New South Wales Supreme Court CITATION : Australian and New Zealand Banking Group Limited v Aldrick Family Company Pty Limited & Ors [2010] NSWSC 1000 HEARING DATE(S) : 16/08/10 - 19/08/10, 25/08/10 JUDGMENT DATE : 10 September 2010 JURISDICTION : Equity Division Commercial List JUDGMENT OF : Einstein J DECISION : Orders sought by ANZ to be made. Defendants claim to be dismissed. CATCHWORDS : Banker and customer - ANZ seeks to recover the moneys owing from the defendants pursuant to agreements, guarantees and/or mortgages of land given by the defendants - ANZ also seeks orders for possession of various mortgaged properties - Defendants seek relief from their obligation to pay ANZ because of a claim for damages and various other relief claimed including breach of a duty or contractual term of confidentiality, unconscionability, unconscionable or misleading or deceptive conduct under the Trade Practices Act 1974 (Cth), and the Contracts Review Act 1980 (NSW) - ANZ discloses confidential information of customer to competitor seeking to have customer placed into liquidation - ANZ does not dispute that, in substance, ANZ employee conveyed to competitor that ANZ had concerns about group's present financial condition and that ANZ was contemplating enforcing its security - Customer contends that the disclosure was a breach of the common law duty of confidentiality/secrecy owed by ANZ as a banker to its customer, a breach of a statutory duty not to disclose confidential information to third parties, a breach of an implied contractual term to the same or similar effect contained in each of the relevant agreements, guarantees and mortgages, and otherwise was negligent - Causation - Basic legal principle that plaintiff must prove its loss or damage was caused by the defendant's breach, whether the plaintiff grounds its case in contract, tort or statute - Causation a question of fact - Want of proper claimants - "Prudential principle", said to be derived from Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204, denies to members of a company (a fortiori persons with more remote interests) the right to recover for themselves damages for wrongs done to the company, or damages reflective of damages suffered by the company. - Deeds - ANZ requires customers to enter into deed waving customers' rights in respect of the confidential information as a condition for ANZ advancing funds permitting customer to have access to legal advice in the ensuing litigation leading to winding up of customer group - Whether deed enforceable - Whether ANZ's conduct in requiring entry into the deed constituted unconscionable conduct in contravention of s 12 CC of Australian Securities and Investments Commission Act 2001 (Cth) - Whether s 12CC applies to present case - Whether defendants can claim relief under Contracts Review Act 1980 (NSW) in relation to deed - Whether defendants within exclusion contained in s 6(2) of that Act - Misleading or Deceptive conduct - Whether representations in question shown to be misleading or deceptive or likely to mislead or deceive at the time they were made - Whether relevant defendants demonstrated requisite reliance on alleged misleading and deceptive representations - Granting of relief under remedial provisions of Trade Practices Act 1974 (Cth) - Basal proposition that relief must be appropriate to any cause of action established Australian Securities and Investments Commission Act 2001 Civil Procedure Act 2005 LEGISLATION CITED : Contracts Review Act 1980 Fair Trading Act 1987 Trade Practices Act 1974 (Cth) CATEGORY : Principal judgment Abram v Bank of New Zealand (1996) ATPR 41-470 Adler v Australian Securities and Investments Commission [2003] NSWCA 131 Agricultural and Rural Finance Pty Ltd v Atkinson [2010] NSWSC 635 Attorney General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557 Australia and New Zealand Banking Group Ltd v Karam (2005) 64 NSWLR 149 Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132 Bennett v Minister for Community Welfare (1992) 176 CLR 408 Bill Acceptance Corporation Ltd v GWA Ltd (1983) 50 ALR 242 Buckeridge v Mercantile Credits Ltd 147 (1981) CLR 654 C A Henschke & Co v Rosemount Estates Pty Ltd (2000) ATPR (Digest) 46- 199 Cameron v Qantas Airways Ltd (1994) 55 FCR 147 Canon Australia Pty Ltd v Patton (2007) 244 ALR 759 Cedric Constructions Pty Ltd v Elders Finance and Investment Co Ltd (1988) ATPR 40-879 Chappel v Hart (1998) 195 CLR 232 City of Botany Bay Council v Jazabas Pty Ltd [2001] NSWCA 94 Collins v Parker (Lee J, 11 May 1984) Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 Coombs v Bahama Palm Trading Pty Ltd (1991) ASC 56-097 Cummings v Lewis (1993) ATPR (Digest) 46-103 David Ballard v Multiplex Limited (2008) 68 ACSR 208 CASES CITED : Ellison v Vukicevic (1986) 7 NSWLR 104 Ford v Perpetual Trustees, Allsop P and Young JA, Sackville AJA Harris v Milfull (2002) 43 ACSR 542 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No. 1) (1998) 39 FCR 546 Holman v Deol [1979] 1 NSWLR 640 Hurley v McDonald's Australia Ltd (2000) 22 ATPR 41-741 Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1 Jones v Dunkel (1959) 101 CLR 298 King Mortgages v Satchithanantham; Cash King v Satchithanantham [2006] NSWSC 1303 Kowalczuk v Accom Finance Pty Ltd (2009) 252 ALR 55 Lander v Trigger [1999] NSWSC 1253 Lonrho PLC v Fayed (No. 5) [1993] 1 WLR 1489 McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants in Australia [2001] FCA 1056; (2002) 122 FCR 110 Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 Qantas Airways Ltd v Cameron (1996) 66 FCR 246 Shire of Gingin v Coomb [2009] WASCA 92 Sykes v Reserve Bank of Australia (1998) 88 FCR 511 Thomas v D'Arcy [2005] 1 Qd R 666 TS Recoveries Pty Ltd v Sea-Slip Marinas (Aust) Pty Ltd [2007] NSWSC 1410 Tsolakkis Nominees Pty Ltd v National Australia Bank Ltd (Unreported, Court of Appeal of the Supreme Court of Victoria, 4 June 1998) (1998) BC 9802334) Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388 Balkin and Davis, Law of Torts (LexisNexis Butterworths, 4th ed, 2009) Carter, Peden and Tolhurst, Contract Law in Australia (LexisNexis Butterworths, 5th ed, 2007) TEXTS CITED : JD Heydon, Cross on Evidence, (Butterworths: Sydney, 6th ed, 2000) Peden, The Law of Unjust Contracts (Butterworths, 1982) Zipser, "Unjust Contracts and the Contracts Review Act 1980 (NSW)" (2001) 17 Journal of Contract Law 76 Australian and New Zealand Banking Group Limited (Plaintiff) Aldrick Family Company Pty Limited (First Defendant) Brighton Associates Pty Limited (Second Defendant) PARTIES : Lyn Dulcie Brighton (Third Defendant) Wayne Brighton (Fourth Defendant) Dulcie Catherine Aldrick (Fifth Defendant) Diane Patricia Bowen (Sixth Defendant) FILE NUMBER(S) : SC 2008/00283775 COUNSEL : Mr MB Lee, Mr Cowpe (Plaintiff) Mr TJ Morahan (First, Third, Fourth, Fifth and Sixth Defendants) SOLICITORS : Kemp Strang (Plaintiff) Brydens Law Office (First, Third, Fourth, Fifth and Sixth Defendants) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST Einstein J Friday 10 September 2010 2008/00283775 Australia and New Zealand Banking Group Limited v Aldrick Family Company Pty Ltd & Ors JUDGMENT The proceedings 1 The plaintiff (ANZ) seeks to recover the moneys owing from the defendants pursuant to agreements, guarantees and/or mortgages and orders for possession of various mortgaged properties. Putting the proceedings into perspective 2 The sundry defendants are introduced below. However it seems to me appropriate to make some important introductory remarks. I proceed accordingly: i. There is no doubt but that the defendants believe that the unauthorised disclosure by the bank of the defendants' confidential information to a serious competitor who was about endeavouring to have the defendants businesses placed into liquidation, required redress at law. ii. As these reasons demonstrate there were several insurmountable obstacles to the defendants' success in the proceedings. Without being exhaustive these included: (a) The simple fact that the relevant parties which could have suffered the claimed damages were not the claimants for damages in the proceedings. Rather a claim is made by Mr and Mrs Brighton who are not proper plaintiffs. (b) Accepting that ANZ did breach its obligations of confidence between banker and customer, the breach had no factual or legal consequences because the breach of the defendants' obligations to ANZ had already occurred and the recipient of the disclosed information, Mr Robinson, had already determined on a course of conduct to wind up the insolvent entity within the "group" (SSMA) which had the benefit of any existing contractual claims which the defendants claim were lost. (c) The bank had procured a specific release in a deed pursuant to which some of the cross claimants released ANZ from the precise liabilities which are the subject of the cross claim. 3 Courts of law administer justice according to law. But it is critical to the proper functioning of the courts of law that one take account of the relevant legal rights of both groups of party. Absent this requirement the law would soon lose its very ethos which is to uphold legitimate the rights of the parties according to law. The defendants 4 There are nine defendants who may, for overview purposes, be described as the See Slip Marinas Group ("SSMG"). 5 It is convenient to commence with a useful chart generally identifying and explaining the position of this group and the sundry defendants: i. ANZ claims against AFC, Brighton Associates, Mrs Brighton, Mr Brighton, Mrs Aldrick, Mrs Bowen, Manufacturing, SSMI and SSMQ. On the first day of the hearing in this case, amended pleadings were filed pursuant to which the defences and cross-claims brought by Brighton Associates were dropped: T35.10, and SSMP withdrew from the proceedings (ie it no longer files a defence or makes a cross-claim against ANZ). ii. Following this, the parties in true contest are ANZ as the plaintiff, and AFC, Mrs Brighton, Mr Brighton, Mrs Aldrick and Mrs Bowen, who resist the plaintiff's claim and can thus be referred to as the defendants/cross-claimants. The defences 6 The defendants plead various defences, and materially similar allegations are made in cross-claims against ANZ. Without being exhaustive the defendants contend as follows: i. that the alleged defaults relied upon by the plaintiff did not occur; ii. that an alleged disclosure by an officer of the plaintiff to an unrelated third-party on or about 25 September 2006 constituted a breach of the common law duty of confidentiality/secrecy owed by the plaintiff as a banker to its customer, a breach of statutory duty not to disclose confidential information to third parties, a breach of implied contractual term to the same or similar effect contained in each of the relevant loan documents, guarantees and Mortgages, and otherwise was negligent; iii. the defaults upon which the plaintiff relies occurred by reason of the disclosure; iv. the third and fourth defendants, Mrs and Mr Brighton, suffered certain loss and damage because of the disclosure; v. unconscionability defences under the common law and under the Trade Practices Act 1974 (Cth) ("TPA"); specifically, it is variously alleged: a) That the disclosure by ANZ itself constituted unconscionable conduct under sections 51AB or 51AC of the TPA; b) That the disclosure and the plaintiff's conduct in respect of it make it unconscionable for the plaintiff to enforce the relevant agreements; c) In relation to Mrs Aldrick, that given her age and the circumstances leading to the execution of the guarantee relating to her, it would be unconscionable to permit the plaintiff to rely upon the guarantee against her; d) That ANZ's requirement of entry into a deed of release as consideration for advance of certain loan funds constituted unconscionable conduct under s 51AC of the TPA and s 12CC of the Australian Securities and Investments Commission Act 2001 (Cth) ( " ASIC Act " ). vi. that the cross-defendants made certain representations to cross-claimants that were misleading and deceptive or likely to mislead or deceive for the purposes of sections 51A and 52 of the Trade Practices Act ; vii. that the guarantees given by the fifth and sixth defendants are unjust and should be set aside under the Contracts Review Act 1980 ("CRA"). 7 The relief sought by way of cross-summons, is as follows: i. Damages for breach of contract; ii. Damages for breach of duty of care; iii. Damages pursuant to Section 82 of the TPA; iv. An order that the Cross-Defendant be permanently restrained from enforcing as against the Cross-Claimants the alleged agreement specified in the Statement of Claim, namely, the Second Agreement, the Third Agreement, the Fourth Agreement, the Fifth Agreement, the Sixth Agreement, any alleged debt of the Brighton Associates Access Accounts or the Brighton Access Account, the First Guarantee, the Second Guarantee, the Third Guarantee, the Fourth Guarantee, the Fifth Guarantee, the Sixth Guarantee, the Seventh Guarantee ("the Agreements and Guarantees"); v. An order that the Cross-Defendant be permanently restrained from exercising any alleged rights specified in the Statement of Claim in relation to the Brighton Keiraville Mortgage, the Sanctuary Point Mortgage, the Gosford Mortgage, the Aldrick Keiraville Mortgage and the Batemans Bay Mortgage ("the Mortgages"); vi. Orders pursuant to Section 87 of the Act: a) Refusing to enforce the Agreement and Guarantees and the Mortgages, or b) Declaring the Agreement and Guarantees and the Mortgages, in whole or in part, void; or c) Varying the Agreements and Guarantees and the Mortgages, as the Court thinks fit; or d) Terminating the Guarantees and the Mortgages. viii. Interest pursuant to Section 100 of the Civil Procedure Act 2005; ix. Costs. 8 The defendants' case theory exposed by way of opening is that but for the disclosure, SSMA would not have been wound up, the collapse of which caused the "group", known as SSMG, to collapse; this collapse caused Mrs and Mr Brighton to suffer damages. As counsel for the defendants in his opening submissions submitted, "causation is the major issue". ANZ'S Claims 9 Certificates were admitted without objection pursuant to which ANZ certified pursuant to the relevant provisions that the following amounts were owed by the defendants as at 1 April 2008 under their respective Mortgages or Guarantees as follows: (a) Mrs Brighton – $2,704,173.63 (b) Mr Brighton – $2,132,636.95 (c) Brighton Associates – $2,224,262.95 (d) AFC – $620,040.35 (e) Mrs Aldrick – $379,963.26 (f) Mrs Bowen – $571,536.68. [These amounts do not encompass the position as it will be following these reasons] 10 It follows that, subject to the pleaded defences and cross-claims, the plaintiff, ANZ, is entitled to judgment: i. in the amounts set out in Exhibit P1 (together with interest accruing from the date of the commencement of this proceeding) against all parties the subject of certificates except Brighton Associates; and ii. for possession of the Brighton Keiraville Property, the Sanctuary Point Property, the Gosford Property, the Aldrick Keiraville Property and the Batemans Bay Property. The significance of the confidentiality/secrecy issue 11 In broad terms and as already pointed out, the defendants seek relief from their obligation to pay ANZ because of a claim for damages (maintained on behalf of two individual parties, Mrs and Mr Brighton) and other relief pleaded by all of the defendants/cross-claimants and importantly based upon the disclosure. 12 The allegation is that an employee of ANZ, Mark Hancock, had a telephone conversation with a third party, Andrew Robinson, during which, the defendants/cross-claimants allege, Mr Hancock disclosed to Mr Robinson certain confidential information which caused or contributed to the claimed loss. 13 On the defendant's case: i. over an extended period of time Mr Robinson through his group had determined upon a strategy aimed at driving the defendant group into insolvency; ii. in the course of that endeavour Mr Robinson's group had been staved off by the defendants on a number of occasions and certainly had not been in possession of such an invaluable tool as was handed to him by Mr Hancock; iii. that tool [in the form of the relevant confidential information pertaining to the status of the defendant group's financial position] was able to be used by Mr Robinson three days following the disclosure when his company filed for an interlocutory order for the appointment of a provisional liquidator to the plaintiff group on the ground of general insolvency; iv. Mr Robinson, for all his group's attempts to bring down the defendants' group, had not until the unauthorised disclosure been in a position to put before a Court actual evidence. 