JUDGMENT No. |! 4 4. evoveseneronenesel sesndecscess CATCHWORDS TRADE PRACTICES - mortgage securing loan from bank - failure of mortgagors to pay interest due - mortgage documents explained to mortgagors by bank's solicitor - whether provisions of mortgage are unjust ~ whether bank or solicitor engaged in unconscionable conduct - application for order for possession. NEGLIGENCE - advice as to meaning of mortgage documents - whether solicitor provided adequate explanation of documents. Trade Practices Act 1974 ss 51AB, 52, 53, 55A, 60, 82 and 87. Contracts Review Act 1980 (NSW) ss 7 and 9 Real Property Act 1900 (NSW) ss 57, 58 and 60 Debbs_ v The National Bank of Australasia Ltd (1935) 53 CLR 643. Alderton and Anor v The Prudential Assurance Company Ltd (1993) 41 FCR 435. Fox v_ Everingham and Anor (1983) 50 ALR 337. MacIndoe v Parbery, New South Wales Court of Appeal, 17 August 1994, unreported. Crisp vy Australia and New Zealand Banking Group (1994) ATPR 41 - 294. Wardley Australia Ltd and Anor v The State of Western Australia {1992) 175 CLR 514. March v EB & M H Stramare Pty Ltd and Anor (1991) 171 CLR 506. Zoneff v Elcom Credit Union Ltd (1990) 94 ALR 445 at 463. Wongala Holdings Pty Ltd v_ Mulinglabar Pty Ltd, NSW Court of Appeal, 21 July 1995, unreported. Commonwealth Bank of Australia v Smith (1991) 43 FCR 390 RECEIVED O6FEB 1996 -DERAL CORAT OF Fe AUSTRALIA PRUNOL Al: HEGISTAY No. NG 42 of 1993 JOSEPH ABRAM and another v BANK OF NEW ZEALAND and anothe MOORE J SYDNEY DATE: 28 JULY 1995 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION ng2 bs S if ia THE BETWEEN: Moore J Sydney 28 July 1995 ww No. NG 42 of 1993 JOSEPH ABRAM First Applicant First Cross-Respondent JANETTE DAWN ABRAM Second Applicant Second Cross-Respondent BANK OF NEW ZEALAND First Respondent Cross-Claimant MICHAEL J. FITZPATRICK Second Respondent ORDER OF THE COURT COURT ORDERS THAT: NOTE: The matter be adjourned to Friday 11 August 1995 at 9.00am to enable the parties to bring in short minutes. Any submissions on the question of costs be filed and served within 7 days of the date of judgment and any submissions in reply within a further 5 days. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. NG 42 of 1993 eee GENERAL DIVISION BETWEEN : JOSEPH ABRAM First Applicant First Cross-Respondent JANETTE DAWN ABRAM Second Applicant Second Cross-Respondent AND: BANK OF NEW_ZEALAND First Respondent Cross-Claimant MICHAEL J. FITZPATRICK Second Respondent JUDGE: Moore J PLACE: Sydney DATE: 28 July 1995 REASONS FOR JUDGMENT Introduction These proceedings concern claims made by Mr Joseph Abram and Mrs Janette Abram against the Bank of New Zealand ("BNZ") and Mr Michael Fitzpatrick. The Abrams allege contravention of ss5S1AB, 52, 53, 55A and s60 of the Trade Practices Act 1974 ("TP Act") by BNZ, with a consequential claim for damages under s82 and relief under s87. They seek damages for negligence, breach of - 2 - contract and breach of a fiduciary duty. They also seek damages in what is said to be a claim based on breaches of s57 of the Real Property Act 1900 (NSW) ("RP Act"). They claim relief under the Contracts Review Act 1980 (NSW) ("Review Act"). The claim against Mr Fitzpatrick alleges, inter alia, a breach of contract and fiduciary duty. BNZ cross-claims for an order for possession and judgment for a money sum. Central to these claims is a Registered Mortgage No Y337025 over the Abram's family home securing a $170,000 loan facility provided to the Abrams by BNZ. Mr Fitzpatrick is a solicitor who prepared the mortgage documents and had them executed by the Abrams. As a result of a direction given by Wilcox J on 4 July 1994 the matter has been heard, to this point, on issues other than the quantum of damages and this judgment is correspondingly limited. Background The following is the background to these proceedings. It is, in the main, a chronology of events and reflects findings of fact I have made principally by reference to uncontentious evidence, much of it documentary. In 1985 the Abrams, who are a married couple, purchased a block of land at Erskine Park, Sydney from Landcom. They became the registered proprietors as joint tenants. One of the terms of the contract required them to build a house within three years from the date of purchase. In 1986 the Abrams made the decision to build. In April 1987 they borrowed $90,000 from the National Australia Bank Ltd -3- ("NAB") which was secured by a mortgage over the Erskine Park property. A home was built, in part, with the proceeds. In August 1987 Mr Abram was invited to transfer his American Express Gold Card facility to BNZ which he did. At that time it was an unsecured account with a limit of $10,000 ("the credit card facility"). A letter he received from BNZ, dated September 1987, explained the nature of the facility. It read: "Thank you for accepting your new Gold Card from American Express, with its credit line from Bank of New Zealand. I am pleased to welcome you as a new customer and explain to you how your Gold Card has delivered a lot more than you may have been expecting. Your Gold Card credit line is an overdraft facility which is part of your new Bank of New Zealand Smarter Cheque Account. Unlike your former credit line, your Smarter Cheque Account offers you the choice of either operating in overdraft, or earning high money market interest on deposit balances. If you have been a regular Gold Card credit line user, you will now enjoy the benefits of no minimum monthly repayment and low overdraft interest rates - currently 17% p.a. - plus the convenience of cheque access to your approved overdraft limit. If you have not been a regular Gold Card credit line user, you will now enjoy high money market interest rates on deposit balances and you will have the peace of mind of knowing that your overdraft is as close as your Smarter cheque book. Using your Smarter Cheque Account Your Smarter Cheque Account is much more than a charge card credit line. It is an interest bearing cheque account with an overdraft. You can withdraw from your account by using your enclosed Smarter cheque book; by using your Credit Line Activator from American Express; or by using the American Express services for ATM's and cash advances. Your Smarter Cheque Account lets you directly access any deposit balance, and then it automatically activates your overdraft as required. You will earn interest every day your deposit balance is $1,000 or more and you only pay interest when your account is in overdraft. You can pay into your Smarter Cheque Account to add to your deposit balance or reduce your overdraft by using the enclosed deposit book. Simply mail your deposit with a completed deposit slip to any Bank of New Zealand branch or visit any of our branches in person. You can also use your Smarter deposit book to pay into your account through any branch of any bank in -4- Australia. (Other banks may charge a small fee for this service.) There are no account maintenance, overdraft service, or unused limit fees on the Smarter Cheque Account. All you pay are statutory government charges and the normal transaction fees which are detailed in the enclosed schedule. For additional Smarter cheque and deposit books please write to or visit the Bank of New Zealand branch at the address printed on your cheques. If you choose not to use your Smarter Cheque Account please keep the enclosed cheque and deposit books with your compliments for possible future use. Statements and Repayments As a Smarter Cheque Account customer you will receive a monthly statement of your account which details all deposits and withdrawals, including interest earned on deposit balances and interest charged for overdraft use. You are not required to make minimum monthly repayments on your Smarter Cheque Account overdraft. All we ask is that you do make regular deposits, and stay within your approved overdraft limit. Please remember that your monthly statement is a report of your position NOT an invoice of amounts owing. Do watch your overdraft balance carefully. I am delighted to welcome you as a new customer to Bank of New Zealand and I am confident that you will be happy with the many benefits of your new Smarter Cheque Account. Should you wish to discuss an increase in your overdraft limit; arrange for the automatic transfer of funds from other bank accounts; or ask any questions about your new Smarter Cheque Account, your local Bank of New Zealand branch manager will be pleased to assist you. Yours sincerely, Eric Dodd General Manager Retail Banking P.S. I'm sure your Gold Card has delivered a lot more than you expected by linking with the Bank of New Zealand Smarter Cheque Account. Do take advantage of your new account goon. While, for convenience, I describe the facility as the credit card facility, it is plainly more than that." In probably late 1988 Mr Abram became aware of an offer from BNZ contained in promotional material he had either received in the post or had seen at BNZ Parramatta branch of an account styled "Smarter Mortgage Account". He made inquiries about the account. He did so because of the level of the fees he was then paying to NAB. I should note that there is, in evidence, a second mortgage to NAB signed by the Abrams and dated 6 February - 5 - 1989. Mr Abram submitted that it is a forgery. I do not accept that it is but nothing of substance, in my opinion, turns on its existence. As a result of those inquiries made of BNZ about the "Smarter Mortgage Account", Mr Abram received a letter dated 9 February 1989 from a BNZ Account Executive, Mr Tietjen, which stated that the facility would operate in a way similar to an overdraft facility and that it would be perpetual. The letter read: "Dear Mr Abrams (sic) Thank you for your enquiry concerning our new mortgage product. The features are summarised as follows: 1) The Bank will lend up to 90% of the registered valuation of the property. The minimum amount that can be obtained is $50,000.00. 2) Operates similar to an overdraft facility where you can repay and redraw amounts within the established loan limit. A monthly repayment of interest is required and access to your loan is through a cheque/deposit book. 3) Interest rate as at 31st January 1989 is 15.5% and is a managed floating rate. 4) Facility has no Fixed Term date and is perpetual. 5) A First Registered Mortgage over residential freehold property in a metropolitan area. 6) There are NO loan service, unused limit, commitment, holding discharge, or early repayment fees applicable to the account. 7) Costs will be Establishment Fee of $500.00. Valuation Fee, Mortgage Insurance (Where loan exceeds 75% of valuation) and legal fees for preparation and registration of mortgage documentation. Should you have any questions pertaining to our mortgage, please do not hesitate to contact me on 290 6666." - 6 - On more than one occasion, Mr Abram met the Account Executive, who requested Mr Abram to provide BNZ with a letter from his accountant verifying his income as he and his wife were self employed. He did so. Thereafter the Abrams jointly applied for a loan of $170,000 from BNZ to be by way of a "Smarter Mortgage Account". The application was signed on 27 February 1989 by Mr Abram and Mrs Abram and it included an agreement that the Abrams would be bound by BNZ's "usual terms and conditions" for operating bank accounts. The loan was to be used, in part, to discharge the mortgage with the NAB. It was to be secured by a mortgage. Their application was successful and on 29 March 1989 Ms V Dikkenberg, Assistant Manager, Loans Administration of BNZ wrote to the Abrams: "RE: ACCOUNT NO. 959971-00 Congratulations! I am pleased to advise that your application for a Smarter Mortgage from Bank of New Zealand with a limit of $170,000.00 has been approved. Your Smarter Mortgage will be secured by a First Registered Mortgage over your property at 10 Lexington Avenue, ST CLAIR. A copy of the Bank's terms and conditions for the operation of your Smarter Mortgage Account is enclosed for your reference. The current Smarter Mortgage interest rate is 17% per annum calculated on your daily balance and charged to your account each month. The rate varies from time to time and is published every Friday in the Australian Financial Review. An important feature of your Smarter Mortgage Account is repayment flexibility. You may choose the repayment schedule that best suits your personal cash flow. Of course, you may also draw down and repay funds