Supreme Court New South Wales Medium Neutral Citation: Ari v Decevic [2013] NSWSC 1967 Hearing dates: 18, 19, 20 February 2013 Decision date: 24 December 2013 Jurisdiction: Common Law Before: Slattery J Decision: Plaintiff successful against the defendant in recovering value of deposit. Judgment for the cross defendant bank against the cross claimant. Directions made for argument as to costs. Catchwords: CONTRACTS - contract for the sale of land - deposit provided by a bank deposit bond - completion date subsequently extended to accommodate a lease to a third party - validity of the deposit bond not extended - defendant not ready to complete at the completion date because of lack of financing - plaintiff terminated the contract, sold the property to a third party at a profit and sued the defendant for the deposit - whether the termination was invalid because the property was not vacant at the extended completion date and at the time of the notice to complete - whether the plaintiff's breach was waived by the defendant - whether the Court should exercise its discretion under Conveyancing Act 1919, s 55(2A) and not order the payment of the deposit. CONTRACTS - the defendant cross-claimed against the bank for the loss caused by its refusal to finance the purchase of the property - the bank unconditionally approved the loan, issued a deposit bond and sent a written offer of finance to the defendant and her husband - the offer required for the loan to be drawn within 3 months - defendant did not return the signed offer to the bank until after the deadline expired - the defendants subsequent loan application was not approved because of judgment debts discovered on the updated credit check of the defendant's husband - whether a partly written and partly oral loan agreement was entered into between the bank and the defendant and her husband - whether the bank was entitled to refuse to provide finance because of the result of the credit check. Legislation Cited: Conveyancing Act 1919 s 55(2A) (NSW) Conveyancing (Amendment) Act (1930) (NSW) Law of Property Act, 1925 (UK) Uniform Consumer Credit Code Cases Cited: Carrapetta v Rado [2012] NSWCA 202 Castle Hill Tyres Pty Ltd v Luxspice Pty Ltd (1996) 7 BPR 14,959 Dillon v Bepuri Pty Ltd (1989) NSW ConvR 55-436 Havyn Pty Ltd v Webster (2005) 12 BPR 22,837; [2005] NSWCA 182 HG and R Securities Pty Ltd v Sayer [2009] NSWSC 427 Lucantonio v Ciofuli (2003) 11 BPR 21,181 Malouf v Sterling Estates Development Corporation Pty Ltd [2002] NSWSC 920 McNally v Waitzer [1981] 1 NSWLR 294 Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 Schindler v Pigault (1975) 30 P& Cr 328 Socratous v Koo (1993) NSW ConvR 55-685 Strickland v Grieve (1995) 7 BPR 14,376 Wilde v Anstee (1999) 48 NSWLR 387 Texts Cited: Lindgren, Time in the Performance of Contracts (2nd ed), Butterworths 1982 Category: Principal judgment Parties: Plaintiff- Leon Ari Defendant- Tania Decevic Cross Claimant- Tania Decevic Cross Defendant- Westpac Banking Corporation Representation: Counsel: Plaintiff- P. O'Loughlin Defendant- P. Bolster Cross Defendant- J. White; L.E. Edwards Solicitors: Plaintiff- Michael John Sommerville, Redmond Hale Simpson Defendant/Cross-Claimant- Mark Marando, Marando Solicitors Cross-Defendant- Justin Bates, Gadens Lawyers File Number(s): 2010/333236 Publication restriction: No Judgment 1On 22 October 2009 Mr Leon Ari, as vendor, entered into a contract with Mrs Tania Decevic, as purchaser, for the sale of a residential property in Kogarah Bay ("the property") for consideration of $725,000 ("the contract"). Mrs Decevic and her husband, who is not a party to these proceedings, organised with St George Bank, now Westpac Banking Corporation ("the bank"), to fund the purchase. The contract required Mrs Decevic to pay a deposit of 10 per cent of the purchase price, or $72,500. Mrs Decevic arranged and provided a deposit bond, which was issued by the bank for this $72,500, upon exchange of the counterparts of the contract. 2The contract provided for completion to occur on 22 April 2010, 182 days after the exchange of contracts. This date was later extended, by mutual agreement, to 31 May 2010. But the bank did not extend the deposit bond which expired on 28 April 2010. On 31 May 2010 Mr Ari says he was ready to complete the contract, and that Mrs Decevic was not. On 9 June 2010 Mr Ari served Mrs Decevic with a notice to complete the sale on 25 June 2010 but Mrs Decevic failed to complete that day. So on 30 June 2010 Mr Ari sent her written notice terminating the contract. 3The bank had refused to provide Mrs Decevic with the funding to complete on 31 May. She asked Mr Ari, to delay completion to 30 June, so that she could raise funds, partly by attempting to sell her and her husband's existing residence. But despite her offer Mr Ari proceeded to terminate the contract on 30 June. Mr Ari then commenced these proceedings for the recovery of the deposit, and shortly after sold the property to a third party for $775,000. As between Mr Ari as plaintiff and Mrs Decevic as defendant the issues in the proceedings are: (1) whether Mr Ari has validly terminated the contract; and (2) if so, whether Mr Ari is entitled to recover the deposit of $72,500 from Mrs Decevic. 4But events taking place at the same time between Mrs Deceivc and the bank resulted in Mrs Decevic cross-claiming against the bank. Shortly before the contract was signed the bank approved the Decevics' loan application to it. Shortly after the contract, was signed and exchanged on 22 October 2009, but before the statutory cooling off period expired, the bank issued the deposit bond. But it did not issue a written loan offer to the Decevics until a month later in November 2009. The bank's November 2009 loan offer included a standard term that the loan had to be drawn down within three months, that is before 20 February 2010. 5But the Decevics did not draw down the loan before 20 February 2010. Instead, in May 2010 the bank decided to consider a second loan application from them. The bank rejected the Decevic's second loan application and said that the first loan application had expired because it had not been drawn down within time. The bank continued to refuse to fund the purchase price, leading to Mrs Decevic's incapacity to complete. On the cross-claim the Decevics contend, and the bank disputes, that the bank was and is bound to provide the Decevics with finance in conformity with their first loan application. These are the issues for trial. 6Each of the parties was represented by counsel and solicitors. Mr P. O'Loughlin of counsel appeared for the plaintiff, Mr Ari. And Mr P. Bolster of counsel appeared for the defendant, Mrs Decevic. And Mr J. White of counsel appeared for the bank. The History of these Proceedings 7Mr Ari commenced these proceedings by Statement of Claim on 8 October 2010, seeking relief requiring Mrs Decevic to pay him the deposit together with interest calculated from 30 June 2010. Initially the proceedings were commenced in the District Court of New South Wales and were later transferred to this Court. On 23 November 2010 Mrs Decevic filed her Defence contesting payment of the deposit. 8Then Mrs Decevic cross-claimed against the bank seeking: (1) a declaration that she and her husband had contracted with the bank for it to fund the purchase of the property; (2) a declaration that the bank has breached that contract; and (3) relief by way of indemnity or damages for that breach. 9In its Defence to the Cross Claim the bank contends that it has no obligation to provide finance for the purchase of the property because: (1) no agreement to provide funds for the purchase of the property was made between the Decevics and the bank; and (2) even if such a funding agreement were made, its terms were such that the bank ultimately had no obligation to provide any funding. The bank says even if there were a funding agreement the Decevics did not bring themselves within the express terms of any such agreement, because they did not draw down the loan within the prescribed period of 3 months. The Defence to Cross-Claim also alleges that the Decevics were in default in qualifying for loan funds under any such agreement because of certain judgment debts entered against Mr Decevic in October 2009 and in 2010. The bank contends as a result that it was excused from the obligation to advance funds to Mrs Decevic. 10These reasons first consider Mr Ari's claim for recovery of the deposit and the Mrs Decevic's Cross Claim. Claim for Recovery of the Deposit 11Mr Ari seeks to recover the amount of the deposit from Mrs Decevic. If he validly terminated the contract then, subject to the Court's discretion conferred by Conveyancing Act 1919 s 55(2A), he has a right under the contract to recovery of the deposit. 12The principal disputed issues on Mr Ari's claim for return of the deposit are the following. First, Mr Ari alleges that the contract was terminated on 30 June 2010. Mrs Decevic disagrees that a valid termination then took place. If the contract was not validly terminated, the deposit is not recoverable. But if Mrs Decevic is wrong, and a valid termination occurred, she alleges that the Court should nevertheless exercise its discretion under Conveyancing Act 1919, s 55(2A) and not order the payment of the deposit to the vendor. Mr Ari contests this and says there is no occasion to exercise the Court's s 55(2A) discretion. The Parties' Advisors 13During negotiation of the contract and leading to termination the parties were each assisted by professional advisors. Mr Jeffrey O'Brien of Redmond Hale Simpson, solicitors acted for Mr Ari. Mr Mark Marando of Marando Solicitors acted for Mrs Decevic. Both Mr O'Brien and Mr Marando gave evidence in the proceedings. Mr Ari had employed, Century 21 Bayview as an estate agent to sell the property. Ms Seval Oksuz from Century 21 also managed the tenanting of the property from the time that the contract was signed in October 2009. Ms Oksuz also gave evidence. 14Ms Oksuz kept an "Action and Conversation Diary" in which she recorded her communications with various parties in relation to the property. This diary was a thorough and consistently kept business record, which I accept sets out an accurate account of the conversations and events described within it, in which Ms Oksuz participated. Contract Variation - 22 October 2009 to 21 November 2009 15The contract signed on 22 October 2009 foreshadowed completion 182 days (approximately six months) later, on 22 April 2010. But the next month, November 2009, the vendor and purchaser decided to vary this date. On 2 November Mr Marando faxed Redmond Hale Simpson a copy of the deposit bond, by then issued by the bank, and the requisitions on title. On 12 November Mr O'Brien faxed Mr Marando a request by the vendor for a variation to the contract. Because of the delayed settlement already written into the contract, Mr Ari was considering renting out the property in the intervening period. He wanted to lease the property for 6 months from 26 November. Such a lease would expire on 26 May 2010, about a month after the contract settlement date of 22 April 2010. So Mr Ari, through his solicitor Mr O'Brien sought Mrs Decevic's consent: either to delay the settlement to 31 May 2010 (just after the expiry of the proposed lease); or, to settle in April, as planned, but subject to an existing tenancy. 16On 13 November 2009 Mr Marando confirmed back in writing to Mr O'Brien that Mrs Decevic had agreed to change the contract settlement date to 31 May 2010. The parties do not dispute that this change was agreed. But Mrs Decevic alleges that her cooperation at the time of this request is relevant to the Court's exercise of its Conveyancing Act s 55(2A) discretion. 17Once the contract was varied by agreement, on 21 November 2009 Ms Oksuz, on behalf of Mr Ari, entered into a 26 week lease of the property from 26 November 2009 to 27 May 2010 at a rent of $550 per week. These tenants actually stayed in the property until 13 June 2010. Mrs Decevic claims that Mr Ari's notice to complete and his subsequent termination of the contract are invalid, because of the tenants' occupation of the property between 31 May and 13 June 2010. 18Mrs Decevic says that because the tenants did not leave the property until 13 June 2010, Mr Ari was not able to give vacant possession as the contract required. But that aspect of her claim will fail if, as Mr Ari alleges, Mrs Decevic agreed during the parties' communications in May 2010 that the tenants could remain in the property until after settlement Contract to Settlement - 21 November 2009 to 31 May 2010 19Between December 2009 and April 2010 the parties barely communicated about this purchase. In late April correspondence resumed. Mr O'Brien began preparing for the settlement. On 29 April he contacted the solicitor of Eclipse Prudent Mortgage Corporation ("Eclipse"), the existing mortgagee of the property, to organise a discharge of its mortgage at the settlement scheduled for 31 May. On 18 May Eclipse confirmed that it would prepare for a discharge of its mortgage on 31 May. On 25 May Eclipse provided Mr O'Brien with details of the documents required to effect the discharge at settlement. 20Ms Oksuz also started to prepare for the settlement. The contract required Mr Ari to provide vacant possession at settlement. The executed lease was due to expire on 27 May 2010. But the lease required Mr Ari to give 14 days notice of termination before the expiry date, otherwise it would become a continuing tenancy agreement and a 60 day notice would become necessary to have the tenants vacate. Ms Oksuz needed to know if the notice had to be given. To have vacant possession by 31 May Mr Ari had to give notice to the tenants by no later than 17 May. 21The entry in Ms Oksuz's diary for 19 April states that on that day she first tried to contact Mr Marando to ascertain if Mrs Decevic would be prepared to settle subject to the tenancy, or if she would prefer the tenants to vacate before settlement, in which case it would be necessary to serve a termination notice on the tenants. The subsequent entries in Ms Oksuz's diary in late April and early May 2010, which I accept as accurate, state that in that period Ms Oksuz attempted several times without success to contact Mr Marando about whether the tenants would be permitted to stay on expiry of the lease. But he was unavailable each of those occasions and did not return her calls. 22By late April 6 months had passed since the contract had been signed. By then the tenants had indicated to Ms Oksuz that they were keen to remain in the property. Ms Oksuz's account of this period, which I accept, was that in May the tenants informed her that they had had a death in the family, were preoccupied with personal matters, and did not have time to look for a new place, and therefore wanted to stay in the property. She understood they wanted some clarity about the term of the lease. That Ms Oksuz would be making enquires of Mr Marando in these circumstances was understandable, and I find that she did. 23Not having had success in getting through to Mr Marando, Ms Oksuz then tried unsuccessfully to discuss the tenancy issue directly with Mr Marando's client Mrs Decevic. On 10 May Ms Oksuz recorded in her diary that Mrs Decevic, said to her in one such communication that she was busy with family matters, and that "she [Mrs Decevic] would like me [Ms Oksuz] to speak to her husband as he is handling all matters re: the purchase". Ms Oksuz then recorded in her diary that she called Mr Decevic the same day and he told her that: "they are likely to keep the tenant's on a month to month basis" [sic]. I accept all her diary entries on this subject as an accurate record of what passed between Mr and Mrs Decevic and Ms Oksuz. 24Ms Oksuz notes in her diary that she spoke to Mr Decevic twice more about this subject in May 2010. On 17 May Mr Decevic mentioned to Ms Oksuz that he had requested Mr Marando to attempt to extend the settlement to 30 June 2010 and said "the tenant can stay there [in the property] till then". And on 26 May, after Ms Oksuz had informed him about the tenants' personal circumstances, he said that "they [the Decevics] had a bit of decency and would not do that [vacate the property] to them". I accept Ms Oksuz's evidence that during this conversation Mr Decevic enquired about the rent paid by the tenants and stated again that he and his wife were "happy for them [the tenants] to stay on month to month". This particular part of her recollection was not supported with a note in her diary to that effect but I nevertheless accept that Mr Decevic said this to her. 25On 11 May 2010 the Decevics instructed Mr Marando to delay the settlement from 31 May to 30 June 2010. On that day Mr Marando sent a fax to Redmond Hale Simpson which was consistent with what Ms Oksuz was to record in her diary six days later on 17 May, and indicating: "We have today been contacted by our client who required an extension of the settlement date until 30 June 2010. We are instructed that the Tenancy may also be extended to 30 June 2010. We await your urgent response." 