Tomcsanyi v National Australia Bank Ltd - [2017] WASCA 140

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: TOMCSANYI -v- NATIONAL AUSTRALIA BANK LTD [2017] WASCA 140

CORAM: MARTIN CJ
NEWNES JA
MURPHY JA

HEARD: 2 FEBRUARY 2017

DELIVERED : 27 JULY 2017

FILE NO/S: CACV 174 of 2015

BETWEEN: LEWIS MICHAEL TOMCSANYI
Appellant
AND
NATIONAL AUSTRALIA BANK LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :ACTING MASTER GETHING
Citation  :TOMCSANYI -v- NATIONAL AUSTRALIA BANK LTD [2015] WASC 448
File No  :CIV 1427 of 2014

Catchwords:

Contract - Mortgage - Whether breach excused innocent party from compliance - Whether fiduciary relationship existed - Whether conduct unconscionable - Causation of damage - Costs - Orders made in party's absence - Turns on own facts

Legislation:

Nil

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

Appellant: In person
Respondent: Ms E C Hensler

Solicitors:

Appellant: In person
Respondent: Allens

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

Commercial Bank of Australia v Amadio [1983] HCA 14; (1983) 151 CLR 447
National Australia Bank Ltd v Rice [2015] VSC 10
Permanent Mortgages Pty Ltd v Vandenbergh [2010] WASC 10; (2010) 41 WAR 353
Tomcsanyi v National Australia Bank Ltd [2015] WASC 448
REASONS OF THE COURT:

Summary

Mr Lewis Tomcsanyi appeals from the judgment of Acting Master Gething given in proceedings commenced by Mr Tomcsanyi against the National Australia Bank Ltd (the Bank). The proceedings arose from a deed executed by Mr Tomcsanyi, other parties[1] and the Bank in settlement of earlier proceedings between Mr Tomcsanyi and others and the Bank (Settlement Deed).
[1] Mr Tomcsanyi's wife and his former lawyer, Mr Craig Sutherland, were also parties to the deed. Mrs Tomcsanyi participated in the proceedings at first instance but is not a party to this appeal.
The Settlement Deed required Mr and Mrs Tomcsanyi to deliver up various items of real and personal property to the Bank and also provided that their liability to the Bank was to be limited to $765,000, which amount was to be repaid in full to the Bank on or before 12 months after the date of the Settlement Deed. The Settlement Deed also provided that interest would not accrue on that debt until 12 months after the date of the deed.
After the Settlement Deed was executed, statements automatically generated by the Bank were sent to Mr Tomcsanyi showing amounts owing which were greater than the amount of the liability specified in the Settlement Deed. However, the Bank did not assert that the amounts shown in those statements were due and owing and confirmed that Mr Tomcsanyi's liability was limited to the amount of $765,000 specified in the Settlement Deed.
Nevertheless, following default in payment of the amount due to the Bank under the Settlement Deed, Mr and Mrs Tomcsanyi commenced proceedings against the Bank claiming that the generation of the statements to which we have referred constituted a breach of the deed. They claimed specific performance of the Settlement Deed and damages in excess of $5 million. As Mr Tomcsanyi had not paid any part of the $765,000 within 12 months of the date of the Settlement Deed, or at all, the Bank counterclaimed for that amount, together with interest, and for orders relating to the enforcement of a mortgage held over some farming land near Denmark (the Denmark farm) as security for the debt owed by Mr Tomcsanyi.
The acting master concluded that the Bank had breached the terms of the Settlement Deed by sending the automatically generated statements to which we have referred, and ordered the Bank to remedy that breach by providing statements which complied with the terms of the Settlement Deed. However, having found that Mr and Mrs Tomcsanyi had not suffered any loss or damage by reason of the Bank's breach, the acting master dismissed their claim for damages. He also held that the Bank's counterclaim had been made out, and entered judgment against Mr Tomcsanyi in the amount of $1,340,905.97, together with interest accruing from 4 December 2015 until payment. He also ordered Mr Tomcsanyi to deliver up possession of the properties over which the Bank held security.
Mr Tomcsanyi appeals from the judgment of the acting master on various grounds. For the reasons which follow, each of those grounds, and the appeal, must be dismissed.

