Australia and New Zealand Banking Group Limited v Ngo

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
MORTGAGE RECOVERY LIST

S ECI 2019 00667

BETWEEN:

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522)	Plaintiff
and
CHUC HONG NGO	Defendant
AND BETWEEN:
CHUC HONG NGO	First Plaintiff by Counterclaim
and
JESSICA’S PUBLIC PTY LTD (ACN 159 147 823)	Second Plaintiff by Counterclaim
and
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522)	Defendant to Counterclaim

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JUDGE:	M Osborne J
WHERE HELD:	Melbourne
DATE OF HEARING:	16 May 2022, 18 July 2022
DATE OF JUDGMENT:	22 November 2022
CASE MAY BE CITED AS:	Australia and New Zealand Banking Group Limited v Ngo
MEDIUM NEUTRAL CITATION:	[2022] VSC 713

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BANKING AND FINANCE – Consumer and small business lending – Default under business and residential loan agreements – Whether defendant had ‘financial nous’ – Stubbings v Jams 2 Pty Ltd (2022) 96 ALJR 271 – Whether defendant was better off having had loan – Commonwealth Bank of Australia v Dinh [No 2] [2019] WASC 456 – Whether defendant entitled to damages, compensation, discharge of mortgages and legal costs by counterclaim – Whether the plaintiff’s conduct fell short of the requisite care and skill of a diligent and prudent banker – Whether plaintiff met its responsible lending obligations – Application of Australian Bankers’ Association Code of Banking Practice – Judgment entered for the plaintiff – Orders for possession of the properties.

MISLEADING, DECEPTIVE AND UNCONSCIONABLE CONDUCT – Whether plaintiff engaged in misleading, deceptive or unconscionable conduct – Unconscionable conduct required to be more than unfair or unreasonable – Whether plaintiff made a misleading representation about a future matter – Whether ss 4, 18, 20 and 21 of sch 2 of the Competition and Consumer Act 2010 (Cth) apply – Whether ss 12CB, 12CC and 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) instead apply.

CONSUMER LAW – Whether services were provided by plaintiff with due care and skill –Whether plaintiff upheld statutory guarantee of fitness for purpose – Whether ss 60 and 61 of sch 2 of the Competition and Consumer Act 2010 (Cth) apply – Whether defendant was a ‘consumer’ under the relevant legislation.

CONSUMER CREDIT – Whether the National Consumer Credit Protection Act 2009 (Cth), including sch 1, the National Credit Code, apply to both the business and residential loans – Whether assessment of borrower under residential loan was sufficient – Whether credit contract was suitable for residential loan – Use of borrower’s declared living expenses in determining suitability for residential loan – Australian Securities and Investments Commission v Westpac Banking Corporation (2019) 139 ACSR 25 – Whether residential loan was provided in unjust circumstances – Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 – Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 – Mackintosh v Johnson (2013) 37 VR 301 – Director of Consumer Affairs Victoria v Scully (2013) 303 ALR 168.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr L Currie	Thompson Geer
For the Defendant and Plaintiffs by Counterclaim	In person

HIS HONOUR:

Introduction

On 20 January 2015, the plaintiff, Australia and New Zealand Banking Group Limited (‘ANZ’), agreed to provide the first defendant, Chuc Hong Ngo (‘Ms Ngo’), with a business loan facility (the ‘Business Loan’) in the amount of $220,000. On 8 September 2015, ANZ agreed to provide Ms Ngo with a residential loan facility (the ‘Residential Loan’) in the amount of $591,431.94.

Earlier, on 7 January 2015, ANZ provided Ms Ngo’s company, Jessica’s Public Pty Ltd (the ‘Company’), with an overdraft facility (the ‘Overdraft Facility’) which had an initial facility limit of $24,500.

The Business Loan, Residential Loan and Overdraft Facility are collectively referred to as the ’Facilities’ in these reasons.

The funds advanced under the Business Loan were used by Ms Ngo to purchase a commercial office suite at Unit 15, 471-475 Sydney Road, Coburg (the ‘Coburg Property’) of which Ms Ngo is currently the registered proprietor. The Business Loan is secured by a registered mortgage over the Coburg property (the ‘Coburg Mortgage’).

The funds advanced under the Residential Loan were used by Ms Ngo to purchase a residential property at 37 Sheila Street, Preston (the ‘Preston Property’) of which Ms Ngo is currently the registered proprietor. The Residential Loan is secured by a mortgage over the Preston Property (the ‘Preston Mortgage’).

On 7 November 2018, ANZ notified Ms Ngo that she was in default of the Business Loan and the Coburg Mortgage (‘First Default Notice’), and in default of the Residential Loan and the Preston Mortgage (‘Second Default Notice’).[1] Each default notice gave Ms Ngo 61 days from the date of the notice to remedy the default.
[1]See below [82].

Ms Ngo has not remedied the defaults. In this proceeding, ANZ seeks to recover debts owing from Ms Ngo, comprising:

(a) $300,509.08 under the Business Loan, together with interest of that sum at the rate of $54.57 per day from 19 July 2022 to the date of judgment;

(b) various bank fees, charges and legal costs in relation to the Business Loan; and

(c) $534,194.02 under the Residential Loan. The amount owing under the Residential Loan is calculated by reference to:

(i) the principal sum advanced to Ms Ngo of $591,431.94;

(ii) less repayments made by Ms Ngo totalling $52,237.92; and

(iii) less the $5,000 inconvenience compensation in Ms Ngo’s favour from ANZ, which circumstances are explored further below.[2]

[2]See below [93] and [97].

In addition, ANZ seeks possession of the Coburg Property and the Preston Property.

ANZ does not seek interest on the Residential Loan or repayment of the Overdraft Facility.

Ms Ngo admits that she received advances under the Facilities and defaulted under the Facilities.

Ms Ngo nevertheless contends that she should be relieved from all liability under the Business Loan and the Residential Loan because, among other things, ANZ acted improperly and unconscionably in:

(a) approving the Business Loan and the Residential Loan;

(b) applying two credit limit increases to the Overdraft Facility; and

(c) various instances of unconscionable conduct in relation to the Business Loan.

Ms Ngo and the Company have made counterclaims based upon such alleged conduct.

Apart from a very limited period, Ms Ngo was self-represented throughout the proceeding and was granted leave to represent the Company.

The proceeding has been the subject of various delays and adjournments, which included an adjournment of the proceeding part heard on 18 May 2022. Ms Ngo made a further application for an adjournment on 18 July 2022, which was refused. Before commencing consideration of the claim and counterclaim, it is appropriate to set out in further detail material aspects of the history of the proceeding.

Procedural history

ANZ commenced this proceeding on 18 February 2019. On 14 August 2019, it obtained judgment in default of appearance against Ms Ngo and the Company. By the terms of the judgment, ANZ was to recover possession of the Coburg Property and the Preston Property and Ms Ngo and the Company were also ordered to pay certain sums to ANZ. A warrant of possession was issued on 20 September 2019.

Prompted by these events, Ms Ngo subsequently lodged a complaint with the Australian Financial Complaints Authority (‘AFCA’). As a result, ANZ agreed to refrain from taking any action under the warrant of possession until November 2019.

On 10 January 2020, Ms Ngo filed a summons seeking urgent relief setting aside the default judgment and staying the warrant of possession.

On 15 May 2020, orders were made by the Court,[3] which set aside the default judgment against Ms Ngo and the Company, stayed the warrant of possession, and provided for the filing and service of pleadings.
[3]Then constituted by Justice Almond, who remained the judge managing the case until approximately August 2021, at which point I was allocated the proceeding.

On 19 May 2020, ANZ informed the Court that Ms Ngo’s complaint lodged with AFCA remained open, the effect of which, under the AFCA resolution process, was to preclude ANZ from taking further action in the proceeding, beyond preserving its rights. On 20 May 2020, Almond J made orders staying the proceeding until further order.

On 22 July 2020, the stay was removed. On 24 July 2020, orders were made timetabling discovery, extending the existing pleading timetable and referring the proceeding to mediation.

On 7 August 2020, ANZ filed and served an amended writ which removed its claims against the Company. As such, ANZ confined its claims to those against Ms Ngo arising under the Business Loan and Residential Loan and the associated mortgages over the Coburg Property and the Preston Property. The claim for recovery of the amounts advanced pursuant to the Overdraft Facility against the Company was not pressed.

On 4 September 2020, the Court made orders on Ms Ngo’s application, joining the Company to the proceeding for the purposes of making a counterclaim. However, further orders were made to the effect that no steps were to be taken in the proceeding on behalf of the Company, except by an Australian legal practitioner. Orders were also made referring the proceeding to the Victorian Bar Pro Bono Scheme, for the purposes of assisting Ms Ngo and the Company in drafting a defence and counterclaim.

On 29 September 2020, the Court made orders enabling Ms Ngo to file and serve a counterclaim on behalf of the Company.

On 16 October 2020, the Court made orders extending the timetable for pleadings and for the mediation. Those orders referred the matter to Justice Connect, a pro bono legal service provider, on the understanding that a solicitor on the record was required in order for the Company to file and serve a defence and counterclaim, which had been drafted for it by a member of the Victorian Bar Pro Bono Scheme.

As the investigation before AFCA remained pending, directions hearings in this proceeding were adjourned on two further occasions without the need for appearances, on 26 February 2021 and 7 May 2021.

By 6 August 2021, the investigation by AFCA had concluded and, on that day, the Court made orders timetabling pleadings and again referred the parties to mediation, given that the mediation previously ordered had not yet taken place.

On 21 October 2021, the proceeding was mediated by a judicial registrar. It did not resolve.

The proceeding came back before the Court on 12 November 2021, where orders were made setting down the proceeding for trial, commencing 1 March 2022, on an estimate of three days, along with associated timetabling orders. Orders were also made referring Ms Ngo to the Court’s self-represented litigant co-ordinator.

The proceeding came back before the Court again on 3 December 2021, at which time Ms Ngo sought leave to amend the counterclaim. The amendment was opposed by ANZ. Ms Ngo’s application was granted and leave was also given to Ms Ngo to represent the Company in the proceeding. Ms Ngo informed the Court that she had previously had some limited assistance from a community lawyer in drafting her defence and counterclaim, but that such assistance was no longer ongoing. Ms Ngo was again advised to contact the Court’s self-represented litigant co-ordinator.

On 8 December 2021, the Court made orders referring the proceeding to Justice Connect again, in order to assist Ms Ngo and the Company in preparing for the trial. On 14 December 2021, related orders were also made referring the proceeding to the Victorian Bar Pro Bono Scheme for the same purpose.

On 18 February 2022, the parties returned to Court and a discussion of pre-trial administrative matters took place. Ms Ngo was provided with an explanation as to how the trial process would work.

On 25 February 2022, a member of the Victorian Bar informed the Court (by email) that he had accepted a referral from the Victorian Bar Pro Bono Scheme. Counsel requested an adjournment of the trial then fixed for hearing on 1 March 2022, so that he would be available to appear at the trial on a reconvened date.

