Serobian v Commonwealth Bank of Australia [2010] NSWCA 181 | Case summary

Serobian v Commonwealth Bank of Australia [2010] NSWCA 181 | Case summary | Zoe

[18]

Factual circumstances 8 In 2004 the appellants were the shareholders and directors of Schypsl Pty Ltd ("Schypsl") and Refnok Pty Ltd ("Refnok"). Schypsl operated three child-care centres, owned properties at three other places and carried on a renovation business. Refnok conducted a real estate business. The appellants themselves owned a residential property at Manly and investment properties, including ones at Cranebrook and The Entrance. After earlier communications had occurred between the respondent and certain finance brokers, the appellants met with representatives of the respondent on 14 October 2004 to discuss the possibility of the respondent refinancing the substantial indebtedness that the appellants and Schypsl then had to St George Bank and to an organisation named Yes Home Loans. Following the meeting Mrs Serobian sent to the respondent valuations for the properties that would be offered as security. 9 A further meeting took place later in October 2004, probably on 25 October. There was widely divergent evidence as to what occurred at this meeting but it is at least clear that the parties moved substantially towards agreement upon the terms of facilities to be granted by the respondent to the appellants and to Schypsl. 10 Further communications between the parties led to the appellants, on behalf of themselves and Schypsl, signing on or about 19 November 2004 facility letters prepared by the respondent. At a later meeting of 13 December 2004 the appellants and their companies executed the following documents: "a mortgages by the Serobians in favour of the bank over The Entrance, Cranebrook and the Manly [properties]; b mortgages by Schypsl in favour of the bank over 3 - 5 Grandview Street, Parramatta and 3/22 - 26 Addison Road, Manly; c guarantees by Mr Serobian and Mrs Serobian for the debts of Schypsl and Refnok; d guarantees by Schypsl and Refnok for the debts of the Serobians; e declarations by Schypsl (signed by the Serobians as directors) and Refnok (signed by Mrs Serobian as director) that the companies were not controlled by public companies; f shareholders' resolutions by Schypsl and Refnok (each certified by Mr Serobian as secretary) resolving to enter into the transactions; g declarations of solvency by Schypsl and Refnok (signed by the Serobians as directors); and h acceptance of the letters dated 13 December 2004 to the Serobians and Schypsl respectively fixing the interest rates" (Judgment [115]). 11 The facilities granted to the appellants personally comprised one bill facility of $4,800,000 and another of $2,000,000. The securities provided included mortgages over the appellants' home at Manly and the properties owned by them at Cranebrook and The Entrance. The facility granted to Schypsl was for an amount of $4,500,000. 12 On 16 February 2005 the respondent granted Schypsl an overdraft facility of $150,000. The appellants agreed in writing to extend their guarantees to cover this facility. 13 In July 2006 the respondent granted Schypsl further facilities of $46,750 and $800,000. These facilities, together with the original $4,500,000 facility and the $150,000 overdraft facility of February 2005, brought Schypsl's total facilities to $5,496,750. The additional $800,000 facility related to the acquisition of a property at Ermington upon which Schypsl planned to operate a child-care centre. 14 In September 2006 the respondent granted to Schypsl a further facility of $950,000 and increased the earlier $800,000 facility to $1,600,000. The appellants signed consents to the extension of their guarantees to cover the new facilities. 15 A meeting occurred on 27 March 2007 between the appellants and representatives of the respondent. There was conflicting evidence as to whether there was discussion at this meeting about the possible grant by the respondent to Schypsl of an additional facility of $750,000. 16 In late March or early April 2007 the appellants sought an increase in Schypsl's overdraft facility from $150,000 to $650,000. Mr Chad Molenaar, an officer of the respondent, wrote on behalf of the respondent a letter dated 5 April 2007 approving the request on the basis that the facility was available only for three months and would be cleared through the sale of a child-care business owned by Schypsl at Hornsby. 17 After Mr Molenaar's departure from the service of the respondent on 10 April 2007, Mr Paul Tannock arranged for the overdraft facility to be made available. The date for its expiry was 11 July 2007. 18 A further meeting occurred between the appellants and representatives of the respondent on 21 May 2007. At that meeting the appellants said that they were entering into a joint venture to develop a golf course worth $100,000,000 and would require funding from the respondent to make their investment in the project. Mrs Serobian and her son Patrick gave evidence that there was also discussion at this meeting about the $750,000 facility that they said had previously been discussed with the respondent, including at the meeting of 27 March 2007 (see [15] above). 19 Inconclusive communications occurred between the appellants and the respondent in May and June 2007 concerning the proposed golf course development. 20 By letter of 21 June 2007, the respondent declined a request that the appellants had earlier made (presumably on behalf of Schypsl) to the respondent for an additional facility of $550,000 to establish a new child-care centre at Wamberal. 21 In June 2007 the appellants and respondent were in dispute as to whether the increase of $500,000 in the Schypsl overdraft facility granted for three months from April 2007 should be repaid upon its expiry in July 2007. Mrs Serobian and her son contended that the respondent had agreed to extend the facility if (as was the case) the Hornsby property had not been sold by the date of expiry. The respondent declined to extend this facility and to provide any further facilities to the appellants or their companies. By letter of 2 July 2007 it requested that the appellants refinance all existing facilities that the appellants and Schypsl had with the respondent. This did not occur and on 22 October 2007 the respondent appointed agents for sale of the Cranebrook, The Entrance and the Manly properties and on 10 December 2007 appointed receivers to Schypsl. 22 The respondent commenced the present proceedings on 6 December 2007.

[37]

Duties of represented litigant and its lawyers when opposed to unrepresented litigant 41 The respondent's pre-appeal-hearing Written Submissions dated 4 November 2009 were not of assistance to the Court in considering the appellants' earlier Written Submissions, to which they should have responded directly, because they did not refer to those submissions at all. These submissions of the respondent did little more than refer to the parts of the judgment below that were relevant to the appellants' grounds of appeal listed in their Notice of Appeal. Following a direction given by the Court at the hearing of the appeal on 3 March 2010, the respondent lodged Written Submissions dated 19 March 2010 that dealt specifically and in detail with the contents of the appellant's Written Submissions. 42 Submissions of this type should have been provided by the respondent at the outset, without the need for intervention by this Court. Section 56(3) of the Civil Procedure Act 2005 imposes an obligation upon parties to civil proceedings to assist the court to further the overriding purpose identified in s 56(1) of facilitating "the just, quick and cheap resolution of the real issues in the proceedings". Where, as here in the case of the respondent, a party is represented by competent and experienced lawyers and is opposed by litigants in person, the party and its lawyers have a duty to assist the court to understand and give full and fair consideration to the submissions of the litigants in person. In particular such a party must refer the court to evidence in the proceedings that is relevant to those submissions. This duty is accentuated where, again as here, the party is a substantial institution accustomed to litigating cases involving issues such as are involved in the present case, often against litigants in person. 43 In response to the respondent's Submissions of 19 March 2010, the appellants lodged further Written Submissions. These were organised by reference to the same subject headings as the appellants' Written Submissions in chief. I have taken them into account in forming the views set out below.

