Commonwealth Bank of Australia v Anna Maria Crowe - [2004] NSWSC 330

No judgment structure available for this case.

CITATION: Commonwealth Bank of Australia v Anna Maria Crowe [2004] NSWSC 330

HEARING DATE(S): 10/03/04,11/03/04,12/03/04

JUDGMENT DATE:
30 April 2004

JUDGMENT OF: James J at 1

DECISION: Plaintiff entitled to succeed - making of final orders deferred

CATCHWORDS: Default on mortgage - claim for possession by plaintiff bank - whether defendant can resist claim under principles in - Amadio - Yerkey v Jones - Contracts Review Act

LEGISLATION CITED: Contracts Review Act
Fair Trading Act
Trade Practices Act

CASES CITED: Commercial Bank of Australia Limited v Amadio (1982-1983) 151 CLR 447
Elkofairi v Permanent Trustee Company Limited [2002] NSWCA 413
Garcia v National Australia Bank Limited (1998) 194 CLR 395
Kings North Trust v Bell (1986) 1 WLR 119
Teachers Health Investments Pty Limited v Wynne (1996) ASC 56-356
Yerkey v Jones (1938-1939) 63 CLR 649

PARTIES :
Commonwealth Bank of Australia v Anna Maria Crowe

FILE NUMBER(S): SC 10136/2003

COUNSEL: M B J Lee - Plaintiff
G P McNally - defendant

SOLICITORS: Cater & Blumer - Plaintiff
Corrs Chambers Westgarth

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

JAMES J

Friday 30 April 2004

10136/03 COMMONWEALTH BANK OF AUSTRALIA v ANNA MARIA CROWE & 1 Ors
JUDGMENT

1 HIS HONOUR: In these proceedings the plaintiff the Commonwealth Bank of Australia sued two defendants Anna Maria Crowe (“Mrs Crowe”) and Darren Neil Crowe (“Mr Crowe”), Mrs Crowe’s estranged husband.

2 The Commonwealth Bank of Australia sued Mrs Crowe and Mr Crowe, as being the successor to the State Bank of New South Wales Limited by virtue of s 22 of the Financial Sector (Transfers of Business) Act 1999 (Commonwealth). In the proceedings there was no dispute that the Commonwealth Bank of Australia was the successor to the State Bank of New South Wales and in this judgment I will use the expression “the Bank” to refer to either the State Bank of New South Wales or to the Commonwealth Bank of Australia.

3 In the proceedings the Bank claimed judgment for possession of the land in Certificate of Title Folio identifier No. 4/91/758476 known as 84 Noorilla Street, Griffith (“the property” or “the house property”) and judgment for an amount alleged to be owing to the Bank by Mr and Mrs Crowe. The claim for possession of the property was based on default having been made under a registered mortgage dated 6 July 1993 granted by Mrs Crowe to the Bank over the property of which she was the sole owner (“the mortgage”).

4 A defence and a cross-claim were filed on behalf of Mrs Crowe. At the hearing there was no dispute that Mrs Crowe had granted the mortgage over the property, that there had been default under the mortgage and that the Bank had taken the appropriate procedural steps so as to be entitled to possession of the property. The issues which were argued at the hearing were issues which were raised by Mrs Crowe’s cross-claim, namely whether she could successfully resist the Bank’s claims (1) under the principles stated in Yerkey v Jones (1938-1939) 63 CLR 649 (2) under the principles stated in Commercial Bank of Australia Limited v Amadio (1982-1983) 151 CLR 447 (“Amadio”) relating to unconscionable transactions or (3) under the provisions of the Contracts Review Act. Claims under the Trade Practices Act or the Fair Trading Act which were pleaded in the cross-claim were not pressed at the hearing.

5 The second defendant Mr Crowe did not defend the proceedings. Cross-claims by Mrs Crowe against Mr Crowe, a company called Darkcm Pty Limited (“Darkcm”) and another company called RKCM Harvesters Pty Limited, which was a company associated with Mr Crowe, were not defended.

6 The evidence adduced in the proceedings consisted of affidavits, oral evidence and documentary exhibits.

7 The affidavits that were read were affidavits by a bank officer Mr Lee, who gave formal evidence in support of the Bank’s claims, which was not disputed; by Mrs Crowe in support of her cross-claims; by three solicitors who witnessed the execution of documents by Mrs Crowe (and whose affidavits were filed on behalf of the Bank), namely Mr Lancaster who witnessed the execution of the mortgage on 6 July 1993, Mr Del Gigante who witnessed the execution of documents on 7 October 1994 and Mr Davidge who witnessed the execution of documents on 31 May 2000; and by Mrs Crowe in reply to the affidavits filed on behalf of the Bank.

8 Oral evidence was given at the hearing by Mrs Crowe, Mr Lancaster, Mr Del Gigante and Mr Davidge.

9 The principal documentary evidence was a large bundle described as the Bank’s “tender bundle”, which contained copies of the Bank’s records relating to Mr Crowe, Mrs Crowe and Darkcm. The documentary evidence also included a transcript of proceedings in the District Court on 18 October 1999, when Mr Crowe was sentenced for a criminal offence.

OUTLINE OF UNDISPUTED FACTS

10 Before examining the evidence in detail, it is convenient to set out a concise outline of facts about which there was no dispute.

11 Mrs Crowe was born in 1956. Mr Crowe was much younger, having been born in 1969.

12 Mr Crowe was Mrs Crowe’s second husband, her first marriage having ended in divorce. Mrs Crowe had two children by her first marriage.

13 Before her first marriage Mrs Crowe became the owner of the house property. She acquired the property with money saved out of her own earnings and with money given to her by her father.

14 Mrs Crowe and Mr Crowe were married in 1990. There were two children of the marriage, born in 1992 and 1994. After Mr and Mrs Crowe were married they went to live on his parent’s farm, where Mr Crowe worked in farming activities. The house property was leased to a tenant.

15 In January 1993 Mr and Mrs Crowe borrowed $18,000 from the Bank to assist in the purchase of a Ford Maverick motor vehicle. The loan by the Bank to Mr and Mrs Crowe was secured by a bill of sale over the Ford Maverick motor vehicle.

16 In July 1993 Mr and Mrs Crowe borrowed $35,000 from the Bank for the purpose of purchasing and fitting out a truck. At the time of this loan the amount of $18,000 under the loan made in January 1993 was still outstanding. On 6 July 1993 Mrs Crowe granted the mortgage over the property to the Bank to secure all monies which were then or which would thereafter become owing by her to the Bank.

17 In May 1994 the loan of $18,000 made in January 1993 was repaid.

18 On 21 June 1994 the company Darkcm was registered, with Mr and Mrs Crowe as its only directors and shareholders.

19 By a proposal dated 27 July 1994 Darkcm made an application to the Bank for finance for farming operations it proposed to carry on.

20 In August 1994 the Bank granted Mr and Mrs Crowe a financial facility, consisting of a loan of $33,391 (which was in fact the balance outstanding of the loan of $35,000 made in July 1993) and an overdraft with a limit of $30,000. This financial facility was granted as a temporary measure, while the Bank was considering the proposal made on behalf of Darkcm that the Bank grant a financial facility to it.

21 By letter of 1 September 1994 the Bank offered a financial facility to Darkcm, consisting of a loan of $33,391 (the balance outstanding of the loan of $35,000 made in July 1993) and an overdraft with a limit of $110,000. This offer was accepted by Darkcm. To secure repayment of this facility Mr and Mrs Crowe on 7 October 1994 executed a joint and several guarantee of all liabilities of Darkcm to the Bank and a trader’s bill of sale. Among the assets which would be subject to the bill of sale were approximately half a dozen specific vehicles. By virtue of the mortgage of 6 July 1993 being an “all monies” mortgage, money which became due under this facility became part of the monies secured by the mortgage.

22 Pursuant to a facility agreement signed on 14 March 1996 the limit of the overdraft was reduced on 30 April 1996 to $90,000.

23 Pursuant to a facility agreement signed on 26 August 1996 the limit of the overdraft was increased to $100,000.

24 In June 1999 the Bank accepted a proposal made on behalf of Mr and Mrs Crowe and Darkcm that in consideration of an immediate payment of $30,000 and further payments of $3,700 each on 30 September 1999 and 31 December 1999 the Bank would not take legal action for recovery of the property, would charge a reduced rate of interest and would restructure the residual debt into a new facility.

25 A payment of more than $30,000 was made and a payment of more than $3,700 was made on 30 September 1999.

26 By a letter of 11 April 2000 the Bank offered a financial facility being a term loan of $145,000 to re-finance the existing term loan and overdraft. This offer was accepted on 31 May 2000. On 31 May 2000 Mrs Crowe executed a further guarantee to the Bank guaranteeing the indebtedness to the Bank of Darkcm.

MORE DETAILED EXAMINATION OF THE EVIDENCE

Mrs Crowe’s Affidavit

27 In her affidavit Mrs Crowe said that she was born on 26 October 1956 and that she had always lived in Griffith. Her parents were of Italian origin and she did not learn to speak English until she went to school. She found it difficult to learn at school and left school after gaining the School Certificate. After leaving school she worked in a hamburger shop.

28 In 1979 she married her first husband, whose name was Kevin Hill, by whom she had two children. She separated from her first husband in 1985 and was later divorced.

29 Before her first marriage she had bought the house property with money she had saved herself and with money given to her by her father.

30 In about 1988 she met Darren Crowe and they were married in 1990. After they were married she moved to his family’s farm outside Griffith and leased the house property in Griffith. There were two children by her marriage to Mr Crowe, who were born in 1992 and 1994.

31 In par 13 of her affidavit Mrs Crowe said that she had a conversation with her husband to the following effect:-

“He said: ‘I’ve had another big fight with dad and he won’t give me any money. I want to set up my own contracting business but I haven’t got the funds to buy a truck. The bank will loan me some money if there is some real estate to back up the loan. I’d like you to put up your house in town for the bank so that they will lend me the money. You will need to go and see the bank about it as soon as you can’.

I said: ‘What do you mean put the house up?’

