Dinh v Commonwealth Bank of Australia

[2021] WASCA 127

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT  :   THE COURT OF APPEAL (WA)

CITATION:   DINH -v- COMMONWEALTH BANK OF AUSTRALIA [2021] WASCA 127

CORAM:   BUSS P

MURPHY JA

MITCHELL JA

HEARD:   22 - 23 APRIL 2021

DELIVERED          :   22 JULY 2021

FILE NO/S:   CACV 1 of 2020

BETWEEN:   ANNE TRAN DINH

Appellant

AND

COMMONWEALTH BANK OF AUSTRALIA

First Respondent

PETER DINH

Second Respondent

ON APPEAL FROM:

Jurisdiction              :   SUPREME COURT OF WESTERN AUSTRALIA

Coram:   ARCHER J

Citation: COMMONWEALTH BANK OF AUSTRALIA -v- DINH [No 2] [2019] WASC 456

File Number            :   CIV 1376 of 2014

Catchwords:

Banking and finance - Loan agreement - Appellant defaulted under loan agreement secured by mortgage - Whether respondent breached clauses of the Code of Banking Practice incorporated into the loan agreement - Whether breach of Code of Banking Practice caused loss to the appellant

Equity - Unconscionable conduct - Whether loan agreement should be set aside on basis of unconscionable conduct - Where appellant had poor English skills - Whether appellant under special disadvantage - Whether respondent unconscientiously took advantage of a special disadvantage

Legislation:

Australian Securities and Investments Commission Act 2001 (Cth), s 12CB

Result:

Appeal dismissed

Category:    B

Representation:

Counsel:

Appellant	:	N Lucarelli QC and J Paterson
First Respondent	:	M D Cuerden SC and C H Thompson
Second Respondent	:	No appearance

Solicitors:

Appellant	:	Forbes Kirby
First Respondent	:	Dentons Australia
Second Respondent	:	No appearance

Case(s) referred to in decision(s):

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447

Commonwealth Bank of Australia v Doggett [2014] VSC 423

Doggett v Commonwealth Bank of Australia [2015] VSCA 351; (2015) 47 VR 302

Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640

Fox v Percy [2003] HCA 22; (2003) 214 CLR 118

Gooley v NSW Rural Assistance Authority [2020] NSWCA 156

Haynes v St George Bank [2018] SASCFC 51; (2018) 130 SASR 551

Lee v Lee [2019] HCA 28; (2019) 266 CLR 129

Robinson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679

Sam Management Services (Aust) Pty Ltd v Bank of Western Australia Ltd [2009] NSWCA 320

Smart v Power [2019] WASCA 106

Thorne v Kennedy [2017] HCA 49; (2017) 263 CLR 85

Zerjavic v Chevron Australia Pty Ltd [2020] WASCA 40

Contents

Summary

Facts found by the trial judge

The appellant, Peter Dinh and Andrew Dinh

Appellant's financial experience and knowledge

Property portfolio at the time of the Loan Agreement

History of farming in Carnarvon

Discussions with the Bank in November 2008

Mr Pollard's assessment of the loan application

General approach

'Projected performance' spreadsheet

Assessment of estimated income

Assessment of estimated Plantation expenditure

Assessment of funds for servicing loans

Assessment of the Dinhs' capacity to service loans

The questionnaire

The $50,000

Conditional approval of the loan on 2 January 2009

Early possession of the Plantation on 4 January 2009

Contract of sale of the Plantation on 10 January 2009

The loan is approved on a revised basis on 16 January 2009

Communication of unconditional approval

Documents refinancing loans to other lenders:  5 - 12 February 2009

Signing of the loan transaction documents on 12 February 2009

Trial judge's findings as to appellant's knowledge when signing the Loan Agreement

Re-signing the Loan Agreement on 4 March 2009

Extension of overdraft for stamp duty on 16 March 2009

Settlement of the Plantation sale on 20 March 2009

Further extension of the overdraft on 22 April 2009

Preparation of a cash flow budget in May - June 2009

Further extension of the overdraft on 5 June 2009

Events prior to March 2010

Events after March 2010

Trial judge's approach:  an overview

Credibility findings

Claim under cl 2.2 of the Banking Code

Claim under cl 10.2(b) of the Banking Code

Claim under cl 25.1 of the Banking Code

Misleading or deceptive conduct

Unconscionability

Limitation defence

Restitution

Primary court's orders

Claim under cl 2.2 of the Banking Code

Proper construction of cl 2.2

Whether Mr Pollard adequately explained the loan documents

Focus on the appellant's understanding rather than the Bank's conduct

Whether the appellant understood the loan documents

Reduction of the term of the loan for the Ballajura property

Acceptance of appellant's signature on documents

Claim under cl 10.2(b) of the Banking Code

Claim under cl 25.1 of the Banking Code

Proper construction of cl 25.1

The appellant's case on appeal

Exception to the 'income repayment capacity test'

Bank's opinion about repayment capacity

Assessment of income from grapes

Reference to $50,000 cash held by the appellant and Peter Dinh

Prudence of the loan

Relevance of events arising after the loan approval

Failure to include a contract term requiring sale of investment properties

Absence of expert evidence

Loss and damage caused by a breach of cl 25.1 of the Banking Code

Claim of unconscionable conduct

Orders

Conduct of the appeal

JUDGMENT OF THE COURT:

Summary

1. In early 2009, the appellant and her husband, Peter Dinh (the second respondent), purchased a plantation in Carnarvon (Plantation) with the assistance of finance from the first respondent (Bank).  At that time, the appellant and Peter Dinh owned a number of mortgaged investment properties.  They were not in a position to service, long‑term, a loan of the funds required to purchase the Plantation, as well as their other liabilities, without undertaking arrangements to rationalise their assets and retire certain debt.  The Bank already held mortgages over two of the properties.  The Bank refinanced the debts on the three other properties and financed the purchase of the Plantation, offering what was in effect a 12‑month interest only bridging loan.  This was to give the appellant and Peter Dinh 12 months to sell three of their investment properties and use the sale proceeds to reduce their overall indebtedness to a manageable level. 

2. The agreement for finance of the purchase of the Plantation (Loan Agreement) was signed on 12 February 2009, and re-signed with a presently immaterial variation on 4 March 2009.  The Loan Agreement provided for a $1,100,000 12‑month bill facility (Bill Facility) to provide the funds for the purchase of the Plantation, and a $50,000 overdraft facility (overdraft) to provide working capital for the farming venture.[1]

   [1] Commonwealth Bank of Australia v Dinh[No 2] [2019] WASC 456 [13] (Primary decision); exhibit 2.92 (Green AB 131 - 139).

3. The appellant and Peter Dinh did not sell the three investment properties during the 12‑month loan period as contemplated.  While the Bank continued the finance beyond that period, the appellant and Peter Dinh, with a few exceptions, stopped making any loan repayments in early 2011.  Peter Dinh was made bankrupt in 2012.

4. In 2014, the Bank commenced the primary proceedings seeking to recover the outstanding balance of the loans and an order for possession of the mortgaged properties.  The appellant resisted the Bank's claim, alleging misleading or deceptive conduct, breach of various terms of the Modified Code of Banking Practice 2004 (Code), which had been incorporated as terms of the Loan Agreement, and unconscionable conduct.  The appellant also counterclaimed for orders setting aside the Loan Agreement and damages.

5. On 17 December 2019, the trial judge awarded judgment for the Bank and dismissed the appellant's counterclaim.  The appellant appealed against that decision and advanced 34 grounds in support of her appeal. 

6. In our view, none of the appellant's grounds of appeal is established.  The trial judge was correct to give judgment for the Bank and dismiss the appellant's counterclaim, essentially for the reasons which her Honour gave.  Therefore, the appeal must be dismissed.

Facts found by the trial judge

1. The trial judge made the following findings as to the primary facts of this case (which we have supplemented with reference to the documentary evidence in some respects).

The appellant, Peter Dinh and Andrew Dinh

1. The appellant and Peter Dinh emigrated from Vietnam in 1982.  Vietnamese is their first language.  The appellant can read and write in Vietnamese.  Neither the appellant nor Peter Dinh are fluent English speakers.  Although both gave their evidence through interpreters, it was clear that they understood some of the English being spoken.[2]

   [2] Primary decision [291], [300].

2. Andrew Dinh (the son of the appellant and Peter Dinh) came to Australia from Vietnam when he was about 2 years old.  He completed year 10 of school.[3]  Andrew Dinh translated and passed on messages and information to and from his parents, primarily his mother, and Mr Pollard (the Bank officer with whom the appellant principally dealt).  Andrew Dinh was also communicating with the settlement agent for the purchase of the Plantation on behalf of his parents.  He passed on his parents' instructions to the settlement agent, ensured that his parents were aware of the settlement agent's requirements, and kept his parents updated on what the settlement agent told him.[4]

   [3] Primary decision [293].

   [4] Primary decision [314] - [316].

3. The appellant had access to various people who could have assisted her with queries or advice, and she had demonstrated the capacity to obtain assistance and advice.  Both her brother and her niece worked in banks, at least at some stage.  Her brother helped her apply for a loan in relation to her property in Ballajura, discussed below.  The appellant used Vietnamese‑speaking mortgage brokers on a number of occasions.  She used the same settlement agent, Ms Casella at Settlements Plus, for all of her property transactions.[5] 

   [5] Primary decision [317] - [320].

4. The appellant obtained advice from her accountant, who spoke Vietnamese and communicated with her in that language.[6] 

Appellant's financial experience and knowledge

[6] Primary decision [96], [321].

1. The appellant appeared to act as a banker for her extended family.  She agreed that she had lent money to various family members in the past, and there was also evidence of the appellant assisting her children.  This included purchasing a block of land in Landsdale, discussed below, for her son, Yuong Dinh, when he was not in a position to borrow money from a bank.  The appellant and Peter Dinh then built a house on the block and sold that property to Yuong Dinh for what he could borrow from a bank.[7]

   [7] Primary decision [323] - [332].

2. Although the appellant did do some physical work, her main job in the family farming business was looking after the books and paying the bills.  She looked after the finances and handled account transactions and bank statements.[8]

   [8] Primary decision [333] - [335].

3. The appellant had a long history of borrowing money for the purchase of properties and the construction of houses on them, and of refinancing loans.  She understood that if she borrowed money from a bank she would have to pay it back.  She understood that she would also have to pay interest and fees.  She understood that a mortgage meant that, if she did not repay the loan, the bank might take the property.  She also knew that, if the sale of a property did not cover the debt that she owed, she could still owe the bank money.  She was aware of the requirement to make regular payments on home loans.[9] 

   [9] Primary decision [336] - [337], [342].

4. The appellant also understood that whether a lending institution would lend money could depend on the circumstances of the borrower.  More than once, the appellant borrowed money on behalf of family members who were unable to obtain loans in their own names.[10]

Property portfolio at the time of the Loan Agreement

[10] Primary decision [343].

1. Peter Dinh and the appellant had a history of purchasing, developing and financing properties for residential and investment purposes, from the early 1990s.  At the time they entered into the Loan Agreement, they were registered proprietors of the following properties:[11]

   (1)a property in Ballajura, purchased in 1999, on which they constructed a house that became the primary family residence and which was mortgaged to the National Australia Bank (NAB);

   (2)a property in Aveley, purchased in 2006 and mortgaged to SAMsLoans/Perpetual Ltd (Perpetual), on which they constructed a house with finance from NAB secured by NAB's mortgage over the Ballajura property;

   (3)a property in Perth (which was jointly owned although Peter Dinh was the sole registered proprietor), purchased in 2007 and mortgaged to the Bank;

   (4)a property in Landsdale, purchased in 2007 as a vacant block of land and mortgaged to the Bank, which was also the subject of construction finance from the Bank obtained in 2008;

   (5) a property in Dianella, purchased in 2007 and mortgaged to Suncorp‑Metway Ltd (Suncorp); and

   (6) a property in Bassendean, purchased in 2008 by the appellant in her Vietnamese name and financed through the Bank.