26Mr Marando's 11 May letter gives no reasons for his request. Mrs Decevic suggested in oral evidence that the request for extension was made because of the slower than expected progress of the sale of the Decevic's existing residence. But in her affidavit Mrs Decevic explained that the extension was requested because in early May 2010 Mr Marando was concerned that he could not get in touch with Mr Crow, the representative of the bank with whom the Decevics had been dealing. Mrs Decevic does not suggest she was then aware of any problem with the bank being able to fund her purchase. Although her evidence is that Mr Crow contacted her in early May 2010 to inform her that the bank had declined her loan. Mrs Decevic says that Mr Crow's contact occurred after the extension request was made. But for the following reasons I do not accept her evidence as to this. 27Mr Marando's affidavit evidence on why the purchaser Mrs Decevic was seeking an extension is inconsistent with the evidence of his client on the same subject. And I generally prefer Mr Marando's affidavit version, although it is not without its own problems. In his affidavit Mr Marando explained that his 11 May letter gave effect to Mrs Decevic's instructions to him that finance from the bank was not then available and that she would have to seek finance from another source. This contradicts Mrs Decevic's evidence that she did not know about any problem with the financing at the time of this 11 May letter. Mr Marando then further complicated matters when he contradicted his affidavit evidence, himself at the hearing. In oral evidence he gave the following reasons for the request which are considerably closer to Mrs Decevic's account of having problems progressing the sale of their existing residence: "Mr and Mrs Decevic obviously have not sold their property at the time. There were some concerns about serviceability first and just either that they had their marketing campaign and they thought by the time auction goes off and - effectively the request was on basis that they could have simultaneous settlement, that their sale and purchase could go through." 28Mr Marando said in this oral evidence that his understanding on 11 May was that the loan from the bank was still in place and that the extension was aimed at achieving a simultaneous sale of the Decevic's existing residence and the property, to avoid their having to take out bridging finance. And Mr Marando's recollection of his instructions at this time also incidentally captured the Decevics' intentions in relation to the tenants staying in the property. Mr Marando remarked in oral evidence about his instructions on this subject: "because there was a tenant in the property the clients asked me to see if I could stretch the date out". Mr Marando's evidence generally supports Ms Oksuz's evidence that the Decevics were content to leave the tenants in the property for a longer period. 29Mr O'Brien took instructions from Mr Ari about the requested extension of the settlement date to 30 June. On 19 May Mr O'Brien informed Mr Marando by fax that his client would not agree to the requested extension. Mr Marando did not make any written reply to Mr O'Brien's 19 May fax; at least no such reply was tendered in evidence. 30After the extension was requested and then refused on 19 May the Decevics knew they had to prepare for a settlement on 31 May, not on 30 June. And they seemed prepared to settle on the earlier date subject to the existing tenancy on the property. Ms Oksuz recorded, and I accept, that after 19 May she spoke to Mrs Decevic twice more, on 24 and 27 May 2010. According to her diary records, on 24 May Mrs Decevic inquired from Ms Oksuz about the amount of rent the tenants were paying and said, "if they would like to stay, she was happy for them to stay another month". I accept that this conversation took place. But the Decevics were not just motivated by commerciaI considerations. I infer Mr and Mrs Decevic were happy to have the tenants stay on also because they felt a degree of empathy for the tenants' personal situation. I accept that Mrs Decevic said to Ms Oksuz that they she and her husband "are not the type of people to push them [the tenants] out". As will be described in more detail later in these reasons, by at least 22 May Mrs Decevic knew that the finance from the bank was not forthcoming, and that she probably would not be able to settle on 31 May. This means in my view that Mrs Decevic was well aware on 24 May when she said she was happy for the tenants to stay "another month" that this would mean the tenants would be in the property after the completion date of 31 May, to which Mr Ari was adhering. 31Ms Oksuz's records support the inference, which I draw, that between 24 and 27 May she repeatedly requested the Decevics to provide written confirmation that they were happy for the tenants to stay on in the property. On 27 May Ms Oksuz sent a fax to the Decevics confirming that the tenants were paying rent of $550 per week and again requesting a written confirmation that the Decevics "are happy for the tenants to resume their tenancy". No written confirmation was provided. Why no reply to Ms Oksuz's inquiries emerged from Mrs Decevic at this time is difficult to fathom: but it does not diminish Ms Oksuz's evidence from which the Court infers that the Decevics were willing to have the tenants stay on after the appointed settlement date of 31 May and said so to Ms Oksuz. 32What the Decevics were saying to Ms Oksuz about the tenants seems quickly to have reached the ears of the vendor, Mr Ari. On 25 May Mr O'Brien wrote to Mr Marando in relation to the tenancy: "We understand your clients have indicated to the Agent that they are happy for the tenants to stay on in the premises after the settlement until the end of June. Please confirm this." 33But Mr O'Brien never received back from Mr Marando any written confirmation that his understanding was correct. Relationships seem rather to have soured after Mr Ari's 19 May refusal of an extension of the date of settlement. Mr O'Brien did not receive a reply. 34As of 31 May 2010, the agreed date for settlement, the tenants were still in the property. The contract required Mr Ari to provide vacant possession on settlement. Mr O'Brien and Mr Ari, were trying to establish where they stood in relation to this obligation. They contacted Ms Oksuz who summarised her understanding of her communications with the Decevics in a fax on the same day as follows: "I have spoken with the purchaser Tania Decevic as well as her husband Samir who have both verbally indicated they were fine to have the tenants stay. I requested this in writing from them but have not received anything as yet. The tenants have given notice to vacate on 26/06/2010 however will vacate earlier should they find an alternate property sooner." 35This fax, which I accept as an accurate summary of Ms Oksuz' then recent communications, confirms the accuracy of her diary entries for 24 and 27 May. 36The parties disagree as to the effect of their various communications in May 2010 regarding the tenants staying in the property after 31 May 2010. The issue in dispute is whether the Decevics communicated to Ms Oksuz that they were happy for the tenants to remain in the property after the settlement. I find that they did so communicate and that they were so willing. Each of Mr Ari, Ms Oksuz, Mr and Mrs Decevic gave oral evidence in these proceedings in relation to this issue. Here is a short account of relevant parts of the evidence of these four witnesses. 37Ms Oksuz had only limited independent recollection of her conversations with the Decevics. She knew what she recorded in her diary. As indicated earlier in these reasons, I accept that the Decevics made the statements recorded in her diary. Ms Oksuz understood from those statements that the Decevics were happy to keep the tenants in the property after the settlement, "on month to month basis". But they never expressly said that they were happy to keep the tenants until after the actual settlement occurred. At least from the refusal on 19 May of their 11 May request for extension of the settlement date, the Decevics expected that the settlement would occur on 31 May 2010. Ms Oksuz's evidence was that she never specifically discussed with the Decevics the fact that the settlement may be delayed. But for the reasons already given it is to be inferred that Mrs Decevic told Ms Oksuz that she would accept the tenants being there after 31 May, a settlement date to which she knew the vendor was adhering. 38Neither Mr or Mrs Decevic referred in their affidavit evidence to any conversations with Ms Oksuz, or any other employee of Century 21, in relation to the tenancy. And it was apparent to the Court from their oral evidence that neither of them had a clear recollection of any such discussions. At one point in his evidence Mr Decevic denied that he had any such conversations with Ms Oksuz. But I find that they did. Mrs Decevic admitted that she could have discussed the tenancy issue with Ms Oksuz. But she could not remember any of the particular statements recorded in Ms Oksuz's diary. She could not confirm or deny that they occurred. I find that they did. 39But Mrs Decevic did claim to remember that her intention and that of her husband was always to move into the property directly after the settlement. She nevertheless agreed that she would probably have been happy to let the tenants stay until she wanted to move in. She said " I am not going to kick the tenant out, the house isn't mine". She recalled that she did not want to keep them after the settlement. When asked what she would have done if the simultaneous sales of the property and their existing residence did not proceed, she indicated that she would still have moved into the property and rented out their existing residence. 40Mr Decevic said that his initial plan was to sell their existing residence and to move into the property. He admitted that when he realised that the funding for the settlement would not be available on 31 May he discussed the tenancy issue with Mr Marando. He enquired about the amount of the rent the tenants were paying. Knowing about the tenants' personal circumstances, he did not request that they vacate the property, " I was not going to kick them out...". 41In my view Mr and Mrs Decevic had not really reached a final view as to how they would manage the tenancy; they had to get to settlement first. Much would depend on what happened at and shortly after settlement. But what is clear is that they were quite ready to indicate to the vendor's agent that the tenants could stay after 31 May even if settlement were to occur that day. They were still hoping settlement would not occur then and would be deferred (and so the tenants might still leave before a further extended settlement date after 31 May). But they had no assurance of such a further extension. And they never qualified any of their statements to Ms Oksuz that their agreement to the tenants staying on was conditional upon settlement occurring after the tenants had vacated. 42Mr Ari adds some evidence to this mix. He says that he was informed by Ms Oksuz that Mrs Decevic had indicated to her that the tenants could stay on because the Decevics had no intention of moving into the property straight after settlement. I accept his evidence that this conversation with Ms Oksuz occurred before 19 May 2010, when he refused to agree to Mrs Decevic's 11 May request to delay the settlement until 30 June 2010. He explained that this conversation with Ms Oksuz was the reason he did not take any steps to ask the tenants to leave prior to the planned completion on 31 May. This evidence was not challenged in cross-examination and I accept it. Mr Ari's account shows that he had then understood, and in my view reasonably understood, the Decevic's communications as indicating that they were prepared to settle subject to the tenancy. 43But Mr Ari's motivation for not then instructing Ms Oksuz to have the tenants quit was a little more complicated. Mr Ari agreed in cross-examination that he had learned as early as 11 May that the Decevics were experiencing problems in funding the purchase. In my view Mr Ari felt he was in a comfortable position whatever happened: if the information he had received via Ms Oksuz was wrong and the Decevics were able to fund the purchase, then they seemed prepared to settle subject to the tenancy; but if the information received was right, and the Decevics were not able to settle, then Mr Ari was better off leaving the tenants there. Either way it was not in his interests then to move to disturb the tenancy. 44When asked just before 31 May, Mrs Decevic deliberately did not expressly confirm that the tenants might stay in the property until after the settlement. But she had by then already indicated to Mr Ari via Ms Oksuz that she was happy for them to stay. But she was hoping settlement might still occur on 30 June and that they might be gone by then anyway. But her hopes of a further delay in settlement were not very realistic. Termination - June and July 2010 45The parties did not settle on 31 May. Mr Ari wanted to clarify his position as at that date. On the same day he asked Ms Oksuz to explain to him what the Decevics had told her in relation to the tenancy. After receiving her 31 May letter, cited above, he immediately handwrote a letter to the tenants accepting the notice they had by then given that they proposed to vacate the property on 26 June 2010. He offered them a rent-free week as an incentive, if they agreed to move out earlier, by 13 June 2010. The tenants accepted this offer on 7 June in a written notification addressed to Ms Oksuz. On 9 June Ms Oksuz informed Mr Ari that the tenants would be vacating by 13 June. And they did. 46On 9 June 2010, once he had a confirmation that the tenants would be moving out Mr Ari, through his solicitor, served a notice to complete on Mrs Decevic. The notice stated that Mrs Decevic was in default because she did not complete the contract on 31 May. It required settlement by 25 June. A separate letter requesting Mrs Decevic to provide Mr Ari with a signed Transfer for the settlement was sent that day. 47Mrs Decevic did not accept that Mr Ari was entitled to serve this notice to complete. In his letter of 11 June, her solicitor, Mr Marando rejected the validity of the notice on the same basis for which she argued in these proceedings: that the property was to be sold with vacant possession and the tenants had not yet vacated. He asked the vendor to advise "when the tenant has vacated the property in order that settlement arrangements may be made". Mr Marando also denied that Mrs Decevic agreed "for the tenants to remain in the property after the settlement". This letter included a typographical error, later clarified in Mr Marando's unchallenged evidence, which error I do not need to discuss further. 48The Decevics dealings with the bank, described in detail later in these reasons, makes clear that they knew by late May 2010 that their loan application had been declined and they needed to organise alternative financing to be able to complete. But this was not expressly mentioned in their solicitors' correspondence in relation to the completion. Mr Marando was cross-examined about conversations he had with Mr O'Brien in relation to the Decevics' financial difficulties in settling. He said that there were such conversations "in the spirit of negotiating and explanation", and that any solicitors' discussions were exhausted in late June because it was by then clear that Mr O'Brien had instructions from Mr Ari not to extend the settlement period. Mr Marando thought that file notes confirming his recollection of such conversations might be in his files. But no file notes confirming that such conversations occurred found their way into evidence. I accept that some conversations between the solicitors took place in the May-June period. But Mr Marando's evidence does not indicate he told Mr O'Brien very much at all about the Decevics' dealings with the bank, their efforts to organise alternative finance and the timing of any such finance. Mr O'Brien was not asked about his knowledge or the extent of his conversations with Mr Marando. Not unwisely Mr Marando was fairly circumspect in my view in what he said to Mr O'Brien. Mr O'Brien said, and I accept, that the first time Mr Marando raised with him a possibility of the Decevics proceeding to settlement was on 14 July, after Mr Ari's termination notice and after the Decevics had sold their existing residence. 49Mr Ari prepared to settle on 25 June. He contacted Eclipse to organise the discharge of mortgage, and signed the Transfer. Mr O'Brien sent details of the settlement venue and the required settlement calculations to Mr Marando. There was no written reply from Mr Marando until 25 June, the day of the settlement appointed in the notice to complete. On that day Mr Marando sent a fax restating his client's position that the notice to complete was defective and premature because "it was served prior to the tenant vacating the property". But Mr Marando also enclosed a Transfer signed by Mrs Decevic and he informed Mr O'Brien that Mrs Decevic would be in a position to settle on 12 July 2010 because of a "simultaneous sale". Mr O'Brien's reply rejected Mr Marando's argument in relation to the validity of the notice and reserved Mr Ari's rights if the settlement did not occur at 3pm that day. Mr O'Brien did not refer to the settlement appointed on 12 July that Mr Marando had proposed on 12 July. 50On 30 June 2010 Mr O'Brien sent Mr Marando a fax attaching a notice of termination of the contract. That notice relied on Mrs Decevic's failure to comply with Mr Ari's 9 June notice to complete as a reason for termination. The Validity of Mr Ari's Termination 51Mr Ari contends that the contract was terminated on 30 June 2010. Mrs Decevic contests this contention. Parties' Submission on Validity of the Termination 52Mrs Decevic denies Mr Ari's termination was effective. She submits that Mr Ari was not entitled to give a notice to complete because he was in breach of the contract both on 31 May 2010, the agreed settlement date, and on 9 June 2010, the day he issued the notice to complete. The contract required Mr Ari to give vacant possession of the property on completion. But as the tenants were still in the property on both 31 May and 9 June (and at all material time in between), Mrs Decevic submits, Mr Ari was in breach of his obligations under the contract on these dates. She submits that he was not ready willing and able to settle and was not in a position to issue a notice to complete. So, she contends that Mr Ari's purported termination of the contract was itself a repudiation of his obligations. And she alleges that repudiation now disentitles him from recovering the deposit. 