Supreme Court New South Wales Medium Neutral Citation: Paratei Pty Ltd v ING Bank (Australia) Limited; Sparks v Battaglia [2015] NSWSC 1368 Hearing dates: 24 and 25 November 2014, 13, 14, 15 and 16 July 2015 Date of orders: 17 September 2015 Decision date: 17 September 2015 Jurisdiction: Equity Before: Darke J Decision: Cross claims by guarantors and mortgagors dismissed. Orders to be made for possession of mortgaged properties. Judgments to be entered against guarantors and mortgagors. Catchwords: EQUITY – unconscionable conduct – guarantees and mortgages given by shareholders in support of debts of companies – whether special disability by reason of lack of involvement in management of companies and lack of knowledge or explanation of transactions – some of guarantees and mortgages executed under power of attorney – whether unconscionable of lender to enforce guarantees and mortgages BANKING AND FINANCE – unconscionable conduct in connection with financial services – guarantees and mortgages given by shareholders in support of debts of companies – whether conduct of lender unconscionable in circumstances due to lack of knowledge or explanation of transactions – some of guarantees and mortgages executed under power of attorney – Australian Securities and Investments Commission Act 2001 (Cth), s 12CB CONTRACTS – unjust contracts – guarantees and mortgages given by shareholders in support of debts of companies – whether contracts unjust in circumstances due to lack of knowledge or explanation of transactions – some of guarantees and mortgages executed under power of attorney – Contracts Review Act 1980 (NSW), ss 7,9 Legislation Cited: Contracts Review Act 1980 (NSW) ss 7, 9 Australian Securities and Investments Commission Act 2001 (Cth) s 12CB Cases Cited: Bakarich v Commonwealth Bank of Australia [2007] NSWCA 169; Blomley v Ryan (1956) 99CLR 362; Canty v Paperlinx Australia Pty Limited [2014] NSWCA 309; Commercial Bank of Australia v Amadio (1983) 151 CLR 447; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25; Provident Capital Limited v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36; Spina v Permanent Custodians Limited [2009] NSWCA 206; Taheri v Vitek [2014] NSWCA 209; Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 West v AGC (Advances) Limited (1986) 5 NSWLR 610; Category: Principal judgment Parties: 2013/231527 ING Bank (Australia) Limited (first cross claimant/defendant to second cross claim) Florentina and Stefano Battaglia (sixth and seventh cross defendants; second cross claimants) 2014/100650 Grant Sparks, Michael Owen and Stephen Parbery (plaintiffs/cross defendants) Florentina and Stefano Battaglia (defendants/cross claimants) Representation: Counsel: Mr D Savage QC, Mr J White (ING Bank and the receivers) Mr D Murr SC, Mr R Freeman (Florentina and Stefano Battaglia) Solicitors: Gadens Lawyers (Brisbane) (ING Bank and the receivers) Forbes Dowling Lawyers (Florentina and Stefano Battaglia) File Number(s): 2013/231527; 2014/100650 Publication restriction: None Judgment Introduction 1. This matter involves two separate proceedings that were heard together. 2. The first proceeding (2013/231527) was commenced by Paratei Pty Limited and others against ING Bank (Australia) Limited ("the Bank"). The plaintiffs are four companies associated with the Battaglia family, together with Domenico Battaglia and his parents, Florentina and Stefano Battaglia. Numerous claims for relief were made, including claims that certain mortgages and guarantees taken by the Bank were liable to be set aside. The Bank filed a cross claim seeking monetary judgments against each of the plaintiffs (and a further family company Base Group Development Pty Limited). Florentina and Stefano Battaglia filed a second cross claim by which they sought orders setting aside certain guarantees and a mortgage over a property they own in Bulls Road, Burraneer. On 24 October 2014 the Statement of Claim was dismissed by Rein J, and judgment was given in favour of the Bank against each cross defendant other than Florentina and Stefano Battaglia. The balance of the proceedings, being the Bank's cross claim against Florentina and Stefano Battaglia, and their cross claim against the Bank, remained to be determined. 3. The second proceeding (2014/100650) was commenced against Florentina and Stefano Battaglia by Messrs Sparks, Owen and Parbery. They are receivers and managers appointed by the Bank pursuant to a mortgage over a property in Broadbeach, Queensland, owned by Florentina and Stefano Battaglia. Possession of the Broadbeach property is sought. Florentina and Stefano Battaglia filed a cross claim seeking to set aside the mortgage over the Broadbeach property and the guarantees sought to be enforced against them. 4. The essential claim made by Florentina and Stefano Battaglia is that it would be unconscionable for the bank to enforce the mortgages over the Burraneer and Broadbeach properties and the guarantees that were entered into by Mr and Mrs Battaglia in December 2008, November 2009 and June 2011. Statutory claims to a similar effect are made pursuant to the Contracts Review Act 1980 (NSW) and s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth). A promissory estoppel claim is also made in relation to the mortgage over the Burraneer property. It is alleged that Florentina Battaglia agreed to give the mortgage on the basis of an assurance given by an officer of the Bank that the mortgage would be released once certain units in a development at Surfers Paradise had been sold. It is contended that in circumstances where such units were in fact sold, the Bank is estopped from seeking to enforce its rights under the mortgage. 5. There is no dispute that the Bank is entitled to succeed on its claims, save to the extent that Florentina and Stefano Battaglia establish that they are entitled to be relieved against enforcement of the guarantees and mortgages. Background 1. Stefano Battaglia was born in Calabria, Italy in 1936. He is now 79 years of age. He learnt English when he came to Australia in 1956, but he says that he cannot read English well. He deposed that he can recognise numbers and most names but cannot read long or complex sentences. 2. Florentina Battaglia was born in Lima, Peru in 1949. She is now 66 years of age. She came to Australia in 1971, and met Stefano Battaglia later in that year. Mr and Mrs Battaglia have a daughter, and twin sons Domenico and Bruno, born in December 1973. 3. Mr Battaglia began working with his brother doing concreting and plastering work in about 1963. Later, he bought blocks of land and developed them by building home units on them. For that purpose Base Constructions Pty Limited (initially known as Battaglia Investments Pty Ltd) was incorporated in 1973. Mr and Mrs Battaglia have been directors of the company throughout. They are also shareholders in the company, along with Base Group Development Pty Ltd (which holds its shares as trustee for a family trust known as the Paeroa Unit Trust). Florentina Battaglia worked in the company office, primarily dealing with correspondence and accounts, whilst Stefano Battaglia was involved in the construction side of the business. 4. In 1981, Paratei Pty Limited was incorporated to undertake property development. Since at least 1990, both Mr and Mrs Battaglia have been directors of Paratei Pty Limited. They hold all of the shares in the company. Also in 1981, Base Group Development Pty Ltd (initially known as Paeroa Pty Ltd) was incorporated. Mr and Mrs Battaglia have been directors of Base Group Development Pty Ltd throughout. They hold all of the shares in the company. 5. In August 1986 Stefano Battaglia suffered severe injuries in a car accident. He deposes that, as a result of the accident, he suffers from problems with both his short term and long term memory. It appears that after the accident, Stefano Battaglia was no longer able to undertake physical work. From about the late 1980s he began to spend more of his time in Argentina, where members of his family lived. In 1993 Florentina Battaglia and the children went to live in Argentina for a few years. Florentina Battaglia then returned to Australia to live, although she occasionally spent periods of time in Argentina. The sons, Domenico and Bruno, also returned to live in Australia. 6. Companies associated with the Battaglia family first obtained finance from Mercantile Mutual (a predecessor of the Bank) in 1993. From that time, numerous financial transactions were entered into between those companies and the Bank (or its predecessors). In many of those transactions, the relevant documents were executed by attorneys acting under powers of attorney. A brief summary of the financial dealings up to about mid-2008, as is apparent from the documents tendered in evidence, is set out below. 7. In July 1993 Base Constructions gave a mortgage over certain property in Abbotsford in favour of the trustee of the Mercantile Mutual Mortgage Fund in connection with a borrowing of $1.5 million. As part of the same transaction, Mr and Mrs Battaglia entered into a Deed of Guarantee and Indemnity. When the loan was due for repayment in 1996, the period of the loan was extended to September 1997. 8. In September 1997 Base Constructions refinanced the loan. The loan amount was increased to $2.5 million. It is apparent that the additional $1 million was to be used to assist in the purchase of the Burraneer property (described in the letter of offer as "a waterfront residence at Cronulla"). The loan was repayable in three years. Again, Mr and Mrs Battaglia entered into a Deed of Guarantee and Indemnity. At the same time, Mr Battaglia executed a General Power of Attorney in favour of Mrs Battaglia and Bruno Battaglia. In October 1997 Base Constructions gave a mortgage over the Abbotsford property, and Mr and Mrs Battaglia gave a mortgage over the Burraneer property, in favour of ING Mercantile Mutual Bank Limited. 9. In November 2000, the $2.5 million loan was renewed and extended for a further five year period. It appears that by this time the Burraneer property was no longer required as security for the loan. I assume that the mortgage over the property was discharged. 10. In about July 2002 Base Constructions accepted offers from the Bank for further loans of $200,000 (to provide for personal expenses) and $300,000 (to provide for a short term cash advance). 11. In about August 2002 Paratei accepted an offer from the Bank for a loan of $9,325,000 to finance construction of a residential unit development at Labrador in Queensland. In September 2002, Mr and Mrs Battaglia, amongst others, executed a Guarantee and Indemnity in respect of the obligations of Paratei to the Bank. Also in September 2002, Paratei accepted an offer from the Bank for a further loan of $4,500,000 to refinance an existing facility with the Commonwealth Bank. In November 2002 Mr and Mrs Battaglia, amongst others, executed a Deed of Affirmation by Guarantors in connection with the further loan of $4,500,000. 12. In June 2004 Base Constructions accepted an offer from the Bank for a $500,000 cash advance facility (to allow for future investment or acquisitions). 13. In October 2004 Paratei accepted an offer from the Bank for a $500,000 cash advance facility (to assist with upgrades to remaining units within the recently completed project at Labrador). 14. In March 2005 Base Constructions accepted an offer from the Bank for a new facility of $3 million to consolidate its existing facilities. 15. In November 2005 Paratei accepted an offer from the Bank for a $500,000 cash advance facility (to provide working capital). 16. In March 2006 Base Constructions accepted an offer from the Bank to increase the amount of its existing facilities to $3,300,000. In August 2006 Base Constructions accepted an offer from the Bank to restructure its existing facilities and increase their total amount to $4,300,000. In December 2006 Base Constructions accepted an offer from the Bank to further increase its facilities to $4,400,000. Also in December 2006, Paratei accepted an offer from the Bank to increase its existing facilities to a total amount of $6,800,000. That facility was to be repaid by 28 November 2008 or such later date as the Bank agreed. 17. In May 2007 Base Constructions accepted an offer from the Bank to increase its existing facility to an amount of $4,650,000. That facility was to be repaid by 1 December 2011 or such later date as the Bank agreed. In the following month, the facility was reduced to $4,400,000 following the sale of the mortgaged property at Abbotsford. The net proceeds of that sale exceeded $10.7 million. The Bank retained $4,400,000 out of the proceeds of that sale in a deposit account which henceforth formed part of the security for the facility. 18. By August 2008 Paratei had accepted offers from the Bank for further facilities totalling an additional $1.25 million. Of that amount, $750,000 was to be repaid by 28 November 2008 or such later date as the Bank agreed. These additional facilities were connected with a development site owned by Base Constructions in Vista Street, Surfers Paradise, known as the "Era" site. 19. Accordingly, by August 2008 Paratei had facilities with the Bank for a total amount of $8,050,000, and Base Constructions had a facility for a total amount of $4,400,000. The security for the Paratei facilities included a mortgage over 39 units owned by the company in a development at High Street, Southport known as "Signature on High". The security for the Base Constructions facilities included the security deposit in the amount of $4,400,000. 20. It is clear that on dozens of occasions in the period from about August 2006 to about August 2008, Florentina Battaglia gave written authority to the Bank to transfer significant sums between accounts maintained by the companies associated with the family. The sums ranged from relatively small amounts of $5,000 up to amounts in excess of $300,000, and as high as $362,000. The transactions in December 2008 1. The first of the impugned transactions occurred in December 2008 when Base Constructions entered into a new facility with the Bank for $4.4 million. The new facility entailed altered security arrangements. The security required for the new facility included a mortgage over the Burraneer property, and guarantees to be given by Mr and Mrs Battaglia. The mortgage and the guarantees are sought to be set aside. 2. It is apparent that in the months prior to these transactions, there were numerous communications between Domenico Battaglia, who described himself as the Managing Director of Base Group Developments Pty Limited, and Timothy McCabe, a Senior Manager of the Bank, concerning the business plans and funding requirements of "Base Group". 3. Domenico Battaglia had been a Director of Base Constructions since March 1995, and a Director of Paratei and Base Group Development since August 2002. Bruno Battaglia had also been a Director of Base Constructions since March 1995, and a Director of Paratei and Base Group Development since October 1992. Neither of the sons held shares in any of those companies. 4. On 16 May 2008 Domenico Battaglia sent a letter to Mr McCabe which included the following: Further to our recent discussions, this letter is to confirm that we will present a Portfolio Plan to ING relating to the properties Base Group holds on the Gold Coast. A central component of this Plan is the development of the "Era" project. Currently, Base Group has loans of $13.15 million with ING with no land security but offset by a term deposit of $4.5 million. This letter is to confirm that plans for "Era" will be activated in June and Base Group is now prepared to offer security over the site…… It should be noted that negotiations are underway to sell a share of the "Era" site to a joint venture partner and this letter is to confirm that the current debt will be retired once this sale is finalised. Base Group will then discuss other projects with ING as per the portfolio plan, and the future funding of the "Era" project will be negotiated by the joint venture partners. We look forward to discussing the preparation of interim security documentation with you in the near future and also setting a date in early June for discussion about the total Portfolio Plan for the Gold Coast properties. 1. Domenico Battaglia sent a further letter to Mr McCabe on 3 June 2008 which stated: Further to our letter of 15 May [sic] to Tim McCabe we request a reply from ING on the following proposal: Base Group will be commencing marketing of the Era site in June 2008. The property will be offered for sale with existing Development Approvals and the vendors will consider all options from retaining an interest in the property or selling outright. ING will take acceptable security over the property…… Cash flow from the High Street property will be retained by Base Group. Base Group will draw down from the current deposit of $4.5 million to restructure to [sic] business in line with family objectives. Your feedback on this proposal would be appreciated. If acceptable, it is proposed that the security documentation would be completed by the Directors as soon as it is available for signing. 1. Following a meeting between Domenico Battaglia and Mr McCabe, Domenico Battaglia sent a further letter to Mr McCabe on 10 June 2008 in the following terms: Thanks for the meeting on Friday. We are now well on the way to achieving our planning timetable for our properties on the Gold Coast. We have now briefed Colliers and will be receiving a marketing proposal this week for the Vista St site. Once we have agreed on the format, we will proceed with a target of reviewing offers and/or expressions of interest at the end of August. We will consult with ING regarding the decision on the site during this process. We are prepared to review our security position with ING as per our previous correspondence. Please direct any enquiries direct to me regarding progress on our plans or ongoing finance arrangements. I will then communicate with the other family members. It is critical that we have one point of contact through the next 6 months as we manage our development plans. With regard to our deposited funds with ING, we want to immediately draw $500K to finalise a number of family transactions prior to the end of the financial year. Our intention is to have all outstanding issues dealt with by 27 June so that this draw down needs to be processed this week. Your assistance with this would be appreciated. 1. On 13 June 2008 the Bank wrote to the Directors of Paratei offering to provide a $500,000 cash advance, repayable within a year, to assist with a marketing campaign for the Era development. One of the conditions of the offer was: Borrower is to provide by no later than 30 June 2008 a full and satisfactory strategy paper in respect of the Base Group's property interests and in particular the proposed Vista St "Era" asset. 1. The offer was accepted. Florentina Battaglia signed the acceptance as a Director of Paratei and also as Director of Base Group Development Pty Limited. 2. It is not clear whether a strategy paper was provided in accordance with the condition of the offer of finance. It appears, however, that an Overall Strategic Position document of Base Group Developments was presented to the Bank in about November 2008. 3. On 11 November 2008 Bruno Battaglia sent a letter to Mr McCabe. The letter included the following: As already discussed this letter is to outline the next step regarding Base Strategy 2009 onwards. The family and I have worked very hard in the last six months to map out the future of our development company and our existing property portfolio. We also wish to confirm with you and the ING team how happy and proud we are to be associated with ING over many many years and how excited we are to be working more closely with you in the coming year. As you are aware from our many discussions over this year and especially the last few months, the family seeks to take advantage of the current economic climate and create lines of credit available using our other existing properties and their debt free status, to seek and acquire distressed sites at very low prices therefore building upon our very strong property portfolio. We also wish to outline the three phases to commence our strategy negotiations. 1st Phase: 7-10 days Tina and Bruno fly to Sydney and have meeting with Tim McCabe to discuss $4.5 million cash deposits and Cronulla Property. 2ND Phase: 30 days Stefan arrives to Australia (delayed return) to finalise family meetings re 2009 3RD Phase: 30-90 days Final negotiations regarding 2009 strategy with ING and rest of the portfolio. 1. On 12 November 2008 Mr McCabe responded to Bruno Battaglia by email. The email included the following: Thanks for your email of yesterday afternoon and txt message of this morning. As per our earlier conversation I summarise my proposed position as follows – Paratei Proposal – (1) Capitalise current month's (October) interest so that payments are now technically monthly in arrears This will require increasing limit by 1 months interest and issuing a new letter of offer. We will also take opportunity to extend and consolidate the loans for a further 12 months (these will of course be repayable should Era sell and settle within the term). Base Constructions Proposal (1) release $3 million cash from deposit back to Base. (2) execute mortgage over 46 Bulls Rd, Cronulla. In the short term this will free up $3m cash flow to be used for your agreed working capital/investment purposes. We recognise your desire to have all of the cash released and substitute the Cronulla security however we could not agree to accept the release of 100% cash cover for a transaction in place of 100% cover from property assets (this generally being between 60-70% depending on commercial markets). Property financiers do not work this way. Subject to your agreement to the above, it is readily believed that this restructure could be agreed and formalised within 7-10 days. In the meantime could you please ensure your accountant has released to us the most up to date and current financials available for the group and recent correspondence in respect of Era is provided to us. 1. On 14 November 2008 Bruno Battaglia sent an email to Mr McCabe which included the following: 3. 1st Time Horizon 250k (asap) If your boys need time to consider the docs that is fine, but as we have prior commitments to take care of we require urgently the release of $250k today. We then have time to negotiate the restructuring of all our loans next week which is consistent with my email on Monday. 4. 2nd Time Horizon It may be we put Vista in the mix so we can release the full $4.5 million. As you are aware it has been very intense for Mick and I in the last two months working in synergy with each other and Tina. It has been very rewarding and with this release of the funds will go a long way to reassuring Stefan and Tina that through Tim McCabe, ING and the twins have a very strong relationship going forward and that we have a definite process in place that cannot be jeopardised or interfered with by other external parties for the next 90 days. WHY? As it has taken considerable effort to get everyone on the same page and Mick and I are shielding Stefan from bogus advises from other parties to look elsewhere. As you can understand everyone is trying to get into his ear before his return and that is why Mick and I spent so much time with you guys over the last two months especially. Tim now that we have provided you a raft of documents as promised I hope that you can see how organised and motivated we are to keep to our 3 time horizon agenda…… Tim I hope that I have made things crystal clear now and I apologise in advance if it was not made clear how critical it is for Mick and I to stick to the timeline we have made. This email is only to reassure not add pressure to our relationship and it is an opportunity to move things more efficiently and close any other parties out of the process. 1. The references in the email to "Mick" are to Domenico Battaglia. 2. On 19 November 2008 the Bank wrote to the Directors of Paratei offering to provide further funding of $250,000 for marketing costs. That, and an amount of $750,000 provided earlier in 2008 in relation to the Era development, would be repayable by 31 March 2009 or such later date as the Bank agreed. The offer included conditions that the Era development property in Vista St, Surfers Paradise remain unencumbered during the term of the loan, and that if the sale of the Era development did not occur before 31 March 2009 then a first registered mortgage over the property was to be provided. 3. Also on 19 November 2008 the Bank wrote to the Directors of Paratei offering to extend the term of the existing $6.8 million facility from 28 November 2008 to 31 March 2009, and offering to extend the term of a $500,000 Commercial Equity Loan from 28 November 2008 to 31 March 2009. These offers contained the same conditions concerning the Era development as the other offer made on the same day. The three offers also stipulated that Bruno Battaglia and Domenico Battaglia would provide personal guarantees. All three offers were accepted. The acceptances were signed on behalf of the companies by either Bruno Battaglia or Domenico Battaglia. 