History of farming in Carnarvon

[11] Primary decision [11] - [12], [47] - [55].

1. From about 2002 up to their purchase of the Plantation, the appellant and Peter Dinh farmed leased land in Carnarvon.  For the first year, they worked as share farmers with the appellant's brother.  The appellant's role was simply to provide labour.[12]

   [12] Primary decision [56] - [57].

2. After that, the appellant and Peter Dinh leased land, at South River Road Carnarvon, with the appellant's sister Ms Lee.  They farmed that land with the appellant's two sisters and their husbands.  They then leased and farmed land at North River Road.  The appellant's main job on both of those farms was looking after the books and paying the bills.[13] 

   [13] Primary decision [58] - [59].

3. The appellant and Peter Dinh wanted to be able to farm on their own land.  In late 2007, they approached the ANZ bank for a loan to purchase the Plantation, but were told they had too much debt.  The appellant said they were told 'to go back and sell whatever we own so that then they will be able to lend us the money to buy that property'.[14]

Discussions with the Bank in November 2008

[14] Primary decision [60].

1. The appellant and Peter Dinh met with Mr Pollard at the Bank's Carnarvon office, probably in November 2008 and before 21 November 2008.  The appellant's sister, Ms Lee, was at the meeting.  It is not clear whether the appellant's son, Andrew Dinh, was at the meeting.  Either her sister or her son translated for the appellant.  Ms Lee speaks better English than the appellant does.  Andrew Dinh is fluent in English and spoken Vietnamese.[15]

   [15] Primary decision [62], [64] - [65].

2. After the meeting, Mr Pollard sought financial records from the Dinhs' accountant.  He also requested title searches on the Ballajura, Dianella, Aveley and Perth properties.  On 21 November 2008, Mr Pollard began work on the Dinhs' loan application.[16]

   [16] Primary decision [70] - [71].

3. On 24 November 2008, Mr Pollard sent an email to Andrew Dinh asking for more information to allow the Bank to assess the loan.  Among other things, Mr Pollard asked for 12 months of loan statements in relation to the home loans with the other lenders.  Andrew Dinh responded the next day, advising that he would forward the request to his parents and update Mr Pollard with any information he could.[17]

   [17] Primary decision [75].

4. Sometime prior to 2 January 2009, the appellant, Peter Dinh, Andrew Dinh and Ms Lee met with Mr Pollard at the Bank's Perth offices, where a loan was discussed.  The appellant's evidence was to the effect that she understood that the Bank would lend them money to purchase the Plantation for one year at an interest rate of 3.4% to give them time to sell their other properties.  She understood that they needed to sell their other properties within the year.  She also understood that she needed to pay $5,000 to $6,000 monthly to the Bank 'and then after one year there will be change'.[18] 

Mr Pollard's assessment of the loan application

[18] Primary decision [76] - [91].

1. Mr Pollard prepared an application report and associated documents for the purposes of assessing the appellant's and Peter Dinh's loan application.[19] 

General approach

[19] Exhibits 1.41 - 1.43 (Green AB 23 - 46).

1. Mr Pollard described his general approach in the following evidence, which was evidently accepted by the trial judge:[20]

   So the application was obviously to look to purchase the plantation.  What we had was, they were quite heavily geared, so from a servicing exercise that we did, it was - it was determined that the only way we could do it immediately was to look at some form of bridging finance.  Otherwise, what would have had to have happened, we would have had to have waited until a number of properties which they were going to sell were going to be sold and then we would be able to look at the plantation purchase.  But obviously, doing that, there's a delay and they run the risk of obviously losing the plantation.  So what we did was we did - as I mentioned, we've got in two parts.  So we're financing the plantation and then the second component is to ensure the control of the disposal of asset and reduction of debt.  So as it was, the borrowing were in other lenders, so we weren't able to control obviously the - the ability to sell those assets or reduce the debt with the proceeds where that went.  So what the intention was was to look to provide an interest‑only facility to enable them to buy the plantation, still being able to make ends meet, but then also give them 12 months to sell those properties.

'Projected performance' spreadsheet

[20] See trial ts 953 - 954 and primary decision [400]. See also the commentary in exhibit 1.42 (Green AB 37 - 40), parts of which are set out at primary decision [401] - [402], [410], [415].

1. Mr Pollard created a detailed spreadsheet estimating the income and expenditure of the Dinhs if they farmed at the Plantation (Projected Performance).  The spreadsheet included a breakdown of the farming income and expenditure of the Dinhs at their leased property in 2008 (Dinhs' 2008 Performance) and of the existing owner of the Plantation in 2007 (Wainwright's 2007 Performance).[21]

   [21] Primary decision [403].

2. Mr Pollard estimated the Projected Performance by making adjustments to the income and expenditure shown in the Dinhs' 2008 Performance or in the Wainwright's 2007 Performance.  This estimate was done on a 'year in/year out' basis.[22]

Assessment of estimated income

[22] Primary decision [404], [422].

1. There were developing grape vines on the Plantation that had not produced grapes in 2007.  Therefore, the Wainwright's 2007 Performance figures did not show any income from grapes or the additional expenses associated with grapes.  Mr Pollard added to the Projected Performance an estimate of the grape income for the first year and the costs that would be caused by the grape production, with a buffer.  Mr Pollard estimated that in 2009 there would be $236,918 of income from grapes.  He then 'sensitised' that figure by 10%, reducing it to $213,226.[23]

   [23] Primary decision [405], [415] - [416]; exhibit 1.43 (Green AB 43).

2. Mr Pollard added his estimate of grape income ($213,226) to his estimate of income from other crops ($389,000), to estimate the total income generated by the Plantation ($602,226).  For his estimate of income from other crops, he used a figure that was slightly less than the Dinhs' 2008 Performance figure.[24]  He added rental income of $28,860 from the Perth property to the Plantation income (but did not add rental income from the other investment properties which were to be sold), to estimate the appellant's and Peter Dinh's total annual gross income of $631,086.[25]

Assessment of estimated Plantation expenditure

[24] Primary decision [406]; exhibit 1.43 (Green AB 43).

[25] Primary decision [409], [411]; exhibit 1.43 (Green AB 44).

1. Mr Pollard estimated the annual expenditure on the Plantation at $453,000, which figure included $60,000 in depreciation and $115,500 in interest (including interest on the new Bill Facility at 9% pa).[26]

   [26] Exhibit 1.43 (Green AB 43).

2. Mr Pollard's estimate of annual expenditure included a number of 'buffers', as follows:[27]

   (1)In the estimate for the cost of 'freight, grading, cartage and packaging', Mr Pollard used a figure that was more than $20,000 higher than the figures in the Dinhs' 2008 Performance and the Wainwright's 2007 Performance to allow for the '[i]ncreased cost due to the Grapes being fully productive with Buffer'. 

   (2)In the estimate for 'Fertiliser', Mr Pollard used a figure that was about $35,000 more than the Dinhs' 2008 Performance figure,[28] and about $10,000 more than the Wainwright's 2007 Performance figure, to allow for 'increased cost in fertilizer prices'.

   (3)For the item 'Sundry', the Dinhs' 2008 Performance figure was less than $500, and there was no entry for this item in the Wainwright's 2007 Performance figures.  Mr Pollard used a figure of $20,000, describing this as 'Buffer'.

   (4)For the item 'Wages', there was no entry for this item in the Dinhs' 2008 Performance figures.  In the Wainwright's 2007 Performance figures, there was an entry of just under $30,000.  Mr Pollard used a figure of $40,000, writing 'whilst a large portion of the [labour] will be family, we will include a buffer'.

Assessment of funds for servicing loans

[27] Primary decision [487] - [490]; exhibit 1.43 (Green AB 43).

[28] While the trial judge incorrectly referred to the figure being about $5,000 more at primary decision [488], this was an error in the appellant's favour.

1. Mr Pollard deducted his estimated annual Plantation expenditure of $453,000 from his estimated annual income of $631,086, to arrive at a 'net profit' of $178,086.  After deducting tax and adding back interest and depreciation, Mr Pollard estimated the annual funds available for servicing the loans to be $310,351.60.[29]

Assessment of the Dinhs' capacity to service loans

[29] Primary decision [412]; exhibit 1.43 (Green AB 44 - 45).  The judge refers to this as an 'EBITDA calculation'.

1. Mr Pollard created two more tables setting out what funds would be left after all the commitments had been met.  The first of these dealt with the bridging period.  This showed the position before the investment properties had been sold and on the basis that the Bill Facility commitment would be interest only.  The other showed the position after the investment properties had been sold and on the basis that the Bill Facility commitment would be principal and interest.[30]

   [30] Primary decision [413]; exhibit 1.43 (Green AB 45 - 46).

2. A version of those tables is reproduced below, simplified and using terms employed in this judgment for ease of comprehension.

Funds for Servicing During Bridging Period
Commitment	Principal amount	Loan term	Interest rate (p/a)	Annual payment
Bill Facility (interest only)	$1,100,000	15 years	8%	$88,000.00
Overdraft	$50,000	11%	$5,500.00
Ballajura home loan	$435,000	30 years	7%	$34,527.39
Aveley home loan	$130,000	30 years	7%	$10,318.53
Perth home loan	$439,878	29 years	7%	$35,272.87
Landsdale home loan	$442,615	30 years	7%	$35,131.81
Dianella home loan	$255,000	30 years	7%	$20,240.19
Credit card and chattel mortgages	$96,767	$59,138.00
Total payments				$288,128.77
Surplus from $310,351.60 in annual funds available for servicing loans				$22,222.83

Funds for Servicing Post‑Bridging Period
Commitment	Principal amount	Loan term	Interest rate (p/a)	Annual payment
Bill Facility (principal and interest)	$1,100,000	15 years	9%	$132,886.54
Overdraft	$50,000	11%	$5,500.00
Perth home loan	$439,878	29 years	7%	$35,272.87
Credit card and chattel mortgages	$96,767	$59,138.00
Total payments				$232,797.41
Surplus from $310,351.60 in annual funds available for servicing loans				$77,554.19

1. The first table relating to the bridging period anticipated that principal and interest repayments on the home loans would continue during the bridging period. The second table relating to the post‑bridging period did not anticipate that the sale proceeds would be used to repay the Bill Facility or overdraft.  Rather, it anticipated that the Aveley, Landsdale and Dianella properties would be sold and the home loans for those properties and the Ballajura property would be repaid from the sale proceeds. 

2. The use of proceeds from the Aveley, Landsdale and Dianella properties to discharge the home loans for those properties and the Ballajura property was also anticipated by a table forming part of Mr Pollard's report and recommendations.  That table indicated a value of the properties to be sold of $480,000 (Aveley and Dianella) and $462,000 (Landsdale).  Assuming a 10% cost to sell the properties, the table calculated that there would be a buffer of $147,185 after the loans for those properties and the Ballajura property were cleared.[31]

   [31] Exhibit 1.42 (Green AB 38).