within your approved limit without restriction so you can use your Smarter Mortgage to meet major expenses like provisional tax and school fees. All we ask is that you deposit sufficient funds each month to cover the amount of your monthly interest. Your monthly statement will detail the amount of interest charged as well as cheques drawn, deposits made and any transaction fees or government charges. The minimum you need to deposit by the 20th of each month is the amount of interest detailed on your statement. Deposits to your account and the first cheque drawn -7- each month are free with a transaction fee of $1.00 applying to each cheque after the first. You can deposit to your account by using your personalised deposit slips at any branch of any bank in Australia. There are no unused limit, loan service or early repayment fees applicable to your Smarter Mortgage Account. I am pleased to welcome you as a Smarter Mortgage customer of the Bank of New Zealand and I am confident that you will enjoy the many benefits of your Smarter Mortgage Account. If you have any questions about your new Smarter Mortgage, please do not hesitate to contact me." The enclosed terms and conditions ("the standard terms") constituted four pages of detailed typed conditions one of which was: "5B. Repayment and Termination (a) The whole of the outstanding debit balance on the Account shall become immediately due and payable to the Bank on demand. The Abrams received a letter from a firm of solicitors, Champion & Partners, dated 3 April 1989. It read: "Dear Mr & Mrs Abram, Re: ADVANCE FROM BANK OF NEW ZEALAND Security: 10 Lexington Avenue, St Clair We are the solicitors for the Bank of New Zealand. The Bank hag requested that we prepare mortgage documentation and check matters of Title in relation to the Bank's advance to you in the sum of $170,000 for which you should have received formal approval. The mortgage documentation has been prepared and we would ask that you make an appointment to see Michael Fitzpatrick of this office as soon as possible for the purpose of signing mortgage documentation and discussing the Bank's other requirements. A full explanation of the mortgage documentation and an outline of fees associated with the loan will be give (sic) to you at the time of your consultation with Mr Fitzpatrick. Please bring with you at the time of your consultation the following documents: - 1. Copy of Certificates of Title, if available. 2. Council and Water Rate Notices/receipts. 3. Copy survey report, 149 Certificate, etc. if available. ~ g- We also ask that you provide us with a Fire Insurance Policy noting "Bank of New Zealand" as mortgagee for not less than $180,000. Please telephone Mr Fitzpatrick in the meantime if you have any enquiries." Mr Fitzpatrick was a partner of that firm. Mortgage documents were signed at a meeting at Mr Fitzpatrick's office on 6 April 1989. Much of the contentious evidence in these proceedings concerned this meeting and it is a matter I return to consider in more detail shortly. However it was not in issue that Mr Fitzpatrick did not explain to the Abrams that the credit card facility would be secured by the mortgage. The terms upon which the mortgage was granted were contained in a Memorandum numbered V617544 ("the memorandum of mortgage"). There is an issue as to whether, when Mr and Mrs Abram signed an acknowledgment of receipt and explanation of the memorandum of mortgage, it was attached to the memorandum. At some stage the Abrams received a copy of the memorandum of mortgage. It contained a clause in the following terms: "The Mortgagor COVENANTS AND AGREES with the Bank and it is HEREBY DECLARED as follows: 1. THAT unless there is an agreement in writing between the Mortgagor and the Bank to the contrary (in which case the Mortgagor will pay the Bank at such time or times and in such manner as has been so agreed) the Mortgagor will pay to the Bank on demand in writing made upon the Mortgagor at any time or from time to time by or on behalf of the Bank the whole or such part as is specified in each such demand of: (a) all and every part of any moneys which are now or may from time to time hereafter be owing or remain unpaid to the Bank in any manner or on any account or by reason of any circumstances whatsoever by the Mortgagor whether alone or jointly with any other person and whether as principal or surety, ({b) all and every part of any moneys (if any) which the Bank (whether requested so to do or not) has already -9- advanced or paid or is liable to pay or may hereafter (whether requested to do so or not) advance or pay or become liable to pay to or for or on account of or on behalf of the Mortgagor whether alone or jointly with any other person," (ec) While there is an issue about when it was received, to which I return, the Abrams received a memorandum of account from Champion and Partners dated 3 April 1989. There are two documents in evidence in the form of an account, one dated the 3 April 1989 and the other dated 19 April 1989. There are minor differences between them. The memorandum of 3 April 1989 reads: "Mr & Mrs J. Abram, 10 Lexington Avenue, ST. CLATR. N.S.W. 2759. MEMORANDUM OF OUR COSTS AND DISBURSEMENTS RE: ADVANCE FROM BANK OF NEW ZEALAND SECURITY: 10 Lexington Avenue, St. Clair Solicitor's scale fees on mortgage of $170,000 - mortgagee costs only $ 796.00 Solicitor's scale fees on mortgage of $170,000 - mortgagor costs only $597.00 $1,393.00 SPECIALLY NOTED AT: $ 600.00 DISBURSEMENTS : - Stamp duty on mortgage $ 625.50 Registration fees - (a) Discharge of Mortgage (2) $ 84.00 (b) Mortgage $ 42.00 Miscellaneous $ 60.00 Section 149 Certificate $ 100.00 Settlement fee $ 25.00 Title Search $ 40.00 Final Search $ 17.00 TOTAL : $1,593.50 With Compliments, CHAMPION & PARTNERS" - 10 - The only difference between this account and that of 19 April 1989 is the way the disbursements are particularised. The account dated 19 April 1989 was under cover of a letter of the same date from Champion and Partners which read: "Dear Mr & Mrs Abram, RE: ADVANCE FROM BANK OF NEW ZEALAND SECURITY: 10 Lexington Avenue, St Clair We wish to confirm that we have completed the loan transaction from the Bank of New Zealand and have attended to the discharge of the mortgage with National Australia Bank. We are presently attending to the stamping and registration of the mortgage and title deeds and upon completion of the registration procedure you will be advised. We enclose herewith Statement of Account showing how the advance was disbursed. The balance of the advance is presently being held in your account with Bank of New Zealand and you should contact the branch with regards to getting access to funds in the future. We note that your insurance policy still shows the National Australia Bank as first mortgagee. We suggest that you take this letter to the G.I.0O. as proof of discharge of mortgage and have policy amended accordingly. Kindly forward original insurance policy to us so that same can be sent on to the Bank. Should you have any enquiries in relation to the above, please do not hesitate to contact this office. Yours faithfully, CHAMPION & PARTNERS" A further letter dated 5 May 1989 from Champion and Partners was received by the Abrams. It read: "Dear Mr & Mrs Abram, RE: ADVANCE FROM BANK OF NEW ZEALAND SECURITY: 10 Lexington Avenue, St Clair We refer to previous correspondence. Enclosed please find copy of duly registered Mortgage and Certificate of Title Folio Identifier 309/708572. We note that the only matter outstanding is receipt of original fire insurance policy from you covering the subject property for not less than $180,000 noting Bank of New Zealand as mortgagee. Please attend to this matter urgently. -11- We confirm that all title deeds are being held by the Bank of New Zealand and the matter has been finalised. We trust that the entire transaction has been handled to your satisfaction and we invite you to contact us again any time in the future should you require any assistance in legal matters." Part of the moneys advanced were used to discharge the mortgage with NAB. Approximately three months after the mortgage was executed, the Abrams had accessed the residue of the funds and had reached close to the agreed limit of $170,000. The level of their indebtedness remained in that vicinity till payments into the account ceased. Mr Abram had a business as a computer consultant and salesman though that latter aspect of his work had ceased by mid 1990. Mr Abram was unemployed from February 1992. In June 1992, Mr Abram informed BNZ in writing that he was not going to make further payments to the Smarter Mortgage Account or the credit card facility. As it related to the credit card facility the letter read: "June 9, 1992 Mr Bruno Fiore Collections Executive (NSW) Bank of New Zealand 333-339 George street Sydney NSW 2000 Dear Sir, Re Account No: 378317000 Received your kind letter dated 3/06/92, I will not be making any more cash payments into this account. I now know how all banks including the BANK of NEW ZEALAND create book-entry credit out of thin air at absolutely no cost to themselves, and I have come to the conclusion that I do not owe your bank anything. If you do not agree, please let me know and I will if the Courts agree, without prejudice supply you with my own Book Entry Credit Certificate. ~ 12 - I have stopped using this account. I will not be responsible for any further charges made to this account after today. I kindly request that you close the account. Sincerely Joseph Abram On 9 June 1992 Mr and Mrs Abram commenced proceedings in this Court which became No G369 of 1992 against BNZ and two employees of BNZ. Those proceedings sought a declaration that the Abram's did not owe BNZ $170,000, damages from BNZ of five million dollars and an injunction restraining BNZ from exercising powers conferred by the mortgage. The proceedings were the subject of a judgment of Einfeld J of 19 February 1993 summarily dismissing them against which the Abrams unsuccessfully appealed. The proceedings were founded on the theory of "credit creation" which had some currency at the time and has been considered in a number of judgments of this Court: see Napier v National Australia Bank Ltd, Spender J, 16 April 1992 unreported, Fisher v Westpac Banking Corporation, French J, 18 August 1992 unreported and Arnold v State Bank of South Australia, Full Court, 18 November 1992 unreported. In August 1992, Mr and Mrs Abram received a formal letter of demand from BNZ requiring payment of $172,664.36 which was the debit balance of their overdrawn "Smarter Mortgage Account" at 30 June 1992. It read: "22/07/92 The BANK OF NEW ZEALAND HEREBY MAKES DEMAND upon you for the payment forthwith of the sum of ONE HUNDRED AND SEVENTY TWO THOUSAND SIX HUNDRED AND SIXTY FOUR DOLLARS AND THIRTY SIX CENTS $172,664.36 being the amount of your overdrawn current account. The Bank also demands payment of interest on the amount demanded accruing hereafter at the rate charged by the Bank from time to time until the date of payment. This demand does not include any effects outstanding at the date hereof or any costs incurred by the Bank in collecting moneys due to it for which separate demand will (if necessary) be made upon you. All moneys hereby demanded are to be paid to the Branch of the Bank at the above address but the Bank will accept payment at any other Branch of the Bank in Australia provided such payment is accompanied by your signed request to remit the moneys to such first-mentioned Branch. In the event of failure by the Debtor to comply with this notice the Bank intends to exercise the rights powers and remedies conferred upon it by law." No payment was made in response to this demand. In September 1992, BNZ served notices in apparent conformity with s57 of the RP Act on both Mr and Mrs Abram. There were four notices in all. The notices in respect of the "Smarter Mortgage Account" demanded $175,611.64. They read: " NOTICE PURSUANT TO SECTION 57 (2) (b) OF THE REAL PROPERTY ACT _1900 TO: JOSEPH ABRAM AND JANETTE DAWN ABRAM of 10 Lexington Avenue ST. CLAIR NSW TAKE NOTICE that the Bank of New Zealand (ARBN 000 288) as Mortgagee under Registered Mortgage No. Y¥337025 of which you are the mortgagors hereby require you to make the undermentioned payments in respect of which you have made default: Equity Mortgage Account Number 9599710000 Amount due and owing arising from failure to comply with a demand dated 22 