Supreme Court New South Wales Medium Neutral Citation: Geoffrey Alfred Rixon v Perpetual Trustees Victoria Ltd [2012] NSWSC 106 Hearing dates: 7 December 2011, 8 December 2011, 16 December 2011 Decision date: 29 March 2012 Jurisdiction: Equity Division Before: Sackar J Decision: See paragraphs 134, 178 and 179 Catchwords: EQUITY - general principles - mortgage - unconscionability - unconscionable dealing - unconscionable conduct Legislation Cited: Trade Practices Act 1974 (Cth) Fair Trading Act 1987 (NSW) Cases Cited: Legione v Hateley (1983) 152 CLR 406 Stern v McArthur (1988) 165 CLR 489 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 Blomley v Ryan (1956) 99 CLR 362 Commercial Bank of Australia v Amadio (1983) 151 CLR 447 Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51 Jones v Dunkel (1959) 101 CLR 298 Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 Briginshaw v Briginshaw (1938) 60 CLR 336 Christmas v Nicol Bros Pty Ltd (1941) 41 SR (NSW) 317 Cubillo v Commonwealth (No 2) [2000] 103 FCR 1 Perpetual Trustees Victoria v Geoffrey Alfred Rixon [2001] NSWSC 329 Texts Cited: Nil Category: Principal judgment Parties: Geoffrey Alfred Rixon - plaintiff Perpetual Trustees Victoria Ltd - defendant Representation: Counsel: R W Evans (plaintiff) D Cook (defendant) Solicitors: McKell's Solicitors (plaintiff) Norton Rose (defendant) File Number(s): 2007/258227 Judgment The Proceedings 1In these proceedings the plaintiff contends that the conduct of the defendant in response to his attempts to discharge his mortgage was unconscionable pursuant to the general law, under the Fair Trading Act 1987 (NSW) and Trade Practices Act 1974 (Cth). The unconscionability is said to arise from the defendants stance in refusing to acknowledge to the plaintiff and/or his solicitor an error in the calculation of the amount allegedly owing under his mortgage. The plaintiff asserts that as a litigant in person he was vulnerable and unable to protect his own interests. The defendant he contends exploited that situation to his disadvantage. As a result the plaintiff lost his home. 2The plaintiff asserts that therefore the defendant is liable in damages or such other equitable compensation as the Court deems fit. 3The defendant denies any unconscionability and generally denies relief on the various basis articulated by the plaintiff. 4The hearing conducted before the Court dealt only with the question of liability. Questions concerning damages were deferred. Background Facts 5In 1974 the plaintiff purchased a property at James Street, West Ryde where he lived with his wife and three sons until 1988 when he and his wife separated. 6In April 1999 he sought to borrow $300,000 in order to arrange a Family Court property settlement. The plaintiff agreed to mortgage the James Street house to the defendant in order to secure the loan. 7The defendant used an entity called Interstar Securities (Australia) Pty Limited (Interstar) which managed its mortgages. Interstar as part of its role of manager dealt with defaulting mortgagors from time to time. At the same time brokers would arrange mortgage facilities from time to time with the defendant. One such broker was Residential Housing Corporation Pty Ltd (Resi). This latter entity according to the plaintiff facilitated the arrangement of his mortgage with the defendant. 8In late 1999 the plaintiff was admitted to hospital. He was diagnosed as having suffered from a pulmonary embolism and was advised it might take a year to completely recover. 9On 14 December 1999 Mr Rixon was sent a letter of demand by a Mr Ian Robertson, the then credit controller of Interstar. The letter stated that Mr Rixon was one month in arrears on his mortgage payments. It further stated another payment was due on 15 December and interest would accrue on and from 1 December at a higher rate of interest. 10The plaintiff alleges on the other hand that it was he who made contact with the defendant and tried to explain his situation. He says the person he spoke to, who he cannot recall, referred him to its manager Interstar who in turn he says referred him to Resi. 11Mr Rixon asserts that he eventually had a conversation with a "Ms Kathy Coe" of Resi with whom he asserts he had his original conversation and meeting in March 1999 to obtain the loan in the first place. He asserts he told her he had been ill and further told her he might have difficulty paying his mortgage. It was she who suggested he could capitalise his loan repayments. This would as he understood it relieve him of monthly repayments for at least a year. He was subsequently told that had been approved. He says he requested paperwork in connection with the capitalisation of the loan and says he was assured all was in order. He alleges in subsequent conversations he was assured the loan had been capitalised. 12On 6 February 2000, Mr Rixon was sent a further letter of demand indicating again from Mr Robertson his mortgage was now two payments overdue and that the status of his account was totally unacceptable and if payment in full was not received within 5 days of the date of the letter legal proceedings would be commenced against him. 13On 16 March 2000, Heidtman & Co, Solicitors (Heidtmans) on behalf of the defendant by letter notified the plaintiff of his alleged default under his mortgage and served on him a section 57(2)(b) notice pursuant to the Real Property Act 1900 (NSW). 14Proceedings were commenced in this Court on 2 May 2000 in which the defendant sought possession and an order for costs. 15The plaintiff asserts that despite the arrangement he had about his payments being capitalised the plaintiff was served with a statement of claim by the defendant at James Street on Saturday 13 May 2000 during his son's 21st birthday party. 16The plaintiff further asserts that he sought clarification from Resi and was told that the proceedings were a mistake but that he never received written confirmation to that effect. The plaintiff further asserts that, confused and concerned, he visited Heidtmans solicitors and was told apparently that Resi should not have arranged to suspend his payments. 17Mr McMurran, a partner of Heidtmans who had the conduct of the matter was instructed to obtain default judgment. 18After proceedings were commenced, Mr Rixon informed Mr McMurran he had arranged to refinance the loan and expected to settle within 21 days. 19In the meantime Mr Rixon filed a defence on 16 June 2000. 20Having filed his defence in June 2000 the matter came before the Court on no less than 8 occasions between 4 August and 1 December 2000. In the meantime it seems Mr Rixon had retained a Ms Tancred at Piggot Stenson Ratner Thom solicitors to act on his behalf in relation to the Family Court matter and to some extent perhaps the refinance. 21Mr Rixon did not obtain finance to pay the defendant out and therefore the defendant filed a motion to set aside the defence and obtain summary judgment. 22Mr McMurran briefed Mr Newton of Counsel to appear at the hearing. 23On each occasion the matter came before the Court the plaintiff represented himself and requested adjournments on the basis that he was obtaining refinance in order to discharge the mortgage. No such refinance ever materialised in 2000. 24Mr Newton of Counsel had been at a number of the hearings before the Court. The defendant had instructed Mr Newton to press for a hearing date on the application for summary judgment. The matter was fixed for hearing before Justice James on 15 December 2000. 25On 15 December the plaintiff was represented by Mr Derek Cassidy QC. He on behalf of Mr Rixon agreed to terms of settlement which provided that if refinance was not obtained before 14 February 2001 the plaintiff would consent to judgment and to possession. Mr Rixon signed those terms and orders were made accordingly. 26The plaintiff asserts that at or about this time he had an indication from an entity called Sydney Home Loans that a loan of $400,000 would be available. In early 2001 negotiations were being conducted with a firm of solicitors, R L Kremnizer & Co Solicitors for a loan of $400.000 from one of their clients. 27Refinance however was not obtained by 14 February 2001. 28On 2 March 2001 the plaintiff made application to withdraw his consent to the entry of judgment. This was refused by the Court on 9 March 2001. The Court granted judgment to the defendant on that day, and it was formally entered against the plaintiff on 28 March 2001. 29The plaintiff had also engaged a solicitor, Mr Gary Pickering to assist him and attempt to arrange a settlement with the defendant. The plaintiff had been served with a notice to vacate which was to take effect on 18 April 2001 at 1pm. The defendant had caused a writ of possession to issue and had arranged an appointment with the Sheriff to take possession. 30The plaintiff appeared in person before the Court on 17 April and successfully sought ex parte to have the writ of possession stayed on the basis that settlement of the refinance was to take place on that day 17 April 2001. The ex parte application was granted and the writ was stayed until 19 April 2001. 31Settlement did not take place on 17 April 2001. 