He said: ‘Don’t worry, nothing will happen to it. If anything happens the bank will sell the truck so you don’t have to worry about the house’”.

32 In par 14 of her affidavit Mrs Crowe said that she and Mr Crowe had gone to the Bank. A bank officer gave Mr Crowe a document headed “mortgage”. The bank officer said “take this to a solicitor and get him to witness your signatures”. Mr Crowe said “I’ll take her to my solicitor who is Bill Lancaster”.

33 Mr and Mrs Crowe went to see Mr Lancaster. Mr Lancaster had previously acted for Mrs Crowe in family law matters arising out of her first marriage.

34 In par 16 of her affidavit Mrs Crowe said that there was a conversation in Mr Lancaster’s office to the following effect:-

“Darren said: I want Anna to put up her house so I can get a loan to buy a truck to set up a business. The bank said she should come and see you. She doesn’t want anything to happen to the house because of the kids’.

Lancaster: ‘You don’t have to worry about the house because if for some reason Darren didn’t repay the loan, the bank can take the truck and that would look after the loan’”.

35 At the conference with Mr Lancaster Mrs Crowe signed the mortgage. She thought that nothing could happen to the property, because, if the loan was not repaid, the truck which was being acquired would be sold. If she had thought that there was any risk that the Bank could sell the house, she would not have signed the mortgage.

36 In par 19 of her affidavit Mrs Crowe said that, before any documents were signed (before Mr Lancaster), Mr Crowe said to her:-

“He said: ‘I’m setting up a company to run the business. You will have to be secretary. You won’t have to do anything except sign some documents when I ask you to’”.

37 In par 20 of her affidavit Mrs Crowe said that in about October 1994 she had a conversation with Mr Crowe in which he said:-

“Darren: ‘I want to borrow some more money to buy more machinery to run the farms. If the business expands it will make money. You will have to sign some more documents so the Bank will lend more money. I’ll take you in to see my solicitor. You just shut up and let me do the talking’”.

38 In par 21 of her affidavit she said that her husband had said to her in the presence of Mr Del Gigante words to the following effect:-

“Darren: ‘Don’t worry about signing this, it’s just standard paper work so that the bank can lend some more money to the company to buy more machinery. If anything goes wrong, they will sell up the machinery so you don’t have to worry about the house’”.

39 Par 21 of her affidavit continued:-

“I believed Darren when he said this and signed the documents because he said that. At no time did the solicitor say to me that there was any chance that I could lose my house. I also remember that because Darren had told me to ‘shut up’ I said very little. I also had two small children with me at the time”.

40 In her affidavit Mrs Crowe said that, so far as Darkcm was concerned, she had had nothing to do with the running of the company’s business. Her husband did whatever he wanted and she found out later what had been done. She had never received any money.

41 In her affidavit Mrs Crowe said that she had signed further documents relating to the overdraft in about March 1996 and in about August 1996. On both occasions she had signed the documents believing, as her husband assured her, that her house was not at risk, because if Darkcm could not repay its loans, the Bank would sell the farm machinery and the proceeds of sale of the farm machinery would cover the debt.

42 Mrs Crowe said in her affidavit that from time to time her husband assured her that the business was going well.

43 By 1999 Mrs Crowe was having “extreme marriage difficulties”, her husband was being physically violent to her and she was afraid of him. They separated on a date which she said in her affidavit was 31 May 1999. After separating from her husband she moved back into the house property in Griffith, with her children.

44 In about April 2000 Mr Crowe asked her to sign more documents. Mrs Crowe had a meeting with a bank officer, who told her that she would have to sign more documents in the presence of a solicitor. Her husband arranged for her to see a solicitor Mr Davidge. Par 30 of her affidavit continued:-

“I said: ‘I’m here to sign some documents for the bank. Darren wants me to sign them and I don’t feel I have any choice’.

I kept saying to David Davidge: ‘What choices do I have?’

Mr Davidge simply shrugged his shoulders and I signed the document and he witnessed it”.

45 In par 31 of her affidavit Mrs Crowe said that on about six occasions in 1999 and 2000 she had a conversation with her husband in which he said that he was transferring machinery to his mother and wanted Mrs Crowe to sign some document. Mrs Crowe asserted that at no time had the Bank or her husband told her that the bill of sale was going to be released.

46 In June 1999 she signed a letter from the Bank at the insistence of her husband, without reading the letter.

47 In her affidavit Mrs Crowe gave evidence about the making of a written agreement between herself, her husband and the company RKCM Harvesters Pty Limited in which RKCM Harvesters Pty Limited agreed to meet payments due under the mortgage of the house property.

Mr Lancaster’s Affidavit

48 Mr Lancaster said in his affidavit that over a period between 1985 and 1992 he had acted for Mrs Crowe in family law proceedings in the Local Court concerning custody, access and child maintenance between Mrs Crowe and her first husband.

49 In 1991 he made wills for Mrs Crowe and Mrs Crowe. Mr Lancaster could not recall having previously acted as a solicitor for Mr Crowe.

50 While acting for Mrs Crowe in the family law proceedings, Mrs Crowe had said to Mr Lancaster words to the effect that she did not want her first husband to succeed in any claim against her house and that she intended to keep the house for the benefit of her children. In her affidavit in reply Mrs Crowe agreed that she had said words to that effect.

51 On 8 June 1993 Mrs Crowe telephoned Mr Lancaster and they had a conversation to the following effect:-

“Mrs Crowe: ‘Darren [referring to Mr Crowe] wants to borrow money to buy a truck and has asked me to put up my home as security for the loan’.

I said: ‘I do not think you should do that. I know that you wanted to keep your home for the benefit of your children. If Darren [referring to Mr Crowe] does not pay the loan, the bank will be able to foreclose and sell your home to pay out the loan’.

Mrs Crowe: ‘But we have a baby now and he is the only father that my children know. Kevin [referring to Mr Hill] is so mean with them. Darren needs the truck to get ahead and it will be the children who will benefit in the end. I don’t think I have much option’”.

52 Mr Lancaster made a file note of the conversation, which was in the following terms:-

“Anna Crowe telephoned. She is seeing the State Bank with her husband. He is to borrow money to buy a truck. She to put up her home as security”.

53 In her affidavit in reply Mrs Crowe said that she could not remember Mr Lancaster saying that she should not put up her home as security for a loan.

54 Later in June 1993 a bank officer and Mrs Crowe contacted Mr Lancaster’s office, advising that Mrs Crowe had authorised the Bank to collect the certificate of title for the property from Mr Lancaster’s office.

55 On 5 July 1993 Mr and Mrs Crowe had a conference with Mr Lancaster. Mr Lancaster was shown a letter of offer from the Bank of 24 June 1993, which had already been signed by Mr and Mrs Crowe. There was a conversation to the following effect:-

“Mr and Mrs Crowe: ‘We intend to extend our business to buy an extra truck and need to borrow $35,000 from the Bank as set out in that letter of acceptance [referring to the Letter of Offer shown to me]’

Mr Crowe: ‘Anna [referring to Mrs Crowe] will own the business equally either in partnership or through a company or trust and we would like to know the benefits of each’”.

56 Mr Lancaster then discussed the differences between partnerships, companies and trusts.

57 Mr Lancaster made a file note of the conference, which was in the following terms:-

“Attended Mr and Mrs Crowe. They extending his business to buy extra truck, etc. borrowing $35,000 from State Bank.

Discussed setting up partnership –ats- Company/trust.

Perused Banks letter of acceptance.

Scale Item: 20 Minutes”

58 In her affidavit in reply Mrs Crowe did not deny that these matters were raised between Mr Lancaster and her husband but said that she did not understand them.

59 On 6 July 1993 Mr Lancaster had a further conference with Mr and Mrs Crowe. In par 12 of his affidavit Mr Lancaster said that there was a conversation to the following effect:-

“I said: ‘Anna [speaking to Mrs Crowe], you realise that the Bank can foreclose and sell your house if payments are not made or if you sell the house that you will have to pay out the loan before you receive any of the sale proceeds?’

Mrs Crowe: ‘Yes, we’ve talked about that but Darren needs the money to buy the truck and this is the only way we can get it’.

Mr Crowe: ‘Don’t worry I will make sure the payments are made’.

I said: ‘But it may be out of your hands, you may get hurt so you can’t work, or you may be sued by somebody and end up going bankrupt, anything can go wrong. You might prang the truck or it could be stolen. If something like that happens Anna could lose the house’.

Mrs Crowe: ‘We are married now and Darren knows that the house is to be kept for the children. He’s not borrowing the money for himself it is for the children and my benefit too. I have decided to go ahead with the mortgage’”.

60 At the conference Mr Lancaster explained the documents including the mortgage, various documents including the mortgage were signed and Mr Lancaster signed a certificate of witness. Part of the certificate was as follows:-

~~was~~

~~he/she~~

~~his/her~~

~~him/her~~

and the answer was ‘yes’.

Schedule of Documents

61 Mr Lancaster made a file note recording that he had “attended Mr and Mrs Crowe on signing mortgages etc”, the attendance lasting ten minutes.

62 In his affidavit Mr Lancaster denied that he had said the words attributed to him in par 16 of Mrs Crowe’s affidavit “you don’t have to worry about the house because if for some reason Darren didn’t repay the loan, the Bank can take the truck and that would look after the loan”.

Mr Del Gigante’s Affidavit

63 Mr Del Gigante said in his affidavit that he had not been able to locate any documents relating to the matter. He said that, to the best of his recollection, at the conference on 7 October 1994 he had summarised and explained the documents referred to in the schedule to his affidavit, which included the Bank’s letter of offer of 1 September 1994, and that he had witnessed the execution of the documents including the guarantee and the bill of sale. Mr Del Gigante furnished a certificate of witness to the Bank, which was in a standard form and in which all answers to the questions he had asked were recorded as being “yes”.

64 In his affidavit Mr Del Gigante denied that the words attributed to Mr Crowe in par 21 of Mrs Crowe’s affidavit had been said in Mr Del Gigante’s presence. In her affidavit in reply Mrs Crowe said that what she had asserted in her first affidavit that her husband had said might have been said before they went into Mr Del Gigante’s office. She said that all she could remember Mr Del Gigante saying to her was “have you read it? (referring to papers Mr Del Gigante had in front of him)”.