3. Mr Pollard's assessment did not take account of the Bassendean property as he did not discover, and the appellant did not tell him, that she owned the Bassendean property.  Mr Pollard could not have discovered that she owned it because the appellant purchased the property in her Vietnamese name, though she bought it five years after she had changed her Vietnamese name to Anne Dinh by deed poll.[32]

The questionnaire

[32] Primary decision [542].

1. Mr Pollard also completed a 'Credit Risk Rating' questionnaire, which was a tool for the Bank to assess the probability of default and measure the Bank's risk.[33]  At trial the appellant made various criticisms of the manner in which Mr Pollard answered various questions in the questionnaire, all of which were rejected by the trial judge.[34]

The $50,000

[33] Primary decision [433]; exhibit 1.41 (Green AB 30 - 31).

[34] Primary decision [435] - [458].

1. Within the application documents, Mr Pollard set out the total funds available to the Dinhs and the funds required for the purchase of the Plantation.  In calculating the latter amount, Mr Pollard allowed $53,100 for stamp duty and fees.[35]

   [35] Primary decision [465] - [466]; exhibit 1.41 (Green AB 25).

2. In calculating the total funds available to the Dinhs, Mr Pollard recorded that the Dinhs had $17,035 in bank accounts and $50,000 in cash.  While Mr Pollard could not recall, when giving evidence, why the $50,000 figure was included, the judge inferred that it was more likely based on what the Dinhs had told him.[36]

Conditional approval of the loan on 2 January 2009

[36] Primary decision [467] - [473].

1. Mr Pollard spoke with Peter Dinh on 2 January 2009, informing him that, if the Bank approved finance, it would take security over all of the appellant's and Peter Dinh's properties.  He confirmed this discussion in an email sent to Andrew Dinh.  The appellant was aware, in January 2009, that the Bank would only lend them the money to buy the Plantation on the basis that the Bank would take securities over all of their properties.[37]

   [37] Primary decision [98] - [107].

2. Later on 2 January 2009, the Bank gave conditional approval for the loan, subject to, among other things, valuations of the appellant's and Peter Dinh's other properties.[38] 

Early possession of the Plantation on 4 January 2009

[38] Primary decision [108].

1. The appellant and Peter Dinh took possession of the Plantation on 4 January 2009.  The appellant knew there was a risk that, if they did not get the money from the Bank, they would have to move off the Plantation.[39]

Contract of sale of the Plantation on 10 January 2009

[39] Primary decision [112].

1. The contract for the sale of land for the Plantation was dated 10 January 2009.[40]  The purchase price was '$1,100,000 walk in walk out as a going concern'.[41]  There was no deposit, and settlement was due on or before 12 February 2009.  Paragraph 1.1 of the finance clause provided that the contract was conditional upon finance approval of the whole purchase price being obtained from the Bank by the 'Latest Time', being 4 pm on 15 January 2009.  Paragraph 1.2 required the purchaser to apply for finance approval and notify the vendor of such approval, while par 1.3 required the purchaser to notify the vendor if the application was rejected or no finance approval was obtained.  Paragraph 1.4 relevantly provided:[42]

   UNLESS the Purchaser has waived this condition and communicated such waiver in writing to the Vendor or the Vendor's Agent prior to the Latest Time, then if:

   (a)the condition in paragraph 1.1 is not satisfied; and

   (b)the Purchaser has complied with paragraphs 1.2(a), 1.2(b) and 1.3

   THEN this Contract shall be deemed to have come to an end without the necessity of either party giving to the other notice to that effect.

   [40] Primary decision [113].

   [41] Exhibit 9.587 (Green AB 367).  While the text of the reproduction in the appeal book is unclear, the parties provided the court with the agreed text of the finance clause at the hearing of the appeal (appeal ts 219 - 220).

   [42] Exhibit 9.587 (Green AB 367 - 368). 

2. There was no real estate agent involved in the sale contract.  The owner of the Plantation was an English speaker.  The appellant conceded that Mr Pollard had done nothing in relation to the contract other than tell the appellant and Peter Dinh how much they would be able to borrow.[43]

The loan is approved on a revised basis on 16 January 2009

the[44]

[45][46]

[D]ue to the poorer than expected security position please reduce the proposed loan terms for the proposed [investment home loans] to 12 months repayments to be on an interest only basis.  These properties are expected to be sold and debt cleared from now confirmed values of $462,000 [Landsdale property] $440,000 [Aveley property] & $420,000 [Dianella property].  We agree that full net sale proceeds should be collected to reduce the debt/s.  [Credit Risk Rating] has been confirmed at YY0, for this application.  Due to the tight servicing position I am not prepared to approve 30 year loan term.  When the three [investment home loans] are reduced to [interest only] repayments the commitment level is 96.52% with minimal surplus of $10,698.03[.] [Income repayment capacity test] exception has been identified and accepted.

The three identified properties should clear $1,322,000 with debts to be repaid of $1,262,000[.] Surplus of $60,000 which will be required to address the unsecured component of the [new loan facilities].

(emphasis added)

[43] Primary decision [114].

[44] Primary decision [115].

[45] Primary decision [116].

1. Senior counsel for the respondent explained that YY0 was a credit risk rating relating specifically to home loans.[47]

Communication of unconditional approval

[47] Appeal ts 185; trial ts 1064.

1. As noted at [44] above, the contract for sale of land for the Plantation was conditional upon finance being obtained by 4.00 pm on 15 January 2009. The loan was unconditionally approved on the revised basis by the Bank on 16 January 2009.[48] The judge made no finding as to when the unconditional approval was communicated to the appellant and Peter Dinh. Nor did the judge make any finding as to whether the notices required by the finance clause, referred to at [44] above, were sent. The appellant's appeal counsel invited this court to infer that the unconditional approval of the loan must have been communicated to the appellant and Peter Dinh before the contract for the sale of land for the Plantation became unconditional and the appellant and Peter Dinh were committed to the purchase of the Plantation because par 1.1 of the finance clause had been satisfied by 4.00 pm on 15 January 2009.[49]  We are not prepared to draw that inference on the primary facts found by the trial judge and the evidence referred to by counsel during the appeal.

Documents refinancing loans to other lenders:  5 - 12 February 2009

[48] Appeal ts 59; primary decision [115] - [116].

[49] Appeal ts 4 - 7, 54 - 60.

1. On 5 February 2009, the Bank issued:[50]

   (1)'Consumer Loan Authorities' which, when signed, would authorise the Bank to pay out the NAB loan on the Ballajura property and the Suncorp loan on the Dianella property. 

   (2)'Consumer Credit Contract Schedules' setting out the terms of the home loans in relation to the Ballajura, Dianella and Aveley properties.  Each stated there were to be 11 months of interest only payments followed by repayment of the full amount.

   [50] Primary decision [117] - [118].

2. The Consumer Credit Contract Schedules indicated the following loan and repayment amounts, at the Bank's investment home loan standard variable rate:

Property	Amount borrowed	Total interest payments
Ballajura[51]	$400,000	$24,160.02
Dianella[52]	$255,000	$15,402.04
Aveley[53]	$130,000	$7,851.99

[51] Exhibit 2.75 (Green AB 81 - 86).

[52] Exhibit 2.77 (Green AB 87 - 92).

[53] Exhibit 6.366 (Green AB 233 - 238).

1. The appellant and Peter Dinh signed the documents referred to at [50] above, sometime before 12 February 2009, being the date the Bank received the signed Consumer Credit Contract Schedules.[54] 

   [54] Primary decision [117] - [118].

2. Mr Pollard did not have anything to do with the home loan documentation, which was dealt with by a different section of the Bank.[55]

Signing of the loan transaction documents on 12 February 2009

[55] Primary decision [119].

1. On 12 February 2009, Mr Pollard met with the appellant, Peter Dinh, Andrew Dinh, Ms Lee and Ms Lee's husband.  The meeting took place at the Gateway Hotel in Carnarvon, where Mr Pollard was staying.  At this meeting, the appellant and Peter Dinh signed various documents, including a version of the Loan Agreement and mortgages on the Plantation, the Ballajura property and the Dianella property.[56] 

   [56] Primary decision [121] - [122].

2. At this meeting, Mr Pollard followed his usual practice of providing a simple explanation of the terms of the agreement.[57]  Although he could not remember the particular meeting, Mr Pollard described his usual practice in the following terms:[58]

   [T]he letter of offer has the majority of the information, so I would go through what the products are, what are we looking at doing, what the relevant security is and [interest rates]. … So [I] would just briefly go through the document.  Then we would go to explain what the securities were and then if there's any conditions of funding or either post-funding or prior to funding…  I would explain, 'These are the mortgages.  These are what link the properties to the loan and this is obviously what the bank has, you know, to effect its security.'  … So yes, so any of the relevant stuff I would briefly explain what they were and how they are linked [to the loan].

   [57] Primary decision [147].

   [58] Primary decision [143].

3. The Loan Agreement provided for the advancement of a total sum of $1,150,000 on two accounts:[59]

   (1)the overdraft account with a limit of $50,000 to provide 'Seasonal Carry on Finance' for the farming venture, at an interest rate of 11.14% pa (rising to 13.99% pa for excesses); and

   (2)the 12‑month Bill Facility in the amount of $1,100,000 to provide the funds for the purchase of the Plantation, at a fixed bill rate of 3.4% pa and a line fee of 3% pa.

   [59] Primary decision [13]; exhibit 2.92 (Green AB 131 - 139).

4. The Loan Agreement provided for the facilities to be secured by a first registered mortgage over the Plantation and second mortgages over the Ballajura, Aveley, Perth, Landsdale and Dianella properties.[60]  The Bank already had a first registered mortgage over the properties in Perth and Landsdale.  The Bank refinanced the three properties which had been mortgaged to other lenders, being the properties in Ballajura, Dianella and Aveley.[61]

   [60] Primary decision [16]; exhibit 2.92 (Green AB 131 - 139).

   [61] Primary decision [17].

5. Each of the mortgages incorporated the terms set out in the Memorandum of Common Provisions J584291, which had been registered at Landgate.  The appellant and Peter Dinh had previously entered into mortgages with the Bank on these same terms.[62]

   [62] Primary decision [123].

6. The Bill Facility, overdraft and mortgages were all on the Bank's usual terms.[63]

   [63] Primary decision [18].

7. Although it was not a written condition in the Loan Agreement, the Bank granted the loan on the basis that three of the Dinhs' properties would be sold during the one year term to reduce the debt load.  It was, in effect, a bridging loan.[64]

Trial judge's findings as to appellant's knowledge when signing the Loan Agreement

[64] Primary decision [19].

1. Before entering into the Loan Agreement, the appellant:

   (1)knew that the Loan Agreement was for one year;[65]

   [65] Primary decision [351].

   (2)understood that she needed to pay $5,000 to $6,000 to the Bank per month;[66]

   [66] Primary decision [352].

   (3)knew that the Bank was lending them money at a lower interest rate, for the very short term of one year, to enable the investment properties to be sold;[67] 

   [67] Primary decision [362].

   (4)knew that the Bank was offering them a way to buy the Plantation without having to first sell their investment properties (and risk losing the opportunity to buy it, and being unable to farm on it in the meantime), by giving them one year to sell their investment properties;[68]

   [68] Primary decision [362].

