Stuart v Rabobank Australia Ltd - [2021] FCA 1388 - FCA 2021 case summary — Zoe

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Stuart v Rabobank Australia Ltd

[2021] FCA 1388

Federal Court of Australia|2021-11-11|Before: Halley J

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Source facts

Court

Federal Court of Australia

Decision date

2021-11-11

Before

Halley J

Source

Original judgment source is linked above.

Judgment (192 paragraphs)

[1]

Legislation: Constitution s 51 Australian Securities and Investments Commission Act 2001 (Cth) ss 12CB, 12CC, 12DA, 12GF, 12GM Competition and Consumer Act 2010 (Cth) s 87 Competition and Consumer Act 2010 (Cth) sch 2, The Australian Consumer Law s 238 Corporations Act 2001 (Cth) s 912A Evidence Act 1995 (Cth) ss 55, 76, 79, 97 Federal Court of Australia Act 1976 (Cth) s 37AF Judiciary Act 1903 (Cth) s 78B National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth) s 4, sch 1 s 3 National Consumer Credit Protection Act 2009 (Cth) sch 1, National Credit Code s 76 National Consumer Credit Protection Act 2009 (Cth) ss 128, 130 Trade Practices Act 1974 (Cth) ss 52, 87 Corporations Regulations 2001 (Cth) reg 7.6.02 Consumer Credit (Queensland) Act 1994 (Qld) app, Consumer Credit Code ss 6, 11 Credit (Commonwealth Powers) Act 2010 (Qld) ss 4, 11 Fair Trading Act 1989 (Qld) s 38 Limitations of Actions Act 1974 (Qld) ss 10, 38 Chancery Amendment Act 1858 (UK) s 2

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Cases cited: Aravena v R (2015) 91 NSWLR 258; [2015] NSWCCA 288 Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (2021) 388 ALR 577; [2021] FCAFC 40 Australian Securities and Investments Commission v Australia and New Zealand Banking Group Limited [2018] FCA 155 Australian Securities and Investments Commission v Citrofresh International Ltd (2007) 164 FCR 333; [2007] FCA 1873 Australian Securities and Investments Commission v Dover Financial Advisers Pty Ltd (2019) 140 ACSR 561; [2019] FCA 1932 Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18 Australian Securities and Investments Commission v Narain (2008) 169 FCR 211; [2008] FCAFC 120 Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132; [2005] FCAFC 226 Australian Securities and Investments Commission v The Cash Store Pty Ltd (in liquidation) (No 2) [2015] FCA 93 Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) (2018) 266 FCR 147; [2018] FCA 751 Banditt v The Queen (2005) 224 CLR 262; [2005] HCA 80 Bradford Third Equitable Benefit Building Society v Borders [1941] 2 All ER 205 Canavan v Wright [1957] NZLR 790 Commonwealth Bank of Australia v Quade (1991) 178 CLR 134; [1991] HCA 61 Connor v Blacktown District Hospital [1971] 1 NSWLR 713 Dasreef Pty Limited v Hawchar (2011) 243 CLR 588; [2011] HCA 21 Derry v Peek (1889) 14 App Cas 337; [1886-90] All ER Rep 1 Domain Names Australia Pty Ltd v .au Domain Administration Ltd (2004) 139 FCR 215; [2004] FCAFC 247 Dorfler v Australia and New Zealand Banking Group Limited (1991) 103 ALR 699; [1991] FCA 545 Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158; [1969] 2 All ER 119 Eckford v Six Mile Creek Pty Ltd (No 2) [2019] FCA 1307 Edgington v Fitzmaurice (1885) 29 Ch D 459; [1881-5] All ER Rep 856 Fuge v Commonwealth Bank of Australia [2019] FCA 1621 Gooley v NSW Rural Assistance Authority [2020] NSWCA 156 Gould v Vaggelas (1985) 157 CLR 215; [1985] HCA 75 Grant v John Grant & Sons Proprietary Limited (1954) 91 CLR 112; [1954] HCA 23 Haynes v St George Bank a Division of Westpac Banking Corporation; Haynes v Westpac Banking Corporation [2018] SASCFC 51 Honeysett v The Queen (2014) 253 CLR 122; [2014] HCA 29 Hornal v Neuberger Products Ltd [1957] 1 QB 247; [1956] 3 All ER 970 Hughes v The Queen (2017) 263 CLR 338; [2017] HCA 20 IMM v The Queen (2016) 257 CLR 300; [2016] HCA 14 Jones v Dumbrell [1981] VR 199 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Jonsson v Arkway Pty Ltd (2003) 58 NSWLR 451; [2003] NSWSC 815 Keen Mar Corporation Pty Ltd v Labrador Park Shopping Centre Pty Ltd [1988] FCA 88 Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 Lewis v Australian Capital Territory (2020) 381 ALR 375; [2020] HCA 26 Magill v Magill (2006) 226 CLR 551; [2006] HCA 51 Make It Mine Finance Pty Ltd, in the matter of Make It Mine Finance Pty Ltd (No 2) [2015] FCA 1255 Mayne Nickless Ltd v Multigroup Distribution Services Pty Ltd (2001) 114 FCR 108; [2001] FCA 1620 Mullet v Mason (1866) LR 1 CP 559 Nicholls v Taylor [1939] VLR 119 Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199; [2015] FCAFC 50 Pasley v Freeman (1789) 100 ER 450; [1775-1802] All ER Rep 31 Pertzel v Qld Paulownia Forests Ltd [2008] 2 Qd R 526; [2008] QCA 287 Phelan v Melbourne Health [2019] VSCA 205 R v Chatimba (No 1) [2021] NSWSC 204 R v Gordon (No 4) [2016] NSWSC 312 R v Sharpe (No 5) [2021] NSWSC 52 R v Wilson (No 3) [2017] NSWSC 1680 Re Culleton (2017) 340 ALR 550; [2017] HCA 3 Redgrave v Hurd (1881) 20 Ch D 1; [1881-5] All ER Rep 77 Reeves (a pseudonym) v R (2013) 41 VR 275; [2013] VSCA 311 Reilly v Australia and New Zealand Banking Group Limited (No 2) [2020] FCA 1502 RH v R (2014) 241 A Crim R 1; [2014] NSWCCA 71 Sarina v Fairfax Media Publications Pty Ltd (2018) 365 ALR 15; [2018] FCAFC 190 Sent v Jet Corporation of Australia Proprietary Limited (1986) 160 CLR 540; [1986] HCA 35 Smith v Chadwick (1884) 9 App Cas 187; [1881-5] All ER Rep 242 Stanley v Service to Youth Council Incorporated (No 2) (2014) 317 ALR 141; [2014] FCA 644 Stuart v Rabobank Australia Limited [2018] FCA 30 Stuart v Rabobank Australia Ltd [2018] FCA 1304 Stuart v Rabobank Australia Ltd [2019] FCA 343 TB v R [2019] NSWCCA 224 Toteff v Antonas (1952) 87 CLR 647; [1952] HCA 16 Wardley Australia Limited v The State of Western Australia (1992) 175 CLR 514; [1992] HCA 55 Webb v GetSwift Limited (No 5) [2019] FCA 1533

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THE COURT ORDERS THAT:

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Table of Contents A. INTRODUCTION [1] B. PRINCIPAL CONCLUSIONS [18] C. DRAMATIS PERSONAE AND LAY WITNESSES [19] The Applicants [19] The Respondent [25] Mr Ellem and other Rabobank personnel [26] Mr Couper [32] Ms Bowden [36] Mr Nevison [39] Applicants' lay witnesses [41] Ms Hawking [41] Ms Bodkin (née Christmas) [43] Mr McCallum [45] Mr Cowley [46] Ms Beardsley (née Bonnett) [47] Mr Wass [50] Mr and Mrs Brauer [52] D. WITNESSES AND CREDIT ISSUES [54] Mrs Stuart [54] Mr Stuart [66] Other lay witnesses of the Stuarts [72] Mr Ellem [73] Mr Couper [88] Mr Brady [90] The expert reports of Mr White and Mr Green [93] E. EVIDENTIARY ISSUES [112] Admissibility of McGovern and Keogh reports [113] Dr McGovern's reports [119] Mr Keogh's report [135] Admissibility of hardship evidence [146] Weight to be given to testimonial evidence [153] Jones v Dunkel inferences [158] Application to adduce tendency evidence [166] Sequence of events [169] Consideration [180] Section 97(1)(a) - "reasonable notice" [183] Section 97(1)(b) - "significant probative value" [188] Disposition [221] F. FACTUAL BACKGROUND [224] The Stuarts' prior property dealings [225] Initial entry into a Rural Term Loan [226] November 2004 Letter of Offer - Wallal [227] December 2004 Letter of Offer - Tullochard [234] Conversion of Rural Term Loan to an All in One Facility in February 2005 [247] July 2005 Letter of Offer [249] Sale of Kurrajong in October 2005 [258] June 2006 Letter of Offer [260] Purchase of Evergreen and sale of Tullochard in July 2006 [263] December 2006 loan limit increase [264] Decision to sell Evergreen in mid-2007 [266] December 2007 loan limit increase [271] Proposed property acquisitions in late 2007 and early 2008 [274] The Stuarts' offers on Mt Morris [277] February 2008 Evergreen auction [283] April 2008 Letter of Offer [287] Purchase of Mt Morris [293] Vendor finance option for sale of Evergreen [302] Progression of the application for finance in early May 2008 [308] Negotiations for purchase of Mt Morris are stalled [313] Negotiations for purchase of Mt Morris resume [323] Contracts are exchanged for purchase of Mt Morris [324] 27 May 2008 valuations by Mr Ellem [327] 28 May 2008 internal Rabobank Dalby emails [337] May 2008 Loan Application [339] May 2008 Credit Submission [341] June 2008 Letter of Offer [349] Loan documents alleged to be signed by the Stuarts in mid-May 2008 [355] Consumer Credit Code declaration [369] Completion of purchase of Mt Morris on 30 June 2008 [371] Advertising Evergreen for sale in July 2008 [372] October 2008 QRAA application [375] March 2009 instructions to agents to sell Evergreen [380] March 2009 Letter of Offer [381] Burberrys' offer to purchase Evergreen [386] 3 September 2009 valuation of Evergreen [408] October 2009 Letter of Offer [412] Sale of Lot 14 of Evergreen in January 2010 [417] June 2010 Letter of Offer [422] November 2010 credit submission [426] 31 December 2010 interest payment [431] 2 March 2011 letter to Rabobank [435] 3 May 2011 valuation of Mt Morris [448] Lease of Lots 3 and 7 of Evergreen [450] 3 February 2012 farm debt mediation notice [453] Sale of Lots 3 and 7 of Evergreen [454] 9 August 2012 Mediation [457] Deed of Forbearance [459] 10 April 2013 Rabobank offer to the Stuarts [475] Sale of Mt Morris [480] 2015 Proceedings [485] Statement of indebtedness [493] G. ASIC ACT SECTION 12DA - MISLEADING AND DECEPTIVE CONDUCT [494] Relevant statutory provisions [494] Relevant principles [495] H. FRAUD AND DECEIT CLAIMS [500] Relevant principles [500] I. 15 YEAR REPRESENTATION [508] Was it conveyed? [508] Was it made in trade or commerce? [514] Was it misleading or deceptive? [515] Was it knowingly false or made recklessly? [516] Was it relied upon? [517] Did the Stuarts suffer any loss or damage by reason of their reliance? [518] J. REPAYMENT REPRESENTATION [519] Was it conveyed? [519] Was it made in trade or commerce? [533] Was it misleading and deceptive? [534] Was it knowingly false or made recklessly? [535] Was it relied upon? [536] Did the Stuarts suffer any loss or damage by reason of their reliance on it? [537] K. SUITABLE FINANCE REPRESENTATION [538] Was it conveyed? [538] Was it made in trade or commerce? [549] Was it misleading and deceptive? [551] Was it knowingly false or made recklessly? [577] Was it relied upon? [584] Did the Stuarts suffer any loss or damage by reason of their reliance on it? [589] L. ASIC ACT SECTION 12CB - UNCONSCIONABLE CONDUCT [590] Relevant statutory principles [590] Relevant principles [592] Was Rabobank's conduct unconscionable? [598] Bredhauer unconscionability claims [600] Inequality of bargaining power [614] Not reasonably necessary for legitimate protection [615] Use of unfair tactics [616] Failure to comply with lending and credit policies [617] Refusal to negotiate permanent repayment provision [625] Taking advantage of disadvantageous circumstances [626] Unilateral right to vary or terminate the Facility [627] Failure to act in good faith [628] M. DAMAGES [629] Relevant statutory provisions and principles [631] Section 12GF of the ASIC Act [631] Section 12GM of the ASIC Act [634] Damages for action in deceit [640] Causation [644] Stuarts' Particulars of Loss and Damage [656] The White loss report [662] Oral evidence of Mr White [674] N. LIMITATION ISSUES [684] Reliance on s 12GM of the ASIC Act [685] Fraud and deceit claims [691] Postponement in cases of fraud [694] Postponement in cases of fraudulent concealment [712] Section 12GF of the ASIC Act [719] O. DEED OF FORBEARANCE [722] P. CARBON FARMING CLAIM [752] Was a binding contract or arrangement entered into? [753] Was there any breach? [763] Causation [766] Quantum [768] Q. NATIONAL CREDIT CODE CLAIM [769] Does it apply? [769] Were the changes to the Facility unjust? [791] Should the Court reopen the credit contract? [805] Section 78B application [806] R. COMPLIANCE WITH DISCOVERY OBLIGATIONS [816] Delay case [816] S. AMENDED STATEMENT OF CROSS-CLAIM [826] Facility breach cross-claim [828] Contractual indemnity cross-claim [834] Misleading or deceptive conduct cross-claim [837] Consideration [840] T. DISPOSITION [843]

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A. INTRODUCTION 1 By late 2007, after a series of successful rural property acquisitions and realisations, the applicants Mark and Catherine "Cate" Stuart (the Stuarts) by late 2007 found themselves in a position where they could no longer meet their financial commitments on their current rural property without continued extensions to their facility limit of the financing provided to them by the respondent, Rabobank Australia Ltd (Rabobank). 2 The Stuarts were confident that they could address this predicament by increasing the limit of their facility to enable them to purchase an alternative property pending the sale of their existing property. Unfortunately, the combined effect of the severe drought and the global financial crisis frustrated their efforts to sell their existing property. The Stuarts were not able to continue to meet interest payments on their facility with Rabobank and they defaulted. 3 Ultimately, both properties were sold for prices well beneath their expectations, receivers were appointed, and the Stuarts have been left with virtually nothing and a substantial debt outstanding to Rabobank. 4 In this proceeding the Stuarts seek declarations of contravention, damages, compensation and various orders relieving them from liability and setting aside facilities and mortgages against Rabobank. 5 In an attempt to address the difficult financial position they faced, in late 2007 the Stuarts embarked on a course of action to sell Evergreen, a cattle property they owned near Talwood in Queensland, and purchase a new cattle property. The farming operation conducted by the Stuarts on Evergreen had not been profitable and in around April 2008, the Stuarts agreed with Rabobank to sell Evergreen and use the proceeds of the sale to substantially reduce their existing facility with the bank with a view to them acquiring a different cattle property. 6 In May 2008, prior to the entry into any contract for the sale of Evergreen, the Stuarts entered into a contract for the purchase of Mt Morris, a cattle property near Charleville in Queensland. 7 On 11 June 2008, the Stuarts accepted a letter of offer from Rabobank dated 3 June 2008 (June 2008 Letter of Offer), pursuant to which Rabobank agreed to extend the limit of the Stuarts' existing facility with the bank (Facility) from $1.12 million to $3.48 million to fund the purchase of Mt Morris. A term of the extension of the limit of the Facility (Facility Limit) was that the proceeds of the proposed sale of Evergreen had to be used to reduce the indebtedness of the Stuarts to Rabobank under the Facility from $3.48 million to $250,000 by 31 March 2009. 8 The Stuarts were not able to sell Evergreen by 31 March 2009. 9 Notwithstanding the requirement to reduce the outstanding balance of the Facility to $250,000 by 31 March 2009, Rabobank maintained the Facility Limit at $3.48 million until December 2009. 10 In December 2009, Rabobank increased the Facility Limit to $3.6 million, but then reduced it to $2.7 million in January 2010 following the receipt of $900,000 from the sale of part of Evergreen. In June 2010, Rabobank increased the Facility Limit to $2.75 million, then subsequently reduced it to $950,000 in December 2010 and ultimately reduced it to nil in May 2012. 11 The Facility was in default from December 2010 by reason of the Stuarts' failure to meet an interest payment under the Facility. 12 On 9 August 2012 the parties attended a mediation (Mediation), following which they entered into a deed described as a Deed of Forbearance and Acknowledgement (Deed of Forbearance). It included a clause purporting to contain a release by the Stuarts of all claims that they might have against Rabobank with respect to, inter alia, the June 2008 Letter of Offer. The deed provided for the Stuarts to complete the marketing campaign for the sale of Mt Morris by 30 November 2012. In the event Mt Morris was not sold by this date, the Deed of Forbearance required the Stuarts to agree an acceptable amount with Rabobank in full and final satisfaction of the debt owed by them to the bank on or before 31 March 2013 while also continuing their efforts to sell Mt Morris. Neither of these two provisions was satisfied. 13 On 10 April 2013, Rabobank agreed to accept the sum of $1.5 million in full and final satisfaction of the debt owed by the Stuarts, if payment was made by 31 May 2013. The date for payment was subsequently extended to 30 August 2013. No payment was ever made by the Stuarts and, on 9 September 2013, Rabobank declared an end to its moratorium on enforcement action under the Deed of Forbearance. 14 On 7 November 2013, receivers were appointed to Mt Morris by Rabobank (Receivers). On 10 October 2014, the Receivers took possession of Mt Morris and it was sold at auction. The sale was completed in June 2015. 15 As at 31 March 2021, the outstanding balance under the Facility was $2,972,705.42 (including interest up to 31 March 2021). 16 Briefly stated, the Stuarts seek to advance the following claims against Rabobank: (a) 15 Year Representation: The Stuarts contend that Rabobank falsely represented that the increase in the Facility to fund the purchase of Mt Morris was made on an interest only basis until the expiry of the Facility on 30 July 2019 and that representation was thereby misleading or deceptive or likely to mislead or deceive in contravention of s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). It is further alleged that the 15 Year Representation was made by Rabobank knowing it to be false or was made recklessly as to its falsity; (b) Repayment Representation: The Stuarts contend that Rabobank falsely represented that the requirement in the Facility to repay $3.23 million on or before 31 March 2009 was a typographical error and that the representation was thereby misleading or deceptive or likely to mislead or deceive in contravention of s 12DA of the ASIC Act. It is further alleged that the Repayment Representation was made by Rabobank knowing it to be false or was made recklessly as to its falsity; (c) Suitable Finance Representation: The Stuarts contend that Rabobank falsely represented that the finance to be supplied by Rabobank pursuant to the June 2008 Letter of Offer was suitable finance, serviceable by the Stuarts, "right" for the farming operations of the Stuarts and that Rabobank's All in One finance product was designed for primary producers like the Stuarts. It is alleged that the Suitable Finance Representation was thereby misleading or deceptive or likely to mislead or deceive in contravention of s 12DA of the ASIC Act. It is further alleged that Rabobank made the representation knowing it to be false or was reckless as to its falsity; (d) Unconscionable Provision of Finance: The Stuarts contend that Rabobank engaged in unconscionable conduct by providing finance to the Stuarts pursuant to the June 2008 Letter of Offer in breach of its lending, credit and valuation policies and that the finance was unsuitable for the Stuarts, unserviceable by them, financially imprudent, comprised asset lending and was not fit for purpose and that Rabobank took advantage of the Stuarts' inferior bargaining position in contravention of s 12CB(1)(a) of the ASIC Act; (e) Carbon Farming claim: The Stuarts contend that Rabobank breached a binding contract or arrangement reached between them in relation to a proposed carbon farming initiative on Mt Morris by failing to sign an "Eligible Interest Holder Consent" form required by the Clean Energy Regulator and failing to fund the costs of the verification process required by the Clean Energy Regulator for the proposed initiative; (f) National Credit Code claim: The Stuarts contend that the Facility should be reopened as an unjust credit transaction pursuant to s 76 of the National Credit Code contained in sch 1 to the National Consumer Credit Protection Act 2009 (Cth) (National Credit Code), by reason of the variation to the Facility pursuant to the terms of the June 2008 Letter of Offer, inter alia, on the basis that: (i) the permanent repayment provision of $3.23 million by 31 March 2009 comprised a form of financial misconduct; (ii) there was a relative inequality of bargaining power; (iii) Rabobank engaged in unfair tactics; (iv) the provisions in the Facility, as varied in June 2008 and thereafter, were not reasonably necessary for the legitimate protection of Rabobank's interests; and (v) Rabobank failed to comply with the Australian Bankers' Association Code of Banking Practice (Code of Banking Practice) by undertaking enforcement action rather than working with the Stuarts to resolve their financial difficulties; (g) Deed of Forbearance claim: The Stuarts contend that the Deed of Forbearance: does not bar or release any claims made by them; is invalid and unenforceable as a result of Rabobank's alleged financial misconduct; was rendered void by Rabobank making unauthorised alterations; was not entered into pursuant to an authorised dispute resolution scheme; and was an unjust transaction within the meaning of s 76 of the National Credit Code; (h) Serious Consideration Representation: The Stuarts contend that Rabobank, by its servants or agents Richard Witherow, Greg Brady and/or Lee Nevison, falsely represented that it intended to give serious consideration to an offer received from the Stuarts immediately prior to the Mediation on 9 August 2012 to refinance the Stuarts' indebtedness to the bank and that the representation was thereby misleading or deceptive or likely to mislead or deceive in contravention of s 12DA of the ASIC Act; (i) Unconscionable Mediation Conduct: The Stuarts contend that Rabobank, by its servants or agents Mr Witherow, Mr Brady and/or Mr Nevison, engaged in unconscionable conduct at the Mediation on 9 August 2012 and thereafter, inter alia, by placing undue pressure and/or duress upon the Stuarts to sign the Deed of Forbearance in contravention of s 12CB(1)(a) of the ASIC Act; and (j) Fraud and Fraudulent Concealment: The Stuarts allege that Rabobank is precluded from relying on the limitation periods advanced by Rabobank in its defence on the grounds that the Stuarts' claims are based in fraud or deceit or otherwise because each is a cause of action that has been fraudulently concealed, in that each wrongful act was not reasonably discoverable and fully appreciated by the Stuarts prior to June 2018. 17 Briefly stated, Rabobank advances the following claims in its amended statement of cross-claim: (a) Breach of the Facility: Rabobank contends that the Stuarts are in default under the Facility and that although it has served a valid demand for payment of all amounts outstanding (together with accrued interest), the Stuarts have failed to pay the amounts demanded and Rabobank has thereby suffered loss and damage; (b) Contractual Indemnity: Rabobank contends that, independently of the Breach of the Facility claim, the Stuarts are obliged to indemnify Rabobank pursuant to the indemnity contained in the standard terms to the Facility. This includes indemnity against any losses that Rabobank has suffered as a result of the Stuarts' defaults, Rabobank's costs of exercising its rights pursuant to those defaults and any losses that Rabobank may suffer as a result of the Stuarts bringing this proceeding; and (c) Misleading or Deceptive Conduct: Rabobank contends that the Stuarts made misleading or deceptive representations to it in relation to loan applications they made in May 2008 and May 2010, six Rabobank letters of offer between June 2008 and June 2010 and the mortgage that the Stuarts provided to Rabobank over Mt Morris in June 2008, and thereby engaged in misleading or deceptive conduct in contravention of s 12DA of the ASIC Act.

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B. PRINCIPAL CONCLUSIONS 18 For the reasons set out below, my principal conclusions in relation to the claims advanced by the Stuarts against Rabobank are as follows: (a) Rabobank did not make the alleged 15 Year Representation; (b) Rabobank did not make the alleged Repayment Representation; (c) Rabobank did not make the Suitable Finance Representation; (d) I accept, however, that Rabobank made a representation as to the suitability of the finance offered to the Stuarts pursuant to the June 2008 Letter of Offer, but this did not extend to any representation as to the ability of the Stuarts to service their ongoing commitments under the Facility and the representation made was otherwise not misleading or deceptive or false; (e) Rabobank did not engage in unconscionable conduct by providing finance to the Stuarts pursuant to the June 2008 Letter of Offer; (f) Rabobank did not enter into any binding contract or arrangement with the Stuarts with respect to any carbon farming initiative proposed for Mt Morris; (g) the National Credit Code has no application to the variation to the Facility effected by the Stuarts' acceptance of the June 2008 Letter of Offer; (h) the Deed of Forbearance was not a credit contract for the purposes of the National Credit Code; (i) in any event, all of the claims advanced by the Stuarts with respect to the variations to the Facility between June 2008 and May 2010, the Carbon Farming claim and the Mediation (other than the Unconscionable Mediation Conduct claim) were released pursuant to the terms of the Deed of Forbearance; (j) Rabobank did not engage in the conduct the subject of the Unconscionable Mediation Conduct claim; (k) in any event, the claims advanced by the Stuarts with respect to the variations to the Facility between June 2008 and May 2010 are time barred; (l) Rabobank did not act fraudulently or deceitfully, nor did its conduct give rise to any fraudulent concealment; (m) the Stuarts are in default of their contractual obligations pursuant to the Facility, as varied on and from June 2008; and (n) Rabobank has suffered loss and damage by reason of the Stuarts' default.

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Mrs Stuart 54 Mrs Stuart gave extensive oral evidence in support of her case. A large amount of contemporaneous documentation authored by Mrs Stuart was also tendered as evidence in this proceeding. 55 At all relevant times Mrs Stuart maintained what she described as an options book in which, inter alia, she sought to analyse the financial implications of various proposed property purchases that the Stuarts were contemplating in the period leading up to the acquisition of Mt Morris. 56 While both Mr and Mrs Stuart had many oral conversations with their accountants, solicitors and Rabobank, all written communications were exclusively conducted by Mrs Stuart. These written communications were primarily in the form of emails. 57 Mrs Stuart's options book, contemporaneous emails and oral evidence demonstrated a relatively sophisticated appreciation of both legal and financial matters. 58 Her credit was challenged by senior counsel for Rabobank, Mr Braham SC who appeared with Mr Gray for the respondent. 59 Understandably, given she considers that Rabobank financially ruined her family, Mrs Stuart found giving evidence challenging at times. Her examination in chief had to be suspended at one point when she almost collapsed in the witness box and required treatment in hospital. 60 Unfortunately, at times her evidence in cross-examination became somewhat petulant, argumentative and rehearsed, as evident from the following exchange with senior counsel for Rabobank: Mr BRAHAM SC: I'm exploring the recollection that you proffered up a little while ago where you say - you said you remember discussing it with Mr Ellem?---Yes, because it was a little bit of a surprise, but I accepted it - - - All right?--- - - - afterwards. All right. But when you say afterwards, you mean - you're not talking about years and years afterwards, you're talking about in the weeks afterwards?---After signing it. After signing it?---Like a week or two week or three weeks later, whatever. All right. And on that occasion you discussed with Mr Ellem the obligation to make the permanent repayment?---I just said it was stupid, but yes. All right. Well, by this stage it was the fourth letter of offer you had signed from the bank, wasn't it, that had an obligation for permanent repayment in it?---The fourth - yes, the fourth one it says, "surprise, defer, roll it over, stick with you, you'll be right, all in one, suitable product, 15 years." Yep, that's the one. All right. But at very least, you were getting used, weren't you, to seeing that term or a term like it in the letters of offer that the bank provided you for the purposes for your credit arrangements?---Actually, no, I didn't get used to it. Each time it was a bit of a shock because I thought once-off was simply once-off and it didn't keep reoccurring. All right. But by April 2008, you had had - you had seen and identified four of these one-off, permanent repayments, hadn't you?---You're telling me. And I'm asking you to agree; do you agree?---If it was four, it was four. 61 A further example of her apparent advocacy, rather than genuine recollection, was her oral evidence in chief concerning the purpose of the finance to be provided pursuant to the June 2008 Letter of Offer. Mrs Stuart was taken by her counsel, Mr King, who appeared with Ms Rusiti for the applicants, to an internal Rabobank document that recorded the relevant subject for consideration to be "[i]ncrease to facility of $2,360,000 for the purpose of purchasing additional property". It is difficult to see how this was not an accurate statement of the purpose of the proposed variation to the Facility, namely, to enable the Stuarts to purchase Mt Morris pending the sale of Evergreen. 62 Mrs Stuart, however, gave the following evidence in chief in an apparent attempt to characterise the provision of credit in a manner that would attract the operation of the National Credit Code, notwithstanding that the Stuarts intended to operate a working cattle grazing operation on Mt Morris and did not propose to live there until after the sale of Evergreen: MR KING: Would you have a look, please, at page - I think it's 955 in the Court Book. See, that's an internal bank work request number 78643 which has dates apparently commencing on Wednesday, 28 May 2008; do you see that?---I do. And when did you first see that document?---Through discovery from the bank. Thank you. Do you see in the top under 'Summary' in the fifth line it refers to an apparent purpose for the Mt Morris advance; do you see that?---I do. Increase to facility?---I do. Is that an accurate record of the purpose of the finance which you informed Mr Ellem?---No. And how would you describe - sorry, withdraw that. To the best of your recollection, what did you say to him was that purpose?---Well, there are a number of things that come to mind here. And that is, firstly, when we began before - - - MR BRAHAM SC: I object. MR KING: Yes, just - - - HIS HONOUR: Mrs Stuart, try to concentrate a little more sharply on Mr King's question. MR KING: Sorry, Mrs Stuart, that's probably my error. In - you mentioned you - I mentioned three conversations which I took you through yesterday. Was - in any one of those conversations in particular, do you recall discussing the issue that I've just raised with you?---Yes, I do. And do you know which - whether it was one or all three conversations?---All three. And just doing the best you can, can you recall what it is you said about what the purpose of the Mt Morris finance was for you and - - -?---It was personal. It was our home. I'm a generational grazier. And did you - what were the words you actually used, to the best of your recollection?---That it was an investment in my family. 63 Again, notwithstanding the extent to which the advance funding to enable the purchase of Mt Morris pending the sale of Evergreen could reasonably be characterised as "bridging finance", her counsel elicited this evidence from Mrs Stuart: MR KING: Thank you. All right. Now, would you - did - the bank, in its defence, has pleaded that this was bridging finance. Did you ever have that perception?---Never. Poppycock. Did Mr Ellem ever mention bridging finance to you?---Never. Did Mr Webber, his manager at Dalby, ever mention that to you?---Never. 64 Considerable caution therefore needs to be exercised in accepting Mrs Stuart's evidence, except to the extent that it is supported by contemporaneous documents or is objectively plausible. Her recollections were advanced in a litigious context, many years after conversations and events occurred. 65 The inherent difficulties in accepting such evidence were exacerbated in this case by reason of the number of dealings that the Stuarts have had with Mr Ellem involving the provision of finance pursuant to variations to the Facility, and the previous close and friendly relationship that the Stuarts had with Mr Ellem.

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Mr Stuart 66 Mr Stuart found it difficult in the course of his cross-examination to focus on the questions he was asked to address. He was inclined to be argumentative and some of his evidence was at times implausible, offensive and evasive. He came across in his oral evidence as less financially and legally sophisticated than Mrs Stuart. He took every opportunity to attack Mr Ellem's credit and advance implausible evidence that he might have thought supported his case. 67 In the course of his supplementary oral evidence in chief, after his cross-examination had commenced, Mr Stuart gave the following evidence with respect to his signature on a letter of offer from Rabobank dated 1 June 2010 regarding a variation to the Facility (June 2010 Letter of Offer): MR KING: Would you then go across, please, to page 1995?---Yes. And you see there that there's a reference in - sorry, your Honour. If you go across, please, to - just looking at page 1995. It's not clear, but is that your - initial at the bottom of the page, or not?---Yes, it does look like it. And then, the following page?---No. I never - just do an M and an S. Just go across to page 1999. Is that your signature there?---No. HIS HONOUR: Wait, when you say 1999, are you talking about the signature next to Mark Lindsay Stuart or are you talking about the initials of signatories at the foot of the page? MR KING: Yes. I do apologise, your Honour. Just looking at the middle of the page, not the bottom of the page?---Yes. No. HIS HONOUR: So you're saying that's not your signature?---I never use my middle initial, ever. MR KING: Well - well ..... HIS HONOUR: Well, this evidence should have been led in chief, Mr King. If it's seriously suggested that this is a document that does not bear Mr Stuart's signatures, why wasn't this evidence led in chief? MR KING: Yes, your Honour, I'm - - - HIS HONOUR: Or is this the first time you've heard that? MR KING: I acknowledge this is the first time I've heard that, your Honour. It wasn't the purpose of me leading this evidence; the purpose of me leading this evidence, I'm about to address, and that's this: Mr Stuart, you see there, at page 1995 - - -?---Yes. - - - the reference to "working capital", under Loan Purpose - beside Loan Purpose?---Yes. To what did you understand that was a reference?---It was not working capital. That was an interest repayment. You mean, by that, a provision for an interest repayment?---Yes, that was money to pay interest. All right. Now, I just want to ask you this question, please: if you had known at that time that the bank was proceeding in relation to the provision of its finance on the basis of the material in the credit submission to which I have referred - page 1972 and 1973 - would you have signed that letter of variation?---No. Definitely not. That's the only evidence, your Honour. 68 The "letter of variation", being the June 2010 Letter of Offer, gave the Stuarts a further six months to make a $1.8 million permanent principal reduction and advanced them a further $50,000 in working capital to make an interest payment. The implausibility of Mr Stuart's evidence that he would not have signed the document was the subject of the following exchange in cross-examination: MR BRAHAM SC: You were asked by your counsel what you would have done, in 2010, if you had known the matters to which he drew your attention, and you said you would not have signed the credit submission. Now, is that truthful evidence? HIS HONOUR: I think the letter of offer. MR BRAHAM SC: The letter of offer. Is that truthful?---Yes. Well, what would you have done instead?---I would have made the bank come back with more realistic bloody terms, wouldn't I? What, particularly, in the terms, in 2010, would you have wanted changed?---Ellem has lied to me. No - - -?---I've - - - - - - no?--- - - - stated it. No, Mr Stuart, that question is not another opportunity - - -?---Right-o. - - - for you to say something about Mr Ellem. Now, what different terms would you have required from the bank in 2010?---I would have insisted that nine months, which he lied to me about, was taken out. Well, it was already 12 months down the track and you were - I'm sorry, it was already two years down the track and you were being given more time to repay. What different terms would you have wanted, Mr Stuart?---More terms, for the bank to steal more assets? Is that what you're saying? Might take all my equity, which you did. You answered a question from Mr King, a minute ago, on your oath. He said, "if you had known various matters were in the credit submission, would you have signed the letter of offer at that time"; and you said, no, you wouldn't have?---No, and Chris Ellem, I would have made sure he was sitting in front of me. Isn't this the case, Mr Stuart: you're willing to agree to any proposition Mr King puts to you, without thinking about it, without any regard to whether it's the truth or a lie, and that's what happened in that last piece of evidence, isn't it?---No. You didn't know what you were agreeing to, when you agreed to that proposition for Mr King, didn't you. You had no idea what you were agreeing to, did you; isn't that right?---No. You're wrong. And you agreed to it because Mr King put it to you even though it made no sense to you at all - - -?---You're wrong. - - - isn't that right?---You're wrong. And that's the way you've conducted your evidence in chief, isn't it? Agreeing to things Mr King has put to you - - -?---No. - - - even if you don't understand them. MR KING: I object. THE WITNESS: You're wrong. I'm here because the bank stole my assets. MR BRAHAM SC: And you're going to say that over and over again, Mr Stuart, no doubt?---You repeat yourself, too, pretty well, sir. HIS HONOUR: We might break then. Could we adjourn for - please adjourn the Court. 69 The extent to which Mr Stuart found it difficult to give his evidence objectively was also demonstrated in the course of an unsuccessful attempt by counsel for the Stuarts to challenge the credit of Mr Couper, the solicitor acting for Rabobank and a witness in the proceedings. 70 Counsel for the Stuarts, presumably as a result of a communication with Mr Stuart, made the following serious challenge to the credit of Mr Couper in the course of his cross-examination: MR KING: Do you recall that yesterday, when his Honour released Mr Ellem from giving his evidence, that his Honour made plain that Mr Ellem wasn't to speak further about his evidence to anybody?---Yes. Did you do so?---Did I speak to Mr Ellem about his evidence? Yes?---Certainly not. Didn't you follow Mr Ellem into the corridor and down the corridor to the lift?---Yes, I did. And didn't you say to him with respect to an aspect of his evidence, "You've got to," and then you were interrupted by Mr Mark Stuart, who said, "You're not supposed to be speaking to the witness, and you gulped, and the conversation ceased?---No, that did not happen. 71 In the course of re-examination, senior counsel for Rabobank elicited this evidence from Mr Couper: MR BRAHAM SC: So, Mr Couper, what happened outside the courtroom yesterday afternoon, after Mr Ellem had completed his evidence and you spoke to him?---I followed him down the corridor. I wanted to make sure that he was okay to get a cab to get out to the airport, and he asked me what he would do about his witness expenses, and I said he should write to me about that. When that conversation finished, I turned around to walk back to the courtroom. Mark Stuart was on my left, and as I walked past him, he started walking with me and he said, "what are you doing, you little prick? You're just a grub". And was there any other words exchanged between you and Mr Ellem or you and Mr Stuart in that period?---No.

