Supreme Court New South Wales Medium Neutral Citation: LNCP002 Pty Ltd v Feridun Akcan [2021] NSWSC 848 Hearing dates: 10-12 May 2021 Date of orders: 16 July 2021 Decision date: 16 July 2021 Jurisdiction: Common Law Before: N Adams J Decision: See [242]. Catchwords: CONTRACTS — Breach of contract — alleged default by borrower under mortgage – where due date for payments disputed – whether due date varied orally or in writing by parties – held, due date was varied as advanced by lender CONTRACTS — Implied terms — Terms implied in fact – whether it was an implied term of the loan agreement that the lender would provide a loan statement upon request – where borrower had express right to early repayment of loan – where borrower had to give irrevocable notice specifying the amount to be repaid – held, necessary to imply such a term ESTOPPEL — Promissory estoppel — where borrower believed payment was due on 11th – where lender previously accepted payment on 11th – whether lender entitled to issue default notice due to failure to pay on 8th of the month – held, lender was estopped from issuing default notice CONSUMER LAW — Unconscionable conduct — In connection with goods or services — System of conduct or pattern of behaviour – where lender failed to issue loan statement without reasonable excuse – where lender entered negotiations for deed of forbearance during COVID-19 shutdown – where lender issued default notice during negotiations – where default notice issued two days before borrower believed payment was due – held, lender acted unconscionably under s 21 of the ACL CONSUMER LAW — Misleading or deceptive conduct — Representations as to future matters – where lender said it would "action" request for a loan statement "now" – where lender failed to do so – held, not misleading and deceptive conduct Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth), ss 12BB, 12DA Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, ss 18, 20, 21, 22, 232, 236 Conveyancing Act 1919 (NSW), s 93 Real Property Act 1900 (NSW), s 57(2)(b) Cases Cited: Australian Competition and Consumer Commission (ACCC) v Get Qualified Australia Pty Ltd (In Liq) (No 2) [2017] FCA 709 Australian Competition and Consumer Commission v Medibank Private Ltd (2018) 267 FCR 544; [2018] FCAFC 235 Australian Competition and Consumer Commission (ACCC) v Lux Distributors Pty Ltd [2013] FCAFC 90 Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18 Awad v Twin Creeks Properties Pty Limited [2012] NSWCA 200 B.P. Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Blomley v Ryan (1956) 99 CLR 362; [1956] HCA 81 Butt v McDonald (1896) 7 QLJ 68 City of Botany Bay Council v Jazabas Pty Limited (ACN 060 105 053) [2001] NSWCA 94 Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 Heilbut, Symons & Co v Buckleton [1913] AC 30 Hercules Motors Pty Ltd v Schubert (1953) 53 SR (NSW) 301 Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133; [1919] HCA 64 Kosho Pty Ltd v Trilogy Funds Management Ltd [2013] QSC 135 Nadrak Pty Ltd v Permanent Custodians Ltd (1994) 6 BPR 13,344 Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199; [2015] FCAFC 50 Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596; [1979] HCA 51 Sykes v Reserve Bank of Australia (1998) 88 FCR 511; [1998] FCA 1405 Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O'Donnell [2011] NSWCA 389 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7 Category: Principal judgment Parties: LNCP002 Pty Ltd ACN 637 107 576 (Plaintiff/First Cross-Defendant) Feridun Akcan (Defendant/First Cross-Claimant) Diamond House Jewellery Pty Ltd ACN 083 444 277 (Second Cross-Claimant) MZF Investment Group Pty Ltd ACN 626 166 854 t/as LaunchCap (Second Cross-Defendant) Representation: Counsel: Mr M W Young SC (Plaintiff) Mr M B Evans/Ms V Chan (Defendant) Solicitors: Summer Lawyers (Plaintiff) Future Legal (Defendant) File Number(s): 2020/166316 Publication restriction: Nil Judgment Overview 1. By statement of claim filed on 4 June 2020 the plaintiff, LNCP002 Pty Ltd ("the lender") seeks possession of the family home of Feridun Akcan ("the defendant" also known as "Adam") in Canada Bay. Mr Akcan guaranteed a loan from the lender to his jewellery business, Diamond House Jewellery Pty Ltd ("Diamond House"). The lender claims that Diamond House defaulted on that loan. Mr Akcan disputes any default. 2. By cross-claim filed on 24 August 2020, Mr Akcan and Diamond House seek relief, including damages as against both the lender and MZF investment Group Pty Ltd trading as LaunchCap (hereinafter "LaunchCap") for breach of contract, unconscionable conduct and misleading and deceptive conduct. The lender is a corporate vehicle set up purely for the purposes of this specific loan whereas LaunchCap and its director Jeremy Fleischner managed the loan. 3. A number of issues arose for consideration in this matter. The statement of claim raised the following questions: 1. Were interest payments under the loan agreement due on the 11th day of each month or on some other day?; 2. If the April interest payment was due on 8 April 2020 (rather than 11 April 2020) was the lender estopped from relying on an alleged default on 8 April 2020?; and 3. Was Mr Akcan in default on 9 April 2020? 1. The following issues arose for consideration under the cross-claim: 1. Did the lender act unconscionably in issuing a default notice on 9 April 2020?; 2. Was there an implied term of the contract requiring the lender to provide Mr Akcan with a loan statement in a timely manner upon request?; 3. Did the lender breach an implied term of the contract by failing to provide Mr Akcan with a loan statement within a reasonable time after he requested it?; 4. If the lender is unsuccessful in its claim what orders should be made?; 5. Did the lender and/or LaunchCap engage in misleading and deceptive conduct after 18 February 2020 by informing Mr Akcan and his broker that a loan statement would be provided imminently when none was provided until 22 June 2020?; and 6. If the defendant/cross-claimant succeeds in the cross-claim what is the appropriate relief? The evidence 1. The hearing was conducted before me over three days on 10, 11 and 12 May 2020. Mr Young SC appeared for the lender and LaunchCap and Mr Evans of counsel appeared with Ms Chan for Mr Akcan and Diamond House. 2. The lender and LaunchCap relied upon the affidavits of Mr Fleischner and the exhibits thereto. Mr Akcan and Diamond House relied upon Mr Akcan's affidavits and that of his broker, Ms Lordin Arvanitopoulos, as well as the exhibits and annexures thereto. Ms Arvanitopoulos is a finance broker from whom Mr Akcan sought advice as to the refinancing of his loan between late February and mid-June 2020. These three witnesses all gave evidence and were cross-examined. 3. It became apparent from the evidence of Mr Fleischner that he was not the sole decision-maker in relation to a number of important factual matters in dispute. One of the individuals providing the funds to the lender was Mr David Fitzgibbon. He provided instructions to Mr Fleischner and a real issue arose as to whether he, rather than Mr Fleischner, was the decision-maker on a number of important issues including the decision to issue the default notice on 9 April 2020. Although Mr Fitzgibbon was a party to a number of relevant emails, no affidavit was ever obtained from him. 4. Most of the relevant evidence was in documentary form which I have set out below. In addition to the documents, the facts set out below represent factual matters not in dispute. As it turned out, very few of the relevant factual findings turn on questions of credit, as opposed to the drawing of inferences from proven facts. I will make the relevant factual findings in relation to facts in dispute below at [175]-[183]. Facts 1. In October 2019, Mr Akcan was an established jeweller running his own business, Diamond House, out of a jewellery shop in the Top Ryde shopping centre. He had operated his jewellery business for about 38 years at the date of hearing and had worked in the jewellery industry since the age of 18. He arrived in Australia at the age of 15. English is his fifth language. He gave evidence that he had no formal training in English before the age of 15 and learned to speak English primarily through his business. 2. In October 2019, Mr Akcan was offered an opportunity to purchase wholesale diamonds at discounts of up to 60%. He needed to borrow about $200,000 in a short time frame to take advantage of this opportunity and approached a mortgage broker to refinance the loan on his home in Canada Bay. That property was already subject to a mortgage and was refinanced at a higher rate so that Mr Akcan could obtain the money he required at short notice. 3. Mr Akcan was introduced to Mr Fleischner, the director of LaunchCap, by his broker. Mr Fleischner had commenced operating LaunchCap in May 2018. LaunchCap's function was to manage loans on behalf of investors. As at the date of hearing, Mr Fleischner had been involved in the private lending industry for four years. The loan to Diamond House was approved and the lender was set up as a corporate vehicle to loan the funds. It was just one of several "LNCP" companies, each of which was set up for an individual loan agreement. These companies were sometimes deregistered once a loan agreement had been paid out. 4. The funds for the loan to Diamond House came from external investors. One of those investors was Mr David Fitzgibbon, who was described by Mr Fleischner as the "point man" for the investor group on the Diamond House loan. The written agreement 1. On 30 October 2019, Mr Akcan's solicitor, Mr Ahmet Nedjat, forwarded him an email with attachments. That email stated that hard copies of the loan documents were being couriered to his solicitor's office for execution. 2. On 31 October 2019, Mr Akcan received a text message from his solicitor advising that the documents had been delivered to his office. Mr Akcan arranged for he and his family members (the guarantors) to attend the solicitor's office and sign the documents. These documents were: 1. A Letter of Offer and Guarantee and Indemnity; 2. A mortgage and Mortgage Deed; 3. A General Security Deed; 4. A verification certificate and verification of identity certificates. 1. Mr Akcan and the guarantors signed these documents on 31 October 2019. The borrower was Diamond House and the guarantors were Mr Akcan and his two family members. After he signed the documents, Mr Akcan hand-delivered them to the office of Piper Alderman, the solicitor for the lender, that same day. When he delivered the documents, there was no date affixed next to his signature on the Letter of Offer and Guarantee and Indemnity, nor on the Mortgage Deed or General Security Deed. These documents came to bear the date 1 November 2019, which appears to be in the same handwriting as the signature of the lawyer from Piper Alderman who signed the documents on behalf of the lender. 2. On 4 November 2019, a solicitor at Piper Alderman sent further documents to be signed by Mr Akcan and the guarantors (a "Waiver of Independent Financial Advice" form). These documents were signed on 4 November 2019 and Mr Akcan again hand-delivered these documents to the Piper Alderman office on the same day. 3. On 5 November 2019, the same solicitor from Piper Alderman emailed a further document entitled "Undertaking re tax portal statements". That document included the following requirement regarding payment in advance of three months' interest: "The Borrower undertakes to repay to the lender three months interest as a Condition Precedent to the Initial Advance." 1. This was not a condition that had previously been proposed or agreed to by Mr Akcan. Mr Fleischner conceded in cross-examination that this additional condition was essentially put to Mr Akcan as a "take it or leave it" proposition after the other documents had already been signed. In those circumstances, Mr Akcan and the guarantors signed that document on 6 November 2019 and Mr Akcan again hand-delivered it to the lender's solicitor on the same day. 2. Due to these settlement delays (caused, inter alia, by the lender adding the additional conditions), Mr Akcan did not get the funds he needed until 11 November 2019. Three months' interest was deducted from the amount advanced to Mr Akcan as well as $13,012.30 in legal fees paid to Piper Alderman. The mortgage and loan documents 1. Part A of the loan agreement ("Facility Terms") provides that the principal amount is $2,025,000 with a "higher rate" of 30% per annum interest (the default rate) and a "lower rate" of 11.5% per annum (the ordinary rate). The "Initial Advance Drawdown Date" is recorded as 30 October 2019. That was not the date that Mr Akcan received the funds. This appears to be the date that the monies were advanced by the investors to the lender. The term of the loan is 12 months from the date of the "Initial Advance" with a minimum term of six months. 2. Part D ("Terms and Conditions") sets out the following relevant definitions in cl 1.1: "Advance means any drawing under this deed and where appropriate the amount of the Advance, and includes any deemed Advance under clause 12.2 (Costs and Expenses); … Force Majeure includes, without limitation, fire, storm, flood, earthquake, explosion, accident, war, act of the public enemy, rebellion, insurrection, sabotage, epidemic, labour dispute, electrical failure, telecommunications failure and/or act of God; … Initial Advance means the first Advance made under this deed; Initial Advance Drawdown Date means the earlier of the Initial Advance or the date detailed in Item 5 [30 October 2019]; … Interest Payment Date means the first day of each calendar month; Interest Period has the meaning set out below: (a) the first Interest Period begins on the Initial Advance Drawdown Date and ends on the next Interest Payment Date which shall be the first day of the following calendar month, and interest shall be calculated and pro-rated for the number of days in that period (Initial Interest Period); (b) the second Interest Period begins on the date of expiry of the Initial Interest Period and ends on the next Interest Payment Date; and (c) each subsequent Interest period begins on the date of expiry of the preceding Interest Period and ends on the next Interest Payment Date. …" (emphasis in original) 1. Clause 3.4 requires the borrower to obtain refinance for the loan within 12 months: "3.4 Conditions subsequent (a) The Obligors warrant to the Lender that they will on or prior to the Termination Date repay the Secured Money from the refinance of the Property and the Facility to another financier. Should a refinance of the Facility to another financier be unsuccessful prior to the Termination Date, then the Obligors must sell the Property, on terms acceptable to the Lender in all respects, and apply all of the sale proceeds from the sale of the Property in full payment of the Facility and all other Secured Money prior to the Termination Date; (b) The Obligors undertake and agree to refinance the Secured Money on or prior to the Termination Date with time being of the essence. If the Obligors have not refinanced or otherwise paid out the Secured Money by the Termination Date (which the Obligors acknowledge will be an Event of Default) they undertake and agree to [facilitate the sale by auction of the property not less than 3 months after the Termination Date or, after that period, to provide vacant possession]." 1. Clause 4.2 of the Terms and Conditions provides for early repayment of the loan: "4.2 Early Repayment The Borrower acknowledges and agrees that by the Lender making financial accommodation available to the Borrower, the Lender has made commitments to investors on the promise of a minimum payment of interest, costs and expenses in accordance with clause 4.2(b) below. The Borrower may at any time before the Termination Date prepay all or any part of the Secured Money provided that: (a) the Borrower gives the Lender not less than 30 days notice of its intention to prepay (which shall be in writing, be irrevocable and specify the date upon which the relevant prepayment is to be made and the amount of the proposed prepayment) (Prepayment Notice); (b) if the date of prepayment in the Prepayment Notice falls within the Minimum Term, in addition to the amount to be prepaid, the Borrower must also pay to the Lender an amount equal to all interest and fees (including, but not limited to the monthly Management Fee) which (but for the prepayment) would have been payable by the Borrower to the Lender on the amount to be prepaid for the period from the date of the relevant prepayment up to and including the last day of the Minimum Term; and (c) in the Lender's opinion no Event of Default has occurred and no Event of Default is likely to occur as a result of such prepayment." (emphasis in original) 1. Clause 5 provides for the payment of interest: "5.1 Payment of interest (a) The Borrower must pay interest in advance to the Lender on the Limit and any other Secured Money for each Interest Period at the applicable Interest Rate. The Borrower must pay the applicable amount of Interest on each Interest Payment Date. (b) Interest shall be calculated on the basis that it accrues daily in advance from and including the first day of each Interest Period to the last date of that Interest Period. In the case of a prepayment or repayment being made on a date other than an Interest Payment Date, interest shall be calculated on the basis that it accrues daily in advance from and including the first day of that Interest Period to the relevant prepayment or repayment date. (c) The Borrower must pay in advance to the Lender on or before the date of the Initial Advance the Management Fee for the Period together with the Interest for that Period at the Lower Rate." 1. Clause 7 provides that the guarantors jointly, severally and unconditionally indemnify the lender for the punctual payment of the secured moneys, as well as all charges, costs, and expenses associated with, inter alia, any failure on the part of the borrower to punctually pay the secured moneys. 