4. On 21 November 2008 Mr McCabe sent an email to Bruno Battaglia which included the following: Going forward, we agree that we will sit down and finalise a restructure of the group facilities that will best suit both Base Group and ING. This will include introducing Vista St into the equation such that we can consider allocating loans to match assets, releasing the cash and potentially the personal guarantees of both Mick and yourself. We will document this and agree it prior to seeking any formal credit approvals and hope that we can commence this process in the next couple of weeks. 1. On 27 November 2008 Bruno Battaglia sent an email to Mr McCabe which included the following: 2. Restructure proposal dated 12 November (2nd Phase – Time Horizon) (i) release $3m cash from deposit back to Base. (ii) execute mortgage over 46 Bulls Rd, Cronulla. Our family wishes to accept the proposal and as you have our financials and all relevant and recent correspondence in respect to ERA could you confirm that we will have all documentation ready in the 7 day time period as per your email. Please understand that Mick and I are very appreciative of your support in locking in the 3 month process and as promised we have secured this Cronulla deal for you and behind the scenes we did everything possible to maintain our relationship with yourself and the rest of the team at ING Bank. 1. Mr McCabe deposed that he received a letter dated 1 December 2008 from Florentina Battaglia which concerned a request for the release of $3 million from the funds held as security. The letter contains some handwritten notes made by Mr McCabe. Florentina Battaglia denied that she sent the letter, and denied that she was its author. I will return to this issue later in these reasons. 2. The first sentence of the letter refers to a conversation with Mr McCabe earlier on the morning of 1 December 2008. There is no doubt that at some time in about early December 2008 Florentina Battaglia and Mr McCabe had a conversation in which the giving of a mortgage over the Burraneer property was discussed. There is, however, a dispute about what was said, and in particular, whether Mr McCabe said that the mortgage was "only temporary" and that the deeds would be returned once the sales of the units in Signature on High had finished. This issue will also be dealt with later in these reasons. 3. In any event, the letter dated 1 December 2008 purports to provide answers to the questions why a release of cash was requested and how the cash would be deployed, and further refers to a debt reduction strategy that was being developed. The letter included the following: The purpose of this Cronulla option was due to the ongoing negotiations with the Korean developers and now potentially Sunland, we wish to keep the site clean which we thought you understood and accepted. If the deals do not go ahead by next March then Vista St would be considered as placing [sic] into the loan structure. 1. The site referred to is the Era site. Negotiations concerning the acquisition of an interest in the site had been continuing for some time with a Korean company. 2. Another letter, undated and apparently prepared by Bruno Battaglia, also provided answers to the questions why a release of cash was requested and how the cash would be deployed. It contains a statement to the effect that the Era development site was being kept "clean". This letter also contains some handwritten notes made by Mr McCabe. 3. On 2 December 2008 Bruno Battaglia sent an email to Mr McCabe. It foreshadowed that further information would be provided later in the day. A quick response concerning the proposed release of cash security was sought. 4. It is not clear whether the further information was provided, but on 4 December 2008 Bruno Battaglia sent a further email to Mr McCabe in which he indicated that the family was seeking a quick response from the Bank. On 4 December 2008 Mr McCabe sent an email to Bruno Battaglia in which he suggested that a release of $3 million did not seem possible, but a release of between $2.5 million and $2.8 million might be achievable. He referred in this email to his conversation earlier in the week with Mrs Battaglia. Mr McCabe sent an email to Clint Woods of the Bank on 5 December 2008 in relation to the proposal. The email contained the following: Basically what we are going to do is release something between $2.5 and $2.8m of Base Constructions cash balance and substitute the Bulls Rd residential property (valuation attached). Not ideal, certainly not desirable but family now talking about moving out of ING due to negative perceptions regarding rates, security and our unwillingness to swap to the alternative security…… Era now subject to multiple interest – Koreans + Sunland + another – they wish to retain site unencumbered for "face value". I am not happy about this given agreements several weeks ago but this is another story of me agreeing something with the boys and them telling mum and dad something different to my mind. I have spoken with Tina – she is now the one pushing this for "security and comfort" reasons – we don't want to lose connection. Can you start and finish up the variation request ASAP. 1. The Bank had given its approval to the proposal by 11 December 2008. A letter of offer to Base Constructions dated 11 December 2008 stated that the security for the existing loan of $4,400,000 could be altered by adding the Burraneer property as security and releasing $2,800,000 from the cash security deposit. A guarantee from Stefano and Florentina Battaglia was required. The offer was accepted. Florentina Battaglia signed the acceptance as secretary of Base Construction, as well as for herself and as the attorney of Stefano Battaglia (pursuant to the Power of Attorney he had given in September 1997). 2. On 11 December 2008 Gadens Lawyers, acting for the Bank, sent mortgage and guarantee documents to SP&G Lawyers of the Gold Coast. The documents included certificates as to the giving of independent legal and financial advice to the guarantors. 3. On 12 December 2008 Ms Van der Veen of SP&G Lawyers informed Ms Burgess of Gadens Lawyers that documents would be signed by Stefano Battaglia under Power of Attorney. According to a note made by Ms Van der Veen, Ms Burgess said she would obtain instructions about whether that was acceptable. The note further indicates that Ms Van der Veen spoke to Florentina Battaglia on that day to defer the appointment for the signing of documents to Monday 15 December 2008. It appears that Florentina Battaglia told Ms Van der Veen that the Bank had previously accepted documents signed under Power of Attorney. 4. Another note of Ms Van der Veen's shows that Gadens informed her later on 12 December 2008 that the Bank would accept Florentina Battaglia signing for her husband pursuant to a Power of Attorney. The note also suggests that it was contemplated that Stefano Battaglia would later sign the guarantee himself in Argentina after getting legal and financial advice over the telephone. It further appears that Gadens requested that a signed undertaking to that effect be provided prior to settlement. Ms Burgess sent an email to Ms Van der Veen in the early afternoon of 12 December 2008 setting out the Bank's requirements in relation to execution of the security documents. 5. Later on 12 December 2008 Ms Van der Veen sent a facsimile to Florentina Battaglia enclosing a Form of Undertaking "required to be signed by Stefano and returned to our office, prior to settlement", and requesting that she arrange for the undertaking to be so signed and returned. 6. It can be inferred that Florentina Battaglia attended the office of SP&G on 15 December 2008. She apparently executed numerous documents in the presence of Ms Van der Veen on that day including the mortgage over the Burraneer property (both personally and as attorney for Stefano Battaglia) and the Deed of Guarantee (both personally and as attorney for Stefano Battaglia). She also made a declaration before Ms Van der Veen that she had received independent legal advice about the loan and security documents and that she freely and voluntarily signed the mortgage and Deed of Guarantee. 7. It further appears from a certificate signed by Florentina Battaglia that on 15 December 2008 she received independent financial advice from Mark Buhmann of HBA Partners in Surfers Paradise. 8. After 4pm on 15 December 2008 Ms Van der Veen sent a facsimile to Ms Burgess consisting of a letter and numerous documents that had been executed. The letter concluded with a statement that "our client is anxious to settle this matter on or before Wednesday 17 December 2008 and accordingly we look forward to confirming settlement details with you as a matter of urgency". Amongst the documents sent by facsimile was a certified copy of the General Power of Attorney given by Stefano Battaglia in September 1997, and a "Form of undertaking by Stefano Battaglia". 9. The undertaking, which appears to bear the signature of Stefano Battaglia, had earlier been sent by facsimile from the address "Corralon Centrico" on 14 December 2008. The evidence discloses that "Corralon Centrico" was located in Buenos Aires, and is a name associated with a hardware business carried on there by Stefano Battaglia through a company Stefano Holdings SRL. The undertaking is addressed to the Bank and to Gadens. It is in the following terms: RE: ING BANK (AUSTRALIA) LIMITED ADVANCE TO BASE CONSTRUCTIONS PTY LIMITED – 46 BULLS RD BURRANEER GUARANTOR: STEFANO BRUNO BATTAGLIA AND FLORENTINA BATTAGLIA I, Stefano Bruno Battaglia hereby undertake to provide to the Lender or the Lender's Solicitors on or before the 30th January 2008 [sic] a duly signed counterpart of the Guarantee and Indemnity for the aforesaid matter, together with the Certificates of independent legal and financial advice. Dated this 14 day of December 2008. 1. On 16 December 2008 Ms Burgess informed Ms Van der Veen that a required Deed of Set-off over deposits (to be entered into by Base Constructions) also had to be executed, and that the level of insurance cover should be increased to $3 million. Arrangements were then made by Ms Van der Veen for Florentina Battaglia to come in and execute the Deed of Set-off. Later on 16 December 2008, Ms Van der Veen sent a copy of the executed deed, and a certificate of currency of insurance, to Ms Burgess. Ms Van der Veen reiterated that settlement must occur on or before 17 December 2008. 2. There was then a discussion between Ms Van der Veen and Ms Burgess concerning the destination of the funds upon settlement. Ms Burgess said that the Bank would deal directly with Florentina Battaglia on that issue. On 16 December 2008 Florentina Battaglia signed an authority for the Bank to transfer $700,000 to a Commonwealth Bank account of Base Group Development, and the balance (apart from some amounts for legal fees) to an investment account of Base Constructions. 3. The transaction settled on 17 December 2008. The mortgage and the Deed of Guarantee (as signed by Florentina Battaglia) both bear that date. The mortgage had been registered by 5 January 2009. 4. A further version of the Deed of Guarantee (also bearing date 17 December 2008) apparently bears the signatures of both Florentina Battaglia and Stefano Battaglia. Florentina Battaglia gave evidence that Ms Van der Veen had provided a guarantee document to her which was to be signed by Stefano Battaglia. I infer that the date 17 December 2008 was placed on the document by someone at SP&G. It is likely that the same person placed the date on the Deed of Guarantee that was executed by Florentina Battaglia on 15 December 2008. 5. The signatures on the further version of the Deed of Guarantee were witnessed by Sean Wardrop. Sean Wardrop, as part of a business referred to as Rothesay CFO Services, had been retained by Base Group Development on 15 December 2008 to provide consultancy services. Florentina Battaglia gave evidence that she did not think that the purported signature of her husband on the Deed of Guarantee was his signature. Stefano Battaglia deposed that he did not think that it was his signature. Florentina Battaglia accepted that it was her signature on the document. She said she had no recollection of when she signed it or whether she did so in front of Sean Wardrop. 6. There was also a dispute about the genuiness of Stefano Battaglia's signatures on the declaration that independent legal advice had been received, and on the certificate concerning independent financial advice. The declaration was apparently made before a solicitor, Anthony Delaney, on the Gold Coast on 14 January 2009. The certificate of independent financial advice was given by Sean Wardrop. It also bears the date 14 January 2009. 7. It seems that Stefano Battaglia had returned to Australia on about 19 December 2008. According to his evidence, he flew back to Argentina on 15 January 2009. He denies signing any documents on 14 January 2009. The question of the genuiness of the various signatures of Stefano Battaglia will be dealt with later in these reasons. 8. A file note of Ms Van der Veen dated 23 December 2008 indicates that by that date she had not received a Deed of Guarantee signed by Stefano Battaglia. It was noted as a matter she was to follow up in January 2009. 9. On 16 January 2009 Howard Ng of the Bank sent an email to Bruno and Domenico Battaglia asking whether they had the original signed guarantee for Stefano Battaglia. On 23 January 2009 Ms Burgess sent an email to Ms Van der Veen asking when the guarantee and legal and financial advice certificates would be received, noting that the undertaking called for this to be done by 30 January 2009. 10. On 27 January 2009 Ms Van der Veen spoke to Florentina Battaglia on the telephone. According to Ms Van der Veen's note, Florentina Battaglia told her that she did not go overseas because her mother had died over Christmas, that Stefano Battaglia came to Australia and signed the guarantee, and that she would drop the document in to the SP&G office the next day. In cross examination, Florentina Battaglia did not accept that she told Ms Van der Veen that her husband had signed the guarantee, and denied that she told her that she would drop the document in the next day. 11. In any event, she did not do so. It appears from another of Ms Van der Veen's notes that on 29 January 2009 Ms Van der Veen again took the matter up with Florentina Battaglia, who said she would drop in to the office. However, it seems that arrangements were instead made to send the document directly to the Bank. On 30 January 2009 Domenico Battaglia sent an email to the Bank attaching a scanned copy of the Deed of Guarantee, and stating that the document would be forwarded by express post. 12. The certificate concerning independent financial advice was not complete on the scanned copy. The description of the identity of the provider of the advice was not included. Later on 30 January 2009, Sean Wardrop sent "the completed document" to Domenico Battaglia by email. It is apparent that Sean Wardrop had inserted his personal details in the certificate concerning independent financial advice as the person who provided the advice. This completed document was sent to the Bank later on 30 January 2009. 13. I turn now to note various aspects of the evidence of the witnesses in so far as it is directed to the transactions of December 2008. 14. Florentina Battaglia deposed that in early December 2008 her son Domenico told her that Mr McCabe needed more security to release some of the Abbotsford money from a term deposit, and wanted to know what deeds she had to put up as security. She further deposed that at about that time she had a telephone conversation with Mr McCabe in terms to the following effect: McCabe: Tina, we need to take Cronulla as security, otherwise the boys are going to be in trouble. What other deeds do you have too? Mrs Battaglia: I don't want to. I don't know how the boys are going to meet the interest. McCabe: The boys only have a short time to get this refinanced and they need the Cronulla security. They are beginning to prepare the Signature on High units for sale and converting to strata but that will take more time than they have. Give me the Cronulla deeds – we'll use them to release the money on deposit – and you will get them back when they finish selling down Signature on High. It's only temporary. Mrs Battaglia: Ok. 1. Mrs Battaglia deposed that she would not have agreed to give the mortgage if Mr McCabe had not said that the deeds would be returned after Signature on High had been sold. She says that later, every time she saw Mr McCabe in person, she asked him whether she could have the deeds back. 2. Florentina Battaglia gave evidence that she was in a distressed state in December 2008 because her mother was dying. Her mother in fact died on 15 December 2008. 3. Florentina Battaglia further deposed that she had a conversation with Domenico Battaglia in which he told her, in effect, that if the mortgage over Cronulla was not given then "we are going to run in to trouble with interest with ING". 4. She further deposed that she had a conversation with her husband in the second week of December 2008 in which she mentioned that there were a lot of important papers she had to sign, but did not specifically mention the possibility of a mortgage over the Burraneer property. She says, however, that she assisted in making arrangements for a document to be sent by facsimile to her husband in Argentina "to authorise the Bulls Road Mortgage". Clearly, that document was the undertaking to provide a duly signed guarantee. 5. In her second affidavit, Florentina Battaglia deposed that she signed numerous documents at the offices of SP&G Lawyers. She says that a number of documents were signed in front of Matthew Brook (when her son Domenico was also present), before going into another office where she signed some further documents in front of Ms Van der Veen. Florentina Battaglia deposed that neither Ms Van der Veen nor Mr Brook explained to her what it was she was signing. She further says that she went to the office of HBA Partners later on the same day and saw Mark Buhmann. She deposed that Mr Buhmann did not give her an explanation of the documents she was signing. She also deposed that she did not write the letter dated 1 December 2008 which bore her name. 6. In her third affidavit, Florentina Battaglia responded in detail to an affidavit sworn by Sean Wardrop. She took issue with many aspects of his affidavit including his assertion that on 15 December 2008 Florentina Battaglia witnessed the signatures of Mr Wardrop and Domenico Battaglia on a Consultancy Agreement. Florentina Battaglia deposed that she could not have attended any meetings with Mr Wardrop on that day as it was the day of her mother's death and she was at her beside the entire day. She did not deal in her affidavit with Mr Wardrop's assertion that he witnessed the signatures of both Mr and Mrs Battaglia on a Deed of Guarantee. 7. In cross examination, Florentina Battaglia accepted that she knew that there was a proposal to exchange one security for another. That is, a mortgage over the Burraneer property in place of cash in the security deposit. She maintained, however, that Mr McCabe told her that the Burraneer property would only be a temporary security until the units in Signature on High were sold. She also maintained that she was not the author of the 1 December 2008 letter. 8. Florentina Battaglia did not recall anything that Ms Van der Veen said to her about the mortgage. She agreed that Ms Van der Veen gave her some documents which were to be taken to Argentina in order to have her husband sign them. However, she denied that on 27 January 2009 she told Ms Van der Veen that her husband had come to Australia and signed the guarantee. 9. Stefano Battaglia swore six affidavits. In his first affidavit, he deposed that prior to the commencement of the proceedings, he had no knowledge of the December 2008 mortgage of the Burraneer property. He said that he would not have mortgaged it under any circumstances. In his second affidavit he deposed that he had not previously seen the Deed of Guarantee dated 17 December 2008 that had been signed on his behalf by his wife. 10. In his third affidavit he deposed that it was not his signature that appeared on the undertaking to provide a duly signed guarantee. He further deposed that it was not his signature on the declaration concerning independent legal advice, and that he did not think it was he who signed the certificate concerning independent financial advice. In his fourth affidavit, Stefano Battaglia deposed that he did not think it was his signature on the execution page of the Deed of Guarantee. 11. His fifth affidavit contained a response to the affidavit sworn by Sean Wardrop. Stefano Battaglia deposed that he did not recall the actual dates upon which he arrived in Australia in December 2008 and subsequently flew back to Argentina. However, aided by certain documents which indicated that he flew from Sydney to the Gold Coast on 20 December 2008, and from the Gold Coast to Sydney on 29 December 2008, he deposed that he thereafter remained in Sydney until he departed for Argentina, which he thought was on the morning of 15 January 2009. He denied that he signed any documents in front of Sean Wardrop in Queensland on 14 January 2009. He also denied that he signed any document in front of Anthony Delaney, whether on 14 January 2009, or at any other time. 12. In his sixth affidavit, Stefano Battaglia gave evidence concerning his Argentinian company Stefano Holdings SRL and the business name "Corralon Centrico". He deposed that he had local managers running the business. He further deposed that he had purchased various properties in Argentina, all of which had been sold in 2011, with the proceeds being sent to Australia. 13. In cross examination it was quite evident that Stefano Battaglia had very little, if any, recollection of the relevant events. When asked about the signature on the undertaking document he did not accept that it was his signature, although he did say that the signature was "almost similar" to his own. He maintained his denials that he placed his signature on the Deed of Guarantee. 14. Mr and Mrs Battaglia also called evidence from a forensic document examiner, Mr Christopher Anderson. In his report dated 8 March 2015 he expressed various opinions about whether seven "questioned signatures" of Stefano Battaglia were likely to have been written by the same person who wrote twenty five "specimen signatures" of Stefano Battaglia. Mr Anderson divided the questioned signatures into two groups, group A and group B. 15. Group A consisted of items one to three. Mr Anderson found no substantive evidence to suggest that these questioned signatures had been written by a writer different from the writer of the specimen signatures. 16. Group B consisted of items four to seven. This group included the signature on the undertaking dated 14 December 2008, and the three signatures on the Deed of Guarantee being the signature on the execution page (page 12), the signature on the declaration concerning independent legal advice (page 14), and the signature on the certificate concerning independent financial advice (page 16). Mr Anderson identified seven features present in the group B signatures that were different from the specimen signatures, and stated that this supported the hypothesis that these questioned signatures were written by a different writer. It was his opinion (subject to the various limitations and qualifications noted in the report) that there was very strong support for the proposition that the writer of the specimen signatures did not write the questioned signatures in group B. 17. In cross examination, Mr Anderson was initially confused about whether the questioned signature on the undertaking dated 14 December 2008 was in group A or group B. However, he clarified that all bar the first of the seven identified features was present in relation to that signature, and that all seven features were present to a greater or lesser extent on the other group B signatures. He further stated that, having regard to the presence of the identified features in all four group B signatures, it was more probable than not that they were written by the same person. 18. An affidavit sworn by Dr Mary Joseph was also read in Mr and Mrs Battaglia's case. Dr Joseph deposed, by reference to records of the medical centre at Miranda where she works, that Mr Battaglia attended the medical centre and consulted with her on 3, 5 and 14 January 2009. The records indicate that the consultation on 14 January 2009 was taking place at 12:22pm. 19. The Bank adduced evidence from several witnesses. Only Messrs McCabe, Wardrop and Delaney gave evidence in the witness box. Several deponents of affidavits (Mark Ayala, Grant Sparks, Peter Stewart, Kimberley Arden, Demetrio Padilla and Avelino Rolon) were not required for cross examination. 