53Mr Ari submits that he validly terminated the contract on 30 June 2010. He argues that although the tenants were in the property on 31 May that was not a breach of the contract because through his agent, Ms Oksuz, Mr Ari understood from Mr and Mrs Decevic were happy for the tenants to stay "month to month". And Ms Oksuz confirmed her understanding of what the Decevics told her in her fax to Mr O'Brien on 31 May. 54The parties accepted the applicable legal principle that a vendor in default is not entitled to issue a notice to complete. The Court of Appeal recently restated this principle in Carrapetta v Rado [2012] NSWCA 202 ("Rado") at [27] where their Honours said: "[27] Case law thus makes it plain that the party seeking to make time of the essence must be an "innocent" party who is not "in default" or "in breach" and is "ready, willing and able" to proceed to completion in accordance with the contract. The underlying concept is that a party who gives a notice to complete and thereby calls on the other party to adhere to the contract must be in a state of both present and prospective adherence to the contract. When it is the vendor who serves the notice, he or she must be seen to be willing and able to perform, on the day the notice fixes for completion, the obligations that the vendor is required to perform on completion - predominantly, in a "cash on completion" case such as the present, the obligation of delivering a clear title in return for the money that the contract requires the purchaser to pay in cash on completion - and to have adopted up to the time of service of the notice a stance consistent with that future performance. If the vendor is in breach of contract when the notice is given, he or she is not in such a state of willingness and ability. Likewise, if the vendor has taken and made known an uncompromising stance that he or she will not deliver title on completion except in return for payment of a sum greater than that required by the contract, that vendor will be "in default" (or "in breach") and not be "innocent" or relevantly "ready, willing and able" because the unequivocal stance inconsistent with the contract bespeaks lack of adherence in the nature of anticipatory breach." 55But Mr Ari submits that Rado and the principle can be distinguished, a different default was alleged in that case, which was in any event not made out on the facts. But in my view the principle clearly applies here. In the alternative, Mr Ari submits that if he was in default under the contract Mrs Decevic waived that default because she was content for the tenants to remain in the property. 56Mr Ari further submits that although the tenants were in the property on 9 June, the day when the notice to complete was issued, that does not invalidate that notice. He contends that he was required to provide vacant possession not on the date of the notice, 9 June 2010, but on the completion date appointed in that notice, 25 June. When issuing the notice to complete Mr O'Brien knew that the tenants had already agreed to vacate the property by 13 June; this having been arranged by Mr Ari. Mr Ari submits that because the appointed time for completion was not until 25 June, the agreement he had made with the tenants made him confident that he would be ready to complete by then giving vacant possession. The Termination Provisions in the Contract 57The contract was in the form of the Law Society of New South Wales and Real Estate Institute of New South Wales 2005 edition of contract for the sale of land, together with special conditions. 58The front page of the contract specified the amount of the deposit, $72,500. Clause 9 provided: "If the purchaser does not comply with this contract (or a notice under or relating to it) in an essential respect, the vendor can terminate by serving a notice. After the termination the vendor can: 9.1 keep or recover the deposit (to a maximum of 10% of the price)" 59Clause 38 of the contract provided: "Payment of Deposit Despite any other provision of this contract the deposit payable pursuant to this agreement is $ being ten per cent of the purchase price, payable as to $ on the date of the contract and the balance of $ payable on completion or on default by the purchaser of the purchaser's obligation under this contract, and nothing shall relieve the purchaser of the obligation to pay the full ten per cent deposit to the vendor."(sic) 60Although the blanks in clause 38 were not filled in, the deposit was shown as $72,500 on the front page of the contract, and that was the amount of the deposit bond Mrs Decevic actually provided on exchange of contracts. 61And as earlier indicated in these reasons, the contract had originally specified 22 April 2010 as the "completion date". This was later changed by agreement to 31 May 2010. Standard condition 15 provided as to failure to complete on the agreed date for completion: "The parties must complete by the completion date and, if they do not, a party can serve a notice to complete if that party is otherwise entitled to do so." 62Standard condition 15 was supplemented by special condition 32, which made agreed provision for the reasonableness of a 14 day notice to complete: "Notice to complete Despite any rule of law or equity to the contrary, the vendor and the purchaser agree that any notice to complete under this contract will be reasonable as to time if a period of 14 days from the date of service of the notice is allowed for completion. ..." 63Mr Ari's notice of termination relied on Mrs Decevic's non-compliance with his notice to complete. The validity of the termination in turn depends on the validity of that latter notice. Requirements for a valid notice to complete 64The legal requirements for a valid notice to complete are clear. They were summarised in Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 ("Neeta") at 299: "In relation to such a notice [notice to complete] given by a vendor to a purchaser the following questions must be answered: (i) Was the purchaser in breach of any term of the contract or guilty of unreasonable delay? (ii) Was the vendor himself in default by breach of any term of the contract or guilty of any antecedent relevant delay?(iii) Was the time fixed a reasonable time in all the circumstances?" 65The parties are not in contest that the third requirement described by the High Court in Neeta was satisfied here. It is not discussed further in these reasons. The parties contested whether the other two requirements were satisfied here. 66Was Mrs Decevic breach of any term of the contract? The law in relation to this requirement can be shortly stated. A mere failure to comply with a non-essential stipulation as to the time of completion of a contract is a relevant breach and justifies giving a notice to complete: Wilde v Anstee (1999) 48 NSWLR 387 at 396; [1999] NSWSC 612. Mrs Decevic did not complete the contract on 31 May 2010, the completion date prescribed in the contract. She was in breach of the contract and therefore, Mr Ari was entitled to issue a notice to complete on the basis of such breach on and from 1 June 2010. 67Was Mr Ari himself in default by breach of any term of the contract or guilty of any antecedent relevant delay? Mrs Decevic submits that Mr Ari was himself in breach of the contract and not ready, willing and able to proceed with completion, because the tenants did not leave the property until after Mr Ari's 9 June notice to complete was issued. The contract provided that vacant possession would be provided on completion. The property was in continuous possession of the tenants until 13 June 2010. It was in their possession on the agreed completion day, 31 May 2010 and on the date of the notice to complete, 9 June 2010. It is convenient to analyse the situation on each of those dates separately, starting with the latter. 68Breach of Contract on 9 June 2010? Did the fact that the tenants had not moved out before the notice to complete was issued on 9 June 2010 invalidate that notice? In my view it did not. Mr Ari was not in breach on 9 June 2010. And the fact that the tenants did not vacate the property before that date does not invalidate the notice to complete. 69Established authority makes this result clear. In McNally v Waitzer [1981] 1 NSWLR 294 at 296 the Court summarised the vendor's obligation before issuing a notice to complete as follows: "The vendor, or indeed the purchaser, is to be judged to be presently able to fulfil his contractual obligations if he can do so at the due time. It could hardly be asserted that a purchaser giving a notice to complete would have to show that on the date he gave it he had immediately available funds to complete any more than it could be asserted that a vendor who had contracted to sell an unencumbered freehold could not give a notice to complete unless he first discharged the mortgage." And at 304 the Court further said: "The correct rule, in my opinion, is simply that a vendor who is in default in respect of things which up until then should have been done cannot give a notice to complete, but he can give notice to complete prior to performing all those other things which he has to perform in order to complete the contract." 70If vacant possession is to be provided on completion the vendor must be able to provide such possession on completion, but not before: Dillon v Bepuri Pty Ltd (1989) NSW ConvR 55-436. The tenants vacated before 25 June 2010, the time for completion prescribed by the notice to complete arrived. And at the time that he issued the 9 June notice to complete Mr Ari could have well expected on 9 June 2010 that they would vacate by 25 June. It is clear in my view Mr Ari only decided to issue his 9 June notice to complete when he was sure through his solicitor that the tenants were ready to vacate. 71Breach of Contract on 31 May 2010? Was the notice to complete invalid because the tenants were in the property on 31 May 2010, the agreed contract date for settlement? Under the contract Mr Ari was required to provide vacant possession on the day of the agreed settlement. He contends that in her communications with Ms Oksuz that Mrs Decevic agreed to let the tenants stay in the property after the settlement. In my view Mrs Decevic clearly waived her right to insist on vacant possession at settlement on 31 May. Although she had refused to provide confirmation in writing of her position, she had nevertheless made clear to Ms Oksuz that she would not insist on vacant possession on 31 May. Mrs Decevic could no longer allege that Mr Ari was in breach of the contract by not being ready to give vacant possession of the property on 31 May. 72There are three potential circumstances in which a vendor's breach would not disentitle that vendor from issuing a notice to complete: (1) the breach was trivial (the de minimis rule) (McNally at 301); (2) the breach was waived by the purchaser (McNally at 301); or (3) the breach was "spent force" and ceased to be operative at the time a notice to complete was given (see HG and R Securities Pty Ltd v Sayer [2009] NSWSC 427 at [98] referring to the analysis in Lindgren, Time in the Performance of Contracts (2nd ed), Butterworths 1982). 73But there was no formal agreement between Mr Ari and Mrs Decevics to the effect that the tenants could stay in the property after the agreed completion date of 31 May and Mr Ari had to be able under the contract to provide vacant possession on 31 May 2010. Accordingly on 31 May 2010 he was in breach of the contract. Unless the waiver exception applied under the second requirement in McNally, this breach would disentitle Mr Ari from issuing a valid notice to complete. 74But the third exception in McNally also applies here. The idea of a breach ceasing to be operative was explored by Young J in Castle Hill Tyres Pty Ltd v Luxspice Pty Ltd (1996) 7 BPR 14,959; (1996) NSW ConvR 55-771. In that case his Honour specifically considered the operation of a provision equivalent to clause 15 of this contract (Castle Hill Tyres Pty Ltd v Luxspice Pty Ltd (1996) 7 BPR 14,959 at 14,961). He concluded that such a clause could only be relied on: against a party whose default led to the completion not occurring; and by a party who was "innocent of a default which brought about the no-occurrence" of the completion and not "merely because the completion date has passed". His Honour explored this issue further in Malouf v Sterling Estates Development Corporation Pty Ltd [2002] NSWSC 920 ("Malouf"). There he usefully summarised the preconditions for a valid notice to compete as follows (at [36]): "If a vendor wishes to issue a notice to complete, it will only be able to do so, (a) if it is free from any relevant breach of contract which may have provided the purchaser a good excuse not to complete by the due date; and (b) it is able to proceed to completion and deliver to the purchaser all the purchaser is entitled to under the contract no later than the expiry of the notice to complete. [emphasis added]" 75Requirement (a) in Malouf calls for an investigation of whether "there had been non-completion by the due date for completion, other than caused by a breach by the vendor" (at [40]). Young J's analysis was recently approved by the Court of Appeal in Carrapetta v Rado [2012] NSWCA 202 at [25]. 76Was the fact that the tenants were in possession on 31 May the reason why Mrs Decevic did not complete on that day? In my view it was not. Mrs Decevic's lack of finance to complete the contract was the reason she did not complete that day. Just before 31 May she was not insisting on or calling for completion; nor was she asking for the tenants to leave the property, so she could settle. Her failure to make such calls is wholly consistent with the conclusion that it was her lack of finance that prevented her from settling on 31 May. Accordingly, quite apart from Mrs Decevic's waiver, the fact that Mr Ari was in breach on 31 May 2010 because the tenants were still in the property did not disentitle him from issuing a valid notice to complete. His breach was not the reason why Mrs Decevic did not complete on 31 May. 77One can pause for a moment and see what might have happened if Mrs Decevic had objected to the tenancy on 31 May. Had the fact that the tenants were in possession on 31 May 2010 been the reason why Mrs Decevic did not complete on that day, after the agreed settlement had passed, she would have been entitled to reasonable notice that the tenants were intending to move out before Mr Ari could insist on completion. And a new date for completion would need to be agreed by the parties: Castle Hill Tyres Pty Ltd v Luxspice Pty Ltd (1996) 7 BPR 14,959; (1996) NSW ConvR 55-771. Similarly if Mrs Decevic had, for example, agreed with Mr Ari before 31 May 2010 that completion would not occur on that day, and would be delayed for an unspecified period, she would also have been entitled to reasonable notice that the tenants were intending to move out before Mr Ari could insist on completion: Strickland v Grieve (1995) 7 BPR 14,376, (1996) NSW ConvR 55-762). In either of those circumstances Mr Ari would not have been able to issue a notice to complete for 31 May. 78But that is not what happened. This was no impediment to Mr Ari issuing his notice to complete on 9 June by reason of the tenants remaining in the property until 13 June. 79This means that subject to the operation of Conveyancing Act, s 55(2A), under contract clause 9.1 Mr Ari is entitled to recover the deposit of $72,500. Conveyancing Act, s 55(2A) Claim 80Mrs Decevic says the Court should exercise its statutory discretion so the deposit should not be paid to Mr Ari. She relies on Conveyancing Act, s 55(2A), a provision giving the Court a discretion to order the return of a deposit:- "55. Right of purchaser to recover deposit etc In every case where specific performance of a contract would not be enforced against the purchaser by the Court by reason of a defect in the vendor's title, but the purchaser is not entitled to rescind the contract, the purchaser shall nevertheless be entitled to recover his or her deposit and any instalments of purchase money he or she has paid, and to be relieved from all liability under the contract whether at law or in equity, unless the contract discloses such defect and contains a stipulation precluding the purchaser from objecting thereto. If such undisclosed defect is one which is known or ought to have been known to the vendor at the date of the contract the purchaser shall in addition be entitled to recover his or her expenses of investigating the title. (2A) In every case where the court refuses to grant specific performance of a contract, or in any proceeding for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit with or without interest thereon. On the application of the purchaser the Court may order payment under this section and declare and enforce a lien in respect thereof on the property the subject of the contract. This section applies only to contracts made after the commencement of this Act and shall have effect notwithstanding any stipulation to the contrary. This section applies to land under the provisions of the Real Property Act 1900." 