2. Under cl 10(d), an event of default includes any failure to "pay or repay any moneys payable… under any Finance Document when due and in the manner required." Clause 11.1 provides that in the event of any default the lender may "demand and require immediate payment of the Secured Money in full and take all necessary steps to recover the Secured money from the Obligors or any one of them". 3. Clauses 12.29 and 12.31 deal with variation of the contract and force majeure: "12.29 Variation of Document A variation of the terms and conditions of this deed will not be of effect unless it is in writing and signed by or on behalf of the parties. … 12.31 Force Majeure If an act of Force Majeure occurs: (a) the obligations of the Lender under the Finance Documents (including, without limitation, any obligations to continue to provide or maintain the Facility) will be suspended to the extent that the Lender is wholly or partially unable to comply with those obligations by the relevant act of Force Majeure; (b) the Lender will, as soon as practicable, notify the Borrower of the Force Majeure event and the extent to which the Lender is unable to comply with its obligations under the Finance Documents; and (c) the Lender may by notice to the Borrower, to the extent that it is necessary (in the Lender's reasonable determination) for it to do so, terminate its obligations under the Finance Documents and on receipt of such notice; (i) the obligation of the Lender to continue to provide the Facility will be cancelled; and (ii) if the Lender so requires, the Borrower will, on such date as the Lender specifies, prepay all Secured Money then outstanding or otherwise payable to the Lender." 1. As stated above, Mr Akcan and the two guarantors also signed an undertaking on 6 November 2019 providing that three months' interest would be paid in advance as a condition precedent to the initial advance. That undertaking also required that Mr Akcan and the two guarantors provide their tax portal statements on the first day of each month, unless otherwise agreed, and that Mr Akcan provide an invoice for the full amount of the diamonds purchased not later than five business days from the date of the initial advance. 2. The Mortgage Deed provided for a mortgage over the Canada Bay premises (Mr Akcan's family home) as security for the funds advanced under the loan agreement. The mortgage form records that a registered mortgage was granted against the Canada Bay premises, and that the document was executed by the mortgagor on 31 October 2019 and by the solicitor for the mortgagee on 11 November 2019. 3. PEXA records indicate that settlement occurred on 11 November 2019. The total funds settled were $1,979,050 (the principal amount of $2,025,000 less three months' interest at the lower rate paid in advance). Mr Akcan had needed and expected to receive over $200,000 in funds to purchase the diamonds. Instead, he only received $139,672.41, after the advance interest payments and the lender's legal fees were taken out. February 2020 interest payment 1. Mr Akcan proceeded on the basis that the first interest payment was due on 11 February 2020 given that he received the funds on 11 November 2019 and three months' interest was paid in advance. As the first payment date approached, Mr Akcan realised that none of the loan documents contained any details as to how he was to make the interest payments. He wondered whether, based on previous experience, the interest payments would be debited directly from the account into which the advance was paid. 2. In early February 2020, Mr Akcan started making enquiries about how to make the interest payment. He first asked his lawyer, Mr Nedjat, who did not know but offered to ask Mr Mitchell Mackinnon (the broker for Mr Akcan's loan). Mr Nedjat later contacted Mr Akcan to say that Mr Mackinnon did not pick up his phone and he would let Mr Akcan know once he had spoken to him. 3. On 11 February 2020 (the date Mr Akcan believed that the interest payment was due), Mr Akcan telephoned Mr Nedjat and said, "[n]o one has taken money out of [the] Diamond House Jewellery [bank account] what do I do?". Mr Nedjat said that he had still not heard from Mr Mackinnon. 4. On 12 February 2020, a solicitor at Piper Alderman, acting on behalf of the lender, sent a default notice to Mr Akcan by email. That notice claimed that Mr Akcan had been in default since 31 January 2020 as the interest payments were due on the last day of each month. I pause here to note that this was incorrect. It was common ground that the contract actually provided that interest was due on the first day of each month. Mr Fleischner gave the following evidence about the lender's omission to provide account details for interest payments in cross-examination: "Q. The reason Mr Akcan hadn't paid interest on the mortgage at any time in February prior to that was that you hadn't provided him with details of any bank account to pay the money into, and you hadn't given him any other means such as a book of deposit slips or whatever to enable him to actually pay the interest into the right place, had you? A. No, we hadn't. Q. Launchcap is a professional loan management company; is that correct? A. Yes. Q. That's all it does, isn't it? A. Yes. Q. How could you lend someone $2 million and not give them information that enabled them to make the payments of interest? A. At this moment, we didn't set it up until later on - at a later date to this. … Q. I put it to you that that shows a rather an attitude of carelessness or indifference to the interests of the borrower on the part of, at least, Launchcap, doesn't it? A. You can put it that way, if that's the way you characterise it." 1. Mr Akcan responded to the default notice by email of 13 February 2020 in these terms: "I have not been told to make payments nor have i been provided with the lander's [sic] bank account details to make payments, nor any contact details (phone or email) The lender was provided with our bank details and at settlement which was on the 11th of November 2019 approximately $ 139,000.00 was deposited into our account, we were under the impression that the lender was going to debit our account on the 11th of every month starting 11th of February. Could you please provide me with the lenders account details so that i can make the payments…" 1. As for Mr Fitzgibbon's role in deciding to issue the default notice, Mr Fleischner described it as follows: "Q. And were you the person that made the decision to issue that default notice? A. Myself and a few others, yes. Q. Was Mr Fitzgibbon one of the others? A. Yes. Q. What's Mr Fitzgibbon and where does he fit into all of this? A. He's - he forms part of the investor group that's investing into this loan." 1. Mr Fleischner gave the following evidence about the decision to subsequently withdraw the default notice issued on 12 February 2020: "Q. You had the power to do that; did you? A. Yes. Q. That was – and just to clarify your answer that was an authority that you had that you could exercise-- A. Sorry, I apologise, I agreed that with David at the time. Q. You would need Mr Fitzgibbon's agreement to do that? A. Yes. Q. And you obtained his agreement to do that? A. Yes." Telephone conversation of 18 February 2020 1. On 18 February 2020, Mr Akcan's solicitor, Seyfi Atila, wrote to Piper Alderman noting that no account details had been provided, and requesting that the lender's account details be provided urgently. Mr Atila further noted that: "Settlement took place on 11 November 2019 and the funds were advanced on 11 November 2019. On settlement 3 month's interest payments were deducted in advance. Therefore, the first repayment was due on 11 February 2020 and not on 31 January 2020 as your client claims." 1. Mr Fleischner telephoned Mr Akcan on 18 February 2020 after Mr Akcan's solicitor sent the above email. Mr Akcan's recollection of that conversation was as follows: "[Mr Fleischner]: I am calling you about the default of your loan on 31st of January 2020. [Mr Akcan]: How can you default me on 31st of January when I did not receive my money until 11th of November? You kept 3 months pre-paid interest without my consent, I was told the next interest payment will be on the 11th of February 2020. [Mr Fleischner]: Well technically because you have signed the mortgage execution of the document on 31stof October 2019 you are liable to pay interest from that date. [Mr Akcan]: I do not accept that I am in default. You didn't tell me the date the next interest payment was due, and you did not give me the bank account details to make the interest payments. Jeremy, I have the money to pay you. … [Mr Fleischner]: As far as I am concerned we have given you all of the account details through Mitchell [Mackinnon] to deposit the interest in our account. [Mr Akcan]: Mitchell didn't send me the details. I speak to Ahmet [Nedjat] and he speaks to Mitchell. Jeremy you are lending me the money and I am going to pay you back. You should be communicating with me not with Mitchell. [Mr Fleischner]: Okay. Send the money to the account number you were provided with by my solicitor don't worry about the default interest just pay the $2000 for the solicitor's costs. [Mr Akcan]: I'm not paying your solicitor's costs because I haven't done anything wrong. [Mr Fleischner]: Ok. Just pay the normal interest rate only and forget about the rest. [Mr Akcan]: Jeremy we must confirm this in writing. Send me an email so there's no misunderstanding as soon as I receive your email I will make the interest payment. [Mr Fleischner]: Ok, text me your email address." 1. Although Mr Fleischner recalled having this telephone conversation with Mr Akcan on that date, he did not recall all the details of it. He recalled that the effect of it was that Mr Akcan would pay interest at the lower rate and would not pay legal costs of $2,000. 2. Mr Akcan gave evidence that it was during this telephone conversation that he first requested a "loan statement" from Mr Fleischner. A loan statement is a short document (one or two pages) setting out the key elements of the loan including the principal amount, the repayments made to date, and the payout figure. It also indicates whether the loan has ever been in default. Ms Arvanitopoulos' evidence was that a default-free loan statement was an essential pre-condition to obtaining approval for refinance. Mr Akcan said that he requested that statement on 18 February 2020 in the following terms: "[Mr Akcan]: Ok, Jeremy I am refinancing as we speak, I need the loan statement. [Mr Fleischner]: I will have my accounts people send it to you." 1. Mr Fleischner initially denied saying these words to Mr Akcan but conceded that he did not have a sufficient recollection of the conversation to depose as to what he did say. He gave the following evidence as to whether the loan statement was discussed during that conversation: "Q. And you knew that because amongst other things you discussed [issuing a loan statement] with him on the phone on 18 February; hadn't you? A. I don't recall that conversation but if I did, yes. Q. Do you recall speaking to Mr Akcan not necessarily then [on 17 March 2020], but at some time about what he wanted? A. Yes. … Q. Do you recall talking to Mr Akcan on the phone at any time other than 18 February, at least before 8 April? A. No, I don't recall. Q. Might it be that your recollection of a conversation in which he talked about a loan statement is in fact part of the exchange that took place between you and him on 18 February? A. Yes." (emphasis added) 1. Given that Mr Fleischner conceded in cross-examination that Mr Akcan may have raised the issue of the loan statement during the 18 February conversation I am satisfied that he did so. As to whether Mr Fleischner knew that Mr Akcan was refinancing at that time, it was put to Mr Akcan in cross-examination that he was not in fact refinancing at that time and that if he told Mr Fleischner that he was that would have been incorrect. Mr Akcan's evidence was as follows: "Q. You thought about it but you'd actually not taken any significant step towards [refinancing] as at that date; isn't that correct? A. I was refinancing from day one when Mr Nedjat and Mr Mitchell got involved to get this loan and within three to four months they were going to refinance me so that was already on the card[s]." 1. On 19 February 2020, Mr Akcan wrote to Mr Fleischner confirming that the monthly interest payment of $19,406.25 for February would be transferred to the account details provided and noting that the default interest of $31,218.75 and legal fees of $2,000 would not be paid. On 19 February 2020, Mr Akcan sent a further email attaching a receipt for the interest payment and noting that the interest payment was "for 11th of February 2020". 2. On 25 February 2020, Mr Fleischner, on behalf of the lender, emailed Mr Akcan in the following terms: "Just confirming with you that moving forward, your due date is the 8th of every month. Any future missed payment will attract another event of default." 1. Mr Akcan responded as follows: "Just confirming the settlement was on 11th November 2019 the payments are due on the 11th of every month." 1. Mr Fleischner then sent the following email: "The drawdown date was on the 30th October as per the loan docs and the delays caused by various reasons like the existing lender delaying settlement date and so on pushed the settlement date to the 11th November. Technically the interest was accruing since the 30th but in this case, we're willing to forego the extra week or so of interest and push the interest start date to the 8th of November." 1. On 26 February 2020, Mr Akcan sent Mr Fleischner the following email: "The Original Finance Documents were posted by your solicitor on the 30th October 2019, my solicitor received it on the 4th of November and i personally delivered them to your solicitor on the same day. Your solicitor requested for further documents to be signed on the 5th of November. The delay was not from the existing lender it was from your solicitor who charged me $13,000 Jeremy i don't want to go back and forward with emails, the end result was you lend me money on the 11th of November that means the repayments were due on the 11th of every month." 1. Mr Fleischner did not reply to Mr Akcan but did forward his email to Mr Fitzgibbon shortly after receiving it. Mr Fitzgibbon replied 30 minutes later saying "[t]hanks". Mr Fleischner gave the following evidence about his understanding of the effect of that email: "Q. You never responded to that? A. No, I did not. Q. So, you accepted his position, didn't you? A. No, I didn't. Q. Well why didn't you tell him you didn't accept his position? A. I had said the 8th in numerous occasions prior, and he insisted on the 11th. The difference is there." March 2020 interest payment 1. Mr Akcan did not make an interest payment on 8 March 2020. Mr Fleischner did not contact Mr Akcan on 8 or 9 March 2020. On 10 March 2020, Mr Fitzgibbon emailed Mr Fleischner at 9:21am, stating: "Please can you chase up this payment [Diamond House], nothing received to date." 1. Mr Fleischner replied to Mr Fitzgibbon at 9:24am that day, stating: "Yup will do. Have followed them up yesterday and will stay on it today until we get a response." 1. Mr Fleischner conceded in his evidence that, contrary to his representation to Mr Fitzgibbon on 10 March 2020, it was possible that he had not in fact contacted Mr Akcan on 9 March 2020. He did not remember doing so and he was unable to provide any records of such contact. Mr Akcan denied any such conversation and I am satisfied it did not occur. 