Supreme Court New South Wales Medium Neutral Citation: Commonwealth Bank of Australia v Geoffrey Anthony Shannon [2013] NSWSC 1076 Hearing dates: 21, 22, 23, 24, 27, 28, 31 May, 3, 4, 5, 6, 7, 11, 12, 13 June 2013, oral submissions 16 July 2013, further written submissions 17 July 2013 Decision date: 12 August 2013 Jurisdiction: Equity Division Before: Sackar J Decision: See paragraph [307] Catchwords: CONTRACTS - repudiation - whether bank repudiated facility agreement - whether alleged failure by the bank to pay GST component of drawdown amount was repudiatory - whether alleged statement by a bank employee that the bank "wanted out" was repudiatory - whether repudiation accepted - whether borrower's conduct amounted to event of default - whether bank entitled not to make further payments under the facility - whether bank is relying on its own wrongdoing. CORPORATIONS - duties of mortgagee when selling corporate property - whether the bank contravened s 420A of the Corporations Act by failing to take all reasonable care to sell property for not less than its market value - whether advertisement as "mortgagee sale" was in contravention of s 420A - whether alleged delay in dealing with alleged prospective purchaser amounted to a breach of s 420A. CORPORATIONS - unconscionable conduct under the Australian Securities and Investments Commission Act 2001 - whether the bank engaged in unconscionable conduct under s 12CC. BANKING AND FINANCE - whether Code of Banking Practice applies - whether bank breached Code of Banking Practice - effect of breach of Code of Banking Practice. Legislation Cited: Evidence Act 1995 Australian Securities and Investments Commission Act 2001 (Cth) Bankruptcy Act 1966 (Cth) Corporations Act 2001 (Cth) Cases Cited: Attorney General of New South Wales v World Best Holdings Limited (2005) 63 NSWLR 557 Commonwealth Bank of Australia v Starrs [2012] SASC 222 Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 Florgale Uniforms Pty Limited v Orders (2004) 187 FLR 142 GE Capital Australia v Davis (2002) 180 FLR 250 Hallifax Property Corp Pty Ltd v GIFC Ltd (1987) 4 BPR 9, 708 Investec Bank (Australia) Limited v Glodale Pty Limited (2009) 256 ALR 104 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 Leveraged Equities Limited v Goodridge [2011] FCAFC 3 Pendlebury v Colonial Mutual Life Assurance Society Limited (1912) 13 CLR 676 Seeto v Bank of Western Australia [2010] NSWSC 922 Shevill v Builders Licensing Board (1982) 149 CLR 620 Stockl v Rigura Pty Limited [2004] NSWCA 73 Tonto Home Loans Australia Pty Limited v Tavares (2011) 15 BPR 26,699 Category: Principal judgment Parties: Proceedings 2009/296947: Commonwealth Bank of Australia (Plaintiff and First Cross-Defendant) Geoffrey Anthony Shannon (Defendant) 33 Electra Pty Ltd (First Cross-Claimant) C2C Investments Pty Ltd (Second Cross-Claimant) Jim Williams (Second Cross-Defendant) Glen Triggs (Third Cross-Defendant) Neil Singleton and Stephen Parbery (in their former capacities as receivers of 33 Electra Pty Ltd) (Fourth Cross-Defendant) Proceedings 2010/323602: 33 Electra Pty Ltd (First Plaintiff) C2C Investments Pty Ltd (Second Plaintiff) Geoffrey Anthony Shannon (Third Plaintiff) Neil Singleton and Stephen Parbery (in their former capacities as receivers of 33 Electra Pty Ltd) (First Defendant) Commonwealth Bank of Australia (Second Defendant) Neil Singleton and Stephen Parbery (in their former capacities as receivers of C2C Investments Pty Ltd) (Third Defendant) Proceedings 2010/383607: 33 Electra Pty Ltd (Plaintiff) Commonwealth Bank of Australia (Defendant) Representation: Counsel: A Leopold SC, P Dowdy (Commonwealth Bank of Australia) Mr Shannon (self represented) Solicitors: Gadens Lawyers (Commonwealth Bank of Australia) Mr Shannon (self represented) File Number(s): 2009/296947 2010/323602 2010/383607 Judgment The proceedings 1Three sets of proceedings were heard before me. As will emerge, a number of events occurred during the course of the hearing of the matter which had the effect of substantially altering the nature of the case, especially in relation to the defences which were pleaded by Mr Shannon and various corporate entities of his. 2In its third amended statement of claim, the Commonwealth Bank of Australia's case in chief concerns claims for a monetary judgment against Mr Shannon pursuant to guarantees proffered by him to the Commonwealth Bank in respect of the obligations to the bank of his companies 33 Electra Pty Ltd (33 Electra) and C2C Investments Pty Ltd (C2C Investments). The 33 Electra guarantee was a guarantee of a $6 million Commercial Advance Facility and a $100,000 Overdraft Facility provided by the Bank to 33 Electra. I note that the initial contractual arrangements were between Mr Shannon (and his various corporate entities) and BankWest. As a result of the acquisition of BankWest by the Commonwealth Bank, BankWest is now a division of the Commonwealth Bank, and therefore the relevant party to the present proceedings is the Commonwealth Bank of Australia. For simplicity, I will refer to the relevant financial institution throughout this judgment as the Bank. 3The 33 Electra Commercial Advance Facility expired on 12 February 2009 and the Bank asserts that on that date it became payable in full. 4The 33 Electra Overdraft Facility was repayable on demand. The Bank made such a demand on 7 October 2008 and again on 6 November 2009. 5The C2C Investments guarantee was a guarantee of the obligations of C2C Investments under what were described as the First Business Edge Facility and the Second Business Edge Facility. Subject to the entitlement of the Bank to demand payment of the entire amount outstanding under each facility if and when an event of a default occurred, the First Business Edge Facility was due to expire in 2021 and the Second Business Edge Facility was due to expire in 2017. The Bank asserts that events of default did occur, and the Bank accordingly made demands on 5 November 2008 and 6 November 2009. 6The amount in respect of both guarantees stands at approximately $8,508,963.55, including interest and costs, as at 21 May 2013. Although the Bank has waived any claim for costs beyond that date, it claims interest on and from 21 May 2013 until the date of judgment. 7In the third amended defence to the third amended statement of claim, various defences are raised in answer to Mr Shannon's alleged liability. He pleads repudiation on the part of the Bank of the loan facilities, unconscionable conduct, and breach of the Code of Banking Practice. All of these, Mr Shannon asserts, enable him to avoid liability in respect of the 33 Electra guarantee. 8The claim based on the C2C Investments guarantee is founded upon alleged events of default. What is relied upon is the appointment of administrators to C2C Investments itself (and three related companies). 9Mr Shannon seeks to avoid liability under the C2C Investments guarantee by broadly arguing that C2C Investments and the three related entities only went into administration because of the Bank's alleged misconduct in relation to the development of land at 4-6 Electra Parade, Harrington, on the mid-north coast of New South Wales, otherwise described as Dockside. The Bank asserts that the allegation of misconduct is not articulated with any precision so as to permit Mr Shannon to avoid liability under the guarantee. 10Cross-claims were brought by 33 Electra and C2C Investments. Those cross-claims and any other claims by 33 Electra and C2C Investments were all relevantly dismissed with costs. It is desirable before I discuss the factual materials that I in slightly more detail set out the procedural history of this matter. Procedural history 11Although the only proceeding which remained on foot was that by the Bank against Mr Shannon (2009/296947), there were initially two further related proceedings (2010/323602 and 2010/383607). For clarity and completeness, I will briefly outline the procedural history of all related matters. 12The Bank first commenced proceedings (2009/296947) on 13 November 2009 against Mr Shannon pursuant to guarantees he provided to the Bank of the obligations of two related corporate entities, namely 33 Electra and C2C Investments, under facilities extended to those entities by the Bank. On 31 January 2010, 33 Electra and C2C Investments filed a cross-claim, naming as cross-defendants the Bank, Mr Williams, Mr Triggs, and Mr Neil Singleton and Mr Stephen Parbery (in their capacities as former receivers of 33 Electra). In the cross-claim, 33 Electra sought, in broad terms, damages in the sum of about $11 million, whilst C2C Investments sought damages of about $2 million. 13On 29 September 2010, Mr Shannon filed an originating process (2010/323602) in the Corporations List of the Equity Division, against the Bank and Neil Singleton and Stephen Parbery (being former receivers of 33 Electra and C2C Investments), seeking leave to institute proceedings on behalf of 33 Electra. On 1 March 2011, a statement of claim was filed on behalf of 33 Electra, C2C Investments and Mr Shannon as plaintiffs, against the defendants as specified in the originating process of 29 September 2010. 14On 18 November 2010, 33 Electra commenced proceedings (2010/383607) by a statement of claim against the Bank seeking damages of about $12 million for various alleged breaches of contract. The factual circumstances on which this proceeding is based are in substance the same as those on which the other related proceedings are based. 15Prior to the commencement of the principal hearing before me, notices of motion were filed on behalf of the cross-defendants in proceeding 2009/296947 and on behalf of the defendants in proceeding 2010/323602 seeking security for costs in relation to the claims made by C2C Investments as the second cross-claimant in proceeding 2009/296947 and as the second plaintiff in proceeding 2010/323602. The primary concern which appears to have given rise to the security for costs applications was that C2C Investments was in liquidation, and would therefore probably be unable to meet a costs order in the event that its claims were unsuccessful. On 26 April 2013, when the security for costs applications came before me, the parties managed to agree on orders to the effect that unless an amount of $72,000 was provided (in total) on or before 8 May 2013 by Unhappy Customers Litigation Pty Ltd (a corporate entity apparently associated with Mr Shannon) or any other corporation or person on its behalf, as security for costs for both proceedings, the claims by C2C Investments would be dismissed with costs as against C2C Investments. By 21 May 2013, being the first day of the principal hearing before me, no sum had been provided as security for costs, and therefore orders were made to the effect that all claims by C2C Investments (both as cross-claimant in proceeding 2009/296947 and as the second plaintiff in proceeding 2010/323602) be dismissed. 16Also on the day the hearing commenced (i.e. 21 May 2013), 33 Electra was placed into voluntary administration. After hearing from the parties as to the effect of the appointment on the proceedings, I indicated that, in the circumstances, the administrators should indicate quickly (and in any event by 10am on 23 May 2013) their position on whether 33 Electra would be pursuing its claim as cross-claimant in proceeding 2009/296947 and as plaintiff in proceeding 2010/383607. On 23 May 2013, counsel for the administrators appeared before me and requested further time for the administrators to consider the pleadings and other documents relevant to the proceedings involving 33 Electra. The following day, counsel for the administrators indicated that the administrators did not wish to take any active part in the proceedings. Again, the position was formalised by the making of orders on 24 May 2013 having the effect of dismissing all claims made by 33 Electra (both as cross-claimant in proceeding 2009/296947 and as plaintiff in proceeding 2010/383607). 17It follows that the only remaining substantive claims for determination are those by the Bank against Mr Shannon in proceeding 2009/296947. I note that Mr Shannon's claims as a nominal plaintiff in proceeding 2010/323602 did not involve any personal claim by Mr Shannon. As the claims brought by 33 Electra and C2C Investments (the only substantive plaintiffs) were dismissed, the entirety of proceeding 2010/323602 should be dismissed. 18I finally note that there have also been numerous other matters involving Mr Shannon or a related corporate entity and the Bank (for example Shannon v Shannon & D & W Shannon Pty Ltd v Shannon [2013] NSWSC 608 and Commonwealth Bank of Australia v C2C Developments Pty Limited [2013] NSWSC 724 among other decisions), but those proceedings are unrelated to the proceeding before me. Background facts 19In early January 2006, Mr Shannon brought a proposal to the Bank for the development of Dockside. 20The property which was situated at Harrington was on the mid-north coast of New South Wales and was approximately a twenty minute drive north of Taree and about a forty five minute drive from Forster and Port Macquarie. 21Ryder Hunt, later Ryder Levett Bucknall (RLB), a firm of quantity surveyors, estimated in a report that the construction costs for the proposed development would be $4.79 million to $4.818 million (plus GST). 22The Bank prepared its credit analysis on the basis of the RLB report. It adopted RLB's figure of $4.79 million and then added estimated GST. It further did an estimate of marketing and legal costs, an estimate of capitalised interest on principal, audit development costs and section 94 contributions to be paid to the local council. All up, the Bank estimated that the total costs would be approximately $6.264 million. The Bank determined that following its analysis it could lend a total of $6 million for the construction facility (plus an Overdraft Facility of $100,000) on the basis that Mr Shannon/33 Electra would bear the estimated excess of $264,000. 23Mr Jim Williams (who at the time was employed by the Bank as a Business Manager), prepared a Credit Risk Submission dated 18 May 2006, in which he recommended approval of the loan facility based on the analysis referred to above. 24On 26 May 2006, the Bank made an offer to 33 Electra to provide loan facilities to it totalling $6.1 million. This was accepted by 33 Electra on 10 June 2006. 25On 31 August 2006, 33 Electra acquired the relevant land. At the time of its acquisition, there was already development consent in respect of the land permitting the construction of sixteen (two storey) residential townhouses, each with its own marina berth. 26On 30 September 2006, 33 Electra, as owner of the land, entered into a building contract with a related entity, C2C Developments Pty Ltd (C2C Developments), as builder. It was, as required by the loan facility, a fixed price contract ($5.3 million, including GST). 27On 31 August 2006, Mr Shannon was the sole director of C2C Developments. He and his father each owned 50% of the shares in the company. Mr Shannon was also the sole director of and controlled 33 Electra, a special purpose vehicle incorporated to carry out the relevant development. The facilities, as I have already mentioned, comprised a credit limit of $6 million and a "business bonus overdraft facility" with a credit limit of $100,000. 2833 Electra's obligations under each of the facilities was to be secured by a first ranking registered mortgage over Dockside and a first ranking registered fixed and floating charge over the assets and undertaking of 33 Electra, together with a guarantee from Mr Shannon. 29The Overdraft Facility was expressed to be "repayable at any time on demand". 30The Commercial Advance Facility ($6 million) was to expire 24 months after the first drawdown date. There is no dispute that the first drawdown date was 12 February 2007, and thus the facility expired on 12 February 2009. One of the conditions precedent in the facility's terms (subparagraph (o)), provided the drawdowns were to occur in accordance with progress claims certified by the appointed quantity surveyor (which was RLB). 31Subparagraph (o) of the facility terms also provided that it was a condition precedent to utilisation of the Commercial Advance Facility that: Progress claims are paid on a strict 'cost to complete' basis as certified by the Quantity Surveyor, ensuring the undrawn loan amounts remain sufficient to complete the project at all times. Any cost overruns identified at the time of a progress claim would need to be covered by the Borrower from their own resources at each progress payment as they are identified. 3233 Electra gave a positive undertaking that "all cost overruns identified by the quantity surveyor appointed by the Bank must be satisfied by the borrower from the borrower's own resources upon being identified and before any further drawings". 3333 Electra also gave a negative undertaking that it would not, without the Bank's prior written consent, "vary the building contract or any plans and specifications in respect of the development works". Events of default were specified as per the Bank's General Terms for business lending, dated September 2005. Clause 16.1 of the General Terms provided that an event of default occurred (whether or not it was in 33 Electra's power to prevent it) if (adopting the subparagraph lettering in clause 16.1): (a) 33 Electra did not "pay on time any amount payable by it under any Facility Document in the manner required under it"; ... (c) 33 Electra did "not comply with any other obligation under a Facility Document" and, where that default was capable of rectification, if it was not rectified within seven business days, or if in the Bank's opinion all action necessary or desirable to quickly rectify that result was not taken; ... (f) A representation "made or taken to be made by or on behalf of" 33 Electra "in connection with a Facility Document" is "found or is notified by the Borrower to be incorrect or misleading when made or taken to be made"; (i) An undertaking given to the Bank or its solicitors by 33 Electra in connection with any Facility Document was breached or not wholly performed within the period specified in the undertaking or, if no period was specified, within 7 days from the date of the undertaking; 34Apart from the events of default, clause 3.1 of the 2005 General Terms provided that the Bank need not provide any drawing unless a drawdown notice was given (clause 3.1(a)) and unless: (b)(iii) "The Bank is satisfied that no Event of Default or a Potential Event of Default is subsisting or would result from the accommodation being provided"; ... (b)(v) "All conditions precedent to that Drawing are fulfilled". 35On 9 February 2007, 33 Electra mortgaged Dockside to the Bank and also gave a fixed and floating charge over all of its assets and undertaking, including Dockside. 