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Mr Ellem 73 It was clear from Mr Ellem's oral evidence that he only had a very limited recollection of his dealings with the Stuarts. Much of his evidence, as perhaps could be expected given the effluxion of time and the number of dealings he had with the Stuarts, was in substance evidence of his usual practice, particularly when it came to alleged conversations that he had had with the Stuarts. The weight to be given to evidence of a usual practice, and the question of whether that evidence is to be preferred, depends upon the specific nature and quality of the evidence that is given in a particular case: see Phelan v Melbourne Health [2019] VSCA 205 at [84] and the cases cited at [80]-[83] (Tate AP, Kaye JA and Zammit AJA). 74 Mr Ellem's credit was forcefully challenged by counsel for the Stuarts, who submitted that his evidence should not be accepted on any issue unless it was corroborated by both independent documentary evidence and independent evidence of any alleged practice or system of Rabobank. If evidence was not supported in this manner, it was submitted that it should be treated as speculation and mere hope or reconstruction, referring to Connor v Blacktown District Hospital [1971] 1 NSWLR 713 (Connor v Blacktown) at 721 (Asprey JA with whom Mason JA agreed); R v Gordon (No 4) [2016] NSWSC 312 (Gordon) at [14]-[15] and [20] (Campbell J). There is no reference, however, in Connor v Blacktown or Gordon to any requirement of independent corroboration or treating uncorroborated evidence of usual practice as only speculation, mere hope or reconstruction. 75 Asprey JA explained in Connor v Blacktown at 721, quoting from McCormick, CT, Handbook on the Law of Evidence (West Publishing Company, 1954) at 341-2, that evidence of an act that is habitually done by a person under like circumstances will be received as evidence that it was done by the person on a particular occasion, subject to the Court having a discretion to exclude the evidence if it was not sufficiently regular and uniform or the circumstances were not sufficiently similar to outweigh the danger, if any, of prejudice or confusion. 76 In Gordon, Campbell J stated at [15], that evidence of a practice lays a foundation for an inference that the practice was followed on a particular day and that is the proper basis for its admissibility. However, evidence to the effect that a person believed they did something on a particular day because that was their usual practice would not be admissible, as it would be a conclusionary statement, rather than evidence of what they saw, heard or otherwise perceived: Gordon at [17]. 77 In any event, to my observation, Mr Ellem was seeking at all times to be listening carefully to the questions he was asked and genuinely attempting to answer them by reference to his recollection, rather than engaging in any process of reconstruction, speculation or mere hope. He is no longer employed by Rabobank and on his own evidence left the bank in strained circumstances. He certainly did not appear to have any incentive to embellish his evidence to suit Rabobank's position. When faced with inconsistencies or potential inconsistencies between those paragraphs of his outline that were admitted into evidence and his oral evidence, he somewhat candidly admitted that he was unable to explain the inconsistencies. He did not attempt to defend his position by engaging in any form of rationalisation or seek to diminish the significance of any concession that the cross-examiner may have believed he had obtained. His evidence on some matters was more emphatic, particularly with respect to the less plausible aspects of the cases sought to be advanced by the Stuarts, such as the typographical error in the Repayment Representation and the 15 Year Representation alleged to have been made by him to the Stuarts. 78 Much of the attack on the credit of Mr Ellem was directed at his evidence that he visited Mt Morris in 2008 prior to the issue of the June 2008 Letter of Offer. In his written outline that was admitted into evidence Mr Ellem stated at [62]: I refer to a Property Inspection/Valuation Report on "Mt Morris" by a Mr Swalling dated 5 June 2007. Mr Swalling was Branch Manager in Longreach and later was in credit in the Brisbane office of the Bank. My recollection is that Mr Swalling prepared the valuation from information that I provided to him. I relied on this valuation as well as my own checks. This document is in the Court Book, pages 525 and 526. 79 Mr Ellem, however, gave the following evidence in cross-examination: MR KING: Could you have a look, please, at - so let me ask you this. When do you say, if at all, you visited the farm Mt Morris? When was - do you say you visited?---Yes. When was the first time?---Prior to submitting to credit for the loan application. Just prior to it, in May 2008?---I think so. Well, would you have a look, please, at page 525 of the Court Book - in Volume 1, your Honour. Is that document familiar to you?---It looks like a property inspection report prepared by Craig Swalling. Yes. … Yes, was Mr Swalling in credit in Brisbane at that time?---I don't think so. So did you have any involvement in the preparation of this report?---No. If you have a look at paragraph 62 of your statement, according to your statement, you said that Mr Swalling prepared the valuation from information you provided to him?---Okay. Which is right: the evidence you've just given in the box or what you've said in your statement?---My memory may be incorrect. Can you please assist the court by telling us which is correct?---I don't know. 80 It can perhaps readily be accepted that it was most unlikely that Mr Ellem had provided any material to Mr Swalling with respect to the Property Inspection/Valuation Reports of Mt Morris that were generated from his 5 June 2007 inspection and valuation. Much of the apparent force in the challenge to Mr Ellem's credit on the issue of an inspection of Mt Morris prior to the June 2008 Letter of Offer is diminished when one has regard to a subsequent Property Inspection/Valuation Report for Mt Morris that was run on 14 September 2011 and records an inspection date by Mr Ellem of 1 May 2008 (2011 Ellem Mt Morris Valuation). The criticisms made of this report by counsel for the Stuarts on the basis that it records Mr and Mrs Stuart as the registered proprietors prior to their acquisition of Mt Morris and a valuation of $1.8 million for Mt Morris, rather than the $2.2 million used in the credit submission in May 2008, are misconceived. The copy of the 2011 Ellem Mt Morris Valuation in evidence was printed on 14 September 2011 at the time of the preparation of the credit submission by Mr Brady, which recommended that the account strategy for the Stuarts include a sale of Mt Morris. By this time the Stuarts had been the registered proprietors for more than three years and both the credit submission and the version of the 2011 Ellem Mt Morris Valuation printed on 14 September 2011 expressly refer to an external valuation of Mt Morris provided by Herron Todd White in May 2011. The compelling inference is that the 2011 Ellem Mt Morris Valuation had been updated to reflect events since the stipulated inspection date of 1 May 2008. 81 Further evidence that Mr Ellem inspected Mt Morris prior to the June 2008 Letter of Offer is provided in the handwritten notes of Mrs Stuart that were tendered from her options book. Her notes on 10 April 2008 recorded: 10th HAPPY TO LOOK AT IT AT 2.2 RANG Keith - checked above details asked about $ pr hd & terms of (RATE) 1,500 hd adjusted Inspection on 18th with Chris NEED to check equipement (didn't before) A list of equipement & house/quarters [illegible] Need to check feed/fences after flood. 82 In context, I am satisfied that "Keith" is a reference to Keith Richardson, Kevin Bredhauer's selling agent, "Chris" is a reference to Mr Ellem and "Inspection on 18th with Chris" is a reference to a proposed inspection of Mt Morris by the Stuarts with Mr Ellem on 18 April 2008. Mr Bredhauer and his then wife Sharon Bredhauer were the registered proprietors of Mt Morris at the time. The Bredhauers were also customers of Rabobank. 83 Ultimately, equally misconceived was the challenge to Mr Ellem's credit directed at the circumstances surrounding the signing of the loan application in relation to the June 2008 Letter of Offer. Counsel for the Stuarts submitted in their closing written submissions that Mr Ellem's evidence that he arranged for the loan application to be signed on the date that it bears, namely 28 May 2008, was false and hence "his strenuous assertions that he did not have the loan application form with him, or if he did the Stuarts did not sign it in mid-May at his farm visit … should be rejected". 84 The principal focus of the attack on Mr Ellem's credit in this respect was his denial that the Stuarts signed the loan application in "mid-May" 2008, namely at a time prior to their entry into the contract for the purchase of Mt Morris. 85 Counsel for the Stuarts submitted in their closing written submissions that: One explanation is that, as the Stuarts have maintained throughout their oral testimony, that prior to signing the contract for sale, he came to the farm with bank documents and that they signed the loan applications in blank which he took away [Ex R 9]. It follows his evidence at Tr 876/14 to the Court was false. The letter of 3 June 2008 also makes his evidence on this topic false, but for a different reason. [MFI - 47] does not have an original fully completed loan application in it, which would be expected if the returned envelope from the Stuarts contained the completed loan application form. 86 However, Rabobank's letter to the Stuarts of 3 June 2008, as explained below, demonstrates that contrary to its usual procedures Rabobank did not have a signed loan application form prior to the issue of the June 2008 Letter of Offer. Hence it was not possible for the Stuarts to have signed the loan application either in mid-May 2008 or on 28 May 2008. 87 In the circumstances, I am not prepared to accede to the submission by counsel for the Stuarts that I only accept the evidence of Mr Ellem to the extent that it satisfies the two stipulated conditions identified above.

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The expert reports of Mr White and Mr Green 93 The Stuarts relied on an expert report prepared by Stuart White dated 25 October 2020. 94 Mr White currently operates a business advisory firm specialising in business planning, financial management and financial modelling for business projections. He has previously been an auditor and chartered accountant at KPMG, CEO of Macquarie Premium Funding and executive chairman of a financial technology start-up enterprise. At the commencement of his report, Mr White notes: "Whilst I have not had direct experience with Rural Lending per se, I consider my qualifications and experience relevant to these circumstances …" 95 Mr White was asked to address the following questions in his report (I note that there was no question numbered one): 2. In assessing the Stuarts' credit application in May 2008 to vary the All in One account with RBL [Rabobank] in respect of the purchase of Mt Morris and in offering them finance on or prior to 2 June 2008 in your view did RBL breach its own guidelines and/or did it other act imprudently? [All In One Facility - Variation] 3. Whether in your view the All in One account as amended in June 2008 for the purpose of the purchase of Mt Morris by the Stuarts was suitable finance for the Stuarts? [All In One Facility - Suitability] 4. Whether in your view the All in One account as amended in June 2008 for the purpose of the purchase of Mt Morris by the Stuarts remained after its amendment a 15-year Interest Only facility? [All In One Facility - 15 Year Interest Only] 5. What in your view was the loss of the Stuarts having regards to the particulars of loss claimed: a) On the assumption that the Stuarts did not proceed with the purchase of Mt Morris; b) On the assumption that the Stuarts did go ahead with Mt Morris? [Loss Estimates] 96 Rabobank retained Geoff Green to prepare a report in response to the report prepared by Mr White in respect of Questions 2 to 4. Mr Green was not asked to address Question 5 dealing with loss estimates. 97 Mr Green is a chartered accountant. At the time of writing his report dated 5 February 2021, he had 12 years' credit and risk experience at the National Australia Bank (NAB) and two and a half years' experience with the Australia and New Zealand Banking Group (ANZ). His experience at NAB included a role as an Agribusiness Leader in the Strategic Business Services division of the bank, which manages problem loans. Mr Green has also directly managed several Queensland cattle farming and other agribusiness enterprises. 98 Mr White and Mr Green conferred with each other prior to the commencement of the hearing and produced a joint report dated 31 March 2021. 99 In their joint report, Mr White and Mr Green agreed that: (a) Kurrajong, Tullochard, Evergreen and Mt Morris were all cattle farming properties; (b) the approval of the credit submission for the Mt Morris advance in May 2008 was prompt; (c) the Facility remained an interest only facility after the Mt Morris advance; (d) the credit assessment documents of Rabobank included the formal credit submission, the work flow request and other information that the credit team already had access to (eg through the CMS or CRE system), or may have requested the originating team to provide (eg client financial statements); and (e) the Stuarts' historical business model of buying and selling properties was relevant to the assessment of their capacity to comply with the condition to sell Evergreen by 31 March 2009. 100 There were five principal areas of disagreement between Mr White and Mr Green. 101 First, while both experts agreed that the Facility remained an interest only facility after the advance to permit the Stuarts to purchase Mt Morris, they disagreed as to whether the periodic reviews had any effect on the term of the Facility. Mr White was of the view that the reviews permitted the term of the Facility to be shortened at Rabobank's sole discretion, while Mr Green considered that the review provisions were standard provisions that did not falsify the proposition that, from its inception, the Facility was a 15 year interest only facility. Ultimately, I consider that this is largely a matter for me to determine, but as I explain later in these reasons, Mr Green's evidence was of assistance in determining this issue. 102 Second, the experts disagreed as to whether Rabobank breached its own guidelines in the assessment and approval of the Mt Morris advance. Mr White found that various specified policies were mandatory, while Mr Green found that they were not mandatory and that some of the policies specifically permitted non-compliance. I did not derive any real assistance from either expert on this issue. The experts sought to construe the language of the Rabobank policies in seeking to characterise whether the policies were mandatory or discretionary. I do not consider that this is an appropriate matter for expert evidence. Moreover, for reasons developed below, whether policies were mandatory or discretionary and whether, in any event, Rabobank complied with those policies does not answer the question of whether Rabobank acted unconscionably. 103 Third, Mr White and Mr Green disagreed as to whether Rabobank acted imprudently in the assessment and approval of the May 2008 Credit Submission (see [341] below) for the increase to the Facility Limit to facilitate the purchase by the Stuarts of Mt Morris. Mr White contended that Rabobank acted imprudently, citing deficiencies in the serviceability assessment that "resulted in this risk of default being materially mis-judged". These deficiencies included breaches of Rabobank's policies, a lack of consideration of actual events that did not reflect assumptions, a lack of consideration of the net decline in the Stuarts' equity, insufficient cash flow from Mt Morris to cover drawings and information deficiencies. Mr White concluded that the credit assessment deficiencies, taken collectively, were material enough to have resulted in a different credit outcome. On the contrary, Mr Green did not believe that Rabobank acted imprudently, stating that any deficiencies in the credit submission would not have led to a different outcome. Overall, Mr Green characterised the Mt Morris advance as "a simple transaction that was clearly to the benefit of the Stuarts". 104 I did not find this conflicting evidence of much assistance. It was largely directed at measuring the materiality of the alleged deficiencies by speculating on whether or not Rabobank would have declined to approve the May 2008 Credit Submission had the deficiencies not occurred. This is inherently a counterfactual question that could only be answered by drawing inferences from a large quantity of conflicting evidence from which an informed but ultimately impressionistic view is required. Ultimately, it is again a matter for the Court to determine, not an expert issue. 105 Perhaps this is most clearly demonstrated in the approach taken to the valuations of Evergreen and Mt Morris in the May 2008 Credit Submission. Formal valuations were not obtained by Rabobank of these properties, but the objective evidence taken as a whole (in particular, the evidence of Ms Bodkin given in cross-examination that was not considered by the experts) suggests that the values attributed to those properties in the May 2008 Credit Submission and the likely timeframe for selling Evergreen would generally have been consistent with values and estimated timeframes that would have been provided if formal valuations had been obtained. 106 Fourth, the experts disagreed as to whether or not the Mt Morris advance was suitable finance. Mr White concluded that it was not while Mr Green found that it was. Mr White gave three reasons as to why it was not suitable finance: (1) it was reasonably foreseeable that the Stuarts would be unable to comply with the terms and conditions of the Facility because the net proceeds from the sale of Evergreen were unlikely to equate to $3.23 million; (2) it was reasonably foreseeable that the Facility would not meet the objectives of the Stuarts due to insufficient projected cash flow from Mt Morris; and (3) the acquisition of Mt Morris elevated the risks of the Stuarts' financial situation. 107 Both experts acknowledged that each had used a different definition of "suitable": Mr White used the definition given in the National Credit Code while Mr Green used the definition of "suitable" in the ordinary sense of the word. 108 Again, these are inherently factual issues for the Court to determine having regard to all the evidence, rather than expert issues. Further, their resolution is not assisted by experts using definitions derived from a specific statutory context or by resorting to notions of the "ordinary sense" of a word. 109 Fifth, in regard to whether Rabobank understood that the Stuarts' primary business was cattle farming in the assessment and approval of Mt Morris, Mr White was of the opinion that it did and that Rabobank's categorisation of the Stuarts' enterprise as cattle farming was demonstrated in the credit assessment documents. However, Mr Green found that there was nothing to suggest that the Stuarts were operating their properties to maximise income from cattle production itself; rather, the success of the Stuarts as cattle farmers was also as a consequence of their improvement of properties. Again, I did not find this evidence to be of any real probative value. The issue was of only tangential relevance and any necessary characterisation would ultimately be a matter of fact to be determined by the Court, not experts expressing opinions by reference to limited assumptions. 110 Both experts were cross-examined at some length following a concurrent evidence session. Senior counsel for Rabobank sought to discredit the evidence of Mr White, noting, among other matters, that Mr White had never worked in a bank and that he did not have experience in the sort of lending that was the subject of these proceedings. Given Mr White's relative lack of such experience compared with Mr Green, I would have generally preferred the evidence of Mr Green but given my views on the relevance of their expert evidence this was of little significance for the determination of the issues in this proceeding. 111 Much of the cross-examination of Mr White and Mr Green only served to highlight the inherent lack of utility in asking experts to address what are innately counterfactual issues or to express opinions by drawing inferences from contested evidence as to the suitability of, or deficiencies in, credit assessments.

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Admissibility of McGovern and Keogh reports 113 The Stuarts sought to rely on opinion evidence from an economist, Dr Mark McGovern, and a carbon farming consultant, Benedict Keogh. 114 Section 79(1) of the Evidence Act 1995 (Cth) (Evidence Act) operates as an exception to the opinion rule in s 76(1), which provides that: "[e]vidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed". 115 Section 79(1) relevantly provides: If a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge. 116 When considering the operation of s 79(1), it is necessary to identify why the evidence is relevant having regard to s 55(1) of the Evidence Act. This requires an identification of the fact in issue that the party tendering the evidence asserts the opinion proves or assists in proving: Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21 (Dasreef) at [31]. To put it another way, "[e]xpert evidence is inadmissible unless the facts on which the opinion is based are stated by the expert - by way of proof if the expert can admissibly prove them, otherwise as assumptions to be proved in other ways": Dasreef at [64]. 117 Section 79(1) has two requirements. First, that the witness has specialised knowledge based on their training, study or experience, and second, that the opinion expressed is based wholly or substantially on that knowledge. Regarding the second requirement, the opinion must be presented in a way that makes it possible for the Court to ascertain whether the opinion was based on that knowledge: Honeysett v The Queen (2014) 253 CLR 122; [2014] HCA 29 (Honeysett) at [24]. A failure to express an opinion in such a way is a matter that goes to the admissibility of the evidence, not its weight: Dasreef at [42]. 118 In the course of the hearing I found that the reports prepared by Dr McGovern and Mr Keogh failed to satisfy the requirements of s 79(1) and were thus inadmissible. I rejected the proposed tender of them by the Stuarts. I will now give my reasons for doing so.

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Dr McGovern's reports 119 Dr McGovern has been a visiting fellow in economics and finance at the Queensland University of Technology (QUT) since his retirement from research and lecturing at QUT in 2016, which spanned 27 years. He has specialised knowledge based on his training, study and experience as an economist, but not with respect to banking practice and procedures. Dr McGovern prepared two reports, the first entitled "Response to Instructions: Stuart partnership and Rabobank" (First Report) and the second entitled "Response to the Report of Mr Green: Stuart partnership and Rabobank" (Response). 120 The letter of instruction dated 9 September 2020 attached to the First Report asked Dr McGovern to answer the following questions ("RBL" being Rabobank): 1. Whether an All In One account was suitable finance of a bank for the Stuarts? 2. Was the All In One account bridging finance? 3. Was the credit supplied to the Stuarts under the All in One account credit to which [the National Credit Code] applied? 4. Did RBL act unreasonably or unconscionably towards the Stuarts in varying the All In One credit account in June 2008, or at other times? 5. Whether over the life of the loan RBL failed to act reasonably and /or work with the Stuarts' financial difficulty in: a. Objecting to the sale of Evergreen; b. Refusing to support Stuarts' application to QRAA to restock and offers of agistment; c. Refusing consent to Stuarts' Carbon Farming project and other income sources. d. Whether there was any other issue which contributed to the demise of their farming enterprise? 121 The Stuarts confirmed in the course of the determination of the admissibility of Dr McGovern's First Report that his answer to Question 3 would not be pressed or otherwise relied upon. 122 The First Report failed to comply with well-established principles regarding the admissibility of expert reports. 123 First, the questions that Dr McGovern was asked to address were inherently fact specific and the focus on reasonableness in Questions 4 and 5 required the making of normative judgments. These are fundamentally matters for the Court. For any opinions to be of assistance to the Court in addressing the questions pressed by the Stuarts, the Court would need to be satisfied that the expert had relevant specialised knowledge, the factual basis upon which the expert was proceeding was clearly articulated and the reasoning process of the expert was transparently exposed. 124 Second, while Dr McGovern has specialised knowledge based on his training, study and experience as an economist, that specialised knowledge was of limited, if any, relevance to the questions he was asked to address in his reports. Specifically, it was not established that he had any specialised knowledge based on his training, study and experience with respect to banking practice and procedures. 125 Third, the assumptions that Dr McGovern was asked to make for the purpose of preparing the First Report were not identified and no attempt was made to identify with any specificity the documents with which he had been provided. His letter of instruction simply stated: "I have separately supplied you with a copy of the pleadings in the matter, the Bank's discovery and lay statements of witnesses". 126 The letter of instruction itself presented further difficulties. First, the pleadings and discovery provided to Dr McGovern were as they existed in September 2020 (presumably Dr McGovern was given outlines of evidence that existed prior to that date). Second, some of the lay witnesses were never called to give evidence. Third, Mrs Stuart largely gave her evidence in chief orally and it is unknown how consistent this evidence was with the outlines of evidence given to Dr McGovern. 127 Despite his role as an economist, Dr McGovern makes very little reference to economic theory. When he does make reference to economic theory it does not appear to have been used to explain or understand the issues he was asked to address. For example, in his First Report Dr McGovern writes under the heading "Approach adopted" that he assumed his role "is to frame the facts and connect the incidents as best I can so as to assist the Court in its determining of the validity of representations and claims using apt areas of Law". However, Dr McGovern went on to say that his work draws on "different but complementary areas to Law" where "Business, Economics and Finance together provide perspectives and insights on human actions, events and impacts". 128 Fourth, there is limited, if any, disclosure of Dr McGovern's reasoning process, or the basis on which he formed his opinions. This makes it difficult to ascertain whether Dr McGovern has utilised, wholly or partially, his specialised knowledge when coming to his conclusions. For example, under the heading "Question 5. RBL failures?" and in coming to the conclusion that "[m]any failures are evident, and of importance also are other issues and failures", Dr McGovern writes: Situation a. No party was perfect, nor should we expect them to be. A range of possibilities, adversities and failures attend any project, and working with another party over 15 years for mutually beneficial outcomes is difficult. b. Any investment project faces not just recognised risks but also uncertainties. Idiosyncratic exposures exist along with asymmetries in information, insight, capacity and power. c. Still we each try to do our best, informed and hopefully supported by shared conventions, beliefs and laws. d. Dealing fairly, reasonably, conscionably and lawfully with "an other" should all be convergent in actions, to at least some extent. e. Resilience, and indeed survival, require an ability to adapt when adversities arise. Situations and adaptations that cause untoward damage to another should be avoided. f. Essentially, in this case two quite different enterprises were engaged in a joint venture i. One had an excess of funds, the other of labour ii. Each could profit by investing some excess for mutual benefit iii. A relationship formed in 2004, but the commitment of one faltered… … and the rest you know 129 It does not appear that Dr McGovern is applying specialised knowledge based on his training, study and experience. Rather it appears that he is expressing general opinions divorced from that training, study and experience. This together with the lack of identification of the First Report's underlying assumptions and facts dictates the conclusion that the opinions in the First Report are not expressed in a form that makes it possible to ascertain whether the opinions were based on Dr McGovern's specialised knowledge: Honeysett at [24]. In the First Report, Dr McGovern also gives opinions about ultimate issues in dispute, including the suitability of the Stuarts' finance, whether certain representations were made by Rabobank, whether those representations may be true or misleading and whether Rabobank's conduct was unconscionable. All of these are questions for the Court. 130 A further deficiency is that Dr McGovern appears to have based his First Report solely on the characterisation of the representations pleaded by the Stuarts in their statement of claim. Dr McGovern does not address a point that was argued extensively in the defence (and we know Dr McGovern was provided with the pleadings); namely, the express term in the June 2008 Letter of Offer that there be a substantial repayment within approximately nine months. It thus appears that Dr McGovern ignored any defence Rabobank might advance and simply assumed that the pleadings of the Stuarts were factually correct. 131 The First Report therefore is inadmissible as it does not satisfy the requirements of the exception to the opinion rule provided in s 79(1) of the Evidence Act. 132 The Response suffers from similar deficiencies to the First Report. Again, the Response does not identify the facts (assumed or otherwise) on which Dr McGovern relied to form his opinions. In addition, unlike the First Report, there does not even appear to have been any specific instructions given to Dr McGovern in order for him to prepare the Response. The only clarity provided is the following statement: "My purpose in developing this Report is to provide an objective and impartial assessment of the Response of Mr Green to aspects of the Report of Mr White relevant to my First Report". However, this does not identify any assumptions or facts on which the Response is based and therefore does not permit any analysis of Dr McGovern's reasoning process, which would assist the Court in ascertaining how his specialised knowledge has been applied to any assumed facts. 133 Further, in a similar manner to the First Report, Dr McGovern proffers opinions in the Response on a range of matters outside his specialised expertise in economics, including: Rabobank's conduct, internal processes and procedures; negligence, hearsay, conflicts of interest and agency; agricultural real estate valuation; and the nature of the Stuarts' business. Again, Dr McGovern expresses opinions in the Response about legal norms and standards. 134 Therefore, for essentially the same reasons outlined above regarding the First Report, the Response is inadmissible as it does not satisfy the requirements of the exception to the opinion rule provided in s 79(1) of the Evidence Act.

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Mr Keogh's report 135 In the last week of the hearing counsel for the Stuarts sought belatedly to tender an expert report of Mr Keogh dated 26 April 2021 (Keogh Report). 136 According to his curriculum vitae supplied to the Court, Mr Keogh is a "career professional in the agricultural market with extensive experience in the practical development and implementation of carbon farming projects", having obtained a Bachelor of Applied Science in Natural Resource Management and a Diploma in Forestry from the University of Melbourne. Mr Keogh was involved in the Stuarts' proposed carbon farming scheme as the founder and managing director of Australian Carbon Traders Pty Ltd. Relevantly, he provided the Stuarts with a project assessment report dated 19 February 2013 that contained a preliminary estimate that the project presented a positive profile that warranted further investment. In a letter to the Stuarts dated 1 August 2013, Mr Keogh discussed the form and prospects of the carbon farming scheme, as well as applicable policies. 137 The letter of instruction dated 23 April 2021 annexed to his report (Keogh instruction letter) asked Mr Keogh the following questions under the heading "Report Requirements" (I note that the questions were identified by letters, but the cross-references were to numbered paragraphs, hence, by way of example, the reference to "3 above" is a reference to "c above"): a. Do you adhere to the opinions which you expressed in your project assessment report to the Applicants dated 19 February 2013 (copy attached, together with the CFI Mapping Tool dated 18 February 2013)? b. Having regard to your knowledge and experience of and in the carbon market since that time, do you have any reason for altering the opinions expressed in the report referred to in 1 above? c. Do you adhere to the opinions which you expressed in your letter to the Applicants dated 1 August 2013 (copy attached)? d. Having regard to your knowledge and experience of and in the carbon market since that time, do you have any reason for altering the opinions expressed in the report referred to in 3 above? e. We note that in your letter to the Applicants of 1 August 2013, referred to in 3 above, you include an estimate of the returns for the financial years ended 30 June 2010 to 30 June 2050. We note that those returns are based on an estimated carbon price. Having regard to your knowledge and experience of and in the carbon market since that time, in your report please provide your expert opinion as to the actual returns that would have been generated for the financial years 30 June 2014 to 30 June 2020, inclusive, on the assumption that the Applicants had proceeded with the carbon farming initiative on Mt Morris. f. In addition to 5 above, your expert opinion as to the estimated returns that would have been generated for the financial years 30 June 2021 to 30 June 2050, inclusive, on the assumption that the Applicants had proceeded with the carbon farming initiative on Mt Morris. 138 The Keogh instruction letter also set out the following factual assumptions on which Mr Keogh was to rely: 1. The Stuarts were interested in conducting carbon farming on Mt Morris 2. A trial area of 114 hectares was established in January 2013 to examine the potential of carbon farming on Mt Morris 3. A further area of 5,000 hectares was surveyed to be set aside for the carbon farming project to proceed on Mt Morris 4. That area of 5,000 hectares was utilised for the carbon farming project on Mt Morris 5. That the carbon farming project on Mt Morris continued to be managed in a competent and compliant manner from inception to 30 June 2050. 139 As explained above, an expert report must be presented in a form which makes it possible to ascertain whether an opinion is wholly or substantially based on the specialised knowledge of the expert: Honeysett at [24]; Dasreef at [36]. The form of Mr Keogh's report makes this impossible. 140 The Keogh Report could fairly be described as a bundle of documents, comprising: (a) a six page report that is not paginated (Primary Report), containing a one page summary of the background of Mr Keogh's involvement with the Stuarts, a two page list of Mr Keogh's career and expertise and a three page section entitled "Factual Assumptions"; (b) the Keogh instruction letter; (c) a two page Carbon Farming Initiative (CFI) Mapping Tool Carbon Estimation Area Summary Report dated 18 February 2013 and a Mt Morris project assessment report prepared by Mr Keogh for the Stuarts dated 19 February 2013 (incorrectly stated in his 26 April 2021 report to be dated 18 February 2013); (d) a five page curriculum vitae of Mr Keogh; and (e) the Expert Evidence Practice Note and the Expert Code of Conduct. 141 The section in the Primary Report entitled "Factual Assumptions" sets out the questions Mr Keogh had been asked to address with short form answers that included references to his creation of a "Reforestation Modelling Tool", downloading location specific attributes from a government server, executing the model and then exporting results to Microsoft Excel. From this, Mr Keogh calculated that between 2010 and 2020, the Stuarts would have received approximately 93,000 Australian carbon credits at a rate of $10.00 each, in aggregate $930,000. 142 The "Reforestation Modelling Tool" was not included in the proposed tender, nor were any Microsoft Excel calculations or the underlying data that was relied upon. 143 The "Factual Assumptions" section of the Primary Report also included the following responses to the questions concerning Mr Keogh's project assessment report dated 19 February 2013: 4.1 Do you adhere to the opinions which you expressed in your project assessment report to the Applicants dated 19 February 2013 [copy was attached, together with the CFI Mapping Tool dated 18 February 2013]? i. The report prepared on the 18th February 2013 was done on the best available information at the time, it weas [sic] completed as a [preliminary estimate to determine if the project area warranted further investigation, based on the outcomes of the assessment and as expressed in the report the project presented a positive profile that warranted further investment. The information provided in that report was prepared with due care and would be considered correct at that time given the rules of the CFI at that time. … 4.3 Do you adhere to the opinions which you expressed in your letter to the Applicants dated 1 August 2013? i. Yes. 144 As can be seen from the above summary and extracts from the Keogh Report, it does not comply with established procedures and principles for the admission of expert evidence. It barely rises above mere assertion and to the extent that any reasoning is provided, the underlying calculations and data are not provided or identified with any specificity. I therefore rejected the tender of the Keogh Report. 145 Furthermore, the Keogh Report was sought to be tendered very late in the proceedings, such that it would have been manifestly prejudicial to Rabobank if it had to cross-examine Mr Keogh without being able to obtain access to and been given an opportunity to respond in a substantive manner to the undisclosed calculations undertaken by Mr Keogh in response to the Keogh instruction letter.

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Admissibility of hardship evidence 146 At the conclusion of the expert evidence in this proceeding, counsel for the Stuarts made an application to reopen their case to read an affidavit of the Stuarts' solicitor Keith Spencer, which was said to annex a personal hardship statement of Mrs Stuart entitled "Catherine Enid Stuart - PERSONAL HARDSHIP Statement 6 October 2019". The statement was extracted from the affidavit of Mr Spencer and marked for identification. Part A of the document, being just over one page, contained a numbered list setting out the tasks Mrs Stuart would attend to on the farm each day. Part B of the document, around 53 pages in length, set out a table containing a schedule of "Hardship Events", being descriptions of events occurring between 2011 and 2019 that Mrs Stuart found to be distressing. For example, the table begins by recounting that the Stuarts' daughter suffered a serious spinal injury and had subsequent hospital stays and physiotherapy appointments. The table also includes descriptions of events surrounding the sale of the Stuarts' various properties and the Mediation. 147 Counsel for the Stuarts also sought to read a short affidavit of Mr Stuart sworn on 8 April 2021 that had previously been relied upon in support of an interlocutory application for impecunious access to the transcript of the hearing. 148 When asked as to what issue in the proceedings these documents were relevant, counsel for the Stuarts stated that it "goes to hardship and also the issue of evidence supporting her case … on the delay question". Counsel clarified that the reference to the delay question was the amendment to the pleadings in the course of the final hearing to raise discretionary relief, namely, injunctive and declaratory relief. 149 When asked why the statement of Mrs Stuart was not led in chief, counsel for the Stuarts responded that the "full panoply of the issues regarding the relevance of the hardship question wasn't to the fore" and although it was not dealt with specifically in relation to the personal hardship of Mrs Stuart, it was dealt with "in some detail in different contexts". He also submitted that "in terms of reopening, the only ground upon which I can rely upon is simply oversight in the context of preparing a complex matter with a lot of factual material and many witnesses in different parts of the country adducing evidence and the other exigencies of the case". Counsel for the Stuarts contended that there was no prejudice to Rabobank. 150 Counsel for the Stuarts also acknowledged that the statement ought to have been led in evidence in chief, but stated "when it came to the cross-examination of both Mr and Mrs Stuart, none of the discretionary issues were the subject of cross-examination". Counsel for the Stuarts submitted the statement should be received subject to relevance. 151 I did not allow the Stuarts' application to reopen their case. The orders for the efficient conduct of this hearing required evidence to be advanced initially by way of outlines of evidence. That evidence was then given orally or, alternatively, given by witnesses swearing to the content of their outlines of evidence with respect to particular paragraphs. Mr and Mrs Stuart had already been cross-examined at length. The potential additional evidence that would be admitted may well have led to the need to recall both Mr and Mrs Stuart for further cross-examination and result in significant additional hearing time, in circumstances where the final hearing had already been extended beyond the dates originally listed. 152 Moreover, leave to file an amended originating process and statement of claim to raise the discretionary issues was granted expressly on the basis of counsel for the Stuarts' confirmation that the amendments would not give rise to the need for the Stuarts to rely on any additional evidence.

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Weight to be given to testimonial evidence 153 I have alluded above to the limitations in the probative value of testimonial evidence of all witnesses, given the amount of time that has elapsed since the events in question and the Stuarts' belief that Rabobank, and in particular Mr Ellem, was responsible for the Stuarts' current financial predicament. 154 The following observations of Lee J in Webb v GetSwift Limited (No 5) [2019] FCA 1533 at [17]-[18] about the weight to be given to testimonial evidence are equally relevant in the present case: 17 As those experienced in commercial litigation in general, and in securities class actions in particular, would readily appreciate, what matters most in the determination of the issues in cases such as this is the analysis of such contemporaneous notes and documents as may exist and the probabilities that can be derived from these documents and any other objective facts. Take the example of the dealings between GetSwift and the customers: there is likely to be a documentary record both within the business records of GetSwift and their contractual counterparty which records dealings between them which go beyond the agreement itself. Additionally, experience suggests that it is also likely that there will be informal email exchanges, both between GetSwift and the customers, and within the relevant organisations. 18 As Leggatt J said in Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm) at [15]-[23], there are a number of difficulties with oral evidence based on recollection of events given the unreliability of human memory. Moreover, considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial. As his Lordship noted, a witness is asked to make a statement, often when considerable time has already elapsed since the relevant events. The statement is usually drafted by a solicitor who is inevitably conscious of the significance for the case of what the witness does or does not say. The statement is often made after the memory of the witness has been "refreshed" by reading documents. The documents considered can often include argumentative material as well as documents that the witness did not see at the time and which came into existence after the events which the witness is being asked to recall. It may go through several iterations before it is finished. As Lord Buckmaster famously said, the truth "may sometimes leak out from an affidavit, like water from the bottom of a well". This may be overly cynical, but the surest guide for deciding the case will be as identified by Leggatt J at [22]: … the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on the witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. 155 In these proceedings witnesses gave their evidence partly orally by reference to written outlines and partly by the tender of extracts from written outlines, the truth of which they confirmed in their oral evidence. In my view the cautions expressed above in relation to securities class actions regarding affidavits and written statements apply equally to the present circumstances. 156 A significant quantity of contemporaneous emails, letters and other documents were tendered in the course of the hearing. Taken together, these contemporaneous materials illuminate and put into context many of the events and issues that the parties seek to agitate in these proceedings. 157 To the extent that there are discrepancies or inconsistencies between the testimonial evidence in this case and inferences that can be drawn fairly from contemporaneous documents and known or probable facts, I have given more weight to the contemporaneous documents.