[39]

Medical Condition of Mrs Serobian 45 The appellants contended that the primary judge was in error in not finding that from May 2003 until mid 2005 Mrs Serobian was suffering from a serious medical condition that affected her ability to understand financial and legal matters, to read documents and to form judgments. Apart from simply asserting that the primary judge was in error in finding otherwise, the basis of the appellants' challenge to this finding was that the primary judge had erroneously rejected the appellants' tender of medical notes and had therefore failed to take them into account. The appellants' complaint related to documents that were annexure "A" to Mrs Serobian's affidavit of 20 March 2008. The judge did not give reasons for his rejection of the documents (Transcript p 9). 46 The first part of annexure "A" was a letter dated 2 July 2003 from a doctor at Northern Sydney Health stating that Mrs Serobian had "a long history of menorrhagia [excessive menstrual bleeding] - worse recen[tly]". The next part of the annexure comprised "Continuation Notes", relating to Mrs Serobian, of the Manly Hospital & Community Health Services. The Notes contained an entry dated 2 July 2003 referring to the Emergency Department and noting "irregular bleeding", "bleeding almost every day", "no pain" and "v. heavy bleeding today". There then appeared in the annexure a pathology test result dated 6 May 2005. The evidence did not explain how this test result assisted the appellants' case. 47 There then appeared in the annexure an "Emergency Department Assessment & Treatment Record" also dated 2 July 2003. This related to Mrs Serobian and was presumably another record of the Manly Hospital & Community Health Services. Relevantly, the record said: "[s]tates 1½ years PV Bleeding saw LMO 18/6/03 was to have pathology done but states didn't have time for this. Presents tonight for [elevated] Bleeding". 48 This material said nothing about Mrs Serobian's medical condition at the points of time relevant to these proceedings, namely, from late 2004 onwards. The material indicated that as at 2 July 2003 Mrs Serobian had a long history of menorrhagia and had a sufficiently serious episode of that condition to warrant her attending a hospital Emergency Department on that date. It did not deal with her condition 12 months later, nor did it indicate that even in mid 2003 Mrs Serobian's mental capacity and ability to protect her own financial interests, and that of her husband, were impaired by the condition that she had. In my view the primary judge was correct to reject the tender of the documents. They were not relevant to any fact in issue in the proceedings. 49 The remaining document in annexure "A" was a letter dated 19 March 2008 written by Dr N Jackson in the following terms: "To Whom it May Concern Re Mrs Christine Serobian Mrs Serobian has been a patient of this surgery since 2.5.2003. Mrs Serobian presented in several consultations with heavy bleeding, Dizzy spells & blackouts. Mrs Serobian had [on] off anaemia 2º to PV bleeding Mrs Serobian had Dysfunction Uterine bleeding that Responded on & off to Medical treatment. During the time she was unfit to work or drive. This medical condition has [emerged] between Mid 2003 until Mid 2005. Please feel free to contact me if needed" (Blue Appeal Book p 40). 50 This letter was not a contemporaneous record of treatment of, or advice given to, Mrs Serobian and it was not a business record admissible under the provisions of s 69 of the Evidence Act 1995. Rather, it was a letter written after the commencement of the proceedings making out-of-court assertions about Mrs Serobian's medical condition. As the letter was tendered to prove the truth of the assertions, these assertions were hearsay and the letter was rightly rejected by the primary judge in response to the objection of the respondent to its tender. If the letter had been admitted, it would not in any event have provided any support for the appellants' case as it did not assert that Mrs Serobian's abilities were impaired in the manner to which reference was made above. The statement that she was "unfit to work" did not, without more, indicate that she was unfit to participate in the isolated meetings that took place with the respondent, particularly as the statement was made in the context of a reference to Mrs Serobian responding "on & off to Medical treatment", suggesting that any unfitness for work was not necessarily a continuous one.

[40]

Attestation of the Manly mortgage 51 The primary judge held that the fact that the appellants' signatures on the Manly mortgage were witnessed by an officer of the respondent, Ms Sue Bell, did not invalidate the mortgage (see [24] above). The appellants' Written Submissions appear to put the appellants' challenge to this finding on two bases, first, that Ms Bell was not personally acquainted with the appellants and could not therefore be satisfied about their identity and, secondly, that Ms Bell was a party to the mortgage and for that reason could not witness it. 52 The factual foundation for the first basis of challenge did not however exist as there was no doubt on the evidence that, in connection with the contemplated facilities, Ms Bell had met with the appellants on at least two occasions before the date upon which the mortgage was signed and was accordingly capable of later identifying them. 53 As to the second basis of the challenge, Ms Bell, as distinct from her employer the respondent, was clearly not a party to the mortgage. In any event the submission could not succeed for the additional reason that Campbell JA gave in an interlocutory judgment in the present proceedings (Serobian v Commonwealth Bank of Australia [2009] NSWCA 309) as follows: "17 As well, the mortgage was in a form that was prescribed under the Real Property Act 1900. The legal requirement that a witness not be a party to a document that the Serobians had relied on was a requirement under s 38 Conveyancing Act 1919. That requirement applies to a deed. A Real Property Act dealing is not a deed. It has the effect of a deed once registered under s 36(11) Real Property Act but that does not make it a deed at the time of execution. Indeed there is a specific provision in s 36(1D) Real Property Act that gives the Registrar-General a discretion to refuse to accept for registration a dealing that is not attested by a person who is [not] a party to the dealing. That the Registrar-General has such a discretion is inconsistent with a dealing witnessed in that fashion being void from the outset". 54 These observations also point to a further ground for rejection of the first basis of challenge. Section 117(1)(b)(i) of the Real Property Act 1900 specifically gives the Registrar-General a discretion to refuse to accept for registration a dealing that does not bear a certificate by a witness to the execution of the dealing that the witness "is personally acquainted with, or is otherwise satisfied as to the identity of, the person to whose execution of the … dealing … the witness is attesting". The existence of such a discretion is inconsistent with the proposition that the dealing is void if the execution of it is not witnessed by persons who can identify the persons executing the dealing. 55 The appellants contended that the reason Ms Bell witnessed their signatures was "so [that] we can't obtain legal advice" (Written Submissions, Orange Appeal Book p 31). Even if this were so, it would not assist the appellants' submission that is presently under consideration. Furthermore, the primary judge's finding that the appellants were offered the opportunity to obtain legal advice (see [27(c)] above) is not the subject of a separate challenge on appeal. To the extent that the contention quoted at the beginning of this paragraph constituted such a challenge it must be rejected because the appellants did not identify any basis for interfering with the judge's finding.

[41]

