FEDERAL COURT OF AUSTRALIA Hudson v National Australia Bank [2022] FCA 1222 File number: NSD 1277 of 2019 Judgment of: MARKOVIC J Date of judgment: 14 October 2022 Catchwords: CONSUMER LAW – misleading or deceptive conduct – unconscionable conduct – breach of contract – natural justice – where first applicant caused second applicant to enter into a sub-originator agreement with the second respondent – where second respondent terminated the sub-originator agreement – whether second respondent engaged in misleading or deceptive conduct by making representations to the effect that the first applicant had not performed her role satisfactorily – whether respondents engaged in unconscionable conduct in allegedly forming false conclusions about the applicants without giving them a proper hearing and then suspending and terminating the applicants by reason of those allegedly false conclusions – where the second respondent refused to provide a letter of separation in the terms requested by the applicants – whether in doing so the second respondent engaged in unconscionable conduct – whether second respondent breached confidentiality and good faith obligations contained in the sub-originator agreement – whether the respondents owed a duty to the applicants to afford them natural justice – application dismissed Legislation: Australian Consumer Law being Sch 2 to the Competition and Consumer Act 2010 (Cth) ss 18, 21, 22 National Consumer Credit Protection Act 2009 (Cth) ss 6, 7, 8, 9, 29, 35, 47, 64 Cases cited: Australian Consumer and Competition Commission v TPG Internet Pty Ltd (2020) 278 FCR 450 Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1 Australian Securities and Investments Commission v National Australia Bank Limited [2020] FCA 1494 Bodney v Bennell (2008) 167 FCR 84 Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 Carey v Freehills [2013] FCA 954 Dasreef Pty Limited v Hawchar (2011) 243 CLR 588 Enderby Town Football Club Ltd v Football Association Ltd [1971] Ch 591 Good Living Company Pty Ltd v Kingsmede Pty Ltd (2021) 284 FCR 424 I&L Securities v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 Paciocco v Australia and New Zealand Banking Group Limited (2015) 236 FCR 199 R v Gaming Board for Great Britain; Ex Parte Benaim v Khaida [1970] QB 417 Re Pergamon Press [1971] Ch 388 R v Commission for Racial Equality; Ex Parte Hillingdon London Borough Council [1982] AC 779 Sundararajah v Teacher's Federation Health Limited (2011) 283 ALR 720; [2011] FCA 1031 Trans Petroleum (Australia) Pty Ltd v White Gum Petroleum Pty Ltd (2012) 268 FLR 433; [2012] WASCA 165 Trivett v Nivison [1976] 1 NSWLR 312 Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 266 FCR 631 Watson v Foxman (1995) 49 NSWLR 315 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 446 Date of hearing: 30 August 2021 – 6 September 2021 Counsel for the Applicants: Mr M W Young SC Solicitor for the Applicants: Gavin Parsons and Associates (7 August 2019 to 24 September 2020) Bransgroves Lawyers (24 September 2020 to present) Counsel for the Respondents: Mr J Giles SC with Mr M Rose Solicitor for the Respondents: Dentons ORDERS NSD 1277 of 2019 BETWEEN: KERRY ANN HUDSON First Applicant LEASEWORKS AUSTRALIA PTY LTD Second Applicant AND: NATIONAL AUSTRALIA BANK LIMITED First Respondent FINANCE & SYSTEMS TECHNOLOGY PTY LTD Second Respondent order made by: MARKOVIC J DATE OF ORDER: 14 October 2022 THE COURT ORDERS THAT: 1. The originating application filed on 8 August 2019 and the further amended statement of claim filed on 6 May 2020 be dismissed. 2. The parties are to confer on the question of costs of the proceeding and either: (a) on or before 28 October 2022 provide the Associate to Markovic J with proposed consent orders addressing the costs of the proceeding; or (b) if the parties are unable to agree as to the proposed form of orders then: (i) on or before 4 November 2022 the respondents are to file and serve their submissions on the question of costs of the proceeding, not exceeding five pages in length; and (ii) on or before 11 November 2022 the applicants are to file and serve their submissions on the question of costs of the proceeding, not exceeding five pages in length; and (c) unless either party requests an oral hearing, the question of costs will be determined on the papers. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. TABLE OF CONTENTS THE STATUTORY CONTEXT [4] THE FACTS [13] The witnesses [13] Ms Hudson and Leaseworks [15] FAST [22] NAB [31] BPM [33] BPM broker reviews [34] BPLAC [38] Leaseworks is accredited and enters into a sub-originator agreement with FAST [45] Submitting loan applications to Panel Lenders [55] Leaseworks' FAST affiliated accreditations [60] Ms Hudson meets Mr Dandachli [65] Ms Hudson meets with Mr Maroun, ANZ [72] Events following Ms Hudson's meeting with Mr Maroun [74] The August 2014 email [89] Accreditation with ANZ [98] The Dandachli database of files [101] Mr Mohamed's early interactions with Ms Hudson [103] First BRR Report [106] First file review meeting [113] Events following the first file review meeting [134] First BPLAC Submission [139] May 2016 BPLAC meeting [144] First and final warning letter [146] Second BRR Review [155] Second BPLAC Submission [159] Ms Nguyen recommends that Ms Hudson undertake a compliance audit [164] April to June 2017 [171] NAB suspends Ms Hudson [188] Second file review meeting [195] Third BPLAC Submission [225] Events following the second file review meeting [227] Ms Hudson's health [234] Mr Davidson prepares a "BPLAC Firm Review Submission" [239] Extraordinary BPLAC meeting – 14 August 2017 [241] NAB cancels Ms Hudson's accreditation and FAST gives notice of its intention to terminate the Sub-Originator Agreement [251] FAST issues a letter of separation [256] Steps taken by other Panel Lenders – August 2017 [260] BPLAC meetings – 30 August 2017 and 12 September 2017 [264] FAST terminates the Sub-Originator Agreement [267] Ms Hudson's accreditation terminated by other Panel Lenders – September 2017 [268] Correspondence between the parties [271] Evidence given by Mr Currie and Dr Hasham [276] THE PLEADED CASE [289] DID NAB AND FAST ENGAGE IN MISLEADING OR DECEPTIVE CONDUCT? [298] Statutory framework and legal principles [298] The applicants' submissions [302] Consideration [306] DID NAB AND FAST ACT UNCONSCIONABLY? [312] Statutory framework and legal principles [312] The applicants' submissions [319] Consideration [333] DID NAB AND FAST FAIL TO AFFORD NATURAL JUSTICE? [345] The applicants' submissions [346] Consideration [353] DID FAST BREACH THE SUB-ORIGINATOR AGREEMENT? [374] The applicants' submissions [377] Consideration [379] DAMAGES [394] The expert evidence [395] Mr Monaghan's evidence [397] Objection to Mr Monaghan's report [404] Respondents' submissions [406] Reasons for overruling the respondents' objection [413] Mr Giliberti's evidence [422] The joint report [425] The applicants' alternate claim for damages [440] CONCLUSION [444] REASONS FOR JUDGMENT MARKOVIC J: 1 Kerry Ann Hudson and Leaseworks Australia Pty Ltd, the first and second applicants (together, applicants), bring this proceeding against the National Australia Bank Limited (NAB) and Finance & Systems Technology Pty Ltd (FAST), as first and second respondents respectively (together, respondents). At the relevant time FAST was NAB's wholly owned subsidiary. The relationships between the parties are described below but the proceeding essentially arises out of the dealings between FAST, which carries on business as a mortgage aggregator, and Leaseworks, which carries on business as a finance broker. Ms Hudson is and was a shareholder in and director of Leaseworks. 2 In summary Ms Hudson and Leaseworks allege that: (1) NAB and FAST: (a) engaged in misleading or deceptive conduct contrary to s 18 of the Australian Consumer Law being Sch 2 to the Competition and Consumer Act 2010 (Cth); (b) engaged in unconscionable conduct within the meaning of s 21 of the Australian Consumer Law; and (c) breached their duty by failing to provide Ms Hudson and Leaseworks with natural justice or procedural fairness in making certain decisions about them; (2) FAST breached its contract with Leaseworks; and (3) because of the conduct set out above the applicants have suffered loss and damage. 3 NAB and FAST deny the allegations made by the applicants. THE STATUTORY CONTEXT 4 Before proceeding further it is instructive to set out the statutory framework within which both Ms Hudson and Leaseworks, on the one hand, and NAB and FAST, on the other, operate their respective businesses in relation to the provision of credit to consumers. 5 The National Consumer Credit Protection Act 2009 (Cth) (National Credit Act) regulates the provision of credit. It provides for a comprehensive licensing regime for persons or entities engaging in "credit activity" as defined in s 6 of that Act. In Australian Securities and Investments Commission v National Australia Bank Limited [2020] FCA 1494 at [83]-[85] Lee J identified the scope of the National Credit Act: 83 … Under this regime, those wishing to engage in a "credit activity" are required to apply for, be issued with, and hold, an [Australian credit licence]. The National Credit Act imposes entry standards for licensing and, once an ACL is granted, licensees must meet ongoing standards of conduct. ASIC has the power to suspend or cancel an ACL, or to ban individuals from engaging in a "credit activity". The key aims of the licensing regime are to regulate credit industry participants and enhance consumer protection. 84 Section 27 provides a guide to Part 2-1 of the National Credit Act which makes this clear, comprising Division 2 – Engaging in credit activities without a licence (containing s 29) and Division 3 – Other prohibitions relating to the requirement to be licenced (containing s 31): This Part is about the licensing of persons to engage in credit activities. In general, a person cannot engage in a credit activity if the person does not hold an Australian credit licence. Division 2 prohibits a person from engaging in credit activities without an Australian credit licence. However, the prohibition does not apply to employees and directors of licensees or related bodies corporate of licensees, or to credit representatives of licensees. Division 3 deals with other prohibitions relating to the requirement to be licensed and to credit activities. These prohibitions relate to holding out and advertising, conducting business with unlicensed persons, and charging fees for unlicensed conduct. 85 The National Credit Act also introduced industry-wide responsible lending conduct requirements for licensees. Those requirements aim to protect consumers (both from conduct of lenders and from consumers making poor borrowing decisions) by imposing standards of behaviour on licensees prior to and when entering into a credit contract. The conduct requirements apply only to persons who are licensed under the National Credit Act (that is, holders of an ACL). Relevantly, licensees are required to test the suitability of the proposed credit contract and assess the consumer's ability to meet their financial obligations under the proposed credit contract. To do so requires direct dealings between the lender and the putative borrower, hence the prohibition on an unlicensed intermediary. 6 As set out above, s 6 of the National Credit Act defines "credit activity" and relevantly, for the purposes of this proceeding, provides that "a person engages in a credit activity": (1) in relation to "credit contracts" if: (a) the person is a credit provider under a credit contract; or (b) the person carries on a business of providing credit, being credit the provision of which the National Credit Code applies to; or (c) the person performs the obligations, or exercises the rights, of a credit provider in relation to a credit contract or proposed credit contract (whether the person does so as the credit provider or on behalf of the credit provider); (2) in relation to "credit service" if "the person provides credit service". 7 The term "credit service" is defined in s 7 of the National Credit Act as follows: A person provides a credit service if the person: (a) provides credit assistance to a consumer; or (b) acts as an intermediary. 8 In turn, s 8 and s 9 of the National Credit Act define the terms "credit assistance" and "acts as an intermediary". Those sections relevantly provide: 8 Meaning of credit assistance A person provides credit assistance to a consumer if, by dealing directly with the consumer or the consumer's agent in the course of, as part of, or incidentally to, a business carried on in this jurisdiction by the person or another person, the person: (a) suggests that the consumer apply for a particular credit contract with a particular credit provider; or … (d) assists the consumer to apply for a particular credit contract with a particular credit provider; or … It does not matter whether the person does so on the person's own behalf or on behalf of another person. 9 Meaning of acts as an intermediary A person acts as an intermediary if, in the course of, as part of, or incidentally to, a business carried on in this jurisdiction by the person or another person, the person: (a) acts as an intermediary (whether directly or indirectly) between a credit provider and a consumer wholly or partly for the purposes of securing a provision of credit for the consumer under a credit contract for the consumer with the credit provider; or (b) acts as an intermediary (whether directly or indirectly) between a lessor and a consumer wholly or partly for the purposes of securing a consumer lease for the consumer with the lessor. It does not matter whether the person does so on the person's own behalf or on behalf of another person. 9 Section 29 of the National Credit Act prohibits a person from engaging in a credit activity unless the person holds a licence. Such a licence is known as an Australian credit licence (ACL). It authorises the licensee to engage in particular credit activities specified in a condition of the licence: see s 35 of the National Credit Act. 10 Section 47 of the National Credit Act sets out the general conduct obligations of a licensee. It relevantly provides: (1) A licensee must: (a) do all things necessary to ensure that the credit activities authorised by the licence are engaged in efficiently, honestly and fairly; and (b) have in place adequate arrangements to ensure that clients of the licensee are not disadvantaged by any conflict of interest that may arise wholly or partly in relation to credit activities engaged in by the licensee or its representatives; and (c) comply with the conditions on the licence; and (d) comply with the credit legislation; and (e) take reasonable steps to ensure that its representatives comply with the credit legislation; and (ea) comply with the Reference Checking and Information Sharing Protocol in relation to: (i) if the licensee is an individual to whom the Protocol applies—the licensee; and (ii) if a former, current or prospective representative of the licensee is an individual to whom the Protocol applies—the representative; and (f) maintain the competence to engage in the credit activities authorised by the licence; and (g) ensure that its representatives are adequately trained, and are competent, to engage in the credit activities authorised by the licence; and (h) have an internal dispute resolution procedure that: (i) complies with standards and requirements made or approved by ASIC in accordance with the regulations; and (ii) covers disputes in relation to the credit activities engaged in by the licensee or its representatives; and (ha) give to ASIC the same information it would be required to give under subparagraph 912A(1)(g)(ii) of the Corporations Act 2001 if it were a financial services licensee (within the meaning of Chapter 7 of that Act); and (i) be a member of the AFCA scheme; and (j) have compensation arrangements in accordance with section 48; and (k) have adequate arrangements and systems to ensure compliance with its obligations under this section, and a written plan that documents those arrangements and systems; and (l) unless the licensee is a body regulated by APRA: (i) have available adequate resources (including financial, technological and human resources) to engage in the credit activities authorised by the licence and to carry out supervisory arrangements; and (ii) have adequate risk management systems; and (m) comply with any other obligations that are prescribed by the regulations. 11 Section 64 of the National Credit Act permits a licensee to give a person a written notice authorising that person to engage in specified credit activities on behalf of the licensee and the person so authorised is a "credit representative" of the licensee. 12 Against that background I turn to set out the facts. THE FACTS The witnesses 13 The following witnesses gave evidence for the applicants: (1) Ms Hudson. She has been a director of Leaseworks since its incorporation save for the period from 30 July 2017 to 19 August 2018. Ms Hudson has worked in the finance industry for 20 years. She has a Certificate III in financial services and a Certificate IV in finance and mortgage broking. Since May 2012 Ms Hudson has been an accredited member of the Finance Brokers Association of Australia Limited, and as part of maintaining her membership, has completed various courses. Ms Hudson was the principal witness relied on by the applicants. She gave evidence about Leaseworks' business, her own experience as a broker and her dealings with NAB and FAST. Ms Hudson was cross-examined. While I accept that she was doing her best, Ms Hudson's evidence was unreliable in some respects which I have described below. While I accept that her recollection of events was likely affected by the passing of time and possibly by her health issues which, unbeknownst to her, she was experiencing at the time, there are instances where her recollection cannot not be accepted; (2) John Christopher Currie who was a director of Leaseworks from its incorporation in 2007 until 2012. He holds 41% of the shares in Leaseworks. Mr Currie gave evidence about his interactions with Anthony Hasham who had an interest in acquiring Leaseworks or its business. Mr Currie was cross-examined; (3) Anthony Hasham who is the sole director of Australian Consulting Engineers Pty Ltd (ACE), a multi-disciplinary firm that provides civil and structural engineering services. ACE has around 150 staff with offices in Lebanon, Abu Dhabi, the Philippines and Australia. Dr Hasham gave evidence about his interest in acquiring Leaseworks, or its business, and discussions he had in about 2015 to 2017 about that. He was cross-examined; (4) Professor Stan Sidhu, a specialist endocrine surgeon, who provided a report on Ms Hudson's health as at July 2017. Professor Sidhu was not cross-examined; and (5) Trevor Monaghan, an accredited business valuation specialist under the Chartered Accountants Australia and New Zealand (CAANZ). Mr Monaghan prepared two reports on behalf of the applicants in which he opined as to the loss suffered by each of Ms Hudson and Leaseworks as a result of the conduct that they allege was engaged in by NAB and FAST. Mr Monaghan also prepared a joint report with the respondents' expert, Adam Giliberti. Mr Monaghan gave evidence concurrently with Mr Giliberti. 14 The following witnesses gave evidence for the respondents: (1) Rob Ryan who was an employee of NAB from November 2006 until March 2021. From August 2013 until the sale of FAST in early 2021, Mr Ryan was the Head of Northern Region for FAST, a leadership and management function for New South Wales (NSW), the Australian Capital Territory (ACT) and Queensland (QLD). In that role, he was involved in managing operations in those states and leading and managing a team of eight partnership managers, including Patrick Clarkson and Hien Nguyen (see below), who together practice managed about 800 brokers in NSW, the ACT and QLD. Mr Ryan was also a member of the FAST Leadership Team. This involved managing, coaching and leading a distribution team. Mr Ryan was cross-examined; (2) Patrick Clarkson who has been employed by NAB since 2013 in the role of FAST partnership manager. In that role Mr Clarkson was responsible for: (a) developing and managing relationships with a portfolio of brokers aggregated with FAST; (b) assisting brokers to obtain accreditation with Panel Lenders (described at [24] below); (c) assisting brokers with compliance and risk management, commissions, managing broker relationships for FAST's Panel Lenders, client relationship management (CRM) and training, including in the use of the CRM system. From March 2013 until 30 September 2014, Mr Clarkson was Ms Hudson's FAST partnership manager. He gave evidence about his interactions with Ms Hudson. Mr Clarkson was cross-examined; (3) Hien Nguyen who was an employee of FAST from September 2015 to February 2019 and also held the role of FAST partnership manager. In that role she had the responsibilities described at (2)(a)-(c) above. From about July 2015 until Ms Hudson's termination in 2018, Ms Nguyen was Ms Hudson's FAST partnership manager. She gave evidence about her interactions with Ms Hudson in that role. Ms Nguyen was cross-examined; (4) Allison Smith who has been an employee of NAB since 23 January 1989. She is currently the manager of broker partnerships monitoring and the chair of the Broker Partnerships Lender Accreditation Committee (BPLAC), a committee within NAB (described at [38] below). Ms Smith gave evidence about her review of submissions for and attendance at relevant BPLAC meetings. She was cross-examined; (5) Nick Notaras, NAB's "head of broker distribution for NSW/ACT". Mr Notaras is responsible for managing a team of business development managers (BDM) and relationship associates who, in turn, support brokers submitting home loan applications to NAB in relation to, among other things: NAB policy; process; pricing and compliance. Mr Notaras' team manages day to day interactions with the brokers in their respective portfolios, part of which involves reviewing and managing broker activity that may be a potential risk to NAB. Mr Notaras had limited direct involvement with individual brokers. Mr Notaras gave evidence about his role in completing and considering submissions prepared for BPLAC. Mr Notaras was cross-examined; (6) Brent Davidson, a NAB employee from May 2011 until March 2018. From August 2015 to March 2018, Mr Davidson held the role of "manager broker relationship team NSW/ACT, broker distribution". In that role, he conducted file review meetings with brokers accredited with NAB for the purpose of reviewing a selection of files for loans the broker had submitted to NAB for approval. From August 2015 to March 2018, Mr Davidson attended approximately eight to 15 file review meetings each month with brokers accredited with NAB. Mr Davidson gave evidence about his attendance at file review meetings with Ms Hudson and subsequent reporting. Mr Davidson was cross-examined; (7) Mustafa Mohamed who has held the role of "BDM, broker distribution", with NAB since 2015. Mr Mohamed is a member of the BDM team managed by Mr Notaras. He was Ms Hudson's NAB BDM from 1 February 2015 to July 2017 and gave evidence about some of his discussions and other interactions with Ms Hudson. Mr Mohamed was cross-examined; (8) Shane Mahoney who is a senior consultant, cyber forensic and investigations, with NAB. Mr Mahoney gave evidence about conducting an "email recovery search" for emails sent between the emails addresses of Ms Hudson, Mr Ryan and Mr Clarkson between July and October 2014. Mr Mahoney was not cross-examined; (9) Monique Tavares, a solicitor in the employ of Dentons, the respondents' solicitors. Ms Tavares gave evidence about her review of the material identified during the "email recovery search" undertaken by Mr Mahoney. Ms Tavares was not cross-examined; and (10) Adam Giliberti who is a member of CAANZ and is recognised by CAANZ as a forensic accounting specialist and a business valuation specialist. Mr Giliberti provided his expert opinion on Ms Hudson and Leaseworks' claim for damages and responded to Mr Monaghan's report. Mr Giliberti gave evidence concurrently with Mr Monaghan. Ms Hudson and Leaseworks 15 As set out above, Ms Hudson has worked in the finance industry for 20 years. 16 Leaseworks was incorporated on 8 February 2007. It has a number of shareholders including Ms Hudson and Mr Currie who each hold approximately 41% of its shares while the balance of the shareholders hold the remaining 18%. Ms Hudson has been a director of Leaseworks since its incorporation, save for the period from 30 July 2017 to 19 August 2018, and worked in Leaseworks' business. 17 On 20 December 2010 the Australian Securities & Investments Commission (ASIC) issued ACL 390454 to Leaseworks authorising it to: (a) Engage in credit activities other than as a credit provider by: (i) providing a credit service where the licensee is not or will not be: (A) where the service relates to a credit contract or proposed credit contract – the credit provider under the contract; or (B) where the service relates to a consumer lease or proposed consumer lease – the lessor; and/or (ii) performing the obligations or exercising the rights of a credit provider in relation to a credit contract or proposed credit contract under which the licensee is not or will not be the credit provider; and/or (iii) performing the obligations or exercising the rights of a mortgagee in relation to a mortgage or proposed mortgage that secures or will secure obligations under a credit contract under which the licensee is not the credit provider; and/or (iv) performing the obligations or exercising the rights of a beneficiary under a guarantee or proposed guarantee that guarantees obligations under a credit contract under which the licensee is not the credit provider; and/or (v) performing the obligations or exercising the rights of a lessor in relation to a consumer lease or proposed consumer lease where the licensee is not or will not be the lessor. 18 Leaseworks maintains required insurance and is a member of dispute resolution schemes including the Australian Financial Complaints Authority and before that, the Credit Ombudsman Service Limited. 19 Because Leaseworks was licensed at all relevant times, Ms Hudson was not required to hold any formal credit representative authorisation. However, under Leaseworks' agreements with various lenders and financiers (described below), Ms Hudson also had accreditations, at least from the time of commencement of the National Credit Act. 20 Between July 2007 and about July 2014, Ms Hudson and Leaseworks were primarily engaged in broking for commercial equipment finance, vehicle finance, insurance products and extended warranties. In or about June 2014 they decided to expand Leaseworks' broking business into both consumer and commercial real property lending. 21 Leaseworks has been, and continues to be, an authorised representative of a number of Australian financial services licensees. It also has and has had introducer agreements and accreditations with lenders to introduce vehicle finance, equipment finance and personal loan applications on behalf of loan applicants. It is not necessary to set out the detail of those relationships and arrangements. FAST 22 FAST is a wholesale aggregator in the finance broking industry specialising in residential, commercial and asset finance. It does not have franchises. Its brand is known to brokers and lenders rather than the general public. NAB was, at the time of the events the subject of this proceeding and, as I understand it, until relatively recently, FAST's ultimate holding company. All of the shares in FAST were held by NAB's subsidiary, Advantedge Financial Services Holdings Pty Ltd. 23 An aggregator is an intermediary between lenders and mortgage and finance brokers. When the role of aggregator first emerged, they managed commission payments and lender accreditations, giving brokers access to more lenders and reducing their administration by having a centralised entity to manage them. The role of an aggregator has developed and now offers licensing solutions, CRM platforms, loan processing systems and compliance options, and broker professional development and training. 24 As an aggregator FAST has lender agreements with an extensive panel of residential, commercial and asset finance lenders including banks, building societies and credit unions (Panel Lenders). As at July 2020 FAST's Panel Lenders comprised around 45 residential lenders and 25 commercial lenders. 25 FAST acts as an intermediary between brokers and lenders. Brokers accredited with FAST have access to, and source residential home loans, commercial loans and asset and equipment finance through its Panel Lenders. In addition, for those brokers, FAST provides access to: (1) CRM platforms for the transmission of loan applications to Panel Lenders; (2) an allocated partnership manager to assist a broker with obtaining accreditation with a selection of Panel Lenders and with various aspects of its business; and (3) training and development opportunities such as broker forums. 26 In order for a broker to become accredited with FAST, it had to complete and submit a "New Partner Accreditation Pack" (FAST Accreditation Application) together with the following: (1) copy of professional indemnity insurance certificate of currency and policy; (2) certificate of business registration; (3) certificate of registration of business name; (4) copy of trust deed (if applicable); (5) copy of current mortgage industry association membership certificate; (6) copy of current external dispute resolution scheme membership certificate; (7) company profile including resumes of directors/partners/proprietors; (8) letter of separation (if with another aggregator prior to joining FAST); (9) copy of current national police clearance; and (10) certificate IV in financial services (finance/mortgage broking). 27 Upon receipt by FAST of a FAST Accreditation Application, it was reviewed by partnership support officers or the associate operations and sales support team who would check that it had been completed in full and that all supporting documents had been provided and were in order. 28 Since September 2010 brokers accredited with FAST could either operate under their own ACL or they could apply to be authorised to engage in credit activities as a representative of BLSSA Pty Ltd, which holds an ACL. NAB was also the ultimate holding company of BLSSA. Brokers authorised to act as BLSSA's representatives could provide mortgage broking services to consumers using BLSSA's accreditation. 29 Once a FAST Accreditation Application was approved, the broker and FAST entered into a sub-originator agreement (see below) pursuant to which FAST carries on the business of providing mortgage bulking facilities for mortgage originators and the sub-originator, or broker, utilises FAST's mortgage bulking facilities, which is the process of bulking loan volumes. This enables enhanced negotiations between brokers and lenders in relation to matters such as commissions and service levels. An individual broker may not otherwise have the volumes to negotiate in the same way. 30 Mr Ryan explained that each of NAB and FAST were independent of each other and had separate functions. FAST did not share information which was subject to privacy obligations with NAB, brokers were required to obtain accreditation with NAB separately, even if they had accreditation with FAST, and FAST did not have access to NAB's lender accreditation reviews or internal processes. NAB 31 As set out above, NAB was at the relevant time and until recently the ultimate holding company of FAST. There are a number of areas and processes within NAB relevant to this proceeding which I describe below. 32 Relevantly, despite the commonality in ownership between NAB and FAST, NAB through its relevant areas, BPLAC and Broker Partnerships Monitoring (BPM) (described below), treat FAST as it would any other aggregator. It follows all of the usual formalities when dealing with a FAST broker, including notifying FAST as aggregator of any suspension or termination of a broker and inviting the relevant broker and a FAST representative to attend any meeting (which usually takes place before a meeting of BPLAC) where broker conduct is discussed. BPM 33 BPM, previously known as Broker Risk Review (BRR), is an area within NAB responsible for reviewing third parties accredited with NAB Broker Partnerships to ensure they adhere to the obligations and standards of their accreditation. BPM broker reviews 34 A broker review generally arises in one of two ways: (1) as a monitoring review resulting from a member of the BPM team randomly selecting a broker to review; or (2) as an investigation based on intelligence being provided, by an internal or external source, to the BPM team about broker behaviour. Reviews are completed according to their seriousness, as opposed to the date of receipt. 35 The BPM team member responsible for the review records his or her findings which includes details of the: (1) broker under review; (2) action to be taken after the review; (3) overall review rating which may be green, amber or red; (4) review purpose; (5) broker's background information; (6) review summary; and (7) information in relation to each broker file review, presented in a tabulated form recording information for each loan review including the: (a) name of the loan applicants, (b) loan amount; (c) application date; (d) loan purpose; (e) security address; and (f) BPM reviewer's loan score from 0 to 15 (Number Rating) and rating of green, amber or red (Colour Rating) allocated to various categories in relation to the loan application including credit, regulatory compliance, operational risk and file outcome, being the overall rating for the file. 36 In relation to: (1) the Number Rating: (a) 0 = for noting only; (b) 5 = minor finding. Attempt made to meet policy but has fallen short; (c) 10 = failure to attempt to meet obligations or suspect fraud; and (d) 15 = confirmed fraud, regulatory breach or other serious finding; (2) the Colour Rating: (a) green is generally satisfactory. However it may give rise to an opportunity to provide feedback to a broker; (b) amber generally indicates some concerns exist, but they are not considered material, or there may be insufficient information to prove the allegations; and (c) red is generally unsatisfactory and indicates that there are concerns which are serious in nature. 37 Following a BPM review: the matter may be referred to BPLAC; referred to broker distribution to request a formal response to matters arising from the review; or referred to broker distribution to provide feedback to the broker. BPLAC 38 BPLAC's role includes reviewing findings from file review meetings conducted by leaders from NAB's broker introduced lending businesses, NAB Broker & Advantedge. It makes decisions on cases presented to it about broker accreditations including whether a broker's accreditation is to remain active, be suspended or terminated. 39 As at 2017 the members of BPLAC included: Ms Smith as chair; Emily Black, a senior consultant, broker network assurance, as secretary; Steve Kane, general manager, NAB broker distribution; Christine McArthur, head of management assurance, broker partnerships; Brett Halliwell, general manager, Advantedge; and Gary Howard, described by Ms Smith as general manager operations. Ms Smith and Ms Black did not vote on outcomes. The decision making committee comprised Ms McArthur and Messrs Kane, Halliwell and Howard. 40 Where BPM refers a matter to BPLAC a document titled "BPLAC Submission" is prepared by a case presenter who is the "Head Of" the respective channel within NAB e.g. Head of NAB Broker, NSW. If BPM completes a "Broker Partnerships Review" form, it is also presented to BPLAC. 41 Once a matter is referred to BPLAC, NAB's usual practice is to require a broker interview to take place in order to afford the broker a "right of reply". Following the broker interview the matter is presented to BPLAC at its monthly meeting either for: (1) a decision to be made – this occurs where the chair of BPLAC and the case presenter do not agree on the recommended outcome and a decision needs to be made; or (2) endorsement – this occurs where the chair of BPLAC and the case presenter agree on the recommended outcome. Any decision made by BPLAC must be unanimous. If it is not, the matter is referred to the Executive General Manager of Broker Partnerships for a final decision. 42 The outcomes following referral to BPLAC may include: (1) no further action; (2) coaching required; (3) process improvement required; (4) issue of a warning or of a final warning; or (5) termination of the broker's accreditation. 43 Findings made by BPLAC in relation to a broker are communicated to an aggregator, where relevant, by the distribution team. 44 As at 2017 Ms Smith was aware that generally FAST would follow a decision made by NAB in relation to a broker, although it was for FAST to make its own decision about the broker. Ms Smith was also aware that FAST did not carry out the same type of investigations as NAB but would make its own decision following a NAB investigation. It is not always the case that where NAB terminates the accreditation of a broker with it, the aggregator also terminates its relationship with that broker. Leaseworks is accredited and enters into a sub-originator agreement with FAST 45 On or about 23 September 2010 Ms Hudson signed, and submitted, on behalf of Leaseworks a FAST Accreditation Application (Hudson Accreditation Application). 46 On or about 1 October 2010 the Hudson Accreditation Application was approved. 47 On 27 October 2010 FAST and Leaseworks as "Sub-Originator" entered into a Sub-Originator Agreement. The recitals to that agreement provide that FAST carries on the business of providing mortgage bulking facilities for mortgage originators and that the Sub-Originator, in this case Leaseworks, wishes to utilise those facilities. 48 Clause 2 of the Sub-Originator Agreement is titled "Applications" and provides: 2.1 The Sub-Originator will use its best endeavours to source and generate finance applications through FAST. 2.2 Applications sourced by the Sub-Originator will be processed through FAST in accordance with this Agreement and any direction given by FAST to the Sub-Originator in writing from time to time. 2.3 The Sub-Originator will use FAST for the purposes of submitting finance applications to Lenders during the term of this Agreement unless otherwise approved by FAST in writing. 49 Clauses 3 and 4 respectively set out the obligations of FAST and the Sub-Originator. They relevantly provide: 3. OBLIGATIONS OF FAST 3.1 FAST will at all times during the Term:- 3.1.1 maintain all licences and business registration required for the purposes of carrying on its business; 3.1.2 as requested co-ordinate training and accreditation of the Sub-Originator in regard to the products and lending guidelines for each Lender; 3.1.3 become obliged to pay commission to the Sub-Originator, subject to, and in accordance with, the terms of this agreement, when FAST becomes entitled to receive commission from a Lender. 