On 28 February 2022, the matter was listed for directions, where pro bono counsel appeared for Ms Ngo and the Company. The Court made orders vacating the 1 March 2022 hearing and re-listed the proceeding for hearing on 16 May 2022, in order to allow counsel time to properly prepare and to facilitate his appearance on behalf of Ms Ngo and the Company on that day. Related timetabling orders were also made.

On 4 March 2022, counsel wrote to the Court advising that, following the 28 February 2022 hearing, Ms Ngo had informed him that she no longer wished for him to represent her or the Company. His notification otherwise informed the Court that Justice Connect had also discussed the matter with Ms Ngo and they had confirmed that this was her wish. In those circumstances, as requested by Ms Ngo, counsel was excused.

On 7 March 2022, 18 March 2022 and 28 March 2022, Ms Ngo wrote to the Court regarding various pre-trial matters and noted that she was experiencing psychological stress and was suffering from a physical injury. She did not request an adjournment in those communications.

On 21 April 2022, the night before a scheduled directions hearing, Ms Ngo emailed the Court requesting an adjournment in the following terms:

I would like [to] update with you my circumstances[.] I [have] been very sick and went [to the] hospital because [of] back injuries [and] worse pains. [I] [c]an’t do anything. [I am] [s]uffering worse pains every day and [my] stress increases [because of] pandemic[,] suicidal conditions and panic attack.
Due to my [severe] illness [and] health conditions I would like to adjourn [the] order[s] [made on] 28/02/2022 [in] paragraph[s] 4, 5, 6, 7, 8 [and] 9 to July. [I will] [s]till represent myself and my company Jessica’s Public.

Later on that same day, my chambers responded to Ms Ngo by email, informing her that the directions hearing would take place the next day, and that the Court would consider her request for an adjournment at that hearing.

At the directions hearing on 22 April 2022, Ms Ngo’s application to adjourn the trial was dismissed and oral reasons were provided. In the reasons, Ms Ngo was informed that if she wished to make any application for any further adjournment of the trial on 16 May 2022, at the very least she would have to obtain a medical report which set out her current condition, why it was the case that she was unable to appear at the hearing on 16 May 2022 and when she would be able to appear. She was informed that she should exhibit any medical report to an affidavit and that ANZ may, depending upon its content, wish to cross examine the reporting medical practitioner. Ms Ngo was informed that the mere fact that a person was somewhat ill or found court processes stressful would not necessarily result in an adjournment, unless there was some other change to her circumstances. The trial date of 16 May 2022 was confirmed.

On the same day, Ms Ngo emailed my chambers following the directions hearing and, among other things, advised that Justice Connect had informed her to the following effect:

(a)[it is] [l]ikely Justice Osborne [will] order [ANZ] [to] pay compensation [to] the company Jessica’s Public Pty Ltd [for] loss of [earnings in] all those 5 years, $200,000 [per] … [year]; and;
(b)[it is] [l]ikely [that ANZ will be ordered to] pay compensation to [Ms Ngo] for her personal loss of earnings, being … $97,000 each year [for five years];
(c)[it is] [l]ikely [the Court will] waive … the amount owing under the [h]ome loan and the [business loan entirely]; [and]

(d) [there will be an order for] a formal apology from [ANZ].

My chambers replied, by email, confirming that as previously advised, the matter was listed for trial on 16 May 2022.

On 11 May 2022, Ms Ngo telephoned my chambers. Ms Ngo advised that she was unwell and sought an adjournment of the trial fixed for 16 May 2022. My chambers requested that she communicate in writing and accordingly, Ms Ngo emailed the Court the following day and sent a copy of such to ANZ’s solicitors, in the following terms:

Dear Justice Osborne,
I can’t [a]ttend [the] [t]rial hearing [on] 16/05/2022 at 10am due to my illness, [I] need [a] new date please. My conditions [have remained severe for] at least 2 years and [I] can’t work more than 6 hours per week.
As per our conversation [at] the directions on 22/04/2022 [at] 10am, … I attach here [a] copy of [an] affidavit with my current doctor [and] [u]pdated [r]eport/letter … I am seeking to reschedule [the] trial hearing [on] 16/05/2022 to [a] new date of 29/07/2022 at 11am.

The accompanying affidavit was unsigned. In it, Ms Ngo deposed the following:

1[D]ue to my severe illness I can’t make 16 May 2022 at 10am, I would [seek] that you give me options like 29 July 2022. I [will] have [a] new date please. Please find my [c]urrent doctor[‘s] [c]urrent updated report/letter [as proof].
2Justice Osborne [hasn’t] confirmed with me [that] he [has reviewed] my case including all documents[, evidence] and my email[s] in March 2022 to April 2022, Without [h]is [Honour’s confirmation] I don’t know where he [is] at therefore, I [can’t] proceed [with the] [t]rial on 16/05/2022.
3[I] [can’t] attend [the trial] until Justice Osborne [replies] to my email sent on 22/04/2022 at 10:06pm [in which the] Justice Connect Senior Lawyer … advised … [of their findings] and … [that] Justice Osborne order[s] ANZ Bank [to] pay compensation … and [to entirely] waive … [the business and home loan] …
4[The] Supreme Court … promised at the time I put my application [and] appealed, they [said] we [will] help you … still live in your home and your losses and compensations. [I] [can’t] proceed [with the trial] on 16/05/2022 at 10am until Justice Osborne [gives] his guarantee [that I will receive all] … compensation …

Therefore, [I can’t] attend [the trial on] 16/05/2022 at 10am, [I] require [it] to [be] reschedule[d] to [a] new date, please … [provide a] new date like 29/07/2022 at 11am.

Ms Ngo’s email also attached a letter from Dr Jeremy Gale, a medical practitioner. The letter was dated 16 March 2022 and was addressed to a Centrelink Disability Support Assessment Officer. Dr Gale’s letter outlined Ms Ngo’s mental health condition and her chronic back pain. The gist of Dr Gale’s report was that Ms Ngo was experiencing significant distress following financial hardship in 2016 and reported being ‘harassed’ and ‘attacked’ by ANZ in relation to her mortgage. Ms Ngo reported that her mental health concerns had developed following this and that she had experienced significant anxiety and low mood, fluctuating in intensity. Ms Ngo also reported that as a result of her mental health condition, she had difficulty attending to normal daily living activities. In Dr Gale’s assessment, this caused severe functional impact (20 point impairment rating), as per the DSP mental health impairment tables.

Dr Gale further reported that Ms Ngo had been in contact with mental health services, including a psychiatric review at the North-Western Mental Health Service. She had previously been treated with pharmacotherapy without significant improvement in symptoms and was currently engaged with Anxiety Treatment Australia, where she was receiving assistance on a weekly basis. Her most recent review was in August 2021, which recommended continued engagement with a psychologist and the continuation of pharmacotherapy. Dr Gale believed that Ms Ngo’s condition was likely to remain severe and would persist for at least two years.

Dr Gale also recorded that Ms Ngo was experiencing persistent cervical and lumbar spine pain, which she had reported was closely linked to the aggravation of her mental health condition. Ms Ngo had reported to Dr Gale that as a result of her back pain, she was unable to remain standing or seated for more than 30 minutes at a time. Dr Gale considered that this amounted to moderate to severe impairment (20 point impairment rating) as per the spinal function impairment tables. Dr Gale recorded that Ms Ngo had recently been attended to by a pain specialist, who proposed a diagnosis of Somatic Symptoms Disorder. Dr Gale also expected this condition to persist for a further two years.

On 12 May 2022, my chambers notified the parties by email that the proceeding would be listed for directions on 13 May 2022. At the directions hearing, Ms Ngo confirmed that her email, delivered in the early hours of 12 May 2022, should be taken as a request for an adjournment of the trial scheduled to commence on 16 May 2022. Ms Ngo requested that the hearing be adjourned until July 2022, and relied upon Dr Gale’s report of 16 March 2022.

ANZ opposed the adjournment noting, among other things, that the report from Dr Gale was dated 16 March 2022, which was before the previous directions hearing and that the report did not, in any event, address Ms Ngo’s ability to appear at trial. Further, ANZ submitted that whilst the report stated that Ms Ngo was unable to remain standing or seated for more than 30 minutes at a time, this could be accommodated by having regular breaks during the course of the trial. Otherwise, ANZ noted that the matter had been previously adjourned and had been on foot for some time.

The application for an adjournment was refused. Brief reasons were provided, including that the material provided by Ms Ngo did not disclose any basis to suggest that her circumstances would be different in any relevant respect by July 2022, that the matter had previously been adjourned when it was first listed for trial in March 2022 and had, in any event, been the subject of various earlier delays.

In the reasons, Ms Ngo was also informed that she would have every opportunity to direct the Court to whichever documents she wanted to rely upon at the trial. It was reaffirmed to Ms Ngo that the Court would familiarise itself with the matters in the court book, prior to the commencement of the trial. In the reasons, it was explained that it was not appropriate or possible for Ms Ngo to be given a guarantee that ANZ would be ordered to pay compensation, as she had sought in her email of 22 April 2022,[4] but that she would have the opportunity to advance her claim at the trial. The trial date of 16 May 2022 was confirmed.
[4]See above [38].

At 9:14am on the morning of the trial, Ms Ngo sent an email to my chambers, which read to the following effect:

Dear Justice Osborne,
The court book [was] amended in the last [minute]. Due to my illness I can’t do things in the last [minute], [the trial] hearing [needs to be rescheduled]. I [want a] … new date please. Matter of [life and death] threatens. I have witness[es] they are here[,] monks give me mental treatments, they [are] all here.
I … sincerely [apologise].

My chambers responded to Ms Ngo via email, confirming that the trial would proceed as scheduled. In accordance with the protocols developed as a result of the COVID-19 pandemic, the 16 May 2022 trial was conducted by way of a Zoom hearing.

The matter was subsequently called on for hearing. On the screen, it could be seen that Ms Ngo was lying in bed, attended to by at least three people, presumably the monks, who were apparently providing her with care. It appeared as though one of the monks was holding a mobile phone, on which the hearing was accessible to Ms Ngo.

In order to be satisfied that the technical requirements were met for the trial to proceed such that orders could be made in accordance with ss 42E and G of the Evidence (Miscellaneous Provisions) Act1958 (Vic), I asked Ms Ngo whether she could see and hear me. In response, an unidentified speaker advised that he was ‘sorry’ and that Ms Ngo could not talk because she was ‘very sick’. I asked the speaker to identify himself, but he did not do so. When I sought clarification from Ms Ngo as to whether she was applying for an adjournment, she confirmed that she was and would be able to provide a medical certificate later that day. ANZ opposed the adjournment. I stated that I was not prepared to grant an adjournment without a medical certificate and noted that this was third application for an adjournment based on a suggestion of ill health, the most recent of which was made on the preceding Friday.

Ms Ngo and her attendants remained visible on screen while counsel for ANZ opened the case.