81Conveyancing Act, s 55(2A) confers on the Court a statutory jurisdiction to return forfeited deposits, a jurisdiction, which was not previously available either at common law or in equity. The provision, modelled on the Law of Property Act, 1925 (UK), was added to the Conveyancing Act in 1930 Conveyancing (Amendment) Act No. 44 of 1930. McGarry V-C sets out the history of the provision in Schindler v Pigault (1975) 30 P& Cr 328, at 336-337. Courts have often resisted attempts to confine the jurisdiction the provision confers. But they have nevertheless offered a number of cautionary observations about its exercise. The Court of Appeal summarised these observations in Havyn Pty Ltd v Webster (2005) 12 BPR 22,837; [2005] NSWCA 182 at [173]: "By way of summation, I would conclude as follows: (a) Section 55(2A) confers upon the Court a statutory jurisdiction to return forfeited deposits which was not previously available either at common law or in equity. Therefore, it would be wrong to seek to confine the jurisdiction conferred by the words of the statute by analogy with the jurisdiction of common law and equity to relieve against penalties or forfeiture. (b) Notwithstanding this, it is important for a Court in considering the scope of the discretion conferred by s 55(2A) to bear in mind that a deposit is an earnest of performance. That fact forms part of the context in which the discretion falls to be exercised, and means that a Court will not lightly be moved to order the return of a deposit paid as an earnest of performance, and forfeited in accordance with the express terms of the contract when performance does not occur. (c) That context is significant when considering the justice and equity of the case, and whether the Court "sees fit" to order the deposit to be returned. It does not involve putting a gloss on the words of the statute requiring the applicant to show "special circumstances" (or satisfy any like test) before a deposit will be returned. (d) In particular, this principle mandates against characterising a forfeited deposit as a windfall to the vendor, merely because it is forfeited. (e) In considering an application under s 55(2A), it will often be material for the Court to consider a number of factors, including (though not exhaustively) the nature of a deposit, the terms of the contract providing for its forfeiture and the circumstances in which the deposit was forfeited. (f) Considering the circumstances of this case, the factors enumerated above and the relative unreasonableness of the conduct of the vendor compared to the purchaser following the former's misrepresentation, it is appropriate for the deposit to be returned, although for different reasons than those adopted by the trial judge." 82Bryson J also crisply summarised the effect of the provision in Lucantonio v Ciofuli (2003) 11 BPR 21,181; [2003] NSWSC 1058, at [81]: "The purchasers claimed an order under s 55(2A) of the Conveyancing Act 1919 relieving them against forfeiture of the deposit. Applications under s 55(2A) come before the Equity Division frequently and counsel referred me to a number of decisions at first instance, not all of which need be cited in these reasons. As first enacted s 55 of the Conveyancing Act 1919 gave a purchaser an entitlement to recover his deposit and other relief where specific performance would not be enforced by reason of a defect in title which the contract did not disclose. Subsection (2A), added by amendment by Conveyancing (Amendment) Act No 44 of 1930, greatly expands the grounds on which a purchaser may recover his deposit. It is no longer necessary that there be a defect in the vendor's title, and it is not necessary that the purchaser have any legal or equitable entitlement to recover the deposit. Subsection (2A) confers on the Court, using the words "the Court may, if it thinks fit," a wide but not unlimited discretion to order repayment of a deposit. There must be some substantial ground or good reason, relevant to the parties' contractual relationship, for the Court to think fit to order repayment." Application of s 55(2A) in an Action to Recover an Unpaid Deposit 83The parties seemed not to notice at the time that the deposit bond the bank had provided, expired on 28 April and was not renewed. The parties were pre-occupied with other issues at the time and this event seemed to have escaped their attention. Once the deposit bond expired Mr Ari did not ask for a replacement cash deposit. So these proceedings against Mrs Decevic are in substance proceedings for the payment of the deposit. 84Section 55(2A) refers specifically to "repayment of any deposit". But it can also be applied when the purchaser, in breach of his or her obligations under the contract, has not paid a deposit and the vendor brings an action for recovery: Socratous v Koo (1993) NSW ConvR 55-685 at 59-917. That is the case in these proceedings. This approach avoids unnecessary circularity of court action, which would occur if the vendor had first to recover the deposit, before the purchaser could then bring a s 55(2A) action for its repayment to the purchaser. Discretionary Factors 85Mr Ari contests the Decevics' s 55(2A) case. The Decevics say that even if Mr Ari was entitled to terminate the contract, the s 55(2A) discretion should be exercised in their favour and payment of the deposit should not be ordered. 86The parties point to facts that the Court should consider when exercising its discretion. Many of these have already been summarised above, when these reasons dealt with the events leading to Mr Ari's termination of the contract. But other facts relevant to the exercise of the discretion and on which the parties rely, occurred after the termination of the contract. And it is now necessary to look at these further facts in relation to the parties conduct between July and October 2010. Post Termination Conduct - July to October 2010 87Mr Ari thought the contract had been terminated on 30 June 2010. But Mrs Decevic disputed the termination and attempted to complete the sale. After the funding from the bank fell through she and her husband explored other ways of obtaining the necessary finance. They continued their efforts in selling their existing residence and were eventually successful. They unsuccessfully applied for funding from the National Australia Bank Limited. And Mrs Decevic asked her sister for a loan. 88On 29 May 2010 the Decevics had contracted to sell their existing residence for $1,200,000. This sale was eventually completed on 10 July 2010. After the repayment of the outstanding loan to the National Australia Bank Limited secured over their existing residence, the Decevics received a surplus of around $300,000. In late June 2010 Mrs Decevic had also borrowed some funds from her sister. And by mid-July Mrs Decevic was in a position to pay the balance of the consideration due under the contract for the property. 89The correspondence at this time shows Mr Marando contacted Mr O'Brien on 14 July to inform him that Mrs Decevic was ready to settle. But Mr O'Brien's reply on the same day referred to his client's termination and anticipated proceedings for recovery of the deposit. On 15 July Mr Marando forwarded to Mr O'Brien a signed Transfer "in anticipation of settlement". But on 19 July Mr O'Brien returned the signed form and again referred to the termination of the contract. 90Mr Ari was no longer interested in selling to Mrs Decevic after 25 June 2010. His evidence was that he had lost confidence in her as a purchaser. He also thought that the property might have gained in value since the contract had been signed in October 2009. So in July 2010 he re-listed the property for sale through a real estate agent. His July 2010 agency agreement included a sales inspection report with the agent's estimate of the selling price for the property as of 12 July 2010 in the range of $720,000 - $800,000. 91On 9 October 2010, a little over three months after the 30 June termination, Mr Ari entered into a contract to sell the property to a new buyer for $775,000.00. This was $50,000 more than the price in the Ari-Decevic contract. This 9 October sale contract completed on 22 November 2010. 92The day before the new contract was signed Mr Ari commenced these proceedings to recover the deposit from Mrs Decevic. He could not call on the deposit bond because it had expired on 28 April 2010. This expiry date was set before the settlement date under the contract was extended by agreement from 22 April to 31 May. And it was never changed, in my view due to an oversight. 93The evidence of Mr Ari, Mr O'Brien and Mr Marando made clear that the expiry of the deposit bond was not discovered until after 31 May 2010. Neither Mr O'Brien or Mr Marando noticed in November 2009 at the time the settlement date was extended that the deposit bond would now expire before the extended settlement date. It is understandable in November 2009 that they both thought the deposit bond would be dealt with by or sometime during April 2010. 94After the settlement did not occur on 31 May and Mr Ari issued a notice to complete, Mr O'Brien looked at the deposit bond, realised the difficulty and informed Mr Ari of the facts. But shortly afterwards, Mr Ari instructed him to terminate the contract. Parties' Submissions on the Exercise of the s 55(2A) Discretion 95Mrs Decevic submits that the overall justice of the situation is the pivotal consideration in exercising the s 55(2A) discretion. She advances six reasons for the exercise of that discretion in her favour: (a)Within a few months of terminating the contract Mr Ari resold the property for $50,000 in excess of the contract price agreed with Mrs Decevic, thereby taking advantage of Mrs Decevic's misfortunes and gaining a windfall profit; (b)Mr Ari failed to ensure that the deposit bond was extended consistently with the 13 November 2009 extension of the contract completion date, and these proceedings are really a result of that oversight. Mr Ari's oversight contributed to the cost of these proceedings. If the deposit bond had been extended Mr Ari could now simply request the bank the pay the deposit amount; (c)Mrs Decevic acted reasonably in May-July 2010: she sought to extend the time for completion to enable her to organise the required funds; she obtained the required funds two weeks after the purported termination; and she attempted to settle the contract. Mr Ari rebuffed all those attempts on her part. By then he expected that the likely sale price for the property had increased, and he just wanted to take advantage of that increase; (d)Mrs Decevic had previously cooperated with Mr Ari in agreeing the November 2009 extension of the settlement date to enable him to benefit from a six months lease of the property. But in May 2010 he refused to grant a similar indulgence to her that would have prevented the catastrophic situation that followed. (e)Mr Ari could have sought a specific performance of the contract but chose not to do so. (f)The outcome of the Cross Claim is said to be relevant either way to the Court's exercise of s 55(2A) discretion. If Mrs Decevic is successful, the fact that it was the conduct of the bank that led to termination of the contract will strengthen her claim for discretionary relief. If she fails on her cross claim, in considering her claim for s 55(2A) relief she submits the Court should take into account in her favour the fact that she will have to pay the deposit out of her own funds. 96Mr Ari contends this is not an appropriate case to order the refund of the deposit under Conveyancing Act, s 55(2A). He submits: (a)The purchaser must do more than merely show that the deposit will result in a windfall to the vendor, a result which will usually be the case: Havyn Pty Ltd v Webster [2005] NSWCA 182 at [155]. The Court will not lightly be moved to order the return of a deposit paid as an earnest of performance and forfeited in accordance with the express terms of the contract: Nassif & Ors v Caminer [2009] 74 NSWLR 276 at [64]. (b)The fact that Mr Ari and Mr O'Brien failed to ensure that the deposit bond was extended consistently with the 13 November 2009 extension of the completion date cannot be used as a factor in favour of Mrs Decevic. Under the contract Mrs Decevic was required to provide the deposit. She was in breach of that obligation once the deposit bond lapsed on 28 April 2010. She cannot now use that breach in her favour. In any event, the present case shows that even if the deposit bond was extended there would still now be a dispute about Mr Ari's entitlement to issue a notice to complete. (c)Mr Ari had good reason not to agree to an extension of the settlement in May-July 2010. On 11 May, when Mr Marando first sought the extension, he did not provide any reasons for that request. Mr Ari never received any confirmation of the advice from the Decevics to Ms Oksuz that the tenants could stay after the settlement. After Mr Ari served the termination notice he no longer had confidence that Mrs Decevic could complete the contract. He wanted to sell the property because he was living in shared accommodation and needed the proceeds of the sale to buy his own place. He had an impression that there was a rising market. And after Mrs Decevic's default he was entitled to pursue his own economic interests to get a better price. In addition, Mrs Decevic did not disclose to him the real reason for not being able to complete in May 2010. Her solicitor's correspondence in June 2010 alleges that Mr Ari's notice to complete was invalid because the tenants were still in possession. And Mr Marando's correspondence, rather misleadingly, does not refer to the real problem, namely that Mrs Decevic was unable to raise finance for the purchase. (d)As Mrs Decevic needed time to complete the renovations of the Decevics' existing residence to get it ready for sale, the November 2009 extension of the settlement date was as much for Mrs Decevic's benefit as it was for Mr Ari's benefit; (e)The remedy of specific performance is normally used against a vendor and not against a purchaser. In any event, the choice of remedy is a matter for Mr Ari who chose to terminate the contract instead of seeking specific performance, because he had no confidence that Mrs Decevic could complete. 97Mrs Decevic's arguments are all unsuccessful. Her first argument that the plaintiff has sold the property at a $50,000 profit, is merely another way of putting an argument, often dismissed in claims for Conveyancing Act, s 55(2A) relief; that the forfeited deposit should be seen as a windfall: Havyn Pty Ltd v Webster (2005) 12 BPR 22,837 at [173]. That is not an obstacle to the forfeiture of the deposit to the vendor. This first argument fails. 98Mrs Decevic's next four arguments, all arguments in relation to aspects of Mr Ari's behaviour, also fail. As to her argument (b), it was not Mr Ari's sole responsibility to ensure that the deposit bond was extended beyond 28 April 2010. As to her argument (c), if Mr Ari's termination was valid he was under no obligation to accept Mrs Decevic's July offer to settle. As to her argument (d), the November 2009 agreement to extend the settlement date was mutually convenient to vendor and purchaser and did not imply that there must be similar acts of future co-operation to vary what was agreed throughout the performance of this contract. As to her argument (e), it was not unreasonable of Mr Ari not to seek specific performance of the contract rather than terminating it; he was entitled to pursue his own economic advantage, which clearly lay in termination. 99And to deny making an order for payment of the deposit the Court would need to find some substantial ground or good reason, relevant to their contractual relationship why such order should not be made. Mrs Decevic pointed to several characteristics of her contractual relationship with Mr Ari which differentiates this transaction from a standard conveyancing transaction. But in my view, none of Mr Ari's alleged acts and motives satisfies the requirement of a good reason for an order that Mrs Decevic is not required to pay the deposit. Mr Ari was entitled to stand on his contractual rights; and he did. 100Even if Mr Ari were able to claim the amount of the deposit directly from the bank under the deposit bond, Mrs Decevic would then be able to bring s 55(2A) proceedings for recovery. As to the agreement to a settlement extension and the specific performance claim, those choices were Mr Ari's to make. And the argument that Mr Ari was influenced by the desire to sell the property at a better price is just another way of putting the windfall argument, which has already been rejected. 101Mrs Decevic's last contention that the Court should be influenced in the exercise of the s 55(2A) discretion by the outcome of the Cross-Claim against the bank is misplaced. If she were to be successful on the Cross-Claim against the bank, Mrs Decevic may be able to recover the amount of the deposit from the bank. But this is not a significant influence on the exercise of the discretion about the deposit as between her and Mr Ari. If Mrs Decevic's argument in relation to the validity of the termination fails, there is no reason why she should not be required to pay the deposit out of her own funds, if she also fails against the bank. Mrs Decevic's Cross Claim 102In her Further Amended Cross-Claim Mrs Decevic alleges that between 1 September and 28 October 2009 (or in the alternative, in March 2010) Mrs Decevic and her husband entered into a loan agreement with the bank in which the bank agreed to advance $1.660 million to her to finance the purchase of the property (as to $725,000) and to refinance the mortgage over the Decevics' existing residence (as to the balance). Mrs Decevic contends that the loan agreement was made in two conversations between herself and Mr Crow, an officer of the bank: the first conversation at the offices of Carrington Financial Services in Liverpool in September 2009; and the second on the telephone somewhere between 9 and 22 October, when Mr Crow is said to have informed Mrs Decevic that the bank had approved a loan in the terms pleaded. And Mrs Decevic further contends: that when the bank issued a deposit bond to satisfy Mrs Decevic's obligations to pay a deposit of $72,500 on exchange of contracts for the property the bank was taking a step in performance of the contract; and that the issue of the deposit bond was "a critical feature of the binding agreement" to finance the purchase the property had been reached. 103Mrs Decevic alleges that the bank breached that loan agreement when in May 2010 it refused to finance the purchase of the property. She says that the bank should now be liable for all her loss arising out of her failure to complete the 22 October 2009 contract with Mr Ari. 104The bank denies that any such loan agreement was made between it and the Decevics. It says that on 20 November 2009 it made a formal written offer to Mrs Decevic to provide finance for the purchase but that the offer was not accepted in writing before the 3 month time for drawing down the loan expired on 20 February 2010. In the alternative, the bank contends that if such a contract were made, its express terms relieved the bank from any obligation to advance the loan monies. The bank says that certain court proceedings and judgments relating to Mr Decevic, which the bank did not know about until about May 2010, gave it the option to decline to make advances to the Decevics. And that is what the bank did when the Decevics made a second loan application in May 2010 after the expiry of the first loan offer from the bank. 105These issues on the Cross-Claim require supplementary background and a more detailed chronology of the Decevic's dealings with the bank between November 2009 and May 2010. The NAB's Mobile Lending Manager, Mr Crow 106Mr Michael Crow handled the Decevics' loan application on behalf of the bank. In 2009 Mr Crow was, and was still at the time of trial, employed by the bank as a "Mobile Lending Manager". As his title implies, Mr Crow did not operate out of an office of the bank on a day-to-day a basis. He spent most of his time "on the road", going to houses and businesses to discuss loan applications with the bank's customers. 