20. Mr McCabe deposed that he commenced employment with the Bank in 1995, and since 1999 has been in the Commercial Property Finance Group. Since 2000 he has been the "relationship banker" for what he described as the Battaglia Group. 21. He deposed that in June 2008 the Battaglia Group wanted access to the money held on security deposit, but the Bank would not agree to release it unless alternative security was put in place. He says that he had discussions with both Domenico and Florentina Battaglia about the matter, in which they expressed reluctance to provide a mortgage over the Era development site. He had no recollection of the conversation which Florentina Battaglia deposed to about the deeds to Cronulla, and the security being only temporary until the sale of the units in Signature on High had occurred. However, he agreed that, commencing shortly after the mortgage had been given, Florentina Battaglia regularly made requests for the mortgage to be released. 22. In cross examination, Mr McCabe agreed that he developed a close relationship with Bruno and Domenico Battaglia, but denied that he consistently preferred their interests in transactions to those of their parents. He stated that in September and October 2008, as the global financial crisis emerged, the Battaglia family was looking to take advantage of opportunities within the market, and for that purpose wanted access to the cash that was held as security. Mr McCabe also stated that Domenico Battaglia wanted to keep the Era development site unencumbered as it was thought this would create a favourable impression with the Korean company which was negotiating to acquire an interest in the site. 23. In relation to the conversation with Florentina Battaglia concerning a mortgage over the Burraneer property, Mr McCabe did not accept that she exhibited a lot of reluctance to the giving of the mortgage. He did not believe that he would have said (and had no recollection of saying) that the mortgage would only be required until the Signature on High units were sold. He agreed that on about three or four occasions Florentina Battaglia asked him when the Burraneer mortgage was going to be discharged. He rejected the suggestion that he told her it was only required as a temporary measure. 24. Mr Wardrop deposed that as a consultant engaged by Base Group Development his primary role was as a financial officer for Supplycorp Australia Pty Limited, a company associated with Domenico Battaglia which had a tile supply business. He further deposed that he also worked on matters for companies including Core Element Pty Limited, Base Constructions and Paratei. (Core Element seems to have been associated in some way with Bruno Battaglia). 25. Mr Wardrop deposed that he met and spoke to Florentina Battaglia many times about the financial position of the companies in what he described as "the Battaglia Family Group". He said that she was "the ultimate decision maker for the Battaglia Family Group" in matters in which he was concerned, was a signatory to bank accounts, and was responsible for the drawing of cheques. 26. Mr Wardrop deposed that when he started working he was told that Stefano Battaglia was in Argentina, and that he looked after the family's business operations there. Mr Wardrop says that he first met Stefano Battaglia at Christmas time at the family property in Broadbeach, and that on that occasion, he discussed with Stefano Battaglia the financial position of the Battaglia Family Group companies. Mr Wardrop recalls meeting Stefano Battaglia on one or two other occasions around that time. He formed the impression that Mr Battaglia was a sophisticated business person who was fully aware of the Battaglia Family Group's financial position. 27. As for the Deed of Guarantee apparently signed by Stefano and Florentina Battaglia, Mr Wardrop deposed that he signed as a witness to the signatures of Stefano and Florentina Battaglia on the execution page, and also signed and dated the certificate of independent financial advice. He said he recalled reading the certificate and deciding that he was qualified as a chartered accountant to give it, but said he had no separate recollection of the execution or witnessing of the document. He deposed that he certainly would not have certified as he did without first taking Stefano Battaglia through the guarantee and the documents referred to in the certificate to make sure he understood them. 28. In cross examination, Mr Wardrop was not sure when he "effectively started" his consultancy work after the agreement was signed on 15 December 2008. He did not recall whether he advised Stefano Battaglia that there was possibly a property other than the Burraneer property that could be used as security. He denied that the meeting with Stefano Battaglia did not occur, and that his certificate was false. He also denied that Stefano Battaglia did not sign the document in his presence. Mr Wardrop could not recall any detail of the meeting itself, or whether it took place on 14 January 2009. 29. Mr Delaney did not make an affidavit. When called to give evidence he said that the stamp and the signature on the declaration concerning independent legal advice looked to be his. He said that he had only the faintest of recollections of the occasion, although he recalled the line through Florentina Battaglia's name on the document, and that the document was "somewhat completed" when he received it. He said that the handwriting on the document was not his, apart from his signature. 30. Mr Delaney said in cross examination that he could not recall whether it was 14 January 2009 when he signed the document. He said that if he had noticed that the date was wrong he would have corrected it. He conceded that he did not correct the erroneous address of where the declaration was made. He maintained that he certainly does not witness such declarations unless the person is "sitting before me". 31. Mr and Mrs Battaglia seek to have the December 2008 contracts of guarantee, and the Burraneer mortgage, set aside on general equitable principles of unconscionability and alternatively pursuant to the Contracts Review Act. 32. Mr D Murr SC, who appeared with Mr R Freeman of counsel for Mr and Mrs Battaglia, submitted that Mr and Mrs Battaglia were each labouring under a special disability (in the sense identified in cases such as Blomley v Ryan (1956) 99 CLR 362 and Commercial Bank of Australia v Amadio (1983) 151 CLR 447) of which the Bank had notice. It was put that the special disability meant that Mr and Mrs Battaglia were not in a position to make worthwhile judgments about their interests. 33. In relation to Stefano Battaglia, it was submitted that since his accident in 1986, he had ceased to be actively involved in the business of the companies and spent most of his time living in Argentina. Further, he was an elderly man who suffered from memory problems and had very limited skills in the English language. 34. In relation to Florentina Battaglia, it was submitted that she was not involved in the making of financial or investment decisions for the companies, her role being limited to carrying out administrative tasks. It was submitted that the business of the companies was substantially conducted by the twin sons, who were trusted to make the important decisions. It was submitted that there was little or no direct contact between the Bank and Mr or Mrs Battaglia. 35. Mr Murr submitted that the Bank's knowledge of those circumstances, gained through Mr McCabe, meant that it must have been apparent to it that Mr and Mrs Battaglia required advice and explanation about the guarantee and mortgage transactions and the implications of such. Yet, at least in relation to Stefano Battaglia, he had no knowledge that he was giving a guarantee and a mortgage over the Burraneer property, and Florentina Battaglia did not receive adequate explanations of the transaction documents or the financial implications of the transaction. 36. In final submissions Mr Murr made the point that there was very little advantage in the transaction for the Battaglia interests in circumstances where the unencumbered Era site (worth much more than the Burraneer property) was either to be sold, or mortgaged to the Bank, by 31 March 2009. The only advantage was therefore an acceleration of the release of cash from March 2009 to December 2008. 37. Mr Murr further submitted that Mr Wardrop's evidence about the certificate of independent financial advice should be rejected, and that Mr Delaney's evidence about the declaration concerning independent legal advice could not be relied upon to establish that he witnessed Mr Battaglia's signature on 14 January 2009 or at all. As for the undertaking dated 14 December 2008, it was submitted that the fact that the document was returned by facsimile from "Corralon Centrico" was by no means conclusive evidence that it was returned by Stefano Battaglia. 38. Mr Murr did not submit that Mr McCabe was not a witness of credit. However, he submitted that Florentina Battaglia was also a witness who endeavoured to tell the truth. In particular, it was submitted that her evidence about not being the author of the 1 December 2008 letter should be accepted, having regard to its typeface, style and content and the fact that it was not signed by her. Mr Murr also submitted that Mr Battaglia was a witness who, despite obvious limitations, was endeavouring to tell the truth. 39. Mr Savage QC, who appeared with Mr J White of counsel for the Bank and the receivers, submitted that it was necessary to bear in mind that the companies that were parties to the transactions with the Bank were, with the exception of Yorkgrange Pty Limited (a company associated with Bruno Battaglia), companies whose shares were held by Mr and Mrs Battaglia. Moreover, both Mr and Mrs Battaglia remained directors of the companies throughout, and were beneficiaries of the various trusts of which one or other of the companies was trustee. 40. In relation to the December 2008 transactions, Mr Savage submitted that they followed upon a proposal advanced by the companies to obtain a release of cash to take advantage of opportunities in the Gold Coast property market. He submitted that the contemporaneous documents showed that Mr McCabe spoke to Florentina Battaglia, who was aware of the proposal to obtain the release of cash by giving a mortgage over the Burraneer property. He submitted that the 1 December 2008 letter apparently from Florentina Battaglia (which refers to a conversation held that morning between she and Mr McCabe) ought not be regarded as bogus. It was put that it should be inferred that the letter was at least written with Mrs Battaglia's involvement. 41. Mr Savage emphasised that Mrs Battaglia obtained independent legal advice and independent financial advice about the guarantee and mortgage transactions. Further, it was she who executed the documents, not only for herself, but also for Stefano Battaglia, pursuant to a valid Power of Attorney. 42. Mr Savage further submitted that it was clear that Mrs Battaglia obtained the form of undertaking from SP&G Lawyers, and that Mr Battaglia signed the undertaking dated 14 December 2008 in Argentina and returned it to Australia by facsimile. As for the Deed of Guarantee apparently signed by Stefano Battaglia, Mr Savage submitted that it was most unlikely that Mr Wardrop and Mr Delaney would give false evidence about their involvement with the document, although there was some doubt about when the document was signed. Mr Savage referred also to Mr Anderson's evidence that it was likely that the same person placed the signatures on the undertaking and the Deed of Guarantee. 43. The transactions of December 2008 concerned the $4.4 million finance facility of Base Constructions. That facility (which was not due to be repaid until December 2011) had remained in place following the sale of the Abbotsford property in 2007, supported by a cash security deposit. Base Constructions was the owner of the Era development site, which was unencumbered. Communications sent by Domenico Battaglia to the Bank in May and June 2008 indicated that steps were being taken to sell an interest in the Era site, and that the company would be prepared to offer security over the site. In November 2008, the Bank was informed by Bruno Battaglia that the family sought to take advantage of the current economic climate by acquiring "distressed sites at very low prices". Evidently, this was to be aided by lines of credit using other properties that were "debt free". In this context, a discussion with Mr McCabe about the cash deposits and the Burraneer property was mooted, and Mr McCabe then put forward a proposal involving the release of $3 million in cash and the execution of a mortgage over the Burraneer property. He was resistant to the idea of releasing all of the cash held. 44. On 14 November 2008, Bruno Battaglia indicated that it was possible that the Era site would be used so "we can release the full $4.5 million". However, offers of finance made to Paratei on 19 November 2008, which were accepted, stipulated that the Era site was to remain unencumbered until 31 March 2009. 45. On 27 November 2008, Bruno Battaglia informed Mr McCabe that the family wished to accept the proposal involving the release of $3 million and execution of a mortgage over the Burraneer property. It may be inferred from the two letters received by Mr McCabe (one dated 1 December 2008 from Florentina Battaglia and one undated from Bruno Battaglia) that at about that time he was asking questions about why the release of cash was sought and what it would be used for. Those letters were clearly intended, at least in part, to provide answers to those questions. 46. Despite the fact that the letter bearing Florentina Battaglia's name is typed, rather than in her handwriting as would be usual for her written communications with the Bank, I do not accept that the letter was neither written by nor approved by her. The likelihood is that even if she did not type it, she was involved to some extent in its composition. It is also likely that she was aware of its content and that it was to be sent to Mr McCabe, with whom she had recently spoken. At one stage in her cross examination she said that the letter "probably has been signed by me, but it's not done by me". I do not accept her evidence that the terms of the letter were "too technical" for her, and that she "cannot write English that well". She did not specify what aspects of the letter were too technical or beyond her. I note that the numerous letters written by Florentina Battaglia to the Bank to authorise transfers of money show that she undoubtedly had a close involvement with at least the banking arrangements of the companies. I note further that those letters, while brief, do not suggest an inability to write reasonably clearly (see, for example, her letter of 27 September 2007). 47. I regard her evidence concerning the letter of 1 December 2008 as an example of a self-serving statement intended to bolster her case. Another example is her evidence that she received no explanation about the documents she signed at SP&G Lawyers. I cannot accept that evidence, having regard to the declaration concerning independent legal advice Mrs Battaglia made before Ms Van der Veen, and Ms Van der Veen's notes which to my mind indicate that she was acting thoroughly and conscientiously in the matter. I also cannot accept her evidence that she could not have attended any meetings on 15 December 2008, the day of her mother's death. The contemporaneous documents clearly show that she signed documents on that day at the office of SP&G. 48. It is clear that Mr McCabe had a conversation with Florentina Battaglia in early December 2008 in which the giving of a mortgage over the Burraneer property was discussed. I infer from the letter dated 1 December 2008 that the conversation probably took place on that day. 49. Despite Mr McCabe's lack of recollection of the conversation, I am not prepared to accept Florentina Battaglia's version of the conversation, including her evidence that he told her that the mortgage would be only temporary until the sales of units in Signature on High had finished. There is no support for the existence of such an assurance or condition in any of the contemporaneous documents, including the Bank's letter of offer of 11 December 2008, the mortgage itself, and the records of SP&G Lawyers. Had there been such an assurance or condition, and had it been important to Florentina Battaglia's decision to agree to the mortgage, it is likely that it would have been mentioned to the lawyers at SP&G and been the subject of discussion with Ms Van der Veen who, I find, gave an explanation to Florentina Battaglia of the mortgage and guarantee documents. 50. Moreover, the conversion to strata title and the sale of units in Signature on High does not appear to have been pursued until about August 2009. A file note of Mr McCabe's dated 11 August 2009 indicates that strata title was then being registered for the units and that selling agents were being engaged. It is of course possible that such a course of action was in contemplation earlier than August 2009. I note that the 1 December 2008 letter from Florentina Battaglia refers to a 2009 debt reduction strategy involving Signature on High, and states that there was increased interest from investors for the property. This is likely to be a reference to the property as a whole as opposed to individual units. 51. The communications with the Bank in early December 2008 tend to suggest that Base Constructions was keen to quickly proceed with the proposed release of cash in return for a mortgage over the Burraneer property, whereas Mr McCabe was lukewarm. In his email of 4 December 2008 to Bruno Battaglia, for example, Mr McCabe stated (after referring to his earlier conversation with Florentina Battaglia) that whilst he did not want to lose the relationship "we are not going to be pressured into something we don't want to do either". I also note that in his email to Clint Woods on 5 December 2008, Mr McCabe again referred to his earlier conversation with Florentina Battaglia and stated that she was now "pushing this". There is no suggestion of any reluctance on the part of Mrs Battaglia, or of any keenness on the part of the Bank. I accept Mr McCabe's denial that he told Florentina Battaglia that the mortgage was only required as a temporary measure. I find that the assurance which Florentina Battaglia claims she received was not in fact given. I am also unable to accept her evidence that Mr McCabe said that the mortgage was needed "otherwise the boys are in trouble", and that she expressed reluctance to the giving of the mortgage and concern about meeting interest payments. 52. I have not overlooked the evidence to the effect that, commencing shortly after the giving of the mortgage, Florentina Battaglia regularly made requests for the mortgage to be released. These requests seem to have been made verbally, although it appears that in September 2009 Florentina Battaglia wrote a letter to Mr McCabe about the "possible release of the Cronulla home". That letter was not adduced in evidence. In any event, such requests, made on any view before the completion of the sales of units in Signature on High, are equivocal as to whether any assurance was given by Mr McCabe as claimed. I note further that on 19 May 2010 Domenico Battaglia sent an email to Mr McCabe (concerning cash flow issues that had apparently been discussed with Mr and Mrs Battaglia) which included the following words: "After the full sale of Signature on High, Stefan and Tina wish to have the Cronulla house taken out". It was not suggested in the email that this was something that had already been promised by the Bank. 53. The evidence is clear that Florentina Battaglia signed the acceptance of the Bank's letter of approval, and dealt with Ms Van der Veen in relation to the execution of the necessary documents, including on behalf of Stefano Battaglia by Power of Attorney. Florentina Battaglia was also involved in arranging for the form of undertaking to be sent to Stefano Battaglia in Argentina. The undertaking, as signed, was returned to Australia by facsimile. It was sent from a facsimile machine of "Corralon Centrico", a hardware business associated with Stefano Battaglia. It is likely that Florentina Battaglia brought the signed undertaking with her when she attended upon SP&G on 15 December 2008. It appears that no suggestion was made to Ms Van der Veen that the undertaking was anything other than one signed by Stefano Battaglia. In her letter to Gadens later that day she described the document as "Form of undertaking by Stefano Battaglia". 54. Notwithstanding his evidence to the contrary, in my view it should be concluded that Stefano Battaglia did in fact sign the form of undertaking. It was not suggested that any other family member was in Buenos Aires on 14 December 2008. There was no evidence to suggest that some other person in Buenos Aires at the time might have forged Mr Battaglia's signature on the document. 55. The evidence was unclear about what, if anything, Mr Battaglia had been told about the proposed transaction before he signed the undertaking. Florentina Battaglia deposed that she spoke to her husband by telephone in the second week of December 2008. She said that she made no mention of a mortgage over the Burraneer property. The undertaking itself does not explicitly mention a mortgage, although the Burraneer property is referred to, in the context of an advance by the Bank to Base Constructions, in respect of which Mr and Mrs Battaglia were to give a guarantee. By signing the undertaking, Mr Battaglia at least signified his willingness (subject to obtaining independent and legal financial advice) to provide a personal guarantee in relation to an advance to Base Constructions. 56. For the reasons which follow, I have also concluded that it is likely that Stefano Battaglia signed the Deed of Guarantee on pages 12, 14 and 16. As noted earlier, it was Mr Anderson's opinion that it was more probable than not that those signatures were written by the person who signed the undertaking dated 14 December 2008. 57. As for the signature on the execution page (page 12), Florentina Battaglia accepted in cross examination that she executed this version of the Deed of Guarantee on page 13, and at least initially she appeared to accept that she signed it in the presence of Mr Wardrop. Whilst she was uncertain as to when she signed it, she agreed that it was some time in the period December 2008 to January 2009. She was also uncertain as to whether her husband's signature was on page 12 of the document when she signed. However, whether the signatures on pages 12 and 13 were made on the same occasion or separate occasions, I accept Mr Wardrop's evidence that he would not have witnessed the signatures of Stefano Battaglia and Florentina Battaglia on the Deed of Guarantee unless they had each signed the document in front of him. Whilst Mr Wardrop accepted that his recollection concerning the Deed of Guarantee was poor, he seemed to me to be a witness endeavouring to give his honest recollection of what had taken place more than six years ago. It was not suggested that some reason existed that might cause Mr Wardrop to be prepared to falsely witness Mr Battaglia's signature. 58. The conclusion that both Mr and Mrs Battaglia signed the document is further supported by Mr Van der Veen's note of 27 January 2009, which records that Florentina Battaglia told her that Stefano Battaglia had come to Australia and signed the guarantee. I accept that Florentina Battaglia made such a statement to Ms Van der Veen. 59. That statement has to be considered together with the evidence that suggests that after Stefano Battaglia returned to Australia he was only on the Gold Coast in the period between 20 December 2008 and 29 December 2008. That evidence raises questions about whether the signatures appearing on page 14 (declaration concerning independent legal advice) and page 16 (certificate concerning independent financial advice) which bear the date 14 January 2009 and according to Mr Wardrop and Mr Delaney were made on the Gold Coast, are in fact signatures of Stefano Battaglia. 60. It is clear that Stefano Battaglia was in Sydney at about 12:20pm on 14 January 2009. That does not, of course, exclude the possibility that he was on the Gold Coast early that morning or later that afternoon. However, the evidence concerning the responses of Qantas Airways Limited and Virgin Australia Airlines to subpoenas indicates that Stefano Battaglia flew from Sydney to the Gold Coast on a Jetstar flight on 20 December 2008, and from the Gold Coast to Sydney on a Virgin flight on 29 December 2008. There is no evidence of any other flights taken by Stefano Battaglia in the period 18 December 2008 to 19 January 2009 (the period to which it appears the subpoenas were directed), although any bookings made on Qantas in that period, unless made using Stefano Battaglia's Frequent Flyer membership, would have been deleted from the system. This evidence formed the basis of a direct challenge to the veracity of the accounts given by Mr Wardrop and Mr Delaney. 