32Further on 19 April against opposition from the defendant the stay was again extended this time until 3.45pm on Friday 20 April 2001. 33On or before 19 April Mr Pickering formed the view that the defendant was claiming an incorrect amount by way of a pay out figure. 34On 19 April Mr Pickering requested a complete breakdown of the sum claimed by Heidtmans. 35On 19 April Mr Pickering following telephone discussions with Mr McMurran faxed Heidtmans a detailed letter pointing out what he asserted was an obvious error in the interest claimed and requested a readjustment ahead of the settlement at 2.30pm on 20 April 2001. 36In his letter Mr Pickering pointed out that on 16 February 2001 the pay out figure was $357,029.14 but by 12 April 2001 it was $366,989.85. In addition $10,200 he observed was claimed for legal costs. He requested the matter be reconsidered. 37On 19 April Heidtmans sent a letter to Mr Pickering with updated settlement figures and indicating the settlement amount was $367,656.48 plus $10,219 for legal fees. 38The next day, 20 April Heidtmans faxed a reply at 12.25 pm which was approximately 2 hours before the proposed settlement. The letter indicated that their client had verified that it had made no errors in its calculations and the figure had been checked by Interstar. However, a different and larger payout figure was then asserted to be the appropriate amount, namely $405,902.75. Mr Pickering on receipt of the fax telephoned Mr Alan McMurran of Heidtmans informing him that settlement could not take place because the plaintiff's funding was only $400,000 and claimed the refusal of the defendant to admit its error was a blatant mistake. 39Settlement did not take place at 2.30pm that day. The stay therefore lapsed at 3.45pm on Friday 20 April 2001. 40At or about 5pm on 20 April the plaintiff telephoned the chambers of Justice O'Keefe. The events, so far as his Honour was concerned which both immediately preceded and followed that telephone call including a summary of the hearing which took place before him are to be found in his Honour's judgment of 24 April 2001 in Perpetual Trustees Victoria v Geoffrey Alfred Rixon [2001] NSWSC 329. 41Justice O'Keefe held an urgent hearing late that afternoon of 20 April 2001. 42The plaintiff appeared in person and sought a further stay and attempted to explain that an error had occurred in the amount claimed. That position was opposed by the defendant who had again retained Mr Newton of counsel who was in turn instructed at the hearing by Mr McMurran. The defendant through its counsel asserted that the sum claimed was correct. Justice O'Keefe gave judgment refusing the application for a further stay and ordered that the plaintiff pay the costs of the application. 43A further attempt to refinance was apparently mooted for 27 April but it did not occur. 44On 30 April Mr Pickering alleges that he telephoned Mr McMurran and suggested that an independent accounting take place and that eviction be postponed. Mr McMurran he said refused. 45On 30 April the defendant took possession of the property. On 22 September 2001 contracts for the sale of the property were exchanged after a public auction and on 17 December 2001 the property was transferred into the name of the new owners. 46On 17 December 2007 these proceedings were commenced. The Contentions of the Parties 47The plaintiff contends that the defendant during the relevant period conducted itself towards him in such a way as can only be characterised in law as unconscionable. The plaintiff asserts the defendant made an obvious error which it would not admit. The defendant via its lawyers it is submitted adopted a vindictive and high handed attitude and one which was simply not susceptible to reason in the face of materials which clearly exposed an error in the calculation of the amount required for discharge of the mortgage. 48The defendant asserts that that is a simplistic characterisation of the facts and indeed of its conduct and that although the defendant's lawyers were uncompromising, their attitude was based on their honestly held belief that the calculation was correct and that their client had verified the calculations. There was therefore no support in the evidence for a finding of unconscionable conduct. The Legal Principles 49A party having a legal right will not be permitted to exercise it in such a way that the exercise amounts to unconscionable conduct. Legione v Hateley (1983) 152 CLR 406. 50In Stern v McArthur (1988) 165 CLR 489 Mason CJ said at 503: Furthermore, to accept the respondents' submission and extend relief against forfeiture to instances in which no exceptional circumstances are established would be to eviscerate unconscionability of its meaning. The doctrine is a limited one that operates only where the vendor has, by his conduct, caused or contributed to a situation in which it would be unconscionable on the vendor's part to insist on the forfeiture of the purchaser's interest. Priestley J.A. thought that "it would be unreasonable and unconscionable...to permit [the vendors] to shut [the purchasers] out from ownership" (my emphasis), and consequently allowed relief against forfeiture. But, contrary to his Honour's view, the jurisdiction to grant relief against forfeiture does not authorise a court to reshape contractual relations into a form the court thinks more reasonable or fair where subsequent events have rendered one side's situation more favourable. 51In Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ observed at 324: The terms "unconscientious" and "unconscionable" are, as was emphasised in Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd, used across a broad range of the equity jurisdiction. They describe in their various applications the formation and instruction of conscience by reference to well developed principles. Thus, it may be said that breaches of trust and abuses of fiduciary position manifest unconscientious conduct; but whether a particular case amounts to a breach of trust or abuse of fiduciary duty is determined by reference to well developed principles, both specific and flexible in character. It is to those principles that the court has first regard rather than entering into that case at that higher level of abstraction involved in notions of unconscientious conduct in some loose sense where all principles are at large. 52Kitto J in Blomley v Ryan (1956) 99 CLR 362 said to a similar effect at 429: The fact that the defendant's condition was the result of his own self-indulgence could make no difference, for, as is shown in Cooke v Clayworth, the principle applied is not one which extends sympathetic benevolence to a victim of undeserved misfortune; it is one which denies to those who act unconscientiously the fruits of their wrongdoing. 53Mason J said in Commercial Bank of Australia v Amadio (1983) 151 CLR 447 at 462: It is not to be thought that relief will be granted only in the particular situations mentioned by their Honours. It is made plain enough, especially by Fullagar J., that the situations mentioned are no more than particular exemplifications of an underlying general principle which may be invoked whenever one party by reason of some condition of circumstance is placed at a special disadvantage vis-a-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word "disadvantage" by the adjective "special" in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party. 54Deane J in Amadio made the following remarks at 474 - 475: The equitable principles relating to relief against unconscionable dealing and the principles relating to undue influence are closely related. The two doctrines are, however, distinct. Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party (see Union Bank of Australia Ltd. v. Whitelaw (1906) VLR 711 at p 720; Watkins v. Combes [1922] HCA 3; (1922) 30 CLR 180, at pp 193-194; Morrison v. Coast Finance Ltd. (1965) 55 DLR (2d) 710, at p 713). Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so. The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogued. In Blomley v Ryan (1956) 99 CLR, at p 405, Fullagar J. listed some examples of such disability: "poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary". As Fullagar J. remarked, the common characteristic of such adverse circumstances "seems to be that they have the effect of placing one party at a serious disadvantage vis-a-vis the other". 55At 480 - 481 Deane J also said: Relief against unconscionable dealing is a purely equitable remedy. The concept underlying the jurisdiction to grant the relief is that equity intervenes to prevent the stronger party to an unconscionable dealing acting against equity and good conscience by attempting to enforce, or retain the benefit of, that dealing. Equity will not, however, "restrain a defendant from asserting a claim save to the extent that it would be unconscionable for him to do so. If this limitation on the power of equity results in giving to a plaintiff less than what on some general idea of fairness he might be considered entitled to, that cannot be helped" (per Lord Greene M.R., Wrottesley and Evershed L.JJ., In re Diplock [1948] 1 Ch 465 at p 532). 