36Mr Shannon gave a guarantee to the Bank of all obligations of 33 Electra to the Bank under the $6 million Commercial Advance Facility and the $100,000 Overdraft Facility. Although the document is undated, it does not appear to be controversial that it was likely executed by him on or about 10 June 2006. The 33 Electra guarantee incorporated the "Guarantee and Indemnity - Terms (small business and consumer)" issued in March 2006. 37The Bank provided to C2C Investments in August 2006 the First Business Edge Facility, and in February 2008, what is called the Second Business Edge Facility. The First Business Edge Facility was varied on several occasions, including by way of introduction of the Second Business Edge Facility, which is said to be a supplementary facility. As varied, the First Business Edge Facility had a facility limit of $475,000 and was repayable in 2021, except in the case and in the event of a default; and the Second Business Edge Facility had a facility limit of $300,000 and was repayable in 2017, except in the case and in the event of a default. 38Mr Shannon gave a guarantee dated 11 August 2006 to the Bank of all obligations of C2C Investments to the Bank under the First and Second Business Edge Facilities. The C2C Investments guarantee also incorporated the same terms which were incorporated into the 33 Electra guarantee. 39Each of the guarantees specified a maximum sum which could be demanded including interest, but costs and expenses were additional. 40Each of the 33 Electra guarantee and C2C Investments guarantee contained the following provisions: [Clause 11(a):] "As long as any of the guaranteed money remains unpaid, you may not, without our consent ... reduce your liability under this guarantee and indemnity by claiming that you or the debtor or any other person has a right of set-off or counterclaim against us (except to the extent that you have a right of set-off granted by law which we cannot exclude by agreement)" [Clause 14.1:] "Except to the extent that you have a right of set-off granted by law which we cannot exclude by agreement (such as under a Code) you must pay us the guaranteed money in full without set-off, counterclaim or deduction." 41The Dockside development was progressing until early 2008, when Mr Shannon notified the Bank in an email of 29 January 2008 that he had "upgraded most items in the project". 42In an email of 14 March 2008 to Mr Williams, Mr Shannon described the "extras that are going into the Dockside development". The extras were said to include things like upgraded kitchen packages, pay television systems, full security systems and the like. Total "upgrade costs" were said by Mr Shannon to be in the order of $581,800. Mr Shannon indicated that the upgrades were appropriate because he had decided to raise prices due to the location of the project and the type of development. 43Mr Shannon indicated in the email that he was seeking "extra funding" and then he itemised the various amounts he intended to expend in upgrading the units. He concluded the email with the following remarks: Jim, I appreciate your input on this as I believe it only enhances this project and with the lvr at currently around the 50% this is roughly only an estimate of an extra 5% to the current lvr. I look forward to a positive response. 44On 15 March 2008, Mr Williams sent an email to Mr Shannon. Mr Williams indicated to Mr Shannon that he assumed he would be requiring an increase of some $600,000. Mr Williams emphasised the need for Mr Shannon to indicate that some sales had occurred and that this would cover the additional funding so that he could satisfy "Credit" with the proposal for any increase. Mr Williams also indicated the need for an amended report from the quantity surveyor to ensure that the extra funds would be "all that is required to get the development completed". 45Mr Williams and Mr Shannon had a conversation shortly after the 15 March 2008 email. Mr Shannon accepts that in the course of this conversation (according to Mr Williams) he said he wanted the Bank to fund the additional costs. 46By 27 March 2008, it appears that the work on the Dockside project had begun to slow down. RLB estimated in its progress report number 18 that only 1% of the project had been completed since 25 February 2008. At or about this time, Mr Shannon's wife was seriously ill. 47On 2 April 2008, Mr Shannon sent an email to Mr Williams modifying the 14 March 2008 email by adding two additional items (Items 8 and 9) and increasing the costs of the upgrades to $921,000. The two additional items related to increased building costs and increased capitalised interest. The increased costs of materials was said to be in the order of $240,000 and the increased interest costs were estimated at $100,000. Mr Shannon expressed the view that he had adjusted prices on some of the units to $1.1 million for the waterfront homes on the basis of what he said were "record prices" being achieved in the area. 48On 4 May 2008, Mr Shannon made contact with Mr Aaron Satchell at RLB, indicating that he needed to make a claim for Dockside and that the project was at a standstill until a proper assessment had been made of the costing of the upgrades. 49On 8 May 2008, RLB submitted its revised cost to complete, which identified variations (so described) in the order of $921,800. These corresponded with the variations that had been, or were in the process of being, implemented. At the date of its report, RLB indicated that the works completed to date for the new variations would be valued at approximately $75,000. 50On 13 May 2008, Mr Williams along with others from the Bank discussed the status of the 33 Electra account. It was decided that the Bank should negotiate an increase in the Facility Interest Rate Margin, effective immediately, in order to reflect a changed "risk profile" of the 33 Electra account. 51On 14 May 2008, Mr Shannon met with Mr Williams and a Mr Glen Triggs (employed by the Bank as a Regional Manager) at Dockside. It seems uncontroversial that Mr Shannon was asked by either Mr Williams or Mr Triggs how much he thought would be needed to keep the project going, to which he responded somewhere in the range of $200,000 to $210,000. Mr Shannon was invited to submit a progress claim in order to keep the project moving, but he was told that the claim would need to be approved by Credit. Mr Shannon also agreed that he was told that in order for the Bank to determine whether it would fund the variations, a number of matters need to be looked at, and a figure of $1.2 million was discussed as the possible amount of the increase in the facility limit that might be needed. Mr Shannon informed Mr Triggs and Mr Williams that his wife had been ill and that work had slowed. It is alleged by the Bank that there was an agreement reached at the meeting that there would be an increase in the Facility Interest Rate Margin to 2.75% in return for the Bank waiving its success fee. 52At or about this time, it appears that Mr Shannon decided that he would attempt to sell the project. 53Following the 14 May 2008 meeting, and on 15 May 2008, Mr Triggs wrote to Mr McIntosh (the Senior Manager Credit Sanctioning at the Bank of Western Australia, at the relevant time) and copied in Mr Williams and Ms Karen Ford (the Regional Manager Portfolio Enhancement, at the relevant time). Mr Triggs expressed the view that an extra $1.2 million in the loan amount was likely to be needed. He observed that work had slowed and that Mr Shannon's wife had been taken ill. He also observed that the quantity surveyor had been updated and that a new valuation had been commissioned. Mr Triggs indicated that he would be submitting a request for progress payments once it could be quantified with other materials including a pre-sales contract due diligence process. Later on 15 May 2008, Mr Shannon faxed to the Bank on behalf of C2C Developments a statutory declaration declaring that all sub-contractors and suppliers to C2C Developments had been paid all monies payable to them in respect of materials supplied and work performed for the purpose of the relevant building contract. 54At 3:58pm on 15 May 2008, Mr Shannon alleges that one of his staff working under his supervision and employed by one of his companies faxed to the Bank on behalf of C2C Developments a tax invoice from C2C Developments to 33 Electra in the sum of $225,800 with no GST component. It appears that, of that amount, $217,800 related to the variations/upgrades. 55At 4:41pm on the same day, Mr Shannon on behalf of C2C Developments caused to be faxed to the Bank a drawdown notice in the sum of $225,800, "ex GST". 56At 5:08pm on 15 May 2008, RLB issued what was described as the "Executed Report No. 19". The report refers to "approved variations of $921,800". This had the effect of increasing the forecast final figure from $4,818,181 to $5,739,981. 57Although the RLB report referred to the $921,800 as the "Approved Amount", the Bank at this stage had not approved any increase in the facility limit. The only approval of that amount was the approval between 33 Electra and C2C Developments as to the level of variation. 58On 16 May 2008, C2C Developments faxed a further tax invoice from C2C Developments to 33 Electra, this time including GST of $22,580 and stating a "Balance Due" of $248,380. RLB, in its covering letter of 15 May 2008 to the Bank, pointed out that the $225,800 would carry GST of $22,580, which would bring the total amount "Payable" to $248,380. 59The increased amount, however, was never the subject of any formal drawdown notice. 60On 16 May 2008, Mr Williams emailed Mr McIntosh attaching the report from RLB and indicating the fact that a request for $225,800 "ex GST" was made. The email indicated that, according to Mr Williams, GST would be "paid by Geoff". Mr Williams also reiterated that, according to him, Mr Shannon had told him that he would need around $200,000 to keep the project going for the next month. 61On 21 May 2008, Mr McIntosh sent an email to Mr Williams approving the payment of the $225,800 subject to the margin being increased to 2.75%. Mr McIntosh asserts that he approved the payment for commercial reasons and in order to prevent the project ceasing due to a lack of funding. In his email to Mr Williams, Mr McIntosh imposed certain conditions, which included updated valuations of all units and a "fresh" check of pre-sales contracts to ensure they complied with the Bank's requirements. Mr McIntosh observed that the use of the term "approved variations" in the RLB report was factually inaccurate as no such approval had been given and that it would only be considered once the various requirements and conditions had been satisfied. He also indicated to Mr Williams that he wanted the 33 Electra account placed on the "watch list". 62It is not in dispute that the $225,800 was paid in full but in two separate tranches. 63The Bank asserts that the monies advanced were not used by 33 Electra to reimburse the builder, C2C Developments, for construction costs, but rather, it contends that in large part the monies were used for payments to related companies, to relatives and for expenditure which had no direct connection with the project. As such, instead of facilitating a recommencement of the activity on the site, the Bank contends that subcontractors of and suppliers to C2C Developments were left unpaid. 64In May or early June 2008, Mr Shannon met with a Mr Leigh (a partner at PPB Advisory, a firm of accountants (PPB) at the relevant time) and told him that the financial position of 33 Electra, C2C Developments, C2C Investments, Abode Group and Shannon Trading Co (both are companies of which Mr Shannon was a director) was perilous and that there were a number of creditors that were actively pursuing recovery proceedings and that a number of his banks had also effectively frozen facilities. Mr Shannon and Mr Leigh met on approximately six further occasions in May and June 2008 and on 26 September 2008. 65On 5 June 2008, Mr Williams sent an email to Mr Triggs and Ms Ford following a conversation he had with Mr Shannon. In that conversation, as recorded in the email, Mr Williams had advised Mr Shannon of "the urgency of getting this finalised". The email records that Mr Williams had been told by Mr Shannon that he had an offer on the table to sell the entire project and that he had spent the whole of the previous day with his accountant and the prospective purchaser in an attempt to finalise the offer. Mr Shannon told Mr Williams that he was hoping to have something to him by close of business "tomorrow". The email also records that Mr Williams was told that there was a good chance the deal would happen, and if so, he (that is Mr Shannon) would probably not need to apply for any increase in facilities. Mr Williams recommended that a soft approach be taken in order to enable matters to be worked out amicably. Mr Williams records in the email as follows: He has asked us to hold back for a couple of days to see if he can get this deal for the sale of the project over the line. 66On 11 June 2008, Mr Triggs emailed Mr Williams asking for an update on the valuation for "33 Electra". He indicated that he and Ms Ford would like to visit the site "next Wednesday". Mr Williams responded indicating that an arrangement had been tentatively made, however Mr Shannon had said to him that he did not want to waste anyone's time given the fact that he had almost sold the development. Mr Williams also records having been told by Mr Shannon that "he is pushing to off-load the project". 67On 17 June 2008, Mr Shannon emailed Mr Triggs. He informed Mr Triggs that he thought "we are moving closer to a sale on the project". Mr Shannon referred to a request for a temporary overdraft for C2C Investments due to the fact that he would probably not be drawing on the facility if the deal proceeded. 68Later on 17 June 2008, Mr Triggs emailed Mr Williams and Ms Ford recording that he has spoken to Mr Shannon and that Mr Shannon had indicated to him that he had provided the "info to the valuer", which he (that is Mr Shannon) had promised on 11 June 2008. Mr Triggs expressed the view that he thought the sale appeared to be progressing but the site had to be completed and any increased funding needed to be considered if for any reason the sale did not proceed. 69On 18 June 2008, Mr Triggs, Mr Williams and Ms Ford met Mr Shannon near the development site. Mr Shannon informed those present that he was negotiating a sale with a Mr Smithson of Wagga Wagga and that it would occur by way of a sale of shares in 33 Electra. He also informed the group that the sale would clear the debt to the Bank and that he would not be seeking another progress claim. His only monetary request was for a temporary overdraft for C2C Investments of about $90,000 enabling the creditors of 33 Electra's "Abode Selections" division to be paid off. There was discussion at the meeting of the possibility of a sale of the project falling through and Mr Triggs asserts that he expressed concern about the "significant cost overruns and variations on the development and that the work are progressing slowly". 70On 20 June 2008, Mr Williams sent an email to Mr Shannon. In that email Mr Williams referred to the meeting and requested certain information be provided, including full and final statements of the supplier accounts on the Abode retail outlet. He wanted to do an analysis in relation to the request for additional funding. If the purchase was proceeding, Mr Williams indicated he wanted the purchaser's approval in relation to possible progress drawings and emphasised the need for a quantity surveyor report to support any additional drawdown that may be requested. He concluded by indicating that once that information had been received and the Bank obtained a new valuation, it would discuss the matter and advise Mr Shannon what its attitude would be. 71On 8 July 2008, Mr Shannon's solicitor, a Ms Megan Grainger of Stacks, wrote to Mr Williams to inform the Bank that an "agreement has been reached which will result in all of Geoff's liability ... being paid in full and we have commenced the documentation process for the agreement". She informed Mr Williams that the proposed purchaser was finalising his due diligence, which involved a number of items as set out in the letter. Ms Grainger informed Mr Williams that the contract was for the sale of shares and she confirmed that she had instructions to agree to pay "all Bank fees including valuation costs" on settlement. 72On 15 July 2008, Mr Williams assisted in the preparation of and signed a Credit Risk Facility Amendment. 73Under the heading "Change Sought", it is recorded that no increase in facilities for 33 Electra was requested at that point. The purpose of the report was indicated as required to update Credit Sanctioning about the progress of the sale of the Dockside development. This had been as a result of a verbal request from Ms Ford. The report makes mention of "cost overruns of some $1.3 million" and provides a breakdown of those amounts. It also indicated that the overruns had been confirmed via a new "QS report". Further reference is made to Mr Shannon's personal issues with his wife's health and the fact that he had been attempting to negotiate a sale. The report does mention that Mr Shannon had been strongly encouraged to sell and refinance the debt and that this was the Bank's preferred option, although it was accepted that this may take some little time. 74The entirety of the letter from Mr Shannon's solicitor, Ms Grainger, is set out in the body of the report. The report also mentions the fact that 33 Electra had "$90K of creditors" and refers to the possibility that the Bank may need to provide some short-term funding. The report specifically contemplated as an alternative that if the sale of the development fell through, the Bank could expect an application for an increase of $1.3 million to enable completion of the project. The view was expressed to be on the basis that the valuation was still accurate and that pre-sales were still in place. 75On 18 July 2008, Mr Shannon sent an email to Mr Williams updating him on sales of various properties and further updated him on the proposed sale of Dockside. Mr Shannon indicated that he had been working "hard" on getting funds in the door to clear up excesses. He apologised for the delay in attending to various matters but went on to explain that he had a good deal on his plate. 76On 31 July 2008, Mr Shannon again emailed Mr Williams. In the email, Mr Shannon stated "it would be good if the claim of $105K could be paid". 