The respondent's lending procedures 56 The appellants made multifarious submissions under this heading. Some repeated submissions that the appellants made elsewhere and that are dealt with under other headings in this Judgment. Others, such as "Always rush documents" and "Poor customer service", are mere assertions of such a generalised nature that without further specification and elaboration could not possibly assist the appellants' case. The submissions that warrant mention are as follows. 57 The submission that the respondent "debited, deposited our account without our permission" was sought to be supported by references to evidence that in fact provides no support to such a proposition. In the main, those references were to bank statements. The appellants did not identify any basis for concluding that any of the entries in those statements were unauthorised. 58 One of the matters of which the appellants complain is of the respondent allegedly "[f]orging signatures". However there was no issue at first instance about the forgery of any signatures. The primary judge said that a contention that Mr Serobian's signature on the Consent and Acknowledgement to Extension of Guarantee dated 13 July 2006 was forged had been foreshadowed at the hearing below but that the "proper report" that the appellants foreshadowed would be provided to support such a contention did not materialise (Judgment [440]). In any event, in his affidavit of 27 March 2008, Mr Serobian admitted signing the document (Blue Appeal Book pp 197 - 198). 59 Secondly, the appellants referred to an internal document of the respondent of 19 March 2005 stating that Schypsl's capacity to repay was poor (Blue Appeal Book p 1052). This statement appeared in the document in the context of a description of Schypsl's profit record as being good, its asset position as being satisfactory and its cash flow as being good. Without any explanation from the appellants as to how the document might assist their case, I do not consider that the document is of any significance. 60 Thirdly, the appellants submitted that "[s]taff [of the respondent] prepared fraudulent documents" (Orange Appeal Book p 32). One of the documents referred to by the appellants is the letter dated 16 December 2004, apparently from Mrs Serobian to Ms Bell, (Blue Appeal Book p 995, mistakenly referred to by the appellants as p 515), which is dealt with below at [105] - [109] of this Judgment. 61 The other documents are copies of Acceptance Documents that the appellants signed, either on their own behalf or on behalf of Schypsl, in late 2004 accepting facilities offered by the respondent to them or Schypsl. As Mrs Serobian explained at the hearing of the appeal, the appellants' point here relates to the fact that the copy of the Acceptance Document at Blue Appeal Book p 1006 contains a "Business Purpose Declaration" whereas a copy bearing an earlier date does not. 62 The former document bears the signatures of the appellants, is dated 16 December 2004 and relates to the facilities granted to them personally. The Business Purpose Declaration says: "I/We declare that each of the credit facilities referred to in this Acceptance Document is to be applied wholly or predominantly for business or investment purposes (or for both purposes)". 63 The latter document, a form of Acceptance Document relating to the same facilities, signed by the appellants and dated 18 November 2004 does not contain such a Business Purpose Declaration (Blue Appeal Book p 794). The presence in the former document of the Business Purpose Declaration is not surprising in light of the fact that the facilities for $4,800,000 and $2,000,000, the subject matter of the Acceptance Documents now in question, that the appellants and respondent agreed would be made available to the appellants were each entitled "BetterBusiness Bill Facility". 64 According to the respondent's case, the Acceptance Document dated 16 December 2004 formed part of a 16 page facsimile dated 16 December 2004 that Mrs Serobian sent to Ms Bell. The appellants contended that the respondent fraudulently altered the Acceptance Document, after the appellants signed it, to insert the Business Purpose Declaration. The appellants' argument on appeal that this document, as distinct from one in a similar form relating to the Schypsl facility, that also formed part of the 16 page facsimile, had been altered by the respondent appears to be a new one that was not put to the primary judge. 65 The primary judge rejected the proposition that the respondent had altered the Schypsl Acceptance Document relating to the Schypsl facilitiy and it was clearly implicit in his findings that the facsimile in the form that it was tendered (Exhibit Q in the proceedings) was sent by Mrs Serobian and had not been altered by the respondent (see Judgment [431] - [432]). The appellants have not advanced any credible reason for concluding that the Acceptance Document relating to the facilities to be granted to them personally was altered by the respondent or, indeed, for permitting them to raise, for the first time on appeal, this highly contentious factual issue. Nor, I add, have they advanced any credible reason for concluding that the judge's conclusions in [431] - [432] of his judgment were flawed. 66 For these reasons the submissions made by the appellants under this heading should be rejected.

[42]

The appellants' $2,000,000 facility (December 2004) 67 The primary judge rejected the appellants' contention that the respondent had agreed that this facility would be granted to Schypsl, rather than to the appellants, and that the respondent represented that the appellants could draw the facility down fully at settlement (see [25(a)] above). The judge's conclusions were based partly upon his credit findings and partly upon what he regarded as substantial objective evidence inconsistent with the appellants' contentions and evidence (see [26] above). 68 In these circumstances, the appellants have a high hurdle to surmount to challenge successfully the judge's conclusions. To succeed, they need to demonstrate that the judge's conclusions are inconsistent with "incontrovertible facts or uncontested testimony" or are "glaringly improbable" or "contrary to compelling inferences" (Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [28] - [29]). 69 The principal matter the appellants relied upon in this context was evidence given by Ms Kerry Small, an officer of the respondent, at Transcript p 264 lines 42 - 45 and p 280 line 31. 70 The passage at page 264 (which actually commences at line 39 and concludes at page 265 line 9) is in the following terms: "Q. Inevitably the $2 million line of credit that was discussed at the meeting of 22 October 2004 was not approved, was it? A. The $2 million line of credit was approved, yes. Q. Was it your understanding that Christine Serobian wanted the $2 million available on settlement? A. She wanted to be able to draw it immediately upon settlement, yes. Q. But that didn't happen, did it? A. No, that wasn't how it was established. Q. I put to you that Christine said to you she wanted $2 million available on settlement. Do you agree with that? A. She wanted to be able to access the $2 million line of credit when she wanted to and we had conditions of funding associated with that that had to be complied with. Q. But you didn't tell her that at the meeting of 22 October 2004, did you? A. Yes, we did. It was in the approval letter and Susan Bell went through the approval letter in great detail". 71 The passage in which line 31 on page 280 of the Transcript appears is as follows: "Q. You say in paragraph 18 of your affidavit, that's on page 5, that you observed Susan Bell opening each page of the approval letter and pointing out and explaining the terms. I put it to you that that did not happen? A. No, it did happen. Q. Did Mr or Mrs Serobian ask Susan Bell any questions about it? A. Yes, there were questions asked about the conditions of the approval, specifically about the drawdown under the $2 million line of credit. Q. Did you not tell her that that would be available to her when she wanted it on settlement? A. No, we did not. There were specific conditions that had to be complied with in order to enable drawdowns under that facility. Q. See, the bank placed very onerous conditions on that line of credit, didn't they? A. We had specific conditions that had to be met. Q. And it is not what Mr and Mrs Serobian wanted at the time, is it? A. No, they wanted to access at will. We wanted to make sure it was being utilised for business purposes" (lines 14-34). 72 Ms Small did not in these parts of her evidence, or elsewhere, make any concession that is inconsistent with the relevant conclusions that the primary judge reached. Her evidence is consistent with those conclusions and does not provide any basis for regarding the judge's conclusions as contrary to "uncontested testimony" or open to challenge upon one of the other bases to which the decision in Fox v Percy refers. 73 None of the other Transcript references to which the appellants referred in their Written Submissions provides any greater assistance to them. One of the references to the Transcript is to an interchange between the primary judge and counsel for the respondent. His Honour did not in that passage express any concluded view, much less one that would assist the appellants' argument. 74 Subject to the above, the appellants' submissions on this topic constituted no more than assertions of error on the judge's part and did not provide any basis for a challenge to the judge's conclusions consistent with the principles in Fox v Percy. 75 The submissions of the appellants under this heading must accordingly be rejected.

[43]

The evidence of Ms Sue Bell 76 In their Written Submissions (Orange Appeal Book pp 36 - 37), the appellants challenged the primary judge's acceptance of the evidence of Ms Sue Bell. There are many paragraphs of his Honour's judgment in which he accepts Ms Bell's evidence. They relate to her evidence on specific matters (by way of example only, see: [377], [408] and [419]). 77 To support their challenge, the appellants first submitted that, contrary to the primary judge's finding, Ms Bell was aware of an inability of Mr Serobian to understand sufficiently and read English. The only matter they relied upon in this respect was evidence of Ms Bell that after an Acceptance Document signed by the appellants was "dropped into" her at the respondent's Hurstville office, she filled in Mr Serobian's name and address below his signature in the spaces that the printed form indicated should contain such information. This evidence did not in my view demonstrate awareness of Ms Bell of any deficiency in Mr Serobian's English. 78 The appellants further submitted that, contrary to the evidence of Ms Bell, they did not at any time "drop" any papers into the Hurstville office and that Mr Serobian had not at any time spoken to Ms Bell about anything except to say "Hello! Goodbye! Sign here!". They did not however provide any basis, other than mere assertions, for setting aside the judge's contrary findings. They gave some references to the evidence but they were to two passages in Ms Bell's evidence that are inconsistent with the appellants' submissions. 79 The other submission the appellants made under this heading was that the respondent "started working on our file in August/2004 without a signed application, or any mandate signed". This was a reference to the fact that the first contact that was made with the respondent in relation to the appellants' finance requirements was an approach by Mr Kiem Dinh, of Amadaeus Mortgage Management, a finance broker. The judge said that the evidence did not reveal how Mr Dinh became involved but that it was possible that this occurred through another finance broker, Mr Jim Bosch of United Mortgage Pty Ltd, whom the appellants engaged sometime in mid 2004. 80 How Mr Dinh first became involved is not in my view of significance because on 11 October 2004 the appellants signed a formal finance broking agreement with Amadaeus Mortgage Management (Judgment [31]). This was submitted to the respondent well before the meeting of 25 October 2004, the subsequent further negotiations and the conclusion of the facility arrangements in December 2004. In light of these undoubted facts, the appellants' submission that "[t]he broker Mr Dinh who was well known to Hurstville branch organised our loans without our awareness" cannot be accepted. Substantial negotiations for, and the conclusion of, the facility arrangements occurred well after the date that the evidence established that the appellants authorised Mr Dinh to act on their behalf.