56Mere inequality of bargaining power will not suffice. As Gleeson C.J. said in Australian Corporation and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 64: A person is not in a position of relevant disadvantage [for the purposes of unconscionability], constitutional, situational, or otherwise, simply because of inequality of bargaining power. Many, perhaps even most, contracts are made between parties of unequal bargaining power, and good conscience does not require parties to contractual negotiations to forfeit their advantages, or neglect their own interests... Unconscientious exploitation of another's inability, or diminished ability, to conserve his or her own interests is not to be confused with taking advantage of a superior bargaining position. Discussion Mr Rixon's allegation About a Capitalised Facility 57Mr Rixon's case substantially focussed on the wrong calculation which he asserts the defendant simply refused to admit. As a prelude however to the recovery process, he asserts he had made an arrangement with Resi to capitalise his facility and the commencement of proceedings was in breach of that arrangement. This conduct was then exacerbated by the defendants attitude to the suggestion of any error and culminated in his being humiliated by the defendant's lawyers and in effect mistreated during and after the hearing before Justice O'Keefe on 20 April 2001. 58Mr Rixon alleged the agreement in relation to the capitalised facility was reached with the defendant's agent, Resi. 59There is no doubt Mr Rixon was seriously ill in late 1999 and needed time to rest and recuperate. 60This arrangement which he said he relied upon was of course according to him breached by the service of the proceedings upon him in the May of 2000. He also asserts that he was subsequently told it was all a mistake. 61He gives numerous accounts of speaking to persons at Resi when initially arranging his facility. He said he recalled first speaking to a Ms Kathy Coe in March 1999. As a result he stated that he had a meeting with her in Stanmore at her office the next day at which they discussed a suitable loan product. She told him that she would fax the application form to Interstar and then telephone them. 62Shortly afterwards he says Ms Coe spoke to a Mr Bruce Baker who had apparently informed her that Mr Rixon's loan was approved and she passed that on to him. So much does not appear to be disputed by the defendant. 63On 28 November 1999 Mr Rixon was admitted to hospital having suffered a pulmonary embolism. He was discharged from hospital on 2 December. Again this is not in dispute. 64Mr Rixon says he was told by his specialist that he could take at least a year to recover. 65Mr Rixon says upon discharge from hospital he made contact with the defendant who referred him to Interstar who in turn referred him to Resi where he believes he spoke to Ms Coe. He told her of his illness. She asked whether he could go and see her. He asserts he went and saw Ms Coe. She allegedly told him that subject to substantiating his medical condition she indicated that the frequency of his mortgage payments could be varied. She is said to have indicated that she would run it by her manager and get back to him. He asserts that later she rang him and told him the loan had been deferred and capitalised for twelve months. He attributes his alleged agreement with Resi to explain why he ceased payments. 66He insists he followed up the paperwork which he clearly expected he would have to issue. 67He asserts he spoke to a male person and also Ms Coe again about paperwork and was handed some sheets of paper. In his evidence he does not describe what the paper looked like and it is certainly not his evidence that he actually ever signed anything remotely resembling an agreement. Due to circumstances out of his control Mr Rixon insisted at the hearing that many of his documents were or had been destroyed when a flood occurred at his house. What is clear is that there are no documents in existence evidencing the agreement he asserts he made to capitalise the facility. 68He further asserts he received shortly after his discussions with Ms Coe (as arranged apparently) a copy of the Interstar lenders manual by email. This was to apparently assist Mr Rixon understand how his loan was to be managed. It is not immediately clear to me why either a lender or borrower would be remotely assisted by such a document or part thereof. For the purposes of the trial Mr Rixon had otherwise obtained a full copy of the manual. 69There is no doubt in my mind that Ms Coe clearly existed. I say this for two reasons. First there is a document annexed to Mr Rixon's affidavit of 17 November 2010 bearing a date 12 April 1999. It has a reference to a "Kathy Koe" on the front page of a fax which on its face is from Resi. Secondly Mr Rixon first made it seems the assertion about a capitalised facility in his affidavit of 17 November 2000. As a result a Mr Hubbard a solicitor at Heidtmans sent a fax to Mr Robertson obviously seeking information about a Mr Jim Christie and a Ms "Cathy Coe". Mr Christie may be a different person to a Mr Con Christie at Resi who had written to Mr Rixon in the April of 1999 about his loan. In exhibit AM2 to the affidavit of Mr McMurran there are two draft affidavits (pp 61-65) which presumably were never sworn but were obviously prepared for the possession proceedings. They are those of Ms Coe and Mr Christie who are described as a consultant and a director of Resi. They had the same business address in Ultimo. 70Both affidavits in draft deny Mr Rixon ever requested or discussed a capitalisation of his loan facility and go on to say that no person at Resi had authority to approve such a request. Certainly as at November 2000 I am able to infer that not only did Ms Coe exist but she was then potentially available to the defendant. I should add the court file for the possession matter appears to have been lost so it is no longer possible to know what was before the Court. However more importantly no questions were put to Mr McMurran in cross examination about the draft affidavits his firm had prepared nor for that matter was Mr Robertson asked about them. 71Mr Rixon says that having believed his facility was capitalised for a year he nonetheless received a phone call out of the blue from someone at Resi in March 2000. The person who he could not identify apparently asked whether there would be sufficient equity in his property to capitalise his payments. This conversation apparently took place after a twelve month facility had already been agreed. It is rather odd if I may say if Mr Rixon was telling the truth that a financial organisation would not have raised such an issue before agreeing to a facility in the first place. Further, the person allegedly said a formal valuation was not necessary (perhaps another oddity) and a local agent's view would suffice. It was then suggested Mr Rixon should make a month's payment of $2,050 as a sign of good faith. Mr Rixon says he obtained such an appraisal and faxed it to Resi. Mr Rixon was then told that the $2,050 was not needed as the twelve month facility was in place and therefore no payments could be made. He thereafter believed everything was in order until he was served with the possession proceedings in May 2000. To complete this aspect of the matter, he again had contact with someone at Resi who said the proceedings were a mistake and he would be sent something in writing about the capitalisation arrangements. Nothing ever came to him. 72The defendant called evidence from a Mr Ian Robertson. He was employed as a credit controller in 2000 by Interstar. He denies ever speaking to Mr Rixon about capitalising interest payments. He does however say he received a call from Mr Rixon on 24 December 1999. He has a contemporaneous diary note. This is in my opinion of some importance. The note reads: borrower has been ill will chase up outstanding rent - advised to call if arrears not cleared 73Prior to the phone call Mr Robertson had caused a letter of demand to be sent to Mr Rixon on 14 December 1999. The letter referred to the fact that he was one month in arrears with the mortgage. The letter also indicated that another payment would be due and in turn that a higher rate of interest would be charged. The higher rate was charged from 1 December (1 December being the date the account went into default). This is clearly what prompted Mr Rixon's call in my view. 74Mr Rixon did not report further to Mr Robertson on the outstanding arrears in rent. 75On 6 February 2000 Mr Robertson caused a further letter of demand to be sent to Mr Rixon. The letter described the state of the account as unacceptable and threatened legal action. Again it was suggested Mr Rixon make contact. Mr Rixon made no further contact with Mr Robertson. 76Mr Robertson gave unchallenged evidence that no employee at Resi had authority to agree to capitalise mortgage payments. Any such request would have to be conveyed to him. If such a request were made he would have needed to seek approval from the mortgage insurer to consider such a request. Mr Robertson also said at no time was he contacted by any person from Resi to agree to any capitalised facility. He was the person who had instructed Heidtmans to commence proceedings on 9 March 2000. 