Walker v Munnecke
[2025] VCC 1705
•21 November 2025
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-23-02172
| CASSANDRA MARY WALKER and KYALL ANTHONY WALKER | Plaintiffs |
| v | |
| BARBARA ELIZABETH MUNNECKE | Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 12 November 2025 | |
DATE OF JUDGMENT: | 21 November 2025 | |
CASE MAY BE CITED AS: | Walker and Anor v Munnecke | |
MEDIUM NEUTRAL CITATION: | [2025] VCC 1705 | |
REASONS FOR JUDGMENT
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Subject:SALE OF LAND – PROCEEDING TO RECOVER DEPOSIT
Catchwords: Sale of land – contract of sale of land REIV and Law Institute of Victoria standard form GC 20 – Plaintiff purchasers seeking to “end” contract pursuant to condition GC 20 – Land sold subject to purchasers obtaining loan – Whether purchasers “immediately applied for the loan” – Whether purchasers “did everything reasonably required to obtain approval of the loan”
Legislation Cited: Civil Procedure Act 2010 (Vic); Penalty Interest Rates Act 1983 (Vic); Supreme Court Act 1986 (Vic)
Cases Cited:Al Achrafi v Topic [2016] NSWSC 1807;
Berry v CCL Secure Pty Ltd (2020) 271 CLR 151;
Butler Pollnow Pty Ltd v Garden Mews – St Leonards Pty Ltd (1988) 15 ACLR 24;
Jones v Dunkel (1959) 101 CLR 298;
Putt v Perfect Builders Pty Ltd [2013] VSC 442;
Sentinel Property Group Pty Ltd v ABH Hotel Pty Ltd [2024] QCA 14;
Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359;
Smorgon v ANZ Banking Group Ltd (1976) 134 CLR 475;
Stubbings v Jams 2 Pty Ltd (2022) 276 CLR 1;
Tournier v National Provincial and Union Bank of England [1924] 1 KB 461;
Walker v Munnecke [2025] VCC 267
Judgment: 1. Judicial Registrar’s Decision confirmed
2.Costs reserved
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr T P Mitchell KC with Ms C M Jones | Robert James Lawyers |
| For the Defendant | Dr C O H Parkinson KC with Mr S L Freire | Kalus Kenny Intelex |
HIS HONOUR:
Background
1In 2017, the plaintiffs, Mr and Mrs Walker, bought a house at 4 Busana Way, Nunawading, with a view to demolishing the existing residence and replacing it with two townhouse units. They sold the front townhouse, 1/4 Busana Way, for $1,104,000 in November 2019, occupying the rear unit – 2/4 Busana Way – as their primary home. (Court Book (“CB”) 187)
2According to Mrs Walker: “In about September 2020, Kyall and I decided to refinance with CBA Private as we had sold the front townhouse.” (Ibid, paragraph 10) She described CBA Private as being a “private banker concierge service” provided by the Commonwealth Bank of Australia. The Walkers’ assigned “private bankers” were Ms Anna Sculthorpe and Ms Yenny Vu. (CB 186, paragraphs 5 and 6) At the request of Ms Sculthorpe, Mrs Walker provided the bank with a “balance sheet, monthly living expenses, and ID verification information form” (CB 188, paragraph 12(b)) Following the provision of further information to the bank, Ms Sculthorpe told Mrs Walker that the Walkers’ loan application had been approved. (Ibid, paragraph 13)
3Mrs Walker said that in addition to her family’s private banking requirements, she had “utilised the CBA Private concierge service to establish business accounts for [the Walkers’] respective businesses, Cassandra Walker Design Pty Ltd and Upside Management Pty Ltd”, as well as arranging a car lease for her company Cassandra Walker Design Pty Ltd. (CB 188-9, paragraphs 15-16)
4Mrs Walker said that following the birth of the couple’s third child she began looking for a larger residence, viewing a property at 131-133 Park Road, Donvale, and approaching CBA Private “to see if we could obtain finance to fund the purchase of the Property as our new family home”. (CB 189, paragraph 18) She said that on 7 August 2022 she emailed Misses Sculthorpe and Vu seeking to “organise pre-approval for finance with a view to purchasing the [Donvale] Property as our new family home”. (Ibid, paragraph 20) There followed various discussions and the submission of supporting material to the bank. Mrs Walker said that in one of her telephone conversations with Ms Sculthorpe she told her “we would likely need to borrow $1.8 million to purchase the Property”; and Mrs Walker “queried whether [Ms Sculthorpe] thought borrowing $1.8 million to purchase the Property was realistic, and [Ms Sculthorpe] said $1.8 million would be in the ballpark area but she needed to run the numbers”. (CB 190, paragraph 25)
5According to Mrs Walker:
“Following my discussion with Anna on 8 August 2022, the following email correspondence was exchanged with the CBA:
a. At 3.58pm on 8 August 2022, I emailed Anna and confirmed that our monthly living expenses have remained the same since we previously provided information to the CBA in 2020. ...
b. At 4.02pm on 8 August 2022, Anna emailed me requesting further information including draft tax returns for the 2020/2021 financial year, confirmation of Kyall's current shareholding in Upside Management Pty Ltd, and confirmation that Kyall is not personally responsible for any commitments of his business. ...
c. At 8.58pm on 8 August 2022 Kyall sent an email to Anna with updated information regarding his shareholding in Upside Management Pty Ltd and his superannuation. ...