The facts

The findings of fact made by the acting master are not challenged in any ground of appeal. Rather, the grounds of appeal challenge the conclusions drawn by the acting master from the facts which he found. Those facts, relevant to the issues raised by the appeal, may be summarised as follows.
Mr Tomcsanyi is the registered proprietor of the Denmark farm. In February 2009 he borrowed just under $4.4 million from the Bank in order to acquire another farm at Darjeeling and a house in Albany. The funds were advanced through two facilities provided by the Bank - namely, the Market Rate Facility and the Farmers Choice Farm Management Account Overdraft. The loan was secured by mortgages over the Denmark farm, and over the farm in Darjeeling and the house in Albany, and over certain farming equipment.[2]
[2] Tomcsanyi v National Australia Bank Ltd [2015] WASC 448 [15] ‑ [19] (Reasons).
Sometime prior to March 2011 a dispute arose between Mr Tomcsanyi, his wife, Mr Craig Sutherland - a lawyer who had advised Mr Tomcsanyi - and the Bank. Proceedings were commenced by Mr and Mrs Tomcsanyi in the Supreme Court. An agreement to settle those proceedings was reached at a mediation conference and that agreement was recorded in the terms of the Settlement Deed, which is dated 21 February 2012.[3]
[3] Reasons [20] ‑ [22].
All the parties to the proceedings were parties to the Settlement Deed. The deed provided that Mr and Mrs Tomcsanyi would retain possession of the Denmark farm, but would deliver up possession of the Darjeeling farm and the Albany house to the Bank, at times specified in the deed. The Settlement Deed also provided that Mr and Mrs Tomcsanyi would deliver up possession of certain equipment to the Bank within seven days of the date of the deed. Under the Settlement Deed, the Bank was entitled to retain the proceeds of sale of that property in the exercise of its powers as mortgagee.
The Settlement Deed also provided that the facilities were to be varied as and from the date of the deed by reducing the account limit and current balance under the Market Rate Facility to $765,000 and by closing the Farmers Choice Farm Management Account Overdraft account. The Settlement Deed further provided that the Market Rate Facility had to be repaid in full on or before 12 months after the date of the Settlement Deed, during which period interest would not accrue on that facility. The Settlement Deed further provided that if the amount due under the Market Rate Facility was repaid within the time specified, the Bank would discharge the mortgage over the Denmark farm and release Mr and Mrs Tomcsanyi from all claims under the facilities and the mortgage over the Denmark farm. The Settlement Deed further provided that in the event the debt due under the Market Rate Facility was not repaid in accordance with its terms, there would be a default under the facility and under the mortgage over the Denmark farm.[4]
[4] Reasons [22].
Mr and Mrs Tomcsanyi delivered up possession of the Darjeeling farm, the Albany house and the farming equipment to the Bank in accordance with the terms of the Settlement Deed.[5]
[5] Reasons [24].
By two letters each dated 23 February 2012 the Bank wrote to Mr Tomcsanyi advising that under its security documentation it was entitled to debit legal costs it had incurred to Mr Tomcsanyi's account, and that amounts of $16,290.89 and $30,750 would be debited to his account.[6]
[6] Reasons [47] ‑ [48].
Shortly thereafter Mr Tomcsanyi received a statement of account relating to the overdraft facility which asserted that, as at 29 February 2012, that account was in debit in the amount of $1,114,218.89, and recorded the debit of the two sets of legal fees to which we have referred against that account.[7]
[7] Reasons [49].
As this statement of account was contrary to the terms of the Settlement Deed (which required the overdraft facility to be closed, implicitly with a zero balance), Mr Tomcsanyi contacted his lawyer, Mr Paul Sheiner. Mr Sheiner wrote to the Bank's lawyers on 11 April 2012, stating that he had advised his client to ignore the correspondence from the Bank as it was contrary to the Settlement Deed and inviting the Bank's lawyers to advise if their client contended to the contrary.[8] Mr Tomcsanyi gave evidence to the effect that he was provided with advice in those terms by Mr Sheiner at around that time.[9] On 12 April 2012 the Bank's lawyers responded, advising that while the Bank maintained its entitlement to debit Mr Tomcsanyi's account with the legal costs incurred, that debit would not affect the amount to be paid by Mr Tomcsanyi under the terms of the Settlement Deed, which was the amount of $765,000 due under the Market Rate Facility.[10] Mr Tomcsanyi saw this email at or about the time it was sent.[11]
[8] Reasons [51].
[9] Reasons [52].
[10] Reasons [53].
[11] Reasons [54].
In April 2012 Mr Tomcsanyi visited the Albany branch of the Bank and asked the teller for new statements showing the correct amounts due under his facilities. The bank teller told him to speak to Mr Daniel, an officer at the Bank's Albany branch.[12] Mr Daniel's evidence, which was accepted by the acting master,[13] was to the effect that although he had occasional conversations with Mr and Mrs Tomcsanyi relating to the performance of their obligations under the Settlement Deed,[14] neither Mr nor Mrs Tomcsanyi ever raised the question of the account balances or the statements issued by the Bank relating to the account balances with him.[15] Mr Daniel also confirmed in evidence that he was the officer of the Bank who instructed the Bank's lawyers to advise Mr Tomcsanyi's legal advisor that the only amount due under the Settlement Deed was the amount of $765,000. Further, Mr Tomcsanyi confirmed under cross‑examination that he never asked Mr Daniel for bank statements to be prepared reflecting the terms of the Settlement Deed.[16]