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Jones v Dunkel inferences 158 The Stuarts pressed the Court to draw Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 at 320 (Jones v Dunkel) inferences with respect to the absence of Mr Webber, Mr Witherow, Mr Nevison and Mr Ole. Rabobank served outlines of evidence from each of those people pursuant to orders made by Rares J, but the bank ultimately decided not to call any of them as witnesses. In addition, the Stuarts pressed for Jones v Dunkel inferences to be drawn with respect to the Rabobank credit committee (Rabobank Credit Committee) members who reviewed the May 2008 Credit Submission and the May 2010 Credit Submission. 159 The specific inferences that are sought in respect of each of the Rabobank employees is that their evidence would not have assisted Rabobank's case both as to what they observed and the evidence, practice and systems of Rabobank. These inferences, as submitted, would assist the Stuarts on the following "key findings": (a) consistently with the Stuarts' evidence, Mr Ellem did take with him to Evergreen in mid-May 2008 a draft letter of offer and a loan application form; (b) Mr Ellem made the Repayment Representation; (c) Mr Ellem recklessly represented to the Rabobank Credit Committee in the May 2008 Credit Submission that he had inspected Mt Morris for the purposes of the internal valuation dated 5 June 2007; and (d) both Mr Webber and Mr Gray were aware of the unreliability of the 5 June 2007 valuation of Mt Morris and failed in their supervisory and decision-making roles. 160 The Stuarts also press for Jones v Dunkel inferences to be drawn with respect to the Stuarts' evidence as to what occurred at the Mediation and the failure of Rabobank to produce the contemporaneous diary notes of Mr Ellem (other than four irrelevant entries) in circumstances where Mr Ellem's evidence was that he maintained a regular work diary when he worked at the Dalby branch. 161 On balance, I am not inclined to draw any Jones v Dunkel inferences. 162 First, the testimonial evidence of Mr and Mrs Stuart did not extend to any conversations or communications between the Stuarts and any of the persons in respect of whom Jones v Dunkel inferences are sought, with the exception of Mr Nevison. 163 Second, given the effluxion of time it is by no means clear that any of these Rabobank putative witnesses would be able to add materially to the content of the contemporaneous documents and inferences that could fairly be drawn from those documents. 164 Third, although Rabobank served an outline of evidence of what it expected to be able to lead from Mr Nevison, he was an independent witness who could not be considered to be in "Rabobank's camp". This was made clear in his standard form mediation agreement. 165 Fourth, it is not apparent how a Jones v Dunkel inference can be drawn by reason of the limited production of Mr Ellem's diary notes in the absence of any evidence that Rabobank had retained but had chosen not to produce them in answer to the call for their production.

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Section 97(1)(a) - "reasonable notice" 183 Senior counsel for Rabobank submitted that the Tendency Notice was given to Rabobank by the Stuarts on 1 April 2021, being three business days prior to the commencement of the hearing. He submitted that this was not sufficient time before the hearing to investigate the details [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] 184 He further submitted that responding to the proposed tendency evidence, if it were admitted, would require an investigation into [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] 185 [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] 186 [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] 187 I am satisfied that given the breadth and scope of the matters sought to be established by the proposed tendency evidence to be adduced that three days' notification prior to the commencement of the hearing was not reasonable notice in writing of the Stuarts' intention to adduce that tendency evidence, given the extent of the enquiries that would need to be undertaken as outlined above.

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Section 97(1)(b) - "significant probative value" 188 The Dictionary in the Evidence Act defines "probative value" as "the extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue". 189 In this context, "significant" does not mean "substantial", but it does mean "important" or "of consequence": IMM v The Queen (2016) 257 CLR 300; [2016] HCA 14 (IMM) at [103] (French CJ, Kiefel, Bell and Keane JJ) citing R v Lockyer (1996) 89 A Crim R 457 at 459 (Hunt CJ at CL); DSJ v The Queen (2012) 84 NSWLR 758; [2012] NSWCCA 9 at [57]-[60] (Whealy JA with whom Bathurst CJ, Allsop P, McClellan CJ at CL and McCallum J agreed). 190 As explained by Wright J in R v Chatimba (No 1) [2021] NSWSC 204 (Chatimba) at [24]: The significance of the probative value of the evidence depends on the nature of the facts in issue to which the evidence is relevant and the significance or importance which the evidence may have in establishing those facts. 191 Further, the evidence must be "influential in the context of fact-finding": IMM at [46] (French CJ, Kiefel, Bell and Keane JJ). In these circumstances, therefore, the evidence must advance the case of the Stuarts. 192 For the purposes of the assessment under s 97(1)(b), although the evidence of a tendency might be weak by itself, its probity may be assessed together with other evidence to be adduced: Hughes v The Queen (2017) 263 CLR 338; [2017] HCA 20 (Hughes) at [61] (Gageler J). Further, the majority in Hughes stated at [64] (Kiefel CJ, Bell, Keane and Edelman JJ): The second matter to consider is that the probative value of the evidence will also depend on the extent to which the tendency makes more likely the elements of the offence charged. This will necessarily involve a comparison between the tendency and the facts in issue. 193 As Schmidt J stated in R v Wilson (No 3) [2017] NSWSC 1680 at [10], relying on Hughes v R (2015) 93 NSWLR 474; [2015] NSWCCA 330 at [160]-[161] (an appeal of which was dismissed by the High Court in Hughes cited above): [E]vidence that a person had a particular tendency is adduced to provide the foundation for an inference that the person was more likely to act in a particular way, or have a relevant state of mind, on a particular occasion. Thus the tendency evidence must be understood to be a stepping stone, the inference being that because of the tendency, it is more likely that the person acted, or had the state of mind asserted by the tendering party, on the occasion in question. 194 Finally, Bellew J in R v Sharpe (No 5) [2021] NSWSC 52 (Sharpe) at [16] identified a number of factors relevant to the assessment of the probity of proposed tendency evidence, including: (a) the issue to which the evidence is relevant; (b) the number of occasions of particular conduct that are relied upon; (c) the time lapse between each occasion; (d) any geographic connection between the alleged conduct; and (e) the degree of specificity of the conduct or alleged tendency. 195 Regarding the fifth element, Bellew J noted that a close similarity between the incidents is not essential (see Hughes at [34] per Kiefel CJ, Bell, Keane and Edelman JJ) and that a single instance of conduct may have sufficient probative value: see Reeves (a pseudonym) v R (2013) 41 VR 275; [2013] VSCA 311 at [56] (Maxwell ACJ with whom Coghlan JA agreed and Priest JA dissented); Aravena v R (2015) 91 NSWLR 258; [2015] NSWCCA 288 at [86]-[89] (Beazley P, Hall and Wilson JJ). 196 However, Bellew J recognised that considerable care must be taken where there are limited instances of conduct the subject of the tendency evidence. In support of this proposition, White J found in Stanley v Service to Youth Council Incorporated (No 2) (2014) 317 ALR 141; [2014] FCA 644 (Stanley) at [31] that the higher the level of generality or abstraction, the more probable it is that similarities in the features of two or more cases may be found. His Honour noted that similarities of this kind will seldom have the "significant probative value" contemplated by s 97 of the Evidence Act. 197 The nature of the facts in issue in this matter are relevant to whether the tendency evidence sought to be adduced had any strength in establishing the tendency contended for by the Stuarts. The relevant facts involve conduct by [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] 198 This chain of events occurred predominantly after the conduct that is the subject of this matter. I note that tendency may be considered prospectively or retrospectively: see TB v R [2019] NSWCCA 224 at [90] and [102] (White JA with whom Harrison and R A Hulme JJ agreed); RH v R (2014) 241 A Crim R 1; [2014] NSWCCA 71 at [115]-[117] and [129]-[130] (Ward JA with whom Harrison and R A Hulme JJ agreed). 199 [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] 200 I now turn to consider each of the four tendencies sought to be established by adducing the evidence contained in [REDACTED] [REDACTED]

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November 2004 Letter of Offer - Wallal 227 On 9 November 2004 the Stuarts accepted a letter of offer from Rabobank dated 3 November 2004 (November 2004 Letter of Offer). The letter of offer provided for an increase of $1.72 million in the Initial Facility to facilitate a proposed purchase by the Stuarts of Wallal, a rural property in Charleville, Queensland (including stamp duty and legal costs), and to fund the purchase of cattle, used farm plant and machinery and to provide working capital. 228 The November 2004 Letter of Offer stipulated that the Stuarts were required to sell Kurrajong on or before 31 October 2005 and the sale proceeds were to be used to reduce the loan limit on the Initial Facility to $500,000. Prior to the issue of the letter of offer, Rabobank ran a property inspection and valuation report on Kurrajong on 1 November 2004, which was based on an inspection of the property by Mr Ellem on 2 July 2004. The report included a valuation by David Pink dated 29 June 2004, which valued Kurrajong at $1.2 million, comprising a total land value of $1.06 million and a total structures value of $140,000. 229 Mrs Stuart accepted that it was likely that she had read the November 2004 Letter of Offer and had spoken to Mr Ellem with regard to any parts she did not understand. She said she had understood the agreement included a 15 year loan term for the purchase of Wallal, semi-annual interest payment obligations and security in the form of a mortgage over Kurrajong. Mrs Stuart accepted that the loan agreement expressly required the sale of Kurrajong by 31 October 2005, but did not recall whether she was actually aware of that term at the time. 230 She said she was not aware that the sale proceeds of Kurrajong would need to be used to reduce the loan limit to $500,000 under the arrangement. I do not accept that evidence. 231 The requirement for the proceeds of the sale of Kurrajong to be applied to reduce the loan limit was stated in the November 2004 Letter of Offer in clear and simple language. Further, given the significance of the transaction to Mrs Stuart and her relatively sophisticated understanding of financial and legal issues, as evidenced by her contemporaneous emails and options book and the evidence of Mr Stuart referred to below, it is not plausible that Mrs Stuart did not understand this requirement prior to her acceptance of the November 2004 Letter of Offer. 232 Mr Stuart's evidence was that he would only have glanced across the November 2004 Letter of Offer, but he understood that the letter of offer increased the Initial Facility by $1.72 million. He said he was aware at the time that the letter of offer required the Stuarts to sell Kurrajong and repay the proceeds of that sale to Rabobank. However, Mr Stuart said it was his understanding that they would be given more time if they could not sell Kurrajong by 31 October 2005. He said that Mr Ellem had told them it was not an issue, that the bank would just keep rolling over the agreement and it was something the bank did all the time. 233 The proposed purchase of Wallal, however, did not proceed and no funds were ever drawn down pursuant to the November 2004 Letter of Offer.

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December 2004 Letter of Offer - Tullochard 234 From at least December 2004, the Stuarts' principal contact at Rabobank was Mr Ellem. 235 With input from Mr Ellem, Mrs Stuart carried out her own analysis of the financial impact of the purchase of Tullochard, a rural property in Mitchell in the Maranoa region of Queensland. In an undated analysis document that was likely created in or about November 2004, Mrs Stuart contemplated the supplementation of "cash flow / carry on funds" through the sale of excess plant and equipment to allow a minimum 12 month period for stock sales to mature and interest commitments to be met ahead of an 11 March 2005 auction date for Kurrajong. 236 On 20 December 2004, the Stuarts accepted a letter of offer from Rabobank dated 10 December 2004 (December 2004 Letter of Offer) to fund the purchase of Tullochard (including stamp duty and legal costs) as well as the purchase of cattle, used farm plant and machinery and to provide working capital. The December 2004 Letter of Offer provided for an increase of $2.1 million in the Initial Facility. It expressly provided that it replaced the November 2004 Letter of Offer, which was stated to be hereby cancelled by mutual consent. 237 The December 2004 Letter of Offer stipulated that the Stuarts were required to make a permanent repayment to the Initial Facility by selling Kurrajong and using the sale proceeds to reduce the increased facility limit from $2.5 million to a maximum of $800,000 by 30 June 2005. 238 Mrs Stuart said she had relied on Mr Ellem's verbal explanations of the loan contract as "standard" and "nothing to worry about" before signing the December 2004 Letter of Offer, and Mr Ellem's reassurance that "everything just continues as normal". She said she initialled each page of the schedule because Mr Ellem had told them it was "normal banking practice" and it was what the Stuarts did whenever they were handed similar bundles of documents by Rabobank. 239 Mrs Stuart said she had no doubt that she would have read the first two pages of the December 2004 Letter of Offer, but denied reading the attached schedule setting out the terms of the loan, including the loan amount, the repayment schedule, review dates, interest rates, the provision of security and special conditions. 240 I do not accept Mrs Stuart's denial. It is not plausible given the clear and simple language used in the schedule that contained the material terms, the significance of the transaction to Mrs Stuart, her relatively sophisticated understanding of financial and legal issues (as discussed above) and the extent of her involvement more generally in communications with Rabobank and the Stuarts' solicitors, accountants and real estate agents. 241 Mrs Stuart said she was aware at the time she signed the agreement that the Initial Facility would be increased by $2.1 million. However, she said she was surprised when Mr Ellem advised her of the term requiring the permanent principal reduction of the loan amount to $800,000 by 30 June 2005 during a subsequent telephone conversation. Again, I do not accept that Mrs Stuart would have been surprised for the reasons outlined above. 242 Mrs Stuart claimed that she would have challenged this term if it had been brought to her attention at the time she signed the December 2004 Letter of Offer because of the unpredictability of rural property sales and the unrealistic nature of the six month timeframe for such a significant principal reduction. She said it would have been a "sticking point" with regard to their acceptance of the December 2004 Letter of Offer. I do not accept this evidence, essentially for the same reasons outlined above, and because the evidence otherwise establishes, as referred to later in these reasons, that extensive delays in rural property settlements did not occur until late 2008 as a result of the contraction of credit and a loss of confidence attributable to the global financial crisis. 243 Mr Stuart signed and initialled every page of the December 2004 Letter of Offer. He said he was aware of the permanent principal reduction term when he signed the agreement and that it required the sale of Kurrajong and a $1.7 million permanent loan repayment by 30 June 2005. However, Mr Stuart said he understood this due date could be extended and they would have an indefinite amount of time to sell Kurrajong based on conversations he had with Mr Ellem prior to the Stuarts' acceptance of the December 2004 Letter of Offer. 244 I accept that Mr Ellem is likely to have indicated to Mr Stuart that the due date may well have been extended to give the Stuarts more time to sell Kurrajong, but I do not accept that Mr Ellem represented that Rabobank would give the Stuarts "an indefinite amount of time" to sell Kurrajong. Such a statement was denied by Mr Ellem and was objectively inherently implausible. It was plainly inconsistent with the express terms of the Letter of Offer and commercially absurd, unless the Stuarts were otherwise able to meet all their obligations under the Initial Facility including the payment of interest. 245 Rabobank ran a property inspection and valuation report on Tullochard on 23 December 2004 without recording any inspection. The report included a valuation by David Pink dated 6 December 2004, which valued Tullochard at $1.549 million. 246 The Stuarts' acquisition of Tullochard was completed on 24 January 2005.

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July 2005 Letter of Offer 249 Kurrajong was passed in at auction on 11 March 2005. The Stuarts reduced their asking price from $1.8 million to $1.65 million, but were unable to sell the property by 30 June 2005. 250 In accordance with the terms of the December 2004 Letter of Offer, which were carried over to the Facility in February 2005, the loan limit for the Facility reduced to $800,000 on 30 June 2005. Excess interest was charged to the Facility from this date and was recorded on the statement for the Facility as being immediately payable. 251 On 5 July 2005, Mr Ellem sent a facsimile to the Stuarts requesting an updated statement of position to enable him to return the loan limit in the Facility to $2.5 million and defer the permanent principal reduction by 90 days until 31 October 2005. 252 Mrs Stuart accepted that she was aware in the weeks prior to 30 June 2005 that they were obliged to sell Kurrajong and make the permanent principal repayment by that date. She said this knowledge was based on conversations with Mr Ellem, rather than what she had read in the December 2004 Letter of Offer. For the reasons outlined above I do not accept that she did not also derive this knowledge from the December 2004 Letter of Offer. 253 Mrs Stuart remembered having a discussion with Mr Ellem prior to 30 June 2005 in which he suggested that the permanent repayment could be deferred. She said Mr Ellem usually telephoned them approximately one month before each permanent principal reduction was due to enquire as to whether the repayment would need to be deferred. 254 Mrs Stuart said she interpreted the facsimile on 5 July 2005 as Mr Ellem needing to reinstate the loan limit to $2.5 million after it had been reduced because he had made a mistake and needed further information about their cattle. Mrs Stuart gave evidence that she had not realised that the loan limit had reduced to $800,000 until she received the 30 June 2005 account statement for the Facility in the mail sometime after receiving the 5 July 2005 facsimile. I do not accept this evidence. It is inconsistent with her evidence concerning Mr Ellem's practice in the period leading up to dates for permanent repayments, inherently unlikely given her financial literacy and the significance of these transactions to the Stuarts and it is also inconsistent with Mr Stuart's evidence, referred to below, concerning the permanent payment reduction in the December 2004 Letter of Offer. 255 Mr Stuart gave evidence that he was aware in the middle of 2005 that their loan limit had been reduced from $2.5 million to $800,000 because Kurrajong had not been sold. He said his knowledge was based on conversations with Mr Ellem. Mr Stuart said Mr Ellem had never told them they were in default. Rather, Mr Stuart said that Mr Ellem told them not to worry about the reduction of the loan limit, that the agreement would be rolled over and adjusted to suit the Stuarts' situation. 256 On 25 July 2005, the Stuarts accepted a letter of offer from Rabobank dated 15 July 2005 (July 2005 Letter of Offer) reinstating their loan limit to $2.5 million and deferring the due date for the once-off principal reduction repayment of $1.7 million to 31 October 2005. The new offer was issued on the basis that the Stuarts had failed to sell Kurrajong by 30 June 2005 and the July 2005 Letter of Offer reaffirmed the Stuarts' existing undertaking to sell the property and use the proceeds to make the permanent reduction. The previously stated loan purposes continued to apply and the July 2005 Letter of Offer was stated to be on the same terms and conditions as the December 2004 Letter of Offer. 257 Mrs Stuart said she understood at the time that Kurrajong needed to be sold as a condition of the December 2004 Letter of Offer. However, she said she only appreciated that they were required to make a compulsory permanent repayment before the end of the 15 year loan term when the $2.5 million loan limit needed to be reinstated pursuant to the July 2005 Letter of Offer. She said Mr Ellem never explained the permanent repayment condition to them and it was a surprise when they became aware of this obligation in mid-2005. Again, I do not accept this evidence for the same reasons as outlined above.

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Decision to sell Evergreen in mid-2007 266 Evergreen falls within the western part of the Waggamba shire, which was drought declared by the Queensland Government on 1 February 2007. An exceptional circumstances certificate, valid from 24 April 2007 to 23 October 2007, was issued by the Australian Department of Agriculture, Fisheries and Forestry in conjunction with Centrelink to Mr Stuart on 13 March 2007 (Certificate). The Certificate confirmed that Evergreen was located in an area affected by exceptional circumstances, namely drought. Another almost identical certificate was issued on 12 September 2007 extending the validity of the Certificate until 23 April 2008. 267 Ongoing livestock production on Evergreen had been continually hampered throughout 2006 and 2007 due to the adverse seasonal conditions. In a letter to Rabobank's Assets Management Committee dated 2 March 2011, Mr and Mrs Stuart outlined their inability to generate income on Evergreen in the preceding years due to the drought, the shortage of feed for their livestock and increasing interest rates on their financial products. Mrs Stuart said that she and her husband were concerned about eating into their equity because of the severe drought. She said they considered whether it would be prudent to consolidate their financial position and "ride out" the drought by remaining on Evergreen and selling off parts of the property. Evergreen at this time was comprised of three contiguous lots: a "back block", being Lot 14, and two "front blocks", being Lots 3 and 7. 268 On 28 March 2007, the market value of the land and improvements on Evergreen was estimated at between $2,960,100 and $3,157,440. The appraisal was prepared at the request of the Stuarts by Ms Bodkin. The appraisal was stated to be based on "thoroughly research[ed] recent comparative sales, comparative listings, current market climate and buyer demand". 269 Over the next few months, the Stuarts decided to sell Evergreen in its entirety and purchase another rural property in the vicinity of the Charleville area in Queensland. Mrs Stuart said the area had been a place of interest to her family for a number of years because of the quality of the cattle, the potential for the development of a property for fattening and breeding cattle and the proximity to schools in Charleville for their children. 270 Mr Ellem completed a document described as an Account Manager Review on 20 September 2007 and noted that no financial projection had been included in the document because the Stuarts intended to sell Evergreen within the next six to eight months. Mr Ellem also noted in his review, however, that the Stuarts had "no clear plans at this stage" in relation to the sale of Evergreen. The Stuarts' intention to source another rural property on a more long-term basis was also noted by Mr Ellem in a credit submission dated 20 December 2007.

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The Stuarts' offers on Mt Morris 277 The manager of the Rabobank Longreach branch, Craig Swalling, carried out an inspection and valuation of Mt Morris on 5 June 2007. Internal Rabobank Property Inspection/Valuation Reports based on Mr Swalling's inspection and valuation on 5 June 2007 valued the total land and structures of Mt Morris at $2,199,950. 278 The Stuarts inspected Mt Morris and made their first offer to purchase the property in November 2007 for $1.6 million, conditional on finance. It was around this time that the Stuarts also began to advertise Evergreen for sale. The Stuarts' conditional offer of $1.6 million for Mt Morris was not accepted. The Stuarts made another conditional offer shortly thereafter for $1.8 million, which was also rejected. 279 At some stage prior to 11 January 2008, the Stuarts increased their offer for Mt Morris to $2 million, again subject to finance. In an email to the Bredhauers' real estate agent, Des Cuffe, on 11 January 2008, Mrs Stuart questioned the seriousness of the proposed sale given the lack of any response to their offer of $2 million. Mrs Stuart said in the email that they had spent considerable time and expense gathering information on Mt Morris and would appreciate a frank discussion with the Bredhauers at their earliest convenience to determine whether the property was worth pursuing. Mrs Stuart responded to comments, presumably from the selling agent, about the potential for another purchaser to come along and enter into a binding contract in relation to Mt Morris: so what?? I would expect that is the entire reason for a property to be sold ... is to be tied into a contract, pending settlement, with genuine buyers. Given the time frame now, this would be entirely irrelevant. Either the money offered is acceptable, or not. 280 Mr Cuffe responded that same day and confirmed that he would ask Mr Bredhauer what he would require to sign contracts with the Stuarts for the sale of Mt Morris, including a price and reasonable settlement period. He stated in his email to Mrs Stuart: As I have explained the offer has not been considered as an open ended settlement is unsatisfactory to Kevin B. We all understand that searches etc have to be done and this could lead to the sale failing, but it is fair to both the vendor and buyer to have reasonable expectations that the sale will succeed if agreement on conditions i.e. searches, settlement etc is reached first. At this point, as we discussed at length today, there is no firm end date in sight and I repeat this is of major concern to Kevin B. as he simply doesn't now [sic] if a sale has every chance of succeeding. Alternatively if you wish to call me to advise a firm settlement date/period that would be satisfactory to you I would then discuss it with Kevin B. tonight. As you can see there nothing [sic] complicated about the deal as long as an ending is visible. 281 Mrs Stuart responded that settlement would be within a maximum of 60 days from the date of a successful auction of Evergreen and explained: Once our contract for "Evergreen" becomes unconditional, then immediately would the contract for "Mt Morris" follow becoming unconditional. (of course pending title searches). … As discussed previously, that Kevin had concerns of committing to a contract that ties "Mt Morris" up. Surely that as we are this close to our auction date (4 weeks 5 days!) an agreement can be achieved. If by some chance that "Evergreen" does not sell, then "Mt Morris" is not tied to a contract at all. … On Kevin's part, if all he requires is settlement date, he now has an indicator. We also have concerns if this sale will succeed. However our concerns are not financial, or settlement dates. Our concerns are title searches. However if Kevin is confident that all is in order, there will be no problems, and there is no need for concerns on either side. 282 In a handwritten entry in her options book that was dated 27 February 2008, Mrs Stuart noted the current asking price of Mt Morris was $2.5 million.

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April 2008 Letter of Offer 287 On 3 April 2008, the Stuarts accepted a letter of offer from Rabobank dated 3 April 2008 (April 2008 Letter of Offer). The purpose of the April 2008 Letter of Offer was to provide an additional $148,500 to facilitate the purchase of extra cattle and allow for an additional $96,500 in working capital. 288 The April 2008 Letter of Offer provided for a $245,000 increase to the limit of the Facility to $1.12 million, but this was conditional on the Stuarts making a permanent repayment of $1.02 million by 30 September 2008. 289 A supporting credit submission dated 28 March 2008 completed by Mr Ellem explained that the working capital increase would cover the final payment of $70,700 for the bore and water reticulation scheme (which would increase the value of the property and achieve a better sale result) and trenching and pipe laying costs. Mr Ellem reiterated the Stuarts' history of purchasing and selling rural properties for significant capital gain in recent years and again said this success appears to have continued with Evergreen: Projections indicate the sale of "Evergreen" by 30/09/08 with full pay out of the loan facility. Whilst projections indicate operating losses there remains sufficient working capital available to meet operating and debt servicing requirements. Clients do not wish to fully stock the property so as to keep good reserves of feed to allow for better presentation of the property. Increase is subject to a permanent repayment due 30/09/2008 of $1,020,000. 290 In the credit submission, Mr Ellem noted again that the Stuarts' financial projections indicated a low interest coverage. He justified his recommendation to approve the increase as follows: … livestock numbers remain low in an effort to keep feed levels at a premium to assist with presentation of the property for sale purposes. The property has experienced severe drought conditions for an extended period. Sufficient working capital is available for debt servicing requirements and whilst projections utilise a sale date for "Evergreen" of 30/09/2008, expectation is that this will occur well before that timeframe. 291 Mr Ellem noted in the internal work request for the $245,000 loan increase that the auction of Evergreen had been unsuccessful. He noted that serviceability was "evident" until 30 September 2008 and that the increase accordingly included a principal reduction of $1.02 million to be paid by 30 September 2008 to bring the limit down to $100,000. Mr Ellem explained that this much reduced limit would be secured by a term deposit until a new property was sourced by the Stuarts, at which time a full credit submission would be put before the bank. 292 The increase was approved on 3 April 2008 by Cathy Dennis, another manager at the bank. Ms Dennis observed: While equity and security is sound serviceability is the key issue here. If the property does not sell, clients will require working capital from December onwards with further funding required to purchase livestock. Based on a YOY proposition clients' ability to service this level of debt is in question thus making the sale of the property crucial to the clients' overall position. It is noted that the property is to be advertised in the QCL next week for a price of $3.3mln with the clients willing to negotiate on this price. Clients have demonstrated in the past their commitment to meeting property sale covenants. Livestock purchases should always be placed in the livestock schedule as opposed to capital movements. The result for FY08 is an operating loss of $249k if the cash flow is adjusted to reflect this. Capital movements in FY09 appear to have been copied across from the FY08 budget. This has been taken into consideration in assessing this proposal.

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Purchase of Mt Morris 293 Mrs Stuart's options book included an entry dated 9 April 2008 in which she noted that the Stuarts' current offer for Mt Morris was $2 million. The next line of Mrs Stuart's notebook records another call from Mr Richardson on the same day: "Keith rang us. [X] suggested 2.2". The identity of "X" is not readily decipherable from the handwritten notes in the options book. That line in Mrs Stuart's notebook was not drawn to her attention during the course of the hearing and no submissions were directed towards it at the time. 294 Nevertheless, in the course of reviewing the evidence following the conclusion of the hearing, the potential significance of this line in the options book to the dispute between the parties became apparent, in particular as to the extent of the role played by Mr Ellem in the negotiations leading up to the purchase by the Stuarts of Mt Morris. I had initially considered that "X" might have been the word "Rang", but was not at all sure of this. I therefore invited the parties to make supplementary submissions on the issue. 295 Counsel for the Stuarts submitted that "X" was "Kevy", in context a reference to Kevin Bredhauer. Counsel for Rabobank submitted that there was no suggestion in the evidence that Mrs Stuart had ever referred to Mr Bredhauer as "Kevy", as distinct from references to "Kerry", being the Stuarts' accountant Kerry Hawking. Given the way in which the word appears, the absence of any specific evidence on the issue and the absence of any common ground between the Stuarts and Rabobank, I am not able to make any definitive finding. 296 Ultimately, I am inclined to agree with the submission made by counsel for Rabobank that not much turns on whether the word was "Kevy", "Kerry" or "Rang". I note that on no view was the word in question "Chris" or "Ellem" and the extent of Mr Ellem's involvement in the events leading up to the purchase by the Stuarts of Mt Morris will be determined by reference to the other evidence before the Court. 297 On 29 April 2008, the Bredhauers' solicitor, Helen Gurney of Frank Jongkind & Co, forwarded to the Stuarts' solicitor, Michael Cowley of Fox and Thomas, an initial draft of a contract that provided for the sale of Mt Morris to the Stuarts for a purchase price of $2.2 million. 298 On 6 May 2008, Mr Cowley forwarded to Ms Gurney an initial draft of an agistment agreement. The proposed agistment agreement permitted the Bredhauers to graze cattle on Mt Morris for a two year period (Agistment Agreement). 299 The draft contract included a subject to finance clause. The first sentence of clause 23.1 provided that: This agreement is subject to and conditional upon the purchaser obtaining an approval of suitable finance from a suitable bank or financial institution within fourteen (14) days from the date hereof. 300 Clause 23.1 was subsequently amended to provide for 21 days rather than 14 days for the Stuarts to obtain finance. Mrs Stuart gave the following evidence in chief as to why the amendment was made: MR KING: Do you have any recollection as to the circumstances in which that change occurred?---Yes, I do. And can you point - to the best of your recollection, can you inform his Honour about that?---To the best of my recollection at this time, Chris spoke to me on the phone and requested that the 21 days be inserted into the contract of sale - either he was going to be away or he was sick or something was happening, and he requested the 21 days be included into - because we went through the contract together, and I was reading it on the phone. And then, when this was changed, and I had sent it through to Chris, I rang him and - either I rang him or he rang me to let me know that he got it. And during the course of that conversation, I said to him now, you can see the 21 days is inserted, and Chris said yes, and I said so - yes. I just want to make sure I'm right - yes. The conversation, to the best of my recollection, was that I said - sorry. Christopher, I said, you're a suitable financier, are you, and with suitable finance? Because I trusted Chris. I got on very, very well with him. And he said yes. And I said - I did say what do they mean by a suitable bank, and he said, well, it's Rabobank, because I used to talk about how Rabobank took over PIBA, which is a well-respected agricultural bank for farmers. PIBA is the Primary Industry Bank of Australia. That as the Commonwealth's?---Used to be, yes. Yes. Commonwealth Government's bank?---Yes. 301 The contemporaneous explanation provided by Mr Cowley in his letter of 6 May 2008 to Ms Gurney for the change to 21 days was as follows: Our clients have requested 21 days finance as their financier has been away ill and they are therefore not as far advanced in their finance application as they otherwise might have been.

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Vendor finance option for sale of Evergreen 302 On 8 May 2008 at approximately 12.45 pm, Mrs Stuart had a telephone call with Mr Ellem to discuss the proposed financing of the acquisition of Mt Morris and a possible vendor financing option for the related sale of Evergreen. 303 At 2.05 pm on 8 May 2008, Mrs Stuart emailed a summary of the vendor option finance for Evergreen that she had discussed with Mr Ellem earlier that day. Mrs Stuart observed in her email that: At this point in time it is worth noting that if "Evergreen" sold in the immediate future, regardless or not of outright sale, or vendor finance sale, there will be other significant funds available to us, reasons are as follows; As you are aware the proposed sale of Mt Morris is dependant of the adjisment contract. Therefore this would mean that all livestock on "Evergreen" would have to sold. This would give us significant cash flow to actively per sue free holding applications, and PMAV adjustments on Mt Morris, while also increasing infrastructure on property. These changes will increase value to Mt Morris. This is both beneficial to us and Rabobank as financier, as at this stage bearing in mind that our debit on Mt Morris will be at least 1/2 (half) if not completely reduced depending on the finance options of sale for "Evergreen" to get to this point. These issues will be address immediately, and aggressively once "Evergreen" is sold. Okay Christopher…...anything else??? I think I could nearly write our own submission…on second thought…naaahhh!!!You can have that job!You had better check my maths though! (As written, typographical errors not corrected.) 304 Mrs Stuart claimed in both her evidence in chief and cross-examination that the content of the email was essentially dictated to her by Mr Ellem. She went as far as to claim in the course of her cross-examination that the email included information that she thought was untrue and that she was writing emails to Mr Ellem "as he requested and directed and, in part, dictated to". Mrs Stuart denied that she was advocating for approval of the loan or that she was including information in the email because she believed it would assist the Stuarts' application for credit. 305 Mrs Stuart gave the following evidence in chief in relation to the "check my maths" comment: MR KING: Will you go over, please, to the last sentence, "Okay, Christopher"?---Yes. And the last two sentences, "You can have that job. You had better check my maths though"?---Yes. What - when you're referring to him checking the maths, what were you referring to?---Well, he is my banker. He was my banker and I always asked verbally and in writing just - this is an example of my communications with him to check the maths, check that this document is what he wanted, to check the maths as well as, you know - - - The maths in relation to what?---To this, but, more importantly, into the proposed acquisition of Mt Morris. And - - -?---Everything. I always relied on Chris. … Yes. In terms of the suitability of the Mt Morris finance, what was your expectation as to what the bank would be doing?---My expectation and understanding was that our financier, Rabobank, would be doing more in detail and in-depth due diligence and running the maths. That's my speak. Running the maths to make sure that this next home was going to be there forever, that I was doing this much due diligence as what I could for my family, and I believed that the bank was doing the same with running the figures, making sure that this was a good loan. Yes?---A suitable loan. 306 I consider that the reference to "check my maths", in context, was a reference to checking the calculations in the payment schedule that Mrs Stuart had included in her email for the "vendor finance option". I do not accept that the email evidenced any expectation or understanding on the part of Mrs Stuart that she was relying on Rabobank to do "more in detail and in-depth due diligence" and to make sure that this was "a good loan". 307 Moreover, the reference in the email to "I think I could nearly write our own submission" after setting out information in support of the loan application, including details of a proposed "vendor finance" option, strongly suggests that this was an exercise in providing information to Mr Ellem to assist him in preparing the credit submission for the proposed extension to the Facility. It is simply implausible that Mr Ellem was merely dictating what he already knew to Mrs Stuart for her to record it in an email and then send back to him.

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Negotiations for purchase of Mt Morris are stalled 313 Later on 15 May 2008, negotiations between the parties for the purchase of Mt Morris stalled by reason of a series of requests made by the Bredhauers' solicitor, Frank Jongkind of Frank Jongkind & Co, in an email to Mr Cowley. 314 By 20 May 2008, negotiations had deteriorated to such an extent that Mrs Stuart advised Mr Cowley that "Keith [Richardson] has now been told that we have instructed the bank to stop all paper work until Kevin and his solicitor sort this out". 315 At 8.34 am on 21 May 2008, Mr Ellem emailed Mrs Stuart, somewhat tongue in cheek, confirming: As instructed, I shall stop ALL paper work forthwith and go home and put my feet up. Informed management of this decision and received a fairly strange response but will proceed as instructed. Will stay in touch. Regards Chris P.S. - Let me know when I can come back to work. 316 It is apparent that one of the principal matters that caused Mrs Stuart to issue the "pens down" instruction to Mr Ellem was a request by Mr Jongkind that any legal costs that the Stuarts might incur in taking steps to enforce their rights under the proposed Agistment Agreement be only recoverable on a party and party basis, not as solicitor and client costs. 317 At 2.42 pm on 21 May 2008, Mrs Stuart emailed Mr Cowley in response to his email earlier that day reporting on three issues that remained unresolved after he had spoken with Mr Jongkind. Mrs Stuart expressed her concerns with the requests, suggested that Mr Bredhauer appeared to have an ulterior motive and stated that she did not understand the first of the three issues. She concluded her email: We are now quite reluctant to do further business, please convey this to Kevin's solicitor, as if Kevin wishes this to proceed, then he will not compromise this transaction by making unrealistic demands. Look forward to the next update, if you feel we have misunderstood anything below, ring us and set us straight! Before you make contact with Frank. 318 In context, I am satisfied that "Kevin's solicitor" and "Frank" were references to Mr Jongkind. 319 With perhaps a not insignificant degree of overstatement, Mrs Stuart informed Mr Cowley in an email at 4.10 pm on 21 May 2008: Further to the email below, Mark & I have just spoken to Chris Ellem (Rabobank) & he says that without that clause in the adjistment contract being corrected, & Not as Frank says that Kevin wants it below, that this would put our loan in a very weak position.Meaning that by the time that the banks solicitors got through with it, that the bank would not accept this contract, as it is ridiculous. So, I guess we will have to walk away, and see if he comes back to us. 320 I am satisfied that the references to "Frank" and "Kevin" are to Mr Jongkind and Mr Bredhauer. 321 In an email that Mrs Stuart sent to Mr Bredhauer's selling agent, Mr Richardson at 11.45 am on 22 May 2008, she stated: Point 3. Below is the major hurdle. The bottom line is that this is unacceptable to our financiers. They would not approve our finance based on this clause proposed amendments as this in their experience is unheard of. … This clause is not negotiable, for the above reasons, and others. We are quite frustrated with the amount of time and money that both we, and no doubt Kevin has now spent on this. (Original emphasis.) 322 Point 3 was a reference to Mr Jongkind's request to amend the legal recovery costs clause to remove the reference to solicitor and client costs.

