Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Donnelly v Australia and New Zealand Banking Group Ltd [2014] NSWCA 145 Hearing dates: 1 April 2014 Decision date: 09 May 2014 Before: McColl JA at [1]; Macfarlan JA at [2]; Leeming JA at [112] Decision: The appeal is dismissed with costs. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: EQUITY - unconscionable conduct - bank granted dual currency loan facility to appellant and husband - bank exercised right to convert loan currency after deterioration in value of Australian Dollar against the Hong Kong Dollar - whether bank failed to take reasonable steps to ensure appellant aware of risk of loss in event of adverse currency movements - whether appellant aware of bank's unilateral right of conversion - relevance of evidence of usual practice of bank officer - whether bank's alleged failure to recommend that the appellant seek independent legal advice was unconscionable - whether bank agreed with appellant that loan would remain in Hong Kong Dollars - no basis for a finding of unconscionable conduct Legislation Cited: Australian Prudential Regulation Authority Act 1998 (Cth) Australian Securities and Investments Commission Act 2001 (Cth) Contracts Review Act 1980 (NSW) Cases Cited: Canon Australia Pty Ltd v Patton [2007] NSWCA 246; 244 ALR 759 Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 Connor v Blacktown District Hospital [1971] 1 NSWLR 713 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; 218 CLR 471 First Mortgage Managed Investments Pty Ltd v Pittman [2014] NSWCA 110 Fox v Percy [2003] HCA 22; 214 CLR 118 HCK China Investments Ltd v Solar Honest Ltd [1999] FCA 1156; 165 ALR 680 Kakavas v Crown Melbourne Ltd [2013] HCA 25; 87 ALJR 708 PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446 Tambree v Travel Compensation Fund [2004] NSWCA 24; Aust Contract Reports 90-195 Vadasz v Pioneer Concrete (SA) Pty Ltd [1995] HCA 14; 184 CLR 102 Vu v New South Wales Crime Commission [2013] NSWCA 282 Wigan v Edwards (1973) 47 ALJR 586 Category: Principal judgment Parties: Fiona Marie-Therese Donnelly (Appellant) Australia and New Zealand Banking Group Ltd (First Respondent) ANZ Asia Ltd (Second Respondent) Representation: Counsel: K J Ryan (Appellant) A J McInerney SC/C Ensor (Respondents) Solicitors: Appellant (Self-represented) Gadens Lawyers (Respondents) File Number(s): CA 2013/372887 Decision under appeal Jurisdiction: 9111 Citation: Australia and New Zealand Banking Group Ltd v Donnelly [2013] NSWSC 1760 Date of Decision: 2013-11-29 00:00:00 Before: Stevenson J File Number(s): SC 2011/305340 HEADNOTE [This Headnote is not to be read as part of the judgment] In 2008 Mrs Donnelly, the appellant, was living in Macau with her then husband and their four children. In August 2008 the Donnellys drew down HK$4,105,056.00 (the equivalent of A$600,000) under a "Dual Currency Residential Property Loan Facility" granted to them in June 2008 by ANZ Asia Ltd, the second respondent ("the Bank"). The Donnellys' liability under the Facility was secured over a property in Sydney, and the loan refinanced existing debt secured on the property. Under Clause 18 of the Loan Facility (the "Clawback Condition"), the Bank was entitled to convert the loan from Hong Kong Dollars to Australian Dollars in the event that fluctuations in the exchange rate caused the Donnellys' liability, when expressed in Australian Dollars, to exceed 85% of the assessed value of the security property (the "Loan to Value Ratio" or "LVR"). Shortly after drawdown the Australian Dollar fell sharply against the Hong Kong Dollar, adversely affecting the LVR. Following extensive negotiations with Mrs Donnelly, in December 2008 the Bank exercised its right under the Clawback Condition to convert the loan currency to AUD. The Donnellys' indebtedness then became approximately A$730,000. In May 2011 the Bank assigned its rights under the Facility to Australia and New Zealand Banking Group Ltd, the first respondent, which commenced proceedings against the Donnellys for possession of the secured property and judgment for their indebtedness under the Facility. The second respondent was subsequently joined as a plaintiff. Mr Donnelly did not defend the proceedings, and the first respondent obtained default judgment for debt and possession against him in December 2011. At a hearing in November 2013 before Stevenson J sitting in the Common Law Division, Mrs Donnelly defended the proceedings on two bases: first, that the Bank had engaged in unconscionable conduct, principally by failing to inform her that a deterioration in the value of the AUD against the HKD would adversely affect the Donnellys' interests under the Facility; and secondly, that the Bank had breached an agreement allegedly made between the Donnellys and the Bank in November 2008 to negotiate a twelve month repayment plan for the excess LVR, in consideration of the Donnellys paying US$20,000 to the Bank. While the Facility Agreement was expressly governed by the laws of Hong Kong, it was common ground that the law of the forum should be applied given the absence of any evidence as to the content of the laws of Hong Kong. By judgment of 29 November 2013, Stevenson J rejected Mrs Donnelly's defences and upheld the first respondent's entitlement to the relief sought. He later directed judgment for the first respondent against Mrs Donnelly in the sum of $879,685.55 and made orders for possession of the secured property and costs. Held (dismissing the appeal): (1) The appellant did not establish that the Bank acted unconscionably by failing to inform her of the risk of loss if the AUD depreciated against the HKD, as the Bank did take reasonable steps to do this ([106]). (2) The primary judge's finding that an explanation of the effect of exchange rate movements was given to the Donnellys by Mr Stuart of the Bank along the lines of a foreign exchange analysis prior to their entry into the Loan Facility was a credibility-based finding. The appellant failed to demonstrate that it was contrary to incontrovertible facts or uncontested testimony, or was "glaringly improbable" or "contrary to compelling inferences" ([44]). Further, this finding indicates that Mr Stuart had good reason to believe that Mrs Donnelly understood the nature of the Facility ([99]). (3) The Bank's alleged failure to recommend that Mrs Donnelly obtain legal advice was not unconscionable in the circumstances of the case. The primary judge found Mrs Donnelly to be an intelligent and articulate woman, and it was her choice not to seek legal advice from lawyers in her family or a solicitor then acting for the Donnellys on another transaction ([90]). Nor did the primary judge err in finding that Mrs Donnelly was not in a position of special disadvantage ([104]). (4) The appellant did not demonstrate any other basis for a finding of unconscionable conduct on the part of the Bank ([78]-[80], [88], [100]-[103]). (5) There is no basis for overturning the primary judge's finding that there was no agreement between the Donnellys and the Bank to negotiate a twelve month repayment plan for the excess LVR ([81]-[82]), the appellant having contended that this agreement was inconsistent with the Bank's conversion of the loan indebtedness to AUD. The appellant failed to satisfy the conditions for a successful challenge to the primary judge's credibility-based finding rejecting her evidence concerning that agreement ([81]). Judgment 1McCOLL JA: I agree with Macfarlan JA's reasons and the order his Honour proposes. I also agree with Leeming JA's reasons. 2MACFARLAN JA: On or about 22 August 2008 the appellant, Mrs Fiona Donnelly, and her husband drew down HK$4,105,056.00 (the equivalent of A$600,000) under an "Expat Mortgage Loan Facility" granted to them on 12 June 2008 by the second respondent, ANZ Asia Ltd ("the Bank"). The Donnellys' liability under the Facility was secured over a property at Bardwell Valley in Sydney. The loan refinanced existing debt secured on the property. Under the Facility, the Bank was entitled under a "Clawback Condition" to convert the currency of the Donnellys' liability from Hong Kong Dollars to Australian Dollars in the event that, as a result of exchange rate changes, their liability, when expressed in Australian Dollars, exceeded 85% of the assessed value of the security property (the "Loan to Value Ratio": the "LVR"). 