14 During her period in the witness box Mrs Brighton was asked and answered the following questions by the Court: Q. Is it possible to indicate whether or not this notion that you should not have your company's information passed on by the bank, without your approval, is it possible to indicate whether that was just a continued exercise from when you first joined the bank or whether, as time went on, with all the difficulties that you were facing, it became more and more important to you? A. It became critical to us and on many occasions, I wrote to the bank weekly, discussing the procedures that we were going through to recover our debt and the ANZ were a very, very supportive part of recovering our debt and they knew Mr Robinson and they knew the Abel Point contract. They knew that all of our debt and our defaults with the ANZ was caused by the Abel Point contract. They knew the strategic plan that our lawyers had put into place to recover the debt and a week before the disclosure, I even explained that to - so yes it became more critical an in emails we said, we even wrote to the bank and explained that Mr Robinson was attempting to get all our private and confidential information but our lawyers had told us under no circumstances allow them to get hold of it. Q. Another question from me is this. Let's assume for a moment that the bank hadn't, by a particular officer, disclosed as I think your case is, that information. Let's assume it never happened? A. Yes. Q. What would have been the - are you able to assist me in indicating what you say would have been the likely way forward? In short for example, why wouldn't I simply assume that the companies would have gone down anyway, pretty quickly even without that mistake, if it was a mistake, by the bank? A. Right. The BCIPA Act was set up to recover debts on contracts. We had followed legally-- A. The wind up application was the issue. A. Once Mr Robinson got hold of the information he then immediately made application, put in an application-- Q. I want to know what if it hadn't happened, what do you say would have been the future of your company and why? A. If it hadn't have happened. Q. Yes? A. He would not have been able to stay the money in the Courts, for starters, that Thomas Uher money, we would have had that. A. we would have had that money, which meant that he would not have been able to buy the debts, purchase the debts, 'cause the debts would not have been there for him to purchase. Q. And what money is that? Was that? A. That was the money that had been awarded to us through adjudication. A. The second adjudication which was the John O'Brien decision, the 2.7 million. A. Through BCIPA, that money would have become a judgment debt five days after the decision was handed down. A. It would have been in our bank account and all the debts would have been paid. But the wind up application allowed him to put a stay on the moneys in the Queensland Court because of a wind up application. He then used the wind up application to cease the contract and hand the works to other contractors, which gave us the loss of the profits of the final amount of the contract. It allowed him to see that we were, when he found out where we were financially, to know that we were on borderline and we were, and you know, we at no stage we - I mean the ANZ knew we were working together. As soon as he found out we were on borderline he then pursued the legal avenue and, just as an example your Honour, in one week Mr Robinson had seven different sets of proceedings against me in there States in four different Courts. Q. Do you say he wouldn't have been able to do that but for this disclosure? A. Sorry, yes I do believe that he could not have done that if he did not know where we were - he wouldn't have needed to do it. Q. What's the basis of that belief of yours? A. Because in one of the proceedings he put a comment where every proceeding he had started we had found the money to have legal representation there. So he believed that I was fraudulent and I had been taken out of the Court and sifting it through the companies. Until he found out that the money that we were using was through the ANZ and we were then at the end of being able to borrow any more, he knew it was only a matter of time by pursuing legal cases, for us - for our legal costs to escalate and we just could no longer fight the fight. So every adjudication he would appeal immediately-- 15 In short the defendants' case is that the group's situation was very delicate at the time when the unauthorised disclosure was made to Mr Robinson and that the group's demise was effectively brought about by that disclosure. Overview of the plaintiffs several and in some cases overlapping answers to the defendants' cases 16 The Bank puts forward the following rebuttal to the defendants' various cases: i. First, even if ANZ did breach any obligations (whether as to confidence between banker and customer or otherwise), the breach had no factual or legal consequences, because the breach of the defendants' obligations to ANZ had already occurred and the recipient of the disclosed information, Mr Robinson, had already determined on a course of conduct to wind up the hopelessly insolvent entity within the group (SSMA) which had the benefit of any existing contractual claims which the defendants claim were lost (No Causal Connection Contention). ii. Secondly, even if some claim arose sounding in damages against ANZ (which ANZ denied), it was a claim the subject of specific release in a Deed dated 19 October 2006, pursuant to which relevant cross-claimants released ANZ from the precise liabilities which are the subject of the cross claim (Deed Contention). iii. Thirdly, even if this Deed was set aside as being void the relevant parties which could have suffered the claimed damages are not the claimants for damages but rather a claim is made by Mr and Mrs Brighton who are not proper claimants (Want of Proper Claimant Contention). iv. Fourthly, that there was no breach by ANZ as pleaded in any event (No Breach Contention). v. Fifthly, that even if all these problems were surmounted, the relevant entities within the so-called SSM group who did suffer any supposed loss were insolvent at the time of the alleged breach by ANZ and have suffered no damage as alleged (No Damages Contention). 17 As will appear from the reasons which follow the first, second, third and fifth of these rebuttal contentions are made out. General overview of the facts 18 Before it was wound up, SSMA operated a business of constructing and installing pontoons for marinas. SSMA formed part of a group of companies called "SSMG". SSMG comprised SSMA, SSMI, SSMQ and Manufacturing. 19 On 23 December 2004, SSMA entered into a contract with APM in respect of stages 2 and 3 of the Abel Point Marina (Stage 2/3 Contract). The principal of APM is Mr Robinson. He is also a solicitor and the principle of Robinson Legal, a law practice. 20 Between 19 January 2005 and 4 October 2006, ANZ provided financial accommodation to SSMA, AFC, Brighton Associates, Mrs Brighton and Mr Brighton 21 The relevant agreements, guarantees and mortgages are matters of record which are not in dispute and for present purposes may be summarised as follows: a. The following agreements were entered between ANZ and the relevant SSMG entities: i. The First Agreement with SSMA, an agreement in writing made on or about 13 June 2006; ii. The Second Agreement with AFC, an agreement in writing made on or about 28 April 2005 as varied by agreements in writing made on or about 19 December 2005 and 14 June 2006; iii. The Third Agreement with AFC, an agreement in writing made on or about 20 March 2006, as varied by agreement in writing made on or about and 14 June 2006; iv. The Fourth agreement with Brighton Associates, an agreement in writing made on or about 31 January 2005 as varied by agreement in writing made on or about and 13 June 2006; v. The fifth agreement with Brighton Associates, an agreement in writing made on or about 4 September 2006; vi. The Sixth Agreement with Mrs and Mr Brighton, an agreement in writing made on or about 31 January 2005; b. The following guarantees, with the Liability Limits specified, were executed: i. First Guarantee dated 18 February 2005, by which Mrs Brighton and Mr Brighton jointly and severally guaranteed the performance of the obligations of Brighton Associates to the plaintiff [Liability Limit of the Guarantor as $965,000.00]; ii. Second Guarantee dated 18 February 2005 by which Brighton Associates, SSMA, Manufacturing, SSMI and SSMQ jointly and severally guaranteed the performance of the obligations of Brighton Associates, SSMA, Manufacturing, SSMI and SSMQ to the plaintiff [the Liability Limit of the Guarantor as unlimited]; iii. Third Guarantee dated 19 December 2005, by which Mrs Brighton guaranteed the performance of the obligations of AFC to the plaintiff [the Liability Limit of the Guarantor as $570,000.00]; iv. Fourth Guarantee dated 19 December 2005 by which Mrs Aldrick guaranteed the performance of the obligations of AFC to the plaintiff [the Liability Limit of the Guarantor as $379,000.00]; v. Fifth Guarantee, dated 19 December 2005 by which Mrs Bowen guaranteed the performance of the obligations of AFC to the plaintiff [the Liability Limit of the Guarantor as $570,000.00]. vi. Sixth Guarantee dated 13 June 2006 by which Mrs Brighton and Mr Brighton jointly and severally guaranteed the performance of the obligations of SSMA to the plaintiff [the Liability Limit of the Guarantor as $400,000.00]; vii. Seventh Guarantee dated 19 January 2005 by which Mrs Brighton and Mr Brighton jointly and severally guaranteed the performance of the obligations of Brighton Associates to the plaintiff [the Liability Limit of the Guarantor as $270,000.00]; c. The following mortgages were executed: Short Name Mortgagor Date Registered No. Address Folio Identifier Court Book Reference Brighton Keiraville Mrs and Mr Brighton 18 February 2005 AB398744 xxx 6/2/192837 ECB650 Sanctuary Point Mrs and Mr Brighton 18 February 2005 AB398730 xxx 1081/28530 ECB678 Nowra Brighton Associates 18 February 2005 AB347893 xxx 98/1077878 ECB715 Gosford AFC 26 April 2005 AB59795 xxx 2/SP51256 ECB872 Aldrick Keiraville Mrs Aldrick 26 April 2005 AB498123 xxx 1/SP74241 ECB900 Batemans Bay Brighton Associates 25 January 2006 AC96636 xxx 92/27236 ECB1892 22 From about March 2005, SSMA and APM were involved in a series of disputes in relation to the Stage 2/3 Contract which ultimately led to the winding up of SSMA by a company associated with Mr Robinson, TS Recoveries. The history of these disputes is usefully summarised in the judgment of Barrett J in TS Recoveries Pty Ltd v Sea-Slip Marinas (Aust) Pty Ltd [2007] NSWSC 1410 at [4] to [89]. 23 On 18 June 2006, Mrs Brighton and Mr Brighton defaulted under the Sixth Agreement. 24 On 30 July 2006, SSMA defaulted under the First Agreement, AFC defaulted under the Second Agreement and the Third Agreement and Brighton Associates defaulted under the Fourth Agreement. 25 On or about 1 September 2006, ANZ's file relating to the loans was transferred to Mark Hancock of ANZ's lending services division to consider an "exit strategy". That is, about this time, ANZ had decided not to make any further loans to companies within SSMG and wanted all existing facilities repaid. 26 On 11 September 2006, Waterway Constructions assigned a debt owing by SSMA to it (in the amount of $198,414.70) to TS Recoveries. 27 On 12 September 2006, TS Recoveries served a creditor's statutory demand on SSMA in respect of this debt. 28 On 25 September 2006, Mr Robinson rang Mr Hancock and had a conversation during which Mr Hancock mentioned to Mr Robinson that SSMA was an "exit account" and that ANZ was at that moment considering "the best way to enforce our security". 29 On 28 September 2006 (before the expiry of the creditor's statutory demand), TS Recoveries filed an Originating Process in the Supreme Court of New South Wales seeking orders that SSMA be wound up on the grounds of insolvency (proceedings no 5092 of 2006) (First Winding Up Proceeding). On 3 October 2006, SSMA filed an Originating Process seeking to set aside the statutory demand. 30 On 4 October 2006, Brighton Associates defaulted under the Fifth Agreement. 31 On 5 October 2006, Mr Robinson swore an affidavit in the First Winding Up Proceeding, in which he deposed to the comments allegedly made by Mr Hancock during the conversation known as the disclosure and annexed a file note said to have been made by Mr Robinson immediately following that conversation. 32 In a letter from SSMA to ANZ dated 13 October 2006, SSMA made a number of allegations regarding the Disclosure and requested a response from ANZ. 33 ANZ does not dispute that, in substance, Mr Hancock conveyed to Mr Robinson that ANZ had concerns about SSMG's then present financial condition and that ANZ was contemplating enforcing its security – as was the truth. 34 On 17 October 2006, a directions hearing in the First Winding Up Proceeding was scheduled. The matter was stood over to 2pm on 18 October 2006. 35 On the same date, Mrs Brighton sought to instruct an experienced solicitor, Mr Peter Harkin of Collin Biggers and Paisley, solicitors, to assist SSMA in the First Winding Up Proceeding. 36 Collin Biggers and Paisley required SSMA to deposit $50,000 in to their trust account on account of legal costs before they would act for SSMA in the First Winding Up Proceeding. 37 Mrs Brighton requested ANZ to advance a further $50,000 to SSMA to fund the legal costs. 38 Critically, on 18 October 2006, ANZ's solicitors, Kemp Strang, prepared a deed in relation to the requested further advance and certain other matters. This draft deed was provided to Mrs Brighton and Mr Harkin, and amendments to the draft Deed were negotiated and agreed. 39 On 19 October 2006, SSMA, Brighton Associates, SSMQ, Manufacturing, SSMI, Mrs Brighton and Mr Brighton executed the deed and provided it to ANZ, who then provided the requested funding to SSMA. The hearing of the First Winding Up Proceeding was adjourned to 30 October 2006. 40 Pursuant to the deed: i. ANZ allowed SSMA to draw a further $50,000 under the First Agreement to fund its defence of the First Winding Up Proceeding; ii. the Non-ANZ parties: a) released ANZ from the Alleged Disclosure (clause 5); b) acknowledged that the securities which related to them were valid, binding and enforceable by ANZ (clause 2.1(c)); and c) acknowledged that they entered into the Deed after having the opportunity to obtain legal and financial advice regarding the terms and conditions of the Deed (clause 2.2); and iii. the parties to the Deed agreed that the Deed may be pleaded as a bar to any proceedings between the parties in relation to the subject matter of the Deed other than in respect of a breach of any provision of the Deed (clause 4.12). 41 On 1 November 2006, the First Winding Up Proceeding was dismissed by consent, subject to a number of undertakings by SSMA including an undertaking that it would no longer trade. 42 On 9 November 2006, Engwirda assigned a debt owing by SSMA to it (in the amount of $233,277.25) to TS Recoveries. 43 On 13 November 2006, TS Recoveries served a creditor's statutory demand on SSMA in respect of this debt. 44 On 15 November 2006 (before the expiry of the creditor's statutory demand), TS Recoveries filed an Originating Process seeking that SSMA be wound up (proceedings no 5834 of 2006) (Second Winding Up Proceeding). 45 SSMA admitted insolvency but alleged the Second Winding Up Proceeding was an abuse of process. This contention was rejected and on 7 December 2007, Barrett J made orders in the Second Winding Up Proceeding that a liquidator be appointed to SSMA. Ruling as to expert evidence 46 During the hearing the plaintiff contended that the proposed expert material sought to be adduced before the Court by the defendants was not relevant to a fact in issue. 47 The plaintiff's alternative submission was that the report by Mr Lonergan which has as its focus economic loss suffered by a group of companies, should be the subject of discretionary exclusion pursuant to section 135 as being misleading or confusing or by reason of the fact that its admission would cause or result in an undue waste of time. 48 The approach taken by the Court was to permit the evidence but only on the voire dire. The parties were to be permitted in final address to put forward submissions as to whether or not, and if so in what regard, the material would be permitted into evidence or rejected. 49 It is fair to say that the plaintiffs' approach put the following propositions: i. The scope of the evidence proposed to be given by Mr Lonergan of Lonergan Edwards & Associates Limited is as an expert opinion as to: a) the value of SSMG as at, or around 25 September 2006, being the time of the alleged ANZ disclosure; and b) economic loss sustained by " SSMG, Lyn and Wayne Brighton " subsequent to the disclosure. ii. One only needs to have regard to the scope of the opinion sought to determine that the report is directed to a question other than a fact in issue in this proceeding. iii. The report is set out under various headings giving details of SSMG and then dealing with what is described as three elements: a) a valuation of SSMG (Part IV); b) loss of revenue of SSMG (Part V); and c) 'out of pocket' expenses (Part VI). iv. These amounts are then aggregated in Part VII of the report identifying what is described as "e conomic loss sustained by SSMG, Lyn and Wayne Brighton ". The plaintiff then made the point [earlier referred to in these reasons] that the claim for damages advanced by Mrs and Mr Brighton particularised under paragraph 29 of the commercial list cross claim statement paid no regard to the Prudential principle. Decision 50 I accept that when one has regard to paragraph 15 of the trust report and the three elements identified as making up the claimed economic loss, the loss identified is said to be loss "sustained by SSMG". 51 As earlier pointed out in the reasons there are two fundamental problems with such an approach: i. The first is that loss incurred by SSMG is not claimed in the proceeding (and to the extent that Mr and Mrs Brighton make such a claim it is not available at law); ii. Secondly there has been no effort to discriminate between the various components of SSMG to identify which corporations have actually sustained loss. 52 Moreover, the report is entirely premised on the assumption identified in paragraph 3 of the initial report that "the ANZ disclosure of 25 September 2006 was directly responsible for all losses sustained by SSMG and Lyn and Wayne Brighton". This assumption simply cannot be sustained on the evidence. 53 By reason of these matters, the proposed expert material is not relevant to a fact in issue within the meanings of section 55 and 56 of the Evidence Act 1995 (as going to a calculation of damages which are not recoverable by the only two cross claimants seeking damages, Mr and Mrs Brighton). 