61. It was put to Mr Wardrop that he did not meet with Stefano Battaglia and give him any advice, that his certificate was false, and that Mr Battaglia did not sign the document in his presence. Mr Wardrop denied the matters so put. It was put to Mr Delaney that he did not witness Mr Battaglia's signature on the declaration concerning independent legal advice on 14 January 2009. Mr Delaney reiterated that he had no recollection, although he said that it was his signature and it was his stamp on the declaration. He further stated that he would not sign such a document unless the declarant was before him. 62. It would of course be a very serious matter for Mr Wardrop, a chartered accountant, to falsely certify to a lender that he had given financial advice in relation to a transaction. Similarly, it would be a very serious matter for Mr Delaney, a solicitor, to witness a statutory declaration about giving legal advice on a transaction without seeing the declarant make and sign the declaration. Such conduct, particularly when the person concerned has no interest in the transaction, would not ordinarily occur unless the person was prevailed upon to participate in some form of conspiracy to mislead. No suggestion was made to either Mr Wardrop or Mr Delaney that they became involved in some such conspiracy. No other rationale as to why they might be prepared to engage in such conduct was put to them. That is not to level any criticism at the cross examiner, it is merely to point out that the attack rested solely upon the notion that Stefano Battaglia was not in fact on the Gold Coast on 14 January 2009. 63. If that is assumed to be the case, the dating of the declaration is incorrect (or false), and so is the dating of the certificate. The question then arises as to how such error (or falsity) arose. There are numerous possibilities. 64. In relation to the declaration, one possibility is that Stefano Battaglia signed it and Mr Delaney witnessed it on a day other than 14 January 2009, yet that date was at some time incorrectly inserted as the date of the declaration. This possibility assumes that Mr Delaney did not notice either the absence of a date, or the inclusion of an erroneous date. I regard that possibility as more likely than the possibility that Mr Delaney falsely purported to witness a declaration apparently made by Mr Battaglia. 65. I gained the impression that Mr Delaney was forthright in giving his evidence. He was well able to accept that he might not have picked up errors in the document (such as the address where the declaration was made), but he was firm in insisting that he would not sign such a document unless the declarant was before him. I am prepared to accept his evidence to that effect, particularly where no credible rationale was put forward as to why he might be prepared to engage in nefarious conduct. I therefore conclude that Stefano Battaglia signed the declaration concerning independent legal advice in the presence of Mr Delaney, even if that did not occur on 14 January 2009. 66. In relation to the certificate, one possibility is that it was signed by both Mr Wardrop and Mr Battaglia on a day other than 14 January 2009, yet that date was at some time incorrectly inserted as the date each signature was made. Another possibility is that Mr Wardrop and Mr Battaglia signed the document on different occasions and the date 14 January 2009 was at some time incorrectly inserted as the date for both signatures when one or both of them was made on some other date. 67. It should be noted that the certificate does not in its terms require that it be given at the same time the advice is given. Also, the confirmation by the guarantor is not required to be given at any particular time. Added to that, there is evidence that the certificate was not completed in an orderly way. As noted earlier, the identity of the provider of the certificate was not included in the document until 30 January 2009. (It is clear that Mr Wardrop's signature was on the document by that day). The section of the certificate concerning the documents provided to the giver of the advice is likely to have been completed by someone at SP&G. It is in the same form as the equivalent section in the certificate that forms part of the Deed of Guarantee signed by Mrs Battaglia on 15 December 2008, and there was evidence that SP&G provided Mrs Battaglia with the documents for her husband to sign. However, the certificate seems to have otherwise been completed without any guidance from a solicitor. It is not altogether surprising that the document was completed in a disorderly fashion, particularly as Mr Wardrop had no previous experience of such certificates. 68. In my view, both of the possibilities described above are more likely than the possibility that Mr Wardrop did not meet with Stefano Battaglia yet falsely signed a certificate to that effect. Again, having regard to the manner in which Mr Wardrop gave his evidence, and where no credible rationale was put forward as to why he might be prepared to engage in nefarious conduct, I accept his denial that he did not meet Stefano Battaglia and give him any advice, and his denial that his certificate was false. I accept that he did give Mr Battaglia some advice about the guarantee he was signing. 69. In my view, the likelihood is that this occurred on the occasion when both Mr and Mrs Battaglia executed the document in Mr Wardrop's presence. It further seems to me likely that Mr Battaglia signed the certificate on the same occasion. I am satisfied, in any event, that Stefano Battaglia signed the certificate, even if this did not occur on 14 January 2009. It is unclear who wrote the date next to that signature. 70. Very little evidence was adduced concerning the content of any advice given to Mr Battaglia by Mr Wardrop or Mr Delaney. Mr Wardrop's evidence, which was quite general in nature, was to the effect that he would have taken Mr Battaglia through the guarantee and other documents to make sure that he understood them and his obligations under them. However, as already noted, Mr Wardrop accepted that his recollection of what actually occurred was poor. Mr Delaney did not give any evidence in chief concerning the content of any advice he gave, and the topic was not touched upon in cross examination. This state of affairs perhaps reflects the fact that the essence of the case advanced in relation to Stefano Battaglia was that the December 2008 transactions occurred without his knowledge and participation, not that he received an explanation of the transactions that was inadequate or deficient. 71. The challenge to the December 2008 transactions is based upon equitable principles concerning unconscionable conduct, and s 7 of the Contracts Review Act. It has been said that, compared to those equitable principles, the Contracts Review Act has a lower threshold for relief, or has a wider jurisdiction, and that where both are relied upon it is generally preferable to first consider the application of the statute (see Bakarich v Commonwealth Bank of Australia [2007] NSWCA 169 at [89]; Spina v Permanent Custodians Limited [2009] NSWCA 206 at [74]-[75]). I will follow that course. 72. Section 7(1) of the Contracts Review Act relevantly provides: Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following: (a) it may decide to refuse to enforce any or all of the provisions of the contract, (b) it may make an order declaring the contract void, in whole or in part…… 1. Section 9(1) of the Contracts Review Act provides: In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of: (a) compliance with any or all of the provisions of the contract, or (b) non-compliance with, or contravention of any or all of the provisions of the contract. 1. A number of matters are then set out in s 9(2) which the Court must, to the extent they are relevant to the circumstances, have regard. 2. It is well established that a contract can be unjust "because of the way it operates in relation to the claimant or because of the way in which it was made or both" (see West v AGC (Advances) Limited (1986) 5 NSWLR 610 at 620 per McHugh JA; recently cited by Gleeson JA (with whom Barrett and Emmett JJA agreed) in Canty v Paperlinx Australia Pty Limited [2014] NSWCA 309 at [119]). It is also well established that the provisions of the Act call for a broad evaluation of unjustness that involves a normative evaluation of the totality of relevant circumstances (see Provident Capital Limited v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36 at [7] per Allsop P). In that case, Allsop P went on to state at [7]: Central to the normative evaluation is the recognition that there is a need for the protection of some people in some circumstances, who are not able fully to protect their own interests against factors that may cause injustice. That vulnerability may come from one or more of many circumstances, such as lack of education or of intelligence, from gullibility, from the predation of fraud and greed, and also sometimes from loyalty and love. The characterisation of a contract as unjust and the sheeting home to the other contracting party of the consequences of its unjustness may be a difficult evaluative exercise. At its heart, however, is the recognition of the inadequacy of one party to protect her or his interests in the circumstances. 1. Before turning to that evaluative task, something should be said about the manner in which the relationship between the Bank and the Battaglia family had been conducted in the years leading up to the transactions. Mr Murr placed considerable reliance upon the fact that Stefano Battaglia spent almost all of his time living in Argentina, and that most of the direct contact between the "relationship banker" Mr McCabe, and the family, was with Bruno and Domenico Battaglia. It was submitted that it should be concluded that Mr and Mrs Battaglia had little actual involvement in or knowledge of the activities of the family companies, and that they were thus heavily reliant upon their sons to properly manage the affairs of the companies. 2. I do not think that such a conclusion should be drawn. It does appear that the sons played an important role in the management of the companies. They were after all, along with their parents, directors of the relevant companies at the time. However, I do not think it follows that Mr and Mrs Battaglia suffered from a lack of knowledge of the activities of the companies. Mrs Battaglia at least maintained a close involvement in relation to the finances of the companies. On countless occasions she gave instructions to the Bank for the transfer of sums of money between various accounts. On occasions, Mrs Battaglia was specifically authorised by the companies to deal with the Bank in relation to certain facilities and effect draw downs. For example, such an authority was given by Base Constructions in December 2006, and by Paratei in April 2008. In executing those authorities Mrs Battaglia often directed transfers of very large amounts, extending to the hundreds of thousands of dollars. Mrs Battaglia also executed numerous documents on behalf of the companies in order to obtain finance from the Bank. I think it is likely that she possessed at least a reasonable understanding of the financial position of the companies. I do not think that, in 2008, the Bank ought to have reached any different conclusion. 3. As far as Mr Battaglia is concerned, it is true that from about 1987 he was living in Argentina for most of the time. He nonetheless occasionally signed documents on behalf of the companies in relation to the obtaining of finance (even after he gave a general Power of Attorney to Florentina Battaglia in 1997). For example, he executed a mortgage as a director of Base Constructions in 1993, and at the same time signed a Deed of Guarantee and Indemnity. He signed applications for finance for Base Constructions in 1996 and 1997. That 1997 transaction involved the giving of a mortgage over the Burraneer property. Mr Battaglia signed that mortgage and entered into a further Deed of Guarantee and Indemnity. In 2001, Mr Battaglia executed a mortgage on behalf of Paratei. In 2002 he signed an application for finance for Paratei, signed a further Deed of Guarantee and Indemnity, and then a Deed of Affirmation by Guarantors. From that time, documents were generally signed on his behalf by Mrs Battaglia pursuant to the 1997 Power of Attorney. 4. The degree of knowledge possessed by Stefano Battaglia in those years about the financial position of the companies is not clear. That would depend on the nature and extent of the communications he had with Mrs Battaglia and their sons. It is likely that there were discussions about business matters, including the businesses Mr Battaglia was himself involved with in Argentina. Mr Wardrop's evidence, to the effect that Stefano Battaglia seemed to be fully aware of the financial position of the companies in the Battaglia Family Group, was not directly challenged. I would be prepared to accept that Mr Battaglia had at least a basic understanding of the financial position of the companies. From the point of view of the Bank, its understanding could only come from communications from other family members, mainly the sons. Those communications suggested that the affairs of the companies were discussed with Mr Battaglia from time to time. 5. Mr Murr referred to some parts of the communications which suggested that the sons were trying to shield their parents (particularly their father) from receiving advice from other sources, and were not providing their parents with accurate information. In this regard, Mr Murr pointed to the 14 November 2008 email from Bruno Battaglia which refers to "shielding Stefano from bogus advises [sic] from other parties to look elsewhere", and Mr McCabe's email to Mr Woods of 5 December 2008 in which he referred to "another story of me agreeing something with the boys and them telling mum and dad something different". Mr McCabe was asked about Bruno Battaglia's comment in cross examination. He did not agree that the comment would raise alarm bells, but stated that it would raise a question. He agreed that it suggested the possibility that the sons were diverting potential advisers away from their father. That may be so, but the comment seems to be directed at advice about "going elsewhere", which I would take to be a reference to the family's banking arrangements, not the mooted alteration to security to enable a release of cash. Also, the comment can be seen as an indication that Mr Battaglia was involved in the intra-family discussions about financial matters. As for the comment made by Mr McCabe in his email of 5 December 2008, I accept that the comment does indicate that he had grounds to doubt that the sons could be relied upon to accurately convey information to their parents. 6. In 2008, the borrowing entities were Base Constructions and Paratei. Both Mr and Mrs Battaglia remained directors of those companies. The sons were also directors. Mr and Mrs Battaglia owned all the shares in Paratei, and all the shares in Base Constructions apart from those held by Base Development. All the shares in that company were also owned by Mr and Mrs Battaglia. In all the circumstances, despite Mr Battaglia's absence from Australia, and the limited amount of direct dealing with him particularly after 2002, I do not think that the Bank ought to have concluded that he had little knowledge of the activities of the family companies. 7. I turn now to consider whether either the Deed of Guarantee or the mortgage over the Burraneer property are contracts that were unjust in the circumstances relating to them at the time they were made, within the meaning of s 7(1) of the Contracts Review Act. 8. The guarantee and mortgage were given in relation to a transaction that involved the $4.4 million facility held by Base Constructions. By 2008, following the sale of the Abbotsford property, the security for that facility consisted of a cash security deposit for the same amount. It is not clear why the company chose to maintain the facility rather than simply repay it. Mr McCabe said that he asked that question and was told that was what the family wanted. In any case, the facility, which was not required to be repaid until December 2011, was maintained. 9. The principal asset of Base Constructions was the Era site. By the second half of 2008, negotiations were underway with a Korean company for the sale of an interest in that site. In November 2008 Mr McCabe was informed by Bruno Battaglia that the family wished to take advantage of the current economic climate to "acquire distressed sites at very low prices". This was to be achieved by creating lines of credit using debt free properties. It was mooted in this context that Mrs Battaglia and Bruno Battaglia would meet with Mr McCabe to discuss the cash deposit and the Burraneer property. Mr McCabe put forward a proposal involving the release of $3 million in cash and the giving of a mortgage over that property. 10. That proposal was not immediately agreed to. There were other issues to deal with, including the obtaining of further funding for marketing costs associated with the Era site. That funding was put in place (for Paratei). One of the terms was that the Era site would remain unencumbered until 31 March 2009, but if not sold by then, it was to be mortgaged to the Bank. It would appear that this term put paid to a suggestion (earlier made by Bruno Battaglia) that the Era site might be used so as to achieve a release of all of the funds on deposit. On 27 November 2008, Bruno Battaglia informed Mr McCabe that the family wished to accept his proposal for a release of $3 million of cash in return for a mortgage over the Burraneer property. 11. The foreshadowed meeting between Mr McCabe, Bruno Battaglia and Mrs Battaglia did not eventuate, but it is clear that Mr McCabe discussed the proposal with both Bruno Battaglia and Mrs Battaglia. Mr McCabe and Mrs Battaglia had a discussion on the telephone, probably on 1 December 2008. The giving of a mortgage over the Burraneer property was part of that discussion. I have found that Mr McCabe did not make any promise or give any assurance that such mortgage was to be "only temporary", and would be released once all of the units in Signature on High had been sold. I have also found that the letter Mr McCabe received, dated 1 December 2008 from Mrs Battaglia, was prepared with her involvement and sent with her approval. That letter indicates that Mrs Battaglia had given thought to what the released cash would be used for. It also indicates that Mrs Battaglia had given thought to the mortgaging of the Burraneer property as opposed to the Era site, which was to be kept "clean" due to the ongoing negotiations in relation to it. In my view, Mrs Battaglia showed that she had a good appreciation of the general nature of the proposed transaction. 12. The Bank issued its letter of offer to Base Constructions on 11 December 2008. The offer was to the effect that the existing facility could be altered by adding the Burraneer property as security and releasing $2.8 million from the cash security deposit. A guarantee from Mr and Mrs Battaglia was required. 13. SP&G Lawyers were retained to act for the proposed mortgagors and guarantors. On 12 December 2008 that firm informed Gadens that Mrs Battaglia would be signing documents under Power of Attorney. That was acceptable to the Bank, although the Bank wanted Mr Battaglia to give an undertaking that he would execute the guarantee himself in Argentina after getting legal and financial advice over the telephone. SP&G prepared a form of undertaking, and arrangements were made, which involved Mrs Battaglia, for it to be sent to Mr Battaglia in Argentina. As I have found, Mr Battaglia signed the undertaking in Argentina and sent it back to Australia by facsimile. It was brought to SP&G, probably by Mrs Battaglia, on 15 December 2008. 14. On that day, Mrs Battaglia attended upon Mr Buhmann to obtain financial advice. She also obtained legal advice from Ms Van der Veen of SP&G about the guarantee and mortgage. She executed the various transaction documents, including the guarantee and the mortgage, both for herself and for her husband pursuant to Power of Attorney. There was evidently some keenness for the matter to settle quickly. When Ms Van der Veen sent the completed documents, including the undertaking, to Gadens, she told Gadens that her client was anxious to settle the matter by 17 December 2008. This was reiterated on the following day. Also on that day Mrs Battaglia signed an authority for the Bank concerning the disbursement of the cash to be released. Settlement in fact took place on 17 December 2008 as requested. 15. As I have found, after Mr Battaglia came to Australia in December 2008 he (and Mrs Battaglia) executed a Deed of Guarantee in the presence of Mr Wardrop. It seems that Mr Battaglia received at least some advice from Mr Wardrop about the transaction. Mr Battaglia signed a confirmation to that effect. Mr Battaglia also attended upon Mr Delaney and signed a declaration in his presence to the effect that he had received legal advice and was voluntarily signing the guarantee and mortgage. Mr Battaglia did not in fact sign the mortgage. That was not a requirement of the Bank. The mortgage, executed by Mrs Battaglia, had been registered by 5 January 2009. 16. Mr Murr did not specifically address the applicability or relevance of the various matters set out in s 9(2) of the Contracts Review Act. The Court is required to have regard to such matters to the extent they are relevant. I will deal with each paragraph in turn. 17. As to (a), I do not consider that there was any material inequality in bargaining power between the parties to the guarantee and mortgage. The Base Constructions facility was not due for repayment. The company was in a position to repay it early if it wished (as permitted under its terms) but had chosen to maintain it. The transaction was one pursued by Base Constructions, which wanted a release of cash. For its own reasons, it chose to put the Burraneer property forward as the replacement security. The Bank appeared lukewarm to the transaction. There is a suggestion in the letters to Mr McCabe of 1 December 2008 that the interest rates offered by the Bank were not attractive and Base Constructions was considering taking its cash elsewhere. 18. As to (b), there was no negotiation of the terms of the guarantee or mortgage itself. I note that the Deed of Guarantee contained a maximum liability clause that provided that the maximum liability under the guarantee was $4.4 million plus interest, costs and certain other amounts. 19. As to (c), it was probably not reasonably practicable for Mr and Mrs Battaglia to negotiate for the alteration of, or to reject, any of the provisions of the guarantee or mortgage. 20. Paragraph (d) does not seem to me to be relevant to the circumstances of this case. 21. As to (e), this does not seem to be relevant in relation to Florentina Battaglia. As far as Stefano Battaglia is concerned, whilst it is true that he suffers from an impaired memory and has limited ability in the English language, I do not think that these matters (or his then age of 72) meant that he was not reasonably able to protect his interests. Even after his accident in 1986 he has been able to engage in commercial activities both in Australia and in Argentina, where necessary with the assistance of others. He could communicate with family members including Mrs Battaglia in relation to business matters in Australia if he saw fit. Mrs Battaglia acted as his attorney in relation to the execution of the documents in this transaction, and may be taken to have represented the absent Mr Battaglia in relation to it. She was reasonably able to protect his interests. 22. As to (f), it is my view that Mrs Battaglia had sufficient commercial experience and literacy to appreciate the nature of the transaction, including the contracts of guarantee and mortgage, and to act accordingly. In so far as Mr Battaglia was personally involved in the transaction, I think he also had sufficient commercial experience and literacy to at least appreciate that the transaction involved the giving of a guarantee. 23. As to (g) there is no suggestion that the form of the contracts or the intelligibility of the language in which they are expressed may have given rise to any injustice does not seem to be relevant to this case. 24. As to (h), I have found that Mrs Battaglia received independent legal advice and independent financial advice at the time she executed the transaction documents. Mr Battaglia received some advice from Mr Wardrop, and perhaps from Mr Delaney, although this occurred after 17 December 2008 when the contracts of mortgage and guarantee were made. 25. As to (i), I am satisfied that Mrs Battaglia received from Ms Van der Veen an explanation of the provisions of the mortgage and guarantee documents (and their legal and practical effect), and that Mrs Battaglia was able to understand those provisions. The content of the advice received by Mr Battaglia is less clear. However, there was no suggestion that Mr Battaglia, who had previous experience with mortgages and guarantees, apparently explained to him by solicitors, did not understand the concept of a mortgage or a guarantee. He expressly stated in cross examination that he knew what a guarantee was. 26. As to (j), Mr Murr disclaimed any suggestion of Mr and Mrs Battaglia being subject to the undue influence of their sons. I do not think that the evidence showed that any unfair pressure or unfair tactics were exerted upon or used against Mr and Mrs Battaglia in this transaction. 