[12] Reasons [56].
[13] And which is not challenged by any ground of appeal.
[14] Primarily relating to the delivery up of the property over which the Bank held security.
[15] Reasons [71].
[16] Reasons [66].
In early June 2012 Mr Tomcsanyi received another statement relating to the overdraft facility showing that the balance on that account as at 31 May 2012 was $1,169,071.97.[17] Mr Tomcsanyi gave evidence to the effect that after receipt of this statement he had a conversation with an officer of the Bank relating to the time at which possession of the Albany house would be delivered to the Bank, and accepted that this officer may well have been Mr Daniel.[18] As we have noted, Mr Daniel's evidence was to the effect that at no time did Mr Tomcsanyi raise any issue relating to the bank statements with him, other than the occasion upon which the issue was raised by Mr Tomcsanyi's lawyer and to which we have referred.
[17] Reasons [57].
[18] Reasons [58].
Sometime prior to Christmas 2012 Mr Tomcsanyi received another statement relating to the overdraft facility, showing a debit balance as at 31 August 2012 of $1,214,040.74. At the same time he also received a statement for the Market Rate Facility, showing a debit balance as at 25 July 2012 of $4,725,191.48.[19]
[19] Reasons [59].
In the middle of December 2012 Mr and Mrs Tomcsanyi went to a branch of the Bank of Queensland in Albany and spoke to the acting manager of that branch. Mr Tomcsanyi explained to the acting manager that he was interested in a bridging loan in order to buy a station and perhaps to borrow some extra money to 'spruce up' the Denmark farm. He asked the acting manager what information the Bank of Queensland would require in order to consider an application for a loan. He was told that he would need to provide two to three years of financial accounts demonstrating the ability to provide adequate security for and serviceability of the loan. He advised the acting manager of the dispute with the Bank and of the general terms of the Settlement Deed. In cross‑examination, Mr Tomcsanyi confirmed that his purpose in 'sprucing up' the Denmark farm was to sell it.[20]
[20] Reasons [60].
This is the only step which Mr Tomcsanyi took in relation to raising the funds necessary to discharge the debt of $765,000 owing to the Bank prior to the date upon which payment of that debt was due - namely, 21 February 2013.[21] Mr Tomcsanyi explained his inaction by reference to a period of 'chill out' following the resolution of the dispute he and his wife had with the Bank, and by reference to the proposition that accountants seemed to go on holiday over Christmas. When asked what action he took, he advised that when the date for payment arrived, he and his wife lodged a complaint with the Financial Ombudsman.[22] That complaint was lodged on 22 February 2013, the day after payment was due to the Bank.[23]
[21] Reasons [61].
[22] Reasons [62].
[23] Reasons [26].
Mr Tomcsanyi confirmed in evidence that he had not caused financial statements to be prepared for some time, and that it was necessary for them to be brought up to date. Around the end of 2012 he spoke to his accountant and asked him to prepare accounts showing the position as set out in the Settlement Deed. The accountant gave two reasons for refusing to prepare accounts on that basis. First, Mr Tomcsanyi was not able to pay him immediately and the accountant did not want to carry the debt. Second, the accountant did not want to get involved in preparing accounts that might be used in litigation. Mr Tomcsanyi described the second reason as the main reason for the accountant's refusal to prepare the accounts.[24]
[24] Reasons [56].
Mr Tomcsanyi gave evidence to the effect that as at the end of 2012 and the beginning of 2013, he did not believe that he was in a position to make an application for finance because his financial statements were not up to date.[25]
[25] Reasons [64].
In correspondence with the Financial Ombudsman Service following the lodgment of Mr and Mrs Tomcsanyi's complaint, the Bank reiterated that Mr Tomcsanyi's debt was limited to $765,000, as specified in the Settlement Deed, and was not conditional upon performance of the other terms of the deed. However, the computer systems utilised by the Bank did not enable statements to be generated reflecting balances in accordance with the terms of the Settlement Deed unless and until write‑offs were entered in respect of those accounts, which was to occur after the amount of $765,000 had been paid.[26]
[26] Reasons [29].
The complaint to the Financial Ombudsman Service was finalised on or around 24 December 2013.[27] On or about 13 January 2014 the Bank served a notice of default on Mr Tomcsanyi claiming the amount due under the Market Rate Facility, being $765,000 plus accrued interest, fees, costs and expenses. Mr Tomcsanyi failed to comply with the notice of default and in March 2014 the Bank appointed receivers over the Denmark farm. Mr Tomcsanyi refused to allow those receivers to take possession of the Denmark farm,[28] and on 28 March 2014 the proceedings the subject of this appeal were commenced against the Bank.[29]
[27] Reasons [30].
[28] Reasons [35].
[29] Reasons [37].

