Australia and New Zealand Banking Group Ltd v Couanis
[2020] WASC 125
•22 APRIL 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD -v- COUANIS [2020] WASC 125
CORAM: ARCHER J
HEARD: 24 - 28 FEBRUARY 2020
DELIVERED : 22 APRIL 2020
FILE NO/S: CIV 2290 of 2014
BETWEEN: AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD
Plaintiff
AND
PANAGIOTIS COUANIS
Defendant
Catchwords:
Default under loan agreement - Counterclaim to set aside transaction documents - Unconscionability - False signature - Turns on its own facts
Legislation:
Nil
Result:
Judgment for the plaintiff
Counterclaim dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | C H Thompson |
| Defendant | : | In person |
Solicitors:
| Plaintiff | : | Dentons Australia |
| Defendant | : | In person |
Case(s) referred to in decision(s):
ACCC v Berbatis Holdings [2003] HCA 18; (2003) 214 CLR 51
Australian Securities and Investments Commission v Kobelt [2019] HCA 18; (2019) 93 ALJR 743
Commonwealth Bank of Australia v Dinh [No 2] [2019] WASC 456
Kakavas v Crown Melbourne Ltd [2013] HCA 25; (2013) 250 CLR 392
Mitchell v 700 Young Street Pty Ltd [2003] VSCA 42
Page v Commonwealth Bank of Australia [1995] NSWCA 352
Suncorp‑Metway v Nam Property Holdings [2010] NSWSC 1078; (2010) 16 BPR 30,
The Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447
Thorne v Kennedy [2017] HCA 49; (2017) 263 CLR 85
Vadasz v Pioneer Concrete (SA) Pty Ltd [1995] HCA 14; (1995) 184 CLR 102
Table of Contents
Overview
Background
The First Loan Agreement
Finance from Quantum
The Second Loan Agreement
The falsely signed document
The relevant terms of the Second Loan Agreement
Subsequent events
Mr Couanis' defence and counterclaim
The issues
Disadvantage at trial?
The sources of evidence
The facts
Mr Couanis' English skills and history
Prior loans
Legal advice in relation to Quantum loan
The First Loan Agreement
Mr Couanis' evidence
Mr Frankland's evidence
The alleged bribe
Mr Couanis' evidence
Ms Tran's evidence
Mr Frankland's evidence
Finding on alleged bribe
The Second Loan Agreement
Mr Couanis' evidence
The false signing
The evidence as to the false signing of the Refinance Advice
Was the ANZ negligent in failing to have the Refinance Advice forensically examined?
Irrelevant allegations
Assessment of witnesses
Ms Tran
Mr Kenneday
Mr Manamperi
Mr Couanis
Did the ANZ engage in unconscionable conduct?
Legal principles
In equity
Under the ASIC Act
Was Mr Couanis under a special disability?
Did the ANZ unconscientiously take advantage of Mr Couanis' disability?
The First Loan Agreement
The Second Loan Agreement
Conclusion on defence and counterclaim
If I am wrong, what is the appropriate relief?
Mr Couanis' alleged loss
Alleged personal injuries
Alleged financial losses
Restitution
Conclusion
ARCHER J:
Overview
The plaintiff (ANZ) seeks to recover money it lent to the defendant Mr Couanis. Mr Couanis denies that the ANZ is entitled to recover the money, saying that the ANZ engaged in unconscionable conduct in the course of arranging the loans. Mr Couanis also counterclaims against the ANZ, including a claim for $6,000,000 in aggravated damages.
Mr Couanis was unrepresented in these proceedings, although he was getting legal advice and assistance behind the scenes.[1] In his pleading, Mr Couanis 'did not admit' most of the elements of the ANZ's cause of action. However, during the hearing, he did not contest those elements. Accordingly, the central issues in this case arise from Mr Couanis' allegations against the ANZ.
[1] See under the heading 'Assessment of witnesses'.
Mr Couanis bought a commercial property at 380 Newcastle Street, West Perth (Property) about 30 years ago, with the assistance of a loan from a third party lender. About six years later, he obtained a short‑term loan of $150,000 from another third party lender. Subsequently, he entered into a number of other short‑term loans from third party lenders, each time paying off his existing loan and obtaining additional funds. In 2000, Mr Couanis obtained a loan of $208,000 from the Police & Nurses Credit Society Ltd (P&N Credit Society), again paying off his previous loan and obtaining additional funds. In July 2003, the loan amount was increased to $237,400. All of these loans were secured by a registered mortgage over the Property.
Mr Couanis first approached the ANZ in late 2008. He wanted to borrow money to pay for renovations on the Property. He estimated that the renovations would cost approximately $200,000. He borrowed $500,000 from the ANZ in a 'low‑doc' loan, of which over half was used to pay off the P&N Credit Society Loan.
About two years later, Mr Couanis sought a short‑term loan of $70,000 from Quantum Asset Management Pty Ltd (Quantum). He wanted to borrow more money for renovations. He planned to repay the Quantum loan by refinancing the ANZ loan. His application was approved and the drawdown occurred in March 2011. The term of the loan was six months. Quantum charged approximately $12,000 in fees.
Six months later, in September 2011, Mr Couanis sought another short‑term loan from Quantum, this time for $120,000. He sought this loan so that he could obtain more money for the renovations, and repay the first Quantum loan. His application was approved. The fees charged by Quantum for this second loan totalled approximately $20,000. This second Quantum loan was to be repaid after seven months. After the first six months, it attracted a very high interest rate, being the equivalent of 44.28% per annum.
In November 2011, Mr Couanis sought from Quantum, and was granted, a further loan of $20,000 plus fees.
In June 2012, Mr Couanis sought to refinance his existing ANZ loan to pay off his growing debt to Quantum. He asked ANZ for a loan of $690,000, being an additional $190,000 on top of the original $500,000. Mr Couanis indicated that he intended to sell the Property.
The ANZ agreed to refinance the first ANZ loan. The second ANZ loan was for a term of one year and was an interest only loan. By the settlement date of the second ANZ loan, his debt to Quantum had grown to $171,016.63.
When the term of the second ANZ loan expired in July 2013, Mr Couanis had not sold the Property. He did not pay back the money he had borrowed. He stopped paying interest. By February 2020, his debt to the ANZ had grown to over $1 million.
Mr Couanis is understandably distressed at the prospect that, if the ANZ succeeds in its claim, he will lose his only major asset. Although he alleges that the ANZ loans were unconscionable, the main source of his distress appeared to be that, having obtained, at most, a total of $120,207.84[2] from the three Quantum loans, and having paid interest, he ended up with a debt of $171,016.63. This, however, is not relevant to the issues I must decide, other than to explain the history of the matter and, in particular, the position Mr Couanis was in when the second Quantum loan began attracting interest at the very high rate of 44.28% per annum.
[2] The documentary evidence shows that he did receive this amount in total - see exhibit 3.92 pages 775, 787 and 789. However, Mr Couanis does not accept he received this amount, which further aggravates his sense of grievance.
Although he was unrepresented in court, Mr Couanis did understand that Quantum was not a party to these proceedings. His pleading reflected that understanding, alleging, among other things, that both ANZ loans were unconscionable. His primary allegation in relation to the first loan is that it should not have been for a period of 15 years, but should have been a short‑term loan, or not offered at all. His primary allegation in relation to the second loan is that it should have been for a longer period or not offered at all.
Sometime after Mr Couanis failed to meet his obligations under the second ANZ loan agreement, Mr Couanis discovered that the ANZ employee who handled his loan applications had falsely signed his name on a refinancing notice sent to Quantum. As will be seen, the employee falsely signed Mr Couanis' name in a misguided effort to assist Mr Couanis. The document was not relevant to the assessment of his loan application. However, Mr Couanis was understandably critical of the employee's conduct, and it was a significant focus of his attention during the trial.
Mr Couanis repeatedly said during the hearing words to the effect that he was a sick old man. He sought to portray himself as a person who had no ability to protect his own interests because he did not understand financial matters and because he trusted people. He blamed others for failing to give him advice. Mr Couanis is now 75 years of age and does suffer from a number of health issues. The loans he entered into with Quantum were ill‑advised. The Quantum loans, and his failure to meet the conditions of those loans, significantly reduced his net worth. However, Mr Couanis is very intelligent, has had a lot of experience with loans, and was fully aware of the terms of the two ANZ loans.
In my view, Mr Couanis was entirely able to protect his own interests. I am not satisfied that either of the ANZ loans were unconscionable. The issues in this trial do not require me to determine whether the Quantum loans were unconscionable.
Background
In its written submissions filed in advance of the trial, the ANZ set out the background facts. Mr Couanis did not dispute these facts during the hearing, and they were proved by the documents tendered by the ANZ. I gratefully acknowledge that much of this section reproduces or is drawn from the ANZ's written submissions.
The First Loan Agreement
On about 23 December 2008, the ANZ entered into a contract to lend Mr Couanis $500,000 (First Loan Agreement).[3] The purpose of the loan was said to be to refinance loans Mr Couanis had with the P&N Credit Society.[4] The loan was for 15 years, with the first five years of that term being interest only.[5]
[3] Exhibit 1.15.
[4] Exhibit 1.15 page 179.
[5] Exhibit 1.15 page 179.
In his evidence, Mr Couanis said that he needed the loan to renovate the Property. The Property comprised a retail shop with an apartment above. Mr Couanis had leased the shop to a business. He said the terms of the lease required him to undertake renovations. He said he thought at the time that he would need $200,000 for the renovations (but later realised he would need more).[6]
[6] ts 344.
The First Loan Agreement was a 'low‑doc loan', which meant that Mr Couanis was not required to provide full documentation in support of the application.[7] Instead, he verified his income and other details by way of a declaration on the loan application (First ANZ Loan Application).[8]
[7] ts 275.
[8] Exhibit 1.13 pages 147 ‑ 149.
The First Loan Agreement included a term that a loan approval fee of $5,000 was payable upon acceptance by Mr Couanis of the offer of finance. This sum was 1% of the loan amount. This was the percentage automatically charged by the ANZ to business banking customers for low‑doc loans.[9] The fee was fully disclosed in the First Loan Agreement documentation.[10]
[9] ts 281.
[10] Exhibit 1.15 pages 179 and 183. See also exhibit 1.19. The fee was deducted from the loan proceeds paid into Mr Couanis' account - see exhibit 3.92 page 745.
The security for the First Loan Agreement was to be a first registered mortgage over the Property.[11] It was a condition precedent to the First Loan Agreement that a valuation of the Property would be satisfactory to the ANZ.[12] A valuation was obtained on about 24 December 2008, valuing the Property at $820,000.[13]
[11] Exhibit 1.15 page 180.
[12] Exhibit 1.15 page 181.
[13] Exhibit 1.14.
The First Loan Agreement disclosed that the ANZ may pay fees to other parties where they had referred a loan application to the ANZ. It said that the loan was referred to the ANZ by Mortgage Providers Australia. It said that Mortgage Providers Australia was not an agent of the ANZ, but independently contracted with the ANZ to refer loans to it and, in return, was paid a fee.[14]
[14] Exhibit 1.15 page 181.
The ANZ lodged a first registered mortgage[15] (Mortgage) over the Property. The Mortgage had been signed by Mr Couanis and witnessed by a Terry Frankland, who described himself on the Mortgage as a financial planner.[16] In his evidence, Mr Couanis said that Mr Frankland was his mortgage broker and was also a financial planner.[17]
[15] being K847106, registered at Landgate on 9 February 2009 - see exhibit 1.17 and exhibit 2.50.
[16] Exhibit 1.17 page 251.
[17] ts 397, 398, 400. See also ts 534.
The Mortgage incorporated the terms set out in the Memorandum of Common Provisions I867952,[18] which had been registered at Landgate on 29 April 2004.[19]
[18] Exhibit 1.17 page 250. The Memorandum of Common Provisions is exhibit 1.18.
[19] Exhibit 1.18 page 281.
Over half of the funds advanced to Mr Couanis under the First Loan Agreement[20] were used to pay out Mr Couanis' existing debt to the P&N Credit Society. That debt was $268,134.55 as at the settlement date of 6 February 2009.[21]
Finance from Quantum
[20] on account 016‑002 3662‑22767 - see exhibit 3.91.
[21] Exhibit 1.21 page 334 and exhibit 1.22 page 338. See also exhibit 3.91 page 720 (showing the drawdown of the $500,000) and exhibit 3.92 page 745 (entry for 6 February 2009, showing the balance, after the payment to P&N Credit Society, being deposited in Mr Couanis' account).
Mr Couanis said that, at some point, he realised he would need more money for the renovations. He said he first tried to get more money from the ANZ, but was refused. So he asked his broker Mr Frankland to find him a loan elsewhere. In his evidence, Mr Couanis said that Mr Frankland steered him towards Quantum.[22] Mr Couanis said he knew that it would be an expensive loan, but that he did not know how expensive it would be.[23]
[22] ts 345.