[45]

Mr Serobian's English 85 The primary judge reached the following conclusion concerning Mr Serobian's English language skills: "I do not accept that Mr Serobian has anything approaching a near complete inability to understand English and I reject the evidence of the Serobians and Patrick to the contrary as being untruthful" (Judgment [407]). 86 The reasons that his Honour gave for this conclusion were extensive. They included reference to his Honour's observations of Mr Serobian in the witness box and the inconsistency his Honour perceived between the evidence on this topic of the appellants and that of other witnesses. The judge also referred to evidence that Mr Serobian gave under oath before the Deputy Registrar on 21 December 2008. Mr Serobian's evidence included the following: "Q. Mr Serobian, do you speak English? A. INTERPRETER: Yes. He said, I've been here 30 years. I speak 30%, 40% with my family and in the business. Q. Is it correct that you understand the questions but feel more comfortable in giving your answer in the Armenian language? A. INTERPRETER: That's the truth" (Blue Appeal Book p 1798). 87 The appellants submitted that the following extract from Mr Serobian's cross-examination "proves that he does not understand the word naturalised … but when it is put in basic words he answers. So he is being truthful about his English" (Orange Appeal Book p 39): "Q. You are naturalised Australian citizen, aren't you? A. No. Q. You deny that you are a naturalised Australian citizen, do you? A. Australia? Q. You are an Australian citizen, aren't you? A. Yes" (Transcript p 223, which is to some extent inaccurately recorded in the appellants' Written Submissions). 88 The next question and answer were as follows: "HIS HONOUR Q. When did you become a citizen, what year? A. 1979" (Transcript pp 223 - 224). 89 This evidence does not indicate that, as the appellants contended, Mr Serobian had something "approaching a near complete inability to understand English" (Judgment [407]). On the contrary it is consistent with his Honour's conclusion. 90 The appellants submitted that the primary judge's reliance on the evidence that Mr Serobian gave before the Deputy Registrar on 21 December 2007 was misplaced because the Transcript of the hearing before the Deputy Registrar did not record that at the commencement of Mr Serobian's evidence, the interpreter said that the process of translation "might be slow because we speak [a] different dialect [of] Armenian and it's hard to understand" (Orange Appeal Book p 39P). There was no basis in the evidence before the primary judge for concluding that such a comment was made. Even if it was, the appellants have not provided any adequate reason for concluding that any difference in dialect between Mr Serobian and the interpreter was of significance. Indeed, as his Honour noted, the same interpreter who was used before the Deputy Registrar was employed by the appellants to translate Mr Serobian's affidavits that were read in the present proceedings (Judgment [403]). 91 The appellants also submitted that the primary judge was in error in not having regard to a "medical certificate" indicating that Mr Serobian was "very unwell" when he gave his evidence before him. This appears to have been a reference to an Exercise ECG Report of Peninsula Cardiology Centre Pty Ltd annexed to Mr Serobian's affidavit of 27 March 2008. In the body of the affidavit Mr Serobian referred to this report as indicating his "high stress levels" ([23]). This portion of the affidavit (together, by implication, with the annexure) was rejected by the primary judge (Transcript p 12) and the appellants do not challenge that rejection. In any event there does not appear to have been any error in the judge's rejection of the evidence. The Exercise ECG Report did not prove that Mr Serobian had any medical condition that, if taken into account by his Honour, could reasonably have affected his Honour's assessment of Mr Serobian's evidence. 92 The appellants' other submissions under this heading do not point to any matter that could arguably provide a basis for a challenge, consistent with the principles in Fox v Percy, to the primary judge's findings.

[46]

The $750,000 loan 93 In their Cross Summons the appellants alleged that at a meeting on or about 28 March 2007 Mr Molenaar on behalf of the respondent advised Mrs Serobian acting "on behalf of Schypsl" that the respondent "would advance a further $750,000 to Schypsl" (Red Appeal Book p 21M - N) and that despite subsequent requests for the advance it was not made. Consistent with this allegation, Mrs Serobian gave evidence that she communicated to Mr Molenaar "our company's [that is, Schypsl's] desire to acquire an advance of $750,000.00 for general business use" (Blue Appeal Book p 17G - H). 94 The effect of the primary judge's findings relevant to this issue appears to be that there was no discussion between the parties as to the respondent providing a facility of $750,000, or at least no serious consideration by the respondent of that occurring (Judgment [449] - [451], [453] - [455]: see [30] above). The judge preferred the evidence of Mr Molenaar to that of Mrs Serobian and Patrick Serobian in relation to the parties' dealings after the grant of the September 2006 facilities (Judgment [449]). This evidence included evidence concerning the discussion that the appellants alleged occurred in March 2007 about a further advance of $750,000. Mr Molenaar denied that the appellants made any request to him for a further facility of $750,000 of the type to which Mrs Serobian referred, that is, one for "general business use" (Blue Appeal Book p 425F-S). 95 The appellants relied upon the following evidence of Mr Molenaar in cross-examination: "Q. Are you saying you had no involvement at all or recollection at all with respect to the $750,000 facility? A. I remember there was originally a $750,000 facility but I don't specifically recall any $750,000 for general business use. Q. Do you deny that you had face-to-face meetings with Christine Serobian in relation to a request for $750,000 made to you in 2007? A. I don't recall meeting her in relation to $750,000. I don't remember it at this point in time, no. Q. You are not denying it could have happened but rather you can't remember that it happened? A. That's correct. I have no recollection of the $750,000 facility for general business use" (Transcript pp 371 - 372). 96 This evidence is not in conflict with his Honour's findings. 97 The appellants also relied upon the following evidence that Mr Hill, an officer of the respondent who commenced working at its Wollongong branch in April 2007, gave in cross-examination: "Q. Did at some point after you started working at Wollongong, did you receive a telephone call from Christine Serobian asking you what happened to the loan of $750,000? A. I have a vague recollection that Christine Serobian made a phone call. However, I would not discuss any detail of any loans, given that I have no responsibility over that business or the clients within that business" (Transcript p 401). 98 The solicitor who appeared for the appellants at the trial then suggested to Mr Hill that Mrs Serobian had requested Mr Hill to speak to someone at the Hurstville branch of the respondent about a $750,000 loan (Transcript p 401). Mr Hill said that this was incorrect. 99 This evidence that Mr Hill gave is in my view again not in conflict with the judge's conclusions. 100 The appellants also relied upon the following evidence that Ms Karen Carter, an officer of the respondent, gave in cross-examination: "Q. Is it the case that at any time in or around 2007 you were informed by Mr Paul Tannock that the Serobians had requested a loan for $750,000? A. Yes. Q. To the best of your recollection did you see an approval to the Serobians for an amount of $750,000 in or around 2007? A. No, I don't recall that" (Transcript p 426). 101 Ms Carter became the respondent's Regional Executive Manager for Sydney South in March 2007. This was a senior position. In her affidavit Ms Carter deposed to conversations with Mrs Serobian in April 2007 concerning complaints Mrs Serobian made about delay on the part of the respondent in providing the $500,000 temporary increase to Schypsl's overdraft referred to in [16] - [17] above. She also gave evidence of a meeting of 21 May 2007 (mistakenly referred to as 2008) at which she was present and there was reference to the application made for the advance of $550,000 to establish a child-care centre at Wamberal (see [20] above). 102 Ms Carter's affidavit did not refer to any discussion concerning a new facility of $750,000 for general business use and it is tolerably clear from the following further extract from her cross-examination that in agreeing earlier in her cross-examination that there had been a request for a loan for $750,000 (see [100] above) she had actually been referring to the request for a facility of $550,000 to establish a child-care centre at Wamberal: "Q. Please go to paragraph 12 of your affidavit. It commences on the bottom of page 3 and goes over to page 4. With respect to this paragraph 12 at page 3 and 4, do you refer to the customer's request of a new line of credit in the amount of $750,000? A. I remember a $550,000 request. Q. I put it to you it was a request for $750,000, do you agree with that or disagree with that-- A. My recollection is 550. Q. Were you aware that an application for finance in the amount of $750,000 was provided to Mr Chad Molenaar? A. I don't recall - did you say 550-- Q. 750? A. No, I don't recall a $750,000 amount. Q. Is it your evidence that an application for finance for $550,000 was received by Chad Molenaar? A. I am not sure if it was received by Chad or by Paul. I believe Chad's request was a temporary excess for $500,000 which was to be cleared by the sale of a child care centre in North Sydney or in the north part, but I don't recall him being involved in the Wamberal" (Transcript p 428). 103 I do not consider that Ms Carter's evidence constitutes a compelling indication (compare Fox v Percy (see [68] above)) that the appellants requested, and the respondent considered (let alone agreed to), a new facility for $750,000 for general business use. 104 The appellants also contended under this heading that officers of the respondent "discriminated [against] us as for our race" by ignoring the appellants' telephone calls. The evidence did not provide any basis for a conclusion that, to the extent that telephone calls were not returned, this occurred because of the appellants' race. In any event substantiating their allegation would not have assisted the appellants on this issue as they have not surmounted the threshold of establishing that the respondent agreed to provide, or at least represented that it would provide, an additional facility of $750,000.