27. As to (k) and (l), it is relevant to note that there was a lengthy relationship between the Bank and the Battaglia family and its entities which involved the lending of money on mortgage security, the taking of guarantees including personal guarantees from Mr and Mrs Battaglia, and not uncommonly the execution of documents by Mrs Battaglia on behalf of Mr Battaglia by Power of Attorney. The purpose of the mortgage and guarantee on this occasion was the provision of security in substitution for existing security held by the Bank in relation to a loan facility. 28. The Court is also required by s 9(1) to have regard to the public interest (which includes the enforcement of contracts freely entered into, without fraud or trickery) and all the circumstances of the case. Having done so, I am not prepared to find that either the Deed of Guarantee, or the mortgage over the Burraneer property, was an unjust contract in the circumstances relating to it at the time it was made. In my opinion, the mortgage and guarantee contracts were not unjust, either in the way they were made, or in the way they operated. 29. The contracts were made as part of a transaction that was advanced by Base Constructions (including its director Mrs Battaglia) in its perceived commercial interests. It involved the substitution of a property owned by Mr and Mrs Battaglia as mortgage security in place of cash security, and the provision of a personal guarantee by Mr and Mrs Battaglia. The immediate release of cash was apparently considered to be advantageous in the prevailing economic conditions. Mrs Battaglia, who executed the documents for the mortgagors and guarantors, was plainly aware of the nature of the transaction. She had the benefit of professional advice from a solicitor and an accountant. She must have known that if the money borrowed by Base Constructions was not repaid, the Bank could sell the Burraneer property and apply the proceeds towards the outstanding debt. She had sufficient information and advice available to her to enable her to make a considered judgment about whether to proceed with the transaction. Moreover, prior to settlement, Mr Battaglia at least knew that the transaction involved the giving of a guarantee, a concept he was familiar with. It was open to him to seek whatever information he felt he needed from Mrs Battaglia about the proposed transaction, or to decline to give the undertaking that was sought from him. He chose to sign the undertaking and return it to Australia, thereby signifying his agreement to the proposal. 30. The provision of the mortgage and guarantee in support of Base Constructions can be regarded as third party security. However, Mr and Mrs Battaglia were not only directors of the company, they were its only shareholders. They may have permitted their sons to play important roles in the management of the company's affairs but, as explained above, it does not follow that Mr and Mrs Battaglia had little actual involvement in, or knowledge of, those affairs. 31. The mere fact that the mortgage and guarantee were executed for Mr Battaglia by way of Power of Attorney does not give rise to any injustice. This mode of execution had been employed on previous occasions in transactions involving the Bank. The Power of Attorney was something that could be employed as a matter of convenience, whenever Mr Battaglia was not in Australia. Its use in this case was suggested by Mrs Battaglia. The suggestion was acceded to by the Bank, subject to the provision of an undertaking from Mr Battaglia to later execute a guarantee and provide certificates of independent legal and financial advice. The Bank thus sought to ensure that Mr Battaglia was made aware of a transaction that would involve him giving a personal guarantee. It is relevant to note the important role played by Powers of Attorney in effecting transactions, and the need for third parties to be able to safely rely upon their ostensible efficacy without having to conduct an examination of the relationship between the principal and the attorney (cf Taheri v Vitek [2014] NSWCA 209 at [116] per Leeming JA). 32. It is also relevant to note that the new security, whilst a residential home, could not be described as the family home. Mr Battaglia lived there only on the occasions he was in Australia. Mrs Battaglia lived in the Broadbeach property in Queensland. 33. In my view, this is not a situation where the mortgagors and guarantors were not able to adequately protect their interests. There was no unfair or predatory conduct on the part of the Bank. The contracts were the result of the considered pursuit of a transaction thought to be in the interests of Base Constructions, one of the companies through which Mr and Mrs Battaglia pursued their economic interests. The Contracts Review Act claim fails in relation to the December 2008 transactions. 34. It is also my view that the claim of unconscionable conduct has not been made out in relation to those transactions. A consideration of the circumstances of those transactions does not lead to the conclusion that the mortgage and guarantee were procured by the Bank taking advantage of an inability on the part of Mr or Mrs Battaglia to make worthwhile judgments about their interests (see Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25 at [124]). Mrs Battaglia, who executed the relevant documents, was apparently in a position to make such judgments, assisted to the extent necessary by independent legal and financial advice. As far as Mr Battaglia is concerned, he was capable of engaging in commercial activities and dealing with business matters. The extent of his active involvement in the affairs of the companies in Australia, and the extent to which he was content to leave matters to his wife or sons, seems to have largely been a matter of choice. For some years prior to 2008, the Bank had little or no direct contact with Mr Battaglia. However, the Bank could not be said to have been on notice of an inability on the part of Mr Battaglia to make worthwhile judgments as to his economic interests. There was a history of dealings between the Bank and the Battaglia family companies, sometimes involving Mr Battaglia, sometimes not. He remained throughout a director and shareholder in the relevant companies. The communications the Bank had with other members of the family suggested that the affairs of the companies were the subject of discussion with Mr Battaglia from time to time. 35. In my opinion, there was no special disability sufficiently evident to the Bank so as to render its conduct, in taking the mortgage and guarantee, exploitative (see Kakavas v Crown Melbourne Ltd (supra) at [124] and [160]). Neither can its conduct be described as predatory (see Kakavas v Crown Melbourne Ltd (supra) at [161]). 36. Finally, by reason of my findings concerning the discussion between Mr McCabe and Mrs Battaglia on 1 December 2008, the equitable estoppel case fails. No promise or assurance was given to the effect that the mortgage was "only temporary" and would be released once the Signature on High units were all sold. The 2009 cross-collateralisation transaction 1. The next transaction challenged by Mr and Mrs Battaglia is the Deed of Cross-Guarantee entered into on 11 November 2009. This deed was also entered into by Base Constructions, Paratei, Base Group Development, Full Circle GC Pty Limited, Yorkgrange Pty Limited and Domenico Battaglia. 2. As noted earlier, Yorkgrange Pty Limited is a company associated with Bruno Battaglia. Neither Mr nor Mrs Battaglia were shareholders in that company, although Florentina Battaglia was a director. 3. Full Circle GC Pty Limited was incorporated on 5 November 2009 in circumstances that are more fully described below. Stefano Battaglia held two of the three issued shares. Florentina Battaglia held the other share. She was the sole director of the company. 4. In early 2009 Paratei had facilities for a total amount of $8.3 million that were due to expire on 31 March 2009. It was a condition of the finance that if the Era site had not been sold by then, it would be mortgaged to the Bank. The site had not sold by that date although it appears that negotiations were continuing. Mr McCabe called for the mortgage to be provided, but agreed to a request not to register it for a period. On 7 April 2009 an extension of the Paratei facilities to 31 October 2009 was offered by the Bank, and accepted. Also on 7 April 2009, a facility for $1.45 million held by Domenico Battaglia with the Bank was extended to 31 October 2009. 5. On 29 June 2009 various documents, including a mortgage over the Era site, guarantees from Base Constructions, Paratei and Base Group Development, and a fixed and floating charge given by Paratei, were executed. Many of the documents were signed by Florentina Battaglia. 6. On 21 July 2009, Mr McCabe received an email from Domenico Battaglia which referred to "a shopping centre the family is very interested in" at Nerang. However, that property was soon purchased by other interests. In August 2009, Domenico Battaglia provided some information to Mr McCabe about another shopping centre called Bell Central and sought his ideas concerning finance options. The pair had a meeting on 11 August 2009. Mr McCabe's note of the meeting includes the following: Writer today met with Mick Battaglia to discuss group position and strategy for this family owned and controlled group. Family has sought ING support and/or comment in respect of proposed new acquisition and updates on activity/development on other assets. …… "Era" Vista St Surfers Paradise. Battaglia advises the Korean purchasers have withdrawn from acquisition of the Era site. DA remains on foot through to December 2011. …… High St, Southport. Strata title is being registered for units. Agents are being engaged to sell – expected marketing period 4-8 months. Sale proceeds to repay debt. "Bell Central", Mudgeeraba. 3,690sqm NLA shopping centre being marketed for sale. Coles (2021) BWS, CBA anchored centre + 14 other specialties. Family keen to acquire asset at yield of 9.0% + Funding being sought whilst High St sells and loan is paid down. ING has advised no funding is currently available and to investigate other sources. Argentina. Father and elder brother Bruno based in BsAs. Family interests in Argentina greater than Australia. Possible source of funding for Bell Central above. Maybe possible to use resources in BsAs. …… Family has been with ING for 20+ years and are generally trouble free. Given likely refinance arising from purchase of Bell Central or other like assets, we have deferred registration of mortgage over Era through to October 2009 when full group review will be completed. 1. On 1 September 2009 Domenico Battaglia sent an email to Mr McCabe in which he requested an extension of facilities for a further six months beyond October 2009. It was stated that Florentina and Stefano Battaglia definitely wanted such an extension. In his reply, Mr McCabe enquired about the "retail asset". Domenico Battaglia informed Mr McCabe that it was still being pursued, and that funding may come from a new bank. 2. On 7 September 2009, Domenico Battaglia sent an email to Mr McCabe concerning the Bell Central shopping centre. The email included the following: I have had in depth discussions with the family specifically with regards to the market and our portfolio in the last several months. I definitely believe that working with the market and selling Signature on High Apartments at an expected figure of 11,000,000 plus, compliments the owner occupiers and investors going forwards. We believe having a commercial investment such as Bell Central will increase not only our cash flow expectations and also have a strong asset improving in value going forwards. We realise Signature on High has and will continue to be a good asset with a nett return of mid 4 percent however looking at replacing it with Bell Central having a yield of 9% nett makes obvious sense. …… We are currently communicating with the owners of Bell Central endeavouring to place a formal offer to them very soon. We realise this asset is an attractive one and timing to strike is crucial. After our last conversation mentioning ING could be in a position to fund not only reassures our relationship that we have had for decades but also completely minimises the risk of transferring our portfolio to another financial institution when we know that our family is gearing up to maximise investments in the next 3 to 5 years starting with Bell Central. …… Tim, we are seeking your advice on what ING can propose and assist us with funding to secure this opportunity. 1. On 9 September 2009, Mr McCabe replied in the following terms: Have been thinking further based upon recent discussions and your mum's letter to me re possible release of Cronulla home. How do you feel about revaluing Era site and cross collateralising all facilities – this way I think we can manage to let go of Cronulla and reset everything for two years. You will however contemplate and agree cross collateralisation of all loans and assets. What do you think. 1. In a further email sent shortly thereafter, Mr McCabe summarised the current facilities of "Base Group". These totalled $15.6 million, made up of $8.3 million for Paratei (secured over Signature on High), $4.4 million for Base Constructions (secured over the Burraneer property and $1.6 million in cash), $1.45 million for Domenico Battaglia (secured over a property described as "Backpackers") and $1.45 million for Yorkgrange Pty Limited (secured over Bruno Battaglia's home). The unregistered mortgage over the Era site seems not to have been taken into account. 2. Later on 9 September 2009, Domenico Battaglia sent a further email to Mr McCabe again enquiring about how the shopping centre could most effectively be financed. On 10 September 2009 Mr McCabe replied in the following terms: The bank will want a mortgage over the centre, and fixed and floating charges to pick up lease rentals etc. As related matter for consideration…..Which entity is going to buy it? Will it be a new SPV? What are tax considerations if any? I think best strategy for package going forward, particularly to release Cronulla will be to put everything into the one bucket but I need your guidance on what it is you want. 1. On 23 September 2009, Mr McCabe received an email from Gareth Croy of CRC Solvency Solutions. Domenico Battaglia had earlier described Mr Croy as "our taxation strategist". The email referred to the possible appointment of a controlling trustee under Part X of the Bankruptcy Act in respect of Bruno Battaglia. It seems that such a step would enable companies in the group to write off debts owed to them by Bruno Battaglia, and utilise such losses to offset capital gains on the disposal of real estate assets. The Bank's support "through this process" was sought. Accordingly, a release of Bruno Battaglia from his personal guarantee was sought so that there would be no default under the guarantee when the controlling trustee was appointed. An offer was made for Bruno Battaglia to sign a new personal guarantee upon a renewal of the facilities with the Bank. Mr McCabe suggested that consideration should be given to whether such arrangements might give rise to issues under Part IVA, presumably a reference to the Income Tax Assessment Act. 2. On 30 September 2009, Domenico Battaglia forwarded a proposed Heads of Agreement in respect of Bell Central to Mr McCabe. The Heads of Agreement provided for a price of $14.05 million, immediate payment of a refundable deposit of $50,000, and payment of the balance of the $700,000 deposit on exchange of contracts following a period of due diligence extending to 9 November 2009. 3. On 7 October 2009, Mr McCabe sent an email to Domenico Battaglia headed "Restructure – Bells" which contained Mr McCabe's thoughts about what could happen in various circumstances, including the sale of Signature on High and the acquisition of Bell Central. Reference was made to cross-collateralisation of all facilities. The email also suggested that the mortgage over the Era site should now be registered. 4. On 13 October 2009, Mr McCabe sent an email to Domenico Battaglia which stated that Mr McCabe was thinking that all of the facilities should be cross-collateralised, and extended for six months, and that an indicative offer of finance for Bell Central would be made. 5. An internal discussion paper prepared on that day by Mr McCabe recommended that the Bank proceed with a proposal involving, inter alia, cross-collateralisation of all facilities, and provision of additional finance of $14.5 million to fund the acquisition of Bell Central. Mr McCabe's recommendation was accepted. 6. On 15 October 2009 Mr McCabe sent a letter to Domenico Battaglia to indicate the terms upon which the Bank would be willing to restructure the existing facilities. These terms included the cross-collateralisation of all facilities. 7. On 22 October 2009, Mr Woods of the Bank sent an email to Domenico Battaglia chasing up the provision of certain financial information. On the following day, Domenico Battaglia replied in terms which indicated that Mrs Battaglia had requested the information some time ago. The reply also referred to a request for cash to be used to cover various costs. It was stated that Mrs Battaglia was "on my case" in relation to that matter. 8. On 31 October 2009, the various Paratei facilities were due to be repaid. On 5 November 2009, the Bank offered to extend those facilities to 30 November 2009. That offer was accepted. Domenico Battaglia's facility for $1.4 million was similarly extended to 30 November 2009. 9. On 6 November 2009 the Bank made an offer to Paratei which involved, inter alia, the amalgamation of the existing facilities into a single loan for $8.3 million, extension of the loan to 31 December 2011, and cross-collateralisation with existing facilities. The letter of offer also referred to a new $14.5 million loan to Full Circle GC Pty Limited. That company, which was evidently intended to be the purchaser of Bell Central, was to provide security over the shopping centre upon the full draw down of that loan. The Bank's offer was accepted. Mrs Battaglia signed the acceptance for Paratei, Base Constructions, Full Circle GC Pty Limited, Base Group Development and Yorkgrange Pty Ltd. She also signed the acceptance for herself and, as attorney, for Mr Battaglia. Part of the required security was a joint and several guarantee to be given by, inter alia, Mr and Mrs Battaglia. 10. Also on 6 November 2009 the Bank made an offer to Base Constructions to extend its existing $4.4 million facility to 31 December 2011. Again, the facility was to be cross-collateralised with existing facilities. This offer was also accepted. Mrs Battaglia signed the acceptance for Base Constructions, Full Circle GC Pty Limited, Base Group Development, Paratei, and Yorkgrange Pty Ltd, as well as for herself and her husband. 11. The Bank also made offers to extend the existing facilities of Domenico Battaglia and Yorkgrange Pty Limited to 31 December 2011, with such facilities also to be cross-collateralised with the others. 12. Finally, the Bank made an offer to Full Circle GC Pty Limited for a loan of $14.5 million to finance the acquisition of the Bell Central shopping centre. Again, the facility was to be cross-collateralised with the others. This offer was accepted. The acceptance was signed by Mrs Battaglia on behalf of Full Circle GC Pty Limited, Base Constructions, Base Group Development, Paratei, and Yorkgrange Pty Ltd, as well as for herself and her husband. 13. In respect of each of the offers made to Paratei, Base Constructions and Full Circle GC Pty Limited, Florentina Battaglia was nominated as the authorised person to deal with the Bank. 14. The transaction involved the incorporation of Full Circle GC Pty Limited and the establishment of the Bell Central Property Trust. Mr and Mrs Battaglia were the Appointors and Primary Beneficiaries of the trust. Full Circle GC Pty Limited was the trustee of the trust. As noted earlier, all the shares in Full Circle GC Pty Limited were held by Florentina and Stefano Battaglia. Florentina Battaglia was appointed as the sole director and secretary. 15. SP&G Lawyers were retained to act for the Battaglia family interests in relation to the transaction. McCullough Robertson Lawyers acted for the Bank. The executed letters of offer were forwarded by SP&G to McCullough Robertson late on the afternoon of 10 November 2009. It is clear that the execution of the letters of offer took place in the presence of Mr Brook of SP&G. 16. On 10 November 2009, the Bank sent letters to Mr and Mrs Battaglia and Domenico Battaglia at the Broadbeach property. The letters advised that the Bank had approved facilities in the total amount of $30.09 million (including facilities to Yorkgrange Pty Ltd and Domenico Battaglia), that such facilities were to be cross-collateralised, and that guarantees would be provided by the recipient of the letter "or the company that you are a director of". 17. The transaction documents were sent by McCullough Robertson to SP&G in the post on 10 November 2009. The covering letter included the following: We note that our client is prepared to accept waivers of independent legal and financial advice from Stefano, Florentina and Domenico Battaglia and we have attached those documents for signing. However, if they wish to obtain that advice, please let us know and we will forward the relevant statutory declarations to you. 1. The various documents were executed on 11 November 2009. The documents, as executed, were sent later that day by SP&G to McCullough Robertson. The documents included the Deed of Cross Guarantee entered into by the various Battaglia family companies, as well as Stefano, Florentina and Domenico Battaglia personally. Mrs Battaglia executed the document for herself and also on behalf of Mr Battaglia pursuant to Power of Attorney. In essence, the parties agreed to guarantee repayment to the Bank of the debts of all the companies (including Yorkgrange Pty Ltd), and of Domenico Battaglia. 2. Amongst the documents sent to McCullough Robertson were statutory declarations made by Mrs Battaglia concerning the waiver of independent legal advice and independent financial advice, and similar statutory declarations made by her as attorney for Mr Battaglia. Also included was a resolution by Mrs Battaglia, as the sole director of Full Circle Pty Limited, to the effect that entry into the proposed financing transaction would be to the benefit of the beneficiaries of the Bell Central Property Trust. 3. Late in the afternoon of 11 November 2009 SP&G informed McCullough Robertson that contracts for the purchase of the Bell Central shopping centre had been exchanged that afternoon. The purchaser was Full Circle GC Pty Limited. The contract was executed on behalf of the company by Mrs Battaglia as its sole director and secretary. The balance of the $700,000 deposit was required to be paid by 16 November 2009. 4. On 12 November 2009, SP&G sent McCullough Robertson a copy of the Power of Attorney used by Mrs Battaglia in the execution of the transaction documents. The Power of Attorney was the power given by Mr Battaglia in 1997. 5. On 16 November 2009 the Bank sent a facsimile to Mrs Battaglia seeking confirmation of details concerning the first drawdown of $700,000 for Full Circle GC Pty Limited. Mrs Battaglia confirmed the accuracy of the details by signing the facsimile and returning it. 6. On 19 November 2009, Mrs Battaglia signed an authority to enable the Bank to utilise funds, held on deposit by Base Constructions, for the payment of interest on various facilities. It appears that those funds were in fact utilised for the payment of interest commencing in January 2010. An amount of $405,000 was released from the funds on deposit to assist with the payment of stamp duty when the purchase of Bell Central settled in May 2010. 7. Florentina Battaglia deposed that in November 2009 Domenico came to her house and said to her: Mum, Tim [McCabe] is putting pressure on me. We don't have much time. I need you to come with me to the solicitors to sign some documents. 