3Soon after drawdown the Australian Dollar depreciated sharply against the Hong Kong Dollar. After extensive negotiations with Mrs Donnelly, the Bank, on or about 18 December 2008, exercised its right under the Clawback Condition, with the result that the Donnellys' indebtedness became an amount of approximately A$730,000. 4Following an assignment by the Bank to the first respondent, Australia and New Zealand Banking Group Ltd, of its rights under the Facility, the first respondent commenced the present proceedings against the Donnellys for possession of the secured property and judgment for their indebtedness under the Facility. The second respondent was subsequently joined as a plaintiff, presumably because of a challenge (not now pursued) to the efficacy of the assignment. The first respondent later obtained default judgment against Mr Donnelly. 5At a hearing in November 2013 before Stevenson J sitting in the Common Law Division, Mrs Donnelly defended the proceedings against her on the basis that the Bank had engaged in conduct that was unconscionable under equitable principles and had breached an agreement made in November 2008 in the course of negotiations between the Donnellys and the Bank. Mrs Donnelly had previously withdrawn a cross-claim alleging misleading or deceptive conduct by the Bank and asserting a claim under the Contracts Review Act 1980 (NSW). The principal basis for the assertion of unconscionable conduct was that the Bank had failed to inform Mrs Donnelly that a deterioration in the value of the Australian Dollar against the Hong Kong Dollar would adversely affect her interests under the Loan Facility. Although the Loan Facility provided that it was governed by the laws of Hong Kong, the parties agreed that the law of the forum should be applied in the absence, as was the case, of any evidence as to the content of the laws of Hong Kong. 6By a judgment of 29 November 2013 Stevenson J rejected Mrs Donnelly's defences ([2013] NSWSC 1760). He later directed entry of judgment for the first respondent against Mrs Donnelly in the sum of $879,685.55 and made orders for possession of the secured property and as to costs. 7For reasons that appear below, I consider that Mrs Donnelly's appeal against that judgment should be dismissed with costs. FACTUAL CIRCUMSTANCES 8In April 2008 Mr and Mrs Donnelly were expatriate Australians living in Macau. In response to an inquiry of him by Mr Donnelly, Mr Nicholas Stuart of the Bank sent an email on 7 April 2008 which included the following: "In regards to the refinance of your properties in Australia, we are able to offer you our Expat Mortgage loan facility, or multi currency loan, in either AUD or HKD. In regards to your new purchase in Macau, we cannot take security over Macau property and you would need to approach a local lender who can assist you with this service. The benefits of a multi currency loan include both interest savings & possible currency gains although it is important to be cautious & informed as movements in exchange rates can be both rapid and severe, whereas the security for the loan, your property, is generally stable and not easily disposable. In order to gain a better understanding of ANZ's Expat Mortgage facility I am happy to meet with you to discuss the product in more detail. At the meeting I will provide you with a clear working example on how the facility operates along with demonstrating strategies that can assist you in managing / reducing the risks. The strategies will allow you to react to any shifts in currency movements by providing you with the ability to choose desirable entry / exit points. The attached documents include an application form, a list of the required supporting documents & a product information sheet that includes today's interest rates for HKD & AUD" (emphasis added). 9Mr Donnelly forwarded Mr Stuart's email to Mrs Donnelly who gave evidence that she read its presently relevant paragraphs when she received it (Judgment [65]). The 13 May 2008 meeting 10On or about 13 May 2008 the Donnellys met with Mr Stuart in Macau. There was conflicting evidence as to what occurred at the meeting. 11Mr Stuart exhibited to his affidavit of 16 May 2013 a form of foreign exchange analysis ("FX Analysis") completed by him in respect of other clients but which he said was substantially the same as an FX Analysis that he completed in the presence of the Donnellys at the 13 May meeting. He said that it was his practice to complete an FX Analysis at every meeting with prospective loan applicants and to provide "a written and visual demonstration in front of the prospective loan applicants [of] the potential interest savings as well as how foreign exchange movements had a direct impact on the expat mortgage facility and risks associated with the foreign exchange movements" ([18]). He then described how he "populated" the form when meeting with loan applicants. 12In relation to the meeting with the Donnellys, he said: "To the best of my recollection, I took the template FX Analysis to my first meeting with Mr and Mrs Donnelly and completed the hypothetical scenarios in the FX Analysis during the meeting by inserting the loan and property value amounts, exchange rates, interest rates and performing the calculations in each section of the FX Analysis during the meeting. I did so using a calculator and inserting the results into the FX Analysis in writing by hand during the meeting" ([45]). He said also that he left the FX Analysis with the Donnellys at the conclusion of the meeting ([46]) but the primary judge concluded that that did not in fact occur (Judgment [97]). 13The form of FX Analysis exhibited to Mr Stuart's affidavit provided for the calculation of the applicants' savings in interest as a result of borrowing in HK Dollars rather than Australian Dollars. Interest rates applicable to borrowings in HK Dollars were far lower than those applicable to Australian Dollar borrowings. The FX Analysis then provided for a calculation of the effect on a borrowing in HK Dollars of different movements in the exchange rate, "Scenario 1" dealing with an appreciation of the Australian Dollar against the Hong Kong Dollar and "Scenario 2" dealing with the converse. Scenario 2 understandably showed an increase in the Australian Dollar equivalent of the HK Dollar principal. Under a heading "Loan to Value Ratio", three benchmarks were referred to. The original LVR was shown as 75%, and that where additional security or a cash top-up might be requested (that is, a "Call" made) shown as 80%. The third was stated as follows: "Close-out: 85% - the loan will be automatically converted back to AUD and additional security/cash top up will be required to bring the LVR back to 80%". 14Illustrations were then given of the impact of currency changes on the LVR, including ones which would entitle the Bank to make a Call. 15Finally, under a heading "Strategies to Reduce Risk", five possible courses of action, including "Forward Exchange Contracts", were mentioned. The FX Analysis comprised only two pages and was set out in a readily comprehensible form. Mr Stuart's evidence was that at the meeting with the Donnellys, he populated a form of this type with figures pertinent to the Donnellys' proposed borrowing. 16Prior to Mr Stuart giving oral evidence on 12 November 2013, the Bank's counsel read, ultimately without objection (Transcript p 124), an undated affidavit that Mr Stuart had sworn responding to evidence given by Mrs Donnelly the previous day. 17The affidavit included the following paragraph concerning the 13 May meeting: "35. I say that, during my meeting with Mr and Mrs Donnelly at the Crown Casino in Macau, I took Mr and Mrs Donnelly through the FX Analysis tool whilst explaining the features of the expat mortgage facility to them. In doing so, I informed Mr and Mrs Donnelly in substance that if they chose to borrow in HKD: (a) The loan principal balance would reduce if the AUD appreciates against HKD; (b) The loan principal balance would increase if the AUD depreciates against HKD; (c) The LVR would change in the event of currency fluctuations impacting (a) and (b) above; (d) If the AUD depreciates against HKD, then the LVR could exceed the maximum allowable limit of 75%; (e) If the LVR reaches 80%, the bank can request extra security in the form of cash, cash security or property security to reduce the LVR back to 75%; (f) If the LVR reaches 85%, the bank is within its rights to convert the loan back to AUD at its absolute discretion and then request the LVR be reduced to 75% via extra security in the form of cash, cash security or property security; (g) There were five strategies to reduce risk of the exchange rate exposure as listed in the FX Analysis document (a template of which is at page 3B of [Exhibit] NS 1) including reduction of the loan balance and currency switching". 