77On 14 September 2000 Mr Rixon wrote a letter to Ms Kerry James (who was assisting Mr McMurran) of Heidtmans. The letter relevantly stated as follows: Dear Kerry I thought it might be helpful to first recall the history of what has happened so far. As part of the property settlement in the Family Court I was awarded the family home, which I then financed through Interstar. In late 1999 I suffered a Pulmonary Embolism (blood clot on the lung) as a result of me tripping and falling over in my boat. At that time by doctors advised that it would take up to 12 months to recover. I contacted Interstar in Melbourne and advised them what had happened and they asked me to deal with the Account Manager, Resi Home Loans. I contacted Resi Home Loans who advised me that the interest rate would be increased until I could bring the payments up to date again, and to keep them advised as to my recovery which I have done. In April this year I became concerned that I was not recovering as quickly as I had hoped and spoke to Resi Home Loans again. They advised me to get a market appraisal on my property to satisfy the mortgagee that there was still 75% equity in the property to cover the initial mortgage and the missed payments. On the 13th April 2000 I obtained a market appraisal of $500,000.00 which I forwarded a copy of to Resi Home Loans on 14th April 2000. I was assured by Resi Home Loans that there was no problem, and to keep them informed as to my progress. It therefore came as quite a shock when on the 8th May 2000 when I was served with the court papers. I then made enquiries for refinance of the loan through a number a mortgage brokers and received an approval. Another broker, Fox Corp Home Loans, Fox Corp Home Loans have misrepresented the approval to myself and my solicitors, this was only established this week. I am now seeking a fresh approval for refinance, which is progressing well although slowly due to the Olympics. I have received indications that an approval for a $100,000 second mortgage will be received within the next week. A valuation of my property has been completed where it has been valued at $500,000.00 and I have been advised that refinance to 80% of the valuation will be approved. What I propose is that I put a second mortgage in place to pay out the arrears on the Interstar loan and to provide additional working capital to assist my business. This will assist me in my business and allow me to make future payments when they fall due. I ask you to consider this approach and to consent to a short adjournment at tomorrow's court appearance. I am prepared to enter an agreement that if the above proposal is acceptable I will completely refinance my property within the next 6 months, which would fully pay out Interstar. As you can appreciate the most favourable mortgages and rates take time to put in place. The urgent finance is expensive and has very high up front fees and sold by a collection of opportunistic sharks. I would point out that I have at all times dealt with yourselves and Interstar honestly and kept you informed. What I am proposing is realistic and achievable; I have never attempted to mislead you or your client. I am happy to provide the market appraisal, valuation and letters of offer if it assists you. I will phone you later to discuss the above. 78Mr Rixon had suggested in his affidavit filed in these proceedings that he was up to date with his mortgage payments as at 1 December 1999. He would not agree that a copy of his account for 1 December showed that the last payment he had made on his mortgage was 15 October 1999. 79Mr Rixon denied that he was in dire financial difficulties before he went into hospital in 1999. He did not believe he spoke to Mr Robertson in 1999. He denied telling Mr Robertson he would clear the arrears on his account. It was put to Mr Rixon that his account of Ms Coe's statements were most improbable. He would not accept that description. It was further put to him he never did have a conversation with anyone at Resi about capitalising his loan. He rejected that. Indeed it was put the only conversation about arrears was with Mr Robertson and he never had an arrangement of the sort he had suggested. 80I should observe that when he was from time to time being questioned about events for example the whereabouts of emails which he asserts he had sent to Ms Coe, he alleged they were lost when his property was flooded. That had destroyed his computer and he alleged a number of his paper files. 81It was put to him that the market appraisal he had had done in 2000 was not for Resi but for the purposes of raising money to refinance the loan. It was also put to Mr Rixon that he drew the bank cheque for $2,050 and rebanked it not because he was told his loan was capitalised but because he realised he would not otherwise have any monies to live on. 82Mr Rixon at first agreed he had received the letter of demand of 6 February sent to him by Mr Robertson. He later said he could not recall but pointed to it as being one of the letters which he said directed him as he saw it to Resi which was the reason why he made contact with them. Again when confronted with the question why he did not send a communication setting out the arrangement he again asserted he had, but it had been destroyed with others in the flood. 83I cannot accept Mr Rixon's evidence about his alleged conversations with Ms Coe or anyone else from Resi about capitalising his loan. I am firmly of the view he has manufactured these events. His version, uncorroborated as it is, in my view conflicts with contemporaneous documentary evidence. There is no doubt in my mind that when he became ill he was unable through his own efforts and due to inadequate rental income to keep up his mortgage payments. I am satisfied he rang Mr Robertson on 24 December 1999 as a result of the first letter of demand. I am also satisfied he told Mr Robertson he hoped to catch up and pay arrears. He could not as it turned out. 84I find it inconceivable that a financial institution (more to the point its agent even assuming that it was such) would orally vary a mortgage. Such variations would normally be in writing and Mr Rixon clearly appreciated that. His inability to produce what he asserted were contemporaneous emails because of the flood is either unlucky or convenient. No such documents were it seems procured by his lawyers from the defendant or any other entity in discovery or by subpoena, and none were brought forward by the plaintiff which corroborated this so called arrangement. His activity in procuring a valuation around 13 April 2000 I find was in response to his being served with proceedings and as a result of his attempting to refinance or perhaps sell to pay the defendant out. 85The two letters of demand (14 December 1999, and 6 February 2000) made it clear that by reason of the default a higher interest rate was being charged and the second of course threatened proceedings. 86Importantly his letter of 14 September 2000 portrays a history which is diametrically opposed to the one he swore to in his evidence. He would not have written it in those terms in my view if he genuinely believed he had an arrangement which involved capitalised interest. The notion of bringing his payments "up to date" runs quite contrary to his believing he had been relieved of making payments for at least a year from late in 1999. So does the mention of "missed payments". The letter is entirely consistent with the tenor of his conversation with Mr Robertson. I unequivocally accept Mr Robertson's evidence that he had a conversation with Mr Rixon as he asserted in his evidence. I reject the plaintiff's allegation about the existence of a capitalised facility. 87True it is Ms Coe was not called. It was put that I should draw an inference adverse to the defendant by reason of Jones v Dunkel (1959) 101 CLR 298. In Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 Campbell JA said at [91] - [92]: [91] Jones v Dunkel authorises, but does not require, a tribunal of fact to engage in two different types of reasoning. One is to infer that the evidence of an absent witness, if called, would not have assisted the party who failed to call that witness. The other is that the tribunal of fact can draw with greater confidence any inference unfavourable to the party who failed to call the witness, if that witness seems to be in a position to cast light on whether that inference should properly be drawn: Manly Council v Byrne [2004] NSWCA 123 at [51]. It is only the first of those courses that the trial judge followed in the present case. [92] Glass JA identified a number of propositions for drawing such an inference in Payne v Parker [1976] 1 NSWLR 191 at 201-202. Among these were the following conditions: "Whether the principle can or should be applied depends upon whether the conditions for its operation exist. These conditions are three in number: (a) the missing witness would be expected to be called by one party rather than the other, (b) his evidence would elucidate a particular matter, (c) his absence is unexplained. The first condition is also described as existing where it would be natural for one