[23] ts 352.
In December 2010, Mr Couanis made an application for short‑term finance to Quantum. He sought $70,000 for a term of six months. Mr Couanis declared that the loan was for investment or business purposes. The application recorded that it would be repaid by refinancing the existing ANZ loan.[24] In his evidence, Mr Couanis agreed that was his intention at that time.[25]
[24] Exhibit 2.27.
[25] ts 406 ‑ 407.
Quantum eventually approved the application and loaned Mr Couanis the money he had sought. The drawdown occurred on 11 March 2011. Quantum charged approximately $12,000 in fees.[26] Quantum registered a second mortgage over the title to the Property on 27 April 2011[27] and entered into a priority agreement with the ANZ.[28]
[26] See exhibit 2.43.
[27] Exhibit 2.30.
[28] Exhibit 2.31.
In September 2011, Mr Couanis made a second application to Quantum for finance.[29] He sought $120,000 for a term of six months. Again, Mr Couanis declared that the loan was for investment or business purposes.[30] In the section titled 'Loan Exit Strategy', the application recorded that the funds being sought were to enable the existing Quantum loan to be 'rolled‑over' and to provide additional funding 'to complete (upmarket) renovations. Once completed the property will be placed on the market for sale'.[31] In his evidence, Mr Couanis agreed that that was his intention at the time.[32]
[29] Exhibit 2.33.
[30] See also exhibit 2.39.
[31] Exhibit 2.33 page 455.
[32] ts 411.
Quantum required Mr Couanis to obtain independent legal advice and to advise it of the name of his lawyer. Mr Couanis signed a Quantum form which stated that his lawyer was Mr Menna of Independent Legal.[33] Mr Menna signed a 'solicitor's certificate' confirming he gave Mr Couanis advice on the agreement and stating that Mr Couanis appeared to understand what his obligations would be under the agreement.[34] Mr Menna also witnessed Mr Couanis' signature on a number of documents.[35]
[33] Exhibit 2.34 pages 463 ‑ 464, although the lawyer's surname was spelled 'Manner'.
[34] Exhibit 2.41.
[35] See exhibit 2.38 page 480, exhibit 2.39 and exhibit 2.40.
Quantum agreed to provide further finance to Mr Couanis for a term of seven months from the date of the loan.[36] A further mortgage was registered over the property on 19 January 2012,[37] and Quantum entered into another priority agreement with the ANZ.[38] The fees charged by Quantum for this second loan totalled approximately $20,000.[39] After the first six months, the loan attracted a very high interest rate of 3.69% per month,[40] being the equivalent of (at least) 44.28% per annum.
[36] Exhibit 2.38. See also exhibit 2.69.
[37] Exhibit 2.37.
[38] Exhibit 2.46.
[39] Exhibit 2.38 page 479 and exhibit 2.69 page 655.
[40] Exhibit 2.38 page 479 and exhibit 2.69 page 655.
The first Quantum loan was paid off from funds advanced under the second Quantum loan.[41] However, the mortgage that had been registered in relation to the first Quantum loan remained on the title.
[41] See exhibit 2.43. See also exhibit 2.37 page 474 (special condition in the mortgage that the proceeds would first be applied to pay out the first loan).
In November 2011, Mr Couanis sought from Quantum, and was granted, a further loan of $20,000 plus fees. This was effected as a variation of the agreement in relation to the second Quantum loan.[42]
[42] See exhibit 2.45. See also exhibit 2.69.
The second Quantum loan was due for repayment on 7 May 2012.[43] On 9 March 2012, Quantum wrote to Mr Couanis to remind him of this. Quantum also asked that Mr Couanis contact Quantum if he was not going to be able to repay the loan on that date so that the available options could be discussed.[44] Quantum wrote a similar letter on 2 April 2012.[45]
The Second Loan Agreement
[43] See exhibit 2.49 and exhibit 2.52.
[44] Exhibit 2.49.
[45] Exhibit 2.52.
On about 21 June 2012, Mr Couanis made an application for a business loan from the ANZ (Second ANZ Loan Application).[46] An employee of Quantum, Peter Kenneday, helped Mr Couanis with the application.
[46] Exhibit 2.54.
The application included a copy of a selling agency agreement with a real estate agent for the Property, a cash flow statement for Mr Couanis and a copy of the lease for the Property.
The cash flow document indicated to the ANZ that Mr Couanis was working and intended to continue working for the next year.[47] The lease indicated that Mr Couanis was entitled to receive $45,000 plus GST per annum in rent.[48]
[47] ts 285 ‑ 286.
[48] Exhibit 2.54 page 538.
The ANZ submits, and I accept, that the only reasonable inference to be drawn from the inclusion of the selling agency agreement was that Mr Couanis intended to sell the Property.
In the Second ANZ Loan Application, Mr Couanis sought an additional $180,000, to be added to the $500,000 which the ANZ had lent him under the First Loan Agreement.[49] Mr Couanis gave evidence that he needed the extra money to pay off his growing debt to Quantum.[50] By this time, Mr Couanis' loan with Quantum was attracting interest at the rate of 44.28% per annum.
[49] Exhibit 2.54 page 525.
[50] ts 347 ‑ 348.
The Second ANZ Loan Application was approved on 5 July 2012.[51] On that date, a letter of offer was issued to Mr Couanis (Second Letter of Offer).[52] That letter became the loan agreement once it had been executed and returned to the ANZ by Mr Couanis, on 11 or 12 July 2012 (Second Loan Agreement).[53]
[51] Exhibit 2.61.
[52] Exhibit 2.63.
[53] The document records that the date on which Mr Couanis signed the letter of offer, accepting the offer, was 11 July 2012. There is an ANZ stamp on the document recording it was received by the bank on 12 July 2012, but it is conceivable it had been dropped off the day before.
The terms of the Second Loan Agreement included that the facility was for a one year term,[54] on an interest only basis.[55] The ANZ submits that this was entirely consistent with Mr Couanis' intention to sell the property.
[54] Exhibit 2.63 page 563 (see also the 'Finance Conditions of Use' cl 2 pages 573 ‑ 574 and the definition of 'Term of the Facility' on page 621).
[55] Exhibit 2.63 page 563.
The Mortgage continued to be security for Mr Couanis' obligations.[56] The amount loaned was $690,000.[57] A loan approval fee of $1,000 was payable.[58]
[56] Exhibit 2.63 page 564.
[57] See exhibit 3.91 page 726, which shows the drawdown on 31 July 2012 of the additional funds.
[58] Exhibit 2.63 page 563. This was because the loan was a 'full doc' loan, which attracted a fee of 0.75%, but which was negotiable downwards - see ts 281 and 290 ‑ 291.
Similarly to the First Loan Agreement, the Second Loan Agreement disclosed that the ANZ may pay fees to other parties where they had referred a loan application to the ANZ. It said that the loan was referred to the ANZ by Silvalake Flexi Finance (WA) Proprietary Limited. It said that entity was not an agent of the ANZ but independently contracted with the ANZ to refer loans to it and, in return, was paid a fee.[59] Silvalake was an entity associated with Mr Kenneday.
[59] Exhibit 2.63 page 564.
It was a condition precedent to the Second Loan Agreement that Mr Couanis provide an integrated running balance account from the Australian Tax Office confirming he had no outstanding tax liabilities.[60]
The falsely signed document
[60] Exhibit 2.63 page 564.
It was also a condition precedent that the two Quantum mortgages had to be discharged.[61]
[61] Exhibit 2.63 page 564.
Quantum was notified by two documents that its mortgages needed to be discharged.[62]
[62] Exhibit 2.64 and exhibit 2.65.
Mr Couanis signed one of those documents (Discharge Authority).[63] On the other, an ANZ form headed 'Refinance Advice' (Refinance Advice),[64] an ANZ employee, Ms Tran, forged Mr Couanis' name.
[63] Exhibit 2.65.
[64] Exhibit 2.64.
Later I will explain why I find that Ms Tran did not do this for a dishonest reason. As the offence of 'forgery' relevantly requires both a forgery and an intention to defraud, I will use expressions such as 'falsely signed' to refer to Ms Tran's conduct to avoid confusion.
The ANZ accepts that Ms Tran should not have falsely signed the Refinance Advice. However, the ANZ says this did not have any practical impact on the events. Mr Couanis says, however, that he would not have signed the Second Letter of Offer if he had known that the Refinance Advice had been falsely signed with his name.
The relevant terms of the Second Loan Agreement
The Second Loan Agreement incorporated the ANZ's standard business banking terms, being the applicable Finance Conditions of Use (Conditions), which were enclosed with the Second Letter of Offer.[65]
[65] Exhibit 2.63 page 570ff. So too did the First Loan Agreement - see exhibit 1.15 page 184ff.
In accordance with cl 4 of the Conditions,[66] Mr Couanis agreed to repay the whole of the funds lent to him pursuant to the Second Loan Agreement, being $690,000, at the end of the one year term.
[66] Exhibit 2.63 page 575 and the definition of 'Outstanding Money' on page 620.
Clause 16 of the Conditions provides that the failure to pay on time, or within any relevant grace period, an amount that is due and payable is an event of default.[67] Once an event of default has occurred, the ANZ may terminate the agreement immediately and may, after giving notice, make the money owing payable immediately. The borrower must also pay on demand all of the ANZ's costs and losses.[68]
[67] Exhibit 2.63 page 588 and the definition of 'Transaction Document' on page 621.
[68] Exhibit 2.63 pages 591 ‑ 592 (cl 17).
Under cl 7.1(b)(i) of the Memorandum of Common Provisions, incorporated into the Mortgage, it is an event of default for a borrower to fail to pay any part of the secured money on time.[69] If a default event occurs and is continuing, the ANZ may require the borrower to pay the entirety of the secured money and take action for enforcement.[70] Under cl 7.4, the ANZ is not required to give any notice or wait before exercising its power of sale or any other right, unless a law which cannot be excluded requires otherwise.
[69] Exhibit 1.18 page 266. See also page 256 (cl 2.2 and cl 2.3), page 277 (definition of Default Event).
[70] Exhibit 1.18 page 268 (cl 7.2(b) and cl 7.3).
Various clauses of the Memorandum of Common Provisions make the borrower liable to pay expenses in relation to action taken in anticipation of a default event and liable to fully indemnify the ANZ against any loss it incurs as a result of a default event.[71]
Subsequent events
[71] See exhibit 1.18 cl 9.2 (page 272), cl 9.3 (page 273) and the definition of 'Enforcement Expense' (page 277).
Settlement of the second ANZ loan was on 30 July 2012. $171,016.63 was paid to Quantum to discharge its mortgages.[72]
[72] See exhibits 2.67, 2.68 and 2.69.
On 12 July 2013, shortly before the one year term of the Second Loan Agreement expired, Mr Couanis met with an employee of the ANZ, Chathu Manamperi. Mr Couanis asked for an additional loan of $46,000. This was to pay the Australian Taxation Office a debt of $14,227.81, provide $25,000 for renovations on the Property and obtain an ANZ credit card with a $6,500 limit.[73] This request was refused.
[73] ts 586, 588 (Mr Manamperi) and exhibit 4.136. See also ts 449 ‑ 452 (Mr Couanis).
Throughout the term of the second ANZ loan, Mr Couanis paid interest. However, he did not repay the loan in full at the end of the term.[74] Accordingly, Mr Couanis was in breach of the contractual obligation under the Second Loan Agreement and the Mortgage to repay the entire loan of $690,000 by that date.
[74] Exhibit 3.91 page 729.
Mr Couanis was given notice that he was in default of his obligations by letter dated 26 August 2013.[75]
[75] Exhibit 2.72.
In September 2013, Mr Frankland wrote a letter on Mr Couanis' behalf, seeking relief on hardship grounds.[76] In his evidence, Mr Couanis agreed he had given Mr Frankland the information in that letter. The letter asserted that Mr Couanis had retired as a taxi driver. When asked if that meant he had retired before these proceedings were commenced (contrary to what Mr Couanis had said earlier), [77] Mr Couanis said he went back to taxi driving part‑time after the letter was sent.[78]
[76] Exhibit 4.137 and ts 453 ‑ 455.
[77] ts 439.
[78] ts 455 ‑ 456.
Mr Couanis' application for relief on hardship grounds was refused. The ANZ gave notice of its intention to take legal proceedings by letter dated 14 October 2013.[79]
[79] Exhibit 2.75.
On 28 October 2013, Mr Couanis sent another letter to the ANZ asking again for relief on the grounds of hardship. Again, Mr Frankland wrote this for him.[80] The ANZ's response was not in evidence, but it can be assumed that the ANZ again refused to grant him relief.