18Mr Donnelly did not give evidence in the proceedings. 19In an affidavit dated 5 September 2013, Mrs Donnelly denied that Mr Stuart had discussed "the issue of risk at all" but in oral evidence she said the following in relation to the 13 May meeting: "A. ... Mr Stuart, mentioned other Australian ex pats that were living in Macau that were customers of his, and then we turned to the issue of borrowing from ANZ and we told Mr Stuart that we were interested in refinancing our Sydney home and also purchasing a unit in Potts Point because our oldest daughter had begun school there and she was only 13 and I wanted to spend some time with her. And so then Mr Stuart asked us some questions about our home in Sydney; how much it was worth. We told him it was worth about $950,000. He asked us what interest rate we were paying, who we were with; we were with - NAB was the answer, and we told him the interest rate; I can't exactly remember what it was but somewhere around 7%, and then he told us that the interest rate in Hong Kong was really low, I can't remember exactly what he said but it was about two and a half percent or so. And then he did some calculations and he - first of all he told us what sort of funds we could borrow, which was around 750,000, and then he did some calculations and he wrote some things down on some paper and told us that we could save a lot of interest by borrowing in Hong Kong. And he did a calculation and it was a really big amount; it was something like $40,000 a year. And then-- Q. Are those calculations based on some hypothetical figure or based upon what you told him you and your husband had borrowed from the NAB? A. No, this was - well, I suppose this was based on the borrowing, the equivalent through ANZ in Hong Kong, I suppose, to come up with that sort of figure, I assume. He was punching in the numbers and telling us so I assume that that's how he calculated it. Q. Punching in the numbers to what? A. He had a calculator. So he came up with this fantastic interest saving and then he did some other calculations showing us how we could make currency gains; he was talking about the rising Australian dollar and he was saying - well, he showed us a brochure; it was certainly an ANZ glossy brochure and it backed up what he was saying; that the Australian dollar was going to skyrocket, he said. And he said that he'd be able to make currency gains, he did some further calculations showing how we could reduce our loan balance, and these were big amounts that he was coming out with. And he was saying that you can borrow in Australian dollars or Hong Kong dollars but he was recommending to us to borrow in Hong Kong dollars because we would make these savings. And I suppose that was the general topic of the conversation at the meeting." (emphasis added by primary judge at [76]) The Loan Facility 20A form of "ACCEPTANCE BY THE BORROWER(S)" at the end of the Bank's Facility Letter of 9 June 2008 was signed by the Donnellys on 12 June 2008 in Mr Stuart's presence. On three pages of the Letter, including at the foot of the first page, is a prominent box containing the following information: "Risk Disclosure Statement The fluctuations in foreign currencies and the values relative to each other will have an impact on the repayment of the Facility. It will also have an impact on the value of the investments or assets of the Borrower and/or Security Provider for which this Facility is taken. The Borrower and/or Security Provider are requested to consider such risks carefully and seek independent advice." 21The Clawback Condition is contained in Clause 18 of the letter and the Donnellys' signed Acceptance includes a statement (on the same page as that which Mrs Donnelly signed) that they: "(d) acknowledge that I am / we are aware of the exchange risk inherent in the use of the Facility and that I / we have or will take whatever advice I / we may consider necessary to ensure we understand the potential consequences to me / us of that exchange risk. I have not relied upon any advice or opinion provided or advised by the Bank in regard to this specific transaction". 22On 11 June 2008 Mrs Donnelly had received by email from her husband a copy of the form of Facility Letter, in the same form as that which she signed the next day but without the Bank letterhead and without a small print statement at the foot of the first page stating the separateness of the second respondent from the first respondent (see [68] - [69] below in relation to Ground 3C). The primary judge found that Mrs Donnelly "scanned" the first, second and part of the third page of the Facility Letter and his Honour recorded that Mrs Donnelly said in evidence that she "definitely [scanned] the first page" of it and "got the information out of the first page" (Judgment [106]). 23Subject to what is mentioned in [74] - [77] below in relation to Ground 3E, neither Mrs Donnelly nor Mr Stuart suggested that Mr Stuart gave any explanation of the transaction or of the documents at the meeting on 12 June 2008, although they did agree that he asked whether the Donnellys had any questions, to which they responded that they did not. Drawdown of the loan 24By email of 20 August 2008, Ms Sarangdhar, Mr Stuart's assistant, asked Mrs Donnelly to let her know in which currency she wished the drawdown to occur. Mrs Donnelly replied that "We would like to draw down in Australian dollars". After Ms Sarangdhar pointed out that in that case the Donnellys would be subject to interest rates referable to Australian Dollar borrowings, Mrs Donnelly gave instructions for the loan to be drawn down in Hong Kong Dollars, which then occurred. EVENTS AFTER DRAWDOWN 25Following a significant deterioration in the value of the Australian Dollar against the HK Dollar soon after drawdown, the Bank required the Donnellys to take steps to return their Loan to Value Ratio to the approved limit of 75%. As a result, a number of communications occurred concerning reduction of the loan or the provision of additional security. Details of the communications are to be found in [137] and following of the primary judgment. It is sufficient to note that in his emails of 20 and 24 October 2008, Mr Stuart referred to the Bank's ability to convert the loan indebtedness to Australian Dollars and that in none of the communications did Mrs Donnelly, who conducted the communications on behalf of the borrowers, assert that she had been unaware that a weakening of the Australian Dollar would lead to an increase in the Australian Dollar equivalent of the loan indebtedness, or that she was unaware that the Bank was entitled in certain circumstances to convert the loan indebtedness to Australian Dollars. The alleged agreement 26Mrs Donnelly's claim that the Bank entered into a binding agreement not to convert the loan indebtedness to Australian Dollars was based on the following affidavit evidence that she gave: "We went to Hong Kong on the same day [10 November 2008] and met Mr Stuart at his office at about 5.30pm and immediately I said to him 'we definitely want to leave the loan in Hong Kong dollars. We'll be destroyed if we move it to Australian dollars because we have four kids' and Jason said 'I can pay you USD$20,000 immediately and the rest over 12 months'. Mr Stuart agreed to this and within a few days, Jason deposited USD$20,000" (emphasis added by primary judge) (Judgment [157]). "On 4/12/08 I phoned Mr Stuart and I said to him words to the effect 'I will not agree to converting the loan to AUD because I chose HKD on your advice that I could choose the loan currency at all times and I am not agreeing to a conversion now.' I also said to him words to the effect 'You agreed with us on 10/11/08 when we spoke to you in Hong Kong that if we paid you USD$20,000 you would agree to a plan over the next 12 months to pay the rest of the money and we have paid that money to you so why are you still talking conversion to AUD?' He replied with words to the effect 'your payment of USD$20,000 has been received and that looks good. I don't know what has happened to the payment plan but I'll find out and let