2. On 10 March 2020, the following text message exchange took place between Mr Fleischner and Mr Akcan: "[Mr Fleischner]: Hi Adam, Just making sure this month's interest repayment is good to go? [Mr Akcan]: Hi Jeremy, It's all good. I will transfer first thing tomorrow morning and email the payment receipt to you. Regards Adam [Mr Fleischner]: Thanks" (emphasis added) 1. On 11 March 2020, Mr Akcan sent Mr Fleischner an email with a payment receipt attached. The following exchange occurred by text: "[Mr Akcan]: Hi Jeremy I have made payment and sent you an email with the payment receipt. Regards Adam [Mr Fleischner]: Thanks Adam. Received" 1. Mr Fleischner was asked in cross-examination why he did not challenge Mr Akcan at that time about the "late" payment if he genuinely believed that the March interest payment was overdue as at 11 March 2020 and that Mr Akcan was in default at that point. Mr Fleischner gave evidence that "[a]fter those messages, we discussed it between David [Fitzgibbon] and I working out what we would do next." As to why he did not issue a default notice on 9 March 2020 if he believed that the interest payment was due on 8 March 2020, his evidence was as follows: "Q. Why didn't you issue him with a default notice on 9 March 2020? A. We didn't see that it was necessary in March. Q. I beg your pardon? A. We didn't see it was necessary since the money arrived in the accounts to pay the‑‑ HER HONOUR: No, the question was… [o]n 9 March, when you didn't have the money, which you say was due on the 8th, why didn't you issue a default notice on that day, 9 March, like you subsequently did in April; why didn't you do it in March? A. We waived it, same as in February, we waived the default notice in March. Q. Yes, but in February you communicated it. Did you communicate that you had waived that in relation to 8 March? A. For the 8th of March‑‑ Q. Did you communicate with the borrower that you had waived it, a default notice in March? A. In March, no. … I don't believe so. Q. So how was he supposed to know that? A. I don't know, your Honour." Further requests for the loan statement 1. Ms Arvanitopoulos gave evidence that she had a telephone conversation about refinancing with Mr Akcan in late February or early March. In cross-examination she accepted that it may have been early March. Her affidavit evidence was that it was late February and the evidence of Mr Akcan was that it was late February. I am satisfied this occurred in late February. 2. Ms Arvanitopoulos gave evidence that she would have indicated to Mr Akcan that he would need to obtain a loan statement. They arranged to meet in person on 12 March 2020. 3. On 11 March 2020, Ms Arvanitopoulos sent an email to Mr Akcan requesting that he bring the following documents to their meeting the next day: "Please make sure that you bring the following: Passport (needs to be original) Drivers Licence (needs to be original) Rates notice 6 months mortgage statement from La Trobe 12 months BAS Last 2 years tax returns if you have them Please bring what you can. That is an extensive list I know. The most important is the first two" 1. Ms Arvanitopoulos clarified in her evidence that she believed at that time that the current mortgagee was La Trobe, rather than the plaintiff. 2. It was common ground that Mr Fleischner did not provide a loan statement to Mr Akcan following their conversation of 18 February 2020. He agreed in his evidence that it would not have taken long to generate a loan statement in February 2020 and that he had employees who could do it on his behalf. He agreed that he did not have any records or any recollection of requesting that a loan statement be prepared at any time between 18 February and 11 March 2020. 3. On 11 March 2020, shortly after receiving Ms Arvanitopoulos' email about the documents required for seeking refinance, Mr Akcan wrote to Mr Fleischner requesting "the last 5 months mortgage statement" stating that "I would really appreciated [sic] if you could please sent it to me today" (emphasis added). 4. Mr Akcan met with Ms Arvanitopoulos on 12 March 2020. She verified his identity and performed a credit check. He informed her that there had been no defaults on the loan at that time. They agreed that Ms Arvanitopoulos would try to arrange refinance for Mr Akcan's loan with a brokerage fee of 1%. Ms Arvanitopoulos deposed that at the meeting of 12 March 2020 Mr Akcan said the following: "I spoke with Jeremy from LaunchCap on the 18th of February and asked him for a loan statement. He said he would have his accounts people send it to me. I hadn't received anything so I sent Jeremy an email yesterday (the 11th of March) asking for a statement. I expect that as soon as he receives the email he will send it to me." 1. She further deposed that she said to Mr Akcan: "At present the ANZ Bank would definitely accommodate refinancing with an interest rate of 2.29% of the loan from the outgoing mortgagee who is charging you interest rate of 11.5%." 1. Ms Arvanitopoulos said that she requested that Mr Akcan obtain the loan statement as quickly as possible so that a settlement date could be booked in by the end of March, for settlement to be finalised sometime in April 2020. She said that she expected at that time that if the matter proceeded in the ordinary manner, the refinance would be completed within about four weeks. 2. Mr Fleischner did not provide a loan statement following Mr Akcan's request of 11 March 2020. Emails of 17 March 2020 1. On 17 March 2020, Mr Akcan sent the following email to Mr Fleischner: "I sent you an email on the 11th of February 2020 [sic: March] requesting mortgage statement for 5 months that i paid interest, i have not received anything as yet if you have sent me an email. Could you please sent it to me, my accountant needs it urgently." (emphasis added) 1. When asked in cross-examination why he said that his accountant needed the loan statement, rather than saying that he needed it urgently for refinance, Mr Akcan said the following: "A. As I said to you, you've got a loan with somebody, the reason why you would ask for a loan statement is because you're refinancing, he already knows I'm refinancing, without that document no major bank will actually lend me any money, that is a crucial document that's it needed with every single time that I went to a bank for a loan, they needed that statement. Q. If it was a crucial document that you needed to refinance why didn't you say that in the email? A. I assume he already knew that. Q. But instead you say, my accountant needs it urgently? A. But I forgot to put there my accountant also needs it urgently. … A. As I said to you my English isn't that good, I haven't, I don't read and write how do I say, legal stuff or when you need legal documents or accountant, I did my accountant did say he needs it, I forgot to write he also needs it, when I said I need it urgently I meant I need it, not my accountant I need it urgently for the refinancing." (emphasis added) 1. Mr Fleischner replied to Mr Akcan's email of 17 March 2020 one minute later stating: "Ah, apologies for missing this Adam. I'll get this actioned for you now." (emphasis added) 1. Mr Fleischner accepts that despite sending that email, he did not "action" the request at that time. He gave the following evidence about his response to that email: "Q. And in your email of 17 March you say to him 'I'll get this actioned for you now'; do you see that? A. Yes. Q. Do you do anything then to prepare a loan statement for Mr Akcan? A. I believe I didn't. Q. Why not? A. Amongst other things, I think this one got missed again. Q. It got missed? A. Yes. Q. How? A. Again, I can't recall everything that was happening at the time but I believe this got missed during the time just because of everything that was happening. … what I'm trying to say is the things that we were trying to achieve at that particular time may be loan settling or other loans needing actioning or negotiations, whatever it is, I don't recall all of the things that were happening but I believe in this instance this was missed on my part." 1. As to whether he requested that anyone else prepare a loan statement in response to Mr Akcan's email of 17 March 2020, Mr Fleischner gave the following evidence: "Q. You agree that the – that the message you sent to Mr Akcan would give him the impression that you were going to have a statement prepared for him that very day? A. Yes. Q. Did you send a memo to any of your staff to prepare a statement of Mr Akcan's loan? A. No, I didn't. Q. Did you set about preparing a loan statement yourself at any stage? A. No, I didn't, no." 1. Mr Fleischner gave evidence that it would have taken between 30 minutes and one hour to produce a loan statement for Mr Akcan's account in March 2020. I pause here to note that when a loan statement was finally provided on 22 June 2020 it was a one-page document that contained very little detail. It was never properly explained why it would take that long to prepare the statement. Although Mr Fleischner conceded that he would need to send it to Mr Fitzgibbon for instructions, that is a different question to how long it would actually take to prepare. LaunchCap at that time employed two people to look after the loan accounts. The company was managing approximately 26 loans in March and April 2020. Mr Fleischner said that the company did not deal with requests on every loan on a daily basis, but that around half of the 26 borrowers would have been seeking refinance in mid-March 2020. 2. In relation to the process for generating a loan statement, Mr Fleischner said that the normal procedure would be for him to create a draft statement which would then be sent to Mr Fitzgibbon for confirmation or instructions. Despite this, he accepted that he at no stage in February or March 2020 created a draft statement and sent it to Mr Fitzgibbon for approval. Nor could he find any evidence of having asked his employees to do so. 3. As to why Mr Fleischner failed to provide the loan statement to Mr Akcan in February or March 2020 despite numerous requests to do so, Mr Fleischner's explanation was that he did not know that Mr Akcan needed the loan statement for the purposes of refinancing, and believed he possibly wanted the statement "for his records". He accepted that he had always known that Mr Akcan had planned for the loan to be refinanced early in 2020. 4. Mr Fleischner gave evidence that in his experience it was common for borrowers to be provided with loan statements in order to obtain refinance, and that he knew Mr Akcan could not get refinance without it. Despite this, he maintained in cross-examination that he did not know that Mr Akcan needed the loan statement for the purpose of obtaining refinance. 5. Ms Arvanitopoulos gave evidence that after this meeting she did not immediately approach a bank to arrange refinance because she was waiting for the loan statement. As to why she was waiting for the loan statement Ms Arvanitopoulos said that: "I wouldn't apply without the statement. I need to know the behaviour of the client. I wouldn't waste my time, nor would I get a credit hit against my client, because it would be - I would deem that non responsible." Email of 30 March 2020: COVID-19 hardship 1. On 30 March 2020, Mr Akcan sent the following email to Mr Fleischner: "I would like to let you know that due to corona virus my business has stopped, I won't be able to make anymore repayments. Please defer my repayments as of today, as per the government announcement. Thank you." 1. Mr Akcan gave the following evidence about the "government announcement" referred to in the above email: "The government made announcement, they said that the banks are going to help, the landlords they're going to help with the rent, that was the announcement. Everybody's going to help, so I was asking him, as the government made that announcement, I was asking for help because of COVID if he could help me. That's why he came back and said, 'Give me these tax returns, this information, these documents then we'll look at it'." 1. Counsel for Mr Akcan tendered a bundle of contemporaneous newspaper articles referring to the events of late March 2020 and the various government announcements around that time. One of them included the following: "'I can say, to anybody who is individually concerned about their mortgage, there is assistance that banks can provide already,' Anna Bligh, chief executive of the Australian Banking Association said on March 20". 1. Mr Fleischner did not reply to Mr Akcan's email of 30 March 2020. Instead, he forwarded it to Mr Fitzgibbon asking if he "[had] a sec to have a chat?". Mr Fleischner gave the following evidence about his delayed response to this email: "Q. Will you agree that there was some urgency in Mr Akcan's request on 30 March for deferral of repayments? A. Yes. Q. But you don't get back to him until the Monday, the following Monday? A. Yes, that's correct. Q. Why did it take that long? A. As you can see in [the email from Mr Fitzgibbon], there's - that file and a bunch of others that we were talking about. That's when the decision was made for Diamond House that that's what, that's the next step that we were going to be doing for Diamond House and that's how long it took. Q. And is Mr Fitzgibbon's reference in that email of 6 April 'I hope everything is okay from Friday', a reference to a discussion you had with him on Friday? A. Honestly, I can't recall. I'm not entirely sure. Q. Did you have discussions with him during that week, from 30 March to 6 April, about these loans that are referred to his email of 6 April? A. Yes, we would have." 1. He further deposed that after receiving Mr Akcan's email of 30 March 2020 in which Mr Akcan sought a deferral of interest payments (extracted above at [76]) he no longer believed that Mr Akcan was refinancing, and so he did not think Mr Akcan still needed a loan statement. He said that he then decided to prioritise responding to requests from other loans in his portfolio. Emails of 6 April 2020 1. By 6 April 2020, Mr Fleischner had still not responded to Mr Akcan's email of 30 March 2020. On that date at 8:55am, Mr Fitzgibbon sent the following email to Mr Fleischner: "Jeremy, I hope everything is okay from Friday. I have summarised below our position in relation to our loans per our previous discussion. Please note this week is a short week so we need to ensure we are on top of these borrowers. I will call you today to discuss. … Diamond House Next payment due date: 08.04.20 Please provide evidence of hardship by COB. If they have not provided by today, we will have to take action. Their monthly interest payment is due on the 08.04. Still waiting for docs to prove hardship. Client is aware loan is active and not deferred in the meantime." (emphasis in original) 1. Mr Fleischner gave evidence that when he received this correspondence from Mr Fitzgibbon, he had not yet requested any documents from Mr Akcan as proof of hardship. As to Mr Fitzgibbon's comment that the "client [was] aware" that the loan was "active", he admitted that he knew that Mr Akcan believed the next interest payment was due on 11 April 2020. 2. Mr Fleischner further acknowledged that despite knowing that Mr Akcan thought that interest was due on 11 April 2020, he intended to issue a default notice on 9 April 2020 unless agreement was reached as to deferral. He further acknowledged that he took no steps to warn Mr Akcan that if he did not pay interest on 8 April 2020 he would be put into default. 3. On 6 April 2020 at 10:38am, Mr Fleischner sent the following email to Mr Akcan in response to his email of 30 March 2020 seeking deferral due to the impact of COVID-19 on his business: "In summary, please note that your current request to defer is not acceptable and we need to remedy ASAP. In relation to your claim for hardship and reprieve /discount of the monthly payment and in order for us to assess properly, please can you provide the following documentation: 2 years tax returns for Diamond House Individual tax returns and NOA for each Guarantor Rental schedule for any additional properties they may own. Evidence of any leases for any investment properties that have been suspended 12 months trading statements – Diamond House Evidence of and source of funds used to pay our interest for previous months Please note the onus is on you, the borrower to be able to prove hardship. After we receive the requested information, we will have to enter into a Forbearance Deed stating an agreeable monthly amount is payable. Any questions, please let me know. If you can provide the following documents requested by COB today, that'd be great." (emphasis added) 1. On 7 April 2020, Mr Akcan replied in the following terms: "When we applied for the loan all of the Tax Returns were provided to you, there are no rental for any additional properties nor is there any investment properties. The interest payment for the first 3 months you kept upon approval of the loan, the balance of the approved funds I used to buy the discounted wholesale jewellery which i was selling and paying the interest. I am in a Shopping Centre at Ryde NSW, the first doctor got infected with the corona virus was in Ryde Hospital since the news broke out my business has been declining and eventually my business has stopped, i am not selling anything I am not making any money to be able to make payment, over 90% of the Shopping Centre shops are closed, this is the reason why I have asked for you to defer my payment." 