[80] Exhibit 4.143.
On 23 May 2014 a default notice was issued. It was served by registered post on 27 May 2014.[81]
[81] Exhibit 2.76, exhibit 2.77 and exhibit 2.78.
The default notice gave Mr Couanis until 30 June 2014 to make payment in full. Mr Couanis did not make payment in full by that date. Therefore, as of 1 July 2014, the ANZ was entitled to commence proceedings to recover the unpaid loan, interest and costs and to seek orders for possession of the Property.
The writ was issued on 12 September 2014.
Mr Couanis continued to make interest repayments until June 2015.[82] After July 2015, Mr Couanis made only a single payment, of $421.79 on 27 September 2017.[83]
[82] Exhibit 3.91 page 736.
[83] Exhibit 3.91 page 742.
As at 21 February 2020, a total of $1,020,292.66 was outstanding with a current interest rate of 7.10% per annum.[84] Mr Couanis retains the Property. The Mortgage remains on the title.
[84] Exhibit 6. And see cl 10.1 on page 274 of exhibit 1.18.
Mr Couanis' defence and counterclaim
As noted in the Overview, the central issues in this case arise from Mr Couanis' allegations against the ANZ.
Mr Couanis denies that the ANZ is entitled to judgment and says that the ANZ engaged in unconscionable conduct in the course of arranging the Second Loan Agreement.[85] Mr Couanis says, therefore, that the Second Loan Agreement should be set aside.[86]
[85] Amended Defence and Counterclaim dated 7 November 2019 (Defence) [7].
[86] Defence [8].
Mr Couanis alleges[87] that the ANZ's conduct was unconscionable because it unconscientiously took advantage of his position by:
(a)arranging the principal of the loan pursuant to the Second Loan Agreement to be repaid following the conclusion of a one year period; and
(b)failing to explain to him at any stage, or suggesting he obtain independent advice that would cause him to understand, that he would be unable to refinance the Property with the ANZ after the conclusion of the one year period.
[87] Defence [7.1].
In support of this allegation, Mr Couanis says that:
(a)at the time that the Second Loan Agreement was arranged, he was a 68‑year‑old taxi driver;
(b)the ANZ is a large publicly listed organisation;
(c)the Second Loan Agreement was presented to him on a 'take it or leave it' basis;
(d)he speaks English as a second language;
(e)in the financial year ending 30 June 2011:
(i)his liabilities outweighed his assets; and
(ii)he had a net income of $50,718.00.
Mr Couanis also counterclaims against the ANZ on various grounds.
First, he alleges that the ANZ also engaged in unconscionable conduct in relation to the First Loan Agreement. Mr Couanis alleges[88] that the ANZ's conduct was unconscionable because it unconscientiously took advantage of his position by:
(a)arranging the principal of the loan pursuant to the First Loan Agreement to be repaid following the conclusion of a five year period (by which he means that the first five years of the 15 year loan term was interest only); and
(b)failing to explain to him at any stage, or suggesting he obtain independent advice that would cause him to understand, that he would have to, following that five year period, make significant repayments pursuant to the First Loan Agreement.
[88] Defence [11].
In support of this allegation, Mr Couanis repeats that the ANZ is a large publicly listed organisation and that he speaks English as a second language. He again refers to his occupation as a taxi driver and his age which, at the time the First Loan Agreement was arranged, was 65.
In further support of his allegation of unconscionability, Mr Couanis alleges that the First Loan Agreement was irresponsible lending.[89] At the time it was made, he was 65 years of age. The term of the First Loan Agreement was 15 years, with the first five years being interest only. Mr Couanis says it was not a viable loan because he was earning a higher income in the first five years of the term of the loan but making the lowest payments. He says he became a pensioner at the age of 68, which significantly reduced his income, yet he was required to make higher repayments after the first five years and up until the age of 79.
[89] Defence [9] and ts 248.
Second, Mr Couanis alleges that his broker, Mr Frankland, bribed Ms Tran by paying her $5,000 in order to secure the First Loan Agreement.[90] Mr Couanis claims that this money was paid without his knowledge.[91] He says he would not have entered into the First Loan Agreement if he had known that a bribe had been paid.[92] He says that he would have instead refinanced with an alternate lender through an alternate broker.[93]
[90] Defence [10].
[91] ts 247 and 249.
[92] This was what he intended to allege by his Defence [13] - see ts 247.
[93] Defence [10].
Third, Mr Couanis says he would not have signed the Second Letter of Offer, which became the Second Loan Agreement, if he had known that his signature had been falsely signed on the Refinance Advice.[94]
[94] Defence [19].
Fourth, Mr Couanis says the ANZ was negligent in not conducting a forensic investigation to ensure that his signature on the Refinance Advice was genuine.[95]
[95] Defence [18].
In relation to damages, Mr Couanis alleges[96] that the ANZ's unconscionable conduct and the false signing of the Refinance Advice caused him various health problems and to resume smoking. He also claims damages for the financial loss he alleges he suffered by entering into the Second Loan Agreement. He claims general damages in the sum of $532,000, aggravated damages in the sum of $6 million, reimbursement of all fees, charges and interest paid by him (in relation to both loans) and interest on the damages in the sum of $100,000.[97]
[96] Defence [20] ‑ [21].
[97] Amended Particulars of Damage filed 18 December 2019.
Prior to the trial, the ANZ withdrew its pleaded allegation that Mr Couanis' causes of action in relation to the First Loan Agreement were time‑barred.[98]
[98] Plaintiff's Opening Submissions for Trial filed 4 February 2020 [88] and ts 233.
The issues
In relation to the allegations of unconscionability, the following issues arise:
(1)Did Mr Couanis suffer from a special disadvantage (or special disability) which seriously affected his ability to make a judgment as to his own best interests?
(2)If so, did the ANZ unconscientiously take advantage of that special disadvantage?
In relation to the alleged bribe, the issue is simply whether Mr Frankland paid a bribe of $5,000 to Ms Tran.
In relation to the false signing, the following issues arise:
(1)Did the Refinance Advice have any effect?
(2)Would Mr Couanis not have entered into the Second Loan Agreement if he had known that the Refinance Advice had been falsely signed?
(3)Was the ANZ negligent in failing to have the Refinance Advice forensically examined to ensure that the signature was genuine? If so, was the negligence causative of loss?
Finally, if Mr Couanis establishes any of the matters he pleads, it will be necessary to consider the appropriate relief.
Disadvantage at trial?
During the trial, Mr Couanis was at pains to emphasise his age and ill‑health and the disadvantages he suffered by being unrepresented.[99] For example, in his closing address, he said this:[100]
I'm 76 in May. It's - the statistics show that the life expectancy over men in Australia is 79 years. So if we take that seriously, I have another three years to go. Yes. Another three years to live if we take that seriously. And with the death of my two brothers, I feel very vulnerable about that. And your Honour, like I said (indistinct) a layman in many ways, I am sophisticated in other things, in philosophical things, but not in legal things.
And therefore, I feel I have been disadvantaged. The plaintiff took advantage of these disabilities and they tormented me. They made this court their own private torture chamber with their continuous bombardment of actions against me, one after the other. When one fail, they will go into the next one. For all this time, no humanity, no sense of responsibility, no principle of duty of care for - especially for a senior citizen but for all people, not just old people.
So even if some of the problems were because I'm old person, they knew that I was an old person and they're subjecting me to this distress and I find that irresponsible and dishonest because there are - there is a lot of dishonesty involved. Their witnesses, they lie, your Honour.
[99] See, for example, ts 168 ‑ 169, 175 ‑ 176, 241, 627, 629, and 631.
[100] ts 632 ‑ 633.
Factually, Mr Couanis is 75 years old and in imperfect health. It can be disadvantageous being unrepresented. However, I am required to decide the case, on the evidence, not on sympathy.
Further, while I accept he is 75 years old and in imperfect health, his mind remains very sharp. Apart from a difficulty hearing at times, when he was not wearing the hearing loop that had been provided to him, it was apparent to me that he understood what was occurring, had made a plan as to how to defend the case, and was executing that plan.
In addition, I consider he sought to exaggerate the extent of the disadvantage he suffered as a result of being unrepresented.
While Mr Couanis did not have a lawyer appearing for him in the courtroom, he had the assistance of a lawyer behind the scenes. Although Mr Couanis referred to this lawyer as his 'document lawyer',[101] she was clearly more than that. During the trial, Mr Couanis sought to tender a report that had been written by one his doctors, Dr Oyefeso. The report responded to a letter dated 20 February 2020 which sought Dr Oyefeso's expert opinion as to Mr Couanis' medical issues and whether they had been caused by the ANZ's conduct. On its face, it appeared to have been drafted by a lawyer.[102] I say this even though the letter inappropriately asked a series of leading questions, as I have found that it is not unusual to see such letters written by lawyers. Mr Couanis said that he and his lawyer had written the letter together.[103] Mr Couanis also had a law student with him throughout the trial.[104]
[101] ts 423.
[102] Exhibit 8.1.
[103] ts 501.10.
[104] ts 168.
Further, in various pre‑trial proceedings, I had sought to explain in clear terms to Mr Couanis the court process and the steps he was required to follow. The ANZ's legal representatives, in particular the instructing solicitor Ms Strack, frequently assisted Mr Couanis to understand his obligations. With few exceptions, the ANZ did not object on the occasions Mr Couanis failed to meet a deadline or when he filed amended pleadings shortly before the trial. At one pre‑trial hearing, counsel put on the record what Mr Couanis would need to prove to establish particular elements of his defence, for Mr Couanis' benefit.[105]
[105] See ts 87. See also ts 90 ‑ 91, 94 ‑ 95. See also ts 197 ‑ 198, 200.
The sources of evidence
The ANZ primarily relied on its records. The ANZ also called three witnesses:
1.Ms Tran, the ANZ employee who falsely signed Mr Couanis' name;
2.the broker who acted for Mr Couanis in relation to the Second ANZ Loan Application, Mr Kenneday; and
3.a solicitor from the ANZ's firm of solicitors to prove the provenance of various subpoenaed documents and to prove the sending of the default notice.
Mr Couanis gave oral evidence. He called as witnesses two of his doctors, Dr Oyefeso and Dr Soon. He also called as witnesses Mr Frankland and the ANZ employee Mr Manamperi.
I deal with my assessment of the witnesses, to the extent necessary, in a subsequent section.
The facts
Mr Couanis' English skills and history
Mr Couanis came to Australia in 1962 when he was 17 years old.[106] He said that, prior to coming to Australia, he learned a bit of English at high school in Greece. He also said he used to work in a hotel in summer, where he would mix with tourists. He said he had learned much more English over the years. He said that he had a good command of English, but that it was not enough for court.[107]
[106] ts 342.
[107] ts 349.
Before he became a taxi driver, Mr Couanis owned and operated a coffee shop in the city with his brother.[108]
[108] ts 342.
Mr Couanis bought the Property about 30 years ago. He lived in the apartment above the shop.
When he bought the Property, there was a tenant in the shop running a lunch bar. Mr Couanis bought the business and operated the lunch bar himself for a period of time. He said that the business did not do well, so he leased it out and went back to driving a taxi.
Mr Couanis worked as a taxi driver for about 40 years, retiring sometime after he entered into the Second Loan Agreement. He said about taxi driving:[109]
It's very interesting and educating, because I - you have time to read the papers every day, and you read the editorials and you get critical thinking. So I was actually educated in my own way from newspapers, by reading editorials.
[109] ts 463.
Mr Couanis agreed he talked to his customers, but less so to the other taxi drivers. He said:[110]
We didn't have much in common. My interests were very different, intellectually, and we had the common sort of conversations, taxi driver talk, but I - I think I was a bit more sophisticated in my political/economical views and everything else I - philosophical - and so I - I developed a certain concept about a world without money and I - for the last 40 years I have been developing this concept, and I was going to write a book about this and not - just before all this trouble started.
[110] ts 463 ‑ 464.
In his evidence, Mr Couanis demonstrated a sharp intelligence. Although English is his second language, he spoke fluently and demonstrated an extensive vocabulary. He was also able to read English competently.
Prior loans
Before entering into the First Loan Agreement with the ANZ, Mr Couanis had entered into numerous other loans, each secured by mortgages.
The very first loan was to fund the purchase of the Property in 1991. On the mortgage in relation to that loan, Mr Couanis declared that he had obtained legal advice. Mr Couanis said he could not now remember getting legal advice, but agreed he would not have signed a false declaration.[111] The mortgage also indicated that Mr Couanis had used a broker.
[111] ts 383.
After the first loan to purchase the Property, Mr Couanis then entered into a series of short‑term loans with people associated with an entity called Clifton Partners Finance:
1.He borrowed $150,000 in January 1997 for a two year term.