d. At 9.34pm on 8 August 2022 Anna emailed me setting out the outstanding documents and information “to be able to finalise the application for submission”. ... (CB 190-191, paragraph 26)
6The Commonwealth Bank’s files record a note by Ms Sculthorpe. She spoke to Mrs Walker on 15 August 2022 and “talked through again the banks [sic] position in regards to them being required to sell their exisiting [sic] home at Busana Rd frist [sic] prior to us being able to look at an approval for their maximum borrowing capacity”. (CB 1005) Mrs Walker said that on 15 August 2022 she told Ms Sculthorpe “that the Busana Property had been listed on the market and that we had been informed by our selling agent that we would achieve a sale price of at least $1.4 million”. (CB 191) According to Mrs Walker, Ms Sculthorpe “said words to the effect to me that if the Busana property sold for at least $1.4 million we would receive finance for the Property”. (CB 192, paragraph 29(c))
7The Walkers signed a contract of sale for the purchase of the property at 131-133 Park Road, Donvale, for a price of $2,620,000 with the defendant, Ms Munnecke, as vendor, dated 17 August 2022. (CB 1162ff) According to the particulars of sale, “This contract is subject to a loan being approved ...” The lender was shown as “CBA”, the loan amount being $1,800,000, with an approval date of “31/08/2022”. (CB 1164) Settlement was said to be “due on 12/12/2022”. (Ibid) On the same day, Mrs Walker emailed a copy of the contract to Misses Sculthorpe and Vu at the Commonwealth Bank, stating that it was:
“subject to finance. This is currently a 2 week period of which we either hope to have sold and obtained finance approval by that stage or we may be required to request an extension of the sale contract. Please see attached for your reference.
We have been advised that if we can not obtain finance from Commbank we will be able to exit the contract with all deposit monies returned.” (CB 193, paragraph 40)
8The Walkers’ solicitor, by email dated 23 August 2022, sought an extension of the approval date under the “subject to finance” clause to 14 September 2022. This was granted by Ms Munnecke’s then solicitors, Bayside Law, by email dated 24 August 2022. (CB 195, paragraphs 50 and 52; CB 1249, 1250)
9The provision in the particulars of sale as to its being subject to a loan approval engaged condition GC 20 of the contract, which provided as follows:
“20. LOAN
20.1If the particulars of sale specify that this contract is subject to a loan being approved, this contract is subject to the lender approving the loan on the security of the property by the approval date or any later date allowed by the vendor.
20.2The purchaser may end the contract if the loan is not approved by the approval date, but only if the purchaser:
(a)immediately applied for the loan; and
(b)did everything reasonably required to obtain approval of the loan; and
(c)serves written notice ending the contract, together with written evidence of rejection or non-approval of the loan, on the vendor within 2 clear business days after the approval date or any later date allowed by the vendor; and
(d)is not in default under any other condition of this contract when the notice is given.
20.3All money must be immediately refunded to the purchaser if the contract is ended.” (CB 1175, paragraph 20)
10The dispute in this proceeding centres upon the operation (or non-operation) of this provision in the sale contract; the Walkers contending that in the events that occurred they complied with the obligations set forth in GC 20.2, but failed to obtain the necessary loan approval. Therefore, they claim an entitlement to recovery of “all money” paid by them under the contract. (Clause 20.3) This means, in practice, the deposit money.
11Mrs Walker said:
“At all times during the loan application process for the Property I understood from my telephone calls and emails with [Ms Sculthorpe] that in order to approve our loan to purchase the Property, the CBA required certainty that the Busana Property had sold for not less than $1.4 million.” (CB 197, paragraph 64)
12On 6 September 2022 the Reserve Bank of Australia announced an increase to the “cash rate” operating in Australia’s banking system of 0.5 per cent per annum. (CB 197, paragraph 98; CB 1282) Mrs Walker said she had a telephone conversation that same day with Ms Sculthorpe, who told her:
“the CBA would be passing on the full interest rate increase of 0.5 per cent ... [which] would likely take effect for CBA customers on 16 September 2022 ... based on the revised interest rate and the financial information provided to the CBA, the minimum forecast sale price of Busana Way of $1.4 million would no longer be sufficient for our loan application to be approved”. (CB 198, paragraph 73)
13She said Ms Sculthorpe told her “we should look to include the most recent year’s draft tax return as [Mrs Walker’s] business was increasingly profitable and this may now be important”. (Ibid)
14According to Mrs Walker, Ms Sculthorpe told her “A sale price greater than $1.4 million for the Busana property may now be required to offset the rise in interest rates”. (Ibid) In the event, the Busana property was passed in at auction on 10 September with the highest bid “at around $1.3 million” and was sold subsequently the same day to the highest bidder for $1.35 million. (CB 199, paragraph 76) Mrs Walker sent a text that day, stating “Accepted $1.35m (50m [sic] below reserve) which means no park road. We think things will get worse and we’ll make the 50k back on the next one. Thanks for your support”. (CB 1287) She sent an email from her iPhone to Ms Sculthorpe as follows:
“Hi Anna,
I hope you are having a lovely week end.
We have sold Busana way this morning for 1.35m. We will send the contract across when we have an electronic copy. 60 Day settlement.
We are now not in a rush to finalise finance for Park Rd. Can we please obtain a letter or email from CBA stating that at this point in time you are unable to loan us 1.8m? This will allow us to exit the contract of Park Rd and we will still seek a formal pre approval for a lesser value which we would be more comfortable with.
Thank you
Cassie.” (CB 1288)
15Ms Sculthorpe replied with an email from her iPhone on the morning of 12 September 2022 (that is, the Monday morning after the Saturday auction) as follows:
“Hi Cassie
A Big congratulations on the sale of Busana!! You must feel a lot of relief, I am so happy for you that it sold :)
I am so sorry for not replying over the weekend, I have been unwell and am only working intermittently today as on top of being unwell I have now caught conjunctivitis from my son and my eyes are very sore. Goodness me!