July 1992 $175,611.64 NOTE that unless the requirements of this Notice are complied with within one month after service of this Notice, the Bank of New Zealand as Mortgagee under Registered Mortgage No. Y337025 proposes to exercise its power of sale under the said mortgage, and such other powers as are available to it under the said mortgage. - 14 - NOTE FURTHER that Bank of New Zealand requires you to pay its costs and disbursements for preparing this Notice which total $150. David Paul Cowling Solicitor for and on behalf of the Bank of New Zealand DATED: 28 August 1992" No payment was made in response to this demand. The notices in respect of the credit card facility demanded payment of $10,450.95. They were in the same terms as the other notices but the description of the debt was as follows: "Cheque Account Number 3783170000 Following your default in payment of minimum monthly payment of $305.37 that fell due on 17 July 1992 the Balance of your account is now payable, such balance, as at close of business 21 August 1992, totalling $10,450.95" No payment was made in response to this demand. Indeed it is clear that by this stage the Abrams had decided that no payments would be made and any claims for payment would be resisted. They had by then commenced proceedings in the Federal Court. They responded to the notices by letter dated 2 September 1992 in the following terms: "Vanessa-Ann Jenkins National Manager Collections Bank of New Zealand 333-339 George Street Sydney NSW 2000 Dear Vanessa-Ann Jenkins I acknowledge receipt of your letter of demand dated 22/07/92 which was handed to me by you during our meeting in your offices on 22 July 1992. - 15 - I note that a copy of the same letter of demand dated 22/07/92 was delivered to Janette Dawn Abram at 7.30pm at the above address on 7 August 1992. I acknowledge receipt of Notice pursuant to Section 57(2) (b) of the Real property Act 1900 and relating to Account Number 3783170000 dated 28 August 1992 and signed by David Paul Cowling on behalf of the Bank of New Zealand, the notice was delivered at 3.30pm on 1 September 1992. I acknowledge receipt of Notice pursuant to Section 57(2) (b) of the Real property Act 1900 and relating to Account Number 9599710000 dated 28 August 1992 and signed by David Paul Cowling on behalf of the Bank of New Zealand, the notice was delivered at 3.30pm on 1 September 1992. I will be contesting all the notices and demands on several grounds. I warn you not to attempt to execute any of these matters ex parte. Yours faithfully Joseph Abram" I do not accept the suggestion made by Mr Abram in these proceedings that had a claim been made at this stage for outstanding interest it would have been paid or might have been paid. Whether because they were unable to pay or had an abiding belief in the argument about credit creation or both, the Abrams had, by this time, made a decision not to make any payments and to contest the matter in whatever way that they believed was open to them. Mr Abram wrote to BNZ informing them that it had made a mistake in respect of the credit card facility as it was unsecured and was solely in his name. BNZ informed him by letter that they were not in error and relied on the "all moneys clause" in the memorandum of mortgage. BNZ later informed Mr Abram that it would not rely on those notices concerning the credit card - 16 - facility. The present proceedings were commenced by application filed on 1 February 1993. The contentious evidence in detail - steps leading to the meeting of 6 April 1989 and the meeting itself In attendance at the meeting of 6 April 1989 were Mr Abram, Mrs Abram, one of their children and Mr Fitzpatrick. There was an issue whether and to what extent others were present during the meeting. It is convenient to commence by recounting the evidence of Mr Fitzpatrick as he conceded certain matters of fact upon which the Abrams case depends. He had no direct recollection of the meeting. What he said occurred was based on his belief that he would have conducted the meeting in the way he had conducted similar meetings on hundreds of previous occasions. Much of his evidence as to what occurred prior to, at and following the meeting depended upon past practice and systems and procedures for undertaking this work. Mr Fitzpatrick gave the appearance of someone trying to recount truthfully his recollection, or lack of it, of the relevant events. I accept him aS a witness of truth. Mr Fitzpatrick received written instructions from BNZ in the form of an instructions advice of 28 March 1989 and a letter dated 29 March 1989. The instructions identified the loan to which the mortgage would relate as an advance of $170,000. Mr Fitzpatrick then had in place a system for dealing with such matters which involved the use of standard procedures and - 17 - precedents. His account in his affidavit was that upon receiving these instructions a property search was undertaken and the letter of 3 April 1989 was sent to the Abrams. By then the mortgage documents had been prepared which involved recording information concerning the property and the names of the mortgagors on a printed standard form BNZ mortgage, and the creation of five documents. They were: (i) acknowledgments of explanation of mortgage documents and an offer of independent legal advice to be signed by each of the Abrams ("the general acknowledgment") ; (ii) a warranty to be signed by the Abrams concerning the mortgaged property and their solvency ("the warranty") ; (iii) an authority and direction to receive and pay moneys provided by BNZ to be signed by the Abrams ("the authority to pay"); (iv) an acceptance of the loan conditions and a further authority to pay to be signed by Mr Abrams ("the acceptance document") ; (v) a confirmation of explanation to be affixed to the memorandum of mortgage ("the confirmation of explanation"). - 18 - The procedure also involved obtaining two copies of the memorandum of mortgage and the preparation of a draft memorandum of account. Mr Fitzpatrick denied that as part of the system he had instituted, the mortgagors would have been sent prior to any meeting with them, a copy of the draft memorandum of account, the memorandum of mortgage or the BNZ's standard terms. He denied having kept copies of the last mentioned document in his offices. Mr Fitzpatrick said that prior to the meeting commencing he would have had the printed mortgage form in duplicate, the five precedent documents, the memorandum of mortgage in duplicate, and the draft memorandum of account. A matter the parties viewed as of some significance was whether the confirmation of explanation was stapled to the front of a copy of the memorandum of mortgage. The confirmation of explanation reads, in its completed form: "I CONFIRM THAT THE CONTENTS OF THIS MEMORANDUM HAVE BEEN EXPLAINED TO ME AND THAT I HAVE RECEIVED A COPY. DATED: 6.4.89" J Abram (signature) Joseph Abram (signature) Mr Fitzpatrick said that it would have been stapled to the front of the memorandum of mortgage. In his affidavit Mr Fitzpatrick then recounts what he is likely to have said to the Abrams. I will not repeat all of it save to identify material matters that were discussed. He would have commenced by explaining the nature of the loan as a super bankcard, being funds made available that could be drawn upon subject to a limit. He would have explained that the Abrams -~ 19 - would have to service the interest requirements and the interest rate was variable. He would have also said in these introductory remarks that "any monies you are owing in respect of this financial accommodation will be secured by a mortgage". He would then have gone on to deal with his role as a solicitor in the following way: "Do you have a solicitor? You can use an independent solicitor, you do not have to use me. I am here for the bank but my instructions from the bank are to assist you in any way possible. You can take the documents away if you want to and have them explained by your own solicitor or I can explain them to you now. I do the work for a flat fee." Mr Fitzpatrick denies saying, in this context, "there is no need to waste any money" or "you don't need another solicitor". He would then have asked if the Abrams were content for him to proceed and would have explained the relevant documents commencing with the mortgage which would have included the explanation that "It is a mortgage in respect of any monies loaned or advanced to you by the bank under this accommodation", The term "accommodation" would have been used earlier as a description of the "super bankcard". He would have explained five obligations arising under the memorandum of mortgage. The second to fifth were insurance of the property, the payment of rates, the property's maintenance and compliance with demands of the council and the like. The first concerned the payment of interest which would have been explained in the following way: "You understand that this is a loan and not a gift. The Bank wants the money back with interest and expects you to make those payments promptly and punctually, so your first obligation is to make prompt and punctual payment of interest. That means that the payments are due on the second of each month, that means the - 20 - second of each month not the third or the fourth but the second, do you understand that?" As to a breach of this obligation, Mr Fitzpatrick would have said: "... i£ you don't make your payments on time, the Bank can come to you and say "look if you're not fair dinkum about this we will have our money back now thank you very much". However, the Bank can't commence any legal proceedings against the property unless and until it has given you a notice in writing telling you what you have done wrong and giving you an opportunity, normally 28 days, in which to fix things up. If you fix things up with the Bank within that period that prevents the Bank from taking any further legal action against the property and you go back to square one. If however you ignore that notice or don't come to some arrangement to the satisfaction of the Bank within the time frame then that allows the Bank to institute legal proceedings against you to effect recovery of the property and the Bank would then proceed to exercise its power of sale. There are very strict laws as to how the Bank can go about that. It requires institution of proceedings which must be served on you. In texms of the Bank's exercise of its power of sale, they must generally obtain a good price, and they can only keep what is actually owed to them, any monies obtained in excess of that from the sale proceeds, come back to you. Do you understand all of that?" He would then have said they could repay the loan at any time and later that Mr and Mrs Abrams would be jointly liable to the bank. Mr Fitzpatrick said he would then have got the Abrams to gign the five precedent documents, having read each of them out and showed them to the Abrams. When dealing with the memorandum of mortgage he would have said, when giving Mr Abram a copy, "keep this as a way of curing insomnia". When each of the documents had been signed, Mr Fitzpatrick would have witnessed those documents requiring a witness, and dated those requiring a date save for the mortgage because it is customarily dated on the date of settlement. After the documents had been executed he would have given the Abrams the draft memorandum of account and said that they represented the standard charges ~ 21 - though they would be sent a final account in due course but it would not be likely to be any different. He would have briefly explained every item in the memorandum of account. Mr Fitzpatrick would have explained what was to happen next and the Abrams would have left with the draft memorandum of account and a copy of the memorandum of mortgage. Mr Fitzpatrick denied in his affidavit elements of the account of the meeting given by Mr Abram. When called, Mr Fitzpatrick was asked some supplementary questions by his counsel and was cross examined by counsel for BNZ and then Mr Abram. It emerged from cross-examination by counsel for BNZ that Mr Fitzpatrick had first started working for BNZ in 1987, first drafted the precedent documents in 1987 and that by mid 1988 they had been developed into a final form. He also said that the patter he developed and which formed the basis of is affidavit, had been given thousands of times. Mr Fitzpatrick was prepared to adopt the word "patter" put to him by Mr Hutley, counsel for BNZ. Mr Abram's cross-examination of Mr Pitzpatrick was not a particularly testing one in that no real attempt was made to ascertain whether the patter was so familiar to him that it was likely that the account he gave of it in his affidavit reflected the form of words used with the Abrams. However, questions were asked of Mr Fitzpatrick about his opening remarks concerning his relationship with the Abrams. He said: -~ 22 - "Mr Fitzpatrick, were all these mortgages that you were involved in in organising the signatures and so on for the Bank of New Zealand, like ours, were they all cases where there was no other solicitor involved?