2.In July the same year, he borrowed $10,000 for 18 months.
3.In February 1999, he borrowed $180,000 for one year. It seems that this loan repaid the $160,000 he had already borrowed, with an additional $20,000.
4.In June 1999, he borrowed $200,000 for one year. It appears that this loan repaid the $180,000 he had already borrowed, with an additional $20,000.
Mr Couanis said he must have received advice about the mortgage in relation to this last loan, but could not now remember doing so.[112] Mr Couanis admitted that he 'must have' understood what his obligations were at that time, and admitted that he knew what a mortgage was. He said he had been confident he could repay the loan.[113]
[112] See ts 383 ‑ 389.
[113] ts 391 ‑ 392.
In August 2000, Mr Couanis borrowed $208,000 from the P&N Credit Society to repay the last Clifton Partners' loan. In July 2003, the P&N Credit Society loan amount was increased to $237,400.
Legal advice in relation to Quantum loan
It will be recalled that Quantum required Mr Couanis to obtain independent legal advice and to advise it of the name of his lawyer. Mr Couanis signed a Quantum form which stated that his lawyer was Mr Menna of Independent Legal.[114] Mr Menna signed a 'solicitor's certificate' confirming he gave Mr Couanis advice on the agreement and stating that Mr Couanis appeared to understand what his obligations would be under the agreement.[115]
[114] Exhibit 2.34 pages 463 ‑ 464, although the lawyer's surname was spelled 'Manner'.
[115] Exhibit 2.41.
Mr Couanis alleged that Mr Menna was Quantum's lawyer and had been paid from the funds advanced to him.[116]
[116] ts 346.
Mr Kenneday gave evidence that Mr Menna was a fully independent lawyer who invoiced clients directly. He said Quantum did not pay Mr Menna, and would not have built in any legal cost for Mr Couanis to get advice from him. Mr Kenneday explained that the only legal fees it deducted from loan funds were the fees Quantum's own solicitors charged for preparing the loan documents and attending to settlements.[117] I accept Mr Kenneday's evidence. It was consistent with the certificate itself.[118]
[117] ts 320 ‑ 321.
[118] The certificate described Mr Couanis as the client. See also under the heading 'Assessment of witnesses'.
More relevantly, Mr Couanis admitted attending Mr Menna in relation to the loan and, while he did not remember Mr Menna giving him advice, he did not strenuously deny it.[119]
The First Loan Agreement
Mr Couanis' evidence
[119] ts 412 ‑ 415. Mr Couanis initially said he could not remember if Mr Menna had given him advice but later said he did not think Mr Menna had given him advice because he (Mr Couanis) had just signed a document and then left.
Mr Couanis gave evidence that Mr Frankland was acting for him in relation to the first ANZ loan. However, he said that Mr Frankland did not give him any advice about it.[120] Mr Couanis said he did not seek advice from anyone else because he did not know he had to. He said that both Mr Frankland and the ANZ should have told him to get advice, but neither did so.[121]
[120] ts 354 ‑ 355.
[121] ts 355.
Mr Couanis said that Mr Frankland filled in the First ANZ Loan Application from information Mr Couanis had given him.[122] Mr Couanis admitted signing the declaration in the application but said he could not remember reading the declaration first.[123]
[122] ts 400.
[123] ts 401.
The First ANZ Loan Application included information about Mr Couanis' financial position. He agreed that he would have been the source of that information. When asked if he had looked at the figures before signing the application, he said he 'must have done'.[124]
[124] ts 403.
In cross‑examination, Mr Couanis admitted that he received and signed the letter of offer in relation to the First Loan Agreement. He said he did not remember whether he read it or not, but admitted that he could have read it and there was nothing to stop him from doing so. He admitted that no one stopped him from asking questions about it.[125]
[125] ts 373.
Mr Couanis said that, while he had the opportunity to read the letter of offer, he 'needed a lawyer to do that, because I don't understand … legalities'.[126] However, Mr Couanis agreed that, when he received the letter, he understood that the offer was for $500,000 for a term of 15 years. He understood that he had to pay it all back within 15 years, but also knew it was open to him to pay off the loan before the end of the term. Mr Couanis agreed that he understood that for the first five years he only had to pay interest, and did not have to pay any of the principal. However, he said that he did not know what the consequences of that would be.[127]
[126] ts 374.
[127] ts 375 ‑ 377.
Mr Couanis said that Mr Frankland was a financial adviser, a financial planner, and should have told him what the consequences would be. Mr Couanis said he did not ask Mr Frankland questions because he did not know he needed to ask anything.[128]
[128] ts 376.
Mr Couanis admitted that the ANZ had loaned him $500,000 under the First Loan Agreement. He admitted that he knew at the time that he would have to pay a $5,000 loan application fee.[129]
[129] ts 371.
Mr Couanis admitted that he had not repaid the loan.[130]
Mr Frankland's evidence
[130] ts 372.
It is unnecessary to discuss much of Mr Frankland's evidence. This is because most of the conflicts between his evidence and Mr Couanis' evidence are not relevant to the issues arising in this case. It is only necessary to refer to two areas of dispute.
The first area is the capacity in which Mr Frankland acted for Mr Couanis.
Mr Frankland agreed that he did not give Mr Couanis advice about the first ANZ loan. However, he said that he was acting as Mr Couanis' broker, and his role was limited to finding him the best loan he could.[131] Mr Couanis said that Mr Frankland was a financial planner at the time, and was, in effect, acting as such. I accept this. Among other things, when Mr Frankland witnessed Mr Couanis' signature on the first registered mortgage, Mr Frankland described himself as a financial planner.[132]
[131] ts 537.
[132] Exhibit 1.17 page 251. See also ts 534.4, 540.7.
The second area is what Mr Couanis' intentions were in relation to the first ANZ loan.
Mr Frankland said that Mr Couanis had told him that he wanted a loan so that he could complete the renovations to the Property so that it could be sold. Mr Frankland said that Mr Couanis 'knew exactly where [he] wanted to go'.[133] I accept this evidence. It was consistent with the evidence that Mr Couanis had this intention, or was at least communicating this intention, when later seeking funds from Quantum and when applying for the second ANZ loan.
[133] ts 535 ‑ 536. See also ts 541.5, 542.9 ‑ 544.
Mr Couanis signed a declaration of purpose document on 8 March 2011, indicating that the funds to be provided by Quantum were to be used 'for completing unfinished renovations in order to sell my property'.[134] The ANZ only found this document after preparing the trial bundles.[135] Perhaps this is why the ANZ incorrectly understood it to relate to the second Quantum loan. The mortgage for the first Quantum loan was signed by Mr Couanis on the same day as he signed the declaration of purpose document, 8 March 2011.[136] The drawdown for the first Quantum loan occurred on 11 March 2011.[137] I am satisfied that the declaration of purpose document related to the first Quantum loan.
[134] Exhibit 4.117.
[135] ts 227.
[136] Exhibit 2.30 page 431.
[137] See exhibit 2.43.
In any event, there was other evidence which confirmed that Mr Couanis' stated intention at the time of seeking the first Quantum loan was to sell the Property.[138]
[138] See exhibit 4.114 page 1049 point 3 in the email of 22 December 2010 and page 1048 in the email of 2 February 2011 (and page 1047, which shows this email chain was emailed to Mr Couanis) and exhibit 4.113. In relation to his exit strategies in relation to the Quantum loans generally, see ts 314.
The evidence also showed that Mr Couanis' stated intention was the same when he later sought the second loan from Quantum[139] and when he later made the Second ANZ Loan Application.[140]
The alleged bribe
[139] Exhibit 2.33 page 455 and ts 411.
[140] By the attachment of the selling agency agreement to the Second ANZ Loan Application (exhibit 2.54 page 529) and Mr Kenneday's evidence as to Mr Couanis' intentions at the time of making the application - see ts 314 and 316 ‑ 317.
Mr Couanis alleges that Mr Frankland bribed Ms Tran by paying her $5,000 in order to secure the First Loan Agreement.[141] Mr Couanis claims that this money was paid without his knowledge.[142] He says he would not have entered into the First Loan Agreement if he had known that a bribe had been paid.[143] He says that he would have instead refinanced with an alternate lender through an alternate broker.[144]
[141] Defence [10].
[142] ts 249.
[143] This was what he intended to allege by his Defence [13] - see ts 247.
[144] Defence [10].
It will be recalled that the ANZ charged a fee of $5,000 in relation to the First Loan Agreement. In his opening address, Mr Couanis clarified that he was not referring to this fee. He acknowledged that he had known at the time of entering into the First Loan Agreement that it attracted a fee of $5,000.[145] He also said that his complaint was not that this amount was too much.[146] Rather, his complaint was that Mr Frankland had paid a separate amount of $5,000, without his knowledge, to Ms Tran as a bribe.[147]
Mr Couanis' evidence
[145] ts 244.
[146] ts 249.
[147] ts 249 and 352 ‑ 353.
Mr Couanis gave evidence that he asked Mr Frankland why he was steering him towards a loan with Quantum, as he knew Quantum would be expensive. Mr Couanis said:[148]
[Mr Frankland] said, 'Well, it's not easy to find finance nowadays. How do you think I got you your 500,000? We had to pay somebody $5000'. And I don't know what he meant by we. Him and Terry Frankland or him and me. He didn't tell me that he had to pay it, so it couldn't be me, because if he paid it and he meant that I was part of that, and he didn't tell me, then that's wrong. So he - so that's when he told me that he paid $5000.
[148] ts 352 ‑ 353.
Mr Couanis said that he believed that Mr Frankland was not talking about the $5,000 application fee, but was talking about a bribe. He said that if there had been a $5,000 bribe, and he had known about it, he would not have taken the loan from the ANZ.[149]
[149] ts 353.
To evaluate Mr Couanis' allegation, it is necessary to set out Ms Tran's evidence of her involvement with the First Loan Agreement in detail. This evidence is also relevant to the false signing issue, discussed later.
Ms Tran's evidence
Ms Tran has a degree in accounting and economics. After she completed her degree, she started work at the Commonwealth Bank. She then worked for the ANZ as a credit assessor, and then as an assistant manager to a relationship manager. In 2008, Ms Tran obtained a permanent position as a business banking manager. She had two periods of maternity leave, and resigned around April 2018. In December 2018, she reapplied to the ANZ for a position as a business banking manager and was reemployed. Ms Tran remains employed in that role.
Ms Tran was the employee at the ANZ who primarily dealt with Mr Couanis. She said that the ANZ's first loan was instigated when a broker, 'Terry' (Mr Frankland), sought a loan on behalf of Mr Couanis. Ms Tran said that brokers usually contacted the ANZ by telephone. She did not remember meeting Mr Frankland.
After receiving the application for the loan, Ms Tran transferred the information into a 'qualification sheet' and undertook various inquiries in relation to Mr Couanis' credit.[150] Ms Tran also conducted a search of Mr Couanis' ABN to confirm it was registered and had been active for at least one year. She found that his ABN had been active since 2000. Ms Tran also arranged for a valuation to be conducted on the property to be secured. Ms Tran entered 'yes' into the qualification sheet to confirm that the loan to value ratio met the requirements of this type of loan. Ms Tran then answered the question on the qualification sheet under the heading 'Manager's Declarations' to confirm that Mr Couanis was eligible for the loan.[151]
[150] ts 276.
[151] ts 277, 278 ‑ 279.
After completing the qualification sheet, Ms Tran printed it out and sent it to 'SBO' with the cover sheet. SBO is the department in which loan applications are assessed. Ms Tran explained that her role was to see if the applicant was eligible for the loan, while SBO's role was to assess the application.[152] Ms Tran said she was not involved in any way with the approval of a loan. She said that she would be told that a loan had been approved by being sent a letter of offer. She said that the documents that were required for the settlement would be emailed to her about 24 hours later. The documents required to settle included security documents (unless there was already a security in place from an earlier loan) and a disbursement and settlement authority.[153]
[152] ts 277.
[153] ts 279 ‑ 284, 291.
After receiving a letter of offer, Ms Tran would check to make sure it was correct. Once the other necessary documents had been received, she would telephone the broker and advise that the letter of offer and other documents were ready for collection for signing. She would print off the relevant documents and prepare a pack for the applicant.[154]
[154] ts 279 ‑ 280.
When she received the signed documents back, she would then make sure that the conditions precedent on the letter of offer had been met. She would then collate the documents and fax them to SBO. Ms Tran said it was SBO's role to check the documents and arrange the drawdown. Ms Tran said she was not involved in the drawdown, but would be kept informed by email.[155]
[155] ts 283 ‑ 284.
Ms Tran denied ever receiving a bribe for organising a loan. She denied Mr Frankland had given her a bribe of $5,000. She said she did not think she had ever met Mr Frankland. She said that all of their contact was over the phone and by email.[156]
[156] ts 294 ‑ 295.