   (5)understood that the investment properties had to be sold within the one year term;[69] 

   (6)knew what an overdraft facility was and that an overdraft facility was being established;[70]

   (7)knew that the interest rate for the overdraft was significantly higher than the ordinary interest rate;[71]

   (8)knew that the interest payments for the Bill Facility and housing loans would be deducted automatically from the overdraft account;[72]

   (9)knew that the Bank was going to take security over all of their properties;[73]

   (10)knew that the Bank was going to refinance the properties that were mortgaged by other lenders;[74]

   (11)knew that her home loans were being refinanced to one year loans with interest only repayments;[75] and

   (12)knew she could obtain legal advice, but elected not to do so.[76]

Re-signing the Loan Agreement on 4 March 2009

[69] Primary decision [360].

[70] Primary decision [344] - [345], [348], [353].

[71] Primary decision [353].

[72] Primary decision [346] - [348].

[73] Primary decision [365].

[74] Primary decision [369], [382].

[75] Primary decision [383] - [384].

[76] Primary decision [350].

1. Due to an issue in relation to water licences, it was necessary to amend the Loan Agreement documentation and have it re-signed.  The final version of the Loan Agreement was signed on 4 March 2009.  The version that had been signed at the Gateway Hotel was not in evidence.  However, there was no suggestion that it differed from the final version, other than in relation to the water licences.[77]

Extension of overdraft for stamp duty on 16 March 2009

[77] Primary decision [148].

1. Shortly before settlement of the sale of the Plantation, the appellant's and Peter Dinh's settlement agent asked them for the stamp duty of $47,765.50.  Andrew Dinh contacted Mr Pollard and advised him that the appellant and Peter Dinh required money for stamp duty prior to settlement, which was booked in for 19 March 2009.  Andrew Dinh in effect said that the appellant and Peter Dinh had watermelons ready to be picked which were expected to realise in excess of $63,000.  Mr Pollard approved a temporary facility for 30 days to be repaid from funds generated by the watermelon sales.[78]

   [78] Primary decision [150] - [162].

1. The effect of Mr Pollard's approval was to increase the overdraft limit to $100,000 until 15 April 2009.  After that date, the increase would 'drop off', making the limit again $50,000 unless a further temporary extension was granted.[79]

Settlement of the Plantation sale on 20 March 2009

[79] Primary decision [157].

1. Settlement of the sale of the Plantation to the appellant and Peter Dinh occurred on 20 March 2009.[80]

Further extension of the overdraft on 22 April 2009

[80] Primary decision [179].

1. The temporary extension of the overdraft granted by Mr Pollard expired on 15 April 2009.  On that date, the overdraft limit reverted to $50,000.  The appellant and Peter Dinh had not brought the overdraft back under the limit.[81] 

   [81] Primary decision [180].

2. On about 22 April 2009, Mr Pollard met with the appellant, Peter Dinh and Andrew Dinh at the Plantation.  At that meeting, two reasons were advanced as to why the temporary extension of the overdraft had not been cleared.  First, personal loans from Peter Dinh to family members totalling approximately $55,000 were expected to have been paid but the borrowers were unable to do so at this point in the growing season.  Secondly, the income from the watermelon crop was less than predicted, and had been retained by the market agent to repay a $30,000 loan which the agent had advanced to Peter Dinh in March 2009.  Peter Dinh indicated that he expected to clear the temporary extension from a partial repayment of a family loan and further sales of watermelons and other crops.[82] 

   [82] Primary decision [94] - [95], [173] - [175], [183], [187].

3. At this meeting, Mr Pollard approved a further extension of the additional $50,000 limit on the overdraft to 22 May 2009.[83]

Preparation of a cash flow budget in May - June 2009

[83] Primary decision [183], [187], [188].

1. In the week prior to 26 May 2019, Mr Pollard spoke to Andrew Dinh and was advised that the temporary extension of the overdraft limit could not be cleared as the family debts had not been paid on time and that, due to recent rain, the watermelons were not ready to be picked.[84]

   [84] Primary decision [190], [193].

2. On 26 May 2009, Mr Pollard sent an email to Andrew Dinh attaching a template cash flow spreadsheet, saying 'as discussed please complete the above cash flow budget with the reasoning for not being able to clear the temporary overdraft and the required amount and time frame for the proposed extension'.[85]

   [85] Primary decision [192].

3. Mr Pollard attended the Plantation to assist Andrew Dinh in preparing the cash flow budget, the content of which was based on the information that Andrew Dinh was providing.[86] 

   [86] Primary decision [200] - [201], [204].

4. On 3 June 2009, Andrew Dinh emailed Mr Pollard a cash flow budget.  On 4 June 2009, Andrew Dinh emailed Mr Pollard an explanation of the reasons why a further extension of the temporary overdraft was required.  On 5 June 2009, Mr Pollard emailed the cash flow budget and Andrew Dinh's explanation to Andrew Williams, a credit risk manager in the Bank.[87] 

   [87] Primary decision [202] - [205].

5. The cash flow budget predicted that the peak debt would be $107,000 and would occur later that month.  It predicted that the debt would be cleared (ie. below the overdraft's unextended limit of $50,000) by August 2009.[88]  It predicted a positive balance of about $265,000 in December 2009, reducing to a positive balance of about $256,000 in January 2010.[89]

   [88] Primary decision [205].

   [89] Exhibit 2.118 (Green AB 143 - 144).

6. At this time, Mr Pollard was expecting the situation to improve based on the information the Dinhs were providing to him.  This was entirely reasonable.  Mr Pollard had no reason to think, at that time, that the Dinhs were not being honest with him.[90]

Further extension of the overdraft on 5 June 2009

[90] Primary decision [207].

1. In his communication with Mr Williams on 5 June 2009, Mr Pollard recommended that a further temporary extension of the overdraft limit to $60,000 be granted to 31 August 2009.  Mr Williams approved the further extension.  Mr Williams noted, however, that it was a 'weak credit and debt carry really needs to be reduced'.  He stated that 'all future dealings with this credit from a risk perspective are to be channelled through me'.[91]

Events prior to March 2010

[91] Primary decision [205] - [206]; exhibit 2.118 (Green AB 141 - 142).

1. The trial judge made findings as to the management of the loan from 5 June 2009 until the expiry of the one year term in March 2010.  It is unnecessary to detail all of those findings here.  However, the following points may be noted.

2. Eventually all of the appellant's and Peter Dinh's properties, except the Plantation and the family home in Ballajura, were listed for sale.[92]  However, none of the properties were sold within the 12 months up to March 2010.

   [92] Primary decision [213].

3. Despite the fact that none of the investment properties was sold during the one year term, the funds drawn on the overdraft account never exceeded $115,000 over that period.  Further, within that one year period, there were periods when the overdraft was under or close to its limit.  From 1 October 2009 to 23 December 2009, the balance remained under $60,000 and was under $50,000 at times.[93] 

   [93] Primary decision [508] - [509].

4. In March 2010, the one year loan term expired.  At that point, the Bank could have converted the Bill Facility into a Bills Matured Account, under which the entire loan would have been immediately repayable.  Instead, the Bank repeatedly authorised 'roll‑overs' of the Bill Facility, and further extensions to the overdraft, to give the appellant and Peter Dinh more time to get their finances in order.[94]

Events after March 2010

[94] Primary decision [237].

1. In the two months following the first year, the overdraft increased, peaking at about $142,000.  Part of the reason for the increase was because the Bank permitted further funds to be drawn in light of the pending sale of the Aveley property.[95]

   [95] Primary decision [510].

2. The sale of the Aveley property settled on 14 May 2010.  The proceeds from that sale were used to pay out the home loan account for that property, to pay down the overdraft account (by $140,000, reducing the debit balance to $1,221.88) and to reduce the outstanding loan balance for the Perth property.[96]  Following the settlement of the Aveley property, the Bank continued to communicate with the Dinhs about the progress of the sales of the other properties.[97] 

   [96] Primary decision [248] - [249], [285].

   [97] Primary decision [259].

3. There was a flood in Carnarvon in late 2010.  There was another flood in February 2011.  The appellant and Andrew Dinh claimed the floods affected their crops.  Peter Dinh claimed that their farming was disrupted for six months by the combined effect of the two floods.  As a result of the floods, the Bank suspended the appellant's and Peter Dinh's obligation to make repayments for ninety days.[98]

   [98] Primary decision [261] - [266].

4. The appellant and Peter Dinh sold the Landsdale property to one of their sons.  Settlement was in November 2010 and the proceeds were used to pay out the home loan.[99]

   [99] Primary decision [286].

5. Peter Dinh sold the Perth property on 11 January 2012 and the proceeds (less a credit to the buyer of $138,678.32) were used to pay out the home loan account for that property and to pay down the overdraft.[100]

   [100] Primary decision [287].

6. Between 14 May 2010 and 18 January 2011, the funds drawn on the overdraft went up and down, peaking at about $72,000, and were often under $50,000.  The appellant and Peter Dinh stopped depositing money into the overdraft account in early 2011.  No deposits were made after 18 January 2011 until a single deposit of $3,083.60 was made on 23 February 2012 (which appears to have been made by the Dinhs' agent for watermelon sales).[101]

   [101] Primary decision [267], [511].

7. At least by mid-2011, farm income from the Plantation was being deposited into an ANZ bank account.  The ANZ bank account had been set up by Peter Dinh and Andrew Dinh in late 2009, in the name of 'The Manager, Peter Dinh & Hung Tran'.  Hung Tran is Andrew Dinh.  The appellant handled all of the transactions on this account.[102] 

   [102] Primary decision [231] - [232].

8. In November 2011, the Bank issued notices of demand in relation to the money owed.  On 30 November 2011, the Bill Facility was transferred to a Bills Matured Account.  Once that occurred, the appellant and Peter Dinh were obliged to repay the amount outstanding, and interest continued to accrue on the unpaid amount.  In January 2012, the Bank told Peter Dinh it intended to take possession of all of the secured properties.[103]

   [103] Primary decision [268] - [270].

9. On 13 September 2012, Peter Dinh was made bankrupt on the petition of an entity unrelated to the Bank.  He remained an undischarged bankrupt at the date of trial.[104]

   [104] Primary decision [283].

10. A notice of demand was issued to the appellant with respect to both the Bills Matured Account and the overdraft account on 18 October 2013[105] and delivered to the appellant on 30 October 2013.[106]

    [105] Primary decision [284]; exhibit 6.385.

    [106] Primary decision [284].

11. The Bank sold the Dianella property on 31 March 2014 and the mortgages on that property were discharged.  The net proceeds were paid into the overdraft account.  This was the last deposit made into the overdraft account.  Prior to that payment, the last deposit made was the deposit of $3,083.60 made on 23 February 2012.[107]

    [107] Primary decision [288].

12. As at 23 July 2019, a total of $4,695,933.52 was outstanding on the two facility accounts, as follows:[108]

    (1)$1,436,700.29, on the overdraft account; and

    (2)$3,259,233.23, on the Bills Matured Account.

    The interest rate on both accounts at the date of trial was 13.56%.

    [108] Primary decision [289].

13. Subject to a caveat by Peter Dinh's trustee in bankruptcy, the appellant retained both the Plantation and the Ballajura property at the date of trial.  The registered mortgages remained on the Plantation and the Ballajura property.[109]

    [109] Primary decision [290].

14. In the appeal it was common ground that, since judgment was entered for the Bank in the primary proceedings, the Plantation had been sold and the proceeds of sale applied to reduce the appellant's indebtedness to the Bank.  At the date of the hearing of the appeal, the Ballajura property was subject to a contract of sale which was conditional upon finance approval being obtained.[110]

    [110] Appeal ts 2 - 3.

Trial judge's approach:  an overview

1. The trial judge adopted the following approach in relation to the appellant's claims.

Credibility findings

1. The factual findings referred to above were significantly influenced by the trial judge's assessment of the credibility of persons called as witnesses at trial.