54 And even if this was wrong the principled approach to be taken by the Court which has its focus economic loss suffered by a group of companies, would have been to refuse to admit the evidence on the basis that its probative value is substantially outweighed by the danger that the evidence might be the unfairly prejudicial to the plaintiff and/or be misleading or confusing and/or would result in an undue waste of time. 55 Furthermore, there is substance in the plaintiff's additional submissions concerning the voire dire which made the following valid points: i. It is true that the primary areas of disagreement between the experts are summarised on page 5 of the expert joint report and that those disputes relate essentially to profit margins and discount rates; ii. The difficulty for the defendants is that the evidence of Mr Lonergan as to profit margins and discount rates was the subject of challenge in cross examination while the evidence of Ms Wheatley was not the subject of any challenge; iii. A deliberate forensic decision was made by counsel for the defendants not to test or challenge any aspect of whatever of the report of Ms Wheatley; iv. It is not sufficient to deal with experts by merely leaving it to the Court to determine which of two opinions ought to be preferred but to the extent that any opinion is the subject of dispute, the opinion evidence as a matter of procedural fairness ought to be tested; v. The only matter of expert consensus to which the Court needs to have regard is the fact that neither Mr Lonergan nor Ms Wheatley never gave any attention to who was the proper claimants for any loss. 56 For those reasons the material produced on the voire dire is disallowed. Turning to the plaintiff's purported complete answers to the defendants' case 57 As outlined above, the plaintiff put forward several contentions that it said were a complete answer to the defendants' case. Dealing with the no causal connexion contention 58 The defendants plead that the defaults upon which ANZ relies were brought about by reason of the disclosure and its effects. 59 The disclosure occurred on 25 September 2006. 60 This defence fails on the facts in relation to: i. the First Agreement, the Second Agreement, the Third Agreement and the Fourth Agreement because the defaults under these Agreements occurred on 30 July 2006; and ii. the Sixth Agreement because the default under this Agreement occurred on 18 June 2006 (and continued for each month thereafter). 61 In relation to the default under the Fifth Agreement, which occurred on 4 October 2006, the apparent argument is that the disclosure was a breach of various contractual and other norms examined in more detail below. It is these breaches that are said to have given rise to a claim which is maintained by Mrs Brighton and Mr Brighton. 62 However, the defendants must show that ANZ's breaches did in fact cause the damages claimed by the Brightons. 63 The causation issue is applicable to the defendants/cross-claimants other than Mrs and Mr Brighton - who claim relief other than damages – because their claims rely to varying degrees on the contention that the disclosure caused the consequences from which they now claim relief. 64 It is basic legal principle that the plaintiff must prove that its loss or damage was caused by the defendant's breach, whether the plaintiff grounds its case in contract, tort or statute. Causation is a question of fact, not law: Bennett v Minister for Community Welfare (1992) 176 CLR 408 at 412-13. Leaving aside, for present purposes, differences between the statutory and other causes of action, the relevant question is whether ANZ's breach was so connected with the Brightons' loss that, "as a matter of ordinary common sense or experience it should be regarded as a cause of it". [See Tsolakkis Nominees Pty Ltd v National Australia Bank Ltd (Unreported, Court of Appeal of the Supreme Court of Victoria (1998) BC 9802334) at 8: "a practical or commonsense" concept. See, generally, Carter, Peden and Tolhurst, Contract Law in Australia (LexisNexis Butterworths, 5th ed, 2007) at [35-20]. See also Balkin and Davis, Law of Torts (LexisNexis Butterworths, 4th ed, 2009) at [9.2]-[9.6]]. 65 In the present case, the claim is that the disclosure "armed" Mr Robinson (via TS Recoveries) with sensitive confidential information, and that as a consequence Mr Robinson changed his "modus operandi" or "tack" and engaged in a strategy to starve SSMA of cash flow and to make it incur substantial legal costs, thereby ensuring its ultimate financial collapse which prevented SSMA from pursuing and receiving the benefit of certain contractual claims which SSMA allegedly had under the Stage 2/3 Contract. 66 However, the evidence demonstrates that Mr Robinson/TS Recoveries had long been in dispute with SSMA and already formed an intention and indeed taken active steps to put financial pressure to cause the winding up of SSMA before the date of disclosure (25 September 2006). 67 The evidence given and admissions made by Mrs Brighton and Mr Brighton make plain that Mr Robinson/TS Recoveries (for the benefit of APM) did indeed embark on a strategy at least from June 2006 to bring about the financial collapse of SSMA. Not only is this consistent with the objective evidence of Mr Robinson procuring the assignment of debts from trade creditors of SSMA, but is also the subject of the following key admissions by Mrs Brighton: i. the "kernel" of the problem faced by SSMG was the bloody-mindedness of Mr Robinson [T43.41] and this bloody-mindedness brought about the demise of the group and succeeded in Mr Robinson not having to pay a large amount of money to SSMA [T43.50]. ii. Mr Robinson used his expertise to pursue every legal avenue available to him to withhold and delay contract payments in an attempt to compromise the financial capacity of SSMA [T44.5]. iii. Mr Robinson, from no later than June 2006, had been seeking to obtain debts that could be assigned to a company that he controlled (TS Recoveries) in order to place financial pressure on SSMA [T45.0, T62.3]; and iv. from May 2006, Mr Robinson had started speaking to SSMA's creditors [T45.8] seeking to entreat them to commence proceedings against SSMA and place financial pressure on SSMA [T45.14] and that, after that, Mr Robinson went a step further and changed tack in June 2006 and sought the assignment of debts that were said to be owing to third party creditors so he could seek to recover the debts himself [T45.22, T45.29] - and it is important to emphasise here that this change in tack occurred before the date of the Alleged Disclosure; v. from the middle of 2006, when it first became obvious that SSMA wished to agitate its contract claims against APM, Mr Robinson one way or the other had done everything he could to have SSMA wound up [T45.36, T46.9]; vi. Mrs Brighton conceded that the relationship between Mrs Brighton and Mr Robinson could be described as "poisonous" [T46.13]; vii. Mrs Brighton conceded that Mr Robinson was trying to drive SSMA into insolvency [T107.2]. 68 Additionally, as the plaintiff submitted Mrs Brighton's concession that during the period 2005 to 2006, SSMG had a chronic shortage of working capital [T80.10] is relevant in relation to causation because that fact meant that SSMG could not resist Mr Robinson indefinitely. 69 Consistently, the evidence of Mr Brighton is that: i. Mr Brighton sent an email dated 1 September 2006 to ANZ in which he stated that APM's managing director had demonstrated devious and spurious attempts to disable SSMA [T181.25]. ii. Mr Robinson had engaged in this behaviour for some time prior to September 2006 [T181.36]. iii. Mr Robinson was certainly starving the company from cash flow [T181.50]. iv. Mr Robinson was trying to orchestrate the disablement of SSMA [T182.2]. v. Mr Robinson from June 2006 was engaged in a course of conduct to seek to wind up SSMA [T182.29]. vi. Mr Robinson was out to get SSMA any way he could [T183.7]. 70 In relation to causation the contemporaneous accounts of the disclosure, by Mr Hancock of ANZ and Mr Robinson are relevant because they shed light on what Mr Robinson learned from the conversation. In a diary note– at page 52 of Exhibit p 2 - Mr Hancock recorded in relation to the conversation that he did not know how Mr Robinson obtained his contact details, and Mr Robinson appeared to know that the account group had been transferred to Portfolio Management and what that department did. Furthermore, Mr Hancock records that Mr Robinson talked about appointing a Provisional Liquidator. 71 Similarly in a file note – appearing at p 20 of Exhibit P2 – Mr Robinson recorded in relation to the conversation that 'I have certain instructions but do not want to incur legal costs if ANZ were to set in over the top". As the plaintiff contended, these records, along with the other contemporaneous evidence, point heavily against the contention that Mr Robinson did not know of the dire financial position of SSMG until the disclosure occurred. Rather, it appears that Mr Robinson had the distinct purpose in contacting Mr Hancock of ascertaining whether ANZ was going to appoint a receiver or the like to SSMG, in order to evaluate his commercial and legal options. 72 In summary, the evidence plainly establishes that Mr Robinson/APM had already embarked on their strategy of causing SSMA to be wound up well prior to the disclosure, and the disclosure had no causal connexion with the ultimate financial collapse and winding up of SSMA. A review of the evidence of the Brightons demonstrates that they conceded this to be the case. It follows, axiomatically, that any breaches by ANZ did not cause the loss or damages claimed. The defendants' claims against ANZ fail at the threshold causation hurdle. The want of proper claimant contention 73 The plaintiff contended that Mrs and Mr Brighton were not the proper claimants – and therefore not entitled – to the damages they claimed. 74 In order to treat with this area it is necessary to be conversant with how the claim for damages advanced by Mrs and Mr Brighton was particularised. The particulars provided in paragraph 29 of the Commercial List Cross Claim Statement were in summary form: a. loss of outstanding salary and wages by Mrs and Mr Brighton including superannuation; b. outstanding salaries and wages (including superannuation) for which Mrs Brighton is liable; c. creditors of SSMG which remain unpaid and to whom Mrs Brighton is liable; d. outstanding fees due to consultants and sub contractors of SSMG which remain unpaid and to whom Mrs Brighton is liable; e. outstanding legal fees for which Mrs Brighton is liable; f. legal fees paid in defence of the winding up of SSMG; g. lost investments of SSMG (a head which includes as (viii) "loss of reputation and credibility in the industry of [Mrs Brighton]"; h. loss of certain contracts, profits of which would "flow through to [Mrs Brighton]"; and i. loss of international opportunities in Dubai, Pennsylvania, Malaysia, Philadelphia and other places (not particularised). 75 To establish its contention in this areas the plaintiff relied on the principle derived from Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204, which denies to members of a company (a fortiori persons with more remote interests) the right to recover for themselves damages for wrongs done to the company, or damages reflective of damages suffered by the company. 76 The current state of the law with respect to the Prudential principle in Australia is as articulated by the Court of Appeal of Queensland in Thomas v D'Arcy [2005] 1 Qd R 666. In that case the Queensland Court of Appeal confirmed that a shareholder in a corporation is not entitled to claim or recover damages comprising a diminution in the value of the shareholding reflecting loss of or injury to the assets of the corporation, as to which the corporation is the only proper plaintiff. In doing so it approved Lord Bingham's three propositions as set out in his speech in Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1 at 35–36 which can be summarised as follows: i. Where a corporation suffers loss caused by a breach of duty owed to it, only the corporation may sue in respect of that loss. No action lies at the suit of a shareholder suing in that capacity and no other to make good a diminution in the value of the shareholder's shareholding where that merely reflects the loss suffered by the corporation. A claim will not lie by a shareholder to make good a loss which would be made good if the corporation's assets were replenished through action against the party responsible for the loss, even if the corporation, acting through its constitutional organs, has declined or failed to make good that loss. ii. Where a corporation suffers loss but has no cause of action to sue to recover that loss, the shareholder in the corporation may sue in respect of it (if the shareholder has a cause of action to do so), even though the loss is a diminution in the value of the shareholding. iii. Where a corporation suffers loss caused by a breach of duty to it, and a shareholder suffers a loss separate and distinct from that suffered by the corporation caused by breach of a duty independently owed to the shareholder, each may sue to recover the loss caused to it by breach of the duty owed to it but neither may recover loss caused to the other by breach of the duty owed to that other. 77 A useful summary of the relevant principles is provided by McDougall J in David Ballard v Multiplex Limited (2008) 68 ACSR 208 at [32]-[41]. 78 The defendants' response to the want of proper claimant contention was that they were claiming under sections 82 and 87 of the Trade Practices Act, which refer to a person who has suffered damage [s 87 also refers to a person who is likely to suffer damage but I do not think that changes the analysis]. It was said that this could be any person and thus the proper claimant contention was not of substance. 79 In this area, I accept the plaintiff's submission that there is nothing in s 82 that overrides the Prudential principle. As the plaintiff contended, the Prudential principle assists in identifying which entity has suffered loss and damage [and therefore must be considered when applying sections 82 and 87]. The plaintiff correctly drew implicit support from Harris v Milfull (2002) 43 ACSR 542, a decision of the Full Federal Court of Australia, which involved consideration of the Prudential principle in the context of deciding a claim under the Trade Practices Act [thus showing that the Prudential principle is not displaced in this context]. Examining the precise particulars of loss 80 It is appropriate to travel through each of the heads of loss particularised in paragraph 29. 81 In relation to the claim for wages by Mrs and Mr Brighton including superannuation referred to in paragraphs 29(a) and (b), the defendants conceded that there were difficulties with these claims in light of the relevant principle. Furthermore, as the plaintiff contended, these claims for wages are claims held against the relevant employer. If there is some causal relationship between the actions of ANZ and the inability of the relevant corporation to pay creditors (including the wages) that is not a loss separate and distinct from that suffered by the corporation. In any event, in evidence Mrs Brighton could not tell the Court which entity within SSMG allegedly owed these amounts to Mrs Brighton and Mr Brighton [T120.28]. Furthermore, Mrs Brighton said that, so far as the administrative work was concerned, her time was charged to Brighton Associates, which did not form part of SSMG [this appeared to constitute a concession because the defendants entire case was based on loss and damage caused to SSMG]. 82 In relation to the claims for creditors' and outstanding consultants' fees and legal fees referred to in paragraphs 29(c), (d), (e) and (f), it may be as a matter of theory that the Prudential principle, as explained in the cases, would not prevent recovery of the payments actually made by Mrs Brighton pursuant to binding obligations to creditors. If this was the case, the relevant SSMG corporation would not have suffered loss because although legally obliged to pay creditors it would not have done so [relevantly however there is no evidence of what creditors have been paid by any SSMG corporations in liquidation or otherwise]. The question of whether this type of claim falls within the exception recognised by Lord Millett in Johnson at 67 or that recognised by McPherson JA in Thomas at [16] need not be examined, as there is no evidence of any payment to creditors by Mrs Brighton. Indeed, Mrs Brighton admitted that she had not paid the relevant creditors [T120.36-47]. Thus I cannot accept the defendants' contention that such promised payments which have not actually been made can be characterised as a legitimate loss suffered by Mrs Brighton. 83 In relation to the lost investments referred to in paragraph 29(g), the defendants' counsel abandoned the claims made in sub-points (ii), (iii), (iv), and (v). It was further conceded that there were probably difficulties with the remainder of subparagraph (g). In any case, Mrs Brighton conceded that all the assets (except for the Dubai office) mentioned were in fact owned by Brighton Associates as trustee for the Brighton Family Trust. That is, the assets were not owned (legally or beneficially) by any member of SSMG. Furthermore, all these assets had been sold and applied in reduction of debts owed by SSMG. The alleged office in Dubai was in fact that of a company, Super Yacht Marinas International, which did not form part of SSMG. Accordingly, none of the matters referred to in 29(g) were truly losses of SSMG [again this point appeared to be significant because the defendants' case was premised on loss and damage to SSMG]. 