Mr Couanis said that Ms Tran was not telling the truth. I do not accept this. For reasons I will later explain, I accept her evidence entirely.[157]
Mr Frankland's evidence
[157] See under the heading 'Assessment of witnesses'.
Mr Frankland denied making a payment of $5,000 to get the first ANZ loan approved. He denied paying any bribe. He said he never met Ms Tran.[158]
[158] ts 546 ‑ 547, 567.
Mr Couanis challenged Mr Frankland's credibility as a witness. It is unnecessary for me to make a finding about Mr Frankland's credibility. This is because I do not accept Mr Couanis' evidence[159] and I accept Ms Tran's evidence entirely. Even if I rejected Mr Frankland's evidence altogether, I would find Ms Tran was not bribed.
Finding on alleged bribe
[159] See under the heading 'Assessment of witnesses'.
I am not satisfied that Mr Frankland paid a bribe to Ms Tran. Indeed, I am positively satisfied that he did not.
First, I do not accept Mr Couanis' evidence unless it was against his interests or corroborated by independent evidence. His evidence about this was not corroborated.
Second, even if I was to accept Mr Couanis' evidence, his evidence is only that Mr Frankland said, 'Well, it's not easy to find finance nowadays. How do you think I got you your 500,000? We had to pay somebody $5000'. If Mr Frankland said this, it is far more likely that he was referring to the loan application fee of $5,000.
Third, Ms Tran denied receiving a bribe. I found Ms Tran to be a truthful and reliable witness.[160]
The Second Loan Agreement
Mr Couanis' evidence
[160] See under the heading 'Assessment of witnesses'.
Mr Couanis agreed that his increasing debt to Quantum was causing him a great deal of stress. He agreed that he had told Ms Tran that he was paying high interest and was stressed.[161]
[161] ts 443.
Mr Kenneday submitted the application for the second ANZ loan on Mr Couanis' behalf. Mr Couanis said that Mr Kenneday had not given him any advice. Mr Couanis said he did not get any advice from anybody else about the terms of the loan. He said this was because 'I didn't know I had to. Nobody told me I had to do that. And the bank didn't suggest it, so I didn't'.[162] Later, Mr Couanis said he must have asked Mr Kenneday questions, but could not now remember doing so.[163]
[162] ts 355.
[163] ts 379.
Mr Kenneday gave evidence that he 'would have' obtained the cash flow document and the selling agency agreement from Mr Couanis. He also said that the lease and rates notice 'would have' been provided by Mr Couanis or Mr Frankland.[164]
[164] ts 316 ‑ 317.
Mr Couanis was asked if he had given Mr Kenneday the copy of the lease that was included with the application. He said that he must have given it to Mr Kenneday 'because I had to show the lease to inspire some trust or - and - what do you call - confidence in their lending to me'.[165]
[165] ts 437.
By this answer, Mr Couanis demonstrated he fully understood that the purpose of the information provided to the ANZ was to enable the ANZ to be satisfied it should lend him the money.
Mr Couanis agreed he had given Mr Kenneday the cash flow statement that was included with the application.[166] The cash flow document indicated that Mr Couanis was working and intended to continue working for the next year.[167] The ANZ was entitled to assume that was Mr Couanis' intention.
[166] ts 436.
[167] ts 285 ‑ 286.
It was put to Mr Couanis that he did not say anywhere in the application that he intended to retire as a taxi driver. Mr Couanis said 'I didn't want to retire, but I got sick and I had to stop'. He was asked if he meant that in June 2012 he had no intention to retire. He said 'Well, I was 65 years old'. The exchange continued:[168]
[168] ts 438 ‑ 439.
No. I'm asking you a very specific question?‑‑‑Yes, but it's obvious that people at 65 ‑ ‑ ‑
Mr Couanis?‑‑‑They go on pension.
In June 2012 you were not intending to retire as a taxi driver, were you?‑‑‑I - I cannot confirm that. I cannot say that I was not, because ‑ ‑ ‑
Okay?‑‑‑Sorry?
So where in - if you were intending or thinking about it, where in the document do you tell the bank that you were going to retire as a taxi driver?‑‑‑But I'm also not telling them that I'm not going to retire.
So you wanted the bank to think that you were going to keep working?‑‑‑It's not what I wanted. It's just what you asked me and I have to reply to you, and I'm saying it's not about what ‑ ‑ ‑
Well, were you thinking of retiring?‑‑‑When I - I felt like - when I felt ready to retire.
Were you thinking in June 2012 of retiring?‑‑‑I - I did not put any - any time for my retirement.
Okay. So no?‑‑‑I knew I - I knew I was able to retire then, so I'm going to limit to that.
So you knew you could?‑‑‑I - that's right. I knew I could, but ‑ ‑ ‑
But you weren't thinking of retiring?‑‑‑I - it's not a matter that happens in - it can happen from one month to the other, to change your feelings, your thoughts, your health. All these things happen. You cannot specify this thing.
Okay?‑‑‑You can't - cannot confirm it.
So when did you decide to retire?‑‑‑Sorry?
When did you decide to retire?‑‑‑Well, when I - the - the action started against me - I had to ‑ ‑ ‑
No, Mr Couanis. It's a very simple question. When did you decide to retire?‑‑‑Well, I retired at the age of 68.
When did you decide to retire?‑‑‑I don't know the ‑ ‑ ‑
What year?‑‑‑I don't know the exact date, but I was 68 years old.
So you turned 68 in March 2014?‑‑‑Yes.
So you retired then?‑‑‑And the action has already started.
So you had - you did not decide to retire until after the action started; is that what you say?‑‑‑Yes, yes.
Mr Couanis said that he did not remember whether he gave Mr Kenneday the selling agency agreement. However, he said that Mr Frankland had not been involved in the Second ANZ Loan Application.[169] Given this, and Mr Kenneday's evidence, I am satisfied Mr Couanis provided the selling agency agreement to Mr Kenneday to include in the application.
[169] ts 436 ‑ 437.
Even disregarding Mr Frankland's oral evidence of Mr Couanis' earlier intentions, I am satisfied that Mr Couanis' intention at the time of seeking the second ANZ loan was to finish the renovations and then sell the Property, or at least to communicate that intention to ANZ.[170] He communicated that intention to the ANZ by providing to Mr Kenneday the selling agency agreement to include in the Second ANZ Loan Application. As I have noted, Mr Couanis fully understood that the purpose of the information provided to the ANZ was to enable the ANZ to be satisfied it should lend him the money.
[170] See ts 314 and 316 ‑ 317. See also the evidence in relation to his intention when applying for the Quantum loans. In relation to the first Quantum loan, see exhibit 4.117. See also exhibit 4.114 page 1049 point 3 in the email of 22 December 2010 and page 1048 in the email of 2 February 2011 (and page 1047, which shows this email chain was emailed to Mr Couanis) and exhibit 4.113. In relation to his intention at the time of the second Quantum loan, see exhibit 2.33 page 455 and ts 411.
Mr Couanis admitted that in July of 2012, under the Second Loan Agreement, the ANZ loaned him a further $190,000 to bring his total loan up to $690,000.[171] He admitted that he understood at the time that this loan would pay off the first ANZ loan and pay off his debt to Quantum. He said that he knew at the time that the term of the Second Loan Agreement was only one year and knew that the whole of the $690,000 would have to be repaid in one year.[172]
[171] ts 371.
[172] ts 372, 379 ‑ 380.
Mr Couanis admitted that he had not repaid the loan.[173]
The false signing
[173] ts 372.
It will be recalled that Ms Tran falsely signed Mr Couanis' name in the Refinance Advice. Mr Couanis says that he would not have signed the Second Letter of Offer if he had known this.
The ANZ accepts that Ms Tran should not have falsely signed the Refinance Advice. However, the ANZ says this did not have any practical impact for several reasons.
First, the ANZ submits that the Refinance Advice had no legal or contractual effect as between the ANZ and Mr Couanis, and it played no part in the credit assessment process. The ANZ submits that the Refinance Advice was merely an advice to a third party lender that its loans were to be refinanced, so that the exiting lender could commence the preparation of documents. It was a condition precedent to the Second Loan Agreement that the Quantum mortgages had to be discharged.[174]
[174] Exhibit 2.63 page 564.
Second, the ANZ submits that the Refinance Advice did not have effect in any context. The purpose of the Refinance Advice was to advise Quantum that it was authorised to release details of its security and provide a payout figure to the ANZ to enable settlement to occur. However, Mr Couanis had signed the Discharge Authority on 11 July 2012 which achieved the same end (in addition to authorising Quantum to debit fees and interest from his account).[175]
[175] Exhibit 2.65. See also ts 254 ‑ 255.
I accept these submissions and Mr Couanis did not seek to argue that the Refinance Advice did have any effect. However, he pleads that he would not have entered into the Second Loan Agreement if he had known that the Refinance Advice had been falsely signed. He asserted, in effect, that he would have been so offended by that conduct, he would have sought funds elsewhere.[176]
The evidence as to the false signing of the Refinance Advice
[176] See, for example, ts 304 ‑ 305.
Ms Tran gave evidence of her involvement in the Second Loan Agreement. As with the First Loan Agreement, her role was to undertake various checks to ensure that the applicant was eligible for the loan. Again, it was SBO who approved it.[177]
[177] ts 287 ‑ 290.
Ms Tran said she received the signed Second Letter of Offer from Mr Couanis on 12 July 2012, and recorded that date on the letter.[178]
[178] ts 292 and exhibit 2.63 page 566.
Ms Tran then attended to the collation of the other documents necessary for the settlement. One of these was the Discharge Authority which Mr Couanis had signed.[179]
[179] ts 294.
In her evidence in chief, Ms Tran was asked to explain the purpose and significance of the Refinance Advice. She said it was not a form the ANZ required for a refinance. She said it was an extra form that could be used to let the other bank know that the ANZ had approved a loan and would be refinancing. She said she would have faxed it to Quantum and then just filed it.[180]
[180] ts 295 ‑ 296.
Ms Tran gave evidence as to the circumstances in which she falsely signed the Refinance Advice. She said she had done it because she did not want the settlement to be delayed because she knew Mr Couanis' loan with Quantum was incurring high interest.[181]
[181] ts 293. See also ts 300.
Ms Tran repeatedly acknowledged that she knew it was very wrong to have falsely signed the document.[182] In giving evidence about this, she got extremely distressed.
[182] ts 300.
Under cross‑examination by Mr Couanis, Ms Tran said:[183]
I do know it's very wrong. I do know it's very wrong, but at the time, I knew you were actually very upset because you were getting charged a lot of interest from the other bank. It was a very high interest and the penalties were very high. That's what I really got from you and you already signed the letter of offer, you already signed the legal documents, and the form that I got, I knew it wasn't critical in terms of the actual, like, required forms, like, legal forms. I just wanted to quickly refinance for you. Like, I wanted to help you quickly get over to ANZ with a lower rate. So that form was just a form just to let the other bank know that we will be refinancing.
[183] ts 301.
Mr Couanis put to Ms Tran that he would have signed the document if she had given it to him, and it would only have required a phone call and about 30 minutes for him to attend her office. Ms Tran agreed, but said she probably did not think all that at the time. She said she knew that Mr Couanis was a bit impatient and she did not want to inconvenience him. She said it was also possible she had been working late at night.[184]
[184] ts 302.
Mr Couanis put to Ms Tran that she falsely signed the document to cover up the fact that she had received a bribe of $5,000. She denied that, each time she was asked.[185] Ms Tran also said that there was not a logical connection between the two allegations. She said that, even if she had taken a bribe (which she strenuously denied), falsely signing the document could not have covered that up in any way. Ms Tran said that Mr Couanis had already signed the Second Letter of Offer before she falsely signed the Refinance Advice. The loan would have settled regardless of whether or not she signed the Refinance Advice.[186]
[185] See, for example, ts 302.
[186] ts 302 ‑ 306.
Ms Tran seemed genuinely perplexed at the proposition she falsely signed the document for personal gain.
Mr Couanis ended his cross‑examination by asking 'if I start a criminal proceeding against you, will you be very upset?'[187] Although I told Mr Couanis that was not a proper question, Ms Tran said:[188]
I will answer it. Of course I will because I had no benefit what I did. I didn't take your bribe. I had no benefit forging your signature. I don't want to go through that. I didn't forge your signature to benefit for myself. …I actually genuinely wanted to help you. I did at the time.
[187] ts 310 ‑ 311.
[188] ts 310 ‑ 311.
I have no hesitation in accepting Ms Tran's evidence.
First, Mr Couanis' posited motive does not make sense. The Refinance Advice was unrelated to the approval of the loan. It merely advised Quantum that the ANZ had approved the loan and there would be a settlement in the future. Ms Tran did not need to falsely sign the document in order to get the loan approved.