2. The appellant was found to have acted dishonestly, both in various aspects of her conduct generally and in giving her evidence at trial.[111]  The trial judge found that the appellant was not a credible or reliable witness and did not accept her evidence.[112]

   [111] Primary decision [520] - [551].

   [112] Primary decision [552].

3. The trial judge found that, overall, Peter Dinh was an unsatisfactory witness who was at times attempting to assist his wife's case, rather than simply answering questions.  To the extent that there were differences between the evidence of Mr Pollard and Peter Dinh, the trial judge preferred Mr Pollard's evidence.[113]

   [113] Primary decision [553] - [558].

4. The trial judge found that there were some unsatisfactory aspects to Andrew Dinh's evidence, and she did not accept all of his evidence.  Notwithstanding that, the trial judge preferred his evidence to that of his parents where there was any conflict.  To the extent that there were differences between the evidence of Mr Pollard and Andrew Dinh, the trial judge preferred Mr Pollard's evidence.[114]

   [114] Primary decision [560] - [561].

5. By contrast, the trial judge found Mr Pollard to be a truthful and reliable witness.[115]

Claim under cl 2.2 of the Banking Code

[115] Primary decision [575].

1. The trial judge found that the Code is a voluntary code of conduct which sets standards of good banking practice.  Its provisions applied to the Loan Agreement and it was common ground that the provisions had effect as contractual warranties.[116]

   [116] Primary decision [579].

2. Clause 2.2 of the Code provides:

   We will act fairly and reasonably towards you in a consistent and ethical manner.  In doing so we will consider your conduct, our conduct and the contract between us.

   (emphasis in original)

3. The judge said that the appellant alleged the Bank breached cl 2.2 by failing to act fairly towards her in three ways, none of which her Honour found to be established:

   (1)The Bank breached cl 2.2 by failing to ensure that the appellant understood the nature and terms of the proposed loan facility and mortgages and the nature and effect of a bill facility and an overdraft.  Because of the Bank's failure, there were various matters that the appellant did not understand and, if she had understood them, she would not have entered into the Loan Agreement.  The appellant contended that she:

   (a)did not know that she would not have control of the overdraft and that repayments to the various property loans would effectively be taken out of her hands, by being paid automatically out of the overdraft account;[117]

   (b)did not know that she had to sell her three investment properties within the one year term of the loan;[118]

   (c)did not understand that the Bank was going to refinance the loans with other lenders;[119] and

   (d)did not know her home loans were being refinanced to one year loans with interest only repayments.[120]

   The judge rejected these contentions on the basis that the appellant knew all of the above matters,[121] and had not established that she would not have entered into the Loan Agreement even if she had known of these matters.[122]  The appellant's grounds 13 - 19 challenge these conclusions.

   (2)The Bank failed to allow the appellant an opportunity to take legal or financial advice about the proposed loan facility and the mortgages.[123]  The trial judge was not satisfied that the Bank failed to give this opportunity to the appellant.[124]  None of the grounds of appeal challenge this conclusion.

   (3)Mr Pollard failed to comply with the Bank's policy for witnessing documents executed by a person illiterate in English when he witnessed the appellant's signature on the mortgages for the Plantation, the Ballajura property and the Dianella property without providing a simple explanation of the document.[125] The judge found that Mr Pollard did provide an adequate explanation,[126] and even if he did not it would not have caused loss to the appellant, who understood what a mortgage was and did not suggest she did not understand the mortgages she signed.[127]  Ground 20 challenges the conclusion that Mr Pollard complied with the policy by providing a simple explanation of the mortgages.  None of the grounds challenge the conclusion that any failure to comply with the policy did not occasion any loss.

   [117] Primary decision [585].

   [118] Primary decision [592].

   [119] Primary decision [594].

   [120] Primary decision [596].

   [121] Primary decision [586] (overdraft), [592] (having to sell properties), [595] (refinancing loans with other lenders), [597] (one year interest only loans).

   [122] Primary decision [587] - [591] (overdraft), [593] (having to sell other properties), [598] (one year interest only loans), [607] (generally).

   [123] Primary decision [608].

   [124] Primary decision [609] - [610].

   [125] Primary decision [611], [613] - [614].

   [126] Primary decision [615].

   [127] Primary decision [616].

4. In light of the above findings, it was unnecessary for the judge to determine the proper construction of cl 2.2 of the Code, and her Honour did not do so.[128]  However, by ground 4 of its notice of contention, the Bank contends that, on its proper construction, cl 2.2 of the Code:

   (1)did not apply to the Bank's conduct prior to entry into the Loan Agreement; and

   (2)did not require that the Bank ensure the appellant understood the essential nature, terms or effect of the transaction or the documents that evidenced it.

Claim under cl 10.2(b) of the Banking Code

[128] Primary decision [612].

1. Clause 10.2(b) of the Code provides:

   The terms and conditions of our banking services will … be in English and any other language we consider to be appropriate.

   (emphasis in original)

2. The trial judge noted that the appellant alleged that the Bank breached cl 10.2(b) by failing to provide information in Vietnamese or with translation and interpretation.[129]  The appellant submitted that, had the Bank not breached these clauses, she would not have entered into the Loan Agreement.[130]

   [129] The obligation was also said to arise under cl 2.1(d) of the Code, but that aspect of the claim is not pursued on appeal.

   [130] Primary decision [619].

3. The trial judge found that the Bank's failure to provide information in Vietnamese or with translation and interpretation did not breach cl 10.2(b) of the Code.[131]  The obligation was to provide information in English and in any language the Bank considers to be appropriate.[132]  There was no reason for Mr Pollard to think the documents should be provided in Vietnamese or with translation and interpretation, in circumstances where:[133]

   (1)the appellant had a trusted fluent interpreter, her son Andrew Dinh, who could translate anything she desired;

   (2)the appellant presented herself to the Bank on the basis that her son would translate for her and act as the intermediary;

   (3)there was no suggestion that the appellant ever asked for documents to be translated; and

   (4)Mr Pollard was aware of the appellant's experience in acquiring properties, entering into home loans and providing securities.

   [131] Primary decision [628].

   [132] Primary decision [620].

   [133] Primary decision [621] - [627].

4. The judge also concluded that, even if the Bank had breached these clauses, it would not have caused a loss.  The appellant fully understood the essential terms of the documents and it would have made no difference if she had them in Vietnamese.  The appellant would still have entered into the Loan Agreement.[134]

   [134] Primary decision [629].

5. The appellant's grounds 21 and 22 challenge the judge's finding that the Bank did not breach cl 10.2(b) of the Code.  None of the grounds challenge the trial judge's conclusion that any breach would not have caused a loss.  Grounds 21 and 22 accordingly go nowhere.

6. Ground 5 of the Bank's notice of contention contends that, on its proper construction, cl 10.2(b) of the Code:

   (1)did not apply to the Bank's conduct prior to entry into the Loan Agreement; and

   (2)did not impose an obligation on the Bank to require that the terms and conditions be translated or otherwise provided in another language or to ensure that the appellant understood the terms and conditions.

Claim under cl 25.1 of the Banking Code

1. Clause 25.1 of the Code provides:

   Before we offer or give you a credit facility (or increase an existing credit facility), we will exercise the care and skill of a diligent and prudent banker in selecting and applying our credit assessment methods and in forming our opinion about your ability to repay it.

   (emphasis in original)

2. The trial judge described the appellant's case at trial as follows:[135]

   (1)The Bank breached cl 25.1 by failing to exercise the care and skill of a diligent and prudent banker in selecting and applying its credit assessment methods to the appellant and Peter Dinh and in forming an opinion about their ability to repay the loan amount and any other credit facility. 

   (2)The appellant suffered a loss as a result, because, had the Bank not breached this clause, the Bank would not have offered her the loan.

   [135] Primary decision [631].

1. The trial judge was not satisfied that the Bank failed to exercise the care and skill of a diligent and prudent banker in selecting and applying its credit assessment methods and in forming its opinion about the appellant's and Peter Dinh's ability to repay it.[136]  This was on the basis of the trial judge's findings that:

   [136] Primary decision [638].

   (1)The Bank sought to calculate whether the appellant and Peter Dinh would be able to service the loan, and Mr Pollard concluded that they would be able to service the loan.[137]

   [137] Primary decision [503].

   (2)Mr Pollard did a great deal of work on the loan application.  He obtained the financial records of the Dinhs and Mr Wainwright.  He did not factor in rental income for the properties that were to be sold.  He carefully analysed and explained why he predicted increased income.  The judge rejected the appellant's various criticisms of Mr Pollard's analysis,[138] being:

   (a)the inclusion of income from grapes in the projected performance of the Plantation;[139] and

   (b)the double-counting of land taken up by grape vines.[140]

   (3)The Bank was not 'imprudent in offering the loan'.  In particular, the judge was not satisfied:[141]

   (a)that the Bank failed to exercise the care and skill of a diligent and prudent banker in forming its opinion about the appellant's and Peter Dinh's ability to repay the loan;

   (b)that a diligent and prudent banker would have formed the view that the appellant and Peter Dinh could not meet their repayment obligations or even that it was unlikely that they would be unable to meet them; or

   (c)as a matter of fact, that the appellant and Peter Dinh could not have serviced the loan.[142]

   [138] Primary decision [504].

   [139] Primary decision [414] - [422].

   [140] Primary decision [424] - [430].

   [141] Primary decision [505].

   [142] Primary decision [506] - [518].

2. The appellant's grounds 1 - 9 challenge the trial judge's failure to find that the Bank breached cl 25.1 of the Code.

3. The judge said that determining whether the appellant suffered any loss as a result of a breach of cl 25.1 would require a determination of whether, if the Bank had not breached the clause, the Bank would not have offered her the loan.[143]  The judge did not determine the issue of causation as she considered it would only be possible to do so once any error was identified.[144]  The judge also did not make a provisional assessment of damages in the event that (contrary to her Honour's view) breach had been established.  However, her Honour commented that the appellant had received benefits under the Loan Agreement which would need to be taken into account in any assessment of damages for breach of contract.[145]

   [143] Primary decision [639].

   [144] Primary decision [642].

   [145] Primary decision [648] - [649].

4. The appellant's grounds 10 and 11 contend that the trial judge erred in failing to find that a breach of cl 25.1 caused loss to the appellant, and challenge the conclusion that the appellant received benefits as a result of the Loan Agreement.

5. Grounds 1 - 3 of the Bank's notice of contention respectively make the alternative contentions that:

   (1)a breach of cl 25.1 is not capable of sounding in damages as a matter of law;

   (2)the appellant did not prove that she suffered any loss or damage as a result of any breach of cl 25.1 of the Code; and

   (3)the appellant failed to prove the amount of any loss or damage, and there was and is no basis for the Court to quantify any damages or other compensation either in the amount of the debt owing to the Bank or at all.

Misleading or deceptive conduct

1. The trial judge rejected the appellant's claim that the Bank engaged in misleading or deceptive conduct, by representing that:

   (1)the Bank did not require the refinancing of any of the property loans held by other lenders (a representation which the judge found was not made);[146] and

   (2)the appellant and Peter Dinh would be able to service any finance provided to them (which, if made, her Honour found the appellant did not rely on and which her Honour found was in any event a representation the Bank had reasonable grounds to make based on Mr Pollard's analysis).[147]

   [146] Primary decision [655] - [661].

   [147] Primary decision [662] - [676].