[47]

The Schypsl letter of 16 December 2004 105 There was in evidence a form of letter dated 16 December 2004 from Schypsl to the respondent with the name (but not the signature) of Mrs Serobian at its conclusion. The letter stated that Schypsl's total expenditure on improvements to four child-care centres had been $727,000. The letter gave a breakdown of that expenditure. 106 On appeal the appellants repeated the submission that they made at first instance that Mrs Serobian did not send the letter and that it was prepared by an officer of the respondent. The primary judge described Mrs Serobian's evidence to this effect as "fantastic" (Judgment [431]). The judge found that the letter was part of the facsimile dated 16 December 2004 sent by Mrs Serobian to the respondent (see [64] - [65] above). That finding was contrary to the evidence of Mrs Serobian but was supported by the notations concerning transmission that were on this copy letter and other pages of the fax. These notations were substantially the same, suggesting each page formed part of the one facsimile. 107 According to the case of the respondent, the reason for the submission of the letter was that, as the date approached in December 2004 for advances to be made under the facilities that had been offered to the appellants, the respondent ascertained that the appellants would have insufficient funds to pay-out the appellants' retiring lenders, that is, St George Bank and Yes Home Loans, unless the $2,000,000 facility was partially used for that purpose (Judgment [139]). Because the existing arrangement in relation to the $2,000,000 facility (see [11] above) was that the "funds [were] to be utilised for purchase of an income producing business asset" (quoted in Judgment [96]), the respondent apparently thought it necessary for the appellants to provide a letter confirming that an amount approximating the amount to be drawn under the $2,000,000 facility to complete the pay-out of the previous lenders had been spent in improving the child-care centres conducted by Schypsl over which the respondent had security. 108 On appeal the appellants submitted that if Mrs Serobian had sent the letter, the respondent "would have told [her] it's a lie, because the bank knew that this is a shortfall of settlement the letter states it for established new businesses" [sic] (Orange Appeal Book 41V - W). It seems that the appellants intended this to be a submission that, according to the facility documents, the $2,000,000 facility was to be used for the "purchase of an income producing business asset" (see [107] above) and expenditure on improvement of an existing asset did not constitute this. Whether or not it is correct to draw that distinction, it is clear that even on the appellant's case (that is, that the respondent created the letter) that the respondent accepted the letter as justification for allowing the appellants to draw on the $2,000,000 facility to assist in the pay-out of the outgoing lenders. That drawing was duly made and the appellants do not contend that they did not receive the benefit of it. Moreover the appellants have not provided any reason for this Court to conclude that the judge's decision as to authorship of the letter was wrong. 109 In these circumstances the issue about who created the letter seems to relate only to questions of credit and not to any issue in the proceedings. As his Honour's conclusion about the letter formed only a limited part of the large number of matters regarded by his Honour as relevant to credit, a successful challenge to that conclusion would not in my view have undermined his Honour's general findings as to credit.

[53]