Second, and further to the first point, Ms Tran had nothing to gain by falsely signing Mr Couanis' name on the Refinance Advice. The only possible motive was to assist him. Mr Couanis agreed in cross-examination that he had told Ms Tran that he was paying high interest to Quantum and was stressed.[189] In addition, Mr Couanis would have signed it if she had asked him to.
[189] ts 443.
Third, Ms Tran's answers were internally consistent and credible.
Fourth, while a witness's demeanour may be an unreliable guide for the assessment of the reliability of his or her evidence, there was nothing in Ms Tran's demeanour that caused me to doubt her reliability or credibility. On the contrary, she appeared genuinely remorseful for having falsely signed Mr Couanis' signature, but equally genuinely perplexed at the proposition she did it for personal gain.
As I accept her evidence, it follows that I am satisfied that Ms Tran falsely signed the Refinance Advice after receiving the signed Second Letter of Offer from Mr Couanis on 12 July 2012. That is, I find that Mr Couanis had already signed the Second Letter of Offer before the Refinance Advice was falsely signed. Therefore, his pleaded case must fail.
As Mr Couanis was unrepresented, I also considered whether I might have found that, if he had discovered that the Refinance Advice had been falsely signed after he signed the Second Letter of Offer but before he drew down on the funds, Mr Couanis would have elected not to draw down on the funds. I would not make this finding. I do not accept he would have been so morally outraged as to elect not to proceed.
First, while the false signing was wrong, if Mr Couanis had found out about it at the time, he could not have thought it had been done maliciously or with an intention to defraud. The Refinance Advice did not authorise anything that he had not himself authorised in the Discharge Authority. It did not cheat him of any money or advantage the ANZ. It was only a duplicate notification to Quantum in the process of achieving his desired goal of refinancing the Quantum loan. It was a document Mr Couanis would have signed if Ms Tran had asked him to.[190]
[190] ts 302.
Second, the Second Loan Agreement was significantly advantageous to Mr Couanis. The Quantum loan had expired. Mr Couanis had been paying interest to Quantum at the rate of 44.28% per annum, far more than the interest rate that applied under the Second Loan Agreement.[191]
[191] Exhibit 2.38, exhibit 2.49, exhibit 2.51, exhibit 2.52, exhibit 2.53, and exhibit 2.69.
Third, Mr Couanis was very stressed about the interest that was accumulating on the Quantum loan and did not like Quantum.[192]
[192] See, for example, ts 301, 305 and 443.
Mr Couanis is entitled to be outraged that his signature was falsified. However, I consider that his claim that he would not have proceeded with the loan if he had known about it stems from his desire to avoid the consequences of his failure to meet the obligations of the loan. I am satisfied that Mr Couanis would have proceeded with the loan if he had known about the false signing.
Was the ANZ negligent in failing to have the Refinance Advice forensically examined?
Mr Couanis pleads that the ANZ was negligent in failing to have the Refinance Advice forensically examined to ensure that the signature was genuine. It was not clear when Mr Couanis alleges this should have been done.
If he is alleging it should have been done at the time of the false signing, I would not accept this. If Ms Tran's knowledge is not attributed to the ANZ, the ANZ would have had no reason to arrange such an examination. If her knowledge is attributed to the ANZ, the ANZ knew the signature was not genuine and there would be no reason to arrange an examination. In any event, any such negligence was not causative of loss. If the signature had been found to be false, it would not have made any difference. Quantum had the necessary authority from the Discharge Authority, and Mr Couanis would have proceeded with the loan in any event.
If Mr Couanis was alleging that the ANZ should have forensically examined the document when he told them his signature had been forged (in around 2014/2015), I do not accept this could have caused any loss.
It appears that Mr Couanis alleges that, had the ANZ discovered the false signing earlier, the proceedings may have been resolved.[193] In my view, had the ANZ discovered it earlier, it would have had no effect on the likelihood of settlement. From the way it ran its case, it is clear that the ANZ saw the false signing as wrong, but totally irrelevant to the issues.
[193] See the 'Further Amended Particulars of Damages' filed 21 February 2020 [3] ‑ [4].
Irrelevant allegations
Mr Couanis made a number of allegations about Quantum. These included that the Quantum loans had been unconscionable and that Quantum was a 'loan shark'. These allegations are not relevant to the issues in this case.
Mr Couanis also made a number of allegations about his finance broker, Mr Frankland. Again, these allegations are not relevant to the issues in this case. Mr Frankland was not an agent of the ANZ. Nor was there anything in the loan applications that might have put the ANZ on notice that Mr Frankland was acting in an unsatisfactory manner. The ANZ was not obliged to give advice to Mr Couanis. From the ANZ's perspective, it clearly disclosed the terms of its offers in the letters of offer and Mr Couanis accepted those terms.
Assessment of witnesses
Ms Tran
Ms Tran was obviously distressed at having falsely signed Mr Couanis' name on the Refinance Advice, and knew that she was going to have to talk about it in open court. Nevertheless, she unhesitatingly confessed her wrongdoing. Her remorse was palpable. She answered every question she was asked in a straightforward manner. Her demeanour was of a person seeking to assist the court, rather than to defend herself.
Ms Tran's account of her role and the events was consistent with the documentary evidence.
As noted earlier, I do not accept Mr Couanis' evidence,[194] and therefore do not accept his evidence in relation to the alleged bribe.[195] I have also previously explained why I accepted Ms Tran's evidence in relation to the false signing of the Refinance Advice.[196]
[194] See under the heading 'Assessment of witnesses'.
[195] See under the heading 'Finding on alleged bribe'.
[196] See under the heading 'The evidence as to the false signing of the Refinance Advice'.
There was nothing in the cross‑examination or the evidence that caused me to have concerns about Ms Tran's credibility or accuracy as a witness.
I am satisfied Ms Tran was an honest and reliable witness. I accept her evidence.
Mr Kenneday
Mr Kenneday's evidence was of marginal relevance. The only arguably relevant challenge to his evidence was Mr Couanis' assertion that Mr Menna was Quantum's lawyer.[197] I have already explained why I accept Mr Kenneday's evidence in that regard.[198]
[197] ts 320 ‑ 321. See also ts 327 where Mr Couanis said that he was not attacking Mr Kenneday, just the standards of Quantum.
[198] See under the heading ' Legal advice in relation to Quantum loan'.
There was nothing arising from Mr Kenneday's cross‑examination or the evidence that caused me to have concerns about Mr Kenneday's credibility or accuracy as a witness.
I accept Mr Kenneday's evidence.
Mr Manamperi
Mr Manamperi's evidence was of relevance only in relation to the ANZ's conduct shortly before the expiration of the Second Loan Agreement.[199]
[199] Relevant to the allegation of unconscionability under the Australian Securities and Investments Commission Act 2001 (Cth) by s 12CC(1)(j).
Mr Couanis' complaints were that Mr Manamperi had refused to lend him more money and that Mr Manamperi said that he would help Mr Couanis but did not help him. Mr Manamperi said he could not remember the meeting he had with Mr Couanis. However, with the benefit of his contemporaneous file-note, Mr Manamperi was able to respond to Mr Couanis' complaints. He gave a cogent explanation as to why the further funds were refused. He explained how he had sought to help Mr Couanis by recommending that his account be retained and managed rather than proceeding straight to an 'exit' of the loan.[200]
[200] ts 587.
Mr Couanis did not accept that Mr Manamperi could not remember the meeting. Mr Couanis put to Mr Manamperi 'it's very convenient to say that. You are a younger person than I am and I remember, and that is very convenient: that you don't want to remember'.[201] I do not find it at all surprising that Mr Manamperi could not remember the meeting he had with Mr Couanis, nearly seven years ago.
[201] ts 583.
There was nothing arising from Mr Manamperi's cross‑examination or the evidence that caused me to have concerns about Mr Manamperi's credibility or accuracy as a witness.
I accept Mr Manamperi's evidence.
Mr Couanis
Mr Couanis is facing a claim which, if successful, would cause him to lose his primary asset. He is now 76 years old and retired. Given this, he was understandably keen to defend the claim. I also accept that Mr Couanis suffers from numerous health conditions, including depression which itself can, among other things, seriously impair mental functioning. Further, Mr Couanis was an unrepresented litigant. I have made full allowance for each of these factors. Nevertheless, I found him to be an unsatisfactory witness.
Central to Mr Couanis' claim for damages is his allegation that he suffered various medical conditions as a result of the ANZ's conduct. Mr Couanis gave extensive evidence of his ailments.[202] In cross‑examination, he was taken to three documents recording medical assessments that had been made of him for the purposes of his taxi driver's licence.[203] This prompted an exchange with me:[204]
THE WITNESS: Excuse me, your Honour. Can I ask how they got these documents?
ARCHER J: I'm guessing that they came from you because they're in volume 5, but you accept those documents are your medical certificates that you signed?‑‑‑Yes. But doctors usually are very lenient because people's living is at - the - the question, so not - they're not very severe, and they don't spend much time in ‑ ‑ ‑
Well, you will have an opportunity say that when it's your turn?‑‑‑Yes.
But I think Ms Thompson is going to be asking you a question about the content of these documents in a while, so then you will be able to respond to that?‑‑‑Because the - the main check they do is the - your vision. That's the main test. That's all. The rest is all doctors - not just Dr Oyefeso - that just go tick, tick, tick, tick. So it's not the first time. That's a normal thing, especially for - for aged people.
[202] See in particular ts 367 ‑ 368. See also, albeit under prompting from me, ts 355.10‑361.
[203] Exhibits 5.191, 5.193 and 5.199.
[204] ts 472.
Shortly afterwards, Mr Couanis was taken to a page of one of the medical assessment documents which he appeared to have signed under a typed declaration that read:[205]
I, Couanis, Peter, declare the information on this form is true and correct.
[205] ts 473.
The cross‑examination continued:[206]
So you read that and signed it?‑‑‑Well, I don't think I read that, but I just signed it.
But you wouldn't swear - you wouldn't make a false declaration would you, Mr Couanis?‑‑‑No, but the thing is these things are written in small letters deliberately to make people not to read them, you know. Because they - they hide a few traps in those small letters and so they do that deliberately so people get trapped when they complain about it.
[206] ts 473 ‑ 474.
Two of the medical assessment documents included a section headed 'Patient Questionnaire'. The section listed a number of medical conditions with boxes to be marked to indicate 'yes' or 'no'. In both of the documents, this section had been completed with 'ticks' in the boxes. In relation to the first one he was asked about, Mr Couanis said he couldn't remember if he had put the ticks on the document.[207] In relation to the second, Mr Couanis again said he couldn't remember but said 'I don't think so because normally, my ticks are much better'.[208]
[207] ts 474.
[208] ts 476. See also ts 491 ‑ 492.
The doctor who had completed the assessments, Dr Oyefeso, said that Mr Couanis had filled in the 'Patient Questionnaire' section in each of the medical assessment documents.[209] I accept Dr Oyefeso's evidence.
[209] ts 516 ‑ 517 and 521.
Mr Couanis' answers in relation to the medical assessment documents were not the answers of a witness seeking to answer questions honestly and accurately. Rather, the answers appeared to be an attempt to show that any inconsistencies between what had been written in the medical assessment documents and the health issues Mr Couanis alleges in these proceedings were due to Dr Oyefeso not actually conducting a proper assessment and that, despite Mr Couanis' signed declaration on those documents, it should not be concluded that he read what he was signing.
Dr Oyefeso was not the only person to whom Mr Couanis sought to attribute responsibility. As has been seen, Mr Couanis was critical of Ms Tran, Mr Kenneday, Mr Manamperi and Mr Frankland. He was also critical of a lawyer who gave him free legal advice to assist him to sue his tenant for bankruptcy. This exchange occurred in cross‑examination:[210]
[210] ts 444 ‑ 445.
Okay. So, Mr Couanis, you sued your tenant, Mr Smith, for bankruptcy, didn't you?‑‑‑Yes. My pro bono lawyer suggested that.
Yes?‑‑‑And - and so ‑ ‑ ‑
[A named law firm at which the pro bono lawyer worked] helped you, didn't they?‑‑‑ … Yes.
Yes, and you ‑ ‑ ‑?‑‑‑But he abandoned me nine months later, because he told me ‑ ‑ ‑
Well, just let me ask the questions?‑‑‑If you mention the name, I have to tell you what happened, not ‑ ‑ ‑
No, you don't?‑‑‑Well, you just mentioned it.
I asked you if it was [the named law firm], and the answer to that is yes or no?‑‑‑Yes, but you said he helped me, but there is more to that. When he ‑ ‑ ‑
It doesn't ‑ ‑ ‑?‑‑‑He abandoned me at nine months after, because he told me to hand my property to the bank and I refused that. So that has to be in your mind. You don't just stop halfway.