The acting master's reasons

After setting out the findings of fact to which we have referred, the acting master addressed the issues which he took to arise from the pleadings and submissions of the parties.

Did the Bank breach the Settlement Deed by sending out the automatically generated statements of account?

The acting master concluded that the Bank had breached the express terms of the Settlement Deed because it had not reduced the current balance under the Market Rate Facility account to $765,000, nor had it closed the overdraft account, as required by the deed.[30] Even though the Settlement Deed provided that the parties agreed that as from the Settlement Date (the date of execution of the deed) the account limit and current balance under the Market Rate Facility would be $765,000, and the overdraft would, in effect, be zero, the acting master evidently considered that the bank was obliged administratively to amend its records to reflect that agreement, and found that the bank had breached its obligations in that regard. As there is no cross‑appeal from that conclusion, it is unnecessary to set out the process of reasoning which led the acting master to that conclusion.

Did the Bank's breach excuse Mr Tomcsanyi from paying the amount due, or defer that obligation until the Bank had remedied its breach?

[30] Reasons [86].

Mr Tomcsanyi contended that the Bank's breach of the Settlement Deed had the consequence that he was excused from the obligation of paying the amount due under the deed unless and until the Bank remedied its breach. The acting master rejected that submission. He noted that while it was possible for a contract to provide that the obligations of the parties were conditional upon the performance of the other, or interdependent in that sense, the Settlement Deed contained no provision to that effect. Accordingly, he construed the deed as providing that Mr Tomcsanyi's obligation to pay the amount due according to its terms was not conditional upon the Bank's performance of the obligations to reduce the balances shown in the relevant statements of account. The acting master further noted that Mr Tomcsanyi had not purported to terminate the deed by reason of the Bank's breach - rather, he had required the Bank to perform the terms of the deed, and had sought orders for specific performance.[31]

Did the Bank act unconscionably by entering into the Settlement Deed on terms it knew at the time it could not honour?

[31] Reasons [105] ‑ [107].

Mr Tomcsanyi submitted that the Bank had acted unconscionably by entering into the Settlement Deed when it knew that it would be unable to honour the commitments it made in the deed because of its internal computer systems. That conduct was said to contravene provisions in both the Australian Consumer Law and the Australian Securities and Investments Commission Act 2001 (Cth).
The acting master held that the latter legislation did not apply, but concluded that the Bank's conduct was governed by the terms of the Australian Consumer Law.[32] However, he concluded that the Bank's conduct was not unconscionable within the meaning of that law for four reasons.
[32] Reasons [89].
First, the acting master concluded that Mr Tomcsanyi's claim was not made out on the facts. In this context he took Mr Daniel to reflect the relevant mind or knowledge of the Bank, and accepted his evidence that he did not become aware of the difficulties in relation to the Bank's internal computer systems until after the Bank had entered into the Settlement Deed. Further and in any event, Mr Daniel confirmed that he could have provided Mr Tomcsanyi with manually generated account statements reflecting the terms of the Settlement Deed upon request, although no such request was ever made.[33]
[33] Reasons [92].
Second, the acting master concluded that there was no evidence of any special disadvantage suffered by Mr Tomcsanyi, nor any evidence of the Bank taking unconscientious advantage of any such special disadvantage, so as to invoke equitable doctrines of unconscionable conduct.[34] In this context the acting master rejected a submission to the effect that there was a fiduciary relationship between Mr Tomcsanyi and the Bank noting that no allegation to that effect had been pleaded. In any event, the acting master noted that although the relationship between a banker and a customer may be fiduciary in some circumstances, the relationship itself was not one of the accepted categories of fiduciary relationship. In the view of the acting master there were no facts or circumstances which would bring the present case within the ambit of a fiduciary relationship, for much the same reasons as he had concluded that Mr Tomcsanyi was not under any special disadvantage in his relationship with the bank.[35]
[34] Reasons [93] ‑ [95].
[35] Reasons [95].

Third, the acting master concluded that there was no evidence to suggest that the Settlement Deed was anything but a fair, just and reasonable bargain.[36]
[36] Reasons [96].
Fourth, the acting master concluded that there was no evidence of any conduct by the Bank which could said to be contrary to the norms of conscientious behaviour or which would offend against basic notions of good conscience and fair play.[37] He noted that breach of contract, without more, is not sufficient to give rise to unconscionable conduct and that at no point had the Bank sought to renege on the position created by the Settlement Deed to the effect that the debt owed by Mr Tomcsanyi to the Bank was $765,000.[38]

Did the Bank's breach cause Mr Tomcsanyi any loss or damage?

[37] Reasons [97].

[38] Reasons [98].