I can prepare an email to you stating that at this time the bank cannot at this time assist you in accommodating a borrowing capacity of $1,800,000 and that we would be happy to review this should your circumstances change?
Would that suffice? ...” (CB 1318)
16Ms Baker of Grice Legal, the Walkers’ solicitors, sent an email to her counterpart at Ms Munnecke’s then solicitors, Bayside Law, on the afternoon of 14 September 2022, stating:
“Please find attached decline letter from CBA.” (CB 1320)
17Ms Jovanovski of Bayside Legal responded:
“I am waiting instructions from the Vendor.
They may wish to request confirmation from the purchaser’s bank that the purchaser:
(a) immediately applied for the loan; and(b) did everything reasonably required to obtain approval of the loan;
Therefore, to keep the ball rolling you may wish to make the request to the banker while I wait for instructions.” (CB 1324)
18Meanwhile, Ms Vu reported to Mr Brent Musgrove, her superior at the bank. Mr Musgrove is the executive manager of CBA Private, and as such responsible for managing approximately ten private bankers. (CB 215) According to Ms Vu’s report:
“Hi Brent,
Was hoping to get some guidance on this situation. Our client Cassie and Kyall Walker put in an offer for a property and Anna [Sculthorpe] had very thorough discussion regarding the loan and was not able to service on bridging so told them they would need to sell their home first and we had discussed this in our last 1:1 if you may recall. We both kept to this point we would not input an application UNTIL THEY SOLD THEIR FAMILY HOME and client went out on their own risk and purchased and paid a deposit then this last weekend they sold the family home but they are no longer wanting to proceed with their purchase. We have not completed any pre approval as Anna [Sculthorpe] was still awaiting on documents from accountant for this financial year in order to proceed and her discussion this week with client was she would submit the application upon return of her leave once accountant provides this document. This new loan still was in no relation to the purchased property. As they now wish to pull out so asked Anna [Sculthorpe] to prepare a letter in which Anna mentioned she cannot provide a decline letter however completed the attached ...
They have come back today and would like us to amend the letter with the following information below:
the Vendors have requested written confirmation from the bank confirming that the purchaser:
(a) immediately applied for the loan; and(b) did everything reasonably required to obtain approval of the loan.”
I just wanted to reach out to seek your guidance as I am not comfortable in stating this as they have not applied for any loan hence so do I simply revert back to advise this? However require this letter in order to get their deposit funds back.
Happy to discuss anytime tomorrow if you can with me prior to me contacting Cassie.” (CB 1328)
19Ms Sculthorpe sent an email to Mrs Walker and her solicitor on the afternoon of 13 September, stating as follows:
“Dear Cassie and Rachel
Thank you for your reply Rachel
I have prepared the below, please confirm you are happy with this and we will place this on letterhead when in the office tomorrow and have this sent across to you both then.
If you need me to specifically place the address in the below please let me know
Dear Cassandra and Kyall,
Thank you for your recent enquiry into acquiring finance for the purchase of a new residential home.
I am writing to you today to inform you that at this time, the bank cannot assist you in accommodating a borrowing capacity of $1,800,000 and therefore your finance has not been approved.
Please however know that we would be happy to review this should your circumstances change.
Thank you for the opportunity to look your borrowing needs and we look forward to working with you in the future.
Kind Regards
Anna Sculthorpe and Yen Vu
Thank you and kind regards
Anna” (CB 1334)
20Ms Vu advised the Walkers’ solicitor that “Due to compliance in relation to our letter and wording”, the email form already suggested was “the best we are able to provide”. (CB 1362) The bank would not state that the Walkers had immediately applied for the loan and done everything reasonably required to obtain approval of the loan. (Cf CB 1361-2)
21Ms Munnecke has declined to refund the deposit money.
This proceeding
22Consequently solicitors acting for the Walkers filed a writ dated 9 May 2023 commencing this proceeding. Their amended Statement of Claim dated 6 October 2023 sought repayment of the deposit in the sum of $282,328.33; alternatively, damages together with interest costs or further or other relief. (CB 4-13) Solicitors for Ms Munnecke filed a document styled “Amended Defence to Amended Statement of Claim” dated 9 September 2024, pursuant to leave granted by a judicial registrar. (CB 14-27)
Trial
23The trial of the matter was conducted by Judicial Registrar Bennett. It occupied four sitting days, with supplementary written submissions filed thereafter. The judicial registrar resolved the matter in favour of the defendant, dismissing the plaintiffs’ claim. ([2025] VCC 267) He also ordered that the plaintiffs pay the defendant’s costs “on the standard basis up to and including 20 December 2023, and thereafter on the indemnity basis”. (CB 184)
Review application
24The plaintiffs’ solicitors filed a “Notice seeking review of the decision of the Court constituted by a Judicial Registrar (Rule 84.03(3))”. (CB 3)
25This application came on for hearing before me on 12 November this year.
26In reaching his conclusions, Mr Bennett proceeded by reference to a series of questions as follows:
“Issue 1: Was GC 20.2(a) fulfilled?
Issue 2: A preliminary question
Issue 3: Was GC 20.2(c) fulfilled?Issue 4: Interest”
27Dealing with the contention on the part of the plaintiffs that “if there is a finding that any further steps [relative to obtaining loan approval from the Commonwealth Bank] would have been futile”, or, in other words, there was no substantial chance of the Walkers obtaining the loan, the plaintiffs should succeed.
28Mr Bennett determined the first issue – viz, had the Walkers immediately applied for the loan – favourably to the plaintiffs. He answered Issue 2 favourably for the defendant, unfavourably for the plaintiffs, dealing contingently with Issue 3, he said had Issue 2 gone in favour of the plaintiffs he would have resolved Issue 3 in their favour.