After approximately 15 minutes, Ms Ngo’s attendant moved the mobile phone camera to show the Court the arrival of paramedics at Ms Ngo’s home. The paramedics appeared to be hesitant at what seemed to be an individual filming their arrival and asked that the attendant stop filming. Subsequently, the mobile phone was moved to a separate room and the Court was no longer able to view Ms Ngo or ascertain what was occurring at her residence.

As a result, I stood the matter down and left the bench. During my absence from the bench, my associate informed an attending paramedic that a Court proceeding was occurring by Zoom, through the mobile phone. The paramedic advised that they had received a call regarding a medical emergency involving Ms Ngo. The paramedic also advised that Ms Ngo was awake and that they were attempting to understand Ms Ngo’s current circumstances. My associate obtained confirmation from the paramedic that a call was received at 10:16am,[5] and that the call to the ambulance service was placed by one of the other occupants in the house.
[5]Which was after Ms Ngo’s adjournment application had been refused.

Some short time later, once Ms Ngo’s circumstances had apparently been clarified, I returned to the bench. The paramedic confirmed that Ms Ngo was awake and was talking to them, but was quite distressed. The paramedic advised they had concerns for Ms Ngo’s mental wellbeing, based on what she had told them. For that reason, Ms Ngo was to be transported to the Austin Hospital for a mental health assessment. The paramedic also referred to Ms Ngo’s complaints of ongoing back pain. Ms Ngo was then taken out of her room for transportation to the Austin Hospital. In those circumstances, the trial was adjourned part heard to 18 July 2022. A date in July 2022 had previously been requested by Ms Ngo.[6]
[6]See above [40].

Accordingly, on 16 May 2022, orders were made adjourning the matter to 18 July 2022 and reserved the day’s costs. A copy of the orders was circulated to the parties.

On 17 June 2022, in circumstances where the Court had not received any further communication from either party, the Court made orders on its own motion:

1Subject to further order, the resumed trial fixed for 18 July 2022 shall take place in person in a courtroom to be advised.
2In the event that Ms Ngo wishes to make any application to adjourn the further hearing of the trial listed for 18 July 2022 for medical reasons, she shall give notice of such application by no later than 4:00pm on 4 July 2022 and shall do so by way of provision of a copy of any of the following:
(a) a sworn affidavit in support;
(b)an affidavit of a medical professional or a report by a medical professional; or
(c)copies of any report or assessment provided to Ms Ngo from the Austin Hospital as a consequence of her admission to that hospital on 16 May 2022.

A further order was made that, in the event that Ms Ngo wished to rely on an affidavit from a medical professional or medical report, she should take all reasonable steps to ensure that said medical professional was available to be examined on their affidavit or report as the case may be, if so required.

Additionally, another order was made such that if Ms Ngo wished to make an application for a further adjournment, that application could be made at a directions hearing on 8 July 2022, which would take place remotely, by Zoom. The proceeding was otherwise listed for directions to be conducted by Zoom on 8 July 2022.

At the directions hearing on 8 July 2022, Ms Ngo made a further application for an adjournment on two bases. The first basis was that Ms Ngo had lodged a further complaint with AFCA, as a consequence of which, it was necessary for the trial to be adjourned and, secondly, that Ms Ngo continued to experience depression and anxiety which was causing her back pain. Ms Ngo advised that she was continuing to obtain assistance from the monks for her health issues. Counsel for ANZ advised that AFCA had in fact written to ANZ and Ms Ngo providing its consent for the trial to proceed. A copy of the letter, confirming that this was so, was provided to the Court. Otherwise, the request for a further adjournment was refused and Ms Ngo was advised that the trial would proceed as scheduled. I reaffirmed to Ms Ngo that she would have every opportunity to raise matters as to the conduct of ANZ at the trial on 18 July 2022.

Following the hearing on 8 July 2022, Ms Ngo forwarded the Court and ANZ a copy of a report from a Dr Esther Dube dated 19 May 2022 and emergency discharge documentation from Austin Health given 16 May 2022.

Dr Dube’s report and discharge documentation recorded a diagnosis of unspecified backache and a clinical summary which, among other things, read:

ongoing LBPO and neck pain
worse today, and attends ED for med cert due to unable to attend court
Cert provided
[sic]

Dr Dube’s report recorded a telephone review with Ms Ngo on 19 May 2022. This report referred to Ms Ngo’s ‘chronic non-specific pain with significant psychosocial stressors that are likely contributing to the significant impact pain has had on her life’. Generally, the report concentrated on Ms Ngo’s lower back pain with radiation down both lower limbs which apparently started in 2016, the relevant trigger being stress, related to the issues with ANZ. Dr Dube’s report refers to Ms Ngo’s ongoing litigation with ANZ and Ms Ngo’s advice that this was the trigger for all of her stress which has resulted in her pain condition. The report noted that the scans taken on Ms Ngo’s lumbar spine did not explain her clinical picture and noted that Ms Ngo had been clear that one of her goals in engaging with the pain clinic was to have support in her issues with ANZ.

On 18 July 2022, shortly prior to the trial’s commencement, Ms Ngo sent another email applying for a further adjournment on health grounds. My chambers replied by email, confirming that the proceeding was listed for hearing as scheduled at 10:00am.

Ms Ngo was not present in Court when the matter was called. When my associate called Ms Ngo three times outside the body of the Court, Ms Ngo responded by appearing on the screen located in the courtroom via an earlier provided Zoom link. Ms Ngo confirmed that she sought a further adjournment until a date in September 2022 on the basis of her health condition and indicated that she hoped her condition would be better then. ANZ opposed the application for a further adjournment, submitting that the matter was not suitable for another delay and that the medical evidence before the Court was not sufficient to enable the grant of another adjournment. Counsel noted that the medical material did not identify when Ms Ngo was likely to recover or when the trial would be able to proceed and submitted that all that the medical material did was set out Ms Ngo’s medical issues. Counsel for ANZ submitted that the trial could not be adjourned indefinitely and that there was nothing on the current material which suggested Ms Ngo’s condition would improve.

I rejected the adjournment application on substantially the same grounds as those the subject of the earlier refusals, including that I could not be satisfied that there was any reasonable prospect that Ms Ngo’s condition would improve by September 2022, noting that Ms Ngo had earlier sought an adjournment to July 2022 and that this date had now come and additionally, that both the March 2022 and May 2022 trials had been adjourned. I observed that it was clear from the medical reports that the stress of the litigation was a primary cause of Ms Ngo’s condition and that the only way that the litigation would go away was either if ANZ abandoned its case, which it was not willing to do, or if the case was heard and determined.

I informed Ms Ngo that, notwithstanding my order, which required the trial to be conducted in person, I would give her leave to participate in the trial and defend the claim made against her on Zoom, but that if she chose not to do so, the trial would proceed in her absence. I explained the process that would be followed, with ANZ’s counsel opening its case before calling ANZ’s witness, Mr Ezra May (‘Mr May’), at which time Ms Ngo would be given the opportunity to cross-examine Mr May. I advised Ms Ngo that her witness statement could be tendered as her evidence-in-chief upon her being sworn and that she would also have the opportunity to make submissions, tender any further documents and make submissions in support of her case.

Ms Ngo participated in the trial by way of Zoom. Ms Ngo made her submissions courteously, coherently and to my observation, without obvious impediment from the health issues previously raised.

ANZ’s evidence

ANZ called Mr May, a Senior Relationship Manager at ANZ, as its sole witness in the proceeding. Mr May’s evidence was given by way of the tender of a witness statement, a copy of which had been earlier served on Ms Ngo. Mr May’s evidence largely comprised the production of various documents which were relied upon by ANZ in order to establish its claim. These documents were compiled into a court book, which was earlier served on Ms Ngo. The events set out below are derived from that documentary evidence and were not relevantly disputed by Ms Ngo.

On 6 January 2015, Ms Ngo made the application for the Business Loan. Ms Ngo’s application disclosed that she was born on 14 May 1981 and was a small business proprietor, carrying on a bookkeeping/accountancy practice under the name Jessica’s Public.[7] She was at that time living with her parents and stated that she earned a net monthly income of approximately $3,300 per month. Otherwise, she had savings with ANZ of approximately $11,000, additional other assets totalling $24,000 and existing credit cards with a limit of $10,000, of which $5,000 was owing. Her ‘gross monthly living expenditure’ was disclosed as $600.
[7]Being the Company.

On 20 January 2015, ANZ forwarded a letter of offer to Ms Ngo for the Business Loan of $220,000. The loan term was 15 years with a variable interest rate of 7.66% per annum,[8] minus a margin of 0.45% per annum. Repayments were interest only, monthly and due in arrears for two years. Security for the Business Loan was to be by way of a mortgage over the Coburg Property, which was to be acquired with the proceeds of the Business Loan. Ms Ngo had agreed to purchase the Coburg Property for $275,000 and the drawdown of the loan was conditional on Ms Ngo providing a copy of the contract of sale and ANZ obtaining a valuation of not less than $275,000. The Coburg Property was the subject of a three year lease which commenced on 28 September 2014, at a commencing rental of $22,000 per annum. At settlement, ANZ obtained a registered mortgage over the Coburg Property.[9]
[8]Which was ANZ’s ‘Business Mortgage Index’ rate at that time.
[9]ANZ’s mortgage was registered on 7 March 2015.

Separately, on 7 January 2015, ANZ also forwarded Ms Ngo a letter of offer for the Overdraft Facility in the amount of $24,500. The Overdraft Facility was to be provided to the Company and the letter of offer was to be secured by way of guarantee and indemnity, to be provided by Ms Ngo. In the result, it appears that the guarantee and indemnity was not provided. In any event, ANZ did not seek to pursue either the Company or Ms Ngo for the funds advanced to the Company pursuant to the Overdraft Facility.

On 19 May 2015, the limit of the Overdraft Facility was increased at the request of the Company to $74,500 (the ‘First Increase’).

On 30 July 2015, Ms Ngo entered into a contract of sale to purchase the Preston Property for $665,000, payable as a deposit of $66,500, of which $2,000 had been paid by 4 August 2015. The remainder of the deposit was due on 4 August 2015, with the balance of the purchase price ($598,500) due at settlement, which was scheduled to take place on 28 September 2015.

On 25 August 2015, Ms Ngo applied for the Residential Loan for the evident purpose of facilitating settlement of her purchase of the Preston Property. Her application was accepted by ANZ, which forwarded to Ms Ngo a letter of offer dated 8 September 2015. The offer referred to a residential loan in the amount of $591,431.94, with the interest rate then being 4.75% per annum. The period of the loan was 30 years, with the first 12 months of payments being interest only, to be followed thereafter by principal and interest payments of $3,134.55, payable in arrears.

On 23 September 2015, the Overdraft Facility limit was further increased at the request of the Company to $124,500 (the ‘Second Increase’).

At settlement, ANZ obtained a mortgage over the Preston Property.[10]
[10]ANZ’s mortgage was registered on 5 October 2015.

On 24 June 2016, ANZ issued a letter of variation in relation to the Residential Loan, in anticipation of the foreshadowed change from an interest only loan to a principal and interest loan, to take effect from 29 June 2016.