84 In relation to paragraph 29(g)(vii), being the claim for loss of reputation and credibility in the industry of Mrs Brighton, the plaintiff pointed out that a claim for loss of reputation or credibility can usually only be vindicated only through an action for defamation, relying on Lonrho PLC v Fayed (No. 5) [1993] 1 WLR 1489 and McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409. However, the plaintiff conceded that as indicated by Evans LJ at 1509 in Lonrho there is "the need to distinguish between loss of reputation in the defamation sense and loss of reputation which is synonymous with a loss of customer goodwill resulting in a loss of business which can therefore be measured in money terms". ANZ did not dispute the latter could be subject of an award for damages but submitted, correctly in my view, that the claim is that of the relevant SSMG corporation through which the business was transacted, rather than Mrs and Mr Brighton. Critically however, even if Mrs Brighton could claim for loss of reputation or credibility, the position would still be that such loss was not caused by the bank, and that such a claim would be barred by the deed. 85 In relation to the claimed loss of contracts and profits mentioned in subparagraph 29(h), such contracts and profits belonged to the relevant SSMG company [T125.10-24]. Thus they cannot properly be characterised as losses suffered by Mrs and Mr Brighton. Furthermore, Mrs Brighton conceded that the alleged Queensland Muddy Bay contract was no contract at all. Additionally, Mrs Brighton admitted that the intellectual property in relation to SSMG and its method of doing business as a whole was vested in Brighton Associates, which does not form part of SSMG. 86 More generally, the defendants/cross-claimants have failed to prove that the disclosure caused any company within SSMG to lose any economic opportunity. To take but one example, Mrs Brighton in her 2 October 2009 Affidavit at [315(b)] points to a project which she refers to as the "Port of Airlie 250 berth (involved from early stages) approximately $3.5 million", under the heading "Queensland contracts lost because of the liquidation of the Group". But the Court has before it the evidence of Mr Warwick Bible in his statement of 18 June 2010 – which was read without any challenge – to the effect that it was highly unlikely that a company within SSMG, whether in 2006 or later, would have been awarded a contract in relation to that project. 87 As has been made clear, the claims by Mrs and Mr Brighton, which seek as they do recovery of damages occasioned to SSMG, are inconsistent with the above outlined principles. Even if one were to assume the existence of an independent duty owed to Mrs and Mr Brighton, they have not shown that they suffered a loss separate and distinct from that suffered by the relevant corporations. The relevant losses (if any) were suffered by the relevant SSMG entity; the loss to shareholders was merely "reflective" of losses sustained by the corporation. Put another way, if the corporations had agitated a cause of action successfully, the relevant loss could have been made good by replenishment of the corporation's assets through action against ANZ. 88 For the reasons given above, I conclude that all of the claims for damages advanced by Mr and Mrs Brighton [as particularised in paragraph 29 of the Commercial List Cross Claim Statement] are simply not available to them. However, this does not dispose with the entire case since the defendants seek relief other than such damages. Accordingly, it is necessary to proceed to the next major issue of contention. The plaintiff's so-called deed contention 89 At the beginning of the hearing the plaintiff abandoned a mooted notion to have the deed question be heard first, before the rest of the proceedings. However, that issue remains central to the entire case. 90 ANZ submitted that the deed was a complete answer to all of the cross-claims brought by the parties bound by the deed [who were relevantly Mr and Mrs Brighton], even if pleaded in the form of a defence. 91 The defendants admitted that Mrs Brighton and Mr Brighton executed the deed. However, they claimed that, in the circumstances, ANZ's actions in requiring the deed to be signed were "unconscionable, harsh and oppressive". 92 The issues [and implicit allegations] pleaded by the defendants in relation to the deed are: i. Whether the defendants can claim relief under the provisions of the CRA, wherein the Court may refuse to enforce all or any of the provisions of the deed or declare it void wholly or in part. ii. Whether, given the disclosure made by ANZ it would be unconscionable for it to have the benefit of the purported releases contained in the deed. iii. Whether in relation to the alleged unconscionable conduct of ANZ section 51AC of the TPA and section 12CC of the ASIC . 93 Two issues arise. First, is the deed enforceable by ANZ? Secondly, if it is, does the Deed constitute a complete answer to the cross-claims made by Mrs Brighton and Mr Brighton? 94 It is appropriate to deal with the second issue first, because it is necessary to be familiar with the provisions of the deed in order to decide the enforceability question. The second question: if the Deed is valid, does it constitute a complete answer to the claims of Mrs Brighton and Mr Brighton and Brighton Associates? 95 It is appropriate to set out the relevant provisions of the deed, with emphasis added to those of particular importance: OPERATIVE PROVISIONS 1. Definitions and Interpretations … "Allegations" means any allegation by any of the Non-ANZ Parties that ANZ or its servants, agents or employees has in any way acted improperly or in breach of any law or statute (including the Privacy Act) including but not limited to the allegations made in the letter dated 13 October 2006 sent by SSMA to ANZ; "Claim" means any action, suit, cause of action, arbitration, debt, due, cost, claim, demand, verdict or judgment either at Law or in Equity, or arising under any statute; … 2. Acknowledgement and Warranties 2.1 The non-ANZ Parties acknowledge, warrant and covenant that: (a) they have each provided Securities to ANZ to secure the repayment of the Debt; (b) the Securities secure the repayment to ANZ of the Debt; (c) the Securities which relate to them are valid, binding on them and enforceable by ANZ; (d) defaults have been committed under the Securities; (e) ANZ is entitled to enforce its rights under the Securities; (f) they hereby request ANZ to provide the Litigation Advance to SSMA; (g) … (h) ANZ was entitled to make the Disclosure. 2.2 The non-ANZ Parties acknowledge that they entered into this deed: (a) fully and freely after considering the terms and conditions contained in it; (b) of their own free will and volition; and (c) after having the opportunity to obtain legal and financial advice regarding the terms and conditions of the deed. 3. Release The non-ANZ Parties release ANZ and its servants, agents and employees from any Claim which they have now, may have had in the past or may have at any time in the future but for the execution of this deed; in respect of or arising directly or indirectly out of: (a) any Allegations; (b) any Communication; (c) the Conversation; (d) the Disclosure; (e) the Privacy Act; (f) the Robinson Affidavit; and (g) the Winding Up Proceedings. 4. General 4.12 This deed may be pleaded as a bar to any proceedings between the parties in relation to the subject matter of this deed other than in respect of a breach of any provision of this deed. 96 The question arises as to whether the release contained in clause 3 of the deed applies to matters pleaded by way of defence rather than cross-claim. The definition of "claim" in clause 1.1 of the deed – to which the release applies – includes inter alia "any action, suit, cause of action, claim or demand, either at law or in equity, or arising under any statute". That is sufficiently broad to catch all of the relief sought by the defendants - namely a claim for damages and other orders in relation to the parties' rights – which requires an application by the defendants even if pleaded by way of defence. 97 Thus the deed – subject to the enforceability question – provides a complete answer to the defendants' contentions by way of defence and cross-claim. Is the Deed enforceable by ANZ? Relevant principles for deciding whether, as the defendants contend, the actions of ANZ in requiring the deed to be signed were unconscionable, harsh or oppressive S 12CC of the ASIC Act 98 S12CC of the ASIC Act relevantly provides: 12CC Unconscionable conduct in business transactions (1) A person must not, in trade or commerce, in connection with: (a) the supply or possible supply of financial services (see subsection (6)) to another person (other than a listed public company); or (b) the acquisition or possible acquisition of financial services (see subsection (7)) from another person (other than a listed public company); engage in conduct that is, in all the circumstances, unconscionable. (2) Without in any way limiting the matters to which the Court may have regard for the purpose of determining whether a person (the supplier) has contravened subsection (1) in connection with the supply or possible supply of financial services to another person (the service recipient), the Court may have regard to: (a) the relative strengths of the bargaining positions of the supplier and the service recipient; and (b) whether, as a result of conduct engaged in by the supplier, the service recipient was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and (c) whether the service recipient was able to understand any documents relating to the supply or possible supply of the financial services; and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the service recipient or a person acting on behalf of the service recipient by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the financial services; and (e) the amount for which, and the circumstances under which, the service recipient could have acquired identical or equivalent financial services from a person other than the supplier; and (f) the extent to which the supplier's conduct towards the service recipient was consistent with the supplier's conduct in similar transactions between the supplier and other like service recipients; and (g) if the person is a corporation—the requirements of any applicable industry code (see subsection (11)); and (h) the requirements of any other industry code (see subsection (11)), if the service recipient acted on the reasonable belief that the supplier would comply with that code; and (i) the extent to which the supplier unreasonably failed to disclose to the service recipient: (i) any intended conduct of the supplier that might affect the interests of the service recipient; and (ii) any risks to the service recipient arising from the supplier's intended conduct (being risks that the supplier should have foreseen would not be apparent to the service recipient); and (j) the extent to which the supplier was willing to negotiate the terms and conditions of any contract for supply of the financial services with the service recipient; and (ja) whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the service recipient for the supply of the financial services; and (k) the extent to which the supplier and the service recipient acted in good faith. … (4) A person is not taken for the purposes of this section to engage in unconscionable conduct in connection with: (a) the supply or possible supply of financial services to another person; or (b) the acquisition or possible acquisition of financial services from another person; merely because the person institutes legal proceedings in relation to that supply, possible supply, acquisition or possible acquisition or refers a dispute or claim in relation to that supply, possible supply, acquisition or possible acquisition to arbitration. (5) For the purpose of determining whether a person has contravened subsection (1) in connection with the supply, possible supply, acquisition, or possible acquisition of financial products or financial services: (a) the Court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and (b) the Court may have regard to circumstances existing before the commencement of this section but not to conduct engaged in before that commencement. (6) Subject to subsection (8), a reference in this section to the supply or possible supply of financial services is a reference to the supply or possible supply of financial services to a person whose acquisition or possible acquisition of the financial services is or would be for the purpose of trade or commerce. …. (11) In this section: … listed public company has the same meaning as it has in the Income Tax Assessment Act 1997. Does s 12CC apply? 99 I note at the outset that s 12CC will prima facie apply because ANZ in advancing the $50, 000, was supplying "financial services": [See the combined effect of ss 12BAA(1) and (7)(k) (definition of a financial product includes a credit facility), ss 12BAB(1) and (7)(a) (financial services includes a dealing in a financial product, which includes applying for or acquiring a financial product) and regulation 2B of the Australian Securities and Investments Commission Regulations 2001 (which expands the meaning of a credit facility for the purposes of s 12BAA(7)(k) to include a provision of credit, which includes any form of financial accommodation)]. 100 I further note that s 51AC of the TPA may also apply, but this will not change the analysis since the two sections are substantively identical. As to this point, see generally Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132 at [30] wherein it was noted that s 12CC was intended to operate as a "mirror" provision to s 51AC. I will thus refer to s 12CC but this can be taken as also referring to s 51AC. 101 It is uncontroversial that in executing the transaction that resulted in the deed, ANZ was a corporation, acting in trade or commerce. It is also uncontroversial that the relevant services were provided to a person other than a listed public company [since all of the SSMG entities were proprietary companies]. 102 In applying s 12CC, the question arises whether ANZ was acting "in connection with the supply of financial services". Subsection (6) requires that the reference to the supply of financial services be read as a reference to the supply of financial services to a person whose acquisition of the financial services "is … for the purpose of trade or commerce". Thus for ss 12CC to apply, the relevant persons [namely, SSMA, to whom the funds were advanced] must have acquired the services "for the purposes of trade of commence". 103 In Kowalczuk v Accom Finance Pty Ltd (2009) 252 ALR 55 Campbell JA Hodgson and McColl JJA agreeing, at [188] held that in relation to s 51AC "a transaction is entered "for the purpose of trade or commerce" when it is entered to enable some further activity, that has itself a trading or commercial character, to be engaged in". Campbell JA at [186]-[187] cited a passage from Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 603 wherein Mason CJ, Deane J and Dawson J and Gaudron J adopted a narrow interpretation of the phrase "in trade or commerce" in the context of s 52 of the TPA. Their Honours restricted the phrase to "'the central conception' of trade and commerce … [rather than] the 'immense field of activities' in which corporations may engage in the course of, or for the purposes of carrying on some overall trading or commercial business". 104 In Kowalczuk the Court of Appeal held at [187] that the relevant loan – obtained for the purposes of investing where the borrowers were not in the business of investing – was not obtained "for the purposes of trade or commerce". Similarly, in ASIC v National Exchange at [47], the Full Court of the Federal Court held that the acquisition of a financial service by way of accepting a share buy-back offer was not for the purpose of trade or commerce. As Campbell JA pointed out in Kowalczuk at [185], all the shareholders in National Exchange were doing was realising an asset – they could have used the proceeds for any purpose. 105 It has been judicially noted that the clear purpose of s 51AC is to protect small business in their dealings with "big business": Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants in Australia [2001] FCA 1056 at [259], approved on appeal: (2002) 122 FCR 110 at [116]. This point applies equally to s 12 CC, since it was intended to operate as the "mirror" provision of s 51AC and thus authority on s 51AC assists in the interpretation of s 12CC: see National Exchange at [30]. 106 In the present case, the transaction in question was entered into by the non-ANZ parties in order to fund legal representation to resist winding up proceedings against SSMA [the relevant funds being advanced by ANZ to SSMA as consideration for entry into the deed]. Applying Kowalczuk at [188] – extracted above - the relevant question is whether this further activity, namely resisting winding up proceedings, was of a trading or commercial character. It is true that applying the High Court's comments in Concrete Constructions (extracted above), some doubt arises as to whether the relevant activity was of a trading or commercial character. 107 This reflects that resisting winding up proceedings is not an activity that prima facie has a core trading or commercial character, and instead is an activity which corporations may incidentally engage in the course of carrying on other trading or commercial activity. However, it must be remembered that those comments were made in the different context of s 52 and the different phrase there concerned. Thus the discussion in Concrete Constructions is not directly on point. 108 Further, in my view the fact that the SSMA sought to fund legal representation in order to resist winding up proceedings initiated by a commercial rival [with whom there was an ongoing commercial dispute], assists the argument that the transaction was entered into in order to further activity of a commercial character. Moreover and importantly, the phrase "for the purpose of trade or commerce" must be interpreted in a way that furthers s 51AC and s 12CC's clear purpose of protecting small businesses in their commercial transactions. In all of the circumstances, I conclude the deed transaction was entered for the purpose of trade or commerce, meaning s 12CC and s 51AC will apply. 