party to produce the witness: Wigmore, par 286, or the witness would be expected to be available to one party rather than the other: O'Donnell v Reichard [1975] VR 916, at 921, or where the circumstances excuse one party from calling the witness, but require the other party to call him: ibid [1975] VR 916, at p. 920, or where he might be regarded as in the camp of one party, so as to make it unrealistic for the other party to call him: ibid [1975] VR 916, at 920, Regina v Burdett (1820) 4 Barn & Ald 95; 106 ER 873, or where the witness' knowledge may be regarded as the knowledge of one party rather than the other: Earle v Castlemaine District Community Hospital [1974] VR 722, at 733, or where his absence should be regarded as adverse to the case of one party rather than the other: ibid [1974] VR 722, at 734. It has been observed that the higher the missing witness stands in the confidence of one party, the more reason there will be for thinking that his knowledge is available to that party rather than to his adversary: ibid [1974] VR 722, at 728. If the witness is equally available to both parties, for example, a police officer, the condition, generally speaking, stands unsatisfied. There is, however, some judicial opinion that this is not necessarily so: ibid [1974] VR 722, at 728. Evidence capable of satisfying this condition has been held to exist in relation to a party's foreman: Cafe v Australian Portland Cement Pty Ltd (1965) 83 WN (Pt 1) (NSW) 280; his safety officer: Earle v Castlemaine District Community Hospital [1974] VR 722; his accountant: Steele v Mirror Newspapers Ltd [1974] 2 NSWLR 348; his treating doctor: O'Donnell v Reichard [1975] BR 916, at 921. 88There was no explanation given by the defendant as to Ms Coe not being available. Mr Robertson was asked about her and said he was not familiar with her and had never met her. That is where the cross examiner left it. As I have already observed no questions were put on her draft affidavit. The draft affidavit of course denies any conversation with Mr Rixon about capitalising his facility. 89The question here though of drawing an inference adverse to the defendant does not arise because I simply do not accept the plaintiff's evidence that such an arrangement was ever made by him in the first place. The Wrong Calculation 90The case was conducted by the defendant on the basis that the calculation of the amount actually claimed by it as outstanding by Mr Rixon as at 20 April 2001 was erroneous. The amount claimed by it was $405,902.75 instead of the correct amount which was $385,770.74 as I understand the evidence of the plaintiff's expert Mr Hughes. 91The defendant says that this is irrelevant in any event because the plaintiff was (insofar as finance had been arranged) short of the required amount in any event by reason of the other debts he had to discharge. So that claiming the incorrect amount caused no compensable loss. I will return to this question separately. 92It is relevant to trace the events leading up to the hearing before Justice O'Keefe on 20 April 2001 for the purposes of examining how the error arose. 93On 17 April a Mr Liouliakis a credit controller at Interstar wrote to Heidtmans. The letter was written obviously in anticipation of a settlement on 20 April. The letter claimed an amount of $367,656.48 as the payout figure. 94Mr Pickering wrote to Heidtmans on 19 April referring to a telephone conversation earlier that day. He referred to an affidavit of a manager of the defendant who had sworn that as at the date 9 February 2001 the amount outstanding was $357,029.14 but was on 19 April $366,989.85. A further amount of $10,200 was to be added for legal costs. He drew attention to what he said was clearly a mistake in the computation of the outstanding amount. Mr Pickering requested the defendant's position be reconsidered. Mr Pickering had also sent a further letter on 19 April requesting a break down of precise figures for principal and interest to 2 February and to 20 April. He also requested a breakdown of costs up to and since 2 February. 95The defendant was, it seems to me, wanting a repayment of the loan and to have the mortgage discharged. I should say immediately that the evidence in my view only points in that direction. That would be an entirely unexceptionable approach for a financier to take, especially with a customer who at the very least had caused significant delay in finalising his facility. 96It is clear that Ms Kerry James a paralegal who was assisting Mr McMurran requested Mr Liouliakis to do a breakdown of the balance outstanding, with principal and interest shown as separate figures. 97In response on 20 April Mr Liouliakis sent a letter to Heidtmans recording what the original principal was and what the interest was to 2 February 2001 and then from that date to 20 April 2001. The loan principal was said to be $300,000 which was correct. The interest to 2 February was said to be $51,806.96 which again was correct and the interest to 20 April was said to be $7,743.92. That was also correct. Mr Liouliakis invited Heidtmans to advise on their costs. The problem was that there was no account taken of any payments made by Mr Rixon (limited though they might have been) through the course of the mortgage. This was clearly an erroneous position to take. There is no evidence Mr Liouliakis had turned his mind to that position. 98In response to Mr Pickering's letter and again on 20 April Heidtmans sent a letter to him indicating their client had verified no miscalculation had occurred and further the figures had been checked. This time principal and interest said to be outstanding as at 14 June 2000 was $318,042.37. This figure had come from Mr Pickering's letter of 19 April. He had presumably obtained it from a Resi loan statement as at 14 June 2000. But in compiling those figures Ms James likewise failed to account payments made by Mr Rixon. 99At this point in time the communications were being exchanged in an air of some urgency. Settlement was due to take place on 20 April and the matter was also due back before the Court that afternoon. 100The plaintiff put this part of the case on the basis that the settlement did not take place on 20 April at 2.30pm not because finance was not available but because the defendant deliberately inflated the figure for discharge and displayed a lack of good conscience in failing to concede the mistake they had made when it was pointed out. That lack of good conscience it is said was perpetuated by Mr McMurran instructing counsel to appear before Justice O'Keefe on the afternoon of 20 April to maintain his client's position notwithstanding the error. 101These are serious allegations about the defendant and in effect of professional misconduct on the part of the defendant's lawyers. In considering such allegations I am obliged to take into account what Dixon J said in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362: The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences. (See also s 140 of Evidence Act) 102What emerges from the evidence as a whole in my view is not a financier or for that matter its lawyer or his staff exploiting a person in a weakened position but rather a solicitor in a long drawn out matter relying unsurprisingly upon his financier client to get the calculations correct. That after all is their business as it were, not his. The error accepted by the defendant at the trial is one I believe genuinely escaped the attention of Mr McMurran and those assisting him. To suggest that such an organisation or its professional legal advisor would deliberately choose a strategy out of spite and which would frequently lead to a shortfall in the amount recovered is to attribute an utterly uncommercial motive. Nothing short of the most cogent and compelling evidence would in my view be necessary to prove such an allegation to the requisite degree of satisfaction. I frankly do not see it as the rational explanation. The business of lending money for profit occasionally carries with it the need to exercise a power of sale. To maintain that the recovery process was being driven out of malice and not for purely commercial reasons requires a court to entertain and accept an inherently unlikely motivation. 103Mr McMurran gave evidence before me. He was the lawyer at Heidtmans in charge of the recovery proceedings. He confirmed Ms Kerry James worked for him as a paralegal as part of his team. She assisted him in relation to this transaction. He instructed her to act in accordance with the clients instructions and to rely upon the client for the calculation of amounts owed by borrowers. 104Mr McMurran accepted before me the defendant was in error in its calculations. He insisted and I accept him that he did not perform any calculations. He accepted the Court had in April 2001 directed that a breakdown of the figures be provided to the plaintiff's solicitor. He further believed, and again I accept his evidence, that the figures had been checked by persons employed at the defendant and/or Interstar. 