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27 May 2008 valuations by Mr Ellem 327 The documents from Rabobank's files tendered in the proceedings include "Property Inspection/Valuation Reports" that record Mr Ellem undertaking inspections of both Evergreen and Mt Morris prior to 28 May 2008. 328 A Property Inspection/Valuation Report for Mt Morris that has a "run date" of 22 December 2009 (Ellem Mt Morris Valuation) records an inspection by Mr Ellem of Mt Morris on 1 May 2008 and a valuation date of 27 May 2008. 329 The Ellem Mt Morris Valuation largely replicates the content of an earlier valuation of Mt Morris undertaken by Craig Swalling that has a "run date" of 27 May 2008 (Swalling Mt Morris Valuation). Both the valuation date and inspection date in the Swalling Mt Morris Valuation are recorded as 5 June 2007. The "run date" of the Swalling Mt Morris Valuation is the same date as the valuation by Mr Ellem recorded in the Ellem Mt Morris Valuation. 330 With regard to market value evidence, both the Ellem Mt Morris Valuation and the Swalling Mt Morris Valuation recorded that the "Account Manager has adopted a valuation of $2,200,000". 331 Much of the content of the Swalling Mt Morris Valuation, including the description of the structural improvements on the property and timbers found on the property, appears to have been taken from or was otherwise consistent with an advertisement and marketing brochure for a proposed sale of Mt Morris by auction on 3 April 2007. 332 At 3.38 pm on 27 May 2008, Mr Ellem performed a sales search report for properties between 10,000 and 40,000 hectares within 100 km of Mt Morris that sold for between $1 million and $10 million in the period between 1 January 2007 and 27 May 2008. The search identified three properties with an average sale price of $3,191,667 and an average area of 15,706 hectares. 333 A Property Inspection/Valuation Report for Evergreen that has a "run date" of 22 December 2009 (Ellem Evergreen Valuation) records an inspection of Evergreen by Mr Ellem on 27 May 2008 and a valuation by Mr Ellem on 22 December 2009. 334 The run date of the Ellem Evergreen Valuation, 22 December 2009, is the same date as the run date of the Ellem Mt Morris Valuation. It is also the date on which Mr Ellem submitted a work request with respect to a partial release of security for Credit Committee approval in connection with the sale of Lot 14 of Evergreen. 335 On its face, the 2009 Ellem Evergreen Valuation is limited to Lots 3 and 7 of Evergreen and does not include any post 27 May 2008 information. Significantly, the valuation records that no other land is held by the Stuarts (Mt Morris had not been acquired as at 27 May 2008). 336 Given the evident practice of updating earlier valuations and the content of the Ellem Evergreen Valuation, I infer that the Ellem Evergreen Valuation was originally prepared on or about 27 May 2008 by Mr Ellem and it was revised on 22 December 2009 by deleting the valuation data for Lot 14, as Rabobank would no longer have that part of Evergreen as security following the anticipated completion of its sale in January 2010.

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May 2008 Credit Submission 341 On 29 May 2008, Mr Ellem forwarded a credit submission to Rabobank's Credit Committee seeking approval for the proposed $2.36 million increase to the Facility to fund the acquisition of Mt Morris, the payment of stamp duty and legal costs and for working capital (May 2008 Credit Submission). Under the heading "Security Description", the May 2008 Credit Submission recorded valuations of $2.2 million for Mt Morris and $3.2 million for Evergreen. 342 Mr Ellem noted in the May 2008 Credit Submission that after the sale of Evergreen, all cattle would be sold off the property and the proceeds of the livestock sale would be used for development and working capital purposes. He also noted that at the conclusion of the two year Agistment Agreement that the Stuarts would "look to purchase a core breeding herd of their own and possibly work on a 50/50 basis of own cattle and agisted cattle" on Mt Morris. 343 The May 2008 Credit Submission included the following supporting comments: Increase to AIO facility of $2,630,000 for the purchase of the property Mt Morris at Charleville. Increase will take limit from $1,120,000 to $3,480,000. Clients have listed the existing property "Evergreen" for sale. Property went to auction 14/02/2008 but was passed in. Both listing agents put a reserve price on the property of $3.3m. "Evergreen" was purchased for $1,750,000 in July 06. Extensive development work has been completed on the property since purchase including major pasture development and addition of secure water supply. Ongoing livestock production has continued to be hampered by adverse seasonal conditions. Approx 300mm of rainfall was received in Dec, Jan & Feb providing significant feed reserves greatly enhancing the chances of a successful sale result. Clients have purchased and sold a number of rural properties in recent years, each time achieving significant capital gain. "Kurrajong" at Mundubbera was purchased for $540,000 and sold within 3 years for $1,500,000. Clients purchased "Tullochard" in Jan 2005 for $1,600,000 and sold 07/06 for $2,670,000. In all cases the client has completed extensive investigation on all aspects of development potential etc prior to purchase. Clients have a history of significant capital gain through purchase, development and sale of rural properties. It appears that they have continued this success with "Evergreen". A conservative value has been placed on the property with 2 other properties currently listed on the market in the district for sale at a higher value and would considered equivalent in quality of country. Projections indicate the sale of "Evergreen" by 31/03/09 with net proceeds as a permanent reduction to the loan facility. Increase is subject to a permanent repayment due 31/03/2009 of $3,230,000 reducing the facility limit to $250,000. 344 Beneath his supporting comments in the May 2008 Credit Submission, Mr Ellem provided information about the Stuarts' "Personal Factor and Ability". He noted that Evergreen was purchased in July 2006 and market appraisals provided by two "well respected rural real estate firms" indicated a value of $3.3 million. 345 The related internal Rabobank work request material for the May 2008 Credit Submission recorded similar comments from Mr Webber, the "C Signatory". Mr Webber noted: Clients have a proven record of property acquisition, development and sale. That they investigate each potential acquisition would be an understatement - these people know more about properties, their values and potential than most. All advice is that Evergreen is reasonably priced and that a sale will eventuate given time. The lease of the Mt Morris by the vendor will provide for the bulk of the financial cost over the next two years thereby largely mitigating this risk. Some $1.9Mln surplus in security value in real dollars largely mitigates any perceived risk associated with the relatively high LSR. Upon the sale of Evergreen, clients will be quite lowly geared and quite capable of raising any funding required for cattle acquisitions going forward. Proposal is supported on the basis of the people we are dealing with, their proven record and their commitment to this venture. Property valuations confirmed. 346 The related internal Rabobank work request material also included a detailed cash flow projection for the financial year to 30 June 2009 (2009 cash flow projection). The 2009 cash flow projection recorded a forecast closing balance for the Facility at the end of March 2009 of ($704,307) with a closing available working capital at that time of $415,693. 347 The 2009 cash flow projection was prepared on the assumptions that Evergreen would not be sold until March 2009 and the Facility Limit would be $1.12 million. This was the limit at the time of the preparation of the May 2008 Credit Submission, but the proposal in the credit submission was that it be increased to $3.48 million to permit the purchase of Mt Morris and then be reduced to $250,000 following the sale of Evergreen by no later than 31 March 2009. 348 The principal income included in the 2009 cash flow projection was the receipt of $195,000 in agistment income referrable to Mt Morris, payable quarterly in instalments in advance of $48,750, and a $331,200 net profit from the sale of the cattle on Evergreen. The 2009 cash flow projection recorded an improvement in the closing available working capital for the Stuarts from $197,442 in July 2008 to $415,693 in March 2009.

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Loan documents alleged to be signed by the Stuarts in mid-May 2008 355 Both Mr and Mrs Stuart gave evidence that they signed a document in connection with the financing of the purchase of Mt Morris in the presence of Mr Ellem at Evergreen. Their evidence was initially that this occurred in May 2008, but they subsequently agreed with their counsel that it was in fact in mid-May and denied emphatically that it was on 28 May 2008. 356 The apparent significance of "mid-May" and "not 28 May" to the various representations and other claims sought to be advanced by the Stuarts relates to whether the document was signed before the Stuarts entered into the contract to purchase Mt Morris on 26 May 2008. 357 Mr Ellem's evidence was that the loan application for the increase in the Facility to enable the Stuarts to purchase Mt Morris was signed in his presence on 28 May 2008. 358 There are several fundamental difficulties with the Stuarts' evidence concerning the alleged signing of a document in connection with the financing of the purchase of Mt Morris in the presence of Mr Ellem at Evergreen in mid-May 2008. 359 First, the only documents in evidence that could conceivably be documents that the Stuarts signed in connection with the financing of the purchase of Mt Morris were the May 2008 Loan Application or the June 2008 Letter of Offer. 360 The May 2008 Loan Application was only partially completed. No information is provided in "Section G Property Details" or "Section H Statement of Position". Mrs Stuart accepted that it was her handwriting on the first two pages of the loan application form, and her and Mr Stuart's signatures on pages three and six, but all other handwriting on the loan application, including the dates under the signatures, were not in her handwriting or that of Mr Stuart. 361 Second, Mrs Stuart's evidence was that she signed a blank document at Mr Ellem's request in the course of the meeting in mid-May but, as explained above, she had otherwise confirmed that it was her handwriting on the first two pages of the May 2008 Loan Application. Further, Mrs Stuart explained that her usual practice was to insert the date on which she signed a document if the date had not already been inserted. If she had signed the document in mid-May then it would follow that if the date had not been inserted she would have inserted that date. While it is not impossible, it would be highly unlikely that the date of 28 May 2008, being the date on which Mr Ellem completed the credit submission, would be known and inserted in mid-May before arranging for the Stuarts to sign the May 2008 Loan Application. 362 Third, Mrs Stuart's recollection of signing of a blank document would appear to be more consistent with the Stuarts' signing of a loan application form on 14 March 2008 (March 2008 Loan Application). This application was for a $245,000 increase to the Facility for the purpose of purchasing extra cattle and working capital, which was approved pursuant to the April 2008 Letter of Offer. Unlike the May 2008 Loan Application, Sections B, C and D of the March 2008 Loan Application, which required details of account owners, contact information and third parties, were almost entirely blank and only the Stuarts' names were otherwise written in Section B of that application. I acknowledge, however, that no information was inserted in sections G, H, I and J of either loan application. 363 Fourth, as late as 22 May 2008, Mrs Stuart had instructed Mr Ellem not to take any further steps in relation to the proposed financing of the purchase of Mt Morris because of the impasse that had arisen in relation to the legal costs of any enforcement of the terms of the proposed Agistment Agreement. 364 Fifth, the emails passing between Mr Ellem and Mr Webber on 28 May 2008 at [337] and [338 above do not establish that Mr Webber and Mr Ellem were reviewing paper versions of a draft letter of offer as the suggested revisions are set forth in the email, not handwritten on a paper copy of a draft letter of offer. They certainly do not establish that it was likely that a draft letter of offer could have been discussed in hard copy form with the Stuarts in mid-May or even on 28 May 2008. Further, there was no evidence that any drafts of the June 2008 Letter of Offer were ever printed in hard copy form. 365 Sixth, and most tellingly, the Stuarts did not receive the letter dated 3 June 2008 from Ms MacMillan forwarding both a copy of the June 2008 Letter of Offer and a loan application form for the Stuarts to sign and return to Rabobank, until 6 June 2008. 366 It is implausible that if Rabobank had a copy of a loan application form signed by the Stuarts on 3 June 2008 that they would be sending a copy of a loan application form to the Stuarts on that day asking for it to be signed by the Stuarts and returned to the bank. 367 Further, it is equally unlikely that the 3 June 2008 covering letter was a standard form template document, sent in error by Ms MacMillan. In the usual course, a signed loan application form would precede, not follow, the approval by Rabobank's credit department of a credit submission in support of a loan application, not least because a Rabobank loan application at that time included the Consumer Credit Code business or investment purposes declaration. Further, as noted below, the declaration was stated to be made "before the acceptance of Letter of Offer". 368 In the circumstances, I make the following findings: (a) Mr Ellem did not meet with the Stuarts at any time in May 2008 for the purpose of arranging for them to sign any application form for any increase in the Facility to purchase Mt Morris; (b) Rabobank did not have a signed loan application form from the Stuarts at the time that the bank's Credit Committee approved the May 2008 Credit Submission on 29 May 2008; (c) the Stuarts did not receive copies of either the May 2008 Loan Application or the June 2008 Letter of Offer until 6 June 2008; (d) Mr Ellem did not provide drafts of either the May 2008 Loan Application or the June 2008 Letter of Offer to the Stuarts at any time prior to 6 June 2008; and (e) the Stuarts signed both the May 2008 Loan Application and the June 2008 Letter of Offer on 11 June 2008 and returned them to Rabobank shortly thereafter.

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October 2008 QRAA application 375 In October 2008, the Stuarts completed an application to the Queensland Rural Adjustment Authority (QRAA), a specialist administrator of government financial assistance programs, on the basis that they were beginning to experience hardship (Hardship Application). Mrs Stuart gave evidence that Mr Ellem said it was a good idea to make the application. In order for the Stuarts to make the application, Mr Ellem signed a document entitled "Schedule of Debit/Credit Account" on behalf of Rabobank. In the schedule, Mr Ellem signed a lender certification which stated: For the purpose of this enterprise obtaining Exceptional Circumstance assistance, we confirm the foregoing information to be true and correct and agree to continue to support this enterprise for a further 12 months unless default occurs. 376 The Hardship Application was sent to the QRAA sometime between October 2008 and January 2009. 377 As at 30 January 2009, the Hardship Application was still being considered by the QRAA. In an email on that date, Mr Ellem provided the following responses to a number of questions posed by the QRAA: 1. We really didn't have any issues with the funding for Mt Morris as the Stuart's had a history of purchasing, developing and selling a couple of properties with us and had always fulfilled any bank requirements and commitments they had made to us. It would appear that Mt Morris will be now a long term proposition with a possible additional property purchase at some future point utilising what will be a strong equity position post sale of Evergreen. … 3. Given that the property has continued to have been well marketed and appears to be conservatively priced I don't think we'll have any issues with regard to deferring the principal reduction due at the end of March. … 378 This correspondence was forwarded to Mrs Stuart on 4 February 2009. 379 Ultimately, the Stuarts did not receive any financial support by way of payments or otherwise from the QRAA at that time.

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March 2009 Letter of Offer 381 The Stuarts did not sell Evergreen by 31 March 2009. They were therefore unable to repay the amount of $3.23 million to reduce the Facility by that date, as required by the June 2008 Letter of Offer. 382 A credit submission was prepared by Mr Ellem on 25 March 2009 seeking an extension for the principal reduction to 31 March 2010, giving the Stuarts a further year to make the payment. This application included a reduction in the amount of the permanent repayment due at that date to an amount not less than $2.8 million. 383 Rabobank's credit department was prepared to approve an extension of the time for the principal reduction to 30 September 2009, giving the Stuarts an extra six months instead of the extension proposed by Mr Ellem of one year. The credit department otherwise accepted a reduction in the amount of the permanent repayment from $3.23 million to $2.8 million. A letter of offer reflecting these approvals was issued on 26 March 2009 and accepted by the Stuarts on the same day (March 2009 Letter of Offer). 384 In her evidence, Mrs Stuart said that while she knew they had been given an extension of time, she could not recall the exact date of 30 September 2009 and said that she did not recall whether she knew that the amount of the permanent repayment had been reduced to $2.8 million. However, she did accept that she had signed the March 2009 Letter of Offer. In cross-examination, Mrs Stuart accepted that it was likely that she had spoken to Mr Ellem in the month before the permanent repayment was due on 31 March 2009 to discuss the possibility of an extension that Mr Ellem could "procure from the bank". Mrs Stuart stated that Mr Ellem's usual practice was "he would ring and say, 'this is what I'm going to do'". 385 I am satisfied that Mr Ellem may well have represented to the Stuarts in March 2009 that he was confident that he would be able to procure an extension of time for the Stuarts to make the stipulated permanent repayment. I consider it would be inherently unlikely, however, given the extensive dealings between the Stuarts and Mr Ellem up until that time with respect to obtaining credit approvals outlined above, for Mr Ellem to have represented that he was in a position to "procure" any extension from Rabobank, other than by making a recommendation to the bank's Credit Committee that the extension be granted and expressing confidence to the Stuarts that his recommendation would be accepted.

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Burberrys' offer to purchase Evergreen 386 By letter dated 17 June 2009, Ms Bodkin provided the Stuarts with what was described as a market appraisal of Evergreen. Ms Bodkin advanced a value of between $330 and $340 per acre after "researching recent comparable sales, comparative listings, current market climate and buyer demand". Given the land area of Evergreen was 9,866.9 acres, this translated into a value of between $3,256,077 and $3,354,746 for Evergreen. 387 In late August 2009, Ms Bodkin introduced the Stuarts to several potential purchasers of Evergreen, including Daniel and Cynthia Burberry. 388 The Burberrys inspected Evergreen on 24 August 2009. 389 In an email with the subject line "Evergreen inspection today" sent by Mrs Stuart to Ms Bodkin on 20 August 2009, Mrs Stuart stated that "this will give you something to discuss with Cynthia" and "[i]f they did buy one and lease/buy the other in 2 years". The first comment appears to be a reference to Mrs Burberry. The second comment appears to be the first contemporaneous evidence of a proposed sale of part of Evergreen and a deferred sale/lease of the balance of Evergreen. 390 The Burberrys ultimately made an offer of $2.65 million for Evergreen. This included $1.4 million payable on acceptance for Lots 3 and 7 and $1.25 million to be paid over four years for Lot 14, with interest payable at a rate to be negotiated between approximately 3% and 4%. The offer was not accepted by the Stuarts. 391 The date on which the Burberrys' offer was made and the reasons why it was not accepted by the Stuarts were the subject of conflicting evidence and submissions. 392 Mrs Stuart was adamant that the offer from the Burberrys was conveyed to her orally by Ms Bodkin in the course of a telephone call on 24 August 2009. Mrs Stuart said she called her accountant Ms Hawking, who agreed that it was a good offer, before she called Mr Ellem. 393 In giving this evidence, Mrs Stuart placed significant reliance on her Telstra account statements for 24 August 2009, that recorded a call with Ms Bodkin at 4.28 pm for five minutes and 59 seconds, a call with Ms Hawking at 4.43 pm for 14 minutes and 54 seconds and a call with Mr Ellem at 5.00 pm for seven minutes and 3 seconds. 394 In her oral evidence in chief, Mrs Stuart described her conversation with Mr Ellem in the following terms: MR KING: And what - and to the best of your recollection, what did he say?---I said we wanted to accept the offer. And Chris said, "You're not a bank. The bank won't accept that." And how did you respond to that?---I - I was fairly quiet because I had never had him sort of use that tone before to me on the phone. And I - I - I can't prove it. I just felt something was wrong. I just felt something was wrong. I - that's it. I - I - and he moved on to the next - the very next thing he asked me about was, "How's the valuation going on Evergreen?" straight away. Didn't even want to discuss it - nothing. 395 Mr Ellem stated in the course of his cross-examination that he did not recall having a conversation with Mrs Stuart in which Mrs Stuart told him "excitedly" that the Stuarts had received a $2.65 million offer for Evergreen. However, he accepted that it was possible that the conversation happened. Mr Ellem remembered the name Burberry and that there was possibly a proposal by the Burberrys to buy Evergreen, but he could not recall the details of their offer. He said he did not remember saying words to the effect that "the bank will not accept that as the sale offer", nor did he remember telling Mrs Stuart that she and Mr Stuart "are not bankers" after she apparently expressed "stunned surprise". 396 It is difficult to reconcile Mrs Stuart's evidence with the contemporaneous documents for the following reasons. 397 First, at 5.04 pm on 24 August 2009, Mrs Stuart sent an email to herself with the subject line "VERY IMPORTANT EVERGREEN" (24 August 2009 email). The email was timestamped four minutes into her seven minute telephone conversation that day with Mr Ellem and included the following analysis: Math's after Burberry inspection 24/08/09, these figures correct. Lots 3 & 7 = 1,972.70 Ha or 4,872.581 ac $370.00 per ac 4,872.581 = $1,802,854.97 rounded to $1,800,000.00 And lot 14 2020.292 ha or 4,990.121 ac $280.00 per ac 4,990.121 = 1,397,233.947 rounded up to $1,400,000.00 Lease purchase option with Lot 14 $1,400,000.00 @ 5% = $70,000.00 per year x 2 years = $140,000.00 + settlement of $1,400,000.00 total = $1,540,000.00 total 398 There is no reference to any offer from the Burberrys in the 24 August 2009 email. Further, the figures of $1.8 million for Lots 3 and 7, $1.4 million for Lot 14 and $140,000 in total interest pursuant to a two year "lease purchase option" for Lot 14 appear to reflect a starting positon for the Stuarts, not a response to any offer that might have been received from the Burberrys. 399 My characterisation of the figures in the 24 August 2009 email as a starting position is supported by the contents of Ms Bodkin's email to Mrs Stuart on 27 August 2009, in which Ms Bodkin appears to have cut and pasted an earlier email that she sent to the Burberrys. Ms Bodkin's email to the Burberrys confirms that she has put their offer to the Stuarts, but the Stuarts had advised that "[t]hey are not negotiable on the front block at $1.8M as they have already adjusted the price to meet the market". With respect to the "back block", Ms Bodkin wrote that "[t]hey are prepared to drop the price by $50,000 to $1.35M and to lease it to you for $60750 per annum for 2 years". Both these references indicate that the Stuarts had nominated selling prices of $1.8 million for Lots 3 and 7 (the front block) and $1.4 million for Lot 14 (the back block). Those figures, together with the two year "lease purchase offer" were the figures in the 24 August 2009 email. 400 It is of course quite conceivable, even perhaps likely, that Mrs Stuart may have substantially completed the 24 August 2009 email prior to commencing the telephone call with Mr Ellem at 5.00 pm. Further, the 24 August 2009 email may well reflect the discussions that Mrs Stuart had with Ms Bodkin and Ms Hawking in her telephone calls with them on 24 August 2009, immediately prior to her telephone call with Mr Ellem. Whatever the positon might be, however, it is clear that the analysis in Mrs Stuart's email does not record the content of any offer made by the Burberrys for Evergreen. 401 Second, Mrs Stuart made the following note in her diary for 26 August 2009: Prue rang first "tester" offer from Burberries - emailed counteroffer 402 At 8.37 pm on 26 August 2009, Mrs Stuart sent an email to Ms Bodkin that outlined the terms of the offer from the Burberrys, as described above, and stated that it was "unrealistic". Mrs Stuart explained: We have already "given" away by the sale price approximately $300,000.00 min, and they want a further $550,000.00 this would equate to $850,000.00 approximately, you must make them see this! We are prepared to cop the $300,000.00 (as our prices reflect) they must bear this in mind, as equity that they will gain, should a sale proceed. (worked out on value of property @ $3.4 mill) 403 Mrs Stuart went on to outline a counteroffer in this email to Ms Bodkin that included a reduction in the price of the back block by $50,000 to $1.35 million, "not the $150 k they asked", and a lease term of two years noting that "we will meet them half way, as originally we said 1, possibly 2 years at a stretch, cannot do more than that, we are not a bank". Mrs Stuart does not make any reference in this email to any refusal by Rabobank to consider or agree to the Stuarts accepting the Burberrys' offer for Evergreen. Rather, the focus of the email was Mrs Stuart's desire to limit the extent of any discount from a $3.4 million valuation of Evergreen. 404 When cross-examined on her 26 August 2009 diary note and email to Ms Bodkin, Mrs Stuart steadfastly maintained that she had received the Burberrys' offer from Ms Bodkin in the course of their telephone call at 4.28 pm on 24 August 2009. She also said that Mr Ellem had made it clear to her that Rabobank would not permit the Stuarts to accept the offer in her subsequent telephone call with him at 5.00 pm that day. 405 In cross-examination, Mrs Stuart sought to draw a distinction between an "offer" and a "tester offer" in an attempt to address the contention that her diary note and subsequent email on 26 August 2009 to Ms Bodkin meant that she had received the Burberrys' offer on 26 August rather than 24 August 2009. She denied that she had discussed this counteroffer with Mr Ellem and also said, despite her email, that she did not think that the offer was unrealistic. She claimed that she had only said that because she "was embarrassed to say that the bank manager said no". When asked why that would be embarrassing, Mrs Stuart said that "it makes you very vulnerable". 406 Third, on 27 August 2009, Mrs Stuart sent an email to her solicitor, Mr Cowley, advising him that they were in negotiations for Evergreen, explaining that the purchasers were proposing to buy Lots 3 and 7 outright and enter into a "lease/purchase basis, with settlement in two years" arrangement for Lot 14. Mrs Stuart did not make any reference in this email to any refusal by Rabobank to contemplate any deferred lease/purchase arrangement for Lot 14. 407 On balance, I make the following findings: (a) the concept of a deferred sale/lease arrangement in relation to part of Evergreen first emerged on or about 20 August 2009; (b) Mrs Stuart raised the possibility of a deferred sale/lease arrangement with respect to the sale of Evergreen with Mr Ellem on or about 24 August 2009, in the course of which he indicated that Rabobank may have significant concerns about such an arrangement; (c) at some time between 24 and 26 August 2009, the Stuarts conveyed to the Burberrys, most likely via Ms Bodkin, that they would be prepared to accept $1.8 million for Lots 3 and 7 of Evergreen, payable on settlement, and $1.4 million for Lot 14, payable over two years with a lease/interest arrangement in the intervening period; (d) on 26 August 2009, the Burberrys made a $2.65 million offer for Evergreen, with $1.4 million payable on acceptance for Lots 3 and 7 and $1.25 million to be payable over four years for Lot 14, with interest payable on this amount at a rate to be negotiated between 3% and 4%; (e) Mrs Stuart did not regard the offer made by the Burberrys as realistic and at 8.37 pm on 26 August 2009, she instructed Ms Bodkin via email to make a counteroffer to the Burberrys maintaining the purchase price sought for Lots 3 and 7 at $1.8 million, but agreeing to a discount of $50,000 for Lot 14 and otherwise maintaining a two year period for the deferral of the period for the payment for Lot 14, not a four year period; (f) at some time on 27 August 2009, most likely shortly after a telephone conversation between Mrs Stuart and Ms Bodkin at 11.59 am lasting for 14 minute and 11 seconds, Ms Bodkin conveyed the Stuarts' counteroffer to the Burberrys; and (g) the amounts sought in the counteroffer and the period for the deferral of the payment for Lot 14 were not acceptable to the Burberrys and they did not proceed with their proposed purchase of Evergreen.

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3 September 2009 valuation of Evergreen 408 On 3 September 2009, the Stuarts obtained a valuation report of Evergreen from Herron Todd White, an independent property advising firm. The valuation indicated a range between $2.9 million and $3.4 million, with the final market value of Evergreen assessed to be $3 million. Herron Todd White noted that potential buyers were cautious about entering the market at that time and "the sentiment appears to be a 'wait and see' approach with potential buyers anticipating a fall in prices". 409 Under the heading "Local Rural Property Market Issues", Herron Todd White stated: Sales of properties in the Talwood to Weengallon area have been steady. The district is becoming recognised for its suitability as a backgrounding area for the beef industry. As the beef industry has remained relatively strong and stable, values in this district have held. What has probably held sales volume back in the past two years has been uncertainty surrounding broader issues such as climate, vegetation management, interest rates and the Australian dollar. We note that the property 'Evergreen' has been on the market for more than twelve months, and that there are a number properties currently available in the Talwood/Weengallon district. There have been some sales in the past six to twelve months and we feel that the period of caution mentioned above may give way to some more positive activity. 410 Regarding the advent of the global financial crisis, Herron Todd White observed: Agriculture is broadly accepted as somewhat of an exception to this global downturn and may well provide much of the growth and stability to help keep our domestic economy in a stronger position, comparatively speaking, to many of our trading partners. … The view that agriculture is an exception to the downturn has its basis in that demand for agricultural products will continue to be strong. The simple fact that there will be an ever increasing demand for food due to increasing population and general economic growth give support for this view. 411 Further, Herron Todd White stated that "[a]necdotal evidence suggest that there have been a number of rural property purchases that have not proceeded due to lack of availability of credit and/or the tightening of credit policies by banks" and "[o]verall, we would describe the market as softer, however with the strong fundamentals, a quick recovery could be expected if confidence returns".

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October 2009 Letter of Offer 412 On 23 October 2009, Mr Ellem completed a credit submission requesting approval to defer the permanent repayment due on 30 September 2009 to 31 March 2010, pursuant to the March 2009 Letter of Offer. 413 Mr Ellem observed in the related work request material for the credit submission that: Client's have had a registered valuation completed for "Evergreen" which confirms their asking price for the property. Branch holds a copy of the report. There remains a clear commitment to offload the property and clients continue to take all reasonable steps to sell. The property has been well advertised and has previously been to auction. It remains listed with 3 reputable marketing agencies and clients have also listed the property privately on the internet. Attached to the submission is the latest ad for the property included in this weeks Qld Country Life. Projections indicate that serviceability is evident up until the interest payment due at the end of this financial year effectively providing a further 8 months to offload the property. Clients will await rainfall and then within the next 3 months consider taking the property to a tender process and accept any reasonable offer. Branch is provided with constant updates re inspections and interested parties. 414 This credit submission was accepted and a letter of offer giving effect to this further extension of the permanent repayment was issued on 30 October 2009 (October 2009 Letter of Offer). On the same day, Mr Ellem faxed a copy of the October 2009 Letter of Offer to the Stuarts, commenting: As per our conversation yesterday I think this will be the last deferral that will be allowed without a signed contract. 415 The October 2009 Letter of Offer included a special post settlement condition that: The Borrower and/or the relevant Security Provider undertake to sell the Security property known as "Evergreen" on or before 31/03/2010 in order to make a permanent repayment of not less than $2,800,000 to reduce the Loan Limit by no later than the date of the settlement of the sale of "Evergreen". 416 The October 2009 Letter of Offer was signed by the Stuarts and faxed back to Mr Ellem on 30 October 2009.

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Sale of Lot 14 of Evergreen in January 2010 417 On 15 December 2009, Mr Ellem completed a credit submission requesting an increase of $120,000 to the limit of the Facility "to assist with interest due at the end of this month and additional working capital". 418 Mr Ellem also noted in this credit submission that the Stuarts had signed an unconditional contract for the sale of Lot 14 of Evergreen for $1 million. He recommended that Rabobank: (a) accept $900,000 from the sale of Lot 14; (b) reduce the limit of the Facility from $3.6 million (following the proposed $120,000 increase) to $2.7 million; (c) reduce the permanent principal repayment due on 31 March 2010 from $2.8 million to $1.8 million; and (d) extend the due date for the permanent principal repayment to 30 June 2010. 419 Mr Ellem noted in the credit submission that after these payments had been made it would: [L]eave a facility limit of $900k based on an existing security value for "Mt Morris" of $2.2m. Given the property has a carrying capacity of approx 1,200 breeders suggest a debt to breeder ratio of 1 : $750 provides comfort to the bank. Intention is to continue on a 50:50 basis of own cattle and agistment cattle. 420 Mr Ellem's recommendations were accepted by Rabobank's credit department. A letter of offer was generated in these terms and dated 21 December 2009. It was signed by Mr Ellem, but not by the Stuarts. 421 On 18 December 2009, the Stuarts exchanged contracts for the sale of Lot 14 of Evergreen for a purchase price of $1 million. The sale settled in January 2010. Later that year, Mrs Stuart sent an email to Mr Ellem and Rod Saal on 2 December 2010 to inform them that they had "sold the back block for $1,000,000.00 at the beginning of this year, with proceeds going to Rabobank, as was always our objective". Mr Saal was an agricultural consultant who was assisting the Stuarts with their applications to the QRAA and for government grant funding proposals. Mr Saal also provided general assistance to the Stuarts in relation to their dealings with Rabobank.

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November 2010 credit submission 426 In late July 2010, the Stuarts advised the Rural Financial Counselling Service that they were worried about their financial position as they did not have the means to make the semi-annual interest payment due to Rabobank in December 2010. 427 On 22 November 2010, Mr Ellem prepared a credit submission to defer the principal repayment due on 31 December 2010 to 30 June 2011 and reduce the required repayment amount from $1.8 million to $1.5 million. The reduced amount of $1.5 million was to allow the Stuarts to partially restock. The submission also requested a $150,000 increase to the Facility for working capital purposes. 428 The credit submission included extensive comments under the heading "Personal Factor and Ability". Mr Ellem wrote the following in relation to the Stuarts' history of purchasing and selling of rural properties: In all cases the client has completed extensive investigation on all aspects of development potential etc prior to purchase. … Clients are hard working and both property and financial management abilities are very sound. Relationship with account manager is strong. Personal factor continues to be strong. There is a well proven track record of sourcing rural properties with significant capital improvement potential and the Stuart's provide constant updates regarding financial projections and development plans. … They are committed to the sale as they wish to commence realising the potential of the "Mt Morris" property and the inability to offload "Evergreen" continues to hamper any implementation of those plans and is a sense of significant frustration. 429 Mr Ellem's concluding comments under the heading "General Comments" were: Clients are well aware of the need to achieve a sale. Through a number of property turnovers they had structured themselves into what was going to be a strong financial and equity position on a property that has significant development potential only to see this now be significantly eroded firstly by severe drought conditions and then by a very subdued property market. 430 On 14 December 2010, the credit submission was declined by the Rabobank Credit Committee, notwithstanding Mr Ellem's strong and sympathetic endorsement.

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2 March 2011 letter to Rabobank 435 On 2 March 2011, the Stuarts sent a letter to Rabobank under cover of an email to Mr Ellem and Mr Varnay, a Special Assets Manager at Rabobank. The letter set out the history of the Stuarts' attempts to sell Evergreen and their acquisition of Mt Morris. Both Mrs and Mr Stuart signed the letter. 436 The Stuarts noted in their letter that Evergreen went to auction on 17 February 2011. They explained that the "interest in the property, has not been a problem over the past 3 years, exception for 6 months with the GFC really hit". 437 Regarding Mt Morris, the Stuarts stated that their decision to buy the property was: [B]ased on facts. The fact was that our ability to generate income due to drought conditions, on "Evergreen", the shortage of feed for stock, and increasing interest rates, was a down hill slide. Not good business. We were proactive. 438 The Stuarts also stated with respect to the purchase of Mt Morris: Doing a risk analysis, showed that this was a good business proposition, and indeed, if "Evergreen" had sold within this 2 year period of the term of agistment arrangement, would have been in an exceptionally strong position. 439 The Stuarts attributed their present financial positon to: Unprecedented duration of Drought, GFC and Floods. All of these factors were totally out of our control, and Rabobanks. These 3 factors alone had a huge impact on our business, and our equity. … You now have a personal letter from us, you know what we have achieved. You know that the drought, GFC and floods were outside our control, and have had a direct impact on our business, that brings us exactly where we are today. In turn this has had an effect on Rabobanks business. 440 The Stuarts warned that: If we do sell "Evergreen" below the drop in the market in this area, this will severely impact on other Rabobank clients. How many rural properties does Rabobank need to protect, I would suggest all. 441 In their letter, the Stuarts queried whether the interest payments could be halved for the period in which they continued to market Evergreen, explaining: That way we are going forward in a positive manner, and not indefinitely and not negatively, demonstrating our willingness to meet our obligations. 442 Regarding Mr Ellem, the Stuarts wrote: We also take this opportunity to make mention of your manager at Dalby branch, Chris Ellem whom we have worked along side since our partnership with Rabobank began. Rabobank is fortunate to have a man with a true understanding financially and of conditional seasons on its team. We have always found him straight down the line, ensuring that Rabobank is first and foremost, yet he understands working properties. These two attributes are much appreciated as clients, with your staff member, Chris Ellem. 443 During cross-examination, Mrs Stuart was asked by senior counsel for Rabobank whether her understanding at the time she wrote that letter was that things had gone wrong for reasons that were outside of her and the bank's control. She responded: "in part". When pressed about what part was not right, she provided the following explanation: This letter, when read in its entirety, is a classic example of what a client will write when they know that there is an imbalance of power and when they have been refused the sale of a property a year or so before. This is a suck-up letter because I knew Rabobank had the power and was crushing my family. 444 It was put to Mrs Stuart that she would not have written the paragraph praising Mr Ellem if she had a genuine grievance against him at the time she wrote this letter. Mrs Stuart disagreed with this proposition and said she "absolutely" had a grievance against Mr Ellem at that time because he had "refuse[d] the sale" of Evergreen pursuant to the Burberrys' offer in August 2009. 445 I do not accept this evidence of Mrs Stuart. It is inconsistent with the content of the contemporaneous email communications between Mrs Stuart and Mr Ellem, and Mr Ellem's unequivocal support for the Stuarts in his credit applications submitted on their behalf to the Rabobank Credit Committee. 446 On 14 March 2011, Mr Ellem emailed a letter dated 7 March 2011 to the Stuarts that he and Mr Varnay had jointly written in response to the Stuarts' letter of 2 March 2011. Mr Varnay and Mr Ellem noted that: Rabobank fully recognises the efforts you have made to sell Evergreen and to keep it informed of all developments and this had been a key reason as to why Rabobank has continued to support you to date. For clarification, the facility is in breach and Rabobank continues to reserve its rights. … In your letter you have asked for more time to achieve a better sales price, a temporary reduction of the interest rate, and additional funding of AUD470,000. Whilst Rabobank may be prepared to provide more time to sell the property and may out of necessity have to allow interest to be accrued, we are not, without a detailed cashflow prepared to consider more funding. Any non-payment of interest would still be an event of default under the Facility, and Rabobank would reserve its rights as to what action it took and when. 447 Mr Varnay and Mr Ellem stated that it was Rabobank's preferred position for the Stuarts to continue to pursue a sale of Evergreen for $1.5 million and seek to agist cattle on Mt Morris to supplement their income and defer the restocking.