77On 21 July 2008, Ms Ford sent an email to Mr McIntosh. She undertook an overall appraisal of the credit risk to the Bank. In relation to 33 Electra she expressed the view that the project was "ticking over very slowly". She noted that construction had slowed considerably in recent weeks and she attributed the potential purchase that Mr Shannon had been trying to negotiate as the reason for that. She went on to provide other details as she understood them in relation to the proposed sale. Whilst on the one hand she expressed the view that provided costs to complete do not increase further, the project should be able to be completed within the covenanted LVR, she expressed concern that things may not be that simple. As far as C2C Investments was concerned, she noted that the Bank had been asked to provide funding of $95,000 in order that all trade creditors be paid up to date. She noted Mr Shannon had offered some additional security, but for various reasons it was unacceptable. She thought the request for further funds should be rejected unless appropriate security could be provided. In relation to 33 Electra, she thought that, as Mr Shannon had a good deal to cope with in a number of respects, if the Bank was going to go down the route of funding the completion of the development it would be wise to insist on the appointment of a project manager acting on behalf of the Bank as a condition of any additional funding. She also expressed the view that a sale of the project appears to be the best (and quickest) outcome for all concerned. 78On 23 July 2008, Mr McIntosh responded saying that he thought the proposed sale to Mr Smithson was "too good to be true", but equally, if additional funding was going to be contemplated, Mr McIntosh was prepared to accept the security offered by Mr Shannon and which Ms Ford thought was inappropriate. 79Mr Shannon received an email from Mr Smithson on 4 August 2008, the terms of which make it apparent that the sale of 33 Electra was still proceeding. 80On 5 August 2008, Mr Shannon and his solicitor, Ms Grainger, met with Mr Triggs, Ms Ford and Mr Williams from the Bank. It is plain from the handwritten notes made by Ms Grainger that a number of matters were discussed. The state of the accounts for 33 Electra and C2C Investments was clearly discussed along with possible sales. It is also plain that during the meeting somebody from the Bank, according to her notes at least, had mentioned that the Bank would want its own project manager over and above perhaps a quantity surveyor. Ms Grainger was not called to give evidence. Mr Triggs in his affidavit provides a detailed summary of what he asserts took place at the meeting of 5 August 2008. Mr Shannon asserts that he was told by Mr Triggs in no uncertain terms in the meeting that the Bank in effect wanted no further part of the facilities it had with him or his entities. 81On 12 August 2008, Mr Williams emailed Mr Shannon. Mr Williams referred to what was apparently a promise at the meeting of 5 August 2008 of an update from either Mr Shannon or from Ms Grainger regarding the progress of the sale, which was to be received by 8 August 2008. Mr Williams also requested a clearance date for all of the account arrears. He required Mr Shannon to provide an update so that he could inform the Bank the following day (13 August 2008). 82Mr Shannon responded on the same day indicating that he had to urgently go to Queensland as his youngest daughter had attempted suicide on the weekend. He informed Mr Williams that he would be liaising with his solicitor as to the progress as to the "dockside matters" but would have to postpone the meeting that was proposed for that week and he would deal with arrears when he was able. 83On 15 August 2008, Ms Grainger emailed Mr Williams and Mr Shannon. She informed Mr Williams that Mr Shannon had applied for various refinancing facilities and expected an approval of a new facility with another lender "early next week". She indicated that the facility should enable Mr Shannon to clear his arrears and pay out one of the properties over which the Bank held security, making it clear that it would not involve the Dockside properties. She promised to keep Mr Williams informed. She also indicated that she hoped that this would assist Mr Shannon to finalise negotiations for the sale of Dockside. 84On the same day, Mr Triggs emailed Mr Williams and Ms Ford. He indicated that he thought the Bank was "not getting anything from Geoff Shannon other than more promises". Mr Triggs also expressed concern about the Bank's security position, and he expressed the view that an assumption should be made that the sale of Dockside was becoming protracted and that it may not come to fruition. Mr Triggs indicated that he wanted a number of things attended to, including a new quantity surveyor's report and an updated valuation and information about pre-sale contracts. Having canvassed various options, he also addressed the option that if the Bank elected "to build out" then it would insist upon the appointment of an independent project manager and site manager and that Mr Shannon should stand aside. He also addressed a number of issues about the difficulties with subcontractors. On 19 August 2008, Mr Williams assisted in the preparation of and signed a Credit Risk Facility Amendment, again bringing Credit Sanctioning up to date. 85On 19 August 2008, Ms Ford sent an email to Mr McIntosh in which she indicated that she was keen to move quickly to determine how much it would cost to complete the development so that, amongst other things, the Bank could make a decision as to what might be the appropriate strategy to adopt. The email canvasses a number of options. On 19 August 2008, Mr McIntosh indicated by email to Ms Ford that he noted her comments and agreed with her views. There is little doubt, from the handwritten notes on Mr McIntosh's email to Ms Ford, that Mr Triggs instructed Mr Williams to keep from Mr Shannon the Bank's consideration of the various strategic options. 86On 26 August 2008, Middletons (which had been retained by the Bank to assist in reviewing the status of the pre-sales contracts) reported to the Bank on the pre-sales. The Middletons letter raised a number of concerns in relation to the pre-sales. 87On 27 August 2008, Ms Ford emailed to Mr Triggs and others her interpretation of the difficulties which Middletons had pointed out. 88On 29 August 2008, Page Kirkland (the new quantity surveyor) sought certain information from Mr Shannon in order to assist it with the preparation of its report. 89On 11 September 2008, Mr Shannon emailed Mr Triggs. Mr Shannon updated Mr Triggs on the sale, indicating that he would be in Sydney "on Monday" to finalise the deal on the property. He indicated to Mr Triggs that the price had been renegotiated. He also indicated he was uncontactable because he was in hospital. 90On the same day, Mr Triggs responded indicating he would like a meeting with Mr Shannon to discuss matters. 91Page Kirkland issued its report on 16 September 2008, estimating that the cost to complete was in fact $4,797,886 and that the project was currently 42% complete. 92On the same day, Mr Triggs provided an analysis of the Page Kirkland report. He noted in the report that Mr Shannon had been made aware of Page Kirkland's estimate but disputed it. Mr Triggs expressed the view that given the increased costs to complete the end LVR position was "poor at 87%". He also indicated that Mr Shannon appeared to be still in hospital for "unknown period/cause" and concluded in part by indicating that the position was not looking "great for sale". 93Mr Triggs prepared a Credit Risk Facility Amendment dated 23 September 2008. He noted that Mr Shannon remained in hospital and was clearly feeling the pressure of the current situation. He again acknowledged that Mr Shannon disputed the views of Page Kirkland as to the cost to complete, but expressed concerns about a number of issues, including the fact that the wider Shannon corporate group continued to "suffer from cashflow issues" and was endeavouring to undertake asset sales, though that was proving difficult. He also expressed the view that the ability of C2C Developments to complete was questionable, and ultimately he recommended that the file be transferred to Credit Restructuring for assessment on ongoing strategy for the group. 94The credit issues associated with Dockside were transferred to a Mr Onno Hornstra (Senior Manager, Group Credit Restructuring) and his group shortly thereafter. 95The Overdraft Facility was repayable on demand, the demand being made on 7 October 2008. 96The Commercial Advance Facility expired on 12 February 2009. 97Receivers (being primarily Mr Singleton, but also Mr Parbery) were appointed to Dockside on 1 July 2009. 98The Bank sold the Dockside property on an "as is" basis following a tender process for $2.215 million on 14 July 2010, which purchase settled on 1 September 2010. The credit of the witnesses 99The Bank submits that Mr Shannon was not only an extremely unimpressive, but indeed a dishonest witness. 100It was submitted that rather than adopt an honest, open and frank approach to the answers to questions in cross-examination, he often ignored what, it is said, he must have understood to be the position and answered non-responsively by raising irrelevancies. 101It was also submitted that he took inappropriately long pauses before answering questions which he perceived as dangerous to his case, so as to think of an answer which would not damage him. 102It was also pointed out that it appears he had given inconsistent evidence when one looked at his affidavit of 5 February 2013 in proceedings in the Federal Circuit Court on the one hand, and his Statement of Affairs in relation to his attempt to be dealt with under Part X of the Bankruptcy Act 1966 (Cth) on the other hand. It was suggested that he could not conceivably have approached each of the due documents in an honest way bearing in mind the inconsistencies. 103I am not prepared to make a finding that Mr Shannon gave deliberately dishonest evidence before me. However, when I contrast many of the answers he gave with the contemporaneous documents (most importantly emails he himself composed) I will certainly go as far as to say that he was a most unreliable witness in terms of his recollection of events. In the end, because of the passage of time and perhaps the possibility of an underlying and/or ongoing stress reaction, I really am unable to accept much of what he said unless corroborated by a contemporaneous document or the evidence of another witness. I observe, as is plain from the transcript, that he was hospitalised in the middle of the hearing. Evidence from his treating psychiatrist was taken, and I am satisfied that he suffered during that period at least with severe stress requiring hospitalisation. The stress was undoubtedly exacerbated by the fact that in the end he conducted almost the entirety of the proceedings unrepresented. That said, it is also clear that on a pro bono basis he had assistance from Mr Jacobs QC, and Mr Slater of Counsel, both of whom had varying degrees of familiarity with Mr Shannon's cases. There is no doubt that they assisted him to an extent in relation to some of the written materials which were ultimately provided to the court. 104The same considerations do not arise in relation to the Bank's witnesses. Unsurprisingly, their evidence was prepared in the light of the contemporaneous documents. Mr Williams, I detected, felt he may have been unfairly dealt with by the Bank, but I nonetheless did not detect in him or others any attempt to give deliberately untruthful evidence even if in some instances what they said was not always entirely supported by the contemporaneous documents. An example was Mr Williams' inability to recall perhaps the detail of the meeting of 5 August 2008. In the end, however, nothing turns on that, and in the main I accept each as an honest and accurate witness. Rulings on evidence 105The Bank provided a court book which comprised many volumes. Mr Shannon provided some additional documents which comprised, in the end, less than two folders. As is the case in many commercial hearings, in the end very few of the documents in the various volumes were referred to or proved to have any real relevance. 106The Bank submitted a very detailed schedule in which it indicated those documents to which objection was taken. I observed during the hearing that I would provide my rulings in my judgment. In some instances objection was taken to a document (e.g. document 54) because of the fact that it was annexed to an affidavit which was not read. Although I have not physically removed those documents from the court book in each case where a document falls into that category, unless the same document was otherwise admitted I have not taken it into account. In addition, where for example, an affidavit was not read (e.g. affidavit of Scott Kirby), although I agreed that the objection is a valid one, I have not physically removed the affidavit from the court book, but I have not taken that affidavit into account. An objection was taken to document 132. The objection was that the document had no relevance and was only pre-contractual as it were. I uphold that objection. Document 156 comprises certain pages (2,014 - 2,107). Objection is taken to those pages on the basis that the provenance is not known. Again I think that objection is well taken. Document 290 (Colliers Valuation of Dockside commissioned by BankWest on 14 May 2008) was the subject of objection. I restricted its use under s 136 of the Evidence Act 1995 as being a mere assertion and not evidence of value, and that would likewise apply to other documents that fall into that category, for example document 289. The same ruling applies to document 356, which consists of pages of handwritten notes apparently produced by Stacks solicitors. 107Objection was taken to document 399, which is an exhibit to Mr Shannon's affidavit of 14 February 2013, and in particular page 4,818 which deals with the appointment of an administrator to 33 Electra. I think the document, for other reasons, is inadmissible and I reject it. Objection is taken to document 440, in particular pages 6,036 to 6,038. It is plain, from both the heading on the letter and its contents, that it is a without prejudice communication and hence I regard it as objectionable. I reject it. 108Objection is taken to document 758 but in particular the unsworn affidavit of Mr Dullard at pages 8,950 to 8,952. Clearly it is objectionable and I reject it. 109Document 786 comprises a tender bundle identified as "G" referred to in the affidavit of Mr Shannon of 13 June 2012. Particular pages are objected to, namely 9,952-9,976 and 9,982-10,022. Consistent with my other rulings on the issue of value, I reject those documents as going to value and restrict their use under s 136 to assertions. The same objection applies to document 815 (in particular page 31). Again, I restrict the use of the material on that page pursuant to s 136 to mere assertion and not as evidence of value. I invited the Bank also to put in writing any objections had to what might be described as impermissible evidentiary references in Mr Shannon's closing materials. I have received a document dated 16 July 2013 which identifies a number of matters. I should indicate that I regard each of the objections and comments made in that document to be well founded. In a number of instances, documents whose use is restricted under s 136 have been referred to as if they are evidence as to the fact. My rulings make clear what the position is, but in any event, as I say, I regard as correct the various submissions made by the Bank in relation to those evidentiary references. Legal principles relating to repudiation 110Mr Shannon alleges the Bank repudiated the facilities by failing to pay the full amount contained in the tax invoice dated 15 May 2008 totalling $248,380, and also by stating, through Mr Triggs, during the 5 August 2008 meeting, that it effectively "wanted out" of the loan facilities. It will therefore be helpful to recite the leading statements of principle in respect of repudiation. 111In Shevill v Builders Licensing Board (1982) 149 CLR 620, Gibbs CJ (with whom Murphy and Brennan JJ agreed) said (at 625, citations omitted): ... a contract may be repudiated if one party renounces his liabilities under it - if he evinces an intention no longer to be bound by the contract or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way. In such a case the innocent party is entitled to accept the repudiation, thereby discharging himself from further performance, and sue for damages... 112Similarly, Wilson J said with reference to the facts of that case (at 633, citations omitted): This case does not call for a detailed examination of the law touching repudiation, because in my opinion the circumstances do not even approach the point at which it can be said that by its words or conduct the lessee had demonstrated that it would or could no longer perform its obligations under the contract. Repudiation of a contract is a serious matter and is not to be lightly found or inferred ... . In considering it, one must look to all the circumstances of the case to see whether the conduct "amounts to a renunciation, to an absolute refusal to perform the contract". 