---No, from time to time there were other solicitors involved. Did you know that we did not have a solicitor before we attended your invitation?---Yes, well, it was suggested, I think, in the bank's letter of instruction to me that there was - that you didn't have a solicitor. That we did?---That you didn't. I mean that's why I wrote to you. Had they - had the bank told me that you had a solicitor I would have written in the first instance to your solicitor rather than to you directly. You say that you asked us if we had a solicitor, is that correct?---Yes. And we obviously would have said no, is that correct?---Well, that was what obviously would have been the result because we proceeded with it. Is it in your opinion, you tell me, is it okay for you to act for both parties in that situation?---In a line transaction? At that time, yes. Bear in mind this that it was part of my usual patter to say this that I'm here for the bank, not for you. The bank instructs me to be as cooperative as I can with you to see that you get what you want. With that in mind if you want to take these documents away please do so, but if you are content to sign them here well then you may do so. It is a matter for you. So it wasn't my job to twist your arm to go elsewhere. It was my job to (a) look after the bank's interest, but in so doing assist the bank's customer, you, to get on with what you wanted to do. Did you say something to the effect that in doing so would cause a delay?---No, that's not something that I would say. So you would invite the customer along to sign, telling him that he might go away and see a solicitor and then you would have to make another appointment or sign them as it were, is that right, if you chose to do so?---Well, it may have been that you considered that that would cause a delay but it is not something that I would say to someone, this is going to cause a delay if you don-t - you have got to use me otherwise it will cause a delay. I mean that's not something I've ever said. Well, I put it to you that that is what you said to us?---Well, I deny that." It is to be noted in this answer, unlike the statement in his affidavit, Mr Fitzpatrick says that it was part of his patter to say to the mortgagors that "I'm here for the Bank not for you". - 23 - During the cross-examination, Mr Fitzpatrick conceded he was not aware at the time of the interview that Mr Abram had the credit card facility with BNZ. Mrs Abram's recollection of the meeting was limited. She swore a brief affidavit in which she says she attended the premises of Champion and Partners with her husband and thirteen month old daughter, Jessica. She said they were kept waiting at the top of some stairs, were invited into Mr Fitzpatrick''s office, her husband had a brief conversation with him while she engaged Jessica to keep her quiet, she signed some papers as instructed by Mr Fitzpatrick and then left. In supplementary evidence given orally she said the meeting concluded within half an hour. My impression of Mrs Abram was that generally she was endeavouring to answer honestly questions put to her, though her attitude to the cross examiners was hostile and at times appeared belligerent. I gained the impression, however, that she was prepared to mould her answers to suit her case. In cross- examination she said that she did not read any of the documents she signed. She was content to leave to her husband the task of talking to Mr Fitzpatrick. It is plain that she was prepared to have her husband conduct the discussions with Mr Fitzpatrick on her behalf while she attended to the child and sign documents on the same basis. She did, however, recall making a comment about interest rates. She also recalled Mr Fitzpatrick saying something about whether the Abrams had a solicitor, whether they ~ 24 - wanted to take the documents to be explained by their own solicitor and that he did the work for a flat fee if they wanted to use him. Generally, however, her evidence in cross- examination was to the effect that nothing was explained to her because the conversation was between Mr Fitzpatrick and her husband. She denied knowing what a mortgage was though she agreed that during the proceedings she had become aware that "the holder of the mortgage has the right in certain circumstances, to sell the property mortgaged to pay out moneys". However, she did not agree that she had that understanding in 1989. Mrs Abram did not accept that the various documents she signed were read out by Mr Fitzpatrick though conceded at least the warranty may have been read out loud to her husband. She said her husband did not take any documents from the meeting but was only able to say so because Mr Abram helped her carry a stroller down the steps after the meeting concluded. Mr Abram's account of the meeting and events leading to it were first recorded in a document entitled "note of conversation" prepared as the result of a direction of the Registrar. That account was later put into an affidavit form. After receiving the letter of 3 April 1989 from Champion and Partners, Mr Abram made an appointment by phone for 10.00am on 6 April 1989. They arrived at that time but were kept waiting till 10.30am. Their child was becoming restless. When the meeting started they were ushered into Mr Fitzpatrick's office. The child was by then agitated and his wife was fully occupied keeping her quiet. Mr - 25 ~ Fitzpatrick sat down behind a desk with the mortgage in front of him. Mr Fitzpatrick apologised for being late, said he was in a hurry to catch up, there was some conversation about Mr Abram's job, the house and Mrs Abram having her hands full placating the child. The following is the account given by Mr Abram in an affidavit of the conversation concerning the mortgage which I set out in full as it is materially different from the reconstructed account of Mr Fitzpatrick: "13. Mr Fitzpatrick said to me: Mr Abram, have you read the terms and conditions attached to the letter we sent out to you? 14. I said to Mr Fitzpatrick: If you mean the one about the credit cards etc. Yes I have. 15. Mr Fitzpatrick said to me: Mr Abram, did you read the memorandum attached to the Jetter, the second page? 16. I said to Mr Fitzpatrick: Yes, I did. 17. Mr Fitzpatrick said to me: Mr Abram, do you have another solicitor acting for you? 18. I said to Mr Fitzpatrick: No. 19. Mr Fitzpatrick said to me: I thought that you had a solicitor acting for you when you signed the mortgage with the NAB, didn't you? 20. I said to Mr Fitzpatrick: No, we have never had a family solicitor as such, we did have a solicitor acting for us when we purchased the block of land from Landcom, because as I recall, there was some requirement of Landcom to do so, a Mr Hickie in Crows Nest, but he is not our family solicitor as such, he was 21. 22. 23. 24. 25. 26. 27. 28. 29. ~ 26 - recommended to us by our then Westpac bank manager at Five Dock, but we don't have a solicitor. Mr Fitzpatrick said to me: There is no need to waste any money on other Solicitors, you could go away and find another solicitor to represent you, but that would delay the signing of this mortgage and then if after all that, the bank was still willing to sign, you would both have to come back here again to sign and it would cost you more money in fees etc. I said to Mr Fitzpatrick: There is no need to do that, we trust you and the bank. Mr Fitzpatrick said to me: You don't need another solicitor, that would only waste your money, this is a very simple mortgage, it is on a standard form, there is only one property involved, and there are no hidden fees or anything, not like some of the other banks. I said to Mr Fitzpatrick: Look, we trust you and the bank. Mr Fitzpatrick said to me: Mr Abram, this is the best kind of mortgage you can have, it is for perpetuity, and the interest rate is very reasonable, in fact it is an excellent deal. I have looked at a lot of these mortgages and compared the various banks, and the Bank of New Zealand has a very good deal with this mortgage, there are none of the hidden fees like with the other banks charging you for this that and the other. I said to Mr Fitzpatrick: You are just saying that because this is the bank we are signing up with. Mr Fitzpatrick said to me: No, Mr Abram, I really mean it, I am very excited about this, I have compared all the other mortgages available, this is an excellent deal, it is for perpetuity, this is the last mortgage you will ever need to sign, this mortgage ig very simple and straight forward, you can transfer it to another property if you ever need to, it can go up and down as you like, there are no hidden traps or fees like with the other banks. Mrs Abram said to Mr Fitzpatrick: Are you sure the interest rates won't go up? Mr Fitzpatrick said to Mrs Abram: No, they won't, they are high now, and if anything they are likely to drop, this is an excellent deal as there are no extra fees or hidden fees like with some of the other banks, all you have to do is pay the interest shown on the previous statement by the 20th of each month, I am sure you will not have problems doing that. ~ 27 - 30. Mrs Abram said to Mr Fitzpatrick: So long as you are right, it sounds OK. 31. Mr Fitzpatrick said to me: Mr Abram, I have explained to you all the important details, all you have to do is pay the interest by the 20th of each month, I am sure Mr Abram, that you won't have any problems doing that. 32. I said to Mr Fitzpatrick: I hope you are right. 33. Mr Fitzpatrick gaid to me: Mr Abram, there is no need to worry, signing this document is just a formality to keep the bank happy, it will never be used. 34. I said to Mr Fitzpatrick: OK. 35. Mr Fitzpatrick said to me: So if you don't have any other questions, we can start signing. Mx Abram then recounted how a woman was invited into the room to witness the signing of documents. Documents were then signed by Mr and Mrs Abram and the woman who was witnessing them. No explanation was given of the documents and there was no discussion about them save for directions by Mr Fitzpatrick to sign each document. There was no time for the Abrams to read the documents and they left empty handed. Mr Abram said the memorandum of mortgage was not available that day and no reference was made to it at the meeting. No explanation was given of any document to either Mr or Mrs Abram. Mr Abram said he did not. understand the copies of the BNZ's terms and conditions sent to him from time to time nor the memorandum of mortgage. He said that was not then aware that the signing of - 28 - the documents would affect his credit card facility. He also said in his affidavit that he believes that Mr Fitzpatrick was acting as his and his wife's solicitor. This is a reference to his belief at the time he swore the affidavit, 31 May 1994. In supplementary oral evidence he said that with the letter of 19 April 1989 he received a copy of the memorandum of account of the same date. He had earlier given supplementary oral evidence that substantially the same account, dated 3 April 1989, accompanied the letter of 3 April 1989. He also said that with the letter of 5 May 1989 he was sent a copy of the registered mortgage and certificate of title. He said that with that letter he received a copy of the memorandum of mortgage but without anything stapled to the front. He said he was not able to produce the copy he was sent because it was in a bundle of documents he gave discovery of but it was not 'there when discovery had been completed. Mr Abram was cross examined for a day and a half by counsel for BNZ and counsel for Mr Fitzpatrick. Having regard to the evidence he gave in chief and that cross-examination I was left with a clear impression of Mr Abram in four respects. That impression was confirmed by his conduct of the proceedings more generally. The first