Mr and Mrs Tomcsanyi claimed that the Bank's breach of the Settlement Deed caused them to suffer loss and damage in excess of $5 million. The basis of that claim has always been somewhat obscure, but seems to have been to the effect that the bank statements issued by the Bank prevented them from trading 'normally'.[39]
[39] Statement of claim [13], BAB 58.
The acting master first noted that, applying the conventional measure of contractual damages and putting the innocent party in the position in which they would have been but for the breach, the Bank's breach had no effect upon the amount due under the Settlement Deed, which was always $765,000.[40] Further, on the hypothesis that the Bank's breach had prevented Mr Tomcsanyi from refinancing the debt, any loss or damage would not include the principal amount of the debt, which had to be paid either to the Bank or to other finance providers, but would be limited to costs and accruing interest flowing from Mr Tomcsanyi's default.[41]
[40] Reasons [125].
[41] Reasons [126] ‑ [127].
In that context the acting master addressed the issue of causation, and in particular, the question of whether the Bank's breach caused or materially contributed to Mr Tomcsanyi's failure to refinance the debt due to the Bank. In that context the acting master noted that the only evidence of any attempt by Mr Tomcsanyi to secure an alternate source of finance was his informal conversation with the acting manager of the Albany Branch of the Bank of Queensland, about eight weeks prior to the date upon which the debt to the Bank was to be paid. The acting master noted that the reasons given by Mr Tomcsanyi for not taking any action earlier were not attributable to the Bank's breach, but rather to the decision to 'chill out' for a period.[42]
[42] Reasons [137].
The acting master also noted that in April 2012 Mr Tomcsanyi was given legal advice to the effect that the letters from the Bank could be ignored; that he saw an email from the Bank to that effect; and that he failed to raise any concerns with respect to the bank statements with Mr Daniel prior to the due date for payment despite being told to do so by a teller at the Albany branch of the Bank in April 2012.[43] The acting master noted that on no occasion did Mr Tomcsanyi ever ask Mr Daniel for bank statements to be prepared reflecting the terms of the Settlement Deed.[44]
[43] Reasons [138] ‑ [139].
[44] Reasons [139].
In the same context the acting master noted that Mr Tomcsanyi made no attempt to cause current financial statements to be prepared until the end of 2012, and that his accountant's unwillingness to prepare those statements was unrelated to any breach by the Bank.[45]
[45] Reasons [140].
Having regard to these various matters, the acting master concluded that the Bank's breach did not cause or materially contribute to Mr Tomcsanyi's failure to repay his debt to the Bank on the due date. Rather, the cause of that failure was Mr Tomcsanyi's failure to obtain an alternate source of finance in sufficient time to make that payment when due.[46]
[46] Reasons [141].
In that context it was strictly speaking unnecessary for the acting master to consider the Bank's submission to the effect that Mr Tomcsanyi failed to mitigate any loss he may have suffered. However, the acting master considered and accepted that submission and concluded that if he had formed the view that the Bank's breach had caused Mr Tomcsanyi to suffer loss by reason of his failure to repay the debt when due, he would have concluded that the Bank had established that Mr Tomcsanyi failed to mitigate that loss by taking the various steps which he should have taken in order to obtain an alternate source of finance prior to the date upon which payment was due under the Settlement Deed.[47]

What amount was due under the Settlement Deed?

[47] Reasons [146] ‑ [150].

The acting master assessed the amount owed by Mr Tomcsanyi under the Settlement Deed and concluded that Mr Tomcsanyi was obliged to pay the Bank the principal under the Market Rate Facility of $765,000, costs incurred by the Bank in the amount of $171,752.28 and interest accrued on the facility as at 20 October 2015 in the amount of $334,342.29. Those amounts were revised as at the date judgment was entered on 4 December 2015, and judgment was entered in the amount of $1,340,905.97 together with interest continuing to accrue at the contractual rate of 16.12% per annum.[48]

Possession of the Denmark farm

[48] Reasons [115] ‑ [117].

The acting master also concluded that the Bank was entitled to take possession of the Denmark farm and sell it using the services of the receivers, in accordance with its mortgage security over the farm.[49]

The orders made by the acting master

[49] Reasons [156].

In order to give effect to these conclusions on 4 December 2015 the acting master ordered that the Bank serve upon Mr Tomcsanyi statements of account which complied with the Settlement Deed, but otherwise dismissed the claims of Mr and Mrs Tomcsanyi. He further ordered that Mr Tomcsanyi deliver up possession of the Denmark farm, made various specific orders to that effect and entered judgment in the amount to which we have referred. Because Mr Tomcsanyi had failed to appear at the hearing at which these orders were made,[50] the acting master further ordered that Mr Tomcsanyi have liberty to apply with respect to the terms of the orders, that liberty to be exercised by 15 January 2016 or within seven days of service, whichever was the later.[51]
[50] For reasons which will be addressed below.
[51] BAB 1 ‑ 2.

The grounds of appeal

There are six grounds of appeal. Two of those grounds[52] challenge the acting master's conclusions with respect to the consequences of the Bank's breach. Another two[53] challenge the acting master's conclusions with respect to unconscionable conduct, including his conclusion that there was no fiduciary relationship between the Bank and Mr Tomcsanyi. Another two[54] are concerned with the final orders made by the acting master. It is convenient to consider the grounds grouped in this way.

Grounds 1 and 4 - the consequences of breach

[52] Grounds 1 and 4.

[53] Grounds 2 and 3.

[54] Grounds 5 and 6.

Ground 1 asserts that the acting master erred by failing to conclude that Mr Tomcsanyi was not obliged to pay the amount due under the Settlement Deed while the Bank continued to be in breach of that deed. The submissions advanced in support of that ground challenge both the acting master's conclusion that Mr Tomcsanyi's obligation to pay the amount due under the deed was not conditional upon, or interdependent with, performance by the Bank of its obligations to amend the balances shown in the relevant books of account, and the acting master's conclusion that Mr and Mrs Tomcsanyi had not suffered any loss by reason of the Bank's breach. The second aspect of those submissions overlap with ground 4 which asserts that the acting master erred by finding that Mr Tomcsanyi had suffered no damage as a consequence of the Bank's breach.
As the acting master noted, neither Mr Tomcsanyi nor the Bank purported to terminate the Settlement Deed because of breach by the other party. It follows that the question of whether Mr Tomcsanyi was excused from the obligation of payment imposed by that deed by reason of the Bank's breach turns upon the question of whether performance of that obligation was conditional upon, or interdependent with, performance of the Bank's obligation to amend the amounts shown in its books, and in the statements presented to Mr Tomcsanyi. As the acting master noted, this is essentially a question of construction of the deed.
There is no basis identified in argument in support of this ground, or any conceivable basis upon which it could be concluded from the terms used by the parties in their deed, viewed in the commercial context in which the deed was executed, that it was their mutual intention that Mr Tomcsanyi's obligation to pay the amount of $765,000 was conditional or dependent upon the Bank's performance of an obligation to amend its books of account and render statements to Mr Tomcsanyi in accordance with those books of account. On the contrary, it is evident that Mr Tomcsanyi's obligation to pay the sum of $765,000 on or before the 12-month anniversary of the Settlement Date derived from the parties' agreement to treat the relevant facilities as varied with immediate effect, and was not contingent or dependent upon the bank, subsequently, administratively amending its own records.