113In Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623, Mason CJ cited with approval the comments made by Gibbs CJ in Shevill v Builders Licensing Board as quoted above, and elaborated on the kind of conduct that may amount to repudiation (at 634): There is a difference between evincing an intention to carry out a contract only if and when it suits the party to do so and evincing an intention to carry out a contract as and when it suits the party to do so. In the first case the party intends not to carry out the contract at all in the event that it does not suit him. In the second case the party intends to carry out the contract, but only to carry it out as and when it suits him. It is much easier to say of the first than of the second case that the party has evinced an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way. But the outcome in the second case will depend upon its particular circumstances, including the terms of the contract. In some situations the intention to carry out the contract as and when it suits the party may be taken to such lengths that it amounts to an intention to fulfil the contract only in a manner substantially inconsistent with the party's obligations and not in any other way. 114Likewise, Brennan J cited with approval (at 643) Gibbs CJ's statement in Shevill v Builders Licensing Board as quoted above, and added (at 647-648): Repudiation is not ascertained by an inquiry into the subjective state of mind of the party in default; it is to be found in the conduct, whether verbal or other, of the party in default which conveys to the other party the defaulting party's inability to perform the contract or promise or his intention not to perform it or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way. ... The question whether an inference of repudiation should be drawn merely from continued failure to perform requires an evaluation of the delay from the standpoint of the innocent party. Would a reasonable person in the shoes of the innocent party clearly infer that the other party would not be bound by the contract or would fulfil it only in a manner substantially inconsistent with that party's obligations and in no other way? 115Deane and Dawson JJ said (at 657-658, citations omitted): Lord Wright's oft-quoted admonition that "repudiation of a contract is a serious matter, not to be lightly found or inferred" is, no doubt, a wise one. It should not, however, be allowed to cloud the fact that an allegation of repudiation of contract in a civil case does not involve an assertion that the alleged repudiator subjectively intended to repudiate his obligations ... An issue of repudiation turns upon objective acts and omissions and not upon uncommunicated intention. The question is what effect the [relevant person's] conduct "would be reasonably calculated to have upon a reasonable person". It suffices that, viewed objectively, the conduct of the relevant party has been such as to convey to a reasonable person, in the situation of the other party, repudiation or disavowal either of the contract as a whole or of a fundamental obligation under it. 116Their Honours made further comments, though perhaps more relevant to cases considering whether a delay in performance amounts to repudiation (at 658-659, citations omitted): It is not necessary for repudiation of a contract that the repudiator make plain that he will never perform his contractual obligations at all. What Lord Dunedin described ... as the assumption of "a shilly-shallying attitude in regard to the contract" and what Lord Shaw of Dunfermline ... called "procrastination ... persistently practised" can, in some circumstances, reach the stage of repudiation even though accompanied by assurances of ultimate performance at some future time. In that regard, the law was correctly stated by Lord Shaw in the following extract from his judgment in Forslind ... which is directly in point to the circumstances of the present case: If, in short, A, a party to a contract, acts in such a fashion of ignoring or not complying with his obligations under it, B, the other party, is entitled to say: 'My rights under this contract are being completely ignored and my interests may suffer by non-performance by A of his obligations, and that to such a fundamental and essential extent that I declare he is treating me as if no contract existed which bound him.' ... In business over and over again it occurs - as, in my opinion, it occurred in the present case - that procrastination is so persistently practised as to make a most serious inroad into the rights of the other party to a contract. There must be a stage when the person suffering from that is entitled to say: 'This must be brought to an end. My efforts have been unavailing, and I declare that you have broken your contract relations with me.' Lord Shaw went on to point out ... that "the question whether the stage has been reached when procrastination or non-performance" constitutes repudiation is essentially one of fact. That question will, as has been said, only be properly answered in the affirmative when procrastination or non-performance has marked the stage of conveying to a reasonable person, in the situation of the other party, repudiation or disavowal either of the contract as a whole or of a fundamental obligation under it. 117Gaudron J also accepted Gibbs CJ's formulation in Shevill v Builders Licensing Board of whether conduct should be characterised as repudiatory. 118More recently, in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115, Gleeson CJ, Gummow, Heydon and Crennan JJ said (at [44], citations omitted): [44] ... The term repudiation is used in different senses. First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations. It may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it ... There may be cases where a failure to perform, even if not a breach of an essential term (as to which more will be said), manifests unwillingness or inability to perform in such circumstances that the other party is entitled to conclude that the contract will not be performed substantially according to its requirements. This overlapping between renunciation and failure of performance may appear conceptually untidy, but unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. In contractual renunciation, actions may speak louder than words. 119These principles were summarised by Bathurst CJ (with whom Macfarlan and Meagher JJA agreed) in Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 (at [179]-[180]). The Chief Justice described repudiation as a renunciation of the contract, namely, an unwillingness or inability to render substantial performance of it, and said that the test of whether conduct amounts to such a renunciation, is whether the conduct was such as to convey to a reasonable person renunciation of the contract as a whole or of a fundamental obligation under it. Discussion 120As I have already observed (at [110]), Mr Shannon points to two events which he says amount to repudiatory conduct on the part of the Bank. First, in failing to pay the full amount contained in the tax invoice dated 15 May 2008 totalling $248,380. In addition, he asserts that what was said to him by Mr Triggs at the meeting of 5 August 2008, to the effect that the Bank "wanted out", was equally an act of repudiation. 121For various reasons which follow, I do not consider the Bank in any sense repudiated its arrangements with Mr Shannon and/or his entities. 122It seems to me that in relation to the so called "upgrades" first notified to the Bank on 29 January 2008, Mr Shannon did not seek the Bank's input or consent to initiating and commencing the implementation of the upgrades. This was an entirely unilateral decision which in due course he caused 33 Electra and C2C Developments to agree upon. He in effect made a decision as to what, and if so to what extent, upgrades would be implemented. He decided on the costs of those upgrades. He did so having formed a more optimistic view of the market. 123The tone and terms of Mr Shannon's email of 29 January 2008 could not be clearer. He said "I have upgraded most items in the project as we are marketing the remainder over the $1 million each". 124As at 14 March 2008, Mr Shannon thought the total for the upgrade costs would only be $581,000. He acknowledged in his email of that date that he was seeking extra funding and was looking forward to a "positive response". He fully appreciated, it seems to me, and he clearly acknowledged by this email, that this was a decision on his part for which he had no immediate funding. He could of course fund it himself. 125By 8 May 2008, the upgrades were underway. It seems to me that Mr Shannon, as he appears to have acknowledged in his evidence, took a substantial commercial risk that he would in some way be able to fund the variations or receive additional funds from the Bank. 126Mr Shannon asserts that he only embarked upon this process of upgrading by reason of some encouragement from Mr Williams. I reject that. I will return to the evidence in a little detail shortly. In my mind, there seems little doubt that Mr Shannon's group at this time was having cashflow difficulties. Indeed he appears to have confronted that issue by attempting to sell the Dockside project as early as April 2008. Admittedly, his wife became seriously ill, he later became ill himself, and his daughter attempted suicide. He had a lot of personal issues to deal with. Either these caused or indeed exacerbated the financial circumstances of the group including, and in particular, the Dockside development. 127It is obvious that the combination of Mr Shannon's very serious personal difficulties, and his somewhat optimistic view of the worth of the project after the upgrades, was more than enough to concern the Bank. The concern was whether there was a material change in the risk profile of the facility. 128Acting prudently, Mr Williams was concerned to ensure that the sum of $581,000 initially estimated by Mr Shannon as the total upgrade cost was indeed a firm figure. He was aware for example that the building contract between 33 Electra and C2C Developments (dated 30 September 2006) was a fixed price contract of $4,818,181 exclusive of GST or $5,300,000 inclusive of GST. It is plain that the Commercial Advance Facility provided to 33 Electra was approved on that basis. Mr Williams was limited in his authority. He did not have any authority to grant any approvals for advances to new customers. He only had authority to approve additional funding for existing customers up to a maximum amount of $250,000. 129I am satisfied that shortly after 15 March 2008 Mr Williams and Mr Shannon had a discussion in which Mr Shannon indicated that he wanted the Bank to fund the additional costs. During the course of that conversation Mr Williams made some handwritten annotations on a copy of the email he had received from Mr Shannon of 14 March 2008. Mr Williams said in his affidavit of 9 March 2012 that he had a practice when dealing with customers to tell them that if they wanted to make an application for additional funding then such an application would need to be placed before Credit for approval and that it was therefore better to think of all items that they needed so that they did not have to go back for further funding. He says, which I accept, that he believes he made such a statement, or a statement to that effect, to Mr Shannon when the additional funding was discussed. Mr Shannon, as I understood his evidence, appears to accept this occurred. 130I am also satisfied and again accept Mr Williams' evidence that he made Mr Shannon aware that apart from the upgrades themselves there were other issues that the Bank may well be concerned with relating to the financial stability of 33 Electra. 131It would appear that by the end of March 2008 the Dockside project had very much slowed down. As I have already noted, the RLB report number 18 indicated that only 1% of the project had been completed since 25 February 2008. I am satisfied that this situation was caused by a combination of Mr Shannon being distracted by at least the severe illness of his wife, together with cashflow issues. 132It is also plain that by 2 April 2008 Mr Shannon was caused to revise the estimate for the costs of the upgrades to $921,000. $240,000 was attributable to increased building costs and $100,000 was attributable to the estimated increased capitalised interest. I am satisfied that this assessment was made entirely by Mr Shannon and was by no means induced by some representation by Mr Williams in effect inviting him simply to make a claim for $1 million. Mr Shannon's assertion during the course of his evidence that Mr Williams effectively approached him to apply for a loan is fanciful and quite frankly I think it is improbable. Mr Shannon clearly made a calculation which led to the figure of $240,000 which he believed to be an accurate indication of the increase in the cost or rising costs of materials. Likewise, in relation to the calculation of the $100,000. I am satisfied that Mr Shannon was indeed complying with a request from Mr Williams, namely that he supply a realistic assessment of the additional costs likely to be caused by the upgrades so, as Mr Williams put it to him, one application and one application only would be made for an increase. 133I am satisfied that Mr Shannon appreciated at all times that in order to obtain an increase in facilities, a formal application would have to be made. 134Following the meeting between Mr Triggs, Mr Williams, Mr McIntosh and Ms Ford on 13 May 2008, I am satisfied that the Bank decided Mr Triggs should negotiate an increase in the Facility Interest Rate Margin, effective immediately, because of the Bank's view that the risk profile of the 33 Electra account had changed. 135Mr Shannon agreed in his evidence that indeed he met with Mr Williams and Mr Triggs on 14 May 2008. He agreed he was asked by one or other of them how much he thought he needed to keep the project going, to which he responded somewhere between $200,000 and $210,000. He agreed that he was invited to submit a progress payment claim in order to keep the project moving, but that the claim would need to be approved by the Bank. He also agreed that there was a discussion about a possible increase in the facility limit in the order of $1.2 million, and he further agreed that he told Mr Triggs and Mr Williams that the work had slowed the previous month because funds had dried up and that he had been distracted because of his wife's serious illness. 136Importantly, Mr Triggs asserts that at this meeting there was an agreement made with Mr Shannon that there would be an increase on the Facility Interest Rate Margin to 2.75% in return for the Bank waiving his success fee. Mr Shannon disputes this. I am unable to accept Mr Shannon's version of events. Mr Triggs, on 15 May 2008, sent an email to Mr McIntosh and others referring to the meeting held with Mr Shannon and Mr Williams on 14 May 2008. I am satisfied that this corroborates Mr Triggs' version of what he asserts took place (which I accept) at the meeting of 14 May 2008, and in particular his comment as follows: Pricing has been discussed - currently on 130BP - we have agreed to increase to 275BP on total facility, and retain $6 per quarter management fee (which equates to further 40BP) - success fee has been set aside given immediate increase in margin. 137On 15 May 2008, Mr Shannon says that one of his staff faxed to the Bank on behalf of C2C Developments a tax invoice from C2C Developments to 33 Electra in the sum of $225,800 excluding GST. Of that figure approximately $217,800 related to the variations and/or upgrades. 138On the same day, Mr Shannon on behalf of C2C Developments caused to be faxed to the Bank a drawdown notice in the sum of $225,800 "ex GST". Mr Shannon agrees that the $225,800 was paid in full by the Bank but somehow in breach of the arrangements because the account number on the drawdown notice was a National Australia Bank account whereas in fact the monies were paid to a Commonwealth Bank account. In my view, nothing at all turns upon this. He realised, I am satisfied, that the Bank would pay on a drawdown notice. Mr Shannon claimed in the course of the hearing that the drawdown notice was not the correct drawdown notice and that there must have been some other drawdown notice. I reject that evidence as purely fanciful. He was never able to identify the other drawdown notice except to say that some other drawdown notice must have existed. He could not identify who might have sent the other drawdown notice or why neither his records nor those of the Bank did not disclose a second drawdown notice. As far as I am concerned, the evidence only supports one drawdown notice. 139On 15 May 2008, RLB issued report number 19. The report makes it apparent that the cost to complete, when added to the cost "to date", yielded a "forecast final" that exceeded the "budget" by $921,800. In the details provided in that report under the column "Variation Summary" there is a column headed "Approved Amount". It is plain on the evidence that the only approval ever given for the variation was an approval of the building contact or the building specifications, that is, an approval between 33 Electra and C2C Developments. On the evidence, there was never any approval given by the Bank for that amount. 140Notwithstanding the earlier drawdown notice, Mr Shannon, on 16 May 2008, sent a further fax in the form of an invoice to the Bank from C2C Developments stating a balance was due of $248,280. Either Mr Shannon did this under the mistaken belief that he was amending the drawdown notice, or he did so in order to obtain further funds from the Bank. I am satisfied Mr Williams rang Mr Shannon and asked him why it was that in their earlier conversation Mr Shannon had indicated that something in the order of $200,000 was necessary and now there was a further request for some $50,000 more. 141Mr Shannon gave a number of what I regard as rather strange answers during cross-examination in relation to these events. He tried to suggest that somehow the later tax invoice was the record of some complaint by him that there was a shortfall by the Bank in the amount paid to 33 Electra in May 2008. He also asserted someone had altered the later invoice, although as I have earlier remarked, he could not identify who that might have been. His answers on this matter were generally confused, illogical and internally inconsistent. Indeed I did not find he gave any helpful evidence on this aspect at all at least in his interest. The facts are clear in my view, as I have said, that only one drawdown notice was ever provided and Mr Shannon never sought to amend the drawdown notice by issuing a second one. 142Mr Williams asserts that in a conversation with Shannon, Mr Shannon indicated that he would pay the GST himself. I accept Mr Williams' evidence on this. It is indeed corroborated, in my view, by an email he sent to Mr McIntosh and others on 16 May 2008. 143On 21 May 2008, Mr McIntosh approved the payment of $225,800 subject to the Facility Interest Rate Margin being increased to 2.75%. It is clear that the Bank approved this payment for purely commercial reasons. In particular, the Bank did it in order to prevent the project stopping entirely due to a lack of funding. It was also important to the Bank that it obtained updated valuations of all units and an appraisal of the pre-sales contracts before conducting any further funding. 