29On review, the matter proceeded entirely by legal submission based on the evidence that had been adduced before Mr Bennett. In accordance with Rule 84.08, Dr Parkinson and Mr Freire, on behalf of the defendant, obtained a ruling excluding certain passages of the viva voce evidence of Mr Musgrove on the ground that they constituted inadmissible hearsay.
30There was no challenge to Mr Bennett’s determination of Issue 1 in favour of the plaintiffs, nor Mr Bennett’s credit findings made relative to the plaintiffs’ witnesses, Mr and Mrs Walker and Mr Brent Musgrove.
31Mr Bennett conducted a critical analysis of Mrs Walker’s evidence. He concluded:
“... I consider Mrs Walker to have been an unsatisfactory witness. ... I am not prepared to accept Mrs Walker’s evidence on any contentious issue unless it is corroborated by contemporaneous documents or the evidence of another witness (other than Mr Walker) or is otherwise inherently objectively probable.” ([2025] VCC 267 [150])
32Mr Bennett was critical of the Walkers’ performance of their discovery obligations and their redaction of certain documents which they produced. As to Mr Walker, he said:
“I am also not prepared to accept Mr Walker’s evidence ...” ([2025] VCC 267 [163])
33Mr Bennett made a similar finding as to Mr Walker’s evidence. His findings as to Mr Musgrove, who gave evidence on behalf of the plaintiffs, were more complex. He said:
“My impression of Mr Musgrove in the witness box was that he was a careful witness who sought to give responsive and truthful evidence. Whilst it will be apparent from what I have said above that I do not accept all of his evidence, I consider him generally to be a creditworthy witness. That said, his involvement in the Walkers’ dealings with CBA was limited to discussions with Ms Vu and Ms Sculthorpe about the application, approving the wording of the Second Decline Letter, and reviewing records and providing the confirmations in the Q&A Email. It was not suggested by anybody that Mr Musgrove had any direct communications with the Walkers prior to the 10 September Email.” ([2025] VCC 267 [179])
34Mr Bennett observed, in a number of places in his determination, that resolution of the current matters in dispute should be guided by the contemporaneous documentation. I respectfully agree. Contemporary documents are the beacons and signposts by which we may navigate the seas of imperfect recollection. The document described by Mr Bennett as the “Q&A Memorandum” was an email dated 27 September 2022 in which Mr Musgrove responded to some five questions posed by Mr Richard Pedley of the law firm Lawcrest which was acting for the Walkers. The email was in the following terms:
“Dear Richard,
Thank you for your email.
Please see response to your questions:
1. When did Kyall and Cassandra contact you to commence the process for obtaining finance for the purchase of the Property?
There has been various correspondence regarding the finance application, however I’ll need to wait for Anna and Yen’s return from leave on 5 October to confirm this question.
2. How much was the loan that Kyall and Cassandra applied for?
$1,800,000
3. Did Kyall and Cassandra provide all information and documents that Commonwealth Bank requested in relation to the proposed loan?
Yes
4. Did Commonwealth Bank approve the loan to Kyall and Cassandra?
No
5. Were the two attached letters sent by you?
I can confirm that these letters (attached) were issued by CBA and are authentic. I note that the original letter issued contained an error with page 2 not being removed by CBA prior to issuing. I can verbally confirm the authenticity of these letters to any third party who the Walkers provide consent to.
Kind Regards
Brent Musgrove
Executive ManagerCommonwealth Private” (CB 1432)
35The plaintiffs’ case on review, in light of the matters just referred to, therefore necessarily relied solely upon (a) the documentary evidence; and (b) Mr Musgrove’s evidence. Mrs Walker’s account was that it was the failure to attain a price of $1.4 million or more upon the sale of the Busana Way property which was fatal to the loan application made to the Commonwealth Bank. There is no document emanating from the bank to that effect. No document from the bank has been identified that distinctly identifies a particular ground leading to the failure of the Walkers’ loan application. The plaintiffs’ case on review therefore ultimately depends crucially, and almost solely, upon the evidence of Mr Musgrove.