Did the Bank's breach cause any damage?

The written submissions in support of this aspect of Mr Tomcsanyi's appeal assert that his damage included vacating the Darjeeling farm, the Albany house and surrendering the farm equipment without receiving the benefit of his bargain, and the value of that benefit was more than $4.8 million, being the amount by which the balances in the various accounts were to be reduced.[55] That submission must be rejected. Mr Tomcsanyi's obligation to surrender up the property identified in the deed was an obligation which he assumed in return for a reduction in the debt which he owed to the Bank of nearly $5 million. He obtained the benefit of that reduction. At no point did the Bank ever request or demand that he pay any more than the amount due under the Settlement Deed.
[55] Appellant's amended submissions [27(a)], WAB 14.
In support of this aspect of his appeal Mr Tomcsanyi also submits that the Bank's breach caused him to suffer loss because he was denied the opportunity to obtain refinance from another institution and could not prepare his financial accounts.[56] That proposition must also be rejected. The acting master found that Mr Tomcsanyi made no significant attempt to refinance his debt to the bank - the most he ever did was to have the informal conversation with the acting manager of the Bank of Queensland to which we have referred. Further the acting master found, consistently with Mr Tomcsanyi's evidence, that his failure to prepare financial statements was unrelated to the Bank's breach. On the facts found by the acting master, and which are not challenged, the only conclusion reasonably open is that the Bank's breach was entirely unrelated to Mr Tomcsanyi's failure to refinance his debt to the bank. The acting master was correct to arrive at that conclusion.
[56] Appellant's amended submissions [27(c)], WAB 14.
In further support of this aspect of Mr Tomcsanyi's appeal, he asserts that the damage he suffered is compounded by the order requiring him to pay interest at contractual rates as from the date of default.[57] That submission must also be rejected. The obligation to pay interest at contractual rates arose from Mr Tomcsanyi's default. Once it is concluded, as it must be, that the Bank's breach did not cause or materially contribute to that default, it follows that the interest obligation which was the consequence of that default cannot be attributed to the Bank's breach.
[57] Appellant's amended submissions [27(f)], WAB 14.
For these reasons grounds 1 and 4 must be dismissed.