The increase of $500,000 in Schypsl's overdraft facility 123 In April 2007 the respondent granted to Schypsl a $500,000 increase in its overdraft facility (see [16] - [17] above). The respondent's letter of 5 April 2007 advising of the grant of that facility stated that it was a condition of the increase that, to the extent that the $500,000 was drawn down, it be repaid after three months from the proceeds of sale of Schypsl's Hornsby child-care business. The judge implicitly found that Schypsl was obliged to repay the facility after three months notwithstanding that the Hornsby child-care centre had not by then been sold (Judgment [449], [452]). The appellants submitted on appeal that the primary judge however failed to take into account oral representations that were made to them as representatives of Schypsl concerning the term of this increase in the facility and its extension. 124 Mrs Serobian's affidavit evidence was that, prior to the grant of the increase in the facility, Mr Molenaar told her that the Credit Department of the respondent required a condition that the increase of $500,000, if drawn, be repaid within three months. Her evidence was that she said that she was not happy about that and that Mr Molenaar responded with words to the effect of: "Do not worry about it. This is just to keep the credit guys happy and when it comes to repayment time, we will extend it and fix it up" (affidavit of 20 March 2008 [43]); see also affidavit of 31 July 2008 [10]). 125 Mrs Serobian also gave evidence by affidavit about a statement made to her by Mr Tannock on behalf of the respondent prior to the increase being agreed upon. During April 2007 Mr Tannock took over Mr Molenaar's role with the respondent (see [17] above). Mr Tannock met with the appellants and Patrick Serobian in that month to have them sign a document relating to the $500,000 overdraft facility increase. Mrs Serobian's evidence was that after Patrick queried the requirement to repay after three months and also a prohibition in the documentation against Schypsl borrowing more than $300,000, she complained about the two restrictions. She said that Mr Tannock responded with words to the effect: "Do not worry about this, we can extend it later, this is just a formality" (affidavit of 20 March 2008 [44]). 126 Mr Molenaar denied the statement attributed to him (affidavit of December 2008 [82]). In response to the relevant part of Mrs Serobian's affidavit, Mr Tannock confirmed that what occurred when he met the appellants and Patrick Serobian was as he had described earlier in his affidavit (affidavit of 9 December 2008 [15] - [16]). That earlier evidence was that in response to a question from Mrs Serobian about what would happen "in three months time if we haven't sold Hornsby", he said words to the effect: "Within three months I will have had time to complete the assessment of your group and understand the financials and cashflows. Assuming everything is satisfactory we can either extend the time to sell Hornsby or look to put further formal arrangements in place if need be. We will need to discuss this further" (affidavit of 9 December 2008 [13]). 127 After referring earlier to Mrs Serobian's evidence of the statements that Mr Molenaar and Mr Tannock made (Judgment [250] and [260]), the primary judge expressed the following conclusions relevant to the increase of $500,000 in the overdraft facility (doing so under the heading in his judgment of "Dealings up to the 21 May 2007 meeting including the temporary excess of $500,000"): "449 I prefer the evidence of Chad Molenaar, Mark Hill and Paul Tannock to that of Mrs Serobian and Patrick with regard to the parties' dealings after the September 2006 facilities. Mark Hill and Paul Tannock were unshaken in cross examination . … 452 Although I consider that it might be thought to have been true to form for Chad Molenaar to have told Mrs Serobian not to worry about the three months repayment condition of the temporary excess facility, his letter of 5 April 2007 clearly stipulated that it was a 90 day facility to be cleared through the sale of the Hornsby centre. This condition was further specified in his letter to Schypsl dated 10 April 2007". 128 With respect, I consider that there is a difficulty with this finding of his Honour concerning Mr Molenaar's alleged statement. His Honour did not find whether Mr Molenaar made the statement attributed to him, although it is plain that his Honour thought that it was possible that Mr Molenaar might have done so. The judge stopped short of making a finding about that because, as I interpret [452] of his judgment, he took the view that the clear stipulation in the letter of 5 April 2007 (reiterated in the letter from the respondent of 10 April 2007) as to the 90 day term of the facility (referred to in the letters as a 3 month term) and the requirement that it be cleared through the sale of the Hornsby child-care centre automatically negated the effect of any such statement made orally by Mr Molenaar. The judge seems to have reached this conclusion without considering the possibility that the oral and written statements could stand together or that when the relationship and communications between the appellants and the respondent were looked at as a whole, the oral statement should be regarded as taking precedence. 129 The statement that Mrs Serobian attributed to Mr Molenaar arguably represented that the respondent would later extend the time for repayment beyond three months. This was not necessarily inconsistent with the written condition that the facility be repaid after three months. In any event, the primary judge should have considered whether reasonable persons in the appellants' position would have been justified in relying upon any such oral assurance notwithstanding the existence of the written condition (see Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 at [39], [152]; Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 at [25] - [29] and Italform Pty Ltd v Sangain Pty Ltd [2009] NSWCA 427 at [30] - [37]). 130 The primary judge also did not make any express finding as to whether Mr Tannock made the statement that Mrs Serobian attributed to him, although the judge did say, as he did in connection with Mr Molenaar's evidence, that he preferred Mr Tannock's evidence to that of Mrs Serobian and Patrick in relation to the parties' dealings in the period in which the statement was alleged to have been made (see [127] above). As with the statement attributed to Mr Molenaar, the primary judge in my view needed to find whether Mr Tannock made the statement that Mrs Serobian attributed to him, whether that statement, if made, amounted to a representation by the respondent that the facility would be extended after three months and whether reasonable people in the position of the appellants would have been justified in relying upon the statement notwithstanding what the respondent communicated to them in writing. 131 It could be argued that the primary judge's expressed general preference for the evidence of Mr Molenaar and Mr Tannock over that of Mrs Serobian (see Judgment [449] quoted in [127] above) should be treated as a finding that Mr Molenaar and Mr Tannock did not make the particular statements which were attributed to them by Mrs Serobian and that are now under consideration. 132 For two reasons I would not accept this argument. First, the primary judge's expressed general preference related to a number of dealings over a period of more than eight months and did not involve any specific consideration of whether the particular statements in question were made. Secondly, the opening words of paragraph [452] of the Judgment (see [127] above) suggest that, if the judge had considered it necessary to consider the question, he might have concluded that Mr Molenaar made the relevant statement. 133 Other findings that would have become necessary to be made if the issues referred to in [128] - [129] above had been resolved favourably to the appellants, would have been whether the appellants in fact relied upon the oral statements and what difference, if any, any such reliance made to the events that occurred. 134 A complication from the appellants' point of view is that the respondent made the alleged representations to the appellants as representatives of Schypsl and in relation to a facility to be granted to Schypsl, yet Schypsl is not a party to the proceedings. This may not have been a fatal problem for the appellants' case if they had been able to lead evidence that they personally relied upon the alleged representations, and were prejudiced by so doing. After all, they had guaranteed Schypsl's obligations to the respondent. 135 Another possible difficulty for the appellants would have been that, unlike the representation attributed to Mr Molenaar, the representation attributed to Mr Tannock was not pleaded in the appellants' Cross Summons. Again this difficulty would not necessarily have been fatal to the appellants' case as the relevant issue may have been litigated, notwithstanding that it was not pleaded. I note in this respect that the respondent did not contend in its Written Submissions that it was not open to the appellants to rely upon that alleged statement. 136 This Court is not in a position itself to determine whether the alleged representations were made, as that issue turns very much upon the credibility of the witnesses who gave evidence concerning them. 137 In these circumstances, the question arises of whether this Court should order a retrial in relation to the appellants' case concerning the statements attributed by Mrs Serobian to Mr Molenaar and Mr Tannock. The Court may only order a new trial if it appears to the Court that "some substantial wrong or miscarriage" has been occasioned by an error that it has identified (Uniform Civil Procedure Rules r 51.53(1)). 138 This condition is not in my view satisfied here as the appellants did not refer this Court to any evidence that was before the primary judge indicating that the appellants acted to their detriment in, or suffered any loss or damage as a result of their, reliance upon the alleged representations. 139 In its Further Written Submissions dated 19 March 2010 the respondent, in dealing with the alleged representations presently under consideration, contended that the appellants did not lead any evidence of, or prove any, loss or damage (expressed as "no loss of damage was led or proved" [sic]: at [16.12]). The appellants did not in their written response to these submissions (or elsewhere) refer the Court to any evidence to this effect. 140 Evidence of this character is essential in a case such as the present where conduct is alleged to have been misleading or deceptive and to entitle the claimant to relief under the Trade Practices Act or Fair Trading Act. As McHugh, Hayne and Callinan JJ observed in Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 474 at 514 [48]: "A party that is misled suffers no prejudice or disadvantage unless it is shown that that party could have acted in some other way (or refrained from acting in some way) which would have been of greater benefit or less detriment to it than the course in fact adopted". 141 In these circumstances it cannot be concluded that the appellants have suffered any "substantial wrong or miscarriage" (see [137] above) as a result of the errors that I have identified above (see [128] - [130]) because, even if the primary judge had found that Mr Molenaar and Mr Tannock made the statements attributed to them by Mrs Serobian, the appellants' case based upon those statements would have failed. 142 I should add that in her affidavit of 20 March 2008 Mrs Serobian said that "had [the respondent's representatives] told us three months ago that we were not being approved for … these excess funds" [apparently a reference to the respondent failing to indicate in April 2007 that the three month term for the additional $500,000 overdraft for Schypsl would not be extended] "we could have approached alternative lenders for the funds for use in our business" ([58]). 143 The primary judge rejected this evidence (Transcript p 9) and the appellants do not challenge that rejection. However, even if the evidence had been admitted, it would not in my view have assisted the appellants as it did not say anything as to what the appellants would, as opposed to could, have done in the eventuality referred to, nor did it provide any basis for a conclusion that steps to obtain alternative finance would, or even might, have been successful.