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Deed of Forbearance 459 At the conclusion of the Mediation, the Stuarts signed the Deed of Forbearance. 460 The Deed of Forbearance included acknowledgements that: (a) Rabobank was entitled to make a demand and had made a valid demand for repayment of the loan under the Facility; (b) the Stuarts were in default; (c) the Stuarts owed $2,282,106.75 to Rabobank; (d) the security and any other security interest was valid, binding and had become enforceable; (e) the Stuarts had received independent legal advice in relation to the Deed of Forbearance; and (f) Rabobank had participated in the Mediation in good faith and had satisfied their obligations to mediate pursuant to the Queensland Farm Debt Mediation Scheme. 461 The Deed of Forbearance also included a moratorium whereby Rabobank agreed not to take enforcement action before 31 March 2013. The basis of the moratorium included an agreement by the Stuarts that: (a) on or before 15 September 2012, they would obtain a real estate marketing proposal for Mt Morris to be provided to Mr Brady; (b) the marketing campaign for Mt Morris was to be completed by 30 November 2012; and (c) in the event that Mt Morris was not sold by 30 November 2012, the Stuarts would have until 31 March 2013 to seek to reach an agreement with Rabobank as to an amount that would be acceptable to Rabobank in full and final settlement of their indebtedness, but that otherwise the Stuarts would continue with their efforts to sell Mt Morris; 462 Under the terms of the moratorium, Rabobank also agreed to pay up to $10,000 in marketing costs incurred in relation to the sale of Mt Morris, as well as up to $20,000 in relation to a bore and other reasonable expenditure required to present Mt Morris for sale. 463 Importantly, the Deed of Forbearance stated (I note that REFL is a reference to Rabo Equipment Finance Limited): In consideration of RAL and REFL's agreement to place a moratorium on Enforcement Action, the Debtor and the Security Provider having obtained independent legal advice concerning their rights and obligations under this Deed and each Transaction Document and Security, release and discharge RAL and REFL from any liability in respect of RAL and REFL's past dealings with them in relation to any matter whatsoever, howsoever arising, including but not limited to any Debtor and Security Provider incurring any Financial Indebtedness, or the granting of any Security or Transaction Document. 464 During her examination in chief, Mrs Stuart said that prior to the Mediation she had received an offer via a text message from Ms Beardsley on behalf of her company. Ms Beardsley offered the Stuarts a negotiated equity share in her company's unencumbered real property, which had an approximate market value of $1.3 million, in exchange for a share in Mt Morris. Mrs Stuart gave evidence that the offer was conveyed to Rabobank at the Mediation and received positively: MR KING: To the best of your recall, what was the response?---"It looks like this could be all over before it begins. This looks really positive, very favourable", and he was - Mr Nevison was smiling and talking to Denis McMahon of Legal Aid. And was anything said during the course of the day about whether or not the bank would consider that?---I'm unsure how long later it was, maybe after the formal commencement that Mr Nevison then conveyed, to the best of my recollection, Mr Nevison then came in and conveyed that he said, the bank had to take it back to Sydney, or credit committee in Sydney or something, that offer, to get it approved. 465 Mr Stuart gave similar evidence: THE WITNESS: … I remember when the - the text was shown to Nevison. He was - he said, "This is good" and he got all excited about it. … MR KING: And did you understand that an offer was made to the respondent at the mediation to that effect?---Yes, I was under the belief that that $1.3 million - Witherow - because I asked Witherow and Witherow said he had to go above him to get it to sign off. Well, I said, "How come I've got to sign and you don't?" He had to go - that letter had to go to Sydney to - to be viewed to see if it was acceptable. And did - that day, did Sydney "to which Mr Nevison and Mr Witherow are referring" get back to you in relation to that proposal?---No, they were going to take two weeks. … HIS HONOUR: Well, what lead you to believe they were going to take two weeks? What was said to you that caused you to have that view?---I was told I had to sign it on the day by McMahon and Nevison. I was told that, that I had to sign it on the day. And that was the best chance of getting it done but it had to be sent to Sydney and I was told it was going to take 10 to 14 days. And who told you that?---Nevison. 466 Both Mr and Mrs Stuart gave evidence that they would not have signed the Deed of Forbearance had they known that the bank would not consider the $1.3 million offer from Ms Beardsley. 467 Mrs Stuart said: "I understood that the bank was taking the offer back to Sydney and would consider it. I signed the deed of forbearance under extreme duress and I said so countless times." She said that as she signed the Deed of Forbearance, she said out loud, "I am not signing this of my own free will". Mrs Stuart agreed in cross-examination that she was not in the same room as the Rabobank representatives during the Mediation. When she signed the Deed of Forbearance, Mrs Stuart was in a room with Mr McMahon. Mrs Stuart also stated in her outline of evidence, which she verified in the course of her oral evidence, that she was asked twice by Mr McMahon whether she understood the Deed of Forbearance. 468 Mr Stuart said that the only reason he signed the Deed of Forbearance was because he believed that Ms Beardsley's $1.3 million offer was going to be considered by Rabobank. Mr Stuart said that he would not have signed the Deed of Forbearance if he had known that the bank had no intention of considering this offer. Both Mr and Mrs Stuart gave evidence that at the time they signed the Deed of Forbearance, Mr Stuart did not have his glasses. Mrs Stuart added that her husband "is all but illiterate to start with". 469 Of the experience of the Mediation, Mrs Stuart said during her examination in chief: Farm debt mediation for a farmer, in my experience, is not mediation because of what I have experienced. The bank - we were there in good faith. The bank, I believe by their response and their approach to myself and my husband, were not there in good faith. They denied everything, including things that they had acknowledged prior to farm debt mediation and apologised for … And when they gave me the Deed of Forbearance to look at "read this" and I started to flick through it and I said "that's the most dangerous document I've ever seen" because I didn't understand it. I said time and time again "I do not want to sign this." I said "I want the right to sue this bank" and Lee Nevison said, "You will never win, even though you're right you will never win. There are people who know people; isn't that, right, Denis?" And that frightened the shit clean out of me. 470 The contemporaneous documentary evidence does not support the Stuarts' evidence that Rabobank had agreed to refer Ms Beardsley's $1.3 million offer to Rabobank's head office. 471 The handwritten notes of Mr McMahon, written on a printout of the offer as recorded on the white board in the mediation room by Mr Nevison, state that the proposal relating to Ms Beardsley's $1.3 million offer was rejected. 472 Further, the handwritten notes that Mr Couper made during the Mediation include the following statements: market has to be tested … - Bank says the best way to do that is to fully test the market … What would bank take now can't say without market being tested 473 Mr Couper confirmed in his oral evidence in chief that the offer from the Stuarts for Rabobank to accept $1.3 million in 90 days in full and final settlement was rejected by the bank at the Mediation. He also clarified that the reference in his handwritten Mediation notes to "bank would accept write down without testing market first" was an error and that he meant to write "bank would not accept write down without testing market first". 474 Following the Mediation, Mr Nevison issued a notice pursuant to s 12 of the Queensland Farm Debt Mediation Scheme confirming that Rabobank had "participated in the mediation in good faith".

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10 April 2013 Rabobank offer to the Stuarts 475 Contrary to the terms of the Deed of Forbearance, the Stuarts did not: (a) sell Mt Morris by 30 November 2012; (b) agree an amount with Rabobank in full and final settlement of the debt owed by the Stuarts on or before 31 March 2013; or (c) refinance their debt to Rabobank. 476 On 10 April 2013, Mr Couper sent a letter on behalf of Rabobank to Mr Cowley offering to accept $1.5 million in full and final settlement of the debt owed by the Stuarts under the Facility on the condition that the payment was made by 31 May 2013 (10 April 2013 letter). The letter stated that if payment was not made, Rabobank reserved the right to take enforcement action as it deemed fit without further reference to the Stuarts. In an email to Mr Saal and Ms Bowden, Mrs Stuart set out a cash flow analysis to ascertain how the full and final settlement figure might be achieved by 31 May 2013. Mrs Stuart outlined four major income streams: carbon credits income, tourism income, agistment income and Mr Stuart's income. 477 In a letter dated 16 April 2013 sent by Mr Cowley to Mr Couper on behalf of the Stuarts, the Stuarts agreed to the terms of the 10 April 2013 letter. 478 On 26 April 2013, Mrs Stuart wrote an email to Ms Bowden with details of a phone call she had had with Mr Brady about the 31 May 2013 deadline. Mrs Stuart wrote: [I]ts "amicable" between Rabo and us :) … Asked worst case scenario re getting "off" - he advised for me NOT to pack anything - and "don't stress about that part of it, its a worst case scenario if you and Mark exploded, which is not the case." So, I then said refinancing is looking positive, however we have to deal with govt departments, and that is going to take time - he again reiterated how important the letters of offer are, and also the fact that the $100k payment from Evergreen coming in will help to "buy" us some time as well if settlement in full cannot be achieved by 31st of May. 479 However, the Stuarts were unable to make the payment on or before 31 May 2013. On 6 June 2013, Rabobank extended the date for payment to 28 June 2013. However, in correspondence between Mr Cowley and Mr Couper, it became apparent that it was highly unlikely that the Stuarts would be able to meet the new 28 June 2013 deadline. The Stuarts requested an extension to 31 August 2013 and offered to resume payments on a vehicle and direct that agistment income be secured for the payment of interest under the Facility. An extension to Friday, 30 August 2013 was granted by Rabobank. This offer was accepted by the Stuarts, but they were unable to make the payment by 30 August 2013 despite attempting to raise funds with various financiers and continuing to advertise Mt Morris for sale.

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2015 Proceedings 485 In 2015, the Stuarts commenced proceedings in the Federal Court of Australia against Rabobank. They alleged that over the course of their banking relationship, including before and after their entry into the Deed of Forbearance, Rabobank had acted toward the Stuarts in breach of contract and/or unconscionably within the meaning of the unwritten law or the provisions of the ASIC Act or its statutory analogues. 486 The first statement of claim in the 2015 Proceedings was filed on 19 June 2015. It made numerous allegations against Rabobank, including that the Stuarts: (a) suffered loss and damage caused by Mr Ellem's refusal to consent to the Burberrys' offer to buy Evergreen in 2009; (b) were subjected to undue influence, duress, oppressiveness and unfairness in relation to the Mediation; (c) suffered loss and damage as a result of Rabobank's refusal to consent to the Carbon Abatement Interest Scheme in respect of Mt Morris, including by refusing to sign an "Eligible Interest Holder Consent" form; (d) suffered financial hardship as a result of Rabobank's breach of ss 131 and 133 of the National Credit Code in relation to the Facility and the manner in which the bank dealt with the Stuarts and the credit contract was therefore unsuitable; and (e) experienced unconscionable lending practices by Rabobank, which lacked the requisite degree of care and diligence and were not consistent with good principles of sustainable lending by a rural bank. 487 In early September 2015 Jagot J ordered the Stuarts to file an amended statement of claim: Stuart v Rabobank Australia Limited [2018] FCA 30 at [20]. The three ensuing iterations of the statement of claim drafted by the Stuarts' legal advisers contained largely the same allegations. 488 In early 2016, Jagot J struck out the amended statement of claim. This prompted seven subsequent iterations of reformulated versions of the amended statement of claim. A document entitled "Revised Third Amended Statement of Claim" dated 20 March 2017 included the following allegation: 6. At the time of entry into the said Facility the Bank by its servant or agent Mr Chris Ellem Manager of the Dalby Branch represented to the Applicants that it was a specialist rural Bank with a growing profile in Australia providing expert rural advice to its many account holders … 489 On 5 February 2018, her Honour refused the Stuarts leave to file a "third" further amended statement of claim. 490 When Rabobank did not consent to the filing of a proposed "fourth" further amended statement of claim, Jagot J summarily dismissed the proceedings on 17 September 2018: see Stuart v Rabobank Australia Ltd [2018] FCA 1304. Justice Jagot said at [4]: Rabobank should not be burdened with yet further versions of a statement of claim with the same subject matters with which it had been dealing for a year, and which remains incomprehensible or so seriously deficient that it cannot be understood as disclosing any coherent cause of action or claim. 491 The Stuarts unsuccessfully applied for leave to appeal the summary dismissal: Stuart v Rabobank Australia Ltd [2019] FCA 343. Justice Rares found no error in the reasoning of Jagot J, stating at [19] that "[t]he current proposed pleading in fact reads more like a set of submissions, at a high level of generality, without it condescending to pleading material facts". Justice Rares ordered that the application for leave to appeal be dismissed, noting at [23]-[24] that the Stuarts would be able to commence fresh proceedings because no rights had been finally determined by Jagot J's summary dismissal orders. 492 The Stuarts commenced this proceeding on 26 March 2019.

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Relevant principles 495 Regarding the expression "in trade or commerce", both "trade" and "commerce" are of the widest import. That conduct need not be undertaken with a dominant objective of profit making, but need only bear a trading or commercial character: Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) (2018) 266 FCR 147; [2018] FCA 751 (ASIC v Westpac) at [2169] (Beach J). 496 The concept of "engaging in conduct in relation to financial services" is broad and includes dealing in a financial product. The expression "in relation to" is "extremely wide" and an indirect or less than substantial connection may be sufficient: ASIC v Westpac at [2216] and [2260]. There must be some ostensible connection or relationship on the face of the conduct: Australian Securities and Investments Commission v Citrofresh International Ltd (2007) 164 FCR 333; [2007] FCA 1873 at [73] (Goldberg J). To "engage in conduct", there must be some act on the part of the relevant person, which may include the act of an agent or the act of a person which should, as a matter of law, be attributed to the person: Australian Securities and Investments Commission v Narain (2008) 169 FCR 211; [2008] FCAFC 120 at [19] (Finkelstein J). 497 In relation to "misleading and deceptive", the central question is whether the impugned conduct, viewed as a whole, has a sufficient tendency to lead a person exposed to the conduct into error. That is, to form an erroneous assumption or conclusion about some fact or matter: Australian Securities and Investments Commission v Dover Financial Advisers Pty Ltd (2019) 140 ACSR 561; [2019] FCA 1932 (Dover) at [98] (O'Bryan J). 498 As O'Bryan J explained in Dover at [98], a number of subsidiary principles directed to this central question have been developed: (a) First, conduct is likely to mislead or deceive if there is a real or not remote chance or possibility of it doing so: see Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 87; Noone (Director of Consumer Affairs Victoria) v Operation Smile (Australia) Inc (2012) 38 VR 569 at [60] per Nettle JA (Warren CJ and Cavanough AJA agreeing at [33]). (b) Second, it is not necessary to prove an intention to mislead or deceive: Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228 per Stephen J (with whom Barwick CJ and Jacobs J agreed) and at 234 per Murphy J; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; [1982] HCA 44 (Puxu) at 197 per Gibbs CJ. (c) Third, it is unnecessary to prove that the conduct in question actually deceived or misled anyone: Puxu at 198 per Gibbs CJ. Evidence that a person has in fact formed an erroneous conclusion is admissible and may be persuasive but is not essential. Such evidence does not itself establish that conduct is misleading or deceptive within the meaning of the statute. The question whether conduct is misleading or deceptive is objective and the Court must determine the question for itself: see Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 (Taco Bell) at 202 per Deane and Fitzgerald JJ. (d) Fourth, it is not sufficient if the conduct merely causes confusion: Puxu at 198 per Gibbs CJ and 209-210 per Mason J; Taco Bell at 202 per Deane and Fitzgerald JJ; Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at [106]. 499 Regarding the phrase "likely to mislead or deceive", it is not necessary to prove that anyone was actually misled or deceived. The test is objective. Conduct is likely to mislead or deceive if that is a real or not remote possibility: Domain Names Australia Pty Ltd v .au Domain Administration Ltd (2004) 139 FCR 215; [2004] FCAFC 247 at [17] (Wilcox, Heerey and RD Nicholson JJ); Dover at [105] (O'Bryan J).

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Relevant principles 500 The Stuarts also seek to advance causes of action in fraud and deceit with respect to each of the three representations alleged to contravene s 12DA of the ASIC Act. 501 The five elements that need to be established by a plaintiff for the modern tort of deceit were outlined by the High Court of Australia in Magill v Magill (2006) 226 CLR 551; [2006] HCA 51 (Magill) at [114] (Gummow, Kirby and Crennan JJ) as follows. 502 First, the plaintiff needs to show that a defendant made a false representation. A false representation has been described as a "misstatement of an existing fact": Edgington v Fitzmaurice [1881-5] All ER Rep 856; (1885) 29 Ch D 459 (Edgington) at 483 (Bowen LJ). The representation may be made by words or conduct: Bradford Third Equitable Benefit Building Society v Borders [1941] 2 All ER 205 (Bradford) at 211 (Viscount Maugham). 503 Second, the defendant needs to have made the false representation either knowingly or without belief in its truth, including being reckless or careless as to the falsity of the representation: Derry v Peek [1886-90] All ER Rep 1; (1889) 14 App Cas 337 at 374 (Lord Herschell) affirmed by a majority of the High Court of Australia in Banditt v The Queen (2005) 224 CLR 262; [2005] HCA 80 at [2] (Gummow, Hayne and Heydon JJ). 504 Third, the defendant needs to have made the representation with the intention that it be relied upon by the plaintiff. The representation must be made with the intention that either it is acted upon by the plaintiff or by a class of persons that includes the plaintiff in the manner which resulted in the damage: Bradford at 211 (Viscount Maugham). 505 Fourth, the plaintiff must have acted in reliance on the false representation. If it is a material representation that was calculated to induce another person to enter into a contract and that person does enter into the contract, then the Court can infer that the person was induced by the representation to enter into that contract. Such an inference may be rebutted if it is shown that the plaintiff either had knowledge of the facts contrary to the representation or they stated in terms or showed clearly by their conduct that they did not rely on the representation: Redgrave v Hurd [1881-5] All ER Rep 77; (1881) 20 Ch D 1 at 21 (Jessel MR); see also Edgington at 483-4 (Bowen LJ). 506 Fifth, the plaintiff needs to show that they suffered damage which was caused by reliance on the false representation. As stated by Buller J in Pasley v Freeman [1775-1802] All ER Rep 31; (1789) 100 ER 450 at 453: "Fraud without damage, or damage without fraud, gives no cause of action; but where these two concur, an action lies". See also: Smith v Chadwick [1881-5] All ER Rep 242; (1884) 9 App Cas 187 at 195-6 (Lord Blackburn); Bradford at 211 (Viscount Maugham). 507 The need to satisfy each of five elements of the modern tort of deceit has always been strictly enforced, due to the serious nature of an allegation of fraud: Magill at [114] (Gummow, Kirby and Crennan JJ).

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Was it conveyed? 508 The first of the three representations alleged by the Stuarts to have been made by Rabobank is described in the pleadings as "the 15 year representation". It is alleged to be a representation in the following terms: (a) the Bank had approved a variation in its finance under its All in One 15 year interest only Facility account No 1130578 for the purposes of the Applicants purchasing the rural property Mt Morris near Charleville for the price of $2,200,000 from Mr Kevin Bredhauer and Ms Sharon Cuffe (nee Bredhauer); (b) the varied finance increased the limit of funds available to the Applicants for the remainder of the Bank's All in One 15 year Facility term supplied to them by the Bank until its expiry on 30 July 2019 by $2,200,000 on an interest only basis at competitive rates payable 6 monthly in arrears with early principal repayment allowed 509 There are a number of difficulties with accepting that such a representation was conveyed to the Stuarts. 510 First, a representation to the effect that Rabobank had agreed to increase the limit of the Facility by $2.2 million until 30 July 2019, subject only to an entitlement by the Stuarts to make an early principal repayment at their apparent discretion, is simply not possible to reconcile with the express and clearly stated early principal repayment terms in the June 2008 Letter of Offer, and the early principal repayment terms stipulated in each of the five earlier letters of offer from Rabobank accepted by the Stuarts prior to 3 June 2008. 511 Second, the Stuarts accepted in the course of their respective cross-examinations that they always knew that it was a requirement of the June 2008 Letter of Offer that they had to sell Evergreen and pay down the amount outstanding on the Facility. This acceptance was highlighted in the following extract from the cross-examination of Mr Stuart: MR BRAHAM SC: But you understood, didn't you, Mr Stuart, that you were agreeing to sell Evergreen and pay down your debt to the bank with the proceeds of sale?---Yes. And you had no difficulty with that idea, did you?---There's other scenarios in there, but yes. So you understood, didn't you, when you borrowed money for Mount Morris, that you were going to be obliged to the bank to sell Evergreen and pay down your debt with the proceeds of sale?---And I thought the bank would've been obliged to do the homework to make sure I could pay it back. No, no, no, no, no. Just please answer my question. You understood, didn't you, that your agreement with the bank, by which they would lend you money to buy Mount Morris, you were agreeing with the bank to sell Evergreen and pay down the debt with the proceeds of sale; do you agree?---Yes. … And after you bought Mt Morris, you kept trying to sell Evergreen, didn't you?--- Yes. And you were trying to sell the whole of Evergreen, weren't you, all three lots?---Yes. And you understood, didn't you, that subject to any further discussions with the bank that needed to happen, if it could happen by 31 March 2009?---Repeat that one again. You understood, didn't you, that subject to some further discussion with the bank, you needed to sell Evergreen by 31 March 2009?---Yes. 512 Mrs Stuart gave similar evidence in cross-examination: MR BRAHAM SC: You were putting to the bank that one reason for approving the loan to you was that you were planning to sell Evergreen, in whole or in part, and you would use the proceeds of that sale to pay down the debt?---To put it into our All in One Account facility, yes. 513 I therefore do not accept that the 15 Year Representation was conveyed to the Stuarts.

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Was it conveyed? 519 The second of the three representations alleged by the Stuarts is described in the pleadings as "the repayment representation". It is alleged to be a representation in the following terms: [B]etween 2 and 30 June 2008 the Bank by its servant or agent Mr Chris Ellem represented to the Applicants in the course of his employment that the Bank's letter dated 3 June 2008 sent to the Applicants by Ms MacMillan of his office on or about 3 June 2008 and received by the Applicants by post on late 6 June 2008 and in particular the words, 'permanent repayment' of $3,230,000 on or before 31 March 2009, were incorrect and not part of the Bank's finance terms for the purpose of the Applicants purchasing Mt Morris, saying to them in words 'That is just a typo - I'll get it corrected - Don't worry - the Bank's All in One 15 year interest only Facility is in place for you to buy Mt Morris and is good to go.' 520 The Repayment Representation is alleged in the Second Further Amended Statement of Claim (2FASOC) to have been made in the course of a telephone call between Mr Stuart and Mr Ellem on 9 June 2008 that was overheard by Mrs Stuart. 521 Mr Stuart gave the following evidence regarding the inclusion of the principal repayment term in the June 2008 Letter of Offer in his examination in chief: MR KING: What did you do - what did you do when you saw that?---I waited until the Monday and I rang Ellem. It was about mid-morning. I was on the hands free phone on loudspeaker out the back around the - yes, under the gazebo. I rang up Ellem and started with very frank words. I was peeved with him, actually. And doing the best you can can you - I withdraw that. When you say you were peeved does that mean that you were angry and irate?---Yes. Yes, I was. Why was that?---Well, he told me it was going back and he was going to change it. It was a typo and it came back and he lied to me. That's what he ended up actually doing was lying to me because he told me at the house he was going to change it and then when the letter showed up he hadn't changed nothing. And then what did you - did - were you able to telephone him on the Monday?---Yes, because we had his mobile phone and all that. He had - he handed out his little business cards when we first signed up. And what did you - to the best of your recollection using the words "he said" and "I said" what was - what then occurred?---Well, I asked him for the rent and he was being very sheepish and I said, "You told me you were going to do that" and I was going on about it. But as I told him I said, "You know it will ruin me because there's no way in the world you're going to get a rural property to sell in - in months especially with the so-called GFC that was going on and drought conditions and all that". It wasn't going to happen so quick. And he was umming and ahh-ing and that went on for a good 12 minutes and then he started talking normal. Calmed me down. He said, "It's all right, Mark". He said, "Just go in and sign it". He said, "I will do what I will do before. I will just roll it over and we will just continue on". He said, "It won't affect you". And when - he said it won't affect you, did he?---Yes. Yes. And he said, "I will roll it over"?---He will roll it over. 522 The following exchanges during the cross-examination of Mr Stuart are also instructive: MR BRAHAM SC: So you understood, didn't you, when you borrowed money for Mt Morris, that you were going to be obliged to the bank to sell Evergreen and pay down your debt with the proceeds of sale?---And I thought the bank would've been obliged to do the homework to make sure I could pay it back. No, no, no, no, no. Just please answer my question. You understood, didn't you, that your agreement with the bank, by which they would lend you money to buy Mt Morris, you were agreeing with the bank to sell Evergreen and pay down the debt with the proceeds of sale; do you agree?---Yes. And you say in respect of the date that Mr Ellem told you if you couldn't sell it by that date, it would be rolled over?---As he had done on several times before. But you're agreeing with me?---Yes. Now, can I suggest to you that what Mr Ellem actually said to you on the long weekend was that if you can't sell Evergreen as expected, you should keep him up to date and the bank would look at extending the date, they would try and work with you?---No. He said the bank would work with me, not try, would. All right. But he said the bank would work with you, did he?---Yes. … And after you bought Mt Morris, you kept trying to sell Evergreen, didn't you?---Yes. And you were trying to sell the whole of Evergreen, weren't you, all three lots?---Yes. And you understood, didn't you, that subject to any further discussions with the bank that needed to happen, if it could happen by 31 March 2009?---Repeat that one again. You understood, didn't you, that subject to some further discussion with the bank, you needed to sell Evergreen by 31 March 2009?---Yes. 523 Mrs Stuart did not recall the word "typo" being used in the course of the 9 June 2008 telephone conversation on speaker phone between Mr Stuart and Mr Ellem. Rather her evidence was that: MR BRAHAM SC: [Y]ou understood, didn't you, if the two contracts didn't happen at the same time you were going to purchase Mt Morris before you sold Evergreen, subject to getting the finance?---Loosely, yes. And you understood, didn't you, your expectation was that the bank would finance you into the purchase of Mt Morris and that in due course, when you sold Evergreen in whole or in part, that money would come back to the bank?---We would put it back in the Rabobank account, yes. … THE WITNESS: And - so he said that and I heard part of that conversation at Evergreen, which he referred to earlier, and then when that phone conversation took place with Mark and I on 9 June, even though you say it's a long weekend, he sort of averted everything and he was saying multiple things because he was clearly shaken. He was stuttering a lot so - and then he calmed everything down, said, "It's okay. It's no big deal. Don't worry about it." Did he say, "Look, you know, I will sort it out again. It's a typo"? No, I don't recall him saying that in the second conversation. It was more about convincing me that, "It was okay. It's no big deal. It's not going to be binding." That's how I understood his representations to be because he said those words, "Don't worry about it, you two. It's no big deal." 524 Mrs Stuart suggested that Mr Ellem had stated that there was a typographical error in the June 2008 Letter of Offer in the course of an earlier conversation in May 2008. Any such suggestion, however, is inconsistent with the following evidence of Mrs Stuart: MR KING: [D]id he say anything about signing the document?---Yes, he just - he just said, "Look, it's fine. Just go ahead, sign it, it's your same All in One Account, 15 years interest only". And - and I kept saying, "But this permanent principal repayment" and he's going, "No, no, no, it's nothing to worry about it, we defer it, we roll it over, it's done all the time". And I said, "But it says here we've got to sell - you know, sell everything at once and you know that's not exactly the - what we've been discussing about selling all of Evergreen because" - that was a different conversation again - and staying on this, he was - he was - he was very reassuring and I believed him, because he said "Look, you know, it has been done before, we can do it again" and I went "No" and he goes "It's all fine" but it was on that basis that I believed him that - - - … MR BRAHAM SC: All right. And you always understood, didn't you, that, pending some further discussion with Mr Ellem, the date by which you had to sell Evergreen was 26 March 2009?---But it wasn't made out to be a big deal. It was - it was not important to Chris in the end. No, and I understand what you've said, but the arrangement that you - the understanding you had after speaking to Mr Ellem was, although the bank had stipulated 26 March, Mr Ellem would work with you, if the date seemed unachievable, to extend that time to some later time. Is that a fair summary of your conversation with him?---Yes, that it would always be - it was - to me, it was like it was fluid, because he was so, "Don't worry about it. Roll it over. Defer it. It's no big drama. Don't worry about it, you two." And the understanding you had was, wasn't it, that that might be necessary because you may not be able to sell Evergreen by 26 March?---Yes, or Ashley come in with hers. Yes. That's correct. 525 Although Mr Stuart steadfastly maintained throughout his oral evidence that Mr Ellem told him that the permanent repayment clause in the June 2008 Letter of Offer was a typographical error, I do not accept that Mr Ellem represented to either Mr Stuart or Mrs Stuart at any time prior to their execution of the June 2008 Letter of Offer that it contained any typographical errors. 526 First, it is inherently improbable, given that the extension of the Facility was to enable the Stuarts to purchase Mt Morris prior to the sale of Evergreen, that the reference to the permanent reduction in the June 2008 Letter of Offer would be represented to be a typographical error. 527 Second, Mrs Stuart expressly disavowed in her oral evidence any suggestion that Mr Ellem stated in the course of the 9 June 2008 telephone conversation that the permanent principal reduction provision in the June 2008 Letter of Offer was a typographical error. 528 Third, Mr Ellem denied ever suggesting to the Stuarts that the permanent principal reduction provision in the June 2008 Letter of Offer was a typographical error, giving evidence that he "wouldn't have used words like that". 529 Fourth, the first suggestion that Mr Ellem had represented to the Stuarts that there was a typographical error in the June 2008 Letter of Offer was not advanced until the commencement of these proceedings in 2019. There is no evidence that it was raised earlier in any communications between the Stuarts and Rabobank or at any time in the course of the Mediation or in the 2015 Proceedings. 530 Fifth, both the Stuarts signed the June 2008 Letter of Offer notwithstanding the alleged typographical error. 531 Rather, the evidence suggests, and I find that, Mr Ellem represented to the Stuarts in the course of the 9 June 2008 telephone call that if the Stuarts needed more time to sell Evergreen that he was confident that the date for the principal reduction stipulated in the June 2008 Letter of Offer would be extended, consistently with the approach that Rabobank had taken on previous occasions with the Stuarts. 532 The typographical error representation was an integral component of the Repayment Representation and there is nothing else that suggests the inclusion of the permanent repayment term in the June 2008 Letter of Offer was incorrect or not part of Rabobank's finance terms. Accordingly, I find that the Repayment Representation was not conveyed to the Stuarts.

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Was it conveyed? 538 The last of the three representations alleged by the Stuarts to have been made by Rabobank is described in the pleadings as "the suitable finance representation". It is alleged to be a representation in the following terms: [B]etween 30 April and 30 June 2008 the Bank by its servant or agent Mr Chris Ellem represented to the applicants orally that the Bank's increase in finance provided for the purpose of the purchase of Mt Morris namely, that the additional funding in the sum of $2,360,000 increasing the Facility limit to $3,480,000, including funding 100% of the purchase price of Mt Morris, government and legal charges of $100,000, additional working capital of $60,000, together with the payment of the Mt Morris deposit of $100,000 out of the existing Facility and the retention of Evergreen pending its sale, was suitable finance supplied by the Bank to the applicants, serviceable by them and 'right' for the farming operation of the applicants at Mt Morris and that the Bank's finance product was 'designed for Primary Producers like you'. 539 It is alleged in the 2FASOC that the Suitable Finance Representation was made by Mr Ellem on no less than six occasions in the course of telephone calls with each of the Stuarts between 30 April 2008 and 30 June 2008 and that in each conversation Mr Ellem used words to the same material effect. 540 Rabobank accepts that it advertised its products as "being designed for primary producers like you". Rabobank also accepts that it promoted its All in One Account product as being suitable for the Stuarts as farmers and that it was designed for primary producers like the Stuarts. 541 Rabobank accepts that words like "suitable finance" were said by Mr Ellem to the Stuarts prior to their acceptance of the June 2008 Letter of Offer, but the bank contends that those words were said in relation to the structure of the All in One Account product, not in reference to the particular transaction the subject of that letter of offer. In particular, Rabobank submits that no representation was made as to the ability of the Stuarts to service the loan or meet the permanent payment reduction by the end of March 2009. 542 In his oral closing submissions, senior counsel for Rabobank submitted that questions of serviceability "can become a bit academic" when one realises that this was a bridging loan in substance and that the "only real expectation anyone had was that the Stuarts would repay the finance down to a level which they could easily afford to hold by selling Evergreen". He contended that it follows that the assessment of the value of Evergreen "underpinned everything from a suitability perspective". 543 The Stuarts contend that the Suitable Finance Representation was not limited to the general suitability of the All in One Account product for rural clients. They submit that it was directed at the finance that Rabobank offered to them to enable them to buy Mt Morris. They further submit that Rabobank inherently conveyed representations, consistently with clause 1.1 of the bank's "Credit: Securities and Legal" policy, that there was substantial backing for the equity provided by way of security and that there was sufficient income to service interest payments. Clause 1.1 of Rabobank's "Credit: Securities and Legal" policy provides: It is important to remember that security is no substitute for repayment or servicing ability. When making a credit assessment the account manager must first check to ensure that servicing capacity is demonstrated and only then should the availability of sufficient security be established. 544 The specificity with which the Suitable Finance Representation is pleaded is not established by the generality of the evidence given by the Stuarts in the course of the hearing. 545 Mrs Stuart gave the following evidence of her discussions with Mr Ellem concerning the suitability of the finance being offered by Rabobank to fund the acquisition of Mt Morris: MR KING: And in relation to the issue of finance, what - can you recall what was said at that point in time with Mr Ellem, other than what's recorded there?---Yes. That discussion revolved around using the All in One Account facility. Fifteen years interest only, it was suitable finance to expand our home. It was good, it was flexible for primary producers. Those things were very important to us. … MR KING: Doing the best you can, can you just recite to his Honour the occasions and the effect of the words that were said on this topic?---So in regard to the Mt Morris advance, the discussions that I had with Chris Ellem face-to-face and on the phone were numerous. There were a number of them, touching on different things from the Agistment Agreement to the suitability of the All in One Account. That was for us, that it's to be, you know, we're going to relocate our family out there. It's 15 years interest only; no permanent principle of reduction was ever brought to my attention. HIS HONOUR: I'm sorry. Mrs Stuart, what - - -?---At those times. I appreciate this is hard, I appreciate this is difficult, but perhaps if we could just take it a step at a time. The first is in what period were these conversations?---In the April and the May and in the lead up to, but more intense in that April period and April and May period. Now, what I'm interested in is what was the effect or words to the effect that were given or spoken to you by Mr Ellem?---It's still your same account that you've always had, All in One, 15 years interest only. It's flexible, it's suitable to primary producers like yourselves, so it's fit for purpose for our purpose, for the family enterprise. You know, it was investment in my children's future and Chris understood that, I know him. … MR KING: And did he say anything to you about the nature or character of the Mt Morris finance which you were to be provided - supplied by the bank?---Yes. He said that it was suitable. Chris' words were, "Yes, it was suitable," because it was our All in One Account and each time that Chris said that, he didn't explain every single time and go through - he did quite often but every single conversation, he didn't say, "All in One Account, 15 years, interest only, suitable finance, fit for purpose." He might say that one out of every 10 occasions but there was a number of those conversations in the lead-up to in those weeks, that April and May, with - with Chris - - - Leading up to the signing of the contract?---Yes. He was very - very descriptive during those times, yes. 546 Mr Stuart's evidence concerning the suitability of the finance offered by Rabobank was in equally generic terms, as demonstrated by the following extracts from his oral evidence in chief: MR KING: And do you recall having a discussion with him at that time about the All in One Account?---Well, he told me the All in One Account was an account that would serve all our needs. You know, it was suitable for our purpose. Suitable finance. … And did he - did you ask him about the All in One Account as distinct from the rural term loan account, with respect to its duration? That is to say, the period of it?---It was still to finish up in July '19. … And what did you understand him to mean when he said it was a 15-year account at that stage? And we're now talking late - or early 2005?---It was interest only, twice a year. Did the representation made to you to the effect that you have just stated, did he repeat that at later times in his relationship with you?---All my years dealing with Chris Ellem, he always stated it - All in One Account, how suitable it was for our farm, you know, your - your finance. He spoke it up to be the best account you could find in the country. … And was there anything else he said about it?---Well, he - he was telling me how it was still a suitable package for me, like, the finance was suitable. It suited - it suited our purposes. It's all in one account. Like, he went with his usual spiel as he did for years, like, how it was suitable for your - your purpose to go and buy properties and suitable for re-payment and suitable for your finances … 547 The evidence of Mr and Mrs Stuart does not establish any express representation to the effect that the proposed extension to their Facility would be "serviceable by them". Nor do I consider that such an inference can be drawn to that effect from the evidence of Mr and Mrs Stuart or any of the contemporaneous documents. 548 The balance of the alleged Suitable Finance Representation did not materially rise above a representation that the terms of the finance being offered to the Stuarts pursuant to the June 2008 Letter of Offer was suitable finance for their proposed farming operation on Mt Morris and that it was designed for primary producers like the Stuarts. I am prepared to find at that level of generality that such a "suitability representation" was expressly or by necessary implication made to the Stuarts (Generic Suitable Finance Representation). Given that the Generic Suitable Finance Representation was a pleaded aspect of the Suitable Finance Representation, rather than an unpleaded alternative representation, I will also consider whether the making of this representation contravened s 12DA of the ASIC Act or otherwise constituted fraud or deceit.