1. Again, Mr Fleischner did not respond to that email to indicate whether he would accept Mr Fleischner's request for deferral or not. As to the relevance of the documents he requested in his email of 6 April 2020 to establish COVID-19 hardship, Mr Fleischner gave the following evidence: "HER HONOUR: Can I ask you just to answer the question that's been asked. You've been specifically asked, what would two years tax returns, which you had, tell you about his ability to withstand a COVID shutdown? A. I don't think it would materially affect the decision. EVANS: Q. It wouldn't give you any useful information at all, would it? A. Sure. Q. Then you asked for individual tax returns and notice of assessments for each of the guarantors; do you see that? A. Yes. Q. Again, you already had that information, didn't you? A. Yes. Q. What would the individual tax returns from the past and the notices of assessment for each of Mr Akcan and his wife tell you about the capacity for Mr Akcan's business to cope with a COVID shutdown? A. It wouldn't affect it materially, no. Q. It was all historical, wasn't it? A. Sure. … Q. Rental schedules for any additional properties they may own. Did you know of any other properties they owned? A. It was only one other which the address leaves my mind, but it was in their email somewhere. Q. That was, again, material that you knew about from the original loan application, wasn't it? Then you asked for 12 months trading statements for Diamond House; do you see that? A. Yes. Q. You'd already received that information in the original loan application, hadn't you? A. Not for the last four or five months when this email was sent. I would have received it from October prior. Q. There was a misunderstanding occurred about the interest payment due in February 2020. Didn't Mr Akcan supply you with bank statements, at least up till then? A. Up till then, yes." 1. In relation to the last document requested, that being "evidence of and source of funds used to pay our interest for previous months", Mr Fleischner gave the following evidence: "Q. The situation that faced Mr Akcan in early April 2020 was a shutdown of his business because, effectively, the floor on the shopping centre where his shop was situated was closed down - people weren't going there. What could previous trading statements tell you about his ability to cope with COVID? A. Where their bank balances are at the moment to be able to service any loan or any serviceability during that time. […] Q. You never asked him what he could pay then did you? A. In this email and that email, no, we did not." 1. Mr Fleischner stated that it was Mr Fitzgibbon who requested the list of documents that he in turn requested from Mr Akcan as evidence of hardship in his email of 6 April 2020. 2. Mr Fleischner eventually conceded in his evidence that the information provided in Mr Akcan's email of 7 April 2020 did constitute evidence of hardship. He said, however, that a decision was made not to enter into a deed of forbearance: "Q. So, after 7 April where he gave you evidence that you've accepted was evidence of hardship, what happened to the idea of the forbearance deed? A. It was not agreed between myself, Mr Fitzgibbon or whoever else was involved that that was enough to enter into a lesser payment. Q. So, what else was needed? A. I'm not entirely sure. That's what was - that's the directive that I was given. Q. And where's the documentation to show that, are there any documents to show what you've just described? A. I'm not entirely sure, no, I don't think so." (emphasis added) 1. Mr Fleischner gave the following evidence about the subsequent decision to issue a default notice: "Q. … Do you recall discussing with Mr Fitzgibbon the information Mr Akcan had given you about his COVID hardship? A. Yes. Q. And was that a short discussion, long discussion, what? A. I couldn't recall exactly how long the minutes were. Q. But in that conversation the decision was made to issue a default notice on the 9th, wasn't it? A. Payment wasn't made on the 8th, that was the decision. Q. So, to the extent that you discussed Mr Akcan's COVID issues with Mr Fitzgibbon, the view taken at least by Mr Fitzgibbon was that Mr Akcan's COVID problems were either not proven or that he wasn't suffering sufficient hardship to warrant any sort of deferral, correct? A. Correct. Q. Even though he told you that 90% of the shopping centre shops had closed? A. Yes. Q. And that his business had had to close? A. Yes. Q. That's not COVID hardship? A. I didn't say that. Q. Well did Mr Fitzgibbon say that? A. I said a decision that we weren't ever proceeding as per normal irrespective of everything that was provided in that email the decision for the loan to continue as normal is what the decision was in the end." 1. In relation to whether he seriously considered the impact of COVID-19 on Diamond House, Mr Fleischner's answers were as follows: "Q. Mr Fleischner you said that you did give some thought to the impact of COVID19 on Mr Akcan's business but I put it to you that you really gave it no serious thought at all, that's true isn't it? A. No. Q. It didn't occur to you or you didn't consider for instance that because of COVID19 and the fact that he was running a retail shop, customers were not going to be able to come to his shop and he could not continue trading did you? A. We considered that, yes. Q. But you didn't consider that constituted evidence of hardship in COVID, correct? A. It impacted his ability to pay, yes, we considered it. Q. And you put him into default? A. When he missed his payment, because we hadn't come to an agreement, or a deferral or a forbearance deed of any sort." (emphasis added) Default notice of 9 April 2020 1. Regarding the procedure for issuing default notices generally, Mr Fleischner said that: "Q. The relationship between you and Mr Fitzgibbon is one where he, in a sense, is the person who makes the decisions and you carried them into effect? A. To a degree, yes. Q. If he says he's taken a decision to take action against someone, then you're bound by that decision, aren't you? A. Yes." (emphasis added) 1. On 8 April 2020 at 2:58pm, Mr Fleischner sent an email to Summer Lawyers, with Mr Fitzgibbon copied in, stating: "Hi Sam & Nick, Please prepare to send a default notice for this file [Diamond House Jewellery Pty Ltd] tomorrow." 1. Mr Fleischner said that the default notice of 9 April 2020 was checked by both him and Mr Fitzgibbon prior to it being issued. Mr Fleischner said that he and Mr Fitzgibbon discussed the evidence of hardship provided by Mr Akcan on 7 April 2020 and that Mr Fitzgibbon took the view that the hardship problems were either not proved or not sufficient to warrant a deferral of repayments. He said that he and Mr Fitzgibbon jointly instructed Summer Lawyers to issue the default notice of 9 April 2020. 2. At 6:30am on 9 April 2020, Mr Akcan was served at his home with a default notice stating that he had failed to pay the interest due on 8 April 2020. That notice claimed that the arrears amount was $50,625.00 and demanded payment within seven days. 3. Mr Akcan gave the following evidence about his state of mind on 9 April 2020: "… I was waiting for an answer from Jeremy … while I was waiting for an answer he defaulted me. … A. In 30 March and 7 April, I'm telling Jeremy what the situation is and I'm asking him for help for deferral at that stage, waiting for an answer from him to see what he's going to do, whether he's going to help me or not, once he doesn't help me then I'm going to find alternative ways to make the payment. … I ask him to defer the repayments. He came back to me and said, 'Supply me this and I'll have a look at it'. And then I wrote a letter to him saying that 'you've already got most of the information, I'm asking you for deferral because 90% of the shopping centre is shut, I'm having problems:'. I'm waiting for an answer, he defaulted me the next day." (emphasis added) 1. Mr Akcan could have paid interest at the lower rate on 11 April 2020 if Mr Fleischner had declined to enter into a deed of forbearance. In his oral evidence, he clarified that while Diamond House had less than $19,000 in its trading account at that time, he would have used money from his personal account to make up the shortfall for the April interest payment. Documents were before the Court confirming that to be the case. 2. On 16 April 2020, a solicitor for Mr Akcan wrote to Summer Lawyers requesting that the default notice be withdrawn and stating that: "… our client was in discussions and correspondence with Jeremy Fleischner from the lender in relation to deferring loan payments due to the COVID 19 pandemic. The last correspondence from our client to Mr Fleischner was on 7 April 2020. The Default Notice was issued on 8 April 2020, while these discussions were continuing. Further, the Default Notice was issued before our client was in default as the next payment was due on 11 April 2020. The drawdown on the loan was on 11 November 2020 and consequently each payment is due on the 11th of each month. Our client operates a jewellery store in a shopping centre in Ryde NSW. Once one of the doctors in Ryde Hospital tested positive to the virus, our client's sales started dropping and it eventually came to a halt. Over 90% of the shopping centre is closed and our client is not making any new sales. These matters were conveyed to Mr Fleischner and discussions were continuing between our client and Mr Fleischner. In the circumstances the lender's actions are unconscionable." 1. That email further stated that due to a recent government announcement the lender was obliged to defer repayments for a period of six months upon application by the borrower. 2. Summer Lawyers responded to this letter by email of 20 April 2020 stating that the lender was under no obligation to defer the loan repayments and that, regardless of whether payment was due on 8 April or 11 April 2020, the interest had not been paid on either day. Evidence about the impact of COVID-19 generally 1. Mr Akcan gave evidence about the implementation of a government mandate on 23 March 2020 which required non-essential shops to shut down. He stated that: "The government had implemented a mandate restriction to shopping centres and closure of shops. As soon as that happens it tells you that your business is going to shut down, you're not allowed to trade. Customers are told not to go out for non‑essential shopping, and all of a sudden within a couple of days the deterioration of - deterioration; shops started to close straight away and it's within seven days it turns into a ghost town." 1. Mr Akcan described the impact of COVID-19 on his business in this way: "Business started to go down. It wasn't suffering at that time [in early March], but it started to from the 23rd onwards it started going downwards. It wasn't at the 23rd that it just suffered, it just slowly slowly started going down." 1. Mr Akcan stated that although his business did not shut down completely there were no customers coming in and all of the other shops on his floor of the Top Ryde shopping centre were closing down. He was cross-examined about his statement on 30 March that his business had "stopped" and he gave the following evidence: "A. … if I'm not trading the shop would be shut and not working at all, that's shutting the shop, that's not trading. If I left the shop open and customers are not coming in money is not coming in to pay the interest, or not enough money coming in to pay for the interest because you hardly got any customers and all the shops are shut. Q. Before you said no customers, coming in, now you're saying hardly any customers, is that right? A. Well, 90% of the shopping centre, the non-essential shop, are closed. There is still 10%, they come and do their groceries, the butchers are open, supermarkets are open, people are coming in. Not on my level, or very few on my level. … The traffic was slowing by the day. That's what was - since the 23rd of March it was declining, shops shutting down and customers coming down, it was just going like it was hitting a brick wall basically. It hadn't stopped completely, but it was heading down. … … there were days I was not making a cent. At that stage, the shopping centre is a major shopping centre which has got five levels, they've got over 200 stores. I'm on the fashion level, which is the exclusive level, and there's 62 stores there. By that stage there was only about ten left, plus me, and out of those ten banks were about four or five, the post office they had to stay, and the nearest shop to me was about 50 metres away. So, no one was coming in. I would have zero dollars making in some days. Some days I might $50 for a repair or something but it wasn't making money to pay the interest, that's why I wanted to ask for a deferral so I can get over this difficult time." 1. He described his response to the downturn in April and May 2020 in this way: "Well, what had happened during that time was COVID-19 kicked in and everything was just turning upside down and I panicked trying to think how am I going to get to the next month because of what's happening and after he defaulted me there was no need…" 1. Counsel for Mr Akcan tendered a letter from the Top Ryde shopping centre manager, Mr Damian Lewis, dated 9 July 2020 which stated that: "As part of the government restrictions, people were only allowed to leave their houses for essential reasons and whilst grocery shopping was one of these reasons, jewellery shopping was not. Accordingly, Diamond House was impacted severely with sales dropping as I am advised by 97.3% in April and 89.2% in May as per their reported figures. … I am very familiar with the plight of all shopkeepers within the complex and I feel perfectly safe in saying that Diamond House Jewelry [sic] has been massively affected by the COVID-19 mandated closures and the mandated requirement that people can only leave their home for essential purposes, which was noted purchasing jewellery is not considered essential." 1. Mr Fleischner's evidence also supported Mr Akcan's evidence as to the impact of COVID-19 on his business and on the economy generally. In his affidavit of 17 February 2021 Mr Fleischner stated that: "At the time Mr Akcan requested the loan statement [in March 2020] I was inundated with work as a large number of borrowers were contacting me by reason of the COVID-19 pandemic, and I did not prepare and issue a loan statement at or about the time this was requested." 1. In relation to the COVID-19 situation in June 2020, when Ms Arvanitopoulos was seeking a loan statement, Mr Fleischner stated that: "The accounts team was also delayed in providing the updated statement due to the volume of further work generated by defaults and requests for loan extensions by reason of the COVID pandemic." 1. When asked in cross-examination why it took him one week to respond to Mr Akcan's request for a deferral of repayments on 30 March 2020, Mr Fleischner said that: "Again, going back to what we were dealing with at the time, we've had to stand staff down ourselves, and we're dealing with a lot of loans, a lot of files that we need to deal with accordingly, and that's the length of time it took us to deliberate what to do with this particular file." 1. He said that some borrowers were given deferrals on their repayments while others went into default. 