On 2 November 2017, Ms Ngo wrote to ANZ (the ‘2 November 2017 Letter’), complaining about the charges on her Residential Loan and the Business Loan from August to November 2017.[11] In her letter, Ms Ngo advised that her business ‘was not doing good because [it had a] big drop [in] clients[, meaning] less job[s]. Plus, the director of the company[12] was very sick [and did] not work.’ Ms Ngo also advised that the Company was in ‘hardship’. In the 2 November 2017 Letter, Ms Ngo further advised that she was looking for a job and was presently only earning Centrelink money, totalling $486 per fortnight. She advised that the tenant had moved out of the Coburg Property,[13] which was on the market for sale at a price of $370,000,[14] and was also being advertised for lease. Ms Ngo advised that if the Coburg Property was sold, she would pay off the Business Loan and some of the Residential Loan. Ms Ngo requested that ANZ waive all fees and interest on the Residential Loan from June 2017 to February 2018 and waive all fees and interest on the Business Loan from September 2017, until the Coburg Property was leased or sold. In relation to the Residential Loan, Ms Ngo also requested that ANZ reduce the interest rate to 3% and limit the payments of interest and principal to no more than $2,000 per month, as the current amount was too high.
[11]See below [126].
[12]In fact, Ms Ngo.
[13]In the 2 November 2017 Letter, Ms Ngo referred to it as ‘the shop’.
[14]As noted above, the Coburg Property had been acquired for $275,000.

On 24 November 2017, ANZ wrote to Ms Ngo noting her recent request for assistance and advised that its attempts to contact her had been unsuccessful. ANZ advised that it was willing to assist Ms Ngo and encouraged her to call ANZ’s hardship team as soon as possible. ANZ further advised Ms Ngo that if she was not satisfied, she could contact ANZ’s customer advocate (the ‘Customer Advocate’), which would review any complaint and attempt to reach a fair resolution, or, alternatively, Ms Ngo could contact the Financial Ombudsman Service (now constituted by AFCA).

On 7 November 2018, ANZ served notices of default in relation to the Business Loan and the Residential Loan. The First Default Notice (in relation to the Business Loan) specified arrears of $30,878.12, a loan balance of $234,042.02 and noted that the last payment made of $1,091.39 had been received by ANZ on 4 August 2017. The Second Default Notice (given in relation to the Residential Loan) specified arrears of $49,429.05, a loan balance of $616,087.44 and stated that the last payment made of $2,878.88 had been received by ANZ on 3 July 2017.

Ms Ngo did not rectify the defaults on the Business Loan or the Residential Loan.

As noted above, ANZ commenced this proceeding on 18 February 2019 and obtained default judgment against Ms Ngo and the Company on 14 August 2019.

Following a complaint made by Ms Ngo, the Customer Advocate reviewed Ms Ngo’s concerns in relation to ANZ’s decisions to approve the Overdraft Facility on 7 January 2015, with an initial limit of $24,500, the First Increase on 19 May 2015 and the Second Increase on 23 September 2015 to increase the Overdraft Facility limit to $74,500 and $124,500 respectively, ANZ’s decision to approve the Business Loan of $220,000 on 7 January 2015 and ANZ’s approval of the Residential Loan of $591,431.94 on 28 September 2015.

The role of Customer Advocate was established by ANZ to review matters not resolved through internal dispute resolution processes. The Customer Advocate aims to reach a resolution ‘fair’ to both the customer and ANZ. ANZ is not obliged to accept the resolutions proposed by the Customer Advocate, however, ANZ’s general practice is to do so.

The Customer Advocate set out its conclusions and proposed resolution in a letter to Ms Ngo dated 13 March 2020. The letter recorded, by way of background, that as at 13 March 2020, the balance of the Overdraft Facility was $178,498.60, the balance of the Business Loan was $258,437.80 and the balance of the Residential Loan was $648,700.46. The latter balances included arrears of $68,534.88 and $95,032.77 respectively.

In relation to the Overdraft Facility, the Customer Advocate concluded that whilst the decision to grant the facility with an initial limit of $24,500 was appropriate, this was not the case with ANZ’s subsequent decisions to approve the First Increase and Second Increase in the facility limit to $74,500 and then $124,500. It considered that, whilst all of the overdraft credit limit increases were approved based on satisfactory account conduct and financial information provided by Ms Ngo, in which she declared income, expenses and provided signed financial performance summaries, the approvals by ANZ for the First Increase on 19 May 2015 of $74,500 and the Second Increase approved on 23 September 2015 to a limit of $124,500 ‘should have raised a red flag’ to ANZ, given that there were several credit increase requests for an overdraft account within a short period. As a result, the Customer Advocate considered the increases unaffordable and concluded that ANZ did not comply with its obligations as a prudent and responsible lender in relation to the First Increase and Second Increase of the Overdraft Facility. The Customer Advocate recommended that ANZ write off the balance of the Overdraft Facility (being $178,498.60).

Further, the Customer Advocate noted that Ms Ngo’s application for the Business Loan disclosed total living expenses of $160 per month, but if a more realistic living expense amount based on the Henderson Poverty Index (‘HPI’) plus a margin of 10% was assumed, there was a surplus of $384.55 per month. As such, the Customer Advocate found that the Business Loan was affordable and that ANZ had complied with its responsible lending obligations when it approved the loan. The Customer Advocate recommended that the Business Loan be repaid in accordance with the terms and conditions of the facility. As noted above, the outstanding balance at the time was $258,437.80.

The Customer Advocate concluded that the Residential Loan had been inappropriately approved. It noted that, whilst the loan was approved based on a fully verified loan application, with Ms Ngo’s income verified by her individual tax return and supported by a notice from the Australian Taxation Office, the application was accompanied by a declaration from Ms Ngo that her monthly living expenses were $1,100. Notwithstanding that the application also disclosed that Ms Ngo was living with her parents, did not pay rent and that ANZ’s own analysis was based on a sensitised analysis of Ms Ngo’s living expenses calculated by reference to a higher monthly expenditure than that submitted by Ms Ngo, the Customer Advocate assessed the serviceability of the loan by the application of monthly living fees based on the HPI, plus an additional buffer of 10%. On that basis, the Customer Advocate formed the view that the Residential Loan was not affordable and could not be serviced by Ms Ngo without substantial hardship. As a consequence, the Customer Advocate concluded that ANZ had not complied with its responsible lending obligations in approving the Residential Loan.

In relation to the Residential Loan, the Customer Advocate recommended that ANZ recover only the principal advanced, and not the interest charges and fees of $107,491.49, but that Ms Ngo needed to also bring to account a rental benefit of $63,458.49. This rental benefit was based on the fact that when the loan was advanced, ANZ obtained a rental assessment which stated that the Preston Property could be rented out at $1,665 per month.

The Customer Advocate calculated the outstanding balance under the Residential Loan to be $602,668.92 (with the above adjustments in relation to interest charges, fees and the rental benefit). The Customer Advocate recommended the debt be interest-free until repaid, but that the Residential Loan needed to be repaid within a short period of time, by either a refinance with another financial institution or by the sale of the Preston Property. Given that the outstanding balance of the home loan was $648,700.46, this represented a write off by ANZ of approximately $46,000.

In addition, the Customer Advocate recommended that ANZ pay Ms Ngo $5,000, to acknowledge the stress and inconvenience associated with ANZ’s conduct.

The letter concluded by requesting that if Ms Ngo was disposed to accept the proposed solution, she should sign an attached acceptance of offer and return it to the Customer Advocate by 27 March 2020. The commercial effect of the proposed solution was to provide for an allowance in Ms Ngo’s favour,[15] totalling $229,510.14.[16]
[15]Putting to one side any distinction between the Company and Ms Ngo.
[16]Comprising the write-off of the Overdraft Facility of $178,498.60, plus the $5,000 payment, plus the reduction in the amount due under the Residential Loan from $648,700.46 to $602,688.92.

Ms Ngo did not accept the solution proposed by the Customer Advocate.

Nevertheless, ANZ was content to confine its monetary claims in this proceeding in the same way as recommended by the Customer Advocate, save that it made a further allowance in Ms Ngo’s favour by not requiring the rental benefit under the Residential Loan (of $63,458.49) to be brought to account.

Thus, ANZ confines its monetary claim against Ms Ngo in relation to the Residential Loan to $534,194.02, calculated as follows:

(a) principal, in the amount of $591,431.94;

(b) less payments received, in the sum of $52,237.92; and

(c) less inconvenience compensation, in the amount of $5,000.

This represents an allowance in Ms Ngo’s favour as at 18 July 2022 of $159,905.04. This sum is calculated by reference to the debt balance, including interest, as at 18 July 2022 of $699,099.06, less $539,194.02 (which comprises the total of the sum claimed by ANZ plus the compensation amount).

ANZ does not pursue recovery of the Overdraft Facility, the balance of which, as at 7 August 2020, was $202,737.63.

ANZ maintains its claim for the amount due under the Business Loan which, as at 18 July 2022, totalled $300,509.08, comprising the debt balance as at 16 December 2021 of $288,710.49, plus $11,798.59 interest from 17 December 2021 to 18 July 2022, continuing at the rate of $54.57 per day from 19 July 2022 to the date of judgment. ANZ also claims legal costs of $61,953.97.

Ms Ngo’s case

Ms Ngo relies upon a document headed ‘Proposed Amended Defence and Proposed Amended Counterclaim’, which was filed in accordance with leave given by the Court by order made 12 November 2021 (‘Defence and Counterclaim’). The Defence and Counterclaim incorporate a counterclaim made by the Company as well as Ms Ngo.

It is clear that Ms Ngo and the Company obtained legal assistance with the counterclaim, which follows conventional form. The part of the combined document under the subheading ‘Defence’ is less conventional. Nevertheless, read as a whole, the nature of Ms Ngo’s Defence and Counterclaim is comprehensible.

Further, Ms Ngo gave evidence in the proceeding by way of her adoption and tender of a document headed ‘Witness Outline’, which was clearly prepared with legal assistance. That witness outline refers to various documents identified by their tab numbers in the court book and is drafted as if it were a witness statement. Each of those documents was tendered in evidence by Ms Ngo, along with her outline.

A review of the Defence and Counterclaim and the witness outline reveals a number of arguments and claims in relation to the Facilities. Including the specific matters set out below, Ms Ngo generally claims that ANZ bullied, accused and/or threatened her and the Company, including by threatening her at her home, though she pleaded no material facts supportive of such an allegation.

The Overdraft

Ms Ngo[17] admits that ANZ provided the Company with the Overdraft Facility on or around 7 January 2015, with an initial limit of $24,500 which was increased to $74,500 pursuant to the First Increase on 19 May 2015 and $124,500 pursuant to the Second Increase on 23 September 2015.
[17]For convenience, these reasons refer to ‘Ms Ngo’ when dealing with arguments raised by Ms Ngo in her personal capacity and on behalf of the Company.