105Mr McMurran said he had only in 2010 become aware of the precise error himself. The figures in 2001 were according to Mr McMurran put together by Ms Kerry James. Mr McMurran had asked Ms James to prepare a letter in response to that from Mr Pickering of 19 April. Mr McMurran had had conversations with Mr Pickering who he accepted was concerned about the calculations. 106Mr Pickering who gave evidence before me clearly indicated his frustration at the defendant and in particular Mr McMurran not being prepared to admit the error as he saw it. There is no doubt he lost his patience with the situation. 107It was suggested that Mr McMurran perceived Mr Pickering was quite abusive and strident in suggesting an error. Mr McMurran could not recall. Mr McMurran did say he (and I took it his client) were hopeful Mr Rixon would discharge the mortgage. I must say that would be the very attitude I would expect and I accept his evidence on that. 108Mr McMurran denied being annoyed with Mr Rixon trying hard to discharge the mortgage and avoid eviction. I accept his denial. He also denied wanting to pay Mr Rixon back for his delaying actions and again I accept his denials. It must be observed Mr McMurran's client had been delayed in being repaid, and had incurred considerable fees in contesting the lengthy delays that had occurred. The delays were costly to the defendant but Mr McMurran's firm was being paid for its time. 109There were a number of questions put to Mr McMurran which were in my view tantamount to suggesting he was guilty of professional misconduct. 110Far from the picture of a lawyer "paying back" a litigant I gained the impression Mr McMurran, under difficult circumstances, was attempting to pursue his clients interests in good faith, albeit in circumstances where he accepted his financier client in effect could not or had not made any mistake in its calculations. I do not consider that to be an unreasonable position for him to take in all the circumstances. 111Mr McMurran said he accepted that despite Mr Pickering's complaints he believed his clients figures were correct. He could not deny that after 20 April Mr Pickering may have telephoned him to have him agree to some independent assessment, but rejected that he told Mr Pickering his client could "sue us" if he wished. He could recall a conversation with Mr Pickering but asserted he would not have spoken to a fellow professional in that way. Mr McMurran gave me the impression he was a capable and calm professional who did not resort to heated remarks unlike Mr Pickering. That is not to say Mr Pickering did not feel entirely justified, after all, he was frustrated at not having his viewpoint unequivocally accepted as correct, which clearly it was. 112The plaintiff's case is that the defendant was intentionally requesting a higher figure than that to which it was entitled. There is in my opinion simply no evidence of that. There is no doubt Mr McMurran was quite confident his client's calculations were correct. He was entitled to believe the calculations had been checked. It was not put to Mr McMurran that he knew at the time the figures were incorrect. On the evidence, it could not sensibly be said that Mr McMurran knowingly claimed a higher figure than that which he believed was actually due. Nor can such a serious allegation be attributed to a commercial lender without the most compelling evidence. There is none. 113Further, no opportunity was taken to put any questions to Mr Robertson about his part (if any) in the calculations nor to suggest any other approach should have been adopted. He was the person who gave instructions to commence proceedings in the first place. 114Mr McMurran accepted that he went before Justice O'Keefe on the afternoon of 20 April. He recalled getting a phone call from the Judge's associate. He agreed he had earlier attended before the Judge at 3.45pm. He agreed that at that time there had been no appearance of Mr Rixon or Mr Pickering. 115He says he made an attempt to contact Mr Pickering but he did not take the calls. It was put to Mr McMurran he had fabricated his evidence about attempting to call Mr Pickering. He rejected that assertion. The cross examiner again was not only suggesting professional misconduct but something much more serious. I accept Mr McMurran's evidence. I regard such a proposition on the part of the cross examiner as bold given the length of time since the events had occurred, Mr Pickering's own memory, and the fact that not all of the relevant solicitors files were still available. 116When Mr McMurran attended the hearing before Justice O'Keefe on 20 April he did so with a Mr Newton of Counsel who he had instructed. 117Mr Rixon's account of what occurred during and after hearing is in stark contrast to what Mr McMurran and for that matter Mr Newton recall happening. 118Mr Rixon in his affidavit asserts that he overheard Mr Newton at one point of the hearing turn to Mr McMurran and say that Mr Rixon was correct (in relation to his calculations) to which Mr McMurran is alleged to have said "No, no, he is lying. He is always lying". Mr McMurran said in his affidavit in the proceedings he did not recall the conversation, but before me he said it did not occur. I accept his evidence. 119Mr Rixon also asserted that after the hearing and outside Court the following exchange allegedly occurred: McMurran:I am going to take your house, throw you out on the street, and make sure you don't get a penny out of it. Newton:Come on Allan (beckoning him to leave, he is clearly embarrassed). Me:All I want to do is pay you people out so that I do not have to have anything to do with you or your client. McMurran:I will make sure that does not happen. You are a prick and I will do you over. We effectively own your property now. You will get nothing. Newton:Come on Allan (beckoning him to leave, he was clearly embarrassed). Me:This is only round one. You may think you are on top now because I am stuck with you attitude and your timing. You probably think I am down now but I will rise up and I will sue you and make you and your client accountable for what you have done. You and Newton both know you have not declared what is owing. That is fraud and I will sue over for it if I have to. Newton:Come on Allan (beckoning him to leave, he was clearly embarrassed). McMurran:We will see. There is no way you will ever have the money to take us on. Me:We will see about that. Allan McMurran walked off and John Newton turned to me and said words to the effect of: Newton:I apologise for your behaviour. What you said in court about the amount if correct. Try and get your solicitor to get him to see reason. Me:We have tried that and got nowhere. He is intractable. He knows it is a mistake but he will not face up to it. John Newton then nodded and said: Newton:I will try to have a word to him. Me:Alright, hope you get somewhere. It is my home. 120Again Mr McMurran could not recall such a conversation, but asserted he did not speak to litigants in person in that fashion. Again I accept his evidence. 121Mr Newton of counsel was called. He agreed that Mr Rixon had handed up some calculations to the Judge. Mr Newton denied saying to Mr McMurran that Mr Rixon's calculations were correct. Indeed he was quite sure he did not say that because he could not himself at the time work out whether the calculations were right or wrong. He believes he asked Mr McMurran about the figures. He also denied Mr McMurran said Mr Rixon was lying. He was quite firm Mr McMurran did not say those words. He was able to say so without reservation. He agreed that within a day or two he prepared a letter by way of a report and there is no reference in that about the conversations Mr Rixon alleges took place. 122He was also asked about the alleged conversation as parties left the courtroom. Mr Newton again denied such things as Mr Rixon asserts were said. He asserted in my opinion candidly and plausibly that had such a confrontation occurred he would have remembered it. One reason he said he had such a clear recollection was because the hearing was unusual. It was an evening hearing at around 6pm in the old Supreme Court building and it was dark. 123On the issue of the events that took place at the hearing, I accept the evidence of Mr McMurran and his denials corroborated in important respects by Mr Newton. Both witnesses I believe gave their evidence candidly and their account is entirely plausible and I accept their evidence. 124I cannot say the same for Mr Rixon. On this and other issues I had serious reservations about his ability to accurately and unemotionally and hence objectively recall these events. I simply do not accept his evidence on these issues concerning the hearing before Justice O'Keefe. I regard the very elaborate series of events he swore to and set out above as a series of self serving and worse a simply manufactured set of statements attributed to the two lawyers. It is uncorroborated and highly improbable. 