2. Mr Fleischner gave evidence that in early April 2020, while dealing with the requests for deferral, he was working from his home in Sydney due to COVID-19 restrictions. In re-examination, Mr Fleischner gave evidence about having to stand down staff due to the economic consequences of COVID-19: "Q. Yesterday, sir you were asked about various things that happened during the start of the COVID-19 crisis in March and April 2020? A. Yes. Q. And you said that you had to stand staff down yourselves? A. Yes. Q. What staff did you have to stand down? A. A credit analyst, admin staff, and a sales person. … Q. You stood down everyone? A. Yes. Q. And you did everything after that? A. Yes. Q. And so from what date were you doing everything? A. It would have been the last week of January, sorry, last week of March. Q. And when did you cease being the only person who was doing everything? A. June. Q. When in June? A. I can't recall exactly but it would have been around either the second or the third week of June. Q. And what happened then? A. I brought back some of the staff, who were happy to come back on with JobKeeper as well, as cutting their pay to come back on staff to help out." Continued requests for the loan statement and revocation of April default notice 1. On 23 April 2020, Mr Akcan sent an email to Mr Fleischner attaching bank statements for Diamond House for January, February, and March 2020, showing a significant decrease in trade in March 2020. Mr Fleischner could not recall whether he discussed the bank statements with Mr Fitzgibbon in relation to a potential deferral. He was asked the following in cross-examination: "Q. You've issued Mr Akcan with a default notice, potentially that will lead to action that will cost him his home, he sends you three months of statements to show, the trading history of his business and you can't recall whether you had a discussion about those matters with Mr Fitzgibbon? A. Not vividly, no. Q. Was it the case that by then you had no intention of changing the decision in respect of Mr Akcan? A. Potentially, yes." 1. On the same day, 23 April 2020, a caveat was lodged against a house registered in the name of Mr Akcan's wife. 2. On 27 April 2020, a solicitor acting for Mr Akcan emailed the solicitor for the lender noting that they were instructed that Mr Akcan's broker was in negotiations with Mr Fleischner to "amicably" resolve the matter and that they were awaiting the outcome of these negotiations. The solicitor for Mr Fleischner forwarded this email to Mr Fitzgibbon who forwarded it to Mr Fleischner. Mr Fleischner replied to Mr Fitzgibbon saying: "Yup their broker called me saying they're trying to refi [refinance] it but I'm not confident so we should continue with the [enforcement] process as per normal. If they come up with the money then great, if not then so be it." 1. Ms Arvanitopoulos stated that in early May she eventually arranged a valuation of Mr Akcan's house with ANZ despite not having obtained a loan statement as she did not want any further delay. The ANZ valuation came to $2.85 million, amounting to $2,280,000 at an LVR (loan to value ratio) of 80%. 2. The interest rate offered by ANZ at that time was 2.29% for an 80% LVR. She deposed that if a loan had been obtained from ANZ at that time (in late March or April 2020) Mr Akcan would have saved about $10,000 per month in repayments while increasing the value of the mortgage advance. 3. On 25 May 2020, Ms Arvanitopoulos sent a letter to LaunchCap indicating that she was acting on behalf of Mr Akcan in relation to refinancing the mortgage. She noted that due to COVID-19 there had been significant delays with banking institutions and stated that she was aware of the "absolute urgency" of getting Mr Akcan refinanced. She informed LaunchCap that a valuation had been performed which met the loan requirements and that she was hopeful that the loan would be refinanced within the next month. She reiterated the urgency of the refinance arrangements and asked that LaunchCap contact her directly to make arrangements. LaunchCap did not respond to this letter. 4. Ms Arvanitopoulos deposed that she received a telephone call from Mr Fleischner on 26 May 2020 in which she requested a loan statement. She said that Mr Fleischner was "very critical" of Mr Akcan and said the following: "[Mr Fleischner]: Did you know [Mr Akcan] is in default? [Ms Arvanitopoulos]: No – this is the first I am hearing of this. Did you send [Mr Akcan] a written notice to tell him of this? [Mr Fleischner]: No. As a goodwill gesture we let it go. [Ms Arvanitopoulos]: I have all the documents except the loan statement. I need the statement; can you send through to me default free statement? [Mr Fleischner]: Shouldn't be a problem. I will sort it out and send you an updated statement which does not have a default in it by tomorrow. … [Mr Akcan] has defaulted over six times. However, now that you are attending to the matters we will wait a little longer. [Ms Arvanitopoulos]: How can that be? You took the first three months interest in advance. Just send the statement showing there are no defaults. Also, I know [Mr Akcan] is happy to sort everything out with you. If you call him now, he will be happy to take your call and sort everything out with you. [Mr Fleischner]: OK. No problem. I'll call [Mr Akcan] and tell him we have sorted it out." (emphasis added) 1. Mr Fleischner recalled having this phone conversation with Ms Arvanitopoulos on or about 26 May 2020 but did not have a detailed recollection of it. He denied telling her that he would provide a default-free statement. He also denied telling her that he would tell Mr Akcan that Ms Arvanitopoulos had "sorted it out". In relation to whether Mr Akcan had "defaulted six times", Mr Fleischner gave the following evidence: "Q. According to you a conversation that she had with you and you said to her, '[Mr Akcan] has defaulted over six times'; do you recall telling her that? A. I don't recall exactly, no. Q. And as at 26 May he hadn't defaulted six times had he? A. No. Q. You're not calling the February failure to pay a default are you? A. It was an event of default that was waived. Q. It was waived because you hadn't given him the account details that pay the money how can that be a default by him? A. That's why it was waived. Q. But you still count it as an act of default do you? A. No. Q. He didn't default in March did he? A. No, we didn't seek to take action in March. Q. He didn't default in March did he? A. No. Q. And he didn't default in April either did he? A. Yes, he did. Q. Well, before 11 April he was served with a default notice and told he had to pay $50,000 interest, how could he pay the interest he was expected to pay at the ordinary rate on the 11th? A. Sorry, can you repeat the question? Q. He was served with a - I withdraw that. You said he didn't default in March when he paid the interest on 11 March. Correct? A. Yes. Q. The interest in April was due on the 11th wasn't it? A. No. Q. There were further exchanges between you and [Ms Arvanitopoulos], by email but you never provided her with a statement showing a payout figure with no default did you? A. No. Q. You maintained the position that Mr Akcan was in default? A. Yes." 1. Mr Fleischner deposed that he would not have provided a loan statement showing no defaults as he believed that would be a false and misleading statement due to his belief that Mr Akcan was in default. 2. On 26 May 2020 at 4:14pm, Ms Arvanitopoulos emailed Mr Fleischner requesting that: "When you get the chance, could you please send through to me the updated statement for Feridun Akcan? Appreciate our talk today." 1. Mr Fleischner responded at 7:03pm that day saying, "I'll sort this tomorrow". 2. Ms Arvanitopoulos emailed Mr Fleischner again on 27 May 2020, and then on 28 May, 1 June and 2 June 2020 requesting a loan statement, stating that Mr Akcan had said that things had been "sorted out" with Mr Fleischner. 3. Mr Akcan recommenced his interest payments on 1 June 2020. He paid $10,000 on that day. 4. On 2 June 2020, Mr Fleischner finally replied to Ms Arvanitopoulos, saying: "Hey Lordin, Part payment has been received. Let me chase up our accounts team now for the loan statement." 1. On 4 June 2020, Ms Arvanitopoulos emailed Mr Fleischner in the following terms: "How did you go with your accounts department? I am kind of desperate to refinance the client. The only thing that I am waiting for is the statement to finalise the submission…" 1. On 4 June 2020, the lender filed the statement of claim in these proceedings. 2. On 6 June 2020, Mr Fleischner replied to Ms Arvanitopoulos, stating: "Understood. I've been promised that it'll be over to you tomorrow. Thank you. Sorry just inundated at the moment." 1. On 9 June 2020, Mr Akcan made a $9,406.25 interest payment and emailed Mr Fleischner stating: "I really want to work with you to get you your money asap, could you please give my broker Lordin the statement that she has been asking for some time. Thank you" 1. On 15 June Mr Akcan made a further $7,406.25 interest payment and reiterated this request, noting that: "My broker and i have been asking for the statement for some time now, as you know banks policy are changing and the more delay getting the statement more difficult it will become" 1. Mr Akcan emailed Mr Fleischner's solicitor at Piper Alderman on 18 June 2020 again seeking a loan statement. He noted that he had been seeking the statement since 11 March 2020. 2. On 22 June 2020, Mr Fleischner finally emailed a loan statement dated 18 June 2020 to Mr Akcan and Ms Arvanitopoulos. This statement indicated that default interest of $50,625 a month was payable for April, May and June 2020, and that these amounts had not been paid. 3. On 28 July 2020, Mr Akcan emailed Mr Fleischner stating: "We have supplied everything to the incoming lender, we need one thing only to finish this episode. Please give me the last six months loan statement without showing a default. I CAN NOT REFINANCE without it. I asked you on the phone for a loan statement on the 18th of February 2020 and by an email on the 11th of March 2020. I simply cannot refinance without it. No lender in Australia will refinance me with a default loan statement. … I will lose everything if I do not get it from you. The more you withhold it, the deeper in debt I become. Please let me have it ASAP." 1. On 3 August 2020, Ms Arvanitopoulos emailed Mr Fleischner requesting a default-free statement. She stated that: "As you would know, I have been hassling [Mr Akcan] since February to get the loan statement, and he has been requesting this from you. He has been incredibly persistent and I had done a number of valuations on his property which he has paid out of his own pocket for with a number of different valuers, all of which are soon going to expire. I was getting frustrated with [Mr Akcan] as he was putting a great amount of pressure on me, when I couldn't do anything without the mortgage statement from LaunchCap. He has been trying to get these loan statements from you since February, and I was since May. If I had the statements when [Mr Akcan] had first requested then from you in February, I would have been able to refinance him back in March/April. May I suggest that you get the statement through to me showing no defaults, so you can at least get your money?" 1. Mr Fleischner replied on 5 August 2020 stating that: "What you're requesting from me is misleading given this loan has been in default for some months now. If I was to send such a statement not specifying the actual conduct on the borrower then I would be intentionally deceiving the incoming lender and would be considered fraudulent." 1. Mr Fleischner gave the following evidence about Mr Fitzgibbon's involvement in the procedure for issuing a loan statement: "A. To confirm, because there's money coming from an outside - David Fitzgibbon, I've got to confirm with them what the amounts on their side is and confirm exactly what the numbers are. So, it could take anywhere between 30 to an hour, depending on how quickly I get a response. Q. Wouldn't you have, on your computer, a complete statement of the moneys loaned, the interest payable, any other fees and charges including fees and charges that are payable on payment out? A. Yes, I would have that information. But before I send anything out, I need to confirm it with other people. HER HONOUR: Q. Are you saying that you had the information, but you needed to get instructions from Mr Fitzgibbon? A. Correct." The pleadings The statement of claim 1. The statement of claim was filed on 4 June 2020. The lender sought possession of the premises at Canada Bay and leave to issue a writ of possession. Two defaults were relied upon: failure to make an interest payment at the ordinary rate on 8 April 2020 and failure to pay interest at the default rate following a notice issued pursuant to s 57(2)(b) of the Real Property Act 1900 (NSW) on 14 April 2020. The amended defence 1. An amended defence was filed on 18 August 2020. The amended defence relied on the following matters: that the contract was varied orally or in writing such that repayments were due on the 11th of each month; that the lender was estopped from asserting that interest payments were due on the 8th of each month; that the lender breached an implied term requiring it to provide a loan statement to Mr Akcan upon his request; that the borrower should be granted relief against forfeiture; or that the borrower should be granted relief under a force majeure clause. The cross-claim 1. Mr Akcan filed a cross-claim on 24 August 2020. The cross-claim relied on three matters: that the lender breached an implied term of the contract requiring it to provide a loan statement to Mr Akcan upon request; that the lender engaged in unconscionable conduct by failing to provide a loan statement, refusing a deferral on hardship grounds, and then issuing a default notice on 9 April 2020; and that the lender engaged in misleading and deceptive conduct by representing that a loan statement would be provided in March 2020. 2. The damages said to have been incurred as a result of this conduct included the loss of the opportunity to refinance, payment of default interest, and loss of Mr Akcan's home if the lender is successful. 3. The cross-claimants also plead unconscionable conduct on the part of Mr Fleischner and LaunchCap in breach of ss 20 or 21 of the Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law ("the ACL"). The particulars of the unconscionable conduct are set out at [55] of the cross-claim as follows: 1. Failing to provide Mr Akcan with a loan statement in a timely manner after 18 February 2020, 11 March 2020 and/or 17 March 2020 or at all in the period from 18 February 2020 to 4 June 2020; 2. Failing to have proper regard to the rights of Diamond House to repay the monies borrowed under cl 4.2 of the loan agreement; 3. Failing to take proper account of the impact of the COVID-19 pandemic on the business of Diamond House from January 2020 and especially in March 2020, and also failing to take into account the express terms of the contract it had provided which included "epidemic" in the definition of events of force majeure; 4. Insisting on strict compliance with the provisions of the said loan agreement on the part of LaunchCap in March and April 2020 and thereafter in circumstances in which Mr Fleischner had himself failed to comply with the implied term of the said agreement by failing to provide a loan statement in a timely manner after 18 February and by failing to give any or any proper consideration to the request for COVID-19 relief in the email of 30 March 2021 when "epidemic" was included as one of the circumstances of force majeure in the loan agreement; and 5. By the CEO of its agent Mr Fleischner, making representations to Mr Akcan on 17 March 2020 that a loan statement would be supplied and otherwise, despite the request made a behalf of Diamond House for a loan statement for the purpose of obtaining refinance, failing to supply any such statement until a default statement was provided by the second cross-defendant on 18 June 2020. 1. Misleading or deceptive conduct in breach of s 18 of the ACL is pleaded in relation to the representation on 17 March 2020 that Mr Fleischner would "get this actioned… now". 2. As to the relief sought, the cross-defendants seek injunctions under s 232 of the ACL and damages under s 236 of the ACL. The defence to the cross-claim 1. In their defence to the cross-claim, the cross defendants admitted that no loan statement was provided but disputed the implication of a contractual term requiring the provision of that document. They further submitted that the force majeure clause was irrelevant and otherwise denied any unconscionable conduct or misleading or deceptive conduct. Submissions Plaintiff/cross-defendants' submissions 1. Mr Young submitted that the lender was entitled to possession of the Canada Bay property due to the defaults identified in the statement of claim. It was submitted that the question of whether the payments were due on the 8th or the 11th of each month was irrelevant as payment was not made on 11 April 2020 in any event. Mr Young further submitted that the estoppel case "goes nowhere" because there was non-compliance with the s 57(2)(b) notice sent on 14 April 2020. 2. It was submitted that the defendant's force majeure argument referred only to the definitional clause in cl 1.1. The only substantive force majeure clause in the contract was cl 12.31 which provided that the lender's obligations under the agreement could be suspended due to force majeure but made no similar provision for any other party such as Diamond House. 