65 To the best of Mr Gigante’s recollection, he had advised Mrs Crowe that she could lose her house if Darkcm did not repay the Bank.

Mr Davidge’s Affidavit

66 Mr Davidge said in his affidavit that on 31 May 2000 he had had a conference with Mr and Mrs Crowe, during which he explained the nature and effect of documents including the letter of offer from the Bank of 11 April 2000, the guarantees to be entered into by Mr and Mrs Crowe and the certificate to be given by him as a solicitor.

67 Mr Davidge said that he could recall having been retained and having had the conference but had no recollection of what had been said at the conference. He said that it would have been his usual practice, when retained to explain loan and security documents, to have described each document and its effect. He said that he was certain that when he explained the letter of offer he would have said words to the following effect:-

“This Letter of Offer is in relation to a loan to your company, Darkcm, in the amount of $145,000. In order to accept the Offer, the Bank will require both of you to provide it with a guarantee that you will personally pay the Bank the money owed by the company if the company fails to pay. The Offer also says that the loan will be secured by a mortgage over your [referring to Mrs Crowe] property at 84 Noorilla Street, Griffith. If the company fails to repay the loan, the Bank may sell your house in order to cover all debts owed to it by the company, including interest”.

68 Mr Davidge said that when explaining the guarantee documents he would definitely have said words to the following effect:-

“If you sign this Guarantee, you will be personally responsible for the debt, plus any interest and costs. If the debt is not repaid by the company, you can lose everything that you own”.

69 Mr Davidge said that he was certain that, if asked by a client “what choices do I have?”, he would not simply have shrugged his shoulders and would have answered the question by discussing the options open to the client.

Mrs Crowe’s Oral Evidence

70 Mrs Crowe was cross-examined at some length.

71 In cross-examination Mrs Crowe accepted that her husband had done work for a company called Fodder King Pty Limited between about 1995 and 1998 and that by 1998 he was owed money by Fodder King. He became extremely upset that he was not being paid by Fodder King and he assaulted Mr McCardell, a representative of Fodder King. For committing this assault he was sentenced to periodic detention and having to serve this sentence had affected her husband’s ability to work.

72 In cross-examination Mrs Crowe agreed that Darkcm had leased land from Frances de Rosa but de Rosa had evicted Darkcm from the land at a time when there was an advanced rice crop and barley crop on the land. Legal proceedings had been brought by Darkcm against de Rosa and eventually some money had been recovered.

73 In 1993 a firm Landaco Spreaders had provided a spreading machine to Mr Crowe but the machine had not worked properly.

74 As at 28 June 1995 Darkcm had debts outstanding to it of $93,500, including a debt from a firm named Pure Foods of $10,000.

75 Mrs Crowe agreed that the reason why Darkcm was having financial difficulties was that its debtors were not paying Darkcm promptly. She also agreed that the reason why Mr Crowe could not fulfil his promise to pay the Bank was “that people had let him down in not paying their bills”.

76 Mrs Crowe said in her evidence that she had not understood what a mortgage was at the time she granted the mortgage and in one part of her oral evidence she claimed still not to understand what a mortgage is.

77 She accepted that by the time of the agreement of December 2000 with Mr Crowe and RKCM Harvesters Pty Limited she understood enough about a mortgage to know that there was a risk that the Bank could sell her property under the mortgage she had given. In cross-examination she gave the following evidence:-

“Q. You knew that irrespective of you not knowing what a mortgage is as a legal term, you always knew from 1993 onwards that whatever else a mortgage means, it means that the bank, if it is not paid money, could sell the house. You knew that didn’t you, didn’t you?

A. Yes but not, I thought the machinery would go first”.

78 Mrs Crowe said that she had trusted and relied on her husband. She had believed that nothing would happen to her house because she believed that her husband would keep up the payments. She accepted that “because you believed your husband… would make payments in accordance with the arrangements with the Bank, you were prepared to run the risk of giving a mortgage”. The following questions and answers occurred in cross-examination:-

79 The following questions and answers occurred in cross-examination:-

80 Mrs Crowe was cross-examined about the allegation made in her affidavit that by 1999 her husband had become physically violent to her. She said that her husband “pushed her around” when she was pregnant in 1992 but after that he had “calmed down” a bit. He had not been physically violent to her as early as 1994 or 1995 but by 1998 he had been violent to her. She had given evidence for her husband when he was sentenced on 18 October 1999 and when asked in these proceedings whether her husband had ever been violent to her she had replied “No”. She conceded in cross-examination that that piece of her evidence had been a lie.

81 Mrs Crowe said in cross-examination that if her husband told her to sign a document she would sign it, because she trusted him and, if she did not sign the document, “he would just go off”. She said that she had entered into the transactions in 1994 and 2000, because “I didn’t have any choice. Darren would just go off at me… if I didn’t do it, I’d just cop it after. He’d go off at me”.

82 She was embarrassed by her husband’s acts of violence towards her and kept his acts of violence to herself.

83 She was unclear about precisely when she had started living apart from her husband. She was still living on the farm at the time Mr Crowe was sentenced.

84 Mrs Crowe denied that in July 1993 she knew that she was becoming liable to pay the Bank about $48,000 (the advance of $35,000 plus the balance outstanding of the loan made in January 1993). However, when asked “you knew in 1993 that, if you were the borrower of funds from a bank, then you were liable to repay them, didn’t you?” She replied “Yes”.

85 Mrs Crowe confirmed that Mr Lancaster had been her solicitor in family law proceedings and said that she had seen him “dozens of times” before July 1993.

86 The following questions and answers occurred in relation to the telephone call on 8 June 1993:-

87 Mrs Crowe agreed that she had decided to go ahead with the proposed transaction, prior to seeing Mr Lancaster.

88 In her oral evidence Mrs Crowe agreed that she had said both of the things attributed to her by Mr Lancaster in par 12 of his affidavit.

89 Mrs Crowe agreed that she had become one of the directors of Darkcm but said that she had had no choice. She accepted that Mr Anderson, an accountant, had given advice that it would be appropriate to conduct activities through a company. She accepted that, to the extent that Darkcm made any profits, it would be good for her as a shareholder of Darkcm.

90 As to any role Mrs Crowe played in the affairs of Darkcm and the extent to which her husband consulted her, she said that “the wages got paid once a week and anything else never got discussed”. She discussed business matters with a third party such as the Bank, only “if he (her husband) forced me… to make a telephone call”. If she answered a telephone call from the Bank “I never knew anything. I always say they’d have to ring Darren on his mobile or I’ll get him to ring back”. She did not know how much was coming in and her husband did all the bills.

91 Bank memos of 5 April 1995 and 28 June 1995 were put to Mrs Crowe and it was suggested that as at 28 June 1995 she knew quite a bit about how the business was faring. She replied “I don’t know”. Mrs Crowe said, with respect to a letter of 9 August 1994 from the Bank addressed to her husband and herself, “I wouldn’t have read it… not very good at reading… I can read it but I don’t know what the words mean”.

92 Mrs Crowe said that all she could remember Mr Del Gigante saying was “have you read it?” to which she replied “Yes”. She had not in fact read the letter from the Bank of 1 September 1994 offering the facility, because she trusted her husband. She had taken her two children, then aged two and five months, to the meeting with Mr Del Gigante. She had hardly spoken at the meeting. Her husband had done all the talking. However, Mr Del Gigante might have asked the questions set out in his certificate.

93 Mrs Crowe said that she was scared when she went to the conference with Mr Davidge. She then thought that there was a real risk that her house might be lost.

94 Mrs Crowe said that she had not known what a bill of sale was but “when they came out to have a look at the machinery, I was told that it was to do with the Bank and them selling the machinery”. The only meeting she could recall at the Bank at which the equipment (the vehicles) was discussed was a meeting at which a bank officer asked what had happened to “the ute” (a Diahatsu 4 wheel drive). She denied that the Ford Maverick had “died a natural death” and that a Mercedes Benz garbage truck had been sold.

95 In re-examination Mrs Crowe said that she had given false evidence in her husband’s proceedings on sentence because “I was scared of him, he would have got me after”.

96 Mrs Crowe said in re-examination that in 1994 Mr Crowe still had the Ford Maverick, which had cost about $50,000.

97 In re-examination she was asked “right through up until the end of 2000 what risk did you think there was to your house?” and she replied “I never believed I had a risk, because he always promised he would cover it with the machinery or work and pay for it”.

Mr Lancaster’s Oral Evidence

98 In cross-examination Mr Lancaster said that his affidavit was partly based on what had been his usual practice in such matters but that he had some actual recollection of what had been said at the conferences with Mr and Mrs Crowe.

99 Mr Lancaster agreed that he had been giving legal advice and was not purporting to give financial advice.

100 At the conferences Mr Crowe had said that there was no risk to the house, because there would be equipment available to pay any debt. Mr Crowe had said that, if he had an accident in the truck, the truck was insured and the Bank could be repaid out of the insurance monies.

101 Mr Lancaster had not seen Mrs Crowe separately from her husband on 6 July 1993. At the time, and even in hindsight, he did not think that there was any conflict of interest between Mr Crowe and Mrs Crowe. There was nothing he would have said to Mrs Crowe privately which he would not have said in front of her husband.

102 It was clear to Mr Lancaster that Mr Crowe was the driving force and that he would be operating the truck and the business. However, Mr Crowe had said that it was going to be a joint enterprise and he had asked about partnerships, companies and trusts.

103 Mr Lancaster could not remember raising with Mrs Crowe that the mortgage was an “all monies” mortgage.

104 In re-examination Mr Lancaster said that he had been “personally quite shocked” when Mrs Crowe telephoned him on 8 June 1993. He knew how passionate Mrs Crowe had been about keeping her house. On 8 June 1993 he said words to the effect, “Anna look, you realise that if it’s not paid, you could lose the house”. He remembered being a bit impatient at the end, “because she didn’t take my advice about it”.