[56]

The cause of default 149 One of the submissions that the appellants made under this heading (which was in fact concerned with the realisation of security rather than the cause of default) was that "[w]e had a written offer from a buyer for 1B Magarra Place Seaforth [a property that was the subject of a mortgage by Schypsl in favour of the respondent] for $1,700,000. Sarah Hall refused [the offer] and she sold it through her contacts for $900,000 [and] made a loss of $800,000" (Orange Appeal Book p 48J - K). This matter was not pleaded by the appellants in their Cross Summons, was not the subject of any findings by the primary judge and is not referred to in the appellants' Notice of Appeal. 150 Mrs Serobian's supplementary affidavit of 8 August 2008 referred to this topic (Blue Appeal Book p 185) but the primary judge rejected that paragraph, apparently on the grounds of relevance (Transcript p 20S). Immediately after the rejection of that and other parts of that affidavit, the solicitor for the appellants informed the Court that the appellants might apply to amend their Defence in a manner that would have a bearing upon the admission of that evidence (Transcript p 21C). It does not appear that any such application was made. 151 Notwithstanding the rejection of paragraph [4] of Mrs Serobian's affidavit of 8 August 2008, the respondent read paragraph [41] of Ms Sarah Hall's affidavit, which replied to that paragraph. Ms Hall's evidence does not assist the appellants as it relevantly says no more than that Mrs Serobian informed Ms Hall that "she had found a purchaser" for the Seaforth property and that Ms Hall told Mrs Serobian that the potential purchaser should contact the real estate agent involved. 152 In the Appellants' Further Written Submissions, the appellants referred to oral submissions that their solicitor made at first instance (at Transcript p 568E - Y). Those submissions were made in response to a question earlier asked by the judge of counsel for the respondent "as to why this whole thing went sour at the end". The appellants' solicitor, Mr Dlakic, said that the Seaforth property had been sold for $900,000 "where there was an offer on the table for [$]1,700,000". He referred to the affidavit of Ms Hall in this context. 153 In my view it is clear that the complaint that the appellants now make about the sale of the Seaforth property was not pleaded or otherwise put in issue by them at first instance. The reference that Mr Dlakic made to the topic was no more than a passing one in response to a question from the primary judge. Further, this issue was not included in the Statement of Issues dated 14 March 2009 provided by the appellants' solicitor to the Court (Transcript pp 578 - 586; the evidence at first instance was substantially concluded on 12 March 2009 and oral addresses commenced on 16 March 2009). As the matter was not in issue at first instance, the primary judge made no findings about it. 154 In these circumstances I do not consider that the appellants should be permitted to raise this factual issue for the first time on appeal. 155 Under this heading the appellants also referred to various other matters that were likewise not in issue at first instance, including for example an allegation that as a result of a refusal by the respondent to accept a refinancing offer by the appellants in relation to four properties, a loss of $714,000 was suffered. These matters again involve factual issues and are not able to be raised for the first time on appeal.

[61]

New trial by Jury if permissible by Law". 157 In support of this Notice of Motion the appellants relied first upon an affidavit of Mrs Serobian of 25 February 2010. The affidavit sought admission into evidence of the medical records and doctor's letter referred to in [45] - [50] above that were rejected by the primary judge. For the reasons I there gave, these documents do not assist the appellants' case. Accordingly the primary judge's rejection of these documents as irrelevant was correct. 158 In her affidavit Mrs Serobian proceeded to assert that a new trial should be ordered. Subject to the matters discussed below, what she says is mere assertion and does not provide any basis for interfering with the judge's conclusions. 159 In support of their Notice of Motion the appellants also relied upon an affidavit of Dr Nihad Jackson sworn on 16 September 2009. This was also relied upon in Mrs Serobian's affidavit of 25 February 2010. Dr Jackson treated Mrs Serobian for menorrhagia in 2003 (as to this condition, see further [46] above). He said that "[b]leeding stopped on the 26th November 2003 while she was still experiencing dizziness, being light headed and lack of concentration, and was advised to continue on iron tablets and increase dietary iron supplement to treat her anaemia" and that in 2005 "Mrs Serobian continued to have on and off episodes of bleeding". He said that at this time she was "still anaemic and thus was advised to continue on iron tablets" and start on another form of medication. He also said that Mrs Serobian was diagnosed with Type II diabetes in May 2005. Initially he advised control of her blood sugar by dieting but in July 2008 prescribed medication. He concluded by saying that Mrs Serobian had suffered chest pain throughout 2007. 160 As stated above, none of this material would in my view be of any assistance to Mrs Serobian in demonstrating an impairment of her ability to protect her financial interests at the isolated meetings that occurred with the respondent, in particular that of 25 October 2004. In any event, no adequate explanation has been offered as to why the affidavit evidence of Dr Jackson was not tendered at first instance. In my view its tender on appeal should be rejected. 161 The appellants also read an affidavit of Mr Amil Dlakic who was the solicitor that appeared for them at the trial. Again, this was relied upon in Mrs Serobian's affidavit of 25 February 2010. Mr Dlakic says that his intention at the trial, as communicated to the Court, was to proceed with all aspects of the Cross Summons. As I have indicated above (see [118]), the primary judge did not confine his attention to the points the appellant made in relation to the mortgage over the Manly property. Rather, he considered the full ambit of the appellants' Cross Summons and the appellants have not on appeal identified any aspect of the matters that were in issue before his Honour with which he did not deal. As a result, Mr Dlakic's affidavit of 9 September 2009 is not of any assistance to the appellants and should be rejected. 162 By her affidavit of 25 February 2010 Mrs Serobian also sought to adduce evidence suggesting that the Seaforth property was sold for less than the price for which it could have been sold. This was further material on the topic that is dealt with in [149] - [154] above. This evidence, if admitted, would raise a factual question that was not in issue at first instance, with the result that the primary judge made no findings about it. It is not permissible for such a contention to be raised for the first time on appeal (see Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 at 438). 163 For the reasons I have given above, the appellants have not established any of the grounds upon which they sought, by their Notice of Motion filed on 25 February 2010, an order directing a new trial. As a result that Notice of Motion should be dismissed.

[62]