[139]

Was it misleading and deceptive? 551 The Suitable Finance Representation is alleged in the 2FASOC to be false because: (a) the loan to security ratio of 100% was substantially above Rabobank's applicable safe lending margin of 40%; (b) the finance provided was not provided on an interest only basis until the expiry of the Facility on 30 July 2019; (c) it was unlikely that the Stuarts would be able to permanently repay $3.23 million on or before 31 March 2009 except out of the sale of both Evergreen and Mt Morris; (d) Rabobank had not prepared or completed any prudent account suitability or serviceability assessment; (e) the finance provided was in "form and effect bridging finance" until the sale of Evergreen and not for the purpose of the purchase of Mt Morris as a farming operation by the Stuarts; (f) Mr Ellem had not obtained an independent and current valuation of either Evergreen or Mt Morris on or prior to the purchase by the Stuarts of Evergreen in June 2008; and (g) the finance provided was "in form and effect asset lending" by Rabobank in that there was a substantial risk that the permanent repayment of $3.23 million on or before 31 March 2009 would be repaid out of equity and/or only after enforcement action had been undertaken. 552 If, as would appear plain, the increase to the Facility pursuant to the June 2008 Letter of Offer was to permit the Stuarts to purchase Mt Morris prior to the sale of Evergreen, the loan to security ratio complaint (at [551(a)] above) is misconceived. The relevant loan to security ratio is the ratio between the amount outstanding under the Facility until Evergreen was sold and the combined value of Evergreen and Mt Morris. 553 It is not apparent on what basis it is alleged that, contrary to its stated purpose, the Facility was not to be used to purchase Mt Morris (at [551(e)] above). 554 As explained above, the interest only complaint (at [551(b)] above) ignores the plain wording of the June 2008 Letter of Offer and the bridging loan context. That is, the permanent repayment obligation following the sale of Evergreen. 555 The asset lending complaints (at [551(c) and (d)] and [551(g)] above) turn on whether it was reasonable to expect a sale of Evergreen by the end of March 2009 in an amount of approximately $3.2 million to $3.3 million. The precise position is somewhat complicated because the May 2008 Credit Submission included a valuation of Evergreen of $3.2 million but a permanent repayment due by the end of March 2009 of $3.23 million. Further, the 2009 cash flow projection forecast "Capital In" from "Asset Sales" of $3.3 million and "Capital Out" and a "Debt Repayment - Rabobank" of $3.23 million in March 2009. Given the forecast $415,693 working capital surplus at the end of March 2009 for the Stuarts in the 2009 cash flow projection, I do not consider that the discrepancies between these figures are material. 556 The absence of any independent valuation complaint (at [551(f)] above) appears to proceed on the assumption that unless Rabobank had obtained an independent contemporaneous valuation of Evergreen and Mt Morris, it would be misleading or deceptive for the bank to represent that the finance offered pursuant to the June 2008 Letter of Offer was suitable finance. I do not accept that such an assumption is warranted. Section 12DA of the ASIC Act calls for an objective enquiry as to the alleged falsity of the Suitable Finance Representation. 557 The objective evidence as to the value of Evergreen adduced in these proceedings, as set forth in the factual background above, provides support for Rabobank's use of a value of $3.2 million in the May 2008 Credit Submission. First, Ms Bodkin's market appraisal of Evergreen dated 28 March 2007 valued the property between $2,960,100 and $3,157,440. Second, the reserve price of $3.4 million set for the February 2008 auction of Evergreen was based on the advice from real estate agents, together with the Stuarts' preparedness to negotiate below that figure but not for less than $3.3 million. Third, the evidence of Ms Bodkin was that in early 2008 it was common for rural properties to be passed in at auction, but to be sold within the following five to six months. Fourth, Ms Bodkin's description in her evidence was that the reserve price of $3.35 million at the time of her appointment to sell Evergreen on 9 July 2008 was a likely sales figure based upon recent comparative sales and listings, the market climate at that point in time and buyer demand. Fifth, Herron Todd White's 3 September 2009 valuation of Evergreen was at a range between $2.9 million and $3.4 million, with a final market value assessed to be $3 million. 558 Equally I am satisfied that the objective evidence as to the value of Mt Morris adduced in the proceedings, as outlined in the factual background above, provides support for Rabobank's use of a value of $2.2 million in the May 2008 Credit Submission. First, the internal 5 June 2007 inspection and valuation undertaken by Mr Swalling for Rabobank assessed the value of Mt Morris to be approximately $2.2 million. Second, the 3 May 2011 valuation undertaken by Herron Todd White provides some basis for the drawing of an inference of a value for Mt Morris of between $2 million and $2.575 million as at June 2008. 559 Any failure by Rabobank to obtain an independent valuation or otherwise comply with any of its policies with respect to the valuation of properties cannot establish the alleged falsity of the Suitable Finance Representation. This is because the figures Rabobank relied upon were broadly consistent with the evidence adduced in these proceedings relevant to the objective value of Evergreen and Mt Morris in June 2008. 560 Finally, it is necessary to address the lack of a prudent account suitability or serviceability complaint (at [551(d)] above). This complaint appears to focus principally on the "serviceable by them" component of the Suitable Finance Representation. This complaint would have limited, if any, relevance to the Generic Suitable Finance Representation. 561 The Stuarts contend that Mr Ellem and Rabobank failed to undertake any meaningful analysis of the Stuarts' ability to service the Facility, particularly in the period leading up to the proposed sale of Evergreen. Much reliance was placed on the May 2008 Credit Submission prepared by Mr Ellem and the attached cash flow statements and livestock and crop program spreadsheets in the related work request. 562 It is necessary to first consider an issue that received extensive consideration in the course of closing submissions with respect to both the Suitable Finance Representation and the unconscionability cases advanced by the Stuarts. 563 The 2009 cash flow projection, as explained above, demonstrates that if the proceeds from the sale of Evergreen were received by the end of March 2009, the Facility at that stage would have a closing debit balance of $704,307. This is some $454,307 above the permanent payment reduction to $250,000 stipulated in the June 2008 Letter of Offer. 564 This closing balance takes into account the receipt of the proceeds from the sale of the cattle on Evergreen in the three months prior to March 2009 in a forecast amount of $243,450. An internal Rabobank livestock spreadsheet generated on 29 May 2008 records a projected opening balance for the financial year ending 30 June 2009 of 358 cattle as at 1 July 2008, a natural increase of 224 cattle, purchases of 100 cattle and sales of 676 cattle. This left a forecast closing balance at 30 June 2009 of only six cattle. In effect, all cattle on Evergreen were forecast to be sold, other than six bulls. 565 Counsel for the Stuarts placed considerable emphasis on this forecast closing balance and submitted that it would have placed the Stuarts in default even if they otherwise complied with the requirement to make a permanent reduction of $3.23 million from the sale of Evergreen by 31 March 2009. 566 Senior counsel for Rabobank, advanced the following propositions in response to this submission. 567 First, senior counsel submitted that Rabobank was not seeking to predict the future by preparing the cash flow projections in the work request material, including the 2009 cash flow projection. Rather, he contended, Rabobank was preparing "hypothetical projections to test the prudence and the suitability of the finance" from information provided by the Stuarts - information that I infer could reasonably have been expected by Rabobank to be the best information available to it for the purpose of assessing the prudence and suitability of the proposed finance to be offered to the Stuarts for the purchase of Mt Morris. 568 Second, senior counsel for Rabobank submitted that the 2009 cash flow projection reflected a "worst reasonably foreseeable outcome". Consistently with the evidence of the time previously taken by the Stuarts to sell rural properties and the evidence of the real estate agent, Ms Bodkin, Rabobank submitted that a sale of Evergreen could have been achieved much earlier and thus the closing balance as at end of March 2009 would have been much lower. 569 Third, senior counsel for Rabobank submitted that the 2009 cash flow projection demonstrated that the Stuarts would have been in a superior financial position if they had been able to sell Evergreen by March 2009. 570 The 2009 cash flow projection records a projected opening outstanding debit balance for the Facility of $924,501 as at 1 July 2008, a projected closing outstanding debit balance for the Facility of $704,307 as at 31 March 2009 and an increase in available working capital from $195,499 to $415,693 (assuming a Facility limit of $1.12 million) over the same period. Stated more directly, the Stuarts' financial position was forecast to improve by $220,194 over the nine month period leading up to the assumed receipt of the proceeds from the sale of Evergreen by the end of March 2009. 571 This forecast reduction in the outstanding balance under the Facility is in stark contrast to the $685,050.88 increase in the balance outstanding under the Facility between 24 July 2006 ($378,654.60 following the purchase of Evergreen and the receipt of the sale proceeds from the sale of Tullochard) and 11 June 2008 ($1,063,705.48 at the date on which the Stuarts accepted the June 2008 Letter of Offer). 572 As Rabobank submitted, if "the Stuarts' plans had come to fruition within Ms Bodkin's 'quite common' experience of less than half a year to sell a rural property after a failed auction", the Stuarts would have: (a) sold the significantly loss making Evergreen by about September 2008; (b) owned Mt Morris with an estimated market value of $2.2 million, that in their view gave them cattle breeding, cattle grazing (including by agistment) and tourism opportunities, as well as potential carbon farming income; (c) reduced the outstanding balance of the Facility by approximately $3.2 million with a significantly reduced interest liability; and (d) had the benefit of annual income from the Agistment Agreement of $195,000 for two years. 573 Given the objective forecast of a likely significant improvement in the Stuarts' financial position, I do not consider that either the temporary extension to the Facility to facilitate the purchase of Mt Morris prior to the sale of Evergreen or the $3.23 million permanent repayment condition in the June 2008 Letter of Offer would falsify or otherwise render the Suitable Finance Representation misleading or deceptive or likely to mislead or deceive. 574 Further, as the Stuarts themselves represented to Rabobank in their 2 March 2011 letter, "[d]oing a risk analysis" showed that the sale of Evergreen and the purchase of Mt Morris was "a good business proposition" and if Evergreen "had sold within this 2 year period of the term of agistment arrangement, [they] would have been in an exceptionally strong position". 575 I recognise that the 2009 cash flow projection, on the assumption that a sale of Evergreen was not completed until March 2009, recorded a closing account balance at the end of that month of ($704,307), not the stipulated ($250,000) in the June 2008 Letter of Offer. Ultimately, however, I consider that this stipulated reduction was a negotiable provision, as evidenced by Rabobank's approach to permanent reductions, both before and after the June 2008 Letter of Offer in its dealings with the Stuarts. The more critical issue is that the 2009 cash flow projection forecast an ability to meet the interest payments on the increase to the Facility to facilitate the purchase of Mt Morris and a significant improvement in the available working capital for the Stuarts in the period between 1 July 2018 and 31 March 2009. 576 In all the circumstances, I am not persuaded that either the Suitable Finance Representation or the Generic Suitable Finance Representation was misleading or deceptive or likely to mislead or deceive.

[140]

Was it knowingly false or made recklessly? 577 The Stuarts submit that by no later than the submission of the credit submission with the accompanying work request cash flows around May 2008, Mr Ellem must have recognised that the Suitable Finance Representation was false or that it was made recklessly. They rely on the principle that where a representation subsequently becomes false to the knowledge of the representor, it is a deceit as if the representation had been false to his or her knowledge when it was originally made: see Jones v Dumbrell [1981] VR 199 (Jones v Dumbrell) at 202-4 (Smith J). It is important to note, however, that Smith J stressed that liability in deceit would only arise in this way in very specific and factually dependent circumstances. Such liability required either an equitable basis or a continuing representation at the time the representation subsequently became false to the knowledge of the representor. Justice Smith held on the facts of Jones v Dumbrell that the representation was continuing at the relevant time, as the contract was yet to be concluded. 578 The serviceability analysis in the cash flow projections in the work request material for the May 2008 Credit Submission is assessed against a Facility Limit of $1.12 million, being the Facility limit immediately prior to the increase for the purpose of acquiring Mt Morris. Given that assumption and the assumed receipt in March 2009 of the proceeds from the sale of Evergreen, the cash flow projections show a material surplus in working capital for the Stuarts at all times between 1 July 2008 and 30 June 2010. 579 On balance, I do not consider that it was inherently unreasonable or dishonest for Rabobank to conduct a serviceability analysis, for its internal purposes, against a Facility limit of $1.12 million, notwithstanding that the June 2008 Letter of Offer required the Facility limit to be reduced to $250,000 from the proceeds of the sale of Evergreen by no later than 31 March 2009. 580 First, this was the Facility limit that Rabobank had in fact agreed to provide to the Stuarts pursuant to the April 2008 Letter of Offer, following the unsuccessful auction of Evergreen in February 2008. 581 Second, Rabobank had demonstrated a willingness on previous occasions, provided interest payments were made, to extend the limit of the Facility to meet the Stuarts' working capital requirements or to address delays in the sale of properties. The fluctuations in the limit of the Facility prior to the June 2008 Letter of Offer variation are summarised in the table below: Statement Date Facility Limit Comments 31.08.04 $400,000 Initial loan to pay out Elders 31.12.04 $2,500,000 Increase for purchase of Tullochard 30.06.05 $800,000 Reduction from anticipated receipt of Kurrajong sale proceeds 31.08.05 $2,500,000 Increase to permit more time to sell Kurrajong 31.10.05 $1,100,000 Reduction following receipt of Kurrajong sale proceeds 31.05.06 $1,295,000 Increase for working capital 30.06.06 $1,345,000 Increase for working capital 31.07.06 $550,000 Reduction following receipt of Tullochard sale proceeds and increase for purchase of Evergreen 31.12.06 $750,000 Increase for working capital 31.12.07 $875,000 Increase for working capital 30.04.08 $1,120,000 Increase for working capital

[143]

Was it relied upon? 584 Both Mr and Mrs Stuart gave evidence that they relied upon representations made by Mr Ellem as to the suitability of the finance being offered by Rabobank to fund the purchase of Mt Morris. I am satisfied that the Stuarts relied upon the Generic Suitable Finance Representation. 585 If contrary to my finding above, the Suitable Finance Representation was made by Rabobank, I am not satisfied that the Stuarts have established that they relied on it. As explained above, while it can be inferred that a person was induced by, and therefore relied upon, a representation to enter into a contract, I consider that inference has been rebutted in the present circumstances because the Stuarts showed clearly by their conduct that they did not rely on the Suitable Finance Representation. 586 On balance, I consider that the contemporaneous communications between Mrs Stuart and Mr Ellem in May 2008 outlined above, and the extensive notes made by Mrs Stuart in her options book, establish that the Stuarts were seeking to provide information to Mr Ellem to assist him in persuading Rabobank's Credit Committee to support the proposed extension to the Facility to facilitate the acquisition of Mt Morris, rather than looking to Rabobank to verify their ability to service the proposed extension to the Facility. 587 I am satisfied that little weight can be given to Mrs Stuart's at times strenuous efforts in the course of her evidence, both in chief and in cross-examination, to downplay her advocacy in support of the proposed advance to purchase Mt Morris. 588 Nor do I accept Mrs Stuart's attempts to rely on the reference to "check my maths" in her 8 May 2008 email to Mr Ellem as support for her contention that she was relying on Mr Ellem to confirm that the Stuarts would be able to meet their obligations in relation to the proposed increase to the Facility limit pursuant to the terms of the June 2008 Letter of Offer. In context, it is clear that the reference to "check my maths" was limited to the vendor finance calculations undertaken by Mrs Stuart in her email to Mr Ellem.

[146]

Relevant principles 592 The Full Court of the Federal Court explained in Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132; [2005] FCAFC 226 at [33] (Tamberlin, Finn and Conti JJ), that unconscionable conduct "on its ordinary and natural interpretation, means doing what should not be done in good conscience". 593 Unconscionable conduct under s 12CB of the ASIC Act is not limited by the unwritten law. Nor, as the Full Court of the Federal Court recently emphasised in Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (2021) 388 ALR 577; [2021] FCAFC 40 (Quantum Housing) at [78] (Allsop CJ, Besanko and McKerracher JJ), is it necessary to establish "some form of pre-existing disability, vulnerability or disadvantage of which advantage was taken". 594 As Gageler J stated in Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18 (Kobelt) at [87]: The correct perspective is that s 12CB operates to prescribe a normative standard of conduct which the section itself marks out and makes applicable in connection with the supply or possible supply of financial services. The function of a court exercising jurisdiction in a matter arising under the section is to recognise and administer that normative standard of conduct. The court needs to administer that standard in the totality of the circumstances taking account of each of the considerations identified in s 12CC if and to the extent that those considerations are applicable in the circumstances. 595 At [92]-[93], his Honour explained: 92 What I meant to convey by the reference was that conduct proscribed by the section as 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. To that view of the statutory standard I adhere. 93 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. 596 The Full Court of the Federal Court in Quantum Housing at [89] described the normative standard to be applied in assessing unconscionability in the following terms, with particular emphasis being given to the explanation provided by the Allsop CJ in Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199; [2015] FCAFC 50: As the Chief Justice sought to explain in Paciocco 236 FCR 199 especially at 274-276 [296]-[299] and [304]-[306] the values and considerations that inform the answer to a question whether conduct is against business conscience will be drawn from the values and considerations that one finds in the text, structure and context of the statute, in particular those in s 22, from statutes relevant to consider in the context of the conduct in question: Lux (2013) ATPR 42-447 at [23] and Medibank 267 FCR at 605 [241], and from the informing norms of equity and the common law, many of which need no restating by any Parliament, nor by any honest business person to another in their dealings. The Chief Justice sought to set some of these out in Paciocco 236 FCR at 274-75 [296]-[298]. These are not considerations outside the statute. They are basal values and considerations of equity and the common law in which the statute sits. Most are matters which honest business people understand and do not need expressly to require of each other (Paciocco [296]): The evaluation includes a recognition of the deep and abiding requirement of honesty In behaviour; a rejection of trickery or sharp practice; fairness when dealing with consumers; the central importance of the faithful performance of bargains and promises freely made; the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to respond for their protection, especially from those who would victimise, predate or take advantage; a recognition that inequality of bargaining power can (but not always) be used in a way that is contrary to fair dealing or conscience; the importance of a reasonable degree of certainty in commercial transactions; the reversibility of enrichments unjustly received; the importance of behaviour in a business and consumer context that exhibits good faith and fair dealing … 597 At [92] of Quantum Housing, the Full Court of the Federal Court referred to Gageler J's reasoning in Kobelt at [59]-[60] and stated: We would respectfully venture to suggest that the strength of the qualifying or descriptive language ("so far outside", "warrant condemnation", "offensive to the conscience") should be seen as indicative of the quality of the departure from right commercial behaviour, explicated and articulated case by case over time, rather than be taken as definitional of some measurable departure from conscionable business conduct. Perhaps little is to be gained by quibbling over adjectives, adverbs and verbs to express the notion, as long as it is recognised that unconscionable conduct is not limited to the worst kind of unconscionable conduct. There may be more and less serious examples. That will reflect in penalty. The task is an evaluation of the impugned conduct to assess whether it is to be characterised as a sufficient departure from the norms of acceptable commercial behaviour as to be against conscience or to offend conscience and so be characterised as unconscionable. In any particular case, it should be recognised that if the evaluative answer be "no: it is not unconscionable", the court is concluding that by an Australian business conscience the conduct was conscionable and is not to be deterred by penalty.

[148]

Bredhauer unconscionability claims 600 Counsel for the Stuarts contended that Mr Ellem had encouraged or otherwise persuaded the Stuarts to pay $2.2 million for Mt Morris because that was the amount of the permanent repayment that the Bredhauers were required to make following the sale of Mt Morris. Counsel for the Stuarts submitted that this was a material indicia of unconscionability in circumstances where it must be inferred that Mr Ellem knew of this requirement, persuaded the Stuarts to obtain a loan outside Rabobank's safe lending margin and had failed to disclose that "he was close with the Bredhauer family". In substance, it was alleged that Rabobank had an undisclosed conflict of interest and exploited that conflict to the detriment of the Stuarts. 601 I do not accept that the Stuarts have established these contentions. 602 First, the only evidence in which Mr Ellem suggested it was necessary for the Stuarts to raise their offer to $2.2 million came from Mrs Stuart during her oral evidence. As noted above in the factual background, Mrs Stuart's contemporaneous diary note records that Mr Richardson (Mr Bredhauer's selling agent) had advised her that Mr Bredhauer had suggested an offer of $2.2 million and that she had then discussed this figure with Mr Ellem. Mrs Stuart's initial evidence during examination in chief was that Mr Ellem had told her that "2.2 would be okay in regard to the agistment" and "what he believed it was worth plus the agistment agreement would justify the 2.2 million". In context, Mrs Stuart was seeking confirmation from Mr Ellem that Rabobank would be prepared to lend sufficient funds to enable the Stuarts to acquire Mt Morris for $2.2 million. Mrs Stuart's initial evidence as to the origin of the $2.2 million figure is consistent with her contemporaneous diary note and Mr Ellem's evidence in cross-examination that "I wouldn't have known what [the Bredhauers] wanted for the property". I accept this evidence in preference to the oral evidence given later in Mrs Stuart's examination in chief that Mr Ellem "told me I would have to go more" and "[a]t the $2 million offer, Chris Ellem told me I would have to go higher to purchase the property". 603 Second, the Stuarts have not established any material concern that Rabobank may have had in relation to the Bredhauers' financial positon in the period leading up to the purchase of Mt Morris by the Stuarts. Pursuant to the terms of a letter of offer from Rabobank to the Breadhauers dated 8 June 2007, the Bredhauers were not required to sell Mt Morris until 31 December 2008 and the permanent repayment of $2.2 million was not required to be made until 30 January 2009. 604 Despite being given access to the original bank file for the Bredhauers, the only evidence tendered by the Stuarts suggesting any potential financial concern that Rabobank might have had in the first half of 2008 was an internal work request and bank statements for the Bredhauers' All in One Account facility. 605 The internal work request included a notation made on 2 April 2008 that a $50,000 increase to the Bredhauers' facility limit was approved, "[h]owever no further shortform funding until Mt Morris is sold and debt reduced". 606 The bank statement for the Bredhauers' facility dated 31 January 2008 recorded a $29,968.20 excess/unarranged overdraft drawing against a facility limit of $4 million. The following statements recorded an increase in the facility limit to $4.05 million as at 29 February 2008, a further increase to $4.1 million as at 30 April 2008 and a $167,534.93 excess/unarranged overdraft drawing against a facility limit of $4.1 million as at 30 June 2008 (immediately prior to the receipt of the proceeds of the sale of Mt Morris to the Stuarts). 607 Even assuming that Rabobank passed the content of the notation in the internal work request onto the Bredhauers and that position had not changed by late May 2008, there was no evidence that the Bredhauers' account was overdrawn in the period leading up to the execution by the Stuarts of the contract for the purchase of Mt Morris on 26 May 2008. I note in this regard that the Stuarts did not tender the Bredhauers' bank statement for May 2008 and while the statement dated 30 June 2008 was overdrawn, the previous statement dated 30 April 2008 was not. 608 Third, there was no evidence that Mr Ellem had access to Rabobank's file concerning the Bredhauers, or that he had knowledge of the Bredhauers' $2.2 million permanent repayment obligation. It does not follow that if he was ultimately aware that the Bredhauers were holding out or pressing for a sale price of $2.2 million that he was also aware of the permanent repayment obligation, particularly in circumstances where such knowledge would suggest a material breach of client confidentiality and where the physical file was held in the Charleville branch of Rabobank, not Dalby where Mr Ellem was based. 609 Fourth, the contemporaneous email communications in evidence that are included in the factual background above do not suggest any concern on the part of Mr Ellem that it was critical from his or Rabobank's perspective for the Stuarts' purchase of Mt Morris to proceed. As late as 22 May 2008, Mr Ellem appeared to be content for the purchase to fall over if the Bredhauers would not withdraw the request from their solicitor to delete the reference to solicitor and client legal recovery costs, as opposed to party and party costs, if there was a default under the Agistment Agreement. 610 Fifth, as is also apparent from the factual background, the Stuarts were very interested in acquiring Mt Morris and Mrs Stuart played a very active and decisive role in bringing the acquisition to fruition. She kept a very close and informed eye on all aspects of the proposed purchase and played a pivotal coordinating role, both with her solicitor and with Mr Ellem. 611 Sixth, the purchase price of $2.2 million for Mt Morris is supported by contemporaneous and subsequent assessments of the market value of the property in June 2008. It is also relevant to note that the Bredhauers were initially seeking a purchase price of $2.5 million for Mt Morris, as stipulated in a real estate advertisement in April 2008. 612 In the circumstances, I do not accept that the contentions advanced by the Stuarts with respect to Rabobank's alleged conflict of interest establish or support a finding of unconscionable conduct on the part of Rabobank. 613 In their closing submissions, the Stuarts also sought to advance the following specific matters in support of their s 12CB claim by reference to the integers of unconscionability specified in s 12CC(1) of the ASIC Act.

[152]

Failure to comply with lending and credit policies 617 Fourth, it was alleged that Rabobank failed to disclose to the Stuarts that the proposed supply of its financial services pursuant to the June 2008 Letter of Offer was "outside" of or in breach of its own lending and credit policies in a way that might adversely affect their interests: s 12CC(1)(i). The Stuarts also alleged pursuant to this integer of s 12CC that Rabobank failed to disclose the inherent risks to them of the reduction of the loan limit to $250,000. The Stuarts contend that a risk, evident to Rabobank by reason of the 2009 cash flow projection but not readily apparent to them, was that even if Evergreen was sold for the anticipated price in March 2009 the Stuarts would be in breach of the permanent payment reduction condition. 618 My analysis of the 2019 cash flow projection above with respect to the alleged falsity of the Suitable Finance Representation is equally relevant to this element of the unconscionability case sought to be advanced by the Stuarts. I am satisfied that, contrary to the submissions of counsel for the Stuarts, Rabobank did not promise unusual, extravagant financial support for the purchase of Mt Morris. 619 Nor do I consider that the term of the June 2008 Letter of Offer requiring a permanent repayment of the anticipated proceeds from the sale of Evergreen was a speculative and reckless assumption, particularly in the context of the contemporaneous assessments by rural real estate agents of the value of Evergreen, their evidence as to likely anticipated sale times in mid-2008 and Rabobank's historical and subsequent willingness to vary and extend "permanent repayment" obligations in the Facility as outlined above. 620 Further, I do not accept the submission that the effect of the June 2008 Letter of Offer was to require the Stuarts to live on $21,600 per annum, being "a sum well below the poverty index at the time". The 2009 cash flow projection, on its face, provides for annual expenditure of $44,148 for "TOTAL LIVING AND TAXATION" expenses (including drawings of $21,600, health insurance of $3,096, life insurance of $4,452 and school fees of $15,000) and, even more significantly, provides for an annual surplus of $56,936. Moreover, it is important when comparing income to poverty indices that the relevant comparison would be to indices that do not include housing expenses, because "housing expenses" are in effect subsumed in the interest payable on the Facility. 621 Counsel for the Stuarts appeared to be advancing the contention that Rabobank's alleged failure to comply with its own internal policies amounted to unconscionability. In support of this argument, counsel made reference to three cases: Australian Securities and Investments Commission v Australia and New Zealand Banking Group Limited [2018] FCA 155 (Middleton J); Make It Mine Finance Pty Ltd, in the matter of Make It Mine Finance Pty Ltd (No 2) [2015] FCA 1255 (Beach J); and Australian Securities and Investments Commission v The Cash Store Pty Ltd (in liquidation) (No 2) [2015] FCA 93 (Davies J). 622 This contention is misconceived. While a failure to comply with an internal policy might amount to unconscionable conduct, it is not the failure to comply with the policy itself that gives rise to the unconscionability. For example, a failure to comply with an internal policy that the flu vaccination status or the political affiliation of a loan applicant was to be taken into account in the assessment of loan serviceability could hardly give rise to any unconscionability. 623 Further, the abovementioned cases can readily be distinguished given the different legal enquiry undertaken in each case. Each case was concerned with failures to comply with legislative requirements imposing positive obligations relating to responsible lending under the National Consumer Credit Protection Act 2009 (Cth) (NCCP Act). Section 128(c) of the NCCP Act provides that a licensee entering into a credit contract with a consumer must make an assessment as to the unsuitability of the credit contract if the contract was entered into in the period covered by the assessment. Section 130(1)(c) of the NCCP Act provides that, for the purposes of s 128(d), the licensee must take reasonable steps to verify the consumer's financial situation before entering into the credit contract. 624 These proceedings were concerned with unconscionable conduct, not allegations of contraventions of the specific responsible lending provisions of the NCCP Act.

[159]

Section 12GM of the ASIC Act 634 Section 12GM(1) of the ASIC Act empowers the Court to make various remedial orders, including orders to pay compensation and orders declaring a contract void, in a proceeding instituted under (or for an offence against) Division 2 of Part 2 of the ASIC Act. The Court's jurisdiction to make such orders arises where the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by reason of conduct of another person that was engaged in contravention of a provision of Division 2: Reilly at [88]. 635 Section 12GM of the ASIC Act relevantly provides that: (1) Without limiting the generality of section 12GD, if, in a proceeding instituted under, or for an offence against, this Division, the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of a provision of this Division, the Court may, whether or not it grants an injunction under section 12GD or makes an order under section 12GF, 12GLA or 12GLB, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (7) of this section) if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage. (2) Without limiting the generality of section 12GD or 12GNB, the Court may, on the application of: (a) a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of a provision of this Division; or … make such order or orders as the Court thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (7)) if the Court considers that the order or orders concerned will: (c) compensate the person who made the application, or the person or any of the persons on whose behalf the application was made, in whole or in part for the loss or damage; or (d) prevent or reduce the loss or damage suffered, or likely to be suffered, by such a person or persons. … (4) An application may be made under subsection (2) in relation to a contravention of this Division notwithstanding that a proceeding has not been instituted under another provision of this Part in relation to that contravention. (5) An application under subsection (2) may be made at any time within 6 years after the day on which the cause of action that relates to the conduct accrued. (6) For the purpose of determining whether to make an order under this section in relation to a contravention of Subdivision C (sections 12CA to 12CC), the Court may have regard to the conduct of parties to the proceeding since the contravention occurred. (7) Without limiting the generality of subsections (1) and (2), the orders referred to in those subsections include the following: (a) an order declaring the whole or any part of a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, or of a collateral arrangement relating to such a contract, to be void and, if the Court thinks fit, to have been void ab initio or at all times on and after a date before the date on which the order is made; (b) an order varying such a contract or arrangement in such manner as is specified in the order and, if the Court thinks fit, declaring the contract or arrangement to have had effect as so varied on and after a date before the date on which the order is made; (c) an order refusing to enforce any or all of the provisions of such a contract; (d) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to refund money or return property to the person who suffered the loss or damage; (e) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage; … (10) A reference in this section to a contravention of a provision of this Division includes a reference to applying or relying on, or purporting to apply or rely on, a term of a contract that the Court has declared under section 12GND to be an unfair term. 636 As stated by O'Bryan J in Reilly at [90]: [Section] 12GM(1) is not subject to an express limitation period. However, the Court's power to grant relief under s 12GM(1) is expressly dependent on there being a proceeding instituted under Division 2 of Part 2 of the ASIC [Act before the] Court. By the terms of s 12GM(1), an applicant cannot commence a proceeding seeking relief under that section. The applicant must commence the proceeding seeking other relief under Division 2 of Part 2 of the ASIC Act. In that way, the Court's power to grant relief under s 12GM(1) is subject to any limitation period that applies to the other relief that is sought. If that other relief is a claim for damages under s 12GF(1), the 6 year limitation period in s 12GF(2) will apply in respect of relief sought under s 12GM(1). If that other relief is an injunction under s 12GD(1), no limitation period will apply in respect of relief sought under s 12GM(1). 637 The foregoing principles were established by the High Court of Australia in Sent v Jet Corporation of Australia Proprietary Limited (1986) 160 CLR 540; [1986] HCA 35 (Sent v Jet Corporation). That case was principally concerned with s 87(1A) of the Trade Practices Act 1974 (Cth) (TPA), which differed to some extent from its present form in the Competition and Consumer Act 2010 (Cth) (CCA) and which is replicated in s 12GM(2) of the ASIC Act. In a unanimous joint decision, the High Court of Australia concluded at 545-6 of Sent v Jet Corporation: [W]hen a person has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of a provision of Pt IV of the Act, the Court may make a compensatory order under s. 87(1) if that person is a party to a proceeding instituted under a provision of Pt VI other than s. 87 or for an offence against Pt VI in respect of that conduct; … Although s. 87 contains no time limitation, the proceeding on which the power to grant relief under s. 87 depends will be barred if it is instituted outside the time, if any, limited for instituting that proceeding. 638 If proceedings are commenced under the relevant statute seeking relief for which no limitation period applies, such as injunctive relief, relief may also be sought under the ancillary relief provision (s 87(1) of the CCA, s 238(1) of the Australian Consumer Law contained in sch 2 to the CCA and s 12GM(1) of the ASIC Act). The principles stated in Sent v Jet Corporation have been affirmed in subsequent decisions: Mayne Nickless Ltd v Multigroup Distribution Services Pty Ltd (2001) 114 FCR 108; [2001] FCA 1620 (Mayne Nickless) at [53] and [55] (Wilcox, French and Drummond JJ); Reilly at [91]; Dorfler v Australia and New Zealand Banking Group Limited [1991] FCA 545; (1991) 103 ALR 699 at 702 (Spender J); Eckford v Six Mile Creek Pty Ltd (No 2) [2019] FCA 1307 at [309]-[312] (Rares J). 639 Section 12GM(2) of the ASIC Act also empowers the Court to make remedial orders of the same kind as allowed by s 12GM(1). Unlike s 12GM(1), s 12GM(2) operates as a stand-alone provision and is not ancillary to an application made under another remedial provision: Mayne Nickless at [53] (where the Full Court was addressing the equivalent provisions in ss 87(1) and (1A) of the TPA). However, pursuant to s 12GM(5), an application under s 12GM(2) is subject to a six year limitation period: Reilly at [93].