144When the drawdown amount of $225,800 was paid, it was paid in two separate tranches, being one payment of $145,027 and another of $81,730.50 (CB11/4331-4332) (which inexplicably total $226,757.50). Although there is no dispute about this, there is equally no explanation of precisely why it was done in this way. However, both payments were made on 22 May 2008 and letters were sent by Mr Williams to 33 Electra. It is plainly apparently from the face of both documents that the increased margin of 2.75% was to apply. It is also plainly apparent on the evidence that Mr Shannon made no contemporaneous complaint about the alleged shortfall by the payment of the $225,800 or the increased margin of 2.75%. The first time any such complaint appears to have been recorded about the payment is when his initial defence was filed and verified by him on 21 January 2010. He certainly never wrote or emailed complaining about what he alleges was the shortfall, nor is there any internal and/or contemporaneous note within the Bank indicating such a complaint was made orally by him. I am satisfied he did not complain at the time and I reject any suggestion by him that he did. 145The Bank asserts, and in my view there is considerable support for the proposition, that rather than the payment of $225,800 being used by 33 Electra to reimburse the builder, C2C Developments, for construction costs it was paid to related companies or relatives and much of the expenditure had no direct connection with the project. Mr Shannon in his affidavit material attempts to suggest that somehow the payments are directly or indirectly related to the project. I am really unable to accept this evidence. It seems readily apparently that he or C2C Developments had other perhaps more pressing requirements for the use of the funds. Mr Shannon in conducting the case before the court proceeded upon the basis that once the monies were in the hands of C2C Developments it could do with the monies what it wished. I do not regard that position as correct. The drawdown notice quite explicitly asserts that the purpose for which the drawing was required was the "Development Works in terms of the Facility Agreement". The evidence would appear to support that subcontractors and/or suppliers of C2C Developments were left unpaid and ended up submitting proofs of debt in the external administration of C2C Developments. For example J R Richards, Hyline Formwork, Bunnings, Timberfast and Cemex. In any event, it was a commercially reckless position for him to have adopted and one which highlights the perilous position of his group's activities. 146The fact that Mr Shannon perceived other creditors to be more important perhaps than those in relation to the Dockside development is in large measure corroborated by Mr Leigh who gave evidence, which I accept, that in May/June of 2008 he had a number of meetings with Mr Shannon. Mr Leigh said in his evidence that the topic of the discussion was the financial position of his group of companies. Mr Leigh says that Mr Shannon told him that the financial position was perilous and that there were a number of creditors that were actively pursuing recovery proceedings and that a number of banks had also effectively frozen his facilities. 147I am satisfied that by about June 2008, Mr Shannon was probably entirely distracted both with cashflow difficulties but more importantly perhaps the health of his wife. In my view, the Bank was attempting to resolve issues and as far as possible ensuring that the project did not go off the rails. For example, on 5 June 2008 Mr Williams sent an email to Mr Triggs. It refers to a conversation he had with Mr Shannon to the effect that he told Mr Shannon that there was some urgency in getting matters finalised. Mr Shannon apparently advised Mr Williams that there was an offer on the table to sell the entire project and he was working with his accountant and the prospective purchaser to finalise the offer. 148Mr Shannon asserted that the Bank was in fact dilatory in processing matters from about mid May 2008 onwards. However, as is clear from Mr Williams' email of 5 June 2008 and others to which I shall refer, quite the opposite position was the fact. Mr Shannon told Mr Williams on or about 5 June 2008 that if a sale were to occur he would not need to approach the Bank for any increase. I am satisfied that from about this time onwards Mr Shannon made his own decision that, given his personal predicament and given the cashflow issues, a better course for him commercially to adopt was to see if he could sell the whole of the project. It was in this context that he clearly asked Mr Williams to hold back or defer the processing of any application for further funding until he could get the deal over the line. A further email between Mr Triggs and Mr Williams on 11 June 2008 indicates that Mr Triggs was obviously anxious to move the Bank's credit analysis along more quickly. The Bank had an obvious interest in ensuring as far as it could that Mr Shannon either sold the project or alternatively expeditiously got on with completing it if that could be realistically achieved. 149In an email dated 11 June 2008 from Mr Williams to Mr Triggs, Mr Williams makes reference to Mr Shannon indicating to him that he did not want to waste anyone's time given the fact, as he indicated, he had almost sold the Dockside project. This was yet another indication from Mr Shannon that he did not want the Bank to undertake any unnecessary analysis for increased funding. 150In his email to Mr Triggs of 17 June 2008, Mr Shannon informed Mr Triggs that it looked like he was moving closer to a sale on the project, intimating, again in my view, that he wished for Bank's credit analysis to remain on hold. 151I am also satisfied that apart from his personal circumstances, the cashflow difficulties suffered by Mr Shannon's corporate group in reality prevented C2C Developments from continuing with the project. It was simply unable to pay subcontractors and expend monies on construction works. 152It is clear that by 17 June 2008 Mr Shannon told Mr Triggs that Mr Shannon had provided "info to the valuer". There is no doubt that Mr Shannon's attempts to sell off the project may well have had the effect of dampening the Bank's enthusiasm for completing the credit analysis. 153At a meeting of 18 June 2008, Mr Shannon again informed Mr Triggs, Mr Williams and Ms Ford that the sale to a Mr Smithson would occur by way of a sale of shares in 33 Electra. I am satisfied that he told those present at the meeting that the sale would clear the debt to the Bank and that in light of this he would not be seeking any further progress claims. His monetary requests were restricted to the request for a temporary overdraft for C2C Investments of about $90,000, enabling the creditors of 33 Electra's "Abode Selections" division to be paid off. Mr Triggs, unsurprisingly however, at the meeting, referred to the possibility of the sale of the project falling through, and I am satisfied that Mr Triggs expressed his concern to Mr Shannon about the significant cost overruns and variations on the development and the fact that the work was progressing slowly. 154Mr Williams told Mr Shannon in an email of 20 June 2008 that once the Bank had received all relevant information it would obtain a new valuation for Dockside. I am satisfied that it was Mr Shannon who had promised but had failed to deliver information until 17 June 2008 for the purposes of that valuation. 155On 8 July 2008, Ms Grainger, Mr Shannon's then solicitor, informed the Bank that an agreement had been reached with a prospective purchaser of the Dockside development. Apart from the fact that no complaint was made by Mr Shannon to this point about the alleged shortfall in the 22 May 2008 advance, I am able to infer that Mr Shannon did not complain to his solicitor nor ask her to register his complaint in relation to that matter. That fortifies my view that it never occurred to him that the alleged shortfall was indeed a problem at all. 156By July 2008, it seems to me the Bank was entitled to form the view that the corporate group of Mr Shannon was in a perilous financial position. If the sale fell through, it was likely there would be a need for Mr Shannon to fund about $1.3 million extra to complete the project. There had been considerable delay to that point in addressing a range of issues, which delay it seems to me was entirely at the feet of Mr Shannon. I do not suggest that his personal circumstances were not significant and that he was not distracted by them. But it does seem to me that a combination of those factors, together with his making the very deliberate commercial choice to offload the project on the one hand, caused him to encourage the Bank to hold off making its assessment for the purposes of any further increase in facilities. He had also delayed in supplying information. Indeed, in his email of 18 July 2008 to Mr Williams, Mr Shannon apologised for the delay in clearing up the excesses on various accounts. This is quite inconsistent with any concern on his part that the Bank was somehow delaying its processes. 157I am quite satisfied that Mr Shannon fully appreciated that apart from the one-off payment of $225,800 he had no approval for any other increases on the facilities. I reject any assertion to the contrary. That is why he floated in his email of 31 July 2008 to Mr Williams the idea that "it would be good if the claim of $105,000 could be paid". I am equally satisfied that he fully appreciated that any further excesses would be entirely within the Bank's discretion. 158In the period leading up to the meeting of 5 August 2008 the Bank was on an ongoing basis carefully considering its commercial position. It was in this context, and in recognition of the fact that Mr Shannon was trying to cope with a great deal of activity including his personal circumstances, that Ms Ford raised the question of the appointment of a project manager in the event that the project was to continue. This is entirely inconsistent with any notion of repudiation. There is also no doubt that by late July 2008 Ms Ford and possibly others within the Bank thought that the best and quickest outcome for all concerned was the sale of the project or perhaps even that the preferred alternative to that was that Mr Shannon refinanced the entirety of the facilities elsewhere. On the eve of his meeting with the Bank on 5 August 2008, Mr Shannon received an email from Mr Smithson, the prospective purchaser, which on its face at least indicated the acquisition of the project by Mr Smithson was still on the cards. 159At the meeting of 5 August 2008, I am satisfied that all parties had a relatively frank and at times perhaps heated discussion. Apart from Mr Shannon, Ms Grainger, his solicitor, attended with him. Mr Triggs, Ms Ford and Mr Williams, as I have already mentioned, were there. It is at this meeting that Mr Shannon asserts repudiatory conduct on the part of Mr Triggs took place. Mr Triggs rejects that notion. Mr Shannon asserts however that by Mr Triggs suggesting that the Bank "wanted out", Mr Shannon says he felt he had no option and that the Bank effectively conveyed that it was no longer bound by any contractual obligations. Mr Triggs denies he said such things and I accept his evidence. I reject the evidence of Mr Shannon. At most, I consider what was said by Mr Triggs was that the Bank's preferred option or course was that Mr Shannon refinance or sell the project. Even assuming Mr Triggs indicated to Mr Shannon that that was the Bank's preferred option, that would not in my view amount to repudiation. I am unable to find that anything occurred at the meeting of 5 August 2008 which consistent with the authorities conveyed that the Bank was no longer regarding itself as bound by its contractual obligations. It was facing commercial difficulties and, indeed, so was Mr Shannon. The Bank was entitled to be frustrated by the pace at which Mr Shannon had not only sought to consummate a sale, but provide information for the purposes of a valuation and/or an evaluation by the Bank as to any possible increase in facilities. 160I am satisfied that at the meeting, Ms Ford or others may have indicated to Mr Shannon that they would want their own project manager in. Again, I do not regard this as repudiatory, but merely a recognition of Mr Shannon's incapacity to manage the affairs of his group efficiently in everybody's interests, including his own, and entirely consistent with completing the project efficiently. There is nothing in the handwritten notes taken by Ms Grainger at the meeting to indicate that anything at all was said by anyone on behalf of the Bank that could amount to repudiation. I accept Mr Triggs' evidence about what occurred at the meeting, especially that set out in his second affidavit. I accept that he informed Mr Shannon, and Ms Grainger for that matter, that the Bank was concerned with the slow progress of the sale and needed to consider its position if the sale fell through. I accept that he also stated that the Bank wished to engage a second quantity surveyor, whose report the Bank needed before it considered any request for additional funding. These comments were clearly all made in a context where it seems to me the Bank was otherwise acknowledging its contractual obligations. Neither Mr Shannon, nor Ms Grainger were prompted following that meeting to record in any formal sense, or indeed in any sense, that they had understood that the Bank in fact was purporting to repudiate its arrangements. 161In subsequent emails, for example on 12 August 2008, Mr Williams enquired of Mr Shannon about the progress of the sale, indicating that he required a definite clearance date for all "account arrears". This is entirely inconsistent with a termination of the facilities and it is simply consistent with attempting to ensure Mr Shannon abided by his contractual obligations. Mr Shannon clearly understood the email as referring only to his arrears, and he responded accordingly. 162My mid-August 2008, Mr Triggs had lost faith in the notion that a sale was likely and indeed in his email to Mr Williams and Ms Ford of 15 August 2008, he was canvassing a number of options which included, amongst others, a continuation of the project. The terminology "should we elect to build out" is only consistent, in my opinion, with the Bank contemplating funding a completion of the construction, albeit perhaps with an independent project manager. Further, on 19 August 2008, in her email to Mr McIntosh, Ms Ford indicated that she was trying to gather information so as to make a decision in relation to the appropriate strategy the Bank should adopt which included, amongst other things, information on the costs to complete the project. It is no surprise, given the significant degree of commercial uncertainty then facing all parties but most importantly from their point of view, the Bank, that they chose to keep their strategic thinking to themselves and not share it with Mr Shannon. Again, I do not regard it as repudiatory conduct even had it been asserted. 163By about the middle of September 2008, Mr Shannon himself was in hospital, clearly as a result of the pressure he was under in relation to the project, the affairs of his corporate group and his wife's illness. In addition, the Bank must have treated with some considerable alarm the report obtained from the independent quantity surveyor, Page Kirkland, that the estimated cost to complete was in fact $4,797,886, and if they were correct, the project was then only 42% complete. Putting to one side Mr Shannon disputing that assessment, the Bank was entitled on the material it had before it to be very concerned about the commercial future of the project. It is little wonder that the file was transferred to Credit Restructuring for assessment and ongoing strategy. 164There is nothing in the factual material, as I have analysed it at least, to suggest anything remotely resembling repudiatory conduct on the part of the Bank. Such a case, in my view, is entirely untenable and I reject it. Hence Mr Shannon has not made out any case of repudiation on the part of the Bank. Real issues for determination 165On or about 17 May 2013, the Bank delivered to the court, pursuant to the usual order for hearing, a document entitled "Statement of the Real Issues for Determination". In its final submissions, the Bank addressed each of the matters contained in the issues document, and Mr Shannon provided written materials in response. As the parties have addressed each of the items, it is appropriate that I accordingly do likewise. Because of the number and complexity of the issues, and to make my reasons for judgment intelligible, I have attached to this judgment a document articulating more fully the precise issues for determination advanced by the Bank and addressed by Mr Shannon. 166Mr Shannon provided submissions purporting to respond to each of the issues identified by the Bank. In many of those submissions, Mr Shannon merely "disputed" or "denied" submissions made by the Bank, expressed disagreement, made submissions which were non-responsive, or purported to rely on matters in respect of which I have made findings to the contrary. I have otherwise noted and addressed Mr Shannon's submissions of any substance. Issues 1 to 3 - Variation of building contract / specifications 167In relation to these issues, I have already made findings as to the circumstances in which Mr Shannon determined to implement the upgrades to the finishes on the townhouses within the Dockside development. I have found that he unilaterally determined to implement them and, as a result, he caused 33 Electra and C2C Developments (as building owner and builder) to agree on the variations. This clearly had the effect of causing a variation to the building contract with a variation in the contract price. 168It also had to involve an amendment to the specifications, at least in some respects. Accordingly, I am satisfied that there was a variation both to the specifications and to the building contract. Those variations occurred without the knowledge of the Bank and certainly not with its prior written consent. In the circumstances, given Mr Shannon's unilateral implementation of the upgrades without consultation with the Bank, no question of estoppel could arise. Hence the Bank is in no way estopped from relying on the variations as events of default. Issue 4 - Cost overrun 169As a result of the upgrades, there was clearly in my view a costs overrun. An additional cost to complete the development was specifically identified in report number 19 of RLB dated 15 May 2008. Mr Shannon asserted that there was no cost overrun, on the basis that report number 19 only referred to "variations" of $921,800 but "does not state cost overruns". The cost overrun, however, is simply commensurate with the variation in these circumstances. The extent of the costs overrun was, in my view, $921,800. Hence it follows that the issue should be determined on the basis that the quantity surveyor did identify a costs overrun. Issues 5 to 6 - Misleading statutory declarations Issue 5 - The scope of clause 16.1(f) of the 2005 General Terms 170Issue 5 raises the question of whether the statutory declaration, as declared by Mr Shannon in connection with each drawdown notice, fell within the scope of clause 16.1(f) of the Bank's 2005 General Terms. The particular provision leads to an event of default when a representation is made or taken to be made on behalf of 33 Electra in connection with the facility document and is "incorrect or misleading when made or taken to be made". 