2. None of the grounds of appeal challenge the dismissal of the appellant's misleading or deceptive conduct claims.

Unconscionability

1. The trial judge turned to consider the appellant's contention that the Bank acted unconscionably by reason of the alleged breaches of the Code and the misleading conduct, contrary to s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and the general law.[148]

   [148] Primary decision [677].

2. The trial judge held that, both in equity and as the appellant's statutory unconscionability case was put at trial, the appellant had to prove:[149]

   (1)she suffered from a special disadvantage (or special disability) which seriously affected her ability to make a judgment as to her own best interests; and

   (2)the Bank unconscientiously took advantage of that special disadvantage.

   [149] Primary decision [679], [682].

3. While accepting that the appellant's English skills were poor,[150] the trial judge found that her ability to make a judgment in her own best interests was not affected in any practical sense.[151]  The appellant's ground 23 challenges this conclusion.

   [150] Primary decision [686].

   [151] Primary decision [687] - [694]. 

4. The trial judge held that, even if she was wrong about this conclusion, she did not accept that the Bank took advantage of the appellant's disability, in circumstances where:[152]

   [152] Primary decision [695] - [707].

   (1)the transaction documents were on the Bank's usual terms;

   (2)the letter of offer contained most of the important terms, and matters it omitted were known to the appellant;

   (3)the Bank did not breach the Code;

   (4)the Bank did not make the representation referred to at [117](1) above and, if it made the representation referred to at [117](2) above, it had reasonable grounds for doing so;

   (5)the Bank knew it was dealing with a person with considerable experience in the acquisition of property;

   (6)the appellant presented to the Bank as having a trusted source of translation in her son Andrew Dinh;

   (7)the appellant received a benefit from the loan, which enabled her and Peter Dinh to buy the Plantation and then earn an income from it;

   (8)the only time pressure came from the contract of sale for the Plantation, and the Bank did not impose any time pressure on the appellant or exert any other form of pressure or influence;

   (9)the Bank acted in good faith; and

   (10)the Bank's conduct after the Loan Agreement was entered into was supportive and restrained.

5. The appellant's grounds 24 ‑ 34 contend that the trial judge erred in various respects in failing to find that the Bank had acted unconscionably.

Limitation defence

1. The trial judge rejected a limitation defence which the Bank had pleaded in relation to the appellant's counterclaim.[153]  Neither party seeks to challenge this conclusion on appeal.

Restitution

[153] Primary decision [708] - [713].

1. Although it was not necessary to do so, and her Honour did not finally resolve the issue, the trial judge made some observations as to what relief should be granted if unconscionability had been established and the transaction documents were set aside.

2. The trial judge expressed the view that, if the appellant proved the Bank had engaged in unconscionable conduct, it would have been appropriate to make orders that would leave her in the same position she was in immediately prior to the date of the Loan Agreement, so far as that was possible.

3. The trial judge appeared to accept the appellant's contention that, prior to the agreement date, the appellant and Peter Dinh had $874,485 in net assets (calculated by deducting the amount owed to the mortgagee of each property from the value of the property).[154]  However, it was necessary to take account of the fact that the joint tenancies between the appellant and Peter Dinh were severed by his bankruptcy in 2012.[155]  In the judge's view, it would not have been equitable to put the appellant in the position of owing that sum outright to the exclusion of any other person, when that was not her previous position.  In the judge's view, it would have been equitable to have put the appellant in a net position of 50% of the net value of the jointly held assets, being $437,242.50.[156]

   [154] Primary decision [724] - [728].

   [155] Primary decision [729] - [730].

   [156] Primary decision [731].

4. However, the trial judge noted that the appellant did not adduce any evidence of her current asset position.  Nor would it have been possible, without more evidence, to craft relief to permit her to retain the Ballajura property subject to paying the Bank an amount that would leave the appellant with equity of no more than $437,242.50.  The appellant had not provided an updated valuation of that property.  Accordingly, the judge observed that, had the appellant been successful in obtaining orders to set aside the transaction documents, it would have been necessary to hear from the parties as to how to achieve equity.[157]

   [157] Primary decision [732] - [734].

5. The appellant's ground 34 challenges the judge's conclusion that the appellant's current asset position would be relevant to this exercise.

Primary court's orders

1. The trial judge entered judgment for the Bank, ordering the appellant to pay the Bank the amount owed at the date of judgment (17 December 2019) of $4,962,413.91 plus post-judgment interest at the rate provided for in the Loan Agreement.  The appellant was also ordered to give possession of the Plantation and the Ballajura property to the Bank.  The appellant's counterclaim was dismissed, and the appellant was ordered to pay the Bank's costs of the primary proceedings.

Claim under cl 2.2 of the Banking Code

1. We will begin by considering the grounds of appeal and the notice of contention so far as they relate to the appellant's claim for breach of the warranty contained in cl 2.2 of the Code.

Proper construction of cl 2.2

1. Clause 2.2 of the Code, set out at [101] above, with the definitions of 'we' and 'you' incorporated, provided that the Bank would act fairly and reasonably towards the appellant and Peter Dinh in a consistent and ethical manner.

2. The appellant pleaded that the terms of the Loan Agreement expressly incorporated the Code.[158]  The Loan Agreement incorporated the Bank's 'Terms and Conditions for Commercial Lending Facilities', subject to presently immaterial amendments.[159] Clause 18.20 of those terms and conditions relevantly provided:

   If the Borrower is an individual or small business relevant provisions of the Code of Banking Practice will apply to these facilities. 

   [158] Par 31 of the Defence and Counterclaim (Blue AB 182).

   [159] Exhibit 2.92 (Green AB 131, 133).

3. Also relevant to the context in which the Code is adopted is cl 18.5, which provides that the Bank 'takes no responsibility for any decision the Borrower makes' to enter into the Loan Agreement or obtain the Bill Facility.

4. The breadth of language in cl 2.2 presents a number of constructional challenges in determining the application of that clause to the wide range of factual circumstances in which it may be relied upon by a customer.  In Sam Management Services (Aust) Pty Ltd v Bank of Western Australia Ltd, Young JA made the following observations about cl 2.2 of the Code:[160]

   The clause in a legal document is so fraught with ambiguity. Its exact meaning was not canvassed before us so that it would be unwise to attempt to be definitive in its construction.  Assuming it must be given some meaning in a commercial document, it probably does not operate to beyond requiring the bank to act in good faith towards the customer.

   However, the principal purpose of these remarks is to suggest to bankers that the cross reference in legal documents to their promotional material is likely to lead to complications in litigation.

   [160] Sam Management Services (Aust) Pty Ltd v Bank of Western Australia Ltd [2009] NSWCA 320 [74] - [75].

5. We will proceed on the assumption that cl 2.2 is capable of constituting a warranty that the Bank has acted, and will at all times act, fairly and reasonably towards the appellant in relation to the Loan Agreement.  On that assumption, the clause is capable of being breached by unfair or unreasonable conduct of the Bank in relation to the offer to enter into the Loan Agreement.

6. However, in our view, cl 2.2 cannot be reasonably read, either in general or in its application to the circumstances of this case, as imposing an obligation on the Bank to ensure the appellant understood the nature and terms of the Bill Facility, the overdraft and mortgages, or the nature and effect of facilities of that kind.  The generality of the language of cl 2.2 is inconsistent with a construction that it conveys or incorporates a promise by the Bank to ascertain the subjective understanding of the customer.  There is nothing elsewhere in the transaction documents evidencing the contractual arrangements between the Bank and the appellant in this case which would put a different complexion on cl 2.2.  No reasonable business-person would understand the general words of cl 2.2 as involving an obligation on the Bank to ensure that the appellant's subjective understanding of the nature and effect of the finance documents was correct.[161] 

   [161] As to the general principles of contractual construction, see Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35].

7. In our view, ground 4 of the respondent's notice of contention is established to the extent that it contends that cl 2.2 of the Code did not require the Bank to ensure that the appellant understood the essential nature, terms or effect of the transaction or the documents that evidenced it.

8. In the present case, the relevant breach of cl 2.2 pleaded by the appellant was a failure to ensure that the appellant understood the nature and terms of the Bill Facility, the overdraft and mortgages, or the nature and effect of facilities of that kind.[162]  Our construction of cl 2.2 means that this pleaded case must fail.

Whether Mr Pollard adequately explained the loan documents

[162] Par 31A.1.1 and par 31A.1.2 of the defence and counterclaim (Blue AB 182 - 183).

1. The substantive question raised by the appellant's ground 16 is whether the trial judge erred in finding that, at the meeting on 12 February 2009, Mr Pollard followed his usual practice of giving a simple explanation of the terms of the Loan Agreement.[163]

   [163] A finding made at [147] and [605] of the primary decision.

2. The trial judge expressly rejected the appellant's evidence about what occurred at the meeting on 12 February 2009 on credibility grounds.[164]  The trial judge preferred Mr Pollard's evidence over the evidence of Peter Dinh and Andrew Dinh.  Mr Pollard gave evidence as to his usual practice when having customers sign loan documents.  Understandably, when giving evidence many years after the event about what for him was a regular occurrence, Mr Pollard could not recall the particular occasion on which documents were signed on 12 February 2009.  In our view, it was a reasonable inference, having regard to her Honour's findings as to Mr Pollard's credibility, that Mr Pollard followed his usual practice on that particular occasion.  We would draw the same inference as that drawn by the trial judge.

   [164] Primary decision [128] - [141].

3. Even if we had not drawn the same inference, ground 16 (which, like other grounds discussed below, challenges a credibility‑based finding of fact) would fail.  In the case of a finding that is based, at least to any substantial degree, on an assessment of the credibility of one or more witnesses, an appellate court will not interfere with the finding unless it is demonstrated to be wrong by reference to incontrovertible facts or uncontested testimony, or because the finding is glaringly improbable or contrary to compelling inferences, or because the trial judge failed to use, or has palpably misused, their advantage as trial judge.[165]

   [165] Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 [28] ‑ [29]; Robinson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679 [43]; Smart v Power [2019] WASCA 106 [104].

4. As the High Court said in Lee v Lee:[166]

   A court of appeal is bound to conduct a 'real review' of the evidence given at first instance and of the judge's reasons for judgment to determine whether the trial judge has erred in fact or law.  Appellate restraint with respect to interference with a trial judge's findings unless they are 'glaringly improbable' or 'contrary to compelling inferences' is as to factual findings which are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence.  It includes findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts.  Thereafter, 'in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge'.  (footnotes omitted)

   [166] Lee v Lee [2019] HCA 28; (2019) 266 CLR 129 [55].

5. The judge's finding as to what Mr Pollard told the appellant at the meeting on 12 February 2009 was based in a large part on her Honour's assessment of the credibility of witnesses.  The inference identified by the trial judge, noted above at [141], was supported by Mr Pollard's evidence.  It is neither glaringly improbable nor contrary to compelling inferences.  Ground 16, and the appellant's challenge to the trial judge's finding that Mr Pollard explained the essential features of the loan documents to the appellant, must therefore fail.

6. These conclusions are also fatal to ground 20, which contends that the trial judge erred in finding that the Bank had complied with its policy for the witnessing of documents being executed by a person illiterate in English by providing a simple explanation of the document capable of being understood by the person.  The judge's conclusion was also based on her Honour's finding that Mr Pollard had adopted his usual practice of explaining documents at the 12 February 2009 meeting.[167] 

   [167] Primary decision [612] - [615].