Mr Musgrove’s account
36Mr Musgrove, as the executive manager of CBA Private, was involved in the proposed loan in a purely supervisory capacity. At the material time, he had no direct interaction with the Walkers or either of them. (CB 673, L18-21) In his witness statement he described the process for the making of loan applications to his section of the Commonwealth Bank, namely CBA Private, as follows:
“8. The general process for applying for a loan through CSA Private involves:
(a) the client contacts CSA Private;
(b) a private banker is appointed as lead contact for that client (if the client does not already have an appointed private banker);
(c) a meeting is held with the client either in person, by video conference or by phone to discuss what the client wants to achieve in terms of finance and what options may be available;
(d) the private banker then generally sends an email to the client setting out the information and documents they need to provide to progress a loan application which is generally income tax returns, notices of assessment, payslips, a balance sheet setting out assets and liabilities, monthly living expenses and ID verification;
(e) once the client has provided all of the information and documents requested, they are uploaded into our banking system and assessed by the private banker;
(f) our private banking team has authority to approve finance within certain parameters and authority to decline a finance application without the need to engage the credit risk team;
(g) if the loan application does not fit within certain parameters, the private banker will typically have discussions with the client about ways the application could be further supported such as considering further income or whether expenses can be reduced to improve serviceability;
(h) If the client is able to further support the application, CSA Private would further consider the application and it maybe sent to the credit risk team for further assessment;
(i) where a client is unable to provide further relevant information and there is no realistic prospect that the application will be approved by the credit risk team, the private banker will advise the client that the application falls outside the CBA’s comfort level for borrowing and will not be approved; and
(j) where an application falls outside the CBA's comfort level for borrowing and it is apparent that it will not be approved, it is not submitted to the credit risk team.” (CB 216-7)
37Mr Musgrove said that around the time that the bank was provided with a copy of the contract for the purchase of the Donvale property, viz 17 August 2022, he “had a discussion with Anna [Sculthorpe]”. (CB 219, paragraphs 30-31) Asked to explain what transpired, he said:
“I was very clear around we need to be very forthright around the level of accommodation that the bank can provide and make sure that Cassie [Walker] understands that, yes, we can’t provide – we can’t support a position and that was what was said then.” (CB 624, L9-14)
38Later in his witness statement Mr Musgrove said:
“Based on my recollection of discussions with Anna [Sculthorpe] and Yenny [Vu] and my review of the written records, the loan application was not approved and would not be supported because the Walkers did not meet stated parameters including meeting serviceability requirements.” (CB 221, paragraph 41)
39Speaking of the Walkers’ situation, Mr Musgrove said:
“... you can’t approve a loan which isn’t approvable. It’s not like it’s a decision to approve because that doesn’t exist, if that makes sense.” (CB 633, Lines 15-17)
40Asked why the proposed loan was “not approvable”, he said:
“Because from an income and servicing point of view, we couldn’t get sufficient comfort around acceptable servicing.” (Ibid, L18-20)
41Pressed in cross-examination to elaborate on the concept of serviceability, Mr Musgrove said:
“ ‘Serviceability issues’ is, I suppose, a very broad concept so the aspects which underpin that can be determined by the borrowing history, the nature of where the income comes from, the type of borrowing entity that’s used, the nature of whether it’s PAYG versus self-employed versus an incorporated entity. When I say ‘service built’, there’s lots of factors which on aggregate refer to serviceability.” (CB 670, L21-29)
42Before the judicial registrar, Mr Freire, on behalf of the defendant, called for production of the document or documents of the bank setting out the “parameters” and criteria for the approval of loans. No such document or documents were produced before the judicial registrar. I was referred to an email from the plaintiffs’ solicitors dated 11 October 2024 and addressed to the defendant’s solicitors in the following terms:
“We refer to counsel for your client’s call for production by the CBA of the ‘version of the document [that] existed in August/September 2022 which recorded the parameters within which the private banking team had authority to approve the loan’ and counsel for our clients’ confirmation that enquiries would be made of the CBA.
The CBA have now indicated that:
• There is not one stand-alone document that records the parameters within which the private banking team had authority to approve the loan
• The scope of the request includes voluminous commercially sensitive internal lending policy and process documents which are generally not disclosed absent compulsion by the Court and an appropriate confidentiality regime
• Determining which policy documents applied in August/September 2022 would be difficult and would take some time.”
43This communication seems to have led to the abandonment of the defendant’s attempts to secure production of those documents.
44Mr Freire, cross-examining Mr Musgrove, enquired, putting aside the documented requirement by the bank that the Busana Way property be sold before any loan application could be further processed, whether there was any documentary evidence of his discussion or discussions with Ms Sculthorpe on the subject of serviceability. There seemed to be no direct answer given, though the matter went on for several pages of transcript. Mr Musgrove referred to no documentary evidence of his discussions relative to serviceability with Ms Sculthorpe (or Ms Vu), and I have found none. (CB 665ff)
45Asked whether the bank was guided in making or refusing loan approvals by “a particular ratio that you apply income versus expenses”, Mr Musgrove replied:
“There are general ratios. They are not necessarily codified in policy but there’s general – there’s debt to income ratio, certainly from a loan to value ratio; there’s different policies and when I refer to ‘loan to value ratio’ I am referring to the level of debt that’s secured against the property and that can be different depending on the industry and the situation, but certainly from an income point of view and debt to income point of view it can range, it depends on the circumstances.” (CB 617, L13-23)
46Judicial Registrar Bennett sought clarification, asking:
“Mr Musgrove, you gave evidence a moment ago about having reviewed various source documents: pay slips, notices of assessment, et cetera. You said that the conclusion had been reached that the loan wouldn’t be approved based on certain things. When you were talking about that conclusion being reached, were you talking about a conclusion that you formed after the event, based on your review of those documents, or are you talking about the actual conclusion that was formed – or a conclusion that was formed by you at the time that the application was made?” (CB 629, L11-21)
47Mr Musgrove gave a series of lengthy answers to the judicial registrar’s follow-up question. On the following page of the transcript, the judicial registrar addressed himself to plaintiffs’ senior counsel, Mr Truong:
“It’s helpful to me, Mr Truong, if I know when the witness gives evidence about. It’s not clear to me the extent to which Mr Musgrove was involved at the time. He is also giving evidence of him having looked at these materials after the event, and to simply say to him, ‘Why wasn’t it approved’ or ‘What did you look at’, I don’t know when he looked at it, that’s the difficulty.” (CB 630, L20-27)
48My interpretation is that Mr Musgrove’s review, at least after it was determined that matters could not proceed until the sale of the Busana Way residence, was all ex post facto.
49We have reached the stage, therefore, where it is clear that no loan approval was forthcoming. There is, however, no distinct evidence of the bank’s having given the Walkers to understand that the loan would not be approved. Mr Bennett’s credit findings – which, as previously noted, were not under challenge on review – entail rejection of Mrs Walker’s evidence that she was told that failure to achieve a minimum price of $1.4 million or perhaps a price materially larger than that for the Busana Way house would be fatal to the application. Mr Musgrove gave evidence that the proposed loan could never have been approved, making reference to “ratios”, “parameters” and the concept of “serviceability” at a level of generality without any explanation as to how these various considerations operate. Granted that this is a matter of complexity, and that the bank has a legitimate interest in maintaining commercial confidentiality for its system, it is difficult to believe that the process of approval for a proposed owner-occupied suburban residence is controlled by such “black arts” that no clear description of what is entailed can be given.