3. As for the argument that there had been a variation as to the date that interest was due, it was submitted that any proper interpretation of the relevant documents did not support a variation of that term. 4. As for the estoppel argument, it was submitted that the pleading merely compiled "two pages of historical complaints against the plaintiff". It was submitted that no attempt had been made to establish "any form of estoppel known either to common law or equity" and that "[n]o such estoppel exists". 5. As for the claim headed "relief against forfeiture", it was submitted that that claim had to be raised by way of cross-claim rather than defence and that there was no actual claim for relief against forfeiture because Diamond House was not seeking to tender the money required to rectify the default and then request equitable relief against forfeiture. 6. As for the claims made in the cross-claim, it was submitted that following Mr Akcan's email of 30 March 2020, Mr Fleischner was entitled to conclude that Diamond House was no longer seeking to refinance. By 11 April 2020, at the latest, the loan was in default anyway and the type of loan statement sought by Mr Akcan could not "truthfully" be provided from then onwards. 7. As for the 30 March 2020 email, it was submitted that it amounted to a repudiation of the contract by Mr Akcan. It was submitted that Mr Akcan had exaggerated the true situation as his business had not "stopped"; it remained open. Similarly, the assertion that he would not be able to make any more repayments was false. Significant reliance was placed on the 30 March 2020 email as evidence that Mr Akcan refused to make any more payments at all. 8. It was submitted that the fact that Mr Akcan was also running a wholesale business widened the difference between the actual facts and the representations made by him in his email of 30 March 2020, and that Mr Akcan was "fooling" the lender at that time. 9. As for the text message sent by Mr Fleischner on 10 March 2020, it was submitted that message was a follow-up after a failure to pay on 8 March 2020. Mr Young submitted that the proper construction of that text exchange was that Mr Fleischner was reminding Mr Akcan that there had been no payment on 8 March 2020 but he was not going to make a "big issue" about the lateness even though it was a breach of the agreement. 10. Mr Young accepted that Mr Fleischner's evidence was that as at 30 March 2020 he did not consider Mr Akcan to be in default. He accepted that the fact that Mr Akcan was going to be put into default if he did not pay on 8 April 2020 was never communicated to Mr Akcan. It was submitted that the words "I'll get this actioned for you now" in the email of 17 March 2020 did not mean that he was going to act on it now; it merely meant that he would respond to it. Despite this, Mr Young accepted that it was never actioned in any "way, shape or form". Reliance was placed on the fact that by the last week of March 2020, Mr Fleischner was the only person working at LaunchCap thus it was easy to understand the difficulties he was experiencing. It was accepted that the COVID-19 emergency put a different sheen on the issues in this case. 11. As for the repeated requests for the loan statement, it was submitted that most of those requests were made in May and early June, by which time Diamond House was already in default. 12. As for the claim of misleading and deceptive conduct, it was submitted that the only relevant representation was on 17 March 2020 when Mr Fleischner said that he would "get this actioned… now". It was submitted that such a representation could not "conceivably" cause any loss to anyone. It was submitted that the relevant counterfactual was to ask what Mr Akcan would have done if that representation had not been made? Mr Young contended that Mr Fleischner's conduct was not a contractual promise and one could not sue for the breach. Rather, it was submitted that Mr Akcan had to show that he would have done something to put himself in a much better position if not for the relevant statement. 13. As for the question of whether there was an implied contractual term obliging the lender to provide a loan statement to Mr Akcan, it was submitted that cl 4.2 was the only relevant provision and that clause did not imply an obligation on the part of the lender to provide a loan statement. Clause 4.2 provided that Mr Akcan had to give 30 days' notice in the event of refinance. The lender submitted that because such notice had not been given, it was under no obligation to provide a loan statement. It was submitted that it was one thing to assert the implied right to receive a payout figure from the mortgagee in circumstances in which the equity of redemption had arisen and a payout figure was a practical necessity for redemption to proceed, but it was another thing to claim such an implied right when the equity had not yet arisen. It was further submitted that no such implied term was necessary for the businesslike operation of cl 4.2. 14. Reliance was placed on the fact that Mr Akcan at one stage indicated that his accountant needed the loan statement (as opposed to his mortgage broker). This was said to be another basis to infer that Mr Fleischner did not know why Mr Akcan was requesting a loan statement. 15. The lender accepted that Mr Fleischner knew about the plan to refinance but submitted that Mr Akcan already knew how much was owed and thus did not need a loan statement to obtain refinance. As for the submission that there was a duty to act in good faith, it was submitted that the decision in Kosho Pty Ltd v Trilogy Funds Management Ltd [2013] QSC 135 could be distinguished. 16. Overall, as to the claim in relation to the failure to provide the loan statement it was submitted that the ANZ would not have loaned Mr Akcan money during that time as it would have been obvious to the bank that Diamond House was badly affected by the COVID-19 pandemic. 17. Mr Young then turned to consider the cross-claim itself. He submitted that Mr Fleischner never represented that he would provide a loan statement within a short period of time. It was submitted that even if he had done so and Mr Akcan had relied on that statement, Mr Akcan could not show any loss arising from the representation. 18. As for the unconscionability claim, Mr Young addressed each of the claims made at [55] of the cross-claim (extracted above at [140]) as follows. 19. In relation to [55(a)] (failure to provide the loan statement), it was submitted that Mr Akcan never made it clear that that the loan document was required for the purposes of refinancing. Nor did Mr Akcan give the impression that "this [was] some life or death situation" where he urgently needed the document for refinance. It was said that Mr Akcan did not indicate to Mr Fleischner that he would be greatly prejudiced if he did not get the document. Mr Young noted that it was never suggested to Mr Fleischner in cross-examination that he had intentionally failed to provide the loan statement for some "nefarious purpose". 20. As to [55(b)] (implied term under cl 4.2 of the loan agreement), it was submitted that there was no such requirement under that clause. 21. As to [55(c)] (the impact of the COVID-19 pandemic), it was submitted that the lender's position was one that it was perfectly entitled to take given the approach taken by Mr Akcan, in particular by his email of 30 March 2020. 22. As to [55(d)] (insisting on strict compliance when the lender was in breach of the contract), it was submitted that the lender had not breached the contract because there was no implied term under cl 4.2. It was otherwise submitted that Mr Akcan was not entitled to any serious consideration or forbearance arising from his email of 30 March 2020 because his language was brusque and he incorrectly stated that the lender was legally obliged to grant mortgage relief. 23. As to who the relevant decision-makers were, Mr Young submitted that the evidence disclosed that the ultimate decision-maker was "the committee of Fleischner and Fitzgibbon". It was submitted that Mr Fleischner was not a mere "cipher". It was submitted that nothing flowed from the failure to call Mr Fitzgibbon. Defendant/cross-claimants' submissions 1. Mr Evans submitted that the lender's actions had to be judged in the context of the beginning of the COVID-19 pandemic and the significant uncertainty arising from that. It was submitted that business owners like Mr Akcan were largely "in the dark" about what was going to happen and there were many conflicting announcements in a short period. Despite the fact that people were not permitted to leave their homes to shop for jewellery, Mr Akcan kept his shop open even though his sales decreased by 90%. It was submitted that this was a factor in his favour and not one that should be used against him as the lender sought to do. The only two months in which Diamond House did not make payments on the loan were April and May 2020, at the height of the lockdown. Mr Akcan resumed making payments in June 2020. He has continued to make payments at the court rate every month since that time. It was submitted that numerous attempts were made to settle this matter and Mr Akcan always acted in good faith. 2. It was submitted that Mr Akcan's assertion in his email of 30 March 2020 that his business had "stopped" was not a false statement, but one that had to be viewed through the lens of events that were occurring around that time. Counsel for Mr Akcan also drew attention to the fact that although Diamond House as the borrower had insufficient funds to make repayments, Mr Akcan could have drawn on his own funds to pay interest if he had been refused a deed of forbearance. Bank documents were before the Court that supported this proposition. This was said to be relevant both as to his ability to obtain refinance and to the fact that the lender never explored Mr Akcan's capacity to make reduced or deferred repayments before issuing a default notice on 9 April 2020. 3. Although the defendant conceded that the due date under the loan agreement was the first day of each month it was submitted that this condition was varied by the subsequent words and actions of the lender. 4. As for the absence of Mr Fitzgibbon as a witness, it was submitted that both he and Mr Fleischner acquiesced as to the due date being the 11th rather than the 8th of each month, as evidenced by Mr Fitzgibbon saying "[t]hanks" after receiving Mr Akcan's email stating that the due date was the 11th of each month. 5. It was submitted that there was a live issue as to why on 6 April 2020 Mr Fleischner requested documents that he already had and which he conceded would not have materially influenced the decision to enter into a deed of forbearance. Reliance was placed on the fact that Mr Fleischner said in that email, "we need to remedy as soon as possible". He did not inform Mr Akcan that he and Mr Fitzgibbon considered the payment date to be 8 April 2020 nor that they intended to issue a default notice on 9 April 2020. Mr Fleischner did not elaborate on how the documents he sought might assist him to make a decision. It was submitted that the tone of Mr Fleischner's email and his apparent willingness to consider a deed of forbearance was inconsistent with the email correspondence between Mr Fleischner and Mr Fitzgibbon around that time. 6. It was submitted that if the lender had genuinely been considering a deed of forbearance, Mr Fleischner would not have sought irrelevant and historical information from Mr Akcan. Mr Evans submitted that Mr Fleischner's email of 6 April 2020 was misleading to the extent that it suggested that once Mr Akcan provided that material the lender would enter into a deed of forbearance. 7. It was submitted that onus rested on the lender to show that it was acting properly and that the email correspondence of 6 April 2020 suggested that the lender had already decided not to enter into a deed of forbearance before requesting proof of hardship from Mr Akcan. Additionally, even though Mr Fleischner accepted that Mr Akcan provided evidence of hardship, it was submitted that Mr Fitzgibbon was the relevant decision-maker and although he did not give evidence he clearly did not accept Mr Akcan's evidence of hardship. 8. It was submitted that, by its conduct in the preceding weeks and months, the lender was estopped from issuing a default notice to Diamond House on 9 April 2020. Factual findings 1. As stated above, very few factual findings turned on questions of credibility in this matter. I have already found that that Mr Akcan asked Mr Fleischner for a copy of the loan statement during the telephone conversation on 18 February 2020. Mr Fleischner conceded as much in cross-examination. 2. I am also satisfied that Mr Fleischner always knew that Mr Akcan would be seeking refinance. That fact was expressly acknowledged in cl 3.4 of the loan agreement. It would have constituted an event of default on Mr Akcan's part if he had failed to obtain refinance during the term of the loan. I do not accept Mr Fleischner's evidence that he did not apprehend from Mr Akcan's repeated requests that Mr Akcan needed the statement for refinancing. His evidence on this point was unconvincing as he was not able to advance any other possible reason for the requests other than "for his records". It was the common understanding of the parties prior to signing the loan agreement that refinance would be sought early in 2020 (after the diamonds were sold over Christmas). By the time of the second request on 11 March 2020 it was sought "today" and by the time of the third request on 17 March 2020 Mr Akcan had made it clear that he needed it "urgently". 3. I am satisfied that Mr Fleischner had no reasonable basis for his failure to provide the loan statement to Mr Akcan when it was requested. He was unable to provide any explanation for not providing it on 18 February or 11 March 2020. As for his failure to action the request on 17 March 2020, he explained that it was because he was busy due to pressures arising from the COVID-19 pandemic. It was not put to Mr Fleischner that he deliberately declined to do so for some ulterior purpose such as forcing Mr Akcan to remain locked into this loan rather than refinancing at a lower rate of interest. In those circumstances, it is not open to me to make such a finding. It is, however, open to me to find that Mr Fleischner did not see the request as a priority and effectively ignored it on that basis. 4. Mr Fleischner was reasonably frank in his evidence. He gave answers that were not always in his interest. Some of his answers suggested that he did not fully comprehend the significance of his actions at that time. He seemed defensive when it was suggested to him that Mr Fitzgibbon was the primary decision-maker, yet he conceded that he was bound to act on Mr Fitzgibbon's instructions (see above at [92]). His evidence was internally inconsistent as to the degree of autonomy he exercised in managing this loan. 5. Mr Fleischner's evidence as to why Mr Akcan was issued with a default notice on 9 April 2020 was particularly illuminating as to the attitude of the lender. He accepted that he knew Mr Akcan thought that payment was not due until 11 April 2020. He agreed that he delayed responding to Mr Akcan's email of 30 March 2020 for one week without providing a basis for his delay. He accepted that none of the documents he requested from Mr Akcan on 6 April 2020 would have assisted in establishing hardship. He was satisfied as of 7 April 2020 that Mr Akcan had established hardship due to COVID-19. He said that a decision was made or a "directive" given that no deferral would be granted but that this decision was never communicated (at [89]-[90]). He agreed that he took no steps to warn Mr Akcan of the lender's intention to issue a default notice on 9 April 2020, despite knowing that Mr Akcan thought payment was not due until 11 April 2020. 6. It is not clear to me that Mr Fleischner would have put Mr Akcan into default at that time if not for the instructions of Mr Fitzgibbon, who did not give evidence in this matter. To the extent it is necessary to do so, I am satisfied that it was Mr Fitzgibbon who decided to issue the default notice of 9 April 2020, rather than Mr Fleischner. 7. As for whether Mr Fleischner told Ms Arvanitopoulos in May and June 2020 that he would provide her with a default-free loan statement (see [117] above), I prefer the evidence of Ms Arvanitopoulos to that of Mr Fleischner. The contemporaneous documentation shows that Mr Fleischner was saying one thing to Mr Akcan and Ms Arvanitopoulos and another to Mr Fitzgibbon. That is a factor that goes against Mr Fleischner's credibility. Moreover, there was nothing about Ms Arvanitopoulos' evidence that led me to have any doubts as to her reliability or credibility. Much of her evidence was consistent with the contemporaneous documentation and the evidence of Mr Akcan. 