109 In addition to the above analysis, I note that although it was not admitted on the pleadings, ANZ in its submissions assumed s 12CC and s 51AC applied to the deed transaction [arguing that there had been no contravention of the sections]. It is thus appropriate to now proceed on the basis that s 12CC applies. Assuming s 12CC applies, what is the meaning of unconscionability under the section? 110 In Canon Australia Pty Ltd v Patton (2007) 244 ALR 759, the Court of Appeal discussed the concept of unconscionable conduct that appears in s 51AC of the TPA. Campbell JA observed at [39] that relief might be available "in circumstances that do not involve unconscionability within the meaning of the unwritten law of the states and territories". A similar point was made by the Full Court of the Federal Court in Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132 at 140 [30]. 111 The scope of the statutory concept has been explained. In Canon Australia at [40], Campbell JA, Harrison J agreeing, approved a decision of the Full Court of the Federal Court, Hurley v McDonald's Australia Ltd (2000) 22 ATPR ¶ 41-741. In that case, speaking of s 51AC, the Court held at [22]: For conduct to be regarded as unconscionable, serious misconduct or something clearly unfair or unreasonable, must be demonstrated — Cameron v Qantas Airways Ltd (1994) 55 FCR 147 at 179. Whatever "unconscionable" means in s 51AB and s 51AC, the term carries the meaning given by the Shorter Oxford English Dictionary, namely, actions showing no regard for conscience, or that are irreconcilable with what is right or reasonable — Qantas Airways Ltd v Cameron (1996) 66 FCR 246 at 262. The various synonyms used in relation to the term "unconscionable" import a pejorative moral judgment — Qantas Airways Ltd v Cameron (1996) 66 FCR 246 at 283–284 and 298. 112 In Canon at [55] Campbell JA applied the test of whether the conduct in question "had such a high level of moral impropriety that it could properly be described as unconscionable" (original emphasis). 113 In Canon Harrison J agreed with Campbell JA. Moreover, Campbell JA repeated his remarks from Canon in Kowalczuk v Accom Finance Pty Ltd (2009) 252 ALR 55 at [214]-[215] – holding they applied equally to s 43 of the Fair Trading Act 1987 - and Hodgson and McColl JJA agreed with Campbell JA. 114 However, in Canon Basten JA partially disagreed with Campbell JA's remarks, raising concern as to the description "such a high level of moral impropriety" in describing unconscionability under s 51AC. Basten JA noted at [4] that the use of "such concepts as high moral obloquy is to risk substituting for the statutory term language of no greater precision...". The phrase "high level of moral obloquy" derives from the judgment of Spigelman CJ in Attorney General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557 at 583 where the Chief Justice warned against the equation of what is unconscionable with what is merely unfair or unjust. 115 It follows from the above authorities, that in order to establish a contravention of s 51AC in this area of the case, Mrs Brighton and Mr Brighton needed to establish that the relevant conduct of the ANZ – in requiring entry into the deed – showed no regard for conscience, or was irreconcilable with what was right and reasonable. Turning to the evidence in order to determine whether the requirement of entry into the deed constituted a breach of s 12CC 116 The relevant chronology appears to be essentially as follows: 17/10/06 Meeting between Mrs Brighton and Nick Crennin of Colin Biggers & Paisley (solicitors for Mrs Brighton) and discussion between Mr Crennin and Mr Joseph regarding the Deed 18/10/06 Mr Brighton receives the Deed by facsimile from Colin Biggers & Paisley and has discussions with Peter Harkin of Colin Biggers & Paisley about the Deed 18/10/06 Meeting between Ms Brighton and Mr Crennin 18/10/06 The First Winding Up Proceedings are adjourned to 30 October 2006 18/10/06 The Queensland Court of Appeal proceedings (CA 8951) are dismissed 19/10/06 The Deed is exchanged between ANZ, SSMA, Brighton Associates, SSMQ, SSMG, SSMI, Mrs Brighton and Mr Brighton 117 The plaintiff put forward a range of documentary evidence to support its contention that the defendants had not established the deed should be set aside. I refer to this material in the analysis below. 118 ANZ ultimately submitted that its conduct in requiring that Mrs Brighton and Mr Brighton enter into the deed as a condition of supplying the further $50,000 overdraft funding to SSMA did not constitute unconscionable conduct within the meaning of s 12CC. 119 In making this submission ANZ contended as follows: Mrs Brighton and Mr Brighton did have adequate time and opportunity to obtain independent legal advice about the provisions of the Deed and an opportunity to negotiate, alter or reject provisions of the Deed. i. the Deed was meaningfully negotiated between the parties in that: a) at least two drafts of the Deed were prepared; b) originally, AFC, Mrs Aldrick and Mrs Bowen were a party to the Deed, and ANZ agreed to a request by Mrs Brighton that those persons be omitted from the Deed, which in fact occurred. ii. Mrs Brighton and Mr Brighton had competent and thorough legal representation through Mr Harkin of Collins Biggers & Paisley in relation to the negotiation and entry into the Deed. Mr Harkin provided extensive legal advice in relation to both the terms of the Deed and the legal consequences, which would follow from entering into the Deed. Mr Harkin carefully outlined all the options available, which included the option of SSMA not taking the further $50,000 Overdraft funding and preserving the rights of the cross-claimants against ANZ in relation to the Disclosure which are now sought to be agitated. iii. Having been advised of their options and the legal consequences of the Deed, Mrs Brighton and Mr Brighton made an informed commercial decision to take the further funding from ANZ and to enter into the Deed. iv. The urgency and compressed time circumstances in which the Deed was entered into by the parties were not the making of ANZ – SSMA was required to appear in Court on 17 and 18 October 2006, and the lawyers which Mrs Brighton sought to engage to assist, Collins Biggers & Paisley, made it clear they would not act in the matter or retain counsel unless $50,000 was first deposited into their trust account. ANZ was responding to an urgent request made by Mrs Brighton; the pressure of time and urgency was not imposed nor created by ANZ. v. Because Mrs Brighton and Mr Brighton had their own legal representation and had various commercial and legal options open to them, the strengths of the bargaining positions of ANZ and Mrs Brighton and Mr Brighton were relatively equal – Mrs Brighton and Mr Brighton could have chosen to walk away and pursue their alleged rights against ANZ in connection with the Disclosure. vi. By agreeing to lend a further $50,000 to SSMA, when Mrs Brighton knew that ANZ had already decided it did not want to make any more loans to SSMA or any other companies in SSMG, and ANZ had transferred the SSMA loan account to its portfolio management department due to existing defaults, ANZ was taking a substantial risk that it would not be able to recover the further advance, which risk has indeed materialised. It simply cannot be said that Mrs Brighton and Mr Brighton were required by ANZ to comply with a condition - entry into the Deed - that was not reasonably necessary for the protection of the legitimate interests of ANZ as supplier or that ANZ exerted or used any undue influence, pressure or unfair tactics. The defendants' arguments regarding the deed issue 120 The defendants pleaded five grounds that were contended to justify setting aside the deed. The five grounds were: i. Mrs Brighton and Mr Brighton had no opportunity to negotiate, alter or reject any provisions of the Deed; ii. Mrs Brighton and Mr Brighton were not afforded adequate time or opportunity to obtain independent legal advice about the Deed or to consider properly the ramifications of the Deed; iii. ANZ knew the $50,000 was urgently required or Mrs Brighton and Mr Brighton would be left without legal representation; iv. ANZ did not require any additional security to secure the advance, but instead made provision of the $50,000 conditional upon Mrs Brighton and Mr Brighton executing the Deed; and v. ANZ knew that by requiring the Deed to be signed, Mrs Brighton and Mr Brighton would be foregoing their right to sue ANZ for damages flowing from its breach, such damages being far in excess of the $50,000 required. 121 In final submissions the defendants put forward several contentions that provided some further specificity to the five grounds: These submissions were: i. there was no real opportunity for the Brightons to negotiate with the ANZ in any substantial way. They had to give a release or the money was not forthcoming. ii. because the provision of the $50,000 was a pre-requisite of the obtaining of legal advice there was no opportunity for either of them to obtain proper legal and independent advice. iii. any advice given by Mr Harkin (and there is little evidence that he gave any) was not independent. He wanted $50,000 to be advanced. iv. if Mr Harkin had given proper and adequate legal advice he could have given oral evidence about that. v. the 'hothouse' timing of the creation of the Deed worked against a proper appreciation of the Deed or the provision of proper advice. The Deed had to be executed prior to 2.00pm (so Lyn Brighton was told) or she would be unrepresented in Court. She had only just found out about the ANZ disclosure. The Deed was only produced at 12.45pm to Lyn Brighton and minutes before 2.00pm (in corrupted form) to Wayne Brighton. vi. the oral evidence of Lyn Brighton and Wayne Brighton and their affidavits show how distressed they both were by the speed by which they had to execute the Deed. vii. the contemporaneous emails from Wayne Brighton to Lyn Brighton and to Mr Harkin and Wayne Brighton's (uncontested) evidence of the belligerence of Mr Harkin on the telephone show a picture of a document executed in haste with a large element of duress. 122 It is appropriate to examine in detail the evidence of Mrs and Mr Brighton in relation to the deed. The evidence of Mrs Brighton 123 The following are some key points which emerged from Mrs Brighton's evidence: i. Mr Harkin had made it plain to Mrs Brighton that without that $50,000 being placed into its trust account Colin Biggers & Paisley would not act. ii. Mrs Brighton was cross-examined in detail about the advice of Mr Harkin regarding her options when deciding whether or not to enter the deed. Mrs Brighton repeatedly could not recall matters which the cross-examiner suggested had been canvassed in Mr Harkin's advice. She emphasised that it was a frantic time, because of the 2 o'clock Court appearance on 18 October 2006. However, ultimately Mrs Brighton agreed that she was aware that she could have reserved her rights and not accepted ANZ's offer of funding . However, she did no chose this course because she felt she had no alternative but to fight the litigation [the implicit reason for this was because of the consequences facing the SSMG group]: T71.0-11. iii. At one point Mr Harkin had called Mrs Brighton and told her that she would have to speak to Mr Brighton because he was not prepared to sign the deed, and it needed to be signed for the money to be released by ANZ: T73.15. Mrs Brighton had made a telephone call to her husband in which she sought to convince him to sign the deed: T73.25. 124 Mrs Brighton's evidence also included the following: Q. Do you deny that Mr Harkin went through the deed with you briefly, you then read it and then he said to you, "We'll go over any questions you had in relation to it after you'd had time to review it"? A. I do not recollect that happening. The deed we did not get until an hour or so before I was due in Court. I was also with Mr Harkin's associate preparing affidavits. The discussions that we had would not have been as it is portrayed over a period of time. It might have been a five minute discussion. It certainly wasn't take it away, have a think about it and come back with your problems, that's not how it was. Q. In any event, as you said to his Honour earlier you understood your rights that in the event you signed the deed that it would involve - I withdraw that question. You understood at the time you executed the deed from what Mr Harkin had told you that upon execution of the deed, that you would be releasing the ANZ from any claim that SSMG had against it in relation to the disclosure, correct? A. Correct. Q. You decided to sign it because you were of the very firm view that there was a necessity to obtain the funds to assist the defence of the winding up proceedings, correct? A. There was no reasonable alternative. .. Q. Now at the time that you actually put pen to paper and executed the deed did you in truth propose to reserve your rights at some later stage to sue the ANZ in relation to the disclosure? A. If I'm understanding that question correctly it was never my intention to sue the ANZ. Q. Yes. And you had no intention of suing the ANZ at the time that you executed the deed because you knew that by executing the deed you were giving up your rights to sue the ANZ, correct? A. I executed the deed so I could save my group. Q. Yes. And you had no intention of suing the ANZ at the time you executed the deed because you knew, from what Mr Harkin had told you, that by taking that step and executing the deed you were giving up your rights against the ANZ, correct? A. I don't recollect Mr Harkin telling me that but I was aware that that was what the deed was for. [T74-75] 125 Mrs Brighton was cross-examined regarding whether she could foresee the consequences of the disclosure at the time she signed the deed and testified as follows: Q. Well, why is it that in your affidavit you refer to the fact that you couldn't anticipate what the consequences would have been? A. Because in my affidavit I wasn't - I think you're taking that out of context. When I signed the deed, I signed the deed because I had - there was no reasonable alternative to have legal representation against the wind-up and I would have lost the company and everything that flowed on from there. So, at the time, I didn't stop to think about any other ramifications apart from what was happening right at that point. Q. I see. Well, would this be a fair characterisation of your evidence, that at the time that you signed the deed you couldn't reasonably foresee the consequences that would be flowing from the disclosure, correct? A. That is correct. Q. Didn't realise that it would lead to a catastrophe, correct? A. Correct. Q. But what you say to his Honour is even if in truth you had have realised that, you still would have signed? That's what you tell his Honour? A. Yes. [at T89] 126 Mrs Brighton gave evidence that she did not offer to pay back the $50, 000 together with interest as a condition of the deed being set aside. Mr Brighton did not understand this proposition in the form it was put to him [T206.45]. 127 In relation to the negotiation of the terms of the deed, Mrs Brighton gave the following evidence: Q. Insofar as they relate to you. Mr Harkin, on your behalf, did have the opportunity to negotiate or reject some provisions of the purported deed, didn't he? And in fact, did so. Correct? A. My understanding is that the sections that we wanted to alter were not, the ANZ would not alter, or rejected. The only change that the ANZ agreed to make was removing my mother and other parties off the deed. Q. Well, that's not quite true, is it? A. Yes it is. Q. The ANZ also was prepared to change other parts of the deed which relevantly included the provision that the amount that the ANZ solicitors charged for the preparation of the deed wouldn't come out of the $50,000. A. I was not part of those negotiations. Q. Well, you can't speak for the content of the negotiations between Mr Harkin and Mr Joseph of Kemp Strang, can you? A. No. [at T128] 128 Mrs Brighton was cross-examined as to the opportunity she had to consider the ramifications of the deed: Q. Now, in relation to (b), Mr Harkin went through this deed with you carefully, and-- A. No. Q. He did it flippantly, did he? A. We had a very short period of time. Q. Well, you understood the deed, you told that to his Honour yesterday, didn't you? A. Yes. Yes, I understood the deed. What I'm-- Q. So whatever passed from Mr Harkin to you was sufficient to apprise you of the terms of the deed? A. Incorrect. Q. Well, you said to his Honour yesterday, didn't you, quite non-responsively, I wish to suggest, that you understood the terms of the deed prior to you executing it; correct? A. That's correct, Mr Lee, but I looked at the deed myself. Q. I see, so whatever Mr Harkin did do in relation to the deed was sufficient to apprise you of an understanding of the ramifications of the provisions of the deed, correct? A. I made up my own choice of signing the deed, Mr Lee. What Mr Harkin - Mr Harkin gave me a couple of options, but what I saw as my options and what Mr Harkin saw as my options were miles apart. Q. I see, so Mr Harkin gave you advice and you chose-- A. No, Mr Lee. Q. You considered that advice and then you made a decision on the basis of that advice. A. Yes. [at T129] 129 Ultimately the following picture emerges from Mrs Brighton's evidence: i. Mrs Brighton accepted that it was open to her to reject ANZ's offer of funding and reserve her rights against ANZ, however she felt this option was in commercial reality not open to her because of the consequences she perceived would result for the SSMG group if she did not gain representation in the winding up proceedings. ii. The deed was prepared in a time-pressured environment. On Mrs Brighton's evidence she had some time to review the deed but not a lengthy opportunity. However, Mrs Brighton admitted she understood that the effect of the deed would be to extinguish her rights against ANZ. Turning to the evidence of Mr Brighton 130 Mr Brighton during his cross-examination clearly had difficulties in recalling the events of the time. 131 He knew that he had signed a document proffered to him for signature. On his evidence the first copy of the deed which had been faxed to him just before 2pm on 18 October 2006 by Mr Harkin was illegible. Late on 18 October 2006 he forwarded a document to Mr Harkin advising that he had now read the document and had a fundamental understanding of it so that accordingly his signing of the document earlier in the afternoon was conclusive. 