1. She further deposed that they went to SP&G and were provided with "a bundle of documents". She says that she has no recollection of Mr Brook, or any other solicitor at SP&G, explaining the documents to her. 2. As for the Deed of Cross Guarantee, Mrs Battaglia deposed that she had no specific recollection of signing the document. She further deposed that she did not know that she was giving a personal guarantee, either herself or for her husband. She said that because she did not want to cause delay she did not ask what the documents were, and that she did not feel as if she had a choice. She further says that if she had known she was making herself and her husband personally liable, she would not have signed the documents. 3. In cross examination Florentina Battaglia maintained that she did not know that she was signing a guarantee in November 2009. She said that it was not explained to her that she was signing a guarantee, although she also said that she did not recall what the solicitor said about the guarantee. In relation to Full Circle GC Pty Limited, she disclaimed involvement, saying that the arrangements were made by her sons who asked her to become a director. She said that they used her "like an endorsement". 4. She accepted, however, that she received the letter dated 10 November 2009 from the Bank which referred to various facilities totalling an amount of $30.09 million and stated that she, or a company she was a director of, would be providing a guarantee in respect of such facilities. She also agreed that she was not forced to sign the documents that she signed in the office of SP&G. 5. Stefano Battaglia deposed that he was never asked whether he would give his consent to the Deed of Cross Guarantee, and that it had never been explained to him. He further deposed that had he been asked to give such a guarantee he would not have done so for any amount, let alone for $30 million. He further said that he would not have allowed the companies to give any guarantees. He says that he did not know that he had waived the right to obtain independent legal advice about the guarantee. Finally, Mr Battaglia deposed that he found out about the Bell Central shopping centre when Domenico Battaglia told him that he had purchased it, and he only found out later that the Bank had financed the purchase. 6. Mr Murr submitted that in relation to the Deed of Cross Guarantee, Mr and Mrs Battaglia required a proper explanation of the transaction and its implications for them, including the vast increase in the level of their personal exposure to the debts of the companies. In the absence of such explanation they were, so it was submitted, not in a position to make worthwhile judgments in their own interests in relation to the transaction. It was submitted that the Bank, which had no direct dealings with Mr or Mrs Battaglia in relation to the matter, was on notice of this position, and it is therefore unconscionable for the Bank to take the benefit of and seek to enforce the Deed of Cross Guarantee against them. Reliance was placed upon general equitable principles concerning unconscionable conduct, and also section 12CB of the Australian Securities and Investments Commission Act, which proscribes unconscionable conduct in connection with the supply of financial services. 7. Mr Murr emphasised that the effect of the transaction was that Mr and Mrs Battaglia's potential exposure went from $4.4 million plus interest and costs (under the 2008 Deed of Guarantee and the Burraneer mortgage) to in excess of $30 million once the Full Circle GC Pty Limited facility for the acquisition of Bell Central was fully drawn. It was put that the Bank could have kept the Burraneer mortgage as security for only the $4.4 million facility of Base Constructions, and still adequately protected its position. It was also put that the Bank made no efforts to ensure that the nature of the proposed transaction and the relevant documents were made known to Mr and Mrs Battaglia. 8. Mr Savage submitted that Mrs Battaglia must have known that the documents she was signing concerned a transaction involving the purchase of the Bell Central shopping centre. He pointed to the fact that Mrs Battaglia executed the contract for purchase on behalf of Full Circle GC Pty Limited. Mr Savage also pointed to Mrs Battaglia's involvement in the disbursement of the borrowed funds, including $700,000 in relation to the deposit. Mr Savage submitted that there was nothing to suggest that the purchase of the shopping centre was other than an apparently good investment. 9. As for the question of Mrs Battaglia's understanding of the documents, in particular the guarantee, Mr Savage referred to the terms of the declarations given about waiving independent advice. These included statements to the effect that the Bank had advised that independent advice be obtained, that there had been an opportunity for such advice to be obtained, that a choice had been made not to take such advice, yet the nature and effect of the transaction was understood. Mr Savage also referred to the letter dated 10 November 2009 from the Bank which identified facilities in an amount exceeding $30 million, and referred to the giving of a guarantee. He submitted that an adequate opportunity to obtain advice had been given in the circumstances. 10. In relation to Mr Battaglia, it was submitted by Mr Savage that it was unlikely that he had no knowledge of the transaction. In any event, he submitted, there was no question about Mrs Battaglia's authority to execute the Deed of Cross Guarantee on behalf of her husband. 11. It is true that the Deed of Cross Guarantee had the effect of significantly increasing the potential personal exposure of Mr and Mrs Battaglia to the Bank. That is only one, albeit important, aspect of the transaction. As pointed out by Mr Savage, the guarantee was given as part of a transaction involving the funding of an acquisition of a valuable asset by a newly established company that was not only controlled by Mr and Mrs Battaglia, it was the trustee of a trust in which they were the Primary Beneficiaries. The transaction also involved changes to the existing financing arrangements in circumstances where some of the facilities were due for repayment at the end of October 2009. In that context, the Bank proposed a new set of facilities that would be cross-collateralised. No doubt the Bank sought that outcome in its own commercial interests. 12. Nevertheless, the interests on the other side of the transaction, namely, the various Battaglia family companies and the individual family members behind the companies, possessed considerable wealth and had a substantial degree of commercial property and financial experience. In this instance, they were pursuing a further property acquisition which was to be entered into after due diligence was carried out. In addition, the companies, and the individuals, clearly had the capacity to obtain the assistance of professional advisers, including lawyers, accountants and taxation advisers, to guide them in their business pursuits. 13. The companies (with the exception of Yorkgrange Pty Limited) were all owned by Mr and Mrs Battaglia. I accept that by 2009 Bruno and Domenico Battaglia were playing a central role in the management, and decision making, of the companies. That is not to accept, however, that Mr and Mrs Battaglia therefore had little or no involvement in or knowledge of the affairs of the companies. It is clear that Mrs Battaglia at least continued in her role of arranging transfers of funds. It is likely that she had at least a reasonable understanding of the financial position of the companies, even if she was content to more or less leave the decision making to her sons. The extent to which Mr Battaglia, who was still living in Argentina in 2009, was involved in, or was aware of, the affairs of the companies, is less clear. He may have been content to largely leave decisions to others. 14. The fact remains, however, that Mr and Mrs Battaglia essentially conducted their financial affairs through a structure of companies of which they were the only shareholders. They were in a position to decide how and by whom the management of the companies should be conducted. They chose to stay on the boards of the companies. If they effectively allowed the other directors, who were their sons, to manage the companies, that was their choice also. (I note that in October 2009 Bruno Battaglia ceased to be a director of Paratei, Base Constructions, and Base Group Development, probably due to his financial difficulties). Mr Battaglia gave a Power of Attorney to his wife, no doubt to facilitate execution of documents when he was not in Australia. Mr and Mrs Battaglia were in a position to procure professional advice and assistance for the companies as they saw fit. In my view, they were not people who were unable to look after their financial interests. 15. I recognise that Mr and Mrs Battaglia each have interests that are distinct from those of the companies. In so far as they were providing a personal guarantee in respect of the debts of the companies, their interest clearly differs from those of the companies. Their interests are also distinct from those of Yorkgrange Pty Ltd and Domenico Battaglia. Nonetheless, their position as proprietors of the companies which incurred the vast bulk of the debt to the Bank (and as beneficiaries of the underlying trusts) means that they are not to be regarded as true third party guarantors. 16. SP&G Lawyers acted for the Battaglia family interests in the transaction. There is nothing to suggest that they felt unable to protect the interests of Mr and Mrs Battaglia personally. Mr Brook witnessed the execution of the Deed of Cross Guarantee by Mrs Battaglia, and took her statutory declarations concerning the waiver of independent legal advice and independent financial advice. The Bank may not have ensured that Mrs Battaglia actually received independent legal and financial advice. However, in my view, Mrs Battaglia had every opportunity to obtain legal advice or financial advice about the transaction and the documents she was asked to sign, including the Deed of Cross Guarantee. 17. The statutory declarations made by Mrs Battaglia record choices not to obtain such advice, but go on to record that the declarant had read and understood the legal and financial nature and effect of the finance transaction and the documents that embody it. In the circumstances, the Bank was entitled to rely upon such declarations. 18. Mrs Battaglia must have been aware that the transaction involved the giving of a guarantee by her and her husband. The letters of offer she signed referred to such a guarantee (on page 1). If that was missed, the letter from the Bank dated 10 November 2009 would have alerted her. Even if she did not expressly request advice about the guarantee, it is difficult to conceive of Mr Brook not providing at least a brief explanation of what it entailed. I do not accept that no explanation of the documents was given to Mrs Battaglia on the occasion she signed them at the offices of SP&G. 19. Taking all of the above circumstances into account, I am unable to regard this as a situation where the Bank, in taking the Deed of Cross Guarantee, has exploited or taken advantage of an inability on the part of Mr or Mrs Battaglia to make worthwhile decisions in their own interests. No such inability would have been evident to the Bank. For its part, it would have been entitled to conclude that the transaction was being pursued for rational commercial reasons. It would also be entitled to assume from at least the signed letters of offer and its letter of 10 November 2009, that Mrs Battaglia was aware of the transaction and that it involved the giving of a personal guarantee. Moreover, the Bank would be entitled to think that in so far as the personal interests of Mr and Mrs Battaglia as guarantors were concerned, Mrs Battaglia, who was executing the guarantee for them both, had every opportunity to obtain legal and financial advice to the extent required. It should not be overlooked that over a lengthy period of time Mrs Battaglia had herself represented the companies in dealing with the Bank in relation to transfers of funds. In this transaction she assumed that role for Full Circle GC Pty Ltd as well. The fact that the Deed of Cross Guarantee was executed for Mr Battaglia by his wife as his attorney does not seem to me to give rise to any unfairness. 20. For the above reasons, I do not think that the claims of unconscionable conduct have been made out in relation to the Deed of Cross Guarantee, whether on general equitable principles, or pursuant to s 12CB of the Australian Securities and Investments Commission Act. I recognise that the scope of s 12CB is not necessarily the same as that of the general law of unconscionable conduct (see Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 at [291] and [293]). However, the conduct of the Bank in relation to the Deed of Cross-Guarantee entered into by Mr and Mrs Battaglia lacks the moral deficiency required by the section. No undue pressure was applied by the Bank in the transaction, and no unfair tactics were employed; further, as I have endeavoured to explain above, the Bank did not seek to exploit or take advantage of any inability on the part of Mr and Mrs Battaglia to protect their own interests. Mr Murr did not suggest that any particular factors existed that would support a claim under the statute if the general law unconscionable conduct claim failed. 21. Prior to 2012, s 12CB concerned unconscionable conduct in connection with financial services of a kind ordinarily acquired for personal, domestic or household use (see s 12CB(5)). In view of my conclusion stated above it is not necessary to consider the question (not addressed in submissions) whether the financial services here were of that kind. The June 2011 guarantees 1. The next transactions impugned by Mr and Mrs Battaglia are guarantees given by them on 2 June 2011 in connection with the acquisition by Paratei of a property referred to as Pacific Pines. The guarantees were given by way of various Deeds of Guarantee and Indemnity that were executed on their behalf by their sons pursuant to Powers of Attorney that had been given in October 2004. Before dealing in more detail with the Pacific Pines transaction, it is desirable to record some of the circumstances and events that led up to it. 2. By June 2010 Paratei had reduced its debts to the Bank through sales of units in Signature on High. Its facility of $8.3 million had been reduced to $2.84 million. 3. Despite that reduction in debt, it appears that the family companies were experiencing difficulties with cash flow. On 7 June 2010 the Bank made an offer to Paratei to increase its facility by $1.68 million (to $4.52 million) so as to establish a cash security deposit of $1.68 million which would provide cover for interest, holding costs and operating expenses of "Base group", as approved by the Bank, through to 30 June 2011. The offer also varied the facility by deferring the time for completion of the sale of the units in Signature on High by six months to 31 December 2010. The offer was accepted. 4. It appears that progress on the sales of the Signature on High units did not meet expectations. On 9 December 2010, Mr McCabe sent an email to Domenico Battaglia seeking information about the sales programme. The email concluded with the following: As a related matter have [sic] does Tina understand complete position and what we are looking to manage? 1. In his email in response, Domenico Battaglia provided certain information about unit sales, and stated: …..I have asked Tina to call you so she is aware of where things are at. I have had discussions with her and Stefan with respect to our discussion in Sydney. We are very appreciative of how all of us have been working to reduce our debt. The family have been very proactive on this however it just felt like I was beating a dead horse since May this year with the economy. However I am seeing momentum and I believe when you look where what we are achieving, we are relatively on track. We will reduce our debt and look to seeking funds from Stefan overseas. However times have been harder than I originally thought. This is why we need the monies per month to progress with selling our assets and pay our bills. 1. On 13 December 2010 Mr McCabe asked Domenico Battaglia to produce cash flow projections for the first half of 2011. This was done. Domenico Battaglia stated in his covering email that: ……While the net cashflow is relatively low, this is a major improvement on the portfolio position of two years ago and reflects the successful implementation of a strategy we initiated almost two years ago to reduce debt and improve incomes. The asset values reflected in this cashflow are regarded as fair present values and are effectively consistent with values at 2006 and 2007. While these values reflect the depth of the property downturn on the Gold Coast, the Battaglia family is confident in its belief that we will be at the forefront of the recovery in property values due to the high quality of the assets held…… …… We are requesting that ING Bank continue to make available working capital funding to the Battaglia family as outlined in the cashflow model. As such we are progressively following our direction and consistently improving our asset/debt ratio and improving income at the same time. 1. On 21 December 2010 Mr McCabe sent an internal memorandum to John Moore and Guy Wallace concerning a request for a release of $125,000 out of a setoff account held by Full Circle GC Pty Limited. The memorandum included the following: Approval had cash deposit of $1.68m to finance interest, holding costs and staff expenses. Balance has reduced to $475,000 from costs to date including interest for past 7 months. Borrower has requested $125,000 to meet end of year costs including land taxes. Revised cash flow attached shows current reserve being sufficient to fund costs through to April 2011. …… Family has now agreed to sell offshore assets in Argentina to assist finance reduction program in Australia. Meeting being arranged with Stefan and Tina Battaglia for week 1 in January to confirm. …… 1. Mr McCabe recommended that approval be given to the release of the $125,000. 2. It is clear that, by that time, the Battaglia family account had been placed on "credit monitor" by the Bank. 3. On 21 December 2010 Mr McCabe sent an email to the twins which stated that "the overall group position needs serious attention in the short term…and this includes bringing money in from OS". It was further stated that the Bank wanted to meet with Mr and Mrs Battaglia in Sydney in January 2011 "to make sure we all understand both the position and the strategy". Domenico Battaglia said in his email response that such a meeting was agreed. Mr McCabe said in cross examination that he met with Mrs Battaglia and Bruno Battaglia. 4. On about 23 December 2010 the release of the $125,000 was approved. At that time, Mrs Battaglia signed an authority to transfer the funds to a Commonwealth Bank account held by Base Group Development. 5. On 21 January 2011 Mr Ng of the Bank informed Domenico Battaglia that Mr Moore had requested closer monitoring of the account "until debt is reduced and servicing from assets can be demonstrated". 6. On 31 January 2011 each of the various family companies entered into a Power of Attorney in favour of Domenico Battaglia. Mrs Battaglia signed each of the instruments as a director. The Powers of Attorney were entered into shortly before Mrs Battaglia left Australia to live in Argentina for a period. In cross examination she agreed that they were entered into so that the companies could do business. 7. On 4 February 2011 Domenico Battaglia sent an email to Mr McCabe that referred to two sites said to be of great interest to the family. One of those was the Pacific Pines shopping centre site which had an approval for a retail and residential development. The vendors were said to be interested in swapping the site for units in Signature on High. On 6 February 2011 Domenico Battaglia sent an email to Mr McCabe that contained further information about the sites. The email further stated that Mrs Battaglia had just left for Argentina. 8. On about 14 March 2011, Domenico Battaglia submitted a Base Group Strategy Paper to the Bank. The stated strategy included the acquisition of the two new sites, as well as the acquisition of some land adjacent to the Era site. On 17 March 2011 Domenico Battaglia sent an email to Mr McCabe in which he stated that Mr Battaglia would be flying back to Australia to assist him with projects, and that Bruno Battaglia would then go to Argentina to assist Mrs Battaglia with "our portfolio O/S". He also stated that it was agreed that $1.5 million would arrive in stages, with $500,000 arriving in two weeks. It appears from an internal memorandum written by Mr McCabe on 29 March 2011 that the transferring of money from South America had commenced. 9. On about 24 March 2011, Paratei entered into a contract to purchase the Pacific Pines site for $3.25 million. The price was made up of $1.6 million by way of the transfer of five units in Signature on High, and cash of $1.65 million. Settlement was due to occur on 1 June 2011. Finance was sought from the Bank. 10. On 26 May 2011 the Bank made an offer to Paratei to lend $1.65 million for the cash component of the price of Pacific Pines. The offer included a condition that the borrower make cash deposits totalling $1.2 million in the period up to 30 September 2011 to meet interest payments ($200,000 by 31 May 2011, $500,000 by 31 July 2011, and $500,000 by 30 September 2011). A mortgage over the Pacific Pines site was to be given as an addition to the existing security. 11. It seems that it was contemplated that the cash deposits were to come from Argentina. On 30 May 2011, Domenico Battaglia sent an email to Mr Ng of the Bank which indicated that Mr and Mrs Battaglia did not want to pay $500,000 in two hits, but would rather pay smaller amounts. After some further discussions about the issue, Domenico Battaglia told Mr Ng that he had pushed Mr Battaglia to agree "on $250K stages". 12. SP&G Lawyers again acted for the Battaglia family interests in the transaction, and McCullough Robertson Lawyers again acted for the Bank. On 30 May 2011, McCullough Robertson sent the transaction documents to SP&G. These included the letter of offer of finance, and various guarantees to be given by Mr and Mrs Battaglia. 13. The offer of finance was accepted. Some amendments had been made to the cash deposits requirements so that $100,000 was to be paid by 8 June 2011, $500,000 by 30 June 2011, and a further $500,000 by 30 September 2011. These amendments were acceptable to the Bank. The acceptance was signed by Domenico Battaglia on behalf of Paratei, and the various corporate guarantors of Paratei. Bruno and Domenico Battaglia signed the acceptance for each of their parents (also guarantors of Paratei) pursuant to Powers of Attorney. The sons also signed for their parents, pursuant to Powers of Attorney, statutory declarations of waiver of independent financial advice and various Deeds of Guarantee and Indemnity. As noted earlier, the relevant Powers of Attorney were given by Mr and Mrs Battaglia in favour of their sons in October 2004. 14. The executed transaction documents were returned by SP&G to McCullough Robertson on 3 June 2011. Settlement of the transaction did not occur immediately. 15. On 7 June 2011 Domenico Battaglia informed Mr Ng that sufficient funds had arrived to make the $100,000 cash payment required as a condition of the finance. Also on 7 June 2011, McCullough Robertson raised an issue concerning the authority of Domenico Battaglia to execute documents on behalf of Paratei in the absence of his parents (who were the other directors of the company). In response, SP&G forwarded the Power of Attorney given by Paratei in favour of Domenico Battaglia on 31 January 2011. 16. However, on 8 June 2011, McCullough Robertson stated that in order to accept the form of mortgage to be given by Paratei over the Pacific Pines site, they required minutes of a meeting of Paratei formally appointing Domenico Battaglia as agent for the company. 17. Later on 8 June 2011, SP&G sent an email to McCullough Robertson that attached an Extract of Minutes of Meeting of Directors of Paratei held on 2 June 2011, and a Letter of Confirmation. The Extract of Minutes record that it was resolved to approve certain documents, including the proposed mortgage over the Pacific Pines site, and appoint Domenico Battaglia as the agent of the company to execute the mortgage. 