50Whilst Mr Bennett accepted Mr Musgrove as a witness of credit, he did not uncritically accept the whole of his evidence. ([2025] VCC 267 [179]) Mr Bennett said that he referred “again to my observations ... about the primacy of contemporaneous documents.” Mr Musgrove’s evidence was singularly deficient in support from contemporaneous documents.
51I turn now to the central question. In terms of GC 20.2(b), did the Walkers “do everything reasonably required to obtain approval of the loan” from the Commonwealth Bank?
GC 20.2(b)
Futility
52A preliminary question arises as to whether, if the evidence establishes that a particular step or steps were futile, are the Walkers excused from carrying this step out and not regarded as having failed to do everything required to obtain the loan for that reason alone? Is it sufficient that the step would be objectively futile, or would it be necessary for the Walkers, to avail of this doctrine, to prove that they were aware of the futility?
53Dr Parkinson and Mr Freire denied, in the circumstances of this proceeding, that this “futility” doctrine could be availed of by the Walkers. Mr Mitchell KC and Ms Jones contended that it could be.
54Dr Parkinson and Mr Freire took me first to the pleadings, namely the Amended Statement of Claim. They said that paragraphs 7A to 7D attributed the failure of the Walkers’ loan application to the Busana Way property’s failing to achieve a sale price of $1.4 million or more. They said that doctrine of futility was not relied upon.
55They then took me to a decision of the High Court of Australia in Berry v CCL Secure Pty Ltd (2020) 271 CLR 151 where the Court considered an issue as to alleged misleading and deceptive conduct, damages therefor, and the burden of proof. At [72], in a joint judgment, Gageler and Edelman JJ said:
“ “The function of pleadings is to state with sufficient clarity the case that must be met” and thereby to “ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and … to define the issues for decision”. A plaintiff should be expected to plead all material facts on which the plaintiff relies to constitute the statutory cause of action, including any counterfactual on which that plaintiff relies to establish the requisite causal link between identified loss or damage and identified misleading or deceptive conduct. In the same way, a defendant resisting the statutory action should be expected to plead any different counterfactual on which that party might rely to deny the causal link. Unless and to the extent that the parties choose to depart from the pleadings in the way they go on to conduct the trial, choice between the competing pleaded counterfactuals on the balance of probabilities should then exhaust the fact-finding that is required to be undertaken by the court on the issue of causation.” ((2020) 271 CLR 151, 190 [72])
56They said in the absence of a pleaded “counterfactual” in the present amended Statement of Claim it was not competent for the futility argument to be relied on by the Walkers.
57Mr Mitchell and Ms Jones said that this argument was considered and dealt with by Judicial Registrar Bennett (presumably without objection being raised on behalf of Ms Munnecke). The argument was dealt with in supplementary closing submissions filed on behalf of Ms Munnecke and dated 4 November 2024 at paragraphs 5 and following.
58In my view it is proper that I consider the futility argument. It was dealt with by Mr Bennett in his determination which is the subject matter of this review application. Mr Bennett considered the matter by reference to a series of questions, presumably adopting the procedure contemplated by s50 and s50A of the Civil Procedure Act 2010. The issue of “futility” is therefore properly before me, and there is no breach of procedural fairness.
59Mr Bennett dealt with this issue by reference to the analysis of the operation of clauses giving conditional rights of rescission by Robb J in his judgment in Al Achrafi v Topic [2016] NSWSC 1807. Dr Parkinson and Mr Freire likewise placed reliance upon his Honour’s analysis, and said that the taxonomy applied by his Honour was to put such clauses into two separate classes. (Transcript (“T”) 78) The clause dealt with by Robb J was as follows:
“48.The purchaser acknowledges the sale is subject to registration of plan of subdivision, a copy of which is annexed to this contract (the Plan). If the plan has not been registered within twelve (12) months from the date of this contract either party may rescind this contract in writing to the other party, clause 19 shall apply.” ([2016] NSWSC 1807 [21])
60Following an analysis of a wide range of authorities both in Australia and England and a number of texts, his Honour postulated the following formulation:
“[62]The authorities that will be considered below support the following principles, and related considerations:
(1)Where a contract for the sale of land gives a party a right to rescind the contract upon the occurrence or non-occurrence of a particular event, the party is subject to an implied obligation to do, or cooperate in doing, what is reasonably necessary to avoid the right to rescind arising, in order to permit completion of the contract.
(2)The party is precluded from exercising the right to rescind if (a) the party has not performed its implied obligation; and (b) the failure has caused the event which entitles the party to rescind. Mere breach of the implied obligation is insufficient to preclude the right of rescission.
(3)The same result arises where there is an express obligation upon a party to take steps to avoid the event that gives rise to the right of rescission, provided that performance of the obligation is not made a condition to the exercise of the right to rescind. Where performance of the obligation is not made a condition of the right to rescind, mere breach does not preclude rescission, but only does so if the breach has caused the right to rescind to arise.
(4)The burden of proof falls on the party who denies the right of the party who has rescinded to do so, to prove both the breach of the implied or express obligation by the rescinding party, and that the breach caused the event that has given rise to the right to rescind.
(5)Notwithstanding the placement of the legal burden of proof, the tender of limited evidence by the party subject of that burden may cause a burden of adducing evidence to shift to the other party, because relevant facts are peculiarly within the knowledge of the rescinding party, to lead evidence as to what happened, because otherwise inferences may be drawn against the rescinding party.