Ms Ngo alleges that when ANZ approved the First Increase and Second Increase, the Company did not have the means to service the Overdraft Facility and ANZ knew or ought to have known this. Additionally, Ms Ngo contends that the Second Increase was without the Company’s consent.

Ms Ngo argues that by reason of the fact that ANZ knew, or ought to have known, that she did not have the means to service the Overdraft Facility at the time of the provision of the First Increase and Second Increase, ANZ has:

(a) breached its responsible lending obligations under ss 6 and 7 of the Customer Owned Banking Code of Practice, as applied at that time (between May to September 2015);[18]
[18]Customer Owned Banking Association, Customer Owned Banking Code of Practice (at 1 January 2014).

(b) engaged in misleading and deceptive conduct within the meaning of s 18 of the Australian Consumer Law as contained in sch 2 of the Competition and Consumer Act 2010 (Cth) (‘ACL’); and

(c) engaged in unconscionable conduct within the meaning of s 21 of the ACL.

The Business Loan

Ms Ngo admits that ANZ provided her with the Business Loan and that it was secured by a mortgage over the Coburg Property.[19] Ms Ngo contends that before she entered into the agreement for the Business Loan, on 20 January 2015 ANZ orally offered her the ability to apply for an additional two year interest-only period beyond the initial two year interest-only period.[20] Around the time the first two year interest-only period was about to expire, Ms Ngo communicated to ANZ her desire to take up an offer for an additional two year interest-only period, which ANZ did not apply to the Business Loan.
[19]However, Ms Ngo contends that this was a ‘personal investment loan’: see below [109].
[20]By a representative named ‘Dario’ at the ANZ branch where Ms Ngo applied for the Business Loan.

Further, Ms Ngo makes mention of the fact that she intended to open a ‘personal investment property loan’ for a personal investment rather than a Business Loan, but pleads no material facts to this. In addition, Ms Ngo disputes that she received the First Default Notice,[21] as it was addressed to an incorrect address.[22]
[21]See above [6].
[22]It was addressed to the address that she put down on her Business Loan application in 2015, which appears to have been at that time her parents’ address.

Ms Ngo contends, and ANZ does not dispute, that her 2 November 2017 Letter[23] constituted a hardship notice pursuant to s 72 of the National Credit Code (‘NCC’), contained in sch 1 of the National Consumer Credit Protection Act 2009 (Cth) (‘NCCP Act’). Ms Ngo claims that by that letter and a further attempt by her on 28 November 2017, she sought to vary the terms of the Business Loan so that she could better service that facility, and that ANZ did not respond to her requests.
[23]See above [80].

Ms Ngo argues that by reason of its provision of the Business Loan, ANZ breached the NCCP Act in failing to establish an accurate process to determine the suitability of the loan. Further, by reason of its provision of the Business Loan as well as its failure to apply the further two year interest-only period, ANZ:

(a) engaged in misleading and deceptive conduct within the meaning of s 18 of the ACL;

(b) engaged in unconscionable conduct within the meaning of s 21 of the ACL, or alternatively s 20 of the ACL; and

(c) contravened s 60 of the ACL, which guarantees that services are provided to consumers with due care and skill.

Ms Ngo further argues that by reason of its failure to change the loan terms in response to her 2 November 2017 Letter, ANZ breached s 74 of the NCC. Section 74 refers to a debtor’s ability to make an application to the Court for a change of a credit contract due to the provision of a hardship notice. Ms Ngo may in fact have meant to refer to s 72 of the NCC, which relates to the process between the credit provider and the debtor in relation to changing the credit contract. However, it does not impose an obligation on the credit provider to change the credit contract.

The Residential Loan

Ms Ngo admits that ANZ provided her with the Residential Loan on or about 8 September 2015. Ms Ngo requested a discount to the interest rate on 31 March 2016, which she contends ANZ agreed to provide by email dated 1 April 2016, but did not in fact implement. Ms Ngo further argues that ANZ failed to comply with its responsible lending obligations in assessing the suitability of the loan for her, and that ANZ changed the loan to an ‘investment residential loan’ without her consent. Further, Ms Ngo claims that she may not have received the Second Default Notice which, much like the First Default Notice, was addressed to an incorrect address.

Ms Ngo argues that by its approval of the Residential Loan, ANZ:

(a) contravened s 133 of the NCCP Act, the NCC, and cl 27 of the Code of Banking Practice (‘2013 Banking Code’)[24] because, in substance, its approval of the Residential Loan fell short of the standard of care of a diligent and prudent banker; and

(b) contravened the guarantee contained in s 61 of the ACL that the loan would be reasonably fit for Ms Ngo’s purposes.

[24]Australian Bankers’ Association, Code of Banking Practice (at 1 February 2014). It is currently titled ‘Banking Code of Practice’.

Further, Ms Ngo argues that by its failure to apply the interest rate discount, ANZ made a misleading representation with respect to a future matter for the purposes of s 4 of the ACL.

Finally, Ms Ngo argues that by its provision of the Residential Loan as well as the failure to apply the interest rate discount, ANZ:

(a) engaged in misleading and deceptive conduct within the meaning of s 18 of the ACL;

(b) engaged in unconscionable conduct as per s 21 of the ACL, or alternatively s 20 of the ACL; and

(c) contravened the guarantee in s 60 of the ACL that the provision of the loan and of any interest rate discounts would be rendered with due care and skill.

Relief sought

By reason of the above contraventions, Ms Ngo seeks:

(a) damages, pursuant to s 236 of the ACL;

(b) further or alternatively, compensation under ss 178 or 179 of the NCCP Act:

(iv) in the amount of $1,504,028 to the Company, representing projected earnings that would have otherwise been derived by the Company for the period from the financial year 2017 onwards because, as a result of its inability to service the Overdraft Facility and ANZ’s conduct in respect of its attempt to recover the amount of that facility, the Company had ceased to trade; and

(v) in the amount of $465,375, representing lost wages suffered by Ms Ngo (including superannuation) for the period from the income year ending 30 June 2017 to 30 June 2020, which are the wages and superannuation that Ms Ngo would have earned from the Company over that same period; and

(vi) in the amount of $93,500, on account of psychological and physical injury to Ms Ngo arising from ANZ’s conduct, which has rendered her unfit to work and has resulted in her inability to work in the future; and

(c) further or alternatively, compensation pursuant to s 124 of the NCC:

(i) in the amount of $1,504,028 to the Company, for the reasons stated above;

(ii) in the amount of $465,375, for the reasons stated above; and

(iii) in the amount of $93,500, for the reasons stated above;

(d) the discharge of the Preston Mortgage and the Coburg Mortgage; and

(e) her and the Company’s costs of the proceeding.

The effect of the relief, if granted, is that Ms Ngo would remain the registered proprietor of both the Coburg Property and the Preston Property, both of which would be unencumbered, and neither she or the Company would be required to repay anything to ANZ in respect of the $124,500 advanced to the Company by way of the Overdraft Facility (which ANZ was not seeking to recover), the principal advanced under the Business Loan of $220,000 or the principal advanced under the Residential Loan of $591,431.94.

In addition, the Company and Ms Ngo collectively sought just under $2,000,000 in compensation.

Ms Ngo also tendered a number of other documents as exhibits in the proceeding, most but not all of which related to the psychological and physical injury alleged to have been suffered by Ms Ngo, including the chronic back pain and ongoing anxiety and depression.

The documents relied upon by Ms Ngo comprised the following:

(a) the North-Western Mental Health discharge summary dated 22 January 2021, which discloses that Ms Ngo reported nil concerns regarding her mental health until 2016, when she first faced problems in relation to finances, but since then she has had ongoing difficulty trying to navigate through the paperwork and other issues. Further, the summary disclosed that she has also developed back pain and numbness in her upper arms over the last two years. Ms Ngo reported that she was very overwhelmed with stress and unable to concentrate on her work for the last two years. The assessment concluded with an impression of Adjustment Disorder relating to physical health issues and financial strain, with medicine prescribed and referral back to her general practitioner for ongoing assessment;

(b) a report of an occupational therapist Ms Jinks dated 23 January 2021, which recorded an assessment that she had carried out Northern Area Mental Health Service to the effect that Ms Ngo was suffering from anxiety and depression;

(c) a report from Dr Grech at The Talk Shop Counselling and Psychology dated 1 February 2021. The psychologist’s report referenced Ms Ngo suffering extreme stress due to court proceedings with ANZ and associated financial difficulties. It also reported an inability to work due to a back injury. The letter was provided in support of a Centrelink claim by Ms Ngo;

(d) a medical report of Dr Desai dated 11 February 2021, addressed to the Centrelink Disability Assessment Officer. The report disclosed that Ms Ngo had presented with a history of chronic neck pain, chronic lower back pain, left leg pain and anxiety and depression. Ms Ngo disclosed that her back pain had developed in 2016 and worsened over the past four years. She suffered a left posterolateral disc protrusion with mild canal stenosis and left L5 neural impingement, which was disclosed on a CT scan of her lower spine. These conditions had in turn led to chronic anxiety and depression, which were further aggravated by financial hardship and her dealings with ANZ. The report concluded with an assessment that Ms Ngo was affected both physically (neck and lower back pain) and mentally (anxiety/depression) and was unfit for any work;

(e) a Rosewood Clinic psychological report dated 26 April 2021, which records Ms Ngo seeking counselling in her efforts for management of her mental health, related to her current financial distress. The report disclosed that Ms Ngo was experiencing financial hardship, stemming from loans that she had taken out with ANZ in 2015 and 2016, resulting in her beginning to struggle when she was not able to make mortgage repayments. It records that Ms Ngo approached ANZ seeking assistance from 2017, which ANZ did not provide, instead increasing her overdraft (presumably the Overdraft Facility) without her consent. Ms Ngo advised Rosewood Clinic of threats made by ANZ, pressuring her to make repayments which impacted on her mental health. It reports that Ms Ngo had stated that she had a mental breakdown in August 2019 and was overwhelmed by ANZ’s failure to cooperate, and instead, pursuit of her. Ms Ngo disclosed that she is now disabled, unable to work, her ‘bright accounting career is over’ and that she attributes her current situation to the way she was mistreated by ANZ;

(f) a medical report of Dr Ho, a general practitioner at the Preston Market Medical Clinic dated 8 July 2021. Dr Ho’s report is generally consistent in tenor to the other reports and concludes with an assessment that Ms Ngo is physically and mentally unfit for work;

(g) various letters documenting Ms Ngo’s Newstart Allowance dated between October 2017 and March 2018, which record her receipt of a Newstart Allowance and energy supplement in the amount of approximately $490 per fortnight;

(h) various letters showing Ms Ngo’s Jobseeker payments from early 2020 to early 2021, which vary between $574 to $730 per fortnight;

(i) a letter from Ms Madigan, a clinical psychologist, addressed to ANZ and dated 10 October 2021, which records Ms Ngo suffering back and hip pain, migraines and significant hair loss as well as depression, anxiety and chronic pain and that the ongoing stressful interaction with ANZ in regard to her home loan is a major maintaining factor in her depression. It records Ms Ngo’s complaint that ANZ gave her a home loan which was unaffordable for her. It also records Ms Ngo’s request that ANZ waive her entire home loan and compensate her for any other financial losses suffered;