132 Mr Brighton's cross-examination included the following: Witness: "Fundamental understanding", what I meant by that was that I knew that there was a waiver to a level of right that I didn't understand the full context of it and to further go on with explaining that position there's that, initially my wife was begging me, I was having discussions with Mr Harkin who I'd never met, I was in Nowra at the time, I had expected by our discussions the evening before that I would have something sent to me and explain to me in the morning. That didn't occur and when that - I ended up talking to Mr Harkin over some conversations, I ended up absolutely distressed over the whole matter. I was shaking uncontrollably at the time. I couldn't continue with the conversation and so that he wrote to me and suggested at eleven minutes past four, that I seek urgent legal independent solicitor's advice today. And - so in consideration of my wife's position at the time I said that I had a fundamental understanding of it. I hope that explains it to you. Mr Lee Q. The fundamental understanding of which you speak I'd like to explore further, Mr Brighton. Is his Honour to take it that you signed the deed notwithstanding you didn't want to sign the deed because you were doing it to help your wife? A. My wife was frantic at the time. Q. Mr Brighton, sometimes one does things to help people rather than wanting to do it for your own purposes. I'm just exploring with you whether or not this is one of those situations. Did you sign the deed notwithstanding you personally didn't want to do it because you thought it was the right thing to do by your wife? A. I can't remember the exact circumstances. I was - I could only describe that I was in shock at the time. … Q. Can I just ask a basic question? I would think everyone knows possibly otherwise than myself. Could I just ask you this. What was it that you were so concerned about in relation to the matter when you've said so? What was it that was causing you such anxiety and your wife, as you understood it, such anxiety et cetera? What was the crisis? A. I don't remember. I could only - no, I shouldn't speculate, should I? Q. So you can't recall? A. No. [at T187, 189] 133 It was Mr Brighton's evidence that Mr Harkin had clearly harassed him into signing the deed but he had so signed because he knew that by signing the deed he was assisting his wife who was actually begging him to do that. 134 Otherwise than this I formed the clear impression that his recollections were so bad that the Court could not accept his evidence save where it was corroborated by contemporaneous written material or by the evidence of others whose recollections could be accepted as correct. Considering the various factors contained in s 12CC (2) in order to determine whether ANZ's conduct was unconscionable S 12CC 2(a) The relative strengths of the bargaining positions of the supplier and the service recipient 135 Both Mrs and Mr Brighton were legally advised. 136 In relation to Mrs Brighton, the advice provided by Mr Harkin is evidenced in an internal file note dated 18 October 2006, authored by him (Exhibit P3, page 23). There is also a letter of advice dated 20 October 2006, but this is strictly not relevant to the present inquiry as it post-dates the execution of the deed. The file note of 18 October records that Mr Harkin advised Mrs Brighton she could not accept ANZ's offer of funding and reserve her right to actions against the Bank [Mr Harkin further advised that in his view this option was potentially too costly given the relevant financial circumstances she faced]. On this basis I reject the defendants' submission that there was no opportunity for Mrs or Mr Brighton to obtain proper advice because the advance of the loan funds was a pre-requisite to obtaining legal advice from Mr Harkin. 137 I reject the defendants' submission that the advice of Mr Harkin can be impugned for want of independence because he was improperly motivated by the incentive for the $50, 000 to be advanced, and therefore for the defendants to enter the deed. The evidence before the Court simply does not support such a contention. 138 In relation to Mr Brighton, in cross-examination it emerged that he had become thoroughly distressed in his conversations with Mr Harkin. Essentially it was Mr Brighton's clear view that Mr Harkin had harassed him, and Mr Brighton testified that after a telephone conversation on the afternoon of 18 October 2006 they were no longer on speaking terms: T191.03-10. Mr Brighton deposed that he repeatedly stated on the telephone to Mr Harkin words to the effect of: "I don't fully understand what is going on. I have tried to interpret the meanings but without absolute success". Ultimately, however, several factors point against a finding that Mr Brighton suffered from reduced bargaining power in relation to ANZ. Specifically: i. Mr Brighton did not lead sufficiently detailed evidence as to the legal advice he received from Mr Harkin [when it was Mr Brighton who was trying to impugn that advice and therefore the deed transaction]; ii. Similarly, as is outlined below, Mr Brighton failed to call Mr Harkin, which gives rise to a serious Jones v Dunkel inference; iii. Mr Brighton's evidence must be assessed in light of his concession that he could not actually remember the conversations with Mr Harkin [Mr Brighton testifying that the period had been blanked out in his mind: T204.10]; In such circumstances, weight must be placed on the contemporaneous evidence of Mr Brighton's letter of 18 October 2006 to Mr Harkin in which Mr Brighton said he had a "fundamental understanding" of the deed. iv. The compulsion that Mr Brighton felt he was subjected to was ultimately attributable to his wife. Under cross-examination, Mr Brighton essentially agreed that he had signed the deed, notwithstanding his own reservations, because of his wife's insistence that he do so: T187.18-23, T192.5, 13. Moreover, she was the one who was instructing Mr Harkin to arrange the deed transaction, which in turn required Mr Harkin to obtain proper consent from Mr Brighton. The plaintiff's Jones v Dunkel submission 139 There was a serious Jones v Dunkel proposition put to the Court by ANZ, concerning the failure by the defendants to call Mr Harkin, the solicitor who advised them on the deed transaction. 140 It is important to recall the so-called rule in Jones v Dunkel (1959) 101 CLR 298. This may be summarised as follows: "The unexplained failure by a party to give evidence, to call witnesses, or tender documents… may - not must - in appropriate circumstances lead to an inference that the uncalled evidence would not have assisted that party's case. The appropriate circumstances exist where it was within the power of the party to tender the evidence which was not tendered." (JD Heydon, Cross on Evidence , (Butterworths: Sydney, 6th ed, 2000) at [1215]) "…This instance of a Jones v Dunkel inference ( Jones v Dunkel (1959) 101 CLR 298), also available where there is unexplained failure by the party to call a witness or tender documentary evidence, can entitle the judge or jury more readily to accept the evidence of the opposite party which might have been contradicted, or more readily to draw any inference fairly available from the evidence called by the other party. A Jones v Dunkel inference cannot fill gaps in the evidence, or convert conjecture and suspicion into inference, but unless it is to be empty of content the inference if drawn may weigh the scales, however slightly, in favour of the opposing party." ( Adler v Australian Securities and Investments Commission [2003] NSWCA 131 at [649] per Giles JA, Mason P and Beazley JA agreeing). 141 Notwithstanding the fact that the so-called rule now under discussion must always be very carefully monitored I am of the view that it was important for the defendants to call Mr Harkin, or to have explained his absence from the witness box. He was the one person who dealt with both Mr and Mrs Brighton through the period during which the deed was entered into. He would likely have been an important witness and I do not accept that the failure to call him may be explained by suggesting that there was no reason to call him by reason of the contemporaneous documents before the Court. 142 ANZ has thus succeeded in establishing that Mrs and Mr Brighton were competently advised by Mr Harkin. However, it does not necessarily follow that, as ANZ contended, the parties should automatically be considered of equal bargaining power. The clear picture that emerges from the evidence is that the commercial imperative for SSMG to fight the winding up proceedings resulted in Mrs and Mr Brighton having reduced bargaining power, in that they felt that the only commercially viable option was to accept the offer of funding and the deed. Notwithstanding this, I reject the contention that ANZ can be blamed for bringing about the situation of reduced bargaining power. As the analysis in relation to the so-called causation issue shows, it was the concerted campaign of Mr Robinson, and not the disclosure by ANZ, that ultimately placed SSMG in the perilous position it faced. S 12CC 2(b) Whether as a result of conduct engaged in by the supplier, the service recipient was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier 143 The relevant inquiry here is essentially whether the conditions imposed by ANZ – in the form of the release contained in the deed – were disproportionate to the consideration that it offered in the form of an advance of $50, 0000 to SSMA, in all the circumstances. 144 Here the defendants drew on the fact that ANZ did not require any further security for the advance but instead required entry into the deed as consideration. However, in my view this was not to the point since the bank had a fixed and floating charge over all the assets and undertakings of the relevant entities. Even if this be wrong, the defendants did not take the Court to evidence of further equity being available to the bank (a contention put forward by their counsel): T274.5. 145 The risk borne by ANZ in entering the deed transaction must be borne in mind. ANZ was advancing funds to assist even though it was essentially very reluctant to provide further funds to SSMG: see T77.35-79.08. ANZ had already transferred the SMMA loan account to its portfolio management department due to existing defaults, and had sent Mrs Brighton a letter dated 1 September 2006 to this effect. Plainly, ANZ was taking a risk that it would not be able to recover the further advance, a risk which indeed materialised. Additionally, in entering the deed ANZ wanted confirmation of the continuing efficacy of its securities – an end secured by the Deed which also necessarily involved a surrender (as a part of the bargain) from any action which may be relied upon to impugn those securities. 146 The defendants also contended in this area that the cause of action surrendered by Mrs and Mr Brighton by entering the deed was worth far in excess of the $50, 000 loan obtained as consideration. 147 However, it must be remembered that both s 51AC(6)(a) of the TPA and s 12CC(5)(a) of the ASIC Act provide, in terms, that in determining whether conduct was unconscionable the Court "must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention". The extent of the alleged damage and hence the value of any choses of action was, on the evidence of Mrs and Mr Brighton, not reasonably foreseeable at the time of the alleged contravention. For example, Mrs Brighton explicitly agreed that the damages allegedly suffered could not have been reasonably foreseen, as the consequences which flowed from the disclosure could not have been predicted at the time of entry into the deed: T89.42, T90.6-29. Thus the alleged disparity between the consideration offered must not be taken into account. S 12CC 2(c) Whether the service recipient was able to understand any documents relating to the supply of financial services 148 Relevantly, Mrs Brighton admits she understood the effect of the deed: T70.44. 149 The situation is less clear in the case of Mr Brighton. To recap, the basic chronology in relation to Mr Brighton was that initially he sent a letter to Mr Harkin on 18 October 2006 in which he conveyed that he had only signed the Deed in view of the absolute urgency pertaining and because his wife had begged him. This caused Mr Harkin to send a letter to Mr Brighton on the same date to the effect that it was "most important" that Mr Brighton understand the Deed before it could be provided to ANZ. Mr Harkin also said that where Mr Brighton did not understand the Deed, it was impossible for him to provide it to the other side. In response, Mr Brighton sent a letter on the same date – 18 October 2006 – in which Mr Brighton said: "I have now read the document and have a fundamental understanding of it. Accordingly, the signing if [sic] the document is conclusive". 150 Under cross-examination, although Mr Brighton sought to qualify his expression "fundamental understanding", Mr Brighton ultimately admitted that, at the least, he knew it meant that "there was a waiver to a level of right", but that he did not understand the full context of it. Later, Mr Brighton clarified by saying he understood he was waiving rights, but did not fully understand the "quantum" of it. Mr Brighton conceded hat he had read the Deed before signing it: T202.24. 151 As outlined above, Mr Brighton had a serous inability to recall the events in relation to the deed. In that circumstance, some reliance must be placed on the evidence of the contemporaneous letter Mr Brighton sent to Mr Harkin in which Mr Brighton asserted he had a "fundamental understanding" of the Deed. Ultimately, it has not been shown that Mr Brighton was unable to understand the deed. S 12CC 2(d) Whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the service recipient by the supplier? 152 The focus in this part of the case is on any conduct of ANZ and its agents towards SSMG and its agents that constituted undue influence or pressure, or unfair tactics. 153 Thus the fact that Mr Brighton felt pressure to sign the deed from either his wife, Mrs Brighton, or from his solicitor Mr Harkin, his solicitor, is not relevant. 154 It must be borne in mind that the urgency with which the funds were required and the deed was entered into, which the defendants drew on, was not the making of ANZ. In truth, such urgency came about because SSMA was required to appear in Court on 17 and 18 October 2006, and the solicitors whom Mrs Brighton sought to engage to assist, made it clear that they would not act in the matter or retain counsel unless $50,000. 155 It may be possible to allege that ANZ did not create but nonetheless impermissibly took advantage of the time-pressured circumstances in which the defendants found themselves. However, in my view no such finding is possible in the all of the circumstances. As outlined above, Mrs and Mr Brighton both received competent legal advice and understood the transaction documents, and the consideration obtained by ANZ cannot be regarded as not reasonably necessary for the protection of its legitimate interests. S 12CC (2)(e) The amount for which, and the circumstances under, the service recipient could have acquired equivalent services 156 It seems relevant that given the financial situation of SSMG it was unlikely to have obtained equivalent funding from another supplier, with whom it did not have the ongoing relationship and bargaining power resulting from the disclosure that it had with ANZ. S 12CC 2(j) The extent to which the supplier was willing to negotiate the terms and conditions of any contract for supply of the financial services with the service recipient 157 It is true that as the defendants contended, ANZ was not willing to advance the loan funds unless the deed was entered into. However, ANZ was in other significant ways willing to negotiate the terms of the deed [indeed at least two drafts of the deed were prepared]. Specifically, ANZ: i. Agreed to a request by Mrs Brighton (communicated by Mr Harkin) that AFC, Mrs Aldrick and Mrs Bowen be omitted from the deed [they were named as parties in an earlier draft of the deed]; ii. Agreed that its legal fees would not be taken out of the $50, 000 advance. Overall Conclusion required: was ANZ's conduct unconscionable under s 12 CC/s 51AC? 158 For the above reasons I conclude that ANZ's conduct was not unconscionable within the meaning of sections 12CC and 51AC. 159 In my view it follows a fortiori that the defendants' cannot establish ANZ, in requiring entry into the deed, acted unconscionably within the meaning of the general law, since as outlined above, the concept of unconscionability contained in sections 12CC and 51AC (which the defendants have failed to establish) extends beyond the general law. Moreover, Mrs Brighton and Mr Brighton did not even attempt to establish a relevant "special disability" so far as their entry into the Deed is concerned, as would be required to support an argument as to unconscionability under the general law: see Commercial Bank of Australia Ltd v Amadio; (1983) 151 CLR 447. 