4. SUB-ORIGINATOR'S OBLIGATIONS 4.1 During the Term the Sub-Originator agrees that the Sub-Originator and (where applicable) its staff, agents and contractors who are involved in the preparation and submission of finance applications:- … 4.1.2 comply with all relevant laws and rules of professional conduct applicable to it, including the Financial Transaction Report Act 1998, the Privacy Act 1998, the Trade Practices Act 1974, the Consumer Credit Code 1996, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and the MFAA Code of Conduct; … 4.1.4 act with absolute integrity with regard to all matters pertaining to finance applications; … 4.1.7 provide FAST upon request with such other information as may from time to time be required by FAST to enable FAST to satisfy the compliance requirements pursuant to any relevant legislation or Codes of Conduct, or as required by any Lender; … 4.2 The Sub-Originator must ensure that neither it, any member of its staff, nor any of its agents or contractors does anything which could give rise to a claim against FAST for loss or damage from any person who could become a borrower from FAST or a Lender including by: 4.2.1 making fraudulent, misleading, deceptive or false statements; or 4.2.2 acting unconscionably or unfairly. 4.5 The Sub-Originator will at all times maintain professional indemnity insurance cover of not less than one million dollars ($1,000,000) and where it engages employees, adequate Workers Compensation Insurance and separately where it owns or leases business premises, Public Liability Insurance of not less than ten million dollars ($10,000,000). The professional indemnity insurance is to be maintained in force for the Term and, following termination of this Agreement, for such further period as the Sub-Originator is entitled to receive further commissions under this Agreement. The Sub-Originator will upon request from FAST from time to time provided evidence of the currency of insurances required to be maintained pursuant to this clause. 4.6 The Sub-Originator will ensure at all times during the Term that the Sub-Originator's employees, agents and contractors who are involved in the preparation and submissions of finance applications in relation to this Agreement comply with all provisions of this Agreement on the part of the Sub-Originator to be complied with. 50 Clause 7 is titled "Good faith and confidentiality" and provides: 7.1 The Sub-Originator and FAST agree: 7.1.1 to show the utmost good faith and attention to their mutual business activities and use their best endeavours to promote, develop and extend the mutual business interests of both parties; 7.1.2 the keep confidential all information, documents, dealings, transactions, client list, data, processes, apparatus, specifications, drawings, reports, operations, inventions, patents, technology, know-how, accounts or other documents and things, of whatever type of nature relating to the mutual business interests of both parties which is obtained by both parties or may be available to both parties or which both parties become aware of as a result of or during the term of this Agreement. 7.1.3 it is not FAST's intention to market or contact for marketing purposes clients introduced to Lenders by the Sub-Originator without the prior consent of the Sub-Originator. 51 Clauses 10 and 11 respectively concern termination and suspension. Clause 10 provides: 10.1 This Agreement may be terminated by either Party, at its sole and absolute discretion at any time by giving one month's notice in writing to the other Party. Termination of this Agreement by either Party in this manner does not affect the Sub-Originator's entitlement to Commission where that entitlement arose from a right or event which occurs prior to termination. 10.2 If a party breaches a term of this Agreement ("Defaulting Party"), and that breach is not remedied within fourteen (14) Business Days of notice being given by the other party ("Non Defaulting Party") to remedy that breach, the Non-Defaulting Party may termination this Agreement on giving written notice to the Defaulting Party. 10.3 FAST may terminate this Agreement upon giving written notice to the Sub-Originator if: 10.3.1 the Sub-Originator or any director, employee or contractor of the Sub-Originator is found to have made any fraudulent, dishonest, misleading, deceptive or false statement or has been knowingly concerned in any fraudulent, dishonest, misleading or deceptive conduct; 10.3.2 the Sub-Originator or any of the Directors of the Sub-Originator commits a Prescribed Offence; 10.3.3 a liquidator, trustee in bankruptcy or administrator is appointed of the Sub-Originator, or a Controller as defined in section 9 of the Corporations Act 2001 is appointed in respect of any property of the Sub-Originator. 10.4 In the event this Agreement is terminated, the Sub-Originator will immediately deliver to FAST all documents, reports, data, specifications, or other documents, and things of whatever type or nature bearing the name of FAST or otherwise relating to the business of FAST. 10.5 If this Agreement is terminated by FAST pursuant to clause 10.2 or 10.3, FAST shall, notwithstanding any other provision in this Agreement to the contrary, be entitled to immediately cease paying any further commissions to the Sub-Originator and retain those commissions for its own benefit without prejudice to FAST's other rights and remedies under this Agreement or at law. 52 Clause 11 relevantly provides: 11.1 FAST may suspend the operation of this Agreement by notice in writing to the Sub-Originator to that effect if: 11.1.1 the Sub-Originator or any of its Directors are charged with a Prescribed Offence; 11.1.2 it has been alleged by a Lender, a mortgage insurer, an industry organisation, or a government or semi-government authority that the Sub-Originator has not complied with a statue or regulation relating to the provision of loans or the operation of the Sub-Originator's business, or that the Sub-Originator or any of its Directors has engaged in fraudulent, misleading, deceptive or dishonest conduct; 11.1.3 the Sub-Originator fails to comply with any of the provisions of clause 4.5. 53 The term "Prescribed Offence" is defined in cl 1.1.6 to mean "an offence which may in the reasonable opinion of FAST reflect on the honesty, trustworthiness or integrity of the person charged with the offence". 54 Mr Ryan explained that, typically, after a broker enters into a sub-originator agreement with FAST, the sub-originator will nominate the lenders it wants FAST to arrange accreditation with, usually around eight lenders. The nominated lenders would then contact the broker to notify it of the outcome of any accreditation application and to arrange for the broker to undertake any required training. Submitting loan applications to Panel Lenders 55 Once accredited by FAST, a broker can submit loan applications for assessment and approval to Panel Lenders with whom the broker is accredited via FAST's online portal known as Podium, which is used by the majority of FAST's accredited brokers. Lending applications are processed through Podium to lender platforms called "NextGen" or "Apply Online" which link Podium with the particular Panel Lender's online system. 56 For leasing applications, the broker will usually submit scanned documents to the lender via email. 57 When submitting documents to Panel Lenders, the onus is on the broker to ensure that it has complied with all applicable laws, practices and requirements of the particular Panel Lender and to ensure the integrity of documentation received from the loan applicant and submitted via Podium. 58 Mr Ryan, explained that, since at least 2010, brokers have been required to take the following steps when submitting loan applications (although particular Panel Lenders may have additional requirements which brokers are required to familiarise themselves with before submitting a loan application): (1) send a credit guide to the loan applicant(s) before submitting a loan application to a Panel Lender; (2) sight original documentation (unless certified copies are acceptable to a particular lender); (3) undertake a fact-find and needs analysis (also described as a preliminary assessment). A fact-find is a document which addresses the needs of the loan applicant and a needs analysis is a guide which documents those findings; and (4) make a recommendation of suitable lenders based on the broker's preliminary assessment of the loan applicant's needs. 59 Once a Panel Lender receives an application, it reviews and assesses it pursuant to its own internal assessment processes. FAST is not involved, nor does it contribute to, or engage in, this process. FAST's function is to facilitate the relationship between the broker and Panel Lenders and to provide the Podium platform. Leaseworks' FAST affiliated accreditations 60 During the course of the Sub-Originator Agreement, FAST assisted Ms Hudson and/or Leaseworks to obtain accreditation from the following lenders for vehicle and other consumer loans not related to real property: (1) Liberty Financial Pty Ltd in the period 2010 to 2017 for consumer vehicle loans; (2) Commonwealth Bank of Australia (CBA) in the period 2016 to 2017 for commercial equipment and vehicle finance; and (3) Medfin Australia Pty Ltd in 2017 for medical equipment finance. 61 Ms Hudson explained that as at February 2020 the accreditation with Liberty had been suspended and the accreditations with CBA and Medfin had been suspended and were subsequently terminated. 62 In or about 2016 FAST assisted Ms Hudson to have her personal accreditations with Pepper Asset Finance Pty Ltd, for commercial equipment and vehicle finance, transferred. Ms Hudson had accreditations affiliated with a pre-existing aggregator for that lender transferred. After the transfer, applications were submitted to that lender pursuant to the accreditations affiliated with FAST. 63 In or around July 2014, FAST assisted Ms Hudson to obtain personal accreditation with lenders for residential and/or commercial property mortgages. The lenders included: (1) NAB; (2) Australia and New Zealand Banking Group Limited (ANZ) for commercial and residential property; (3) Pepper Home Loans for residential property; (4) Westpac Banking Corporation for residential property; (5) St George Bank for residential property; (6) CBA for residential property; and (7) Deposit Power for residential property. 64 Insofar as the accreditation with NAB was concerned, Ms Smith explained that Ms Hudson was personally accredited with NAB as a representative of FAST. NAB did not have a direct relationship with Ms Hudson, its agreement was with FAST and Ms Hudson was a representative under that agreement. Leaseworks had no agreement with NAB and was not accredited with it, only Ms Hudson was accredited with NAB. Ms Hudson meets Mr Dandachli 65 In or about April 2014, a colleague of Ms Hudson's, Alex Patsellis, contacted her. At the time of his call, Mr Patsellis was working at Platinum Direct. Mr Patsellis informed Ms Hudson that he was moving to Classic Funding and that he had a couple of referring brokers with whom he had dealt who he was going to direct to Ms Hudson. Ms Hudson recalls that Mr Patsellis mentioned a few first names including "Muzzi" but that she did not know any of the people mentioned. 66 Ms Hudson assumed that, because Platinum Direct was regarded as a major broker, its referrers would have been vetted and that the referrers Mr Patsellis had mentioned in his call would work in the same field as Leaseworks. 67 In or around April 2014 Ms Hudson was contacted by Moustafa Dandachli (also known as Muzzi) who explained that Mr Patsellis had given him her number. They agreed to meet in the coming weeks. 68 Subsequently Mr Dandachli met with Ms Hudson at her office. Ms Hudson recalls that during the course of their meeting they had a conversation to the following effect: Mr Dandachli: I am moving into commercial property development and business mentoring. I was previously in home loan lending. I have a potential pipeline of commercial equipment and vehicle finance referrals I can send your way. I am also considering selling my residential trail book. Ms Hudson: I am interested. But I need to learn more about home loans as it is not an area that I have a lot of experience or knowledge in. Mr Dandachli: I can provide you with training and if you are still interested in the trail we can further discuss. Ms Hudson: OK. What kind of numbers are we talking about? Mr Dandachli: In or around $150,000. 69 In about June 2014 Mr Dandachli contacted Ms Hudson to inform her that he was moving office and ask if he could bring some files over to Ms Hudson's office so that they could "at least start the process". Ms Hudson agreed. 70 Despite Ms Hudson's recollection that the conversation in the preceding paragraph took place in June 2014, she said that in about May 2014 Mr Dandachli brought four filing cabinets of files to Leaseworks' office. In about June 2014 Mr Dandachli started to provide informal training to Ms Hudson in relation to home loans. Ms Hudson recalls that the training, which continued until about July 2014, included: the interview process; completion of forms; supporting documents required; and the loan approval process. 71 Ms Hudson was unaware, at the time of first meeting Mr Dandachli and thereafter until she was informed by Mr Clarkson (see [79] below), that Mr Dandachli had been permanently banned by ASIC from engaging in any credit activities as at 7 or 14 March 2014 and that he had been convicted of fraud in 2013. Ms Hudson meets with Mr Maroun, ANZ 72 In about July 2014, Tony Maroun of ANZ, together with another ANZ employee, attended Leaseworks' office to finalise Ms Hudson's commercial real property accreditation with ANZ. Mr Dandachli was at Leaseworks' office at the time and also joined in the meeting. 73 Ms Hudson recalls that at the meeting they discussed the lending market generally and the commercial property market in which she and Leaseworks were interested in working. The meeting concluded on the basis that Ms Hudson would hear from ANZ in relation to next steps. Events following Ms Hudson's meeting with Mr Maroun 74 Ms Hudson recalls that, as it was taking some time for ANZ to get back to her about her accreditation application, she telephoned Mr Maroun to find out the cause for the delay. They had a conversation to the following effect: Ms Hudson: Hi Tony, what is going on with the accreditation, when can I start? Mr Maroun: Well, about that, there's an issue with who is in your office. You should contact your BDM, Patrick Clarkson. 75 Ms Hudson was perplexed by Mr Maroun's comment. Accordingly, on 6 August 2014 she sent a text to Stefania Riotto, her FAST partnership manager at the time. The text message read (as written): Hey Steph can you give me Patrick's number? I just spoke to Tony @ ANZ. He told me whats going on. Its Kerry 76 According to Ms Hudson, on or about 7 August 2014 she telephoned Mr Clarkson and he informed her that he would come to her office to discuss the issue that had arisen following Mr Maroun's visit. 77 Mr Clarkson recalls that Mr Maroun had contacted him to inform him that he had seen Mr Dandachli at Ms Hudson's office. Mr Clarkson knew of Mr Dandachli from an ASIC release that reported that he had been convicted of falsifying loan documents after an ASIC investigation. Mr Clarkson accepted that he spoke to Ms Hudson on or about 6 or 7 August 2014. He recalled that he wanted to meet with Ms Hudson in person because she was a valued broker and he was concerned that the suggestion that Mr Dandachli had been at Leaseworks' office posed a potential risk to her. 78 There is a dispute between the parties as to whether Ms Hudson and Mr Clarkson met on one or two occasions in early August 2014. The relevant evidence about that issue follows. 79 Ms Hudson recalls that on 7 August 2014 Mr Clarkson attended Leaseworks' office and at that time they had a conversation to the following effect: Mr Clarkson: Look, we need to talk about Mr Dandachli. Are you aware of his background? Do you know anything about him? Ms Hudson: He's a broker. I am looking to buy his book. He is asking for in or around $150,000. What is there to know? Mr Clarkson: He is a banned broker. He has been convicted of fraud. Ms Hudson: What? Mr Clarkson: Yes. You need permission from FAST to buy the book. You cannot use it without our approval. Ms Hudson: Of course. 80 Mr Clarkson recalls that he had minimal face to face contact with Ms Hudson during the time that he was her FAST partnership manager. He recalls that most of his contact with her was by telephone but, based on his outlook calendar, he was able to say that he went to Leaseworks' office on two occasions: 13 August 2014 and 25 September 2014. As to the former, Mr Clarkson recalls the meeting at Leaseworks' office in Parramatta on that day because it was the first time he had been to Leaseworks' office. He recalled making a mental note of the office's location for future meetings. Mr Clarkson's evidence was that he only met with Ms Hudson about the issue that had arisen with Mr Dandachli's files on one occasion, 13 August 2014. That recollection is borne out by the email referred to in the paragraph below. 81 On 10 August 2014 Ms Hudson sent an email to Mr Maroun, copied to Mr Clarkson, in which she wrote: As discussed I was unaware of Muzi Dandachli's conviction for fraud & my first reaction was of horror as he had come to me via a rather large brokerage, Platinum Direct Finance. As he had been vetted by them & had been referring equipment finance deals I never suspected for a moment that he had a criminal conviction for fraud. Having said all that I didn't think that I would have to disclose to anyone outside my business that we were in the process of looking at purchasing his Trail book. I am advising you that this is the reason why he made himself available to assist me with how to put together mortgages & how we would transition his customer base to Leaseworks, which included sitting in on some meetings. When I asked him why he hadn't revealed his conviction, he told (sic) that the information was widely available on the internet & ASIC's website & then went on to state that he did not believe it was relevant to the purchase or sale of his trail book. I assume that his trail book is not fraudulent, otherwise it would have been taken from him, but I have now been placed in a position that I have had to disclose confidential plans for my business. I thought this was a good way to progress the mortgage component of my business but now I am uncertain of whether the purchase will put me at odds with ANZ. Can you please advise me if the purchase is in conflict with ANZ's policies & if I were to continue the process would this exclude me from accessing ANZ's commercial facility. I will be having this conversation (sic) Patrick on Wednesday, to confirm with him that were I to proceed with the purchase that I would not be jeopardising my Fast accreditation. (Emphasis added.) 82 At the time of his meeting with Ms Hudson on 13 August 2014, Mr Clarkson understood, from his previous dealings with her, that she was a car finance broker working predominantly in the area of commercial loans. He was not aware of Ms Hudson doing any work in relation to residential loans. Mr Clarkson recalls that during the meeting Ms Hudson informed him that she wanted to acquire Mr Dandachli's loan book. Mr Clarkson denies telling Ms Hudson during the meeting that she needed FAST's permission to purchase that loan book, as recalled by her and set out at [79] above, and does not recall Ms Hudson referring to the cost of Mr Dandachli's loan book. Mr Clarkson explained that it is not usual practice to speak in dollar amounts around loan books, rather it is usual to speak in multiples when considering book values. 83 Mr Clarkson recalls that at their 13 August 2014 meeting he and Ms Hudson had a conversation to the following effect: Ms Hudson: I want more income streams so I am looking to buy a loan book from Moustafa Dandachli. Mr Clarkson: Whether you buy a book or not is a matter for you, but you should be careful. This guy [Dandachli] has been suspended by ASIC. There are risks. If it were me, I would not be buying the loan book. Ms Hudson denies that Mr Clarkson said the words attributed to him above. 84 Mr Clarkson said that he did not give permission to Ms Hudson to introduce loans from Mr Dandachli's book or to use it to generate leads. Mr Clarkson did not have authority to give any such approval or permission, it was not within the functions or duties of his role as a partnership manager. 85 With leave, Ms Hudson gave oral evidence about a meeting she had with Mr Clarkson in August 2014, which I infer to be the meeting on 13 August 2014. She said that during the course of that meeting they had a conversation relating to Mr Dandachli's presence at her office to the following effect: Ms Hudson: What were you talking about a problem being in my office? Mr Clarkson: Are you aware who was in your office – Mr Dandachli? Ms Hudson: Yes, there was somebody in here. Tony Maroun was in at ANZ. What seems to be the problem? Mr Clarkson: Do you know that he's a – been convicted of fraud? Ms Hudson: No I didn't. Mr Clarkson: Well, you can look it up. It's on Google. 86 Following his meeting with Ms Hudson Mr Clarkson posted a file note on Salesforce, a "customer management relationship system" used for entering and maintaining records in relation to broker groups and brokers. Mr Clarkson's file note, which was entered on 14 August 2014 at 8.44 am records, among other things: Visited Kerry due to an issue arising with a book she was looking at buying. The owner of the book m dandachli has just been prosecuted by ASIC and found guilty of fraud. ANZ BDM Tony Maroun was in her office and recognised him. He advised us as well as speaking to Kerry who was unaware of situation. She had advised ANZ of events by email. Also looking to expand business and look at Residential lending. Advised would need to obtain Diploma as previously purely leasing. Has enrolled with Walker miller to complete via RPL. Also interested in Podium have requested upgrade with 3 months free period. Also looking to put on a new Consultant under her license. Have sent forms and requirements including checklist to her. 87 Ms Hudson said that she was shocked by what Mr Clarkson had told her and uncomfortable with the whole situation. In about mid August 2014 she had a conversation with Mr Dandachli in which she confirmed with him that he had been convicted of fraud and banned and told him that he could not return to Leaseworks' office and that she did not want to proceed with the purchase of his book or referrals. According to Ms Hudson, at that time, Mr Dandachli told her that he did not "have any need for the files", that she could "do with them what [she wanted]" and that "there's nothing wrong with them. ASIC climbed all over them. The ones I got done for are with the lawyers or ASIC". 88 While Ms Hudson maintained that she had two meetings with Mr Clarkson, on 7 and 13 August 2014, I do not accept that is so. Contrary to Ms Hudson's recollection the objective evidence suggests, and I find, that the following occurred: (1) Mr Maroun attended Ms Hudson's office in July 2014; (2) following that meeting Ms Hudson learnt from Mr Maroun that Mr Dandachli, who was present at her office at the time of the meeting with Mr Maroun and whose trail book she wished to purchase, had been banned by ASIC. This is borne out by: (a) Ms Hudson's text message to Ms Riotto; (b) her 10 August 2014 email to Mr Maroun; and (c) Mr Clarkson's file note dated 14 August; (3) on 7 August 2014 Ms Hudson telephoned Mr Clarkson. By that time Mr Clarkson was aware from Mr Maroun that Mr Dandachli had been at Ms Hudson's office. They agreed to meet; (4) on 10 August 2014 Ms Hudson sent an email to Mr Maroun, copied to Mr Clarkson, explaining how she came to meet with Mr Dandachli, why he was at her office and that she wished to purchase his trail book. By that time she was aware of Mr Dandachli's conviction; and (5) as foreshadowed in Ms Hudson's 10 August 2014 email and recalled and, indeed, recorded by Mr Clarkson, Ms Hudson and Mr Clarkson met on 13 August 2014. This was the only meeting they had at the time. During that meeting, they discussed Mr Dandachli. I accept Mr Clarkson's evidence to the effect that he did not tell Ms Hudson that she needed FAST's permission to buy Mr Dandachli's book, that he did not give any such permission and that he had no authority to give that permission in any event. The August 2014 email 89 According to Ms Hudson in or about late August 2014 she sent an email to Mr Ryan, copied to Mr Clarkson. Despite her efforts to do so, Ms Hudson has been unable to obtain a copy of that email. However, she recalls that the email was to the following effect: I/[Leaseworks] were planning on expanding our business into residential (and commercial) property; We were looking for more income streams. We considered purchasing Mr Dandachli's book for in or around $150,000. We saw the trail/ using the book as another potential income stream; Since the meeting with Mr Clarkson, we had confronted Mr Dandachli. He admitted that he was a banned broker/had been convicted of fraud. We told him that we were no longer interested in the proposed purchase of his book/any dealings with him; We told him to come and collect his files but he refused and has left them at our office; We were unaware that we needed permission to use them; Can we use the database to generate leads? 90 Ms Hudson did not receive a response to the email referred to in the preceding paragraph. She said that eventually she telephoned Mr Clarkson in late August 2014 and had a conversation to the following effect: Ms Hudson: I haven't received a response to my email about using the Dandachli files. Mr Clarkson: Look - you can use the database to generate work. Just be very careful/take care with them, as you would with any other file. 91 Mr Ryan has reviewed his email inbox and has been unable to locate any record of the email referred to in [89] above, despite his practice of keeping all emails that he receives. He said that if he had received an email from Ms Hudson containing words to the effect set out in [89] above, it would have raised many "red flags" for him and he would have had serious concerns about its content. This was particularly so given its reference to the purchase/use of a loan book from an individual referred to as a "banned broker/[who] had been convicted of fraud" and the request to "use the database to generate leads". 92 Had Mr Ryan received an email to the effect of that referred to in [89] above, he would have immediately asked Mr Clarkson to arrange a meeting with Ms Hudson to discuss its content and his concerns and to advise Ms Hudson not to have anything to do with Mr Dandachli and his database. Mr Ryan said that it is likely that he would have arranged for that meeting to be a site visit to Leaseworks' premises to gain a better insight into the broker and the premises from where she was operating. Mr Ryan did neither of those things because he did not receive the email. 93 Similarly, Mr Clarkson does not recall receiving an email from Ms Hudson to the effect set out at [89] above. He has searched his inbox for emails sent and received around that time and has not located any such email from Ms Hudson. Mr Clarkson denies having a conversation with Ms Hudson to the effect set out at [90] above. In cross-examination Mr Clarkson said that if he had such a conversation, given its subject matter, he would have recorded it in the notes section of Salesforce. 94 In cross-examination Ms Hudson conceded that her email referred to at [89] above "obviously hadn't gone through" and accepted that she had not located a copy of her "unsent email" on her computer. She recalled that she was having issues with her computer/IT system at the time. Ms Hudson said that at about that time Leaseworks' office flooded, all of their equipment had to be replaced and that was possibly why the email went missing. However, Ms Hudson maintained that she had a "general conversation" with Mr Clarkson as set out at [90] above. 95 Ms Hudson said that from about late August 2014 to July 2017, in reliance on the permission given by Mr Clarkson regarding the use of Mr Dandachli's files, set out at [90] above, (referred to as the Permission), they dealt with those files to generate work. This included by broking residential and/or commercial applications to NAB, including Advantedge, ANZ, Pepper Home Loans, Westpac, St George Bank and CBA. 96 Even if I accept that Ms Hudson drafted an email in the terms set out at [89] above, it is clear that the email was not received by Messrs Ryan and Clarkson. So much is apparent from their evidence which I accept. Further, comprehensive searches undertaken by Mr Mahoney, and reviewed by Ms Tavares, did not recover any email from Ms Hudson to Messrs Ryan and Clarkson to the effect set out at [89] above. In any event, Ms Hudson accepted that the email did not go through. 97 In light of that and Mr Clarkson's evidence I do not accept that the conversation referred to by Ms Hudson at [90] above occurred. Ms Hudson is mistaken in her recollection of these events and her alleged conversation with Mr Clarkson. It follows that, contrary to Ms Hudson's evidence, Mr Clarkson did not give permission on behalf of FAST or otherwise to use Mr Dandachli's loan book to generate work or leads i.e. he did not give the Permission as alleged. It follows that I do not accept Ms Hudson's evidence set out at [95] above, that in reliance on the Permission she dealt with Mr Dandachli's files to generate work. Accreditation with ANZ 98 As at October 2014, Ms Riotto had been reappointed as Ms Hudson/Leaseworks' partnership manager. 99 By emails exchanged on 16 October 2014 Ms Hudson made inquiries of Ms Riotto about the progress of her ANZ accreditation application. 100 Ms Hudson recalls that ANZ approved her commercial property accreditation with conditions in about late October 2014 and that during October 2014 she and Ms Riotto had a conversation to the following effect: Ms Riotto: I've had to chase Mr Scott Wunderlich [of ANZ] a few times. He has approved it – subject to these conditions: (a) anything moving forward with the commercial property accreditation, the applicant/s had to be interviewed by the ANZ BDM; and (b) the applicant/s had to execute the loan documents at a local branch. Ms Hudson: For all applicants or just those from the Dandachli files? Ms Riotto: All applicants. Ms Hudson: OK-got it. The Dandachli database of files 101 To assist with the generation of work from the database comprising the Dandachli files in about early 2015 Ms Hudson had that database, of about 300-400 files, uploaded onto FAST's Salesforce system. Eventually all of Leaseworks' other databases were also loaded onto Salesforce. 102 If a new application eventuated from the database, the loan application/submission process on Podium would be more efficient as the loan applicant's details were pre-loaded. Where a lender was not on Podium, there was a need to scan and dispatch or load paper applications to individual website portals. Mr Mohamed's early interactions with Ms Hudson 103 Mr Mohamed, who was Ms Hudson's NAB BDM, recalls that he met with Ms Hudson three or four times prior to 19 April 2016, the date of the first file review meeting (see [116] below). Jamie Brill, a small business commercial business development manager, attended some of those meetings with Mr Mohamed. The purpose of Mr Mohamed's meetings at that time was to provide an update on NAB's latest residential and small business commercial products and policies and to discuss any loan applications in the pipeline, where Ms Hudson may have needed assistance from Mr Mohamed, e.g. in liaising with other parts of NAB. 104 On 24 March 2015, Ms Hudson exchanged emails with Divya Choudary, an associate in the NAB broker mortgage services team, copied to Mr Mohamed. In her email Ms Hudson asked Ms Choudary a number of questions relating to a loan application in the name of Houssan Dandachli. Ms Choudary responded to Ms Hudson's queries including her query as to whether NAB would accept a letter or statutory declaration "from the tenant confirming they pay the rent in cash". In response to that query Ms Choudary noted that: To use rental income - can we have it on tax returns? if yes, we need tax returns to confirm that applicant is receiving the funds and being declared to ATO. If not I won't use this income, as there's no evidence of income being received, hence it fails income verification process. 105 On 7 May 2015 Mr Mohamed received an email from Ms Riotto asking if he could "reach out for [Ms Hudson] in Parramatta" as she had "been recently ramping up her mortgage business". Mr Mohamed knew that Ms Riotto was Ms Hudson's FAST partnership manager. At the time of receiving Ms Riotto's email, Mr Mohamed had held the position of BDM only for around three months and had a panel of around 400 FAST brokers. He was reliant on the FAST partnership managers to provide him with the contact details of FAST brokers who needed introduction to him as their new BDM. Based on his usual practice at the time, Mr Mohamed believes that after receiving Ms Riotto's email he would have reached out to speak with Ms Hudson but he can no longer recall any specific conversation with her. He believes, based on his usual practice, that he would have telephoned Ms Hudson and introduced himself to her as her NAB broker BDM and sought to arrange a face to face meeting. First BRR Report 106 In March 2016 Ms Hudson was selected for a review by BPM (which at the time was still known as BRR). The review was prompted by three suspect fraud alerts. 107 Maria Casano, an assurance analyst with BRR, prepared a report (First BRR Report) based on a review of six files. The First BRR Report gave an "overall review rating" of "red" and included: Review Purpose Kerry Ann Hudson of FAST has been selected for a review in order to ascertain the quality of their applications. This review was prompted by 3 suspect fraud alerts received by the broker. This report has been provided in order to assist you to discuss the findings with Kerry Ann Hudson and is not intended for distribution direct to the Broker. And: Action Required 1. As this review has been referred to BPLAC for further consideration, conduct an investigation in conjunction with the Broker's aggregator into the findings of Appendices 3, 4 & 5 of this report. 2. Complete a BPLAC Submission which details your findings in regards to the issues identified above and the recommended course of action. 3. Send the completed BPLAC submission to the Committee Secretary to enable scheduling at an upcoming meeting. 108 Pages 3, 4 and 5 of the First BRR Report each included: (1) a "File Type" of "NAB Broker (Suspect Fraud)"; (2) a "Settlement Date" recorded as "Withdrawn", which Ms Smith explained signified that the broker withdrew the application; and (3) in relation to "Operational Risk", among other things, that each of the applications was "originally alerted in Detica", a fraud detection system. 109 By emails sent on 31 March 2016 Ms Casano provided the First BRR Report to Ms Smith, Ms Black and Messrs Notaras and Mohamed noting that the "review has been referred to [BPLAC] for further consideration". This was because of the "following material concerns" identified in the report: The review has been rated Red • Suspect Fraud: Appendices 1 - 3. • Payslips suspected to be manufactured: Appendices 3, 4 & 5. 110 On or about 31 March 2016 Mr Davidson also received a copy of the First BRR Report. 111 Where, as with the First BRR Report, the "Overall Review Rating" is red, part of the BPLAC process is to conduct a review, including conducting a voluntary interview with the broker. This gives the broker the opportunity to respond to any questions that NAB, as lender, might have. The aggregator, in this case FAST, is also given the opportunity to be involved. It is rare for an aggregator not to attend a meeting where a broker is aggregating under them. 112 Mr Notaras also explained that a representative from FAST, usually a partnership manager, attended file review meetings. This was to ensure that FAST had oversight of the review process and was aware of any concerns that NAB had about any of its brokers. First file review meeting 113 On 4 April 2016 Mr Mohamed sent an email to Ms Nguyen, who by that time was Ms Hudson's FAST partnership manager, copied to Ms Riotto and Mr Davidson, forwarding Ms Casano's email (see [109] above) and noting: See below - BPLAC review for Kerry Ann Hudson attached I'll have to get [Ms Riotto] or [Mr Davidson] to attend the interview as [Mr Notaras] is on annual leave the next 2 weeks Please let me know you diary for April 114 On 4 April 2016 Mr Mohamed telephoned Ms Hudson to arrange a file review meeting. Following her telephone conversation with Mr Mohamed, Ms Hudson sent an email to him seeking further details about the proposed meeting including the list of files that were to be reviewed or the questions to be asked. 115 By email dated 4 April 2016 Mr Mohamed responded to Ms Hudson's email notifying her of the date and venue for the meeting and the six files she would need to bring with her. They were: • Angela BITAR - $XXX,XXX - Application date 10/10/15 • Minh & Trang NGUYEN - $XXX,XXX - Application date 10/6/15 • Van NGUYEN - $XXX,XXX - Application date 16/7/15 • Hassan SINARAM - $XXX,XXX - Application date 27/8/15 • Nenad & Ljiljana TODIC - $XXX,XXX - Application date 8/11/15 • Houssan DANDACHLI & Abeir TOUKAN - $XXX,XXX - Application date 10/4/15 116 The proposed file review meeting (which I will refer to as the first file review meeting) took place on 19 April 2016 at NAB's offices at 105 Miller Street, North Sydney. In attendance were Ms Hudson, Mr Davidson, Mr Mohamed and Ms Nguyen, who by that time was Ms Hudson's FAST partnership manager. 117 The first file review meeting was the first occasion on which Mr Davidson met Ms Hudson. Based on his practice at the time, Mr Davidson would prepare for a meeting of the nature of the first file review meeting by undertaking a comprehensive review of the relevant report, the applications and all supporting documents including the loan applications and other documents such as payslips, tax returns and credit files. He recalls that prior to the first file review meeting he printed the relevant documents in case Ms Hudson did not bring them with her. 118 Ms Nguyen engaged with brokers in her portfolio regularly, often meeting them over coffee or lunch. Ms Nguyen also explained that from time to time a Panel Lender would interview a broker whom it had accredited at FAST's request and that this would occur when the lender had concerns about loans being introduced by that broker. Where such an interview was to proceed, Ms Nguyen arranged and attended the interview. She would usually take brief notes and thereafter provide an outline to her boss, Mr Ryan. 119 Ms Nguyen attended the first file review meeting as an "Aggregator Representative". She was required to attend the meeting because Ms Hudson was one of FAST's brokers. It was FAST's preference to send a representative to support its brokers at file review meetings. Ms Nguyen recalls that Mr Davidson led the meeting and did most of the talking and that she mostly observed. Mr Davidson also recalls that he led the meeting and asked questions relevant to the First BRR Report. 