125The plaintiff did file an affidavit of a Cindy-Ann Gatt. Ms Gatt had prepared an affidavit which in part corroborated Mr Rixon and remarks attributed to Mr McMurran at the hearing which she also apparently attended. She was not however called. I do not in the end consider any adverse inference should be drawn against the plaintiff by reason of not calling her. I simply reject Mr Rixon's versions of what he says occurred during and after the hearing. Conclusion on Unconscionability 126I am satisfied that although an error was clearly committed on the part of the defendant by reason of its miscalculation, I am however firmly of the view its actions were driven by a bona fide belief that the figure was correct. There is no plausible evidence in my opinion to the contrary. 127Although the error in the calculation was not, on one view, difficult to comprehend, the evidence of Mr Darrel Ferguson Hughes exposes how even the most sophisticated person can make an error. Mr Hughes was called by the plaintiff as an expert witness. He is an accountant of some distinction and experience. He has a degree in commerce specialising in accountancy and is a member of the Forensic Accountants Special Interest Group. He has provided expert reports over at least twenty years and has given expert evidence I infer on many occasions. In part his evidence was directed to expressing an opinion that, based on his calculations the plaintiff was in a position on 20 April 2000 to repay the loan, and that according to him the correct amount outstanding was in fact $384,582.94, and that the defendants error which he described as significant was in the order of $29,009.81. He readily accepted in cross examination that his interest calculation of $22,797.15 should instead have been $23,773.88. He had simply made an arithmetical error. On one view of it the difference is minor, but it points to the fact that an expert of Mr Hughes calibre can make mistakes even where he has had a reasonable period of time to contemplate and re-check his report. 128On and just before 20 April, the plaintiff was via Mr Pickering requesting a breakdown of the figures. The calculations were being done under some pressure and perhaps frustration. I can understand how the error occurred and I find it was not made with the object in mind of deliberately placing Mr Rixon at a risk of eviction or in any sense to deliberately disadvantage him. 129Likewise I am simply unable to accept Mr McMurran went out of his way to mislead Justice O'Keefe which was the effect of the cross examination. The only conclusion if I accepted the plaintiff's submissions was that Mr McMurran was keen to "pay back" Mr Rixon, that he lost all objectively and wilfully refused to take Mr Rixon and for that matter Mr Pickering seriously and accept them unequivocally. 130I accept Mr McMurran when he said he believed the figures had been checked and verified by his client. 131It was submitted that I should draw inferences adverse to the defendant by reason of its failure to call Mr Liouliakis and Ms James again pursuant to Jones v Dunkel. This suggestion can be disposed of briefly. First Ms James was a paralegal who assisted Mr McMurran and worked under his direction and supervision. True it is she was putting the figures together but all that entailed was her writing off requesting them from the client. That is clear from her letters. Mr McMurran was the senior lawyer at the time. He was directing the litigation and instructed counsel. I do not see how Ms James could be expected to add anything to the matter given her position in the firm and given what she in fact had authority to do. She simply followed orders. 132Mr Liouliakis was of course the author of a letter of 12 April in which he provided settlement figures to Heidtmans. He also provided further settlement figures on 20 April. The evidence is that Mr Liouliakis was an employee in the credit department, but I am by no means persuaded he was someone I would have expected be called. There is no suggestion he had checked any calculations. But more to the point there was no evidence to suggest he was putting figures forward which he knew were incorrect. 133Mr Robertson on the other hand, who was called was clearly in control of the recovery process. No opportunity was taken to put any questions to him about the figures or calculations or indeed his motive in pursuing recovery. This in my view is telling forensically and renders void in my view any advantage the plaintiff could rationally expect by way of adverse inference by reason of the defendants failure to call Ms James and/or Mr Liouliakis. 134For the foregoing reasons I do not consider the plaintiff has made out any case on unconscionability. His case therefore fails. 135The defendant in addition asserts that the plaintiff's unconscionability causes of action under the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW) had to be brought within 6 years from the loss arising. It is submitted correctly in my view that Mr Rixon's claim arose at the latest when he lost the equity of redemption which occurred on 22 September 2001, that is when contracts were exchanged. Proceedings were commenced on 17 December 2007 just outside the 6 year period. It is therefore submitted, which I consider to be correct, that the statutory causes of action are time barred. I did not apprehend the plaintiff to put any contrary view. In any event I do not consider they could have been successful given my findings otherwise. Causation 136Notwithstanding I have found against the plaintiff on liability it was put by the defendant that even if the plaintiff had succeeded in his argument on unconscionable conduct, such conduct did not in any event result in or cause any compensable loss. 137Addressing this issue requires a consideration of whether Mr Rixon had sufficient finance to pay out the mortgage (that is the correct amount) as at 20 April 2001. 138Kremnizer had initially acknowledged receipt of an application for finance on behalf of Mr Rixon as early as 4 August 2000. Then the proposed facility was for the lesser of $357,000 or 65% of valuation. 139The defendant submits that there is no documentary evidence which reflects that the Kremnizer facility had been finally approved by 20 April. That appears strictly correct to me however there is other evidence to suggest to the contrary. 140Mr Pickering was the plaintiff's solicitor who had been retained on 8 March 2001 to act on the refinance of the property. 141On 30 March Mr Pickering received a letter from Kremnizer setting out requirements for a refinance for the plaintiff. The letter sets out a comprehensive list of enquires and has attached a blank statutory declaration to be completed by the putative mortgagor. 142On 4 April a further letter was received by him from Kremnizer. The letter enclosed documents to be completed and requested yet further information. 143Mr Pickering thereafter assisted Mr Rixon gather the materials to be supplied to Kremnizer. 144As I have already observed Mr Pickering contacted Heidtmans to obtain a pay out figure. 145On 12 April Kremnizer wrote to Mr Pickering requesting certain things on settlement including a withdrawal of two caveats. (One related to his former wife and one to a loan from 'No Fuss Finance'). 146On the same day Mr Pickering returned documents to Kremnizer for settlement including an executed mortgage. 147Again on 12 April, Mr Hosking (Mr Rixon's accountant) prepared a report in support of the refinance and a loan of $400,000. Mr Hosking's certificate was one of the mortgagee's requirements. 148On 17 April Mr Pickering received a letter from Kremnizer indicating that settlement would not take place until 20 April as funds would not be available until then. 149On 19 April Kremnizer sent a letter to Mr Pickering. The letter noted that property insurance with GIO was only for $210,000. It was noted the valuation confirmed the property should be insured for $275,000 and a certificate of increased cover was required. 150On 20 April Kremnizer in a letter indicated its client had provided funds for settlement and if the matter did not settle their client would charge interest until it did settle. 151I consider that on the available materials although no one was called from Kremnizer the reasonable inference is that $400,000 was available from Kremnizer and that by late morning of 20 April Kremnizer's client was prepared to advance these funds. 152It is important however to slightly retrace the chronology. In December 2000 Mr Rixon negotiated a loan of $30,000 from a Mr Tony Atana. He executed a loan agreement on 5 January 2001 with one of Mr Atana's companies, No Fuss Finance Pty Ltd, described on the loan agreement as short term lenders. The maturity date was said to be 5 April 2001. Mr Rixon agreed to pay three monthly instalments of $2,100 from 5 January which was calculated at 7% per month interest. These payments were for interest only. Mr Rixon was to repay the principal of the loan on 5 April. If any amount was left outstanding on the relevant date he was thereafter to pay interest on the sum outstanding at 10% per month until it was repaid. 153As part of this arrangement Mr Rixon had to give a mortgage over his property. 