(j) a medical report of Dr Gale from Heidelberg West Medical dated 15 October 2021, which is addressed to the Centrelink Disability Support Assessment Officer. It is generally consistent with the reports outlined above. It records the practitioner’s assessment that Ms Ngo suffers from an adjustment disorder, in the form of significant anxiety and low mood, which had apparently resulted from Ms Ngo’s description of ANZ’s attacks and harassment of her in relation to her mortgage. The doctor concluded that Ms Ngo’s condition was likely to remain severe or persist for at least two years. The report further advised of Ms Ngo’s cervical and lumbar spine pain, which she had reported being linked to aggravation of her mental health conditions and which had the result that she was unable to remain standing or seated for more than 30 minutes at a time. The report disclosed a diagnosis of a pain specialist who had provided diagnosis of Somatic Symptoms Disorder. The doctor referenced the MRI conducted in September 2021, which showed evidence of a disc bulge at the L5 nerve root impingement and a CT scan in 2019. The doctor also recommended analgesia by way of treatment and engagement in physiotherapy and hydrotherapy and continued support for mental health stressors. The doctor opined that this condition would persist for at least two years;

(k) an email from Ms Ngo to Vicky Sutton of ANZ dated 3 December 2021, and an associated email chain, in which Ms Ngo, among other things, noted that she was still awaiting ANZ’s response to her proposal that she be paid compensation for losses of the Company of $1.5 million, her personal wage loss of $392,000 and $98,000 per year for up to five years on account of her mental stress,[25] as well as a waiver by the bank of the balance of the Residential Loan and the Business Loan. Ms Ngo’s email also referenced a recent Westpac case involving misconduct, which Ms Ngo stated was similar to her circumstances. In that case, a court order was made that Westpac pay a fine of $100 million and $80 million in compensation. Ms Ngo attached a copy of a screenshot of the Westpac case which had apparently appeared on a television news program;
[25]On other occasions, Ms Ngo has referred to a singular total of $98,000, rather than $98,000 per year for up to five years.

(l) an email from Ms Ngo to Shayne Elliott, CEO of ANZ, dated 3 December 2021, and a subsequent email chain; the 3 December 2021 email was in identical form to the email sent to Ms Sutton;

(m) a screenshot within Ms Ngo’s emails which referenced a review by the Australian Securities and Investments Commission (‘ASIC’) of lending practices by various major Australian banks. The email also contained a copy of an ASIC statement which disclosed that the Australian Securities and Investments Commission Act 2001 (Cth) (‘ASIC Act’) provides general protections for borrowers, prohibits unconscionable conduct, misleading or deceptive conduct and unfair contract terms. The statement also disclosed that where a lender engages in conduct which improperly takes advantage of a power imbalance between itself and a borrower, such conduct may amount to unconscionable conduct. The ASIC statement also contained a description of circumstances which would make a contract term unfair. Ms Ngo had highlighted various aspects of the ASIC statement, which also listed various examples of unfair contract terms and recorded that if a court finds that a term is unfair, it could make a range of orders, including directing the financial services provider to refund money or return property to the small business affected; and

(n) various other media releases by ASIC, including:

(iv) ASIC declares Bendigo and Adelaide Bank contract terms unfair (29 May 2020);

(v) ASIC sues Bendigo and Adelaide Bank for use of unfair contract terms (4 September 2019);

(vi) ASIC sues Bank of Queensland for use of unfair contract terms (4 September 2019); and

(vii) Prospa removes unfair loan terms for small business borrowers and guarantors (7 September 2018).

The exhibits referred to in Ms Ngo’s witness outline included a copy of a business plan prepared by her in or about July 2018 (the ‘July 2018 Business Plan’). In her witness outline, Ms Ngo gave evidence that she provided ANZ with an updated business plan for the Company, in an attempt to have the loans restructured in or around July 2018. The July 2018 Business Plan is well compiled and is fairly detailed, at approximately 50 pages in length. The business described in the plan involves the establishment of an accounting services office, to be conducted under the Company’s name and operated by Ms Ngo. Ms Ngo estimated that in its first year of its trading, the Company would derive an annual profit after tax of $72,794, increasing in its second year to $74,081. Ms Ngo estimated that the turnover of the Company would be $249,000 in its first year and increase to $250,800 in its second year.

In the section of the July 2018 Business Plan headed ‘Background to Business’, Ms Ngo wrote:

I decided to study [an] Accounting course, I completed my Bachelor of Business in Accounting/Information Systems 2007 and worked for CPA accounting for 4 years. In 2012 I went back to [study] to [complete several] laws subjects required by Tax Practitioner Boards so that I get Taxation licence, I … successfully completed those subjects and [the] Tax Practitioner Boards approved and gran[ted a] Taxation licence to me. Therefore, I opened [a] home office [accounting] business helping individuals, friends and family [with] their business accounts, bookkeeping and lodged tax return[s]. It was run successfully. And I [believe] … many individuals and businesses out there need my service …

In the July 2018 Business Plan, Ms Ngo proposed to operate the business from the Coburg Property and indicated that the owner of the property[26] was willing to lease it for a period of three years, with only outgoings payable (although in another section, the plan referred to payment of rent on a one off basis of $26,400). The plan included an analysis of potential competitors.
[26]In fact, Ms Ngo.

Ms Ngo also relied upon an email exchange between herself and the National Disability Insurance Scheme (‘NDIS’), dated 29 April 2022. That email referenced a conversation between Ms Ngo and a representative of the NDIS on 29 April 2022 and referred to Ms Ngo’s desire to become a registered NDIS provider through the Healthcare Providers Association. The proposed service that Ms Ngo contemplated providing was called ‘Plan Management’, which would involve Ms Ngo managing the funds for NDIS clients, through paying the incoming invoices they received for services provided to them, keeping track of the incomings and outgoings on their account and liaising with the client to ensure that they were kept up to date. The email referred to the fees that providers can earn as comprising an initial setup fee per client of between $232 and $348, an ongoing monthly fee of $104 to $156 and an hourly rate for any time spent working with a client of between $65 to $97 per hour. The NDIS representative advised that, on average, a person providing plan management services would generate around $100,000 to $200,000 a year in revenue from a client base of 50-100 people, but that some larger plan management companies were dealing with clients bases of 2,000 or more people, which would generate around $4 million per year.

Cross-examination of Ms Ngo

In cross-examination, counsel for ANZ took Ms Ngo to the 2 November 2017 Letter,[27] in which Ms Ngo relevantly wrote to ANZ in the following terms:

I am Chuc Hong Ngo writing to complain about the charges on my [h]ome loan and commercial property loan account from the month of August to Nov[ember] 2017.
The business was not doing good because [it had a] big drop [in] clients[, meaning] less job[s]. Plus, the director of the company was very sick [and did] not work. The company is in hardship.
I [am] looking for [a] job. I … only [earn] Centrelink money[,] $486 per fortnight.
The tenant move[d] out on 28 September 2017 … the shop is on [the] market adverti[si]ng to lease and sale.
…
Also my house [is on] … the market advertising to lease out.

[27]See above [80].

In cross-examination, Ms Ngo confirmed that the business referred to was ‘Jessica’s Public’ (the Company) and that the reason the Company shut down was that it suffered a drop in the number of clients it had and hence, received less jobs. Ms Ngo then expanded her answer, linking ANZ’s conduct to the adverse effect on the business of the Company.

ANZ’s reply and defence to Ms Ngo’s defence and counterclaim

ANZ, in varying ways, responds to Ms Ngo’s allegations made in the defence and counterclaim. As the defence and counterclaim repeats itself in part, and as a result ANZ’s reply does so, it is sufficient to summarise the pleading.

ANZ variously does not admit and/or denies the allegations made by Ms Ngo against it in relation to the Overdraft Facility. It does not address Ms Ngo’s claim that the Second Increase was provided without her consent, but states that given it does not pursue recovery of the Overdraft Facility, Ms Ngo’s pleadings in relation to that facility should be ignored.

ANZ denies that the Business Loan was for the purposes of a personal investment but accepts that the Business Loan is detailed as a ‘Business Loan for Personal Investment Facility’. ANZ says that insofar as Ms Ngo makes reference to the further two year interest-only period offer, the allegation is that ANZ offered Ms Ngo the ability to apply for an additional interest-only period of two years, but does not admit that this occurred.

In relation to the 2 November 2017 Letter, ANZ says that notwithstanding that the correspondence is addressed to ANZ’s ‘Complaint Department’, the content of the correspondence is in the nature of a request to change the terms of the Facilities.

ANZ further states that any loss and damaged suffered, or likely to be suffered by Ms Ngo, was not as a result of any contravention by ANZ.

In relation to Ms Ngo’s claim pursuant to s 74 of the NCC, ANZ states that it is unaware of any application made by Ms Ngo to change the terms to the Business Loan. It accepts that the 2 November 2017 Letter was a hardship notice. ANZ further states that it has engaged in voluminous correspondence with Ms Ngo in an attempt to assist her to overcome her financial hardship, including to vary the terms of the Business Loan.

In relation to the Residential Loan, ANZ does not admit that it represented to Ms Ngo that it would offer a discount to the interest rate on the loan. ANZ further does not admit that it failed to adequately assess the suitability of the Residential Loan for Ms Ngo. ANZ otherwise denies all allegations of breaches of law as pleaded by Ms Ngo.

Conclusions as to the ANZ claim

I am satisfied that ANZ has proved its claim, save with respect to the quantum of its legal costs. Ms Ngo admits the receipt of the Business Loan and the Residential Loan and the defaults under each of those loans.

The terms and conditions of the Residential Loan provide that a failure to make a payment by the due date constitutes a default. The default notice served by ANZ advises that in the event of a failure to remedy the default, ANZ may exercise its power of sale in respect of the Preston Property and sell it and may take such other action under the mortgage as it sees fit.

Further, the memorandum of common provisions incorporated into the Preston Mortgage sets out the payment obligations of the Residential Loan and provides, in substance, that if there has been a default and a notice of default had been served and the default has not been remedied, ANZ is entitled under the terms of the Residential Loan and the terms of its mortgage to enter into possession of the Preston Property.

Relevantly similar terms and conditions applied in relation to the Business Loan.

Subject therefore to the matters raised by Ms Ngo in the counterclaim, ANZ has made out its claim for:

(a) $534,194.02, being the total amount claimed under the Residential Loan;

(b) $300,509.08, plus interest at the rate of $54.57 per day from 19 July 2022 to the date of the judgment under the Business Loan; and

(c) orders for possession of the Coburg Property and the Preston Property.

In total, the amount owed to ANZ is $834,703.10, plus interest on the Business Loan at the rate of $54.57 per day from 19 July 2022 to the date of judgment.