you know'" (emphasis added by primary judge) (Judgment [171]). Conversion of the loan indebtedness to Australian Dollars 27The Bank exercised its right of conversion on or about 18 December 2008. THE JUDGMENT AT FIRST INSTANCE The unconscionability alleged 28The primary judge identified the following as the matters that Mrs Donnelly relied upon to constitute unconscionability: "(a) the Facility documents (comprising a 'Facility Letter' and the Bank's 'Standard Terms and Conditions') were signed at the 'urging and direction' of Mr Nicholas Stuart, the person at the Bank with whom Mr and Mrs Donnelly dealt; (b) the 'risks inherent' in the Facility were 'not addressed or explained' by Mr Stuart, particularly in respect of any impact there might be on the LVR 'as a result of deterioration by the AUD as against the HKD'; (c) 'no independent financial or legal advice was offered or able to be accessed' before the signing of the Facility; (d) an indemnity that Mrs Donnelly signed was not the subject of any 'explanation as to its meaning or relevance'; (e) Mr Stuart 'misrepresented' to Mrs Donnelly that the HKD currency of the loan could only be changed at her request or with her consent and did not inform her that the Facility Letter 'which she was directed to sign contained a power to the lender to unilaterally convert the currency to AUD in the event that the LVR exceeded 75% and additional security was not made available' by Mrs Donnelly" (Judgment [24]). The meeting of 13 May 2008 29The primary judge considered that Mrs Donnelly's description of the meeting was, to a certain extent, consistent with Mr Stuart's evidence as to his usual practice, due to Mrs Donnelly's references to Mr Stuart "performing calculations, 'punching' numbers into his calculator and writing things on 'some paper', [and giving] some kind of explanation to Mr and Mrs Donnelly about the manner in which the proposed facility would operate" (Judgment [91] and [19] above). He also noted that Mr Stuart had said in his email of 7 April 2008 that at their meeting he would provide the Donnellys with a "clear working example [of] how the facility operates" (Judgment [92] and [8] above). 30His Honour concluded that at the meeting Mr Stuart "gave an explanation, along the lines of the FX Analysis template, of the manner in which the Facility would operate" and that he "said something to the effect that if the LVR exceeded 85 per cent, the Bank could convert the loan to AUD" (Judgment [98] - [99]). However his Honour found, contrary to Mr Stuart's evidence, that Mr Stuart probably did say something to Mr and Mrs Donnelly to the effect that the AUD would "skyrocket" and did not leave a copy of the FX Analysis with the Donnellys (Judgment [96] - [97]). 31The primary judge said that he was fortified in coming to his conclusions concerning Mr Stuart's explanations to the Donnellys by the absence of any protest by Mrs Donnelly, in her post-drawdown communications with the Bank, to references in there by the Bank to its entitlement to convert the loan indebtedness to Australian Dollars (Judgment [100] and [149]). Mrs Donnelly's understanding of the Facility 32The primary judge was satisfied that when Mrs Donnelly signed the Facility Letter she "wanted the power to be able to convert the currency back to AUD if, at that point in time, it suited her to do so in order to achieve currency gains" (Judgment [121]), that she knew that if the Australian Dollar appreciated against the Hong Kong Dollar she and her husband would gain, because the amount they owed expressed in Australian Dollars would reduce, and that "she must have been able to appreciate, had she turned her mind to it, that the opposite would be the case if the AUD depreciated against the HKD" (Judgment [123]). 33Although the primary judge described Mrs Donnelly as "an intelligent, articulate woman", he was not prepared to disbelieve her evidence that she did not know that if the Australian Dollar declined in value, she and her husband would suffer loss (Judgment [125] and [126]). He added: "I thus accept she had an imperfect understanding of the Facility and that whatever Mr Stuart said to her at the Macau meeting [of 13 May] had not been sufficient to prevent this result" (Judgment [126]). The alleged November agreement 34The primary judge rejected, on a number of bases, Mrs Donnelly's contention that the Bank's conversion of the loan indebtedness to Australian Dollars conflicted with an agreement made between the Donnellys and Mr Stuart on 10 November 2008. 35First, his Honour rejected Mrs Donnelly's evidence about the conversation (see [26] above), holding that Mr Stuart had previously made it clear that such a decision was not his to make and that the alleged agreement was inconsistent with a diary note of Mr Stuart which indicated that Mr Donnelly did not consider that any such agreement had been reached (Judgment [173] - [174]). 36Secondly, his Honour found that Mrs Donnelly's evidence of the alleged agreement was inconsistent with her evidence of a meeting with Mr Stuart on 9 December 2008 in which she recorded Mr Stuart as saying "you can go ahead and put in your proposal and we'll deal with that as we go along" (Judgment [177] - [178]). Unconscionable conduct 37Having referred to relevant case authority, the primary judge concluded that the Bank had not acted unconscionably. 38His Honour found that Mrs Donnelly was not relevantly in a position of special disadvantage and concluded as to the particular matters upon which Mrs Donnelly relied (see [28] above): "(1) I do not accept that Mrs Donnelly signed the Facility Letter at the 'urging or direction' of Mr Stuart, although I do accept that Mr Stuart told her (as the Bank's 'in house economist team' evidently believed) that the AUD would 'skyrocket' and 'shoot past parity before the end of the year'; (2) I do not accept that the 'risks inherent' in the Facility were not 'addressed or explained' to Mrs Donnelly, although I do accept that such explanation as Mr Stuart gave as to how the Facility would operate in the event of currency fluctuations did not bring home to Mrs Donnelly the full implications of foreign currency borrowing; (3) I do not accept that independent legal advice was not available; Mrs Donnelly could have sought advice from her father, Mr Ryan, or her brother, the solicitor Mr Stephen Ryan, or Mr O'Brien, the solicitor acting for her in relation to the Potts Point purchase (to be funded in part from the advance under the Facility) at the time she signed the Facility Letter; (4) the Risk Disclosure Statement contained a request that Mr and Mrs Donnelly seek independent advice, although Mr Stuart did not suggest he said anything to that effect to Mrs Donnelly; (5) I do not accept that Mr Stuart either misrepresented to Mrs Donnelly that the currency of the Facility could only be changed with her consent or failed to warn her that the Bank could unilaterally convert the Facility to AUD if the LVR exceeded 85 per cent" (Judgment [197]). 39His Honour concluded that even if, contrary to his view, Mrs Donnelly had been in a position of special disadvantage, the Bank did not know, nor should it reasonably have known, of that position of disadvantage and that Mr Stuart was not cross-examined in relation to his state of mind at the time the Donnellys signed the Facility Letter on 12 June 2008. His Honour observed that he had not been referred to any evidence which would justify a conclusion that Mr Stuart knew, or should reasonably have known, that Mrs Donnelly did not understand the nature of the Facility (Judgment [200] and [201]). THE MEANING OF "UNCONSCIONABILITY" 40This case does not call for a review of the law relating to unconscionability as developed by courts of equity. For reasons appearing below, the Bank's conduct in this case was in my view clearly not unconscionable in accordance with accepted principles of equity. 