is that he is an intelligent man who was quick to appreciate the consequences and implications of what was said by him either in evidence or submissions or said by others. -~ 29 - The second is that he is a person who does not overlook detail particularly when it concerns financial matters and that generally he is organised and approaches tasks in a methodical and ordered way. The third is that he is committed to doing all he can to avoid the consequences of his and his wife's failure in 1992 to continue to pay amounts due to BNZ that resulted, in all probability, from financial difficulties that he experienced in the first half of 1992. That commitment has, as its foundation, his desire to protect his young family and wife who has suffered from a significant illness in the recent past. The fourth flows from that commitment. Mr Abram has been prepared to exaggerate his evidence and his case more generally and ina number of respects has been prepared to give a false account both of his level of understanding on relevant maters and of material events. I will explain shortly the reasons for these last observations. The cross-examination of Mr Abram ranged over a number of issues. He generally adhered to the account of events leading to the meeting of 6 April 1989 and the meeting itself. However there were several matters in respect of which Mr Abram was demonstrably giving a false account. There were two matters where this is manifest,in part, from evidence that does not depend upon the recollection of the witnesses. In his opening, Mr Abram said the letter of 3 April 1989 from Champion and Partners had attached to it a memorandum of account. His evidence in chief, while slightly ambiguous, was - 30 - to the same effect. During the evidence of his wife, who gave evidence before him, the original of the letter of 3 April 1989 was called for by counsel and shown to Mrs Abram. It was, at the time, in Mr Abram's possession and it was returned to him. Counsel for BNZ then sought to tender the letter. It had to be passed to Mr Liney, counsel for Mr Fitzpatrick, for inspection. Before passing it to Mr Liney, Mr Abram stapled to it the original of the memorandum of account dated 3 April, 1989. The original memorandum of account is in evidence. There are only the holes left by one staple on the document. In cross-examination by Mr Liney, Mr Abram adhered to his evidence that the memorandum of account dated 3 April 1989 came stapled to the letter of the same date notwithstanding, as was being pointed out to him, that the letter itself makes no reference to it. Indeed he denied that the memorandum of account did not accompany the letter and denied that he had been given it at the meeting on 6 April 1989. When, at the conclusion of hig cross-examination, his attention was drawn to three horizontal creases on the letter which suggested that it had been folded to place in an envelope and the absence of creases on the memorandum of account, he firstly said he could not offer an explanation but then immediately said that the memorandum of account had been sent to him with some terms and conditions which were a large document. I am satisfied that the only document containing terms and conditions he was sent, at the relevant time, was by BNZ on 29 March 1989. I accept the evidence of Mr Fitzpatrick that he did not have copies of the terms and - 31 - conditions in his possession and that he did not send them. I also accept the evidence of his secretary to the same effect. Further, Mr Abram had earlier conceded in cross-examination that he received the terms and conditions from BNZ and not Mr Fitzpatrick. Mr Abram later said that his stapling the documents together was stupid. However, I find his evidence in this respect entirely unsatisfactory and I do not accept it. Mr Abram viewed it as important to demonstrate he was sent the memorandum of fees before the meeting on 6 April 1989 and that he was not given it at the meeting. He did so by giving a false account, on oath, of what he had been sent at the relevant time. The second matter concerns the memorandum of mortgage and whether the confirmation of explanation was affixed to the memorandum when it was signed. The Abrams signed the confirmation at the meeting on 6 April 1989. Mrs Abram appeared to deny signing the document when it was attached to the memorandum though his evidence in this respect is unclear. Mr Abram denied the confirmation of explanation was, when signed, attached to the memorandum of mortgage. Indeed he was at pains in the hearing to resist the tender of any document which was constituted by the memorandum of mortgage with the confixmation of explanation attached. However, the physical evidence suggests it was. The first page of the copy of the memorandum ultimately tendered by Mr Liney has indentations on it that correspond with the writing on the confirmation of explanation itself. The . confirmation - 32 - contains three hand written entries on the standard form document . The first is the date, the second is Mrs Abrams signature and the third is Mr Abrams signature. The signature of Mrs Abram is lightly written while the other two entries are more heavily written. On the first page of the memorandum over the words "liable to pay or may" and "liable to pay or for" in the second and third line of clause 1(a) respectively, there appears fairly clearly, indentations in the form of symbols recording the date as it is recorded on the confirmation. Between the words "the" and "Bank" on the sixth line in clause 1{c) there appears less clearly, though it is nonetheless discernible, an indentation in the form of the letter "A" formed in the same way as that appearing in Mr Abrams signature. The spatial relationship between the indentations forming the "A" and the date is the same as the date and signature on the confirmation. While these markings and their significance were not referred to in the hearing, they merely confirm what is, in any event, apparent from other evidence. Mr Fitzpatrick's legal secretary in April 1989, Ms Leis, gave evidence. She was the only witness who had no direct connection with the parties when she gave evidence. She was not then employed by Champion & Partners. She gave the appearance of trying to answer questions truthfully and I accept her as a witness of truth. In her evidence, she described procedures she followed, after meetings with mortgagors had been conducted by Mr Fitzpatrick, of removing the signed confirmation from the memorandum of mortgage and ~ 33 - copying it. There was an issue as to precisely what she did in each case but the material evidence, which I accept, was that a photocopy of the confirmation was made and placed in the files before the original was sent to BNZ. The photocopied document ef the confirmation signed by the Abrams from the file of Champion and Partners, clearly has two marks on it at the top that are either holes where a staple had been, which is more probable, or are an imperfect image of a staple itself. In either event, the confirmation of explanation was stapled prior to it being copied and it was copied shortly after the meeting on the 6 April 1989. It is thus likely that it was stapled to something else before and during that meeting. Not only does this physical evidence suggest that the confirmation was attached to the memorandum of mortgage when it was signed, but it is inherently improbable that two literate adults, and in particular Mr Abram, would have signed a document, in the context of securing a loan from a bank and going through steps that plainly were of a legal character, that said in large and conspicuous type "I CONFIRM THAT THE CONTENTS OF THIS MEMORANDUM HAVE BEEN EXPLAINED TO ME" when it was not attached to a document that would fit the description of "THIS MEMORANDUM" . Other matters that lead me to conclude that Mr Abram's account of what occurred at the meeting was false,included his evidence about the presence of a woman at the meeting who witnessed his and his wife's signatures, his account of how - 34 - answers were given to a series of questions appearing on the warranty and the discord between his expectations prior to the meeting and his failure to complain. Mr Abram said a woman was present at the meeting and witnessed the documents. He was cross-examined about this and said it was crystal clear to him that a woman witnessed the documents. He later denied that it was Mr Fitzpatrick who witnessed them. A witness's signature appears on the mortgage and the two general acknowledgments, one signed by Mrs Abram and the other by Mr Abram. Mr Fitzpatrick said on oath the signatures were his as did Ms Leis. It is substantially the same signature as appears on Mr Fitzpatrick's affidavit of 30 August 1994 filed in these proceedings. The evidence of Mr Abram concerning the presence of a woman who witnessed his and his wife's signature is false. The warranty is signed by Mr and Mrs Abram and next to each signature is the date "6-4-89". It was signed on that day. It contains a series of questions principally relating to the property, with a provision for recording an answer "yes" or "no". Each of the "no" responses are circled in black biro. Mr Abram denied in cross-examination that Mr Fitzpatrick asked him those questions at the meeting on 6 April 1989 and he insisted that they may have been asked of him over the phone when he made the appointment upon receipt of the letter of 3 April 1989. He later said that they may have been asked by the Accounts Executive, Mr Teitjen, who had interviewed him earlier. In view of Mr Fitzpatrick's explanation of the procedure he followed corroborated by the evidence of his secretary, I find Mr Abram's - 35 - account as to how he provided the answers simply fanciful. It is a false account. The last matter of detail I refer to was the evidence of Mr Abram concerning his failure to complain. The letter of 3 April 1989 from Champion and Partners offered an explanation of documents. Mr Abram volunteered in cross-examination that he was excited about getting an explanation and was looking forward to it. While this may have been said somewhat disingenuously I accept that he was looking forward to and expecting an explanation. On his account of the meeting none was forthcoming. He did not then complain or later complain. While I do not doubt there are people who would be sufficiently intimidated by a solicitor that they would not complain in such circumstances, Mr Abram did not, when giving evidence or more generally, appear to be such a person. To the contrary. His explanation for not complaining was that when he left the meeting he was not sure whether they had the loan and, in any event, they had signed all the papers. This explanation is one I do not find credible and his absence of complaint is consistent with the meeting having been conducted other than in the way he says it was. I reject Mr Abram's account of what occurred at the meeting. However, it does not necessarily follow that I should accept Mr Fitzpatrick's account, based as it was on an assumption that it was conducted as he ordinarily conducted such a meeting, and not on an independent recollection of it. Nonetheless ail the contemporaneous records are consistent with the meeting having - 36 - occurred as Mr Fitzpatrick said it did. His account is consistent with the evidence of Ms Leis as to what procedure should have been followed and was likely to have been followed on 6 April 1989. Mrs Abrams evidence does not conflict with the account given by Mr Fitzpatrick in any material way. Generally, throughout the meeting she was paying limited attention to what was being said by both Mr Fitzpatrick and her husband. However, it must be accepted that she was invited to sign documents that did not fairly represent her involvement in the explanations that were given at the meeting. I find that Mr Fitzpatrick conducted the meeting in the way he described in his evidence. In particular, I find that the memorandum of mortgage was explained in the way described by Mr Fitzpatrick and the confirmation of explanation was attached to the memorandum when signed. I find that Mr Abram was given a copy of the memorandum of account and the memorandum of mortgage at the conclusion of the meeting. Evidence Concerning the Role of Mr Fitzpatrick There is evidence that I have already referred to concerning the relationship between Mr Fitzpatrick and the Abrams. It is to be found in the letters of 3 April 1989, the memorandum of fees of that date and the 19 April 1989, the standard explanation Mr Fitzpatrick gave at such meetings recorded in his affidavit and the variant of it he gave orally in evidence. In addition there was a standard document that was signed by Mr Abram and - 37 - another by his wife at the meeting of 6 April 1989 which I earlier described as the general acknowledgment. It read: "THE MANAGER, BANK OF NEW ZEALAND, 333-339 GEORGE STREET, SYDNEY. AND CHAMPION & PARTNERS, SOLICITORS, 9 GEORGE STREET, PARRAMATTA . RE: BANK OF NEW ZEALAND AND ABRAM SECURITY: 10 LEXINGTON AVENUE, ST. CLAIR I JOSEPH ABRAM OF 10 LEXINGTON AVENUE, ST. CLAIR HEREBY ACKNOWLEDGE AND CONFIRM THAT I UNDERSTAND THE PURPORT AND EFFECT OF MEMORANDUM OF MORTGAGE BETWEEN MYSELF AND THE BANK OF NEW ZEALAND AND GUARANTEE /MEMORANDUM AND CONFIRM THAT NOTWITHSTANDING THAT INDEPENDENT ADVICE HAS BEEN OFFERED TO ME I EXPRESSLY REFUSE TO OBTAIN INDEPENDENT ADVICE. I FURTHER CONFIRM THAT I UNDERSTAND THAT I SHALL BE JOINTLY AND SEVERALLY LIABLE UNDER THE TERMS OF THE MORTGAGE. DATED: 6-4-89 (handwritten) JOSEPH ABRAM WITNESS" Mr Abram was cross-examined about his understanding of Mr Fitzpatrick's role on 6 April 1989. He said: "You regarded Mr Fitzpatrick as the bank's solicitor, did you not?