160 I note that the defendants' pleading puts in issue the perhaps slightly different issue of whether, given the disclosure made by ANZ, it would be unconscionable for ANZ to have the benefit of the purported releases contained in the deed. In my view this contention fails for the same reasons given above as to why it was not unconscionable for ANZ to require entry into the deed as consideration for the further advance, after the disclosure had occurred. Turning to the relief claimed by the defendants under the CRA 161 The defendants plead that the ANZ's requirement that the deed be signed was "unconscionable, harsh or oppressive" [these words are the precise definition of 'unjust' under s 4 of the CRA, which is picked up in the operation of the Act's key provision, s 7(1)]. The defendants further put in issue whether the cross-claimants can claim relief under the provisions of the CRA, wherein the Court may refuse to enforce all or any of the provisions of the deed or declare it void, wholly or in part [thus picking up subsections 7(1)(a) and (b)]. 162 Thus it is necessary to determine whether the CRA applies to the present situation. 163 Section 6 of the CRA relevantly provides: Certain restrictions on grant of relief (1) The Crown, a public or local authority or a corporation may not be granted relief under this Act. (2) A person may not be granted relief under this Act in relation to a contract so far as the contract was entered into in the course of or for the purpose of a trade, business or profession carried on by the person or proposed to be carried on by the person … Do Mrs and Mr Brighton fall within the exclusion in s 6(2), meaning the CRA will not apply? 164 In Agricultural and Rural Finance Pty Ltd v Atkinson [2010] NSWSC 635 I reviewed the scope of the s 6(2), noting inter alia: [27] In Ellison v Vukicevic (1986) 7 NSWLR 104 at 111 Young J said that the words "trade, business or profession" are … very wide and cover the whole gamut of professional and commercial activity: see Holman v Deol [1979] 1 NSWLR 640. His Honour then approved the interpretation of Lee J in Collins v Parker (Lee J, 11 May 1984): The expression "for the purpose of" has the meaning that the contract under consideration is entered into as an ordinary incident of the carrying on of a particular trade, business or profession then being carried on or proposed to be carried on. [28] This interpretation of the Act has been subsequently approved: see, eg , Lander v Trigger [1999] NSWSC 1253 at [53], King Mortgages v Satchithanantham; Cash King v Satchithanantham [2006] NSWSC 1303 at [133] and Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388 at p 400 (regarding a slightly different statutory context). Peden, T he Law of Unjust Contracts (Butterworths, 1982) ("Peden") at 116 comments that the exclusion contained in s 6(2) "applies to contracts with a mixed business and private purpose", giving the example of a motor vehicle used for the dual purpose of business and private use. [29] In the recent case of Ford v Perpetual Trustees , above, Allsop P and Young JA, Sackville AJA agreeing, at [95] emphasised the need in applying s 6(2) to focus on the statutory language contained therein. At [98] their Honours said that "[t]he application of s 6(2) should be looked at as a matter of substance and not form". … [33] The above conclusion is consistent with the narrow interpretation that has repeatedly been given to s 6(2): see further Coombs v Bahama Palm Trading Pty Ltd (1991) ASC 56-097 at 57, 025; Zipser, " Unjust Contracts and the Contracts Review Act 1980 (NSW)" (2001) 17 Journal of Contract Law 76 at 76 ("Zipser"); Cheshire at 778–779. 165 In relation to s 6(2), the defendants submitted that the deed was not entered into "in the course of or for the purpose of" the Brightons' pontoon and marina business. Rather, it was contended, the purpose of the Deed was to extinguish the ANZ's liability for a wrongful disclosure. The defendants' counsel submitted that the deed "was for a protective purpose not a mercantile purpose". 166 In my view this submission is incorrect. In relation to Mrs Brighton it seems clear to me that the deed was entered into "in the course of or for the purpose of" the trade, business or profession she was carrying on through SSMG. Put simply, in the course of carrying on that trade, business or profession – and specifically in resisting the winding up proceedings against SSMA – Mrs Brighton entered into the deed. Thus she is not entitled to relief under the CRA. 167 In relation to Mr Brighton, on his own account he had a substantial involvement in the SSMG group over a number of years, including in the period covering the execution of the deed. He had taken a leave of absence of some 14 months in around 2004 in order to work with the SSMG. He intended to join the SSMG in a full time role in 2006. Mr Brighton also had a 50% shareholding in Brighton Associates, which in turn owned 100% of SSMA. When regard is had to these factors, the correct conclusion as a matter of substance is that Mr Brighton entered the deed either in the course of, or for the purpose of, the trade, business or profession he was carrying on, or proposed to carry on, through SSMG. Thus he is also not entitled to relief under the CRA. 168 In the event that the above be incorrect, and the CRA has application, it would be necessary to consider whether the deed is an unjust contract under s 7(1), having regard to the matters in s 9(1) and (2). Due to the conclusions above reached it is strictly unnecessary to express an opinion on this question. However, were it so necessary, I would conclude that the deed was not an unjust contract, principally because of the reasons outlined above in relation to unconscionability under sections 12CC and 51AC. A relevant analogy 169 There is a limit to analogies in this area, but an example where relief was refused (in not entirely dissimilar circumstances) is useful and supports the conclusion reached in part of the case. In a case which would have been thought to be a far more suitable vehicle for statutory intervention, the Court of Appeal in Australia and New Zealand Banking Group Ltd v Karam (2005) 64 NSWLR 149 refused a claim for relief. Karam dealt with a claim where a company borrowed money from the bank, and the bank had taken certain guarantees and mortgages over the personal assets of the directors of the borrower company. The company ran into financial difficulties, and the directors requested further financial accommodation at a time when the company was in a perilous financial condition. Unknown to the directors, the bank had doubts about the enforceability of the original securities. To shore up its security position, the bank made the provision of further accommodation dependent on the directors executing additional documents including an acknowledgement. The acknowledgement was to the effect that the directors, having received independent legal advice and financial advice, acknowledged that the relevant guarantees and mortgages which had previously been granted (and in respect of which the bank had doubts) were always intended to secure payment of all liabilities of the company to the bank: (2005) 64 NSWLR 149 at [37] and [83]]. 170 The company defaulted and the bank sought to enforce the securities given by the directors. The directors sought relief on the basis that they were unjust for the purposes of the CRA and were unconscionable under the general law. In response, the bank sought to rely upon the acknowledgement as an answer to all the claims by the directors. 171 The trial judge had held that the original security transactions were unconscionable and that the acknowledgement should be set aside on grounds including, inter alia, economic duress and unconscionability. 172 The Court of Appeal held that in the circumstances of that case, the directors had not made out any economic duress or unconscionability claims. Accordingly, the security was enforceable by the bank. 173 Importantly, for present purposes, the Court of Appeal made the following points. 174 First, in relation to the concept of unconscionable conduct, the focus is on the unconscientious conduct of the stronger party, and the conduct will be treated as unconscionable only where the weaker party by reason of some condition or circumstance is placed at a special disadvantage vis a vis another and unfair or unconscientious advantage is taken of the opportunity thereby created [at 46]. 175 Secondly, the fact that one party is in financial difficulties, of which the other party is aware, will be relevant but not sufficient to establish unconscionable conduct on the part of the stronger party. Something more is required and may be sought in the terms of the particular transaction. However, even unusual terms will not necessarily demonstrate taking unconscientious advantage of the situation of the weaker party. The greater the financial risk, the greater the justification for increased security [at 68]. 176 Thirdly, the situation arose because the transaction in question involved the grant of an indulgence or a new right on condition that an existing dispute was settled [at 67]. 177 Fourthly, the directors understood the nature and effect of the action they were taking and took it because they understood it was necessary in order to obtain further financial accommodation, essential to the continued operation of the company [at 92]. 178 Fifthly, the perilous financial circumstances of the company were not the bank's doing so there was no basis for saying that the bank, in the legal sense, subjected the directors to pressure. Rather, it was the directors who were seeking that the bank provide additional credit, without which the company would have to cease trading. The bank was under no obligation to extend the credit facilities already granted, nor to do so without securing its own position [at 95]. 179 Sixthly, the finding by the trial judge that illegitimate economic pressure was imposed by the bank was not supportable [at 96]. A finding of unconscionable conduct could not be found absent a finding that the victims suffered from a "special disability" or "special disadvantage" in the sense identified in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447. 180 Seventhly, the trial judge erred in treating the parlous financial state of the business as itself a form of illegitimate pressure and failed to recognise the fact that the directors had received financial and legal advice, provided by persons who had relevant experience and having the relevant materials available to them and having the time they required to consider the material [at 123]. 181 These observations in Karam supports the finding in the present case that no unconscionability occurred in the obtaining of the Deed in the present case for the following reasons: i. the defendants have not established any applicable special disadvantage; ii. it is not sufficient to merely make out that ANZ was aware of SSMA's financial difficulties; iii. as in Karam , ANZ granted an indulgence - the provision of the further $50,000 funding to SSMA on 18 October 2006 – on condition that an existing possible dispute or challenge to securities (in relation to ANZ's alleged liability for the Alleged Disclosure) was settled; iv. it is clear that Mrs and Mr Brighton received legal advice and understood the nature and effect of the action they were taking (in signing the Deed), and that they believed (even if only reluctantly or, in the case of Mr Brighton, only because Mrs Brighton begged him to do so) it was necessary to do so to obtain further financial accommodation essential to the continued operation of SSMA; and v. SSMA's perilous financial circumstances (and any urgency) were not of ANZ's making, and there is no basis for saying ANZ subjected Mrs Brighton and Mr Brighton to any illegitimate pressure. Turning to the no breach contention 182 ANZ submitted that in any event, any information which Mr Hancock conveyed to Mr Robinson during the material conversation was not confidential information of any of the defendants. Rather, such information was ANZ's own information. 183 This submission is rejected. The fact that ANZ had formed its own conclusions or impressions that SSMA was an "exit account" and ANZ had made a decision to assess the accounts and consider the best way to enforce its security is simply not to the point. 184 The submission put forward by ANZ to the effect that such conclusions, impressions and decisions do not constitute confidential information of SSMA is misconceived. Clearly in the circumstances already outlined ANZ has breached both its duty and its contractual terms in relation to non-disclosure of confidential information. The no damages contention 185 These reasons make clear that the evidence called on the voir dire has been disallowed. 186 Had that not been the case ANZ submitted that even if all of its above contentions were overcome, nonetheless the defendants fail because the companies within SSMG were insolvent at the time of the disclosure and consequently have not suffered any damages. 187 In particular ANZ drew the Court's attention to the following admissions which I accept were made by Mrs Brighton in her oral evidence: i. As at September 2006, SSMA could not pay its debts as and when they fell due [T57.34]. ii. During the period 2005 to 2006, SSMG had a chronic shortage of working capital [T80.10]. iii. Prior to June 2006, the overdraft facility for the SSMG entities had been varied on at least seven occasions by reason of SSMG being unable to keep within credit arrangements [T79.22]. iv. By September 2006, SSMG had informal arrangements with creditors whereby debts, which were due, were being paid over time [T81.4]. v. During the period 2005 to 2006, there were constant requests by SSMG for additional funding to allow it to pay such things as salaries and utilities [T79.50]. vi. In 2006 there were limited liquid assets available to SSMG to sell in order to fund short-term debts [T80.14]. vii. The only way the SSMG business could continue to trade from at least June 2006 onwards was its reliance completely on debt finance and continually extending that debt finance obtained through either the ANZ or from arrangements with creditors [T132]. viii. ANZ wished for funds owing to it to be repaid and there was no realistic prospect of refinancing [T133.40]. ix. For the nine months ending 31 March 2007 (the last reporting period for SSMA) the company had a consolidated loss of $236,250 and a net worth of negative $1.9 million [T133.134]. x. As at the time SSMA went into liquidation, there had been no determination that it was entitled to an amount from APM for delay and disruption [T141.39]. xi. SSMG never paid any dividends to Brighton Associates as trustee for the "Brighton Family Trust" [T80.48]. 188 Although it is strictly unnecessary to deal with ANZ's no damages submission it seems to me appropriate to treat with that contention. I proceed accordingly. 189 I accept that had the evidence on the voir dire been admitted, then the expert evidence demonstrates that, after taking into account key insolvency indicators, there was a significant uncertainty as to the solvency of SSMG as at 25 September 2006. ANZ's expert witness, Ms Wheatley, points, in particular, to: i. the level of debt that existed in SSMG as at 30 June 2006 and 25 September 2006; ii. the inability to repay banking facilities as they fell due in the period between 30 June 2006 and 25 September 2006; iii. the repeated requests to extend existing financing facilities; and iv. the negative cash flows generated by SSMG during the year ended 30 June 2006. 190 The evidence which supports Ms Wheatley's expert opinion in this regard is conveniently set out in paragraphs 134, 135 and 146-154 of Ms Wheatley's Expert Report. Ms Wheatley's Expert Report was not challenged. 191 Ms Wheatley's conclusions are as follows: i. SSMG displayed most indicators of insolvency that ASIC has issued to assist directors in determining their level of solvency; ii. SSMG displayed a number of the factors listed in ASA 570 as key risks in assessing the ability of a business to continue as a going concern; iii. SSMG was unable repay banking facilities as they fell due from 1 July 2006 to 25 September 2006; iv. the financial ratios of SSMG indicate that the business was significantly underfunded; and v. SSMG was not generating sufficient positive operating cash flows. [Expert Report of Jenny Wheatley dated 14 May 2010 at 154] 192 Ms Wheatley concludes that, accordingly, in the absence of any apparent equity injection or alternate funding or continued support from related parties in order to repay the existing debts of SSMG, in her opinion there is significant uncertainty as to the solvency of SSMG at 25 September 2006 [Expert Report at paragraph 156]. 193 Notwithstanding the evidence given by Mr Lonergan, that evidence clearly suffered from his instruction to assume that the ANZ foreclosure of 25 September 2006 was directly responsible for all losses sustained by SSMG and Mr and Mrs Brighton. 194 At the end of the day the defendants have not proffered any evidence to demonstrate that SSMG was solvent and had the financial resources, whether by equity injection or alternative debt funding, to take advantage of the economic opportunities which the defendants assert have been lost [even if they were able to claim for them]. Turning to the remaining aspects of the case 195 The findings above that the plaintiff succeeds on all five major rebuttal points except for point four (the no breach contention) undercuts much of the defendants' case. Most obviously, Mrs and Mr Brighton are bound by the deed and accordingly any claims they may otherwise have had against ANZ are barred. It is now necessary to deal with any claims the remaining defendants/cross-claimants, namely AFC, Mrs Aldrick and Mrs Brighton, may have in light of the above conclusions. 