171Mr Shannon's 15 May 2008 statutory declaration contains a representation, it seems to me, in connection with the Commercial Advance Facility. Mr Shannon submitted that the statutory declaration was made on behalf of C2C Developments and not 33 Electra. That may be so, but the better view is that it was also a representation made by or on behalf of 33 Electra. The reason for this is that the purpose, in large measure, of the statutory declaration was to justify a claim for a drawdown under the Commercial Advance Facility with the Bank by 33 Electra. It was for its benefit clearly that the representation was made. The relevant statutory declaration was made by Mr Shannon as the sole director of 33 Electra. On any view, it seems to me, the declaration was relevantly made on behalf of 33 Electra, perhaps as well as on behalf of the builder. 172The Bank submits that paragraph three of the statutory declaration was incorrect or misleading. The question is whether clause 16.1(f) is engaged. Mr Shannon submitted that all declarations were made to the best of his knowledge at the time, and that the Bank cannot seek to rely on something which surfaced several years later. The Bank submits, I think correctly, that the clause is engaged when the representation made or taken to be made is revealed in due course to be misleading or incorrect when made or taken to be made. It follows therefore, again, that I think the Bank's submissions on issue five are correct, and that the clause is engaged even if the incorrect or misleading materials were revealed in due course to be so. Issue 6 - May 2008 statutory declaration was incorrect or misleading 173The Bank submits that the statutory declaration faxed to the Bank by or on behalf of Mr Shannon gave incorrect or misleading information to the Bank, in that paragraph three was not true in respect of at least Bunnings. In that statutory declaration, Mr Shannon made the declaration to the best of his knowledge, information and belief, having made an enquiry, that all subcontractors and suppliers to C2C Developments had "been paid all monies payable to them in respect of materials supplied and work performed for the purpose of the Building Contract". 174The Bank submits that such information was of importance to it, apart from anything else, because it gave the Bank the comfort that the Bank's customer had the relevant cashflow to meet expenses when and if they fell due. 175Bunnings issued three invoices to C2C Developments. One invoice was dated 10 March 2008, for the sum of $6,102.35. The address on the invoice was Dockside Harrington Waters Unit 14, 15, and 16, and the invoice covered plywood flooring (tongue and groove). A further invoice, dated 14 March 2008, was in the sum of $1,601.16, addressed this time to Unit 16, Dockside Harrington, again for tongue and groove flooring. Finally, there was an invoice dated 25 March 2008, in the sum of $6,581.28. This was simply addressed to "Dockside Units Harrington". It covered a number of items, but also, again, tongue and groove flooring. 176It must be the case, and I so find, that some of the timber products were for use in the Dockside development. Each of the invoices had detailed terms and conditions attached. Clause 3 required payment on or before the "due date", which was defined in clause 24 to mean "in relation to any goods, the latter of the last business day of the month following the month in which those goods are supplied and any date which Bunnings tells the applicant in writing is the due date". 177For the first time, Mr Shannon claimed on the afternoon of the last day of his evidence that he had an arrangement with a Mr Ian Rose of Bunnings, that he would have 45 days to pay from the date the statement was issued. Even if that were correct, it would seem that all invoices were payable by 15 May 2008. Mr Shannon accepted that none of the invoices had in fact been paid by 15 May 2008. 178There is no doubt that Mr Shannon informed Mr Williams by email on 14 May 2008 that one of the upgrades was to "upgrade floor finishes". Mr Williams made a note in his handwriting as a result of having spoken with Mr Shannon, that this meant "timber instead of tiling and carpet - downstairs only". 179Mr Shannon was tempted to suggest that in some way or other the upgrade to the floor finishes did not actually refer to any timber. I reject that explanation. He told Mr Williams, and I accept that Mr Williams made a note at the time of the conversation, that the upgrade in fact involved timber flooring. This corresponds with the addresses on the invoices. The fact that the timber had not actually been laid is quite irrelevant. I am satisfied some of the timber at least was clearly intended to be used at Dockside. 180Mr Shannon accepted, as indeed he must, that the variations gave rise to a variation of the building contract in that they increased the costs payable under the building contract. Further, he accepted that in some respects they effected a variation to the specifications. 181I have little doubt, and I am satisfied accordingly, that the material supplied by Bunnings was supplied "for the purpose of" the building contract, that is, for the purpose of constructing the townhouses at Dockside. 182It follows that the May 2008 statutory declaration was incorrect, as each of the three Bunnings invoices was overdue as at 15 May 2008. It was quite incorrect to assert that Bunnings had been paid "all monies payable to them in respect of materials supplied ... for the purpose of the building contract" within the meaning of paragraph 3 of the May 2008 statutory declaration. 183Accordingly, Issue 6 should be answered in the affirmative, namely that the May 2008 statutory declaration was incorrect and misleading, at least in respect of Bunnings. Issues 7 to 9 - Compliance by the Bank with the drawdown notice of 15 May 2008 Issue 7 - Bank had no obligation to permit drawdown 184Mr Shannon and 33 Electra contend that the Bank breached and hence repudiated the Commercial Advance Facility in May 2008 by refusing to pay the GST component of $22,580 in the drawdown notice of that month. 185The Bank contends, on the other hand, that not only was the amount paid (i.e. $225,800) the precise figure specified in the drawdown notice, but in addition, the Bank had no obligation on 15 May 2008 to pay any part of any progress payment to 33 Electra. Mr Shannon alleged that the Bank failed to prove that the drawdown notice was the "correct" one. The evidence, however, is contrary to Mr Shannon's assertion, and he was unable to produce or even recall what he alleged to be the "correct" drawdown notice he says he sent to the Bank. 186The Bank asserts that there were numerous events of default on the part of Mr Shannon and/or 33 Electra, with the consequence that it had no obligation to comply in any way with either the drawdown notice given on 15 May 2008, or for that matter, any future drawdown notice unless and until 33 Electra had first covered the overruns. 187The first event of default the Bank relies upon was the breach by 33 Electra of its negative undertaking that it would not, without the Bank's prior written consent, "vary...any plans and specifications in respect of the development works". 188As I have found, the upgrades were variations to the building contract and/or to the specifications. The Bank never gave its consent to the variations and it was simply informed that they were occurring. Clearly, the Bank did not give its "prior written consent", and therefore the undertaking, the Bank contends, was breached. That is clearly correct. It further contended, which I also regard as correct, that this was an event of default under clause 16.1(c) and (i) of the Bank's 2005 General Terms. The Bank contends, and again I regard it as correct, that pursuant to clause 3.1(b)(iii) of its 2005 General Terms the Bank was entitled, if it wished, to refuse to allow any further drawdown. 189The Bank further contends that there was a very significant costs overrun in the costs to complete the project as varied. This was identified plainly in the RLB progress report number 19. 190The overrun having been identified, 33 Electra clearly had an obligation under condition precent (o) to "cover" that overrun from its own resources. Not only did it not do so, but it simply could not do so. 191Again, the Bank submits that this was an event of default by reason of the failure of 33 Electra to comply with condition precedent (o). The Bank further submits, which is clearly correct, that the failure to cover the costs overrun was also a failure to pay on time any amount payable under the Facility Documents within the meaning of clause 16.1(a) of the 2005 General Terms. In fact the Bank contends that the failure by 33 Electra to cover the overrun in reality gave rise to several events of default. Again the Bank contends, I consider correctly, it was therefore for that reason not obliged to meet any drawdown notice. Mr Shannon disputed the Bank's submissions but did not provide any substantive basis for doing so. 192Thirdly, the Bank contends that by reason of the incorrect or misleading statutory declaration in May 2008, which fell within the scope of clause 16.1(f) of the 2005 General Terms, the Bank had no obligation to pay. This is said to have constituted an event of default under clause 16.1(f) of the 2005 General Terms. As a result, the Bank was relieved of any obligation to permit any further drawdowns for that reason. 193As an adjunct to the third proposition, the Bank contends that the statutory declaration was incorrect or misleading in the sense that there was a representation that the monies were required for the purpose of the project. For reasons otherwise discussed, it is further suggested that this was incorrect or misleading and again was an act of default which again relieved the Bank from any obligation to permit any further drawdowns. 194It seems to me, for any one or more of the above reasons, the Bank was certainly entitled to refuse to pay either the sum of the GST or for that matter any future drawdowns in the absence of 33 Electra meeting the overruns in the first instance. Again, on this issue, Mr Shannon repeated submissions previously made and rejected, and provided nothing further of substance. On that basis, I think Issue 7 should be answered in the affirmative, namely that the Bank was relieved of any obligation it would otherwise have had to comply with a drawdown notice from 33 Electra on (and after) 15 May 2008. Issue 8 - Full compliance in any event 195The Bank submits that, in any event, it at all relevant times had fully complied with its contractual obligations. There was only ever one drawdown notice, despite Mr Shannon's suggestion of another one. I have already rejected Mr Shannon's assertion. It seems to me that the Bank was obliged to pay on the drawdown notice, which it did, and it was paid in full. 196In particular, clauses 3.1(a) and 3.2 of the 2005 General Terms required the Bank, upon receipt in proper form, to pay a drawdown notice. 197The facts are clear. The only drawdown notice ever issued was for the sum of $225,800, and hence, as I have already found, the allegation of short payment is both misconceived and unsustainable. 198Issue 8 therefore should be answered in the negative, namely that the Bank did not refuse or fail to permit 33 Electra to draw down $248,380, because there was no drawdown notice to that effect. Issue 9 - Duress 199Mr Shannon made an allegation that he orally asked the Bank for a higher sum and only signed the drawdown notice for $225,800 by reason of some form of duress. This is simply contrary to reality and the evidence. Mr Shannon was asked at his meeting with Mr Williams on 14 May 2008 to give an estimate of what he required. He said he thought he would only require somewhere between $200,000 to $210,000. It is clear that his estimate was wildly inaccurate. 200In any event I am not aware of any evidence presented in the case which could remotely sustain any basis for an allegation of duress. 201Issue 9 therefore should be answered in the negative, namely that there was no form of duress applied to Mr Shannon in respect of 33 Electra's drawdown notice of 15 May 2008. Issues 10 to 11 - Was the drawdown notice of 15 May 2008 for a permissible purpose? Issue 10 - Was the represented purpose in the 15 May 2008 drawdown notice incorrect or misleading? 202The 15 May 2008 drawdown notice stated in terms that "the purpose for which the proposed Drawing is required is for Development Works in terms of the Facility Agreement". 203The Bank submits, and I have already found, that the amount of $225,800 was applied for purposes which, at least on their face, were quite unrelated to the purpose stated in the drawdown notice. Some monies may well have been attributable to the project, but some, in my opinion, were clearly not. It seems Mr Shannon does not really contest that factual assertion. On the contrary, he seeks to override the statement of purpose in the drawdown notice and to say that he was entitled to apply the monies for any purpose whatsoever, whether in connection with the Dockside project or not. He asserted in his evidence that the Bank knew that he and/or his corporate entities had other projects ongoing, and it effectively should not come as any surprise that monies would be used at his discretion to meet priorities. Sadly, that was a misguided and misconceived notion on his part, if he genuinely held that view at the time. The drawdown notice represented that the monies were required for a particular purpose. I do not think it can be sensibly construed otherwise. This was not a general facility provided to his group in circumstances were no specificity was required as to how monies were to be deployed. 204The facility which was approved for the particular development was specifically designed for that development alone. It was based upon his assessment and no doubt that of the quantity surveyor in terms of what the cost to complete was likely to be. 205As alluded to earlier, it seems to me, on a clear construction of the drawdown notice, that Mr Shannon simply ignored the stated purpose and regarded himself as free to deploy the fund for any purpose notwithstanding the stated purpose. To that extent, in my view, the drawdown notice should be seen as incorrect or misleading. Mr Shannon's submissions on this issue were not on point. Issue 10 therefore should be answered in the affirmative, namely that the represented purpose in the 15 May 2008 drawdown notice was incorrect or misleading. Issue 11 - Was the Bank consequently relieved of any obligation to comply with the drawdown notice of 15 May 2008? 206As I have already observed, the drawdown notice involved a representation "made ... by or on behalf of 33 Electra". It was also a representation "in connection with a Facility Document" and it was "found" to be "incorrect or misleading when made". I agree with the Bank's contention that this was therefore an event of default. 207As I have already observed, the drawdown notice itself involved an undertaking or a representation to the Bank that the proceeds would be used for the stated purpose. It follows, as again I have already observed, that the Bank was relieved at all times from 15 May 2008 of the obligation to permit any drawdown advance to 33 Electra. I note that Mr Shannon disputes the Bank's position on this issue, but has not provided anything of substance to support his position. Accordingly, Issue 11 should be answered in the affirmative, namely that the Bank was, as a result of the representation in the 15 May 2008 drawdown notice about the purpose for which the money was required, relieved of any obligation it would otherwise have had to comply with a drawdown notice from 33 Electra from 15 May 2008. Issue 12 - Whether Mr Triggs repudiated the Dockside facilities on 5 August 2005 208I have already come to the view that whatever Mr Triggs said or did, it did not in law amount to a repudiation. Again, Mr Shannon disputes this conclusion on the basis of submissions previously made and rejected. Issue 12 therefore should be answered in the negative. Issue 13 - Was there a repudiation in May and/or August 2008? 209I have already found there was no repudiation by the Bank. Issue 13 should be answered in the negative. Issue 14 - If there was a repudiation, was it accepted? 210This issue was strictly not applicable. I have found there was no repudiation at any time on the part of the Bank. 211The Bank contends however that even had an act of repudiation been identified, there is simply no evidence to suggest that the alleged repudiation was accepted by 33 Electra by stopping construction on the project. I agree that such a proposition, were it to arise, would simply be untenable on the evidence. There is simply no evidence whereby 33 Electra clearly and unequivocally communicated to the Bank that it was accepting any alleged repudiation. In any event, the real reason or reasons why work stopped on the project from time to time are, as I have already found, a mixture of cashflow difficulties and/or personal difficulties being confronted by Mr Shannon which severely restricted and distracted him from managing the project. 212Issue 14 however should be answered in the negative, namely that even if there was a repudiation, it was not accepted. Issue 15 - If there was a repudiation (or breach) did it have the consequences it is alleged to have had? 213Mr Shannon appears to allege that the so called "short payment" in respect of the 15 May 2008 drawdown notice resulted in a collapse of the Dockside development and the financial demise of 33 Electra, which is in turn said to have led to the financial demise of each of C2C Investments and C2C Developments. The short payment is of the order of $22,580. 214In my view, there is simply no evidence that the alleged "short payment" caused the financial collapse of anything. Sadly, the position is quite straightforward. Mr Shannon, in an overly bullish and optimistic mood, unilaterally formed the view that, with upgrades to the finishes, a number of the townhouses could sell for something around or in excess of $1 million. As I have observed, he completely miscalculated the extent of the upgrades at the outset and had to revise quite substantially what the ultimate cost was likely to be. This was his doing. He paid little if any regard to his contractual obligations or those of his corporate entities. At the time he devised the changes to the building work and hence the overruns, he did not have the financial or personal wherewithal to complete the development. 215The Bank had no obligation to fund the overruns by increasing the facility limit. He well knew that. Absent funding from the Bank, Mr Shannon needed to obtain refinancing from another financial institution, which was something he simply was unable to achieve. 