Masel attaching construction costs

1. This document consists of an email from Mr Ferrante of the Mammoth Group to Mr Caratti sent on an unknown date, then onforwarded to Mr Masel on 26 July 2017. The subject matter is described as:

Lots 79 & 80 Nicholas Road, Hocking - Subdivision Construction Costs for Hinckley Pwy & Intersection with Majorca Elbow.

1. The email to Mr Masel includes a statement from Mr Caratti that he is attaching the claim under s 159 (of the Planning and Development Act 2005 (WA)), and goes on to say:

...of which they have to pay 50% of which is $875,000 payable after they get there [sic] titles It's a debt that I can claim from the subdivider.

1. The document is said by the defendants to relate to the counterclaim pleaded in [49(d)] of the Amended Defence and Counterclaim dated 6 February 2024.
2. There are two attached documents, consisting of a schedule of construction costs, very similar in nature to Exhibit 206, but relating to Hinckley Parkway and the intersection with Majorca Elbow, and a roadworks and drainage plan for Lot 79 of Nicholas Road.
3. An email exchange between Mr Ferrante and Mr Masel is also included as part of the exhibit, sent and received on 26 July 2017 attaching links to provisions of the legislation, which appears to then be forwarded to Mr Masel on the same date.
4. As with the other documents which attracted objections, discussed above, the construction costs schedule which forms part of Exhibit 137 was provided to the plaintiff by email at a time which was proximate to the creation of the document itself. This assists the Court to draw appropriate inferences as to the genuine nature of the schedule and the fact it was created in the course of the relevant business.
5. I formed the view the objection, based on hearsay and opinion, should be disallowed and the tender should be accepted, largely for the same reasons as with Exhibit 206. I concluded the document was capable of being tendered pursuant to s 79C(2a) of the Evidence on the basis that the statements in the document were derived from genuine business records maintained by the Mammoth Group. The observations I have made above in relation to questions of weight and veracity in respect of that Exhibit 206 apply equally to Exhibit 137.

1. Following a concern raised by counsel for the defendants after Mr Masel had completed his evidence, I raised with the parties whether any application might be made to recall Mr Masel to avoid any prejudice which may have been caused by reason of certain objections being held over during the course of his evidence.
2. The view I formed was that it was in the interests of justice to allow the parties to make an application to have Mr Masel recalled to give further evidence in chief or to be the subject of cross-examination (and any appropriate re-examination), to be confined to the matters and documents the subject of the evidentiary rulings made on 14 February 2024.
3. I made orders to this effect on 14 February 2024, as follows:

[4] By 5.00pm on Friday, 16 February 2024, any party shall file and serve any application to recall Steven Alick Masel to give evidence at the continued trial of these actions, such application to identify the grounds of the application and to be supported by an affidavit (and any such application to be confined to the matters and documents the subject of the Court's rulings given on 14 February 2024).

[5] In the event an application or applications are filed and served in accordance with order 4 above, any party opposing such an application is to give notice of that opposition (stating the grounds of that opposition) to the court and to the other party by no later than 5.00pm on Friday, 23 February 2024.

[6] Any application or applications filed and served in accordance with order 4 above will be heard and determined at the directions hearing on 1 March 2024.

1. As to the basis on which the grant of leave would be assessed in this regard, I drew the attention of the parties to the principles expressed by Gummow, Kirby and Callinan JJ in MWJ v R,[520] and by Gleeson CJ in R v Birks,[521] albeit in the criminal law context, as well as the discussion in Cross on Evidence (14th Edition) at [17460].
2. As matters transpired, no application was made by either party to recall Mr Masel.

Email from Steve Masel to Marian Mendoza, Subject: Fw Loan Statements

Tender not pressed by the plaintiff. No ruling required.

Schedule to Default Notice, dated 20 September 2018

Letter from Taylor Smart Lawyers to Byford Land Pty Ltd dated 31 May 2019

Letter from Tina Bazzo to Taylor Smart Lawyers, dated 7 June 2019

Copy Loan Statement titled Tina Bazzo (Hocking) - Mortgage 6.0M (with handwritten notes), dated 4 October 2021

Bundle of copies of letters and correspondence from Walthamstow Pty Ltd to Gucce Holdings Pty Ltd and Tina Bazzo re Mortgage

Plaintiff does not seek to tender this document. No ruling presently required.

Letter from Steve Masel to Daleside Pty Ltd, Mortimer Land Company Pty Ltd, 110 Nicholson Road Pty Ltd Tax Invoice dated 28 Feb 2007

Document produced on subpoena by Byford River Pty Ltd

Plaintiff does not seek to tender this document. No ruling presently required.

Document produced on subpoena by Byford River Pty Ltd

Plaintiff does not seek to tender this document. No ruling presently required.

Hocking Subdivision Construction Costs for Parma Lane

Within the direct knowledge of the witness and business record

The court's ruling is that the statements in the document are derived from a genuine business record within the terms of s 79C(2a). The court will provide its reasons in support of that ruling in its final decision.

Letter from Reliance Finance and Mortgage Services to Hocking Land Company Pty Ltd

Email from Allen Caratti to Steve Masel attaching valuation

Allen Caratti email to Steve Masel attaching City of Wanneroo invoice

No ruling required on the basis the author is being called as a witness.

Within the direct knowledge of the witness and business record

The court's ruling is that the statements in the document are derived from a genuine business record within the terms of s 79C(2a). The court will provide its reasons in support of that ruling in its final decision.

Relied upon for non-hearsay purpose the fact the document was provided

No ruling required, on the basis the document is not being relied upon for the truth of its contents.

No ruling required on the basis the author is being called as a witness.

Email from Tina Bazzo to Steve Masel attaching sales spreadsheet

The court's ruling is that the statements in the document are derived from a genuine business record within the terms of s 79C(2a). The court will provide its reasons in support of that ruling in its final decision.

Email from Tina Bazzo attaching invoice for legal advice

Document is no longer relied upon by the defendants.

No ruling required on the basis the defendants no longer rely upon the document.

Email from Fred Ferrante to Brett White re Hocking Titles

The court's ruling is that even if the document is relevant to matters in issue, as it is relied upon for the truth of its contents the document is hearsay and is not otherwise admissible. The court will provide its reasons in support of that ruling in its final decision.

Email Allen Caratti to Steve Masel attaching price list

Within the direct knowledge of the witness and business record

The court's ruling is that the statements in the document are derived from a genuine business record within the terms of s 79C(2a). The court will provide its reasons in support of that ruling in its final decision.

Emails from Allen Caratti to Steve Masel attaching construction costs

Within the direct knowledge of the witness, business record and non hearsay purpose as to communication sent

The court's ruling is that the statements in the document are derived from a genuine business record within the terms of s 79C(2a). The court will provide its reasons in support of that ruling in its final decision.

Copy of the valuation report for lot 35 Treeby Rd Anketell, dated 12 January 2018

Email from Allen Caratti to Steve Masel with Valuation Report for the Treeby Road property, prepared by CBRE Property Valuers

Valuation received under instruction from Jonathan Masel

No ruling required, on the basis the document is not being relied upon for the truth of its contents.

Relevance, provenance, description of document not admitted.

As the objection is not pressed, the defendant need not complete this row.

Admissible as a published statement, not as to the truth of its content.

Admissible as a published statement, not as to the truth of its content

Admissible as a published statement, not as to the truth of its content