107Mr Crow had authority to approve loan applications up to $500,000. Applications for larger amounts beyond his authority, such as Mrs Decevic's application for an advance of $1,660,000, had to be approved by the bank's Credit Solutions Team. 108Mr and Mrs Decevic were the applicants to the bank through Mr Crow for financial accommodation. They both owned the existing property and together were liable to the NAB on the mortgage over that property which they wished to refinance as part of their application. But Mrs Decevic alone was the purchaser of the property and in these proceedings she was the sole cross-claimant seeking recovery of her alleged losses arising from Mr Ari's termination of the contract. The Bank's Records and Mr Crow's Practices 109Significant parts of Mr Crow's lending file in this matter were missing. The absence of these parts of his file was one part of the controversy between the parties to these proceedings. It is necessary therefore briefly to examine and make some findings about Mr Crow's record keeping practices. 110Mr Crow gave evidence that due to his mobility it was not his practice to keep physical file notes in relation his communications with customers. But he, and other bank employees, recorded the activity in relation to each loan application in the bank's computer system referred to as the "Consumer Lending Application System" ("CLAS"). 111Mr Crow kept a hardcopy file for each loan application that he considered on behalf of the bank. And he stored in each loan application file the original, handwritten loan application prepared by each client. But he said that it was his practice to throw away the files after the loan application had expired. I accept Mr Crow's account of his surprisingly casual approach to record retention. He said, and I accept as accurate, that he threw away the file in relation to the Decevic's loan application. The disputes in this case show how unwise such an approach is; but I accept that is what Mr Crow did. There is sufficient material left in CLAS to infer that an application probably once existed, and I so infer. 112The only records that remained at the time of trial in relation to the Decevics' loan application were those stored in CLAS. Those records included the notes entered into the system by the bank's employees and the copies of documents electronically stored in the system. The first entry in CLAS for the Decevics' application was created on 1 October 2009 and the last one on 21 May 2010. 113In her case Mrs Decevic attempted to discredit some of Mr Crow's evidence by pointing out the gaps in his record keeping. These gaps included the missing handwritten loan application which Mr Crow said he had destroyed, together with its related privacy release, to enable credit checks to be undertaken on the Decevics. 114The gaps were not limited to the original loan application. In her submissions Mrs Decevic correctly pointed out that Mr Crow was unable to produce: (1) the letter dated 22 October 2009, confirming that Mrs Decevic's loan was approved. CLAS records that such letter was prepared. Mr Crow gave evidence that he would have faxed it to Mr Marando. Mr Crow was unable to produce: (2) the cover letter for the loan documents dated 20 November 2009 and addressed to Mr Marando. Although a copy of this 20 November 2009 letter was ultimately available at the hearing, its precise provenance was debated. It is sufficient to say that I accept that the version of this letter in evidence did not come from Mr Crow's records. Mr Crow was unable to produce: (3) the application forms in relation to the deposit bond allegedly signed by the Decevics. Mr Crow was unable to produce: (4) the letter of 25 January 2010 informing the Decevic's that Mr Crow had extended their time for acceptance of the loan offer until 25 February 2010. CLAS records that such letter certainly was prepared. And Mr Crow gave evidence that he sent it to the Decevics. But he did not retain a copy. I accept that Mr Crow was not the best of record keepers and that CLAS therefore is the best available evidence now of what happened. Mr Crow was unable to produce: (5) a letter from the accountant to Mr Decevic's employer in relation to Mr Decevic's director's guarantees, which Mr Crow says he received in late May 2010. Mr Crow was unable to produce: (6) any file notes of meeting or phone calls with the Decevics. My assessment of Mr Crow is that he would not have kept such notes, if he had them, for very long. 115Mrs Decevic's attack on Mr Crow's credit based on these gaps in CLAS emphasised one telephone conversation, which Mr Crow recalls and the Decevics deny took place. In this conversation some time after 26 February 2010 Mr Crow says he informed Mr Decevic that the loan offer had expired. The Decevics say that they were not so informed. And it is puzzling that the Decevics did not respond more vigorously to this news. The conversation is not recorded in CLAS. Although this turned out to be an important conversation, I am not entirely surprised that Mr Crow did not record it in CLAS, as it was conveying to the Decevics something Mr Crow was entitled to believe that they already knew. I accept Mr Crow's evidence that he had this conversation. The Proceedings and Judgments Against Mr Decevic 116The bank has an alternative case in defence, which accepts that there was a binding agreement between it and Mrs Decevic to advance $1,660,000. The bank says that it was entitled to refuse to fund the purchase of the property in the Decevics' second loan application because of the results of Mr Decevic's second credit check in about May 2010. This May 2010 credit check recorded default judgments entered against him. The bank says that these judgments were not recorded in Mr Decevics' first credit check in 2009. The bank produced a copy of the second credit check but did not have the first credit check. The bank submits that the Decevics made incorrect statements to it in relation to the existence of any such judgments or Court proceedings. 117Two proceedings were commenced against Mr Decevic in 2009. And judgment was given in each of those proceedings in late 2009 and early 2010. Those judgments did not exist in September 2009 when Mr Crow first met the Decevics. But they appeared on the subsequent credit check run by the bank in May 2010. Although the bank's first credit check on the Decevics, which was probably done in the first week of October 2009, is not available, it is unlikely that it referred to these judgments. This is not just because of their timing. There is no evidence that the bank followed up any adverse findings in the first credit check, something in my view that it would have done if this first credit check had referred to either of these proceedings. 118The two proceedings and their associated default judgments related to debts incurred by a company called Salex Interiors Pty Limited ("Salex"). Salex manufactured and installed interior fit outs in large building projects. Until March 2009 Mr Decevic had been a director of Salex. In March he resigned as director. But he continued working for the company as an employee. Mr Decevic's employment in this capacity at this time was the Decevics' main source of income. 119Initially Mr Decevic was also a shareholder of Salex. But in mid-October 2009, when the bank was considering the initial loan application, he sold his shares. His decision to sell his interest in Salex was prompted by the bank's request for Salex's tax returns. It seems that those tax returns were required as part of the bank's application process, because the applicant, Mr Decevic, was a major shareholder in Salex and Salex was the major source of his family income. The bank seemed, not surprisingly, interested to inquire into the security of Mr Decevic's future income. 120Salex encountered trading difficulties and eventually went into liquidation on 1 June 2010, after the bank had already told the Decevics in mid May that their second loan application was refused. 121As a director of Salex Mr Decevic had executed director's guarantees in respect of its trading obligations. The director's guarantees covered payments due by Salex for work done for and materials supplied to it. Some of these guarantees remained in place after Mr Decevic resigned as director. Mr Decevic gave evidence that he tried to exit from all of his personal liabilities as a director after he resigned. But he said he overlooked some director's guarantees he had given to suppliers of Salex, including the guarantees, sued upon in 2009 and 2010. 122Caveats in relation to several of Mr Decevic's obligations under these director's guarantees were registered on the title of the Decevics' existing residence at the time the Decevics spoke to Mr Crow in September 2009. 123In 2009 two suppliers of Salex commenced proceedings: (1) against Salex for recovery of money owned for materials supplied; and (2) against Mr Decevic and several other then directors of Salex, pleading against them their obligations under their directors' personal guarantees. The first proceedings were commenced in April 2009 by CSR Building Products Limited ("the CSR Proceedings") and the second proceedings were commenced in November 2009 by Canberra Plasterboard Pty Limited ("the Canberra Plasterboard Proceedings"). 124Judgments by default were entered against Salex, and against Mr Decevic and another director of Salex in each of those proceedings: the first judgment in the CSR proceedings on 14 October 2009 for $2,209 ("the CSR Judgment") and the second judgment in the Plasterboard proceedings was entered on 21 January 2010 for $5,417.00 ("the Canberra Plasterboard Judgment"). 125After the Canberra Plasterboard Proceedings commenced, a caveat, in relation to them was placed on the title of the Decevics' existing residence. The Decevics' Knowledge of the CSR and Canberra Plasterboard Proceedings 126Both Mr and Mrs Decevic were aware of the CSR and Canberra Plasterboard proceedings, and the judgments entered respectively in each proceeding. They were the kind of couple who in my view exchanged financial information between themselves and I find that they both knew what each of them knew about these proceedings and these judgments. In the end their knowledge only goes to their credit. For the bank's purposes in disclaiming an obligation to make advances under any loan agreement it is sufficient for it to show that these default judgments existed. 127As to his knowledge, in his affidavit Mr Decevic deposed that he was not served with the Statement of Claim in either proceeding, and that he was not told about the existence of those proceedings by the then directors of Salex. But in his oral evidence he admitted that it is possible that the Statement of Claim in the CSR Proceedings was served, in his absence, on Mrs Decevic and that the Statement of Claim in the Canberra Plasterboard Proceedings was served on an employee of Salex. And that he knew about the service of each document shortly after it had occurred. I accept that he had this knowledge. 128Two affidavits of service tendered by the bank state that: the Statement of Claim in the CSR Proceedings was served as early as 21 April 2009 on a female person residing in the Decevics' existing residence; and the Statement of Claim in the Canberra Plasterboard Proceedings was served, on a female person present at Salex's registered office on 21 November 2009, just after the formal loan documents issued from the bank to the Decevics. 129It was suggested to Mrs Decevic in cross-examination that the female person who received the Statement of Claim in the CSR Proceedings was her. She could not recall that event and she suggested that it might have been her mother. 130It is not clear precisely when Mr Decevic and Mrs Decevic became aware of the CSR Judgment and the Canberra Plasterboard Judgment. Mr Decevic gave some evidence suggesting that he knew that the judgments existed but that he was under the impression that they have been already paid by the directors of Salex. 131Mr Decevic gave uncontested evidence that his enquiries with the Gosford Local Court and Parramatta Local Court suggest that: the Canberra Plasterboard Judgment was set aside on 26 October 2010; and that the CSR Judgment was set aside on 29 March 2011. But even if this were so, the setting aside of the judgments was well after the bank's refusal to fund the purchase in May 2010 and Mr Ari's termination of the contract on 30 June. 132Mr Decevic's evidence was that the amount due under the Canberra Plasterboard Judgment was in fact paid by Salex in February 2010. This evidence was supported by correspondence between Mr Decevic and a credit check provider Veda Advantage in September 2010. Mr Decevic applied to Veda Advantage to amend his credit record to reflect the fact that the Canberra Plasterboard Judgment has been fully paid as at 9 February 2010. He received a reply that the payment has been confirmed with the creditor and his record had been updated accordingly. 133But again this application to amend his credit record was well after the events in these proceedings and does not gain say the fact that the default judgments were in place in May 2010 and it was not then proved to the bank that the judgments had been satisfied. I am not satisfied that the Decevics even knew either judgment had been satisfied in May 2010. 134It is now useful to move to a more chronological account of the Decevics' dealings with the bank in late 20009 and the first half of 2010. The September 2009 Loan Application 135The Decevics and Mr Crow first met in September 2009 in the offices of a finance broker, Carrington Financial Services, in Liverpool, NSW. The meeting was arranged by Mr Darren Rose, a sales manager employed by Carrington. What Mr Crow said to the Decevics at this meeting in relation to the application process is in dispute between the parties. 136The Decevics say that at this first meeting they told Mr Crow that they had found a property that they wanted to buy, Mr Ari's property. They say that they told Mr Crow that to fund part of that purchase they wanted to use the equity in their existing residence (an equity of approximately $350,000), which was then mortgaged to the National Australia Bank ("NAB"). They further say that Mr Crow advised them that to achieve this objective they could: negotiate a long settlement period in relation to the purchase of the property; attempt to sell their existing residence within that extended settlement period and use the funds remaining after paying out the NAB's mortgage to pay part of the price of the property they were proposing to purchase; and then apply for a small loan with the bank to fund the rest of the purchase. But in case their existing residence could not be sold in time, they say he also advised them to apply for a separate bigger loan, which could refinance the whole NAB loan if necessary. In this scenario until their existing residence was sold the Decevics would be heavily geared. 137Mr Crow was proposing dual facilities: one facility (the refinance facility) to re-finance the NAB mortgage over their existing property and another facility to purchase the new property (the purchase facility). I accept that his idea was to give the Decevics flexibility. If their existing residence did not sell they could rent it out as an investment property using the refinance facility. But if they sold their existing residence they could eliminate the refinance facility and pay down the purchase facility with the proceeds of sale. I accept this seemed to be a rational loan structure for the Decevics' then situation. 138I further accept Mr Crow's account of this meeting that Mr Decevic explained that they "were looking at purchasing a property in my wife's name" and that "we are going to put the current property we own on the market in the near future, once I finalise some small repairs". Mr Decevic also explained that they had an existing mortgage with the NAB but did not have the funds for a deposit on the new property. 139I accept Mr Crow's evidence that he explained the bank would need to re-finance the Decevics' existing property. 140Mr Crow also dealt with the Decevics' problem that they did not have the cash for a deposit. I accept that he said to them "if you need you can apply for a St George deposit bond to secure the property you want to buy once you have an unconditional loan approval from St George". I also accept that either he or Mr Rose said at this meeting that the bank's "deposit bond will be valid for six months" and that any loan approval "will last for three months" and that they "will need to re-apply for a new approval from St George if you do not sell your current home within the three months". 141Finally Mr Crow, I accept, explained if the Decevics sold their existing residence they would have to restructure their application as both properties had been included as security in the application. 