Mr Del Gigante’s Oral Evidence

105 In cross-examination Mr Del Gigante said that, although he had had to try and recollect what had happened without the assistance of any file notes, he had given the matter quite a deal of reflection, after he had been asked to make an affidavit, and he did have some actual recollection of the conference on 7 October 1994. He had seen Mr and Mrs Crowe together. He thought that it was not necessary to see Mrs Crowe separately, because both Mr and Mrs Crowe had a financial interest in the transaction.

Mr Davidge’s Oral Evidence

106 In his oral evidence Mr Davidge said that he had acted for Mr Crowe in a number of civil and criminal matters, including a civil claims matter against de Rosa, Mr Crowe’s criminal proceedings and litigation by Darkcm. He had acted for Mr Crowe in family law and domestic violence matters in the Local Court involving Mrs Crowe.

107 Although he had no specific recollection, Mr Davidge favoured a suggestion made by Mrs Crowe in her affidavit in reply that on 31 May 2000 he had seen her separately. As at 31 May 2000 Mr Davidge knew that Mr Crowe and Mrs Crowe were estranged. In seeing Mrs Crowe he regarded her as his client.

108 Mr Davidge did not think that he would have shrugged his shoulders and not given Mrs Crowe some sort of suggestion of an alternative.

109 Mrs Crowe in her affidavit in reply said that she could distinctly remember the following conversation:-

DOCUMENTARY EXHIBITS

THE BANK’S TENDER BUNDLE (Exhibit C)

110 I have considered all of the voluminous documents in the Bank’s tender bundle Exhibit C. The following is a summary of parts of the contents of some of the documents or facts evidenced by some part of the documents.

111 On 5 January 1993 Mr and Mrs Crowe made a written application to the Bank for a special purpose term loan. In the application Mr Crowe’s date of birth was stated as being 8 March 1969 and Mrs Crow’s date of birth was stated as being 26 October 1956. His occupation was described as “farmer/owner” and her occupation as “home duties”. The amount of the loan required was stated to be $18,000 and the purpose for which the loan was required was to assist in the acquisition of a Ford Maverick motor vehicle costing $48,800. The security offered in the application was a bill of sale over the vehicle to be acquired.

112 In the application certain financial information was provided. The combined income of the applicants was stated to be $467. per week, made up of Mr Crowe’s income being $215 per week, a family allowance of $112 per week and rent (on Mrs Crowe’s house property) of $140 per week. Under the heading “weekly expenses” the words “live on parent’s property rent free” were written. Proposed repayments were shown as $178 per week.

113 Pursuant to the application a loan of $18,000 was made by the Bank to Mr and Mrs Crowe, which was secured by a bill of sale over the Ford Maverick motor vehicle.

114 A Bank document dated 16 June 1993 recorded that an application was being made by Mr and Mrs Crowe for a loan of $35,000 to assist in the purchase and fitting out of a truck for a contracting business.

115 On 22 June 1993 the Bank instructed a valuer to confirm the adequacy of Mrs Crowe’s house property as a security for a loan of $35,000. “by cursory external inspection only”. The valuer later reported that the house property was a satisfactory security for a liability of $35,000.

116 By a letter dated 24 June 1993 to Mr and Mrs Crowe the Bank offered a facility being a term loan of $35,000 to “assist purchase and fit out used truck for contracting operations”. The security proposed was “that the facility and all other obligations now and in the future of the borrower to the Bank shall be secured by the following security:-

“Proposed 1st third party mortgage over house and land, 84 Noorilla Street, Griffith, registered proprietor: Anna Maria Crowe”.

117 The Bank’s letter offering the facility was signed by Mr Crowe as a customer and Mrs Crowe as a customer and as a provider of the security.

118 On 6 July 1993 Mrs Crowe signed the mortgage of her house property to the Bank and her signature was witnessed by Mr Lancaster. Mrs Crowe also signed memorandum X208233 filed with the Registrar of Land Titles, which set out standard provisions for mortgages to the Bank. The mortgage secured the payment of the monies thereby secured as that term was defined in the memorandum, and by the definition in the memorandum the monies thereby secured included all monies then owing or payable or thereafter to become owing or payable to the mortgagee by the mortgagor or the customer.

119 On 17 May 1994 the loan of $18,000 which had been made in January 1993 was fully repaid.

120 On 21 June 1994 the company Darkcm Pty Limited (“Darkcm”) was registered, its directors being Mr Crowe and Mrs Crowe and its shareholders being Mr Crowe and Mrs Crowe, each holding one share.

121 Soon after its registration Darkcm as lessee entered into a lease from Frances De Rosa of land at Yenda and certain farming equipment, for a term of five years from 1 July 1994.

122 On 21 July 1994 an officer of the Bank received a telephone call from Mr Crowe. The record of the telephone conversation was as follows;-

“Darren Crowe phoned and advised that he would be looking for finance of $130,000.ODL to run his farming program. Apparently Darren will be leasing his parent’s farm plus another 1200 acres of irrigation. This will give Darren approximately 1700 acres of irrigation plus 280 acres of dry area.

Darren’s accountant is preparing cash flows and details of cropping program and Darren will call in to discuss the proposal next Wednesday 27/7/94”.

123 A document entitled “Funding Proposal for Darkcm Pty Ltd 27 July 1994” was lodged with the Bank. In the Proposal the purpose of the loan which was being sought was stated to be to enable the commencement of a farming operation involving the leasing of three rice farms and the purchase of a breeding pair of ostriches. Under the heading “History of Directors” in the Proposal it was stated that Mr Crowe had been operating his own rural contracting business since 1989, that he had extensive experience in rice farming having worked in the area all his life and having been heavily involved in the operation of his parents’ property for many years and that he owned 50 per cent of the business of Griffith Waste Removals. The Proposal stated that he had married Mrs Crowe in 1990. In the Proposal the “key personnel” were described as being Mr and Mrs Crowe.

124 In the Proposal the finance required was stated to be a term loan of $100,000 and an overdraft facility of $80,000.

125 Included in the Proposal was a schedule of assets and liabilities, showing assets totally $344,000 and liabilities totalling $66,000. Most of the assets shown were cars, trucks or tractors. Also included in the Proposal were projected cash flows for each month from August 1994 to July 1997.

126 Annexed to the Proposal were financial statements for the partnership of Mr and Mrs Crowe “for the period ended 31 March 1994” prepared by Andersons Accountants. The profit and loss account showed a net profit for the period of $23,068. The financial statements included a disclaimer by the accountants in which the accountants said that they had not audited the accounting records of the partnership and did not express any opinion whether the accounts were true or fair.

127 On 28 July 1994 the manager of the Bank’s Griffith BBO (Business Banking Office) sent a memorandum to the Bank’s district valuer, Mr Connolly, saying “as this is a new venture, BBO feels it is prudent that a report on economics be completed to assess accountant’s estimates and the customers’ servicing ability”.

128 In a Bank document of 8 August 1994 under the heading “Servicing Capacity Summary” the cash flow estimates made in the Proposal are summarised as being for 1994-95 a loss of $14,167, in 1995-96 a profit of $43,016 and in 1996-97 a profit of $146,653. Under the heading “Risk and Mitigants” the risks were stated to be “borrowing to rural sector (variable conditions/prices)” and the mitigants as being “first class security held to cover existing facility + temporary ODL. Satisfactory banking history to date”.

129 By letter dated 9 August 1994 the Bank offered to Mr and Mrs Crowe a banking facility for a period of two months, consisting of a overdraft of $30,000 and a term loan of $33,391.36. The sum of $33,391.36. was the balance outstanding of the loan made in July 1993. The security for the facility offered was to be the mortgage over the house property. The banking facility offered by this letter of 9 August 1994 was offered as a temporary facility, while Darkcm’s Funding Proposal was being considered by the Bank.

130 The funding Proposal made by Darkcm was considered in a rural valuation report made by Mr Connolly, who was a registered valuer.

131 In the report the house property was valued at $120,000 and the vehicles were valued at $193,000. Mr Connolly noted that the maximum loan to security ratio for the house property would be 80 per cent and the maximum loan to security ratio for the vehicles would be 25 per cent.

132 Under the heading “Adequacy Working Capital” Mr Connolly said inter alia:-

“The cash flows contained in this report vary significantly to the ones submitted by his accountant. The ostriches have been excluded…. Purchase of ostriches would only aggravate their shortfall of working capital for the first twelve months.

The cash flow for the first twelve months indicates that the ODL of $110,000 would be exceeded by up to $40,000….”

133 Under the heading “General Remarks” Mr Connolly said inter alia:-

“The Crowes’ financial history has been limited to contract farming and the management of their parent’s property. They have no financial history of management of a project of this size.

The success of this Proposal is largely dependent on Darren Crowe’s ability to generate income from hay and contracting…

The Crowes are presented with very good opportunity to earn income of the two properties over the next five years. Their success is largely dependent upon their ability to generate income and contain expenses. Given the potential for the debt to increase significantly, it is suggested that the account be monitored quarterly to keep greater control over their spending and to help them develop better financial skills”.

134 Under the heading “Summary of Proposal” Mr Connolly said:-

Dependence on lucerne, which can be badly affected in a wet summer.

Overall the Proposal (that is, the amended proposal excluding the ostriches) is considered strong enough to support”.

135 Mr Connolly recommended that an overdraft limit of $110,000 be approved.

136 In a Bank document of 29 August 1994 the valuer’s report and recommendation was discussed in detail. In this Bank document the proposed guarantee from Mr and Mrs Crowe and the existing mortgage over Mrs Crowe’s house property were described as ‘first class security” and the proposed bill of sale over the vehicles was described as “second class security”. The document included the following passages:-

“As proposed facilities represented a new venture for customers, both valuer and BBO agreed would have great difficulty in recommending approval to full application due to likely shortfall in working capital and security.

Customers were advised accordingly and agreed with valuer’s recommendation to apply for overdraft facility purely to assist customers to cropping and livestock program on the leased properties”.

137 By a letter dated 1 September 1994 the Bank offered a banking facility to Darkcm of a gross amount of $143,391, consisting of an overdraft of $110,000 in the name of Darkcm and an existing loan of $33,391 in the names of Mr and Mrs Crowe, the security to be a guarantee by Mr and Mrs Crowe, the existing mortgage over Mrs Crowe’s house property and a bill of sale over the vehicles.