18. The Letter of Confirmation is addressed to the Bank and is signed by Florentina Battaglia and Stefano Battaglia. Mrs Battaglia confirmed in cross examination that the document was signed by Mr Battaglia and herself at the Australian Embassy in Buenos Aires. The document is not dated but bears a facsimile imprint which indicates that it was sent by facsimile very late in the evening of 7 June 2011, presumably from Buenos Aires. The Letter of Confirmation contains the following: We have read and understood the following documents which have been provided to us: (a) Code of Banking Practice Guarantee and Indemnity given by Stefano Bruno Battaglia, Florentina Battaglia and Domenico Battaglia limited to $6,170,000; (b) Code of Banking Practice Guarantee and Indemnity given by Stefano Bruno Battaglia, Florentina Battaglia and Domenico Battaglia limited to $1,450,000; (c) Code of Banking Practice Guarantee and Indemnity given by Stefano Bruno Battaglia, Florentina Battaglia and Domenico Battaglia limited to $1,440,000; (d) Code of Banking Practice Guarantee and Indemnity given by Stefano Bruno Battaglia, Florentina Battaglia and Domenico Battaglia limited to $14,500,000; (e) Code of Banking Practice Guarantee and Indemnity given by Stefano Bruno Battaglia, Florentina Battaglia and Domenico Battaglia limited to $4,400,000; (f) Mortgage in respect of Lot 1, Norris Street, Pacific Pines Gold Coast (Lot 1 on SP227206 ("Mortgage")); …… (q) Certificate of Independent Legal Advice – Stefano Bruno Battaglia; (r) Statutory Declaration – waiver of independent financial advice – Stefano Bruno Battaglia; (s) Certificate of Independent Legal Advice – Florentina Battaglia; (t) Statutory Declaration – waiver of independent financial advice – Florentina Battaglia; …… Letters of Offer 1. Letter of Offer dated 26 May 2011 to Paratei Pty Limited as trustee for the Battaglia (Surfers) Family Trust for $1,650,000; 2. Letter of Offer dated 26 May 2011 to Paratei Pty Limited as trustee for the Battaglia (Surfers) Family Trust for $4,520,000; …… (collectively called the "Documents") Personally Signed Documents In regards to the Documents, we note that Documents a-e (listed above), and q-x (listed above), and letters of offer 1-6 require the personal signatures of ourselves in a personal capacity. Those documents have been executed by our attorneys, Domenico Battaglia and Bruno Battaglia, and we are aware and consent to such execution. Company Execution Documents As to Documents f-p (listed above), w, x, and letter of offer 1-6, we have read those documents and consent, where we are an officeholder of any of the companies listed in those documents, to the execution of the same on behalf of the companies for which those documents require execution, and if those companies act as trustee of a trust, then by the company in a personal capacity and as trustee of the trust. Minutes of Meeting In regards to: Director's Resolution – Paratei Pty Limited as trustee for the Battaglia (Surfers) Family Trust; …… (collectively called the "Resolutions") …… We confirm that Domenico Battaglia has been authorised on behalf of all companies to which the Resolutions relate (and where applicable by the companies in a personal capacity and as trustee of the trust), to execute all and any documents in relation to the transactions contemplated therein (including all Documents) as a duly appointed agent of those companies (and where applicable by the companies in a personal capacity and as trustee of the trust), and without limitation confirm that Domenico Battaglia is authorised to execute the Mortgage as agent for Paratei Pty Limited. 1. The evidence is unclear about when settlement of the Pacific Pines acquisition took place. I infer that it occurred shortly after 8 June 2011. 2. Mrs Battaglia gave evidence that she understood that the Power of Attorney she gave to her sons in 2004 enabled them to sign documents on her behalf when she was out of the country or otherwise unable to sign. She deposed, however, that had she been asked she would not have allowed them to use the Power of Attorney to give a personal guarantee for Domenico Battaglia's own debts. One of the Deeds of Guarantee and Indemnity entered into in June 2011 was of that character. Mrs Battaglia did not otherwise deal with the June 2011 guarantees in her affidavits. She did say, however, that before she left for Argentina, Domenico Battaglia told her that he was going to buy some land at Pacific Pines to develop, and that the Bank would be lending the money for him to do so. 3. In cross examination, Mrs Battaglia agreed that after she went to Argentina in February 2011 she had occasional telephone conversations with Domenico Battaglia in which business matters were discussed. She said that she was aware that there were "troubles with the Bank", and she was worried about the situation. 4. As noted earlier, Mrs Battaglia agreed that she and her husband had signed the Letter of Confirmation at the embassy in Buenos Aires. She stated that they were "practically forced to sign" in circumstances where Domenico Battaglia said "there's no choice we have to get it signed", and that they did not have the chance to obtain legal or financial advice in Argentina. She conceded, however, that she voluntarily signed the letter knowing that it authorised Domenico Battaglia to settle a series of financial transactions. 5. Mr Battaglia deposed that he had no memory of signing the 2004 Power of Attorney. He further deposed that he did not know that his sons could sign documents on his behalf. Mr Battaglia deposed that he had not seen the Deed of Guarantee and Indemnity in relation to Domenico Battaglia prior to the proceedings. He further says that had he been asked to give a guarantee for Domenico Battaglia he would not have done so. Mr Battaglia did not otherwise deal with the June 2011 guarantees in his affidavits. He was not cross examined about the Letter of Confirmation he signed at the embassy in Buenos Aires. 6. It was submitted by Mr Murr that the June 2011 guarantees were given by Mr and Mrs Battaglia in the absence of a proper explanation of them and of the financial implications of the transaction of which they formed part. It was submitted that Mr and Mrs Battaglia, who were both then residing in Argentina, required such an explanation in order to make worthwhile judgments in their own interests. It was further submitted that in those circumstances Mr and Mrs Battaglia were each under a special disability, of which the Bank had notice, such that enforcement of the guarantees against them would be unconscionable. Again, reliance was placed upon equitable principles of unconscionable conduct, and s 12CB of the Australian Securities and Investments Commission Act. 7. Mr Savage submitted that the evidence showed that Mr and Mrs Battaglia, even though in Argentina, had knowledge of the transaction. He emphasised the terms of the Letter of Confirmation, but also referred to the evidence that suggested that Mr Battaglia was involved in discussions about the requirement for cash deposits. It was evidently contemplated that such funds would come from Argentina. Mr Savage also pointed to the subsequent making of transfers of funds from Argentina in order to meet the Bank's requirements. 8. Mr Savage accepted that Mr and Mrs Battaglia did not receive independent legal advice or independent financial advice about the transaction. He submitted, however, that this factor did not on its own lead to a conclusion of unconscionable conduct on the part of the Bank. 9. It is clear that the Battaglia Family companies were under some financial stress by the end of 2010. There were cashflow difficulties and the sale of units in Signature on High had not proceeded as expected. Mr McCabe seemed to appreciate that Mrs Battaglia might not understand the complete position, and suggested a meeting with her and Mr Battaglia in January 2011. It seems that Mr McCabe was able to meet with Mrs Battaglia, but not Mr Battaglia. 10. Shortly thereafter Mrs Battaglia left Australia to live in Argentina for a while. Before she left she participated in the giving by the family companies of Powers of Attorney in favour of Domenico Battaglia. She agreed that that was done so that the companies could do business. I infer that Mrs Battaglia was aware that the day to day management of the companies would be left to Domenico Battaglia whilst both she and her husband were in Argentina. Mrs Battaglia was aware that Domenico Battaglia intended to purchase and develop the Pacific Pines site, and that he intended to obtain funding for that purpose from the Bank. 11. It seems that from March 2011 transfers of money from Argentina to Australia were effected from time to time in order to make payments to the Bank. It is evident that Mr Battaglia was involved in such transfers. It further appears that in May 2011 the requirement for further payments to be made to the Bank was the subject of discussion which involved Mr and Mrs Battaglia. 12. The extent to which Mr and Mrs Battaglia were aware of the details of the financial position of the companies, or of the proposed financing transaction, is not clear. However, it is likely that they were at least aware that the companies were in need of additional cash to fund their interest payments, and aware in general terms that the Pacific Pines property was proposed to be purchased using money borrowed from the Bank. 13. The terms of the Letter of Confirmation would have revealed to them (if they were not already aware): 1. that the financing transaction would involve them providing five guarantees, such guarantees being for amounts of up to $14,500,000 and for a total amount of $27,960,000; 2. that the Bank had issued letters of offer in relation to six facilities for a total amount of $27,960,000; 3. that the guarantees (and certain other documents, including waivers of independent financial advice) had been executed for them by their sons as their attorneys; and 4. that the transaction involved a mortgage over the Pacific Pines property. 1. Both Mr and Mrs Battaglia were aware of the nature of a guarantee. The terms of the Letter of Confirmation would have made it plain to them that the transaction involved them giving guarantees of debts totalling almost $28 million. Mr and Mrs Battaglia had essentially been in that position since the making of the Deed of Cross Guarantee in November 2009, although it should be noted that the Pacific Pines purchase had the consequence that the existing level of debt was increased by $1.65 million. The execution of the further guarantees would not therefore make a large practical difference to their levels of personal exposure to the Bank. 2. In those circumstances, Mr and Mrs Battaglia signed the letter (which is primarily directed to the Bank) and thereby signified that they understood the transaction documents and consented to the way in which they were executed. In essence, Mr and Mrs Battaglia thereby signified their consent to the transaction. 3. The consent so given must be considered in the light of the fact that neither Mr nor Mrs Battaglia apparently received independent legal advice or independent financial advice in relation to the transaction, and in particular the guarantees. As noted earlier, the interests of Mr and Mrs Battaglia are not identical to those of the family companies. In so far as they give guarantees of the debts of the companies, their interests clearly differ. Such guarantees can be regarded as third party security, although it is important to remember that the companies (with the exception of Yorkgrange Pty Limited) were all owned by Mr and Mrs Battaglia. 4. I do not think that Mr and Mrs Battaglia wanted to obtain legal or financial advice but were unable to obtain it, either at all, or quickly. I do not accept the suggestion made by Mrs Battaglia in cross examination to the contrary. There is no reason to think that they could not have obtained advice from SP&G if they had wanted to. In any event, Mrs Battaglia's evidence was rather to the effect that she felt, based upon what Domenico Battaglia had told her, that there was really no choice but to quickly sign the letter to allow the transaction to proceed. 5. The fact remains that Mr and Mrs Battaglia could have withheld the Letter of Confirmation, or delayed signing it until advice was received. They chose instead to sign it and send it immediately. They must be taken to have done so knowing the transaction involved borrowing from the Bank to finance the acquisition of the Pacific Pines property, and knowing that they would be giving guarantees of various debts to the Bank totalling almost $28 million. In my view, they were each in a position to understand the essential nature of the proposed transaction. 6. Despite the fact that it appears that Mr and Mrs Battaglia did not receive independent legal advice or independent financial advice in relation to the guarantees, I do not think that the Bank has engaged in any unconscionable conduct in relation to those guarantees. Again, Mr and Mrs Battaglia were the owners of the companies (other than Yorkgrange Pty Limited), and they were directors of them. The management may have been largely left to Domenico Battaglia, but that was their choice, as was residing in Argentina. If they had seen fit, they could have played a greater role in management themselves, or procured professional assistance elsewhere. To my mind, they were not persons unable to look after their financial interests. 7. It is also relevant to note that SP&G were acting in the transaction for at least the Battaglia family companies, and that they had procured the Letter of Confirmation which contains representations from Mr and Mrs Battaglia to the effect that they consented to the transaction, including the guarantees. The Letter of Confirmation also represented that Mr and Mrs Battaglia were content for the transaction to proceed even though they had not received any independent financial advice. In all the circumstances, I am unable to conclude that the Bank, in taking the benefit of the guarantees, has exploited or taken advantage of an inability on the part of Mr or Mrs Battaglia to make worthwhile decisions in their own interests. 8. I do not think that the Bank could be said to have been on notice of any such inability. The mere fact that Mr and Mrs Battaglia were absent from Australia in 2011 does not lead to that conclusion. It was apparent from the sending of money from Argentina, and the negotiations concerning the requirement for further amounts to be provided, that either or both of the parents remained involved to at least some extent in the affairs of the family companies. That such funds were sent tended to confirm what the Bank had been told about the family having business interests and assets in Argentina that were looked after by Mr Battaglia. The Bank's previous dealings with Mrs Battaglia, particularly in relation to the transfer of funds, could not have suggested any inability on her part to look after her own interests. 9. I do not think that the conduct of the Bank should be regarded as in any way morally or ethically deficient. The Pacific Pines transaction was advanced by Domenico Battaglia for Paratei at a time when the companies were facing difficulties, as part of a strategy to improve the position over time. It was put to Mr McCabe in cross examination that the proposal was reckless and entirely contrary to the existing strategy of asset sales and debt reduction. Mr McCabe did not accept that as the case. He said that, coupled with other asset sales and subject to due diligence, there was a degree of logic to the proposal, and that it was a marginal change to the existing strategy. I accept that Mr McCabe genuinely held such views at the time. 10. The Bank was no doubt astute to protect its own commercial interests in the transaction, for example by stipulating for payments to be made to cover future interest commitments, and the provision of the guarantees. However, no suggestion was made that the Bank sought to extract more than was reasonably required in pursuit of those interests. Neither was any suggestion made that the Bank applied any undue pressure or employed unfair tactics. 11. For the above reasons, the claims of unconscionable conduct in relation to the June 2011 guarantees have not been made out, whether on general equitable principles, or pursuant to s 12CB of the Australian Securities and Investments Commission Act. The Broadbeach mortgage 1. The final transaction impugned by Mr and Mrs Battaglia is the mortgage given by them in January 2012 over their property in River Crescent, Broadbeach. This mortgage was executed on their behalf by Domenico Battaglia pursuant to Powers of Attorney that were given to him on 12 September 2011. Mrs Battaglia deposed that these Powers of Attorney were requested by Domenico Battaglia so he could "deal with the banks". The Powers of Attorney forms were sent by facsimile to the Battaglia's residence in Buenos Aires, and they were executed by Mr and Mrs Battaglia at the Australian Embassy. 2. In accordance with the terms of the Bank's finance, $500,000 was due to be deposited with the Bank by 30 September 2011. There appears to have been some difficulty in effecting the payment. By mid-October only about $355,000 had been paid. It appears that those funds had come from Argentina via accounts maintained by Mr and Mrs Battaglia in Australia. Mr Battaglia had an account with HSBC Bank, and Mrs Battaglia had an account with Citibank. Further funds were transferred from Argentina later in October. 3. The various facilities held with the Bank were due to be repaid by 31 December 2011. 4. It is clear that the Battaglia family companies were continuing to experience significant cash flow problems. On 21 November 2011 Domenico Battaglia sent an email to Mr McCabe in which he suggested that forthcoming cash flow requirements could be met from $650,000 to $750,000 out of the proceeds of a sale of the Broadbeach property, and the proceeds of the sales of two units in Signature on High. The email attached a valuation of the Broadbeach property which indicated a value of $1.5 million. In his email in response, Mr McCabe stated: As discussed last week – be very careful with your request for $650K additional to the 2 apartments at High St – it may backfire as a conditional offering of security top up given valuation reductions will not go down well. I understand what the game plan is but debt reductions have not been forthcoming from any discussed sales of Rowes Ct, Bulls Rd, Era or High St - When is Stefan in town this week…did you speak to him about coming into ING? Will you be advising ING what is held in BsAs? Please send me cashflows soonest – we can amend before I submit but you need to bear in mind the above. 1. Domenico Battaglia then informed Mr McCabe that Stefano Battaglia was in town, and that arrangements would be made for a meeting. 2. On 23 November 2011, Domenico Battaglia sent an email to Mr McCabe asking how he was going "with funds for the family from 58 River Crescent". Mr McCabe's response was to the effect that the release of funds would not be easy to achieve. He also stated that the Broadbeach property was being proposed to cover the decrease in the values of Rowes Ct and the Burraneer property. That may be a reference to the proposal being advanced by Domenico Battaglia, but is more likely a reference to the position of the Bank. That is, that the Bank was looking to take security over the Broadbeach property. 3. Later on 23 November 2011 Mr McCabe sent Domenico Battaglia his "first version" of a cashflow spreadsheet. The covering email included the following: It is clearly obvious that debt needs to come down as we keep highlighting to you via asset sales as while value may improve servicing and operating and living shortfalls are blowing out. Need this updated and returned soonest – this is also what you need to sit down with Stefan and work through. 1. The format of the cashflow spreadsheet appears to be based on a spread sheet that Domenico Battaglia provided to the Bank in March 2011. It now included the Broadbeach property as a security from December 2011. 2. Domenico Battaglia maintained the position that the Broadbeach property should be used to provide a $750,000 "top up" for the Bank, and $750,000 for expenses. 3. On 24 November 2011 he sent an email to Mr McCabe in which he stated that he was working with Stefano Battaglia "on all fronts" including on matters such as "all options of debt reduction". He further stated that he hoped Mr McCabe would work with him in relation to the Broadbeach property. 4. On 28 November 2011 Domenico Battaglia sent a cashflow spreadsheet to Mr McCabe. He indicated that he would be speaking to Stefano Battaglia about it later in the day to obtain "final asset sell down approval". On 1 December 2011 Domenico Battaglia sent a further cashflow spreadsheet, said to be a draft only, to Mr McCabe. He indicated that it had been sent to Florentina Battaglia and Bruno Battaglia for their comments, which were expected on the following day. Both Mrs Battaglia and Bruno Battaglia were in Argentina at that time. This version of the spreadsheet also included the Broadbeach property as a security from December 2011. It also provided for the sale of the Burraneer property (and another property, described as Sorrento) by April 2012, and the Era site by June 2012. Provision was also made for a $1 million injection of "Battaglia family capital" in March 2012. 5. Mr McCabe deposed that he met with Stefano Battaglia, in the company of Domenico Battaglia, on 11 December 2011 on the Gold Coast. This meeting is dealt with in more detail below. 6. Full Circle GC Pty Limited was at this stage attempting to lease a number of shops in the Bell Central centre. A request was made for a release of funds to assist with fit out. Mr McCabe approved a release of up to $367,000 on 16 December 2011 for that purpose. This occurred despite the fact that Full Circle GC Pty Limited had missed its November 2011 interest payment of about $104,000. A request was also made at about this time for the release of funds for lease incentives. The Bank responded by saying that this would only be dealt with once the interest was up to date. 7. On 20 December 2012 Mr McCabe sent an email to Domenico Battaglia in which it was stated that mortgage documents for the Broadbeach property would be sent out shortly. Reference was also made for a meeting to take place on the following day involving Stefano Battaglia and John Moore of the Bank. It appears that, for some reason, Mr Moore did not meet with Mr Battaglia as planned. 8. On 6 January 2012 Mr McCabe sent an internal memorandum to John Moore and Guy Wallace in which he sought approval for a six week extension of facilities (which had been due to be repaid by 31 December 2011) to facilitate completion of a full review, and to allow the deferred meeting between Mr Moore and Stefano Battaglia (described as the "patriarch") to take place. The memorandum included the following: Borrower is on credit monitor to oversee the asset sales and cashflow of group. History has been one of significant wastage through second generation and given downward asset revaluations LVR has risen to 70% and borrower does not generate sufficient regular income to hold assets. We have spent most of past 12 months supporting the Borrower as they acquired a retail asset at Mudgereeba to improve yield, undertaken an asset swap for another retail asset which has material interest at Pacific Pines and the borrower has sought to sell down High St residential units, the Era development site and two residential properties at Bulls Rd Cronulla and Rowes Ct, Bundall. Borrower has been supplementing local income to meet shortfalls from family investments in Argentina. We understand these are significant but no detail has been provided. Senior Manager [Mr McCabe] met with Stefan Battaglia prior to Christmas. Stefan is family patriarch who has been living in South America for most of past ten years and is extremely disappointed family is in position it is. His initial strategy is slightly different in that he sees Pacific Pines as being the future cornerstone as it now has lease commitments and agreements to lease from IGA, a medical centre, a chemist, a fitness centre, liquorland and several fast-food outlets. Approval is currently being sought to remove the residential component and this is being actively marketed towards more retail. We have sought copies of these leases for information. On this basis Stefan Battaglia believes it is also prudent to sell the Mudgereeba asset once the current leasing renegotiation process is completed in March. …… Unfortunately, a meeting agreed between ED CPF [Mr Moore] and Stefan Battaglia had to be cancelled prior to Christmas and this is to be rescheduled to mid-January. This was to finalise and agree strategy for the next 6 months and receive confirmation of same from the patriarch. Given this and timing issues prior to Christmas we were unable to complete this renewal proposal. 1. Approval was given for the extension of the facilities to 17 February 2012. Letters of Offer were issued by the Bank on 11 January 2012. 2. The cash flow problems showed no sign of abating in the New Year. On 7 February 2012 Mr McCabe was informed by Domenico Battaglia that Florentina Battaglia was coming to Australia, and that once she arrived, there would be a family discussion. 3. On 14 February 2012 Mr McCabe sent an email to Domenico Battaglia asking what his position was in relation to the Letters of Offer, transfers from Buenos Aires, and mortgage over the Broadbeach property. 4. As for the transfer of funds from Argentina, Domenico Battaglia informed Mr McCabe on 21 February 2012 that the next transfer would take at least one month to six weeks due to a "government issue", but he had asked Florentina Battaglia to make an urgent request. 