142Mr Crow also gave evidence I accept that at that first meeting in September 2009 the Decevics provided him with certain documents and signed the bank's privacy statement which was a prerequisite for running a credit check on them. Mr Crow further says that during the meeting he completed by hand the bank's standard loan application form with the information provided by the Decevics. He gave evidence that in accordance with his usual practice he would have asked the Decevics to read through the answers he handwrote and asked them to sign the application, if they agreed with its contents. And he says that the Decevics did sign such an application at the September 2009 meeting. I accept Mr Crow's account of this meeting where it diverges from the Decevics' account. I do not accept that Mr Crow was somehow inventing that he had the Decevics sign a loan application at this meeting. And they knew that the application they signed would be submitted for the bank's approval. 143But the bank has neither the original nor a copy of the September 2009 application. Mr Crow's evidence is that, in accordance with his practice, he destroyed the original loan application after the Decevic's application did not proceed. No copy of it was stored on CLAS. The Decevics submit that the Court has no evidence to conclude that such an application ever existed. 144To prove the content of the September 2009 application the bank relied on Mr Crow's evidence and a copy of its then standard loan application form (Annexure 'A' to Mr Crow's 29 November 2012 affidavit). I accept that the bank's standard form as at September 2009 was one that Mr Crow had Mr and Mrs Decevic sign at their meeting. This form includes questions in relation to the applicants' personal details, assets, employment and borrowing history. The borrowing history questions include the following: "Has anyone ever stated a legal action against you because you did not pay an amount when it was due? Have you ever had a judgment entered or a conviction recorded against you, been bankrupt, insolvent, assigned you estate to, or entered into a scheme of arrangements with creditors?" 145Mr Crow says, and I accept, that the Decevics answered both these questions in the negative. 146Mrs Decevic made a number of concessions that Mr Crow's version of their first meeting may be correct. She said that during the September 2009 meeting Mr Crow "could have" completed a handwritten application. She did not recall signing an application similar to the standard form application tendered by the bank. But she again said that she "could have" signed it. And when asked about the questions asked of her and her husband by Mr Crow during the September 2009 meeting she confirmed that they were asked about legal actions started against them and replied that there were none. Mrs Decevic's "could have" evidence on this subject was in substance a grudging acceptance that what Mr Crow had said about this meeting was actually correct. 147The parties contested whether Mr Crow said at the September 2009 meeting that any loan approval granted by the bank in relation to the loan, would be valid for three months only, and if the loans were not drawn within that time that a new approval would be required. Such a statement would probably be fatal to Mrs Decevic's case that there was an oral agreement by October 2009 for the bank to lend $1,660,000 to them. Any such oral agreement would have included a term to this effect. And it was not contested that the loan was not drawn down within three months. 148No such limit is referred to in the bank's standard form application. But this time limit on the drawing down the loan was set out in the "Residential Loan Agreement Offer" prepared by the bank two months later on 20 November 2009, and signed by the Decevics in March 2010. This was one of the bank's then standard terms of offer. The 3 months time limit is to be calculated from the day the offer was issued, 20 November. In my view it was an important limitation on what the bank could offer the Decevics, a limitation of which Mr Crow was quite conscious. As a result Mr Crow did warn the Decevics of this limitation. To do otherwise would be misleading, something Mr Crow, in my view, would not do. 149Mrs Decevic denied that Mr Crow said anything about a three months deadline in September 2009. Mrs Decevic submits that the Court should reject Mr Crow's contentions. She says that it is "commercially implausible" that if she and Mr Decevic were told about the three months expiry date of the approval they would have proceeded to sign the contract under which the settlement period was 6 months. 150I accept that Mr Crow knew in the September 2009 meeting the bank's standard approval terms meant that any loan approval the Decevics' were to obtain from the bank would only be valid for 3 months and that they would have to re-apply if the loan had not been drawn within that time. I accept that in 2009 he was aware that this was one of the bank's standard terms. Mr Crow admitted that taking into account the longer than usual settlement period discussed at the September 2009 meeting, and ultimately agreed to with Mr Ari, it was inevitable that the first loan approval would expire before the proposed settlement. 151But Mr Crow explained why he proceeded with the application in 2009 despite the contradiction between a proposed six month settlement period and the requirement to draw down the loan within three months. He says that he discussed this issue with the Decevics and they knew from the outset that they may well need to reapply. A scenario on which they might not need to reapply is if the Decevics' existing residence sold quickly and they only needed in the end to draw down on the purchase facility. But that was to an extent within their control. I accept this was Mr Crow's reasoning at the time. 152Mr Crow also says that the Decevics wanted the bank to provide a deposit bond and that was possible only if they applied for a loan and got an unconditional approval. But he was confident at the time (and was until May 2010 when the second application was declined) that when the Decevics reapplied that their loan would be approved, given that it was approved the first time. Loan Approval - October 2009 153On 1 October 2009 Mr Crow created on CLAS an electronic application on behalf of the Decevics. I accept that to create this he used the information in the handwritten September 2008 application he had obtained from the Decevics. Although the original handwritten application is missing, its contents I am satisfied were reproduced in CLAS, and were resent to the Decevics as one of the documents with the 20 November loan offer. 154The application created by Mr Crow on CLAS on 1 October 2008 was for a total loan amount of $1,660,000. This total was divided into two separate loan accounts: $795,000.00 (with principal and interest repayments for 30 years) for the purchase of the property and $865,000 (with principal and interest repayments for 25 years) to refinance the NAB loan in relation to the Decevics' existing residence. The application had an indicative interest rate of 5.16 per cent for the purchase facility and 5.59 per cent for the refinance facility. The property and the existing residence were to secure the total loan amount in the application, which also specified a required loan to valuation ratio of 80 per cent. 155Between 1 and 14 October 2009 Mr Crow collected additional information required for the loan approval process. He ordered valuations of the existing residence and the property. Copies of those valuations were saved on CLAS. He gave evidence that he also ordered credit checks in relation to the Decevics. Those credit checks were not saved on CLAS. 156The Decevics' $1,660,000 loan application lay above Mr Crow's $500,000 approval authority, so it had to be approved by the bank's Credit Solutions Team. On 13 and 14 October 2009 Mr Crow prepared and included notes on CLAS in relation the application, for the consideration of the Credit Solutions Team. In those notes he recommended loan approval. 157Mrs Decevic initially said that Mr Crow called her on about 9 October to advise that the loan had been approved. But this cannot be right. The loan was not in fact approved until 22 October. I do not accept that Mr Crow said to Mrs Decevic it was approved before that. 158The caveats supporting Mr Decevic's Salex directors guarantees emerged during the credit checks. On 15 October 2009 Mr Crow made a note in CLAS in relation to the caveats shown on the title of the existing residence. He said: "Caveats listed on Title are in the process of being removed. They are guarantor caveats for suppliers left from when client was owner of the business [sic]." 159The CLAS records show that on the same day 15 October Mr Crow was asked by Ms Angela Economides, a credit officer in the Credit Solutions Team to address a number of issues in relation to the application. The issues Ms Economides raised included Mr Decevic's shareholding in Salex. Ms Economides requested that Mr Decevic provide his and Salex's full tax returns. This request was conveyed to Mr Decevic, who decided to sell his shareholding in Salex. I accept Mr Crow's evidence that Mr Decevic told him that the other owners of Salex "would not like me providing the company's tax returns". 160On 22 October 2009 Ms Economides recorded on CLAS that the loan in the amount of $1,660,000 was "approved", with a loan to valuation ratio of 80 per cent. Mr Crow says that he telephoned Mr Decevic the same day to inform him of the approval. In her affidavit Mrs Decevic says that she was the one who spoke to Mr Crow about the approval, and that she did so on 9 October 2009. But in her final submissions she correctly did not contest that the call most probably occurred on 22 October 2009 and that she had confused the dates in her previous evidence. The Deposit Bond - 22 October 2009 161The contract between Mr Ari and Mrs Decevic was signed on the date of the loan approval, 22 October 2009. Although the contract was signed on 22 October 2009, Mrs Decevic did not provide the $72,500 deposit to Mr Ari that day. She needed to arrange a deposit bond with the bank. Under the contract she had the benefit of the standard cooling off period of 5 business days, until 29 October 2009. She organised to have the deposit bond ready by the end of the cooling off period. 162On 28 October 2009 Mr Marando faxed the first page of the signed contract with Mr Ari to Mr Crow. I accept Mr Crow's evidence that the same day he prepared the deposit bond and faxed a copy of it to Mr Marando. I also accept that he posted the original deposit bond either to Mr Marando or to Mrs Decevic at this time. The deposit bond included a "Date of Issue", 28 October 2009 and the notation "The deposit bond is valid for 6 months from the Date of Issue". Thus, the deposit bond was valid until 28 April 2010. As the later chronology reveals, that is when it expired. 163But the deposit bond also referred to what it described as an "Expected Settlement Date" of 10 March 2010. But settlement was never planned for March 2010. The first page of the contract set the settlement period for 182 days - 22 April 2010. It was later extended to 31 May 2010. This curiosity was not explored in an otherwise very thorough contest between these parties. But in my view it is consistent with Mr Crow's rather casual attitude to what was to happen to the Decevics' purchase in 2010, which he thought would probably take care of itself somehow, when the time came. 164Mr Crow explained the bank's internal process for issuing deposit bonds. The bank's contention in these proceedings is that a deposit bond is issued under a contract separate from the contract with the customer to provide a home or other loan. To obtain such a deposit bond the customer must sign the following documents: first a "Counter Indemnity and Declaration" and, secondly, "St George Deposit Protect Bond Application Form". The bank produced its 2009 current standard form for each of those documents. It could not produce copies of any of those three standard documents signed by the Decevics. Mrs Decevic was asked whether she recalls signing such documents and submitting them to the bank. She could not remember. But she conceded that she could have done so. I find that she did, even though signed copies of these documents are not available. Her having signed these documents is the best explanation for the deposit bond issuing. I infer the bank would not have issued the deposit bond without these documents being signed. 165The Deposit Protect Bond Application ("the bond application") asks an applicant whether the applicant has "arranged finance for the purchase" for which the bond is required and requests the attachment of any such "loan approval". I infer that the 22 October loan approval was attached to this bond application, when it was signed and lodged. This bond application operated with a loan. This loan contract was not required. 166The Counter Indemnity and Declaration ("the counter indemnity") required Mrs Decevic to pay the bank "all amounts paid by the bank in connection with the bond" (clause 3). Once the bank paid out on the bond and the purchaser, Mrs Decevic, failed to pay the bank then the bank was subrogated to Mrs Decevic's rights under the purchase contract. 167I accept the bank's submission that the issue of the deposit bond represented a discrete contractual arrangement in which the bank assumed a discrete contractual risk upon any default by Mrs Decevic. The bank was not unsecured. It had a right, if necessary, to seek specific performance of the contract in her name, and to assume her other equitable rights to the property. 168And as the precondition for issuing the deposit bond is only "loan approval", not the existence of a loan contract, I accept the bank's submission that the issue of the deposit bond is not necessarily evidence of the binding contract between the bank and Mrs Decevic that she claims it is. 169Mr Crow explained his practice in relation to the issue of deposit bonds. He said that once he receives the necessary signed documents from a client, he faxes them to the bank's deposit bonds team. He then electronically fills in a deposit bond application on the bank's computer system. Then the computer system automatically generates a deposit bond which Mr Crow signs on behalf of the bank. 170The precise passage of the original of the deposit bond here is unclear. In his affidavit Mr Crow said that his normal practice would be to post the original of the deposit bond to Mrs Decevic. But in cross examination he said that his ordinary practice would be to send it to the vendor's solicitor. He confirmed that he did not in fact recall to whom he sent the original to in this case. Yet a further puzzle with the deposit bond is that Mr Crow says that he signed the original. Yet the copy in evidence does not have his signature. Despite the unsatisfactory nature of this evidence I do not accept that Mr Crow just created a deposit bond without authority. I find he sent it to either Mrs Decevic or Mr Marando. 171Finally in October the parties to the purchase contract, Mrs Decevic and Mr Ari, agreed to extend the cooling off period which was to expire on 29 October 2009. That day Mr Marando sent a fax to Mr Ari's solicitor, Mr O'Brien requesting an extension of the cooling off period to 2 November 2009. In that fax Mr Marando said: "We are instructed to request an extension of the cooling off period until 5.00 pm on Monday, 2nd November, 2009 as our clients are still awaiting formal approval of their loan which we are advised will not be approved until then." 172What did Mr Marando mean by "awaiting formal approval of their loan"? Ms Economides had given the bank's approval on 22 October. But whatever the reason given, Mr Ari agreed to that extension. Mr Marando says in his affidavit that he asked for the extension to: "ensure that my client's finance had been approved and secondly, to ensure that the deposit bond for the 10% deposit could be issued by St George bank (herein the "bank") prior to the expiration of the cooling off period under the contract." 173The second part of this explanation does not at first seem particularly convincing. The Decevics' finance had been approved. And the deposit bond had been issued and faxed by Mr Crow to Mr Marando on 28 October 2009, the day before the extension was sought. 174Mr Marando provided further explanation in relation to these events under cross-examination. He acknowledged that his 29 October letter postdates his receipt of a copy of the deposit bond. But he pointed out that he had then not yet received the original signed deposit bond. He said that he thought that it was prudent to wait until he had the original deposit bond in his possession before proceeding with the contract. He explained, in a way that I find convincing, that when he referred to the lack of "formal approval" of the loan as of 29 October he was really speaking of the lack of a formal letter of approval from the bank. He said: "...I know my practice, an issue of the deposit bond is pretty much an indicator that that the loan is going to be formally approved and even though I don't have anything in writing the fact that this was a delayed settlement, the client and I were prepared to take the sort of risk or assumption the loan was - the formal written - I should have put "written loan approval" but I only put "formal approval", I should have put "written approval". At that stage there was nothing in writing." 175Mrs Decevic was asked about the extension of the cooling off period in cross-examination. She confirmed that she asked Mr Marando to extend the cooling off period because she understood he had not yet received a firm offer of finance from the bank. But she explained that she understood from Mr Crow's conduct that she was confident that the bank would approve the loan application. 176Mr Bolster puts with some persuasive force, on behalf of Mrs Decevic, that this episode shows that the Decevics were keen to have confirmation of finance before allowing the cooling off period to expire. It does show that. But it also shows that they were nevertheless prepared to let the cooling off period expire before they had a "written loan approval" or a formal letter of loan offer from the bank. Not unreasonably they and Mr Marando felt comfortable that such a written offer would come, once the deposit bond had issued, which would not issue without loan approval. 