(6)The rules that are applicable are materially different where, as in the present case, the contract makes the right of one party to rescind conditional upon the performance by that party of an obligation to take action intended to avoid the right to rescind arising.
(7)If an action required by the obligation imposed on the rescinding party is not done, the right to rescind is lost, and it is immaterial that the breach of the obligation did not cause the right to rescind to arise.
(8)If an action is required by the obligation imposed on the rescinding party, it must be done, even if the doing of that action would not necessarily avoid the right to rescind arising.
(9)The issue of where the burden lies depends upon an analysis of the effect of the contract, to determine the substance of what must be proved by the parties to establish, or negate, the right to rescind. It should not depend solely on the fortuity of who is the plaintiff and who is the defendant.
(10)In principle, the substance of the obligations should require the party who resists the validity of the rescission to prove that the right of rescission was conditional, and to establish the terms of the condition. It should then fall upon the rescinding party to prove that the condition has been satisfied, as the right to rescind will only exist in that event.
(11)The possible shifting of the evidentiary onus may also arise in this context.” ([2016] NSWSC 1807 [62])
61For the purposes of the present argument, paragraphs (7) and (8) are the most immediately material. If these statements can be applied directly to the present scenario, they would exclude the operation of any “futility” doctrine. This was the view taken by Mr Bennett in his determination. ([2025] VCC 267 [227]). He regarded the analysis of Robb J as consistent with the decision of Williams J in the Supreme Court of Victoria in Putt v Perfect Builders Pty Ltd [2013] VSC 442 [21]. Dr Parkinson and Mr Freire said that GC 20 was deliberately drafted to place it in the second category considered by Robb J and for the purpose of specifically avoiding the need for an elaborate counterfactual analysis. (T81, L12-18) They said that the analysis of Robb J had been approved by the Court of Appeal of Queensland in Sentinel Property Group Pty Ltd v ABH Hotel Pty Ltd [2024] QCA 14 [62] and [132]. The Queensland Court of Appeal, being an intermediate Court of Appeal, clothed these statements with authority such that other courts must follow them unless satisfied that they are “plainly wrong”. (T78, L20-25)
62During oral argument I raised with Dr Parkinson whether, accepting the statements of principle in the abstract, the framing of GC 20 by reference to an obligation to do what was “reasonably required to obtain approval” of a loan rendered a causal analysis inescapable. How could something be “reasonably required” if it were demonstrated objectively to be a futile step? Dr Parkinson replied:
“The reason that is not correct, as a matter of logic, is a deliberate choice was made to have a clause of this type, not the first type. It was done specifically for the purpose of not requiring parties for a standardised contract to have to run the complex counter-factual question.” (T82, L3-8)
63Dr Parkinson responded that since the bank was in control of what requests it might make, “if the bank asks for it, it’s a reasonable request ...” (Ibid, L29-30) Later, in discussion with Mr Mitchell KC, I asked:
“Suppose we had a hypothetical borrower, and the financial institution nominated in the contract was prepared to make the loan, subject to the provision of a guarantee mortgage from the borrower’s parents-in-law.”
Mr Mitchell said that this would not be a reasonable request, and the borrower would not, in refusing to provide the guarantee mortgage, be excluded from reliance on GC 20. (T130, L29 – T131, L7) I am clear in my mind that unless there were some exceptional element to the proposed borrowing transaction which would render the normal loan to valuation ratio inapplicable, or if the borrower for instance had a deplorable credit history, such a request by a lending institution would not be reasonable, and a purchaser relying on GC 20 would be entitled to decline to provide the guarantee mortgage. In summary, therefore, I do not accept that the form of GC 20.2(b) and its reference to what is “reasonably” required necessarily leaves open the need to consider whether a step proven to be futile would for that reason alone be regarded as other than reasonable for the purposes of the subclause.
64Further, a consideration of what is “reasonable” necessarily requires an objective, rather than a subjective, enquiry. Since the enforcement of contractual rights is analysed objectively (Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359; Butler Pollnow Pty Ltd v Garden Mews – St Leonards Pty Ltd (1988) 15 ACLR 24), it would be open to the Walkers to rely on proven futility of any requirement not met, whether they were aware of the futility at the time or not, or whether the bank had conveyed to them the alleged futility.