41It is sufficient to refer to the following recent statements of principle by the High Court in Kakavas v Crown Melbourne Ltd [2013] HCA 25; 87 ALJR 708 at [20], [117] and [161]: "... equitable intervention does not relieve a plaintiff from the consequences of improvident transactions conducted in the ordinary and undistinguished course of a lawful business. A plaintiff who voluntarily engages in risky business has never been able to call upon equitable principles to be redeemed from the coming home of risks inherent in the business. The plaintiff must be able to point to conduct on the part of the defendant, beyond the ordinary conduct of the business, which makes it just to require the defendant to restore the plaintiff to his or her previous position." "The absence of a reasonable equality of bargaining power by reason of the special disability of one party to a transaction, while not decisive, is important given that the concern which engages the principle [to relieve against an unconscionable dealing] is to prevent victimisation of the weaker party by the stronger." "Equitable intervention to deprive a party of the benefit of its bargain on the basis that it was procured by unfair exploitation of the weakness of the other party requires proof of a predatory state of mind. Heedlessness of, or indifference to, the best interests of the other party is not sufficient for this purpose. The principle is not engaged by mere inadvertence, or even indifference, to the circumstances of the other party to an arm's length commercial transaction. Inadvertence, or indifference, falls short of the victimisation or exploitation with which the principle is concerned." See also the decision of this Court in PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446 at [93] - [106]. ISSUES ON APPEAL 42Mrs Donnelly's Notice of Appeal contained 17 appeal grounds. These were supplemented by an amendment made, with leave, at the hearing of the appeal. This added Grounds 3A to E. 43It is convenient to resolve the appeal by addressing Mrs Donnelly's grounds of appeal seriatim. GROUND 1: NO EXPLANATION TO THE EFFECT OF THE FX ANALYSIS WAS GIVEN AT THE MEETING OF 13 MAY 44The primary judge's finding that such an explanation was in fact given was a credibility-based finding resolving a conflict between the evidence of Mrs Donnelly and Mr Stuart. To successfully challenge that finding it was accordingly necessary for Mrs Donnelly to demonstrate on appeal that the finding was contrary to incontrovertible facts or uncontested testimony, or was "glaringly improbable" or "contrary to compelling inferences" (Fox v Percy [2003] HCA 22; 214 CLR 118 at [28] - [29]). In my view, she did not succeed in doing this. 45Mrs Donnelly first submitted (in the ground of appeal itself) that the finding was not supported by Mr Stuart's evidence. However, it plainly is (see [12] and [17] above). 46She further submitted (again in the ground of appeal) that the finding was inconsistent with the further finding that Mr Stuart did not leave the FX Analysis with the Donnellys at the conclusion of the meeting "which finding seriously [a]ffects the credibility of Mr Stuart's evidence". 47I do not agree. The primary judge did not have to elect between accepting or rejecting the whole of Mr Stuart's evidence. He was entitled to accept some and reject other evidence where there was a rational reason to do so. His Honour found Mrs Donnelly's evidence that Mr Stuart did not leave the "paper" on which he was writing convincing. It was contradicted only by evidence of Mr Stuart that his Honour considered was based only on Mr Stuart's usual practice rather than his actual recollection. The position was otherwise in relation to Mr Stuart's evidence that he had stepped through the FX Analysis with the Donnellys. That evidence appears to have been based in part on recollection and in part on practice, and was to some extent supported by the terms of his email of 7 April (see [8] above) and by Mrs Donnelly's own evidence of the meeting (see [19] above). GROUND 2: BANK'S RIGHT OF CONVERSION NOT REFERRED TO AT 13 MAY MEETING 48Mrs Donnelly submitted first that the finding that Mr Stuart referred at the 13 May meeting to the Bank's right to convert the loan indebtedness to AUD if the LVR exceeded 85% was based upon [35] of the affidavit Mr Stuart swore immediately before giving evidence (as to which see [17] above). 49However, the finding was not based solely upon that paragraph. The finding is also supported by the evidence in Mr Stuart's first affidavit, first, that his practice was to take potential loan applicants through the FX Analysis, and, secondly, that he did in fact do so at the meeting with Mr and Mrs Donnelly ([17] - [39] and [44] - [45]). As pointed out above, this evidence was also supported to some extent by the contents of the email of 7 April and by Mrs Donnelly's own evidence of the meeting. The terms of the FX Analysis form provide further support as to the topics that would have been discussed if, as Mr Stuart said, he took the Donnellys through the form of FX Analysis and populated it in their presence with figures referable to their proposed borrowing. 50Mrs Donnelly further submitted (by the terms of the ground of appeal itself) that paragraph 35 of Mr Stuart's affidavit referred to above was "effectively a submission by the Plaintiffs and was inadmissible as affidavit evidence on which to base [the relevant] finding". 51However, the paragraph was admitted into evidence, ultimately, without objection and there was in any event nothing objectionable about it. 52In his first affidavit, Mr Stuart gave evidence that was based in part upon his practice but he was in that affidavit (for example in [45], as in [35] of his fourth affidavit) able to make affirmative statements as to what occurred. Even if, which appears not to have been the case, Mr Stuart's evidence was wholly based on his practice, it would not thereby have been rendered inadmissible, although of course its reliability would have been open to be questioned in cross-examination. It is common in everyday life, and permissible in evidence, to rely upon one's practice to assert that something did or did not occur at a particular point of time in the past. For example, drivers in Australia would rarely have an actual recollection of the side of the road upon which they drove on a particular day but their practice would usually enable them to say with some assurance that (unless turning or overtaking) they drove on the left hand side. 53As Jacobs JA said in Connor v Blacktown District Hospital [1971] 1 NSWLR 713 at 716: "The particular rule is that I can give evidence of what I did on a particular day, even though I have no distinct recollection of the particular day, if it was part of my practice to do the act regularly". See also Vu v New South Wales Crime Commission [2013] NSWCA 282 at [92] and Tambree v Travel Compensation Fund [2004] NSWCA 24; Aust Contract Reports 90-195 at [98] (reversed on other grounds at [2005] HCA 69; 224 CLR 627). 54This ground of appeal should accordingly be rejected. GROUND 3: MR STUART'S 7 APRIL EMAIL AND THE RISK DISCLOSURE STATEMENT IN THE FACILITY LETTER 55Mrs Donnelly challenged the primary judge's findings that Mrs Donnelly saw the risk warning in Mr Stuart's email of 7 April ([8] above and Judgment [195]) and must have seen at least one of the Risk Disclosure Statements in the Facility Letter (see [20] and [22] above and Judgment [110]). 56Mrs Donnelly submitted (by the terms of the ground of appeal) that these findings were "not supported by the evidence of Mr Stuart". This is not a sensible submission as the findings were not dependent upon Mr Stuart's evidence but on Mrs Donnelly's own evidence, first, that she read the 7 April email (see [9] above) and, secondly, that she "scanned" relevant parts of the Facility Letter in which the Risk Disclosure Statements prominently appeared (see [22] above). 57Mrs Donnelly also submitted that "she was unable to read effectively on the [computer] screen" the draft Facility Letter forwarded to her on 11 June and signed by her and Mr Donnelly the following day. However, as just noted, she conceded that she had scanned relevant parts of the Facility Letter before signing it. It was her choice not to read it more carefully. 58Mrs Donnelly further submitted that knowledge of the contents of the 7 April email and the Risk Disclosure Statements would not in any event have conveyed relevant information to her because they would not have apprised her of the nature of the risk referred to in them (written submissions, [126]). However, Mrs Donnelly was well aware of the prospect that she and her husband would make gains if the AUD appreciated against the HKD. Both the 7 April email and the Risk Disclosure Statements clearly communicated the obvious corollary, that currency movements, if adverse, could also result in loss to them. GROUND 3A: THE CLAWBACK CONDITION AND THE ACKNOWLEDGEMENTS IN THE FACILITY LETTER 59In support of this ground Mrs Donnelly submitted that the Bank acted unfairly in having her sign the borrowers' acceptance on the Facility Letter when she was unaware of the Clawback Condition in Clause 18 of the Letter and of the acknowledgements contained in the acceptance (see [21] above). 