Conclusions as to the counterclaim of Ms Ngo and the Company

Relevant provisions

Ms Ngo’s complaints in relation to the Overdraft Facility, the Business Loan and the Residential Loan are based on alleged breaches of the Customer Owned Banking Code of Practice,[28] the unconscionable conduct provisions contained in ss 20 and 21 of the ACL, the misleading and deceptive conduct provision contained in s 18 of the ACL and the statutory guarantees that services would be provided with due care and skill and be fit for their particular purpose in ss 60 and 61 of the ACL. Ms Ngo further claims that ANZ made a misleading representation with respect to a future matter for the purposes of s 4 of the ACL in respect of the Residential Loan. Ms Ngo also alleges that ANZ fell short of the standard of care and skill of a diligent and prudent banker under cl 27 of the 2013 Banking Code,[29] in relation to the provision of the Residential Loan. Finally, Ms Ngo variously makes claims for breaches of the NCCP Act and the NCC.
[28]See above n 18.
[29]See above [114].

It is useful to first canvas whether each of the above regimes apply, and then cover the relevant provisions pleaded.

First, ANZ is not a subscriber to the Customer Owned Banking Code of Practice and accordingly, it has no application.[30]
[30]See above n 18.

Secondly, the ACL has no application to Ms Ngo’s complaints in connection with any of the Overdraft Facility, the Business Loan or the Residential Loan. The Overdraft Facility was provided to the Company and the Business Loan was provided to Ms Ngo for investment purposes. Neither the Company that received the benefit of the overdraft or Ms Ngo was a ‘consumer’ for the purposes of the ACL. Further, the Overdraft Facility, the Business Loan and the Residential Loan are financial services, which are largely provided for under the ASIC Act.

In order to be fair to Ms Ngo, I have assumed in Ms Ngo’s favour that the ACL-analogous provisions within the ASIC Act as they apply to financial services apply to Ms Ngo’s complaints concerning the Overdraft Facility, the Business Loan and the Residential Loan. Accordingly, Ms Ngo’s complaints are to be assessed as if she relied upon s 12CB of the ASIC Act (which applies to unconscionable conduct) and s 12DA of the ASIC Act (as it applies to misleading and deceptive conduct).

During the relevant period, s 12CB of the ASIC Act provided that:

(1) A person must not, in trade or commerce, in connection with:
(a)the supply or possible supply of financial services to a person (other than a listed public company); or
(b)the acquisition or possible acquisition of financial services from a person (other than a listed public company);

engage in conduct that is, in all the circumstances, unconscionable.

Section 12CC of the ASIC Act sets out a number of matters to which the Court may have regard to for the purpose of determining whether a supplier has contravened s 12CB in connection with the supply or possible supply of financial services.

Further, s 12DA of the ASIC Act provides (among irrelevant exceptions) that a person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading and deceptive or is likely to mislead or deceive.

Thirdly, as stated above, the NCCP Act includes the NCC as sch 1. The NCC applies to credit contracts entered into on or after 1 July 2010 where:

(a) the lender is in the business of providing credit;

(b) a charge is made for providing the credit;

(c) the debtor is a natural person or strata corporation; and

(d) the credit is provided wholly or predominantly:

(viii) for personal, domestic or household purposes; or

(ix)to purchase, renovate or improve residential property for investment purposes or to refinance credit previously provided for this purpose.

In light of the above, the NCC therefore does not apply to the Overdraft Facility, which was provided to the Company. Further, I do not accept that the Business Loan was a personal investment loan provided to Ms Ngo, because the Business Loan was used to acquire a commercial property (the Coburg Property), not a residential property. Accordingly, the NCC does not apply to the Business Loan. Ms Ngo’s claims in relation to the Business Loan that ANZ breached s 74 of the NCC, or alternatively s 72, as I have inferred she may have meant to refer to, are not made out.

The second key complaint alleges a breach by ANZ of the NCC. Ms Ngo, in effect, adopts the conclusion of the Customer Advocate that the Residential Loan was improperly approved and relies on that conclusion in support of her claim that ANZ breached the NCC and otherwise acted unconscionably in approving the Residential Loan.

The Customer Advocate noted that the Residential Loan was approved on the basis of a fully verified loan application, with Ms Ngo’s income verified by her individual tax return. The Customer Advocate also noted that ANZ performed a sensitivity analysis which, among other things, took account of the estimated rental that would be received by Ms Ngo for both the Coburg Property and the Preston Property, and that ANZ’s analysis assumed a slightly higher amount for Ms Ngo’s living expenses than submitted by her, based on ANZ’s internal benchmark amount of $1,172 per month. Ms Ngo’s estimate was based upon the fact that she was living with her parents, was not paying any rent and that she proposed renting out both the Preston Property and (the earlier acquired) Coburg Property.

Despite those matters, the Customer Advocate nevertheless concluded that ANZ did not comply with its responsible lending obligations when the Residential Loan was approved, because it ought to have assessed the serviceability of the loan by reference to monthly living expenses of $1,675 per month, based on the HPI plus a margin of 10%, rather than ANZ’s internal benchmark amount.

The Customer Advocate concluded that when the serviceability analysis was carried out by reference to the HPI plus margin rate of $1,675 per month (as opposed to ANZ’s internal benchmark amount), the Residential Loan was not affordable and that as a consequence, ANZ should have determined that Ms Ngo was not able to service the Residential Loan without substantial hardship and as such not approved the Residential Loan.

The position taken by ANZ in this proceeding was a pragmatic one; it was content to only press its claim against Ms Ngo for the amounts outstanding as recommended by the Customer Advocate. Given the Customer Advocate’s conclusion that the Residential Loan had been improperly approved and that as a consequence ANZ should only recover the principal sum advanced under the Residential Loan,[42] less payments made by Ms Ngo to ANZ, ANZ did not directly adduce evidence or seek to justify its approval of the Residential Loan in this proceeding, or challenged the amount and calculations of the Customer Advocate.
[42]The principal sum advanced was $591,431.94; Ms Ngo made payments to ANZ in respect of the loan in the sum of $52,237.92; resulting in a net sum recoverable of $539,194.02. Further, the Customer Advocate also determined that it was appropriate to allow Ms Ngo a payment of $5,000 for the stress and inconvenience caused by ANZ’s conduct, reducing in effect the amount owing to $534,194.02.

Nevertheless, this approach did not amount to a concession of a breach of the NCC or otherwise that ANZ acted unconscionably. Whilst ANZ’s pragmatic approach is to be commended, it meant that there was something of a gap as to the evidence in respect of ANZ’s consideration of Ms Ngo’s application and associated submissions as to the issue of breaches of the NCC, the 2013 Banking Code and allegations of unconscionable conduct. Ms Ngo’s claim requires consideration of whether ANZ’s conduct is in contravention of those regimes.

In effect, Ms Ngo’s case is based upon the conclusion of the Customer Advocate that ANZ ought to have assessed that the Residential Loan was unsuitable and not provided the loan to Ms Ngo.

Ms Ngo used the Residential Loan of $591,431.94 to acquire the Preston Property for $665,000, on or about 28 September 2015. It seems that Ms Ngo had already entered into the contract of sale before she applied for the Residential Loan. Although not entirely clear on the evidence, it seems that Ms Ngo then rented out that property for at least a short while and then lived at the Preston Property. Ms Ngo made repayments under the Residential Loan for a little under two years until about July 2017.

As a result of the Customer Advocate’s recommendation, ANZ does not seek to recover any interest owing at all under the Residential Loan. In those circumstances, the effect of any improper approval of the Residential Loan is that it allowed Ms Ngo to purchase a property in September 2015 for $665,000 which is now encumbered by a debt to ANZ of $534,194.02. Further, had the Residential Loan not been approved, it seems likely that Ms Ngo would not have been able to comply with the sale contract.

Given ANZ’s approach to the case, no valuation evidence was led as to the current value of the Preston Property. If the Preston Property has not increased in value at all in the seven years from September 2015, which would be surprising, the net effect of the alleged improperly approved loan is that it has enabled an improvement in Ms Ngo’s financial position by facilitating the purchase of a property and ensured that she did not breach the sale contract.

In that context, the conclusion that the loan was improperly approved in breach of the NCC is not an easy one to reach. It is arguably implicit in the conclusion of the Customer Advocate that ANZ should have assessed the suitability of the loan by reference to the HPI plus a margin of 10% as opposed to assessing its suitability on the basis of Ms Ngo’s own estimate of her living expenses or the deployment of ANZ’s internal benchmarks.

The deployment of the HPI by lenders as opposed to the customer’s own declared living expenses (as sensitised by the lender) as an assessment tool has been much criticised.

In Australian Securities and Investments Commission v Westpac Banking Corporation (‘ASIC v Westpac’),[43] Perram J dismissed an application by ASIC that Westpac had contravened the NCCP Act by approving home loans without regard to the declared living expenses of its customers on their loan application forms. ASIC claimed that Westpac relied solely on the household expenditure measure (‘HEM’) in its unsuitability assessment and had not used the consumer’s declared living expenses.
[43](2019) 139 ACSR 25.

Whilst the particular facts under consideration are not relevant for present purposes, it is not without irony that the contravention alleged by ASIC was based on a suitability assessment conducted by the lender with reference to a similar measure as that which the Customer Advocate submitted should have been adopted in the present case.

Nevertheless, whilst the facts relevant to the disposition in that case can be put to one side, its relevance for present purposes lies with his Honour’s recitation of the basis for the HEM benchmark.

His Honour recited the development of the HEM benchmark as follows:

[39]It remains necessary briefly to explain what the HEM benchmark is. As Mr Love explained in his evidence, prior to 2010 the banking industry had used Henderson Poverty Index (‘HPI’) to assess household expenses in serviceability calculations. The problem with the HPI was that it was based on data from the United States gathered in the 1960s and thereafter indexed for inflation. In 2009–2010 there were several meetings of a body known as the Risk Managers Roundtable Group. This was a body on which all the major credit providers were represented (indeed, it was Mr Love who attended on behalf of Westpac). This group focussed on the desirability of developing an autochthonous equivalent to the HPI using recent Australian data. To this end, they engaged a consulting firm to assist them, Edgar Dunn & Company, and it, in turn, recommended that the Melbourne Institute of Applied Economic and Social Research (‘Melbourne Institute’) be retained to conduct research into alternative expenditure measures that were more tailored for Australian circumstances than the HPI. This resulted in the publication of the Household Expenditure Measure (‘HEM’) by the Melbourne Institute. The Melbourne Institute continues to publish the HEM benchmark on a quarterly basis.

In that context, the Customer Advocate’s assessment that ANZ ought to have assessed the Residential Loan by reference to the HPI plus 10% and as a consequence not approved the Residential Loan is somewhat counterintuitive.

Further, Ms Ngo was a tertiary educated book keeper and tax agent when she applied for the loan; in those circumstances, it is far from clear as to why it was appropriate for any assessment of the suitability of the loan to be carried out by reference to such a crude measure of monthly living expenses as the HPI, rather than entertain the considered estimate provided by a putative borrower whose business involved the provision of accounting and tax advice or an assessment which was customarily implemented by ANZ as part of its ordinary lending practices.