Grounds 2 and 3 - unconscionability and fiduciary duty

Ground 2 asserts that the acting master erred by finding that there was no fiduciary relationship between Mr Tomcsanyi and the Bank. Ground 3 asserts that the acting master erred by concluding that the Bank had not acted unconscionably.
In relation to the alleged fiduciary relationship, the acting master correctly observed that Mr Tomcsanyi had not pleaded any such relationship and that it was not therefore open to him to claim relief on the basis of such a relationship. Further and in any event, the acting master correctly observed that the relationship of banker and customer was not a relationship recognised by the law as inherently fiduciary in character, and there was no evidence to suggest that the particular circumstances of the relationship between Mr Tomcsanyi and the Bank were such as to give rise to a fiduciary relationship. At the time the Settlement Deed was negotiated and executed Mr Tomcsanyi and the Bank were parties to contested litigation in the Supreme Court in which each was represented by lawyers. There is nothing to suggest that the Settlement Deed was anything other than the consequence of an arm's length negotiation between independent parties capable of taking whatever steps were necessary in the protection or advancement of their own interests. Nor is there any evidence to suggest that Mr Tomcsanyi was dependent upon the Bank for the protection of his interests following the execution of the deed, or that he relied upon the Bank to take such steps. To the contrary, the evidence was to the effect that his communications with the Bank were essentially limited to communications relating to the performance of the deed. It is clear from his conversation with the acting manager of the Bank of Queensland in December 2012 that he was aware of the prospect of obtaining finance from other sources in order to satisfy the debt due to the Bank pursuant to the terms of the Settlement Deed, but failed to pursue such a prospect for reasons of his own choosing. For these reasons the acting master was correct to conclude that there was no fiduciary relationship between Mr Tomcsanyi and the Bank.
The submissions advanced in support of the ground of appeal relating to unconscionable conduct essentially reiterate the propositions advanced at trial. Foremost amongst those propositions is the assertion that the Bank acted unconscionably by entering into an obligation which it knew it was incapable of performing.[58] However, that proposition must fail on the facts found by the acting master. First, there is no evidence that any relevant officer of the Bank knew that it would be difficult or even impossible to generate revised statements of account using the Bank's computer system. Second, and in any event, there was uncontradicted evidence which the acting master accepted to the effect that statements could be generated manually in accordance with the terms of the Settlement Deed and in fact this is what the acting master ordered the Bank to do.
[58] Appellant's amended submissions [61], WAB 22.
In submissions in support of this aspect of the appeal Mr Tomcsanyi asserted that he was at a special disadvantage because he was unaware of the operations of the Bank computer systems.[59] However, that submission misconceives the nature of the special disadvantage which might give rise to the equitable principles relating to unconscionability. As the acting master noted, the special disadvantage must be one 'which seriously affects the ability of an innocent party to make a judgment as to his own best interests',[60] and of which the other party has taken unfair or unconscientious advantage.[61] The acting master was correct to conclude that there was no evidence to the effect that Mr Tomcsanyi suffered a disadvantage of this character. Further, the acting master found that both the relevant officer of the Bank and Mr Tomcsanyi were unaware of the limitations of the Bank's computer systems. Accordingly, it cannot be said that Mr Tomcsanyi's lack of awareness of those limitations conferred any particular advantage upon the Bank, whose relevant officer was equally unaware of those limitations.
[59] Appellant's amended submissions [63], WAB 22.
[60] Permanent Mortgages Pty Ltd v Vandenbergh [2010] WASC 10; (2010) 41 WAR 353, 398 [220] (Murphy JA), citing Commercial Bank of Australia v Amadio [1983] HCA 14; (1983) 151 CLR 447, 462 (Mason J).
[61] Commercial Bank of Australia v Amadio (462) (Mason J).
In further support of this aspect of his appeal, Mr Tomcsanyi placed reliance upon the Code of Banking Practice published by the Australian Bankers' Association in 2013 (Code), notwithstanding that it post‑dated the events giving rise to the claim for unconscionable conduct. It was further submitted that the Code bound the parties, and that any breach of the Code would constitute unconscionable conduct,[62] relying upon National Australia Bank Ltd v Rice.[63]
[62] Appeal ts 3 ‑ 5.
[63] National Australia Bank Ltd v Rice [2015] VSC 10.
As these propositions were not advanced at first instance, it would not be appropriate to allow them to be raised, for the first time, on appeal. Further, reliance upon the decision in National Australia Bank Ltd v Rice is misplaced. In that case Elliott J explicitly declined to express a view upon the question of whether a breach that was not otherwise unconscionable could be characterised as unconscionable because it was a breach of an obligation appearing in the Code.[64] In these circumstances it is both inappropriate and unnecessary to determine whether the Code was incorporated into the contractual relationship between the parties. It is equally unnecessary and inappropriate to determine the consequences, if any, of an established breach of the Code in the context of an assertion of unconscionability, although it can be observed that the proposition that a breach of the Code which has been found, as a fact, to have had no adverse effect upon the Bank's customer renders conduct not otherwise unconscionable to be unconscionable is an inherently improbable and implausible proposition.
[64] National Australia Bank Ltd v Rice [296] ‑ [297].
For these reasons grounds 2 and 3 must be dismissed.

Grounds 5 and 6

Grounds 5 and 6 are each concerned with the orders made by the acting master on 4 December 2015. Ground 5 asserts that the acting master erred by including legal costs incurred by the Bank as a component of the amount for which judgment was entered. Ground 6 asserts that Mr Tomcsanyi was denied procedural fairness because orders were made in his absence on 4 December 2015.
Mr Tomcsanyi attacks the acting master's decision to include the Bank's legal costs in the amount for which judgment was entered on two grounds. First, it is submitted that the acting master failed to apply cl 16 of the Settlement Deed.[65] Second, it is submitted that the acting master improperly applied the general rule to the effect that the costs follow the event when the Bank had been unsuccessful, in the sense that an order for specific performance was made against it.[66]

Clause 16 of the Settlement Deed

[65] Appeal ts 36 ‑ 38.

[66] Appellant's amended submissions [77] ‑ [79], WAB 24 ‑ 25.

Clause 16 of the Settlement Deed provides:[67]
Each party must bear its own costs arising out of the negotiation, preparation and execution of this Deed. All stamp duty (including fines, penalties and interest) payable on or in connection with this Deed, and any instrument executed under or any transaction evidenced by this Deed must be borne equally by the parties.
[67] 1 GAB 303.
Having regard to the terms of this provision, it is significant that the legal costs incurred by the Bank which the acting master included within the judgment against Mr Tomcsanyi were all incurred after Mr Tomcsanyi's default in making payment in February 2013. Accordingly, they are not costs arising out of the negotiation, preparation or execution of the Settlement Deed. Rather, they are costs arising from Mr Tomcsanyi's default in the performance of the obligations imposed by the deed. Nor does the provision of cl 16 relating to stamp duty have any application to those costs. The submissions advanced on behalf of Mr Tomcsanyi in reliance upon cl 16 of the Settlement Deed misconceive the nature and the effect of that clause and must be rejected.