65What then is the evidence of futility? I have quoted extensively above from the evidence given by Mr Musgrove. His language was wordy and elaborate, but at a high level of generality and lacking in specificity. The gravamen of it seemed to be that the loan was “not approvable” at the level of $1.8 million because of issues of “serviceability”. “Serviceability” is self-evidently an issue of enormous importance. First, the bank must be concerned on that issue out of simple self-interest – the avoidance of writing loans which turn out to be either “bad” or “non-performing”. Further, as Mr Musgrove correctly observed, financial institutions are now, independently of their own self-interest, required by the wider community to have regard to principles of “responsible lending”. Such issues were canvassed during a Royal Commission into Australian Banking conducted on behalf of the Commonwealth Government by a former High Court Justice. (CB 618, L17-22) A failure to have proper regard to “serviceability” could be regarded as engagement in “asset lending”, which the High Court has held may constitute unconscionable conduct. [Stubbings v Jams 2 Pty Ltd (2022) 276 CLR 1]
66No doubt Mr Musgrove was correct in his evidence that the bank’s rules as to the grant or refusal of loan applications are complex and vary significantly between different modes of employment and different industries. Nevertheless, the Walkers had a particular set of circumstances to which one would suppose particular rules for credit approval applied. It was reference to those particular rules, and not the hosts of other rules which might apply in different circumstances and relative to employees in different trades or industries, which would have made the Walkers’ application either “approvable” or “not approvable”. The tone of Mr Musgrove’s evidence was that the application was, ex facie, not approvable. The conclusion “not approvable”, as he described it, would have been readily apparent – not a conclusion that might be reached only after elaborate analysis. If that be so, one may ask why Misses Sculthorpe and Vu continued to process the application, albeit unofficially, prior to the sale of the Busana Way property, and continued seeking further documentation: for instance, seeking a raft of material on 6 September 2022. (CB 1257-1258)
67The plaintiffs’ case is that, based upon Mr Musgrove’s evidence, the Walkers’ application was a “dead horse”, the whipping of which by taking any particular step was intrinsically futile. (T93)
68Had Ms Sculthorpe or Ms Vu been called as a witness, one or other or both of them might have explained whether or not they were flogging a dead horse in the run-up to the auction of Busana Way. Neither was called, and there was no explanation on behalf of the plaintiffs for this omission. This was a matter which weighed with Mr Bennett. ([2025] VCC 267 [181]-[186]) In his submissions in reply, Mr Mitchell KC contended that no adverse inference should be drawn against the plaintiffs on this score. (T127-128) He contended it could not be said that these ladies were “in the camp” of the plaintiffs because there was no property in a witness. (T128, L10-12)
69Jones v Dunkel (1959) 101 CLR 298 stands for the proposition that where a witness or witnesses “in the camp” of one of the parties is not called without any proper explanation, the court may conclude that the evidence of that witness or witnesses would not have assisted the case of the party who failed to call the witness or witnesses. This is one of the most frequently cited decisions of the High Court. Acceptance of Mr Mitchell’s contention based on there being no property in a witness at that level of generality would rob the principle of any operation at all. Whatever may be the merit of that observation, the two ladies were manifestly in the Walkers’ camp. As bank officers, they were bound by a duty of confidentiality not to disclose the private affairs of the bank’s customers: Tournier v National Provincial and Union Bank of England [1924] 1 KB 461; though it may be overridden by statute or legal compulsion: Smorgon v ANZ Banking Group Ltd (1976) 134 CLR 475.
70In all the circumstances, I am not satisfied that the Walkers’ application was futile such that no outstanding step requested by the bank, such as the provision of draft tax returns, could not be regarded as a “reasonable” step toward obtaining the approval of the $1.8 million loan which was not undertaken by the Walkers. When the approval process came to a close, the requested family trust and personal tax return in draft form had not been provided. (CB 1273)
71Whilst not accepting the proposition advanced by Dr Parkinson and Mr Freire that any request which the bank might have made would by definition be a “reasonable” request because it was made by the bank, in the context of “serviceability” issues this request was plainly a reasonable one, and would have been a reasonable step for the Walkers to take, which in the event was not taken.
72I therefore conclude that the requirements of GC 20.2(b) were not satisfied.
73I should add that, assuming the requirements of GC 20.2(b) had been satisfied, it would have been sufficient for the Walkers to be entitled to terminate the contract if the bank had simply failed to decide by 14 September 2022. Their reliance on GC 20 did not depend upon a refusal. Nevertheless, I should record that I do not accept that the bank refused to make the loan based upon the failure of the Busana Way property to achieve a sale price of $1.4 million or more as alleged in the Statement of Claim. First, there was no documentary evidence of the bank’s having such a requirement. Secondly, I accept Mr Bennett’s reasons for not accepting Mrs Walker’s evidence that there was such a requirement. Finally, the exchange of emails immediately after the sale of Busana Way tells against such an interpretation. When Mrs Walker reported the outcome of the sale of Busana Way for $1.35 million (CB 1287-1288), Ms Sculthorpe’s immediate response was “A Big congratulations on the sale of Busana!! You must feel a lot of relief. I am so happy for you that it sold ...” (CB 1292) Had the Walkers failed to meet a mandatory benchmark for their loan application, Ms Sculthorpe would have offered commiserations rather than congratulations. Again, since the shortfall from a $1.4 million sale price was relatively small, one might have expected Mrs Walker to ask the bank to “stretch the point”. In the event, she simply remarked:
“We are now not in a rush to finalise finance for Park Rd. Can we please obtain a letter or email from CBA stating that at this point in time you are unable to loan us 1.8m? This will allow us to exit the contract of Park Rd and we will still seek a formal pre approval for a lesser value which we would be more comfortable with.” (CB 1288)
74The text remarking “We think things will get worse and we’ll make the $50k back on the next one” seems consistent with the Walkers making their own decision, rather than having one forced upon them by the bank.
75I conclude, therefore, that, prior to the text and the email just quoted, there was a viable application for finance which ought not to be regarded as doomed or futile or “unapprovable”, and it was terminated by the Walkers. The requirements of GC 20.2(b) were not made out.
Interest
76Had the plaintiffs succeeded, there might have been an issue as to what interest would be payable upon the deposit moneys to be refunded. The contract provided for default interest at the rate of 2 per cent above the rate prescribed under the Penalty Interest Rates Act 1983. Absent this contractual provision, the interest entitlement would have been under s58 of the Supreme Court Act 1986 without the 2 per cent uplift from the Penalty Interest Rates Act rate. Mr Mitchell KC confirmed that the plaintiffs only sought interest under s58 of the Supreme Court Act. The conclusion that I have reached as to the operation of GC 20 in this instance renders the interest issue moot.
Disposition
77I confirm Judicial Registrar Bennett’s determination.
Costs
78I have heard no submissions on the question of costs, and so I will reserve them.
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Certificate
I certify that these 24 pages are a true copy of the judgment of his Honour Judge Macnamara delivered on 21 November 2025.
Dated: 21 November 2025
Jodie Daniel
Associate to His Honour Judge Macnamara
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