---On that day I thought he was the bank's solicitor. Not as your own?---No. That is the way you saw it at any rate?---Yes. All right, thank you?---On that day. On that day, yes, that was your belief at that - that is the way you saw things at that time?---Yes, and for quite a while after that. And for quite a while after that?---Yes." - 38 - While the letter of 3 April 1989 inviting the Abrams to meet with Mr Fitzpatrick, together with the account given to the Abrams at the meeting of 6 April 1989 might have led to a finding that the Abrams had been led to believe at the time that Mr Fitzpatrick was their solicitor. However plainly, as a matter of fact, this was not so. It is unnecessary, therefore, to consider those documents together with what might have been said at the meeting to determine whether the relationship of solicitor and client was established. It was not. The Abrams did not then intend that such a relationship be established nor did Mr Fitzpatrick. However, counsel for Mr Fitzpatrick accepted that in the circumstances Mr Fitzpatrick was under a duty to explain the documents to the Abrams. I return to this issue later. The Abram's Application I turn to consider in more detail the application of the Abrams having regard to the findings of fact I have made. The pleadings took the form of an amended statement of claim filed on the 22 October 1993 and defences filed by BNZ on 3 December 1993 and Mr Fitzpatrick on 16 November 1993. BNZ filed a cross- claim on 23 December 1993 in response to which the Abrams filed a document entitled Defence and Cross-Claim on 23 February 1994. While ordinarily the causes of action maintained by the Abrams would be distilled from the statement of claim, the document they filed on the 23 February 1994 was not simply a defence to the cross-claim but also expanded upon the original statement of claim. - 39 - In written submissions filed in December 1994, after the evidence had concluded, the Abrams referred to further bases upon which the proceedings were brought, namely ss52, 53 and 55A of the TP Act. The Abrams are litigants in person and it appears that Mr Abram has formulated and advocated the case on their behalf though at least at one point, and probably others, he received assistance from people who were legally qualified. The Abrams' claims traverse a number of statutory provisions and counts based in the general law. In a case involving unrepresented litigants the court should endeavour to ascertain the true legal character of the claims that are made. As the High Court said in Neil v Nott and Anor (1994) 121 ALR 148 at 150: "A frequent consequence of self-representation is that the court must assume the burden of endeavouring to ascertain the rights of parties which are obfuscated by their own advocacy." However, the role of a judge in assisting a litigant in person is limited as illustrated by the recent judgment of the New South Wales Court of Appeal in The Council of the Municipality of Burwood v Harvey 3 April 1995 unreported. In the present case, causes of action, both statutory and at common law, were identified by the Abrams in their statement of claim and cross-claim as was relief based on equitable principles. It was on the basis of those pleadings that the evidence was called and generally the case conducted. It is plainly necessary to balance the interests of litigants who - 40 - represent themselves with the need to afford procedural fairness to other parties. As will be apparent shortly, the way I have approached the matter is to address the question of loss or damage alleged to have arisen from the conduct of the respondents without considering all aspects of the causes of action that precede consideration of that issue. It is a course that would not ordinarily be adopted but it enables me, in these proceedings, to address all matters of possible substance raised by the Abrams without necessarily addressing all aspects of the many and varied allegations made by them. Some were made late in the day and in circumstances where the respondents were given no effective opportunity to answer them in an evidentiary sense and otherwise. The claims arising from the pleadings may be summarised as follows, though I presently repeat the way they are put by the Abrams. Claims against BNZ In the amended statement of claims filed 22 October 1993 the following is raised against BNZ: e BNZ owed to the Abrams a fiduciary duty,a duty of care and a contractual obligation of fairness, full disclosure and to act conscionably towards them. These duties were breached specifically by not informing the Abrams that the credit card facility would become secured by the mortgage and generally by the manner in which they were induced to sign the mortgage and - Al - the failure of their agent, Mr Fitzpatrick, to explain the terms of the memorandum of mortgage. e The preceding breaches also constituted unconscionable conduct within the meaning of s51AB of the TP Act for which relief was sought under s87. In the Abrams cross-claim filed on 23 February 1994 additional claims were made against BNZ: e The manner in which BNZ induced Mr Abram to enter the credit card facility constituted unconscionable conduct within the meaning of sS1AB of the TP Act for which relief was sought under s87. e The standard terms applying to the credit card facility, and in particular clauses 4(c), 5(a) and 6(b), were unjust within the meaning of s7 of the Review Act and relief was sought under that section. e The terms and conditions applying to the Smarter Mortgage Account, and in particular clause 5(a), and the memorandum of mortgage were unjust within the meaning of s7 of the Review Act and relief was sought under that section. e The demand for payment dated 22 July 1992 constituted undue harassment in contravention of s60 of TP Act. The service of the notices in conformity with s57 of the RP Act similarly - 42 - constituted undue harassment and they were issued maliciously and negligently. These claims, are, in my opinion, untenable and vexatious and I propose to say nothing more about them. ) The term of the memorandum of mortgage that a certificate by an officer of the mortgagee is prima facie evidence of the amount secured is unjust within the meaning of s7 of the Review Act and relief was sought under that section. Claims against Mr Fitzpatrick The Abrams contend Mr Fitzpatrick had breached his fiduciary duty to them, had breached a duty of care to them and had breached contractual obligations. They contend Mr Fitzpatrick failed to adequately explain the mortgage executed by them which caused them loss and damage for which they claim damages. They also rely on the same statutory counts under the TP Act raised against BNZ. Given the concession by Mr Abram in evidence that he did not consider at the time of the meeting of 6 April 1989 that Mr Fitzpatrick was acting as their solicitor, any claim against Mr Fitzpatrick based on contract must fail as there was no intention on the part of the either the Abrams or Mr Fitzpatrick that the latter be retained by the former as their solicitor. The Operation of the Review Act I first consider whether BNZ''s standard terms current at March 1989 and the memorandum of mortgage or provisions of them, are unjust as that expression appears in s7 of the Review Act. - 43 - Clause 6 (a) in the standard terms and conditions provides that a certificate by an officer of BNZ stating the balance of an account will be conclusive evidence of the liability to the bank and clause i(d) of the memorandum of mortgage is to similar effect. The Abrams submitted that these provisions are unjust and should be declared void. Clauses to this effect are an accepted feature of mortgages: see Dobbs v The National Bank of Australasia Ltd (1935) 53 CLR 643. While situations may arise where a bank may be denied the right to rely on them: see e.g. Cook and Ors v Bank of New South Wales (1982) ASC 55-223, there is no aspect of their use or potential use in the circumstances of this case that warrants relief being granted under the Review Act. The only provisions of either the standard terms or the memorandum that, in my opinion, might attract the operation of s7 are Clause 5{a) of the standard terms permitting the BNZ to require payment of all moneys owing on demand together with clauses 1(a) the memorandum of mortgage to the same effect and clause 1(a)-(h) together with 1(D) of the memorandum of mortgage securing loans other than the advance of $170,000 and, in particular, the credit card facility. The character of the Smarter Mortgage Account was relevantly conveyed to the Abrams by the letters of 9 February 1989 and 29 March 1989. Mr Abram gave no evidence of substance as to what he was told at the meetings he had with Mr Tietjen, nor was Mr Tietjen called. The letter of 9 February 1989 from Mr Tietjen - 44 - portrays the character of the facility, or "product" as it was styled in the letter, in paragraph 2 as operating in a way similar to an overdraft facility where amounts can be repaid or redrawn within the loan limit. The letter notes that a monthly repayment of interest is required. The letter goes on in paragraph 4 to say that the "(f)acility has no fixed term date and is perpetual". The clear impression, in my opinion, that the letter leaves is of a loan secured by a mortgage that is operated within the agreed limit and the only requirement imposed on the borrower is to pay the interest. There is no hint in the letter that the entire amount owed at any one time might be required to be repaid in full on demand. Its tenor is to the opposite effect. The letter of 29 March 199 repeats some of what is said in the earlier letter and, in particular, emphasises in the third paragraph that the payments that may be made into the account are entirely a matter for the borrower having regard to his or her financial circumstances though subject to one caveat. It is expressed this way: "All we ask is that you deposit sufficient funds in each month to cover the amounts of your monthly interest". The fourth paragraph explains how these minimum payments are to be made. Again the letter does not hint that the entire amount owed must be paid on demand. It must be accepted that the letter enclosed the BNZ's standard terms. They are said to be enclosed "for your reference" and the letter contains no invitation to read them. It contains no intimation that notwithstanding what is said in the letter or implied by its - 45 - terms, the enclosed standard terms might be inconsistent with what was clearly conveyed by the letter and, to the extent they were, the standard terms would prevail. The way the relevant part of the letter is framed, it is really an invitation to keep them and refer to them if and when necessary. The memorandum of mortgage contained a clause in essentially the same terms as clause 5(a) of BNZ's standard terms. The relationship between the two documents and their proper construction was not the subject of submissions from either Mr Abram or BNZ. Clause 5(a) constituted part of an agreement in writing which, by the prefatory words of clause 1 of the memorandum of mortgage, may operate to the exclusion of paragraph (a) if