5. On 24 February 2012 Domenico Battaglia sent an email to Mr McCabe which included the following: In response to ING's proposal to reset the Battaglia family's finance facility and the conditions contained therein, I wish to firstly recap some of the results we have achieved to date with the support of ING. …… With respect to the Reset Facility, the family will agree to sign the facility for the 6 week period and pay $50,000 to the security deposit account for interest payable immediately. However the family do not wish to release our family home to a mortgage until such time as we can reassess our position once the current valuations have been completed. This will allow us to work together with ING to determine the best plan going forwards and quantify the uplift we expect to have as a result of our recent efforts. For over 30 years the Battaglia Family have been honourable and respectful clients of ING. The Family are simply requesting we work together and wait until we have received the latest valuations before we make a decision to mortgage our family residence to ING if required. 1. Mr McCabe's email response on the same day included the following: Further to the many discussions you need to sign the offer and mortgage outstanding to cover the current short term issue. I understand you want some comfort as to when it may be released but this is not possible. When your family situation improves I will look with you to seek a release but this is conditional to debt and LVR reducing and then getting all the necessary approvals at that time. Please call if any questions but you just simple [sic] need to do this otherwise legal recovery action will commence immediately on Monday. Please sign the documents and return by scan as matter of urgency. 1. Domenico Battaglia then sent an email in response in the following terms: Can you ensure that if we continue this progress that we are performing that ING continue to support us? I am sure this is as per our many conversations this should be very easy for ING to write. Our Family and our assets albeit the market being tough we are performing above market expectations. Please provide me something that I can provide to my family. I need this so we have a level of comfort too? 1. Mr McCabe simply responded with "Did you sign documents?". 2. Mr McCabe was seemingly under the impression that mortgage documents in respect of Broadbeach had already been issued. It is not clear whether that was in fact the case. In any event, on 27 February 2012 McCullough Robertson Lawyers sent mortgage documents to SP&G Lawyers, stating that they understood "that your clients are aware that our client requires this mortgage". 3. The mortgage was executed on that day in the presence of Mr Brook of SP&G by Domenico Battaglia as attorney for each of his parents. The Powers of Attorney so utilised were the powers given in September 2011. The executed mortgage was sent by SP&G to McCullough Robertson on 28 February 2012. 4. It also appears that Domenico Battaglia signed the Letters of Offer dated 11 January 2012. It is not clear when the Letters of Offer were executed by him. 5. On 1 March 2012 Mr McCabe approved a request for the release of about $102,000 for lease incentives. 6. On 2 March 2012 Mr Rotili of McCullough Robertson requested Mr Brook of SP&G to arrange for the Certificate of Title for the Broadbeach property to be sent to him as soon as possible. Mr Rotili made a follow up request on 19 March 2012. On 20 March 2012 Mr Brook sent an email to Mr Rotili in which he stated that he was instructed by his client that they were unable to locate the Certificate of Title, and he had instructions to make an application for a substitute Certificate of Title. He explained that as Mr and Mrs Battaglia were in Argentina, he would need to email documents to them there. Mr Rotili followed the matter up again on 13 April 2012. On 19 April 2012 Mr Brook sent an email to Mr Rotili stating that the documents had been sent to his client and he was awaiting their instructions that the details in the statutory declaration were correct. Mr Rotili followed the matter up again on 14 May 2012. Mr Brook responded on 16 May 2012 indicating that the documents were with one of his clients in Argentina for completion of the statutory declaration, and that he believed that Mr Battaglia was in Australia. On 31 May 2012 Mr Brook sent a letter to Mr Rotili stating that the Certificate of Title had been located. The Certificate of Title was enclosed with the letter. The mortgage was registered shortly thereafter. 7. In the meantime, on 12 April 2012 the Bank issued Letters of Offer in respect of the existing facilities to provide for an extension to 30 April 2012. These offers were accepted on 25 April 2012. The acceptances were signed by Domenico Battaglia. No further extensions appear to have been granted, although discussions about further funding continued for some time, until at least September 2012. 8. On 17 April 2012 Mr McCabe sent an email to Domenico Battaglia seeking certain information, including as to when further money would come from Argentina. Domenico Battaglia responded by stating that Bruno Battaglia was working on the matter, but it "keeps getting harder over there". On 7 May 2012 Domenico Battaglia sent an email to Mr McCabe in which he stated that he had spoken to Mrs Battaglia, who confirmed that $250,000 to $500,000 would come by the end of the first week of July. It seems that no such funds were sent. 9. On 30 April 2012 Mr McCabe sent an email to Domenico Battaglia in which he stated that the various facilities were in arrears in a total amount of almost $350,000. The negotiations concerning further funding were not successful. Notices of Default were issued in October 2012, and further enforcement action was taken thereafter. 10. Mrs Battaglia deposed that she did not understand that Domenico Battaglia might use the Power of Attorney given in September 2011 to make her or her husband personally liable. She further deposed that she did not know of or consent to the giving of the mortgage over the Broadbeach property, which was her home. She says that if she had been asked she would not have allowed it. She deposed that she later found out that Domenico Battaglia had taken the deeds to the property and used the 2011 Power of Attorney to execute a mortgage over it. In cross examination, she said she had no recollection of receiving documents in Argentina, such as a statutory declaration, in relation to the title deeds. 11. Mr Battaglia deposed that he did not know of or consent to the giving of the mortgage over the Broadbeach property. He says that had he been asked he would not have allowed it. Mr Battaglia deposed that when he came to Australia in November 2011 he looked for the deeds to the Broadbeach property but could not find them. He says that he was looking for the deeds because the neighbours offered to buy the property and he wanted to get a valuation. Mr Battaglia had no recollection of meeting with Mr McCabe in a coffee shop on the Gold Coast in December 2011, and no recollection of being shown a spreadsheet by Mr McCabe. 12. In cross examination, Mr Battaglia said that the offer by the neighbour for the Broadbeach property was for $4.5 million, and that he rejected it because he did not want to sell. He further said that he was not interested in obtaining a valuation of the property. Mr Battaglia then said that he and his wife tried to find the deeds at one stage, and could not do so. Mr Battaglia was unable to recall much about the meeting on the Gold Coast that Mr McCabe said took place. Mr Battaglia did say that Mr McCabe spoke to Domenico Battaglia but "they ask me nothing". 13. Mr McCabe deposed that at about the time Domenico Battaglia suggested that funds of $650,000 to $750,000 could be obtained out of the Broadbeach property, he told him that the Bank required additional security due to a decline in the values of some of the securities. He deposed that he met with Stefano Battaglia and Domenico Battaglia on Sunday 11 December 2011 at a coffee lounge on the Gold Coast. He says that he brought with him the spreadsheet that had been sent to him by Domenico Battaglia on 1 December 2011, and that he tabled it. He deposed that he said that the current situation (being a loan to value ratio of almost 73%) was unacceptable, and that there needed to be "short term asset sales". Mr McCabe deposed that Stefano Battaglia said he would work with the Bank to fix the problem and would look to sell the Era site; and further that he was looking to use Pacific Pines as the key development asset. Mr McCabe further deposed that Mr Battaglia did not raise any objection to the grant of security over the Broadbeach property, or to the sale of the Burraneer property. 14. In cross examination, Mr McCabe agreed that in November 2011 it was not Mr and Mrs Battaglia who were proposing that the Broadbeach property be used to cover the decreased values of Rowes Ct and the Burraneer property. As for the meeting with Mr Battaglia and Domenico Battaglia on the Gold Coast, Mr McCabe said that there was a line-by-line, item-by-item discussion of the spreadsheet and that the discussion included the taking of security over the Broadbeach property. Mr McCabe gave evidence that it was said at the meeting that the Broadbeach property was additional collateral required to make up the loan to value ratio. Mr McCabe also gave evidence that there was discussion about the sale of the Burraneer property, which had by that time been listed for sale. Mr McCabe said that he gained the impression that Mr Battaglia had a good understanding of the state of the group's finances and the position it was in. He could not recall that any mention was made of the facts that the facilities were expiring at the end of December, and that there was no commitment by the Bank to renew them. 15. It was put to Mr McCabe that the cashflow spreadsheet was quite unrealistic, particularly in that there was no allowance for borrowings to finance the development of Pacific Pines. Mr McCabe did not agree. Mr McCabe also rejected the suggestion that he was fairly desperate to obtain the mortgage over the Broadbeach property. He agreed that when the mortgage was taken, the position of the companies was precarious, but not that it was extremely precarious. He stated that the family was comfortable with the strategy that involved the giving of a mortgage over the Broadbeach property. 16. Mr Murr submitted that the mortgage over the Broadbeach property was executed by Domenico Battaglia behind the backs of his parents, and in circumstances where they required a proper explanation of the mortgage and the financial implications of giving it. It was emphasised that the mortgage, over a residential property, was taken to support the family companies in circumstances where the financial position of those companies was parlous and there was no guarantee that the Bank would enter into new facilities to replace those that had expired. It was submitted that Mr and Mrs Battaglia were each under a special disability, of which the Bank had notice, such that enforcement of the mortgage against them would be unconscionable. Once again, reliance was placed upon equitable principles of unconscionable conduct, and s 12CB of the Australian Securities and Investments Commission Act. 17. Mr Savage submitted that the request for the mortgage had been foreshadowed on the cashflow spreadsheet that was discussed at the meeting with Mr Battaglia on 11 December 2011. Mr Savage noted that this cashflow spreadsheet was the version sent by Domenico Battaglia to Mr McCabe, and that it also included the sale of the Burraneer property and income of $1 million to come from "Battaglia family capital". Mr Savage submitted that, for various reasons, the evidence given by both Mr and Mrs Battaglia concerning the Certificate of Title ought not be accepted. He submitted that it was most likely that Florentina Battaglia received documents in Argentina from SP&G concerning the need to obtain a new Certificate of Title, and that she would thus have been alerted, if she was not already aware, that the Certificate of Title was needed for the purpose of a mortgage. 18. I do not accept that the mortgage was entered into without the knowledge of Mr and Mrs Battaglia. In my view, the evidence establishes that Mr Battaglia was aware that a mortgage over the Broadbeach property formed part of a strategy put forward to the Bank, and was required by the Bank to assist in reducing the unacceptably high loan to value ratio. It is also likely in my view that Mrs Battaglia was aware that a mortgage over the property was required by the Bank. 19. The initial suggestion that the property be enlisted to assist the financial position undoubtedly came from Domenico Battaglia. He did not suggest a mortgage. Rather, he envisaged a sale of the property with some of the proceeds being applied towards future cashflow requirements. It seems that after this suggestion was advanced within the Bank by Mr McCabe, the response was that the Bank wanted to take security over the property. Mr McCabe informed Domenico Battaglia of this, and then included the property in the security described in his "first version" of the cashflow spreadsheet that he sent to Domenico Battaglia. 20. By this time, Stefano Battaglia was in Australia. Domenico Battaglia informed Mr McCabe that he was working "on all fronts" with his father. When Domenico Battaglia produced his own cashflow spreadsheet he informed Mr McCabe that he was not only speaking to his father about it, he was also seeking comments from his mother and brother who were in Argentina. The spreadsheet had evidently been sent to them. 21. The spreadsheet produced by Domenico Battaglia included the Broadbeach property as part of the security, just as Mr McCabe's "first version" did. There were also some changes, notably the inclusion as income in March 2012 of an amount of $1 million described as Battaglia family capital. I infer that this is a reference to an amount to come in from Argentina. 22. An amount of more than $1 million had already been transferred from Argentina during 2011. These transfers had been effected by Mr and Mrs Battaglia. It is likely that the further $1 million was the subject of discussion with both of them. One of the other changes was the inclusion of the sale of the Burraneer property in April 2012. It is likely that this sale was also the subject of discussion with Mr and Mrs Battaglia. In my view, it should be concluded that the content of the spreadsheet was made known to and discussed with Mr and Mrs Battaglia, and that they were aware that what was being put forward to the Bank included the provision of a mortgage over the Broadbeach property. 23. This conclusion is further reinforced in relation to Mr Battaglia by what occurred at the meeting with Mr McCabe on 11 December 2011. I accept Mr McCabe's evidence about what occurred and what was said at the meeting. Mr Murr did not suggest to the contrary. In particular, I accept that there was discussion about the items in the spreadsheet, including the Broadbeach property, and that such discussion included statements about the Bank requiring security over the property to help reduce the unacceptably high loan to value ratio. I further accept that Mr Battaglia raised no objection to that. I reject Mr Battaglia's evidence to the effect that he did not know of or consent to the giving of a mortgage over the property, and that if asked, he would not have agreed to it. 24. I should note that I also accept Mr McCabe's evidence that he gained the impression that Mr Battaglia, who he described as the patriarch, had a good understanding of the group's finances and the position it was in. It is apparent from Mr McCabe's internal memorandum of 6 January 2012 that Mr Battaglia expressed views at the meeting about various ways to improve the financial situation. 25. The matter is not entirely clear, but there is some evidence to suggest that Mrs Battaglia may have been in Australia for at least part of February 2012. On 7 February 2012 Domenico Battaglia informed Mr McCabe that Florentina Battaglia was coming to Australia and that there was to be a family discussion. In any event, the email communications between Domenico Battaglia and Mr McCabe on 24 February 2012 indicate that the question whether to agree to mortgage the Broadbeach property was the subject of discussion within the Battaglia family. There is no reason to think that Florentina Battaglia would be excluded from such discussions. 26. It is evident that there was reluctance to give the mortgage, at least until the new valuations of the security properties were received. However, Mr McCabe made it clear that the mortgage was required "to cover the short term issue" and that if it was not given then recovery action would commence. When Domenico Battaglia sought some comfort about continued support from the Bank, Mr McCabe did not give any such comfort, and was implacable about the need to sign the mortgage. It is likely that Domenico Battaglia made this position known to his parents and that they acquiesced, albeit reluctantly, in the giving of the mortgage. 27. I am unable to accept Mrs Battaglia's evidence that she did not know of or consent to the giving of the mortgage, and that, if asked, she would not have agreed to it. In addition to the matters referred to above, the conclusion that Mrs Battaglia was aware that a mortgage was being given is supported by some of the evidence concerning the Certificate of Title to the property. It is clear that in about late March or early April 2012 Mr Brook of SP&G sent documents to Argentina including a statutory declaration in relation to the Certificate of Title which had not at that stage been located. It seems that Mrs Battaglia was in Argentina at that time. Even though she said she could not recall receiving such documents, it is very likely that she did. The precise content of the documents sent by SP&G is not known. However, it seems to me that Mrs Battaglia, having received documents from SP&G about an application to obtain a new Certificate of Title, would have at least realised that a transaction involving the property was proposed. If she had been unaware of the proposal she would surely have raised a query with SP&G, who would have appraised her of the situation. There is no evidence to suggest that any such queries, or any objections, were raised by Mrs Battaglia. 28. I note further that Mr Battaglia gave evidence that at some stage he and his wife tried to locate the deeds for the Broadbeach property but could not do so. This evidence must be treated with some caution given Mr Battaglia's general lack of recollection of events, but it provides further, albeit slight, support for the conclusion that Mr and Mrs Battaglia were aware that a mortgage was being given over the property. I do not accept Mr Battaglia's evidence about why he was looking for the deeds. This evidence was contradictory in so far as it related to the obtaining of a valuation, and implausible in so far as it related to an offer to buy the property for $4.5 million. That is three times the value given by a valuer in November 2011. 29. The mortgage was given in circumstances where neither Mr nor Mrs Battaglia obtained independent legal advice or independent financial advice. It was not suggested that they lacked an appreciation of the nature of a mortgage. The complaint made is that Mr and Mrs Battaglia required information, particularly about the parlous financial position of the companies, and whether the Bank was likely to continue its funding. 30. However, I am satisfied that both Mr and Mrs Battaglia had an understanding that the financial position of the companies was very poor. They had been involved in the sending of more than $1 million from Argentina during 2011 to support the companies. Mrs Battaglia said in cross examination that the transfers were made "because the boys were in very bad shape", and the family had been threatened with bankruptcy. The financial position was the subject of discussion with Mr Battaglia at the Gold Coast meeting on 11 December 2011, where Mr McCabe gained the impression that Mr Battaglia had a good understanding of the position the group was in. Mr McCabe's internal memorandum of 6 January 2012 records that Mr Battaglia "is extremely disappointed family is in position it is". 31. I am also satisfied that Mr and Mrs Battaglia were aware that it was a requirement of the Bank that a mortgage over the Broadbeach property be provided. This was stated by Mr McCabe to Mr Battaglia at the meeting on 11 December 2011. Moreover, it was stated that it was required due to an unacceptably high loan to value ratio. It is likely that this requirement was the subject of discussion within the family, including with Mrs Battaglia, around 24 February 2012 when Domenico Battaglia asked for the mortgage to be deferred until the new valuations had been obtained. It is also likely that there was discussion within the family about Mr McCabe's rejection of that request, as well as his stern rebuff of the request that some comfort be given about future support from the Bank. It cannot have been thought that provision of the mortgage guaranteed continued support from the Bank. Rather, it was to stave off imminent recovery action. 32. Mr and Mrs Battaglia no doubt faced a very difficult and stressing situation, and the Bank was taking a hard line in its own commercial interests. There was a degree of pressure applied. In reality, the stark choice presented was between giving the mortgage and thereby preserving for the time being the relationship with the Bank, or declining to give the mortgage and thereby face recovery action. 33. Nonetheless, Mr and Mrs Battaglia were in my opinion in a position to obtain further advice about their position if they felt they needed it. SP&G could have provided legal advice. The companies had in the past engaged accountants, and they could have provided financial advice. Mr and Mrs Battaglia were not unable to protect their own interests in this respect. The way in which Mr and Mrs Battaglia conducted their business and financial affairs over the years, utilising companies and trusts, and engaging professionals such as lawyers and accountants to assist in that regard, would not have suggested to the Bank that they suffered from any such inability. 34. In all the circumstances, and despite the fact that Mr and Mrs Battaglia did not receive independent legal advice or independent financial advice in relation to the mortgage over the Broadbeach property, I am unable to conclude that the Bank, in procuring the mortgage, sought to take advantage of any inability on the part of Mr and Mrs Battaglia to make worthwhile decisions in their own interest. Again I do not think that the fact that the mortgage was executed for each of them by Domenico Battaglia, utilising the Powers of Attorney recently given in his favour, gives rise to any unfairness. 35. Moreover, and notwithstanding the degree of pressure applied by the Bank, I do not think that the Bank has engaged in unconscionable conduct within the meaning of s 12CB of the Australian Securities and Investments Commission Act. The Bank was evidently concerned about the state of the facilities (which were due to be repaid), and there was an immediate concern about the high loan to value ratio. I do not think that requiring a mortgage over the Broadbeach property was an unreasonable response to that concern, particularly in circumstances where it was initially suggested to the Bank that the property could be used to assist the financial position. The giving of such mortgage would undoubtedly improve the Bank's position, and cause Mr and Mrs Battaglia to encumber a residential property, but it should be noted that Mr and Mrs Battaglia were already personally exposed to the very significant debts of the family companies. It is not suggested that the Bank engaged in any trickery, or used unfair tactics in relation to the mortgage. In fact the Bank was very straightforward about its requirement, and Mr McCabe gave no assurances of continued support from the Bank. It seems that the Bank in fact continued to work with the Battaglia family for some months in an effort to reach agreement on further funding. I do not think that the Bank's conduct in relation to the mortgage was morally or ethically deficient. 36. For the above reasons, the unconscionable conduct claims in relation to the mortgage over the Broadbeach property have not been made out. Conclusion 1. It follows from the above that the cross claims filed in each proceeding by Mr and Mrs Battaglia must be dismissed. In that event it is agreed that the Bank and the receivers are entitled to orders for possession of the Burraneer and Broadbeach properties respectively, and the Bank is entitled to monetary judgments against Mr and Mrs Battaglia. Costs should follow the event. 2. I direct that the parties bring in Short Minutes within seven days to give effect to these reasons. ********** 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: 17 September 2015