216It was he who made the decision as to how the $225,800 was to be spent. He certainly did not prioritise the Dockside development in deploying those funds. That is clear from his choice, for example, not to pay for the roof tiling at Dockside, which was not unimportant. 217In my opinion, Mr Shannon has simply failed to discharge his onus of proving (even if there was a repudiation in this regard) that it was causative of any loss to 33 Electra. The reality is that the shortfall in funds necessary for 33 Electra to complete the project was somewhere in the order of $1.3 million, not a mere $22,580. Indeed, even if there was a breach on the part of the Bank in this regard, which amounted to a repudiation, I simply cannot find, on the evidence, that it caused the consequences contended for by Mr Shannon. 218Again, even assuming a repudiation by the Bank on 5 August 2008, I simply cannot see on the evidence what consequences it had in any event. 33 Electra had no right to any further funding under the Commercial Advance Facility until it covered the costs overrun of about $1 million. It simply had no capacity to do that. It is plain that without an increase in the facility (of $6 million) 33 Electra would not have been able to complete the development. I am satisfied that by or about August 2008, Mr Shannon's corporate group was either insolvent or verging on insolvency and would have been unable to pursue the Dockside project in any event. 219Insofar as it appears to be suggested that the alleged repudiation by the Bank caused 33 Electra to be financially unable to pay a $16,000 monthly management fee to C2C Investments and therefore to be in breach of contractual obligations to C2C Investments, such an allegation is in my mind unsustainable. If 33 Electra was in truth unable to pay the $16,000 monthly management fee, then it could have given reasonable notice to C2C Investments, bringing the contract between 33 Electra and C2C Investments to an end. 220In addition, it appears to be suggested that the alleged repudiation by the Bank caused 33 Electra to be financially unable to make the necessary payments to C2C Developments under the building contract and therefore to be in breach of its contractual obligations to C2C Developments. Apart from this submission, Mr Shannon's submissions either "disputed" or "denied" the accuracy of the Bank's submissions. 221However, I am satisfied that even if the Bank had advanced all monies to 33 Electra under the Commercial Advance Facility, that would not have availed either 33 Electra or C2C Developments. The substantial cost overrun meant that an advancement of the full extent of the facility would have left the project incomplete unless funds could be obtained from another source. There simply was not another source. 222Issue 15 therefore should be answered in the negative, namely that even if there was a repudiation (or breach) by the Bank, it did not have any causal consequences. Issue 16 - If there was a repudiation, is the Bank relying upon its own wrong? 223This does not arise because I have found no repudiation on the part of the Bank. 224In any event, the Bank does not need to rely upon any default by 33 Electra in order to claim back the monies advanced to it. The 33 Electra facilities simply expired on 12 February 2009, and the total amount then outstanding thereupon became repayable to the Bank. Accordingly, even if there was a repudiation, the Bank would be entitled to repayment and it would be misconceived to describe in those circumstances the Bank's entitlement to repayment as taking advantage of its own wrong. Mr Shannon's submissions on this issue were tangential. 225Issue 16 therefore should be answered in the negative. Issue 17 - Was the Bank entitled to make demand on 33 Electra on 7 October 2008? 226The Bank contends, and I agree, that the demand was perfectly appropriate on 7 October 2008. By that time, four related entities of 33 Electra (C2C Investments, C2C Developments, Shannon Trading Co and Abode Group) had entered into administration on 29 September 2008. 227Clause 16.1(p) of the 2005 General Terms provided that it was an event of default if 33 Electra became insolvent, which was defined to include being in administration. 228Clause 16.1(q) of the 2005 General Terms provided that it was an event of default if an event described in clause 16.1 occurred in respect of any related entity of C2C Investments. "Related Entity" was defined by reference to the definition in s 9 of the Corporations Act. Clearly, C2C Investments, C2C Developments, Shannon Trading Co and Abode Group were related entities of 33 Electra. That is because, at the material time, Mr Shannon was a director of each of the five companies. 229As I have already observed, in any event, the building contract and specifications were varied without the Bank's prior consent, which provided for an additional event of default. In addition, 33 Electra failed to cover any identified costs overrun, producing a further act of default along with the incorrect or misleading representation in the May 2008 statutory declaration. 230Clause 16.2(a)(ii) entitled the Bank to give notice declaring the "Outstanding Amount" immediately due for payment if an event of default had occurred. Mr Shannon's responses on this issue consisted of denials or expressions of disagreement, but advanced nothing of substance. Accordingly, by 7 October 2008, the Bank was well able to deliver its demand. Issue 17 should therefore be answered in the affirmative. Issue 18 - Did the failure of 33 Electra to repay the Dockside facilities in full after 7 October 2008 relieve the Bank of further obligations? 231Quite simply, 33 Electra was obliged to comply with the 7 October 2008 demand. Its failure to do so was an additional event of default. Pursuant to clause 3.1(b)(iii) of the 33 Electra General Terms, the Bank need not provide any drawing unless it was satisfied that no event of default was subsisting. Accordingly, the failure of 33 Electra to comply with the 7 October 2008 demand was a further reason why the Bank was not obliged, from 7 October 2008, to permit any further drawdowns under the 33 Electra facilities. Issue 18 should therefore be answered in the affirmative. I note that Mr Shannon disputes the Bank's position on the basis of submissions previously made and rejected. Issue 19 - Was 33 Electra obliged to repay the Commercial Advance Loan Facility in full on 12 February 2009? 232The facility was expressed to be repayable two years after the first drawdown. There cannot be any dispute that that was on 12 February 2009. The total amount outstanding was therefore repayable on that date. In my view Issue 19 should be answered in the affirmative. Issue 20 - The applicable interest rate 233The facility terms applicable to the 33 Electra facilities specify that the interest rate was to be the "Bank Bill Rate" plus a margin of 1.3% per annum. 234Although the initial Facility Interest Rate Margin was 1.3%, I have found that, at the meeting of 14 May 2008, the Bank and Mr Shannon agreed that the Facility Interest Rate Margin should be increased to 2.75% in consideration for the Bank waiving its success fee. 235A number of matters are raised in the third amended defence concerning the interest rate. It is suggested that the interest rate was to be determined by the Bank at "the inception" of the facility. Insofar as this is meant to suggest that it could not be varied, I regard that as untenable. It is further suggested that the Bank did not provide the requisite notice pursuant to clause 18.1 of the Code of Banking Practice. That provision of the Code says nothing in my view about increases in the interest rate margin. Certainly clause 18.3 would suggest that variation would not occur unilaterally by the Bank. However, I have found that the increase was by agreement, which led to a variation. Lastly, it is suggested that for some reason the Facility Interest Rate Margin constituted an unlawful penalty. This is misconceived and has no foundation. 236Issue 20 should be answered in the negative, namely that there was nothing unlawful about the interest rate charged by the Bank. Issue 21 - Was the Bank entitled to make demand on 9 November 2009 on Mr Shannon under the 33 Electra guarantee? 237I am satisfied that the events of default under the 2005 General Terms entitled the Bank to demand repayment of the entire amount outstanding under the Commercial Advance Facility. It did so of course on 7 October 2008 and 6 November 2009. 238At the same time as those demands were made, the entire amount outstanding under the Overdraft Facility was repayable on demand. Demand was made for its repayment as well. 239On 9 November 2009, demand was made on Mr Shannon under the 33 Electra guarantee for the entire amount then owing in aggregate in respect of the Commercial Advance Facility and the Overdraft Facility. Clearly, that demand accorded with the obligations of Mr Shannon under the 33 Electra guarantee. Accordingly, Issue 21 should be answered in the affirmative. I note that Mr Shannon challenges the Bank's position on this issue by reference to submissions previously made and rejected. Issue 22 - Did the Bank take all reasonable care to sell the Dockside property for not less than its market value? Relevant background facts 240In order to examine whether and if so to what extent the Bank bore any liability in this regard, it is necessary to briefly revisit some factual matters. 241By 24 September 2008, Mr Triggs decided to transfer the file in this matter to Mr Hornstra's Credit and Asset Management area. On 7 October 2008 demand was then made by the Bank for the total amount outstanding. 242Between October 2008 and June 2009 the contemporaneous materials suggest that the Bank was considering its position, but did not take any formal enforcement action against Mr Shannon or others. On 1 July 2009 the Bank appointed receivers to Dockside. Following that appointment, and through the months August and September 2009, Mr Shannon stated a desire on several occasions to attempt to refinance the facility. He never did so. 243In or about September 2009, Mr David Hobart, a consultant, was retained by the receivers in respect of the disposal of Dockside. 244Between October and November 2009, there were proposals sought from a number of selling agents. Mr Singleton, who at that stage was a partner of PPB Advisory (the receivers), commissioned a Mr Unicomb, a local builder known to Mr Singleton, to estimate the costs to complete the development. On 5 and 6 November 2009, the receivers received proposals from a number of local and Sydney real estate agents. Hartigan Bolt was one such agent, along with Shultz First National. Although L J Hooker Harrington was approached, they were unwilling to submit a proposal as they believed the sale was too complex for their business. 245On or about 6 November 2009, a Mr Mark Bone expressed an interest in Dockside for the first time. 246On 12 November 2009, Mr Hobart and Mr Bone had a conversation. Mr Bone sent an email on that day to Mr Hobart requesting an amount of documentation including recent quantity surveyor report valuations, confirmation of pre-sales and a copy of a survey of the property. He also asked for any other information that Mr Hobart might think to be relevant. Mr Bone indicated in the email that he had met with the original builder and that they had agreed to complete the project. 247On 13 November 2009, Mr Hobart forwarded Mr Bone's email to the receivers. 248On 16 November 2009, Mr Hobart advised that the appointment of marketing agents should be finalised before any further contact was made with Mr Bone. Mr Singleton on behalf of the receivers agreed to that course. 249On 14 December 2009, the receivers received a valuation from Jeffrey Reid Flanagan, real estate valuers, who valued the development site "as is" at $1.1 million. 250On 17 February 2010, the receivers delivered an options paper to the Bank recommending a sale "as is". In that paper, Mr Singleton made it clear that he incorporated the advice and input of Mr David Hobart, Mr David Bolt, Mr Wayne Shultz and Mr Mark Reid. 251At some point shortly before 20 May 2010, Mr Hornstra instructed the receivers to proceed to sell Dockside "as is". On 25 May 2010, Mr Singleton appointed both Mr Bolt and Mr Shultz as selling agents. During the period from about June 2010 to July 2010, tenders were sought and a marketing campaign was undertaken. 252On 5 July 2010, Mr Bolt spoke to Mr Bone to enquire whether he was still interested. Mr Bolt said that Mr Bone responded by simply saying that he had other projects going on in north Queensland and was "fully busy". 253The tender period closed at midday on 8 July 2010. On 9 July 2010 the selling agents recommended acceptance of the highest tender from Chekah Development Pty Limited for $2.215 million. Legal principles 254It is well established that s 420A of the Corporations Act takes the place of, or it may be, operates cumulatively to, the obligation otherwise existing in the "general law", and operates as "a more stringent rule" than the general law obligation on the mortgagee exercising a power of sale (GE Capital Australia v Davis (2002) 180 FLR 250 at [53] per Bryson J). It should be observed however that s 420A does not of itself confer any remedy. Because, plainly, Dockside had a market value, the relevant duty is that imposed by s 420A(1)(a) which provides that "in exercising a power of sale in respect of a property of a corporation, a controller must take all reasonable care to sell the property for ... if, when it is sold, it has a market value - not less than that market value." 255A breach of the section will not of course be established merely because the sale in question did not achieve the market value. What must be shown is a failure by the relevant person to take reasonable care to sell the property for not less than the market value having regard to the circumstances existing when the property was sold (Florgale Uniforms Pty Limited v Orders (2004) 187 FLR 142 at [410]). 256Clearly enough, the court must focus on the process which has been gone through in selling the property (Investec Bank (Australia) Limited v Glodale Pty Limited (2009) 256 ALR 104 at [46]). 257A mortgagee is not obliged to spend further money on a property to improve the value of that property as part of its duty to take reasonable care (Investec at [44], Pendlebury v Colonial Mutual Life Assurance Society Limited (1912) 13 CLR 676 at 701 per Isaacs J). Therefore there could be no criticism that the Bank acted unreasonably for example by not expending a sum in the millions of dollars to complete the construction of the Dockside development. 258Although s 420A confers no right or remedy on guarantors as such, a guarantor is entitled to an equitable remedy on the basis that when the mortgage accounts are taken the quantum of the claim against the guarantor must be reduced by the amount (if any) by which the mortgagee sold the security at an under-value, if indeed the mortgagee breached its duty in exercising its power of sale (GE Capital Australia v Davis at [56] and [83]). Discussion 259The third amended defence raises two issues in respect of which the alleged breach of duty is said to have arisen. First, that Dockside was advertised as a "mortgagee sale", and secondly, that insufficient efforts were made to respond to the approach by Mr Bone. 260The price achieved on the sale of Dockside ($2.215 million) does not of itself, in my view, speak per se of a breach of duty. There was no admissible expert evidence as to what the market value of the Dockside property was at any time, let alone at the time of its sale in 2010. Its value therefore relevantly was not an issue. But there is equally no reason to assume that the price obtained was not the relevant market value at the time, given the circumstances of its sale. 261The suggestion that advertising a property as a mortgagee sale would necessarily depress the price is by no means a logical proposition. Indeed, it might equally be said that it could increase the price (Hallifax Property Corp Pty Ltd v GIFC Ltd (1987) 4 BPR 9, 708 at 9,711). In Stockl v Rigura Pty Limited [2004] NSWCA 73 at [45]-[46], Palmer J made the following observations: [45] In Hallifax Property Corp Pty Ltd v GIFC Ltd (1987) 4 BPR 9708, Young J (as he then was) was of the view that it was not self evident that advertising a sale as a "mortgagee sale" would depress the price likely to be realised, and that opinions upon the point might legitimately differ. I respectfully agree. Some may think that "mortgagee sale" will attract a larger number of potential buyers hoping for a bargain, thereby creating a larger and stronger market for the property. Others may think that "mortgagee sale" will induce buyers to believe that they need not offer a market price, thereby diminishing the strength of the market. [46] In my view, much will depend on the type of property being sold and the way in which the words "mortgagee sale" are used in the advertising campaign. For example, to emblazon the words in heavy black type prominently across advertising brochures may give the impression that the mortgagee is conducting a "fire sale" rather than seeking the best price reasonably obtainable in the market. Such an impression might cause buyers to hang back from making their best offers. On the other hand, where the property is advertised attractively, with its best features given appropriate prominence, the information that the sale is by a mortgagee may serve merely to whet the appetite of the person seeking that type of property. 262In any event, advertising the property as a mortgagee sale was indeed a considered position. The opinions of Mr Shultz and Mr Bolt were sought and, in conjunction with Mr Singleton, all agreed that selling the property as a "mortgagee sale" was the best way to maximise the price. There is simply no evidence to counter this position. On its face, it is by no means an inappropriate or unacceptable strategy. 263However, there is a degree of unreality about this allegation by Mr Shannon. Any experienced or sophisticated purchaser would immediately become aware that Dockside was being sold by a mortgagee in possession upon review of the contract for sale. The Bank had elected to enter into possession and it would have therefore been plainly apparent to any prospective purchaser that the Bank was in effect the vendor. In addition, any prospective purchaser would immediately have discovered, upon conducting a company search or otherwise, that 33 Electra had had receivers appointed to it. 264In any event, on the evidence which is really not in contest, there was, in my view, appropriate and widespread advertising by the Bank's agents. I do not consider in this case marketing the property as a "mortgagee sale" involved any breach of duty on the part of the Bank. 265In addition, I do not consider there is anything in the allegation that the Bank made insufficient efforts to respond to Mr Bone. Mr Bone had an opportunity to acquire the land but in effect went on to other projects and lost interest. 