120 According to Ms Hudson only three of the six files listed in Mr Mohamed's email referred to at [115] above were discussed at the first file review meeting. They were the Van Nguyen, Todic and Sinaram files. Ms Hudson recalls that she had exchanges with Mr Davidson to the following effect about those files: (1) in relation to the Van Nguyen file: Mr Davidson: Where did you meet Mr Van Nguyen? Ms Hudson: He was a referral from his cousin, Mr Minh Nguyen (whom we did a personal loan application and CTP for), another file that you have asked me to bring along. Mr Davidson: Where did you get supporting documents for Mr Van Nguyen's application? Ms Hudson: Some documents came from him personally. Others came from his employer. I believe it's all in the file. Mr Davidson: Why didn't the application proceed? Ms Hudson: There were follow up questions regarding his existing unencumbered property and how that was acquired. He couldn't provide evidence as to how he had acquired the property. I recall he stopped responding to our enquiries. Given the lack of response/information, the application was withdrawn. (2) in relation to the Todic file: Mr Davidson: Where did you meet the Todic? Ms Hudson: We had a preliminary meeting. I believe this would have followed a round of marketing to our database. Mr Davidson: Where did you get the supporting documents? Ms Hudson: This was provided to us by the Todic. What is the issue with this one? The refinance application eventually proceeded (following some back and forth about Liliana's part time position) and was unconditionally approved/ settled by NAB? Mr Davidson: Yes – we will come back to that. (3) in relation to the Sinaram file: Mr Davidson: Where did you meet him? Ms Hudson: We had a preliminary meeting. He cold called us. This was his first property and so I doubt that we had any pre-existing details on our database. Mr Davidson: Where did you get the supporting documents? Ms Hudson: Like the Todics and any others – either at the preliminary meeting or afterwards via email. (4) and, in relation to all three files: Mr Davidson: Have a look at the three payslips. Ms Hudson: Yes, what about them? Mr Davidson: Look at the bank account details on the payslips. The last four numbers for each end in 1038. At this point Ms Hudson looked at the payslips and observed that the same bank account had been provided for each of the Van Nguyen, Todic and Sinaram applications. She was stunned and recalls that she told Mr Davidson that she "was shocked". 121 Ms Hudson said that her conversation with Mr Davidson then continued in words to the following effect: Mr Davidson: What more do you know about these people? Anything that may explain the similarity? Ms Hudson: I'm not sure. The Todics are a refinance out of the Dandachli files. I recall looking at the physical file. Mr Davidson: What files are you talking about? Ms Hudson: The files that Mr Dandachli left at my office. You know, Moustafa Dandachli. He was convicted of fraud - a banned broker. I have his files. Mr Davidson: What? Ms Hudson: Patrick Clarkson knows. I was going to buy his book but the deal was canned after Mr Clarkson told me about him. Mr Dandachli then left the files at my office. I was given permission to use them. You can check with Mr Clarkson. Mr Davidson: Right. Ms Hudson: I am going to get to the bottom of this. Mr Davidson: We are investigating. In the meantime, this will have to go the Board about your accreditation. They have a meeting in the middle of each month. I will present this to them and they will decide whether or not you can keep your accreditation with us. Look, I can understand that you didn't appreciate the issue with the payslips. We can usually tell who are the dodgy brokers as their files are a mess and paperwork is often nowhere to be seen. You are lucky that your files are in good order. You are not on suspension. Not at this point. Ms Nguyen will keep you updated. We will keep you going. But I am telling you now, you only get one warning. 122 At the conclusion of the meeting Ms Hudson was in a state of shock and did not know what to do, other than to leave. 123 Mr Davidson denies that only three of the six files notified to Ms Hudson were discussed at the first file review meeting. He recalls that all of the files were discussed. 124 In relation to the exchange set out at [121] above, Mr Davidson: (1) does not recall what, if anything, he knew about Mr Dandachli or Mr Dandachli's loan book prior to attending the first file review meeting; (2) disagrees that in the course of that exchange he said: We are investigating. In the meantime, this will have to go the Board about your accreditation. They have a meeting in the middle of each month. I will present this to them and they will decide whether or not you can keep your accreditation with us. Look, I can understand that you didn't appreciate the issue with the payslips. We can usually tell who are the dodgy brokers as their files are a mess and paperwork is often nowhere to be seen. You are lucky that your files are in good order. And: We will keep you going. But I am telling you now, you only get one warning. (3) expressly denies using the phrase "dodgy brokers" and telling Ms Hudson "you only get one warning"; (4) reinforced this evidence in cross-examination, noting that he would not have made any reference to "dodgy brokers" and that he would not have told Ms Hudson that her files "were in good order" because they were not; and (5) recalls that, rather, he said words to the following effect: Kerry, we will need to consider and investigate this further. I will prepare a report and this will be presented to the Board. The Board will then meet to consider your accreditation with us. I will keep Ms Nguyen updated. 125 In relation to the issue concerning the payslips, Mr Davidson recalls drawing Ms Hudson's attention to three payslips for three different customers, including Mr Sinaram, which each recorded a bank account number ending in "1038". He said that typically when an anomaly such as this was identified, he would ask the broker a number of specific questions to determine whether the identical payslips may be a result of either customer or broker fraud. At that time he had not determined why three payslips for three different customers had the same bank account details recorded on them. Accordingly, he asked Ms Hudson questions to determine how this had occurred. Mr Davidson recalls that they had an exchange to the following effect: Mr Davidson: Here are three payslips which are identical. The payslips all have the same format and these three customers appear to have the same account number – 1038. Ms Hudson: Yes. Mr Davidson: How did you receive these supporting documents? Ms Hudson: Some I received from customers personally, others were sent to me by customers after our meeting. 126 As Ms Hudson did not have an explanation for why the payslips were the same, Mr Davidson asked her the following further questions: Mr Davidson: How did you receive the payslips? Were the payslips provided electronically? Ms Hudson: Some were provided electronically after the meeting, some were provided in person. Mr Davidson: Was Mr Sinaram known to the other parties. Ms Hudson: Mr Sinaram was referred by other parties. 127 Mr Davidson recalls that towards the end of the meeting he told Ms Hudson that she was not to introduce any new loans to NAB from Mr Dandachli's loan book and that he had an exchange with Ms Hudson to the following effect: Mr Davidson: We have got 3 of the 6 files reviewed with fraudulent payslips. Ms Hudson: Two of the three are from the Dandachli loan book. Mr Davidson: The risk of fraud in the rest of the loan book is clearly high so do not introduce any new loans from the Dandachli loan book to the NAB Group, including NAB Broker or FASTLend. Mr Davidson does not recall Ms Hudson's response. He recalls that Ms Hudson appeared shocked and used the word "shocked" a number of times. In cross-examination Mr Davidson accepted that he did not put this instruction in writing to Ms Hudson nor did he include it in these terms in the draft BPLAC submission he subsequently prepared (see [142] below), which he accepted was an oversight. Rather, as described below, he included a less emphatic description of his instruction. However, he felt at the time that Ms Hudson understood what he had conveyed. Ms Hudson disagreed that she was given any such instruction. 128 Despite Ms Hudson's disagreement, I accept that Mr Davidson gave an instruction to Ms Hudson that was either in the terms described above or, at the very least, a warning about Mr Dandachli's files and the way she should proceed. This is for the following reasons. First, Mr Davidson struck me as a thoughtful witness who had considered his evidence and was prepared to make concessions where necessary. Secondly, given Mr Davidson is no longer an employee of NAB he has no particular interest in the outcome of this proceeding. Thirdly, because of Ms Nguyen's evidence about the second file review meeting (see [221] below). Fourthly, because it is apparent from the terms of the draft BPLAC submission prepared by Mr Davidson that Ms Hudson was cautioned about the danger of dealing with files from Mr Dandachli's loan book. Finally, because in the Third BPLAC Submission (see [225] below), which was prepared just over one year after the first file review meeting, Mr Davidson in fact records that such an instruction was given at that meeting. 129 Mr Mohamed attended the first file review meeting because he had a relationship with Ms Hudson as a broker in his NAB broker BDM role. He recalls that the purpose of the first file review meeting was to review the six files identified in the First BRR Report and recalls that Ms Hudson attended the meeting with hard copies of those files. Mr Mohamed was an observer at the meeting, which, as a BDM, is his usual approach to such a meeting. Mr Mohamed cannot recall all of the discussions that took place during the meeting. He said that there was nothing about the meeting that was so unusual or significant that would cause him to remember it. However, Mr Mohamed does recall that Mr Davidson asked Ms Hudson a number of questions in relation to each of the six files and that they were the type of questions he would typically expect a broker to be asked in any review meeting. For example, he recalls Mr Davidson asking Ms Hudson "can you confirm the source of the supporting loan documents for this file?". He does not recall Ms Hudson's response. He recalls that he also asked a few questions about the payslips in some of the files but does not recall exactly what he asked. 130 Ms Nguyen recalls that Ms Hudson brought a number of files with her to the first file review meeting. She does not recall all of the files that were discussed but recalls discussion about the Dandachli and Nguyen files, which were two of the six files referred to in Mr Mohamed's email (see [115] above). Ms Nguyen recalls that Mr Davidson went through each file, one by one, with Ms Hudson and asked a series of questions to which Ms Hudson responded. 131 Ms Nguyen also recalls that Mr Davidson asked questions about how Ms Hudson had acquired a particular loan book and expressed concern about the loan book as it had been purchased from a broker who ASIC had banned. Ms Nguyen said that at some point in time, she cannot now recall when, Mr Clarkson, Ms Hudson's former FAST partnership manager, informed her that Ms Hudson had obtained or purchased a loan book from a broker who ASIC had banned. 132 After the first file review meeting Mr Davidson had a conversation, either in person or by telephone, with Ms Nguyen and Mr Ryan to the following effect: Mr Davidson: I have just met with Kerry Hudson. NAB is undertaking this investigation but, I have a major concern for the other lenders, as the aggregator, you should consider notifying other lenders. As an example, if Kerry is providing fraudulent documentation to ANZ, ANZ also needs to know about it. Mr Ryan: We will discuss further and determine next steps. 133 Mr Ryan recalls that he had a conversation with Ms Nguyen after the first file review meeting, although he has no notes of that conversation. He described FAST's role at that meeting, which was a lender accreditation review undertaken by NAB, to be as a support for the broker. Events following the first file review meeting 134 After the first file review meeting Ms Hudson did not contact NAB or FAST. She was told that NAB was investigating and she did not wish to prejudice its investigation. However, in order to deal with the risk going forward Ms Hudson put in place the following systems: (1) she uploaded all verified supporting documents to Podium herself (to ensure that only properly verified applications were lodged); and (2) the use of www.bankstatements.com.au (which she now understands is an industry standard). 135 On 26 April 2016 Ms Nguyen sent an email to Ms Hudson which included (as written): Following on from the Risk review meeting with nabbroker I thought it would be a good opportunity to refer you to QED. They provide assistance to Australian Credit License holders to review and audit your files and offer NCCP support. Link is below, we do organise workshops where they can come out to North Sydney to run a session on their offering, I will try to arrange one soon and advise the date. https://www.qedrisk.com.au/ Please let me know if you have any questions. I am yet to hear back from nabbroker, their risk team meet once a month to review and make their decision. Ms Nguyen explained that QED provide assistance to ACL holders to review and audit files and offer National Credit Act support. Ms Nguyen sent the email referred to above to Ms Hudson because part of her role was to ensure that brokers had access to workshops that would assist them in complying with their broker obligations. At the time FAST was promoting QED to all of its brokers. 136 By email of the same date Ms Hudson responded to Ms Nguyen as follows: As you can understand it is upsetting awaiting the outcome of the Nab audit on one hand & then giving me unconditionals & settling my deals on the other hand. … Do you think this workshop would help? They did say my files were in great order ... However, if it helps me to better detect fraudulent documents then I'm all for it. 137 Ms Nguyen and Ms Hudson then had a further email exchange on 26 April 2016. Ms Nguyen informed Ms Hudson that she would advise her when she organised "the next QED session", said that it was "worth attending to see if it will help" and noted that "[t]he files [Ms Hudson] bought may not be as clean due to the previous owner so it may help to audit them". Ms Hudson expressed her thanks to Ms Nguyen. 138 At around that time Ms Hudson had a number of what she described as "life events": (1) on 1 May 2016 her mother passed away following a battle with cancer; (2) in August 2016 her partner, Chris, almost died from a torn artery; (3) in December 2016 Chris underwent major surgery; and (4) she began to lose her voice from time to time, could not eat or swallow properly, had "high place phenomenon" (if near an elevated ledge her mind would tell her to jump) and was having difficulty concentrating and remembering basic things like numbers that someone had just told her. First BPLAC Submission 139 Mr Davidson took handwritten notes at the first file review meeting. Shortly after the meeting, in accordance with his usual practice, he prepared a draft submission to BPLAC (Draft First BPLAC Submission) from his handwritten notes taken at the meeting. In cross-examination, Mr Davidson explained that he took handwritten notes at these meetings which he then typed up into the required form as a BPLAC submission. When he left NAB he left his handwritten notes in his locker and informed his "people leader" that he had done so. Mr Davidson provided the Draft First BPLAC Submission to BPLAC. After doing so, in accordance with his usual practice, he discussed the case and the recommendation he had made over the telephone with the secretary of the BPLAC Committee, at that time Ms Black. She then made any necessary adjustments to the draft submission, for example changing the name of the "Case Presenter" from Mr Davidson to Mr Notaras, who was Mr Davidson's "people leader" at the time. 140 Mr Davidson noted that the last item in a BPLAC submission is "Chair Recommended Outcome". He did not usually complete that item. Rather it was completed by the chair or secretary of BPLAC, Ms Smith or Ms Black. 141 By email sent on 26 May 2016 Mr Davidson forwarded the Draft First BPLAC Submission to Ms Smith, copied to Ms Casano. Ms Smith and Mr Notaras were jointly responsible for preparing BPLAC submissions, with input from other teams and the aggregator who, in the case of Ms Hudson, was FAST. As "Head of", Mr Notaras was responsible for reviewing BPLAC submissions prepared by his team before they were submitted to BPLAC. 142 The final version of the Draft First BPLAC Submission (First BPLAC Submission) recorded: (1) Mr Notaras as the "Case Presenter"; (2) under the heading "Background": Kerry has been in the finance industry since 2007 writing mainly asset finance. To assist in starting to write residential home loans Kerry purchased a loan book from a Broker (Mustafa Dandashly (sic)) who was later terminated by ASIC dues to fraudulent activities. The files reviewed were all repeat customers from this loan book. Rob Ryan (FAST) confirmed this and Kerry has been advised to proceed with caution on any clients coming from this source. All files reviewed were from Kerry's first few months (May to Sept 2015) writing residential home loans, at the time the broker was unaware of the issues with the loan book. Face to face interviews were performed in all cases, file notes, fact find and needs analysis viewed for all. Original documents were received in all cases and held on file (hard copy in folder) which were all presented during BPLAC Interview. (3) under the heading "Member Feedback", among other things: Employment verification - From April to December in 2015 Kerry had a loan processer assisting in her business who was assigned tasks to complete including verifying employment, ABN Searches etc. This persons attention to detail and quality of work were clearly not up to scratch, Kerry terminated their employment and they are no longer in the business. Kerry now completes all of these tasks herself and fully understands that it is her responsibility to ensure this is done. Suspect payslips - When all 3 payslips were reviewed and submitted in isolation Kerry felt they were legitimate. On closer inspection side by side they clearly do look very similar and manufactured. Clients coming from the same source (purchase loan book from Mustafa Dandashly) there are clearly issues with the credibility and authenticity of these clients. During the BPl.AC Interview coaching was provided on how to identify fraudulent documents, further coaching to be provided by Aggregator PM and nabbroker BDM. (4) the "Case Presenter Recommended Outcome" of a first and final warning with a further review in six months, for Ms Hudson "to become a BLSSA representative and further credit reviews to be completed" and for "how to spot fraud" coaching to be provided by the FAST partnership manager and the NAB broker BDM; and (5) the "Chair Recommended Outcome" as supporting a first and final warning. 143 I note that in the First BPLAC Submission Mr Davidson recorded that Ms Hudson was "advised to proceed with caution on any clients coming from" Mr Dandachli's loan book. As I have already observed he accepted that he did not record his instruction not to write any new loans from that source, which was an oversight. That of course does not mean that the instruction was not given. It perhaps demonstrates a lack of proper attention to recording the events in a fulsome way. In any event it is clear from the record constituted by the First BPLAC Submission, which is the only available written record of the first file review meeting, that some form of caution was given. May 2016 BPLAC meeting 144 BPLAC met on 31 May 2016. There were eight attendees at that meeting including Ms Smith as chair and Ms Black as secretary. Included on the agenda for the meeting, as one of the "Cases for Endorsement", was "Kerry Ann Hudson (FAST) – Recommendation for First & Final warning". The First BPLAC Submission was presented at the meeting. 145 The minutes of that meeting record the following in relation to Ms Hudson (as written): • AS advised broker has been referred to the committee due to 3 suspect fraud alerts from AFT. During the interview it was revealed the broker had purchased a loan book from another broker who happened to have been permanently banned by ASIC in 2015 and the 3 files involved were from that loan book. Further training has been undertaken by the Aggregator PM regarding on the importance of comprehensive enquiries regarding living expenses. Broker also had an administrative assistant who assigned to completing employment verifications, ABN searches etc however the person's attention to detail was inadequate and the broker subsequently terminated her employment. • CMc, BH, SK & DB endorsed the recommendation to retain the broker with a First & Final warning with a further review in 6 months. First and final warning letter 146 On 6 June 2016 NAB issued a "first & final warning" letter to FAST in relation to Ms Hudson. That letter, which was from Mr Notaras to Brendan Wright, FAST, included: Subsequent to our recent discussions with Hien Nguyen this letter acts as a first and final warning in relation to your representative's Kerry Ann Hudson ability to continue to submit lending applications to NAB Broker. This warning is being given as a result of the following issues being identified: • Falsified documentation being provided. • We will continue to accept new lending applications from your representative Kerry Ann Hudson on the following basis: • Verification of customer's employment undertaken on all loan applications; • Coaching and education of how identifying suspect documentation to be provided by Aggregator and NAB Broker BDM's. Should we identify any further areas of concern in regards to your representative Kerry Ann Hudson, we will immediately revoke all systems access and take further action in regard to their ongoing ability to submit lending applications to NAB Broker. 147 Ms Hudson said that she was not aware of the NAB "first & final warning letter" at the time of its dispatch despite engaging in a series of email exchanges with Ms Nguyen on 7 June 2016. That exchange commenced with Ms Hudson explaining that she had not been in contact for several weeks due to her mother's death on 1 May 2016 and noting that she assumed that there had been "no negative outcome from the NAB". Ms Nguyen responded stating that the "NAB review will be finalised early July". The email exchange continued with no further mention of the "first & final warning letter". 148 According to Ms Hudson, in the course of a subsequent conversation at about this time, Ms Nguyen informed her that "NAB have issued a warning". Ms Hudson said that Ms Nguyen did not elaborate on the content of the warning or what was in the "first & final warning" letter nor did she provide her with a copy of it. According to Ms Hudson, they also discussed the recent passing of their respective mothers. 149 Ms Nguyen cannot recall having a telephone conversation with Ms Hudson on 7 June 2016. She denies that she spoke to Ms Hudson about the death of her own mother, who had passed away in 2000; does not recall Ms Hudson telling her that her mother had passed away; and does not recall telling Ms Hudson in a telephone conversation at about that time that "NAB have issued a warning". 150 On 9 June 2016 Ms Hudson saw Ms Nguyen at a forum meeting, a professional development meeting attended by brokers for the purpose of obtaining CPD points. According to Ms Hudson, their conversation was general at the meeting, as is typical at a large gathering. 151 Between 14 and 16 June 2016 Ms Hudson and Ms Nguyen exchanged emails about her accreditation with ME Bank, which was subsequently approved. Ms Nguyen recalls a conversation with Ms Hudson on 16 June 2016 which she recorded in Salesforce. Her note includes: Kerry has been quieter on the resi side, AF still busy and commercial consistent. Strong Nabbroker supporter however was reviewed on a few files, outcome is first and final warning, just submitted an increase to nab. 152 Ms Hudson recalls that she and Ms Nguyen regularly caught up over lunch or coffee and that discussion at these meetings usually involved her partnership manager promoting a new product, rates, providing updates on systems or introducing a new partnership manager or staff. According to Ms Hudson she met with Ms Nguyen on 28 June 2016 and 2 November 2016 for lunch and coffee respectively. At the 28 June lunch meeting Ms Hudson recalls discussing the recent trauma both she and Ms Nguyen had experienced. 153 Ms Nguyen recalls meeting with Ms Hudson for lunch on 28 June 2016 but denies that they had a conversation about "recent trauma" they had both experienced, as she had not recently experienced any trauma. Following that meeting Ms Nguyen made a note in Salesforce which included: 154 On the afternoon of 28 June 2016 Ms Nguyen sent an email to Ms Hudson in which she wrote: Great to see you today! As of end of May your figures are $22,669,433.93 I think that is great considering all you have been through in the past year! Ms Nguyen typically sent emails to the brokers in her portfolio updating them on their figures for a particular month to inform them of how they were tracking. It was part of Ms Nguyen's role to ensure that brokers in her portfolio were aware of their sales targets and KPIs. Second BRR Review 155 One of the outcomes recorded in the First BPLAC Submission was for Ms Hudson's files to be reviewed again in six months. Accordingly, on 11 January 2017, at the request of BPLAC, BRR undertook a further review of Ms Hudson's files. Philip Murton, an assurance analyst in the broker risk review team, prepared a report (Second BRR Report) which included: (1) an "Overall Review Rating" of "Green"; (2) as "Action Taken" that the report be "Referred to BPLAC"; (3) under the heading "Review Purpose" that: Kerry Ann Hudson has been selected for a review at the request of BPLAC following a first and final warning in regard to suspect and confirmed fraud in May 2016. This report has been provided in order to assist you to discuss the findings with Kerry Ann Hudson and is not intended for distribution direct to the Broker; (4) that in the last 12 months Ms Hudson had submitted 37 loans of which 16 had been approved and 11 had settled; (5) six files were the subject of the review; and (6) under the heading "Action Required": The Head Of is to investigate the issues identified in this review by conducting an interview with [Ms Hudson]. Findings are to be detailed on the BPLAC submission provided and returned to the BPLAC Secretary to enable scheduling at an upcoming meeting. 156 By email sent on 11 January 2017 Mr Murton provided the Second BRR Report to Mr Notaras, Ms Smith and Ms Black noting that (as written): This review has been referred to the Broker Partnerships Lenders Accreditation Committee (BPLAC) for further consideration as this review has been BPLAC mandated follow up from a previous decision in May 2016. The review has been rated Green with the main issue identified relating to disclosure concerns on appendices 4 & 6. Action Required 1. Review the contents of the attached report. 2. Complete the actions detailed under "Action Required" in the report, including preparing and submitting your recommendation to BPLAC. 157 Mr Notaras explained that the Second BRR Report recorded an overall green rating because all but one of the files reviewed received green ratings for all aspects of the review. The exception was the "Assoud and Selman" file which was rated amber for the "Credit" category. Notwithstanding the anomalies identified with that file (which concerned the number of dependants disclosed on the application and the lack of updated rental income for an investment property) the file received an overall green rating. Mr Notaras also explained that a green rating usually means that a further broker interview is not required. However, in some circumstances an interview may still be held, including where information not known at the time of the review is later identified. A green rating means that the issues identified during the review can be dealt with by a BDM through a follow up call with the broker, simple coaching processes over the telephone with the broker or a meeting to discuss any items raised by the review. 158 On 17 March 2017 Ms Casano emailed a copy of the Second BRR Report to Mr Mohamed. On or around 22 March 2017 Mr Mohamed telephoned Ms Hudson to discuss the review that had been undertaken. Mr Mohamed can no longer recall his exact conversation but does recall that he would have congratulated Ms Hudson on the overall result of the review, which had very few adverse findings, and that the discussion centred around two of the six files reviewed. Second BPLAC Submission 159 Following his telephone interview with Ms Hudson referred to in the preceding paragraph, Mr Mohamed prepared a BPLAC submission dated 22 March 2017 (Second BPLAC Submission). 160 On 22 March 2017 Mr Mohamed sent an email to Mr Notaras, copied to Melanie Pumomo, which relevantly included: See my response to the BPLAC submission attached Spoke with Christine Taket of Distribution Risk today who advised to Email your recommendation as "no further action required" and they will close the file. Chris advised she spoke with Allison Smith if it was OK that I completed the review over the phone with the broker - she confirmed all good. Mr Mohamed's email attached the Second BPLAC Submission. Mr Mohamed explained that Christine Taket, referred to in his email above, was a member of the distribution risk review team situated on the same level as him. He informed Ms Taket that he had conducted a review with Ms Hudson, told her which files he had discussed and of the feedback that he provided. 161 By email dated 23 March 2017 Mr Notaras forwarded Mr Mohamed's email to Ms Smith and Ms Black. 162 While Mr Mohammed was noted as the case presenter for the Second BPLAC Submission, Ms Smith considered this to be an error as the "case presenter" is the "Head of", in this case Mr Notaras. 163 The Second BPLAC Submission recorded that Mr Mohamed had contacted Ms Hudson in order to discuss the Second BRR Review. Her response to some of the findings in the review were recorded in the Second BPLAC Submission. In addition, under the heading "Agreed Recommendation", the following was recorded: Case Presenter Comments: Recommending no further action. Ms Nguyen recommends that Ms Hudson undertake a compliance audit 164 In the meantime, on about 8 February 2017 Ms Hudson had a breakfast meeting with Ms Nguyen. While the conversation was generally social Ms Hudson recalls that she and Ms Nguyen may have had a conversation to the following effect: Ms Nguyen: I recommend that you engage QED. They can perform an end-to-end compliance audit of your business against not only the NCCP requirements but against the benchmark of other brokers. Ms Hudson: I will make some enquiries. 165 Ms Nguyen recalls attending a breakfast meeting with Ms Hudson on or around 8 February 2017. She believes that she also invited one of FAST's lenders to attend, but no longer recalls who that person was. Ms Nguyen said that at the meeting she continued to push QED compliance with Ms Hudson. This was part of the conversation she was having with all of the brokers in her portfolio at that time as FAST was encouraging all brokers to engage QED. While it was part of Ms Nguyen's role to make brokers aware of the training it was ultimately up to Ms Hudson to arrange her training. 166 Ms Hudson recalls that Ms Nguyen provided QED's contact number by text, which she called. She spoke to a receptionist and left a message but no one returned her call. 167 On 15 February 2017 Ms Hudson received an email from Ms Nguyen attaching a communication from QED. That communication included: Yesterday you would have received communication from Brendan Wright, CEO of FAST, about partnering with QED to assist ACL holders with their compliance. As a subscriber of CompliFast, we know you understand and are committed to meeting all your NCCP compliance obligations and using the recommendations from your CompliFast reports to strengthen your business. From viewing Brendan Wright's video, you will know that FAST would like you to participate as well, by having QED conduct an independent verification of your loan files and this data then being shared with FAST (your individual results will be anonymous, with high level results of responsible lending, CPD training and information security components shared with FAST). QED has shared with FAST our belief that, as a group, CompliFast subscribers' results will be exemplary compared to those that are not. The main benefit of having QED verify your loan file review is that we do this for hundreds of brokers and we are very specific with our recommendations. Your CompliFast report will detail the key recommendations from your Self-Review and any additional recommendations from our audit team. This will give you peace of mind about the great work you've been doing with CompliFast. (Emphasis in original.) 168 On 20 March 2017 Ms Nguyen sent Ms Hudson a further email which included: Look forward to seeing you at our Broker Forum on Thursday. I know this webinar was last week but we will be putting on another one next week. Did you hear back from QED the last time we caught up we discussed you arranging a time for them to have a chat with you. ASIC spotlight is on ACL holders so FAST are doing what we can to support our ACL holders to ensure they have strong Compliance processes in place. QED will also be at our Broker Forum on Thursday and there will be a presentation on risk as well. Ms Hudson responded to Ms Nguyen by email of the same date noting that she was not yet sure if she could make the conference as her partner was having an operation the following day. Ms Nguyen sent a subsequent email asking Ms Hudson to "look into the QED when you have a chance". 169 On 28 March 2017 Ms Hudson subscribed to, and attended, the QED webinar "CompliFast Compliance Report Demonstration". 170 On 7 April 2017 Ms Hudson sent an email to "julian@qedrisk" in which she noted that Ms Nguyen had provided Julian's "details to [her] regarding compliancing [her] company" and asked him "to advise what the process is". On 11 April 2017 Ms Hudson was contacted by Kellie Ross of QED. They discussed the services that QED could provide to Leaseworks. Later on 11 April 2017 Ms Ross emailed a proposal to Ms Hudson setting out QED's recommended "best way forward for Leaseworks". April to June 2017 171 On 10 April 2017 Ms Black informed Ms Smith and Mr Notaras of her further concerns in relation to Ms Hudson. In her email sent on 10 April 2017 to Mr Notaras and Ms Smith, copied to Mr Mohamed, Ms Black wrote (as written): I am going through the BPLAC submission for the above broker and have concerns. While the review is rated green and there really aren't too many issues identified, my concern triggered when l saw the name Moustafa Dandachli noted in appendix 6. Kerry Ann was issued a First and Final warning back in May 2016 due to suspect and confirmed fraud and the only reason she was not terminated was because the loans in question were from the loan book she purchased from broker Moustafa Dandachli who had been terminated by BPLAC and banned by ASlC for major fraud concerns. It was noted in the BPLAC submission from May 2016 that the broker was specifically warning to be cautious when dealing with clients from the purchased loan book and yet 2 months after our warning she is doing a loan that inadvertently involves the terminated broker (the security property was in the joint name of Nadia Assoud and Moustafa Dandachli and was being transferred to the joint applicants). Before we can determine the right recommendation with this one, we need to better understand her relationship and dealings with this party. 172 Following receipt of Ms Black's email, Mr Notaras sought, by way of further email, clarification of what Ms Black meant when she referred to "a security in the name of the joint applicants being transferred to the joint applicants". Ms Black responded noting that the loan under review was "in the names of Nadia Assoud & Mona Selman" and that "[t]he security for the loan is being transferred from Nadia Assoud and Moustafa Dandachli to Nadia and Mona". Ms Black clarified that she wanted to know "if there are closer ties here; if only just for monitoring" and noted that Ms Hudson "was not warned not to have any kind of dealings but told to be cautious about [Mr Dandachli's] loan book". 173 As a result of Ms Black's concerns, on or about 12 April 2017 Mr Mohamed was instructed by the NAB compliance team to contact Ms Hudson and follow up on issues that had arisen from the first file review meeting and the Second BPLAC Submission. Mr Mohamed recalls having a telephone conversation with Ms Hudson at the time, but he cannot recall what was said. 174 Ms Hudson recalls that she was driving at the time she received Mr Mohamed's call on or about 12 April 2017 and that she was running late for a client interview. She recalls that they had a discussion to the following effect: Mr Mohamed: Can you tell me the background with the Mona Selman and Nadia Assoud application - from July 2016. Ms Hudson: Yes. Mona Selman is Mr Moustafa Dandachli's former partner. They were splitting up. Mrs Nadia Assoud is married to Dr Assoud, a reputable dentist in Sydney. Mrs Assoud and Mr Dandachli were transferring half of the property to Mrs Assoud and Ms Selman (a separation payout). The sale price was half the mortgage payout balance. Ms Selman needed finance for that. She already banked with NAB. NAB also had the existing home loan for Mrs Assoud and Mr Dandachli. The application for Ms Selman and Mrs Assoud was submitted. The background is all set out in the application. I then recall that there were follow up enquires from NAB as to supporting documents for Dr Assoud. I think eventually Mrs Assoud simply used her/ her husband's line of credit with CBA and ended up becoming the sole registered proprietor / buying Ms Selman out. The settlement funds went into Ms Selman's NAB account. Mr Mohamed: Right. How did you come across it? Ms Hudson: The application? It was sourced from the Dandachli Files. Mr Mohamed: The Dandachli Files. The files you bought? Ms Hudson: Yes the Dandachli Files I have. I thought we were done with this/ I had been cleared". Mr Mohamed: Yes, we are just tying up a few loose ends. I will send you an email and if you can confirm the same the review will be over. 175 Ms Hudson recalls that in or about April 2017 she also had a telephone conversation with Mr Davidson to the following effect: Mr Davidson: What are your processes now when you are dealing with any applications that come from the Dandachli Files? How are you ensuring that any deals that come from them are clean? Ms Hudson: I've just had similar questions from Mr Mohamed about this. Have you not spoken with him? Mr Davidson: I will talk to him. In the meantime, can you spell it out for me. Ms Hudson: After the April 2016 interview, I am far more thorough with the interview process. I am also the only one who loads the applications, giving me another opportunity to vet the supporting documents. Also, I use www.bankstatements.com.au which allows us to further increase the ability to vet supporting bank statements. And of course, payslips and income information is verified by www.bankstatements.com.au. 176 Mr Davidson also recalls that he had a conversation with Ms Hudson in about April 2017, the purpose of which was to follow up on his instruction to Ms Hudson at the first file review meeting that she no longer introduce any loans from Mr Dandachli's loan book. During that conversation he recalls that he had an exchange with Ms Hudson to the following effect: Mr Davidson: Are you still writing loans from the Dandachli book? Ms Hudson: I am only doing a few, but not too many. Mr Davidson: You know that's not the answer we were looking for, we have confirmed fraudulent files come out of that loan book. We asked you not to write any loans from that loan book with NAB. Ms Hudson: There were only a few with problem payslips, it wasn't all of them, there was 2. Mr Davidson: Three of the six were confirmed fraudulent. What processes do you have in place when dealing with any applications that come from the Dandachli Book? Ms Hudson: I am being more thorough and I am using bankstatement.com.au. 177 With the exception of the final statement attributed to her, Ms Hudson denies that she had a conversation with Mr Davidson to the effect recorded in the preceding paragraph and relies on her recollection of the conversation at the relevant time recorded at [175] above. 