177But with less persuasive force Mr Bolster contends that this episode also shows that the Decevics would have rejected a loan that had to be drawn down within three months of approval. In my view Mr Crow did warn the Decevics of the 3 month draw down limitation at the September meeting. But I infer that they were prepared to take the risk that they might be able to sell their existing residence and to settle the purchase from Mr Ari within three months, or the risk that they would have little difficulty in getting another loan approval at the end of the three months. After all, to them nothing seemed to have changed or to be likely to change. But unfortunately they did not focus on the two proceedings being brought against Mr Decevic, which were a looming alteration in their financial risk profile. 178On 2 November 2009 Mr Marando faxed Mr Ari's solicitors attaching a copy of the deposit bond. On 6 November 2009 Mr Marando faxed Mr Crow advising him of the settlement date for the property. The Bank's 20 November Letter of Offer and the Delivery of the Loan Documents 179The bank finalised all the loan documents the Decevics had to sign by 20 November 2009. The parties disagree about the means by which those documents were provided to the Decevics. 180It is not in dispute that in late November 2009 the Decevics received the bank's letter of offer of 20 November together with the documents, which they ultimately signed and returned to the bank after considerable delay on 9 March 2010. But the circumstances in which the delivery occurred on or about 20 November are important for two reasons: (1) the Decevics say that Mr Crow delivered the documents personally and on that occasion did not tell them about any deadline for returning those documents to the bank and, in fact, told them to "take their time"; and (2) the bank says that in addition to the documents for signing, the Decevics also received with the 20 November documents the "Residential Loan Agreement General Terms and Conditions" (the "General Terms"), which terms the bank says formed part of any agreement it made with the Decevics and which it relies on in its defence. 181The Decevics say that Mr Crow visited them at their existing residence in late November 2009 and brought some documents with him. They say that during this visit Mr Crow did not tell them about any deadline for returning those documents to the bank. Mr Crow says in his affidavit that he does not remember if he personally delivered the loan documents to the Decevics. But he admits that it was his practice at the time sometimes to deliver loan documents personally. 182But on these issues, for the reasons which follow, I conclude: that the 20 November letter was posted to and received by Mr Marando; that Mr Crow did not tell the Decevics to take their time and that the Decevics had full notice of the General Terms from 20 November, 2009. 183The bank's 20 November letter was addressed to Mr Marando and confirmed what had happened on 22 October with the opening words to him as solicitor "we have approved your client's loan - what you need to do next". It confirmed approval of a loan to Mr and Mrs Decevic as borrowers in the sum of $1,660,000, divided into the two facilities already identified. In the body of the letter it asked the solicitor to "read [an enclosed] checklist carefully and send everything we have asked for within 7 days". Its tone was the opposite of what the Decevics say Mr Crow represented to them. In my view he was aware of these standard letters and is most unlikely to have told them to take their time. 184Importantly the checklist with the letter lists two Residential Loan Agreements - Offer, one for each of the two facilities, and the General Terms. I am satisfied that these documents and all the other documents in the checklist were sent to and received by Mr Marando. 185The two Residential Loan Agreement Offers stated that if each was not signed and returned within 28 days of its date, 20 November 2009, it will be "automatically treated as withdrawn". The Decevics did not return the documents until March 2010, well outside the prescribed 28 day period. Mr Crow confirmed in his evidence that this particular requirement was routinely waived by the bank. The bank does not rely on this clause in these proceedings, and no more needs to be said about it. 186Each of the two Residential Loan Agreement Offers included identified the three month draw down period in the bank's offer through the following term: "Time limit for borrowing the loan amount: You must borrow the loan amount within 3 months of the disclosure date." 187The "disclosure date" was defined in the offers as 20 November 2009. Accordingly, the time limit for drawing down the loan would ordinarily expire on 20 February 2010. In my view the drawdown requirements of the bank's offer were clear from this written text and the Decevics were aware of them from the time they received the 20 November letter, shortly after that date. 188Mrs Decevic's evidence of what she knew of the terms of the Residential Loan Agreement Offer was very unsatisfactory. Asked if she "understood in November 2009 that any amount of money that [she] might borrow from the bank had to be borrowed within three months after November 2009" she replied: "I-I know what I have signed. I know everything but when you are dealing with Mr Crow we were under the assumption that "take your time", so I have read it, I understood it I signed it but I didn't feel the urgency to return it because he knew house was being renovated so - I don't know how to answer the question." 189But she walked away from what rather looked like an admission that she was aware of the three month deadline on drawdown. She later clarified her evidence that in fact she did not know that the three months deadline applied - it was never explained to her. And she said she thought she would be able to draw the funds down under the loan in six months time, when the settlement was scheduled to take place. She says that she was told that this was the case. And she claimed that if she had known about the three month deadline for the draw down she would have settled the loan earlier. In my view what really happened is that she and her husband lost focus on the three month deadline because they unreasonably thought that even if it expired they would be able to get another approval quickly. 190But who received the 20 November 2009 cover letter and the documents which the Decevics had to sign? The bank submits that the documents were provided to both Mr Marando and then Mrs Decevic. Mr Crow said that the relevant documents were sent to Mr Marando under the cover of a letter of 20 November. The parties spent a considerable amount of time of the hearing tracing what happened to the 20 November letter and its enclosures. This was partly due to unfortunate confusion caused by Mr Marando's evidence on the subject. 191The 20 November letter was addressed to Mr Marando. The form of address on the letter was incomplete and was unlikely itself to have facilitated postal delivery of the letter. There may have been more information on the outside of any envelope used to post the letter. The letter itself was only addressed to: "Mark Marando Fairfield FAIRFIELD NSW 2165" 192But the CLAS system supports the inference that the letter was posted to Mr Marando's post office box address, "PO Box [not published], FAIRFIELD NSW 1860". Mr Crow explained that the bank has separate teams responsible for preparation of the loan documentation for each loan ("CMS Doc Prep") and for sending the documents to clients (or their representatives) ("CMS Dispatch"). "CMS" apparently denotes a part of the bank called "Customer Mortgage Services". The steps taken by those teams in relation to each application are recorded on CLAS. Mr Crow based his evidence in relation to the delivery of the loan documents on those CLAS records. He said from the CLAS records, and I accept, that on 20 November 2009 CMS Doc Prep prepared the following nine documents, which the Decevics needed to sign in relation to their loan: (1)Residential Loan Agreement Offer for $795,000.00; (2)Residential Loan Agreement Offer for $865,000; (3)Package Acknowledgement Letter; (4)Mortgage in relation to the property; (5)Mortgage in relation to the existing residence; (6)Direction to Pay; (7)Discharge Authority; (8)Finance Application; and (9)Personal Account Application, ("the Loan Documents"). 193Mr Crow further concluded from the CLAS records and I accept that a cover letter dated 20 November 2009 was prepared in relation to the Loan Documents. This letter was referred to in CLAS as the "Solicitor Acting Cover Letter". Mr Crow further concluded from CLAS, and I accept, that on 23 November 2009 the Loan Documents and the 20 November letter were sent to Mr Marando by CMS Dispatch. This is supported in particular by the CLAS notes by an employee of CMS Doc Prep which refer to printing of each of those documents and by the following CLAS note of 23 November 2009 by an employee of CMS Dispatch: "Loan document sent to solicitor at: PO Box [box number] Fairfield NSW 1860" 194Mr Crow further says, and I accept, that together with the Loan Documents CMS Dispatch would in the ordinary course have sent to Mr Marando several standard form documents, which did not have to be signed, including the documents relating to discharge of the NAB mortgage and, relevantly, the bank's "Residential Loan Agreement General Terms and Conditions" ("General Terms"). There is no specific note on CLAS in relation to those further documents. But on the basis of Mr Crow's evidence, which I accept, I find that these General Terms were also sent to Mr Marando; and they are referred to in the checklist with the 20 November letter. 195This issue occupied more of the hearing time than it ordinarily would because of confusion and changes in Mr Marando's evidence. In his first affidavit Mr Marando said that he received the 20 November letter from the bank and that it was a reply to his 6 November fax to Mr Crow. But in his second affidavit he denied that he received the letter. And he explained that in fact he did not have a copy of this letter until it was produced by the bank on subpoena. 196Mr Marando's second explanation was proved incorrect during the hearing when the parties inspected the Court's subpoena packets and confirmed that the bank had not produced the letter on subpoena. Then Mr Marando provided a third explanation in his oral evidence. He said then that he did not think that he received the letter from the bank in late November 2009. He pointed out that there is no "RECEIVED" stamp on the letter. He thought that such stamp would be there if the letter had been received in his office in the ordinary course of business. He concluded that the Decevics probably gave him a copy of the letter. But he could not say with any certainty if that occurred back in November 2009, or later when the proceedings commenced. Mrs Decevic submits that Mr Marando did not receive the letter. In addition to Mr Marando's explanation she points to the fact that the address on the letter was incomplete. In the end the Court could place no reliance on Mr Marando's evidence on the subject of his receipt and management of the 20 November letter and associated documents. His evidence appeared to be no more than speculation. 197There is another confusing part of Mr Marando's written evidence in relation to the 20 November letter. In his second affidavit Mr Marando claimed that a copy of that letter attached to Mr Crow's affidavit was copied from the version of the 20 November letter attached to Mr Marando's affidavit. The importance of this statement was not immediately obvious. But in his oral evidence Mr Marando explained that this was intended to point out that Mr Crow did not have a copy of the letter on his own file and therefore had used the copy received with Mr Marando's affidavit. Mr Marando made this comment to discredit Mr Crow. The comment seems to be correct. Mr Crow's affidavit copy includes a stamp "Patrick Agostino Solicitor". That stamp is also on the copy in Mr Marando's affidavit. This is because Mr Agostino witnessed that affidavit and stamped all its exhibits. But what, if any, conclusions can be drawn from this fact is unclear. And in the end it perhaps does not matter. 198Mrs Decevic received a copy of the General Terms. The details of these terms is relevant to the bank's alternative case, which is dealt with below. In cross-examination she accepted that in November 2009 she could have received from the bank not only the documents which the bank needed her to sign but also some additional documents, including the General Terms. 199After the events in late November there was about a two months break in the communication between the Decevics and the bank. The Bank's Offer Expires - January to March 2010 200Each of the bank's two Residential Loan Agreement Offers of 20 November 2010 had set the deadline for borrowing the funds under the offered loans to expire in three months, on 20 February 2010. But somewhat surprisingly, Mr Crow's evidence shows that the bank in fact calculated this period internally from the date of the loan approval recorded in CLAS, namely 22 October 2009. He says, and I accept, that around 20 January 2010 he received a system generated email from CLAS reminding him about the upcoming expiry. And he further says (and CLAS records this as correct) that on 25 January 2010 he extended the Decevics' deadline for acceptance of the bank's loan offer to 25 February 2010. So the expiry date so recorded was five days after the date that would be inferred from the offers. Nothing ultimately turns on this difference, because the Decevics' acceptance was only sent on 9 March, 2010. 201Mr Crow says that he prepared a letter in relation to this extension. The preparation of such a letter is recorded on CLAS, and he sent it to the Decevics. A copy of this letter was not in the bank's records. In her affidavit Mrs Decevic indirectly denied that she received such a letter. Mr Decevic did not refer to the letter at all. And they were not cross-examined about this issue. I accept it was sent and received. It was itself a reminder to the Decevics that they needed to act. Their lack of response to it is a little surprising in hindsight. But in reality they were more relaxed about these deadlines than they now say: if they needed it they felt another approval would come. 202CLAS records two disputed phone conversations in February 2010. On 18 February Mr Crow noted: "spoke to client is signing and getting the docs back to us". Mr Crow says, and I accept, that he said on the telephone that day to Mr Decevic "You have not returned the loan documents". The Decevics deny that this conversation occurred. But I find that it did take place. 203And then on 26 February Mr Stephen Rafton, who was identified as an employee of the bank but who did not give evidence in these proceedings, noted: "spoke to sam who will sign doc and return them next" [sic]. The Decevics agree that a conversation to this effect occurred but they say that it was Mrs Decevic, and not Mr Decevic, who spoke to Mr Rafton. 204But Mr Crow says that he also spoke to Mr Decevic sometime after 26 February 2010. The Decevics deny that that conversation occurred. CLAS does not include any record of it. According to Mr Crow the following exchange occurred: "Mr Decevic: How can you give us a loan one day and take it of us the next day? I am just going to sign the documents and return them to you anyway. Mr Crow: That is not going to do you any good because the loan has already expired." 205Mr Bolster submits on behalf of Mrs Decevic that if Mr or Mrs Decevic had been told in February that the loan would not proceed she, and her husband, would have reacted to such information, "all hell would have broken loose". In fact all that happened was that within another two weeks the Decevics signed the documents already provided to them by Mr Crow back in November 2009 and returned them to the bank, where they arrived on 10 March. In my view Mr Crow's account of this conversation is a good explanation for what happened: it prompted the Decevics finally to return the documents. The Decevics still thought that it would not be difficult to get another approval. 206On 9 March 2010 the Decevics signed each of the Loan Documents in front of a Justice of Peace. And they returned the signed documents to the bank. Importantly among the documents signed and returned was the CLAS text of their original finance application. By signing and returning this they re-iterated - falsely as it was by then clear - their earlier statements that there were no proceedings or judgments against them. 207On 10 March the bank began processing the signed loan documents from the Decevics. Mr Crow received an email that day from another employee of the bank notifying him that the Decevics' loan had to "reset" because their loan offer expired. Mr Crow says "reset" meant to him that he needed to submit a new application. 208Mr Crow says in his affidavit that he did not expect any issues with getting an approval for the new application and the Decevics deny, that he told them in March to delay such an application to mid-May 2010. There is no CLAS record of this conversation. A Second Loan Application - May 2010 209Little else of relevance happened in March and April 2010. The property was due to settle on 31 May 2010. But on 11 May 2010 Mr Marando contacted Mr Ari's solicitors and requested an extension of the settlement date of the contract. This request was ultimately refused on 19 May. 210Much of what passed between Mr Crow and the Decevics in May is contested. But the bank's computer system records the processing of the Decevics loan by the bank internally. On 21 May Mr Crow submitted a new loan application. And it was automatically declined, something which I find almost immediately came to the Decevics' attention. 211CLAS records the short life of that second application. It confirms that on 21 May 2010 at 12:10:02 Mr Crow created a second loan application on behalf of the Decevics. Over the next 14 minutes he added various documents to that application, including the Decevics' credit checks. And at 12:24:35 he saved the application. But the application was automatically declined by CLAS at 12:24:55. This was recorded in the following CLAS entries at 12:24:47 and 12:24:55 respectively: "Added/Reset task applicant has Writ/Judgment - CST: LDS Post Bureau Reason Cod...