266In any event, I am not satisfied on the evidence that it could be properly said of Mr Bone that he was "ready, able and willing to buy" as is alleged in the third amended defence. The Bank contends, and I think there is much force in the argument, that Mr Bone was a "mate" of Mr Shannon. He did attempt in his evidence to suggest that he could not get any or any sufficient information, but it was clear that he had obtained information from Mr Shannon and a person whom he described as a "friend" who lived in the Harrington area, and had made his own enquiries about potential sale prices and the value of the project on completion. Indeed, quite contrary to the impression he sought to give in his affidavit, I am satisfied that he in fact had a substantial amount of information about the Dockside project. He is and was a sophisticated broker/entrepreneur looking for an attractive deal. 267He conceded in cross-examination that it was very likely that he would have had no interest at all in being associated with the Dockside development if he had known that the builder, C2C Developments, was in administration, as indeed it was at the relevant time. Indeed, it was critical to him and his development strategy that he utilise C2C Developments. Insofar as he had received information from Mr Shannon, Mr Shannon clearly had not told him about the predicament that C2C Developments was then in. Undoubtedly he would have discovered that fact in due course. 268Mr Bone also accepted that he could have kept his ear to the ground in following up the Dockside development when it was put up for sale. Although he was not strictly asked the question, he could clearly have made contact with Mr Shannon at any point in time and presumably obtained as much information as he wanted to. He agreed however that he did not in fact follow up what was occurring with the property, and when he was contacted again by Mr Bolt, he was simply not interested. I should say in passing that although he did not remember being contacted, I am satisfied that he was contacted. 269Mr Bone also agreed in cross-examination, somewhat strangely (given his affidavit), that his communications with the receivers and Mr Hobart were in his capacity as an "intermediary", whilst performing a finance broking role. It appears he was acting on behalf of a Mr and Mrs Schmidt. Neither was called to give evidence despite the fact that an affidavit of Mrs Schmidt was served. Somewhat ambiguously however, in his affidavit he asserted that "he" thought that he might make a substantial profit out of the arrangement. 270The Bank invites me to draw an inference that Mr Bone, or for that matter Mr and Mrs Schmidt, were never seriously interested in Dockside but were only making enquiries on behalf of Mr Shannon to ascertain what was happening and to help Mr Shannon get back into the building of Dockside. That may well be the case, but more importantly I do not think the evidence establishes that Mr Bone or Mr or Mrs Schmidt were, or even might have been, ready, willing and able to buy Dockside for any greater sum than was ultimately paid by Chekah Development Pty Ltd (the highest tenderer). 271Given the evidence of Mr Singleton, Mr Bolt and Mr Shultz, I am satisfied that the Bank retained relevantly appropriate professionals who engaged in the marketing campaign and tender process. For example, aerial photography for use in promotional literature, newspaper advertisements, internet advertisements, a widely disseminated colour brochure, sign boards, mail-outs from the sales agents' databases, and numerous communications with those who expressed interest in Dockside took place. 272There were in fact thirty-six expressions of interest and six entities ultimately submitted tenders. The purchase price was the highest which anyone offered after a lengthy tender process. 273I am satisfied that, on the evidence presented, the allegation of breach of duty should be rejected. Accordingly, in relation to Issue 22, Mr Shannon has failed to establish that the Bank failed to take all reasonable care in the sale of Dockside. Issue 23 - Did the Bank breach clause 2.2 of the Code of Banking Practice by virtue of omissions as to interest expressed by Mr Bone? 274Clause 2.2 of the Code is in the following terms: We will act fairly and reasonably towards you in a consistent and ethical manner. In doing so we will consider your conduct, our conduct and the contract between us. 275I am satisfied on the evidence that it could not be said that the Bank had acted contrary to its obligation under the Code. Therefore Issue 23 should be answered in the negative, namely that there was no breach of the Code by the Bank in relation to its conduct concerning Mr Bone. Again, I note that Mr Shannon disputes this conclusion on the basis of previously rejected submissions. Issues 24 to 25 - Were the receivers validly appointed and if not was there a trespass? 276These issues were ventilated only in the cross-claim by 33 Electra, not by Mr Shannon himself, and are no longer applicable following the dismissal of the cross-claim. Issues 26 to 27 - Did the Bank owe a fiduciary duty to 33 Electra? 277Again, these issues are no longer applicable following the dismissal of the cross-claim. They were not matters relied upon by Mr Shannon. Issues 28 to 31 - Did the receivers breach any relevant duty and if so, is 33 Electra entitled to relief under s 425 of the Corporations Act? 278Again these issues are no longer applicable. They are confined to claims that were brought by 33 Electra against the receivers in the cross-claim and have now been dismissed. They were not pursued by Mr Shannon. Issues 32 to 33 - Was the Bank guilty of unconscionable conduct as alleged? 279Mr Shannon did raise unconscionable conduct in his third amended defence (paragraph 57) but made no claim for relief in any cross-claim. However, there was a claim for relief in respect of unconscionable conduct by 33 Electra in its cross-claim, but of course that has been dismissed. 280In any event, as the Bank has made submissions on the matter, I will address it, and I note that Mr Shannon's position in response to the Bank's submissions is "no reply". 281In paragraph 57 of Mr Shannon's third amended defence, it is alleged that the Bank engaged in unconscionable conduct in a number of respects, including by relying on various events of default and demands, by acting allegedly in breach of clauses 2.2 and 25.2 of the Code, by making demands against Mr Shannon allegedly in excess of 33 Electra's liability and by relying upon and making the allegation in the proceedings of a costs overrun, as this was said to be an allegation contrary to the Bank's knowledge of the true facts. In particular, Mr Shannon places reliance on sections 12BC and 12CC of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). Statutory unconscionability 282The Bank contends correctly that the only applicable provision could be s 12CC of the ASIC Act. It submits that s 12CB only applies where there is a supply of financial services of a kind ordinarily acquired for personal, domestic or household use. It contends that in the present case the relevant "supply or possible supply of financial services to a person" must be the provision of the Commercial Advance Facility and the Overdraft Facility to 33 Electra. As each was provided to 33 Electra wholly or predominantly for business or investment purposes relating to the development of Dockside, the essential character of those services should be properly characterised as commercial, hence not personal, domestic or household. As I have said, I regard that as a correct proposition and in line with cases such as Leveraged Equities Limited v Goodridge [2011] FCAFC 3 (at [416]). 283On the other hand, the Bank does not dispute that the acquisition of financial services by 33 Electra was "for the purposes of trade or commerce" pursuant to s 12CC(6). 284Again, and in my view correctly, the Bank points out that unconscionability under s 12CC requires something much higher than simply unfairness or injustice. The conduct must be capable of demonstrating a high level of "moral obloquy" (Attorney General of New South Wales v World Best Holdings Limited (2005) 63 NSWLR 557 at [121]). As is made clear in Tonto Home Loans Australia Pty Limited v Tavares (2011) 15 BPR 26,699; [2011] NSWCA 389 (at [291]), conduct exemplifying unconscionability will include bullying and thuggish behaviour, undue pressure and unfair tactics taking advantage of a vulnerability or lack of understanding, trickery or misleading conduct. Discussion 285Leaving to one side the allegations about the breach of the Code (which I shall deal with shortly) I do not consider the evidence here establishes anything approaching the high level of "moral obloquy" required to sustain a finding of unconscionability. 286It seems to me that each of the events of default and the demands made accordingly were well founded and could not be described as unconscionable. Likewise, I do not think the evidence supports the proposition that there were ever any demands by the Bank in excess of 33 Electra's liability. Even if the evidence did support such a proposition, unless there was also evidence that they were made intentionally or perhaps recklessly, a finding of unconscionability could not be sustained. 287So far as cost overruns were concerned, they were caused solely by Mr Shannon unilaterally changing the nature of the development project. 288Issues 32 to 33 should be answered in the negative, namely that the Bank was not guilty of unconscionable conduct. Issues 34 to 37 - Did an event of default occur when C2C Investments exceeded its overdraft limit? 289The Bank does not, and submits correctly that it need not, press the allegation that an event of default occurred when C2C Investments exceeded its overdraft limit. Issues 38 to 39 - Were the appointments of an administrator to C2C Investments and its related companies events of default under the Business Edge Facilities? 290In my view, there were clear events of default under the Business Edge Facilities by virtue of the appointments of an administrator to each of C2C Investments, C2C Developments, Abode Group and Shannon Trading Co. Hence the issues should be answered in the affirmative. I note that in relation to these issues Mr Shannon either relies on previously rejected submissions or makes assertions of no relevance or substance. Issue 40 - Did the Bank reasonably come to the view that a material adverse change relating to C2C Investments triggered an event of default? 291The Bank does not press the allegation that there was an event of default when it formed the opinion that there was a material adverse change in the creditworthiness of C2C Investments. Issue 41 - Was the Bank entitled to make demand on Mr Shannon under the C2C Investments guarantee? 292I have already referred to a number of events of default which entitled the Bank in my view to demand repayment of the entire outstanding amount under the Business Edge Facilities. The Bank did this on 5 November 2008 and 6 November 2009. 293On 9 November 2009, demand was made under the C2C Investments guarantee on Mr Shannon in respect of the aggregate amount owing at that time by C2C Investments under the Business Edge Facilities in accordance with his guarantee to the Bank of the obligations of C2C Investments. That was an entirely appropriate course to take. Issue 42 should therefore be answered affirmatively. Again, on this issue, Mr Shannon relies on previously rejected submissions. Issues 42 to 44 - Alleged breaches of the Code of Banking Practice 294Mr Shannon invokes clauses 2.2 and 25.2 of the Code. Clause 2.2 has been quoted above, and clause 25.2 is in the following terms: [W]e will try to help you overcome your financial difficulties with any credit facility you have with us. 295It should be observed that pursuant to clause 1.1 of the Code, it is provided that it is a voluntary code of conduct which sets standards of good banking practice to be followed by banks when dealing with persons who are or may become individual or small business customers of the relevant bank. 296The purpose and effect of clause 2.2 was considered by Nicholas J in Seeto v Bank of Western Australia [2010] NSWSC 922 (at [39]): [I]n my opinion adherence to the Code does not require the bank to subordinate its own interests to those of the customer or to prefer the interests of the customer. These clauses indicate the Bank's commitment to have regard to the interests of both parties in the course of its performance of the terms of the relevant contract. They are directed to the manner of exercise of the contractual right or power. They do not operate to qualify or vary such right or power. 297Peek J in the Supreme Court of South Australia in Commonwealth Bank of Australia v Starrs [2012] SASC 222 rejected an argument that breach of a provision or even a number of provisions of the Code had the effect of invalidating the entitlement of the bank to maintain a claim under a guarantee. His Honour, also in my view importantly, observed at [116] that the Code was largely a collection of propositions or principles which were traceable to various factual situations considered in decisions in areas such as unconscionability and related doctrines. In other words, I think his Honour correctly observed that it was really a reflection of the statutory and general law concepts relating to those notions but no more. 298Assuming that the Code applied to the loan facilities given by the Bank to 33 Electra and C2C Investments (which the Bank submits is by no means clear) it is, in my mind, difficult to see how the Code has been breached. Given the findings I have already made in relation to the events of default and unconscionability, it does not seem to me that the Bank conducted itself in any way which falls foul of the Code. I am satisfied that there is simply no evidence whereby it could be suggested the Bank did not have due regard to the interests of 33 Electra, C2C Investments or for that matter Mr Shannon. It clearly did all it could to assist Mr Shannon to deal with his difficulties both financial and personal. Even if it could be suggested that the Bank was in breach of clauses 2.2 and 25.2, it could not seriously be suggested that 33 Electra or C2C Investments were not bound to make any further payments arising from the loan facilities to the Bank. Nor could they be deployed to disentitle the Bank from relying on any alleged breaches of the loan facilities. The Code was clearly not intended to have that effect. In any event I do not see a breach. 299Issues 42 to 44 should be answered negatively. There would be no breaches by the Bank of the Code, and the Code does not in the present case affect the exercise by the Bank of its rights against Mr Shannon. Issue 45 - The anti set-off clauses 300The Bank correctly contends that this issue is not applicable. It would only have arisen if any of the defences raised by Mr Shannon were made good and none of them have. 301The Bank, however, has gone on to address the issue briefly and I agree both with its analysis of the relevant law and its observations as to the facts. Accordingly, I agree that the answer in relation to Issue 45 should be that these provisions are not applicable given that Mr Shannon has not made out any of his defences, but if those defences were made out then these provisions would require that Mr Shannon pay to the Bank the amount owing under the guarantees in full before exercising what is in substance a purported right of set-off. Issue 46 - Quantum of monetary judgment against Mr Shannon 302Exhibit P4 comprises three "Dobbs certificates". First, there is the Certificate of Indebtedness of Mr Shannon in the total sum of $8,508,963.55 as at 21 May 2013 under his 33 Electra guarantee and C2C Investments guarantee. The guarantee, pursuant to clause 16, authorises the Dobbs certificate. Secondly, there is a Certificate of Indebtedness of 33 Electra in the total sum of $8,084,977.67 as at 21 May 2013. Clause 18.2 of the 2005 General Terms authorises the Dobbs certificate. Last, there is a Certificate of Indebtedness of C2C Investments in the total amount of $413,985.88 as at 21 May 2013. The 2007 General Terms incorporated into those facilities contain clause 18.2 which authorises the Dobbs certificate. Mr Shannon submitted that the guarantees are limited to the amount of $6.1 million. The Bank accepted that each of the guarantees did specify a maximum sum which could be demanded, including interest, but correctly submitted that costs and expenses were additional, and that for each of the guarantees, the amount claimed by the Bank is lower than the specified maximum amount. Issue 47 to 48 - Whether 33 Electra is liable to C2C Investments or C2C Developments and whether it is entitled to any of the remedies it seeks 303Correctly the Bank submits that, with the dismissal of the claim and cross-claim by 33 Electra, these issues are no longer applicable. I note that Mr Shannon makes no submission on these issues. Conclusion Proceeding 2009/296947 304Mr Shannon's allegations in respect of the 33 Electra guarantee are rejected. Accordingly, the claim by the Bank against Mr Shannon under the guarantee must succeed. 305It follows that the Bank should have judgment against Mr Shannon for the entire sum owing under the 33 Electra guarantee and the C2C Investments guarantee. Accordingly, I propose to enter judgment in the sum of $8,508,963.55 including costs and interest to 21 May 2013. Interest should thereafter run on that sum between 21 May 2013 and the date upon which judgment is entered. I note that the Bank has waived any claim for costs it may have incurred since 21 May 2013. For that reason, there should be no order as to costs. Proceeding 2010/323602 306As I have already noted, in proceeding 2010/323602 Mr Shannon remains as a nominal plaintiff despite the fact that the claims of the substantive plaintiffs (namely 33 Electra and C2C Investments) have been dismissed. The proceeding involves no personal claim by Mr Shannon and his involvement in the proceeding no longer has any utility. However, I agree with the Bank that to formalise the position the proceeding should be dismissed with costs (to the extent that the proceeding relates to the claims by Mr Shannon). If need be, I will hear submissions on this aspect of the matter. 307I would invite the parties to bring in short minutes of order reflecting these reasons. Attachment ********** 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: 13 August 2013