178 On 12 April 2017, after his telephone discussion with her, Mr Mohamed sent Ms Hudson an email which included: As discussed this morning, please send me a quick Email re the particular file which involved ppty transfer from Moustafa Dandachli and your process now with dealing with the book you bought from him. Just a few bullet points so we can have this matter closed - In the next few days is fine. 179 On 13 April 2017 Ms Hudson responded to Mr Mohamed's email referred to in the preceding paragraph. Her email included: As discussed the file in question was one that was inherited when I purchased the book from Moustafa Dandachli. As the other party was the wife of a reputable Sydney dentist I decided to take on the application. In the end Dr & Mrs Assoud decided to use their CBA line of credit so the file was withdrawn. Since my interview with NAB last April I no longer allow anyone to load the applications into FAST except myself so that I can further inspect the documents before submitting. I now also use a product called bankstatements.com.au, this allows us to receive customers banks statements directly from the banks. This is to further reduce incidents of receiving fraudulent documents from potential customers. Please advise if you need anything further from me to close this matter? In cross-examination Ms Hudson said that she did not know why her email referred to "purchasing" Mr Dandachli's loan book, she just followed Mr Mohammed's lead. She maintained that she did not purchase his loan book, she just had access to it. That evidence seems disingenuous. If Mr Mohammed had misdescribed the nature of the transaction, I would expect that Ms Hudson would, in the circumstances, correct him. It was an important issue, given the concerns that had been raised. However, ultimately, whether Ms Hudson purchased the loan book or simply had access to it, is of no consequence. NAB was concerned by her use of the files. That said, Ms Hudson's reference to a purchase of Mr Dandachli's loan book in her own correspondence explains why NAB in its internal documents would have equally described how Ms Hudson came to have access to the files as a consequence of a purchase of Mr Dandachli's loan book. 180 On 13 April 2017 Mr Mohamed provided Ms Hudson's email referred to in the preceding paragraph to Mr Notaras, Ms Black and Ms Smith. Ms Smith responded to Mr Mohamed by email of the same date stating (as written): It's not clear to me from this email what her approach is going forward to deal with these files she has purchased. She has simply stated she chose to do this deal. I remain nervous about these files and I would have expected a higher level of caution from here but I am not getting that. Am I missing something? 181 On 18 April 2017 Mr Mohamed and Ms Hudson exchanged emails. In his email Mr Mohamed made the following inquiry: As discussed, please confirm what your approach is going forward to deal with the book that you purchased from Moustafa Dandachli. Please advise what controls/precautions you have put in place if you ever have to deal with any of the clients from the book. Ms Hudson responded as follows: As discussed previously, I am far more thorough with the interview process than I have in the past. I am also the only one who loads the apps, giving me another opportunity to vet the supporting documents & we use www.bankstatement.com.au to further increase the ability to vet supporting bank statements. 182 On 18 April 2017 Mr Mohamed sent a further email to Ms Smith and Ms Black, copied to Mr Notaras, in response to Ms Smith's email of 13 April 2017 (see [180] above) in which he wrote: In response to your below Email of Thursday 13/4, I've just had a detailed discussion with Kerry this morning and she has advised as per below: • She is being more thorough with her interview process as she previously had an office admin person assisting her with the interviews • She is now the only person who completes the interviews and loads the applications giving her another opportunity to vet the supporting docs • She uses www.bankstatement.com.au to further increase the ability to vet supporting bank statements for income verification purposes 183 It appears that a period of time passed without any further steps being taken by Ms Smith. However, after a prompt from Ms Black, on 13 June 2017 Ms Smith sent an email to Mr Davidson and Ms Riotto, copied to Ms Black, which included: As discussed. Thanks for the additional info but I have read through this again and I cannot see where [Ms Black's] initial question has been answered. I am at a loss to understand where she has had further dealings with Dandachli post the last BPLAC case. Can you please advise:- • Why she chose to write this deal despite the caution offered; • What the nature of her relationship is with Dandachli; and • Whether she intends to maintain a relationship with him. Can you also please ensue that the submission is updated with all the info below and the answers to above and submitted to us for review. 184 On 13 June 2017 Ms Black responded to Ms Smith's email as follows: I can't locate anything on why Moustafa would be noted to be the spouse although it doesn't make sense that he would be on title and yet not be listed on any of the refi statements ... There is a whole lot of family related loans in this review (another Dandachli relative in appendix 2), which was a loan increase to pay back Mona, their sister in law ... I think there is a whole lot of asset shuffling potentially going on. 185 By email sent on 14 June 2017 by Ms Smith to Mr Davidson, copied to Ms Black and Ms Riotto, Ms Smith wrote (as written): As per our discussion yesterday and in the interests of wrapping this one up. I propose that the recommendation be that we update and reissue the earlier first and final warning to specifically prohibit her submitting any loans that have a connection with Dandachli or form the purchased book to NAB, given we previously only provided a caution. Given this is a 'filing cabinet' and not an actual purchased book I don't think this is unreasonable (can you make sure this is clear in the submission). There is another loan in the review that also has connection which worries me even if it is green. I think the missing piece of the puzzle is to understand what her relationship with Dandachli is. If we can understand that it would help. Also the previous first and final mandated training. Can you confirm this was completed. It also suggested she was going to move to be a BLSSA rep which has not occurred. Can you clarify what happened there. If you agree can you update the paper to include all the email exchanges (an there are many!) on this and resubmit and we will get this in the June agenda. 186 In cross-examination Ms Smith explained that the reason for her recommendation was because of her concern that, despite her understanding that Mr Davidson had told Ms Hudson that she was not to write loans connected with Mr Dandachli's book, there may be some confusion or misunderstanding on Ms Hudson's part as to what she was actually told. Ms Smith was concerned to provide a clear communication of NAB's requirements. 187 On 15 June 2017 Ms Smith informed Ms Black that Mr Davidson had had a telephone conversation with Ms Hudson, that he was "not comfortable on the surface" and that he wanted to reinterview. Therefore the matter would not "be on this month's [BPLAC] agenda". NAB suspends Ms Hudson 188 By letters dated 4 July 2017 from Steve Kane, general manager, NAB Broker Distribution, to each of Brendan Wright, general manager, FAST and Ms Hudson, NAB informed: (1) FAST that: We have recently suspended the accreditation of [Ms Hudson] as we have been unsuccessful in organising a meeting to discuss the findings of a recent review. This letter constitutes formal notice that NAB Broker will not accept new loan applications from Kerry Ann Hudson, a representative of FAST while the suspension is in place. Please contact Nick Notaras on XXXX XXX XXX to organise an appropriate time to discuss the review. Should we not be able to meet by the end of September 2017 NAB Broker will formally terminate the accreditation of [Ms Hudson]. (2) Ms Hudson that: We have recently suspended your accreditation as we have been unsuccessful in organising a meeting with you and your aggregator to discuss the findings of a recent review. This letter constitutes formal notice that NAB Broker will not accept new loan applications while the suspension is in place. We have also written to your aggregator advising them of this suspension and requesting they make contact to organise an appropriate time to meet. Should you have any questions please contact Mustafa Mohamed on XXXX XXX XXX. Should we not be able to meet by the end of September 2017 NAB Broker will formally terminate your accreditation. 189 Ms Smith was cross-examined about the letters referred to in the preceding paragraph. She explained that BPLAC's processes are such that if a case referred to it is not dealt with by it within a specified period, the broker will be suspended in the interim pending BPLAC addressing the case. For that reason, as far as Ms Smith could recall and discern from the minutes of BPLAC meetings, BPLAC did not discuss or make any determination about NAB's suspension of Ms Hudson. 190 In early July 2017 Mr Mohamed arranged to meet with Ms Hudson. He wanted to reconnect with her following the review process. However, prior to the scheduled meeting, Mr Mohamed became aware of Ms Hudson's suspension and thus cancelled the proposed meeting. 191 Mr Ryan said that he would have become aware of NAB's suspension of Ms Hudson shortly after Mr Wright received the letter from NAB referred to in [188] above. 192 On or about 19 July 2017 Ms Hudson noticed that she was not able to access her FASTLend portal, which was a separate system to Podium. She contacted FAST support to inquire about the problem and was told she should speak to her FAST partnership manager. According to Ms Hudson the following morning, 20 July 2017, she had a conversation with Ms Nguyen to the following effect: Ms Hudson: Hi Hien. I've been trying to log on to the NAB/FASTLend portal access but it is coming back with a message saying 'denied'/'removed'. I have contacted FAST support and they have referred me to you. Ms Nguyen: I have no idea. It is the first I have heard of it. I will look into it. Call me if you are still having problems. 193 Ms Nguyen does not recall the conversation referred to in the preceding paragraph. Nor does she know why Ms Hudson would have called her about access to her NAB/FASTLend portal as that portal was managed by NAB. 194 Ms Hudson's inability to access the FASTLend portal continued. She said that she unsuccessfully attempted to contact Ms Nguyen by telephone, although Ms Nguyen does not recall receiving missed calls. It was her invariable practice to maintain contact with the brokers in her portfolio. On 21 July Ms Hudson and Ms Nguyen exchanged the following text messages: Second file review meeting 195 On 24 July 2017 Mr Davidson telephoned Ms Hudson and asked her to attend a file review meeting (second file review meeting). By email sent on 24 July 2017 Mr Davidson confirmed that the second file review meeting was scheduled to take place on 28 July 2017 and requested that Ms Hudson bring copies of five nominated files with her to the meeting. 196 The second file review meeting took place on 28 July 2017 at NAB's offices. In attendance were Ms Hudson, Mr Davidson and Ms Nguyen. After greetings and some informal general discussion the meeting got underway. Each of Ms Hudson, Mr Davidson and Ms Nguyen gave evidence about their recollections of the meeting, although, as Mr Davidson and Ms Nguyen accepted they did not have a complete recollection of the events. Although more emphatic in her asserted recollection of the meeting, Ms Hudson also said that at the time of the meeting she was suffering from memory loss. In any event, it was apparent that by the time of the proceeding, Ms Hudson also did not have a complete recollection of the course of the meeting. 197 It was not in dispute that Mr Davidson led the meeting. Ms Nguyen mainly observed at the meeting and did not ask questions. 198 Mr Davidson recalls that he asked questions relevant to the Second BRR Report. In cross-examination Mr Davidson denied that by the time of the second file review meeting he had decided that he was going to test Ms Hudson's memory and that if she was not able to answer his questions quickly, that would confirm his theory that Ms Hudson was a proxy broker for Mr Dandachli. He explained that the purpose of the second file review meeting was as a follow up, consequent on the first and final warning given by NAB to Ms Hudson and in order to confirm whether file quality was at a level which met broker and lender standards. 199 Mr Davidson noted that prior to the second file review meeting, reporting showed that Ms Hudson had been submitting a high volume of incomplete loan applications and then withdrawing the applications. 200 Mr Davidson recalls that Ms Hudson attended the meeting with a number of files. However, as the meeting progressed it became apparent that Ms Hudson's compliance documents, including, for example, fact-finding, needs analysis, privacy and consent forms, were empty or incomplete. When Ms Hudson was asked questions about specific details on the applications, even with the files she had prepared and lodged in front of her, she could not provide details. Ms Hudson's empty or incomplete compliance documents, combined with her lack of knowledge of the applications, raised serious alarms for Mr Davidson. During the meeting Mr Davidson asked Ms Hudson a series of questions including how or where she met particular customers, how she received supporting documents from customers and why particular needs analyses were incomplete. Mr Davidson recalls that Ms Hudson was not able to answer any of his questions in a satisfactory way. 201 According to Ms Hudson, Mr Davidson first asked about an application in the name of Mr Tajjour. They had a conversation to the following effect: Mr Davidson: You misled us. He is a gambler. Ms Hudson: How do you say that? There is no evidence of that. Mr Davidson: Look at all the withdrawals at the pub. Ms Hudson: Yes but his work address is above a pub. I also asked him about the withdrawals from all of the ATMs and he said he was getting money for his divorced sister and her kids. As we all know, unless you are standing behind someone when they are gambling, you can't say that anyone is or is not gambling. Also, his behaviour over this period was entirely consistent. Mr Davidson: So you think he is gambling? Ms Hudson: He could be. But unless you are standing over someone's shoulder, there is no way to know for sure. I couldn't determine that to be the case and he denied it. As I said, if you look at his history, he had the same pattern. I believed him when he told me that the cash was for his sister and her kids. Mr Davidson denies saying the words "you misled us. He is a gambler" but recalls the balance of the exchange as set out above. Mr Davidson said that the purpose of the discussion was to gather information about how the file was processed. He recalls that in addition he and Ms Hudson had the following exchange in relation to Mr Tajjour's file: Mr Davidson: In this file there is a lot of evidence to show any broker that this application would not have been approved by any lender. Why was this application still submitted? Ms Hudson: I knew that the customer would not get approved but I wanted the bank to be the bad guys. If there is an application, I would always submit it. It is up to the bank to say no. Ms Hudson denies that an exchange to this effect took place. 202 Ms Hudson recalls that Mr Davidson then asked her about an application in the name of "Krayem". They had an exchange to the following effect: Mr Davidson: How old are all of the kids. Ms Hudson: I don't know. For some reason something in my head tells me there are four. If you give me the file, it might jog my memory. I've been having trouble remembering things. I don't know if it is menopause or what. Ms Hudson recalls that both Mr Davidson and Ms Nguyen rolled their eyes at her at that point. Ms Ngyuen denies that she did so and does not recall that Mr Davidson did so. Ms Nguyen said that eye rolling was not behaviour that she would exhibit in a business meeting and that in her dealings with Mr Davidson he always presented and spoke to brokers and colleagues professionally. 203 According to Ms Hudson, the conversation about the Krayem file continued as follows: Mr Davidson: Why is there a 0 balance for educational expenses. Ms Hudson: They run it through their daycare centres. This is recorded in the application as per your policy that if something is recorded as 0 to provide a comment for it. 204 Ms Hudson noted that based on the Second BRR Report, NAB had found an undisclosed credit card related to the Krayem file and had queried a third party valuation but that Mr Davidson did not mention these matters at the meeting. Mr Davidson denies this to be so. In particular, in relation to the undisclosed credit card his evidence was that, as his notes recorded in the Third BPLAC Submission (see [225] below) expressly refer to the fact that the "Broker was not aware of undisclosed Citibank credit card debt", he certainly raised it. He would not have recorded that in the Third BPLAC Submission (see [225] below) had it not been discussed. I accept that to be so. Indeed, the Third BPLAC Submission is the only contemporaneous written record of the second file review meeting. 205 Ms Hudson recalls that Mr Davidson next asked questions about the Selman and Assoud application. They had an exchange to the following effect: Ms Hudson: I have been through this with Mohamed. You can speak to him. They were splitting up - it is on the documents along with the applicants' supporting documents. Mr Davidson: Look at the VEDA search. He is a secretary at the place that she works. Ms Hudson: Yes - they are splitting up. I'd assume they are finalising things like that. Mr Davidson: You're helping a criminal move assets around. You're a front for Dandachli. Ms Hudson: I am not doing anything of the sort. I am not a front for Mr Dandachli. 206 Upon Mr Davidson's review of the file, it became apparent that Ms Assoud was Mr Dandachli's ex-wife. When Mr Davidson asked Ms Hudson questions about the Assoud and Selman file, it was apparent to him, from Ms Hudson's responses, that she did not have much knowledge about the file. This caused Mr Davidson concern as Ms Hudson had been given notice of the meeting, had time to prepare for it and was responsible for preparing and lodging the application. Mr Davidson recalls that he and Ms Hudson had an exchange to the following effect: Mr Davidson: You appear to have very little knowledge of these files. It appears as though you have had no involvement or someone else has been submitting these loans. Ms Hudson: No, they are mine. I did the transactions. Mr Davidson: Is Dandachli still involved? Ms Hudson: How dare you. 207 Ms Hudson recalls that she then raised the Sam Dandachli application which was listed as one of the five files to be discussed. Ms Hudson explained that this application involved a refinance in order to pay Mona Selman money which was owed to her. She recalls that she said words to the following effect: I have done applications for Mr Dandachli's extended family. Just because he committed and was convicted of fraud doesn't mean that anyone else has. My brother is a drug addict - it doesn't mean I am. And: This is about the Dandachli files isn't it? What is the issue? I have been very careful about them. 208 According to Ms Hudson Mr Davidson did not want to listen. She said that Mr Davidson then raised the "Alex Perry" application, even though she was not asked to bring that file to the meeting. According to Ms Hudson they had an exchange to the following effect: Mr Davidson: He nearly went broke 12 years ago. Did you know? Ms Hudson: No - what does it matter. It was 12 years ago. Mr Davidson does not recall discussing the Alex Perry file. 209 Ms Hudson recalls that Mr Davidson produced a list of other applications that she had submitted. Their discussion continued to the following effect: Mr Davidson: Every time we ask questions, you withdraw the application. That's because you're a front for him. Ms Hudson: No. And I am not a front for Mr Dandachli. Mr Davidson: Well you tell me about this. 210 Mr Davidson recalls that he took a list of file names with application numbers to the meeting. He used that list to demonstrate the number of applications submitted which had been declined or approved and he showed it to Ms Hudson to confirm that this was correct, as there was a high volume of applications. He recalls that they had an exchange to the following effect: Mr Davidson: Kerry, it is obvious that many of these applications are not meeting our credit policies. You are submitting a lot of applications and we either have to come back to you asking questions or requesting documents and the applications end up being withdrawn or declined. Conversion is important. Please don't submit applications that you know are not going to be approved as this wastes a lot of time. Ms Hudson: No. It's hard to get approvals through NAB. It is hard to deal with NAB's credit policies and assessors. That is why they were declined. Ms Hudson: It is the broker's responsibility to understand all lenders' credit policies and provide all supporting documents. 211 Ms Hudson says that she then looked at what Mr Davidson was showing her on a piece of paper, which was an application for a client called Billy Jaderpour. Ms Hudson recalls that she said words to the following effect: Billy actually got finance. The form of the application was incorrectly loaded. Your staff withdrew it. It was then reloaded and accepted. 212 According to Ms Hudson the meeting came to an end with the following exchange: Ms Hudson: This is a set up. What do you want from me? Mr Davidson: You're on suspension. Ms Hudson: I have to go. I can't deal with this right now. 213 Ms Hudson recalls that after standing up and pointing to Ms Nguyen, Mr Davidson then said words to the following effect directed to Ms Nguyen: I'll get you the letters. You can then let everyone know. Ms Nguyen denies that Mr Davidson said words to this effect. 214 Ms Hudson did not know what Mr Davidson meant when he said "let everyone know" but assumed it would be in respect of accreditations that were affiliated with FAST. 215 Mr Davidson's recollection of how the meeting concluded differs to that of Ms Hudson. He recalls that he informed Ms Hudson that her accreditation was going to be suspended and that he said words to the following effect to her: We will need to suspend your accreditation to prevent any further damage which may be caused from your non-compliance. 216 Mr Davidson said that at no point during the second file review meeting was Ms Hudson told that her files were "in good order". He denies that he pointed at Ms Hudson and that he did not want to hear her responses. He said that Ms Hudson was given time to respond to all of the questions he directed to her. In cross-examination he denied that at the second file review meeting: he spoke quite quickly when asking questions; he asked a question, paused briefly and then quickly asked the next question; or that he spoke over Ms Hudson when she was trying to answer a question. 217 Ms Nguyen did not have a complete recollection of what was said and by whom at the second file review meeting. However, she denies that Mr Davidson was aggressive in his tone when he spoke to Ms Hudson. She said that both she and Mr Davidson presented and spoke to Ms Hudson in a professional manner. Ms Nguyen recalls that Ms Hudson was asked a series of questions in plain and clear language and that Ms Hudson had documents relevant to each file before her at the time of questioning. She recalls that they went through each file, one by one, and that Ms Hudson was given an opportunity to respond to each question asked. 218 Ms Nguyen said that as they went through each file, they identified a clear pattern of no-compliant practices, including that: (1) preliminary assessments were blank, although that she could not now recall how many were in this state; (2) living expenses were not noted clearly; (3) in one file the declaration of dependants was incorrect; and (4) in one file there was incorrect reliance on an investment property in circumstances where the address on the applicant's driver's licence matched that of the investment property and where Ms Hudson stated that the applicant lived with his parents. 219 Ms Nguyen recalls that when they reviewed the Tajjour file she drew Ms Hudson's attention to evidence of large and frequent withdrawals by the customer. Ms Nguyen recalls that she had a conversation to the following effect with Ms Hudson: Ms Nguyen: Look at these withdrawals. When preparing this application, did you identify any habits of this customer that could or might have been related to gambling? Ms Hudson: Maybe. I thought the customer may have been withdrawing funds for gambling as he often withdrew large amounts from the same venue a few times a day. I asked the customer what the withdrawals were for and he told me that they were for his sister. Ms Nguyen: Kerry it is your responsibility to give credit advice to a loan applicant. If they were not able to afford a loan or if you see issues with the applicant's character and financial circumstances you need to consider this. Ms Hudson: I understand that but I still submitted the loan. The bank can decline and advise the customer. 220 Ms Hudson denied that she had the exchange with Ms Nguyen to the effect set out in the preceding paragraph. She described Ms Nguyen as "virtually mute" throughout the second file review meeting. However, Ms Nguyen explained that she asked these questions because part of Ms Hudson's role as a broker was to undertake a preliminary fact-finding exercise. Ms Hudson was required to give the customer a form to complete, request 100 points of identification and consider the customer's income, assets, liabilities and debts. Thereafter Ms Hudson would have to make a preliminary assessment and advise which lenders were and were not suitable for the particular loan applicant. At the time, it was not clear to Ms Nguyen that Ms Hudson had undertaken this compulsory process. 221 Ms Nguyen recalls that Ms Hudson and Mr Davidson had an exchange in relation to one of the files that had been introduced from Mr Dandachli's loan book to the following effect: Mr Davidson: Kerry, you were advised not to write loans from that book and you did it anyway. Why? Ms Hudson: If there is a deal I am not going to turn it away. Mr Davidson: You didn't do your due diligence and you have not followed any of the compliance, fact finding or statement reviews that would typically be required in your role. Do you have any involvement with Mr Dandachli? Ms Hudson: No. Ms Hudson denies that she had an exchange with Mr Davidson to the effect set out above. 222 Despite her denial about any involvement with Mr Dandachli, Ms Nguyen did not believe that Ms Hudson was telling the truth about her involvement with him. 223 Ms Nguyen also recalls that: (1) in the course of the meeting Ms Hudson said words to the following effect: I did not go through any of the statements properly or in detail. If it looked like one of my customers may have had trouble servicing a loan, I would just submit the documents anyway and let the bank decide whether to approve it or not. It is not up to me to decide. A deal is a deal, I am not going to turn away business. If an opportunity for a deal is there, I will take it. If the bank wants to turn down loans, it is the bank's responsibility to do that. (2) in the last ten minutes of the meeting Ms Hudson explained why she had sought to introduce loans from Mr Dandachli's loan book. She recalls that she had an exchange to the following effect: Ms Hudson: I bought the book from Mr Dandachli. I did not know who he was but he is known to one of my staff members, Alex Patsellis. Ms Nguyen: Did you do any due diligence and engage with an accountant or lawyer before purchasing the book? Ms Hudson: No. I discussed buying the book with my business partners and we paid for it without looking into the book itself. (3) throughout the meeting Ms Hudson would often repeat words to the following effect: One of my family members has passed away recently. I am not thinking properly. (4) during the meeting Ms Hudson appeared alert. Ms Nguyen did not observe Ms Hudson to be in a state where she was unable to understand or answer questions; and (5) it was not the case that Mr Davidson asked questions of Ms Hudson in rapid succession. 224 According to Ms Nguyen, after the second file review meeting: (1) Mr Davidson informed Ms Nguyen that he would go away and consider Ms Hudson's responses and that he would notify her once NAB had made a decision in relation to Ms Hudson's accreditation with it; and (2) she reported to Mr Ryan and informed him of what had occurred at the meeting. Third BPLAC Submission 225 Mr Davidson took notes at the second file review meeting, which he then used to prepare a BPLAC submission dated 28 July 2017 (Third BPLAC Submission). The Third BPLAC submission included: (1) the reason for referral to BPLAC, namely that Ms Hudson "has received an overall green rating for this review and has been referred to BPLAC as this review has been BPLAC mandated from a previous decision in May 2016"; (2) the time and venue for the interview of Ms Hudson; (3) the "Background" which referred to Ms Hudson purchasing a loan book from Mr Dandachli and that during an interview which took place on 19 April 2016 "it was found that 3 confirmed fraudulent files were all previous clients from" that loan book. It also recounted that at the conclusion of that interview Ms Hudson was informed that NAB did not "want to see any business written from this confirmed fraudulent loan book purchased from a convicted criminal. Broker Kerry appeared alarmed by what we uncovered and she confirmed she would comply with this request"; (4) "Member Feedback" about four particular files and other issues discussed with Ms Hudson which provided: Appendix 2 - Houssan Dandachli & Abier Toukan Customer Houssan Dandachli was a referral from Mustafa Dandachli. This was lodged on 23 June 2016, one month after we instructed Broker to not write business from this referral source. Purpose of transaction was $94K cash out for Houssan Dandachli to pay Mona Selman who is Mustafa Dandachi's ex-wife. This transaction confirms Broker is still in contact with this family after being told to cease all dealings. Appendix 4 -Azzam Krayem & Kelly Margaret Krayem This transaction was from the loan book purchased from Mustafa Dandachli. Broker submitted loan with listing 3 dependants (15, 12 & 8 years old), during interview Broker stated she left out a younger child being 5 years old there were in fact 4 children. Kelly Krayem income tax return provided by Broker confirms Applicant has 5 dependants. Broker was not aware of undisclosed Citibank credit card debt. Appendix 5 - Sammy Tajjour This transaction was from the loan book purchased from Mustafa Dandachli. Broker states she lodged this loan "I knew this wouldn't get approved, applicants a gambler, l wanted you guys to decline it so you can be the bad guy and not me". Broker had Applicants savings statements on file showing large withdrawals from Hotels (mainly Wynyard Hotel) which suggests Applicant is gambling. Broker stated she did ask Applicant what he was doing with the cash and he stated "Giving it to my sister" which the Broker did not believe. Broker lodged this application stating $1,530 monthly living expenses although savings statements proved otherwise. Applicant has frequently missed payments on CBA personal loan and NAB Savings account XXXXXXXXX is frequently overdrawn. Regardless of what Applicant is using cash for it does show the Applicants living expenses are not correct. Broker had all the evidence on file to show client is clearly living well beyond their means. Appendix 6 - Nadia Assoud and Mona Selman This was another transaction from the loan book purchased from Mustafa Dandachli. Broker stated this transaction was to "Move Moustafa Dandachli's assets". Transaction was to sell Moustafa's 50% share in 1 Jocarm Avenue CONDELL PARK NSW 2200 which his owns with Ex-Wife Mona Selman. Broker once again lodged Application with missing dependants. Medicare card shows 3 dependants yet Broker lodged Application with only 1 dependant. Broker could not recall how many dependants Applicant has. Another transaction confirming Broker is still in contact with this family after being told to cease all dealings. (5) "Anticipated Impacts" which, at the time, could not be ascertained; (6) "Aggregator Position" which recorded that the aggregator, FAST, "supports Termination"; (7) "Case Presenter Recommended Outcome", that: Given Kerry's lack of compliance and misleading information provided in applications Termination is recommended. (8) "Chair Recommended Outcome" which was to support "termination of the broker's accreditation". 226 After reviewing the Third BPLAC Submission, Mr Notaras discussed it with Mr Davidson. During that discussion Mr Davidson told Mr Notaras that a number of the files he had reviewed were from Mr Dandachli's loan book. Events following the second file review meeting 227 Ms Hudson recalls that following the second file review meeting she was informed that NAB had suspended her accreditation with it. That that is so is supported by an email from Patrick Neary, broker operations manager, business & private banking, CBA sent on 28 July 2017 to FAST Accreditations. In his email Mr Neary requested background information on Ms Hudson as she had informed CBA that she had been suspended and they were "keen to understand the nature of the issue". 228 On 31 July 2017 Ms Hudson sent a lengthy email to Mr Davidson, copied to Ms Nguyen, which included: I would like to advise you both that under the circumstances I have chosen to resign as the Director of Leaseworks. As I only hold a 42% shareholding my resignation was accepted by the majority of shareholders over the weekend. I will also be removing myself as a principal on Leaseworks Credit License. I would like you to understand that I take this whole situation very seriously by taking these measures. My business partner John Currie who has been absent from the business for the last few years has agreed to return so I can take care of my personal health issues. He is now the Director of Leaseworks & I will be removed within the next day or so. The email went on to describe what Ms Hudson considered to be a current medical condition and the various events which had occurred which she considered had contributed to her condition. 229 Mr Ryan explained that when FAST was notified of a Panel Lender's intention to suspend a broker it would usually suspend the broker pending further investigations. 230 By letter dated 4 August 2017 from Mr Ryan to Ms Hudson, FAST relevantly informed Ms Hudson that: National Australia Bank Limited (NAB) have made FAST aware of a pending investigation into deals you submitted and their intention to suspend your accreditation. As a result, FAST is suspending your ability to originate applications under the Sub-Originator Agreement pending further investigations. During the period of the suspension, you must not introduce applications for any products FAST panel lenders make available on the FAST platform. FAST will continue to pay commissions under the Sub-Originator Agreement during the suspension period, subject to the Sub-Originator Agreement terms. FAST will contact you as soon as practicable to notify you of any further action relating to the suspension. 231 In cross-examination Mr Ryan said that FAST suspended Ms Hudson at the time because a major lender, NAB, had suspended her. He understood that, despite being asked not to, Ms Hudson was still making applications on behalf of clients in Mr Dandachli's loan book which was a breach of a duty of care owed to the customer under the National Credit Act. He said that, despite not mentioning it in his affidavit, with the assistance of Philip Haultain, special counsel, governance and legal, NAB, he satisfied himself that the requirements of cl 11.1.2 of the Sub-Originator Agreement had been met before issuing the letter referred to in the preceding paragraph to Ms Hudson. 232 On 4 August 2017 Grant Sutherland, lead, broker support services, NAB sent an email on behalf of FAST (Suspension Email) to 42 recipients who were representatives of its Panel Lenders. Mr Ryan explained that Mr Sutherland ran accreditations and operations for the PLAN, Choice and FAST businesses and for Advantedge. While he could not recall exactly what transpired in relation to Leaseworks on this occasion, Mr Ryan also explained that the usual process would have been that he would have spoken with Julian Kudelko, an operations manager at FAST, who, in turn, would have requested Mr Sutherland to send the Suspension Email. That email provided: Dear lender partner, Please be advised that FAST have suspended Kerry Hudson (Leaseworks Pty Ltd) effective immediately. We have been informed by a major lender of pending investigation into anomalies with a number of loan submissions. We are aware that Kerry holds a number of direct lender accreditations outside of FAST which you may wish to note your side. · If you have any queries regarding this suspension please contact Rob Ryan, Head of Northern Region on XXXX XXX XXX. We will notify you of the outcome and progress of the suspension as soon as practicable. Ms Hudson was not aware of the Suspension Email at the time of its dispatch. 