138 On 1 September 1994 Mr and Mrs Crowe had a meeting at the Bank with a bank officer to discuss the facility which had just been offered. The client contact sheet recording the meeting contains a number of references to what “Mr Crowe” or “Darren” said at the meeting.

139 On 7 September 1994 the Bank wrote to Mr Del Gigante solicitor, enclosing documents to be executed by Mr and Mrs Crowe and Darkcm. The letter included the following paragraph:-

“Customers have requested these documents to be forwarded to yourself for an independent explanation of documents and to witness customers execute same”.

140 On the Bank’s copy of the letter of 7 September 1994 there are subsequent handwritten notations, indicating that the Bank telephoned the solicitor on a number of occasions. The solicitor explained that he had not yet received certain leases which were also to be executed by Mr and Mrs Crowe and wanted to have all documents executed at the same time.

141 On 9 September 1994 Mr Bill George “Credit Administrator Southern” of the Bank sent a memorandum to the manager BBO Griffith. In view of the importance attached to this memorandum in submissions made by counsel, I will set out the memorandum in full:-

“In completing a post approval review of your decision of 31/8/94, I note the following:-

Applicants are leasing country with 5 years negotiated on 2 of the properties. Funding is by way of O/D with no amortisation structure in place to ensure debts are liquidated within the term of the leases. Cash flow shows the debt still substantially drawn by 7/96. Can it be repaid before lease expiry?

While approval is subject to no excesses, valuers cash flow and comments clearly indicate these are likely, in large amounts. Amount approved is within BVS but not in accord with cash flow. Paper rationalising cash flow in terms of Rice Board orders is written after the approval. This should have been addressed before approval and cash flow reworked, which should still be done if you are to monitor effectively. Further, if there is realistic potential for other income to minimise deficit/excesses then why not bring this into the cash flow?

Decision is based on projections only, which for the first 12 months show a deficit of $106,476. Customers simply cannot service in the short term.

Male applicant is only 25 and paper suggests his financial skills are weak. There is no financial history to suggest customers can manage a venture of this size.

There is no room to move on security with substantial reliance on 2nd class assets which may or may not achieve valuers estimates. We have basically leant to BVS.

Outside debts exist for a motor bike, truck & chisel plough.

Paper suggests concessional rental in return for maintenance of properties but there are no repairs and maintenance in cash flow.

Part of purpose is to pay creditors. Who? How much?

I do not believe this is a loan that should have been approved. Two other officers within Business Credit have reviewed the file and agree with me. The loan may prove to be sound and we obviously hope it does. However, the above comments highlight deficiencies, the sum total of which suggest we are now committed to a higher level of risk than the Bank would normally seek.

I note the business has come via Andersons, a valued referral source of your office. If this is the standard of their referrals, I strongly urge you to take a firm stand in managing them. We should only accept business that meets our standards and if the referral source is professional, they will understand.

With regard to your decision, the Bank is committed but I require:-

I note approval was prior to two recent adverse post approval reviews. I strongly recommend that you now take more care in exercising your delegation”.

142 The account officer and the manager BBO Griffith replied to Mr George’s memorandum in an office minute of 27 September 1994 in the following terms:-

“Business Credit raised various questions in relation to ODL(1) facility of $110,000 recently approved at BBO.

Points raised and clarification are as follows:

1) Application does not allow for amortisation of ODL debt during lease period:

BBO is to carry out quarterly monitorings of facility, to ensure customers adhere to budget as best as possible plus achieve maximum annual limit reductions as possible.

2) Reworking of Budget to accommodate additional income and board orders.

Valuer’s income estimates is the minimum customers can expect in the first 12 months of trading.

- Valuer believed customers should easily achieve stated volume of baling. Customer since advised has already been contracted to bale over 20,000 bales (as estimated in budget) and expects bale at least a further 10,000 to 15,000 bales during upcoming season.

- Valuer’s budget allowed for sowing of two rice crops in the first year as customers were under the impression one property was not available. However customer has advised third property is now available for sowing this year, thus adding significantly to budgeted yield and income.

BBO reworked budget, as requested. Budget allows for increased baling and rice activities. Expenses (such as Fertilizer, Seed and Sprays) have been removed from expenditure as these are to be paid out of 1st pool payment via Rice Board Order, therefore 1st payment now reflects ‘net’ payment expected based on valuer’s price and yield estimates.

3) Cannot service in the short term:

As per two above estimated trading loss for first 12 months did not allow for increased baling and rice activity now expected. Customers will have own hay to sell in year 2, whereas due to timing of leasing miss out on this income in the first year.

4) Age of Customer:

Agreed, customer is relatively young for role he is taking on, however has been doing similar work for his parents (and himself) for the past 10 years and has always met commitments when due.

5) Security Mix/BVS:

Agreed. BBO believes security held/offered to be sufficient to repay proposed borrowings in the event of a forced sale. Valuer believed borrowings should not exceed BVS in light of second class security being involved.

6) Outside Debts

-4WD Motor Bike, financed by CDB over a term of 4 years, repayable by monthly P+1 instalments of $112.50

-Volvo Truck, customer advised this debt has now been repaid.

- Chisel Plough, purchased second hand from customer’s fertilizer supplier (Incitec), to be repaid over a two year period i.e: no formal loan agreement entered into, customer hoping to repay debt in coming 12 months (if income permits).

7) Valuer’s cash flow does allow for R&M of $18,000 across coming 12 months, all plant available for operation is considered to be in very good condition and is well maintained by customer. Cost of materials for any improvements to be carried out on properties are to be paid for by Lessors. Labour costs to be borne by customer i.e: customer currently employs three people, who would carry out repair works as part of their normal duties.

8) Purpose: ‘Pay Creditors’.

Submission poorly worded, to read: ‘To assist fund farming programme and assist meet future creditor payments anticipated’.

9) Existing Assets:

Portion of plant obtained in partnership with parents over a number of years, plus customer purchasing second hand plant and overhauling same. All plant listed in Bill of Sale details is owned by customers following years of work for parents.

10) Living arrangements:

Customers occupy dwelling on parents’ farm. Parents have separated, father living in Griffith and mother in other dwelling located on farm. Customers do not pay any rent for these premises.

11) Quality of Referral:

Comment noted, Accountant willing to assist Bank at all times in processing of this proposal.

BBO and valuer believe customer has the technical ability and determination to generate sufficient income to service and reduce debt in given lease period and feel customers are worthy of support in this instance”.

143 On 7 October 1994 Mr and Mrs Crowe at a conference with Mr Del Gigante executed, amongst other documents, the guarantee in favour of the Bank guaranteeing payment of all monies then or thereafter to become payable to the Bank by Darkcm and the traders bill of sale (which would operate as a security over the vehicles) securing payment of inter alia money due under the guarantee. Mr and Mrs Crowe also signed the letter offering the facility. Mr Del Gigante forwarded the executed documents to the Bank with a covering letter of 13 October 1994.

144 On 18 October 1994 a bank officer made a note recording that, with respect to the vehicles covered by the bill of sale, he had telephoned Mrs Crowe “and asked her for ins (insurance) pol (policy) – said will follow up”.

145 On 25 October 1994 the bill of sale was registered.

146 In a facility summary dated 25 November 1994 the Bank’s business banking office noted that the monitoring result of the facility to 31 October 1994 had been “satisfactory”. However, in a facility summary dated 16 March 1995 the business banking office said that it considered the “quarterly monitoring result to 31/1/95” to be unsatisfactory.

147 A client contact sheet recording telephone conversations on 5 April 1995 was in the following terms:-

“BBO contacted Mrs Crowe today regarding $1,500 excess of limit. Mrs Crowe stated has $41,000 (gross) in rice payments to be received ‘this week’, but Rice Board orders would be deducted from this payment. Customer was unsure how much in Board payments is due.

BBO forwarded AOOA to Business Credit to carry account to $115,000 until 14/4/95 pending receipt of payment.

Darren Crowe rang this afternoon to advise they owe $43,000 in Rice Board payments & therefore will not be receiving anything from first delivery.

Darren stated rice harvest is in full swing and will be delivering a substantial amount of rice over the next two weeks prior to Board’s next payment ‘cut off’ date of 18/4/95. Darren stated will be paid on 19/4/95 for deliveries made during next two weeks and should easily adjust account on that date”.

148 A client contact sheet dated 28 June 1995 recording telephone conversations, in which the client contacted was identified as Mrs Crowe, was in the following terms:-

“On 23/6/95, following discussion with customer, BBO gained approval from Business Credit to carry account at a MDB of $115,000 to 7/7/95 pending receipt of outstanding income. Mrs Crowe then stated cheques for wages would be drawn.

However a $7,000 cheque for fuel has now been presented to overdraw account to $120,000 being $10,000 over limit and $5,000 over above arrangement.

BBO contacted customers to advise cheque could not be paid unless proceeds are received today.

Customers became very upset stating they have the following income outstanding:

$ 3,500

Customers stated $10,000 from Pure Foods and $10,000 from Pumpkins are due in over next two to three weeks.

Customers stated have various accounts to pay, BBO advised customers not to draw any further cheques until account is adjusted”.

149 The financial statements of Darkcm for the year ended 30 June 1995 prepared by Andersons accountants from books and records of Darkcm which had not been audited showed a loss for the period of approximately $104,000.

150 In a facility summary prepared 11 July 1995 the following passage occurred:-

Budget allows for $16,000 in vegetable income for period, customer banked $4,071. during period and have stated are owed over $12,000. for delivery of vegetables to Griffith company Pure Foods. It is known that Pure Foods is presently experiencing some financial difficulties. It is unclear at this stage when full payment to growers will/can be made”.

151 In a facility summary prepared 7 November 1995 the following passage appeared:-

“This review has been delayed by several months while we were awaiting production of customers 1995 financial accounts. These are now to hand but to eliminate this being repeated next year we are looking to push the timing of the review back to 30/11 annually.