7. Ground 20 has an additional problem, arising from our rejection (below) of the appellant's challenge to the trial judge's finding that the appellant actually understood the loan documents when she signed them.  As the trial judge correctly noted,[168] given that the appellant actually understood the documents, it is difficult to see how a failure to explain the mortgages to her could have caused any loss to the appellant.  Even if ground 20 had been established, it would not have led to the orders made by the trial judge being overturned.

Focus on the appellant's understanding rather than the Bank's conduct

[168] Primary decision [616].

1. Ground 14 contends that the trial judge erred in failing to consider the conduct of the Bank in finding whether or not the Bank breached cl 2.2 of the Code.  As expressed, the ground cannot succeed, as the trial judge did have regard to the Bank's conduct, and made detailed findings about what the Bank did. 

2. The appellant also appears to contend that the trial judge's findings as to the appellant's understanding of the loan documents were irrelevant to the question of whether the Bank breached cl 2.2 of the Code.[169]  Given the manner in which the appellant's case was pleaded and run at trial, there is no merit to that submission.  The pleaded breach was a failure to ensure that the appellant understood the nature and terms of the Bill Facility, the overdraft and mortgages, or the nature and effect of facilities of that kind.  If the appellant actually understood the relevant matters, then there could be no breach of any obligation to ensure that she understood those matters.  In focusing on what the appellant understood, the trial judge was dealing with the case which had been advanced by the appellant.

Reference to $50,000 cash held by the appellant and Peter Dinh

[201] Appeal ts 104.

[202] Primary decision [506] - [511].

[203] Appeal ts 75.

1. The appellant's ground 8 contends, in effect, that the Bank breached cl 25.1 of the Code by relying on the appellant and Peter Dinh holding $50,000 in cash (referred to at [40] above) in forming its opinion about their ability to repay the credit facility.[204]  The ground in effect contends that the Bank failed to make reasonable inquiries as to whether this cash actually existed.

   [204] Another aspect of ground 8 (being par 8(b)(ii)) was abandoned at the hearing of the appeal:  see appeal ts 10.

2. In our view, there is no merit to this ground.  It was understandable that Mr Pollard could not recall the sources of his information when asked to give evidence many years later.  The appellant does not point to any evidence of her, Peter Dinh or Andrew Dinh that they did not provide the information to Mr Pollard, or indeed that the information was incorrect.  It was reasonable to infer that the appellant and/or Peter Dinh told Mr Pollard that they held this cash.  There was, at that stage, no reason for Mr Pollard to suspect that the appellant, Peter Dinh or Andrew Dinh were dishonest people.  We do not accept the appellant's submission that it was unreasonable for Mr Pollard to rely on what the prospective borrowers told him in this respect, and the appellant points to no evidence supporting a contention that a diligent and prudent banker would not have done so.  Further, the appellant's trial counsel expressly withdrew the submission that the trial judge could find that inquiries of the appellant and Peter Dinh would have revealed that they did not actually have $50,000 in cash.[205]

Prudence of the loan

[205] Trial ts 1259.

1. The appellant's grounds 1 - 3 seek to impugn the trial judge's finding (at primary decision [505]) that she was not satisfied that the Bank was imprudent in offering the loan.[206]  The finding has two aspects to it:  (1) the judge was not satisfied that the Bank failed to exercise the care and skill of a diligent and prudent banker in forming an opinion about the Dinhs' ability to repay the loan; and (2) the judge was not satisfied that a diligent and prudent banker would have formed the view that the Dinhs could not meet their repayment obligations, or even that it was unlikely that they would be unable to meet them. 

   [206] Primary decision [505].

2. Grounds 1 ‑ 3, in our view, proceed on a misapprehension of what cl 25.1 of the Code requires so far as they contend that the Bank breached cl 25.1 by offering the appellant and Peter Dinh a loan the terms of which they could not comply with. As explained at [178] ‑ [181] above, cl 25.1 does not involve a promise by the Bank that an acceptance of the credit facility offered would not be imprudent from the borrower's perspective. Even if the trial judge's finding as to the prudence of the loan in that sense were to be overturned, it could not lead to the appeal being allowed.

3. In any event, in our view, the trial judge's conclusion was correct, for the reasons which her Honour gave.

4. The appellant's allegations of imprudence turn essentially on two factors:  the small surplus available to the appellant and Peter Dinh for general living expenses during the first 12‑month bridging period and the fact that repayment of the principal was required after 12 months.

5. While the surplus of only about $22,000 estimated by Mr Pollard (noted in the table in [34] above) is small, it is to be evaluated in a context where:

   (1)The appellant and Peter Dinh were living on the Plantation, so their accommodation costs and many of their living expenses (such as electricity, rates and telephone) were accounted for in the estimated expenses of running the Plantation.

   (2)It would be expected that the appellant and Peter Dinh would produce much of their own food on the Plantation.

   (3)The loan expenses would progressively reduce if the investment properties were sold as anticipated.

   (4)The estimated Plantation expenses included the 'buffers' referred to at [31] above.

6. The appellant also relies on the note prepared by Mr Morris on 16 January 2009, which indicated that he was not prepared to approve a 30‑year term for the investment home loans.  The note says that, when the three investment home loans are reduced to interest only payments, the surplus reduces to $10,698.03.  There is no evidence as to how Mr Morris came to this figure, and it is not apparent to us how a reduction in payments for the investment home loans could reduce (as opposed to increase) the surplus calculated by Mr Pollard.  Mr Morris' figure makes the loan increasingly tight.  However, it remains necessary to have regard to the factors referred to in the previous paragraph and the circumstance that the loan was a short‑term loan to enable the appellant and Peter Dinh to sell their investment properties.  Having regard to those matters, we would not conclude, in the circumstances of this case, that a diligent and prudent banker exercising reasonable care and skill would not have entered into that arrangement even adopting Mr Morris' figure.

7. Nor, in our view, did the fact that the loans were repayable after 12 months mean that the loans were imprudent.  Clearly, the appellant and Peter Dinh could only have repaid the principal amounts after 12 months by refinancing or selling assets.  However, the purpose of the loan arrangement was to enable the appellant and Peter Dinh to immediately take advantage (as they saw it) of the purchase of the Plantation, and to provide a 12‑month period in which they could sell sufficient assets to reduce their overall debt load to a level that they could obtain refinancing for the principal loan amounts remaining after the sale of the investment properties.  It was a reasonable assumption that if the three investment properties (which were metropolitan residential properties) were placed on the market at their true market value, they would sell within that 12‑month period.  Mr Pollard's estimate that they would have a surplus of about $77,000 after servicing loans in the post‑bridging period provided a basis for concluding that refinancing would be available at that time.

8. For the above reasons, the appellant's grounds 1 - 3 are not established.

Relevance of events arising after the loan approval

1. The appellant's ground 4 contends that the trial judge erred in having regard to matters that transpired following entry into the Loan Agreement, and not confining her consideration to evidence concerning the Bank's approval process prior to making the loan.

2. The first matter to which the appellant refers is a reference to Andrew Dinh reporting to the Bank in December 2009 that the first lot of grapes from the Plantation had been sent off for sale.[207]  This was not a critical part of the trial judge's reasoning that the Bank did not breach cl 25.1 of the Code by having regard to estimated income from grapes.  Nor was it a matter capable of altering the judge's ultimate conclusion as to that aspect of the appellant's case.  To any extent that there was error in referring to the evidence, any error was not material.

   [207] Primary decision [420].

3. The second matter to which the appellant refers is the fact that Mr Pollard's prediction as to the ability of the appellant and Peter Dinh to service the loans during the 12‑month bridging period proved to be accurate.  In our view, this aspect of the ground misconstrues the trial judge's reasons. 

4. Under the heading 'prudence of the loan' the trial judge explained, at [497] - [505], why she was not satisfied that a diligent and prudent banker would have formed the view that the appellant and Peter Dinh could not meet their repayment obligations or even that it was unlikely that they would be unable to meet them.  In doing so, her Honour did not have regard to events transpiring after entry into the Loan Agreement. 

5. Having reached that conclusion, the trial judge then went on to explain, at [506] - [519], why she was not satisfied, as a matter of fact, that the appellant and Peter Dinh could not have serviced the loan.  Her Honour concluded that the failure of the loan was due to the way in which the appellant and Peter Dinh approached their obligations, rather than a lack of capacity.  It is these reasons which are the subject of ground 4.  However, contrary to the appellant's submissions, the trial judge did not rely on these matters for the purposes of considering, without the benefit of hindsight, what care and skill a diligent and prudent banker would have exercised.  Rather, her Honour relied on the findings for the purposes of considering whether any breach of cl 25.1 caused loss to the appellant.[208]

   [208] See also primary decision [638] and [642].

6. The matters to which the trial judge referred at [506] - [507] of the primary decision were relevant to the question of whether the alleged breach of cl 25.1 of the Code caused any loss or damage to the appellant.  If the Bank had failed to exercise the care and skill of a diligent and prudent banker in forming an opinion about the appellant's and Peter Dinh's ability to repay the credit facility, but arrived at an opinion that ultimately proved to be correct as events transpired, that breach of cl 25.1 would have caused no loss or damage.  Those findings, the correctness of which is not challenged as a matter of fact, were fatal to the appellant's claim based on a breach of the second limb of cl 25.1 of the Code.  Even if (contrary to our view) the trial judge took the matters into account in considering whether there was a breach of cl 25.1 and erred in doing so, the error could not have affected the ultimate conclusion that the claim based on the second limb of cl 25.1 failed.

7. For these reasons, ground 4 is not established.

Failure to include a contract term requiring sale of investment properties

1. The appellant's ground 5 contends that the trial judge erred by failing to find that the Bank breached cl 25.1 of the Code by not including a condition in the Loan Agreement that the investment properties had to be sold within 12 months of the commencement of the loan.

2. The case put on appeal is somewhat different from that advanced at trial.  The appellant's trial counsel had in effect contended that Mr Pollard's assumption that the investment properties would be sold within the 12‑month bridging period was unwarranted, in the absence of a contractual condition requiring the sale of the investment properties within any particular period.[209]  On appeal, it is the failure to include a condition requiring the sale of the investment properties which is itself said to constitute the breach of cl 25.1 of the Code.

   [209] Trial ts 1266 - 1267, 1296.

3. There is no merit to this ground.  The appellant did not run this case at trial, and the trial judge did not err in failing to consider it.  In any event, a failure to include a condition in a loan agreement is incapable of constituting a breach of cl 25.1, which is concerned with the formation of an opinion about the customer's ability to repay the loan rather than conditions (which do not affect the extent of the payment obligations) which may be included in a loan agreement.

4. Nor was there any merit to the contention as advanced at trial.  The loans were being offered on the basis that they were 'bridging loans' to enable the appellant and Peter Dinh to purchase the Plantation before selling the investment properties.  Given the common understanding of the purpose of the loan, no unwarranted assumption was involved in an assessment of the appellant's and Peter Dinh's ability to repay the credit facilities which proceeded on the basis that the investment properties would be sold within the 12‑month bridging period.

Absence of expert evidence

1. The appellant's ground 9 contends that the trial judge erred in finding that the appellant was required to rely upon expert evidence to establish that the Bank's selection and application of its credit assessment methods had breached cl 25.1 of the Code. 

2. This ground identifies [445] of the primary decision.  Here the judge was considering a submission, which it appeared the appellant was making, that the Bank ought to have verified that the financial figures provided by Mr Wainwright (the vendor of the Plantation) were accurate.  In that context, the judge observed:[210]

   [The appellant] did not adduce any expert evidence as to what a prudent banker would have done.  In particular, there was no evidence that a prudent banker would have verified this information.  In the absence of such evidence, I would not conclude that a prudent banker would have verified it. 