233 Also on 4 August 2017: (1) CBA suspended Ms Hudson's "Authority to Act" in accordance with the agreement between it and FAST; (2) Westpac "noted 12814494 Ino Kerry Ann Hudson under Finecorp Group Pty Limited as 'Suspended'"; and (3) ANZ suspended Ms Hudson's accreditation "pending investigation outcome". Ms Hudson's health 234 A letter dated 7 August 2017 from Western Imaging Group addressed to the referring doctor, in relation to Ms Hudson, included the following conclusion: 1. Multinodular goitre. 2. Biopsy of right lobe nodule recommended. 235 There is no evidence that this letter was provided to NAB or FAST at the time. 236 As set out above, Professor Sidhu provided a report on Ms Hudson's health as at July 2017. The report included: [Ms Hudson] was suffering from a large toxic thyroid nodule. This was producing compressive symptoms and was overactive. There is documented scientific evidence that the thyroid was overactive based on her thyroid function tests and the thyroid scan. I refer to the symptoms that she describes in paragraph 109 of her affidavit. "I began losing my voice from time to time" this is consistent with having a 4cm nodule in your neck pressing on your trachea and larynx. "I couldn't properly eat and swallow". Again, this is consistent with a large 4cm nodule pressing on the esophagus (the gullet) that causes difficulty swallowing. "I had a high place phenomenon that she was on edge"-this is consistent with having thyrotoxicosis ie an overactive thyroid gland. "I was having difficulty concentrating and remembering basic things like numbers." This again is consistent with thyrotoxicosis and an overactive thyroid gland. The thyroid produces a hormone called Thyroxine. Thyroxine regulates the metabolic rate at which every cell in the body functions. When there is an excess of Thyroxine then the metabolic rate of the body is increased which causes patients to be anxious, agitated, have an increased heart rate, palpitations, sweating and feeling hot and bothered. The presence of her toxic nodule is consistent with the symptoms she has just described. 237 On 4 October 2017 Professor Sidhu performed surgery to remove the right lobe of Ms Hudson's thyroid gland. Professor Sidhu's report concluded that following such surgery, a patient is usually fit to return to work after two to four weeks but hat when patients have a "toxic nodule they may take longer to fully recover cognitive function possibly up to three months' time. Following that, when the patient returns to a euthyroid state there should be no restrictions on any further work capacity". 238 I accept Ms Hudson was suffering from this condition as at July 2017. While Ms Hudson raised that she was experiencing memory loss at the second file review meeting and referred to "her personal health issues" (which she attributed to the number of recent personal losses she had experienced) in her subsequent email dated 31 July 2017, neither NAB nor FAST was aware of this condition at the time of, or proximate to, the second file review meeting. Mr Davidson prepares a "BPLAC Firm Review Submission" 239 In early August 2017, Mr Davidson prepared a document titled "BPLAC Firm Review Submission". That submission nominated the "Firm" to which it related as "Leaseworks Australia Pty Ltd", as opposed to Ms Hudson, who had been nominated as the broker in other BPLAC submissions. Mr Davidson explained that was because at that time BPLAC was considering whether to terminate Leaseworks and, as he recalled the "BPLAC Firm Review Submission" was used when considering a company, such as Leaseworks, as opposed to an individual broker, such as Ms Hudson. In preparing the submission, Mr Davidson had his notes from the first file review meeting and the second file review meeting as well as the earlier BPLAC submissions available to him. 240 The BPLAC Firm Review Submission for Leaseworks included (as written): Broker Terminations: Kerry Ann Hudson is presented to the committee in this meeting to endorse the termination of her accreditation. Kerry Ann was reviewed in March 2016 following 3 suspect fraud alerts being received via AFT. The outcome of this review was rated Red and referred to BPLAC due confirmed fraudulent payslips on 2 files and suspect fraud on 3 files. The suspect fraud files were a result of Detica alerts received for the broker and had matched against customers due to previous fraud application, large cash transactions, declined applications and customer documents. It was identified during the interview with the broker that she had paid $150k to purchase a loan book when she decided to move her business into writing mortgages as well as equipment and asset finance. It was advised that the loan book had belonged to banned broker Mustafa Dandachli. At the time of this interview, Kerry claimed to be unaware of the issues with the loan book she had purchased. She was advised to proceed with caution on any clients coming from this source. The broker was retained with a First and Final warning with coaching to be provided to assist the broker with identifying suspect/fraudulent documentation. A follow up review was completed in January 2017 and was rated green however concerns were noted due to further applications for Mustafa Dandachli's relative's had been processed. During interview the Broker's compliance documents including fact finds & preliminary assessments were viewed. There was very little detail included and many blank sections that should have been completed. The Broker clearly has no regard for compliance. During discussions on all files Broker had very little knowledge or recollection of the detail of each transaction. This is hard to fathom given the Broker completed the transactions and was aware of the files we wished to discuss prior to the interview. Broker stated she is incredibly busy with Leasing and Insurance business, this is the primary focus of her business as the name Leaseworks suggests. Given how little Broker could recall on the details of all transactions it appears as though someone else is involved in the business writing these applications. NAB asked if Broker if Moustafa Dandachli was still involved in the business and she was "a front" for Mustafa Dandachli. Broker denied this was the case. Broker paid $150K for the loan book from Mustafa Dandachli and didn't receive any trail as Aggregator VOW would not transfer the loan book. Loan submission quality / withdrawn rate Broker has an alarming number of withdrawn files (35 of 82 in the past 3 years= 43%) where Applications are poorly presented, we ask for information and then files get withdrawn. Broker tried to explain why 3 of the 35 were withdrawn and then accepted the others were withdrawn when we requested further information which could not be provided. Extraordinary BPLAC meeting – 14 August 2017 241 On 14 August 2017 at 11.52 am Mr Davidson sent an email to Ms Smith copied to Ms Black, the BPLAC committee and Mr Notaras, with subject "BPLAC – Kerry Hudson (Aug 2017)" which included: Please see attached BPLAC submission for [Ms Hudson] and also Resignation email from Kerry. Given [Ms Hudson's] lack of compliance and misleading information provided in applications Termination is recommended. 242 Both Mr Notaras and Ms Smith responded to Mr Davidson's email referred to in the preceding paragraph in short compass. At 12.01 pm Mr Notaras sent an email noting his support and at 12.08 pm Ms Smith sent an email also noting her support and that she would upload the papers for that afternoon's meeting. 243 At 2.00 pm on 14 August 2017 an extraordinary meeting of BPLAC was held at which BPLAC considered whether Ms Hudson should be terminated. 244 At 3.20 pm on 14 August 2017 Ms Smith sent an email to the attendees of the BPLAC meeting which had taken place that afternoon. That email provided: Thank you so much for attending at short notice and your time today. This email is to confirm that BPLAC has supported the termination of [Ms Hudson]. The details of today's meeting (including the action items that came out of the meeting) will be covered in detail in the August minutes which will issue post the next meeting. In the meantime we will issue the termination letters shortly and prepare the firm review. 245 At 3.33 pm on 14 August 2017 Ms Smith sent an email to Mr Davidson and Ms Nguyen, copied to Ms Black, (14 August 2017 Email) which provided: As a result of the extraordinary BPLAC meeting today the committee made the decision to terminate not only [Ms Hudson] but her firm Leaseworks Australia Pty Ltd and all brokers associated with this firm. Can I ask that you please supply a list of all brokers associated with Leaseworks Australia Pty Ltd so that we can finalise this matter. 246 In cross-examination Ms Smith accepted that the 14 August 2017 Email was not entirely accurate. At the extraordinary BPLAC meeting, a decision was made to terminate Ms Hudson's accreditation with NAB. The decision in relation to Leaseworks was not made until the 12 September 2017 BPLAC meeting. In the meantime Ms Smith had to obtain details of any other brokers that were accredited with Leaseworks. 247 Mr Notaras did not communicate NAB's decision to terminate Ms Hudson's accreditation to FAST. He said that decision would have been communicated to FAST by the general manager of NAB broker distribution who, at the time, was Steve Kane. 248 Mr Ryan said that he would have been made aware of NAB's decision to terminate Ms Hudson's and Leaseworks' accreditations referred to in the 14 August 2017 Email either on or shortly after 14 August 2017. Mr Ryan said that once he was made aware of NAB's decision he would have consulted Mr Haultain and asked him to review the Sub-Originator Agreement and, if it was brought to his attention, the 14 August 2017 Email. He would have also spoken to Mr Wright. 249 In cross-examination, Mr Ryan said that on 14 August 2017, in making the decision to give notice of the intention to terminate the Sub-Originator Agreement, he considered that for 12 months FAST had asked Ms Hudson to remediate her business and her processing practices in order to remain compliant with the National Credit Act. This was done by requesting Ms Hudson to take up QED risk training and not to market to clients from Mr Dandachli's files. He said that these were matters he would have discussed with Ms Nguyen and Mr Haultain at the time and that in fact he had a meeting with Ms Nguyen and Mr Haultain on 14 August 2017. Mr Ryan also raised these matters with Mr Wright. 250 As foreshadowed in Ms Smith's email referred to at [244] above, the extraordinary BPLAC meeting was included in the minutes of the BPLAC meeting which took place on 30 August 2017. Those minutes relevantly provided in relation to the decision to terminate Ms Hudson: The case for Kerrie Ann Hudson was heard at a separate meeting of BPLAC chaired by Allison Smith at 2.00pm 14 August 2017. Kerry Ann Hudson - FAST (NSW) • AS advised the broker has been referred to BPLAC due to the broker purchasing a loan book of a permanently banned broker. It was advised to Kerry that NAB would not entertain any business originating from that loan book. AS added that In May 2016, the BPLAC committee requested a follow up review be completed on the back of that condition which resulted in a green outcome. • AS mentioned that Issues were uncovered that the broker was still writing business from the purchased loan book however. • The Distribution Manager Brent Davidson (BD) was present at the meeting and said that when asked about this revelation and if she was farming any business out from the loan book, she advised that she was. BD advised that based on this a face to face meeting was organised where the broker brought along the loan files in question . • BD advised that in appendix one the applicant was the brother of the banned broker which Included $94, 000 cash out to payout an ex-spouse. BD added that appendices four and five were of concern where the broker advised a dependant was left out in appendix four. • 2.05pm - LD joined the meeting. • BD advised that as a result on the revelation of an un-disclosed dependant, the borrower's tax returns were overviewed where it was uncovered she had another undisclosed dependant. He said that the borrower in appendix five was of most concern as the broker stated she knew the loan would not get approved as the applicant was a gambler and she wanted NAB to decline the loan to make the broker's conversation with the applicant easier to be had. Kerry purportedly asked the applicant about his spending habits from his transaction statements where he advised the money was going to his sister which the broker did not believe. • BD also said appendix six was concerning as when asked about the purpose of the loan , the broker said it was to help the applicant move his assets being a 50% stake in property to his ex-wife and where dependants were undisclosed also. • BD also said the broker seemed not to recall the loans in question which was also a concern. She was asked if she was a front for the broker she bought the loan book (Mustafa Dandachli) off to which she said she wasn't. It was mentioned too that Kerry said she paid $150,000 for the book and did not receive any trail income which raised the question of due diligence on the broker's behalf. • BD said that of the 82 loans the broker has submitted to NAB in the last three years, 35 loans had been withdrawn and when requested for further information, the broker would simply withdraw the applications which resulted in poor quality applications. • AS asked BD what was the broker's reply to why she was referring the business from the purchased loan book to NAB which she advised she was writing very little business out of the loan book which she was told by BD it should be zero. BD also said that appendices 2, 4, 5 and 6 all originated from the purchased loan book. • BH asked if there is evidence available that prohibits the use of the loan book to write business with NAB which BD replied it was a verbal condition. BH also asked AS why the review was a green outcome based on all of the concerns just discussed by BD. • AS replied that findings were uncovered that required further questions to be asked of the broker and that the writing of loans off the purchased back book was mentioned only with the standard review scoring adopted. • BD advised he had located the first and final warning letter that was issued in May 2016 where there is no reference that states not to write business from the purchased loan book. • SK advised that the broker received a first and final warning and a number of compliances were breached after this and uncovered in the follow up review and questioned if there would potentially be issues in the future if the broker was terminated based on her receiving a green outcome of her BNA review. • CMc was asked her views and advised that the broker's lack of knowledge of the loans and given the loans generated were from the old book was concerning, she questioned the age of the files and time elapsed between settlement and the case being presented to BPLAC. • EB replied that the duration between review completion to the BPLAC case being heard was the discovery of additional concerns and the back and forth communications of having these addressed is the reason for the delay. • BH asked if there was anyone else associated with the business to which BD replied to his knowledge there was one other person who held accreditation but focuses on the leasing side of the business. • BH and CMc both agreed that based on the broker's actions, they were inclined to terminate not just the broker but the broker's firm Leaseworks Pty Ltd. • BD advised that Leaseworks Pty Ltd holds its own ACL to which AS replied that she will request information from FAST if there are other brokers involved and terminate at a firm level. • CMc, SK, BH and LD endorsed the recommendation to terminate the broker's accreditation. • CMc asked about the broker's current portfolio and if the settled loans should be washed through 'Worldcheck" due to the criminal connections and loans to family members and colleagues to identify other criminal activity. SK advised that it was a good Idea. • AS recommended: • No escalation to Industry Body; • No NAB portfolio applications to be overviewed. • No fraudulent files to warrant clawback; • SK, CMc, BH and LD supported the recommendations. NAB cancels Ms Hudson's accreditation and FAST gives notice of its intention to terminate the Sub-Originator Agreement 251 By letter dated 14 August 2017 from Mr Haultain to Messrs Gavin Parsons & Associates, Ms Hudson's and Leaseworks' lawyers, (14 August 2017 Letter), among other things, Mr Haultain informed Gavin Parsons that: Cancellation of NAB accreditation NAB reserves a discretion as to whether or not to accredit or maintain the accreditation of any mortgage broker. I am instructed that, consequent to NAB reviewing reports arising out of its reviews of Leaseworks Pty Ltd (Leaseworks) files and the 28 July interview, NAB has cancelled Ms Hudson's accreditation. FAST suspension Leaseworks aggregates loans through Finance & Systems Technology Pty Ltd (FAST). NAB notified FAST that it suspended Ms Hudson's accreditation arising out of the Interview on 28 July 2017. FAST relied on its rights under clause 11.1.2 of its Sub-Originator Agreement (Sub-Originator Agreement) with Leaseworks to suspend operation of the sub-Originator Agreement and Ms Hudson's accreditation to engage in credit activities under the Sub-Originator Agreement. Termination of Sub-Originator Agreement I am instructed that FAST will terminate the Sub-Originator Agreement, under clause 10.1 of the agreement, effective 14 September 2017. In the interim period, FAST will maintain suspension of the Sub-Originator Agreement in accordance with clause 11.1.2 of the agreement. FAST's termination of the Sub-Originator Agreement is without prejudice to any other rights FAST may have against Leaseworks or Ms Hudson. I am instructed that FAST will continue to pay commission in accordance with, and subject to, the terms of the Sub-Originator Agreement. Please note that Leaseworks is required to maintain insurances in accordance with clause 4.5 of the Sub-Originator Agreement. 252 That is, in the 14 August 2017 Letter, NAB withdrew Ms Hudson's accreditation and gave notice that, pursuant to cl 10.1 of the Sub-Originator Agreement, FAST would terminate that agreement, effective 14 September 2017. 253 In cross-examination Ms Smith rejected the contention put to her that BPLAC had determined that FAST would terminate the Sub-Originator Agreement and that it then got its legal officer, Mr Haultain, to terminate that agreement without first consulting FAST. She said that BPLAC did not make decisions on behalf of aggregators. Aggregators make their own decisions based on what a lender will do. It was not BPLAC's place to make a decision on behalf of an aggregator. 254 By letter dated 15 August 2017 NAB informed FAST that: Referring to the discussions held on 28th July 2017 where FAST representatives were present at a meeting with Kerry Ann Hudson. During that discussion, we raised concerns around the quality of certain applications lodged by Kerry Ann Hudson. We were not satisfied with the explanations from the broker. On consideration (sic) all the information available to us and the broker's explanation for her conduct, we have formed the opinion that applications submitted by Kerry Ann Hudson included elements that appear to be misleading, suspicious and/or inaccurate, and that the broker was negligent in failing to detect these matters. We have decided to exercise our discretion to withdraw Kerry Ann Hudson's accreditation with NAB Broker. 255 By letter dated 15 August 2017 FASTLend Pty Ltd notified FAST that, with effect from that date, Advantedge was withdrawing accreditation of, and would no longer accept loan applications from, Ms Hudson. "FASTLend" is a branded entity of Advantedge which offers wholesale loans. As set out at [22] above, Advantedge is wholly owned by NAB. FAST issues a letter of separation 256 On 16 August 2017 FAST issued a letter of separation to Ms Hudson (FAST Letter of Separation) which relevantly provided: Kerry Hudson will no longer be associated with FAST with effect from 14 September 2017 and is free to transfer current lender accreditations. 257 In cross-examination Mr Ryan explained that FAST could give a broker two types of a letter of separation: one simply stated that the broker had been a broker of FAST for a specified period of time; and the other would be used if the broker had not engaged in any adverse conduct and would include a clause to that effect. If there was something material in the broker's conduct in the time it was accredited with FAST, then the latter type of letter could not be issued. 258 Mr Ryan said that because of the circumstances surrounding Ms Hudson's termination FAST was not able to issue a "clean letter of separation" as requested by Ms Hudson. He said that there were material concerns about Ms Hudson's business, including that lenders other than NAB had suspended dealing with Ms Hudson. Accordingly, he could not issue a letter that said there were no adverse circumstances. 259 Ms Smith understood that the term "clean letter of separation" refers to a letter issued by an aggregator at the time of separation with a broker which indicates that there were no issues during the period of the broker's accreditation with that aggregator. She explained that it was a matter for the aggregator, and not BPLAC, to consider the issue, and terms, of a letter of separation. Steps taken by other Panel Lenders – August 2017 260 An email from Mary Fitzpatrick, investigations manager secured lending task force, Westpac, sent on 10 August 2017 to a number of people, who each appear to be Westpac employees, titled "purchase of trail book" was in evidence before me (Westpac Email). In that email, Ms Fitzpatrick wrote (as written): Was I dreaming it or did someone ask me this week if we have ever looked at fraud involving the purchase of a trail book? In any case, Jules Kudelko of FAST called to say that they have suspended the accreditation of NSW Broker Kerry Hudson on the back of a NAB investigation that determined that she was proxy broker for banned former broker Moustafa DANDACHALI. HUDSON apparently paid $150K to purchase his trail book claiming that she did not know that he was banned. AFG (his former aggregator) would not release the trail book due to an ongoing ASIC investigation. Despite this NAB have determined that she has processed refinances etc from his trail. NAB spoke with her 2 months ago and she agreed that she would not process any more applications from his trail, but apparently she has, which has this week led to her suspension. The applicants are alleged to potentially be part of the middle eastern underworld, and the applications are supported by fabricated information. There is quite a lot of media about DANDACHALI and his activities if you would care to Google him. FAST have alerted all FI's about her suspension, but have also been informed that she has direct accreditation with some FI's and possibly STG. I couldn't find anything in our inbox or workflow for either Hudson or Dandachali, but of we haven't already started a file, given the ASIC focus on Dandachali, we will need to look at her book should there be one. 261 On 10 and 24 August 2017 respectively Westpac and St George Bank terminated Ms Hudson's accreditation. 262 By letter dated 18 August 2017 ANZ informed FAST, among other things, that: Following an Investigation, ANZ has identified irregularities in the application details provided to us as a part of the loan application process, in relation to loan application 101616253. Effective immediately, ANZ's approval of [Ms Hudson] as an Authorised Officer under the Originator Agreement between ANZ and [FAST] has been suspended. As the suspension remains in place, [Ms Hudson] is not authorized to submit loan applications to ANZ, or undertake any other actions permitted under the Originator Agreement. 263 By email sent on 22 August 2017 Michael Volkiene, state manager broker distribution, retail division, ANZ, informed Mr Ryan that "effective immediately ANZ's approval of" Ms Hudson "as an Authorized Officer under the Originator Agreement between ANZ and [FAST] has been suspended". BPLAC meetings – 30 August 2017 and 12 September 2017 264 The minutes of the meeting of BPLAC which took place on 30 August 2017 record the discussion and the outcome of the extraordinary BPLAC meeting which took place on 14 August 2017 and at which BPLAC determined that Ms Hudson's accreditation with NAB should be terminated (see [250] above). Those minutes also record that "due to time constraints" the case for Leaseworks was carried forward to the September 2017 meeting. 265 At the BPLAC meeting which took place on 12 September 2017 BPLAC considered Leaseworks. The minutes of that meeting record that: • AS advised the case for Leaseworks is the firm review completed at the request of the committee based on the findings and outcome of the case presented to BPLAC in August 2017 for Kerry Ann Hudson; whereby the broker was terminated after she continued to submit applications from the portfolio of an ASIC banned broker, Moustafa Dandachli. Some of the applications also involved the banned broker and/or his immediate family members. • CMc, SK, AC and DO endorsed the recommendation to terminate the broker accreditation. • AS recommended: • No escalation to Industry Body; • No NAB portfolio applications to be overviewed. • No fraudulent files to warrant clawback; • SK, CMc, AC and DO supported the recommendations. 266 Ms Smith explained that the case before BPLAC in relation to Leaseworks was one for "decisoning". Leaseworks was not accredited with NAB and the decision made at the time by BPLAC was that NAB would not deal with any members of Leaseworks. FAST terminates the Sub-Originator Agreement 267 On 14 September 2017 FAST: (1) terminated Ms Hudson's and Leaseworks' accreditation with it; and (2) sent an email to each of the recipients of the Suspension Email described at [232] above (Termination Email) which relevantly provided: FAST notified you of a suspension on the 4th August 2017 for FAST Broker, Kerry Ann Hudson (Leaseworks Australia Pty Ltd). FAST have reviewed the situation surrounding the suspension and have decided to terminate Kerry Ann Hudson with immediate effect as at today, 14 September 2017. Ms Hudson's accreditation terminated by other Panel Lenders – September 2017 268 On 15 September 2017 Liberty informed FAST that as at that date it would "no longer accept loan applications from your sub introducer, Kerry Hudson from FAST Australia". 269 On 20 September 2017: (1) ANZ informed FAST that "after consideration of [its] email, ANZ has agreed to remove the accreditation of [Ms Hudson] effective immediately"; and (2) CBA informed Ms Hudson that it had recently been advised by FAST that its arrangements with her had ceased and that accordingly it would be "revoking the 'Authority to Act CF76596 Kerry Hudson' in accordance with the agreement between the [CBA] and [FAST]". 270 As of 15 September 2017 Leaseworks' accreditation with Macquarie Leasing Pty Ltd and that of any introducers who held accreditations under Leaseworks were suspended until further notice. By letter dated 7 June 2018 Macquarie Leasing informed Ms Hudson that it would not be reinstating her accreditation. Correspondence between the parties 271 Following the dispatch of the 14 August 2017 Letter Gavin Parsons corresponded with NAB and FAST. 272 In a letter dated 21 August 2017 from Gavin Parsons to Mr Ryan at FAST (21 August 2017 Letter), Gavin Parsons informed FAST that the Suspension Email constituted "a gross violation of Clause 7.1.2 of the Sub-Originator Agreement". Those solicitors said that, based on the 14 August 2017 Letter, FAST did not form any opinion, let alone a reasonable opinion, as to whether or not the alleged matter giving rise to Leaseworks' suspension had been finally resolved. Gavin Parsons contended that, rather, FAST acted at the behest of NAB. Those solicitors contended that the maintenance of Leaseworks' suspension breached cl 11.2 of the Sub-Originator Agreement and, as a result, Leaseworks suffered and was continuing to suffer loss and damage. The letter concluded: You are hereby demanded to: 1. Provide a letter of separation (Letter); 2. Include in the Letter a statement to the effect that, upon consideration of all the facts, there has not been any adverse findings by FAST against Leaseworks or any of its related or associated entitles; By doing so, our client is of the view that you will potentially mitigate the loss and damage that you have already caused. 273 By letter dated 23 August 2017 NAB responded to the 21 August 2017 Letter. NAB denied the allegations made therein on behalf of FAST and noted that FAST could not issue a letter of separation in the terms requested because NAB had cancelled Ms Hudson's accreditation "due to adverse conduct". A copy of the FAST Letter of Separation (see [256] above) was attached. 274 By letter dated 23 August 2017, among other things, Gavin Parsons, on behalf of Leaseworks, repeated its request for a letter of separation to be provided in the form requested in the 21 August 2017 Letter, noting that if that was not done by the specified time their client would commence proceedings without further notice. 275 In response, by email sent on 24 August 2017 to Gavin Parsons, Mr Haultain informed Gavin Parsons that he was instructed "that FAST will not alter the letter of termination attached to [NAB's 23 August 2017 Letter]" and otherwise denied the allegations made by Leaseworks and Ms Hudson. Evidence given by Mr Currie and Dr Hasham 276 Mr Currie set up Leaseworks with Ms Hudson in 2007, having previously worked with her in various finance roles. As set out at [16] above, Mr Currie is a shareholder in Leaseworks, holding 41% of its shares. While Mr Currie was not a director of Leaseworks between 2012 and 2017, during that period he was involved in its business and assisted with marketing and other administrative tasks. 277 Mr Currie and Dr Hasham have known each other since 1991. 278 In about 2015 Dr Hasham was considering expanding his business and was looking for recurring revenue streams such as the commission model for insurance and mortgage broking services. His accountant had advised him to invest in these industries as their profits were quite high that year. Dr Hasham thought that investing in the finance sector would be a good way to grow ACE as many of his clients in the building industry were developers who require finance solutions. Dr Hasham was regularly asked by clients looking to invest or purpose properties and developments for referrals to good brokers or lenders and he would often refer them to Mr Currie and Leaseworks. 279 Mr Currie recalls that between 2015 and May 2017 he and Dr Hasham had conversations in which Dr Hasham expressed interest in his company, ACE, purchasing Leaseworks as a going concern or purchasing the shares in Leaseworks. 280 According to Mr Currie the first time Dr Hasham raised his interest in ACE acquiring Leaseworks came out of the blue. They had a conversation to the following effect: Dr Hasham: How's business going. Mr Currie: Well. Dr Hasham: That's good. The new changes in the credit laws aren't causing any issues. Mr Currie: No. We are fine. We have an Australian Credit Licence and many accreditations. Mr Hasham: Do you need a license to operate in finance? Mr Currie: Yes. Unless you go under someone else's licence. 281 Dr Hasham thought that the acquisition of Leaseworks would complement the range of services ACE offered and allow it to offer finance solutions to clients simultaneously with engineering and consulting services. He also thought that this would not be a profitable endeavour for ACE unless he was able to purchase the whole Leaseworks business, including all its accreditations, licensing and staff. 282 The conversations between Mr Currie and Dr Hasham continued in the period from 2015 to 2017. Dr Hasham recalls discussing the process for transferring accreditations, licensing and staff of Leaseworks if he went ahead with the purchase. Dr Hasham only ever discussed the potential acquisition of Leaseworks with Mr Currie, not with Ms Hudson. 283 It is not necessary to set out the nature of the discussions, about which Mr Currie and Dr Hasham had a similar recollection in any detail. Eventually, in May 2017 Dr Hasham requested the rough numbers for Leaseworks for 2015 and 2016. After Mr Currie provided that information, Dr Hasham asked Mr Currie what he would be after if he made an offer for Leaseworks. According to Mr Currie they had a conversation to the following effect: Mr Currie: $2,500,000. Dr Hasham: I'd be happy to pay $2,000,000 for Leaseworks or all of the shares for Leaseworks - but I want the licence and Kerry Hudson. Mr Currie: OK, I will call a shareholder meeting where we can consider and if required, vote on the purchase. Dr Hasham: Yes - we can then do proper due diligence. 284 Dr Hasham thought his offer was a fair and reasonable starting point for negotiations for the purchase of Leaseworks' business based on what he understood Leaseworks' average recurring income to be. Dr Hasham also understood that Leaseworks was a growing business such that he was prepared to make an offer as high as around $4 million to $5 million if that was the asking price. 285 In about early August 2017, prior to calling the proposed shareholders' meeting, Mr Currie was informed by Ms Hudson that there was an issue with NAB and that FAST had suspended the Sub-Originator Agreement. In turn, Mr Currie informed Dr Hasham that there were some issues with a "lender and an aggregator" and that he would need to contact him to discuss the proposal once those issues had been resolved. Dr Hasham informed Mr Currie that he was not interested in buying Leaseworks until those issues were resolved. 286 In late 2017 Mr Currie informed Dr Hasham that the issues remained unresolved such that they would have to decline the offer. Dr Hasham did not purchase Leaseworks because he believed that it had lost its goodwill, being its accreditations and licensing, and it was that goodwill for which he was prepared to pay $2 million. 287 Dr Hasham was never provided with any financial statements for Leaseworks, and was only ever informed of the numbers by Mr Currie orally. In cross-examination Dr Hasham confirmed that before proceeding with a final purchase he would have wished to see the financial statements but not for the purpose of agreeing a purchase price. For the latter he relied on the trail commission that the business was turning over and the fact that Leaseworks was accredited with lenders and intermediaries and was licensed. However, Dr Hasham also noted that he would have to be satisfied that the number he had been given for the trail commissions was accurate before in fact proceeding with a purchase of the business by inspecting Leaseworks' financial records. 288 I have some difficulty with this evidence and accepting that an apparently astute business person, as Dr Hasham appeared to be, would agree a purchase price, particularly of the magnitude indicated for Leaseworks' business, without regard to the financial statements for that business. In fact, despite Dr Hasham's evidence to that effect, it is clear that he would require access to the accounts to verify the trail income, which in turn, it seems, informed or at least would serve to underpin the purchase price. Until that occurred and other salient terms were agreed, there could be a final agreement by Dr Hasham to purchase Leaseworks, let alone an agreement to purchase it for $2 million. THE PLEADED CASE 289 Ms Hudson and Leaseworks rely on a further amended statement of claim (FASOC) filed on 6 May 2020. Before proceeding further it is convenient to set out their pleaded claims. 290 As observed at [2] above, Ms Hudson and Leaseworks allege that NAB and FAST engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law; engaged in unconscionable conduct, within the meaning of s 21 of the Australian Consumer Law; and denied Leaseworks natural justice and/or procedural fairness in and around the decision to terminate the Sub-Originator Agreement. In addition, Leaseworks alleges that FAST breached the Sub-Originator Agreement. 291 Insofar as Ms Hudson and Leaseworks allege that there has been a breach of s 18 of the Australian Consumer Law they contend that: (1) in at least one telephone call to Westpac a person from FAST made statements to the following effect: We have suspended [Ms Hudson] on the back of a [NAB] investigation that determined that she was a proxy broker for banned broker Moustafa Dandachli. [Ms Hudson] paid $150,000 to purchase his trail book. [NAB] has determined that she processed refinances etc from his trail. [NAB] spoke with her two months ago and she agreed that she would not process any more applications from his trail, but apparently she has, which has this week led to her suspension. The applicants are … and the applications are supported by fabricated information. (these statements which are in the Westpac Email are referred to in the FASOC as the Westpac Statements); (2) the Westpac Statements: (a) were made in circumstances where Ms Hudson had not been suspended by FAST; (b) failed to mention or to be qualified by the Permission, namely that in or about August 2014 Mr Clarkson consented to a request made by Ms Hudson on her behalf and on behalf of Leaseworks for permission to deal with Mr Dandachli's files; (c) implied that there were reasonable grounds and proper findings that Ms Hudson was a proxy broker for banned broker, Mr Dandachli, and that the loan applications were supported by fabricated information and Ms Hudson had knowledge of that fact; and (d) incorrectly stated that Ms Hudson and NAB had agreed in about June 2017 that Ms Hudson would not process anymore applications from Mr Dandachli's files and, in contravention of that agreement, she had processed more applications from those files, (together the Westpac Representations); (3) the Westpac Representations were deceptive and misleading; (4) in making the Westpac Representations NAB and FAST engaged in deceptive and misleading conduct in contravention of s 18 of the Australian Consumer Law; and (5) as a result of the Westpac Representations Ms Hudson and Leaseworks suffered loss and damage in that Ms Hudson's accreditation with each of Westpac and St George Bank was terminated and the agreement between Finecorp Financial Services Pty Ltd and Leaseworks (FineCorp aggregator agreement) was suspended. 