[sic] Loan Declined due to the Decline Reason returned from LDS" 212The credit check Mr Crow obtained on 21 May and submitted on CLAS included references to the Canberra Plasterboard Judgment and the CSR Judgment. I accept that the bank's policy was to decline loan applications when the applicant's credit checks referred to default judgments. Mrs Decevic submits in these proceedings that the bank did not provide any evidence of that policy. This policy can be inferred from the course of the second loan application itself. 213Not much else is clear about the events in late May 2010. Mr Crow says that in March when the earlier application had expired he had suggested to the Decevics that they delay applying again until mid-May. This would give the Decevics time to sell their existing property. I accept Mr Crow said this to them. He did not know of the potential jeopardy with a second loan application. And it would have been in their financial interest only to take up the purchase facility, once the proceeds of sale of the existing property were available. I accept his account of this conversation. 214Mr Decevic denies speaking to Mr Crow in May 2010. Mrs Decevic says that sometime in mid-May 2010 she called Mr Crow to enquire about the status of the application and he then told her that the loan was declined because of the liquidation of Salex. She then, she says, after discussing this problem with her husband, called Mr Crow back to explain that: her husband was only an employee of Salex (as opposed to a director or a shareholder); and his income was secure. On Mr Crow's request she then, she says, provided to the bank Mr Decevic's current pay slips. But despite that on 22 May Mr Crow called her to tell her that the bank will not approve the loan. 215But Mr Crow recalls May 2010 differently. His recollection in my view is accurate. He says he spoke to Mr Decevic twice (on 20 and 21 May) and to Mrs Decevic once (on 22 May). He says that on the first occasion he discussed with Mr Decevic the need to re-apply for the loan and asked Mr Decevic to provide "updated financial records". In my view this is what happened and this conversation came as no surprise to the Decevics who Mr Crow had told would need to reapply. 216Mr Crow could not remember if any such records were provided. But in his affidavit he allowed the possibility that the pay slips referred to by Mrs Decevic were provided in response to his query. After these proceedings were commenced, he reviewed what Mrs Decevic says she provided to the bank and commented that he would not have seen at least two of the payslips because they post-dated the second loan application. 217Then on 21 May Mr Crow says he: created the second loan application; performed credit checks on the Decevics; noticed that the CSR Judgment and the Canberra Plasterboard Judgment were listed on Mr Decevic's credit check; and submitted the application on CLAS only to realise that it was automatically rejected. He says that on the same day he took some steps which he hoped might rectify the situation. He called Mr Decevic who referred him to Salex's accountant. He called the accountant, who explained to him the nature of the judgments and promised to send a letter explaining the circumstances of judgments. Mr Crow says that he received such a letter. But it was not produced. Mr Crow then telephoned a member of the Credit Solutions Team to see what could be done about the automatic rejection of the application. He says he was told that the bank would always decline loan applications "with one or more summons or judgment" against the proposed borrower. The unnamed employee of the bank to whom Mr Crow says he spoke, did not give evidence. And the Court did not admit the evidence of this conversation to prove that the bank had the policy to which it refers. 218Mr Crow says that after unsuccessfully attempting to resolve the issues caused by the judgments, on 22 May he spoke to Mrs Decevic to tell her that the loan application was declined by the bank and she should look for alternative finance. I wholly accept Mr Crow's account of these mid-May conversations with the Decevics. 219Mrs Decevic's evidence in relation to the timing of her May 2010 telephone call with Mr Crow is confusing. She recalls a call during which Mr Crow informed her that her and her husband's loan application was declined because of the liquidation of Salex. She was fairly confident in her oral evidence that this call occurred sometime in mid-May 2010. But she also said that she was keen to get in contact with Mr Crow because she had "two weeks to settle because the new owners had a newborn on its way and he was a premature baby so I had two weeks". I infer that she was here referring to the settlement of the sale of their existing property. She referred to this settlement again later in her oral evidence when asked how she reacted to Mr Crow's statement that her loan application was declined: "...I collapsed after that. I don't - I couldn't believe it. I had already sold my home. It all just meant to me one thing - I was going to be homeless in two weeks." 220But the front page of the contract of sale of their existing residence clearly states that it was signed on 29 May 2010, and it was to settle 42 days later. And it did settle in mid July 2010. If, as she says, she spoke to Mr Crow in mid-May, or even on 22 May, on both these dates there was no contract in place for the sale of their existing residence. Mrs Decevic may well be confusing the time of settlement of the property with the one for the settlement of their existing residence. 221The timing of the calls Mrs Decevic remembers and the liquidation of Salex also do not comfortably reconcile. A liquidator was appointed to Salex on 1 June 2010. But Mrs Decevic says that Mr Crow told her in mid-May that "The loan has been declined due to Salex going into liquidation and because of the company's financial situation". If he did say this, his information on Salex's position was wrong. In her affidavit evidence Mrs Decevic said that Mr Crow may have referred to administration not liquidation. But according to the ASIC record an administrator was never appointed to Salex. 222Although Mr Decevic denies that he spoke to Mr Crow about the loan being declined, he says that his wife reported Mr Crow's statements about Salex's liquidation to him. His evidence places this call in "late May or early June 2010", and not in mid May, which is Mrs Decevic's recollection. I did not find his evidence on this subject of any reliable value. Parties' Submissions on the Cross-Claim 223On her Cross Claim against the bank Mrs Decevic submits that there was a binding agreement between the Decevics and the bank requiring the bank to provide the funding for the Purchase of the property at the 31 May 2010 completion date. That agreement was either: (1) a partly written, partly oral and partly implied agreement resulting from the Decevics conversations with Mr Crow, and the bank's conduct in September-October 2009, in particular the issuing of the deposit bond in October 2009; or in the alternative (2) a written agreement resulting from the Loan Documents signed by the Decevics and returned to the bank in March 2010. Mrs Decevic further says the bank breached that agreement by failing to proceed with the loan. She submits that the loss she suffered as a result of the bank's breach includes any amount which she may be required to pay to Mr Ari as a result of these proceedings (including any adverse costs orders), and, as the property gained in value after the date of completion, her loss of profit. 224Mrs Decevic recognises in her submissions that the Residential Loan Offers that she and Mr Decevic received from the bank in November 2009 and signed in March 2010 included a deadline for drawdown of the loans - 20 February 2010. But she says that whether the agreement was concluded in October 2009 or in March 2010, it did not in fact include the term limiting the time for drawdown. 225If the agreement was concluded in October 2009, as is Mrs Decevic's primary case, any documents executed by her in March 2010 were only acts in performance of that existing agreement. And, she says, if their terms were inconsistent with the terms of the agreement already in place, they must be read down to preserve the agreement. 226If, as is Mrs Decevic's alternative argument, the agreement was concluded in March 2010 when the Residential Loan Offers were signed and returned, she contends that the term prescribing the three month borrowing deadline did not form part of that agreement because: (1) it was an essential commercial feature of the transaction between the Decevics and the bank that the loan was for an express purpose of settling the purchase of the property, with the date of settlement being, to the bank's knowledge, not before 22 April 2010, (some two months after the drawdown deadline in the Residential Loan Offers); (2) Mr Crow's statements in September 2009 that there was no hurry to return the documents to the bank and his alleged lack of explanation of any deadline for drawdown of the loan, (3) Mr Crow's clear oral representations that the loan once approved would enable the Decevics to settle the contract; and (4) the fact that the between March and May 2010 the bank did not expressly indicate to the Decevics that their loan has been rejected because of the time stipulations in the Residential Loan Offers but, instead, it sought to establish a new loan to enable the settlement to proceed. 227In defence of Mrs Decevic's claim the bank submits that it was never obliged to advance money to the Decevics because: (1) the oral/by conduct loan contract pleaded is illusory. There is no evidence that the parties agreed on several matters critical to the loan or formalised the contract in any way. And, in any event, an oral loan contract would have been unlawful under the Uniform Consumer Credit Code. Further, the deposit bond was a discrete contractual transaction separate from the loan agreement and the fact that it was issued does not help to establish that a loan agreement was entered into (although it does confirm that the initial loan application was unconditionally approved). Lastly, because a formal written loan agreement complete on its face was later prepared, and signed by the Decevics, the Court may not use any extrinsic evidence of previous communication between the parties to interpret that agreement unless its language is ambiguous; (2) no written loan contract was ever formed because the bank's loan offer was not accepted at any point in time, and specifically not before it expired; (3) borrowing the funds went to the very heart of the loan contract offered by the bank to the Decevics. And therefore the bank's offer expired (and became incapable of acceptance) when the deadline for borrowing the funds included in it ran out; (4) the bank was entitled to withdraw its offer of finance addressed to the Decevics at any time before acceptance; (5) in any event, ultimately the bank declined to provide funding to the Decevics not because of the expiry of the time for borrowing the funds under the initial offer but due to the judgment debts on Mr Decevic's credit check; (6) even if the loan agreement was formed, the Decevics fell immediately into default of the bank's General Terms which governed it. And the bank was entitled to refuse to advance any funds. 228The bank puts the alleged default under the General Terms in three ways: (a) the Decevics provided incorrect and misleading information to the bank in relation to any legal proceedings against Mr Decevic; (b) the judgments entered against Mr Decevic in those proceedings occasioned something that led or could lead to a worsening of his financial circumstances; and (c) because of the information in relation to the legal proceedings the Decevic's loan application was a document by which they gave the bank incorrect financial information. Conclusions on the Cross-Claim 229The Court's findings of fact mean at several levels Mrs Decevic's cross-claim against the bank cannot succeed. In every way that she puts the case she lacks the elements that she requires to make out a cause of action in contract against the bank. The various problems with her case can be summarised at a fairly high level given the detailed findings which the Court has already made. 230Mrs Decevic's claim that there was a binding contract for loan finance in place by 28 October 2009 fails for several reasons. First, there is insufficient evidence that either the Decevics or Mr Crow agreed that the bank's communication of its loan approval would, without more, and without any formal written letter of offer, lead to the bank being bound by what was in effect just an application for finance. None of the usual terms that one might expect to find in a credit agreement issued by the bank was present in the loan application or the conversations. Mrs Decevic was an experienced borrower. And her solicitor, Mr Marando, expected that he was going to receive a formal written letter of approval, which he finally did on 20 November. Moreover, I am not prepared to infer that either side was ready to enter by late October into a contract for the provision of finance, on partly oral terms, in contravention of the Uniform Consumer Credit Code, s 12. 231Secondly, in late November 2009 the Decevics did not behave as though they thought there was already a binding agreement in place. When they received the bank's letter of offer of 20 November had they actually believed that there was already a contract in place, they would have protested at the bank's imposition of more detailed terms upon them. Neither they, nor their solicitor did this, which is consistent with the belief that they did not have a binding agreement until they returned in a signed form the documents that came with the 20 November letter. 232Thirdly, many essential terms that one would expect to find in such a credit agreement were not agreed to in the exchanges that had taken place up until the 22 October. Here are some examples of the gaps: the precisely applicable interest rate for each facility and the formula for its variation, whether interest would be payable in a variable or fixed basis, the loan fees and charges, the frequency of loan instalments, the range of possible defaults under the loan and their consequences, the term of the loan and the terms on which the two securities, the existing residence and the property would be taken. I am not prepared to infer an agreement without consensus as to these matters or at least many of them. 233Fourthly, Mr Bolster pressed upon the Court the importance of the deposit bond as confirming a binding agreement between Mrs Decevic and the bank by the time of its issue. But despite his eloquent pursuit of this issue I do not think the deposit bond had that effect at all. The bank's submissions are persuasive that the deposit bond was issued on its own self contained contractual terms. The bank, to an extent, accepted a risk, as did Mrs Decevic, that a final binding loan agreement might not be made between the bank and Mrs Decevic even though the deposit bond were issued. In such circumstances the bank was protected by the terms on which the deposit bond was issued which gave the bank rights of subrogation over Mrs Decevic's interest in the property. The issue of the deposit bond does not confirm a binding loan agreement of the kind Mrs Decevic pleads. 234But even if Mrs Decevic were to make out her case of a contract to provide finance, one term of that contract would be that the loan advance must be drawn down within three months. I find that is what Mr Crow said to Mr and Mrs Decevic in September. And they were reminded of that condition in the 20 November letter of offer documents. Mrs Decevic did not comply with that contract by seeking to draw down the loan within the three months. Indeed she never attempted to do so within that time. 235Mr Bolster's case also ultimately and correctly accepted that reliance on a contract based on the documents that Mr and Mrs Decevic signed and returned on 9 March, was of no assistance to him. The loan had not been drawn down by 25 February. By then it was too late. 236It is not necessary to consider the bank's alternative defence based on the General Terms. But in my view the General Terms were binding on Mrs Decevic, as a result of her signing the banks documents on 9 March. She was in default of them because she gave "incorrect or misleading information in connection with this loan agreement" within clause 28 of those terms. In the result Mrs Decevic fails on the cross-claim against the bank. Conclusions and Orders 237In the result, on the main claim, the Court has found that the vendor, Mr Ari, validly terminated the contract on 30 June 2010. He is entitled under clause 9.1 of the contract to recover the deposit. And he is unable to obtain such payment from the bank, as agreed under the contract, because the deposit bond has expired. The Court has declined to exercise it jurisdiction under Conveyancing Act, s 55(2A). And I will order Mrs Decevic to pay the value deposit to Mr Ari. But there may be a claim for interest to be calculated. 238Mrs Decevic wholly fails on the Cross Claim. There should be judgment for the bank on the cross-claim. 239Mr Ari has been successful on the principal claim and Mrs Decevic has been unsuccessful on the Cross Claim. Normally costs would follow the event, but the parties may wish to seek some other special order as to costs. 240Accordingly, the Court makes the following orders: 1. I direct the parties to prepare short minutes of order to give effect to these reasons. 2. I direct the parties to file and serve any submissions on questions of costs by 5pm on Friday, 7 February 2014. 3. List the matter for costs argument at 9.30am on Wednesday, 12 February 2014. ********** 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: 03 February 2014