Okay. Mr Couanis, you went to [the named law firm] because you asked the Law Society for a referral?‑‑‑That's right. That's right.
And they gave you the name of a lawyer?‑‑‑No. They never gave me another lawyer after [the named law firm].
But they told you to go to [the named law firm], didn't they?‑‑‑They told me in the first application, but I made another application and they declined. They said, 'We have a lack of resources'. So they did not send me to another lawyer ‑ ‑ ‑
Okay?‑‑‑ ‑ ‑ ‑ after [the pro bono lawyer] dumped me.
In his evidence, Mr Couanis demonstrated a sharp intelligence. Although English is his second language, he demonstrated an extensive vocabulary and was competent in reading documents written in English. He also demonstrated a keen attention to detail. For example, Mr Couanis was taken to the document in which he had made his second application for finance from Quantum. He was asked to confirm he could see that he had signed it, which he did. The following exchange then occurred:[211]
And the date is 15 September 2011?‑‑‑Yes.
So this is the second Quantum ‑ ‑ ‑?‑‑‑Sorry, what was that - 15?
Of September 2011?‑‑‑It says 15 of the 9th.
Yes?‑‑‑Yes.
That's September, isn't it?‑‑‑Yes, but that's what it says '15 of the 9th of the 11th'.
Okay?‑‑‑Not September.
So you accept ‑ ‑ ‑?‑‑‑Yes.
‑ ‑ ‑ that this was signed in September of 2011?‑‑‑Yes. On the 9th, yes.
[211] ts 408.
On a number of occasions in cross‑examination, Mr Couanis demonstrated considerable resistance to answering questions asked of him.
For example, Mr Couanis was asked about Mr Menna's solicitor's certificate, including Mr Menna's statement that it 'appeared to me that Panagiotis Couanis was aware of and fully understood the purport, effect and obligations and consequences of the facility'. The following exchange occurred:[212]
[212] ts 415 ‑ 416.
So he has said that he believed you understood what the documents were about?‑‑‑I don't know.
You did understand what the Quantum documents were about, didn't you?‑‑‑Look, that was a - a - a lawyer who was not my lawyer. He was their ‑ ‑ ‑
Mr Couanis, that's not the question?‑‑‑They sent it to me ‑ ‑ ‑
The question I asked you ‑ ‑ ‑?‑‑‑Yes.
I said to you, you did understand ‑ ‑ ‑?‑‑‑No, I did not understand because ‑ ‑ ‑
‑ ‑ the Quantum ‑ ‑ ‑?‑‑‑ ‑ ‑ ‑ I don't remember reading it.
But you understood what you were borrowing?‑‑‑I don't remember reading it.
You understood that ‑ ‑ ‑?‑‑‑I don't remember reading it.
I didn't ask you if you were reading it?‑‑‑Okay. Carry on.
I asked you if you understood what you were borrowing from Quantum?‑‑‑Yes.
And you understood you - they were short-term loans?‑‑‑Yes.
And you understood you had to pay them back?‑‑‑Yes.
And you understood that they were large amounts of interest, didn't you?‑‑‑Yes. They were previous questions that you asked me.
Okay. So when Mr Menna says that he believed that you understood it, he's right. You did?‑‑‑How did he say - who did he say that to? Who did he say that to?
He has written it in this document, Mr Couanis?‑‑‑Yes. He said in the document, but did he say to me?
So I want to take you ‑ ‑ ‑?‑‑‑I have not signed this document.
Mr Couanis did not take responsibility for any of the loans he entered into. He said, in effect, that it was the responsibility of others to advise him of the terms of the loans and their suitability for him. Mr Couanis said he had not been given advice in relation to any of the Quantum or ANZ loans, including the second Quantum loan, in relation to which Mr Menna had signed a solicitor's certificate. However, Mr Couanis knew what the terms of the loans were. In my view, relevantly to these proceedings, he fully understood the terms of the ANZ loans and the obligations that those terms imposed on him.
While an allowance must be made for the factors I have referred to, I am satisfied that Mr Couanis was seeking to answer questions to advance his case rather than answering honestly and accurately. I do not accept his evidence unless it was contrary to his own interests or supported by independent evidence.
Did the ANZ engage in unconscionable conduct?
As noted, Mr Couanis pleads that the ANZ acted unconscionably. He pleads that the unconscionable conduct was contrary to s 20 or 21 of the Australian Consumer Law and the general law.[213]
[213] Defence [7].
The Australian Consumer Law does not apply to the loans. The provisions in Part 2 Division 2 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) apply to the provision of a financial product and financial services. Accordingly, I will treat Mr Couanis' allegation as an allegation of unconscionable conduct contrary to s 12CB of the ASIC Act, in addition to the general law.
Legal principles
In Commonwealth Bank of Australia v Dinh [No 2],[214] I summarised the legal principles that applied to allegations of unconscionability under the general law and under the ASIC Act. Much of the following reproduces that summary, but I repeat it for convenience.
In equity
[214] Commonwealth Bank of Australia v Dinh [No 2] [2019] WASC 456.
To establish in equity that the ANZ acted unconscionably, Mr Couanis must prove:[215]
1.he suffered from a special disadvantage (or special disability) which seriously affected his ability to make a judgment as to his own best interests; and
2.the ANZ unconscientiously took advantage of that special disadvantage.[216]
[215] Thorne v Kennedy [2017] HCA 49; (2017) 263 CLR 85 [38], [64]. See also Kakavas v Crown Melbourne Ltd [2013] HCA 25; (2013) 250 CLR 392 [14] ‑ [20], [122] ‑ [124], endorsed by the plurality in Thorne at [37].
[216] This element generally requires that the alleged perpetrator knew or ought to have known of the existence and effect of the special disadvantage.
The adjective 'special' emphasises that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his or her own best interests.[217] Lack of English proficiency of itself does not mean the innocent party has a special disadvantage. It will only do so if it seriously affected the person's ability to make a judgment as to his or her own best interests.
Under the ASIC Act
[217] See the much quoted remarks of Mason J in The Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447, 462.
Section 12CB of the ASIC Act prohibits unconscionable conduct in connection with financial services.
The scope of s 12CB is not entirely settled.[218] However, this does not affect the resolution of this case. That is because Mr Couanis did not run his case on the basis that unconscionability under s 12CB of the ASIC Act set a lower bar than equity or that he did not need to prove that he suffered from a special disadvantage and the ANZ unconscientiously took advantage of that. Rather, Mr Couanis ran his unconscionability case on the basis that he suffered from a special disadvantage and the ANZ unconscientiously took advantage of that.[219]
[218] See Australian Securities and Investments Commission v Kobelt [2019] HCA 18; (2019) 93 ALJR 743 [48] ‑ [50] (Kiefel CJ and Bell J), [82] ‑ [93] (Gageler J), [118] ‑ [123] (Keane J), [144], [232] ‑ [234] (Nettle and Gordon JJ), [295] (Edelman J).
[219] Defence [7].
However, in considering the claim under the ASIC Act, it is necessary to have regard to the matters listed in s 12CC to the extent that they are relevant.
Was Mr Couanis under a special disability?
The matters relied upon by Mr Couanis were set out earlier.[220] In summary, in seeking to establish a special disability, Mr Couanis relies on:
(a)his age (65 and 68 at the time of the respective loans);
(b)the disproportionality of bargaining power (referring to the ANZ being a large publicly listed organisation);
(c)that he speaks English as a second language;
(d)in relation to the First Loan Agreement, his financial position in the financial year ending 30 June 2011; and
(e)in relation to the Second Loan Agreement, that it was presented to him on a 'take it or leave it' basis.
[220] See under the heading 'Mr Couanis' defence and counterclaim'.
Taken individually, none of the matters relied upon by Mr Couanis are sufficient to establish a special disability.[221] Further, as I will explain, I am not satisfied that the combination of these matters seriously affected his ability to make a judgment in his own best interests.
[221] In relation to age, see for example Page v Commonwealth Bank of Australia [1995] NSWCA 352; Mitchell v 700 Young Street Pty Ltd [2003] VSCA 42 [29]. In relation to disproportionality of bargaining power, see for example ACCC v Berbatis Holdings [2003] HCA 18; (2003) 214 CLR 51 [14]. In relation to lack of proficiency in the language of the transaction, see for example Suncorp‑Metway v Nam Property Holdings [2010] NSWSC 1078; (2010) 16 BPR 30,859 [57] ‑ [59], [75] ‑ [77].
First, Mr Couanis' age did not affect his ability to make a judgment in his own best interests. There was no evidence that Mr Couanis' cognitive functioning was impaired by his age. Indeed, during the trial he demonstrated his intelligence, he was articulate and he was determined.
Second, while I accept that English is Mr Couanis' second language, Mr Couanis has lived in Australia since he was 17 years old. He ran a coffee house for a period of time, a lunch bar over a different period, and worked as a taxi driver for about 40 years. His spoken English is excellent. He is proficient in reading documents written in English.
Third, Mr Couanis was not inexperienced in financial transactions
In particular, before entering into the loans with the ANZ, he had obtained a number of loans from other lenders which were secured by mortgages on substantially similar terms to the mortgage with the ANZ.[222] Many of these loans were short-term loans. Mr Couanis understood that the short‑term loans with Quantum would be expensive. He also knew, among other things, that he had to provide evidence to the ANZ in order to give the bank confidence it could lend money to him.[223]
[222] See exhibits 1.2, 1.3, 1.4, 1.5, 1.7, 1.8, 1.9 and 1.10.
[223] ts 437.
Mr Couanis' financial experience was not limited to borrowing money. He had also rented the shop on the Property for $45,000 plus GST per annum.[224]
[224] See exhibit 2.54 at page 529 (the lease agreement) and page 528 (the cash flow statement).
Fourth, Mr Couanis knew what the terms of the ANZ loans were.
Fifth, there was no suggestion that Mr Couanis had been denied the opportunity to seek advice. Further, Mr Couanis had a demonstrated capacity to seek expert assistance:
1.he had an accountant who produced his taxation returns and business accounts;[225]
2.he had instructed lawyers to prepare the lease of the Property;[226] and
3.he used mortgage brokers.
[225] See, for example, exhibit 2.54 page 528, exhibit 2.47 and exhibit 2.48.
[226] Exhibit 2.54 page 532 and ts 437.
Earlier, I referred to the solicitor's certificate which showed Mr Menna had given Mr Couanis advice in relation to the second Quantum loan. While Mr Couanis did not remember Mr Menna giving him advice, he did not strenuously deny it.[227] More importantly, Mr Couanis did not suggest he had not known he could get advice in relation to loans.
[227] ts 412 ‑ 415. Mr Couanis initially said he could not remember if Mr Menna had given him advice but later said he did not think Mr Menna had given him advice because he (Mr Couanis) had just signed a document and then left.
Sixth, Mr Couanis was not in dire financial straits. At the time of each of the two ANZ loans, he was still working as a taxi driver, an occupation he had apparently successfully pursued most of his adult life. He lived in the upstairs apartment of the Property. The downstairs shop in the Property was rented for $45,000 plus GST per annum.
Seventh, while the ANZ had a far superior bargaining position to Mr Couanis,[228] it was open to Mr Couanis to refuse the loan. For the same reason, even if the second ANZ loan was presented on a 'take it or leave it' basis, this did not affect Mr Couanis' ability to make a judgment in his own best interests.
[228] See s 12CC(1)(a) of the ASIC Act.
In all of these circumstances, I do not accept that Mr Couanis suffered from a special disability that seriously affected his ability to make a judgment in his own best interests.
Did the ANZ unconscientiously take advantage of Mr Couanis' disability?
Even if I am wrong about that, I do not accept that the ANZ took advantage of any such disability in relation to either loan.
The First Loan Agreement
In relation to the First Loan Agreement, Mr Couanis alleges that the ANZ unconscientiously took advantage of his position by:
(a)arranging the principal of the loan pursuant to the First Loan Agreement to be repaid following the conclusion of a five year period of interest only repayments; and
(b)failing to explain to him at any stage, or suggesting he obtain independent advice that would cause him to understand, that he would have to, following that five year period, make significantly greater repayments.
By alleging that the principal of the First Loan Agreement was repayable after five years, Mr Couanis meant that, after the first five years of the loan, it would cease to be interest only. The total term of the First Loan Agreement was 15 years.
The gravamen of Mr Couanis' allegation that it was unconscionable for the ANZ to give him a loan on these terms is his allegation of irresponsible lending. Mr Couanis says that the ANZ should not have made the first five years interest only, as he was earning a higher income in the first five years of the term of the loan but making the lowest payments. He says he became a pensioner at the age of 68, which significantly reduced his income, yet he was required to make higher repayments after the first five years and up until the age of 79.