   [210] Primary decision [445].

3. We see nothing wrong with this approach.  It does not indicate that a court could never find a breach of cl 25.1 in the absence of expert evidence as to prudent banking practice.  Nor does the passage regard such expert evidence, when tendered, as conclusive as to the content of the legal standard of care which cl 25.1 imposes.  The passage merely recognises that expert evidence as to general banking practice may be relevant to the court's assessment of the care and skill which a diligent and prudent banker would exercise in selecting and applying credit assessment methods.  In obvious cases no expert evidence may be necessary to enable the court to be satisfied that a bank has breached cl 25.1 of the Code.[211]  In other cases, when the answer is not obvious and may be informed by experience of general industry practice not known to the court, the court may, in the absence of expert evidence, find itself unable to conclude that an alleged step is one which a diligent and prudent banker would take in the selection or application of a credit assessment method.  That was the position in which the trial judge found herself, in a context where the step which the Bank failed to take is not one which is obviously required.  The judge was simply indicating that, in the absence of any evidence that the general practice in the banking industry would be to verify information of the relevant kind, the judge was not satisfied that this is something which a diligent and prudent banker would have done.

Loss and damage caused by a breach of cl 25.1 of the Banking Code

[211] As illustrated by the decision at first instance in Commonwealth Bank of Australia v Doggett [2014] VSC 423 [159] - [160].

1. For the reasons explained above, none of the appellant's grounds 1 - 9, which challenge the trial judge's rejection of the appellant's contention that the Bank breached cl 25.1 of the Code, are established.  The appeal, so far as it relates to the claim under cl 25.1 of the Code, must therefore fail.  It is therefore unnecessary for this court to deal with grounds 10, 11 and 12, which concern the question of whether the alleged breach of cl 25.1 caused loss or damage to the appellant and, if so, how that loss or damage should be quantified.  It is sufficient to make the following general observations as to why the approach proposed by those grounds would not have been accepted, even if a breach of cl 25.1 had been established.

2. Those grounds contend that damages should be assessed on the basis that, if the Bank had not breached cl 25.1, then it would not have offered the loans to the appellant and Peter Dinh.  The loss which the appellant claims to have suffered as a result of the alleged breach is:

   (1)the amount claimed by the Bank which the appellant claims an entitlement to set off;

   (2)the value of equity the appellant had in investment properties she owned before the making of the loan; and

   (3)the amount of interest, fees and charges that the appellant paid or incurred with the Bank under the Loan Agreement.

3. In our view, there are at least two reasons why that approach should be rejected.

4. First, it cannot be concluded that any breach of cl 25.1 of the Code caused the claimed losses.  The trial judge made unchallenged findings that the appellant and Peter Dinh actually had the ability to repay the credit facility, and that the reason they did not do so was a decision which they made as to how to manage their obligations.  This conduct included not selling the investment properties within the term of the loan, eventually selling the Landsdale property to their son for less than its market value, diverting the income from the Plantation to the ANZ account, and not making any payments towards the loans (with limited exceptions noted at [85] and [90] above) after early 2011.  In these circumstances, any deficiency in the Bank's assessment of the appellant's and Peter Dinh's ability to repay the loans cannot be properly regarded as causative of the claimed loss or damage.

5. Secondly, the appellant's approach leaves out of account the benefits which (contrary to the assertion in ground 11) she undoubtedly received under the Loan Agreement.  The appellant and Peter Dinh received $1.1 million which they used to purchase the Plantation.  They operated the Plantation from January 2009 (when they took early possession),[212] until January 2020 (when the trial judge's orders required the appellant to give possession of the Plantation to the Bank).  The appellant has given no account of the income which she earned from the Plantation over those 11 years.  For most of the time the appellant was in possession of the Plantation, none of the income generated by the Plantation was applied to pay interest, the principal, or charges on the loans.  There is no evidence of trading losses from the Plantation, or that the value of the Plantation was less than the appellant and Peter Dinh paid for it in 2009.  Damages on the basis proposed by the appellant could only be assessed once an account of that income had been provided by the appellant.  The absence of any evidence as to that matter would have made it inappropriate to assess damages in the manner proposed by the appellant even if a breach of cl 25.1 of the Code had been established.

   [212] Primary decision [112].

6. At the hearing of the appeal, the appellant proposed a more modest assessment of her damages.  The appellant applied to amend her orders wanted so that they would in effect:

   (1)leave undisturbed the judgment of $4,962,413.91 for the Bank and the order giving the Bank possession of the properties; and

   (2)give judgment of $437,242 (being the appellant's net equity in properties she owned before entry into the Loan Agreement as found by the trial judge) for the appellant on the counterclaim, to be set off against the judgment in favour of the Bank.

7. However the obstacles noted above also apply to this more modest claim (the basis for the calculation of which was not made entirely clear in argument) if a breach of cl 25.1 of the Code had been established.

8. The appellant's submissions placed considerable reliance on the decision of the Victorian Court of Appeal in Doggett.  In our view, that decision does not assist the appellant. 

9. In Doggett, the defendants had guaranteed a loan by a company they controlled, called Dogvan.  The loan was used for the purchase of both management rights over, and a manager's apartment in, an apartment complex.  The Code was incorporated in the finance agreement with Dogvan and in the defendants' guarantees.  The vendors of the management rights business had been acting as the managers, and it was apparent on information provided to the lending bank that Dogvan would need to employ its own managers, who would live in the apartment free of rent and be paid wages.  Dogvan was unable to service the loan from its cash flow.  The bank was held to have breached cl 25.1 of the Code, in essence, by failing to account for the cost of employing managers in assessing whether Dogvan would be able to service or repay the loan.  The trial judge assessed damages on the basis that, but for the breach of cl 25.1, the Bank would have concluded that Dogvan did not have the ability to service the loan by a significant margin and would not have advanced the loan to Dogvan, so that the defendants would not have incurred liabilities under the guarantees.  Damages were assessed in the amount of the guarantees together with money which the defendants had paid into Dogvan's business.

1. The issue which divided the court in Doggett was whether it could be inferred, in all the circumstances of that case, that, if the bank had not breached cl 25.1, the bank would not have approved Dogvan's loan application or a re-worked application imposing the same obligations on the defendants.  Whelan JA (Garde AJA agreeing) concluded that the bank would not have approved the loan application or a re-worked application.[213]  McLeish JA found that the defendants had not discharged the onus of proving causation in that manner.[214]

   [213] Doggett [12] - [26], [219].

   [214] Doggett [178] - [189].

2. As noted at [179] above, all members of the court in Doggett proceeded on the basis that cl 25.1 of the Code was directed to the process of assessing a borrower's ability to repay a credit facility rather than the prudence of the offer of credit.  The breach of cl 25.1 arose from the failure to exercise the care and skill of a prudent banker in applying the bank's credit assessment methods and forming its opinion about Dogvan's ability to repay.  The circumstances of the breach established in Doggett are quite distinct from that alleged in the present case.  Doggett also recognises that, in assessing questions of causation and damage, it is necessary to consider what would have happened if there had been no breach of cl 25.1.  The question of accounting for the benefits derived from the provision of the credit facility did not arise in Doggett, as the defendants were guarantors rather than the recipients of loan funds.

3. For these reasons, the appellant's grounds 10 - 12 are not established, and grounds 2 - 3 of the Bank's notice of contention are established.  It is unnecessary to deal with ground 1 of the Bank's notice of contention, which contends that a breach of cl 25.1 of the Code is not capable, as a matter of law, of sounding in damages.

Claim of unconscionable conduct

1. The appellant's case as to unconscionability as put at trial and on appeal, both in equity and under s 12CB of the ASIC Act, depends on the contention that the appellant was under a 'special disability' in executing documents on 12 February 2009. The appellant's ground 23 challenges that conclusion.

2. As the plurality noted in Thorne v Kennedy:[215]

   A conclusion of unconscionable conduct requires the innocent party to be subject to a special disadvantage 'which seriously affects the ability of the innocent party to make a judgment as to [the innocent party's] own best interests'.  The other party must also unconscientiously take advantage of that special disadvantage.  This has been variously described as requiring 'victimisation', 'unconscientious conduct', or 'exploitation'.  Before there can be a finding of unconscientious taking of advantage, it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage. (citations omitted)

   [215] Thorne v Kennedy [2017] HCA 49; (2017) 263 CLR 85 [38].

3. The only potential disadvantage which the appellant suffered was her poor English.  Given the trial judge's unchallenged findings as to her experience in financial matters, including the financing of real estate acquisitions, that was not a sufficient basis for concluding that the appellant was under a special disadvantage which seriously affected her ability to make a judgment as to her own best interests.

4. The appellant's submission is that a special disadvantage arose from the combination of a lack of English skills, the absence of a translation of the loan documents, and the absence of any explanation of those documents during the meeting on 12 February 2009.  That submission cannot be sustained given the failure of the appellant's challenge to the findings that:

   (1)Mr Pollard gave a simple explanation of the terms of the Loan Agreement to the appellant in the presence of the appellant and Andrew Dinh who was available to translate; and

   (2)the appellant actually understood the essential terms of the Loan Agreement and other loan documents.

5. Therefore, ground 23 is not established.  This makes it unnecessary to deal with grounds 24 - 34 which challenge the trial judge's conclusion that the Bank did not take advantage of any disadvantage the appellant did suffer from.  It is sufficient to note that nothing in those particularly prolix grounds provides any reason for doubting the correctness of the trial judge's conclusion.  This case is far removed from the circumstances presented in Commercial Bank of Australia Ltd v Amadio,[216] where it was held to be unconscientious for the defendant bank to rely on the plaintiffs' guarantees of their son's loan.  In the present case, the Loan Agreement advanced funds to the appellant for her own use in the purchase of the Plantation, on the Bank's usual commercial terms, and was preceded by an explanation of its terms which the appellant understood.  The appellant and Peter Dinh were able to service the loans over the 12‑month bridging period and there was no reason to suppose that they would not have been able to refinance the loans if they had sold the investment properties at market value (which was the contemplated basis of the transaction).

   [216] Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447.

Orders

1. For the above reasons, none of the grounds of appeal have been established and the appeal should be dismissed.

Conduct of the appeal

1. One further matter should be mentioned.  The appellant's case contained 34 grounds of appeal which ran over 12 pages.  Many grounds asserted multiple errors and contained several sub-paragraphs.  It would be extraordinary to think that a trial judge in a mortgagee's debt recovery action could have made so many errors.  On the contrary, we have found that the trial judge did not make any material error in her Honour's judgment. 

2. It is regrettable that senior counsel settled grounds of appeal in this form.  Advancing grounds of appeal expressed in this form does a disservice to counsel's client, the other parties and the court.  It does a disservice to the client because so many prolix and unmeritorious grounds simply tend to disguise and distract the court's attention from any meritorious points the client may have.  It does a disservice to the other parties by unnecessarily increasing the legal costs which they are required to incur in responding to the appeal.  It does a disservice to the court which has to expend its limited resources dealing with the multiplicity of issues raised by the grounds advanced.  The difficulty which the appellant's case presented to the court was compounded by the fact that the submissions did not separately address each ground, and sometimes strayed beyond the ambit of the grounds.  Counsel for the appellant should not have advanced grounds formulated in this manner in this appeal.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

JB

Associate to the Honourable Justice Mitchell

22 JULY 2021

[46] Exhibit 8.452 (Green AB 263).