8. The above findings represent those factual findings which turned on issues of credibility. The remaining factual findings turn on inferences to be drawn from the following four pieces of contemporaneous documentation: 1. The text messages between Mr Fleischner and Mr Akcan on 10 March 2020; 2. The email from Mr Fleischner to Mr Akcan on 17 March 2020 informing him that he would "get this actioned… now"; 3. Mr Akcan's email of 30 March 2020 seeking a deferral of repayments due to COVID-19; and 4. The email from Mr Fleischner to Mr Akcan on 6 April 2020 requesting certain documents and advising that a deed of forbearance deed would be entered into if Mr Akcan provided that documentation (at [84] above). 1. I shall consider the significance of these documents below. Consideration The statement of claim 1. The first question for determination is whether the lender was entitled to issue a default notice to Diamond House at dawn on 9 April 2020. There are two aspects to this question. If I am satisfied that the terms of the loan agreement were varied such that repayments were due on the 11th day of each month rather than the 8th, the lender's claim fails at the first hurdle as it had no basis to issue the default notice on 9 April 2020. If, on the other hand, I am satisfied that the interest payments were due on the 8th day of each month, the question is whether by its conduct the lender was nonetheless estopped from issuing the default notice on 9 April 2020. 2. Mr Young submitted that the factual dispute as to whether the due date was 8 April 2020 or 11 April 2020 was irrelevant because Mr Akcan did not make the payment on 11 April 2020 anyway. I do not accept that submission. I am satisfied that the evidence concerning the relevant due dates is central to the determination of the lender's claim. Moreover, once the lender sent the default notice on 9 April 2020 demanding payment of $50,625.00 within seven days, it was too late for Mr Akcan to pay interest at the ordinary rate on 11 April 2020. To the extent that Mr Young implied that the lender would have accepted payment at the lower rate on that date and withdrawn the default notice of 9 April 2020, nothing in the conduct of the lender both before or after 9 April 2020 supported such an inference. The terms of the contract 1. It is not difficult to understand why Mr Akcan believed that interest payments were due on the 11th day of each month. He received the funds on 11 November 2019. The first three months' interest was already deducted from the amount he received so no issue arose as to the due date until February 2020. A default notice was issued on 12 February 2020 and then withdrawn. It was in the context of correspondence about that misunderstanding that Mr Akcan first had the opportunity to assert his understanding that the due date was the 11th day of each month. 2. While the basis of Mr Akcan's understanding is logical and readily apparent, the fact remains that he signed a loan agreement which provided that interest was payable from 30 October 2019 and interest was to be paid on the first day of each month. Although that meant that Mr Akcan was paying a very high interest rate on money he did not even have between 30 October and 11 November 2019, those were the terms he agreed to when he signed the initial offer. It is tolerably clear that this was never explained to him but those were the terms of the contract he signed. 3. Clause 12.29 set out the circumstances in which the terms of the contract could be varied. That clause required any variation to be in writing and signed by or on behalf of both parties. 4. At no stage did Mr Fleischner ever state, orally or in writing, that he was prepared to vary the repayment date to the 11th day of each month. Nor am I satisfied that Mr Akcan's unilateral assertions in his emails of 13, 25 and 26 February 2020 support a variation. With the exception of the last of these emails, his assertions were immediately contradicted by Mr Fleischner. These unilateral assertions are incapable of constituting a mutually acknowledged written variation to the express terms of the contract. 5. I am further satisfied that the repayment date was varied to the 8th day of each month by Mr Fleischner's email of 25 February 2020 (extracted above at [47]). to be the 8th day of every month. Although Mr Akcan continued to insist that the due date should be the 11th day of each month (which was the obvious date for such payments), there was nothing in the material before me to permit a conclusion that the contract was thus varied. 6. Mr Akcan asserted in his amended defence and written submissions that, in the alternative, a collateral contract arose under which the due date was the 11th of each month. This argument was never adequately developed and cannot be sustained. A collateral contract may arise where an inducement is offered for entry into the principal contract, such that the consideration under the collateral contract is the making of the principal contract: Heilbut, Symons & Co v Buckleton [1913] AC 30 at 47; Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133 at 139; [1919] HCA 64. But that is not this case. The relevant discussions about the due date for payment occurred in February, some three months after the parties signed the contract. In those circumstances, it is not possible to infer a collateral contract: Hercules Motors Pty Ltd v Schubert (1953) 53 SR (NSW) 301 at 303. 7. I am satisfied that the original terms of the contract required payment to be made on the first day of each month, with interest accruing from 30 October 2019 but the date for repayment was varied to the 8th of each month by Mr Fleischner's email of 25 February 2020. Promissory estoppel 1. Although I am satisfied that the contract was varied such that payments were due on the 8th day of each month rather than the 11th, that is not the end of the matter. I have already found that Mr Fleischner knew that Mr Akcan believed the payments to be due on the 11th day of each month. I am also satisfied, to the extent that it is relevant, that Mr Fitzgibbon was aware of this because Mr Fleischner forwarded the relevant emails to him and he acknowledged receipt of those emails. 2. A question arises as to whether the lender was entitled to issue a default notice on 9 April 2020 given its conduct from mid-February to 9 April 2020. Mr Akcan relied on the principles of estoppel by conduct as set out in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7 ("Waltons v Maher"). The elements of this equitable estoppel were set out by Brennan J at 428-9 as follows: "(1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise." 1. Further, in the joint judgment of Mason CJ and Wilson J, their Honours observed that the "common thread" in the relevant cases was an element of unconscionability (at 404): "…equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has 'played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it': per Dixon J in Grundt, at 675; see also Thompson, at 547. Equity comes to the relief of such a plaintiff on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption." 1. I am unable to accept Mr Young's submission that Mr Akcan had not established "any form of estoppel known either to common law or equity". Mr Akcan asserted that he, as director of Diamond House, had been induced to believe that he was permitted to make the payments on the 11th day of each month and acted in reliance upon that assumption. The lender induced that assumption by its conduct in March 2020, in particular the text messages of 10 and 11 March 2020. Mr Fleischner knew of Mr Akcan's assumption and did nothing to disabuse him of it. The lender did not fulfil that expectation and Mr Akcan suffered detriment as a result. I have already set out the conduct on the part of the lender giving rise to such an estoppel, but it can be summarised as follows: 1. The first time that the question of repayments arose in February 2020 Mr Akcan made it clear that he believed the repayments were due on the 11th day of each month. 2. When Mr Akcan did not make a payment on 8 March 2020 no default notice was issued on 9 or 10 March 2020. Instead a text was sent on 10 March 2020 by Mr Fleischner checking whether the payment was "good to go". This could only mean, in the context of the other findings I have made, "good to go [tomorrow]". At no stage during that exchange was there any suggestion that the lender believed Mr Akcan to be in default by not paying on 8 March 2020. 3. Mr Akcan paid promptly on 11 March 2020. 4. No default notice was ever issued in March 2020 and Mr Fleischner's evidence was that he did not believe Mr Akcan to be in default as at 30 March 2020. 5. On 30 March 2020, Mr Akcan sought deferral of his interest payments given the impact of COVID-19 on his business. 6. Mr Fleischner on behalf of the lender did not respond to Mr Akcan's email on 31 March, 1 April, 2 April, 3 April, 4 April or 5 April. At a time when it would have been obvious to Mr Fleischner that Mr Akcan needed an answer urgently, no answer was provided until 6 April 2020. This was at a time when the COVID-19 pandemic had created an atmosphere of uncertainty for business owners such as Mr Akcan. The failure to respond to that email could only have led Mr Akcan to believe that there was no opposition to that course being taken. It is common ground that the lender did not contact Mr Akcan during that period to suggest otherwise. 7. It was not until 6 April 2020 that Mr Fleischner sent an email to Mr Akcan indicating: 1. That his request for deferral was not acceptable; 2. That further documentation was required by close of business if possible in order to "assess properly" his claim for hardship and reprieve/discount of monthly payment; and 3. That once those documents were received the lender "[would] have to enter into a Forbearance Deed" (at [84]). 1. Mr Akcan replied promptly to this email on 7 April 2020 indicating that the lender already had all of those documents. Mr Fleischner agreed in his evidence that that was the case. He also agreed that none of the documents he requested could have assisted in assessing whether Mr Akcan's business was suffering hardship due to COVID-19. 2. After receiving that information on 7 April 2020, the lender did not reply to Mr Akcan. Mr Akcan was never advised that the information provided was inadequate. He could not have been so advised as Mr Fleischner's evidence on oath was that he believed that Mr Akcan had established hardship by that time. It was Mr Fitzgibbon who found otherwise. At that stage of the negotiation, the ball was very much in the lender's court. There was nothing Mr Akcan could do but wait until he received advice from the lender as to whether they would enter into a deed of forbearance. 3. The following day was 8 April 2020. Mr Fleischner knew that Mr Akcan did not believe payment was due on that day. Despite this, he did not communicate with Mr Akcan on behalf of the lender to advise him that, contrary to the approach taken in March 2020, failure to make an interest payment on 8 April would be treated as an event of default. Nor was there any indication that his request for deferral had been determined against him. The lender was silent on both repayment and deferral whilst Mr Akcan waited for a response. 4. The lender's response came the following day. A default notice was served on Mr Akcan at 6:30 in the morning at his home. 1. I am satisfied that all of the elements referred to by Brennan J in Waltons v Maher are made out, including the requirement that it would be unconscionable for the lender to seek to rely on its strict rights, having induced in Mr Akcan the assumption that he could pay interest on the 11th day of each month and not be in default and in conveying the impression that it was still considering his request for deferral due to COVID-19 hardship. Other defences raised 1. As for Mr Akcan's reliance on the force majeure clause, the only relevant clause is cl 12.31 which provides that the lender's obligations under the agreement may be suspended due to force majeure but makes no similar provision for any other party such as Diamond House. 2. Similarly, although the defence pleaded relief against forfeiture, that is a matter for the cross-claim rather than the defence and it was not pressed at the hearing. 3. Finally, although misleading and deceptive conduct was also pleaded in the defence, it was at no stage articulated how that claim could be a defence to the claim. It was however squarely raised in the cross-claim, which I will consider below. Conclusion: statement of claim 1. I am not satisfied that the lender was entitled to issue a default notice on 9 April 2020; the lender was estopped from doing so given its previous conduct. 2. I will next consider the issues raised in the cross-claim before addressing the question of the appropriate relief in this matter. The cross-claim 1. Mr Akcan relied on three causes of action based on the continued failure of Mr Fleischner to provide him with a copy of the loan statement despite numerous requests, as well as the conduct of the lender and Mr Fleischner after the default notice was issued on 9 April 2020. Those three causes of action were: 1. Breach of an implied term of the contract. The implied term was said to oblige the lender to provide a loan statement upon request by the borrower; 2. Unconscionable conduct under ss 20 or 21 of the ACL. This was said to arise from a course of conduct including failure to provide the loan statement, refusal to defer or reduce payments due to COVID-19 hardship and the issue of a default notice during hardship negotiations; and 3. Misleading and deceptive conduct under s 18 of the ACL, based on Mr Fleischner's representation on 17 March 2020 that the request would be "actioned… now" and his subsequent failure to do so. 1. I shall deal with each of these claims in turn. Breach of contract 1. Clause 4.2 of the contract provides for the borrower's right of early repayment. The question is whether cl 4.2 contained an implied term requiring the lender to issue a loan statement within a reasonable time after the borrower's request to facilitate early repayment. I am satisfied that notice under cl 4.2 is irrevocable and requires the borrower to specify the exact amount to be paid out. It is difficult to see how the exact amount could be specified with certainty without the loan statement. I do not accept the submission made on behalf of the lender that Mr Akcan knew that precise amount. He probably could have worked out an approximate amount but that would not have been sufficient to comply with the requirements of cl 4.2. 2. I have considered the five requirements for the implication of a term as set out in B.P. Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. Those requirements are: "(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract." 1. I am satisfied that without the implied right to obtain a loan statement, the express right to early repayment under cl 4.2 is meaningless. The term is reasonable and equitable and necessary to give business efficacy to the contract because without it, the lender could prevent early repayment by simply refusing to provide a loan statement (which is the effect of what happened in this case). The implied term is obvious, capable of clear expression and not contrary to any of the express provisions of the contract. It is also in accordance with the statement in Butt v McDonald (1896) 7 QLJ 68 at 70-71 (as adopted by Mason J in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607; [1979] HCA 51) that: "It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract." 1. It was common ground at the hearing that it was the shared understanding of the parties to the loan that it would be paid out by way of refinance. This common understanding was enshrined in cl 3.4 (extracted above at [22]), which provided, inter alia, that failure on the part of the borrower to obtain refinance prior to the termination date would be an event of default, time being of the essence. 2. The lender relied on the decision of Bryson J in Nadrak Pty Ltd v Permanent Custodians Ltd (1994) 6 BPR 13,344. 3. The issue in that matter concerned the right of discharge at any particular point of time and damages claimed for delay. That is a different question. The issue in this case is whether the lender was required to provide a loan statement in circumstances where provision of the loan statement was a necessary pre-requisite to providing notice under cl 4.2 and exercising the right of early repayment. The fact that Diamond House had no "present" right to redeem is a different point. 