it is contrary to the provisions of clause 1, but nonetheless would do so as part of the memorandum of mortgage by incorporation. Either as a result of clause 1 itself or that clause read with clause 5(a), BNZ could, by giving notice, demand payment of all moneys due to it. The explanation given by Mr Fitzpatrick at the meeting on 6 April 1989 tended to emphasise the need to make monthly payments of interest which would have reinforced the impression given by the letters of 9 February and 29 March 1989. Whether a contract or provision in a contract is unjust in the way contemplated by s7 of the Review Act requires reference to s9 of that Act. Section 9 directs attention to a range of matters that should be considered in determining whether a provision is unjust. Given the comparatively detailed account ~ 46 - of the facts appearing earlier in this judgment, it is unnecessary to refer to each of the matters in the paragraphs of s9(2) by reference to those facts. It is sufficient to say that to varying degrees most paragraphs, when addressed by reference to those facts, would tend to support the view that the provisions I am presently considering are unjust. However, for reasons which become apparent shortly, it is unnecessary to express a concluded view on this matter. If the provisions are unjust the question that immediately arises is what, if any, relief should be granted. Section 7 provides that relief is to be granted if the Court thinks it just to do so and for the purpose of avoiding as far as practicable an unjust consequence or result. Subsection 9(5) directs attention to the conduct of the parties in relation to the performance of the contract since it was made. The relevance to these proceedings of clause 5(a) of the standard terms and, if applicable, clause 1(a) of the memorandum of mortgage is, in part, that it provided the basis for the demand made by BNZ in August 1992 for the payment of the entire amount due under the "Smarter Mortgage Account" facility. As I discuss shortly it is that demand and the failure to satisfy it that underpins two of the s57 notices served in September 1992. For whatever reason, BNZ decided not to issue s57 notices in relation to the failure of the Abrams to make the interest payments. ~ 47 - It is clear from the evidence that from 5 May 1992 no deposits were made into the Smarter Mortgage Account and in accounts dated 31 May 1992, 30 June 1992 and 31 July 1992 interest was demanded in the sums of $1,738.94 to be paid by 20 June 1992, $1,679.30 by 20 July 1992 and $1,712.68 by 20 August 1992 respectively. In his evidence Mr Abram said that in June 1992 he refused to pay BNZ any more money. He expressed the view in evidence that BNZ was then indebted to him and his wife ina sum exceeding $40,000. I understand this belief to be based on the application of the theory of credit creation. It is clear from the letter of 29 March 1989 from BNZ approving the Abrams application for a loan as a Smarter Mortgage Account, it was a term of the loan that the Abrams were obliged to pay the interest specified in their monthly statements by the twentieth of each month. The need for monthly payments was explained to them by Mr Fitzpatrick and emphasised even if he was wrong in identifying the date for payment each month. The need to make monthly payments was reflected in the monthly statements they were sent. Those statements constituted a demand for the payment of interest which, under the memorandum of mortgage, the Abrams were obliged to pay by the specified day. In my opinion the conduct of the Abrams in failing to pay interest and commencing legal proceedings against BNZ to avoid any liability under the mortgage at all, would disentitle them to relief under s7 of the Review Act in relation to the standard terms and the memorandum of mortgage in so far as one or both - 48 - permits BNZ to demand payment in full of the loan facility established in 1989 and secured by the mortgage. The Abrams were aware of their obligations to pay interest in relation to the "Smarter Mortgage Account" and did not do so. They then commenced litigation to have the mortgage set aside which was unsuccessful. It would not be a just result to then deny BNZ the right to rely on a provision that, in other circumstances, it might be precluded, either absolutely or on terms, from acting on. Accordingly, I make no order under the Review Act in relation to clause 5(a) of the standard terms or clause 1(a) of the memorandum of mortgage. However, different considerations arise in relation to the security for the credit card facility that may have been created by the mortgage. I will later briefly deal with a submission made by counsel for Mr Fitzpatrick that the mortgage may not have been security for the credit card facility. Nothing was said by BNZ in its correspondence to the Abrams or by Mr Fitzpatrick that moneys owing under the credit card facility might be secured by the mortgage upon its execution. Indeed all that was said was consistent with the mortgage being security for only one loan, namely the facility for $170,000 used, in part, to discharge the mortgage with NAB. The refusal of Mr Abram to pay interest was made in the belief that the mortgage secured the $170,000 facility and nothing more. The refusal of Mr Abram in June 1992 to make any further payments in relation to the credit card facility was made without any appreciation that it was secured by the mortgage. In my opinion a basis exists for finding that - 49 - any provision of the mortgage that secured the credit card facility, is unjust and for taking steps under the Review Act to vary the terms of the mortgage to reflect that finding. However, for reasons I discuss shortly, I give judgment for the BNZ in its cross-claim seeking to recover the money owing under the credit card facility. Accordingly no purpose would be served by granting relief under s7 concerning the mortgage in so far as it related to the credit card facility and I decline to do so. The Abram's Claims - Generally It was conceded by Mr Fitzpatrick that he owed the Abrams a duty to explain the mortgage documents though it is clear from the entire case of Mr Fitzpatrick that the duty conceded was not a contractual duty. He was explaining the documents as agent for BNZ: see Alderton and Anor v The Prudential Assurance Company Ltd (1993) 41 FCR 435 at 444-447. In its written submissions, BNZ adopted the submissions of the second respondent in their entirety and I take that to be an acceptance of the concession that Mr Fitzpatrick was under a duty to explain the mortgage documents to the Abrams. In my opinion Mr Fitzpatrick breached that duty by failing to explain to the Abrams material aspects of the memorandum of mortgage as it might be affected by the standard terms used by his client and principal, BNZ: see Fox v Everingham and Anor (1983) 50 ALR 337 and the more recent consideration of relevant authorities in MacIndoe v Parbery, New South Wales Court of - 50 - Appeal, 17 August 1994, unreported. I accept that Mr Fitzpatrick's obligation to explain did not extend to explaining each and every aspect of the mortgage documents: see Walker v Boyle [1982] 1 WLR 495 at 507. However he assumed the role of explaining the documents and his fees, paid for by the Abrams, were structured on the basis that an element of them was the fee to be charged for acting for a mortgagor. He had been made aware that the Abrams did not have a solicitor acting for them. [In those circumstances, in my opinion, his duty to explain was no different to that of a solicitor retained by a mortgagor. Thus Mr Fitzpatrick's minimum obligation was to explain the legal effect of the various clauses in the memorandum of mortgage as they might be affected by the standard terms, at least clauses that were material: see MacIndoe, supra, per Kirby P at 3. I view as material the provisions that enabled BNZ to demand, by giving notice at any time, payment of all moneys owing even in the absence of default in the payment of interest and the provisions that secured advances other than the $170,000. It is true that Mr Fitzpatrick was unaware that Mr Abram had an unsecured credit facility with BNZ when the mortgage was executed but that does not provide a basis for failing to explain the effect of the provision which secured it. Indeed, the fact that Mr Fitzpatrick did not know whether other facilities existed rendered it all the more important that an explanation be offered as significant sums may have been secured by the mortgage without the Abrams knowing that that was so. - 51 - There is correspondence, predating the mortgage, between BNZ and Mr Abram stating that the credit card facility was unsecured. It may follow, as counsel for Mr Fitzpatrick observed, that this constituted an agreement in writing that rendered ineffective those parts of the memorandum of mortgage that might have otherwise resulted in the credit card facility being a loan secured by the mortgage. However that does not, in my opinion, have any bearing on Mr Fitzpatrick's obligation to explain in the sense that it diminished it. The clause should have been explained. It is unnecessary to determine whether the circumstances that resulted in the breach of duty I have just discussed or more generally the circumstances leading to the execution of the mortgage, constituted a contravention of the TP Act in the ways alleged by the Abrams at various points in the proceedings, as I have ultimately concluded that any conduct of either BNZ or Mr Fitzpatrick that might be actionable at common law or under the TP Act did not cause the Abrams any loss or damage. However, I should indicate that while the Abrams did not have explained to them material terms of the memorandum of mortgage as they might be affected by the standard terms, and while the practice of having a solicitor acting for a bank explain mortgage documents to the mortgagors is, in my opinion, an undesirable one, the conduct of BNZ in this case falls short of what is proscribed by s51AB. The Abrams did receive an | - 52 - explanation of the loan arrangements albeit deficient in two material respects, and were told they could obtain independent advice. In substance, the conduct contravening S51AB relied on by the Abrams is conduct that would justify setting aside or refusing to enforce the mortgage in its entirety. They seek to impugn the entire transaction. However, it is a transaction from which the Abrams benefited, and immediately benefited, by the satisfaction of their debt to NAB. It is not a case of a mortgage entered into for the benefit of a third party: see Alderton supra and Crisp v Australia and New Zealand Banking Group (1994) ATPR 41 -294. The conduct of BNZ and/or Mr Fitzpatrick in the entire transaction does not constitute unconscionable conduct. The various statutory claims made under the TP Act are founded on alleged contraventions of ss51AB, 52, 53 and 55A. Those sections simply proscribe certain conduct. The statutory remedies the Abrams seek are orders under s87 declaring the whole or part of the memorandum of mortgage void or an order refusing to enforce the mortgage and, as they seek damages, it appears those damages are sought, inter alia, under s82. However, both 87 and 82 operate only in circumstances where it has been established that a person has suffered or is likely to suffer loss or damage by conduct which is proscribed: see $387(1) and (1A) and 82 (1). Each of these provisions contain the expression "loss or damage by conduct". The meaning of the word - 53 - "by" in that expression in s82 has recently been considered by the High Court in Wardley Australia Ltd and Anor v The State of Western Australia (1992) 175 CLR 514. The majority comprising Mason CJ and Dawson, Gaudron and McHugh JJ, made clear at 525 that the word "by" expresses the notion of causation and s82(1) "should be understood as taking up the common law practical or common-sense conception of causation recently discussed by this Court in March v E & M.H. Stramare Pty Ltd and Anor (1991) 171 CLR 506, except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act": see also Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 109 ALR 638 in which Lockhart J said: "The use of the preposition "by" in s82(1) is important; it indicates the requirement that be a sufficient cause or link between the respondent's conduct and the recoverable loss or damage: Brown v Jam Factory Pty Ltd (1981) 35 ALR 79 at 88; Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (no 2) (1987) 16 FCR 410 at 418; 75 ALR 271. "by" is used in s52(1) in the sense of "by reason of" or "as a result of": Munchies Management Pty Ltd v Belperio (1989) 84 ALR 700; (1989) ATPR 40- 296 at 50,037. Loss or damage must directly result from or be caused by the respondent's conduct. The respondent's conduct must be the real or direct or effective cause of the applicant's loss; it must have been "brought about by virtue of" the conduct which is in contravention of s52: Elders Trustee & Executor Co Ltd v EG Reeves Pty Ltd (1988) 20 FCR 164; 84 ALR 734;" Further, as Deane J said in March, supra at 524: "None the less, the question of whether conduct is a 'cause' of injury remains to be determined by a value judgment involving ordinary notions of language and common sense." Consonant with principles of statutory construction, the same expression appearing in s87 should bear the same meaning: see Zoneff v Elcom Credit Union Ltd (1990) 94 ALR 445 at 463 affirmed on appeal see (1990) ATPR 41 - 054. - 54 - The question that immediately arises in these proceedings is whether, assuming a breach of all or any of ss51AB, 52, 53 and 55A by one or both of the respondents in the events leading up to and including the registration of the mortgage or, prior to that, the events surrounded by the creation of the credit card facility or its operation, can it be said that the Abrams suffered loss or damage by the proscribed conduct. This might be illustrated by reference to the failure of Mr Fitzpatrick, acting on behalf of the BNZ, to explain that under the standard terms and conditions together with the memorandum of mortgage, BNZ might demand payment in full of all money due to it. What loss or damage did the Abrams suffer as a result of that failure assuming it is conduct contravening any of the sections to which I earlier referred? The answer is, in my opinion, plainly none. It is more probable than not that the Abrams would have provided the mortgage in 1989 even if the memorandum of mortgage had been explained to them more comprehensively. Their concern at the time was the interest rates and charges being levied by NAB. Moreover their case, as pleaded, was that they effectively received no explanation at all. It is to be remembered that in June 1992 the Abrams refused to make any more payments into either the Smarter Mortgage Account and the credit card facility. It was also in June 1992 that they commenced proceedings G 369 of 1992. This conduct was consistent with the Abrams then intending to make no more payments at all to BNZ and to seek to avoid any liability arising - 55 - under the mortgage by seeking to have it set aside by order of the Court. The imperfect knowledge they had about the extent of their liability under the mortgage had, in my opinion, no material bearing on the course they adopted. Their intention was to contest the existence of a liability under the mortgage to make any payments at all. Indeed their contention at the time, reflected in the application to the Court, was that BNZ owed them money and was liable to them for damages. While in submissions Mr Abram said that they had reached a point in mid 1992 where they were selling assets to make the repayments and indeed using a credit card to fund some of them, the course they adopted at the time, perhaps out of desperation, was one of intransigent opposition to making any more payments both in relation to the Smarter Mortgage Acount and the credit card facility and to confront BNZ by commencing litigation against them. It was only then that BNZ relied on the impugned provisions of the mortgage. It was the failure of the Abrams to make payments of interest that precipitated the events that followed, including reliance by BNZ upon those provisions that were not explained to them. No loss or damage was caused by any proscribed conduct of BNZ or Mx Fitzpatrick. This conclusion applies equally to the common law claims as no damage has been suffered by the Abrams as a consequence of a breach of a duty arising at common law. See March v E. & M. H. Stramare Pty Ltd and Anor (1991) 171 CLR 506. - 56 - Slightly different considerations may arise in relation to the alleged breaches of fiduciary duty by BNZ and Mr Fitzpatrick. No detailed submissions were made by Mr Abram on this issue and it is not entirely clear what remedy is sought for these alleged breaches. Circumstances will arise where a fiduciary relationship is created between a bank or its agent and a customer. Commonwealth Bank of Australia v Smith (1991) 43 FCR 390 illustrates a situation where a bank became a fiduciary by proffering investment advice and creating in the customer an expectation that it would provide advice having regard to the customer's interests as well as its own. A distinction may be drawn between investment advice and transactional advice: see Glover, Fiduciary Relationships, Butterworths, 1995 at 88-94, though there is no reason in principle why in the present case, BNZ and its agent Mr Fitzpatrick should not be treated as having created in the Abrams an expectation that the explanation of the mortgage documents would be given having regard to their interests apart from those of BNZ and that a fiduciary relationship was thereby established. The Abrams have not established a basis for concluding that such a relationship arose between BNZ and them in relation to any advice concerning the loan itself. In substance, none was given. While the explanation given of the mortgage documents was deficient in the way I have already discussed, it is by no means apparent that the failure to adequately explain those documents constituted a breach of that fiduciary duty. The standards of conduct which, if not met, give rise to tortious liability are not co-extensive - 57 - with the obligations of a fiduciary: see Wickstead v Browne (1992) 30 NSWLR 1 at 17.9 but see Permanent Building Society v Wheeler (1994) 14 ACSR 109 at 166-167. Moreover even if a fiduciary duty had been breached by the deficient explanation of the mortgage documents, and thus the range of equitable remedies for breach were available, the conduct of the Abrams in failing to pay interest and contesting by litigation any liability at all under the mortgage, as I have discussed earlier, would disentitle them to relief as a matter of discretion: see Hewson v Sydney Stock Exchange (1967) 87 WN (Pt. 1) (NSW) 422 at 429. The Cross-Claim of BNZ for an order for possession Division 3 of PtVII of the RP Act deals with mortgages and confers on mortgagees and mortgagors certain statutory rights and protections. Sections 57 and 58 confer upon a mortgagee a statutory right to sell subject to the qualifications those sections impose on the exercise of that right. The order for possession sought by BNZ has its statutory foundation in s60. An issue was raised by Mr Abram based on the provisions of s57. The submission made by Mr Abram was that proceedings for possession could only be brought if a notice had been issued under s57 claiming the interest due. Until there had been non- compliance with that notice the mortgagee could not rely on a condition of the mortgage which rendered the whole of the principal payable because of that default. He went on to submit - 58 - that s57(5) deprived such a condition of force and effect not only for the purpose of exercising the statutory right of sale under s58, but more generally including securing an order for possession. The relationship between s57(5) and s6é0 is a matter I need not determine though, for my part, I view the second part of the submission of Mr Abrams on the construction of s57(5) as one of substance: but see to contrary effect Mercantile Holdings Ltd v Fisher unreported 19 November 1982 Supreme Court of New South Wales, Yeldham Jd. It is unnecessary to determine because the right of BNZ to demand payment of the principal under the mortgage did not depend upon default by the mortgagor in the payment of interest. It is a right that arises under clause 5 (a) of the standard terms together with clause 1 of the memorandum of mortgage independently of default in the payment of interest. Thus BNZ was entitled to demand, as it did by the letter dated 22 July 1992, the payment of $172,664.36. The making of that demand did not depend on any default by the Abrams in the payment of interest. Accordingly the failure of the Abrams to make the payment of $172,664.36 itself constituted default under the mortgage. BNZ was thus entitled to issue a notice under s57 in relation to that default and the non-compliance with that notice rendered exercisable the powers under s58 and, if Mr Abram's earlier submission is correct, rights conferred by s60. Mr Abram criticised the form of the notices though did so in general terms. However, the notices are not, in my opinion, defective - 59 - in form if they are viewed in a not unduly technical way: see Wongala Holdings Pty Ltd v Mulinglabar Pty Ltd, NSW Court of Appeal, 21 July 1995, unreported. The Abrams defaulted under the mortgage and failed to comply with the notices issued under s57. The BNZ is entitled to an order for possession: see generally United Starr - Bowkett Co-operative Building Society (No. 11) Ltd v_Clyne (1967) 68 SR (NSW) 331 at 347 - 350. The cross-claim for moneys outstanding under the credit card facility. BNZ seeks judgment against Mr Abram for moneys owing under the credit card facility. In the absence of any intervention by the Court to modify BNZ's rights or restrain their exercise, BNZ is entitled to recover the debt arsing from the operation of the account. I did not understand Mr Abram to be submitting otherwise. Accordingly judgment will be given in favour of BNZ subject to the quantification of the final level of indebtedness. Conclusion The orders I will make are an order dismissing the Abrams application against both BNZ and Mr Fitzpatrick in its entirety, an order for possession of the property to which the mortgage related, 10 Lexington Avenue, St Clair, and an order giving judgment for BNZ against Mr Abram in relation to the credit card facility. In their written submissions both respondents asked - 60 - that they be given an opportunity to make submissions on the question of costs and, I reserve on that question. However, I wish to make a concluding observation. The Abrams, and in particular Mr Abram, have sought to resist the consequences of their actions in June 1992 by whatever legal means they consider have been available to them. It is not presently my task to judge the propriety of all they have done. At one point in the proceedings in late 1994, I was informed that Mrs Abram was ill, and potentially very seriously ill. She is the mother of young children and the stress of all that has occurred since early 1992 must have been considerable. I then raised the question of mediation. It was initially agreed to by the solicitor for BNZ but that agreement was withdrawn when agreement was not forthcoming from Mr Fitzpatrick through his counsel. Mr Abram indicated he would consent to mediation and my assessment at the time was that he was then genuinely endeavouring to engage in discussions to resolve the matter though the history of this and related litigation may have then left others more sceptical. In my view, some further attempt should be made to resolve the dispute underlying this litigation by agreement, if need be involving mediation, before orders are formally made. In making these remarks I accept that a point may have been reached where the dispute is now insoluble by such means. If so, that is to be regretted. - 61 - I adjourn the matter to enable short minutes to be prepared to give effect to this judgment. Written submissions of the question of costs should be filed and served within seven (7) days of this judgment and any submissions in reply within five (5) days thereafter. I certify that this and the preceding sixty (60) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore. Associate: Date: 28 July 1995 First Applicant appeared in person for both applicants Counsel for the First Respondent: Mr N Hutley Solicitor for the First Respondent: Clayton Utz Counsel for the Second Respondent: Mr P Liney Solicitor for the Second Respondent : Collins Biggers and Paisley Dates of hearing: 1, 2, 3 and 7 June, 30 and 31 August, 30 September, 4 and 21 October, 1, 29 and 30 November, 12 December 1994 and 1 and 8 February 1995. Date of judgment: 28 July 1995