Turning now to the proposition that the acting master erred by, in effect, ordering that costs follow the event, it should first be noted that the acting master made no specific order with respect to the costs of the proceedings, although he did include an amount equal to the legal costs incurred by the Bank since Mr Tomcsanyi's default in February 2013. Those costs would no doubt have included matters that were not recoverable as party and party costs pursuant to an order made by the court in the exercise of its discretion. Rather, it is a clear inference from the course taken by the acting master that he was giving effect to the contractual entitlement of the Bank to recover costs incurred pursuant to its securities. Accordingly, the submission attacking an award of costs on the basis that they were awarded in the discretion of the court misconceives what in fact occurred. Further and in any event, if the acting master had exercised a discretion with respect to the award of costs, there would be no basis upon which that exercise of discretion could be set aside. Although Mr and Mrs Tomcsanyi were partially successful in their proceedings, and obtained an order that the Bank provide them with statements in accordance with the deed, that victory was entirely pyrrhic, as it had no other consequences of any significance. Mr Tomcsanyi's attempt to avoid the consequences of his default failed entirely, and the Bank's counterclaim succeeded in its entirety. From any practical perspective the Bank was the successful party in the litigation, and an award of costs in its favour would have been an entirely appropriate exercise of the court's discretion.
For these reasons Mr Tomcsanyi's challenge to the acting master's decision to include the legal costs incurred by the Bank since his default in the amount for which judgment was entered must be dismissed.
As we have noted, Mr Tomcsanyi did not attend the hearing on 4 December 2015 at which the acting master's reasons were published and orders were made. He asserts that his failure to attend was a consequence of his inability to access emails sent to him at the time.[68] He asserts that as a consequence he was denied procedural fairness when orders were made in his absence.[69]
[68] Appellant's amended submissions [80], WAB 25.
[69] Appellant's amended submissions [87], [93] ‑ [95], WAB 26 ‑ 27.
There are a number of reasons why this assertion must be rejected. First, as we have noted, as a consequence of Mr Tomcsanyi not being present on 4 December 2015 the acting master granted him liberty to apply, to be exercised prior to 15 January 2016 or within seven days of service of the orders upon him. Although it is clear that Mr Tomcsanyi was made aware of the orders within a few days of them being made, he has never attempted to exercise the liberty to apply which was granted to him. Having failed to take up an opportunity to be heard in relation to those orders, Mr Tomcsanyi cannot now complain of being denied procedural fairness.
Second and in any event, the orders made by the acting master on 4 December 2015 in Mr Tomcsanyi's absence were the inevitable consequence of the conclusions he had reached. By exercising his right of appeal, Mr Tomcsanyi has had every opportunity to challenge the correctness of any of those orders. However, the matters raised by Mr Tomcsanyi in his appeal have been limited to the conclusions at which the acting master arrived, rather than the orders he made to give effect to those conclusions, with the exception of Mr Tomcsanyi's complaint with respect to the entry of judgment including the amount of the Bank's legal costs. However, that complaint is without foundation, for the reasons we have given.
For these reasons grounds 5 and 6 must be dismissed.

The applications to adduce additional evidence

Before concluding these reasons it is necessary to deal with two applications by Mr Tomcsanyi to adduce additional evidence,[70] and one application to the same effect by the Bank.[71] By an application dated 11 April 2016, Mr Tomcsanyi applied to adduce evidence relating to the bank statements produced in compliance with the order made by the acting master, and communications relating to the judgment entered on 4 December 2015. By an application dated 21 July 2016, Mr Tomcsanyi applied to adduce evidence in the form of portions of the Code of Banking Practice, a report in 2001 relating to the Code and a media statement from the chief executive officer of the Australian Bankers' Association.
[70] YAB 2, 12.
[71] YAB(S) 2 ‑ 3.
Each of these applications must be dismissed on the ground that the evidence is not relevant to the issues to be determined in the appeal. The fact that the Bank was able to generate statements complying with the terms of the deed adds no support to Mr Tomcsanyi's ground of appeal - to the contrary, it rather undermines the proposition that the Bank had acted unconscionably by entering into an agreement which it knew it would be unable to perform. The communications relating to the delivery of judgment on 4 December 2015 are irrelevant, because, for the reasons we have given, the circumstances in which Mr Tomcsanyi failed to appear at that hearing do not have any bearing upon the outcome of the ground of appeal relating to that issue. Further, the evidence which Mr Tomcsanyi sought to adduce with respect to the Code and associated documents is irrelevant for the reasons given above.
By an application dated 8 September 2016, the Bank applied to adduce evidence of a letter which was sent by the Bank to Mr Tomcsanyi on 9 December 2015 attaching the orders made by the acting master and the bank statements showing compliance with those orders. That evidence is responsive to the additional evidence which Mr Tomcsanyi sought to adduce with respect to the circumstances surrounding the making of orders on 4 December 2015. As that evidence has not been admitted, there is no need or purpose to be served by admitting the evidence from the Bank, and that application should also be dismissed.

Conclusion

For the reasons given above, all grounds of appeal, each application to adduce additional evidence and the appeal should be dismissed.