292 Ms Hudson and Leaseworks also contend that NAB and FAST engaged in unconscionable conduct within the meaning of s 21 of the Australian Consumer Law. In doing so they rely on the following conduct: (1) that on or about 24 July 2017 their access to NAB via the computer program provided by FAST for use in connection with the Sub-Originator Agreement was removed; (2) that at the conclusion of the second file review meeting Mr Davidson informed Ms Nguyen, in front of Ms Hudson, that Ms Hudson's personal accreditation with NAB was suspended and the second file review meeting was held in circumstances where: (a) no opportunity was provided to Ms Hudson to be clearly informed as to the precise allegation(s) against her or of the source of any information relied upon; (b) no opportunity was provided to Ms Hudson to properly respond or to provide a considered response; (c) no clear concise or detailed reasons were provided to Ms Hudson about the basis for the findings; (d) no opportunity, or proper opportunity, was provided to her to seek to have the decision reviewed; and/or (e) in the alternative, the second file review meeting was held in circumstances where NAB had already formed conclusions about Ms Hudson and was not willing to reconsider its position; (3) that, despite Ms Hudson notifying NAB and FAST on 31 July 2017 that she was suffering from a serious medical condition and had as a result resigned as a director of Leaseworks: (a) no opportunity was given to Ms Hudson to: (i) be clearly informed of the precise allegations against her; (ii) be informed of any source of any information that was relied upon to support the allegations; and (iii) respond to the allegations or to provide a considered response including by providing supporting documents; and (b) no clear or detailed reasons were provided to Ms Hudson as to the basis of the findings and no opportunity was provided to her to seek to have the decision reviewed; (4) that on 4 August 2017 FAST suspended the Sub-Originator Agreement and NAB, purportedly on behalf of FAST, dispatched the Suspension Email to 42 email addresses in circumstances where: (a) FAST had not suspended Ms Hudson, NAB had done so; (b) Ms Hudson and Leaseworks did not have any accreditations with the majority of the lenders who were recipients of the Suspension Email; (c) NAB and/or FAST knew or ought to have known that, or were reckless in relation to that; and (d) as a result of the Suspension Email Ms Hudson's accreditations with CBA, ANZ, Westpac, St George Bank and Adelaide Bank were suspended; (5) that in or about 4 to 10 August 2017 FAST, either of its own accord, or at NAB's direction, made one or a series of telephone calls to lenders including to Westpac and ANZ, in each case saying words to the effect that the reason for the suspension was potential fraudulent behaviour in which Ms Hudson and Leaseworks had been involved; (6) that on or about 4 August 2017 FAST, either of its own accord or at NAB's direction, contacted ANZ and asked it to carry out an investigation into Ms Hudson and to rapidly provide support for the action taken by it and NAB (referred to as the Interference); (7) that in the 14 August 2017 Letter, NAB: (a) terminated Ms Hudson's accreditation; (b) referred to correspondence from Ms Hudson and Leaseworks' solicitors dated 10 August 2017 and rejected answers provided by those solicitors in relation to the Krayem and Tajjuor files on grounds that Ms Hudson says are wholly without foundation; (c) made vague references to the "quality of other loan applications considered" during the second file review meeting but did not say which files or explain the alleged quality issues; (d) set out for the first time an alleged breach of an alleged direction from NAB to Ms Hudson not to deal with clients of Mr Dandachli but did not provide sufficient information or details about that; (e) referred, by implication, to earlier complaints regarding due process and set out that the "opportunity to respond" was provided to Ms Hudson at the second file review meeting; (f) set out that there was sufficient cause arising out of the second file review meeting to justify NAB's suspension of Ms Hudson's accreditation with it pending its decision as to whether to terminate that accreditation, but did not provide sufficient information about that; (g) set out that, consequent to NAB reviewing undisclosed reports arising out of its review of Leaseworks' files and the second file review meeting, it had decided to terminate Ms Hudson's accreditation; and (h) did not provide any opportunity to respond or to seek to have such a decision reviewed; (8) that on or about 14 August 2017 FAST terminated the Sub-Originator Agreement pursuant to cl 10 of that agreement; (9) that NAB only notified FAST of its alleged final findings against Ms Hudson on 15 August 2017 and at no time has NAB put the final findings to Ms Hudson or allowed her an opportunity to respond; (10) that from 24 August 2017 FAST has failed, refused or neglected to perform a proper review of the circumstances surrounding, among other things, NAB's suspension and termination of Ms Hudson's personal accreditation and has refused to provide Ms Hudson with a "no adverse findings letter", thereby preventing her from becoming affiliated with any new aggregator; and (11) that on 14 September 2017 NAB, purportedly on behalf of FAST, dispatched the Termination Email to the recipients of the Suspension Email and those emails were: (a) dispatched in circumstances where: (i) they referred directly to the Suspension Email; (ii) they were intended to be read in light of the Suspension Email, which referred to "anomalies with a number of loan submissions" (iii) they were intended, by reference to the words "immediate effect", to imply that the findings were based on misconduct; (iv) they represented that FAST could terminate Ms Hudson when it could not as FAST's contract was with Leaseworks; and (v) they failed to mention that the termination which took effect on 14 September 2017 was of the Sub-Originator Agreement, which was terminated for convenience with 30 days' notice; and (b) made in circumstances where: (i) FAST has failed, refused or neglected to perform any review or proper review of the situation surrounding any suspension; (ii) NAB and/or FAST knew or ought to have known of the circumstances preceding that email and that Ms Hudson and Leaseworks had vehemently complained about them; (iii) Ms Hudson and Leaseworks did not have accreditation with the majority of the lenders who received the Termination Email and NAB and FAST knew or ought to have known that or were reckless in respect to that; and (iv) as a result of the Termination Email Ms Hudson's accreditation with Liberty, CBA and ANZ was terminated. 293 Ms Hudson and Leaseworks allege that the conduct set out in the preceding paragraph was unconscionable: (1) in circumstances where NAB was in a substantially stronger position relative to Ms Hudson and Leaseworks and in the context where NAB knew or ought to have known that such conduct would have been commercially detrimental to them; and (2) in circumstances where FAST was in a substantially stronger position relative to Ms Hudson and Leaseworks and in the context where FAST knew or ought to have known that such conduct would be commercially detrimental to them. 294 As a result of that conduct Ms Hudson and Leaseworks allege that they have suffered loss and damage. 295 Insofar as Ms Hudson and Leaseworks allege that NAB and FAST failed to afford them natural justice in and about the termination of the Sub-Originator Agreement and in making any decision that would have the effect of causing Ms Hudson and Leaseworks not to be accredited with a large number of major lenders, they contend that: (1) they had a legitimate expectation that they would be afforded natural justice and procedural fairness by NAB and FAST in making any decision that would have the effect of causing them not to be accredited with a large number of major lenders; (2) in addition cl 7.1.1. of the Sub-Originator Agreement imposed a duty of good faith; (3) in the circumstances NAB and FAST had a duty to afford them natural justice and procedural fairness in making any decision that would have the effect of causing Ms Hudson and Leaseworks not to be accredited with a large number of major lenders; (4) NAB and/or FAST have, by their conduct: (a) at the second file review meeting; (b) in sending the 14 August 2017 Letter; and (c) by NAB notifying FAST on 15 August 2017 of its final findings in circumstances where those findings were not put to Ms Hudson and she was not allowed to respond to them, failed to provide Ms Hudson and Leaseworks with natural justice or procedural fairness; (5) by deciding to: suspend the Sub-Originator Agreement; send the Suspension Email; make the telephone calls to Westpac and ANZ (see [292(5)] above); engage in the Interference (see [292(6)] above); terminate Ms Hudson's accreditation; terminate the Sub-Originator Agreement; refuse to provide a clean letter of separation; and send the Termination Email, NAB and FAST each made a decision that would have the effect of causing Ms Hudson and Leaseworks not to be accredited with a large number of major lenders and: (a) the failure to afford Ms Hudson and Leaseworks natural justice or procedural fairness was, in the circumstances, not only unconscionable but a breach of their duty to provide natural justice and procedural fairness to Ms Hudson and NAB; and (b) this failure caused loss and damage to Ms Hudson and Leaseworks. 296 Finally, Leaseworks alleges that FAST breached the Sub-Originator Agreement in that: (6) it breached cl 7.1.1 (see [50] above) by engaging in the conduct set out at [292] above and by failing to provide natural justice or procedural fairness; and (7) further, or in the alternative, it breached cl 7.1.2 (see [50] above) by engaging in the conduct identified in [60], [62], [73] and [86] of the FASOC (see [292(4)-(6) and 292(11)] above). 297 Leaseworks alleges that those breaches have caused it to suffer loss and damage. DID NAB AND FAST ENGAGE IN MISLEADING OR DECEPTIVE CONDUCT? Statutory framework and legal principles 298 Section 18 of the Australian Consumer Law prohibits a person, in trade or commerce, from engaging in conduct that is misleading or deceptive or is likely to mislead or deceive. 299 In Australian Consumer and Competition Commission v TPG Internet Pty Ltd (2020) 278 FCR 450 at [22] a Full Court of this Court (Wigney, O'Bryan and Jackson JJ) summarised the principles relating to s 18 as follows: 22 The applicable principles concerning the statutory prohibition of misleading or deceptive conduct (and closely related prohibitions) in the [Australian Consumer Law] are well known and there was no dispute between the parties concerning those principles. The central question is whether the impugned conduct, viewed as a whole, has a sufficient tendency to lead a person exposed to the conduct into error (that is, to form an erroneous assumption or conclusion about some fact or matter): Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 (Taco Bell) at 200 per Deane and Fitzgerald JJ; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 (Puxu) at 198 per Gibbs CJ; Campomar Sociedad, Limitada v Nike International Limited (2000) 202 CLR 45 (Campomar) at [98]; Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 (TPG Internet) at [39] per French CJ, Crennan, Bell and Keane JJ; Campbell at [25] per French CJ. A number of subsidiary principles, directed to the central question, have been developed: (a) First, conduct is likely to mislead or deceive if there is a real or not remote chance or possibility of it doing so: see Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 87, referred to with apparent approval in Butcher at [112] by Gleeson CJ, Hayne and Heydon JJ; Noone v Operation Smile (Australia) Inc (2012) 38 VR 569 at [60] per Nettle JA (Warren CJ and Cavanough AJA agreeing at [33]). (b) Second, it is not necessary to prove an intention to mislead or deceive: Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228 per Stephen J (with whom Barwick CJ and Jacobs J agreed) and at 234 per Murphy J; Puxu at 197 per Gibbs CJ; Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 (Google) at [6] per French CJ and Crennan and Kiefel JJ. (c) Third, it is unnecessary to prove that the conduct in question actually deceived or misled anyone: Taco Bell at 202 per Deane and Fitzgerald JJ; Puxu at 198 per Gibbs CJ; Google at [6] per French CJ and Crennan and Kiefel JJ. Evidence that a person has in fact formed an erroneous conclusion is admissible and may be persuasive but is not essential. Such evidence does not itself establish that conduct is misleading or deceptive within the meaning of the statute. The question whether conduct is misleading or deceptive is objective and the Court must determine the question for itself: see Taco Bell at 202 per Deane and Fitzgerald JJ; Puxu at 198 per Gibbs CJ. (d) Fourth, it is not sufficient if the conduct merely causes confusion: Taco Bell at 202 per Deane and Fitzgerald JJ; Puxu at 198 per Gibbs CJ and 209-210 per Mason J; Campomar at [106]; Google at [8] per French CJ and Crennan and Kiefel JJ. (e) Fifth, where the impugned conduct is directed to the public generally or a section of the public, the question whether the conduct is likely to mislead or deceive has to be approached at a level of abstraction where the Court must consider the likely characteristics of the persons who comprise the relevant class to whom the conduct is directed and consider the likely effect of the conduct on ordinary or reasonable members of the class, disregarding reactions that might be regarded as extreme or fanciful: Campomar at [101]-[105]; Google at [7] per French CJ and Crennan and Kiefel JJ. 300 Insofar as the alleged misleading or deceptive conduct is constituted by spoken words, in Watson v Foxman (1995) 49 NSWLR 315 at 318-9 McLelland CJ in Eq relevantly said: Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described as "misleading") within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. 301 The question of causation also arises for consideration. In I&L Securities v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at [57] in relation to a claim for damages under s 82 of the Trade Practices Act 1974 (Cth) (the predecessor to the Australian Consumer Law) for breach of that Act, Gaudron, Gummow and Hayne JJ held that it was sufficient to establish that contravention of a provision of the Act was a cause of the loss or damage sustained. It did not have to be the sole cause. The authorities in relation to causation were helpfully summarised by Kenny J in Carey v Freehills [2013] FCA 954 at [411]-[412] as follows: 411 Section 82 of the TPA requires consideration of whether the claimant has suffered loss or damage "by conduct of another person" done in the contravention of an identified provision of the TPA (in this case, s 52). In Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 ('Wardley') at 525, Mason CJ and Dawson, Gaudron and McHugh JJ said that the word "by" "clearly expresses the notion of causation" and that s 82(1) "should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506 ('March v Stramare'), except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act". In order, therefore, to be compensated for any loss and damage under s 82(1) of the TPA, the Carey parties needed to establish a causal connection between the alleged misrepresentations and the loss for which they seek compensation: see further Wardley at 525-526 and Henville v Walker (2001) 206 CLR 459 ('Henville v Walker') at 469-470 (Gleeson CJ), 480 (Gaudron J), 489 (McHugh J) and 508-509 (Hayne J). 412 In Wardley at 525, their Honours said that where the Court is "concerned with contraventions of s 52(1) in the form of misleading conduct constituted by misrepresentations … acts done by the representee in reliance upon the misrepresentation constitute a sufficient connexion to satisfy the concept of causation". If a material representation has contributed to the loss or damage in some way, "despite other factors or conditions having played an even more significant role in producing the loss or damage", it will be regarded as a cause of the loss or damage: see Henville v Walker at 493 [106] (McHugh J, with whom Gummow J agreed), 509 [163] (Hayne J, with whom Gummow J also agreed). A loss may be a loss of opportunity foregone: Henville v Walker 502-503 [133]. A material representation is calculated in the sense of being "objectively likely" to act as an inducement to act in some particular way: see Henderson v Amadio Pty Ltd (No 1) (1995) 62 FCR 1 at 166. As Lockhart, Gummow and French JJ observed in Ricochet Pty Ltd v Equity Trustees Executors & Agency Co Ltd (1993) 41 FCR 229 at 235: Ultimately, the "causative threshold" beyond which liability attaches to a misrepresentation which is one of a number of factors inducing a decision that produces loss, will be a question of judgment. ... But the mere possibility that a misrepresentation might have induced a course of action by the representee can never of itself attach liability under s 82 to the making of it. The applicants' submissions 302 In support of their allegation that NAB and FAST engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law, Ms Hudson and Leaseworks rely on the Westpac Email (see [260] above). 303 The applicants submitted that the Westpac Email refers to a call from Mr Kudelko to Westpac and recounts what he said at that time. They contended that NAB and FAST could have called Mr Kudelko, if they disagreed that what is recorded in the Westpac Email about what he said at the time, but that they decided not to do so. Accordingly, they submitted that this is a case where a Jones v Dunkel inference can be drawn that there is nothing that Mr Kudelko could have said to assist NAB and FAST. They also contended that would give the Court an enhanced ability to draw the inference that Mr Kudelko said what indeed he is supposed to have said as recorded in the Westpac Email. 304 The applicants contended that the Westpac Representations (contained in the Westpac Email) were misleading or deceptive as they implied that there were proper grounds to find that Ms Hudson was a proxy broker for Mr Dandachli and that the loan applications were supported by fabricated information and that Ms Hudson had knowledge of that. They submitted that the Westpac Representations made no mention of the fact that FAST had, via the Permission, allowed Ms Hudson to use information derived from Mr Dandachli's files and to continue to use those files. Instead the Westpac Representation implied the contrary. 305 The applicants submitted that as a result of the Westpac Representations Ms Hudson's accreditation with Westpac and St George Bank was terminated and her accreditation with FineCorp Financial Services was suspended. Consideration 306 There are a number of difficulties with this aspect of the applicants' claim. 307 First, the applicants rely on the Westpac Email and, in particular, on the statement in that email to the effect that Mr Kudelko of FAST called the author of the email, Ms Fitzpatrick, to inform her of certain things. Ms Fitzpatrick records a number of matters in the email. Ms Hudson and Leaseworks rely on Ms Fitzpatrick's recitation of what she was apparently told by Mr Kudelko in the Westpac Email as constituting the representations made by Mr Kudelko in his conversation which they allege are misleading or deceptive. They have not called any direct evidence to establish with any precision the representations on which they rely. That is, they have not proved the words spoken by Mr Kudelko to Ms Fitzpatrick "with a degree of precision" sufficient to enable me to be reasonably satisfied that they were in fact misleading or deceptive. 308 The applicants submitted that the respondents could have called Mr Kudelko to rebut the content of the Westpac Email and to establish that the Westpac Representations were not made. They contended that in the absence of Mr Kudleko I would draw a Jones v Dunkel inference that nothing that Mr Kudelko would have said could have assisted the respondents. However that submission is, in my view, misplaced. It overlooks the fact that it is for the applicants to prove the representations on which they rely with precision. They have not done so. The Westpac Email on its own is simply not sufficient. 309 Secondly, putting that matter to one side, it is difficult to see how the Westpac Representations, if made, were misleading or deceptive. That is because: (1) the statements attributed to FAST in the Westpac Email reflect what had in fact occurred namely that NAB had undertaken an investigation and made findings of the type set out therein, including that: (a) Ms Hudson was a proxy broker for Mr Dandachli; (b) Mr Dandachli was a banned former broker; (c) Ms Hudson had purchased Mr Dandachli's loan book; (d) Ms Hudson had processed applications from Mr Dandachli's loan book; (e) NAB had spoken with Ms Hudson and had instructed her not to process any more applications from Mr Dandachli's loan book; (f) despite that instruction she had done so; and (g) that led to her suspension; and (2) to the extent that the applicants rely on the falsity of the alleged representations, they have not established the critical matters said to falsify them. That is: (a) while FAST had not suspended Ms Hudson, it had suspended Leaseworks; (b) the applicants have not proved that the Permission was given (see [88(5)] above); and (c) NAB had requested Ms Hudson not to process any more applications from Mr Dandachli's loan book. Despite that, she proceeded to submit applications from that source (see [128] and [176] above). 310 Thirdly, the applicants have not established reliance. That is because they have not called any evidence to establish that Westpac, St George Bank and/or Finecorp Financial Services relied on the conversation between Ms Fitzpatrick of Westpac and Mr Kudelko to terminate or suspend, as the case may be, Ms Hudson's accreditation in each case. There may have been other factors at play and which led to their decision in each case. In short, that is not a matter about which I could draw an inference based only on the sequence of events nor about which one could speculate. 311 Finally, while it does not strictly arise given that the applicants have not established that there was a breach of s 18, I briefly address the question of causation. The applicants allege that their loss was caused by the alleged conduct, that is the making of the Westpac Representations. In order to succeed in that contention the applicants would have to establish that, but for the Westpac Representations, the events which occurred and which led to their loss would not have occurred. But the applicants have failed to establish that the conduct, assuming it occurred, had any causative effect and that it led to the damage they claim (as to which see below). As the respondents submitted, to do so they would have had to put forward a counterfactual by which the investigations, meetings and communications with third parties, including the conversation with Mr Kudelko, did not occur. Such a counterfactual would have provided a means of testing whether the misleading conduct, if made out, was sufficiently causative of the loss as opposed to some other factor. DID NAB AND FAST ACT UNCONSCIONABLY? Statutory framework and legal principles 312 Section 21 of the Australian Consumer Law relevantly provides that: (1) A person must not, in trade or commerce, in connection with: (a) the supply or possible supply of goods or services to a person; or (b) the acquisition or possible acquisition of goods or services from a person; engage in conduct that is, in all the circumstances, unconscionable. … (3) For the purpose of determining whether a person has contravened subsection (1): (a) the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and (b) the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section. (4) It is the intention of the Parliament that: (a) this section is not limited by the unwritten law relating to unconscionable conduct; and (b) this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and (c) in considering whether conduct to which a contract relates is unconscionable, a court's consideration of the contract may include consideration of: (i) the terms of the contract; and (ii) the manner in which and the extent to which the contract is carried out; and is not limited to consideration of the circumstances relating to formation of the contract. 313 Section 22 sets out the matters to which the Court may have regard for the purposes of s 21 and relevantly provides: (1) Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the supplier) has contravened section 21 in connection with the supply or possible supply of goods or services to a person (the customer), the court may have regard to: (a) the relative strengths of the bargaining positions of the supplier and the customer; and (b) whether, as a result of conduct engaged in by the supplier, the customer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and (c) whether the customer was able to understand any documents relating to the supply or possible supply of the goods or services; and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the customer or a person acting on behalf of the customer by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the goods or services; and (e) the amount for which, and the circumstances under which, the customer could have acquired identical or equivalent goods or services from a person other than the supplier; and (f) the extent to which the supplier's conduct towards the customer was consistent with the supplier's conduct in similar transactions between the supplier and other like customers; and (g) the requirements of any applicable industry code; and (h) the requirements of any other industry code, if the customer acted on the reasonable belief that the supplier would comply with that code; and (i) the extent to which the supplier unreasonably failed to disclose to the customer: (i) any intended conduct of the supplier that might affect the interests of the customer; and (ii) any risks to the customer arising from the supplier's intended conduct (being risks that the supplier should have foreseen would not be apparent to the customer); and (j) if there is a contract between the supplier and the customer for the supply of the goods or services: (i) the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the customer; and (ii) the terms and conditions of the contract; and (iii) the conduct of the supplier and the customer in complying with the terms and conditions of the contract; and (iv) any conduct that the supplier or the customer engaged in, in connection with their commercial relationship, after they entered into the contract; and (k) without limiting paragraph (j), whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the customer for the supply of the goods or services; and (l) the extent to which the supplier and the customer acted in good faith. 314 In Paciocco v Australia and New Zealand Banking Group Limited (2015) 236 FCR 199 a Full Court of this Court (Allsop CJ, Besanko and Middleton JJ) considered whether fees charged by the respondent were the product of unconscionable conduct on its part within the meaning of s 12CB and s 12CC of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) (which are materially identical provisions to s 21 and s 22 of the Australian Consumer Law) or s 8 and s 8A of the Fair Trading Act 1999 (VIC). Commencing at [259], Allsop CJ set out the approach to be adopted in evaluating whether particular conduct is unconscionable. Relevantly, at [296]-[298] Allsop CJ said: [296] The working through of what a modern Australian commercial, business or trade conscience contains and requires, in both consumer and business contexts, will take its inspiration and formative direction from the nation's legal heritage in Equity and the common law, and from modern social and commercial legal values identified by Australian Parliaments and courts. The evaluation of conduct will be made by the judicial technique referred to in Jenyns. It does not involve personal intuitive assertion. It is an evaluation which must be reasoned and enunciated by reference to the values and norms recognised by the text, structure and context of the legislation, and made against an assessment of all connected circumstances. The evaluation includes a recognition of the deep and abiding requirement of honesty in behaviour; a rejection of trickery or sharp practice; fairness when dealing with consumers; the central importance of the faithful performance of bargains and promises freely made; the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to respond for their protection, especially from those who would victimise, predate or take advantage; a recognition that inequality of bargaining power can (but not always) be used in a way that is contrary to fair dealing or conscience; the importance of a reasonable degree of certainty in commercial transactions; the reversibility of enrichments unjustly received; the importance of behaviour in a business and consumer context that exhibits good faith and fair dealing; and the conduct of an equitable and certain judicial system that is not a harbour for idiosyncratic or personal moral judgment and exercise of power and discretion based thereon. [297] The variety of considerations that may affect the assessment of unconscionability only reflects the variety and richness of commercial life. It should be emphasised, however, that faithfulness or fidelity to a bargain freely and fairly made should be seen as a central aspect of legal policy and commercial law. It binds commerce; it engenders trust; it is a core element of decency in commerce; and it gives life and content to the other considerations that attend the qualifications to it that focus on whether the bargain was free or fair in its making or enforcement. [298] The normative standard of a business conscience referred to in the statute is permeated with accepted and acceptable community values: Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] ATPR 42-447 at [23]; Perpetual Trustee Company Limited v Khoshaba (2006) 14 BPR 26,639 at [64] and Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132 at 139-140, esp [30]. 315 In Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 266 FCR 631 at [155], in the context of considering an argument by the appellant as to how the approach in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362 (now s 140 of the Evidence Act 1995 (Cth)), as a general proposition, should be applied to allegations of contravention of s 21 of the Australian Consumer Law, a Full Court of this Court (Allsop CJ, Middleton and Mortimer JJ) made the following observations: … To behave unconscionably should be seen, as part of its essential conception, as serious, often involving dishonesty, predation, exploitation, sharp practice, unfairness of a significant order, a lack of good faith, or the exercise of economic power in a way worthy of criticism. None of these terms is definitional. The Shorter Oxford Dictionary on Historical Principles (1973) gives various definitions including "having no conscience, irreconcilable with what is right or reasonable". The Macquarie Dictionary (1985) gives the definition "unreasonably excessive; not in accordance with what is just or reasonable". (The search for an easy aphorism to substitute for the words chosen by Parliament (unconscionable conduct) should not, however, be encouraged: see Paciocco at [262]). These are descriptions and expressions of the kinds of behaviour that, viewed in all the circumstances, may lead to an articulated evaluation (and criticism) of unconscionability. It is a serious conclusion to be drawn about the conduct of a businessperson or enterprise. It is a conclusion that does the subject of the evaluation no credit. This is because he, she or it has, in a human sense, acted against conscience. The level of seriousness and the gravity of the matters alleged will depend on the circumstances. Courts are generally aware of the character of a finding of unconscionable conduct and take that into account in determining whether an applicant has discharged its civil burden of proof. We see no reason to doubt the primary judge was conscious of this: so much is apparent from some of the passages in his Honour's reasons to which we have earlier referred. We reject Unique's invitation to make some broader statement of principle about Briginshaw in the context of alleged contraventions of s 21. We do not consider that the findings of the Full Court in Kobelt at [206] and in following paragraphs, on which Unique relied in its written submissions, assist Unique's arguments: those passages deal with grounds of appeal in relation to the pleadings in that case. 316 In Good Living Company Pty Ltd v Kingsmede Pty Ltd (2021) 284 FCR 424 at [7]-[8], Allsop CJ added to these observations: 7. This expression of the matter did not introduce a notion of moral obloquy or a requirement for any pre-existing disability or vulnerability. Rather, it recognised the seriousness of an evaluative judgment that conduct was against or offended good conscience. The words "conscionable" and "unconscionable" may not be words of daily parlance of many, but they have an ordinary meaning derived from an inner human sense of doing right. The human values that can be seen in s 22 and in the common law and equity as set out in Lux [2013] ATPR ¶42-447 at [23] and Paciocco 236 FCR at [296] inform the concept. These are basal values familiar to business people and ordinary people and, along with the circumstances in s 22, find their place in the text, structure and context of the legislation. 8. Sixthly, s 21 (like s 12CB of the ASIC Act) prescribes a statutory normative standard of conduct by proscribing conduct which is "unconscionable". As the Full Court said in National Exchange 148 FCR 132 at [33], "unconscionable conduct, on its ordinary and natural interpretation, means doing what should not be done in good conscience". The function of the Court is to recognise and administer that normative standard in the totality of the circumstances. Those circumstances include the considerations identified in s 22 and in the values of the common law and equity in which context the statute sits. The nature of the task was set out in Paciocco 236 FCR 199 at [296]–[298], [300], [304] and [306]: … 317 At [10] his Honour observed that: … the conduct must depart sufficiently from societal norms of acceptable commercial behaviour as to be characterised as against or as offending conscience, recognising that such is a serious matter which Parliament has considered sufficient to warrant censure by the imposition of a civil penalty to deter such conduct. There may be more or less serious manifestations of unconscionable conduct. 318 In Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1 the High Court of Australia considered the materially identical provisions to s 21 and s 22 found in the ASIC Act and relevantly observed that: (1) the term "unconscionable" is not defined in the ASIC Act. It is to be understood as bearing its ordinary meaning: at [14] (per Kiefel CJ and Bell J); (2) section 12CB of the ASIC Act "operates to prescribe a normative standard of conduct which the section itself marks out and makes applicable in connection with the supply or possible supply of financial services". A court's function exercising jurisdiction in a matter arising under the section was said to be "to recognise and administer that normative standard of conduct" in the totality of the circumstances taking account of each of the considerations identified in s 12CC, if and to the extent that those considerations are applicable in the circumstances. Parliament's use of "the terminology of courts administering equity in the expression of the normative standard which the section prescribes" signifies "the gravity of the conduct necessary to be found by a court in order to be satisfied of breach of that standard": at [87]-[88] (per Gageler J); and (3) Parliament's use of the word "unconscionable", rather than "unjust", "unfair' or "unreasonable" demonstrates a "deliberate legislative choice to proscribe a particular type of conduct". It requires "an element of exploitation". The choice of "unconscionability" as the key statutory concept "confirms that the moral obloquy involved in the exploitation or victimisation that is characteristic of unconscionable conduct is also required for a finding of unconscionability under s 12CB": at [118]-[119] (per Keane J). The applicants' submissions 319 In their opening submissions, Ms Hudson and Leaseworks contended that NAB and FAST engaged in unconscionable conduct (within the meaning of that expression in s 21 of the Australian Consumer Law) through the conduct of NAB and FAST. This was said to be in relation to forming false conclusions about them without giving them a proper hearing and then suspending and terminating them by reason of those false conclusions. In addition it was said to be as a result of widely advertising those conclusions to lenders and failing to provide them with the clean letter of separation that they needed to continue effectively trading as finance brokers. 320 In their oral closing submissions, Ms Hudson and Leaseworks submitted that there were a number of ways in which NAB and FAST violated the standard of "conscionability", and it was not simply by doing something to their commercial detriment. 321 They contended that FAST had the utmost duty of good faith as contracting party with Leaseworks to the Sub-Originator Agreement and that it had to exercise utmost good faith in its dealings with Leaseworks. They said that FAST effectively took no step in relation to the entire decision making process with respect to termination of the Sub-Originator Agreement, despite Mr Ryan's evidence that he had a "snap" meeting with a variety of people on 14 August 2017. They submitted that no such meeting occurred. Rather, NAB took over the whole process. Ms Nguyen's attendance at the first file review meeting and the second file review meeting was just for show, she did not take any notes at the meetings and there is no evidence of her passing on, in any written form, any report. Nor was there any evidence from Mr Ryan with whom Ms Nguyen said she spoke after the meetings, other than in cross-examination. 322 The applicants submitted that "all of the running was done by Mr Davidson" who then made a report to BPLAC and, even though there was space for the aggregator's input in that report, there is no evidence that FAST had any input. They contended that: (1) BPLAC determined everything "in-house"; (2) there was not a single representative of FAST at the meeting; and (3) FAST was not immediately informed of the meeting and was only informed about it later (by an email sent at 3.33 pm) for the purpose of finding out who all the brokers were, just to make sure that NAB could be sure there were no dealings with them at all. 323 They contended that it would appear that NAB made the decision to terminate and that not only did FAST not consider the question of termination properly, it did not make the decision at all. They submitted that NAB made the decision to terminate the Sub-Originator Agreement, in the absence of FAST, and FAST was told about it after the event. 324 The applicants queried how one could be acting conscionably and in good faith when one allows that to happen. They said that FAST had a duty of utmost good faith to deal appropriately with them and the two most important decisions, whether to terminate and, if so, whether to deem it as a termination for misconduct or otherwise, were made without FAST taking any action itself. The applicants also observed that it did not appear that FAST ever directly received the BPLAC findings, viewed the minutes or inquired about the process. 