I do not accept that it was unconscionable for the ANZ to structure the loan in this way. On the contrary, it gave Mr Couanis the option of paying only interest for the first five years. This meant that, if he chose to pay only the interest, he would have more funds available to renovate the Property before he sold it. He was not prevented from paying more than the interest if he chose to do so.
Mr Couanis knew that it was open to him to pay off the loan before the end of the 15 year term.[229] He did not suggest that he did not understand that he could pay more than the interest in the first five years if he wanted to. Nor would I draw that inference. Mr Couanis had considerable experience with loans and refinancing. Further, even if he had not known he could make payments greater than he was required to, there is no reason why he could not have saved extra money in a separate account until the higher repayments were triggered.
[229] ts 376 ‑ 377.
Further, in the circumstances, there was no reason for the ANZ to consider it should explain to Mr Couanis that, following the first five year period, he would have to make greater repayments. The ANZ knew the terms were disclosed in the letter of offer. The ANZ also knew that Mr Couanis had a mortgage broker acting for him (who had described himself as a financial planner when witnessing Mr Couanis' signature on the Mortgage).
Other circumstances tell against, or do not support, a conclusion of unconscionability.
First, the terms of the loan were clearly disclosed in the letter of offer which Mr Couanis accepted by signing the letter of offer.
Second, while the ANZ had a far superior bargaining position to Mr Couanis,[230] there was no evidence that it took advantage of that. The First Loan Agreement was on the ANZ's usual commercial terms on which the ANZ lent to businesses.[231] Further, there is no evidence that Mr Couanis sought any changes to the offer made by the ANZ. It was also open to Mr Couanis to refuse the loan.
[230] See s 12CC(1)(a) of the ASIC Act.
[231] See s 12CC(1)(f) of the ASIC Act.
Third, unlike the parents of Vincenzo Amadio,[232] Mr Couanis received the benefit of the first ANZ loan. It enabled him to pay off the P&N Credit Society loan (in an amount of $268,134.55 by the settlement date). It also gave him the funds he said he needed to complete the renovations he was required to do under the lease for the shop on the Property.
[232] Amadio. See in particular at page 475.
Fourth, the ANZ did not impose any time pressure on Mr Couanis or exert any other form of pressure or influence. The ANZ did not seek to prevent Mr Couanis from obtaining advice.[233]
[233] See s 12CC(1)(d) of the ASIC Act.
Fifth, there is no evidence that ANZ did not act in good faith.[234] I have rejected Mr Couanis' allegation that a bribe was paid.
The Second Loan Agreement
[234] See s 12CC(1)(l) of the ASIC Act.
In relation to the Second Loan Agreement, Mr Couanis alleges that the ANZ unconscientiously took advantage of his position by:
(a)arranging the principal of the loan pursuant to the Second Loan Agreement to be repaid following the conclusion of a one year period; and
(b)failing to explain to him at any stage, or suggesting he obtain independent advice that would cause him to understand, that he would be unable to refinance the loan within the ANZ after the conclusion of the one year period.
As I will explain, I do not accept this conduct was unconscionable.
At the time of applying for the loan, Mr Couanis was seeking to refinance an expired short‑term loan with Quantum. One of the attachments to the Second ANZ Loan Application, the selling agency agreement, showed that the Property was listed for sale. By this, Mr Couanis communicated that his intention was to sell the Property.
The principal advanced under the Second Loan Agreement was $690,000. Of that, $500,000 refinanced the amount advanced under the First Loan Agreement. Of the $190,000 in new funds, $171,016.63 was paid to Quantum to discharge its mortgages.
Whether Mr Couanis would have been able to refinance the loan after the one year term expired would have depended on what the circumstances were when he sought to refinance. Accordingly, the ANZ could not have known, and therefore could not have advised him, prior to the Second Loan Agreement being entered into, whether he would be able to refinance the Property with the ANZ after the one year term expired.
Other circumstances tell against, or do not support, a conclusion of unconscionability. The first four are the same, or similar to, the circumstances that surrounded the First Loan Agreement.
First, the Second Letter of Offer made it clear on its face that the offer of finance was for one year only. Mr Couanis knew that was the term of the loan. He did not question the term, or ask for a longer term, before accepting the offer.
Second, while the ANZ had a far superior bargaining position to Mr Couanis,[235] there was no evidence that it took advantage of that. The Second Loan Agreement was on the ANZ's usual commercial terms, including as to the security needed, the terms of the loan, and the applicable interest rates.[236] Further, there is no evidence that Mr Couanis sought any changes to the offer made by the ANZ. It was also open to Mr Couanis to refuse the loan.
[235] See s 12CC(1)(a) of the ASIC Act.
[236] See s 12CC(1)(f) of the ASIC Act.
Third, Mr Couanis received the benefit of the loan. It enabled him to pay off the Quantum loan which was attracting a much higher rate of interest. It gave him a year within which to complete the renovations and sell the Property, while earning rental income from it in the meantime.
Fourth, the ANZ did not impose any time pressure on Mr Couanis or exert any other form of pressure or influence. The ANZ did not seek to prevent Mr Couanis from obtaining advice.[237]
[237] See s 12CC(1)(d) of the ASIC Act.
Fifth, while Ms Tran falsely signed Mr Couanis' name on the Refinance Advice, this was not done for sinister motives. Her sole motivation was to help Mr Couanis.[238]
[238] See s 12CC(1)(l) of the ASIC Act.
Sixth, the ANZ's conduct after the execution of the Second Loan Agreement was not unreasonable.[239]
[239] Relevant by s 12CC(1)(j) of the ASIC Act.
Shortly before the one year term expired, Mr Couanis asked for an additional loan of $46,000. He wanted the money to pay the Tax Office a debt of $14,227.81, provide $25,000 for renovations on the Property and obtain an ANZ credit card with a $6,500 limit. It was entirely reasonable for the ANZ to decide not to grant him further finance.
The letters seeking hardship relief indicated that Mr Couanis had retired from taxi driving. It was entirely reasonable for the ANZ to decide to require him to meet his obligations under the transaction documents and repay the loan.
The ANZ did not take immediate steps to recover the money. It did not take court action until the loan was more than 12 months overdue.
Conclusion on defence and counterclaim
I have explained why I am not satisfied that the ANZ engaged in unconscionable conduct in relation to the Second Loan Agreement. Accordingly, the Second Loan Agreement should not be set aside and the ANZ is entitled to judgment.
I have explained why I am not satisfied that the ANZ engaged in unconscionable conduct in relation to the First Loan Agreement.
Mr Couanis' allegation of irresponsible lending in relation to the First Loan Agreement was part of his claim of unconscionable conduct. However, for the avoidance of doubt, I repeat that I am not satisfied that the First Loan Agreement involved irresponsible lending.
Further, I am not satisfied that a bribe was paid to Ms Tran. Indeed, I am positively satisfied that a bribe was not paid.
I am also not satisfied that Mr Couanis would not have entered into the First Loan Agreement if he had known about the false signing of the Refinance Advice. In addition, I am not satisfied that the ANZ was negligent in failing to have the Refinance Advice forensically examined to ensure that the signature was genuine. In any event, any such negligence was not causative of loss.
Accordingly, Mr Couanis' counterclaim should be dismissed.
My conclusions make it unnecessary to consider what would have been the appropriate relief had Mr Couanis succeeded in any of his claims. However, in case my conclusions are wrong, I make the following observations.
If I am wrong, what is the appropriate relief?
Mr Couanis' alleged loss
Alleged personal injuries
Mr Couanis alleges that the ANZ's unconscionable conduct and the false signing of the Refinance Advice caused him various health problems and to resume smoking.
On the evidence, the only health issues that I could find may have been caused by the ANZ's conduct were his stress, anxiety, depression, poor sleep and headaches. There was also evidence that his stress may have contributed to his smoking. However, the expert evidence was that it was the ANZ's conduct in commencing and pursing these proceedings that was the potential cause of these issues.[240]
[240] See exhibits 8.1, 8.2 and 4.166 and ts 517 ‑ 518, 525 ‑ 528 and 531. During the trial, Mr Couanis also made it clear that he was unhappy about the ANZ's refusal to lend him more money in 2013 and the way in which the collection process was conducted. Both of these matters arose long after the loans had been executed. In addition, they were not pleaded in Mr Couanis' defence.
There was evidence that Mr Couanis had told one of his doctors that he had been suffering stress from at least 2012.[241] I do not doubt this. In 2012, the second Quantum loan term expired, and the very high interest rate took effect. There was, however, no evidence of anything the ANZ had done to cause him stress at this time.
[241] ts 530.
Had I found that the ANZ engaged in the alleged unconscionable conduct, it could have been said that the alleged conduct was a 'necessary condition' of the alleged harm.[242] This is because, on Mr Couanis' case, if the ANZ had not engaged in that conduct, it would not have offered the loans in the first place. Therefore, there would have been nothing to litigate and the proceedings would not have been commenced. However, I would not have concluded that it would be appropriate to extend the scope of the ANZ's liability to the alleged harm.
[242] See s 5C(1)(a) of the Civil Liability Act 2002 (WA).
Accordingly, had I found that the ANZ engaged in unconscionable conduct, I would not have found that that conduct, or the false signing of the Refinance Advice, caused Mr Couanis to suffer health problems and to resume smoking.
Alleged financial losses
Mr Couanis also alleges that he suffered financial loss by entering into the Second Loan Agreement. I am not satisfied that he did.
Prior to his entry into the Second Loan Agreement, Mr Couanis had taken out two short‑term loans with Quantum, the second of which refinanced the first. The Second Loan Agreement enabled Mr Couanis to repay the second Quantum loan (while also refinancing the loan under the First Loan Agreement). The interest which applied to the Second Loan Agreement was set on the same basis as it had been set under the First Loan Agreement.
The second Quantum loan had expired and was attracting interest at 44.28% per annum. The funds under the Second Loan Agreement attracted interest at no more than 8.56% per annum.[243]
[243] See exhibit 3.91 page 726ff. The interest rate charged by the ANZ fluctuated with the market.
Mr Couanis did not lead evidence that, if he had not entered into the Second Loan Agreement, he would have been able to secure finance on better terms.
Nor was there evidence that the ANZ's fees were excessive compared to other loans that had been available to Mr Couanis.
The ANZ charged a loan approval fee of $1,000 for entry into the Second Loan Agreement. This was 0.5% of the additional funds drawn down. There were one off transaction charges of $356 relating to a title search and discharge of mortgage. The ongoing loan administration fee of $187.50 per quarter was the same amount as under the First Loan Agreement. Even if all of the ANZ's charges were aggregated, they would still be a fraction of the security fee of $16,025 charged by Quantum for its second loan.[244]
[244] Exhibit 2.69 - see the entry in the row dated 7/10/2011.
Further, the ANZ's late payment fee of $35 was also a standard fee payable under the First Loan Agreement, charged if a payment was 30 days or more in arrears. It would only be charged if the terms of the loan were breached.
I am not satisfied that Mr Couanis suffered financial loss by entering into the Second Loan Agreement. On the contrary, it substantially improved his position.
Restitution
The ANZ submitted that, if Mr Couanis established unconscionability and the Second Loan Agreement and the Mortgage were set aside, then he should be required to repay the benefits he obtained, being repayment of the principal sum plus interest at a reasonable rate on appropriate rests.
As I noted in Dinh [No 2], where equitable relief in the shape of rescission of a contract is granted, equity does not require complete restitution of the position which existed before the contract. It allows its remedies 'to be utilised to achieve practical restitution and justice'.[245] Equity also allows a court to not set aside the transaction in its entirety or to set it aside subject to conditions, so as to prevent one party obtaining an unwarranted benefit at the expense of the other.[246] The 'concern of equity, in moulding relief between the parties is to prevent, nullify, or provide compensation for, wrongful injury'.[247]
[245] Vadasz v Pioneer Concrete (SA) Pty Ltd [1995] HCA 14; (1995) 184 CLR 102, 111.
[246] Vadasz (114).
[247] Vadasz (115).
On the evidence before me, it is not possible to assess the extent to which Mr Couanis would be left with an unwarranted benefit if no conditions were imposed.
Accordingly, had Mr Couanis been successful in obtaining orders to set aside the transaction documents, it would have been necessary to hear from the parties as to how to achieve equity.
Conclusion
I would give judgment for the ANZ and dismiss the counterclaim. As at 21 February 2020, a total of $1,020,292.66 was outstanding, with the current interest rate being 7.10% per annum.[248] The ANZ foreshadowed filing an updated certificate as to the debt as at the date of judgment.
[248] Exhibit 6. And see cl 10.1 on page 274 of exhibit 1.18.
I will hear from the parties as to final orders.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SW
Associate to the Honourable Justice Archer22 APRIL 2020
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