196 To recap, the various defences and cross-claims pleaded by the remaining defendants are in summary form as follows: i. That ANZ in making the disclosure breached certain implied terms of the banker-customer agreements, contracts of guarantee and mortgage agreements, and also breached a duty of care not to disclose confidential information; ii. That the disclosure constituted unconscionable conduct in breach of ss 51AB or 51AC of the TPA; iii. That certain representations by ANZ as to confidentiality were misleading or deceptive or likely to mislead or deceive for the purpose of ss 51A and 52(1) of the TPA; iv. That the Disclosure and the plaintiff's conduct in respect of it, make it unconscionable for the plaintiff to enforce the Agreements, Guarantees and Mortgages against the defendants; [AFC made essentially the same claim, simply pleading that in the circumstances which occurred and for the reasons specified in the cross-claim, it was unconscionable for the plaintiff to rely on the relevant agreements]; v. Mrs Aldrick pleaded, slightly differently, that given her age and the circumstances leading to the execution of the guarantee, it was unconscionable to permit the plaintiff to rely upon the guarantee against her; vi. Mrs Aldrick and Mrs Bowen both sought relief under the CRA in relation to the guarantee agreements they were party to. 197 The relief sought by the remaining defendants is relevantly as follows: i. Damages for breach of contract; ii. Damages for breach of duty of care; iii. Damages pursuant to Section 82 of the TPA in an amount equivalent to the Cross-Claimants loss and damage; iv. An order that the Cross-Defendant be permanently restrained from enforcing as against the Cross-Claimants the alleged agreements specified in the Statement of Claim, namely, the agreements and guarantees which relate to the remaining defendants; v. An order that the Cross-Defendant be permanently restrained from exercising any alleged rights specified in the Statement of Claim in relation to the Brighton Keiraville Mortgage, the Sanctuary Point Mortgage, the Gosford Mortgage, the Aldrick Keiraville Mortgage and the Batemans Bay Mortgage. vii. Orders pursuant to Section 87 of the Act: a. Refusing to enforce the Agreement and Guarantees and the Mortgages, or b. Declaring the Agreement and Guarantees and the Mortgages, in whole or in part, void; or c. Varying the Agreements and Guarantees and the Mortgages, as the Court thinks fit; or d. Terminating the Guarantees and the Mortgages. Dealing with the claims made by the remaining defendants 198 There are several reasons barring the claims to relief sought by the remaining defendants. Although an attempt is made below to treat with the individual claims, inexorably the several claims pursued throw up similar parameters and hence for one or other reason some claims require to be dealt with at the same time. The claim for damages for alleged breaches by ANZ of various duties owed to the remaining defendants 199 The defendants' claim for damages was based on the proposition that the disclosure constituted a breach of some standard of conduct required of ANZ as the defendants' banker. Specifically, the defendants variously alleged that: i. Each Agreement, Guarantee and Mortgage contained a term "to the effect that [ANZ] would keep its customers' affairs confidential and would not disclose details of customers' affairs unless under compulsion of law". The defendants also alleged a second implied term "to the effect that [ANZ] would comply with privacy codes in connection with the maintenance of customer records". ii. It was an implied term of the banker-customer agreements that the Cross-Defendant would not disclose confidential information about the relevant Cross-Claimants or companies of which the relevant Cross-Claimants were officers or shareholders to third parties. iii. It was an implied term of the contracts of guarantee that the Cross-Defendant would not disclose confidential information to third parties about the debtors, the debts of which the Second, Third, Fourth, and Sixth Cross-Claimants were purportedly guaranteeing; iv. It was a further implied term of the contracts of guarantee that the Cross-Defendant would not act to the prejudice of the guarantors in the contracts of guarantee; v. It was an implied term of the mortgage agreements that the Cross-Defendant would not disclose confidential information to third parties about the debtors, the debts of which were purportedly secured by the mortgage agreements; vi. Further, or in the alternative, the Cross-Defendant owed the Cross-Claimants a duty of care not to disclose confidential information of a customer to a third-party, which disclosure would or might tend to cause damage to a related customer who had a relationship with the Cross-Defendant under the banker-customer agreements, or guarantors or mortgagors, who purportedly guaranteed debts of debtors under the contracts of guarantee, or purportedly had offered security under the mortgage agreements. vii. The disclosure constituted a breach of the relevant contracts, a breach of the plaintiff's statutory and common law duty not to disclose confidential information to third parties, and was negligent. 200 In making their contentions in this area the defendants variously relied on: the Code of Banking practice [the ANZ adopted the Revised Code of Banking Practice 2003 on 15 August 2003 and adopted the Modified Code of Banking Practice 2004 (current) on 16 August 2004, and the Code was said to be incorporated by the various agreements]; the ANZ's own Code of Conduct and Ethics; authority on a bank's common law duty of confidentiality; and alleged equitable obligations of confidence that were said to be breached. 201 For present purposes I will assume the relevant duties could be established, although this was a live issue between the parties. Similarly, I will further assume that the remaining defendants could establish that they were a proper claimant for the losses in question. The short answer to the remaining defendants' claims for damages can be put as follows: i. Earlier in these reasons it was made clear that the Court's conclusion is that the disclosure did not cause the collapse of SSMG; ii. This finding of no causal connection is plainly inconsistent with the remaining defendants being entitled to claim damages for loss or harm suffered in the collapse of SSMG and said to be caused by the disclosure. This is true whether the disclosure is characterised as a breach of a contractual, tortious, statutory or some other type of duty; iii. Additionally, it does not appear to be pleaded that any of the remaining defendants have suffered loss or damage as a result of the disclosure [rather, the pleading appears to be confined to damages suffered by Mrs and Mr Brighton and other SSMG entities]. Furthermore, the plaintiff conducted its case on the basis that only Mrs and Mr Brighton pressed a claim for damages and this did not seem to be disputed by the defendants. 202 It follows that the remaining defendants cannot succeed on any of the contentions put forward in this part of the case, and it is unnecessary to treat with them in further detail. On the pleadings, damages are the only part of the relief claimed that could potentially be available in this area of the case, since the remaining relief is claimed under the remedial provisions of the TPA which are not engaged in this area of the case (there being no allegation of a contravention of the TPA in this area). The claim based on misleading or deceptive conduct 203 The argument in this area proceeded with reference to the TPA provisions and accordingly I will proceed on that basis, although I note that equivalent provisions in the ASIC Act, relating to financial services, may apply. 204 There are two overarching reasons why this claim must fail. 205 Firstly, it simply has not been established that the representations in question were misleading or deceptive, or likely to mislead or deceive, at the time they were made. It is well established that where a misrepresentation is relied on in support of a claim under s 52 the relevant time for testing the character of the representation complained of is at the date of the making of the misrepresentation and not with the benefit of hindsight [Cedric Constructions Pty Ltd v Elders Finance and Investment Co Ltd (1988) ATPR 40-879 at 49, 539; C A Henschke & Co v Rosemount Estates Pty Ltd (2000) ATPR (Digest) 46- 199]. In determining whether a person had reasonable grounds for a representation, it is necessary to judge the matter as at the date of the representations [Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 513; City of Botany Bay Council v Jazabas Pty Ltd [2001] NSWCA 94 at [83] per Mason P]. 206 The mere fact that representations as to future conduct or events do not come to pass does not make them misleading or deceptive. If the law were otherwise every breach of contract would be a misleading and deceptive conduct case [Bill Acceptance Corporation Ltd v GWA Ltd (1983) 50 ALR 242]. 207 There is simply no evidence that at the time ANZ is alleged to have made representations as to confidentiality it intended to breach those obligations. The defendants' reliance on s 51A(2) of the TPA as settling the evidentiary situation in their favour – based on the failure of ANZ to adduce evidence that it had reasonable grounds for making the relevant representations - is misplaced. In Cummings v Lewis (1993) ATPR 46-103 at 53449, Sheppard and Neaves JJ held: Evidence of reasonable grounds may be established by evidence other than that of the persons who are alleged to have made particular representations as to a future matter. Indeed, as in so many other areas, a Court may find the overall probabilities to which the circumstances of a given case give rise, the background to it and the conduct of parties prior to conversations taking place as providing better guides to whether or not they had particular states of mind or whether particular factors existed which would establish evidence of something such as reasonable grounds. 208 In the circumstances of the present case, it is clear that the manifest intention of ANZ at the time of entry into the relevant transactions was to pay regard to obligations of confidence. This is clear from the contractual documentation and from the nature of the banker-customer relationship. All the evidence tendered points in the same direction. ANZ regarded the confidentiality obligations, which are an ordinary incident of the banker-customer relationship, as important and incorporated such obligations in the contractual documentation it had with its customers. Irrespective of whether there was a subsequent breach of these obligations, there is no basis (let alone a reasonable basis) to contend that at the time representations were said to be conveyed concerning this matter that those representations were in any way misleading or deceptive. This is a complete answer to this part of the remaining defendants' case. 209 The second overarching reason why the misleading and deceptive conduct claim must fail is that the remaining defendants have wholly failed to demonstrate the requisite reliance on the alleged misleading or deceptive representations. As Lockhart J noted in Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No. 1) (1998) 39 FCR 546 at 558-559, recovery under section 52 is founded by the applicant's factual reliance on the misleading or deceptive conduct of the respondent. 210 Under cross-examination, Mrs Bowen conceded that when signing the guarantee she had not turned her mind to how the bank may or may not behave in the future as in respect of confidentiality: T211.13ff. Mrs Aldrick (who is infirm) was not cross-examined on the understanding that the defendants did not submit that she was not confronted with the same type of questions that were asked of Mrs Bowen: T212.27 211 It is true that both Mrs Brighton and Mrs Bowen deposed that they signed the relevant guarantees in the belief and expectation that ANZ would uphold relevant confidentiality obligations, and would not have signed without this belief. However, self-serving evidence of this type has limited weight and the duty of the Court is to have regard to whether or not a witness asserting reliance would have turned their mind to the alleged contravening conduct in embarking upon a particular course of action. Such evidence is somewhat analogous to the cautions given as to subjective evidence of reliance on a warning in negligence cases, as to which see Chappel v Hart (1998) 195 CLR 232 at 246 and 272, and Shire of Gingin v Coomb [2009] WASCA 92 at [79]-[80]. 212 It is apparent from the above that the remaining defendants have failed in relation to the claim based on misleading or deceptive conduct. The claims based on unconscionability 213 I turn first to the claim that the disclosure itself constituted unconscionable conduct in contravention of ss 51AB or 51AC of the TPA. It is important to remember that the disclosure occurred after the entry into the agreements, guarantees and mortgages: cf Buckeridge v Mercantile Credits Ltd (1981) 147 CLR 654 per Brennan J at 675. Thus the disclosure cannot be said to have induced or otherwise affected those transactions. Accordingly, even if it were established that the disclosure contravened the relevant statutory standard, that finding could not support the relief sought by the remaining defendants. That relief is essentially that the ANZ be permanently restrained from enforcing the relevant agreements, guarantees and mortgages, and various orders pursuant to s 87 of the TPA which would have the effect that ANZ could not rely on the relevant agreements. [As outlined above, my understanding was that the claim for damages under s 82 of the TPA was not made by any of the remaining defendants]. Ultimately, the conclusion in this area reflects the elementary proposition that relief must be appropriate to any cause of action established. 214 There is a further reason why the defendants are not entitled to the relief sought. Under section 87 the discretion to make orders applies where "the Court finds that a person … has suffered … loss or damage by conduct of another person that was engaged in contravention" of certain provisions. The relevant case law establishes that the word "by" expresses usual notions of causation: see the discussion in Abram v Bank of New Zealand (1996) ATPR 41-470 at 41782-41783. As explained above, the conclusion is that the disclosure did not cause the loss or damage complained of by the remaining defendants. Thus even if it was established that the disclosure contravened ss 51AB or 51AC, the defendants would not be entitled to relief under s 87. Section 80, which would apply to the injunctive relief sought, does not contain the same limitation but in my view, as outlined above, the relief must be appropriate to the cause of action established, and thus I would refuse the proposed injunctive relief. 215 I turn next to the claim that the disclosure and ANZ's conduct in respect of it makes it unconscionable for ANZ to enforce the relevant agreements. In my view the defendants have failed to establish this claim, (I note that the defendants never articulated how and on what basis it was unconscionable for ANZ to enforce the rights in question). 216 I turn finally to the claim made by Mrs Aldrick, that given her age and the circumstances leading to the execution of the guarantee, it was unconscionable to permit the plaintiff to rely upon the guarantee against her. It simply has not established on the evidence, in particular with reference to the circumstances affecting Mrs Aldrick at the time of contracting, that the doctrine of unconscionable conduct, as explained by the High Court in Commercial Bank of Australia v Amadio (1983) 151 CLR 457, applies. Accordingly, this claim also fails. CRA – Fourth and Fifth Guarantees 217 Each of Mrs Aldrick (in respect of the Fourth Guarantee) and Mrs Bowen (in respect of the Fifth Guarantee) claim relief under the CRA. 218 Section 7 of the CRA relevantly allows a Court to set aside, refuse to enforce, or declare void a contract or a provision of the contract if it finds the contract or provision of the contract to be "unjust in the circumstances relating to the contract at the time it was made" and considers it "just" to grant relief. 219 Section 9 of the CRA provides that, in determining whether a contract or a provision of the contract is unjust in the relevant sense, the Court is to have regard to the public interest and all the circumstances of the case including the consequences arising if the party seeking relief is made to comply with the relevant provisions of the contract. Section 9(2) sets out a list of non-exhaustive specific matters to be considered by the Court in determining whether a contract is "unjust". 220 Mrs Aldrick and Mrs Bowen each swore a statutory declaration that they did obtain independent financial advice and legal advice in relation to their entry into their guarantees. These statutory declarations were provided to ANZ as part of the execution of the relevant agreements. 221 Furthermore, Mrs Bowen gave evidence that she obtained legal advice in the period leading up to her signing of the guarantee concerning the ability of SSMA to recover amounts in relation to Abel Point contract. This was to assure herself that what she was doing was sensible: T211.10. Mrs Aldrick received advice to the same effect. Finding in relation claim under the CRA 222 On the evidence before the Court neither Mrs Aldrick nor Mrs Bowen have shown that the relevant contracts were "unjust" under the CRA. The overall result 223 All of the defendants/cross-claimants have failed to make out any of their defences and cross-claims. Thus the plaintiff is entitled to the relief claimed. 224 The parties are to bring in short minutes of order to reflect these reasons, including in relation to the precise amounts in relation to which the plaintiff is entitled to relief. 225 The parties will be given an opportunity to address as to costs at a future date. ***************** 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.