Customers have requested that we allow their existing facilities to continue at the present level until after the harvest of their 1995 winter crops. At that time (31/1/96) they wish to reduce the limit to $90,000 – a reduction of $20,000.

This limit reduction will see us much better placed from a security perspective as this will place our exposure within the valuation of our first class security, with the second class security then becoming a comfort ‘pad’”.

152 On 9 November 1995 the account manager in the Business Banking Office Griffith was instructed to ensure “security document is correct to secure plant and equipment… and determine which entity owns the assets”.

153 On 24 November 1995 there was a meeting at the Bank. A Bank officer’s note of the meeting was as follows:-

154 In a facility summary prepared 21 February 1996 the following item appeared:-

“Late last year customers sold their aged Diahatsu ute for $5,000 and purchased a second hand Toyota 4WD. They have been reminded that the Bank should have been accounted to for the sale proceeds and have offered the replacement vehicle as security. We feel that the cost of this exercise and the small impact that the transaction had on our overall security makes the exercise uncommercial. Accordingly we recommend that the sale of the vehicle be noted”.

155 On 14 March 1996 Mr and Mrs Crowe entered into a facility agreement with the Bank for the overdraft limit of $110,000 to be extended but subject to certain terms, including a term that the facility be reduced by at least $20,000 by 30 April 1996. On 2 May 1996 the Bank informed Darkcm by letter that the overdraft facility had been reduced to $90,000.

156 The financial statements for Darlcm for the year ended 30 June 1996 prepared by Andersons accountants from books and records of Darkcm which had not been audited showed a loss for the period of $66,257.

157 On 23 August 1996 Mr and Mrs Crowe entered into a facility agreement with the Bank for an increased overdraft limit of $100,000.

158 In September 1996 an application by Darkcm to the Bank for further financial accommodation to finance the acquisition of a specific piece of equipment was refused by the Bank.

159 In a Bank record of 6 March 1997 the following item appeared:-

A limit reduction of $20k was due on 0/D facility 31/12/96 However as customer has had problems with party from whom they lease property on which they carry out cropping, customers have been unable to make the reduction. A major portion of cereal crop proceeds have been withheld due to the dispute”.

160 Financial statements of Darkcm for the year ended 30 June 1997 prepared by Andersons accountants from books and records of Darkcm which had not been audited showed a loss for the period of $4,168.

161 On 17 February 1999 the Bank wrote to Mr and Mrs Crowe seeking confirmation that the assets subject to the bill of sale remained in their possession and were adequately insured. A follow up letter was written by the Bank of 8 April 1999.

162 On 2 June 1999 a bank officer who had been the account manager for the accounts of Darkcm and Mr and Mrs Crowe wrote a memorandum to another bank officer which included the following passage:-

“From memory the biggest problem will be Crowe’s ability to service any residual debt as he never really gave us anything to prove servicing and the monies he is getting is from settlement is a one off. Last discussion with Crowe was for either minimal residual or none as he seemed to recognise that his long term ability to repay wasn’t strong. He was to make some payments to the account during the case however I don’t think he did”.

163 The references to “the case” and “settlement” were references to the legal proceedings brought against de Rosa.

164 In a Bank document headed “Agenda Items Darkcm/Crowe 3/6/99” it was stated, with respect to the vehicles included in the bill of sale, that one vehicle the Ford Maverick was “dead”, two of the vehicles had been sold for a total price of $5,000, two had been acquired by Mr Crowe’s brother with the Bank itself financing the acquisition and one, the Diahatsu, had been released in 1996.

165 In a Bank document of 7 June 1999 the Bank’s then exposure was stated to be $156,000 with the security being the mortgage and the bill of sale. It was noted that the assets subject to the bill of sale had all been disposed of, some with the Bank’s knowledge and some without. This document continued:-

“Until about 18 months ago this was a sound relationship. It fell off the rails when a share farming agreement went into dispute and the land owner froze the crop proceeds. This eventually made its way to court with customers successfully defending their position. The proceeds of this case are those offered in reduction of the Bank’s exposure”.

166 This document sets out a proposal made by Mr and Mrs Crowe in the following terms:-

167 In considering this proposal the Bank noted:-

“Bill of sale vehicles and equipment have been either sold, given to relatives or are no longer operating… the bill of sale will expire 21/10/99 (registered 21/10/94) and with no value ascribed it is recommended that this security be released”.

168 A recommendation was made by bank officers that the Bank accept the proposal. Part of the Bank document was in the following terms:-

“We would appear to have 3 options being:

169 The Bank informed Darkcm by a letter dated 17 June 1999 that it had agreed to accept the proposal, subject to the security over the bill of sale being released and subject to certain other conditions which did not affect the substance of the offer.

170 A Bank record of 25 June 1999 (9.06am) recorded:-

“Apparently Darren hadn’t communicated with Anna as he has the letter in his possession. You said to call in at 9.30am to pay the money and return the letter of acceptance”.

171 A Bank document later the same morning recorded:-

“I have today received a cheque from Darren and Anna Crowe for an amount of $32,000 (versus the promised payment of $30,000). They have signed and accepted the Bank’s offer dated 17 June 1999.

Please note that customers have requested that all future correspondence be mailed under separate cover to each borrower at the following addresses…”

172 An amount in excess of $3,700 was paid on 30 September 1999. A document dated 31 December 1999 prepared by the business manager Commercial Business Riverina Area recorded:-

“Darren just called. He agreed to pay the instalment due however wishes to ensure that the balance of the agreement is in order.

Can you please prepare the required facility agreements for the ‘new’ facility – Darren will hand over the cheque for the payment due in exchange for same – that way all parties can be assured that there will be no issues raised later to cause distress”.

173 On 4 February 2000 the business manager Commercial Business Riverina Area prepared a memorandum. Parts of this memorandum were as follows:-

“In regards to the rate I also agree that few tears would be shed if Darren elected to go elsewhere at this stage, but given his debt to equity ratio, and recent local events I would doubt that he would be able to refinance. My objective is more along the lines of finding a structure that can be serviced (albeit over a long term) thus making something for the bank, and at the same time avoiding the necessity to take action under our security. At this stage I feel that we may come close to looking at a loss situation if this became necessary. At all times it has been my objective to avoid the bank taking a loss in this case.

Darren is still ‘employed’ by his mother as a truck driver/harvesting contractor/hay baler (sounds a lot like his previous occupation when self employed!!) I do not have details as to the income being generated by this business and as the accounts are at another bank I cannot ascertain what the conduct of the account is like.

Again I feel that Darren will do all that he can to protect the home and will undertake whatever is required to meet the proposed loan commitments. As you know however things can happen to disrupt this but the effort will be made. Should this facility fall into arrears I feel that we should give Anna Crowe time to bring it into order, but failing that I would regard this as the banks final concession serious default=recover action.

I agree also that we should undertake some fresh documentation to ensure that (a) all parties are fully aware of what is being proposed & done, (b) as current documentation is relatively aged there may be defects that we wish to correct now while we have the opportunity”.

174 On 29 February 2000 a registered valuer instructed by the Bank valued the house property at $135,000.

175 Parts of a Bank document of 8 February 2000 prepared by bank officers were as follows:-

“Comment on Servicing:

Information conveyed in phone conference 1/2/2000 between the writer and Mr Crowe, who was in the presence of Mr David Traynor Business Manager Griffith Trade Area, included the following.

Mr Crowe is said to be in regular employment, however current tax returns are not available. Mr Crowe has indicated that his capacity to service this debt can be seen from payments of $4,011.76 made 30/9/99 and a further payment of at least $3,7000 to be made upon approval of this facility.

Darren’s employment is as a general transporter of rural produce, such as carting grapes, rice, grain, fruit trees and that, as a result, income is seasonal. His main employer for the last 18 months has been his mother Bruna Crowe (Griffith Waste Removal Service).

Mr Crowe lives in a dwelling that is situated on a property owned by Darren’s mother. Accordingly, the level of income received by Darren reflects this situation, with Darren only needing to incur minimal personal living expenses.

Rental income is no longer being received, with the property being tenanted by Mrs Anna Crowe, who is living apart from her husband. It is for this reason that we have both Darren and Anna execute a new guarantee to strengthen our position.

Darren has not been operating an account to display to the bank a level of savings capacity. Accordingly, we have no formal confirmation of the level of income being received. It was implied in the previous approval that if certain payments were made, the Bank would restructure facilities.

Servicing uncertain”.

176 In another part of the same document it is said:-

“Our alternatives are either to sell security property, which I do not favour at present, or have clients seek refinance. Given total debt vis a vis value of property, this would not be achieved.

Accordingly, it is proposed that we restructure debts”.

177 By a letter of 11 April 2000 to Darkcm Pty Limited the Bank offered a facility of a variable rate term loan of $145,000 to refinance the existing variable rate term loan and the existing business overdraft, to be secured by guarantees from Mr and Mrs Crowe and the existing mortgage over the house property. Repayment was to be made by “bi-annual principal and interest in arrears instalment payments” of an indicative amount of $8,676. per instalment.

178 On 31 May 2000 the letter of offer and the guarantees were signed by Mr and Mrs Crowe in the presence of Mr Davidge solicitor. Mr Davidge completed certificates in the usual form.

179 The terms of the facility offered by the letter of 11 April 2000 and accepted on 31 May 2000 were not complied with.

Evidence in Proceedings on Sentence

180 A transcript of the hearing on 18 October 1999 in the District Court at Griffith of the proceedings for the sentencing of Mr Crowe for an offence of breaking and entering a dwelling house whilst armed with an offensive weapon and committing a felony therein, namely assault occasioning actual bodily harm, became exhibit D.

181 Mr Crowe gave evidence in the proceedings on sentence. He said that he had left school in 1984 and had then worked full-time on his parent’s farm. His parent’s marriage broke down. In consequence of the breakdown of the marriage part of the farm was sold to Fodder King Pty Limited, whose managing director was Mr McCardell, the victim of the criminal offence, and part of the farm was leased to Fodder King Pty Limited. Mr Crowe entered into an agreement to manage the farm for Fodder King Pty Limited and up to some time in 1998 did more than $50,000 worth of work for Fodder King Pty Limited of which in 1998 an amount of about $33,000 was outstanding.