60However Mr Stuart had provided the form of the documents to Mr Donnelly on 10 June and they had been passed on to Mrs Donnelly on 11 June. At the meeting on 12 June, Mr Stuart asked the Donnellys whether they had any questions about the documents. They indicated that they did not and proceeded to sign them. Moreover the subject matter of the Clawback Condition had, on the primary judge's findings, been explained to the Donnellys at the meeting on 13 May and Mrs Donnelly had been apprised of the existence of exchange risks at that meeting, by Mr Stuart's email of 7 April and by her "scanning" of parts of the Facility Letter which included prominent Risk Disclosure Statements. 61So far as advice was concerned, Mrs Donnelly had access to her husband, who was apparently an experienced businessman, and, as the primary judge held, she had the opportunity, if she had wished to take it, to seek advice from her father (who is an experienced barrister), her brother (who is a solicitor) or the solicitor who was acting for the Donnellys on their purchase of a home unit in Sydney (Judgment [111]). 62In light of these circumstances, I do not consider that the matters put in support of this ground of appeal demonstrate any unconscionable conduct on the part of the Bank. GROUND 3B: WHETHER NON-DISCLOSURE AT THE TIME OF DRAWDOWN 63By the terms of this ground of appeal, Mrs Donnelly submitted that, following her instructions to the Bank on 20 August "to change the loan currency to AUD", she was "persuaded by a clerical employee (copied to Nicholas Stuart) to retain the loan currency in HKD". She submitted that she should at that time have been informed of the Bank's power "to unilaterally convert the loan currency" and told about the possibility of the Donnellys' protecting their position by entering into Forward Exchange Contracts. 64Mrs Donnelly instructed the Bank to provide the loan in AUD by email of 20 August (see [24] above). She did not suggest in her evidence that this instruction was a mistake on her part or arose out of forgetfulness that the previous discussions with the Bank had contemplated that the drawdown would be in HKD so that a very much lower rate of interest would be applicable than if the borrowing were in AUD. Indeed, on appeal her counsel submitted that the inference to be drawn from the email was that Mrs Donnelly knew of a limited fall that had occurred in the value of the AUD against the HKD since the 13 May meeting with the Bank. The further inference would follow that Mrs Donnelly made a considered decision that, in light of this information, the drawdown should be in AUD. It is difficult to understand how in these circumstances Mrs Donnelly's instruction of 20 August did not indicate awareness on her part that depreciation of the AUD against the HKD would, or at least could, result in loss to herself and her husband. 65However Mrs Donnelly has the benefit of a favourable contrary finding from the primary judge on that topic (see [33] above) and the Bank did not challenge it on appeal. 66In response to Mrs Donnelly's instruction of 20 August, Ms Sarangdhar of the Bank drew Mrs Donnelly's attention to the fact that, if the loan was drawn down in AUD, Australian interest rates would apply. Mrs Donnelly then gave the instruction that the drawdown should be in HKD. This seems to have been an oral instruction as it is not contained in any email in evidence. Mrs Donnelly's submission that she was "persuaded" by Ms Sarangdhar is not supported by this evidence. Ms Sarangdhar simply pointed out an undoubted fact and Mrs Donnelly thought better of her first decision. As Mrs Donnelly said in her oral evidence, "I changed my mind and decided to draw down in Hong Kong dollars" (Transcript p 39). 67So far as the alleged non-disclosure is concerned, Mr Stuart had, on the primary judge's findings which I have found to be unimpeachable, drawn the Donnellys' attention to the two matters in question (the Clawback Condition and Forward Exchange Contracts) at the 13 May meeting (see [30] above). There was therefore no non-disclosure by the Bank and this ground of appeal should be rejected. GROUND 3C: THE INCLUSION OF A DISCLAIMER IN THE FACILITY LETTER 68By this ground of appeal, Mrs Donnelly submitted that the Bank "acted unconscionably in inserting a Disclaimer into the Facility Letter of which the Appellant was unaware, which removed the Facility Letter from the purview of the Australian Prudential Regulation Authority Act [1998]". The "Disclaimer" referred to was a note in small print appearing at the foot of the first page of the Facility Letter as follows: "An investment or facility with ANZ Asia Limited is neither a deposit with nor liability of Australia and New Zealand Banking Group Limited. ANZ Asia Limited is a separate entity from Australia and New Zealand Banking Group Limited and is not an authorised deposit-taking institution under the Banking Act 1959 (Australia)". 69The "Disclaimer" indicated that the financing contract was to be with ANZ Asia Ltd which operated out of Hong Kong (this being otherwise apparent from the Letter) and conveyed the unsurprising proposition that the lender, which was operating out of Hong Kong and lending to Macau residents in Hong Kong currency, was not subject to Australian statutory regulation. Furthermore, nothing in Mrs Donnelly's evidence suggested that she would have attached any significance to the "Disclaimer" or would have acted differently in any respect if she had been aware of it. The point was not taken at first instance and in my view should not in any event be allowed to be put on appeal as the respondents may well have wished to explore in cross-examination of Mrs Donnelly the significance or lack of significance to her of the "Disclaimer". GROUND 3D: WHETHER THE MORTGAGE WAS INVALID 70Mrs Donnelly submitted on appeal that, whilst she had an equitable debt to the Bank calculated on the basis that the loan indebtedness had remained throughout in HKD, the mortgage was invalid as a result of the Bank's unconscionable conduct and Mrs Donnelly's equitable debt was accordingly not secured by it. This differed from Mrs Donnelly's position at first instance where she conceded the Bank's entitlement to possession under the mortgage but contended that there was less owing under the mortgage than the Bank claimed, because the Bank improperly converted the debt to AUD in December 2008 (Defence to Fourth Amended Statement of Claim, [15]; Transcript pp 200 - 201). This position was reflected in the primary judge's statement that Mrs Donnelly did not challenge the mortgage (Judgment [40]). 71I do not consider that Mrs Donnelly should be permitted to depart from this fundamental basis upon which the proceedings were conducted at first instance, particularly when, even on appeal, the point was only raised at a very late stage, with the result that the Court did not receive full assistance from the parties in relation to it. 72In any event, Mrs Donnelly's argument that the mortgage was invalid was founded on the proposition that there was no debt secured by it (see HCK China Investments Ltd v Solar Honest Ltd [1999] FCA 1156; 165 ALR 680 at [258]). However the mortgage here was relevantly an "all monies" mortgage and thus secured the equitable debt which Mrs Donnelly acknowledged. Furthermore, the better view is that the effect of the postulated unconscionability would not be to relieve Mrs Donnelly completely of her debt at law and to avoid the mortgage. Rather, the Court would treat the mortgage as valid and the debt that it secured appropriately reduced (see Vadasz v Pioneer Concrete (SA) Pty Ltd [1995] HCA 14; 184 CLR 102 at 114; First Mortgage Managed Investments Pty Ltd v Pittman [2014] NSWCA 110 at [169] - [171]). 