Orders 164 For the reasons I have given above, I propose that the appeal should be dismissed with costs. 165 SACKVILLE AJA: I agree with the orders proposed by Macfarlan JA and, subject to what appears below, with his Honour's reasons. My disagreement relates only to the appellant's claim that the respondent, through Mr Hill, Mr Molenaar and Mr Tannock, represented in April 2007 that the temporary excess facility of $500,000 to Schypsl Pty Ltd ("Schypsl") would be extended beyond its nominated expiry date of 11 July 2007. The disagreement does not affect the outcome of the appeal. 166 Macfarlan JA concludes (at [128]-[132]) that the primary Judge should have made an express finding as to whether Mr Molenaar and Mr Tannock made the statements that Mrs Serobian in her evidence attributed to them. 167 The appellants pleaded that Mr Molenaar represented at a meeting with Mrs Serobian and Patrick Serobian on 28 July 2007 that the temporary excess facility of $500,000 had been approved and that the respondent would make funding available to the prospective purchaser of the Hornsby Childcare Centre. They alleged that it was agreed at the meeting that if the Hornsby Centre did not sell before the temporary facility expired, the respondent would extend the facility to a long term Better Business Access Facility (presumably in favour of Schypsl). The appellants further alleged that in reliance on the representation made on behalf of the respondent, they did not seek to obtain alternative finance for the business needs of Schypsl. The appellants then pleaded that notwithstanding the inability to sell the Hornsby Centre by 11 July 2007, the respondent had refused to extend the temporary facility. 168 The appellants pleaded that the representation was with respect to a future matter: cf Trade Practices Act 1974 (Cth) ("TP Act"), s 51A. Nothing turns on this for present purposes. 169 The primary judge addressed the appellants' case concerning the alleged representations more briefly than other claims that he rejected. Nonetheless, in my respectful opinion, it is clear enough, when the judgment is read as a whole, that his Honour intended to make findings of fact that rendered the appellants' case on this issue untenable. 170 It was common ground that Mr Tannock took over Mr Molenaar's responsibilities at the respondent following Mr Molenaar's departure on 10 April 2007. It was also common ground that a conversation took place between Mr Tannock, Mr and Mrs Serobian and Patrick Serobian on 11 April 2007, immediately before Mr and Mrs Serobian signed the respondent's Letter of Offer to Schypsl dated 10 April 2007. 171 The Letter of Offer stated that the offer was for a loan limited to $650,000, including a "temporary excess limit of $500,000". The term was for three months and the "balance and Limit" were to be reduced to $150,000 by 11 July 2007. A separate Condition stated as follows: "Term: 3 months from set up of Temporary Accommodation or earlier from sale proceeds of the Hornsby Childcare Centre." 172 Mr Tannock and Mrs Serobian, as his Honour recorded in detail (at [254]-[260]) gave competing versions of the conversation that took place on 11 April 2007. The two versions, although agreeing that the subject of the sale of the Hornsby Child Care Clinic came up, were at odds with each other. 173 Mr Tannock's account was that the meeting lasted an hour and that he took the Serobians through the Letter of Offer. In response to Mrs Serobian's inquiry into what would happen in three months time if the Hornsby Centre had not been sold, Mr Tannock claimed that he said this: "Within three months I will have had time to complete the assessment of your group and understand the financials and cash flows. Assuming everything is satisfactory we can either extend the time to sell Hornsby or look to put further formal arrangements in place if need be. We will need to discuss this further". 174 Mrs Serobian's version was that the meeting lasted no more than five to ten minutes. She claimed that she told Mr Tannock that the facility could not be repaid in under three months even if the Hornsby Centre was sold the following day. According to Mrs Serobian, Mr Tannock replied: "Do not worry about this, we can extend it later, this is just a formality." 175 It is important to bear in mind that the primary Judge found (at [364]) that Mrs Serobian was not a truthful witness and was prepared to say things under oath if she thought they would support her case even if they were insupportable. His Honour said that where Mrs Serobian's evidence conflicted with that of the respondent's witnesses, his Honour preferred their evidence. He made similar findings (at [364]-[365]) in relation to Mr Serobian and Patrick Serobian. 176 However, his Honour went beyond this. He specifically stated (at [449]) that he preferred the evidence of Mr Tannock to that of Mrs Serobian (and Patrick Serobian) "with regard to the Parties' dealings after the September 2006 facilities". Since this statement appears in the judgment under the heading "Dealings up to the 21 May 2007 meeting including the temporary excess of $500,000", it is clear that his Honour intended to accept Mr Tannock's account of the meeting of 11 April 2007 and to reject that evidence of Mrs Serobian and Patrick Serobian to the extent that their evidence conflicted with his. 177 Once Mr Tannock's evidence is accepted, there can be no suggestion that he represented that the respondent would extend the temporary excess facility, regardless of the circumstances and regardless of whether the respondent considered the account to be in a satisfactory state. The fact that Mr Tannock took the appellants through the terms of the Letter of Offer at length (as his Honour accepted) reinforces the conclusion that Mrs Serobian would have been under no misapprehension that the respondent, if it considered that the account had not been maintained satisfactorily, might insist on its right to require repayment of the temporary excess facility when it expired on 11 July 2007. It is also significant that in the conversation of 11 April 2007 Mr Tannock told the Serobians that he had replaced Mr Molenaar. The Serobians also could have been under no illusion that Mr Molenaar would play any continuing role in the respondent's dealings with them. 178 Mrs Serobian initially gave evidence that she had a conversation with Mr Molenaar "around April 2007" concerning the temporary excess facility of $500,000, but she later amended the timing to around March 2007. She claimed that in one of these conversations, he told her that the respondent required a condition that the facility would be repaid under three months. Her evidence was that she expressed displeasure, whereupon Mr Molenaar said: "Consider the purchaser's application approved and will be available on time to pay for the $500,000. Although the purchase price is $650,000 if settlement takes longer we will extend the three months period, if need be. This is a formality that the bank has put in place". 179 Mrs Serobian also claimed that Mr Molenaar said words to the following effect: "Do not worry about it. This is just to keep the credit guys happy and when it comes to repayment time, we will extend it and fix it up." 180 Mr Molenaar denied making either of the statements attributed to him by Mrs Serobian. He pointed out in his evidence that he had no authority to approve the advance, a proposition borne out by the documentary evidence. Mr Molenaar did recommend in writing, on 3 April 2007, that the advance of $500,000 be approved. However, he noted in his report that the Serobians had failed to return certain security documentation as required by the respondent and that: "the loan [was] to be cleared under the 90-day period through the sale of their Hornsby Centre." 181 A letter to Schypsl of 5 April 2007, signed by Mr Molenaar, conveyed the respondents' decision to approve a further facility on conditions including the following: "1. It will be on a temporary excess basis for 90 days. 2. Clearance will be through the sale of the Hornsby Child care business."

[64]

183 Whilst it may have been better for his Honour to have expanded on his comment concerning Mr Molenaar's "form", I think that his Honour's preference for Mr Molenaar's evidence and his rejection of the Serobians as truthful witnesses shows that he intended to find that Mr Molenaar did not make the representations alleged by the Serobians. In my respectful opinion, a fair reading of the judgment shows that his Honour rejected the factual case the appellants sought to make in relation to the temporary excess facility. 184 As Macfarlan JA has explained (at [137]-[143]), the appellants face other insuperable difficulties in seeking relief based on the respondent's alleged misrepresentation concerning the extension of the temporary excess facility. The cross-claim does not explain how the misrepresentation, if established, would justify the grant of relief claimed by the appellants (bearing in mind that Schypsl was not a cross-claimant). The appellants seem to suggest that if the respondents had engaged in misleading and deceptive conduct, this in some way would justify making an order under s 87 of the TP Act setting aside or rendering unenforceable mortgages and guarantees entered into in 2004 and 2006 - that is, before the alleged misleading and deceptive conduct. 185 As I have noted, the appellants' pleaded case was that the alleged misrepresentation by the respondent caused Schypsl not to seek alternative finance. The appellants' submissions to this Court did not identify any evidence suggesting that alternative sources of finance were, or might have been, available to Schypsl had the respondent not represented that the temporary excess facility would be extended. In the absence of any such evidence, it is difficult to see how the appellants, even assuming that they could show that the respondent engaged in misleading and deceptive conduct, could establish that the conduct caused them to suffer, or to be likely to suffer, any loss or damage: Marks v GIO Australia Holdings Ltd [1998] HCA 69; 196 CLR 494 at 514 [48], per McHugh, Hayne and Callinan JJ. 186 In the absence of a finding of such prejudice or disadvantage, actual or potential, s 87(1) of the TP Act is not enlivened and the powers conferred on the Court by s 87(1A) and s 87(2) are not available to the appellants.

Serobian v Commonwealth Bank of Australia

At a glance

Court

Decision date

Before

Source

Judgment (65 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (14)

Cited By (6)