182 Mr Crowe said in his evidence that he had entered into a lease from de Rosa. In the third year of the lease he had been evicted from the land on which there was a rice and barley crop. Legal proceedings had been brought against de Rosa and these legal proceedings were finally settled in March 1999 by de Rosa paying $100,000.

COUNSEL’S SUBMISSIONS

183 As stated earlier in the judgment, the issues which were argued at the hearing were issues which were raised by Mrs Crowe’s cross-claim, namely whether she could resist the Bank’s claims (1) under the principles stated in Yerkey v Jones (2) under the principles stated in Amadio or (3) under the provisions of the Contracts Review Act.

184 As to Yerkey v Jones, I was referred particularly to the judgment of Dixon J in Yerkey v Jones at pp684-686 and to the joint judgment of Gaudron, McHugh, Gummow and Hayne JJ in Garcia v National Australia Bank Limited (1998) 194 CLR 395. In Garcia it was held in the joint judgment that the principles stated in Yerkey v Jones had not been subsumed in the principles stated in Amadio and continue to have an independent operation. In par 31 of the joint judgment in Garcia their Honours said:-

Yerkey v Jones

185 It was submitted by counsel for Mrs Crowe that the present case fell within the second kind of case distinguished by Dixon J in Yerkey v Jones and in par 31 of the joint judgment in Garcia.

186 As to Amadio, I was referred to frequently quoted passages in the judgments of Mason J and Deane J, including:-

“…an underlying general principle which may be invoked whenever one party by reason of some condition or circumstance is placed at a special disadvantage vis-à-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word “disadvantage” by the adjective “special” in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party” .

276 Mr Lancaster did not advise Mrs Crowe that the mortgage was an “all monies” mortgage. However, this omission on the part of Mr Lancaster would not have affected Mrs Crowe’s appreciation that the mortgage would secure repayment of the money which was then being borrowed.

277 I do not consider that it has been shown that the transactions of 6 July 1993 were improvident or that Mr and Mrs Crowe lacked the ability to service the repayments under the facility granted to them. It is true that Mr and Mrs Crowe’s financial means, as disclosed in the application made in January 1993, were modest. However, they had certain financial advantages, including that they were residing rent free on Mr Crowe’s parent’s farm and Mrs Crowe was receiving rent from the tenant of her house.

278 In my opinion, Mrs Crowe is not entitled to any relief with respect to the transactions of 6 July 1993 and in particular the mortgage.

279 So far as the principle in Yerkey v Jones is concerned, Mrs Crowe has not established that she did not understand the purport and effect of the transactions or that the transactions were voluntary or that a competent independent and disinterested stranger had not explained the transactions to her. I am positively satisfied that she did understand the purport and effect of the transactions, that the transactions were not voluntary so far as she was concerned and that the transactions were explained to her by a competent, independent and disinterested stranger.

280 So far as the principle in Amadio is concerned, Mrs Crowe has not established that she was subject to any special disability which had not been removed by her receiving advice or that the Bank knew or ought to have known of any special disability which had not been removed by her receiving advice or that the Bank acted unconscionably in lending the money and taking the mortgage.

281 So far as the Contracts Review Act is concerned, although some of the matters referred to in subs (2) of s 9 were present, I do not consider that I should find that any contract was unjust within s 9 of the Act.

The 1994 Transactions

282 The findings I have made in considering the transactions of July 1993 concerning Mrs Crowe’s level of education, language skills and lack of commercial or business experience apply equally to these transactions.

283 I do not consider that, with respect to the 1994 transactions, Mrs Crowe was a volunteer within the principle in Yerkey v Jones. The accountant Mr Anderson had advised that farming activities should be carried on through a company and the company Darkcm had been registered, with Mrs Crowe as one of the two directors and as an equal shareholder with her husband. It is true that, as between Mr and Mrs Crowe, it was Mr Crowe who would determine what farming activities were carried on and how they were carried on. However, I am satisfied that the business to be carried on by Darkcm was regarded by both Mr Crowe and Mrs Crowe as a joint enterprise to be carried on for the benefit, not only of Mr Crowe, but of Mrs Crowe and her children both by her first husband and by Mr Crowe. To the extent that Darkcm made any profits Mrs Crowe would benefit.

284 I am also satisfied that Mrs Crowe had a greater knowledge of the affairs of Darkcm and was consulted more by her husband about the affairs of Darkcm than she was prepared to concede in her evidence. For example, the client contact sheet of 5 April 1995 shows that Mrs Crowe was aware that a payment was due to be received from the Rice Board and of the gross amount of the payment and that deductions would be made by the Rice Board from the gross amount of the payment, although she did not know what would be the amount of the deductions. The client contact sheet of 28 June 1995 shows that Mrs Crowe was aware of the overdraft limit and was aware that wages would have to be paid and that she requested that the Bank honour cheques for wages, although payment of these cheques would result in the overdraft limit being exceeded.

285 I have already found in considering the 1993 transactions that from 1993 onwards Mrs Crowe understood the general nature and effect of a mortgage. From 1993 onwards she understood that, if she borrowed money from a bank, she would be liable to repay the money and that, if she gave a mortgage to a bank over her house, the bank, if it was not repaid the money borrowed, could sell the house.

286 It is true that Mrs Crowe had entered into the mortgage in 1993 and that in 1993 Mr Lancaster had not advised Mrs Crowe that the mortgage would secure repayment, not merely of the money being borrowed in 1993 but of all monies which might subsequently become payable by Mrs Crowe to the Bank, and that no further mortgage was entered into in 1994. However, I have decided that I should accept Mr Del Gigante’s evidence, including his evidence that he advised Mrs Crowe that she could lose her house if Darkcm did not repay to the Bank monies which were advanced under the facility. I have already found that the letter of 1 September 1994 offering the facility, which included as its first term and condition that the facility would be secured by inter alia the mortgage over Mrs Crowe’s house, was discussed at the conference with Mr Del Gigante on 7 October 1994 in sufficient depth to prompt Mr and Mrs Crowe later the same day to visit the Bank and raise a concern they had about the terms of the facility. I find that as at 7 October 1994 Mrs Crowe understood the general nature and effect of a mortgage and understood that the mortgage she had given in 1993 would be security for the repayment of amounts to be borrowed under the facility of 7 October 1994.

287 The Bank, having written to Mr Del Gigante on 7 September 1994 and having received Mr Del Gigante’s letter of 13 October 1994, was entitled to assume that, as requested by the Bank in its letter, Mr Del Gigante had given Mr and Mrs Crowe an explanation of the documents which had been forwarded with the Bank’s letter of 7 September 1994.

288 I have already referred to the argument by counsel for Mrs Crowe that the transactions of 7 October 1994 were improvident and that Darkcm would be unable to service the repayments under the facility; that the Bank knew that the transactions were improvident, as was shown by Mr George’s memorandum and by the memorandum of 2 June 1999; the Bank knew or ought to have known that Mrs Crowe was unable to judge for herself whether the transactions were improvident; and that the advice Mrs Crowe received was inadequate to prevent the transactions being unconscionable or unjust, because the advice she received did not include financial advice from an independent financial adviser about the transactions which were actually to be entered into (counsel referred to Teachers Health Investments). It was also submitted that the Bank had acted unconscionably and unjustly in entering into the transactions, notwithstanding that it knew of the likely inability of Darkcm to service repayments, because it knew that amounts which became outstanding to the Bank would be secured by a first class security being the mortgage over Mrs Crowe’s home (counsel referred to Elkofairi).

289 I accept that, when the Bank decided to give the facility and when the transactions were entered into, there was a risk that Darkcm would not be able to service repayments under the facility. However, in my opinion, it was by no means clear that Darkcm would be unable to service repayments under the facility and I would not make a finding that the Bank knew or ought to have known that it was likely that Darkcm would be unable to service repayments. In determining whether the transactions were improvident or whether the Bank knew or ought to have known that they were improvident, it is necessary to refer to parts of the evidence.

290 On 17 May 1994 Mr and Mrs Crowe had repaid the loan of $18,000, which had been made to them by the Bank in January 1993.

291 On 21 July 1994 Mr Crowe informed the Bank that he would be leasing 1700 acres of irrigated land and 280 acres of non-irrigated land and that he would be applying for financial accommodation.

292 The Bank received the Funding Proposal dated 27 July 1994 prepared by Mr Anderson, an accountant, seeking a term loan of $100,000 and an overdraft facility of $80,000 to finance a farming operation involving the leasing of three rice farms and the purchase of a breeding pair of ostriches. In the Funding Proposal it was emphasised that Mr Crowe, despite his youth, had had years of experience in rice farming. The Proposal included a schedule of assets and liabilities showing a large surplus of assets and projected cash flows for three years with a high positive cash flow in the third year.

293 Having received the Funding Proposal the Bank instructed its district valuer, who was a registered valuer, to “assess accountant’s estimates and customers’ servicing ability”.

294 The valuer assessed the proposal, considered that the part of the proposed farming operation which would involve the purchase of a breeding pair of ostriches should be abandoned, weighed up the strengths and weaknesses of the amended proposal and concluded that the amended proposal excluding the ostriches was “strong enough for the Bank to support” and recommended that an overdraft limit of $100,000 be approved.

295 The Bank’s Griffith Business Banking Office considered the valuer’s report and decided to offer a facility consisting of an overdraft of $110,000, as recommended by the valuer, and the existing indebtedness of Mr and Mrs Crowe.

296 Mr George, a credit administrator within the Bank, having completed a post-approval review of the decision to offer the facility, expressed the opinion, giving reasons, that the facility should not have been approved and said that two other officers of the Bank agreed with his opinion. However, the bank officer in charge of Darkcm’s account and the manager of the Bank’s Business Banking Office at Griffith replied in writing, point by point, to Mr George’s memorandum, defending the decision to grant the facility and expressing the opinion that “customer has the technical ability and determination to generate sufficient income to service and reduce debt in given lease period and feel customers are worthy of support in this instance”. I am satisfied that this opinion was genuinely held by the bank officers in Griffith and I consider it was an opinion they could reasonably form.