73I note at this point that on appeal Mrs Donnelly did not challenge the primary judge's implicit conclusion that Mrs Donnelly was jointly liable with Mr Donnelly for the whole of the indebtedness under the Loan Facility (see Judgment [39]). As a result, it is unnecessary to address the respondents' Notice of Contention by which they sought to make the reasoning underlying that conclusion explicit. GROUND 3E: WHETHER ORAL COLLATERAL CONTRACT MADE ON 12 JUNE 74Mrs Donnelly gave evidence that prior to the Facility Letter being signed on 12 June 2008, she asked Mr Stuart to confirm that "we can change the currency whenever we want". When he so confirmed, they proceeded to sign. 75Mrs Donnelly submitted on appeal that in the absence of Mr Stuart at that time drawing her attention to the Clawback Condition, an oral collateral agreement displacing it came into existence. 76This submission assumed that Mrs Donnelly had not previously been advised of the Clawback Condition but, on the judge's findings which I have upheld, she had been. As a result, the answer given by the primary judge to this argument must stand: there was no basis for a complaint of non-disclosure on 12 June because the matter had already been discussed on 13 May (Judgment [120]). 77In these circumstances, it is unnecessary to address the respondents' submission that the alleged oral collateral contract fails for inconsistency with the Loan Facility (see Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; 218 CLR 471 at [36]). GROUND 4: THE INDEMNITY SIGNED ON 12 JUNE 78Included in the documents that the Donnellys signed on 12 June was a "General Indemnity" by which they agreed to indemnify the respondents in respect of any loss suffered by them in acting in good faith on instructions received by facsimile. One of the matters that Mrs Donnelly relied upon to establish unconscionable conduct by the Bank was the Bank's failure to give her any explanation of this Indemnity's meaning or relevance (see [28] above). 79The primary judge found that the Indemnity was irrelevant to the issues that were before him, with the result that the absence of such an explanation was of no significance (Judgment [25]). The correctness of this finding appears to have been accepted by Mrs Donnelly on the appeal as she submits that the Indemnity was relevant (and, by inference, relevant only) to the credibility of Mr Stuart and of Mr Maya Lim of the Bank. The credibility of the latter was however not in issue as he did not give oral evidence. Furthermore, Mrs Donnelly did not demonstrate on appeal, by reference to cross-examination of Mr Stuart or otherwise, how any failure by him to draw the Donnellys' attention to the Indemnity impacted on his credit. The submissions went no further than general, unsupported assertions such as that Mr Stuart and Mr Lim "colluded to actively conceal the existence of the Indemnity" and that this revealed "a culture of deceit and untrustworthiness within the sales and marketing program" being conducted by Mr Stuart (written submissions, [81]). 80In light of these circumstances this ground of appeal should be rejected. GROUND 5: THE ALLEGED 10 NOVEMBER AGREEMENT 81Mrs Donnelly submitted at first instance and on appeal that on 10 November, in consideration of the Donnellys paying US$20,000 to the Bank on 18 November 2008, the Bank "agreed to negotiate a twelve months repayment plan for the excess LVR" and that the Bank's conversion of the loan indebtedness to AUD conflicted with that agreement. The submission was based on evidence given by Mrs Donnelly but the primary judge rejected that evidence (Judgment [172]) and Mrs Donnelly did not on appeal demonstrate that the decision to do that was "glaringly improbable", or otherwise satisfied the conditions for a successful challenge to a credit finding stated in Fox v Percy (see [44] above). 82Moreover, Mrs Donnelly provided no reason why this Court should upset the primary judge's finding that Mr Stuart had earlier made it clear to her that such a decision was not his to make (Judgment [173]) and that any agreement that he might have purported to make that the Bank would not exercise the Clawback Condition did not bind the Bank. 83I note that the respondents found it unnecessary to advance other possible reasons for the unenforceability of the alleged agreement, viz, that the only consideration provided by Donnellys was to fulfil partially an existing obligation by paying US$20,000 to the Bank (Wigan v Edwards (1973) 47 ALJR 586 at 594) and that the Bank's promise, being one simply to negotiate, was illusory (Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1). GROUND 6: MRS DONNELLY'S EVIDENCE OF THE 13 MAY MEETING 84In this ground, Mrs Donnelly submitted that the primary judge erred in saying that Mrs Donnelly's evidence of the 13 May meeting was "to a certain extent, consistent with Mr Stuart's evidence" (Judgment [90]). However, it clearly was that because, as his Honour pointed out, some of the matters Mrs Donnelly recalled were consistent with Mr Stuart having performed the FX Analysis that he described, for example her evidence of him "punching" numbers into his calculator and writing things on "some paper" (Judgment [90] and [91]). 85Accordingly, this ground must be rejected. GROUND 7: THE PRODUCT INFORMATION SHEET 86A Product Information Sheet was attached to Mr Stuart's email of 7 April. It did not refer to risks associated with exchange rate movements, but a version prepared some years later did. 87Mrs Donnelly submitted on appeal that the primary judge should have found that the Product Information Sheet given to the Donnellys in 2008 was "misleading and unconscionable". 88However, this ground of appeal must be rejected as there was no necessity for the Product Information Sheet to refer to exchange rate risks if Mr Stuart otherwise apprised the Donnellys of them, as the primary judge held that he did at the meeting on 13 May. GROUND 8: POTENTIAL SOURCES OF ADVICE FOR MRS DONNELLY 89The primary judge found that if Mrs Donnelly had wished to obtain legal advice she had three potential sources of advice (Judgment [111]). Mrs Donnelly submitted on appeal that this finding was "unrealistic and unsupportable" bearing in mind her difficulties in printing out copies of the documents to be signed on 12 June that she received by email on 11 June. 90The fact, as Mrs Donnelly asserted it to be, that the Bank did not recommend that she obtain legal advice did not in the circumstances of this case render the Bank's conduct unconscionable. Mrs Donnelly was, as the primary judge found, an intelligent and articulate woman. Her husband was apparently an experienced businessman. They consulted the Bank for the purpose of obtaining finance which, because it would be provided to them in HKD, would give them a large interest saving and potential capital gains if there were favourable movements in the exchange rate. On the primary judge's findings, Mr Stuart advised them of the risk of loss to them if there was an unfavourable movement in the exchange rate and Mrs Donnelly can have been in no doubt that she would be asked, as she was, to sign "legal documents" to give effect to the borrowing. It was her own decision not to seek legal advice from lawyers in her family or a solicitor who was currently acting for her and her husband on another transaction. In any event, as it transpired, there was nothing in the "legal documents" that she signed that was not in conformity with the communications that the primary judge found that she and her husband had had with the Bank. 91This ground of appeal should be rejected. GROUND 9: WHETHER MR STUART HAD A RELEVANT PRACTICE 92Mrs Donnelly submitted that Mr Stuart's evidence based on his practice should have been rejected, or at least given little weight, because the "Expat Mortgage Loan Facility" programme he was pursuing was only in "an embryonic stage" and he had no records in relation to the 13 May 2008 meeting. 93On appeal, Mrs Donnelly was not able to refer to any evidence to demonstrate that the programme was in fact in an "embryonic stage". In any event a complete answer to this ground of appeal, so far as it relates to Mr Stuart's practice, is that his evidence of his practice and that he conformed to it was admitted without objection and there was no cross-examination of him as to whether he had such a practice and what its content was. 94The absence of records of the meeting was a point that applied both to Mr Stuart and the Donnellys and was an obvious one of which the primary judge was undoubtedly conscious. Mrs Donnelly's reference to it on appeal does not provide any support for a challenge to the primary judge's findings. GROUND 10: THE ABSENCE OF PROTEST BY MRS DONNELLY 95The primary judge said that he was fortified in his conclusions by the failure of Mrs Donnelly to protest when she was informed that the Bank was considering converting the loan indebtedness to AUD (see [31] above). 