The conclusion that repayments could only be made with substantial hardship is also difficult to reach in light of the evidence. Whilst any conclusion as to whether repayments can only be made with substantial hardship is one which should be carried out at the time of the lending decision based on the information reasonably ascertainable at that time and without the benefit of hindsight, common sense nevertheless suggests that events which post-date the making of the loan may be revealing of circumstances reasonably ascertainable when the loan was made. In this case, Ms Ngo complied with the Residential Loan repayments for a little under two years. Her hardship application contained in the 2 November 2017 Letter made it clear that her repayment difficulties arose, not because of any mismatch between her disclosed and actual expenditure, but rather, from the loss of clients in the course of the conduct of her accountancy practice. These matters are not supportive of a conclusion that, as at September 2015, Ms Ngo could only have complied with the obligations arising under the Residential Loan with substantial hardship; they point to the contrary.

I am not satisfied therefore that the Residential Loan was improperly approved in breach of the NCC or the 2013 Banking Code, nor relatedly that ANZ acted unconscionably in approving that loan.

Nevertheless, given the conclusion of the Customer Advocate and in case I am wrong I will also assess Ms Ngo’s counterclaim in relation to the Residential Loan on the basis that ANZ’s conduct was in breach of the NCC or the 2013 Banking Code and/or constituted unconscionable conduct on its part.

Ms Ngo’s counterclaim seeks substantial compensation from ANZ as a result of the alleged contraventions which preceded the making of the Residential Loan.

In assessing the amount of any compensation, it is appropriate, retrospectively and with hindsight, to put Ms Ngo in the position that she would have been in had the Residential Loan not been made. Given ANZ’s decision to forgo the interest and all charges and allow Ms Ngo the sum of $5,000 on account of stress and inconvenience, the Preston Property is presently encumbered by a debt owing to ANZ in the sum of $534,194.02.

This debt would not be owed by Ms Ngo had the Residential Loan not been made.

However, if the Residential Loan had not been made, Ms Ngo would not have acquired the Preston Property. Any calculation of her loss and damage must bring to account the benefit she obtained as a result of the making of the Residential Loan.[44]
[44]See Commonwealth Bank of Australia v Dinh [No 2] [2019] WASC 456, [648]-[649], affirmed in Dinh v Commonwealth Bank of Australia [2021] WASCA 127.

In the unusual circumstances of this case and confining the analysis in the first instance to the financial position pertaining to the Preston Property alone, Ms Ngo is better off as a result of the making of the loan, assuming that the value of the Preston Property has not declined since it was acquired in September 2015. As noted above, and because of ANZ’s approach, there is no evidence as to the current value of the Preston Property. If I were to assume that there is no change in the value since September 2015,[45] and if I put to one side any rental income received (or benefit acquired by not having to rent), then Ms Ngo is better off as a result of the making of the Residential Loan by approximately $130,000.[46]
[45]Given the upward movement in property prices, this is likely to be a generous assumption in Ms Ngo’s favour.
[46]Being the price at which the Preston Property was acquired of $665,000, less the debt owing on the Preston Property of $534,194.02.

However, Ms Ngo’s counterclaim proceeds on the basis that ANZ’s conduct caused the collapse of the Company’s business. The gist of her argument is that had ANZ not made the Residential Loan, Ms Ngo would not have defaulted and would not have been subjected to the stress and pressure associated with ANZ’s pursuit of the recovery of the loan, which stress and inconvenience caused the Company’s collapse and hence not just its loss of earnings, but the loss of the wages and superannuation that would have been paid by the Company to Ms Ngo.

There are a number of difficulties with this contention. First, it fails on a basic ‘but for’ causation analysis. Contrary to Ms Ngo’s counterclaim, the 2 November 2017 Letter shows that it was the loss of clients by the Company which resulted in the defaults under the various loans, and it seems at least in part caused the illness suffered by Ms Ngo. This sequence is also consistent with a number of medical reports, which show that Ms Ngo reported financial difficulties from about 2016 onwards;[47] this was before the first default under the Residential Loan (and the Business Loan and the Overdraft Facility).
[47]See above [121].

Unfortunately, the Company’s accountancy business suffered a decline in revenue. This in turn led to the defaults which no doubt contributed to the stressful experience Ms Ngo has had. The counterclaim proceeds as if it was the pressure of the repayments in respect of loans that ought not to have been made which caused the decline in the Company’s business. The 2 November 2017 Letter is to the contrary.

Secondly, the causative analysis is complicated by the fact that default also arose on the part of the Company in respect of the amounts advanced pursuant to the Overdraft Facility and on the part of Ms Ngo under the Business Loan. Ms Ngo’s complaints in relation to the Business Loan were not accepted by the Customer Advocate and have been rejected for the reasons earlier set out. I have also rejected Ms Ngo’s claim in relation to the Overdraft Facility. For understandable reasons, the counterclaim does not differentiate between the causative effect of the non-actionable defaults in respect of the Business Loan and the Overdraft Facility and the causative effect of any improperly approved Residential Loan. Yet for any counterclaim in relation to the latter to sound in the damages that Ms Ngo seeks, it must be the case that the loss and damage was caused by ANZ’s conduct in relation to the Residential Loan and would not otherwise have been suffered even if there had been default under the Business Loan and the Overdraft Facility. The evidence suggests that no such differentiation is possible.

Thirdly, whilst I accept that Ms Ngo is clearly suffering from mental and physical infirmities to the effect set out in the various medical reports relied upon by her and that her current physical and mental health is such that she is unable to work, the chain of causation advanced by Ms Ngo again fails to take account of the decline in the Company’s business which preceded the defaults. Further, Ms Ngo’s counterclaim conflates the stress occasioned by ANZ’s legitimate pursuit of moneys owing with the stress caused by the alleged making of inappropriate loans.

Ms Ngo also advances another head of loss and damage in addition to, or in the alternative to, the loss of earnings and income claim occasioned by the collapse of the Company’s business. She argues that she lost the opportunity of setting up a business providing NDIS management services. This claim too suffers from the same causation problem. Additionally, there is insufficient evidence to establish on the balance of probabilities that Ms Ngo and/or the Company lost an opportunity of some not insignificant value, or to enable the assessment of the value of that opportunity. The only evidence relied upon by Ms Ngo is a recent letter (April 2022) from a representative of the NDIS, which sets out the nature of the services that could be provided and the charges that may be rendered for such services. There is no evidence as to the likelihood that Ms Ngo would have been appointed as a provider, much less the number of clients that she could have obtained or their likely needs.

Finally, Ms Ngo also referred to a number of instances where ASIC has taken action against various banks in connection with their lending practices.[48] It appears that such cases relate to provisions in standard form loan agreements or otherwise relate to the practices of lenders in their assessment of loans, much like that of ASIC v Westpac, considered above. They do not relate to the specific circumstances attending a lender’s conduct vis a vis a particular borrower and as such are of no assistance to Ms Ngo’s case.
[48]See above [121(n)].

In Stubbings v Jams 2 Pty Ltd (’Stubbings’),[49] the High Court of Australia upheld an appeal by Mr Stubbings against a decision of the Court of Appeal of the Supreme Court of Victoria, overruling the judge’s decision that the lender in that case had engaged in unconscionable conduct in connection with a loan made by a financier to Mr Stubbings.
[49](2022) 96 ALJR 271.

Whilst each case involving unconscionable conduct is necessarily fact-specific, Stubbings provides a useful illustration of conduct irreconcilable with that which is right and reasonable, or conduct not in good conscience which supports the grant of relief.

Mr Stubbings owned two houses in Narre Warren, both of which were mortgaged to the Commonwealth Bank. Mr Stubbings did not live in either of them. He was unemployed, had no regular income and was found by the trial judge to be unsophisticated, naïve and a person of ‘little financial nous’. Mr Stubbings lived at a rental premises at Boneo, where he worked repairing boats for the owner of the property. After a falling out with the owner of the Boneo property, Mr Stubbings ceased work and needed to move house. Rather than live at one of the Narre Warren properties, he sought a ‘little house’ on the Mornington Peninsula. The lender’s agent advised that there would not be a problem going bigger, and on the strength of that suggestion, Mr Stubbings found a five acre property with two houses on it in Fingal, available for $900,000. The lender suggested that Mr Stubbings could borrow a sum sufficient to pay out the existing mortgages over the Narre Warren properties, purchase the Fingal property, have money left over to go towards the first three months interest on the loan, then sell the Narre Warren properties, reducing the loan to approximately $400,000, which Mr Stubbings would then refinance with a bank at a lower interest rate. Mr Stubbings’ first month’s interest on the loan was paid in advance by the funds received from the loan. Mr Stubbings then managed to sell some assets to pay off the second month’s interest. However, he was unable to pay the third month’s interest payments and as such, the lender commenced proceedings against him, seeking to enforce the guarantee and their rights as mortgagees over the two Narre Warren properties and the Fingal property.

The High Court concluded that the failure of the lender’s agent to make any enquiries about the borrower’s ability to service the loans, his understanding of the loans or his financial nous and vulnerability constituted unconscionable conduct.

Unlike the actions brought by ASIC relied upon by Ms Ngo, Stubbings involved consideration of the specific conduct of a lender in relation to a particular borrower.

In Stubbings, the borrower, a person with ‘little financial nous’, owned two existing properties and was meeting his obligations under the mortgages over those properties. He was persuaded by a lender to take out a new, bigger loan to buy a third property, with the loan to be secured by mortgages over all three properties. The default was inevitable and quickly ensued imperilling not just the third newly acquired property but the two previously safely held properties. The gist of the unconscionable conduct was that it resulted in harm to the borrower’s financial position and was caused by the lender’s conduct.

Here, Ms Ngo approached ANZ and obtained the loans she sought, using them to acquire property assets which she did not previously own. Stubbings is but one example of the type of conduct actionable by a defaulting borrower which is far removed from that identified by Ms Ngo.

In the result, the counterclaim is not made out.

Conclusion

This is an unfortunate case. I do not doubt that the default under the Business Loan and the Residential Loan has been traumatic for Ms Ngo.

However in the events described, the alleged financial and actual non-financial effect of that conduct was not the result of any actionable conduct on behalf of ANZ.

Indeed, ANZ’s conduct in adopting the recommendations of the Customer Advocate, writing off the Company’s overdraft debt of $124,500 and only seeking to recover the net principal advanced under the Residential Loan used by Ms Ngo to acquire the Preston Property in September 2015 went beyond that which the law requires and is the antithesis of unconscionable conduct. That conclusion is not altered by the fact that ANZ seeks to recover principal and interest (but not default interest) owing under the Business Loan.

There will be orders on the claim for possession of the Coburg Property and the Preston Property and Ms Ngo is ordered to pay ANZ the sum of $834,703.10 together with interest on the Business Loan at the rate of $54.57 from 19 July 2022 to the date of judgment.[50] The counterclaim is dismissed.
[50]See above [139]-[140].

I will hear from the parties as to costs.

[2022] VSC 713

22 November 2022