297 The present case is unlike Elkofairi, where the Court of Appeal held that there was a total absence of financial information regarding the capacity to make repayments, with the consequence that the lender was fixed with knowledge that the borrower lacked capacity to meet the repayment obligations under the mortgage, or Teachers Health Investments, where the Court of Appeal held that the transaction which was entered into was “sheer folly”. Other differences between the present case and Elkofairi include that the amount of the financial accommodation in the present case was much less than the amount of the financial accommodation in Elkofairi, Mrs Crowe had a better command of English than Mrs Elkofairi and in 1994 Mrs Crowe was not in “difficult domestic circumstances”.

298 That Darkcm’s business operations ultimately failed does not show that they were doomed to fail from the outset. Substantial causes of Darkcm’s failure were supervening events, including the failure of Fodder King to pay amounts owing by it, the sentence of periodic detention imposed on Mr Crowe for assaulting Mr McCardell of Fodder King, the action of the lessor de Rosa in evicting Darkcm from leased land at a time when there was an advanced rice crop and barley crop on the land and the general failure of debtors of Darkcm to pay their debts.

299 Because I do not accept that it was clear that Darkcm would be unable to service repayments under the facility and because I do not accept that the Bank knew or ought to have known that Darkcm would be unable to service repayments, I do not accept that the Bank entered into the transactions, knowing that Darkcm would default but being content to rely on its mortgage, and I do not accept that it was necessary, in order that the advice Mrs Crowe received should have been adequate advice, that Mrs Crowe should have been advised to obtain financial advice.

300 In any event, the Funding Proposal the Bank had received had been prepared with the assistance of an accountant (Mr Anderson). The Bank was entitled to infer from Mr Anderson’s participation in the preparation of the Funding Proposal that Mr Anderson had given Mr and Mrs Crowe some financial advice. It is true that the farming operation which was ultimately approved was different from the farming operation which was proposed in the Funding Proposal. However, it differed only in that the proposed purchase of the ostriches, which would have aggravated the short-fall of working capital for the first twelve months, was omitted.

301 I accept the submission made by counsel for the Bank, which was well supported by the evidence, that Mrs Crowe trusted the assurances given to her by her husband and it was what her husband said to her that mattered when she was making a decision, irrespective of what she was told by professional advisers or the Bank. Mrs Crowe believed her husband’s assurances that he would make the repayments and that, if he did not make the repayments, the proceeds of enforcing the bill of sale would be sufficient to repay all of the indebtedness but she understood that, if default was made, the Bank would be able to enforce the mortgage.

302 In my opinion, on grounds similar to the grounds I gave in relation to the July 1993 transactions, Mrs Crowe is not entitled to any relief with respect to the 1994 transactions, under either the principle in Yerkey v Jones or the principles in Amadio or under the Contracts Review Act.

The 2000 Transactions

303 Earlier in this judgment I summarised the submissions made by counsel for Mrs Crowe in relation to these transactions.

304 I accept, as submitted by counsel for Mrs Crowe, that in the year 2000 the Bank had no information about Mr Crowe’s current financial position and that the Bank regarded it as uncertain whether there was capacity to service the new facility. Apart from the guarantees, the mortgage was the only security for the facility, the bill of sale not having been renewed. The Bank was on notice that Mr and Mrs Crowe had separated and were living apart at different addresses. By the time of these transactions Mr Crowe had been physically violent to Mrs Crowe and she was frightened of him but Mrs Crowe had not revealed that her husband had been physically violent to her and I am not satisfied that the Bank was aware or ought to have been aware of any violence or intimidation exerted by Mr Crowe on Mrs Crowe.

305 These transactions of 31 May 2000 differed from the earlier transactions in that, because she was estranged and separated from her husband, Mrs Crowe no longer trusted in any assurances given by her husband. I also find that by the time of the 31 May 2000 transactions Mrs Crowe had gained more experience in financial matters than she had had at the time of the July 1993 transactions and the 1994 transactions. By the time of the 2000 transactions Mrs Crowe definitely understood the nature of a mortgage and understood that her house was seriously at risk.

306 In order to determine the nature of the facility offered and accepted in 2000 it is necessary to trace the events leading up to the granting of the facility.

307 As at 7 June 1999 the Bank was owed $156,000. About this time legal proceedings brought against de Rosa were successfully concluded with the payment of a sum of money by de Rosa. A proposal was then made to the Bank, the terms of which are set out in the Bank’s document of 7 June 1999, one term being that, if a payment of $30,000 was made and then two payments of $3,700 each were made, the Bank would restructure the residual debt into a new facility.

308 When this proposal was made to the Bank, the Bank considered that it had three options, either to accept the proposal or to take immediate action to enforce the mortgage or to refuse the proposal in the hope that a better offer might be forthcoming. The Bank decided to accept the proposal, subject to the bill of sale being released (or not renewed).

309 The release (or non-renewal) of the bill of sale was not detrimental to Darkcm or Mrs Crowe, because all of the vehicles which had been subject to the bill of sale had either been disposed of or had reached the end of their useful working lives.

310 The Bank’s decision to accept the proposal was the most favourable outcome for Mrs Crowe. One of the alternatives was for the Bank to take immediate action to enforce the mortgage, which would have been a worse outcome for Mrs Crowe. The other alternative, which depended on an offer being made which was a better offer so far as the Bank was concerned, would also have been a worse outcome for Mrs Crowe and, I am satisfied, was not a realistic possibility.

311 A payment of just over $30,000 was made on 25 June 1999 and a payment of just over $3,700 was made on 30 September 1999. Mr Crowe indicated to the Bank that he would pay the further instalment, in exchange for the new facility, that is the restructuring of the residual debt into a new facility.

312 The Bank considered that it had three options and that it should take the option of restructuring the debt into a new facility. The other options were for the Bank to sell Mrs Crowe’s property pursuant to the mortgage, which would have been a worse outcome for Mrs Crowe, or to press Mr and Mrs Crowe to refinance the debt with another financier, which was not a practicable alternative.

313 The Bank by its letter of 11 April 2000 to Darkcm offered a facility of a variable rate term loan to refinance the existing variable rate term loan and the existing business overdraft, to be secured by new guarantees from Mr and Mrs Crowe and the existing mortgage over the house property.

314 I have found that, in accordance with Mr Davidge’s evidence, the letter of offer and the guarantee were explained to Mrs Crowe by Mr Davidge, in a conference in which Mr Davidge saw Mrs Crowe separately from her husband.

315 I do not consider that Mrs Crowe was any the worse off for entering into the facility agreement of 31 May 2000 or the guarantee of 31 May 2000. Whether or not Mr Davidge shrugged his shoulders in response to a question asked by Mrs Crowe, Mrs Crowe in fact had little choice but to enter into these transactions. Her assessment that she had little choice indicates that she had a good understanding of the situation she was in. If she did not enter into the transactions, then the Bank would probably take immediate steps to enforce the mortgage. Under the new facility the existing loan and the existing overdraft were refinanced by a loan with at least some chance of its being serviced.

316 It is true that the Bank took the opportunity, as a new facility was being granted, to have Mr and Mrs Crowe execute fresh guarantees to replace the joint and several guarantee given in 1994, which was several years old and which a bank officer thought might contain defects. However, counsel for Mrs Crowe did not identify any defects in the old documentation which were overcome by the new documentation. I do not consider that the circumstances that the Bank knew that Mrs Crowe was separated from her husband or that the Bank was seeking new documentation to strengthen its own position in case there were any defects in the old documentation prevent the 2000 transactions being simply a refinancing of Darkcm’s indebtedness, with Mrs Crowe being no worse off.

317 In my opinion, the Bank did not act unconscionably in entering into the financial facility and no contract which formed part of the facility was unjust. In my opinion, Mrs Crowe is not entitled to any relief with respect to the transactions of 31 May 2000, under the principle in Yerkey v Jones or the principles in Amadio or under the Contracts Review Act.

318 I conclude that the plaintiff (the Bank) is entitled to judgment for possession and for the amount due under the mortgage, that the cross-claim by Mrs Crowe against the Bank should be dismissed and that the cross-claims by Mrs Crowe against Mr Crowe, Darkcm and RKCM Harvesters Pty Limited, all of which were undefended, should succeed. I will defer the making of final orders until after this judgment is handed down.

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Last Modified: 09/08/2004

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Citations

Commonwealth Bank of Australia v Anna Maria Crowe [2004] NSWSC 330

Most Recent Citation

Symx Land Developments Pty Ltd v Pugh [2025] QSC 137

Cases Citing This Decision

1

Symx Land Developments Pty Ltd v Pugh [2025] QSC 137

Cases Cited

3

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Garcia v National Australia Bank Ltd [1998] HCA 48

Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413

CITATION:	Commonwealth Bank of Australia v Anna Maria Crowe [2004] NSWSC 330
HEARING DATE(S):	10/03/04,11/03/04,12/03/04
JUDGMENT DATE:	30 April 2004
JUDGMENT OF:	James J at 1
DECISION:	Plaintiff entitled to succeed - making of final orders deferred
CATCHWORDS:	Default on mortgage - claim for possession by plaintiff bank - whether defendant can resist claim under principles in - Amadio - Yerkey v Jones - Contracts Review Act
LEGISLATION CITED:	Contracts Review Act Fair Trading Act Trade Practices Act
CASES CITED:	Commercial Bank of Australia Limited v Amadio (1982-1983) 151 CLR 447 Elkofairi v Permanent Trustee Company Limited [2002] NSWCA 413 Garcia v National Australia Bank Limited (1998) 194 CLR 395 Kings North Trust v Bell (1986) 1 WLR 119 Teachers Health Investments Pty Limited v Wynne (1996) ASC 56-356 Yerkey v Jones (1938-1939) 63 CLR 649
PARTIES :	Commonwealth Bank of Australia v Anna Maria Crowe
FILE NUMBER(S):	SC 10136/2003
COUNSEL:	M B J Lee - Plaintiff G P McNally - defendant
SOLICITORS:	Cater & Blumer - Plaintiff Corrs Chambers Westgarth