96Mrs Donnelly submitted by the terms of this ground of appeal that Mr Stuart could not have advised Mrs Donnelly of Clause 18 of the Facility Letter (the Clawback Condition) at the meeting of 13 May because the Facility Letter was not then in existence. However, his Honour's reference in the relevant finding (Judgment [99]) was to Mr Stuart advising at that meeting that if the Loan to Value Ratio exceeded 85%, the Bank could convert the loan to AUD. This reflected the effect of Clause 18 as it later came to be in the Facility Letter and reflected part of the content of the FX Analysis which his Honour found to have been discussed at the meeting. 97Mrs Donnelly further submitted that it was unrealistic to expect her to have made protests to Mr Stuart when he was the only person with whom she had dealt and he was extending offers of help to her. If Mrs Donnelly did not believe that the Bank was entitled to do what it was foreshadowing, an obvious response was for her to inform the Bank of that belief. Neither of the matters to which Mrs Donnelly referred made that option unrealistic. The absence of such protest by her was in my view powerful evidence in support of the primary judge's findings. GROUND 11: WHETHER MR STUART KNEW OF ANY LACK OF UNDERSTANDING ON MRS DONNELLY'S PART 98As noted earlier, the primary judge observed that his attention had not been drawn to any evidence from which he could conclude that Mr Stuart knew or should have reasonably known that Mrs Donnelly did not understand the nature of the Facility. 99On appeal Mrs Donnelly complained about that finding but did not refer to any evidence that indicated that Mr Stuart had that knowledge or that there was a reason why he should have had it. The primary judge's findings as to the explanations given by Mr Stuart at the 13 May meeting indicate that Mr Stuart in fact had good reason to believe that Mrs Donnelly understood the essential elements of the proposed Facility. GROUND 12: THE SIGNING ON 12 JUNE 100Mrs Donnelly submitted that Mr Stuart should have provided explanations of the Facility at the signing meeting on 12 June. However, on the primary judge's findings, these explanations were given at the meeting on 13 May, rendering it unnecessary to repeat them on 12 June. GROUND 13: THE DRAWDOWN ON 22 AUGUST 2008 101The point made by Mrs Donnelly in support of this ground of appeal appears to be that Mr Stuart should have spoken to the Donnellys prior to the drawdown on 22 August 2008 to inform them of, and discuss with them the significance of, a limited deterioration in the value of the AUD against the HKD after the meeting on 12 June and prior to 22 August. 102However, Mrs Donnelly did not give evidence that she was unaware of either the pre-drawdown deterioration or its significance. Indeed, as noted earlier (see [64] above), she contended on appeal that the inference to be drawn from her instruction given on 20 August for the loan to be drawn down in AUD was that she was conscious of that change and thought an AUD drawdown was thus appropriate. Moreover, on the primary judge's findings, the adverse effects on the Donnellys of a depreciation of the AUD in the event that the loan was drawn down in HKD had been fully discussed with the Donnellys at the meeting on 13 May. 103There was in my view no unconscionability in Mr Stuart not contacting the Donnellys as Mrs Donnelly suggested he should have. GROUND 14: WHETHER MRS DONNELLY WAS IN A POSITION OF SPECIAL DISADVANTAGE 104Mrs Donnelly did not demonstrate on appeal that the primary judge erred in finding that she was not in a position of special disadvantage (Judgment [199]). She was, on the judge's findings, an intelligent, articulate woman who was informed by Mr Stuart of the risks to her and her husband of an adverse movement in the exchange rate. GROUND 15: MR STUART'S KNOWLEDGE OF ANY POSITION OF DISADVANTAGE 105This ground challenges the same finding as that challenged in ground 11. It should be rejected for the same reasons. GROUND 16: WHETHER THE BANK ACTED UNCONSCIONABLY 106This ground does not add to those that have been addressed above. Each of those grounds having failed, Mrs Donnelly's challenge to the primary judge's conclusion that the Bank did not act unconscionably cannot succeed. The essence of Mrs Donnelly's complaint was that the Bank failed to inform her of the risk of loss to herself and her husband if the value of the AUD deteriorated against that of the HKD. On the findings of the primary judge, which are to be upheld on appeal, the Bank did take reasonable steps to do this. As a result, there is no basis for the claim that it acted unconscionably. GROUND 17: AUSTRALIAN SECURITIES AND INVESMENTS COMMISSION ACT 2001 107Mrs Donnelly sought leave to argue on appeal that the Australian Securities and Investments Commission Act 2001 (Cth) was applicable to her transaction with the Bank. The provision sought to be invoked was presumably s 12DB concerning false or misleading representations. 108That Act is, with Ministerial consent, applicable to conduct engaged in outside Australia by bodies corporate incorporated or carrying on business within Australia, by Australian citizens or by persons ordinarily resident within Australia (s 12AC) but Mrs Donnelly did not demonstrate that any of these conditions were satisfied or that Ministerial consent had been granted. In these circumstances, and as the matter was not in any event raised at first instance, I would reject this ground of appeal. A further matter supporting this conclusion is the fact that prior to the hearing at first instance Mrs Donnelly decided not to pursue a cross-claim filed by her alleging misleading or deceptive conduct by the Bank. ORAL SUBMISSIONS 109The matters put on behalf of Mrs Donnelly in oral submissions are, with one exception, sufficiently addressed in the discussion above of the grounds of appeal. 110The one exception is an oral submission that the primary judge's findings in Judgment [98] and [99] (see [30] above) did not amount to, or include, a finding that Mr Stuart went through the form of FX Analysis at the meeting of 13 May. This submission is contrary to the clear words of those paragraphs and should be rejected. CONCLUSION AND ORDERS 111As each of Mrs Donnelly's grounds of appeal have been rejected, her appeal should be dismissed with costs. 112LEEMING JA: I agree with the orders proposed by Macfarlan JA and with his Honour's reasons for them. 113The essence of my reasons for rejecting Mrs Donnelly's main submission on appeal may be stated succinctly. Mrs Donnelly said in her evidence in chief that Mr Stuart had a calculator and paper with him on 13 May 2008, and gave examples of both interest savings and "currency gains". Those gains could only arise from a variation in exchange rates, and in those circumstances, it is implausible that he did not also refer to the possibility of losses if exchange rates moved in the other direction. That was, after all, what he wrote to say he was going to do in advance of the meeting. Mr Stuart advised, in his original 7 April 2008 email, that "movements in exchange rates can be both rapid and severe" and that he would explain strategies to allow the borrower to "react to any shifts in currency movements" so as to assist "in managing/reducing the risks". What is more, the loan was not drawn down immediately (nor was there any obligation to do so). By the time it was drawn down, some two months after it was executed, Mrs Donnelly knew that the Australian dollar had depreciated (by some 9%) as against the Hong Kong dollar. The exchanges between her and the Bank at this time demonstrate that Mrs Donnelly was actively considering the currency in which the loan was to be drawn down. 114Against those considerations, the primary judge nevertheless found at [126] that Mrs Donnelly did not know (or at least, "had not thought through the implications") that if the Australian dollar declined still further after drawdown she and her husband would suffer loss. That finding must stand for the purposes of the appeal. Nevertheless, the foregoing considerations preclude acceptance of Mrs Donnelly's principal oral submission, namely, that there was something unconscientious about the Bank's conduct. ********** 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: 09 May 2014