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Damages for action in deceit 640 In an action for deceit, the general principle is that an applicant is entitled to recover as damages an amount representing the prejudice or disadvantage he or she has suffered as a consequence of altering their position under the inducement of the fraudulent misrepresentations made by the respondent: Toteff v Antonas [1952] HCA 16; (1952) 87 CLR 647 (Toteff) at 650 (Dixon J); Gould v Vaggelas [1985] HCA 75; (1985) 157 CLR 215 (Gould) at 220 (Gibbs CJ). An applicant should be put, so far as possible, in the position that they would have been in had they not acted on the fraudulent inducement: Gould at 220-1. 641 The usual measure of damages when an applicant has been induced to enter into a contract for the purchase of property is the difference between the real value of the property and the sum that the applicant was induced to pay: Toteff at 650-1; Gould at 220. 642 Consistently with the general principle, however, consequential losses have been allowed where the fraud or deceit has induced an applicant to purchase property and the damage has flowed directly from the fraud perpetrated on them: Doyle v Olby (Ironmongers) Ltd [1969] 2 All ER 119; [1969] 2 QB 158 (Ironmongers) at 168 (Winn LJ); Gould at 222. It is important to note, however, that in each of the cases cited in support of this proposition in Gould at 222 and in Ironmongers at 168, the fraudulent misrepresentation was directed at the quality or character of the property being purchased: Hornal v Neuberger Products Ltd [1956] 3 All ER 970; [1957] 1 QB 247 at 259 (damages for loss of machine being repaired falsely represented to be fit for immediate use); Canavan v Wright [1957] NZLR 790 at 798-800, 805-7, 816-17 (damages for loss of stock due to overstocking required by the purchase contract); Mullet v Mason (1866) LR 1 CP 559 (loss of cattle due to purchase of diseased cow falsely represented to be sound); Nicholls v Taylor [1939] VLR 119 (damages for personal injury caused by a tyre blow out that had falsely been represented as new); Ironmongers at 164-5 (Lord Denning MR) and 169 (Winn LJ) (losses incurred due to representations about the running costs of a business). 643 As Gibbs CJ explained in Gould at 223, the approach taken by Winn LJ and apparently Denning MR in Ironmongers was to deduct from the price paid for the business all the benefits that the purchaser eventually received and then to add all further debts incurred in connection with the operation of the business. Gibbs CJ cautioned, however: Such a method could only be safely adopted if it were held, as it was in that case, that all trading losses flowed directly from the fraud.

[161]

Causation 644 On any objective analysis, the Stuarts have suffered a material deterioration in their financial positon since their acquisition of Evergreen in 2006. The critical questions to be addressed here, however, are to what extent that deterioration was the result of the conduct of Rabobank, and to what extent did that deterioration flow directly from the pleaded causes of action. 645 The reality faced by the Stuarts was that by early 2008, their farming operation on Evergreen remained unprofitable, it was becoming increasingly apparent that the Stuarts were not in a financial positon to retain Evergreen and Rabobank had begun providing additional working capital to the Stuarts to meet their interest payments under the Facility, culminating in the further advance made pursuant to the April 2008 Letter of Offer. The Stuarts' endeavoured to sell Evergreen and acquire a replacement rural property, namely Mt Morris. Ultimately, as explained above, that strategy failed because of the unexpected delay in the sale of Evergreen and the unexpected subsequent fall in the market value of both Evergreen and Mt Morris. 646 The causes of action advanced by the Stuarts are not directed at any alleged misrepresentation, deceit or unconscionable conduct with respect to the inherent value of Mt Morris. 647 The premise on which the Stuarts base their primary claim for damages and compensation is that they would not have purchased Mt Morris and they would have retained Evergreen, were it not for the contraventions by Rabobank. In essence, they contend that Rabobank should not have agreed to fund their acquisition of Mt Morris. Hence the measure of any loss or damage must be measured by the use of a counterfactual analysis or by a consequential loss analysis. 648 The Stuarts, however, seek to erect a false counterfactual. The Stuarts, by their acceptance of the April 2008 Letter of Offer, had agreed with Rabobank to sell Evergreen and use the proceeds to reduce the amount outstanding on the Facility to $100,000 by 30 September 2008. The Stuarts do not seek to set aside or otherwise challenge any aspect of their acceptance of the April 2008 Letter of Offer. The April 2008 Letter of Offer reflected the strategy that the Stuarts had embarked upon from late 2007 of selling the loss making Evergreen and purchasing a replacement rural property. 649 Given the strategy that the Stuarts had been pursuing in the period leading up to the acquisition of Mt Morris and the terms of the April 2008 Letter of Offer, if the Stuarts had not purchased Mt Morris I consider that the most likely counterfactual would have been a sale of Evergreen and the purchase of an alternative property to Mt Morris. The Stuarts, however, did not seek to lead any evidence of any alternative properties that could have been purchased, when the properties could have been acquired or what price they would have paid. 650 The absence of such evidence makes the assessment of any loss based on a counterfactual analysis problematic. Given the profound difficulties that the Stuarts encountered in selling Evergreen, attributable largely to the combined effects of the global financial crisis and drought conditions as outlined in the factual background above, the timing of any alternative purchase is inherently speculative. For example, would or could the Stuarts defer any alternative acquisition until after the successful sale of Evergreen? This could only have been possible if Rabobank was prepared to continue to provide additional working capital to the Stuarts independently of the sale of Evergreen, contrary to the express basis on which the Rabobank Credit Committee had approved the additional working capital pursuant to the terms of the April 2008 Letter of Offer. As noted above, Ms Dennis had recognised in her comments approving the credit submission for the April 2008 Letter of Offer that the Stuarts would require additional working capital from December 2008 onwards thus making "the sale of the property crucial to the clients' overall position". 651 Alternatively, if it were suggested that the acquisition of an alternative rural property could have proceeded prior to a successful sale of Evergreen, the Stuarts would have been in essentially the same positon that they found themselves in after they purchased Mt Morris. They would be paying interest on loans with respect to two properties until a much delayed and less favourable price than had been expected had been achieved from the sale of Evergreen. 652 In assessing losses using a consequential loss methodology, two matters stand out in finding that the losses directly flowed from the alleged fraud or deceit, or otherwise arose by reason of the contraventions of ss 12CB and 12DA of the ASIC Act. 653 First, any losses attributable to the delays in selling Evergreen or not achieving the price that was the subject of the contemporaneous evidence as to the value of Evergreen as at June 2008 would have occurred independently of the alleged contraventions. Those losses were going to occur with or without the alleged contraventions, given the Stuarts' unchallenged contractual commitment to sell Evergreen pursuant to the April 2008 Letter of Offer. 654 Second, the fundamental complaint of the Stuarts is not that they paid too much for Mt Morris, but rather that they should not have been lent the money to enable them to purchase it, or at least not lent the money on terms that included the permanent repayment obligation of $3.23 million on the sale of Evergreen. The permanent repayment obligation, however, did not ultimately result in any loss. Rabobank did not place the Facility in default because of any failure to comply with the permanent repayment obligation. It was only when the Stuarts failed to meet their interest payments due under the Facility that Rabobank placed the Facility in default and subsequently commenced recovery action. 655 In summary, given the absence of any evidence as to alternative properties that could have been purchased instead of Mt Morris, it is difficult to see how the Stuarts would necessarily have been in any better financial position if the purchase of Mt Morris did not proceed. The Stuarts could be expected to have encountered the same difficulties in attempting to sell Evergreen, the same ongoing losses on the operation of Evergreen, the same working capital shortfalls and the same interest costs associated with any borrowing to acquire an alternative property. The Stuarts would also presumably have had the same indulgences with respect to the extension of any permanent repayment provisions, subject to them meeting their interest commitments. Moreover, unless the Stuarts were able to negotiate an agistment agreement on similar terms to the Agistment Agreement, they would have been in a materially worse position.

[162]

Stuarts' Particulars of Loss and Damage 656 In their particulars of loss and damage (Particulars of Loss) the Stuarts contend their total losses to be $11,030,288.90. This is alleged to comprise: (a) the loss of Evergreen calculated by reference to its value in May 2019 ($3.4 million); (b) loss of earnings (approximately $2.65 million); (c) expenses associated with buying Mt Morris (approximately $2.26 million); (d) Evergreen plant and equipment sold at auction ($564,924); (e) other expenditures, including Mt Morris rates and land rents between 2008 and 2015 ($13,098.78); (f) legal and associated costs ($794,488.27); (g) interest (approximately $1.15 million); (h) other costs, including advertising sales, borrowing expenses, bank charges and insurance ($32,494.17); and (i) Mt Morris sundry expenses ($30,229.36). 657 In addition to the $11 million figure in the Particulars of Loss, the Stuarts contend that their loss and damage includes presently unquantified loss and damage arising from: (a) the appointment of the Receivers to Mt Morris; (b) the Stuarts' eviction from Mt Morris; (c) payment of penal interest charged by Rabobank; and (d) other expenses and loss arising from the sale of Mt Morris and Rabobank's other enforcement actions under the farm mortgages. 658 By reason of a ruling that I made during the hearing pursuant to s 136 of the Evidence Act, the Particulars of Loss were admitted only as evidence of the particulars of loss and damage advanced by the Stuarts in this proceeding and as evidence of a document that was provided to Mr White, not as evidence of the facts asserted in the Particulars of Loss. 659 In short, the Stuarts did not attempt to lead any evidence to establish the quantum of the alleged losses the subject of the Particulars of Loss, other than the reports of Digby Makim and Stuart White. 660 Mr Makim is an expert valuer. He valued Evergreen as at 18 December 2020 at $5.3 million, comprising a valuation of $2.66 million for Lot 14 and $2.64 million for Lots 3 and 7. His report was admitted without objection. As explained above, however, the retention of Evergreen as at December 2020 was not a plausible foundation for any damages assessment and therefore Mr Makim's valuation of Evergreen cannot assist the Stuarts. 661 In any event, no attempt was made to establish the assumptions necessary to enable any coherent calculation of the profits or losses that the Stuarts would have been likely to have incurred if, contrary to the fact, they had retained Evergreen. The expert witness on which the Stuarts relied to establish their damages case, Mr White, simply assumed: [T]hat the Stuarts had been able to access adequate working capital and would have been in a position to adequately maintain and re-stock their cattle during drought conditions and to generate livestock trading income for the period FY09-FY19.

[169]

Oral evidence of Mr White 674 The utility of using any of Mr White's estimates to undertake any assessment of any alleged loss or damage suffered by the Stuarts is also constrained by the following matters. 675 First, Mr White had no farming experience and he was given few, if any, explicit assumptions to assist him in undertaking his loss calculations. 676 Second, Mr White relied on undisclosed information from Mrs Stuart and reports from third parties for key performance indicators of livestock trading income, such as average cost per head, average kilograms per head and total sales stock weight. When pressed why he had not disclosed this information in the body of his report or in an annexure, he responded "I don't have an - a valid explanation". 677 Third, in forecasting a steady pattern of trading profits after 2010 Mr White did not take into account the historical results that the Stuarts had achieved on Evergreen. 678 Fourth, Mr White started from the position that the Stuarts had financial statements that established each of the matters included in the Particulars of Loss. As he explained in the course of his cross-examination: [W]hat I was seeking to do is identify aspects of the particulars of loss that didn't stand up to scrutiny in the context of determining their loss. So, the way I structured this, is to take the particulars of loss as the baseline and essentially adjust or reconstruct as required using assumptions. 679 The fundamental difficulty with this approach is that he had no relevant experience to make the assumptions on which his adjustments or reconstructions were undertaken. 680 Senior counsel for Rabobank also pointed to several apparent errors made by Mr White in the application of his methodology. For example, in his report Mr White provided a table of calculations intended to determine what income would be generated if the Evergreen operation had continued until 2019, on the assumption that Mt Morris had not been purchased. The table was separated by year, with projected income calculated from 2009 to 2019. In cross-examination, Mr White agreed that the 2009 and 2010 estimates relied on projections, notwithstanding that the Stuarts were actually trading on Evergreen in those years. 681 Senior counsel for Rabobank also pointed out an error made by Mr White in using a stock purchases figure from his livestock trading income projection for 2009 that was based on the assumption that the Stuarts needed to restock Evergreen. However, the projected stock purchase figure was also based on the assumption that Mt Morris had not been purchased, in which case the Stuarts would not have had to restock Evergreen. Mr White also acknowledged that the natural increase in stock figure he projected in the report was inaccurate and that the opening stock in the projections of the years 2009 to 2019 was inflated as a result. 682 In regard to the loss of Evergreen, a capital gain was included in Mr White's loss estimate. Mr White acknowledged that he did not take into account the time value of money because he made no allowance for interest, on the basis that a dollar received in 2012 is worth more than a dollar received in 2019. 683 Ultimately, I was not persuaded that these concessions or errors were of critical importance or reflected in any material manner on Mr White's credibility or expertise. The two principal issues with Mr White's evidence were the implausible counterfactuals he was asked to address and the failure to provide him with adequate and sufficient assumptions, given the nature of his relevant expertise that did not extend to rural lending, to enable him to undertake a reliable determination of loss and damage. It follows that Mr White's report does not assist the Stuarts.

[171]

Reliance on s 12GM of the ASIC Act 685 In their outline of opening submissions, the Stuarts submitted in relation to damages in cases of fraud and deceit: In Henville v Walker the High Court not only corrected the limiting principle of assessment of damages in such cases but also said at [31] that with respect to damages generally referring to tortious damages in deceit 'similar principles are appropriate to the application of s 82 of the [Trade Practices] Act…'. Section 82 has since 2001 been replaced by s 12GF of the ASIC Act. Similarly s 87 of the Trade Practices Act 1974 was replaced by ASIC Act s 12GM. Under s 87 and s 12 GM a different principle as to compensation applies, namely that the Court makes good any adverse position in which the claimant has been placed by contraventions of Part 2 Division 1 including, as pleaded here, ss 12DA and 12CB. However on the facts of this case it is submitted there is no difference in assessing damages in the outcome under ss 12GM and 12GF, subject to ensuring that any injunctive relief is also provided for or compensation in lieu is granted under the principles in Lord Cairns Act [refer Meagher Gummow and Lehane Equity Doctrines and Remedies 5th ed]. (Original emphasis.) 686 By this submission, counsel for the Stuarts alleged that the limitation issues in this proceeding can be overcome by s 12GM and the provisions of the Lord Cairns Act, that is the Chancery Amendment Act 1858 (UK) (Lord Cairns Act), most notably s 2. The Lord Cairns Act enables courts of equity to award damages in lieu of specific performance or an injunction: Lewis v Australian Capital Territory (2020) 381 ALR 375; [2020] HCA 26 at [144] (Edelman J). 687 The Stuarts seek to overcome the six year limitation period for a claim of damages pursuant to s 12GF(2) of the ASIC Act by invoking s 12GM(1). 688 As previously outlined, s 12GM(1) is an ancillary relief provision enabling the Court to make an order for an injunction. The Stuarts seek an award of damages in lieu of that injunction by invoking the Lord Cairns Act. The attraction of s 12GM(1) is that, unlike s 12GM(2), it is not subject to a express limitation period by reason of s 12GM(5): Reilly at [90]. 689 The fundamental difficulty for the Stuarts in this approach is that the power in s 12GM(1) can only be exercised in a proceeding instituted under or for an offence against Division 2 of Part 2 of the ASIC Act: Reilly at [90]; Mayne Nickless at [53]. In this matter, the relevant provision is s 12GF of the ASIC Act. Noting that Mayne Nickless discusses the parallel provisions of the TPA, Wilcox, French and Drummond JJ stated: "If a proceeding is brought out of time under s 82 [s 12GF] and the limitation is pleaded and the application dismissed, then there will have been no finding of a contravention which is a necessary condition of the exercise of power under s 87(1) [s 12GM(1)]". 690 Therefore, on the facts of this proceeding, an application under s 12GM(1) cannot be invoked without an application under s 12GF. The Stuarts are time barred from bringing an action under s 12GF. Consequently, the principles of the Lord Cairns Act cannot apply in the present circumstances.

[173]

Postponement in cases of fraud 694 The Stuarts, however, also seek to advance claims based on the alleged fraud of Rabobank. 695 Section 38(1) of the LA Act provides as follows: 38 Postponement in cases of fraud or mistake (1) Where in an action for which a period of limitation is prescribed by this Act - (a) the action is based upon the fraud of the defendant or the defendant's agent or of a person through whom he or she claims or his or her agent; or (b) the right of action is concealed by the fraud of a person referred to in paragraph (a); or (c) the action is for relief from the consequences of mistake; the period of limitation shall not begin to run until the plaintiff has discovered the fraud or, as the case may be, mistake or could with reasonable diligence have discovered it. 696 Pursuant to s 38(1)(a) of the LA Act, the limitation period would not begin to run until the Stuarts either discovered the relevant fraud, or could have discovered it with reasonable diligence. The date at which the fraud was or could have been discovered by the Stuarts differs with each pleaded representation. 697 Without accepting that any fraud had been established, Rabobank submitted that the alleged Suitable Finance Representation was the last fraud that could have been discovered. At the very latest, this discovery occurred when Rabobank refused to extend any further funds to the Stuart to enable them to meet their interest payments and placed the Facility in default in late 2010. Rabobank therefore submits that the Stuarts are outside the six year limitation period for the latest possible point of discovery of any alleged fraud and are still time barred from bringing these claims. 698 The Stuarts contend, however, that they are within time for the fraudulent representation claims because they did not discover the fraudulent nature of the Suitable Finance Representation until 27 June 2018, when it was revealed in the course of a public hearing of the Financial Services Royal Commission. The Stuarts travelled to Brisbane to attend this hearing and Mrs Stuart said she became "increasingly alarmed" while listening to the evidence of Rabobank's employees and clients. She said internal Rabobank documents pertaining to the bank's lending criteria, risk categories and deficiencies in its customer credit assessments were "most alarming" as they showed a "clear pattern of the bank lending outside its own guidelines" to the Stuarts in both 2005 and 2008. 699 [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] 700 The Stuarts submit that these revelations at the Financial Services Royal Commission were the first time they learned of the "fraud" that formed the basis of the fraudulent Suitable Finance Representation claim. In support of the contention that the Stuarts were not aware of Rabobank's misconduct until later, the Stuarts also sought to rely on a 30 June 2011 targeted review commissioned by the Australian Prudential Regulation Authority (APRA) and undertaken by Ernst & Young of Rabobank's "compliance with APRA's prudential requirements relating to the adequacy of systems and resources used by Rabobank in collateral management" (APRA Report). 701 The Stuarts' revised closing written submissions state that the Court should infer from the APRA Report that Rabobank "has treated every public process looking at its internal affairs with disdain", drawing parallels between the APRA Report and Rabobank "avoid[ing] compliance with each discovery Order of the Court". 702 Counsel for the Stuarts mentioned the APRA Report several times throughout the course of the hearing in support of the Stuarts' allegations as to deficiencies in Rabobank's internal processes, including review and valuations processes. 703 Counsel for the Stuarts made the following statement during closing submissions in relation to the preparation of the May 2008 Credit Submission, accompanying work request materials and cash flow projections: That was the moment when something - when disclosure should have occurred and did not. And the Stuarts then laboured under that false impression for - until the - in relation to the internal workings of the - of the bank on these issues - they didn't know about the Ernst & Young report which disclosed valuation fallacies in the whole workings of the bank as a result of complaints by farmers in Queensland to APRA. That's all set out in the Ernst & Young report. 704 The APRA Report included a review of the collateral management arrangement that Rabobank had for its country banking loan portfolio, including: compliance with applicable prudential standards; assessment of the overall framework for governance and oversight of collateral management; and design and operating effectiveness of policies, procedures and controls surrounding collateral management. 705 The APRA Report noted that while there were some opportunities for improvement, Rabobank was able to demonstrate compliance with the relevant prudential standards. APRA's review of a sample of loan files indicated that there was "no evidence of systematic non-compliance with Rabobank's policies and procedures" and there was evidence that "controls were largely designed effectively". 706 The APRA Report noted some opportunities for improvement and included the following key observations: • An immaterial breach of AGN22O.2 "Impairment, provisioning and the General Reserve for credit losses" due to the lack of an approved panel of valuers and required qualifications for internal valuers and also enhancements are required for controls over currency of insurance and endorsement of valuations for Rabobank's use. • Opportunities for the enhancement of Rabobank's procedures regarding: o Access controls over workflow and data maintenance regarding valuation renewal and file review dates; o Centralised storage of significant documents in the account manager review process and valuations performed at origination before submission to Credit; and o Requirements for a security audit on transfer to Special Asset Management (SAM), together with client communication that this has occurred. • Enhancement to documentation in relation to: o SAM valuation rationale and support; and o Downgrading decisions. We highlight that management has a number of these issues covered in established projects as noted throughout the report and based on our discussion with management, from the 18 issues identified during the period under review 12 have been resolved by management by the date of this report. 707 The public exposure and criticism of Rabobank's lending practices and commitment to take action to address those criticisms in the course of the Financial Services Royal Commission was reflected in the extract of the transcript of the public hearing tendered by the Stuarts in these proceedings. There is no doubt this public exposure and criticism would have intensified the Stuarts' belief that Rabobank was responsible for their predicament and encouraged them to commence further proceedings against Rabobank. From a limitations perspective, however, it is necessary to determine when the causes of action now sought to be pursued were first discovered by the Stuarts. 708 The Stuarts' evidence that they first discovered the existence of potential causes of action in 2018 following their attendance at a public hearing of the Financial Services Royal Commission is difficult to reconcile with the fact that they commenced proceedings against Rabobank in this Court in 2015. The 2015 Proceedings included claims that Rabobank's lending practices regarding the Stuarts were unconscionable, lacked the requisite degree of care and diligence and were not consistent with good principles of sustainable lending by a rural bank. 709 Moreover, it is not apparent how it could be said that the Stuarts only became aware of the matters giving rise to the fraudulent Suitable Finance Representation, 15 Year Representation and Repayment Representation claims in the course of the Financial Services Royal Commission hearings. The matters on which the Stuarts rely to establish each of these representations must have been readily apparent to the Stuarts by no later than when Rabobank placed the Facility in default in late 2010 and the whole of the amount of the Facility became due and payable. By that time, the objective falsity of the alleged suitability of the finance, typographical error and 15 year interest only representations, had they in fact been made contrary to my findings above, must have been readily apparent to the Stuarts. 710 In any event, for the reasons outlined above, I am not satisfied that the Stuarts have established that any of the representations as pleaded have been established, or that Rabobank acted fraudulently. 711 Accordingly, s 38(1)(a) of the LA Act does not operate to postpone the commencement of the limitation period for the Stuarts' fraudulent Suitable Finance Representation, 15 Year Representation and Repayment Representation claims.

[174]

Postponement in cases of fraudulent concealment 712 Pursuant to s 38(1)(b) of the LA Act, the commencement of the limitation periods for the various representations could also be postponed if Rabobank had fraudulently concealed any of the Stuarts' rights of action in tort. 713 The Stuarts provided extensive particulars of the conduct that they alleged amounted to fraudulent concealment in their reply filed 1 June 2021 to Rabobank's defence to the 2FASOC (Reply). These particulars can be summarised as follows: (a) Rabobank represented the Facility to the Stuarts in "glowing terms" and that the bank was a "friend of their farming operation" and would be supportive by "dismissing as irrelevant" repayment dates, placing a Rabobank banner on Mt Morris in 2011, engaging in the Mediation in 2012 and subsequently providing notices dated 9 September 2013 and 7 November 2014, such that at all material times they trusted Rabobank "to do the right thing" in making its suitability assessments and to not "act deliberately or recklessly against" their interests; (b) Rabobank repeatedly made the 15 Year Representation and was supportive of farmers, but at the same time was reassessing the Facility, specifically in 2009 credit submission work request material and in a January 2009 email; (c) Rabobank "engaged in obfuscation" such that the Stuarts "were lulled into believing they had the continuing support" of the bank by "extending the finance in the first place when it was unsuitable", making the 15 Year Representation and by giving them "a false sense of security" that caused them to believe that Rabobank would continue to provide the Facility, including by asserting to them that "everything was fine" with the Facility and "apparently maintaining the account as an ongoing credit arrangement" without being transparent by disclosing to them the "pressures on the Bank from the GFC crisis in 2008 to 2010" and informing them that the Facility was placed "on collection" and referred to the Special Asset Management section of Rabobank in or as from 2009; (d) Rabobank informed the Stuarts that the repayment requirement was a "typo" and "not to worry and soothing words to the same effect" when that did not reflect the bank's true position with respect to the Facility; and (e) the evidence of the Brauer family and others at the Financial Services Royal Commission which was "important in disclosing the truth of the alleged misconduct". 714 I do not accept that any of these matters give rise to any fraudulent concealment. 715 First, the contention that Rabobank concealed its "true intentions" by, in effect, establishing and maintaining a strong and supportive relationship with a borrower, granting extensions and deferring taking steps to place the borrower in default cannot relevantly give rise to any concealment of the pleaded causes of action. The conduct relied upon establishes that Rabobank continued to support the Stuarts notwithstanding their failure to sell Evergreen by 31 March 2009 and deferred taking any action to place the Facility in default. 716 Second, while Rabobank may not have communicated to the Stuarts the extent of its concerns with the Facility and the steps that it had taken to protect its interests after increasing the Facility to enable the Stuarts to purchase Mt Morris, this did not conceal the pleaded causes of action. The Stuarts' causes of action are directed at the circumstances in which Rabobank increased the Facility to enable them to purchase Mt Morris. Any failure to communicate to the Stuarts subsequent concerns that emerged with respect to the Facility cannot relevantly amount to a concealment of those causes of action. 717 Third, the fact that the Stuarts discovered information about Rabobank's internal policies and related issues while attending the Financial Services Royal Commission does not establish that the bank or any of its employees concealed those issues up until that point. 718 Moreover, the matters on which the Stuarts rely to establish the 15 Year Representation and the Repayment Representation claims were not related to the matters considered by the Financial Services Royal Commission. As I have noted above, this must have been readily apparent to the Stuarts by no later than when Rabobank refused to extend the Facility any further and placed it in default in late 2010, when the whole of the amount advanced under the Facility and outstanding interest became due and payable.

[176]

O. DEED OF FORBEARANCE 722 Rabobank relies upon the Deed of Forbearance as a complete answer to all of the claims sought to be advanced by the Stuarts. 723 The execution of the Deed of Forbearance by the Stuarts was witnessed by their Legal Aid solicitor, Mr McMahon, who provided a "Solicitor's Certificate" confirming that he had explained to the Stuarts the nature and effect of the Deed of Forbearance and the legal consequences to them of any breach by any party of its obligations under the Deed of Forbearance. Mr McMahon certified that he had asked and confirmed with the Stuarts that they understood his explanation of those matters. The certificate also included a representation that the Stuarts had confirmed to Mr McMahon that they were signing the Deed of Forbearance freely and voluntarily and that Mr McMahon was not aware of any fact or circumstance that would cause him to doubt that those answers were accurate. 724 Neither the Stuarts nor Rabobank sought to lead any evidence from Mr McMahon in the course of the hearing. 725 The Stuarts advanced various contentions in [9] of the Reply as to why the Deed of Forbearance is not enforceable. 726 First, it is alleged that upon its proper construction and in the events which have happened, the Deed of Forbearance does not bar or release the claims sought to be advanced by the Stuarts in these proceedings. 727 As a general proposition at common law, a release expressed in general terms will be read down to be limited by reference to the express recitals or the matters that were in specific contemplation at the time that the release was given: Grant v John Grant & Sons Proprietary Limited [1954] HCA 23; (1954) 91 CLR 112 (Grant) at 123-4 (Dixon CJ, Fullager, Kitto and Taylor JJ); Sarina v Fairfax Media Publications Pty Ltd (2018) 365 ALR 15; [2018] FCAFC 190 (Sarina) at [20] (Rares, Markovic and Bromwich JJ). 728 Clause 4.9 of the Deed of Forbearance provides that: In consideration of RAL and REFL's agreement to place a moratorium on Enforcement Action, the Debtor and the Security Provider having obtained independent legal advice concerning their rights and obligations under this Deed and each Transaction Document and Security, release and discharge RAL and REFL from any liability in respect of RAL and REFL's past dealings with them in relation to any matter whatsoever, howsoever arising, including but not limited to any Debtor and Security Provider incurring any Financial Indebtedness, or the granting of any Security or Transaction Document. 729 Transaction Documents are defined in Schedule 2 to the Deed of Forbearance and include the letters of offer between Rabobank and the debtor. I do not see any credible basis on which it could be suggested that this would not extend to the June 2008 Letter of Offer and any subsequent letters of offer prior to the date of the execution of the Deed of Forbearance. 730 Further, clause 2.1(a) of the Deed of Forbearance contains a mutual acknowledgement and confirmation by the Stuarts and Rabobank that Rabobank is entitled to make a demand and has made a valid demand for the repayment of the "Secured Moneys". Clause 2.1(b) contains a mutual acknowledgement and confirmation that the Stuarts were presently unable to repay the "Secured Moneys" the subject of the demand, but accepted a current liability to do so. "Secured Moneys" is very broadly defined in clause 1.1 of the Deed of Forbearance and would include all amounts owed to Rabobank by the Stuarts under the Facility. As in Fuge v Commonwealth Bank of Australia [2019] FCA 1621 (Fuge) at [43] (Lee J), these acknowledgements expressly put the enforceability of the underlying transaction documents in issue. 731 The Stuarts maintain, however, that consistently with what they describe as the rule in Sarina, a related issue is whether the subject matter of the Mediation included "the contemplation in equity" in clause 4.9 of the Deed of Forbearance of the causes of action they now advance in these proceedings. The Full Court of the Federal Court explained in Sarina at [21] that: [E]quity will restrain a party seeking to enforce a wide or general release where it would be unconscientious for the party to do so in all of the circumstances. In such a case, the court will examine the knowledge and intention of both releasor and releasee as to the subject matter on which the release would operate. 732 The Stuarts contend that Mr Couper's concessions make plain that, prior to entering into the Deed of Forbearance, the parties did not give any consideration to the subject matter of [1] to [25] of the 2FASOC, the claims pursuant to ss 12DA and 12CB of the ASIC Act or the National Credit Code claim. They further contend that, while there may have been passing references in the Mediation to failures by Rabobank to fulfil representations with respect to assisting the Stuarts with restocking and farm improvements, there was no contemplation or consideration of the validity of the June 2008 Letter of Offer or the associated alleged misrepresentations and unconscionable conduct because the Stuarts were "unaware until 2018 of the internal breaches of policy and misleading and deceptive conduct of which they now properly complain". The Stuarts submit that equity will limit the release contained in the Deed of Forbearance only to causes of action contemplated at the time of entry into the Deed of Forbearance and none of the causes of action that they advance were contemplated by the parties at that time. 733 Mr Couper's evidence, however, provides only qualified support for the Stuarts' contention. His concessions in cross-examination were limited to an agreement that he did not recall either in the Stuarts' position paper or in the course of any discussion at the Mediation of something described as the "15 Year Representation", "the Repayment Representation", the "Suitable Finance Representation", the "Carbon Credit Contract" or the "National Credit [Code] case". Given these were specifically defined terms used in the 2FASOC and earlier iterations of the statement of claim in these proceedings filed many years after the Mediation, the concessions in cross-examination were of limited probative value. 734 More relevant, but not decisive, in determining the surrounding circumstances is the Stuarts' position paper itself, Rabobank's statement of position and Mr Couper's handwritten notes of his opening remarks. 735 The Stuarts' position paper refers to the matters the subject of many of the causes of action that they now seek to advance in these proceedings. These include the nine month permanent repayment obligation, asset lending allegations, the alleged representation to rollover the permanent repayment obligation and Rabobank's assessment of financial commitments. The position paper also refers to many contentions that are now raised in the Stuarts' National Credit Code claim, including the alleged failure by Rabobank to sign QRAA forms, not permitting the Stuarts to accept the Burberrys' offer to purchase Evergreen in August 2009 and refusing to provide funds to the Stuarts for the repurchase of stock for Mt Morris. 736 Ultimately, the relevant issue is not whether the specific causes of action were contemplated at the time of the Deed of Forbearance, but rather whether in all the circumstances equity will intervene to prevent unconscientious reliance upon a general release: Fuge at [50]. The applicants in Fuge made a similar attempt to invoke the equitable doctrine in Grant. They were unsuccessful notwithstanding their submission reproduced in Fuge at [49] to the effect that the equitable doctrine could be relied upon on the basis that: [T]here is not an (sic) single iota of any evidence showing that the Fuges knew about, articulated, or complained to the Bank, prior to the Heads of Agreement, that they were dissatisfied with, entitled to, or were thinking about making a claim regarding asset lending, misleading or deceptive conduct, rights under the National Credit Code or Code of Banking Practice, and so on. 737 The Stuarts also seek to set aside the Deed of Forbearance on a series of alternative bases advanced in [9(ii)] to [9(xi)] of the Reply. 738 First, it is alleged that the Deed of Forbearance is an executory accord which did not and does not extinguish the Stuarts' causes of action because Rabobank did not perform its agreement for a moratorium and later terminated the Deed of Forbearance by letter dated 9 September 2013. This allegation is without substance. Rabobank did not take any enforcement action within the period of the moratorium and clause 5.2.3 of the Deed of Forbearance makes it clear that the releases in clause 4.9 survive termination. 739 Second, it is alleged that the Deed of Forbearance is invalid or unenforceable as it was entered into as the consequence of financial misconduct by Rabobank in contravention of ss 12DA and/or 12CB of the ASIC Act. The financial misconduct is alleged to arise by reason of a mistake by Rabobank vitiating the consent of the Stuarts to participate in the Mediation, because they did so only on the basis that Rabobank had represented to them that it would give serious consideration to Ms Beardsley's $1.3 million offer for Evergreen. 740 This allegation cannot be made good because both ss 12DA and 12CB are premised on events occurring in "trade or commerce". Attendance at a statutory dispute resolution mechanism, such as a farm debt mediation, could not amount to activities with a sufficient trading or commercial character to bring a statutory dispute resolution process within the concept of "trade or commerce": Pertzel v Qld Paulownia Forests Ltd [2008] 2 Qd R 526; [2008] QCA 287 at [48]-[51] (Keane JA, with whom Mackenzie AJA and Lyons J agreed at [56] and [57] respectively). In any event, I have found that the offer was rejected on the unexceptional basis that Rabobank first wanted to test the market in circumstances where Ms Beardsley's offer of $1.3 million was substantially less than the amount that was outstanding under the Facility. 741 Third, it is alleged that the promise by Rabobank not to take any action for six months was illusory essentially because it was "no more than what the Bank intended to pursue i.e. the sale of the Applicant's property at a price acceptable to it". This submission ignores the fact that by entering into the Deed of Forbearance, Rabobank was foregoing the exercise of substantive and important rights that had accrued by reason of the Stuarts' default for a six month period. It also overlooks the fact that during that time, the Stuarts would be able to test the market further by using a marketing campaign paid for by Rabobank to determine a likely value for Mt Morris that could potentially be used as a basis to obtain refinancing in an amount acceptable to the bank that would enable the Stuarts to remain on Mt Morris. 742 Fourth, it is alleged that the Deed of Forbearance was rendered void by Rabobank making unauthorised amendments after it was signed. The amendments specifically relied upon were: (a) the insertion of a date in the Deed of Forbearance that was inconsistent with the date of the Mediation, any agreement made and the dates on which the Deed of Forbearance was signed by the parties, and (b) the alteration of the date in the Solicitor's Certificate in Schedule 3. 743 I do not accept that either of these matters rendered the Deed of Forbearance void. No evidence was advanced to support that contention, and no submissions were made on the point. 744 Fifth, it is alleged that Rabobank served a notice on the Stuarts under the Queensland Farm Debt Mediation Scheme in which it misrepresented that it would resolve its farm debt dispute with the Stuarts in accordance with an authorised scheme. The Stuarts plead that the Queensland Farm Debt Mediation Scheme was not registered with the Australian Securities and Investments Commission and that it did not comply with s 912A(1)(g) of the Corporations Act 2001 (Cth) and reg 7.6.02 of the Corporations Regulations 2001 (Cth) in that it did not provide for a mediation that was independent and accessible because the whole Mediation was instigated and managed by Rabobank in Brisbane to suit its interests, and the Stuarts "gave away all their rights for nothing in return". 745 I do not accept this submission. The necessity for the scheme to be registered with the Australian Securities and Investments Commission was not explained and the Mediation was conducted by an independent mediator, the Stuarts were legally represented and the Stuarts received the benefit of, at least, a further moratorium on any enforcement action for a not insignificant period. 746 Sixth, it is alleged that the Deed of Forbearance was an unjust transaction in the circumstances in which it was made and having regard to its contents within the meaning of the National Credit Code. The allegation is misconceived. There was no provision of credit under the Deed of Forbearance that would enliven the operation of the National Credit Code. Even assuming that there was a supply of credit, it would appear that it could only be a supply of credit with respect to Mt Morris which, for the reasons explained below, could not be characterised as a supply of credit for predominately personal, domestic or household purposes. 747 Further, and in any event, the particulars provided in support of the allegation that the Deed of Forbearance was unjust have either not been established or are insufficient to give rise to a conclusion that it was unjust. In that context, it is important to have regard to Ms Bowden's conclusion that the outcome of the Mediation represented a "compromise for all parties", Mr McMahon's assessment that it was a "reasonable compromise for all parties and there is pain on both sides" and the confirmations and representations provided by Mr McMahon in his Solicitor's Certificate in Schedule 3 to the Deed of Forbearance. 748 Seventh, it is alleged that the Deed of Forbearance should be set aside because in all the circumstances the conduct of Rabobank by its servants or agents Mr Witherow, Mr Brady and/or Mr Nevison at the Mediation and since that time was unconscionable in contravention of s 12CB(1)(a) of the ASIC Act. The particularised conduct relied upon by the Stuarts was limited to conduct at or in connection with the Mediation and a largely impenetrable allegation that Rabobank "has not previously relied on the 2012 Deed or the 2012 Release but instead relied on a compromise wrongly alleged to have occurred between the parties which allegation it has now abandoned". The fundamental difficulty with the allegation is that the conduct relied upon cannot fairly be characterised as conduct in trade or commerce, a necessary element of any cause of action under s 12CB(1)(a), and nor is it apparent how it could be said to be in "relation to the supply of financial services" to the Stuarts. 749 Moreover, I am not satisfied that Rabobank engaged in any unconscionable conduct in connection with the Stuarts' entry into the Deed of Forbearance for the reasons outlined in [722] to [748] above. 750 Eighth, it is alleged that Rabobank repudiated the Deed of Forbearance by taking enforcement action by exercising powers of sale during the forbearance period. This allegation is not supported by any evidence and cannot be accepted. 751 Ninth, it is alleged that Rabobank repudiated the Deed of Forbearance by its 9 September 2013 letter to the Stuarts or upon the filing of these proceedings and the Stuarts have accepted that repudiation, thus "terminating the 2012 Deed and the 2012 Release". The basis on which the alleged conduct amounted to a repudiation having those effects was not explained. In any event, the release in clause 4.9 of the Deed of Forbearance is expressly stated in clause 5.2 to survive any termination event. A "termination event" is broadly defined in clause 5.1 and includes, unless waived by written notice from Rabobank, a failure by any party to perform any provision of the Deed of Forbearance. This would include the Stuarts' failure to sell Mt Morris by 30 November 2012, and agree an amount with Rabobank in full and final settlement of their debt on or before 31 March 2013 or refinance their debt to Rabobank pursuant to the terms of the Deed of Forbearance.