4. I cannot accept the lender's contention that it was under no obligation to facilitate refinance by way of the provision of a loan statement until after it received notice under cl 4.2. Such an argument is contrary to the terms of cl 4.2 which require the exact amount to be included. Again, to the extent that the lender contended that it would not have taken the point if the notice had not specified the correct amount, that was inconsistent with the manner in which it behaved in relation to the loan standing back and considering it as a whole. 5. I do not accept the lender's construction of cl 4.2, namely that Diamond House had to first give notice specifying the amount and date of repayment and then the lender would put itself in a position to allow the mortgage to be redeemed, including by providing a loan statement. Again, that submission ignored the requirement in cl 4.2 that the written notice specify the amount to be repaid. 6. For these reasons I am satisfied that it was an implied term under the contract that the lender was required to provide a loan statement on request and this implied term was breached by the lender. 7. In written submissions Mr Akcan and Diamond House also relied upon breach of an implied term of good faith by failing to provide a loan statement and then defaulting Mr Akcan on 9 April 2020: Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 and Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 at [144]. In Cordon Investments, Bathurst CJ (Macfarlan and Meagher JJA agreeing) observed that the duty of good faith has commonly been held to include the following matters (at [145]): "1 An obligation on the parties to co-operate to achieve the contractual objectives. 2 Compliance with honest standards of conduct. 3 Compliance with standards of conduct that are reasonable having regard to the interests of the parties." 1. To the extent that it is necessary to do so, having regard to the nature of the agreement between the parties, I am satisfied that it was an implied term of the loan agreement that the parties at all times act in good faith. For reasons I have already stated and which I consider further below in relation to the claim of unconscionable conduct, I am satisfied that the lender's conduct fell below the standards of conduct that would be considered reasonable given the interests of the parties. I am thus satisfied that the lender by its conduct breached the implied term of good faith. Unconscionable conduct 1. The claim of unconscionable conduct was made under ss 20 and 21 of the ACL. The parties agreed that the conduct occurred in trade or commerce and thus those sections were applicable. Although s 20 of the ACL was pleaded, the defendant's submissions addressed s 21. No issue was taken about this by the lender and I will proceed on the basis that s 21 is the relevant provision. Unconscionable conduct under s 21 is not limited by the common law doctrine of unconscionability (s 21(4)(a), ACL) and thus does not require the party seeking relief to be under a special disadvantage (cf Blomley v Ryan (1956) 99 CLR 362 at 405; [1956] HCA 81 per Fullagar J). Section 21 of the ACL provides as follows: 21 Unconscionable conduct in connection with goods or services (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; … (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. 1. Section 22 of the ACL sets out the matters to which the Court may have regard for the purposes of unconscionable conduct under s 21. Mr Akcan and Diamond House relied upon a course of conduct including the acts or omissions I have already set out above at [140] as well as the failure to provide the loan statement. 2. The relevant principles in relation to statutory unconscionability were set out by Allsop CJ in Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199; [2015] FCAFC 50 at [296] (subsequently adopted by Kiefel CJ and Bell J in Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18 at [14]): "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." 1. In Australian Competition and Consumer Commission (ACCC) v Lux Distributors Pty Ltd [2013] FCAFC 90 at [23], Allsop CJ referred to the need to evaluate the facts of each case "by reference to a normative standard of conscience… permeated with accepted and acceptable community values". This includes the expectation that "consumers will be dealt with honestly, fairly and without deception or unfair pressure" (at [23]). In Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O'Donnell [2011] NSWCA 389, Allsop P (Bathurst CJ and Campbell JA agreeing) held that the range of conduct captured by statutory unconscionability is wide and can include (at [291]): "bullying and thuggish behaviour, undue pressure and unfair tactics, taking advantage of vulnerability or lack of understanding, trickery or misleading conduct. A finding requires an examination of all the circumstances." 1. Where, as here, a system or pattern of conduct is relied upon, unconscionable conduct may be established by "a systemic pattern of behaviour involving an accumulation of minor incidents" each of which, in isolation, may not be substantial: Australian Competition and Consumer Commission (ACCC) v Get Qualified Australia Pty Ltd (In Liq) (No 2) [2017] FCA 709 at [66] per Beach J. 2. An assessment of whether conduct is unconscionable is an "objective value judgment" of the impugned behaviour, although the subjective state of mind, whether actual or constructive, will be "relevant to the broader sense" of the test: Australian Competition and Consumer Commission v Medibank Private Ltd (2018) 267 FCR 544; [2018] FCAFC 235 at [247] per Beach J (Perram and Murphy JJ agreeing). 3. Mr Fleischner's evidence was that he could not think of any reason why Mr Akcan would need a loan statement beside refinancing, although he somewhat faintly ultimately suggested that he might have needed it "for his records". 4. I have already made the factual findings necessary to consider this ground. I am satisfied that Mr Fleischner knew that Mr Akcan needed to refinance, knew that he needed a loan statement to do so, did not act on the request on 18 February 2020, did not act on the request of 11 March 2020 and did not even act on the urgent request on 17 March 2020 despite replying immediately to say that the request would be "actioned… now". In total 13 requests for such a statement were made by both Mr Akcan and his mortgage broker Ms Arvanitopoulos before a statement showing a default was finally issued on 22 June 2020. 5. Although the lender's state of mind is relevant, I do not accept the lender's submission that because there was no "malice" or "nefarious" purpose on the part of Mr Fleischner, the conduct of the lender could not be unconscionable. The evidence disclosed that Mr Fleischner did not take the request seriously or give it any priority despite Mr Akcan saying he needed it "urgently" on 17 March 2020, after his two earlier requests were ignored. No explanations were provided for the first two failures and the explanation for the third failure to respond (to the 17 March 2020 email) was that Mr Fleischner did not get around to it as he was busy. To the extent that this issue turns on an assessment of the relevant conduct as against accepted and acceptable community values, the conduct of the lender fell far short. 6. I am satisfied that had Mr Akcan been provided with the loan statement at any time after his first request on 18 February 2020 and prior to the issue of the default notice on 9 April 2020 he would have been able to obtain refinance with ANZ bank at a significantly lower rate. I accept the evidence of Ms Arvanitopoulos in that respect. Mr Young's assertion that Mr Akcan would not have been able to obtain refinance at the lower rate was not supported by any evidence. Nor do I accept Mr Young's submission that a loan statement was not required because the incoming mortgagee could simply have relied on uncorroborated assurances by Mr Akcan as to the state of the loan. That submission was contrary to the evidence of both Mr Akcan, that he has never obtained refinance without a loan statement, and Ms Arvanitopoulos, which was that she would not waste her time applying for refinance without a loan statement. It was also contrary to the evidence of Mr Fleischner, which was that you could not refinance without a loan statement. 7. As for the submission that any conduct after Mr Akcan's email of 30 March 2020 could not have been unconscionable because Mr Akcan had repudiated the contract on that date, I reject it. Consistent with the findings I have already made about that email, I am satisfied that it was written by a man who spoke English as his fifth language and was operating a jewellery business in an empty shopping centre in the midst of Sydney's initial COVID-19 shutdown. There were several announcements by the government and various banks about mortgage relief, although there were no concrete policies at that time that would have assisted Mr Akcan. They were uncertain times. The 30 March 2020 email is clearly a request for some form of relief in that climate. It is also clear from Mr Fleischner's response of 6 April 2020 that he did not consider Mr Akcan's email to be a repudiation of his obligations under the contract. 8. I am satisfied that the lender's failure to provide a loan statement caused considerable detriment to Mr Akcan and no reasonable explanation for that failure has ever been provided. The cross-claimants have established unconscionable conduct under s 21 of the ACL. I include in that finding the lender's conduct in issuing the default notice on 9 April 2020 whilst negotiations about deferral were ongoing for the reasons I have already provided. Misleading and deceptive conduct 1. Finally, the cross-claim also asserted that the lender and LaunchCap engaged in misleading or deceptive conduct under s 18 of the ACL by Mr Fleischner's representation of 17 March 2020, in which he stated in response to Mr Akcan's request for a loan statement that he would "get this actioned… now". That section provides as follows: 18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. 1. As above, it was agreed that the relevant conduct occurred in trade or commerce. 2. The cross-claimants also relied on s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) ("ASIC Act"). It is in the same terms but applies specifically to the provision of financial services. That section provides as follows: 12DA Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive. 1. Section 12BB of the ASIC Act provides that a representation with respect to a future matter will be misleading where the representor has no reasonable grounds for the representation and places an evidential burden on the representor to demonstrate reasonable grounds for the representation: 12BB Misleading representations with respect to future matters (1) If: (a) a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and (b) the person does not have reasonable grounds for making the representation; the representation is taken, for the purposes of Subdivision D (sections 12DA to 12DN), to be misleading. (2) For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by: (a) a party to the proceeding; or (b) any other person; the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary. (3) To avoid doubt, subsection (2) does not: (a) have the effect that, merely because such evidence to the contrary is adduced, the person who made the representation is taken to have had reasonable grounds for making the representation; or (b) have the effect of placing on any person an onus of proving that the person who made the representation had reasonable grounds for making the representation. (4) Subsection (1) does not by implication limit the meaning of a reference in this Division to: (a) a misleading representation; or (b) a representation that is misleading in a material particular; or (c) conduct that is misleading or is likely or liable to mislead; and, in particular, does not imply that a representation that a person makes with respect to any future matter is not misleading merely because the person has reasonable grounds for making the representation. 1. A representation may be misleading even if reasonable grounds are identified. Where a representation relates to the representor's future conduct, reasonable grounds will require that the representor had both the ability and intention to perform: Awad v Twin Creeks Properties Pty Limited [2012] NSWCA 200 at [10]. 2. The question of whether a person had reasonable grounds is judged at the time of the representation, although subsequent events may shed light on the overall probability that the representation was reasonable: Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 513; [1998] FCA 1405; City of Botany Bay Council v Jazabas Pty Limited (ACN 060 105 053) [2001] NSWCA 94 at [83] per Mason P, Beazley JA agreeing. 3. I have already found, in considering the unconscionability argument, that Mr Fleischner had no reasonable grounds to promise that he would get the request "actioned… now" and then ignore it without any explanation. I have already rejected Mr Young's submission that it was "highly dubious" that Mr Akcan could have obtained refinance at a lower rate if the loan statement had been provided in February or March, due to the impact of COVID-19. I accept the evidence of Ms Arvanitopoulos on this issue for the reasons already provided. 4. I am satisfied that Mr Fleischner's intention was to get Mr Akcan "off his back" by promising immediate action and then immediately forgetting about it. I am satisfied that he knew he should have provided a loan statement by that time because, having ignored two previous requests, Mr Fleischner replied just one minute after the third request. Despite these findings, I am not satisfied that Mr Fleischner acted in a misleading and deceptive manner in so doing. He simply considered the request to be a low priority and wrote what he did to get Mr Akcan off his back. Conclusion: cross-claim 1. I am satisfied that the lender breached an implied term of the contract by repeatedly failing to provide the loan statement and that the lender and Mr Fleischner acted unconscionably in failing to provide the loan statement and sending the default notice on 9 April 2020 in the midst of negotiations about a deferral of repayments. I am not satisfied that Mr Fleischner's statement on 17 March 2020 that he would get Mr Akcan's request "actioned… now" was misleading and deceptive conduct under either the ACL or the ASIC Act. Relief 1. The orders I would make in relation to the statement of claim are that it be dismissed with costs. 2. The orders I make in relation to the cross-claim should, as near as possible, place Mr Akcan back into the position he would have been had he not been wrongly issued with a default notice on 9 April 2020 and had he been provided with the loan statement within a reasonable time after his first request and, at the very latest, by the time of the second request on 11 March 2020. 3. I note that Diamond House made no repayments in April or May 2020. Payment at the non-default rate was made in June 2020. Since the statement of claim was filed the payments have been made monthly at the court rate, that being 4% above the cash rate last published by the RBA (thus between 4.25% and 4.10% during the relevant period). 4. I have already held that had the loan statement been issued within a reasonable time Mr Akcan would have been able to refinance and would be have been paying a much lower interest rate of 2.29% (as per the evidence given by Ms Arvanitopoulos). 5. I would grant the declaration sought relieving Mr Akcan of the obligation to pay interest at the lower rate under the loan agreement (11.5%) from the time that he would have been able to obtain refinance. I would also grant the mandatory injunction sought requiring the lender to issue a loan statement that records the payment of interest without default and states a payout figure of the principal amount and any applicable fees. ORDERS 1. Accordingly, I make the following orders: 1. The statement of claim is dismissed. 2. Verdict for the cross-claimants on the cross-claim filed on 24 August 2020. 3. The plaintiff is to issue a loan statement to Diamond House free of any default notation within seven days of this judgment to enable refinancing of the loan. 4. The loan statement issued by the plaintiff is to be calculated by applying an interest rate of 2.29% from 8 April 2020 until the date of settlement and offsetting that as against the payments already made. 5. The plaintiff/cross-defendants are to pay the defendant's/cross-claimants' costs on the ordinary basis. 6. The parties have leave to apply to vary these orders by consent in accordance with the judgment within seven days. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 July 2021