154It was put to Mr Rixon that he needed the $30,000 to live on. He denied that. Mr Rixon could not recall getting any money from Mr Atana apart from a small amount. This was most unpersuasive evidence from Mr Rixon. There is a document which he signed on 5 January 2001 suggesting an amount of $15,375 was to be paid to him. 155Mr Rixon said that in January 2001 Mr Atana, by coincidence it seems, pointed out a mistake in the amount allegedly owed by the defendant. He was then unable to articulate clearly or at all what so called mistake Mr Atana found. Mr Atana was not called to corroborate anything Mr Rixon said about his role or indeed his discovering any mistake. There is also a note from Mr Pickering's file to suggest Sydney Home Loans (another of Mr Atana's companies) required some form of deed to be executed. There is no evidence of what this deed was or if it was ever executed. The note reads: Julie - Syd Home Loans 20/4/01 Need to sign deed, if prepared to carry shortfall, only $10,000 - no more 156The reference to the $10,000 could be a reference to a sum of $10,000 (of the original $30,000) being withheld. The state of the evidence on this point is entirely unsatisfactory. 157Mr Rixon says it was Mr Atana who told him that Kremnizer had approved a loan of $400,000. Mr Atana had, apparently according to Mr Rixon, managed the loan approval process. 158Mr Rixon agreed that at least $10,000 of the moneys borrowed had to go to his former wife so she would remove a caveat on the property. 159Mr Rixon asserted he had rearranged the $275,000 insurance by 20 April. There is evidence to support this. There is a notification of policy change dated 20 April from GIO indicating the property was then insured for $275,000. 160It was put to Mr Rixon that as at 12 April he was unemployed. Mr Rixon asserted at or about that time he was about to start a job in South Korea rebuilding a power station. He agreed however due to ill health he had not been employed full time. The job never actually materialised in South Korea. 161Counsel for the defendant sought to cross examine Mr Rixon on what he had told Justice O'Keefe on 17 April 2001 was owing to various creditors in order to suggest the amount available from Kremnizer was insufficient. Mr Rixon admitted to being confused when he had appeared before the Judge. 162Mr Rixon told Justice O'Keefe on 17 April 2001 that there was $10,000 due to costs and application fees (Kremnizer) another $20,000 "on another mortgage" and $360,000 to Interstar. The correct figure as at 20 April was $385,770.74, said to be due by Mr Hughes. On its face Mr Rixon may not have had enough to pay all creditors, even if the debt to Mr Atana required only an immediate payment of $10,000 and a deferral of $10,000 (with an appropriate deed executed). 163There are handwritten notes in Mr Pickering's file. These notes Mr Pickering identified as compiled by someone in his office. He believed the notes were prepared in preparation for settlement, "which highlighted there was a problem". As the person whose notes there were was not identified that person was not called. Again this is critical evidence in evaluating the plaintiff's capacity to refinance within the agreed borrowing on the basis it was $400,000. 164However in cross examination he agreed the notes were probably prepared on 19 April. On one page of the notes a person had identified an amount of a shortfall of $40,290.55. Mr Pickering was unable to express a view about that figure and agreed he left the detail of settlement to his staff. He was unprepared to accept there would have been such a shortfall. 165Mr Pickering would not accept on the basis of the handwritten notes from his file Mr Rixon was approximately $40,000 short. There is no doubt Mr Pickering was doing all that was humanly possible to get the settlement done on 20 April. Mr Pickering said that allowing for a correct (in his opinion) pay out figure there would have been no shortfall if $400,000 was available (as he believed it was) from Kremnizer. 166There are a number of things that should be said about this evidence. It is unsatisfactory and one of the reasons for that in part is the rather ambiguous position in relation to Mr Atana. I am able to infer he was not called because he would not have assisted the plaintiff especially as his absence was not sought to be explained. 167In addition a Mr Hosking (who was a Canberra accountant) set out on 12 April 2001 his opinion that Mr Rixon could afford $3,334 per month. The loan of $400,000 according to Mr Hosking's understanding was to be structured as a 3 year interest only facility. There were to be two mortgages. One $350,000 which would attract an interest rate of 9% and $50,000 which would attract an interest rate of 17%. Mr Hosking was not called and his opinion on a critical issue was incapable of being tested. The reason this is critical is that at the time Mr Rixon had no actual employment except for some part time work for Energy Australia and Sydney Water in relation to which he earned unspecified income. He thought he was about to start a contract in South Korea but that never eventuated. The evidence, such as it was on rent received was scant uncorroborated and at best unreliable. 168When asked whether he had provided Mr Hosking with evidence of his earning ability Mr Rixon answered "I am not saying I provided him with anything specific relating to this mortgage. He was aware of my financial position". Mr Rixon was unable to give any real detail about what Mr Hosking had by way of information. The failure to call Mr Hosking is quite significant. Again, I infer he could not have assisted Mr Rixon, his absence not having been explained. 169It will be recalled that Mr Rixon told Mr Robertson in December 1999 his tenants were in arrears. By reason of his failure to keep his payments to the defendant up to date through 2000 and into 2001, I can infer from that note as well that whatever he received by way of rental income was both irregular and unreliable as a ready and regular source of income. 170I have serious misgivings Mr Rixon could have settled on 20 April. The evidence on balance I believe is equivocal. I am of course not obliged to accept his evidence especially when it is largely uncorroborated: Christmas v Nicol Bros Pty Ltd (1941) 41 SR (NSW) 317; Cubillo v Commonwealth (No 2) [2000] 103 FCR 1. 171Even upon the assumption he had $400,000 from Kremnizer, the position so far as Mr Atana is concerned is unsatisfactory and entirely unclear. I do not know what arrangements were made with Mr Atana especially in relation to any deferral of the payment of capital. Mr Rixon was to have repaid the principal by 5 April 2001. I have no idea what the additional deed referred to in Mr Pickering's file is a reference to. This is made all the more unsatisfactory by reason of Mr Atana not being called. 172I do not consider the plaintiff has credibly proved he could have discharged all of his outstanding liabilities as far as anyone can precisely identify them on 20 April even if $400,000 was available to him. I do not therefore consider the plaintiff has discharged his onus of proof on the balance of probabilities. It follows that even had I found unconscionable conduct he would have suffered no loss. 173As to whether Mr Rixon could have serviced such a loan is again in my mind extremely doubtful. His employment position was problematic and the revenue from tenants was unreliable and erratic. Again this is made worse by a failure to call Mr Hosking. The latter's evidence was critical on this issue. 174I am of the view that if he had managed to refinance the loan on 20 April or shortly thereafter in my opinion his uncertain income (from employment or rental) leads me to conclude that more probably than not he would have defaulted and thereby have landed himself in exactly the same position within a very short time after 20 April. Delay 175It is conceded by the defendant that for the purposes of relief under the general law mere delay is in itself insufficient to refuse relief in equity unless of course the delay occasioned prejudice. 176I received written submissions from the defendant on this issue. It was not addressed either in oral submissions nor if I may say so, in evidence. Proceedings were commenced just over 6 years after the events occurred. There was no attempt however to point to any particular prejudice suffered by the defendant. There was no evidence that any material witness the defendant may have wished to call was dead or unavailable. It is true that the Heidtmans file was only partly retrieved but Mr Rixon had a good deal of information according to him destroyed when his property flooded. Mr Pickering's file was also only partly retrieved 177If it were merely a question of defending the case against Mr Rixon on the basis of delay I would reject the defendant's contention as to prejudice and in my opinion the delay would not provide the defendant with any bar if relief were otherwise available. Conclusion 178In the light of my findings I dismiss the plaintiff's claim and thereby refuse the relief sought. It follows that the plaintiff has no claim in damages. I would invite the parties to prepare short minutes to reflect my reasons. 179In dismissing the plaintiff's claim I would normally order him to pay the costs of the proceedings. However given the circumstances that exist here I would ask the parties to have the matter relisted for the purposes of making submissions on costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 March 2012