325 Next, the applicants submitted that FAST suspended the Sub-Originator Agreement in circumstances where there were no contractual grounds to do so. They submitted that contrary to FAST's contention, there was not even an allegation of misleading conduct at the time of the suspension and no evidence that FAST had been told of any such allegation. They contended that, if FAST is suggesting that the second file review meeting was when FAST was informed of such an allegation, then that confirms that the meeting was not an opportunity for Ms Hudson to put her case at all, but an exercise in making an allegation. They contended that there did not seem to be an allegation made to FAST. 326 The applicants submitted that, in any event, the word "misleading" in cl 11.1.2 of the Sub-Originator Agreement is coloured by the other words appearing in the subclause, namely "fraudulent", "deceptive" or "dishonest" conduct. They contended that the clause requires misleading conduct by the sub-originator itself. It is not a case of simply having unknowingly advanced some document that turns out to be misleading because it was a misleading statement a borrower made in a loan statement, unbeknownst to the broker. On its proper construction cl 11.1.2 requires conduct that the sub-originator knows is misleading. 327 The applicants submitted that such conduct is just not made out. They contended that the suspension was contrary to FAST's contractual obligations and in breach of cl 11 of the Sub-Originator Agreement. 328 They submitted that there is then the matter of FAST not issuing a retraction when Mr Sutherland, nominally in the name of FAST but, actually, for NAB, sent out the Suspension Email and the Termination Email to the 42 lenders. They contended that the Termination Email was particularly problematic as it gave the false impression of a summary dismissal with Leaseworks being terminated forthwith, it made no mention of the "fact of faultless termination under cl 10.1" of the Sub-Originator Agreement and it made reference to the Suspension Email that, in turn, referred to anomalies in loan files. 329 The applicants noted that NAB and FAST now said that Ms Hudson was terminated for misconduct. However, FAST never decided to terminate Ms Hudson for misconduct and made no determination to that effect. They contended that FAST did not even seem to have been aware, as at 14 August 2017 when the decision was made, of any finding by NAB of misconduct except to the extent that Ms Nguyen was given a bare statement of that in an email which she "probably did not pass on". In any event, the applicants noted that NAB did not terminate them for misconduct. NAB, through BPLAC, simply decided to terminate, not to escalate it to the industry body, not to check any more files and not to seek to claw back any commissions on the ground of fraud. There was no determination by NAB of any basis for the termination. 330 The applicants submitted that there was no determination that Ms Hudson engaged in any misconduct. They also said that there was no attempt to issue any letter to Ms Hudson and Leaseworks other than the "unclean" letter of separation, simply referring to the fact of separation and nothing more. 331 The applicants submitted that there was no attempt at fair dealing with Ms Hudson at the second file review meeting and there was no advance notice to her of what she was confronted with at that meeting. They said that the whole process was conducted unfairly, Ms Hudson was not given a proper opportunity to answer questions, her complaints that she was suffering from memory problems were mocked, she was charged with serious matters and she was not given a proper opportunity to speak. 332 The applicants submitted that another way in which NAB and FAST acted unconscionably was by the conduct that they engaged in with Westpac i.e. by making the Westpac Representations. They contacted Westpac and informed it that Ms Hudson was a proxy broker for Mr Dandachli and, while other matters in the email may not have been as misleading, that statement certainly was. Consideration 333 The applicants contend that both NAB and FAST engaged in unconscionable conduct within the meaning of s 21 of the Australian Consumer Law. However, their conduct must be considered separately. They are separate entities and each had different relationships with, in the case of NAB, Ms Hudson and, in the case of FAST, Leaseworks and Ms Hudson as its representative. 334 Turning first to NAB's conduct, in their FASOC the applicants contend that NAB's conduct at the second file review meeting and in the manner in which it terminated Ms Hudson's accreditation with it was unconscionable. In effect, they contend that NAB's conduct leading up to, and its decision, to cease dealing with Ms Hudson was unconscionable. However, NAB had no obligation to deal with Ms Hudson. 335 The arrangement by which Ms Hudson was accredited as a broker with NAB was a purely commercial one. After Leaseworks entered into the Sub-Originator Agreement, Ms Hudson applied for accreditation with NAB and, having met NAB's requirements, obtained that accreditation. The commercial relationship between Ms Hudson and NAB operated within the framework of the National Credit Act, with NAB as credit provider. As NAB and FAST submitted, in the context of the National Credit Act, there is no room for behaviour which does not meet the standards required by the Act, for example failing to undertake a suitability assessment or to make proper inquiries. Having regard to that context, the nature of the relationship between NAB and Ms Hudson and the process undertaken by NAB before it made the decision first to suspend Ms Hudson and then to terminate her accreditation, it is not the case that NAB acted unconscionably. 336 NAB carried out the following steps prior to the second file review meeting: (1) in April 2016 it held the first file review meeting with Ms Hudson. At that meeting NAB formed a view, based on its review, that Ms Hudson and Leaseworks had referred loans to it via FAST which seemed to be supported by fraudulent documents and which otherwise did not meet the standards required by it. Mr Davidson, who conducted the meeting on behalf of NAB, was concerned that loans which originated from a loan book which came from banned broker, Mr Dandachli (either because Ms Hudson had purchased that book or she otherwise had access to his files, which does not matter) were the source of the applications which caused NAB concern; (2) following that meeting Mr Davidson recommended that FAST be given a first and final warning about Ms Hudson but that her accreditation not be removed or cancelled; (3) NAB acted in accordance with Mr Davidson's recommendation. Further training was recommended for Ms Hudson and Leaseworks and FAST took steps to facilitate that training. However, Ms Hudson and Leaseworks did not undertake any such training immediately after the first file review meeting. The evidence discloses that she attended one webinar trading session on 28 March 2017 (see [169] above); (4) in accordance with its usual procedure and as one of the outcomes following the May 2016 BPLAC meeting, six months later NAB undertook a further review of a sample of six of Ms Hudson's files. Despite the recommendation in the Second BPLAC Submission, which was prepared following that review, not to take any further action, at least one member of BPLAC expressed some concern about some of the findings from that review insofar as there was a reference to Mr Dandachli; (5) Mr Davidson then had a telephone conversation with Ms Hudson inquiring whether she was writing loans from Mr Dandachli's loan book; (6) following that conversation, and because it was unable to arrange a meeting with Ms Hudson within a relatively short period of time to discuss the findings following the further review, NAB suspended Ms Hudson's accreditation and informed FAST that it had done so; and (7) on 28 July 2017 the second file review meeting took place at which five files were discussed. Ms Hudson was provided with a list of those files prior to the meeting. 337 The second file review meeting took place on 28 July 2017. Mr Davidson once again attended on behalf of NAB and Ms Nguyen attended as FAST's representative. Mr Davidson gave Ms Hudson notice of the files that were to be discussed and raised his concerns about those files. I do not accept that Mr Davidson asked questions in quick succession without giving Ms Hudson an opportunity to respond or that he or Ms Nguyen acted in a manner that was unprofessional or aggressive. It may have been that his questioning was robust and that Ms Hudson had some difficulty responding to some of the questions, including because she was unwell at the time. However, even assuming that was so, it does not follow that NAB's conduct at the second file review meeting was unconscionable. 338 The second file review meeting had a purpose. It was an information gathering exercise, based on which a recommendation would be made to BPLAC and a decision made about Ms Hudson's accreditation with NAB. Given that purpose and the regulatory framework within which NAB and Ms Hudson operated, the requirement for and nature of the meeting is easily explained and justified. In any event, there is no evidence that, at the time of the meeting, Ms Hudson complained about the nature or tone of the meeting, nor did she ask for more time to consider the issues and provide responses to any of the questions. Indeed, to the contrary, several days later in an email, in which she also set out her personal circumstances, Ms Hudson informed NAB that she had chosen to resign as a director of Leaseworks, remove herself as a principal on its ACL, that she took the "whole situation very seriously" and that she was going to take care of her personal health issues. After the second file review meeting and with the benefit of Mr Davidson's report about the files the subject of review and the discussion at the second file review meeting, which was recorded in the Third BPLAC Submission, NAB determined to terminate Ms Hudson's accreditation with it. 339 Having regard to those matters, there was, to adopt the language of the authorities set out above, no conduct on the part of NAB which could be seen as involving dishonesty, exploitation, sharp practice, significant unfairness, a lack of good faith or the exercise of economic power in a way that could be criticised. As I have already observed NAB and Ms Hudson were in a commercial relationship. Ms Hudson, via FAST, was accredited with NAB. NAB was not obliged to deal with Ms Hudson but, to the extent that it did so and granted her accreditation, both it and Ms Hudson were required to operate within the regulatory framework imposed by the National Credit Act. NAB had serious concerns about some of the applications which Ms Hudson had submitted to it and her practices. Those concerns led it to take certain steps including discussing the issues that arose with her. Ultimately, NAB was not prepared to continue to deal with Ms Hudson and thus cancelled her accreditation. No aspect of that conduct on the part of NAB, whether viewed in isolation or cumulatively, amounts to unconscionable conduct. 340 It is next necessary to consider the conduct based on which the applicants allege that FAST engaged in unconscionable conduct. Ms Hudson and Leaseworks' principal complaint concerns the suspension and subsequent termination of the Sub-Originator Agreement. They contend that FAST acted unconscionably in, among other things, suspending the Sub-Originator Agreement and sending the Suspension Email, making a series of telephone calls to lenders, including Westpac and ANZ, sending the Termination Email and declining to provide a clean letter of separation. 341 The circumstances in which FAST first suspended and then terminated the Sub-Originator Agreement are set out in detail above. I do not intend to repeat those matters save to note by way of summary that: (1) FAST had a contractual right, under the Sub-Originator Agreement, to terminate without cause; (2) notwithstanding that, it gave Ms Hudson and Leaseworks an opportunity to address the concerns which became apparent to it through its attendance at file review meetings arranged by NAB and submissions prepared for BPLAC. As to the latter, FAST's input was sought for the purposes of those submissions; (3) the fact that those concerns were raised with Ms Hudson and Leaseworks, does not make FAST's conduct unconscionable. On the contrary there was a genuine attempt on the part of FAST (and NAB) to assist Leaseworks (and Ms Hudson) to address the concerns; (4) the issues that arose were known to Leaseworks and Ms Hudson. They were raised at the first file review meeting and the second file review meeting. Despite that, and the passage of time, neither Leaseworks nor Ms Hudson has said that the conduct did not occur nor have they adequately explained why it did not give rise to a cause for serious concern; (5) the alleged telephone communications with other lenders have not been established by evidence and, in any event, even assuming they occurred, it is not clear how the fact of those discussions means that FAST acted unconscionably. Further, it was Ms Hudson who informed CBA of her suspension, before any steps were taken by FAST to do so. Therefore it is difficult to see how any subsequent communication to the same effect could be unconscionable; (6) the Suspension Email and the Termination Email recorded the fact of first, FAST's suspension of Ms Hudson and Leaseworks and second, its subsequent termination of them. Given that Ms Hudson and Leaseworks had accreditations with Panel Lenders because of Leasework's contractual relationship with FAST as aggregator, it is understandable that FAST considered it necessary to inform those Panel Lenders of these developments. Its communications in that regard did no more than to report matters of fact to the Panel Lenders; (7) as set out above, FAST terminated Leaseworks pursuant to its contractual right to do so; and (8) FAST provided Leaseworks with a letter of separation, albeit not in the terms Leaseworks requested. It refused to do the latter and to provide what has been termed a clean letter of separation because, as far as it was concerned, it was not able to make the statement that there had "not been any adverse findings by FAST against Leaseworks or any of its related or associated entities". Whether it could issue such a letter was a matter for FAST to determine based on what it knew at the time. Its representative, Ms Nguyen, was present at the second file review meeting and it had been given access to the Third BPLAC Submission. It was thus understandable that it refused to provide such a letter. 342 There is no substance to the applicants' allegation that FAST acted unconscionably in any of the events or steps it took which led to suspension of the Sub-Originator Agreement or in terminating that agreement. Once again the dealings between Ms Hudson and Leaseworks on the one hand, and FAST, on the other, were not dishonest, predatory or unfair. They did not involve exploitation on the part of FAST, there were no unfair tactics or undue pressure brought to bear, nor did FAST take advantage of Leaseworks or Ms Hudson dealing with them. 343 Leaseworks and FAST had entered into a contractual arrangement which FAST then took steps to terminate. It did so in circumstances where Leaseworks (and Ms Hudson) had provided loan applications which contained inaccurate information, a circumstance which was likely contrary to the spirit and purpose of the regime in which the parties were operating as mandated by the National Credit Act. It is difficult to see how advancing the purpose of that Act could result in a finding of unconscionable conduct. 344 Given that conclusion, it is once again not necessary for me to address causation. However, for completeness and in the event that I am wrong in my conclusion that neither NAB nor FAST engaged in unconscionable conduct in and about their dealings with Ms Hudson, the applicants have not established that such conduct, if it occurred, caused their loss. First, NAB had no contractual or other obligation to deal with Ms Hudson. It could refuse to deal, or cease dealing, with her at any point in time and without following any prescribed procedure. In other words, termination of their relationship with NAB was always a risk for Ms Hudson and the Leaseworks business. That being so, in my opinion, NAB's termination of its relationship with Ms Hudson as an accredited broker, after following the process it did, could not be causative of the whole of the loss claimed. No lesser case is brought. Similarly, although FAST had a contractual relationship with Ms Hudson, it was able to terminate that contract without cause. That termination necessitated the dispatch of the Termination Emails. The relationship was always open to termination at one month's notice and, on that basis, the conduct, even if it occurred, could not have caused the whole of the loss claimed. DID NAB AND FAST FAIL TO AFFORD NATURAL JUSTICE? 345 The applicants contend that, in terminating the Sub-Originator Agreement, NAB and FAST failed to afford them natural justice. The applicants' submissions 346 Ms Hudson and Leaseworks submitted that NAB and FAST had a duty to afford them natural justice in relation to any decision that was likely to cause them to be disaccredited by a large number of lenders. They submitted that the imposition of the rules of natural justice in the case of a domestic body has variably been described as: (1) a case of the implication of a term into the contract which binds that body and the applicant; and (2) a rule of public policy merely classed, as a legal fiction, as the implication of a term, relying on Trivett v Nivison [1976] 1 NSWLR 312 and Enderby Town Football Club Ltd v Football Association Ltd [1971] Ch 591. 347 Ms Hudson and Leaseworks submitted that it is well established that there is an obligation to afford natural justice in circumstances involving membership of a professional body or the possession of a licence to trade and that both of these categories are relevant in this case. That is because accreditation with FAST constituted, in effect, membership of a large professional body of brokers with access to about 70 major lenders; and disaccreditation from FAST (at least without a clean letter of separation) made it very difficult for a finance broker to carry on a viable practice. Ms Hudson and Leaseworks said that was so because the broker would effectively be barred from the origination of loans from most large lenders in the industry. 348 Ms Hudson and Leaseworks also contended that as part of the express contractual duty of good faith in cl 7.1.1 of the Sub-Originator Agreement, FAST was obliged to afford natural justice to them in relation to decisions involving suspension and termination of their accreditation, as well as in the issuing or refusal to issue a clean letter of separation. 349 Ms Hudson and Leaseworks submitted that although Mr Dandachli's files were discussed with Ms Hudson at the second file review meeting, she was not informed in any clear way of: (1) the allegations against her; (2) who was making those allegations; or (3) what evidence, if any, there was to support the allegations. They contended that, in those circumstances, no real opportunity was provided to Ms Hudson to properly respond to the allegations, either at the second file review meeting or subsequently. 350 Ms Hudson and Leaseworks submitted that the second file review meeting fell far short of providing Ms Hudson with a fair opportunity to respond to the allegations put against her. She was not given a meaningful hearing. That is because she was not provided with advanced warning of what was to go on at the second file review meeting, other than an indication of which files to bring; and, at the meeting, Mr Davidson tested Ms Hudson's memory so that he could determine whether she was a proxy broker for Mr Dandachli. He did so on the basis that, if Ms Hudson could not readily come up with answers about particular files, he would assume that was the case. 351 The applicants submitted that the Court should accept Ms Hudson's evidence about the events at the second file review meeting over that of Mr Davidson. On Ms Hudson's evidence, Mr Davidson fired a series of questions at her, did not give her time to respond and, when she did respond, spoke over her and made express allegations that she was a front for Mr Dandachli. Ms Hudson and Leaseworks submitted that this occurred in circumstances where Ms Hudson was suffering from a thyroid condition, a condition which she did not understand well at the time, although she did say that she was having problems with memory. Ms Hudson and Leaseworks submitted that the second file review meeting fell so far short of an opportunity for Ms Hudson to make proper representations as to why she was not a proxy broker for Mr Dandachli and had not acted discreditably that there was no procedural fairness afforded to her and this was her one and only opportunity to do this. 352 Ms Hudson and Leaseworks submitted that Ms Hudson then tried to get her solicitor to send letters, because she was not invited to make any submissions to BPLAC, and that she never had the opportunity of anything even approaching a hearing. For that reason they submitted that FAST and NAB failed to afford them natural justice and to discharge the duty they owed. Consideration 353 The first question that arises is whether, in the circumstances of this case, NAB and FAST owed Ms Hudson and Leaseworks a duty to provide natural justice in relation to, adopting the language of the applicants, any disaccreditation decision. 354 Ms Hudson and Leaseworks say that the duty arises because their position is analogous to that of a member of a professional association or club. Relevantly, they rely on the decisions in Enderby Town Football Club and Trivett. It is instructive to set out the relevant facts and passages from those decisions on which Ms Hudson and Leaseworks rely to make good their contention. 355 Enderby Town Football Club concerned the membership of the plaintiff, Enderby Town Football Club Ltd (Enderby FC), in the unincorporated association known as the Leicestershire and Rutland County Football Association (LRC Association), the second defendant to the proceeding. The LRC Association was one of a number of county associations affiliated with the Football Association Limited which controlled the game described as "association football" or soccer. Enderby FC was a limited company with its own memorandum and articles of association and was run on commercial lines. It had directors who were paid directors' fees and ran a totalisator on which members of the public could bet. The LRC Association took exception to those activities and appointed a commission of three to hear charges against Enderby FC. 356 On 5 May 1970 there was a hearing attended by three directors and the secretary of Enderby FC. The commission appointed by the LRC Association found that there had been gross negligence in the administration of Enderby FC and fined it £500, censured the club and its directors and ordered them to take immediate steps to organise the affairs of the club in accordance with the rules of the Football Association Limited. 357 Enderby FC appealed to the Football Association Limited and, in doing so, requested permission for it to be represented by a solicitor and counsel at the hearing of the appeal. The secretary of the Football Association Limited refused that request. 358 In refusing the Enderby Town Football Club to appear by a solicitor and counsel the Football Association Limited relied on r 38(b) of its rules which provided: … An association, competition or club may be represented at the hearing of an appeal, complaint or claim, or at an enquiry, by one or more of its members. A barrister or solicitor may only represent an association, competition or club of which he is a member, if he be the chairman or secretary. Any person summoned to attend an enquiry or the hearing of an appeal, complaint or claim must attend personally and not be legally represented. 359 Following that refusal, Enderby FC commenced proceedings seeking an injunction to restrain the Football Association Limited from hearing the appeal unless it was permitted to be represented by its solicitor and counsel: Enderby Town Football Club at 603-604. 360 At 605 Lord Denning M.R. identified the "important point" raised by the appeal, namely whether a party who is charged before a domestic tribunal is entitled as of right to be legally represented. At 606-607 his Lordship noted that r 38(b) of the Football Association Limited's rules mandated that legal representation was not permitted and the question therefore was whether the rule was valid. Lord Denning identified, as a preliminary point to be determined, whether the court had any power to go behind the wording of the rule and consider its validity. His Lordship continued: On this point Sir Elwyn Jones made an important concession. He agreed that if the rule was contrary to natural justice, it would be invalid. I think this concession was rightly made and I desire to emphasise it. The rules of a body like this are often said to be a contract. So they are in legal theory. But it is a fiction — a fiction created by the lawyers so as to give the courts jurisdiction. This is no new thing. There are many precedents for it from the time of John Doe onwards. Putting the fiction aside, the truth is that the rules are nothing more nor less than a legislative code — a set of regulations laid down by the governing body to be observed by all who are, or become, members of the association. Such regulations, though said to be a contract, are subject to the control of the courts. If they are in unreasonable restraint of trade, they are invalid: see Dickson v. Pharmaceutical Society of Great Britain [1967] Ch. 708; [1970] A.C. 403. If they seek to oust the jurisdiction of the court, they are invalid: see Scott v. Avery (1856) 5 H.L.Cas. 811. If they unreasonably shut out a man from his right to work, they are invalid: see Nagle v. Feilden [1966] 2 Q.B. 633; Edwards v. Society of Graphical and Allied Trades [1971] Ch. 354. If they lay down a procedure which is contrary to the principles of natural justice, they are invalid: see Faramus v. Film Artistes' Association [1964] A.C. 925, 947, per Lord Pearce. All these are cases where the judges have decided, avowedly or not, according to what is best for the public good. I know that over 300 years ago Hobart C.J. said the "Public policy is an unruly horse." It has often been repeated since. So unruly is the horse, it is said [per Burrough J. in Richardson v. Mellish (1824) 2 Bing. 229, 252], that no judge should ever try to mount it lest it run away with him. I disagree. With a good man in the saddle, the unruly horse can be kept in control. It can jump over obstacles. It can leap the fences put up by fictions and come down on the side of justice, as indeed was done in Nagle v. Feilden [1966] 2 Q.B. 633. It can hold a rule to be invalid even though it is contained in a contract. 361 Trivett concerned the cancellation of the plaintiff's horse trainer's licence by the Northern and North Western Districts Racing Association, an unincorporated body consisting of racing clubs in the northern area of New South Wales. The defendants to the proceeding were the members of the committee of the Association. They claimed that the plaintiff's licence as a trainer was cancelled by the committee as a result of a resolution passed at a meeting on 8 September 1975 and subsequent action taken by the chair of the committee on 9 October 1975. Against that, the plaintiff contended that no action taken by or on behalf of the Association had the effect of cancelling his licence and that he was still the holder of a valid trainer's licence: Trivett at 314. 362 Among other things, the plaintiff argued that the committee was bound to observe the principles of natural justice in making its determination to cancel his licence and failed to do so. That submission turned on the contention that, before deciding to revoke the plaintiff's license, the committee should have afforded him an opportunity to explain his conduct. In relation to that submission at 317-318 Rath J said: At the outset, in the consideration of these rival contentions, I propose to examine the basis for applying the principles of natural justice to the proceedings of a domestic tribunal such as the committee of this association. The association and its committee have no statutory basis whatsoever, and, in so far as they are required, in their dealings with other persons, to apply principles of natural justice, the only juristic basis is to be found in contract. The basis in contract is recognized in cases dealing with the discipline of a member by a voluntary organization to which he belongs: see, for example Australian Workers' Union v. Bowen (No. 2), where Dixon J., as he then was, said: "It is important to keep steadily in mind that we are dealing with a domestic forum acting under rules resting upon a consensual basis.' Lord Denning has said that it is a fiction created by lawyers so as to give the courts jurisdiction to treat the rules of such a body as a contract: Enderby Town Football Club Ltd. v. Football Association Lid. But he also said that such rules are a contract in legal theory. The same classification in legal theory must, in my view, be found in a case such as the present, where the relationship involved is not that of a club and its members, but that of a club or rather association of clubs, to a non-member. The consensual basis here lies in the acceptance both by the plaintiff and the defendants, as the committee, of the rules as governing the procedure for cancellation of the plaintiff's licence. Mr. O'Keefe contended that art. 48 should be read as requiring the committee to observe the principles of natural justice, or should be held to be void if it did not require observations of those principles. For his submission that art. 48 is void, if it does not require observations of the principles of natural justice, he relied on observations in Nagle v. Feilden on the right to work. Lord Denning M.R. there said: "The common law of England has for centuries recognised that a man has a right to work at his trade or profession without being unjustly excluded from it. He is not to be shut out from it at the whim of those having the governance of it. If they make a rule which enables them to reject his application arbitrarily or capriciously, not reasonably, that rule is bad. It is against public policy. The courts will not give effect to it." He gives a number of instances, where the courts have struck down rules in the Enderby Town Football Club case. In its terms art. 48 does not provide that the principles of natural justice are to be observed, but on the other hand, it contains no provision inconsistent with observance of those principles. … (Footnotes omitted.) 363 Both of these decisions were said by Ms Hudson and Leaseworks to support their submission that there is a rule that, where a person is a member of an organisation and is unreasonably shut out of his or her right to work, before that occurs, the person so affected is to be afforded natural justice. As recorded above, Ms Hudson and Leaseworks contended that they had effectively joined a club of brokers with access to a number of lenders and that the consequence of removal from that "club" is their inability to access any major banks in Australia and other substantial lenders. Ms Hudson and Leaseworks drew an analogy with a football player, noting that just as a football player may, if shut out of his membership, be able to join a lower division and still be able to kick a football around a field, they are shut out of the "big league" as a result of their removal. 364 In my opinion, Ms Hudson and Leaseworks have failed to establish that the alleged duty exists in the circumstances of this case and in the circumstances of their relationship with NAB and FAST. 365 Unlike the parties in Enderby Town Football Club and Trivett, Ms Hudson and Leaseworks are not members of a club, an unincorporated association or other voluntary organisation. Further they are not subject to a set of rules imposed by the organisation which governs any such membership, nor can it be said that there is a risk that they will be unable to earn their livelihood because they have been terminated as members of such an organisation. Their position cannot be said to be analogous to a sportsperson or association who or which depend, for their existence on, or licensing by, a governing body. The decisions in Enderby Football Club and Trivett are not apt to apply to the present circumstances. 366 Leaseworks carries on a mortgage and loan broking business. It is a party to a commercial contract with FAST. Their relationship is governed by that contract, i.e. the Sub-Originator Agreement, and not by the rules of an unincorporated association or other voluntary organisation imposed on members. The Sub-Originator Agreement sets out the terms on which FAST and Leaseworks have agreed to work together in relation to the provision by FAST of mortgage bulking facilities to Leaseworks. 367 Leaseworks' contractual relationship and its accreditation with FAST did not constitute membership of a large professional body of brokers as contended for by Ms Hudson and Leaseworks. In running its business of providing mortgage bulking facilities to brokers, FAST does not invite membership into a "club" of any type. It contracts with brokers and provides its services to them pursuant to applicable contractual arrangements. 368 Similarly, Ms Hudson's relationship with NAB, by which NAB accredited her as a broker to offer loans on its behalf, was a commercial one. 369 Insofar as the applicants had a relationship with NAB and/or FAST, that relationship did not arise because they were members of an organisation. It was a commercial relationship. 370 The evidence shows that Ms Hudson was a member of a professional body of brokers, namely the Finance Brokers Association of Australia Limited (see [13(1)] above) but that is not because of any accreditation with either NAB and/or FAST. That is a separate matter and organisation. 371 Ms Hudson and Leaseworks also referred to a number of other decisions on which they relied to demonstrate the content of the alleged duty of natural justice, including R v Gaming Board for Great Britain; Ex Parte Benaim v Khaida [1970] QB 417 at 430-431, Re Pergamon Press [1971] Ch 388 at 399-400 and R v Commission for Racial Equality; Ex Parte Hillingdon London Borough Council [1982] AC 779 at 787-788. Those cases are only of relevance if such a duty is found to exist. I have found that it does not. 372 Given my finding that no duty to provide natural justice exists in the circumstances of this case, the claim made by Ms Hudson and Leaseworks that NAB and FAST breached that duty must fail and the question of causation does not arise. 373 But, even if that was not so, the claim that the duty, if owed, was breached would fail for at least the following reasons: (1) there is no evidence to support the applicants' contention that termination of the Sub-Originator Agreement by FAST made it very difficult for a finance broker to carry on a viable practice; (2) even if the applicants had adduced such evidence, it would be of no effect given the contractual relationship between Leaseworks and FAST which gave both FAST and Leaseworks a right to terminate the Sub-Originator Agreement for convenience (see cl 10.1); (3) as the Sub-Originator Agreement could be terminated for convenience, the alleged obligation to provide natural justice is without content; and (4) in any event, Ms Hudson was given the opportunity over an extended period to improve her skills by training and was put on notice that she was required to cease the conduct about which NAB and FAST had concerns. She was provided with the opportunity to respond to the issues raised, in particular, by NAB, including at, and if she wished subsequent to, the second file review meeting. She did not do so. Instead, as I have already observed, Ms Hudson ultimately responded to matters raised at the second file review meeting by her email sent on 31 July 2017 in which she indicated that she had resigned as a director of Leaseworks and that she took the whole situation very seriously. DID FAST BREACH THE SUB-ORIGINATOR AGREEMENT? 374 Leaseworks contends that FAST breached cl 7.1.1 and cl 7.1.2 of the Sub-Originator Agreement. 375 Clause 7.1.1 (see [50] above) provides that the sub-originator, Leaseworks, and FAST agree "to show the utmost good faith and attention to their mutual business activities and use their best endeavours to promote, develop and extend the mutual business interests of both parties". 376 Clause 7.1.2 (see [50] above) provides that the sub-originator, Leaseworks, and FAST agree to: … keep confidential all information, documents, dealings, transactions, client list, data, processes, apparatus, specifications, drawing, reports, operations, inventions, patterns, technology, know-how, accounts or other documents and things of whatever type or nature relating to the mutual business interests of both parties which is obtained by both parties or may be suitable to both parties or which both parties became aware of as a result of or during the term of this Agreement. The applicants' submissions 377 In relation to the alleged breach of cl 7.1.1, the applicants submitted that the circumstances of the suspension and termination of their accreditation did not show good faith, let alone meet the express contractual standard of "utmost good faith". They submitted that NAB and FAST did not even meet the most basic standards of natural justice in dealing with them in this regard. Ms Hudson and Leaseworks contended that, by widely advertising to lenders their suspension and termination, arrived at by reason of FAST's false conclusions, and then refusing to issue a clean letter of separation, FAST did the very opposite of fulfilling its duty to use its best endeavours to promote, develop and extend the mutual business interests of both parties. 378 In relation to the alleged breach of cl 7.1.2, the applicants submitted that FAST's wide dissemination, by mass emails and otherwise, to lenders of its decision to suspend and terminate them was in breach of its duty of confidentiality. They submitted that the information disseminated was information "relating to the mutual business interests of both parties which is obtained by both parties… of which both parties become aware as a result of or during the term of" the Sub-Originator Agreement. The applicants submitted that while FAST could communicate that the relationship with Leaseworks had ended, it could not make any representations beyond that fact because to do so would go beyond any reasonable dissemination of information. Consideration 379 I address each of the alleged breaches of the Sub-Originator Agreement in turn. 380 The first concerns an alleged breach of cl 7.1.1, the terms of which are set out at [50] above. 381 FAST did not dispute that the Sub-Originator Agreement imposed an express obligation of good faith on the parties to it. However, it submitted that it is the content of that duty and what flows from the obligation specified in it which is important. FAST submitted that the content of c 7.1.1 is to be determined by reference to its terms. This is particularly so where cl 7.1.1, which creates a bilateral obligation, is distinct from the power to terminate and, by its terms, does not apply to termination of the Sub-Originator Agreement. It is focussed on the mutual business activities of the parties to the agreement, Leaseworks and FAST. FAST submitted that the words "mutual business interests" used in cl 7.1.1 are words of limitation. They set a boundary for the obligation to show the utmost good faith. FAST observed that termination is conceptually different and inimical to mutual business. 