[178]

Was a binding contract or arrangement entered into? 753 The evidence adduced in these proceedings is not capable of establishing the existence of any binding contract or arrangement in relation to the proposed carbon farming project as alleged by the Stuarts. 754 First, the evidence of Mr and Mrs Stuart does not rise higher than recollections of general statements of support from Mr Ellem, and subsequently Mr Brady, for carbon farming proposals from the Stuarts and an offer by Mr Varnay to erect a banner advertising Rabobank's support on Mt Morris. 755 When pressed during cross-examination, Mrs Stuart ultimately conceded that she did not have any conversations with Mr Ellem concerning a carbon farming "verification process". 756 The high water mark of Mr Stuart's evidence concerning the alleged carbon farming contract or arrangement was the following exchange in the course of his examination in chief: MR KING: Now, in 2010 or 2011, did you have a further discussion regard - with Mr Ellem, regarding carbon farming and the project that you may or may not have had in mind?---We were talking to him about it and I said to Chris - I said, like, "We might need some help to - when you go to eventually get to the point of whether you can get your carbon farm", because you had to get Minister's consents and everything. I said, "We might need some financial help to get it started. To get it locked in". And what was his response to that?---Positive. Well, can you - doing the best you can recall, what were the use he actually used? Just not - just don't give us your conclusion in that respect?---Well, he said that it - it was positive and bank would work - it sounds like he said the way you're talking he said the bank would work with you. Thank you. Now - and in respect to the bank working with you, in that regard, was there some outward and visible sign, if I can use the prayer book expression, of that intention by the bank?---In my mind Chris Ellem - the bank was going to support me. 757 Mr Ellem recalled general discussions with the Stuarts about carbon farming, but did not recall any specific request from the Stuarts for support for any carbon farming initiative. His recollection of his understanding at the time was that "there was nothing we could support". 758 Second, it would appear most unlikely that the verification process required by the Clean Energy Regulator could have been the subject of any discussion in July 2010, because the verification process associated with carbon farming initiatives only came into existence after the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth) commenced on 8 December 2011 and the Clean Energy Regulator Act 2012 (Cth) commenced on 2 April 2012. 759 Third, the purported consideration of a commitment by the Stuarts to meet Rabobank's charges in respect of further finance is illusory. There is no evidence of any consideration passing from the Stuarts to Rabobank. The consideration alleged does not appear to be more than a contention that if funds were to be advanced by Rabobank in "support" of any carbon farming proposal then the Stuarts would pay Rabobank's charges in respect of such future advances. 760 Fourth, as submitted by Rabobank, the terms of the alleged contract or arrangement are so obscure that it is not possible to attribute to the Stuarts and Rabobank any particular contractual intention. 761 Fifth, the existence of any binding contract or arrangement is very difficult to reconcile with the following statement by the Stuarts' solicitors, Fox and Thomas, in their 22 August 2013 letter to Rabobank's solicitors seeking the bank's approval of an agency agreement with Australian Carbon Traders Pty Ltd in relation to the proposed carbon farming initiative on Mt Morris: At no time has your client given any indication to our clients that it would not support the carbon farming initiative project on "Mount Morris" or that our clients should discontinue their efforts in relation to the Project. 762 The statement is restricted to an absence of any indication of a lack of support. Had there been any form of binding contract or arrangement to support the carbon farming initiative on Mt Morris it is implausible that it would not have been raised by Fox and Thomas in the 22 August 2013 letter.

[182]

Does it apply? 769 In order for the Stuarts to rely on the pleaded alleged contraventions of the National Credit Code, they must first establish that the loan advanced in June 2008 was a "carried over instrument" for the purposes of the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth) (NCCP Transitional Act). 770 The potential application of the National Credit Code to contracts or other instruments entered into prior to its commencement is addressed in s 3 of sch 1 to the NCCP Transitional Act, which relevantly provides: 3 Application of the new Credit Code to contracts or other instruments made before commencement (1) The new Credit Code does not apply in relation to a contract or other instrument that was made before commencement. (2) Despite subitem (1), the new Credit Code applies in relation to a carried over instrument. (3) Despite subitem (2), sections 5, 13 and 172 of the new Credit Code do not apply in relation to a carried over instrument. Instead, sections 6, 11 and 150 of the old Credit Code of a referring State or Territory, as in force immediately before commencement, apply from commencement in relation to a carried over instrument as if those provisions respectively were sections 5, 13 and 172 of the new Credit Code. … 771 Section 4 of the NCCP Transitional Act provides the following definition of a carried over instrument: carried over instrument means a contract or other instrument that: (a) was made before commencement; and (b) was in force immediately before commencement; and (c) the old Credit Code of a referring State or a Territory applied to immediately before commencement. 772 Section 6 of the Queensland Credit Code relevantly provided that: 6 Provision of credit to which this Code applies (1) This Code applies to the provision of credit (and to the credit contract and related matters) if when the credit contract is entered into or (in the case of precontractual obligations) is proposed to be entered into - (a) the debtor is a natural person ordinarily resident in this jurisdiction or a strata corporation formed in this jurisdiction; and (b) the credit is provided or intended to be provided wholly or predominantly for personal, domestic or household purposes; and (c) a charge is or may be made for providing the credit; and (d) the credit provider provides the credit in the course of a business of providing credit or as part of or incidentally to any other business of the credit provider. (2) If not all the debtors under a credit contract ordinarily reside, or are strata corporations formed, in this jurisdiction, this Code applies only if credit is first provided under the contract in this jurisdiction. (3) If this Code applies to the provision of credit (and to the credit contract and related matters) - (a) this Code applies in relation to all transactions or acts under the contract whether or not they take place in this jurisdiction; and (b) this Code continues to apply even though the debtor ceases to be ordinarily resident in this jurisdiction. (4) For the purposes of this section, investment by the debtor is not a personal, domestic or household purpose. (5) For the purposes of this section, the predominant purpose for which credit is provided is - (a) the purpose for which more than half of the credit is intended to be used; or (b) if the credit is intended to be used to obtain goods or services for use for different purposes, the purpose for which the goods or services are intended to be most used. 773 Section 11 of the Queensland Credit Code provides that: 11 Presumptions relating to application of Code (1) In any proceedings (whether brought under this Code or not) in which a party claims that a credit contract, mortgage or guarantee is one to which this Code applies, it is presumed to be such unless the contrary is established. (2) Credit is presumed conclusively for the purposes of this Code not to be provided wholly or predominantly for personal, domestic or household purposes if the debtor declares, before entering into the credit contract, that the credit is to be applied wholly or predominantly for business or investment purposes (or for both purposes). (3) However, such a declaration is ineffective for the purposes of this section if the credit provider (or any other relevant person who obtained the declaration from the debtor) knew, or had reason to believe, at the time the declaration was made that the credit was in fact to be applied wholly or predominantly for personal, domestic or household purposes. For the purposes of this subsection, a relevant person is a person associated with the credit provider or a finance broker (or a person acting for a finance broker) through whom the credit was obtained. Note: See section 176 for the circumstances in which a credit provider is taken to have knowledge of or reason to believe something for the purposes of this Code. (4) A declaration under this section is to be substantially in the form (if any) required by the regulations and is ineffective for the purposes of this section if it is not. 774 The critical issues for determination are as follows: (a) was the credit to be extended under the June 2008 Letter of Offer wholly or predominately provided for personal, domestic or household purposes? (b) was the business or investment purposes declaration provided by the Stuarts substantially in the form required by the regulations to the Queensland Credit Code? (c) did Mr Ellem or Rabobank know or have reason to believe that the credit to be extended under the June 2008 Letter of Offer was wholly or predominately for personal, domestic or household purposes? (d) was the business or investment purposes declaration otherwise ineffective? 775 The Stuarts seek to rely upon the presumption in s 11(1) of the Queensland Credit Code that the June 2008 Letter of Offer was a credit contract to which the Queensland Credit Code applied. The Stuarts submit that, in any event, the loan was predominately for personal, domestic or household purposes because it was a loan for the purchase of a family farm on which they intended to live. 776 The Stuarts submit that the purported s 11(2) declaration they made in the May 2008 Loan Application was ineffective because it was not in the form stipulated in the regulations to the Queensland Credit Code and it was made in circumstances where Mr Ellem and Rabobank knew, or had reason to believe, that the credit was in fact to be applied wholly or predominately for personal, domestic or household purposes because it was being used to purchase a family farm. 777 The submissions of the Stuarts cannot be accepted. 778 It is convenient to deal first with the efficacy of the business or investment purposes declaration. 779 The Stuarts do not suggest that they did not sign the business or investment purposes declaration at the same time that they signed the May 2008 Loan Application. The controversy is the date on which the Stuarts, in fact, signed the May 2008 Loan Application as outlined above. Irrespective of the specific date on which the Stuarts signed the May 2008 Loan Application, the contract for the provision of finance pursuant to the May 2008 Letter of Offer was not entered into until after Rabobank received the signed letter of offer. The Stuarts retuned the signed May 2008 Letter of Offer to Rabobank by placing it in the self-addressed envelope and posting it to the bank. By the time that Rabobank received the signed May 2008 Letter of Offer, the Stuarts had signed the business or investment purposes declaration in the May 2008 Loan Application on 11 June 2008 for the reasons outlined above. 780 Nor can the other challenges to the efficacy of the business or investment purposes declaration succeed. Section 11(4) of the Queensland Credit Code only requires the declaration to be "substantially in the form" required by the regulations, rather than literal or absolute compliance. The use of shading rather than a box to highlight the text and the failure to centre and capitalise the word "important" do not establish that the declaration was not substantially in the form required by the regulations. 781 Further, even if the details of the purpose of the loan were not filled in at the time that the Stuarts signed the business or investment purposes declaration in the May 2008 Loan Application and returned it to Rabobank, the only plausible inference is that they were seeking an extension to the Facility for the predominant purpose of obtaining funds for the purchase of Mt Morris. 782 In any event, the following matters establish that the extension to the Facility limit pursuant to the June 2008 Letter of Offer, independently of any presumption enlivened by the business or investment purposes declaration, was not sought wholly or predominately for "personal, domestic or household purposes". 783 First, it was made for the purpose of providing funds to the Stuarts to enable them to acquire a rural property on which to operate a cattle grazing business and ultimately live with their family following the sale of Evergreen. 784 Second, it was made in the name of the "ML & CL Stuart Partnership" and the partnership's tax returns record that all of the interest was treated and claimed as a tax deduction of the partnership. 785 Third, the establishment of a farming operation is a "business purpose" not a "personal, domestic or household purpose": Gooley v NSW Rural Assistance Authority [2020] NSWCA 156 (Gooley) at [44]-[46] and [96] (Meagher JA with whom Macfarlan and White JJA agreed). Contrary to the submissions advanced by the Stuarts, Gooley is not relevantly distinguishable. 786 The reasoning of the Full Court of the Supreme Court of South Australia in Haynes v St George Bank a Division of Westpac Banking Corporation; Haynes v Westpac Banking Corporation [2018] SASCFC 51 (Haynes) provides further support for the proposition that the provision of funds to purchase a farming operation is for a "business purpose". In that case the relevant credit supplied was for the purchase of a property on which there were two residential buildings and a flower farm. The Full Court of the Supreme Court of South Australia agreed with the finding of the trial judge that the credit supplied was predominately supplied for business purposes: see Haynes at [60]-[65] (Kourakis CJ, with whom Blue and Doyle JJ agreed). 787 In Haynes, Kourakis CJ placed particular reliance on the fact that the borrower had claimed as an interest expense in his personal tax return for the 2009/2010 financial year the entirety of the interest payable on the loan to acquire the property. This was done on the basis that he had rented the property to a company that had registered the business name "Flower Folly" and that company had claimed as an expense rent payable to the borrower of $21,000: Haynes at [61]. Kourakis CJ also relied on the business or investment purposes declaration provided by the borrower, even though it was ineffective by reason of s 11(2) of the Uniform Consumer Credit Code (since replaced by the NCCP Act and National Credit Code), the historical use of the property for substantial flower production and the decision to delay settlement to enable the borrower to inspect the spring stocks of flowers: Haynes at [62]-[63]. 788 Kourakis CJ also noted that the trial judge had taken into account that the borrower had "intended to, and did in fact, move his residence" to the property, but at the same time the borrower had "proposed to rely on the income from flower production to support him after his retirement, or at least semi-retirement, from real estate agency and development work": Haynes at [64]. 789 Fourth, the Stuarts' reliance on Jonsson v Arkway Pty Ltd (2003) 58 NSWLR 451; [2003] NSWSC 815 (Jonsson) to suggest that the funds advanced pursuant to the June 2008 Letter of Offer were for personal purposes is misplaced. Even if it is accepted for present purposes that "personal, domestic or household purposes" is not a compendious expression subject to the sui generis principle of statutory construction and that "personal" can be construed broadly, it cannot be construed independently of the other provisions in the Queensland Credit Code that draw sharp distinctions between "business and investment purposes" and "personal, domestic or household purposes". In Jonsson the relevant benefit found to be conferred on a person for personal purposes was the provision of funds to enable her parents to purchase a home. That benefit is clearly distinguishable from the provision of funds for the purchase of a property to operate a cattle grazing business. As Shaw J observed at [32]: The Code should not, in my opinion, be interpreted so that it excludes non-business and non-investment borrowing to purchase a home and hold it on trust for one's purposes. The position may be different if the trust had a business or investment objective, as distinct from the provision of a benefit for a close family member. 790 For the reasons outlined above, I find that the June 2008 Letter of Offer was not a credit contract for the purposes of the Queensland Credit Code and was therefore not a carried over instrument for the purposes of the application of the National Credit Code. Accordingly, the pleaded unjust credit contract allegations cannot succeed.

[183]

Were the changes to the Facility unjust? 791 If, contrary to the conclusion that I have reached above, the National Credit Code does apply, it is necessary to determine whether the June 2008 Letter of Offer was an unjust credit transaction within the meaning of s 76 of the National Credit Code. 792 Section 76 of the National Credit Code relevantly provides: 76 Court may reopen unjust transactions Power to reopen unjust transactions (1) The court may, if satisfied on the application of a debtor, mortgagor or guarantor that, in the circumstances relating to the relevant credit contract, mortgage or guarantee at the time it was entered into or changed (whether or not by agreement), the contract, mortgage or guarantee or change was unjust, reopen the transaction that gave rise to the contract, mortgage or guarantee or change. Matters to be considered by court (2) In determining whether a term of a particular credit contract, mortgage or guarantee is unjust in the circumstances relating to it at the time it was entered into or changed, the court is to have regard to the public interest and to all the circumstances of the case and may have regard to the following: (a) the consequences of compliance, or noncompliance, with all or any of the provisions of the contract, mortgage or guarantee; (b) the relative bargaining power of the parties; (c) whether or not, at the time the contract, mortgage or guarantee was entered into or changed, its provisions were the subject of negotiation; (d) whether or not it was reasonably practicable for the applicant to negotiate for the alteration of, or to reject, any of the provisions of the contract, mortgage or guarantee or the change; (e) whether or not any of the provisions of the contract, mortgage or guarantee impose conditions that are unreasonably difficult to comply with, or not reasonably necessary for the protection of the legitimate interests of a party to the contract, mortgage or guarantee; (f) whether or not the debtor, mortgagor or guarantor, or a person who represented the debtor, mortgagor or guarantor, was reasonably able to protect the interests of the debtor, mortgagor or guarantor because of his or her age or physical or mental condition; (g) the form of the contract, mortgage or guarantee and the intelligibility of the language in which it is expressed; (h) whether or not, and if so when, independent legal or other expert advice was obtained by the debtor, mortgagor or guarantor; (i) the extent to which the provisions of the contract, mortgage or guarantee or change and their legal and practical effect were accurately explained to the debtor, mortgagor or guarantor and whether or not the debtor, mortgagor or guarantor understood those provisions and their effect; (j) whether the credit provider or any other person exerted or used unfair pressure, undue influence or unfair tactics on the debtor, mortgagor or guarantor and, if so, the nature and extent of that unfair pressure, undue influence or unfair tactics; (k) whether the credit provider took measures to ensure that the debtor, mortgagor or guarantor understood the nature and implications of the transaction and, if so, the adequacy of those measures; (l) whether at the time the contract, mortgage or guarantee was entered into or changed, the credit provider knew, or could have ascertained by reasonable inquiry at the time, that the debtor could not pay in accordance with its terms or not without substantial hardship; (m) whether the terms of the transaction or the conduct of the credit provider is justified in the light of the risks undertaken by the credit provider; (n) for a mortgage - any relevant purported provision of the mortgage that is void under section 50; (o) the terms of other comparable transactions involving other credit providers and, if the injustice is alleged to result from excessive interest charges, the annual percentage rate or rates payable in comparable cases; (p) any other relevant factor. … 793 The Stuarts advanced the following contentions in support of their allegation that the June 2008 Letter of Offer was an unjust credit transaction within the meaning of s 76 of the National Credit Code. 794 First, the Stuarts contend that the permanent repayment obligation in the June 2008 Letter of Offer had the result that the Facility became, in effect and operation, asset lending, as the permanent repayment obligation could only be satisfied from the sale of assets. Both the Stuarts and Rabobank, however, proceeded at all times on the basis that the permanent repayment obligation was to be paid from the proceeds of the sale of Evergreen. The allegation that the bridging finance characterisation constituted a form of financial misconduct comprising asset lending against repayment out of equity is misconceived. It ignores the very basis on which the finance was provided, namely a short term extension to an existing facility to fund the acquisition of a new property pending the sale of an existing property. 795 Second, the Stuarts contend that there was a relative inequality of bargaining power between the Stuarts, as commercially unsophisticated outback Queensland farmers, and Rabobank, as a multinational financial institution. Rabobank accepts that there was an inequality of bargaining power, but submits that it was ameliorated by reason of the Stuarts' relative experience and sophistication and their access to independent legal and financial advice. On balance, I accept that the inequality of bargaining power was of limited significance, given the Stuarts' prior experience and success in purchasing and selling rural properties and entering into financial facilities with initially Elders and subsequently Rabobank on very similar terms and their appreciation, at least by Mrs Stuart, at the time of the risks involved in the proposed purchase of Mt Morris prior to selling Evergreen as reflected in her entries in her options book and email communications. 796 Third, the Stuarts contend that the nine month permanent repayment term inserted in the June 2008 Letter of Offer was unilaterally imposed over the objections of the Stuarts and was not the subject of any negotiation. If, when and the extent to which the Stuarts may have objected to the inclusion of the permanent repayment term is the subject of contested evidence. What is clear is that the parties were proceeding on the basis that Evergreen was to be sold and the proceeds of the sale would be used to reduce the amount outstanding on the Facility. Given the Stuarts' previous experience and the contemporaneous expectations of rural property real estate agents, a period of nine months was not an unrealistic period of time in which to expect a sale of Evergreen. 797 It is also important to bear in mind that the contract to purchase Mt Morris included a subject to suitable finance clause and the Stuarts had engaged a solicitor to act on their behalf with respect to the purchase of Mt Morris. If the nine month permanent repayment obligation was not acceptable, the Stuarts were free not to accept the June 2008 Letter of Offer and not to proceed with the purchase of Mt Morris, if they so desired. 798 Further, as I have found, the Stuarts concerns about the nine month repayment obligation were raised with Mr Ellem prior to their acceptance of the June 2008 Letter of Offer. Mr Ellem addressed those concerns by expressing confidence that if the Stuarts needed more time, Rabobank would look favourably on any request for an extension. 799 In the circumstances, the allegation that the permanent repayment term was unilaterally imposed or not the subject of any negotiation cannot be accepted. 800 Fourth, the Stuarts contend that the permanent repayment term was not reasonably necessary for the legitimate protection of Rabobank's interests in that it comprised a form of asset lending requiring repayment out of the sale of assets. For the reasons advanced above, this again misconceives the nature of the transaction and the contention cannot succeed. 801 Fifth, the Stuarts contend that they were relatively unsophisticated with respect to understanding "contract terms and legal requirements in respect thereto" and did not have the benefit of legal or financial advice in relation to the June 2008 Letter of Offer and later alleged variations to their Facility. While the Stuarts may not have sought specific legal or financial advice with respect to their acceptance of the June 2008 Letter of Offer, at all relevant times the Stuarts had solicitors acting for them on the purchase of Mt Morris, retained accountants for the purpose of preparing detailed financial statements and had engaged experienced rural property real estate agents to act on their behalf with respect to the proposed sale of Evergreen. The Stuarts certainly had the ability to obtain legal or financial advice if they had thought it necessary or desirable. 802 Further, Mrs Stuart demonstrated in both her oral evidence and contemporaneous documentation a relative sophistication in understanding the structure and risks inherent in the finance offered pursuant to the June 2008 Letter of Offer and previous letters of offer from Rabobank. In any event, the terms of the letters of offer were clearly and succinctly expressed and neither Mr Stuart nor Mrs Stuart had any apparent difficulty in understanding the important terms of the June 2008 Letter of Offer, as evidenced by their contemporaneous concerns expressed to Mr Ellem about the permanent repayment obligation, as noted at [798] above. 803 In addition, the Stuarts advance contentions that are directed at the conduct of Rabobank after the drawdown of funds pursuant to the June 2008 Letter of Offer, to the effect that Rabobank: (a) charged interest inconsistently with the terms of the June 2008 Letter of Offer; (b) engaged in conduct that was not reasonably necessary to protect its legitimate interests, such as refusing to permit the Stuarts to sell Evergreen in 2009 pursuant to the Burberrys' offer; (c) engaged in unfair tactics by refusing to honour earlier representations that they would advance funds to enable the Stuarts to restock Mt Morris after the end of the agistment period and refusing to support an application in 2011 by the Stuarts to the QRAA; (d) failed to comply with the Code of Banking Practice by undertaking enforcement action rather than working with the Stuarts to resolve their financial difficulties; (e) failed to comply with the now superseded voluntary industry code of practice known as the Queensland Farm Finance Strategy in the course of taking enforcement action; and (f) failed to inform the Stuarts that the Facility had been referred to the Special Asset Management department of Rabobank for "exit of the finance from the Bank and closure of the Facility prior to its expiry on 30 July 2019". 804 Given that each of these contentions is directed at conduct after the June 2008 Letter of Offer was entered into, none can be relevant to whether it was an unjust credit transaction at the time that it was entered into. Further, I am not satisfied that the necessary underlying facts to support each of these contentions have been established on the evidence before me.

[185]

Section 78B application 806 On the last day of the hearing, at the conclusion of his oral reply, counsel for the Stuarts submitted that it would be appropriate to issue a notice pursuant to s 78B of the Judiciary Act 1903 (Cth) (Judiciary Act) on the basis of conflicting interpretations of the application of the National Credit Code (s 78B Notice). 807 Section 78B of the Judiciary Act relevantly provides: 78B Notice to Attorneys‑General (1) Where a cause pending in a federal court including the High Court or in a court of a State or Territory involves a matter arising under the Constitution or involving its interpretation, it is the duty of the court not to proceed in the cause unless and until the court is satisfied that notice of the cause, specifying the nature of the matter has been given to the Attorneys‑General of the Commonwealth and of the States, and a reasonable time has elapsed since the giving of the notice for consideration by the Attorneys‑General, of the question of intervention in the proceedings or removal of the cause to the High Court. (2) For the purposes of subsection (1), a court in which a cause referred to in that subsection is pending: (a) may adjourn the proceedings in the cause for such time as it thinks necessary and may make such order as to costs in relation to such an adjournment as it thinks fit; (b) may direct a party to give notice in accordance with that subsection; and (c) may continue to hear evidence and argument concerning matters severable from any matter arising under the Constitution or involving its interpretation. ... (5) Nothing in subsection (1) prevents a court from proceeding without delay to hear and determine proceedings, so far as they relate to the grant of urgent relief of an interlocutory nature, where the court thinks it necessary in the interests of justice to do so. 808 The conflicting interpretations of the National Credit Code were alleged to arise under or involve the interpretation of the Constitution because the National Credit Code is a law that has been adopted by the state of Queensland in the place of the Queensland Credit Code. Section 51(xxxvii) of the Constitution provides: 51 Legislative powers of the Parliament The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: … (xxxvii) matters referred to the Parliament of the Commonwealth by the Parliament or Parliaments of any State or States, but so that the law shall extend only to States by whose Parliaments the matter is referred, or which afterwards adopt the law; 809 Pursuant to s 4(1) of the Credit (Commonwealth Powers) Act 2010 (Qld) (CCPA), the state of Queensland adopted the NCCP Act and the NCCP Transitional Act within the meaning of s 51(xxxvii) of the Constitution. Pursuant to s 11 of the CCPA, the Queensland Credit Code and related legislation was repealed with effect from 1 July 2010. 810 Counsel for the Stuarts contended that as a result of the repeal of the Queensland Credit Code, the transitional provisions preserving the operation of parts of the Queensland Credit Code could have no relevant operation. He contended that this led to the result that the National Credit Code had been adopted in Queensland without the transitional provisions and the Queensland Credit Code would apply retrospectively to all credit contracts entered into prior to the adoption by Queensland of the National Credit Code. 811 He submitted that this contention had given rise to a legal point involving interpretation of both the Constitution and the National Credit Code. 812 I did not accept that submission. Making reference to a state law adopting a law of the Commonwealth and pointing to a provision in the Constitution that provides for the Queensland Parliament to pass legislation referring powers to the Commonwealth Parliament is not sufficient to give rise to a constitutional issue or a matter involving the interpretation of the Constitution. It is simply, as senior counsel for Rabobank submitted, a matter of interpretation of the relevant statutes. It is not controversial that s 51(xxxvii) of the Constitution permits states to refer matters to the Parliament of the Commonwealth. 813 As Gageler J stated in Re Culleton (2017) 340 ALR 550; [2017] HCA 3 at [29], the constitutional issue must be "real and substantial" to give rise to the obligation under s 78B of the Judiciary Act: Section 78B of the Judiciary Act does not, in my opinion, prevent me from dismissing so much of the summons as seeks to give effect to Senator Culleton's attempt to raise the constitutional objection to jurisdiction. French J made the point in Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd that s 78B "does not impose on the Court a duty not to proceed pending the issue of a notice no matter how trivial, unarguable or concluded the constitutional point may be". To give rise to the obligation not to proceed without notice a cause pending in court must truly "involve" a matter arising under the Constitution or involving its interpretation. As Toohey J stated in Re Finlayson; Ex parte Finlayson, in a passage quoted with approval by Gummow, Hayne and Callinan JJ in Glennan v Commissioner of Taxation, "[I]n terms of s 78B, a cause does not 'involve' a matter arising under the Constitution or involving its interpretation merely because someone asserts that it does". In short, the constitutional point must be real and substantial. 814 I was not satisfied that counsel for the Stuarts had raised a matter that could arguably be characterised as a "real or substantial" issue arising under the Constitution or involving its interpretation. The issue for determination, as outlined above, is a matter requiring the interpretation of the respective credit legislation and the relevant transitional provisions, irrespective of which parliament may have enacted the legislation. 815 I therefore declined to issue the s 78B Notice.

[186]

Delay case 816 In their closing written submissions, the Stuarts make reference to a delay case alleged against Rabobank: [T]he Respondent has at every step not merely not complied with orders of the Court but has knowingly not cooperated with the Applicants and the Court in disclosing to the Applicants its documents related to its alleged financial misconduct supporting an inference that the Applicants' delay case should be accepted on its face … 817 The Stuarts allege that Rabobank failed, on four occasions, to comply with orders for standard discovery that resulted in the need for orders to be made for non-standard discovery on the 14th day of the hearing. 818 Specifically, the Stuarts allege that Rabobank took a "mushroom" approach to the production of its records, by putting forward Mr Ellem as a witness who "cannot recall anything of any significance but instead [gave] equivocal and evasive evidence" and providing "as few documents as it can get away with" and further "adducing no evidence as to its practices and procedures although having available witnesses able to give such evidence". The Stuarts describe the conduct of Rabobank in producing documents as doing so "in a desultory recalcitrant fashion, as if extracting teeth, but calculated to undermine the court's due process". Counsel for the Stuarts alleged that Rabobank has, by reason of this alleged conduct, impliedly admitted financial misconduct which it has sought to conceal. 819 Counsel for the Stuarts made reference to Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 (Kuhl) and Commonwealth Bank of Australia v Quade (1991) 178 CLR 134; [1991] HCA 61 (Quade). 820 Kuhl was a workplace negligence case in which the trial judge was not satisfied by the workman's evidence where, for whatever reason, the workman was "reluctant to say precisely what happened". The trial judge concluded that it was not possible to identify either a breach of any relevant duty of care or the precise cause of the injury: see Kuhl at [66]. A majority of the High Court of Australia found that it was not open to the trial judge to incorporate into his reasons for judgment a finding that the workman had suppressed evidence without giving him the opportunity to address with that criticism: Kuhl at [67] (Heydon, Crennan and Bell JJ). 821 Counsel for the Stuarts submitted that the circumstances surrounding the orders for discovery amounted to an implied admission by Rabobank or circumstantial evidence that permitted an adverse inference to be drawn against Rabobank, consistent with the comments of the majority in Kuhl at [64] concerning the rule in Jones v Dunkel: Depending on the circumstances, when a party lies, or destroys or conceals evidence, or attempts to destroy or conceal evidence, or suborns witnesses, or calls testimony known to be false, or fails to comply with court orders for the production of evidence (like subpoenas or orders to answer interrogatories), or misleads persons in authority about who the party is, or flees, the conduct can be variously described as an implied admission or circumstantial evidence permitting an adverse inference. 822 The Stuarts submit that Rabobank's implied admission is that the "[a]pplicants' whole case has merit which the Respondent is not prepared to formally admit in its Defence" and that Rabobank "accepts it has still not complied with its discovery obligation". 823 Quade involved a failure by the successful party, the Commonwealth Bank, to give discovery of relevant documents until after judgment was delivered. In their written submissions, the Stuarts seek to rely on the following passage of Quade at 142 (emphasis added by counsel for the Stuarts): In so far as the demands of justice in the individual case are concerned, it would cast upon the innocent party an unfairly onerous burden of demonstrating to virtual certainty what would have happened in the hypothetical situation which would have existed but for the other party's misconduct. In so far as the public interest in the administration of justice generally is concerned, it would be likely to ensure to the successful party the spoils of his own default and thereby encourage, rather than to penalize, failure to comply with pre-trial orders and procedural requirements. 824 In deciding whether to order a new trial, the High Court of Australia in Quade unanimously concluded at 142-3: It is neither practicable nor desirable to seek to enunciate a general rule which can be mechanically applied by an appellate court to determine whether a new trial should be ordered in a case where misconduct on the part of the successful party has had the result that relevant evidence in his possession has remained undisclosed until after the verdict. The most that can be said is that the answer to that question in such a case must depend on the appellate court's assessment of what will best serve the interests of justice, "either particularly in relation to the parties or generally in relation to the administration of justice". In determining whether the matter should be tried afresh, it will be necessary for the appellate court to take account of a variety of possibly competing factors, including, in addition to general considerations relating to the administration of justice, the degree of culpability of the successful party, any lack of diligence on the part of the unsuccessful party and the extent of any likelihood that the result would have been different if the order had been complied with and the non-disclosed material had been made available. While it is not necessary that the appellate court be persuaded in such a case that it is "almost certain" or "reasonably clear" that an opposite result would have been produced, the question whether the verdict should be set aside will almost inevitably be answered in the negative if it does not appear that there is at least a real possibility that that would have been so. 825 It is difficult to see how this case is relevant to this proceeding. Rabobank produced the documents during the hearing. I am not persuaded that Rabobank's delay in producing any documents justifies the drawing of any adverse inferences against Rabobank.

[188]

Facility breach cross-claim 828 On 30 June 2010, Rabobank advanced $2,740,498.63 to the Stuarts under the Facility. Pursuant to the June 2010 Letter of Offer, the Stuarts were required to make a permanent repayment of $1.8 million in reduction of the Facility limit by 31 December 2010. The Stuarts failed to make this permanent repayment and have also failed to meet their half-yearly interest repayment obligations since December 2010. Rabobank claims these are events of default under the Facility. 829 On 9 September 2013, Rabobank made a demand for the Stuarts to pay the amount outstanding under the Facility, together with all accrued interest and fees and all other amounts owing, by 18 September 2013. The Stuarts did not pay the amount demanded by this date, or at all. Accordingly, Rabobank claims the Stuarts are in breach of the Facility, causing the bank to suffer loss and damage. 830 Rabobank issued the Revised Statement of Indebtedness to the Stuarts on 27 April 2021, which identified the debt owed as at 31 March 2021 as $2,972,705.42, including interest up to that date. The Revised Statement of Indebtedness confirms interest will continue to accrue until the debt is paid. By accepting the terms of the Facility, the Stuarts agreed that such a statement is sufficient to prove the amount they owe to Rabobank, unless they are able to prove the Revised Statement of Indebtedness is incorrect. 831 The terms of the Facility require statements of indebtedness to be signed by a Rabobank employee whose title includes the word "manager". On 27 April 2021, senior counsel for Rabobank tendered a statement signed by Stephen Musso, the Head of Financial Restructuring at Rabobank. The next day, senior counsel tendered the Revised Statement of Indebtedness signed by Rabobank Senior Manager Bob Ole. The statements are largely identical in that they specify the amount owed, albeit the Revised Statement of Indebtedness includes further details about the terms of the Facility relevant to statements of indebtedness. 832 Counsel for the Stuarts initially objected to the tender of the Revised Statement of Indebtedness on three grounds. First, that Rabobank's case was closed. Second, the Revised Statement of Indebtedness merely purported to be signed by Mr Ole without evidence of that fact. And third, the tender of the Revised Statement of Indebtedness was proposed without explanation. Senior counsel for Rabobank explained that the Revised Statement of Indebtedness was tendered because of the formal requirement in the terms of the Facility that the statement be signed by a bank officer with the title "manager". I admitted into evidence the Revised Statement of Indebtedness signed by Mr Ole in substitution for the previous statement signed by Mr Musso. Rabobank had not formally closed its case so as to warrant the need for an application for leave to reopen and, in any event, senior counsel for Rabobank had expressly reserved his position in relation to the tender of any further material. I also invited counsel for the Stuarts to make further submissions regarding the validity of the Revised Statement of Indebtedness prior to admitting it into evidence. No further submissions were made. 833 The Stuarts contend that by reason of the various causes of action they allege, the variation of the Facility in June 2008 and all subsequent variations were void and of no effect. Accordingly, the variations to the Facility pursuant to the June 2010 Letter of Offer were also alleged to be void and of no effect and thus it was submitted that the Stuarts did not breach any obligations to Rabobank by failing to repay the outstanding amount. The Stuarts also relied on the National Credit Code claim to set aside the Facility as an unjust credit contract.

Stuart v Rabobank Australia Ltd

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Judgment (192 paragraphs)

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