382 Leaseworks seeks to expand the obligation in cl 7.1.1 of the Sub-Originator Agreement to the circumstances of its suspension and its termination. However, it does not explain how that obligation is said to apply to those circumstances. Indeed, it is difficult to see how cl 7.1.1 which, as FAST points out, requires the parties to the Sub-Originator Agreement to show the utmost good faith in their mutual business activities and to use their best endeavours to promote, develop and extend their mutual business interests, could apply to a termination of the very relationship by which the mutual business interests arise. In particular, it is difficult to see how the obligation in cl 7.1.1 could apply to a termination pursuant to cl 10.1 of the Sub-Originator Agreement, which is, in effect, a termination for convenience and which can take place without fault. 383 The same conclusion was reached by the West Australian Court of Appeal in Trans Petroleum (Australia) Pty Ltd v White Gum Petroleum Pty Ltd (2012) 268 FLR 433; [2012] WASCA 165. There the appellant argued that the power of termination under the contract in issue in that case had to be exercised in good faith and that the requirement that the power be exercised in good faith arose upon a proper construction of the contract as a whole or alternatively was implied by law. In considering that argument, Buss JA (with whom Pullin and Murphy JJA agreed) first addressed whether a duty of good faith should be implied into the contract, noting that the necessity to imply such a duty in the context of commercial contracts had not been accepted universally in Australia. However, for the purposes of considering the appeal ground his Honour assumed, favourably to the appellant, that such a duty may be imposed on parties to a contract. His Honour then noted, referring to the decision in Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 (at [144]), that an implied duty to act in good faith does not require a party to a contract to act in the interests of the other party or to subordinate its own legitimate interests to those of the other party. Rather, the duty requires a party to a contract to have due regard to the rights and interests of the other party. At [155]-[157] relevantly Buss JA said: [155] In my opinion, a duty of good faith, in exercising rights under cl 3 of the Peak Fuel Re-Selling Agreement, should not by implication be imposed on the appellant and the respondent. The implication of such a duty would be inconsistent with the terms of the bargain agreed upon by the parties. As I have mentioned, the language of cl 3, read with cl 2.1 and the other provisions of the agreement as a whole, is relevantly unconfined. Clause 3 confers on each of the parties a right to terminate the agreement and the non-exclusive licence without cause. Clause 3, read in context, contemplates that either party may, for any reason and without regard to the rights and interests of the other party, terminate upon two months' written notice. [156] Seventh, the parties to a contract may be under an implied duty to cooperate in the performance of contractual obligations: see Mackay v Dick (1881) LR 6 App Cas 251 at 263 (Lord Blackburn); Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607-608 (Mason J); EDWF Holdings at [105]-[108]. However, this duty to cooperate does not rise above the promises made by the parties to the contract: see EDWF Holdings at [109] and the cases there cited. [157] In the present case, cl 3 of the Peak Fuel Re-Selling Agreement is not circumscribed by the provisions of cl 4 with respect to negotiations in good faith in the review of the Daily Fee. Rather, the parties have expressly qualified those provisions by conferring an express and unequivocal right on each of them to terminate for any reason upon two months' written notice. 384 His Honour refused to imply a duty of good faith in exercising rights in relation to a clause which entitled the parties to the relevant agreement to terminate that agreement without cause, expressly noting that the implication of such a duty would be inconsistent with the terms of the bargain agreed by the parties. 385 Here, there is an express clause requiring FAST and Leaseworks to show utmost good faith in their mutual dealings with one another. However, as was the case in Trans Petroleum, it would be inconsistent with the right to terminate conferred by cl 10.1 of the Sub-Originator Agreement to extend that duty to the operation of cl 10.1. I reject the applicants' invitation to do so. 386 Even if I am wrong in that conclusion, as observed by Foster J in Sundararajah v Teacher's Federation Health Limited (2011) 283 ALR 720; [2011] FCA 1031 at [68]: Generally speaking, if a contract contains a requirement that the parties act in good faith, they must act honestly, not capriciously, and reasonably. However, good faith does not require a party to act in the interests of the other contracting parties nor to subordinate their own legitimate interests to those of the other parties: Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (2010) 15 BPR 28,563; [2010] NSWCA 268 at [147]. It may be that there is no reasonableness requirement in the obligation, should the obligation be implied. The essence of the good faith requirement is honesty. 387 In this case the termination arose as a result of concerns by FAST about the conduct of Leaseworks, the counterparty to the Sub-Originator Agreement. That is, even assuming that the applicants are correct in their construction of the Sub-Originator Agreement, such that the obligation imposed by cl 7.1.1 can be extended to termination pursuant to cl 10.1, there would be no breach of cl 7.1.1 on the part of FAST in terminating. That is because it terminated the Sub-Originator Agreement because of its concerns about Leaseworks and Ms Hudson, the relevant person behind Leaseworks, and in doing so could not be said to breach a term requiring that it exercise its power to terminate in good faith: to like effect see Sundararajah at [72]-[76]. 388 The second part of the breach of contract claim concerns cl 7.1.2 of the Sub-Originator Agreement, the obligation to keep certain information confidential. The alleged breach is said to be comprised by: (1) the dispatch by FAST of the Suspension Email; (2) telephone conversations which took place between 4 and 10 August 2017 with lenders including Westpac and ANZ in which in each case FAST employees said words to the effect that the reason for the suspension was "potential fraudulent behaviour in which [Ms Hudson and Leaseworks] had been involved"; (3) the Interference, that is, contacting ANZ on 4 August 2017 and asking it to carry out an investigation into Ms Hudson in order to provide support for the action taken by NAB and FAST; and (4) the dispatch of the Termination Email. 389 I make the following observations about this claim. 390 First, the applicants have not established by their evidence that the conversations alleged to have taken place between representatives of FAST and representatives of Westpac and ANZ in fact took place. Nor have they established by their evidence that on or about 4 August 2017 FAST contacted ANZ and requested it to carry out an investigation. 391 Secondly, and in any event, cl 7.1.2 of the Sub-Originator Agreement by its terms operates in relation to information "relating to the mutual business interests of both parties which is obtained by both parties" during the term of that agreement. The information concerning the suspension and termination of the Sub-Originator Agreement was not in that category. It was not information relating to the mutual business interests of Leaseworks and FAST nor was it information obtained by both parties. In other words, it was not information that fell within the terms of cl 7.1.2: (1) the information relating to the reason for and fact of suspension and then termination was not obtained by both parties, it was obtained by FAST; (2) that information does not relate to the mutual business interests of both Leaseworks and FAST. At best it could be said to relate to FAST's business interests; and (3) in any event, the information is, as for the application of cl 7.1.1 to the termination of the Sub-Originator Agreement, inimical to the mutual business relationship between FAST and Leaseworks. 392 For those reasons, in my view, Leaseworks has not established that FAST breached cl 7.1.2 of the Sub-Originator Agreement in the manner alleged. 393 It follows that Leaseworks has not established that FAST breached the Sub-Originator Agreement. In those circumstances it is not necessary for me to address the question of causation in this context save to note that the applicants' case on causation, assuming they were able to establish a breach of the Sub-Originator Agreement and accepting the different context, suffers from some of the same flaws I have already identified. DAMAGES 394 Given my conclusions in relation to liability and the applicants' failure to establish any of the alleged breaches, the question of the damage suffered by the applicants, as a result of the conduct, does not arise for consideration. However, for completeness I set out below a summary of the expert evidence going to that question and my observations about that evidence and the applicants' claim for damages more generally. The expert evidence 395 Both the applicants and the respondents relied on expert evidence. As set out at [13(5)] above, the applicants relied on evidence given by Mr Monaghan, an accredited business valuation specialist, and the respondents relied on the evidence of Mr Giliberti, a forensic accounting and business valuation specialist. Mr Monaghan provided two reports: the first dated 17 September 2020 and the second, in response to Mr Giliberti's report, dated 4 March 2021. Mr Giliberti provided one report dated 10 December 2020. Mr Monaghan and Mr Giliberti also prepared a joint report dated 3 May 2021. 396 A summary of the evidence given by Mr Monaghan and Mr Giliberti follows. Mr Monaghan's evidence 397 In his first report Mr Monaghan was asked to address two questions: (1) what loss had Ms Hudson suffered as a result of the "Conduct"?; and (2) what loss has Leaseworks suffered as a result of the "Conduct"? In the letter of instruction provided to Mr Monaghan, the "Conduct" was defined as follows: In August 2017 the Respondents then proceeded first to suspend and then terminate their business relationships with the Applicants. Also in or around August and September 2017, the Respondents contacted a variety of lenders for whom the Applicants worked to inform them first of the suspension and then later of the termination. The communications carried the imputation that the suspension and termination were due to the misconduct of the Applicants. This imputation was strengthened by the subsequent (and ongoing) refusal by the Respondents to provide a letter to the Applicants (which they would then be able to show to other lenders to restore their reputation) stating that the termination was not as a result of misconduct on their part. … 398 In answer to the first question, Mr Monaghan calculated that Ms Hudson had suffered a loss of personal income of $87,799 (after tax) for the period 1 July 2017 to 30 June 2020 in addition to lost potential dividends and share value. In order to assess Ms Hudson's loss Mr Monaghan calculated the difference between what Ms Hudson actually earned in that period with what she would have earned in the same period "but for" the Conduct. 399 For the purposes of calculating Ms Hudson's actual remuneration, Mr Monaghan had regard to the pre-tax wages declared by Leaseworks for Ms Hudson, adjusted by any increase in her loan account, income tax and the Medicare levy. 400 For the purpose of calculating the wage Ms Hudson would have received in the "but for" scenario, Mr Monaghan had regard to a document titled "PayScale salary data for mortgage brokers in Australia" (PayScale data document). He adopted the 90th percentile total pay for the 2020 financial year from the PayScale data document and reduced that amount by 3% for each preceding year to allow for deflation. He then adjusted the resulting amounts for income tax and the Medicare levy to give a net income figure in each of the relevant years. 401 In answer to the second question, Mr Monaghan calculated Leaseworks' loss for the period 1 July 2017 to 30 June 2020 as $378,755. He arrived at that figure by undertaking two calculations. 402 The first was for loss of profits from declining lending commissions compared to the "but for" scenario between 1 July 2017 and 30 June 2020 which he calculated to be $168,880. 403 The second was for loss of business goodwill as at 30 June 2020 from declining profits and, in particular, the declining trailing income when compared to the "but for" scenario. Mr Monaghan calculated loss of business value of $209,895. For the purpose of that valuation Mr Monaghan valued the business at 30 June 2020 and compared that value to what the value would have been "but for" the Conduct. In doing so he calculated the actual business valuation and the "but for" business valuation as at 30 June 2020 using the "recurring revenue method" which he opined is the primary valuation method used in the mortgage broking industry adopted by buyers and sellers, particularly for smaller businesses. As a check method of that calculation, Mr Monaghan also carried out calculations of the value of the actual and "but for" values of Leaseworks' business as at 30 June 2020 using the capitalisation of future maintainable earnings method, which resulted in a lengthy lower valuation for both scenarios. Objection to Mr Monaghan's report 404 The respondents objected to the whole of Mr Monaghan's first report dated 17 September 2020 on three bases. They contended that: (1) there was no basis for the opinions expressed by Mr Monaghan in that report; (2) Mr Monaghan does not have the relevant expertise to express his opinions; and (3) Mr Monaghan did not disclose his central reasoning in his report. 405 After hearing submissions from the parties I overruled the objection and allowed the tender of Mr Monaghan's first report. At the time of doing so I indicated to the parties that I would include reasons for my ruling in these reasons for judgment. Thus a summary of the respondents' submissions and the reasons for my ruling follow. Respondents' submissions 406 The respondents' principal submission was that the there was no basis for the opinions expressed by Mr Monaghan, both in relation to the loss said to have been suffered by each of Ms Hudson and Leaseworks. 407 As to the loss said to have been suffered by Ms Hudson, the respondents observed that in assessing the loss said to have been suffered by Ms Hudson a key assumption made by Mr Monaghan was that a "fair wage was not able to be paid to [Ms Hudson] due to the decline in income and profits of [Leaseworks]". The respondents submitted that: (1) there was no support in the evidence for that assumption; (2) Mr Monaghan does not identify what a "fair wage" is; and (3) there is no basis for the statement that there was a decline in income and profits given that the particular evidence of Ms Hudson relied on to support the statement was rejected. 408 The respondents submitted that there was a further issue, namely Mr Monaghan's reliance on the PayScale data document. The respondents submitted that Mr Monaghan does not explain when the PayScale data document was obtained, from where it was obtained or the qualifications, if any, of the compiler of the information in the document. They contended that the PayScale data document does not provide any basis upon which wages can properly be calculated and that, on any view, this is not a matter in respect of which Mr Monaghan has any expertise nor does he disclose his reasoning. They submitted that it followed that there is no basis for any of the opinions expressed by Mr Monaghan in relation to the loss said to have been suffered by Ms Hudson. 409 In relation to the loss said to have been suffered by Leaseworks, the respondents' complaint concerned the multipliers used by Mr Monaghan. They observed that Mr Monaghan used two separate multipliers in seeking to determine the loss it is said to have suffered: the capitalisation multiple, in calculating future maintainable earnings; and the recurring revenue multiple, in calculating the multiple recurring revenue method. 410 In relation to the capitalisation of future maintainable earnings method, the respondents submitted that, in adopting a valuation methodology of capitalising actual or projected income, an essential matter of expertise and expert opinion is the appropriate capitalisation rate. They contended that Mr Monaghan does not provide any reasoning as to why he chose what it described as those "seemingly arbitrary multipliers" and that he does not explain how or why the trends to which he refers matter, provide any basis or justification for the selection of the multipliers or the range from which the multipliers might be selected. The respondents submitted that there is no basis for the adoption of the multipliers disclosed and that he fails to address any of the "qualitative factors", which he lists in his report, and which he said "influence the required rate of return when assessing the value of any business". They submitted that the effect of this is that the calculations based on those multipliers must be rejected. 411 In relation to the recurring revenue multiple, the respondents again submitted that the multiple selected is critical and that Mr Monaghan does not provide any reasoning as to why he chose those "seemingly arbitrary" multipliers, save for the adoption of assumptions for which there is no support on the evidence. The respondents noted that the only support appeared to be "information from Radar Results in the source documents" but there was no explanation for the source of that document or for the information in it. The respondents contended that, in the absence of any basis for the opinion proffered, and where there is no reasoning disclosed, the opinion based on those multipliers must be rejected. 412 Finally, the respondents submitted that Mr Monaghan's report is inadmissible because many of the assumptions upon which he relies are not proved, nor, in many cases, is an attempt made to prove them. They contended that, in one part of his first report, Mr Monaghan uses a form of "boilerplate assumption" which Ms Hudson and Leaseworks have failed to make good and that they have also failed to make good the specific assumptions. Reasons for overruling the respondents' objection 413 The respondents' attack on Mr Monaghan's first report was to particular components of his calculations. But their objection was to the whole of the report. As I understood it, the respondents' position was that, taking each of those matters into account, I would conclude that there was a lack of reasoning in Mr Monaghan's first report which, in turn, would lead me to conclude that Mr Monaghan did not have the expertise required to provide the opinions in the report. For that reason the report would be rejected. The respondents reinforced this approach given their stated position that, if the objection to the whole failed, they did not, in the alternative, seek to make objections to particular paragraphs or parts of the report. 414 Section 79(1) of the Evidence Act 1995 (Cth) provides: If a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge. 415 In Dasreef Pty Limited v Hawchar (2011) 243 CLR 588 at [37], the High Court (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ) relevantly said: … The admissibility of opinion evidence is to be determined by application of the requirements of the Evidence Act rather than by any attempt to parse and analyse particular statements in decided cases divorced from the context in which those statements were made. Accepting that to be so, it remains useful to record that it is ordinarily the case, as Heydon JA said in Makita, that "the expert's evidence must explain how the field of "specialised knowledge" in which the witness is expert by reason of "training, study or experience", and on which the opinion is "wholly or substantially based", applies to the facts assumed or observed so as to produce the opinion propounded". The way in which s 79(1) is drafted necessarily makes the description of these requirements very long. But that is not to say that the requirements cannot be met in many, perhaps most, cases very quickly and easily. … (Footnotes omitted.) 416 Mr Monaghan sets out his training and credentials in his first report. As observed at [13(5)] above, he is a member, and a public practice certificate holder, of CAANZ, an accredited business valuation specialist, recognised by CAANZ, a registered tax agent and has a diploma of financial planning, a Bachelor of Commerce and a Bachelor of Economics. In addition he has approximately 20 years' experience in a variety of professional roles but predominantly in accounting. It is also apparent that Mr Monaghan has experience in providing expert reports, having done so on numerous occasions, and business valuations across a number of areas including in the mortgage broking and banking industry. 417 I was satisfied that Mr Monaghan has the specialised knowledge, based on his training and experience, to be able to provide an opinion of business value in relation to a mortgage and loan broking business. In his report Mr Monaghan provides an opinion of the loss occasioned by Ms Hudson and the loss occasioned by Leaseworks by reason of the Conduct. As to the former, I would infer that he applied his skill and experience as an accountant and valuation expert and, as to the latter, he undertakes that assessment by, in turn, undertaking a valuation of the Leaseworks' business at a particular point in time and in two scenarios, applying the same expertise. 418 The respondents' objection speaks of a lack of reasoning by Mr Monaghan in his first report as well as a lack of reliability of source material on which he relies. 419 As to the latter, the respondents were critical of two particular documents, the PayScale data document deployed in relation to the calculation of Ms Hudson's loss and the Radar Results document deployed in relation to the identification of the recurring revenue multiple. However, an expert is entitled to rely on publications and articles produced by others in their area of expertise. In Bodney v Bennell (2008) 167 FCR 84 at [92]-[93] a Full Court of this Court (Finn, Sundberg and Mansfield JJ) said: [92] Before the Evidence Act it was well established that experts are entitled to rely upon reputable articles, publications and material produced by others in the area in which they have expertise, as a basis for their opinions. In Borowski v Quayle [1966] VR 382 at 386 (Borowski) Gowans J, quoting Wigmore on Evidence (3rd ed) Vol 2, pp 784–5, said that to reject expert opinion because some facts to which the witness testifies are known only upon the authority of others, "would be to ignore the accepted methods of professional work and to insist on finical and impossible standards". Experts may not only base their opinions on such sources, but may give evidence of fact which is based on them. They may do this although the data on which they base their opinion or evidence of fact will usually be hearsay information, in the sense they rely for such data not on their own knowledge but on the knowledge of someone else. The weight to be accorded to such evidence is a matter for the court. See generally Borowskiat [1966] VR at 385–387; PQ v Australian Red Cross Society [1992] 1 VR 19 at 34–5; H v Schering Chemicals Ltd [1983] 1 1 WLR 143 at 148–149; Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 at 161–163 and Jango (No 4) 214 ALR 608 at [8]. [93] There is nothing in the Evidence Act that displaces this body of law. … 420 Mr Monaghan is entitled to rely on the research and data of others including the PayScale data document and the Radar Results. The respondents complain about a lack of information or explanation about these documents, their authors and the source of their contents. But they are matters that go to weight, rather than to admissibility of the opinion based on them. 421 As to the former, the respondents raised issues about the lack of reasoning in relation to the selection of the recurring revenue multiple and the capitalisation of future maintainable earnings multiple. Mr Monaghan has given some explanation of the factors to be taken into account in estimating these multiples. As to the latter he identified a range of factors and then identified the multiples he adopted and explained why he did so, albeit perhaps not in the detail the respondents might like. There is reasoning in the report. I do not accept that the respondents are unable to cross-examine for reason of lack of explanation as to how Mr Monaghan arrived at the multiples. To the extent that the respondents raise criticisms about Mr Monaghan's approach, they are matters on which the respondents can not only cross- examine but can make submissions as to the weight to be given to the opinions set out in the report. Mr Giliberti's evidence 422 That then brings me to Mr Giliberti's evidence. As set out at [14(10)] above, he provided a report in response to Mr Monaghan's first report. Mr Giliberti was instructed to address the following two questions: a) Assuming that Leaseworks and Ms Hudson's case on liability is accepted and the loss accrues from 24 July 2017, is the approach adopted by Mr Monaghan a reasonable one for the purposes of assessing loss for a claim for damages? b) Are the assumptions adopted by Mr Monaghan reasonable and if not, why not? 423 At [3.6] of his report, Mr Giliberti concludes as follows in relation to Mr Monaghan's first report and the methods adopted in undertaking his calculations: a) the assumptions adopted by Mr Monaghan to calculate Leaseworks' past losses up to 30 June 2020, Leaseworks' loss of trail book value as at 30 June 2020, Leaseworks' loss of goodwill value as at 30 June 2020 and Ms Hudson's losses up to 30 June 2020 are not supported by evidence and therefore are unreasonable. b) based on my instructions at paragraph 2.3(a) and 2.3(b) above, the approach adopted by Mr Monaghan to quantify Leaseworks' past losses up to 30 June 2020, Leaseworks' loss of trail book value as at 30 June 2020, Leaseworks' loss of goodwill value as at 30 June 2020 and Ms Hudson's losses up to 30 June 2020 is not an appropriate approach to measure the applicants' losses. The preferrable approach would be to assess a single amount reflecting the present value as at 24 July 2017 of the stream of losses to Leaseworks (without Ms Hudson's remuneration) applying a discount rate of 39.1%. This approach is similar to the valuation method called a 'discounted cash flow' method, being a valuation method outlined in paragraphs 8.4 to 8.8 of Mr Monaghan's Report. 424 Mr Giliberti provides his detailed reasons for arriving at these conclusions and an illustrative calculation of the applicants' combined loss. The joint report 425 Messrs Monaghan and Giliberti prepared a joint report in which they set out the areas of agreement and disagreement between them and their reasons for the latter. 426 They agreed on limited matters of principle only and disagreed on a range of matters in relation to the valuations arrived at and the methods adopted by Mr Monaghan. The particular areas of disagreement were: (1) Mr Monaghan's opinions on "ex-ante" and "ex-post" approaches where the former characterises the loss quantification approach that Mr Giliberti considers to be preferable and the latter characterises the loss quantification approach that Mr Monaghan has adopted. The ex-post approach adopted by Mr Monaghan involves a calculation of past annual losses for the period 1 July 2017 to 30 June 2020 and a loss of asset value as at 30 June 2020. The ex-ante approach preferred by Mr Giliberti requires an assessment of the applicants' total loss as at the date of the first alleged wrong doing, i.e. 24 July 2017; (2) revenue discrepancies. There was agreement as between Mr Monaghan and Mr Giliberti that not all information provided or asserted could be independently verified and that the calculations rely on certain assumptions but disagreement about the effect of those gaps in the information on the calculations undertaken; and (3) revenue growth in a "but for" scenario. 427 Mr Monaghan and Mr Giliberti gave concurrent evidence in relation to each of the areas of disagreement in their joint report as well as Mr Giliberti's illustrative calculations included in his report and updated in the joint report. 428 In relation to the "ex-ante" and "ex-post" date of valuation issue, Mr Monaghan said that he selected the 30 June 2020 date for his valuation based on the most recent financial information made available to him. Mr Monaghan conceded that he could have assumed that the business was not to be sold, or not capable of sale, as at 30 June 2020 and he could have instead opined about the present value of a future sale or future stream of cash flows beyond that date. However, instead using the best information available to him, he looked at lost profits up to 30 June 2020 based on the actual figures. 429 Mr Monaghan explained that he valued the trail book, i.e. the trailing income of mortgages, and not other parts of the Leaseworks business, and that he had assumed that there was an ability to sell the trail book. However, in valuing the business as at 30 June 2020, Mr Monaghan declined to use a discounted cash flow methodology. He looked at the most recent month of available data, June 2020, annualised the income and then added an industry benchmark. He described this approach as a market method, as opposed to an income method, which has little to do with profit or discounted cash flow methods. Mr Monaghan disagreed that a more reliable valuation methodology would be to adopt a future projection based on the income as at July 2017 (which was the method which Mr Gilberti considered to be the correct approach). 430 Mr Monaghan adopted a growth rate in upfront commission of 3% for FY18, FY19 and FY20 in his calculation. He did so despite the fact that there had been a decline in commission revenue in FY17. He adopted the growth rate on two bases: first, because of evidence given by Ms Hudson (as to her illness), which was rejected; and secondly, because of information provided by his instructing solicitors to the effect that Leaseworks was working on a few big deals, none of which came to fruition because of the Conduct. However, Ms Hudson's evidence to that effect was not read by the applicants. It follows that the evidentiary foundation underpinning Mr Monaghan's assumption of 3% growth was not made out which, in turn, undermines a critical plank in his calculation. 431 Further, Mr Giliberti rejected the suggestion that a 3% growth rate was conservative given that, according to the objective evidence contained in an IBISWorld report, the industry was not growing at 3% at the relevant time and inflation was not at that level. 432 Mr Monaghan identifies two multipliers in his report. The recurring revenue multiplier was taken from the range provided in the Radar Results document, which it seems is produced by a business broker who provides information about multiples by email. Mr Monaghan was unable to provide any detail about the source of the information in that document: the sample size or nature of the transactions considered to underpin the data or the literature the author of the information had reviewed. Mr Monaghan disagreed that he had simply adopted the mid-range of the data provided as the appropriate multiplier. He said that he had used his knowledge gathered over time and adopted a multiple that he considered to be reasonable in the circumstances for both the actual and "but for" scenarios. While I accept that Mr Monaghan has experience as a valuer of businesses across a range of industries, and putting to one side the reliability or otherwise of the range of multipliers in the Radar Results document, Mr Monaghan's inability to explain with greater precision why he selected the particular multiples for his calculations based on recurring revenue causes me some concern. The multiple is a key input into the calculation. I would thus expect an expert valuer to explain why he or she chose a particular multiple in the circumstances of the business in question. The lack of a more detailed explanation for that component, in my view, affects the reliability of the calculation. 433 In relation to the calculation undertaken by Mr Monaghan of Ms Hudson's loss of remuneration, Mr Monaghan accepted that he is not a remuneration specialist. For that reason he used the PayScale data document in order to undertake his research on salary. Mr Monaghan did not think that the salary he had selected for the purpose of his calculation was unreasonably high. He said he would normally use data from the top of the scale in his calculations when he is considering an employee who is managing the business and thus who has additional duties beyond that of an employee. 434 As set out at [400] above, Mr Monaghan arrived at annual remuneration for Ms Hudson by taking the 90th percentile figure from the PayScale data document for 2020, being $99,000, and deflated that amount to allow for wage growth for previous years. That resulted in an amount of $93,317 for FY18. He did not continue that exercise, by applying the same rate of deflation, to take the figure back to FY17. Ms Hudson's remuneration for FY17 was in fact $60,000. Had Mr Monaghan continued to apply his formula to the amount he had arrived at for FY18 remuneration, he would have arrived at a figure substantially in excess of Ms Hudson's actual wages for FY17. 435 Mr Monaghan made inquiries of his instructing solicitors as to why Ms Hudson was paid at that level in FY17 but was not provided with any explanation. Mr Monaghan said that, by looking at hypothetical remuneration which was compiled based on surveys, he had assumed that a person with the requisite skills and experience to fulfil the role occupied by Ms Hudson would be paid the amount he had calculated. Implicitly he had assumed that Ms Hudson was paid less than a market wage in FY17. He said that there could be reasons for that but he was not aware of those reasons. 436 In circumstances where there is evidence of Ms Hudson's actual remuneration in FY17, it is difficult to accept Mr Monaghan's calculation of Ms Hudson's loss which starts with a hypothetical figure as at FY20 and works backwards. Mr Monaghan was aware of Ms Hudson's remuneration as at FY17. There may have been reasons why she was paid at that level, which according to Mr Monaghan was under market. Be that as it may, that she was paid at that level in FY17 significantly undermines the reliability of Mr Monaghan's calculation of Ms Hudson's loss and the basis upon which he calculated her lost wages and her overall loss. I would not give any weight to this aspect of Mr Monaghan's report. 437 In relation to revenue discrepancies, Mr Monaghan accepted that the revenue in the financial statements was Leaseworks' business income. Mr Monaghan relied on source documents available to him to identify the component parts of the total revenue shown in the financial statements. However when he did so he could not get the information in the available source documents to reconcile with the revenue amount in the financial statements. He sought an explanation for the discrepancies, but none was provided. Further, Leaseworks did not keep management accounts, which did not assist. 438 Ultimately, Mr Monaghan relied on an excel spreadsheet produced by Ms Hudson in relation to which he undertook some calculations by way of a check of the data. In doing so he identified some typographical errors (incorrect transposition of numbers) which he did not correct because he did not have any information to enable him to do so. Although Mr Monaghan had some comfort, because when he reconciled the FY17 figures, the discrepancy was only $2,682, he was ultimately not sure where the figures came from for the reported total revenue and why they could not be reconciled. 439 Having regard to those matters, I would not accept Mr Monaghan's evidence in relation to Ms Hudson's alleged loss. There are also a number of issues which arise in relation to his calculation of Leaseworks' alleged loss such that I would put little weight on his report in that regard. Accepting that Mr Monaghan did the best he could in the circumstances a number of the assumptions he relied on were not established in the evidence or doubt was cast upon them and the underlying material on which he relied. The applicants' alternate claim for damages 440 In the alternative the applicants contend that they have a claim for damages amounting to the lost sale to Dr Hasham. That is, but for the alleged conduct the proposed sale negotiated between Mr Currie and Dr Hasham would have proceeded. 441 There is no evidence to support such a claim. 442 First, I do not accept that Dr Hasham's proposal to purchase the Leaseworks business for $2 million was anything more than that. I do not accept his evidence that he would arrive at a purchase price without undertaking some analysis and reviewing the business' accounts. 443 Secondly, Dr Hasham accepted that before he could proceed with a sale he would need to satisfy himself that the trail commission figure was accurate and he would do that by inspecting Leaseworks' books. As he said "once there was something solid [they] would be doing some forensic accounting confirming everything is fine and then moving on". However, there was, to adopt Dr Hasham's language, nothing "solid". There had been discussions and, at best, an expression of interest. But no agreement had been reached on any terms, let alone purchase a price. CONCLUSION 444 The applicants have failed to establish any of their pleaded claims. Accordingly the proceeding should be dismissed. 445 Costs would ordinarily follow the event. However, the respondents have requested that I reserve on the question of costs. The parties are to confer on the question of costs of the proceeding and either to provide my Associate with proposed consent orders addressing the costs of the proceeding within 14 days of the date of publication of these reasons, or if they are unable to reach agreement on that issue: (1) the respondents are to file and serve their submissions on the question of costs of the proceeding, not exceeding five pages in length, within 21 days of the date of publication of these reasons; (2) the applicants are to file and serve their submissions on the question of costs of the proceeding, not exceeding five pages in length, within 28 days of the date of publication of these reasons; and (3) unless either party requests an oral hearing, the question of costs will be dealt with on the papers. 446 I will make orders accordingly. I certify that the preceding four hundred and forty-six (446) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Markovic. Associate: Dated: 14 October 2022